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Bowen Court, LP - Merit Housing Corporation - 2001-06-04
AMENDMENT NO. 1 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT FOR BOWEN COURT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND BOWEN COURT, L.P. THIS AMENDMENT NO. 1 (the "Amendment") is made and entered into this day of , 2001, by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"), and BOWEN COURT, L.P., a California limited partnership ("Developer"). WHEREAS, Agency and Developer are parties to that certain agreement executed by Agency on June 7, 2001, entitled "Disposition and Development Agreement for Bowen Court'', which agreement shall hereinafter be referred to -as the "Agreement", and Agency and Developer wish to amend the Agreement to allow for the subordination of the lease conveying the Property (as that term is defined in the Agreement) to Developer, which lease was executed by the parties on June 4, 2001, NOW, THEREFORE, it is agreed by Agency and Developer as follows: 1. SECTION 1. Section 435 of the Agreement (entitled "Subordination of Agency Deed of Trust, Agreement Containing Covenants, and this Agreement") shall be replaced with the following language: "Agency acknowledges and agrees that this Agreement (including the Lease executed by the parties on June 4, 2001), the Agency Deed of Trust' and the Agreement Containing Covenants shall be subject and subordinate in all respects to all Permitted Mortgages and, within twenty (20) days following Developer's written request therefore, Agency shall execute a subordination agreement (on a form approved by Agency's Executive Director and General Counsel) for the benefit of each holder of a Permitted Mortgage reflecting such subordination together with a deed of trust (on a form approved by Agency's Executive Director and General Counsel) for the benefit of each holder of a Permitted Mortgage (which deed of trust will be executed by Agency as an accommodation and will be non -recourse to Agency) encumbering Agency's fee interest in the Property." 2. SECTION 2. Except as specifically modified herein, all other terms and conditions of the Agreement shall remain in full force and effect. CS:lrb,h-o3o100G 7 `� Hay r � 341! ���5�!'1,fdnfl `ter••,•, 01 agree/jmf/Bowen Court Amendment No. 1/12/3/01/jn IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by and through their authorized offices the day, month and year first above written. BOWEN COURT, L.P., a California limited partnership ("Developer") By: MERIT HOUSING, INC., a California nonprofit corporation, its general partner Eunice Bobert Chief Executive Officer REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic Chairperson ATTEST: Agency Clerk APPROVED AS TO FORM: Agency General Counsel l 1--03 ti 1 01 agree/jmf/Bowen Court Amendment No. 1/12/3/01/jn 2 RECORDED AT THE REQUEST Of CHICAGO TITLE COMPANY OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by: REDEVELOPMENT AGENCY OF THE C:TY OF HUNTINGTON BEACH When Recorded Return to: Redevelopment Agency of the City of Huntington Beach 2000 Main Street, PO Box 190 Huntington Beach, California Attn: Agency Secretary This Document was electronically recorded by Chicago Title Commercial Recorded In Official Records,County of Orange Gary L. Granville, Clerk -Recorder 111111881111 NO FEE 20020091398 08:00am 02/04/02 120 49 S13 13 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9264? SFACE ABJYE TA1S LIKE eGR RelUKDLR'S I;SL SUBORDINATION AGREEMENT (Bowen Court Senior Apartments) NOTICE: THIS SUBORDINATION AGREEtENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT (:his "Agreement") is made as of RJVAA I , 2002 by and among the REDEVELOPMENT AGENCY OF THE CITY OF HUNTI GTON BEACH, a public body, corporate and politic (hereinafter referred to as the "Agency"), BOn'EN COURT, L.P., a California limited partnership (hereinafter referred to as "Borrower") and WELLS FARGO BANK, NATIONAL ASSOCIATION, any successor, assign or transferee of the Bank Loan as defined below (hereinafter collectively referred to as the "Bank"). RECITALS A. Borrower is the tenant currently leasing that certain real property (the "Property") located in the City of Huntington Beach, which is more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference. B. Pursuant to the California Community Redevelopment Law, the Agency has established a Low and Moderate Income Housing Fund and has deposited therein certain tax revenues made available to the Agency exclusively for the purpose of increasing and improving Nb\b0ren%3ubocd3.vpd Subordination Agreement 1-3]-02 Page 1 of 8 the community's supply of affordable low and moderate income housing (referred to in this Agreement as the "Housing Funds"). C. For the purpose of increasing the supply of housing in the City of Huntington Beach that will be affordable to Low and Moderate Income households, including Very Low Income households as defined in California Health and Safety Code Section 50105, Agency and Borrower have entered into that certain Disposition and Development Agreement, dated as of June 4, 2001, as amended by Amendment No. 1 to the Disposition and Development Agreement, dated as of December 17, 2001 (collectively, the "DDA"). The DDA is a public document on file in the office of the Agency Secretary and is incorporated herein by this reference (any capitalized term that is not otherwise defined in this Agreement shall have the meaning ascribed to such term in the DDA). The DDA provides, among other things, for a sixty (60)-year lease of the Property to Borrower and a loan of Housing Funds to Borrower to provide a portion of the financing for the construction of a development to include twenty (20) units of affordable rental housing for Very Low Income households. D. Pursuant to the DDA, among other things, the Agency has entered into a sixty (60)-year Ground Lease with Borrower (the "Agency Lease"), dated June 4, 2001. A Memorandum of Lease was recorded in the Office of the County Recorder of Orange County on June 12, 2001 as Instrument No. 20010385887. In addition, pursuant to the DDA, Agency and'Borrower have entered into that certain Agreement Containing Covenants dated June 4, 2001, which was recorded in the Office of the County Recorder of Orange County on June 12, 2001 as Instrument No. 20010385889. E. Pursuant to the DDA, among other things, the Agency has made a loan to Borrower in the amolt:nt of $900, 000 ("Agency Loan") . The Agency Loan is evidenced by a promissory note in the principal amount of the Agency Loan, dated on or about the date hereof (the "Agency Note"), secured by an Agency Construction Loan Deed of Trust with Assignment of Rents, dated on or about the date hereof (the "Agency Deed of Trust"). The Agency Deed of Trust was recorded in the Office of the County Recorder of Orange County on Ew-o_ , 2002 as Instrument No, . The DDA, Agency Note, lAgency Deed of Trust, Agreement Containing Covenants and Agency Lease are referred to collectively as the "Agency Documents". F. The Bank will originate a conventional first mortgage construction loan in the original principal amount of $1,586,000 eb\bowen\subord].wpd Subordination Agreement 1-3•]-42 Page 2 of 8 (the "Bank Loan") . The Bank Loan is evidenced by a promissory rote in the amount of the Bank Loan (the "Bank Note") and is secured by, ariong other things, a Construction and Permanent Leasehold Deed of Trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing in favor of the Bank (the "Bank Deed of Trust") . The Bank Note and the Bank Deed of Trust and any other documents and instruments executed by Borrower in connection with the Bank Loan are referred to collectively as the "Bank Documents". G. The Bank Documents are being or have been executed, delivered and recorded, as the case may be, prior to or concurrently with this Agreement. H. The Agency and Bank have agreed and required as a condition of making their respective Loans that the order of priority of their respective liens and interests shall be as follows: (1) the Bank Documents; and (2) the Agency Documents. I. Agency is willing to specifically and unconditionally subordinate the Agency Documents to achieve and maintain the order of priority listed in Recital H hereof. THEREFORE, in consideration of the mutual benefits accruing to the Lenders and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Agency and the Bank hereby agree as follows: 1. The Bank Loan and the Bank Documents, together with any advances by Bank pursuant to the Bank Loan, shall at all times be prior and superior , both in right of payment and in priority of all liens and charges, to the Agency Loan and the Agency Documents. 2. The Agency Loan and the Agency Documents, including the Agency Lease, together with any advances by the Agency pursuant to the Agency Documents, shall at all times be junior and are hereby subordinated , both in right of payment and in priority of all liens and Charges, to the Bank Loan and the Bank Documents. 3. The Bank would not originate the Bank Loan, and the Agency would not have made the Agency Loan, without this Subordination Agreement. 4. This Agreement shall be the whole and only agreement with regard to the priority and subordination of the Agency Loan and the Agency Documents to the Bank Loan and the Bank Documents. Kblbowenl9ubord3.wpd Subordination Agreement I-30-02 Page 3 o E 8 5. Agency and Bank declare, agree and acknowledge that: (a) Agency consents to and approves (i) all provisions of the Bank Note and Bank Deed of Trust; (ii) all agreements, including but not limited to reserve agreements, loan agreements, development or escrow agreements, tetween Borrower and Bank for the origination, disbursement and servicing of the Bank Loan, which prior to or concurrently herewith have been submitted to Agency; and (b) Bank consents to and approves all provisions of the Agency Documents described in the Recitals, above; and (c) Agency intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the Agency Documents in favor of the prior lien or charges upon the Property and Improvements of the Bank Documents and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made, and specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination. 6. Notwithstanding anything to the contrary contained in the Subordination Agreement, the parties hereto hereby acknowledge that California health and Safety Code Section 33334.2 et seq., which is the applicable State Law governing the program pursuant to which the Agency is authorized to make the Agency Loan, permits the Agency to subordinate the requirements contained in the Agency Documents to the Bank's lien only if the Agency obtains commitments from the Bank designed to provide the Agency with an opportunity to protect its interests in the evert of Borrower's default, as hereinafter set forth. Therefore, the Bank hereby agrees as follows: (a) Upon the occurrence of an event of default under the Bank Deed of Trust and other Bank Documents, concurrently with Bank's notifying the Borrower of the occurrence of such event of default, Bank shall notify Agency at its address set forth in the Agency Deed of Trust of :he occurrence of such event of default; (b) With respect to a non -monetary default, Bank shall permit Agency to cure any such default within (i) ninety (90) calendar days after receipt of such notice, or (ii) the cure Hblboren\subord3.vpd Subordination Agreement 1-30-02 Page 4 of 8 period, if any, granted to Borrower under the Bank Loan Documents, whichever is longer. The Agency shall have the right, during the cure periods which apply to the Borrower pursuant to the Bank Loan Documents to cure Borrower's default relative to the Bank Loan; (c) With respect to a monetary default, Bank shall permit the Agency to cure or correct such default within (i) sixty (60) calendar days after receipt of such notice, or (ii) the cure period, if any, granted to Borrower under Bank Loan Documents, whichever is longer; (d) Following Bank's notification to Agency of the occurrence of an event of default under the Loan and the expiration of any curative period(s), if any, set forth thereunder, Agency shall have the right, but not the obligation, to purchase the Bank Documents at a cash purchase price equal to all amounts due and owing under the Bank Loan. In the event of any such purchase, Bank shall, contemporaneously therewith, sell, transfer, assign, and deliver to Agency the Bank Note, Bank Deed of Trust any all other Bank Documents, without recourse and without representation or warranty, by executing, endorsing and delivering to Agency any and all necessary and appropriate documents and instruments in recordable form; (e) After a default on the Bank Loan Documents, but prior to a foreclosure sale or deed in lieu assignment of the Property and/or the Improvements, the Agency shall have the right to propose to Bank, without any obligation on the part of Bank to accept, terms and conditions pursuant to which Bank might agree to permit the restrictions on rent and occupancy of the Property as set forth in the Agreement Affecting Real Property to remain in effect following such foreclosure; and (f) After a default on the Bank Loan Documents, but prior to a foreclosure sale or deed in lieu assignment of the Property and/or the Improvements, the Agency shall have the right to take title to the Property and/or the Improvements and cure the default relative to the Bank Loan Documents, without Bank exercising any right it might otherwise have to accelerate the Bank Loan by reason of such title transfer. 7. Nothing in this Agreement shall prevent the Bank from initiating proceedings for foreclosure of the Bank Deed of Trust by trustee's sale or judicial action, from obtaining the appointment Rb\boven\subord3.rpd subordination Agreement 1-30-02 Page 5 of 8 16 of a receiver fcr the Property, or from implementing other rights and remedies available to the Bank under the Bank Documents or applicable law, so long as the foregoing notice and cure rights are made available to the Agency. 8. This Agreement may be executed in counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. The sicnature pages of one or more counterpart copies may be removed from such counterpart copies and all attached to the same copy of this Agreement, which, with all attached signature pages, shall be deemed to be an original Agreement. 9. The benefits of this Subordination Agreement shall run to Bank's successors and assigns and the agreements of the Bank pursuant to Section 6 hereof shall bind the Bank's successors and assigns. NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS PROVISIONS WHICH ALLOW THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN LOANS WHICH MAY BE OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LF.TER SECURITY INSTRUMENT AND WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. [SIGNATURES APPEAR ON NEXT PAGE] kb%bowenlsubord3.rpd Subordination Agreement 1-30-02 Page 6 of 8 "Agency" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH Date: Z 116Z. By: (�5 Ray fiver Executive Director APPROVED AS TO FORM AND LEGALITY GAIL HUTTON AGENCY GENERAL COUNSEL By: KANE, BALLMER & BERKMAN Agency Special Counsel By "Borrower" BOWEN COURT, L.P., limited partnership, By: MERIT HOUSING California corporation, partner a California INC., a nonprofit its general By: Eunice Bobert Chief Executive Officer Hb\bcn+enleubord2.vpd Subordination Agreement 1-25-02 Page 7 of 8 "Bank" WELLS FARGO ASSOCIATION , By: itle: Hb\bowea\3Lb0rd2.wpd Subordination Agreement Z-25-02 Page 8 of 8 BANK, ►C.G NATIONAL STATE OF CALIFORNIA) ) ss . COUNTY OF ORANGE } On n 3I }��'before me, CU /A A ' r7r1 S/N personally appeared --ntrU(CU_ 066ZT- _ , xre- (or proved to me on the basis of satisfactory evidence) to be the person (-&) whose name4-si is/arm subscribed to the within instrument and acknowledged to me that he/-ahefthey executed the same in his/her44he1r authorized capacitykiea), and that by his/her-. ______ signatures on the instrument the person(or) , or the entity upon behalf of which the person k� acted, executed the instrument. WITNESS my hand and official seal. Signature' STATE OF CALIFORIIIA) ) ss. COUNTY OF ORANGE ) GRENIA A. HAR81N N COMM. # 1243253 - WTARY PUSUC{ALM40" N M ORANGE COUNTY YyCommEVb" Mop.33. 2W2 On before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA) ) ss. COUNTY OF ORANGE ) On Wbefore me, ��+�1 i�� �wlu{J personally appeared p sonally known to me ( sts ofK _ ) to be the person(T,) whose name( 0,1&re subscribed to the within instrument and acknowledged to me that &s}ey executed the same in L i h4 q '-,sir authorized capacity 4-ee4 , and that by signature(s} on the instrument the person ( , or the entity upon behalf of which the personts) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA) ) ss. COUNTY OF ORANGE ) LAURA A. NELSON Commission # 1226W Notary ftbrc - Corifa- orange cmnty - WCor-.n. Expires M 23,MM On before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA) L-vS rS ) s s . COUNTY OF E ) On before me, personally appeared -�✓�` o �vSc la- (or proved to on the basis of satisfactory evidence) to be the persons) 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 signatures) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS myP h d an official seal . .� STF.PHEt! T. LEPORE y-• 4 . C0sm. ;1169 ..m.M Signature �p;O1:.All �YP��[iC-C�;.�Oti::1 1)- Cc. it Bp. FEb. Z 2^� ;2 STATE OF CALIFORNIA) ) ' ss. COUNTY OF ORANGE ) On before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures) 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. Signature EXHIBIT A (Fee) Lezal Description PARCEL 1 OF PARCEL MAP NO.2000-148 IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 323, PAGES 47 THROUGH 49 INCLUSIVE OF PARCEL MAPS, RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THERE FROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS, WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO.89-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. APN: 023-042-018, 023-042-019, 023-042-020, 023-042-21, 023-042-022 WWI 28514653.1013102 1833P 01827321 s i certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Date commission expires: Commission number: Vendor number: M6 J County where bond is filed: 1.-� fi1JGD—F'5 Place of execution: Irvine, CA Date: ;U i ID� Chicago Title Company RECORDED AT THE REQUEST OF EHICRGO TITLE COMPANY No fee: Recording requested pursuant to Government Code Section 27383 Recording Requested By, and When Recorded, Return to: Redevelopment Agency of the Agency of Huntington Beach 2400 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary This Document was electronically recorded by Chicago Title Commercial Recorded in Official Records,County of Orange Gary L Granville, Clerk -Recorder 11®®eo1051121 NO FEE 20020091400 08:00am 02104102 120 49 DI I A3612 o.co 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (space above this line for Recorder's use only) AGENCY CONSTRUCTION LOAN DEED OF TRUST With Assignment of Rents THIS DEED OF TRUST, is made this l' - clay of _, 2002, by and between Bowen Court, L.P., a California Iimited partnership (the "Borrower" , as trustor, the City of Huntin-ton Beach, a California municipal corporation, ("Trustee"), and the Redevelopment Agency of the City of Huntington Beach, (the "Beneficiary"), a public body, corporate and politic, as beneficiary, and is executed to secure the obligations contained in that certain Agency Construction Loan and Promissory Note Secured by Deed of Trust executed by Trustor in favor of Beneficiary and dated 'F 2ddZ (the "Note"), that certain Agreement Containing Covenants by and betwetn ?rustor and Beneficiary dated June 4, 2001 (the "Covenants"), and that certain Disposition and Development Agreement by and between Trustor and Beneficiary dated Junc 4, 2001 (the "DDA"). All capitalized terms not other►%ise defined herein shall have the means ascribed to them in the DDA. I. GRANT IN TRUST AND PROPERTY AGREEMENT. For valuable consideration, Trustor irrevocably grants, transfers and assigns to Trustee, in trust, with power of sale, for the benefit of Beneficiary, the following property (the "Property"): (a) Borrower's interest in the real property described in Attachment A attached to this Deed of Trust and incorporated in this Deed of Trust by reference (the "Land'); and (b) all buildings, structures and other improvements now or in the future located or to be constructed on the Land (the "Improvements"); and (Page I of 10) SF-2001 Agree: Dou en Court: Agency Const. Loan-Mcd of Trust 1125/02 - #5 (c) all tenements, hereditaments, appurtenances, privileges and other rights and interests now or in the future benefiting or otherwise relating to the Land or the Improvements, including casements, rights -of -way, development rights, mineral rights, water rights and water stock (the "Appurtenances"). 2. OBLIGATIONS SECURED. The Borrower makes this grant for the purpose of securing the following obligations: A. Repayment of the indebtedness of the Borrower to Beneficiary of the Loan, in accordance with the terms of the Note or as much as has been disbursed to the Borrower under the Note and the DDA, along with any extensions, amendments, modifications, or renewals to the Note; and B. Payment of any sums advanced by Agency to protect the Property and priority of this Deed of Trust; and C. Payment of any sums advanced by Agency following a breach of the Borrower'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 the Borrower contained in this Deed of Trust, the Note, the DDA, and the Covenants, including all modifications, extensions and renewals of these obligations; and E. Performance of any other obligation or repayment of any other indebtedness of the Borrower to Beneficiary, where such evidence of obligation or indebtedness specifically recites that it is secured by this Deed of Trust. 3. ASSIGNMENT OF RENTS AND RIGHT TO POSSESSION. As additional security, the Borrower hereby assigns to Beneficiary- (a) all of the rents, revenues, profits, and income from the Property, any deposits now or hereafter in the Borrower's possession which have been collected with respect to the Property, and any reserve or capital funds now or hereafter held by the Borrower with respect to construction or operation of the Property (collectively, the "Rents"); and (b) the right to enter, take possession of, and manage the Property; provided however that the Borrower shall have, before an Event of Default, the exclusive right to possess the Property and to collect Rents and use them in accordance with the DDA and Note. This assipment is intended to be an absolute and present transfer of the Borrower's interest in existing and future Rents, effective as of the date of this Deed of Trust. 4. ENFORCEMENT. Upon the happening of a Default (as such term is defined in the DDA) and written notice to the Borrower, Agency may, in addition to other rights and remedies permitted by the DDA, the Covenants, this Deed of Trust, or applicable law, (a) enter upon, take possession of, and manage the Property, 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 Property, (b) collect all Rents, including (Page 2 of to) SF-2401 Agree: ©ourn Court: Agency Const. Loan-Dced of Trost 1/25.02 - 65 those past due and unpaid, and apply the same to pay for the costs and expenses of operation of the Property, 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 Property, and complete construction of any improvements on the Property as provided for in the Plans and Specifications approved under the DDA or any modifications to the Plans and Specifications or the Project that Beneficiary in its sole discretion believes is appropriate. 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 Property. 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 Property and take whatever measures are necessary to preserve and manage the Property for the benefit of Beneficiary and the public interest. The Borrower hereby consents to the appointment of a receiver following the occurrence of a Default. The receiver shall have all of the authority over the Property that Beneficiary would have if Beneficiary took possession of the Property 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 NVAINFER OF PONVER OF SALE. The entering upon and taking possession of the Property 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 Property 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. COMMERCIAL CODE PROPERTY 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 Property which under applicable law may be subject to a security interest pursuant to the Commercial Code, and the Borrower 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 Property. The Borrower 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. The Borrower shall pay all costs of filing such financing statements and shall pay all reasonable costs of any record searches for financing statements and releases. Without the prior ,-witten consent of Beneficiary, the Borrower shall not create or permit any other security interest in said items. 8. REMEDIES. Upon the occurrence of a Default, Beneficiary shall have the remedies of a secured party under the Commercial Code and at Beneficiary's option may also invoke the (Page 3 of 10) SF-2001 Agree: Bowen Court: Agency Const. Loan -Deed of Trust I 'M02 - #S 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. The Borrower shall promptly perform each obligation secured by this Deed of Trust. 10. PAYMENT OF PRINCIPAL AND INTEREST. The Borrower shall promptly pay -when due the principal and interest on the indebtedness evidenced by the Note. 11. MAINTENANCE OF THE PROPERTY. The Borrower shall, at the Borro%ver's oven expense, maintain and preserve the Property or cause the Property to be maintained and preserved in good condition, in good repair, and in a decent, safe, sanitary, habitable and tenantable condition. The Borrower shall not cause or permit any violations of any laws, ordinances, regulations, covenants, conditions, restrictions, or equitably: servitudes as they pertain to improvements, alterations, maintenance or demolition on the Property. The Borrower shall not commit or permit waste on or to the Property. The Borrower shall not abandon the Property. Beneficiary shall have no responsibility over maintenance of the Property. In the event the Borrower fails to maintain the Property in accordance with the standards in this Deed of Tntst, the Covenants or the DDA, Beneficiary, after at least sixty (60) days, except in health and safety emergencies, in which case, after at least three (3) days prior written notice to the Borrower, may, but shall be under no obligation to, make such repairs or replacements as are necessary and provide for payment 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 lave), shall become an additional obligation of the Borrower to Beneficiary and shall be secured by this Deed of Trust. 12. INSPECTION OF THE PROPERTY. The Borrower shall permit Beneficiary to enter and inspect the Property for compliance with these obligations upon 24 hours advance notice of such visit by Beneficiary to the Borrower or the Borrower's management agent. 13. DEFENSE AND NOTICE OF CLAIMS AND ACTIONS. Following the occurrence of a Default, the Borrower shall appear in and defend, at its own expense, any action or proceeding purporting to affect the Property and/or the rights of Beneficiary. The Borrower 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 condcmnation offer or action with respect to the Property. 14. SUITS TO PROTECT THE PROPERTY. Beneficiary shall have power to institute and maintain such suits and proceedings as it may deem expedient (a) to prevent any impairment of the Property or the rights of Beneficiary, (b) to preserve or protect its interest in the Property and in the Rents, and (c) to restrain the enforcement of or compliance with any (Page 4 of 1 0) SF-2001 .Agree: Bowen Court: Agency Const. Loan -Deed of Trust 1125:02 - M5 governmental legislation, regulation, or order, if the enforcement of or compliance with such legislation, regulation, or order would impair the Property or be prejudicial to the interest of Beneficiary. 15. DAMAGE TO PROPERTY. The Borrower shall give Beneficiary and Trustee prompt notice in writing of any damage to the Property. If any building or improvements erected on the Property is damaged or destroyed by an insurable cause, the Borrower shall, at its cost and expense, repair or restore said buildings and improvements consistent with the original plans and specifications. Such work or repair shall be commenced within 120 days aver 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 and, if such insurance proceeds shall be insufficient for such purpose, the Borrower shall make up the deficiency. 16. TITLE. Borrower warrants that to the best of Borrower's knowledge, the Borrower lawfully has legal title to the Leasehold Estate in the Property, and Borrower has the right to encumber the same with that Deed of Trust. 17. GRANTING OF EASEMENTS. The Borrower may not grant easements, licenses, rights -of -way or other rights or privileges in the nature of easements with respect to the Property except those required or desirable for installation and maintenance of public utilities including water, gas, electricity, se«-er, cable television, telephone, or those required by law. 18. TAXES AND LEVIES. The Borrower 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 Property. However, the Borrower 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) the Borrower maintains reserves adequate to pay any contested liabilities. In the event that the Borrower fails to pay any of the foregoing items, Beneficiary may, but shall be under no obligation to, pay the same, after Beneficiary has notified the Borrower of such failure to pay and the Borrower fails to fully pay such items within seven 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), steal l become an additional obligation of the Borrower to Beneficiary and shall be secured by this Deed of Trust. 19. 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 Property under assertion of the power of eminent domain ("Funds") are hereby assigned to and shall be paid to Beneficiary. Beneficiary is authorized (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 the Borrower upon such conditions as B- leficiary may impose for its disposition. (Page 5 of 10) Sr-2001 Agrce: Dou,cn Court: Agency Conn. Loan -Deed of Trust 1/25.102 - M5 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. 20. ACCELERATIOti O, TRANSFER OF PROPERTY; ASSUMPTION. In the event that the Borrower, without the prior written consent of the Beneficiary, sells, agrees to sell, transfers, or conveys its interest in the Property 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 DDA; or B. sale or transfer of fixtures or personal property pursuant to the grant provisions in this Deed of Trust; or C. any Permitted Transfer (as such term is defined in the DDA) or any other transfer permitted tinder the terms of the DDA or the Ground Lease pursuant to which Borrower's leasehold interest in the Property is created. 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. 21. RECONVEYANCE BY TRUSTEE. This Deed of 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 and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by the Borrower of Trustee's reasonable fees, Trustee shall reconvey the Property to the Borrower, or to the person or persons legally entitled thereto. DF,FAULT AND REMEDIES 22. EVENTS OF DEFAULT. Any of the events listed in the DDA as an Event of Default shall also constitute an Event of Default under this Deed of Trust. 23. ACCELERATION OF 11IATURITY. Upon the happening of an Event of Default which has not be cured within the times and in the manner provided in the DDA, Beneficiary may declare all sums advanced to the Borrower under the Note and this Deed of Trust immediately due and payable. 24. BENEFICIARY'S REMEDIES. Upon the happening of an Event of Default which has not be cured within the times and in the manner provided in the DDA, Beneficiary may, in addition to other rights and remedies permitted by the DDA, the Note, or applicable law, proceed with any or all of the following remedies: (Page 6 of 10) SF-1001 Agree: Bourn Court: Agency Const. Loan -Deed or Trust 112SM2 -#5 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 Property and collect Rents; B. Enter the Property and take any actions necessary in its judgment to complete construction on the Property as permitted in the assignment of rents and right to possession in this Deed of Trust, either in person or through a receiver appointed by a court; C. Disburse from Agency Loan proceeds any amount necessary to cure any monetary default under this Deed of Trust, the DDA, or Note; D. 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 Property, including the authority to complete construction of improvements; E. Deliver to Trustee a written declaration of Default and demand for sale, and a written Notice of Default and election to cause the Borrower's interest in the Property to be sold, which notice Trustee or Beneficiary shall duly file for record in the Official Records of Orange County, and exercise its power of sale as provided for below; or F. Pursue any other rights and remedies allow at law or in equity. 25. FORECLOSURE BY PONVER OF SALE. Should Beneficiary elect to foreclose by exercise of the power of sale contained in this Died 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 the Borrower such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on the Borrower, 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 given as required by law, sell the Property, 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 the Borrower, 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, the Borrower, Trustee, or Beneficiary, may purchase at the sale. (Page 7 of 10) sr-2001 Agree: Bowrn Court: Agency Const. Lo2n-Deed of Trust I r_5'02 - #5 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. 26. 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 27, GOVERNING LA«'. 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. 28. 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. 29. STATEMENT OF OBLIGATION. Lender may collect a fee not to exceed the maximum allowable under applicable law for furnishing a statement of obligations as provided in the California Civil Code. 30. CONSENTS AND APPROVALS. ,any consent or approval of Beneficiary required under this Deed of Trust shall not be unreasonably withheld. 31. TEME. Time is of the essence in this Deed of Trust. 32. NOTICES, DEMANDS AND C01INIUNICATIONS. Formal notices, demands and communications between the Borrower 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 the Borrower and Beneficiary as follows: (Page 8 of 10) SF-2001 Agree: Dow en Court: Agency Const. Loan -Deed or Trust 1.25 02 -1$5 Beneficiary: Redevelopment Agency of the City of Huntington Beach 2404 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary The Borrower: Bowen Court, L.P. 414 East Chapman Avenue Orange, CA 92866 Attn: Eunice Bobert 33. 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 the Borrower, Trustee, and Beneficiary. 34. WAIVER. Any waiver by Beneficiaryof any obligation of the Borrower in 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 the Borrower or to pursue any remedy allowed under the Deed of Trust or applicable law. Any extension of time granted to the Borrower to perform any obligation under this Deed of Trust shall not operate as a waiver or release the Borrower from any of its obligations under this Deed of Trust. Consent by Beneficiary to any act or omission by the Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for Beneficiary's «ritten consent to future waivers. + 35. 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 the Borrower. 36. DISPOSITION AND DEVELOPINTENT AGREE51ENT CONTROLS. If there is any contradiction between this instrument and the DDA, the terms of the DDA shall control, except that the Borrower shall have no defense or claim that this instrument does not establish a valid lien on the Property or the Property. 37. DEFINITIONS. Capitalized terms not otherwise defined in this Deed of Trust shall have the same meaning as defined terns in the DDA. 38. PROOFS OF CLAIM. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, recomposition or other proceedings affecting the Borrower, 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 the Borrower hereunder after such date. 39. SEVF.RABILITY. 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 (Page 9 of 10) SF-200I Agree: Bowen Court: Agency Cons(. Loan -Dead of Trust ! 25.02 - #5 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 Property, 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. 40. 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. Dated: C BORROWER: BOWEN COURT, L.P. a California limited partnership ("Developer") By: MERIT HOUSING INC., a California Nonprofit Corporation, its General Partner Eunice Bobert Chief Executive Officer (Page 10 of 10) Sr-200t Arc: Bowen Court: Agency Const. loan-Dccd of Trust 125.92 - 05 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of Orange On�G 1 3 ..., 2002 before me, Grenia A. Harbin NotaEy Public, personally appeared ?.0 o CE 1 , personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that behlre-executed the same in hisAter authorized capacity, and that, by hislht,Y 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. GRENIA A, HAR474VBIN COMM. 01243253 rf lFOTARY PUCL]Ci:ALIFORNN N W ORANGE COUNTY N M y Comm FrPi,ys Now. 23, 2903 r 5 � - 4_t/"'t1' enia A. Harbin, Notary Public OPTIONAL Description of Attached Document Cq Cmgm G2A/ OE-W of 7&1 f T= w ITN A41(.1JMw f d F kepj� �'—(FCC) ATTACHMENT A Legal Description PARCEL 1 OF PARCEL MAP NO.2000-148 IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 323, PAGES 47 THROUGH 49 LNCLUSTVE OF PARCEL MAPS, RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THERE FROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER ML -ERALS, WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVENIBER 4, 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. APN: 023 ;042-018 023-042-019 023-042-020 023-042 -21, 023-042-022 Iadb0118514651.1 013102 1833P 01827321 CounciYAgency Meeting Held: Deferred/Continued to: ..� Approved ❑ Conditionally Ap rave O enied y Cler ' ignature — =' ouncil Meeting Date: 14l01 c_ Department ID Num er. E05-�10l- C3OMC rn-n..., v SUBMITTED TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL y, 3AO MEMBERS/REDEVELOPMENT AGENCY MEMBERS SUBMITTED BY. RAY SILVER, City Administrator/Executive Director Cdlz,P n PREPARED BY: DAVID C. BIGGS, Director of Economic DevelopmentlDeputy 3� Executive Director CITY OF HUNTINGTON BEACH kill REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION CD to SUBJECT: Adopt a Resolution Approving a Disposition and Development Agreement with Merit Housing Corporation for Bowen Court Senior Apartments Affordable Housing Project Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: A Disposition and Development Agreement (DDA) between the Agency and Merit Housing Corporation is submitted for approval. This agreement provides for a loan in an amount up to $900,000 of Redevelopment Agency Housing Set Aside funds for the construction of Bowen Court Senior Apartments, to be located at 1968 Lake Street. In addition, an Agency resolution is submitted for adoption. This resolution would allow the Agency to substitute bond proceeds as the source of financing for this project, at some point in the future, should it become feasible. Funding Source: Up to $900,000 of Agency Housing Set Aside funds will be appropriated in the Fiscal Year 2001-2002 budget. Recommended Action: Motion to: City Council Actions: 1. Temporarily waive the City's insurance requirements for the purpose of approving the Agency loan. Direct staff to ensure that insurance requirements as described in the Disposition and Deve!opment Agreement are met by Merit Housing Corporation by the close of escrow. 2. Adopt Resolution Number 0o1-3 approving the Disposition and Development Agreement between the Redevelopment Agency and Merit Housing Corporation for the construction of Bowen Court Senior Apartments. D-I REQUEST FOR COUNCILIREDEVELOPMENT AGENCY ACTION MEETING DATE: 614101 DEPARTMENT ID NUMBER: ED 01-22 Redevelopment Agency Actions: 1. Adopt Resolution Number approving a Disposition and Development Agreement between the Redevelopment Agency and Merit Housing Corporation for the construction of Bowen Court Senior Apartments. 2. Authorize execution and recordation of the DDA, all attachments, and other necessary related documents by the Agency Chairman and Clerk, when advised by the Agency General Counsel's Office. 3. Adopt Resolution Number , A resolution of the Redevelopment Agency of the City of Huntington Beach Declaring Intention to Reimburse Expenditures from the Proceeds of Tax -Exempt Obligations and Directing Certain Actions. Alternative Actions : Do not approve the proposed transaction or direct staff to renegotiate the project terms with Merit Housing Corporation. Analysis: Merit Housing Corporation has been working for a number of years on the development of the Bowen Court Senior Apartments. Merit Housing had previously negotiated deal terms for this project with the Agency; however, when its State application for Tax Credit financing in 1999 was not selected, the project was postponed indefinitely. Merit Housing is currently preparing a new application to the State for Tax Credits and has already applied to the County of Orange for additional financing. Combining these various sources of funds with conventional lender financing and a residual receipts loan from the Agency, Merit Housing believes that the project is now financially attainable. With direction from the Council's Economic Development Committee on March 20, 2001, staff renegotiated the project deal terms with Merit Housing. Under the revised financing structure, Merit Housing will leverage 9% Tax Credit equity, convention lender loan proceeds, County of Orange financing, and an Agency residual receipts loan in the aggregate amount of $3,425,929. In exchange for an Agency loan of up to $900,000 and a ground lease of the project site, Merit Housing wall ensure that the 20-unit senior housing facility is maintained affordable for very low-income residents for at least 60 years. The property management company for the project will be LOMCO, which currently manages nearby Emerald Cove and Wycliffe Gardens senior communities in Huntington Beach. Merit Housing was incorporated as a 501(C)(3) for the purpose of providing affordable housing for very low and low-income seniors and families. They have developed 29 affordable housing projects with 887 units. For this project, Merit Housing has partnered with the Related Companies of California, an experienced for -profit affordable housing developer that brings financial and technical backing to the project. Staff negotiated deal points with Merit Housing and the Related Companies for this project, which are attached to this request as Attachment 6. These deal points include the following terms: RCA for Bowen Court DDA -2- 611101 10:23 AM REQUEST FOR COUNCIUREDEVELOPMENT AGENCY ACTION MEETING DATE: 614/01 DEPARTMENT ID NUMBER: ED 01-22 1. The Agency will provide a residual receipts loan of $500,000 with 3% annual simple interest using Housing Set Aside funds. The Agency will commit up to an additional $400,000 for a total loan amount not to exceed $900,000 to Merit Housing in the event that County of Orange financing is not achievable. 2. The Agency will lease the .75-acre parcel located at 1968 Lake Street to Merit Housing at a rate of $1 per year for 60 years. 3. Merit Housing will obtain Tax Credit financing in an amount anticipated to be $1,782,436, conventional financing in an amount anticipated to be $725,000, and County of Orange financing in an amount anticipated to be $400,000, which together with the Agency's loan will be used for construction of the project. 4. At the end of the third year of the loan agreement, and continuing for the duration of the agreement, Merit Housing will make annual payments to the Agency on its residual receipts loan. Such payments shall be fifty percent (50%) of the project's end -of -year net income. After the 60"' year of the loan agreement, all outstanding principal and interest owed to the Agency will be due. 5. For a period of not less than 60 years, all units in the property will be subject to tenant income and rent affordability restrictions for very low-income senior households. The proposed affordability is described in the following schedule: Unit Size Tenant Income Level Number of Units Proposed Rent 1 Bedroom 45% 9 $582 50% 10 $651 Total Number of Units 19 (plus 1 manager unit) 6. To ensure that overcrowding will not take pla-.e, the maximum number of persons that may occupy a single one -bedroom residential unit may not exceed two persons. This project is an opportunity for the Agency to create 20 units of affordable housing within the Yorktown -Lake redevelopment project sub area and to finally satisfy the Agency's affordable housing production requirement created in 1988 by the Huntington Classics subdivision. The project site was acquired by the Agency in 1994 from Civic Center Partners, the Huntington Classics developer, for the express purpose of providing affordable senior housing within the Redevelopment Project Area, and the site is deed restricted for this use. The current requested action of the City Council and the Agency is adoption of resolutions approving a Disposition and Development Agreement (DDA) with Merit Housing Corporation, which includes an Agency residual receipts loan in an amount up to $900,000 and a long-term ground lease of the project site. Approval of the DDA will demonstrate RCA for Bowen Court DDA -3- 611101 10:23 AM REQUEST FOR COUNCILIREDEVELOPMENT AGENCY ACTION MEETING DATE: 614101 DEPARTMENT ID NUMBER: ED 01-22 the Agency's commitment to the project and will enable Merit Housing to proceed with an application to the State for an allocation of Tax Credit financing. This application must be submitted to the State by June 15, 2001 and requires the DDA for eligibility. The Agency's loan and ground lease have been made contingent upon the developer's successful receipt of Tax Credits. Included in this request is an Agency resolution regarding bond financing. This resolution will allow the Agency to, at some point in the future, consider issuing multifamily housing revenue bonds as a funding source for affordable housing projects thereby freeing other funds for additional affordable housing projects. The attached resolution was prepared by the City Attorney's Office for submission together with the DDA. This project was reviewed by the Council's Economic Development Committee on March 20, 2001 and was recommended for the consideration of the full City Council. The Agency's economic consultant, Keyser Marston Associates Inc., additionally favorably reviewed the project and prepared the project's Section 33433 Summary Report. The DDA, summary report, City and Agency resolutions approving the DDA, and Agency resolution regarding bond financing are attached for review. Environmental Status: This project has complied with the California Environmental Quality Act (CEQA) as part of Conditional Use Permit Number 94-39 and Negative Declaration Number 94-39, both of which were approved on June 2, 1997. Attachmen# s : 1. Disposition and Development Agreement 2. Section 33433 Summary Report 3. City Council Resolution Number.2122L- Y/Approving the Disposition and Development Agreement 4. Agency Resolution Number e� O Approving the Disposition and Development Agreement 5. Agency Resolution Numb,r3 a'Z C Declaring Intention to Reimburse Expenditures 6. Proiect Deal Points RCA Author. HOLTZ (5901) RCA for Bowen Court DDA -4- 611101 10:23 AM Disposition and Development Agreement ATTACHMENT #1 DISPOSITION AND DEVELOPMENT AGREEMENT FOR BOWEN COURT by and between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, and BOWEN COURT, L.P., AGENCY, DEVELOPER. TABLE OF CONTENTS Page I. [§ 100] DEFINITIONS 8 A. [§ 101] Defined Terms 8 I[. [§ 2001 SUBJECT OF AGREEMENT 15 A. [§ 201 ] Purpose of the Agreement. 15 B. [§ 202] The Redevelopment Plan/General Plan. 15 C. [§ 203] The Project Area 15 D. [§ 204] Property 15 E. [§ 205] Parties to the Agreement. . 16 1. [§ 206] Agency. 16 2. [§ 2071 The Developer. 16 F. [§ 208] Prohibition Against Change in Ownership Management and Control of Developer. 16 III. [§ 3001 DISPOSITION OF THE PROPERTY. 18 A [§ 301 ] Representations and Warranties of Developer. 18 B. [§ 302] Representations and Warranties of Agency 20 C. [§ 303] Lease 22 D. [§ 304] Escrow. 22 E. [§ 305] Condition of Titic 26 F. [§ 306] Title Insurance 27 G. [§ 307] Taxes and Assessments 27 H. [§ 308] Occupants of the Property 27 I. [§ 309] Condition of the Property 27 J. [§ 310] Deposit of the Purchase Price and Agreement Containing Covenants and Recordation of the Grant Deed and Agreement Containing Covenants 28 K. [§ 311] Preliminary Work by the Developer 28 L. [§ 312] Submission of Evidence of Financing 29 M. [§ 313] Agency Financing 30 IV. {§ 400] DEVELOPMENT OF THE PROPERTY. 30 A. [§ 401] Development of the Property.. 30 1. [§ 402] Agreement to Design and Construct 30 2. [§ 403] Scope of Development 31 3. [§ 404] Approval of Development and N[anagement Teams 31 4. [§ 404] Basic Concept Drawings 31 5. [§ 4051 Landscaping and Finish Grading Plan 32 6. [§ 406] Construction Drawings and Related Documents for the Property . 32 2 Sr-2001 Agrce: Douce court: DDA 6'6'01 - 4:00 P%1 FA 7. [§ 407] Agency Approval of Plans, Drawings and Related Documents 33 8. [§ 408] Cost of Development 34 9. [§ 409] Schedule of Performance 34 10. [§ 410] Indemnification; Bodily Injury and Property Damage Insurance . 34 11. [§ 411] Anti -discrimination during Construction 39 12. [§ 412] Local, State and Federal Laws 39 13. [§ 4131 City and Other Governmental Agency Permits 39 14. [§ 414] Rights of Access, Inspections and Meetings 39 15. [§ 4151 Books, Records and Audits 40 16. [§ 416] Reports 40 17. [§ 4171 Required Notifications 41 18. [§ 418] Payment of Claims, Costs and Taxes . 42 19. [§ 419] Additional Documents 42 20. [§ 420] Replacement of Third Parties. 42 21. [§ 421 ] Correction of Defects . 43 22. [§ 422] Storage of Materials 43 23. [§ 4231 Signs and Publicity 43 B. [§ 424] Subdivision of Property 43 C. [§ 425] Taxes, Assessments ar.d Liens 43 D. [§ 426] Maintenance of Property Security 44 E. [§ 427] Security Financing; Right of Holders. 44 1. [§ 428] No Encumbrances except Mortgages, Deeds of Trust, Conveyances and Leases -Back or Other Conveyance for Financing for Development 44 2. [§ 429] Holder Not Obligated to Construct Improvements . 45 3. [§ 430 Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure 45 4. [§ 431 ] Failure of Holder to Complete Development 46 5. [§ 4321 Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default 47 F. [§ 433] Rights of Agency to Satisfy Other Liens on the Property After Title Passes. 47 G. [§ 4341 Certificate of Completion. 48 H. [§ 435] Subordination of Agency Deed of Trust, Agreement Containing Covenants, and this Agreement 48 I. [§ 436] Estoppel Certificates 49 J. [§ 4371 Tolling of Time Periods for Benefit of Holder 49 3 S1--2001 ,agree: Ruwen Court: DOA W6b101 - 4:00 PNI V. [§ 500] USE OF THE PROPERTY 49 A. [§ 501] Uses . 49 B. [§ 502] Maintenance of the Property.. 49 C. [§ 503] Obligation to Refrain from Discrimination. 50 D. [§ 504] Form of Nondiscrimination and Nonsegregation Claus:s. 50 E. [§ 505] Effect and Duration of Covenants. 51 F. [§ 506] Rights of Access — Public Improvements and Facilities 51 G. [§ 507] Operation of Project 52 H. [§ 508] Lead -Based Paint 52 I. [§ 509] Barriers to the Disabled 52 J. [§ 510] Maintenance of the Property 52 K. [§ 5111 Term of Residual Receipts Loan 52 1. [§ 512] Amount 52 2. [§ 513] Term 52 3. [§ 514] Repayment 52 4. [§ 515] Definition of Net Operating Income 53 5. [§ 516] Reserved 53 L. [§ 517] Financial Statements 53 VI. [§ 600] DEFAULTS, REMEDIES AND TERMINATION 53 A. [§ 601 ] Default. 53 B. [§ 602] Notice . 53 C. [§ 603] Cure Period 54 D. [§ 604] Rights and Remedies 54 E. [§ 605] Legal Actions . 55 L [§ 606] institution of Legal Actions 56 2. [§ 607] Service of Process 55 3. [§ 608] Applicable Law 55 F. [§ 609 ] Damages 55 G. [§ 610] Specific Performance . 55 H. [§ 611] Rights of Termination 56 1. [§ 612] Termination by Developer 56 2. [§ 613] Termination by Agency 56 1. [§ 614] Agency's Rights of Reentry 56 V1I. [§ 700] GENERAL PROVISIONS 58 A. [§ 7011 Notices, Demands and Communications between the Parties 58 B. - [§ 702] Conflict of Interest 59 C. [§ 703] Nonliability of Agency Officials and Employees 59 D. [§ 704] Enforced Delay; Extension of Time of Performance . 59 E. [§ 705] Inspection of Books and Records 60 F. [§ 706] Real Estate Commissions 60 4 Sr-2001 Agree: E1owen Court: DDA 6'6/01 - 4.00 PAt G. [§ 7071 Plans and Data. 60 H. [§ 708] Not a Joint Venture or Partnership Agreement 60 VIII. [§ 800] SPECIAL PROVISIONS 60 A. [§ 8011 Agreement Containing; Covenants 60 IX. [§ 900] ENTIRE AGREEMENT, `VAIVERS AND AMENDMENTS 61 X. [§ 1000] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY; OF AGREEMENT DATE 61 ATTACHMENTS ATTACHMENT NO. 1 - LEGAL DESCRIPTION OF PROPERTY ATTACHMENT NO.2 - PROPERTY MAP ATTACHMENT NO.3 - SCHEDULE OF PERFORMANCE ATTACHMENT NO.4 - SCOPE OF DEVELOPMENT ATTACHMENT NO.5 - LEASE ATTACHMENT NO. G - AGREEMENT CONTAINING COVENANTS ATTACHMENT NO.7 - AGENCY NOTE ATTACHMENT NO.8 - AGENCY DEED OF TRUST ATTACHMENT NO.9 - CERTIFICATE OF COMPLETION 5 Sr-2001 Agree: Bowen Court: DDA 616,01 . 4-00 P.%1 DISPOSITION AND DEVELOPMENT AGREEMENT FOR BOWEN COURT This Disposition and Development Agreement ("Agreement") is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic (the "Agency"), arnd BOWEN COURT, L.P., a California limited partnership (the "Developer). The Agency and the Developer agree as follows: RECITALS A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (California I iealth and Safety Code Section 33000 et seq). B. Agency is the owner of that certain real property in the City of Huntington Beach (the "Property), described in the Legal Description attached hereto as Attachment No. 1 and depicted in the Property Map attached hereto as Attachment No. 2, which exhibits are incorporated herein by this reference. C. Agency wishes to facilitate the development of a twenty (20) unit affordable senior housing project on the Property (the "Project') by taking the following actions, subject to all of the terns and conditions of this Agreement: (I) lease the Property to Developer; and (2) provide limited construction and permanent financing for the Project as provided in this Agreement. D. The Property is located inside the boundaries of the Huntington Beach Redevelopment Project Area ("Project Area") in the City of Huntington Beach ("City'), State of California, and is to be redeveloped in furtherance of the provisions of (1) the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December I6, 1996, and which merged together four different, previously approved project area; (2) this Agreement; and (3) the General Plan of the City of Huntington Beach. E. The purpose of this Agreement is to effectuate the Redevelopment Plan by providing for the disposition of the Leasehold Estate and development of the Project. The accomplishment of the Project, and the fulfillment generally of this Agreement, are in the vital and b4st interests of the City of Huntington Beach and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state, and local laws and requirements. Further, Agency desires to meet its affordable housing goals pursuant to the Redevelopment Law by assisting Developer in the acquisition and construction of a 20-unit senior rental housing project on the Property. 6 SF-2001 AS=: Rowrn Court: DDA 61101 - 10:38 AM F. The Agency will lease the Property to Developer for sixty (60) years. The fair market value of the Property is Eight Hundred and Eighty-five Thousand Dollars (5885,000). G. Developer will obtain (i) tax credit financing, and (ii) conventional financing of approximately $725,000, which together with the (iii) Agency's loans and any (iv) County Loan will be used for construction of the Project on the Property. Developer will obtain tax credit financing in such an amount that, when added to the Agency Loan, and conventional financing, and the County Loan or alternative financing, if any, will be sufficient to complete construction of the project. The Agency will provide Nine Hundred Thousand Dollars (5900,000) to Developer in the form of a 60-year Agency Construction Loan secured by a trust deed. There will be an annual 3% simple interest charge applied to the outstanding loan balance during the term of the note. In addition, the Developer shall use its best effort to obtain the County Loan or alternative sources of financing up to four Hundred Thousand Dollars (S400,000). The Agency Construction Loan shall be reduced dollar for dollar, by the amount of said financing, if any. H. If Developer does not obtain a written commitment for tax credit financing by December 31, 2002, in an amount that, when added to the Agency Construction Loan, conventional financing, and the County Loan or alternative financing, if any, will be sufficient to complete construction of the project, Agency may, upon thirty (30) days written notice to Developer, terminate this Agreement and the Lease, in which case Developer will quit claim the Leasehold Estate to the Agency. I. At the end of the third year of the Agency Construction Loan, and continuing for the duration of the Loan, Developer will make atirraal payments to the Agency on its Construction Loan. Such payments shall be fifty percent (50%) of the project's end -of -year net income. J. After the 6e year of the project's required affordability period, should Developer wish to continue operating the project with income and affordability restrictions of the Property . Lease, the Agency will extend the term of the Lease. NOW, THEREFORE, in consideration of the promises and covenants contained herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 7 5F-2001 Agm: So%vn Caen: DDA 614T1 - 12:00 PM ACREEIIENT [§ 100] DEFINITIONS A. ] S 101 ] D.-fined Terms. All capitalized terms used in this Agreement and the exhibits attached hereto, and not expressly defined otherwise, have the respective meanings set forth in the following list of defined terms: "Affiliate" shall mean (1) any Person directly or indirectly controlling, controlled by or under common control with another Person; (2) any Person owning or controlling ten percent (10%) or more of the outstanding voting securities of such other Person; and (3) if that other Person is an officer, director, member or partner, any company for which such Person acts in any such capacity. The term "control" as used in the immediately preceding sentence, shall mean the power to direct the management. It shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity. "Agency" means the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic. Unless specifically provided otherwise in this Agreement, any requirement in this Agreement that a matter is to be approved by "Agency" shall be satisfied by the written approval by the Director (defined below). "Agency Construction Loan" shall mean the loan to be made by the Agency to the Developer pursuant to the Schedule of Performance, in a principal amount not to exceed Nine Hundred Thousand Dollars ($900,000), which shall be reduced, dollar for dollar, by the amount of the County Loan or alternative loan, if any. "Agency Construction Loan Closing" shall mean the closing of the Agency Construction Loan as evidenced by the recording of the Agency Deed of Trust. "Agency Deed of Trust" shall mean the deed of trust securing the Agency Construction Loan substantially in the form attached hereto as Exhibit No. 8. "Agency Note" shall mean the promissory note evidencing the Agency Construction Loan, substantially in the form attached hereto as Exhibit No. 7. "Agreement Containing Covenants" shall mean the Agreement Containing Covenants substantially in the form attached to this Agreement as Attachment No.G. "Approved Exceptions" shall mean those title matters shown as exceptions to title on the PTR which are approved by Developer under Section 305 of this Agreement 8 SF-2001 Amc: Bowen Coun: DDA 6'4.'01 - 12:39 PM "Architect" shall mean the architect for the Project selected by Developer. "Business Day" shall mean a day which is not a Saturday or Sunday or a day on which banking institutions located in New York or California are authorized or required to remain closed. "Certificate of Completion" means the certi ficate to be issued by Agency upon its determination that Developer has completed the Project in satisfaction of all requirements of this Agreement, substantially in the form attached hereto as Attachment No. 9, which is incorporated herein by this reference, as provided in Section 434 of this Agreement. "City" shall mean the City of Huntington Beach, California. "Completion" sliall mean the point in time ti-,hen all of the following shall have occurred: (1) issuance of a permanent certificate of occupancy for the Project by the City; (2) recordation of a Notice of Completion by Developer or Developer's contractor for the Project; (3) the Architect certifies that construction of the Project has been completed in a good and workmanlike manner and substantially in accordance with the approved plans and specifications; (4) the expiration of the statutory period(s) within which valid mechanic's liens, materialman's liens andt'or stop notices may recorded and/or served by reason of the construction of the Project, or, alternatively, Agency's receipt of valid, unconditional releases thereof from all persons entitled to record said liens or serve said stop notices, or, alternatively, Agency's receipt of notice of recordation of lien release bonds pursuant to Civil Code Section 3143 relating to all mechanic's liens, materialman's liens and/or stop notices which may have been recorded and/or served by reason of the construction of the Project and which have not been released; and (5) Agency issues the Certificate of Completion pursuant to Section 434 of this Agreement. "Construction Contract" shall mean a general contract for the construction of the Project. "Construction Period" shall mean the period of time between the Closing and the Completion. "County" shall mean the Orange County Housing and Community Development Department. "County Loan" shall mean the loan, if any, made by the County to Developer to cover a portion of the cost of developing the Project. "County Deed of Trust" shall mean the deed of trust securing repayment of all amounts, if any, disbursed under the County Loan. "Conventional Construction Loan" shall mean the construction loan made by a conventional lender to Developer to cover a portion of the cost of developing the Project. 9 SF 21001 Agree: Bourn Court: DDA 6/1101 - 10:33 AM "Conventional Construction Loan Closing" shall mean the closing of the Conventional Construction Loan, as evidenced by the recording of the deed of trust securing repayment of all amounts disbursed under the Conventional Construction Loan. "DDA" or "Agreement" shall mean this document fully executed by Agency and Developer. "Debtor Relief Law" shall mean any applicable liquidation, conservatorship, bankruptcy, moratorium, insolvency, reorganization, or other similar laws, domestic or foreign, including but not limited to those in Title I 1 of the United States Code, as amended from time to time, affecting the rights and remedies of creditors generally, as in effect from time to time§ "Default" shall have the meaning set forth in Section 601 of this Agreement. "Defect" means any defect or deficiency in siting, design, layout, suitability, construction, installation, materials, workmanship or operation of or relating to the Project.. "Developer" shall mean Bowen Court, L.P., a California limited partnership, or any assignee permitted by this Agreement. "Development Costs" means costs incurred by Developer in connection with the Project to the extent set forth in the approved Project Budget. "Director" means the City Administrator and Executive Director of the Redevelopment Agency of the City of Huntington Beach. "Escrow Agent" shall mean Chicago Title Insurance Company, or another escrow agent mutually acceptable to Agency and Developer. "Force Majeure" or "Force Majeure Event" shall mean the following events, provided that any one or more of such event(s) actually delays or interferes with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interference: war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the other party, acts or failure to act of the City of Huntington Beach or any other public or governmental agency or entity (except that acts or failure to act of Agency shall not excuse performance of Agency), or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within fifteen (15) 10 SF-2001 Agee: ©owen Coun: DDA 611/01 - 10:38 A%l days after it obtains actual knowledge of the event and reasonably determines that such event shall result in a delay. "Force Majeure Delay" shall mean any delay in commencing construction of the work of Improvement or in completion of such construction by the Scheduled Completion Date, proximately caused by the occurrence of any Force Majcure Event. "Governmental Approval" shall mean any and all special use permits, general plan amendments, zoning approvals or changes, required approvals and certifications under the California Environmental Quality Act and any other applicable laws and regulations relating to environmental conditions, tentative and final tract maps, variances, conditional use permits, special use permits, demolition permits, excavation/foundation permits, grading permits, building permits, inspection reports and approvals, certificates of occupancy, and other approvals, permits, certificates, authorizations, consents, orders, entitlements, filings or registrations, and actions of any nature whatsoever required from any Governmental Authority in order to commence construction, construct the Project, occupy the completed Project and operate the Project therein. "Governmental Authority" means the United States of America, the State of California, the County of Orange, the City of Huntington Beach, or any other political subdivision in which the Project is located, and any court or political subdivision, agency or instrumentality having jurisdiction over the Project or the Work of Improvement. "Gross Income" shall mean the gross rental income received by Developer from its operation of the Property, and any other income to the Developer derived from the ownership, operation and management of the Property. "Hazardous Materials" shall mean (i) any chemical, compound, material, mixture or substance that is now or hereafter defined or listed in, or otherwise classified pursuant to, any laws as a "hazardous waste," "extremely hazardous substance," "extremely hazardous waste," "acutely hazardous waste," "hazardous substance," "hazardous material," "radioactive waste," "infectious waste," "biohazardous waste," "pollutant," "toxic pollutant," "contaminant" or "toxic substance," as well as any formulation not mentioned herein intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "EP toxicity," or `"TCLP toxicity'; (ii) petroleum, natural gas, natural gas liquids, liquefied natural gas, synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas) and ash produced by a resource recovery facility utilizing a municipal solid waste stream, and drilling fluids, produced waters and other waters associated with the exploration, development or production of crude oil, natural gas, or geothermal resources; (iii) "hazardous substance" as defined in Section 25281(f) of the California Health and Safety Code; (iv) "waste" as defined in Section 13050(d) of the California Water Code; (v) asbestos in any form; (vi) urea formaldehyde foam insulation; (vii) polychlorinated biphenyl ("PCBs"); (viii) radon; and (ix) any other chemical, material, or substance that, because of its quantity, concentration, or physical or chemical characteristics, exposure to which is limited or regulated for health and safety reasons by any Governmental Authority, or which poses a 11 SF--2.001 Agrce: Dowrn Court: DDA &I/01 - 10:38 A\t significant present or potential hazard to human health and safety, or to the environment, if released into the work place or the environment. "HUD" shall mean the U.S. Department of Housing and Urban Development. "Insurance Policies" shall have the meaning; set forth in Section 410 of this Agreement. "Lease" means the instrument by which Agency shall convey leasehold title to the Property to the Developer, substantially in the form attached hereto as Attachment No. 5. "Lease Closing" or "Lease Close of Escrow" shall mean the point in time when Agency conveys possession if the leasehold interest in the Property to Developer, as evidenced by the recording; of the )`viemorandum of Ground Lease. "Legal Description" shall mean the legal description of the Property attached to this Agreement as Attachment No. 1 which is incorporated herein by this reference. "Memorandum of Lease" shall mean the memorandum of lease attached as an exhibit to the Lease. "Operating Expenses" shall mean actual, reasonable and customary costs, fees and expenses directly attributable to the operation, leasing, repair, maintenance, taxes and management of the Property, expressly including, without limitation: payment of principal and interest, all periodic fees and costs attributable to any Permitted Financing; onsite administrative costs (including salaries and benefits and overhead costs); maintenance costs (including materials and labor); reasonable payments to an operating reserve account; reasonable payments to a replacement reserve account; painting, cleaning, repairs and alterations; landscaping; utilities; rubbish removal; certificates, permits and licenses; sewer charges; real and personal property taxes and assessments; insurance; security; advertising, promotion and publicity; office, janitorial, cleaning and building supplies; cable television, satellite and similar facilities; recreational amenities, supplies and services; reasonable fees payable to a property manager, not to exceed five percent (51/u) of Gross Income; devc1oper fees as permitted by the California Tax Credit Allocation Committee; fees payable to the general partners and/or limited partners, not to exceed five percent (5%) of Gross Income; purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves); fees and expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party; and the amortized value of tenant improvements. The calculation of Operating Expenses shall be subject to the reasonable approval of the Agency.. "Ovmer's Title Insurance Policy" shall mean any title insurance policy requested to be issued to Developer at the Closing as provided in Section 306 of this Agreement. "Permitted Financing" shall mean any construction loan or take-out loan, secured by a Permitted Mortgage. 12 Sr -toot Agree: Dowen court: DDA 611ro1 - IH0AM "Permitted Mortgage" means a conveyance of a security interest in the Leasehold Estate and/or works of Improvement to a lender (a "Permitted Lender'), or the conveyance of the Leasehold Estate and/or works of Improvement to the lender or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan, all of which shall be subject, prior to Completion, to the terms and conditions set forth in Section 428 of this Agreement. "Permitted Transfer" means any of the following: An assignment of this Agreement and all of Developer's interests in any of The Leasehold Estate to an Affiliate; b. The inclusion of equity participation in Developer by transfer of partnership interests, shares of stock or limited liability shares or addition of additional partners, shareholders or members to Developer or similar mechanism; C. Any Permitted Mortgage; d. The leasing of any apartment units for occupancy; C. Any transfer of the Leasehold Estate permitted under the Lease; and f. Any transfer of the Leasehold Estate to any of the general partners (or their Affiliates) in Developer pursuant to the terms and conditions of the Developer's agreement of limited partnership following the expiration of the fifteen (15) year tax credit compliance period under Section 42 of the Internal Revenue Code. Any Transfer described in clauses a, b, c, e, and f shall be subject to the reasonable approval of the Director, which shall be granted if the applicable conditions for approval described in this Agreement are satisfied. "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign. "Plans" means the final working drawings and specifications in the form of reproducible masters setting forth all details, requirements, standards and materials for the siting, physical layout and construction of the Project prepared by the Architect and as modified or supplemented from time to time and approved by the Executive Director, the City, and to the extent necessary, by each Governmental Authority which approval shall not be unreasonably withheld or delayed. The Plans shall be consistent with the Scope of Development, and any plans previously approved by the City planning department or planning commission, and shall be prepared according to best industry practice. The Plans shall include as necessary, but not be limited to, site plans, demolition plans, excavation and foundation plans, structural plans with all elevations, building floor plans, building roof plans, building exterior plans, electrical plans, plumbing plans, mechanical plans, floor and ceiling plans, furniture plans, lighting plans, parking landscaping and 13 Sr-2001 Agree: Dowen Court: DDA 611/oi - 11:11 AM irrigation plans, sign plans and all other plans and detailed information necessary to obtain a Construction Contract and all necessary building pen -nits for the Work of Improvement. "Project" shall mean the senior affordable housing residential apartment including approximately 20 one-bed/one-bath units as reflected in the plans and drawings delivered to Agency as of the date of this Agreement (as such plans and drawings may be amended from time to time in accordance with this Agreement). "Property" shall mean the real property described and depicted in the Legal Description and the Property Map. "Property Map" means the document which is attached to this Agreement as Attachment No. 2 and is incorporated herein by this reference. "PTR" mean the preliminary title report dated May 22, 2001, issued by Chicago Title Insurance Company.. "Redevelopment Law" means the Community Redevelopment Law of the State of California, set forth in Division 24, Part 1 of the California Health and Safety Code, beginning at Section 33000. "Schedule of Performance" shall mean the schedule attached to this Agreement as Attachment No.3, which is incorporated herein by this reference. "Scheduled Lease Closing Date" shall mean June 11, 2001. "Scheduled Completion Date" shall mean the date that is eighteen (18) months after the Conventional Construction Loan Closing, subject to Force Majeure Delays. "Scope of Development" shall mean the document by that name attached to this Agreement as Attachment No. 4. "Title Company" shall mean Chicago Title Insurance Company, or another title insurance company mutually acceptable to Agency and Developer. "Title Policies" shall mean the Owner's Title Insurance Policy insuring title to the Leasehold Estate, Agency's Title Insurance Policy insuring the lien of the Agency Deed of Trust, and Lender's Title Insurance Policy insuring the lien of the deed of trust securing the Conventional Construction Loan. "Transfer" shall mean any assignment or attempt to assign this Agreement or any right herein, or any total or partial sale, transfer, conveyance or assignment of the Property, any portion thereof or interest therein. "Work of Improvement" shall mean the preparation of the Plans and construction of the Project, including all on -site and off -site improvements, but excluding the Property. 14 SF-2001 Agree: Down Coun: DDA GiI/01 - 11:12 AM I1. [§ 200] SUBJECT OF AGREEMENT A. [§ 201] Purpose of the Agreement The purpose of this Agreement is to effectuate the Redevelopment Plan for Huntington Beach Redevelopment Project Area (the Yorktown. Subarea) by providing for the disposition of certain real property (the "Property) and the redevelopment of the Property as an affordable senior housing project consisting of approximately twenty (20) for -rent dwelling units (the "Project") pursuant to the Schedule of Performance and Scope of Development, attached hereto as Attachment No. 3 and Attachment No. 4, respectively. As part of the Project, the Developer shall also provide all parking on -site, as necessary and appropriate for the proposed Project along with all appropriate landscaping. The Project is more particularly described in this Agreement and its attachments. The redevelopment and operation of the Property for such uses pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the City of Huntington Beach ("City") and the health, safety and welfare of its residents and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. B. [§ 202] The Redevelopment Plan/General Plan This Agreement is made in accordance with the Huntington Beach Redevelopment Project (the "'Merged Redevelopment Projecf') which was approved by adoption of Ordinance No. 3343 on December 16, 1996, and which merged together four different, previously approved project areas. The Property is within the Merged Redevelopment Project. Agency intends this Agreement to meet its obligations pursuant to Health and Safety Code Sections 33413, 33334.2 and 33413(b)(2)(A)(ii). This Agreement is also subject to the provisions of that certain General Plan for the City of Huntington Beach (the "General Plan"). Any amendment hereinafter to the Redevelopment Plan and/or the General Plan which chances the uses or development permitted on the Property as required by this Agreement or the restrictions or controls which apply to the Property shall require the prior written consent of the Developer. Except as provided in this paragraph, no other amendments to the Redevelopment Plan and/or the General PIan shall require the consent of the Developer. C. [§ 203] The Protect Area The Huntington Beach Redevelopment Project Area (the "Project Area) is located in the City of Huntington Beach, County of Orange, California. The exact boundaries of the Project area are specifically and legally described in the Redevelopment Plan. D. [§ 204] Property The Property is that certain real property located at 1968-82 lake Street in the City of Huntington Beach, California. The Property is comprised of approximately .7S acres in land 15 Sr-2001 Arrcc: Bowcn Court: DDA &1/01 - 10:38 AM area. The Property is located within the Project Area and is designated and illustrated as such on the Property Map which is attached hereto as Attachment No. 2 and incorporated herein by this reference and is legally described as set forth in the Description of the Property which is attached hereto as Attachment No. I and incorporated herein by this reference. E. [§ 2051 Parties to the Aereement I. [§ 206] Agency. The Agency is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California (California Health and Safety Code §§ 33000, et seq.). The address of the Agency for purposes of this Agreement is Economic Development Department, City of Huntington Beach, 2000 Main Street, Huntington Beach, California 92648, Attention. Executive Director. "Agency" as used in this Agreement, includes the Redevelopment Agency of the City of Huntington Beach, and any public body that is an assignee of or successor to its rights, powers and responsibilities. 2. [§ 207] The Developer The Developer is Bowen Court, L.P., a California limited partnership.. The principal off ce of the Developer for purposes of this Agreement is Merit Housing, Inc., 414 East Chapman Avenue, Orange, California 92866, Attention Eunice Bobert. Wherever the term "Developer" is used herein, such term shall include any permitted nominee, assignee or successor in interest as herein provided. F. [§ 2081 Prohibition against Change in Ownership Management and Control of Developer 1. The Developer represents and agrees that its lease of the Leasehold Estate and its other undertakings pursuant to this Agreement are, and will be used, for the purpose of redevelopment of the Property and not for speculation in landholding. The Developer further recognizes that, in view of: (a) the importance of the redevelopment of the Property to the general welfare of the community; (b) the public aid that has been made available by law and by the government for the purpose of making such redevelopment possible; and 16 Sr-' 001 Agree: Dowen Court: DDA 6/1101- 11:13AM (c) the fact that a significant change in identity of the Developer, excepting the substitution of a purchaser at a foreclosure sale, is for practical purposes a transfer or disposition of the Leasehold Estate; the qualifications and identity of the Developer is of particular concern to the community and the Agency. The Developer further recognizes that it is because of such qualifications and identity that the Agency is entering into the Agreement with the Developer. Accordingly, except pursuant to a Permitted Transfer, no voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. For the reasons cited above, the Developer represents and agrees that prior to issuance by the Agency of a Certificate of Completion for the Property pursuant to Section 434 hereof, except pursuant to a Permitted Transfer the Developer shall not assign or transfer or attempt to assign or transfer all or any part of this Agreement, or any rights herein, without the express written consent of the Agency. 2. After the issuance of the Certificate of Completion pursuant to Section 434 of this Agreement: (a) Except in connection with a Permitted Transfer, the Developer shall not assign all or any part of this Agreement without the prior written approval of the Agency. (b) For the reasons cited above, the Developer represents and agrees for itself and any successor in interest that without the prior «Titten approval of the Agency, except for a Permitted Transfer there shall be no significant change in the ownership of the Developer or in the relative proportions thereof, or with respect to the identity of the parties in control of the Developer or the degree thereof, by any method or means. (c) The Developer shall promptly notify the Agency of any and all changes whatsoever in the identity of the parties in control of the Developer or the degree thereof, of which it or any of its officers have been notified or otherwise have kno%;•ledge or information. This Agreement may be terminated by the Agency if there is any significant change (voluntary or involuntary) in membership, management or control of the Developer (other than such changes occasioned by the death or incapacity of any individual or occasioned by a Permitted Transfer). (d) Developer shall not, except as permitted by this Agreement and except pursuant to a Permitted Transfer, assign or attempt to assign this Agreement or any right herein, nor except pursuant to a Permitted Transfer, make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the 17 Sr-2001 Apm: Bowen Court: DDA W1/01 - 10:38 AM Leasehold Estate (referred to hereinaller as a "Transfer"), without prior written approval of the Agency, except as expressly permitted by this Agreement. Consent to a Transfer shall not result in acceleration of the Agency Note. Consent to one such Transfer shall not be deemed to be a waiver of the right to require consent to future or successive Transfers. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Developer. Any such proposed transferee, by instrument in writing satisfactory to the Agency and in form recordable among the land records, for itself and its successor and assigns, and for the benefit of the Agency shall expressly assume all of the obligations of the Developer in this Agreement as of the date of such assumption, and agree to be subject to all conditions and restrictions applicabl to the Developer in this Agreement. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such Transfer, and if approved by the Agency its approval shall be indicated to the Developer in writing. (e) In the absence of specific written agreement by the Agency, no unauthorized Transfer, or approval thereof by the Agency, shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. {f) The provisions of this Section 208 shall be of no force or effect as of the expiration or earlier termination of the Regulatory Agreement. III. [§ 300] DISPOSITION OF THE LEASEHOLD ESTATE A. [301 ] Representations and Warranties of Developer As an inducement to Agency to enter into this Agreement and perform all of the Agency's obligations under this Agreement, Developer hereby represents and warrants to Agency, which representations and warranties are true and correct as of the date of this Agreement and which shall survive the Lease Closing: I. Developer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby; 2. This Agreement and all documents required hereby to be executed by Developer are, and shall be, valid, legally binding obligations of and enforceable against 18 SF-2001 Agree: Dowen Coun: DDA 611101 - 10:33 AM Developer in accordance with their terms, subject only to applicable Debtor Relief Laws or equitable principles affecting or limiting the rights of contracting parties generally; 3. There is no charter, bylaw, or capital stock provision of Developer, and no provision of any indenture, instrument, or agreement, written or oral, to which Developer is a party or which governs the actions of Developer or which is otherwise binding upon Developer or Developer's property, nor is there any statute, rul.- or regulation, or any judgment, decree, or order of any court or agency binding on Developer or Developer's property which would be contravened by the execution, delivery or performance of this Agreement or any documents required hereby to be executed by Developer; 4. There is no action, suit, or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, or, to the knowledge of Developer, threatened against or affecting Developer, or any properties or rights of Developer, which, if adversely determined, would materially impair the right of Developer to execute or perform its obligations under this Agreement or any documents required hereby to be executed by Developer, or would materially adversely affect the financial condition of Developer; 5. Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement and the documents referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, aced of trust, loan, partnership agreement, lease or other agreements or instruments to which Developer is a party; G. To the best of Developer's knowledge, there are no pending, threatened or contemplated actions, suits, arbitrations, claims or proceedings, at law or in equity, in which Developer or and Affiliate is, or to the best of Developer's knowledge will be, a party, including, but not limited to, judicial, municipal or administrative proceedings in eminent domain, unlawful detainer or tenant evictions, collections, alleged building code, health and safety or zoning violations, employment discrimination or unfair labor practices, breach of contract, or workers' compensation, personal injuries or property damages; 7. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Developer, nor are any of such proceedings contemplated by Developer; 8. All reports, documents, instruments, information and forms of evidence delivered to Agency by Developer concerning or required by this Agreement are accurate, correct and sufficiently in all material respects complete to give Agency true and accurate knowledge of their subject matter, and do not contain any material misrepresentation or material omission; 19 SF 2001 Agree: Dowtn Coun: DDA &I/01 - 10:38 AM 9. No representation, warranty or statement of Developer in this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements or facts contained therein not misleading; and 10. If Developer receives any notice that any representation or warranty made herein is false or misleading, Developer shall immediately notify Agency in writing. 11. Whenever a statement concerning the factual matters herein is qualified by the phrase "to the best of Developer's knowledge" or similar words, it is intended to indicate that no information that would give the Developer current actual knowledge of the inaccuracy of such factual statement has come to the attention of the Developer. The Developer has not undertaken any independent investigation to determine the accuracy of any such factual statement, and any limited inquiry undertaken by the Developer should not be regarded as such an investigation. B. [302] presentations and Warranties of A enc As an inducement to Developer to enter into this Agreement, accept a conveyance of title to the Leasehold Estate from Agency and develop the Project thereon, Agency hereby represents and warrants to Developer, which representations and warranties arc true and correct as of the date of this Agreement and which shall survive the Lease Closing: 1. Agency has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby; 2. This Agreement and all documents required hereby to be executed by Agency are, and shall be, valid, legally binding obligations of and enforceable against Agency in accordance with their terms, subject only to applicable Debtor Relief Laws; 3. There is no provision of any indenture, instrument, or agreement, written or oral, to which Agency is a party of which governs the actions of Agency or which is otherwise binding upon Agency or Agency's property, nor is there any statute, rule or regulation, or any judgment, decree, or order of any court or agency binding on Agency or Agency's property which would be contravened by the execution, delivery or performance of this Agreement or any documents required hereby to be executed by Agency. 4. There is no action, suit, or proceeding at law or in equity or by or before any governmental instrumentality or other agency no�v pending, or, to the knowledge of Agency, threatened against or affecting Agency, or any properties or rights of Agency, which, if adversely determined, would materially impair the right of Agency to execute or perform its obligations under this Agreement or any documents required hereby to be executed by Agency, with the exception of eminent domain actions which may be filed, as contemplated by this Agreement; 5. Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement and the 20 SF-2001 AS=: Doµ-cn Court: DDA 611/01 - 10:38 AM documents referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreements or instruments to which Agency is a party; 6. To the best of Agency's knowledge, there arc no pending, threatened or contemplated actions, suits, arbitrations, claims or proceedings, at law or in equity, in which Agency is, or to the best of Agency's knowledge will be, a party, including, but not limited to, judicial, municipal or administrative proceedings in eminent domain (except as contemplated by this Agreement), unlawful detainer or tenant evictions, collections, alleged building code, health and safety or zoning violations, employment discrimination or unfair labor practices, breach of contract, or workers' compensation, personal injuries or property damages, which may or will materially affect the Property or the Leasehold Estate or Agency's ability to perform its obligations hereunder; 7. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Agency, nor are any of such proceedings contemplated by Agency; 8. All reports, documents, instruments, information and forms of evidence delivered to Developer concerning or required by this Agreement are accurate, correct and sufficiently complete to give Developer true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission; 9. Subject to all applicable Governmental Approvals, and without prejudice to the rights of the City to exercise its discretion wife respect to any land use approval, the use of the Property for the Project is an allowable land use, and complies with all of the provisions of, the Redevelopment Plan; 10. To the best of Agency's knowledge, Agency has not received written notice from any Governmental Authority that Agency or any of the Property (or any portion thereof) is or are in violation of any governmental or other legal requirements including, without limitation, legal requirements relating or pertaining to Hazardous Matcrials; 11. To the best of Agency's knowledge, Agency owns the Property free and clear of all liens and encumbrances {except for the matters shown on the PTR delivered to Developer) and there are no claims pending, or to the best of Agency's knowledge, threatened, which would result in the creation of any lien against any of the Property or the Leasehold Estate, including without limitation, mechanic's liens and liens of water, sewer, street or electrical power improvements in progress or contemplated; 12. To the best of Agency's kno-%]edge, all water, sewer, gas and electric and other utilities necessary to service the Property are to will be at the Closing located in the streets adjoining the Property, ready for tap in by Developer, subject to payment of all applicable hook- up fees; 21 SF-2001 Agree: Bowen Court: DDA 61101 - I0:38 Aft 13. Agency has not received any written notice of and has no actual knowledge of any violation of any law, ordinance, regulation, order or requirement applicable to the Property, including without limitation, requirements imposed under any recorded covenants, conditions, restrictions, easements or other rights affecting the Property-, 14. No representation, warranty or statement of Agency in this Agreement contains or will contain any untrue statement of a material fact or omits or vvill omit to state a material fact necessary to make the statements or facts contained therein not misleading; and 15. If Agency receives any notice that any representation or warranty made herein is false or misleading, Agency shall immediately notify Developer in writing. Whenever a statement concerning factual matters herein is qualified by the phrase "to the best of Agency's knowledge" or similar words, it is intend;d to indicate that no information that would give Agency current actual knowledge of the inaccuracy of such factual statements has come to the attention of Agency. Agency has not undertaken any independent investigation to determine the accuracy of any such factual statement, and any limited inquiry undertaken by Agency should not be regarded as such an investigation. 16. To the best of Agency's knowledge, Agency has delivered to Developer copies of all environmental notices from governmental agencies, environmental reports, and environmental assessments in Agency's possession or control and the Property is not in violation of any law, ordinance, regulation, order or requirement relating to Ilazardous Materials. 17. Other than the issuance of a subdivision or parcel map and building permits, all discretionary entitlements necessary for the development and construction of the Project have been obtained. 18. No assessment for street lighting or downtown maintenance has been imposed on the Property. C. [§ 3031 Lease In accordance with and subject to all the terms, covenants, and conditions of this Agreement, the Agency agrees to lease to the Developer and the Property pursuant to the Lease set forth in Attachment No. 5. The Developer shall pay to the Agency One Dollar (Sl .00) per year as the rent for the lease of the Property. The first rent payment shall be paid by the Developer at or prior to the Lease Closing. D. [§304j Escrow 1. The Agency agrees to open an escrow for conveyance of the Leasehold Estate with Chicago Title Company and its escrow department, or another escrow company acceptable to both the Agency and the Developer, which acceptance shall not be unreasonably 22 SF-2001 Agree: Bowen court: DDA 611,01 - 10:38 AEI withheld, as escrow agent (the "Escrow Agent'), wi:hin the time provided in the Schedule of Performance which is attached hereto as Attachment No. 3 and incorporated herein by this reference. This Agreement constitutes the joint escro►., instructions of the Agency and the Developer, and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon the opening of the escrow. The Agency and the Developer shall provide such additional escrow instructions consistent with this Agreement as shall be necessary. The Escrow Agent hereby is empowered to act under such instructions, and upon indicating its acceptance thereof in writing, delivered to the Agency and to the Developer within five (5) days after the opening of the escrow, the Escrow Agent shall carry out its duties as Escrow Agent hereunder. (a) Closing Date. On or before the date established in the Schedule of Performance, the parties shall satisfy the conditions described below and complete the Lease Closing. If, for any reason, the Lease Closing has not occurred by the Scheduled Leasc Closing Date, either party may terminate this Agreement, by providing notice of termination to the other party. (b) Delivery of Documents and Funds by Developer. On or before twelve noon on the last business day prior to the Scheduled Lease Closing Date, Developer shall deposit or cause to be deposited with the Escrow Agent the following: (i) the Lease and the Memorandum of Ground Lease; (ii) the Agreement Containing Covenants, executed and acknowledged by Developer; and (iii) all funds, documents, and deposits Developer is required to deposit with Escrow Agent in order to close the Escrow conveying the Leasehold Estate to Developer. (iv) Developer shall deliver copies of formation documents relating to Developer and its general partner(s), including, without limitation and as applicable: limited partnership agreement and any amendments thereto; articles of incorporation; State of California Limited Liability Company Articles of Incorporation (LLC-1), Statement of Information (including any amendments thereto); copies of all resolutions or other necessary actions taken by such entity to authorize the execution of this Agreement and related documents; a certificate of status issued by the California Secretary of State; and a copy of any Fictitious Business Name Statement, if any, as published and filed with the Clerk of Orange County. 23 SF 2001 Agree: Bowen Court DDA 6 VOI - I0:38 AM (c) Delivery of Documents byAgency. On or before twelve noon on the last business day prior to the Scheduled Lease Closing Date, Agency shall deposit or cause to be deposited with the Escrow Agent the following: (i) the Lease and the Memorandum of Lease; (ii) the Agreement Containing Covenants, executed and acknowledged by Agency. 2. Upon delivery of the Rent, the Agreement Containing Covenants (Attachment No. 6), the Lease and the Memorandum of Lease attached thereto (Attachment No. 5) for the Property (the "Closing Documents") to the Escrow Agent in compliance with this Section, the Escrow Agent shall record the Memorandum of Lease and Agreement Containing Covenants in accordance with these escrow instructions, provided that title to the Leasehold Estate can be vested in the Developer in accordance with the terms and provisions of Section 305 of this Agreement. The Escrow Agent shall pay, affix and cancel any transfer stamps required by law. 3. The Developer shall pay in escrow to the Escrow Agent the following fees, charges and costs promptly after the Escrow Agent has notified the Developer of the amount of such fees, charges and costs, but not earli=r than five (5) days prior to the Scheduled Lease Closing Date: (a). the escrow fees; (b) costs necessary to place the title to the Leasehold Estate in the condition for conveyance required by the provisions of this Agreement; (c) the premium for all title insurance policies to be purchased by the Developer with respect to the Lcasehold Estate as set forth in Section 305 of this Agreement; and (c) any State, County or City documentary stamps or transfer tax imposed respect to the Property; provided however that the Agency agrees to use its reasonable best efforts to obtain a waiver of any such transfer taxes. 4. The Agency shall timely and properly execute, acknowledge and deliver a Memorandum of Lease for the Property in substantially the form established in Section 303 of this Agreement, Ieasing the Property to the Developer in accordance with the requirements of Section 303 of this Agreement. 24 Sr-2001 Agree: Boarn Court: DDA 61101 - 10:38 AM S. Thy Escrow Agent is authorized to: (a) Pay and charge the Developer for any fees, charges and costs payable under this Section 304. Before such payments are made, the Escrow Agent shall notify the Agency and the Developer of the fees, charges and costs necessary to clear title and close the escrow. (b) Disburse the Rent and deliver the Memorandum of Lease, Agreement Containing Covenants and other Closing Documents to the parties entitled thereto when the conditions of this escrow have been fulfilled by the Agency and the Developer with respect to the Leasehold Estate. (c) Record the Memorandum of Lease and any other instruments delivered through this escrow if necessary or proper to vest title in the Developer in accordance with the terms and provisions of the escrow instructions. 6. All funds received in this escrow shall be deposited by the Escrow Agent in a separate interest bearing account acceptable to the Developer and the Agency with any state or national bank doing business in the State of California and reasonably approved by the Developer and the Agency, and all interest accruing on the account shall be payable to the Developer. 7. If this escrow is not in condition to close on or before the time for conveyance established in the Schedule of Performance (Attachment No. 3) of this Agreement, either party who then has fully performed the acts to be performed before the conveyance of title may, in writing, demand the return of its money, papers and/or documents from the Escrow Agent. No demand for return shall be recognized until twenty (20) days alter the Escrow Agent (or the party making such demand) shall have mailed copies of such demand to the other party or parties at the address of its principal place of business. Objections, if any, shall be raised by written notice to the Escrow Agent and to the other party within the twenty- (20) day period, in which event the Escrow Agent is authorized to hold all money, papers and documents with respect to the Property, as the case may be, until instructed by a mutual agreement of the parties or, upon failure thereof, by a court of competent jurisdiction. If no such demands are made, the escrow shall be closed as soon as possible. 8. If objections are raised as above provided for, the Escrow Agency shall not be obligated to return any such money, papers, or documents except upon the written instructions of both Agency and Developer, or until the party entitled thereto has been determined by a final decision of a court of competent jurisdiction. If no such objections are made within said 10-day period the Escrow Agency shall immediately return the demanded money, papers, or documents. 25 SF-2001 Agree: aourn Court: DDA 611/0I - 10:38 Ali 9. The parties understand they may be required to execute additional standard form escrow instructions required by the Escrow Agency ("General Instructions'). In the event of a conflict between this Agreement and any such General Instructions, this Agreement shall control. The parties agree, however, that they will refuse to sign General Instructions which (1) purport to relieve the Escrow Agency of liability for negligence or intentional «Tong -doing; (2) excuse the Escrow Agent from strict compliance with each and all of the provisions of this document and the General Instructions; or (3) purport to authorize the Escrow Agency to follow the instructions or directive of any person not a direct signatory party to this Agreement. 10. Any amendment to the escrow instructions shall be in writing and signed by both the Agency and the Developer. At the time of any amendment the Escrow Agent shall agree to carry out its duties as Escrow Agent under such amendment. 11. All communications from the Escrow Agent to the Agency or the Developer shall be directed to the addresses and in the manner established in Section 701 of this Agreement for notices, demands, and communications between the Agency and the Developer. E. [§ 3051 Condition of Title The Agency shall lease the Property to the Developer free and clear of all Iiens, encumbrances, assessments, easements, leases and taxes; except those which are otherwise consistent with this Agreement; provided however that no covenants, conditions, restrictions or equitable servitudes shall prohibit or limit the development permitted by the Scope of Development (Attachment No. 3), the development set forth in the Lease (Attachment No. 5), and Agreement Containing Covenants (Attachment No. G) and by plans that have been approved by the Agency. The Developer hereby shall take possession to the Leasehold Estate subject to the following exceptions (the "Approved Exceptions')" (1) The Redevelopment Plan; (2) The lien of any non -delinquent property taxes and assessments (to be prorated at the Close of Escrow); (3) all taxes for the period subsequent to the conveyance of title; (4) title exceptions set forth in the PTR and not specifically disapproved by Developer, which disapproved exceptions shall be the responsibility of the Agency, and (5) any other exceptions which are otherwise consistent with this Agreement and which are accepted in writing by Developer. Title to the Leasehold Estate shall be subject to the exclusion therefrom (to the extent now or hereafter validly excepted and reserved by the parties named in deeds, leases and other documents of record, other than reservations made by the Agency) of all oil, gas, hydrocarbon 26 SF-2001 Agrcc: Bowe Court: DDA W1101 • 10:38 AM substances and minerals of every kind and character lying more than 500 feet below the surface, together with the right to drill into, through, and to use and occupy all parts of the Property lying more than 500 feet below the surface thereof for and, and all purposes incidental to the exploration for and production of oil, gas, hydrocarbon substances or minerals from the Property, but «-ithout, however, any right to use or disturb either the surface of the Property or any portion thereof within 500 feet ofthe surface for any purpose or purposes whatsoever. In the event the Agency tenders possession as herein provided, the Developer shall deposit the Rent in escrow in accordance with the provisions of Section 304, accept the right of possession to the Leasehold Estate and proceed with the redevelopment of the Property in accordance with the Scope of Development (Attachment No. 4). F. [§ 306] Title Insurance Concurrent with the recordation of the Memorandum of Lease or instruments conveying possession to the Property and the Agreement Containing Covenants, Chicago Title Insurance Company ("Title Company") shall provide and deliver to the Developer a CLTA mkmer's title insurance policy issued by Title Company insuring that fee title to the Leasehold Estate is vested in the Developer subject only to the Approved Exceptions. The Title Company shall provide the insurance policy in the amount of Eight Hundred Eighty -Five Thousand Dollars (5885,000). The Developer shall be responsible for the paymcrit of all title insurance premiums pursuant to Section 306. In addition, the Developer shall pay for all other premiums for title insurance requested by Developer, including those for any extended coverage or special endorsements which it may request. G. [§ 3071 Taxes and Assessments Ad valorem taxes and assessments, if any, on the Property, and taxes upon this Agreement or any rights hereunder, levied, assessed or imposed for any period, commencing after conveyance of title or possession of the Leasehold Estate, shall be bome by the Developer. H. [§ 3081 Occu ants of the Property The Agency agrees that the Property shall be conveyed free of any possession or right of possession except that of the Developer, unless waived by the Developer in writing. I. [§ 3091 Condition of the Propert The Leasehold Estate, and any improvements thereon, shall be conveyed in an "as is" condition, with no warranty, express or implied, by the Agency as to the condition of the soil, its geology or the presence of known or unknown faults other than the representations and warranties set forth in this Agreement. The Developer further acknowledges receipt of the "Supplemental Geotcchnical Investigation, Bowen Court Senior Apartments, Yorktown -Lake Redevelopment Project Subarea, Southeast Corner of Lake Street and Yorktown Avenue, City of Huntington Beach, California," prepared by Petra Engineering, dated August 30, 2000. The parties acknowledge this Report indicates a "stain" of hydrocarbons on the Property. The Agency agrees to initiate, complete and provide 27 SF-2001 Agree: Mm-en court: FDA 611,101 - 11:15 Ail to Developer, a Phase 2 environmental assessment (the "Phase II Report") of the Property within 90 days following the date of this Agreement to determine the extent of environmental hazards. Developer shall have the right, exercisable by the delivery of written notice to Agency, to terminate this.Agreement and the Lease if Developer fails to approve (in Developer's sole and absolute discretion) the Phase II Report. Agency hereby agrees to defend, indemnify and hold harmless Developer, its constituent partners, shareholders, officers, employees and consultants from and against any and all claims, actions, liability, fines, penalties, charges, damages and costs whatsoever (including attorneys' fees) now or hereafter arising out of or in connection with the Hazardous Materials; provided, however the foregoing indemnity shall be void and shall be of no force or effect if Developer approves (in Developer's sole and absolute discretion) the Phase II Report. Notwithstanding anything stated to the contrary in this Agreement, Agency's indemnity obligations in this paragraph shall survive the termination of this Agreement. Except as to hazardous materials and/or hazardous substances situated on or under the Property ("Hazardous Materials"), it shall be the sole responsibility of the Developer, at the Developer's expense, to investigate and determine the soil conditions of the Property, and any portion thereof, for the development to be constructed by the Developer. If the soil conditions of the Property (excluding Hazardous Materials), or any part thereof, are not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the sole responsibility and obligation of the Developer to take such action or cause such action to be taken by others as may be necessary to place the Property, or any portion thereof, and the soil conditions (excluding Hazardous Materials) thereof in all respects in a condition entirely suitable for the development thereof as described in the Scope of Development (Attachment No. 3), and this Agreement. J. [§ 310] Deposit of the Rent and Agreement Containing Covenants and Recordation of the Memorandum of Lease and Agreement Containing Covenants The Developer shall promptly deposit the Rent and Agreement Containing Covenants (Attachment No.6) with the Escrow Agent upon or prior to the date for the Lease Closing Date, provided that Escrow Agent shall have notified the Developer in writing that the Lease, properly executed and acknowledged by the Agency, has been delivered to the Escrow Agent and that possession is in condition to be conveyed in conformity with the provisions of Section 305 of this Agreement. The Escrow Agent shall deliver the Rent to the Agency immediately following the delivery to the Developer of the title insurance policy set forth in Section 304 of this Agreement and the filing of the Memorandum of Lease and Agreement Containing Covenants for recordation among the land records in the Office of the County Recorder for Orange County. K. [§311] Preliminary Work by the Developer 1. Prior to the conveyance of title of the Leasehold Estate, representatives of the Developer shall have the right of access to and entry upon the Property, at all reasonable times, for the purposes of obtaining data and making surveys and tests necessary to carry out this Agreement. 28 SF-2001 Agrcc: Bowen Court: DDA 6/1/01 - 10:38 AM 2. Investigations may be performed by Developer on and beneath the Property and all improvements thereon for the presence of hazardous, toxic and/or contaminating materials. Developer agrees to pay the entire costs of such investigations. L. [§3121 Submission of Evidence of Financing Not later than December 31, 2002, Developer shall demonstrate to Agency that Developer has obtained a binding commitment of the tax credit and conventional financing necessary for the development of the Property as described in the Recitals, as well as having used its best efforts to obtain the Orange County or alternative financing, provided, that if the financing commitments are not obtained by September 30, 2001, either party may terminate this Agreement and the Lease upon thirty (30) days written notice. The Agency shall approve or disapprove such evidence of tax credit financing within the time established in the Schedule of Performance. Stich approval shall not be unreasonably withheld, conditioned or delayed. If Agency shall disapprove any such evidence of financing, Agency shall do so by written notice to Developer stating the reasons for such disapproval. The Developer shall promptly obtain and submit to the Agency new evidence of financing in the same manner and within the same times established in this Section 312 for the approval or disapproval of the evidence of financing, as initially submitted to the Agency. Such evidence of financing shall include the following: 1. True and correct copies of the commitment or commitments obtained by the Developer for California Tax Credit Allocation Committee financing in the amount that, when added to the Agency Construction Loan, conventional financing in the amount of $725,000 and the Orange County Housing and Community Development or alternative financing, i f any, will be collectively sufficient to finance Project construction. The commitments for financing shall be in such form and content acceptable to the Agency as reasonably evidences a legally binding, firm and enforceable commitment; provided however, such commitments maybe subject to standard and customary conditions (including, but not Iimited to, conditions regarding the status of title, receipt of all required consents, licenses, and permits and approvals of plans, specifications and studies); and 2. A copy of the contract between the Developer and a California licensed general contractor containing a cost estimate of the construction costs for the Development, certified by the Developer to be a true and correct copy thereof; 3. A financial statement as evidence of other sources of capital sufficient to demonstrate that the Developer has adequate funds to cover the difference, if any, between construction cost minus financing authorized by mortgage loans. The Agency shall approve the financial statement as evidence of sources of equity capital if such is approved by the lender making the mortgage loan and the Agency approves such mortgage lender; and 29 SF-2001 Agree: Bowen Coun: DDA 611/01 - 11:16 AM M. [§ 313] Agency Financing. By no later than the Agency Construction Loan Closing, the Executive Director shall establish and fund disbursement accounts (which may include use of a disbursement agent) for disbursing the Agency Construction Loan to the Developer to finance the construction of the Works of Improvement. The Agency may establish predevelopment, off -site, on -site and contingency disbursement accounts. Developer will, if requested by Agency, as a condition precedent to the disbursement of any of the funds from said disbursement accounts, furnish Agency with receipted bills, invoices or other evidences of expenditures equal to the total funds then disbursed from said accounts, and also furnish releases of lien rights covering work performed and materials furnished for said improvements. All funds disbursed by Agency from said accounts will be received in trust for the purpose of fully paying all contractors, subcontractors, materialmen, laborers and others engaged in the construction of improvements. Agency may defer making any disbursement from said Accounts (i) until it receives evidence that the work being performed conforms with the plans and specifications approved by Agency in accordance with good construction practices, and in any event in compliance with all laws and regulations of local, federal or state authorities relating thereto; (ii) until its appraiser or authorized representative certifies in writing that the construction required for the making of such disbursement has been completed; (iii) until any default existing under the provisions of this Agreement shall have been cured; (iv) so long as any conflicting claims based upon assignments, or otherwise, are being made to any of the funds in said accounts; (v) so long as any notice to withhold served upon Agency remains unsatisfied, or any lien or claim of mechanics, materialmen or others affecting said real property appears and remains of record, or any suit upon any such notice to withhold or for the foreclosure of any such lien or claim is pending; and (vi) so long as any levy or service of any process affecting or appearing to affect the funds in said accounts or any part thereof remains in force. IV. [§ 4001 DEVELOPMENT OF THE PROPERTY A. [§ 401] Development of the Property [402] Agreement to Design and Construct. (a) Developer shall cause the design and construction of the Project in accordance with this Agreement, the Scope of Development and the Basic Concept Drawings approved by Agency and any changes thereto that are approved by Agency, the Schedule of j Performance and all Governmental Approvals and applicable requirements of any Governmental Authority. (b) Developer shall perform or cause to be performed all such design and construction work diligently, continuously and without interruption strictly in accordance with the Schedule of Performance, subject, however, to any Force Majeure Delay specified hereunder. Developer shall commence or cause the Project to be commenced within the time 30 SF-2001 Agree: Bowen Court: DDA 6/1/01 - 11:19 AM provided therefor in the Schedule of Performance. Developer shall perform or cause to be performed all such design and construction work in a good and workmanlike manner and in accordance with sound engineering and construction practices. Developer shall not cause or permit cessation of work for a period in excess of ten (10) consecutive Business Days, except cessation caused by Force Majeure Events, without the prior written consent of the Agency. 2. [§ 403] Scope of Development The Property shall be developed by the Developer in accordance with and within the limitations established in this Agreement, including, but not limited to the Scope of Development (Attachment No. 4), and in accordance with and pursuant to all plans approved by the Agency pursuant to this Agreement. 3. [§ 404] Approval of Development and Management_ Teams Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall provide to the Agency, in detail satisfactory to the Agency, information relative to the construction management for the redevelopment of the Property and the general contractor, who shall be properly licensed by the State of California. Said information shall include, but not be limited to, a description of the entities having responsibility for the management of rehabilitation and construction and the general contracting, a description of previous developments of a size and scope at least comparable to the redevelopment contemplated by this Agreement which have been successfully completed by such entities, and copies of contracts for the management of the rehabilitation and construction and the general contracting which each of the entities are prepared to enter into. Within thirty (30) days of receipt of such information, the Agency shall either approve or disapprove such entities; provided however, that the Agency shall not disapprove any contractor or construction manager demonstrating the proper credentials (i.e., contractor's license) and successful experience in the rehabilitation and construction of a senior affordable housing project of a similar size and in a similar location as the redevelopment provided for in the Scope of Development (Attachment No. 4). In the event of disapproval, the Developer shall submit comparable information for another entity within thirty (30) days after such disapproval which information shall be reviewed by the Agency in accordance with the provisions of this Section 304 relating to the original submission of information. 4. [§404] Basic Concept Drawings Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall cause the architect to prepare and submit Basic Concept Drawings and related documents for the development of the Property to the Agency for review and written approval or disapproval. The Basic Concept Drawings and related documents shall include: (1) a site plan showing the placement and number of square feet of the Development to be constructed on the Property, the uses of the improvements thereon, parking area and capacity, and general landscaping treatment and location; (2) rough elevations from each of the streets abutting the Property and from properties abutting the Property; (3) a general description of the architectural 31 SF-2001 Agm: Bowrn Court: DDA 611MI - 10:38AM theme of the improvements; and (4) a description of the devices to be used to reduce the impact of the development on nearby residences. The parties intend that the Plans shall contain sufficient detail so that, on the basis of such Plans, Developer will be able to obtain complete bids for all of the Project Improvement to be performed by a Contractor, and all necessary permits for the Project. The Property shall be developed as established in the Basic Concept Drawings and related documents except as changes may be approved in writing by both the Developer and the Agency. Any such changes shall be within the limitations of the Scope of Development (Attachment No. 4). 5. J§ 405) Undscaping and Finish Grading Plans Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall prepare and submit to the Agency for its approval preliminary and final landscaping and preliminary and finish grading plans for the Property. The landscaping plans shall be prepared by a professional landscape architect and the grading plans shall be prepared by a licensed civil engineer. Such landscape architect and/or civil engineer may be the same firm as the Developer's architect provided that such landscape architect and/or civil engineer are appropriately licensed by the State of California to perform such work. Within the times established in the Schedule of Performance (Attachment No. 3), the Developer shall submit to the Agency for approval or disapproval the names and qualifications of its architect, landscape architect and civil engineer. 6. (§ 4061 Construction Drawings and Related Documents for the Pronertt Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall prepare and submit construction drx.%rings and related documents (collectively called "Drawings") for the Development to the Agency for reasonable architectural review and written approval as set forth in the Schedule of Performance (Attachment No. 3). Such construction drawings and related documents shall be submitted in two states: preliminary and final working drawings. Preliminary drawings are hereby defined as design for development drawings. Final construction drawings are hereby defined as those in sufficient detail to obtain a building permit. Approval of progressively more detailed drawings and specifications will be promptly granted by the Agency if developed as a logical evolution of drawings or specifications theretofore approved. Any items so submitted and approved by the Agency shall not be subject to subsequent disapproval. During the preparation of all drawings and plans, the Agency and the Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of, construction plans and related documents by the Agency. The Agency and the Developer shall 32 S(=-2001 Agm: Bowen Court: nUA 6/1101 - 10:38 AM communicate and consult informally as frequently as is necessary to ensure that the formal submittal of any documents to the Agency can receive prompt and speedy consideration. If any substantial revisions or corrections of plans approved by the Agency shall be required by any government official, agency, department or bureau having jurisdiction over the development of the Property, the Developer and the Agency shall cooperate in efforts to comply, obtain waiver of such requirements (whenever possible and merited under the circumstances) or to develop a mutually acceptable alternative. 7. [§ 4071 Agency Approval of Plans, Drawings and Related - Documents The Agency shall have the right of architectural review and approval of all plans and submissions, including any material proposed changes therein. The Executive Director of the Agency, or his designee, shall have authority to determine on behalf of the Agency if a proposed revision or change to any plans, drawings or other documents previously approved by the Agency is a material change requiring Agency approval. If the Executive Director, or his designee, determines that the proposed revision or change is not material, no approval by the Agency of such revision or change will be necessary. The Agency shall reasonably approve or disapprove the plans, drawings and related documents referred to in Section 404, 405 and 406 of this Agreement and any material revisions thereto within the times established in the Schedule of Performance (Attachment No. 3). The Agency's review is intended to insure that the plans, drawings and related documents are consistent with the Scope of Development (Attachment No. 3) and with the Basic Concept Drawings. With respect to the foregoing approvals set forth in Sections 404, 405, 406 and 407, failure by the Agency to either approve or disapprove of the same within the times established in the Schedule of Performance (Attachment No. 3), which approval shall not be unreasonably withheld or delayed and shall be deemed an approval, if the request for such approval is in writing, delivered to Agency, and includes the following notice, in bold print and capitalized letters: NOTICE: FAILURE BY AGENCY TO DISAPPROVE THE SUBIIIT'I'ED PLANS NN'ITIIILN'10 BUSINESS DAYS AFTER RECEIPT SHALL BE DEEMED APPROVAL PURSUANT TO SECTION 407OFTIIE DDA DATED �wht. 4 J& l BETWEEN TIIE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND MERIT HOUSING CORPORATION, DEVELOPER. Any disapproval shall state in «citing the reasons for disapproval and the changes which the Agency requests to be made. Such reasons and such changes must be consistent with the Scope of Development (Attachment No. 4) and any items previously approved or deemed approved hereunder. The Developer, upon receipt of a disapproval based upon powers reserved by the Agency hereunder, shall revise the plans, drawings and related documents, and shall resubmit to the Agency as soon as possible after receipt of the notice of disapproval; provided 33 SF-2001 Agrce: NAen Coon: DDA 61101 - 10:38 AM that in no case shall the Agency be entitled to require changes which are inconsistent with the Scope of Development, or inconsistent with the most recently applicable previously approved or deemed approved items. 8. [§ 408] Cost of Development (a) The parties anticipate the sources and use of funds for the Project to be as set forth in the Project Budget, which shall be submitted to the Agency for approval pursuant to the Schedule of Performance, which approval shall not be unreasonably withheld or delayed. As delineated in the Project Budget, the Development Costs consist of "Construction Costs" and "Soft Costs." On the basis of actual bids received that relate to Construction Costs, and on the basis of actual Soft Costs, Developer shall update, as necessary, and submit to the Director for approval any proposed changes to the Project Budget, and shall demonstrate the sufficiency of sources of financing to pay all Development Costs to the reasonable satisfaction of the Director, and upon the approval of the Director, the Project Budget, as revised, shall be deemed the final Project Budget. (b) The development of the Project shall be financed with the combination of funds described in this Agreement. (c) Except as other%vise expressly provided in this Agreement to the contrary, the cost of developing the Property shall be borne by the Developer, including, but not limited to, the payment of all costs for permits and any necessary approvals, as well as those costs for demolition, clearance, grading, preparing, designing, financing and constructing on the Property all of the improvements provided in this Agreement. 9. [§ 409] Schedule of Performance (a) Within ten (10) days following the Conventional Construction Loan Closing, Developer shall begin and thereafter diligently prosecute to completion the construction of the Development, as provided in the Scope of Development (Attachment No. 4) subject to Force Majeure delays. The Developer shall begin and complete all construction and development (subject to Force Majeure delays) within the times specified in the Schedule of Performance with such reasonable extensions of said dates as may be granted by the Agency. (b) During periods of construction, the Developer shall submit to the Agency a written report of the progress of the construction when and as reasonably requested by the Agency. The report shall be in such form and detail as may be reasonably required by the Agency and shall include a reasonable number of co:struction photographs (if requested) taken since the last report by the Developer. For purposes of this Section only (and not for purposes of any other Section in this Agreement), construction shall be deemed to have commenced when grading has commenced on the Property pursuant to all legally required permits. 10. [§ 410] Indemnification: Bodily Iniury and Property Damage Insurance; Surety Bonds 34 SF 2001 A": Bowen Court: DDA 6/1101 . 1038 AM (a) The Developer agrees to and shall indemnify and hold the Agency, the City, and their officers, employees and agents harmless from and against all liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person directly or indirectly caused by any acts done thereon or any errors or omissions of the Developer or its agents, servants, employees or contractors, except for the active negligence or willful misconduct of the Agency. (b) The Developer shall furnish or cause to be furnished to the Agency within the time set forth in the Schedule of Performance, duplicate originals or appropriate certificates of insurance as follows: (i) General Liability Insurance. Commercial general liability insurance, including Broad Form Property Damage, Personal Injury Liability, Product and Completed Operations Liability, Fire Legal Liability, Business Automobile Bodily Injury and Property Damage Liability extending to wwned, non -owned and hired vehicles of Developer or the General Contractor used in performance of any Developer's obligations hereunder, amended as necessary to comply with Governmental Requirements. Such coverage shall insure on an occurrence basis against claims for "personal injury" and "property damage," including but not limited to bodily injury, death or property damage occurring upon, in or about the Project, including construction and staging areas, or any adjoining sidewalk, streets, and passageways. Such coverage shall take effect and afford protection on or prior to the Lease Closing. Such policy shall have an initial minimum coverage limit per occurrence of not less than $3,000,000 with respect to personal injury or death to any one or more persons or damage to property (i.e., combined single limit), and carry a deductible per occurrence of not more than 525,000. (ii) Builder's Risk Insurance. Throughout the Construction Period, coverage of the type now kno%-%•n as builder's completed value risk insurance, as delineated on an All Risk Builder's Risk 100% Value Non -Reporting Form. Such insurance shall insure against direct physical loss or damage by fire, lightning, wind, storm, explosion, collapse, underground hazards, flood, vandalism, malicious mischief, glass breakage and such other causes as are covered by such form of insurance. Such policy shall include (A) an endorsement for earthquake, unless earthquake insurance is not commercially available at a reasonable cost, as 35 SF-2001 Agree: Bowen Court: DDA 6i1,101 - 11:30 AM reasonably determined by the Director, (B) an endorsement for broad form property damage, breach of warranty, demolition costs and debris removal, and (C) a "Replacement Cost Endorsement" in amount sufficient to prevent Developer from becoming a co-insurer under the terms of the policy, but in any event in an amount not less than 100% of the then full replacement cost, to be determined at bast once annually and subject to reasonable approval by the Director. The replacement cost coverage shall be for work performed and equipment, supplies and materials furnished to the Property or any adjoining sidewalks, streets and passageways, or to any bonded warehouse for storage pending incorporation into the work, without deduction for physical depreciation and with a deductible not exceeding $25,000 per occurrence (except that earthquake coverage, if obtained, shall carry a deductible not to exceed 25% of the policy amount, or such other deductible amount as Director may reasonably determine is acceptable, in light of the cost of the premium for such insurance). (iii) Worker's Compensation Insurance. Worker's compensation insurance, to be carried by Developer and the General Contractor, in an amount and form sufficient to meet all applicable Governmental Requirements, and employer's liability coverage to a limit of not less than S 1,000,000, with respect to personal injury or death to any one or more p.-rsons or damage to property. Such policies shall cover all persons providing labor or services to or on behalf of Developer and the General Contractor, and all risks to such persons arising out of construction, use or occupancy of the Property or repair of or entry onto the Project, prior to Completion. (c) Each Insurance Policy required under Section 410(b) (or the particular Insurance Policies specified below) shall: (i) Be in form and substance as is then standard in California for policies of like coverage; (ii) Be issued by insurance carriers qualified and licensed to engage in the insurance business in the State of California and having a current Policyholder's Management and Financial Size Category Rating of not less than "A X" 36 SF-2001 Agree: Bowen Court: DDA 64'01 - 12:02 PNI according to A.M. Best's Insurance Reports Key Rating Guide (unless such rating is not commercially available at a reasonable cost, as reasonably determined by the Director) or if such rating system shall cease, then of recognized financial responsibility approved by the Agency in writing; (iii) Provide coverage on an occurrence basis, except for the errors and omissions Insurance Policies; (iv) Provide that the; Insurance Policy cannot be canceled, suspended, lapsed or modified upon less than 30 days' prior written notice by registered or certified mail to the Agency, (v) with respect to the Insurance Policies described in Sections 410(b), contain either (A) a waiver by the insurer of the right of subrogation against Agency, the City, Developer and their respective board members, officers, partners, members, employees, agents and representatives or (B) a statement that the insurance shall not be invalidated should any insured waive in writing its right of recovery or right of subrogation prior to occurrence of a loss covered by the Insurance Policy, and (vi) The Insurance Policies described in subsections (b)(i), (ii) and (iii) of this Agreement shall have attached thereto a Lender's Loss Payment Endorsement (Form 438 BFU NS) or its equivalent, for and in favor of Agency-, and (d) Endorsements shall be obtained for the policies described at Sections 410(b) providing the above insurance for the following three provisions: (i) Additional named insured: "The City of Huntington Beach and the Redevelopment Agency of the City of Huntington Beach, their elective and appointive boards, officers, agents and employees are added as additional name insureds with respect to this subject project and contract with the Agency." (ii) Notice: Said policy shall not terminate nor shall it be canceled or the coverage reduced until after thirty (30) days written notice is given to the City and the Agency." 37 SF-2001 Agrce: Elowcn Court: DDA ti.'1101 - 11:22 AM (iii) Primary coverage: "Said policy and coverage as is afforded to the City of Huntington Beach and the Redevelopment Agency of the City of Huntington Beach, their elective and appointive boards, officers, agents and employees shall be primary - insurance and not contributing with any other insurance _ maintained by the City of Huntington Beach or the Redevelopment Agency of the City of Huntington Beach." (e) Prior to the Lease Closing, and not less than 30 days prior to the expiration date of each Insurance Policy required under subsection (b), Developer shall cause to be delivered to Agency: (i) a complete certified copy of each such Insurance Policy or renewal or replacement Insurance Policy, provided, however, that delivery of a certificate of insurance shall be sufficient for purposes of this clause (i); (ii) satisfactory evidence of payment of the premium therefor; and (iii) a statement of noncancellation consistent with Section 410 (d); and (iv) the endorsement described at Section 410(d). if Developer has not provided Agency with the foregoing proof of coverage and payment within ten (10) Business Days after receipt of wz-itten request therefor, Agency may, in addition to any other available remedy, without obligation and without further inquiry as to whether such insurance is actually in force, and upon ten (10) days prior written notice to Developer, obtain such an insurance Policy and Developer shall reimburse Agency for this cost thereof upon demand. (0 RESERVED (g) Developer shall observe and comply with the requirements of all Insurance Policies. Developer also shall perform and satisfy the reasonable requirements of insurance companies writing such types of Insurance Policies so that at all times companies of good standing and meeting the requirements of subsection (b) shall be willing to write or to y continue such coverage. Developer shall at all times comply with all rules, regulations, orders and requirements of any recognized organization which establishes fire ratings for structures such as the improvements at the Project. (h) Any insurance coverage required in this Section 410 maybe effected by a policy or policies of blanket insurance; provided that (a) the Project (or, in the case of builder's risk and errors and omissions coverage, the Work of Improvement) is specifically identified therein, by endorsement or otherwise, as included in the coverage provided; (b) the amount of the total insurance allocated to the Project (or contract) shall be such as to furnish prote.-tion equivalent to that which would be afforded by separate insurance Policies in the amounts herein required; and (c) in all other respects any such blanket policy or policies shall comply with all other provisions of this Section 410. In any such case Developer shall delivery to Agency a certified copy of such policy or a certificate evidencing such insurance. 38 SF 2001 Agree: Bowen Court: DDA 6401 - 12:38 PNt (i) Neither Agency nor Devcloper make any representation that the limits of liability specified for the Insurance Policies to be carried pursuant to this Section 410 are adequate to protect Developer against its undertakings under this Agreement, or to protect any General Contractor, Architect, engineers or other consultants against their respective undertakings. In no event shall the limits of any coverage maintained or caused to be maintained limit the liability of any person under this Agreement or limit the liability of any General Contractor, Architect, engineer or other consultants under their respective contracts, warranties, guarantees and indemnities. Agency shall not be limited to the amount of the insurance premium not paid in the proof of any damages it may claim against any person arising out of or by reason of failure of Developer, any General Contractor, architects, engineers or other consultants to provide and keep in force the Insurance Policies required by this Section 410; but Agency shall instead be entitled to recover the full arnount of damages available. 11. [§ 411] Anti -discrimination during Construction The Developer for itself and its successors and assigns agrees that in the construction of the Development on the Property, or any portion thereof, provided for in this Agreement, the Developer will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, creed, religion, national origin or ancestry. 12. [§ 4121 Local, State and Federal Laws The Developer shall carry out the construction of the Development on the Property in conformity with all applicable laws, including all applicable federal and state labor standards. 13. [§ 413] City and Other Governmental A- envy Permits Before commencement of construction or redevelopment of any buildings, structures or other work of improvement upon any portion of the Property, and within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall, at its own expense, secure or cause to be secured, any and all permits which may be required by the City or any other governmental agency affected by such construction, development or work. It is understood that the Developer's obligation is to pay all necessary fees and to timely submit to the City final drawings with final corrections to obtain a building permit. The Agency shall provide all proper assistance to the Developer in securing these permits. 14. [§ 414] Rights of_Access, inspections_ and MeetinLs (a) Representatives of the Agency and the City shall have the reasonable right of access to the Property, with reasonable prior notice without charges or fees, at normal construction hours during the period of construction for any purpose deemed necessary by the Agency for carrying out the purposes of this Agreement, or the provisions of the Redevelopment Plan and the General Plan, including, but not limited to, the inspection of the work being performed in constructing the Development. Such representatives of the Agency and other 39 SF-2001 ABrce: DoAen Court: DDA 6'1/01 - 10:38 Aft visitors to the Property, shall observe any reasonable rules adopted by Developer for purposes of maintaining safety on the Property, including requirements that such representatives or visitors be escorted. (b) Developer shall schedule, coordinate and attend regularly scheduled construction progress meetings and cause Architect, engineer and General Contractor to attend and cooperatively participate. Such meetings shall be scheduled at a regular time and date, to be selected by Developer. The purposes of such meetings shall include but not be limited to discussing and furthering the construction of the Project, discussing, reviewing and deciding upon budgetary matters, value engineering matters, changes, delays, and extensions, reviewing work progress in relation to the Schedule of Performance, sharing new information, reporting on progress and on any significant events or developments, and otherwise carrying out the purposes of this Agreement. Developer shall provide all parties at least 24 hours' prior notice (written or telephonic) of any changes in the time or date of each such regular meeting. 15. [§ 415] Books, Records and Audits. (a) Developer shall, and shall cause the General Contractor to, keep and maintain at the Property or at offices in Southern California, true and complete records and double -entry books of account relating to the Project in such manner as to enable a formal audit and preparation of audited financial statements therefrom and in accordance with sound accounting practices. Developer shall retain and cause the General Contractor to retain all such books, records and accounts for a period of two years after Completion. All such books, records and accounts shall be supported by original, authenticated, receipted bills and/or invoices, checks, vouchers, tickets, bank statements, purchase orders, bills of lading, certified payrolls and other documents of entry, shall be maintained separately from boobs and records concerning other business or property and shall include a general ledger and journals with chronological entries. (b) Agency, at Agency's sole cost, may at any reasonable time during the term of this Agreement and for two years after Completion, upon at least five (5) Business Days' prior written notice, examine, copy and audit (or cause to be examined, copied and audited by a professional consultant it selects) such records and books of account for the purpose of verifying costs and expenses and other facts and information pertaining to the Project. In addition, Agency, or its representatives, may from time to tim=, upon five (5) Business Days' prior written notice, conduct a re -audit and observe the business operations of Developer and/or the General Contractor to confirm the accuracy of books and records. After Completion, each party's rights to examine, copy and audit shall be exercisable not more often than once every Calendar Year. Agency agrees to be reasonable in exercising its right to require audits pursuant to this provision. 16. [§ 41 G] Reports. Not later than 20 days after the end of each calendar month prior to Completion, Developer shall prepare and submit to Agency a narrative report on the progress of the design, financing and construction of the Project since the immediately preceding report, describing in detail all significant activities concerning design, Governmental Approvals, new contracts and 40 sf-200t Agree: Dowrn Court: DDA 61I101 - 10:38 Aft subcontracts, identifying the parties, scope and amount, construction and construction progress, and discovery and correction of Defects. Such report shall include a discussion of the Schedule of Performance and compliance therewith, of any new or continuing delays, and the causes thereof and a summary of any new Changes and shall include a reasonable number of construction photographs (if requested) taken since the last report. 17. [§ 417] Required Notifications. Each party shall promptly after obtaining knowledge thereof, notify the other party in writing of the following: (a) As to Developer, any litigation affecting Developer, any of Developer's Affiliates or the Project, and as to Agency, any litigation affecting the Project; (b) Any communication, whether written or oral, received from any Governmental Authority claiming or asserting that any aspect of the Work of Improvement fails in any respect to comply with any Govemmental Requirements, or threatening to suspend or revoke any Governmental Approval; (c) Any material adverse change in the physical condition of the Property or the Project, the financial condition or operations of Developer, the financial condition of any Guarantor, or the financial condition or operations of Agency, but only to the extent such changes affect Agency's obligations to the Property pursuant to this Agreement; (d) Any material default by the General Contractor, Architect, any engineer or by any subcontractor, vendor or supplier, having a contract in excess of $100,000, any material adverse change in the financial condition or operations of Agency, but only to the extent such changes affect Agency's obligations to the Property pursuant to this Agreement; (e) Any cessation in development of the Work of Improvements in excess of twenty (20) days; (f) Any damage to or destruction of any portion of the Project where the cost to repair and restore will exceed S25,000; (g) Any defect where the cost to correct will require a change order to the construction contract or the delay that will be caused will exceed ten (10) Business Days; (h) Any fact or circumstance which may render the Project Budget inaccurate in any material respect; (i) Any lien, charge or encumbrance affecting the Project not expressly permitted hereby; 41 Sr-2001 Agree: Bowen Court: DDA 6/1101 - 10:38 AM (j} Any event or condition, other than matters affecting the economy generally, which may materially adversely affect the development, leasing or operation of the Project; (k) As to Developer, any change in (i) the location of Developer's business; (ii) the legal, trade or fictitious business names used by Developer; or (iii) the nature of Developer's business; (1) The existence of any material default or failure to perform an obligation by any party under any contract relating to the Project; and (m) As to each party, the existence of any Default by such party, or of any condition or event which with the giving of notice or passage of time, or both, would constitute such Default, the nature thereof, and the corrective steps such party is taking with respect thereto. 18. [§ 4181 Payment of Claims. Costs and Taxes (a) Developer shall pay or cause to be paid when due all costs and expenses relating to the Project subject to its right to contest the same.. (b) Developer shall keep title to the Leasehold Estate free and clear of any and all liens (except Permitted Mortgages), claims or charges for labor, services, materials or equipment furnished to it in connection with the Project, shall remove, or shall have removed, any levy or attachment made on the Leasehold Estate (or any portion thereof), or shall assure the satisfaction thereof within a reasonable time but in any event prior to a foreclosure subject to Developer's right to contest the same. (c) Developer shall pay prior to delinquency all real estate taxes and assessments assessed and levied on or against the Property or any portion thereof subsequent to the conveyance to Developer of the Leasehold Estate. (d) Nothing herein contained shall be deemed to prohibit Developer from contesting the validity or amount of any tax, assessment, encumbrance or lien, nor to limit the remedies available to Developer in respect thereto. 19. [§ 4191 Additional Documents. f Each party shall promptly execute and deliver to the other party, from time to time, such other documents as the requesting party may deem reasonably necessary or desirable for the purposes of this Agreement. 20. [§ 420] Replacement of Third Parties. Subject to the consent of Agency pursuant to this Agreement, Developer shall promptly replace or cause to be replaced any General Contractor, Architect, engineer, subcontractor, vendor or supplier which commits a material default that is not promptly cured, or 42 SF-2001 Agree: Bowen Court: DDA 611/01 - 10:38 AN1 which is the subject of a petition, voluntary or otherwise, under any Debtor Relief Law. Developer shall promptly deliver to Agency the name and address of each replacement and copies of any documents required under this Agreement with respect to the replacement. Each replacement shall have the financial ability and expertise to fulfill the requirements of its contract. 21. [§ 421] Correction of Defect. During the course of construction, Developer shall promptly convect or cause to be corrected to the reasonable satisfaction of Agency (a) any material defect in the Project; (b) any material departure of the Project from the approved Plans and approved Changes thereto, Governmental Requirements, Governmental Approvals or sound building practices; and (c) any encroachment by any part of the Project on any building line, casement, property line or restricted area which affects the use of the Project in any material way. If Agency, in its reasonable judgment, determines that any such circumstance exists, it may require the work to be stopped until the matter is corrected. If this occurs. Developer shall promptly undertake such corrective work and pending completion of such corrective work shall not allow any other work - to proceed which could interfere with its completion or reinspection. 22. [§ 422] Storage of Materials. Developer shall cause all materials supplied for, or intended to be utilized in, the construction of the Project, but not affixed to or incorporated into the Project, to be stored at the Property or at such other location as may be approved by Agency, with adequate safeguards to prevent and insure against loss, theft, damage or commingling with other materials or projects. Agency shall reasonably cooperate with Developer to designate a construction staging area on land owned by Agency adjacent to the Property which Agency determines is appropriate for construction staging, subject to the execution by Agency and Developer of a "Right of Entry" agreement containing such reasonable conditions as Agency may determine are reasonably necessary with respect thereto. 23. [§ 423] Signs and Publicity. Developer, without cost or expense to Agency, shall provide, periodically update (but not more frequently than upon changes in the membership of Agency or City Council) and maintain construction site signs identifying the development, giving recognition to Agency, the City Council and their members. Agency and Developer may refer to the Project in their own promotional and advertising materials and press releases. B. [§ 424] Subdivision of Property.. Agency shall, prior to the Agency Loan Closing, cause the Property to be subdivided so that it constitutes one legal parcel of real property in accordance with all applicable laws including, without limitation, California's Subdivision Map Act. Such subdivision of the Property shall be at Agency's sole cost and expense. 43 SF-2001 Agree: Bowen Court: DDA 6/I101 • 10:38 Ail C. [§ 425] Taxes, Assessments and Lens. The Developer shall pay prior to delinquency all real estate tares and assessments assessed and levied on or against the Property subsequent to the conveyance of the title or - possession of the Property. The Developer shall remove, or shall have removed, any levy or attachment made on the Property (or any portion thereof), except thosc created by work of the Agency, or shall assure the satisfaction thereof within a reasonable time but in any event prior to a sale thereunder. Nothing herein contained shall be deemed to prohibit the Developer from contesting the validity or amount of any tar assessment, encumbrance or lien, nor to limit the remedies available to the Developer in respect thereto. D. [§426] Maintenance of Property Security At all times prior to the completion of the construction of the Development on the Property, the Developer shall, at its expense, provide for and maintain adequate construction fencing and security with respect to the Property, to the satisfaction of the Agency. E. [§427] Security Financing. ght of Holders 1. [§428] No Encumbrances exce t Mortwizes. Deeds of Trust, Conyewand Leases -Back or Other Conveyance for Financing for Development Notwithstanding anything to the contrary in this Agreement, mortgages, deeds of trust, and other forms of conveyance required for any reasonable method of financing are permitted for the purpose of securing loans of funds to be used for financing the construction of the Work of Improvement on the Property, refinancing any of the financing obtaining for the construction of the Work of Improvement, and any other expenditures necessary and appropriate to develop the Project pursuant to this Agreement. The Developer shall notify the Agency in advance of any mortgage, deed of trust, or other forms of conveyance for financing if the Developer proposes to enter into the same before the recordation of the Certificate of Completion. The Developer shall not enter into any such conveyance for financing or credit enhancement without the prior written approval of the Agency, which approval the Agency agrees to give if any such conveyance is given to a responsible financial or lending institution or other acceptable person or entity. The Agency shall automatically approve of a "responsible financial or lending institution" if such institution is one of the twenty-five (25) largest banking institutions doing business in the State of California or one of the twenty-five (25) largest insurance lending institutions in the United States qualified to do business in the State of California, or if the institution in question is a bank, savings and loan association, insurance company or pension fund with assets of at least $ 150,000,000. Such lender shall be deemed approved unless rejected in writing by the Agency within ten (10) days after receipt of notice thereof by the Agency. Such lender approved by the Agency pursuant to this section 320, shall not be bound by any amendment, implementation or modification to this Agreement subsequent to its approval without such lender giving its prior written consent. 44 SF-2001 Agme: Bourn Court: DDA 611101 - 11:24 AA1 Notwithstanding anything contained herein to the contrary, the Developer shall promptly notify the Agency of any mortgage, dead of trust, or other financing that has been created or attached to the Leasehold Estate (or any portion thereof) prior to completion of the construction of the Development whether by voluntary act of the Developer or otherwise. The words "mortgage" and "deed of trust" as used herein include all other appropriate modes of financing real estate acquisition, construction and land development, and any other expenditures necessary and appropriate to develop the Property under this Agreement, which involves the granting of a security interest, except where such financing is as a result of an assignment allowed pursuant to Section 208 hereinabove. 2. [§ 4293 Holder Not Obligated to Construct Improvements The holder of any mortgage, deed of trust or other security interest authorized by this Agreement (the "Holder") shall in no way be obligaud by the provisions of this Agreement to construct or complete the Work of Improvement or to guarantee such construction or completion, nor shall any covenants or any other provision in the Lease or Agreement Containing Covenants be so construed as to so obligate such Holder. No holder of any security agreement in the Leasehold Estate or any part thereof or any improvements thereon shall devote the Leasehold Estate to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. 3. [§ 4301 Notice of Defar llt to Morteal;e, Deed of Trust or Other Security Interest Holders, Right to Cure N henever the Agency shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in completion of construction of the Development, or any other default, the Agency shall at the same time deliver to any lender approved by the Agency pursuant to Section 438 hereof and each Holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement, a copy of such notice or demand. Each such Holder shall have the right at its option within sixty (60) days after the receipt of the notice, to cure or remedy, or commence to cure or remedy, any such default and to add the cost thereof to the security interest debt and the lien of its security interest. If such default shall be a default which can only be remedied or cured by such Holder upon obtaining possession, if such Holder has elected to cure the default then such Holder shall seek to obtain possession with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default within sixty (60) days after obtaining possession; provided that in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced within such sixty- (60) day period, such Holder shall have such additional time as reasonably necessary to remedy or cure such default with diligence and continuity; and provided further that such Holder shall not be required to remedy or cure any non -curable default of the Developer. Nothing contained in this Agreement shall be deemed to permit or authorize such Holder to undertake or continue the construction or completion of the Development (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the Developer's obligations (as of the date of such assumption), to the Agency by written agreement reasonably satisfactory to the Agency. Such Holder in that event 45 SP 2001 Agree: B"-en Court: boA 6;1/01 - l 1:24 AM must agree to reasonably complete, in the manner provided in this Agreement, the improvements to which the lien or title of such Holder relates, and submit evidence reasonably satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. A Holder shall be deemed approved by the Agency unless rejected in writing by the Agency within thirty (30) days after receipt of such evidence by the Agency. Any such Holder properly completing the Development shall be entitled, upon written request made to the Agency, to a Certificate of Completion from the Agency. Provided that such Holder has given prior written notice of its name and address to the Agency, the notices of default to the Developer set forth herein, to be valid and effective as to the Holder and the Developer, shall be delivered by the Agency simultaneously to such Holder and the Developer. Breach of any of the covenants, conditions, restrictions or reservations contained in this Agreement shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Leasehold Estate or any part thereof or interest therein, whether or not said mortgage or deed of trust is subordinated to this Agreement, but unless otherwise herein provided, the terms, conditions, covenants, restrictions and reservation of this Agreement shall be binding and effective against the Holder and any owner of the Property, or any part thereof, whose title thereto is acquired by foreclosure, trustee's sale or otherwise. No purported rules, regulations, modification, amendment and/or termination of this Agreement affecting the right of a Holder shall be binding upon any Holder holding a mortgage or deed of trust from and after the date of recordation of such mortgage or deed of trust until the written consent of such Holder is obtained. 4. [§431 ] Failure of Holder to Complete Work of Improvement In any case where, thirty (30) days after default by the Developer in completion of construction of the Work of Improvement under this Agreement, the holder of any mortgage or deed of trust creating a lien or encumbrance upon the Leasehold Estate or any part thereof has not expressly assumed the Developer's obligations to the Agency under this Agreement as provided in Section 430 hereof, or if it has assumed such obligations but has not proceeded diligently with construction, the Agency may purchase the mortgage or deed of trust by payment to the holder the unpaid mortgage or deed of trust of the amount of the unpaid mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. If the ownership of the Leasehold Estate ha3 vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: (a) The unpaid mortgage or deed of trust at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received by the holder during foreclosure proceedings); (b) All expenses with respect to foreclosure; 46 S>=-2001 Agmc: Dowrn Court: DDA W1/01 - 10:39 AM (c) The net expense, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Property or any part thereof; (d) The cost of any improvements made by such holder; and (e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage or deed of trust and such debt had continued in existence to the date of payment by the Agency. Developer acknowledges and agrees that the purchase by the Agency of all amounts secured by any mortgage or deed of trust encumbering the Leasehold Estate shall automatically, without any further written confirmation of the same, release the holder of such deed of trust from any further disbursement obligations it may have arising out of any of the documents evidencing or relating to the indebtedness secured by such mortgage or deed of trust. The Agency's right to a conveyance of the Leasehold Estate from a holder upon payment of the amount set forth above shall automatically expire ninety (90) days after the holder takes title to the Leasehold Estate. 5. [§ 4321 Riph*; t of Agency to Cure Mortgage. Deed of Trust or Other Security Interest Default In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the Leasehold Estate (or any portion thereof) prior to the issuance of a Certificate or Completion by the Agency, and the holder with respect to the Leasehold Estate (or any portion thereof) has not exercised its option to complete the development, the Agency may cure the default prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses reasonably incurred by the Agency in curing the default. The Agency shall also be entitled to a lien upon the Property (or portion thereof) to the extent of such costs and disbursements. Any such lien shall be subordinate and subject to mortgages, deeds of trust or other security instruments permitted by this Agreement.. F. [§ 433] Right of Agency to Satisfy Other Liens on the Property After Title Passes Prior to the recordation of the Certificate of Completion (referred to in Section 434 of this Agreement), and after the Developer has had a reasonable time to challenge, cure or satisfy any liens or encumbrances on the Leasehold Estate (or any portion thereof), the Agency shall have the right to satisfy any such liens or encumbrances after thirty (30) days prior written notice to the Developer; provided however, that nothing in this Agreement shall require the Developer to pay or make provisions for the payment of any tax, assessment, lien or charge so long as the Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Leasehold Estate (or any portion thereof) to forfeiture or sale. 47 SF-2001 AS=: Dowcn Court: DDA W1/01 - 10:38 AM G. [§434] Certificate of Completion Promptly after completion of all construction to be completed by the Developer for the Work of Improvement, as set forth in the Scope of Development (Attachment No. 4), the Agency shall furnish the Developer with a Certificate of Completion upon written request therefore by the Developer. The Agency shall not unreasonably withhold any such Certificate of Completion. The Certificate of Completion shall be, and shall state that it is, a conclusive determination of satisfactory completion of the construction required by this Agreement for the Property. The Certificate of Completion shall not constitute a determination of satisfactory compliance with any other provision of this Agreement. The Certificate of Completion shall be in the form of Attachment No. 9, and may be recorded in the Office of the Recorder of the County of Orange. If the Agency refuses or fails to furnish a Certificate of Completion after written request from the Developer, the Agency shall, within thirty (30) days of receipt of the written request, provide the Developer with a written statement which details the reasons the Agency refused or failed to furnish a Certificate of Completion. The statement shall also contain the Agency's opinion of the actions the Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to the immediate availability of specific items for landscaping, the Agency will issue its Certificate of Completion upon the posting of a bond by the Developer with the Agency in an amount representing the fair market value of the work not yet completed. If the Agency fails to provide the written statement within said thirty- (30) clay period, the Developer shall be deemed entitled to the Certificate of Completion. The Certificate of Completion shalt not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Development, nor any part thereof. Such a Certificate of Completion is not notice of completion as referred to in Section 3093 of the California Civil Code, nor does it constitute evidence of compliance with or satisfaction of any obligation of the Developer with respect to requirements imposed by any governmental entity other than the Agency. H. [§ 435] Subordination of Agency Deed of Trust Agreement Containing Covenants, and this Agreement. Agency acknowledges and agrees that this Agreement (except for the Lease attached hereto), the Agency Deed of Trust and the Agreement Containing Covenants shall be subject and subordinate in all respects to all Permitted Mortgage; and, within twenty (20) days following Developer's written request therefore, Agency shall execute a subordination agreement (on each holder's form) for the benefit of each holder of a Permitted Mortgage reflecting such subordination. 48 St:-2001 Agree. Bowen Court: DDA W1101 - 10:38 AM I. [§ 4361 Estoppel Certificates. Within twenty (20) days following Developer's written request, Agency shall execute and deliver to any potential holder of a Permitted Mortgage an estoppel certificate (a) confirming, provided that such be the case, that Developer is not in default under this Agreement or the Agreement Containing Covenants and that neither this Agreement nor the Agreement Containing Covenants has been modified or supplemented in any way, (b) confirming that such holder of a Permitted Mortgage is entitled to all the protections afforded a holder of a Permitted Mortgage under this Agreement, and (c) containing such other certifications and agreements that such holder may reasonably require or request. J. [§ 437] Tolling of Time Periods for Benefit of Holder. Following the transfer of the Leasehold Estate to a holder (or its nominee), any and all obligations set forth under this Agreement to commence and complete construction of the Project as contemplated under this Agreement shall be suspended until the earlier of (a) ninety (90) days from the date of such transfer, and (b) the date such holder actually undertakes (if at all) the continuation of said construction obligations as evidenced by its written notice to Agency. V. [§ 5001 USE OF THE PROPERTY A. [§ 5011 Uses The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that the Property shall be developed as twenty (20) senior, affordable, for -rent dwelling units as set forth in the Scope of Development (Attachment No. 4). In addition, the Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Leasehold Estate or any part thereof, that during construction and development of the Project and thereafter the Developer, its successors and assignees, shall develop and devote the Property to fie uses specified in the Redevelopment Plan, the Scope of Development (Attachment No. 4), the Lease (Attachment No. 5), the Agreement Containing Covenants (Attachment No. G) and all plans approved by the Agency pursuant to this Agreement. B. [§ 502] Maintenance of the Pr perty Commencing at the time the Developer acquires title or possession to the Leasehold Estate, and solely at the Developer's expense, the Developer or the Developer's successor in interest shall reasonably maintain the improvements thereon in good condition and appearance. The Developer shall keep the Property reasonably free from any accumulation of graffiti, debris or waste materials. The Developer shall also maintain the landscaping on the Property required to be planted under the Scope of Development (Attachment No. 4) in a reasonably healthy condition. 49 sr--2001 Agree: Bowen court: DDA 61Ir01 - 10:38 ANI If, at any time, the Developer fails to maintain the Property as required by this Section 502, and such failure is not corrected within thirty (30) days after the date of written notice from the Agency, either the Agency or the City may perform the necessary landscape or other maintenance, or other actions and the Developer shall pay all costs incurred for such maintenance. C. [§ 503] Obligation to Refrain from Discrimination The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or portion thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or any part thereof nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property or any part thereof. D. [§ 504] Form of Nondiscrimination and Nonsegregation Clauses The Developer shall refrain from restricting the rental, sale or lease of the Property on the basis of sex, marital status, race, color, creed, religion, ancestry or national origin of any person. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: I. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregating of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land" 2. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall lessee himself or herself, or any person claiming under or through him or her, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." 50 SF-2001 Agree: Bowen Court: DDA 611/01 - 10:39 Alf 3. In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendecs of the land." E. [§ 505] Effect and Duration of Covenants The covenants established in Sections 208, 309, 410(a), and 428 of this Agreement shall, without regard to technical classification and designation, be binding on the Developer and any successor in interest to the Leasehold Estate or any part thereof perpetuity for the benefit and in favor of the Agency, its successors and assigns, and the City. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and the Agreement Containing Covenants, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the Covenants have been provided. This Agreement and the Covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is, an owner of any land or interest therein in the Property or in the Project Area. The Agency shall have the right, if this Agreement or tie Agreement Containing Covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and the Agreement Containing Covenants may be entitled. Breach of any of the covenants, conditions, restrictions or reservations contained in the Agreement Containing Covenants shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Leasehold Estate whether or not said mortgage or deed of trust is subordinated to the Agreement Containing Covenants. F. [§ 506] Rights of Access — Public Improvements and Facilities Notwithstanding the Developer's obligation to maintain the improvements on the Property as set forth in Section 502 above, the Agency for itself, and for the City and other public agencies, as their sole risk and expense, reserves the right to enter the Property or any part thereof at all reasonable times and with as little interference as possible, for the purposes of construction, reconstruction, maintenance, repair or service of any public improvements or public facilities located on the Property. Representatives of the Agency, the City and other visitors to the Property shall observe any reasonabl-- rules adopted by the Developer for purposes of maintaining safety on the Property, including requirements that such representatives or visitors be escorted. Any such entry shall be made only after reasonable notice to the Developer. Any damage or injury to the Property or any portion thereof resulting from such entry shall be promptly repaired at the sole expense of the public agency responsible for the entry. Agency agrees to defend, release, indemnify and hold harmless Developer, its partners, shareholders, officers, employees and consultants from any and all claims, actions, liability, fines, penalties, 51 SF-2001 Agree: Bowe Court: DDA 611101 - 11:26 AEI charges, damages and costs whatsoever (including attorneys' fees) arising out of access to the Property pursuant to this Section. G. [§ 507] Operation of Project Developer shall lease, operate and manage the Project in full conformance with the terms of this Agreement and the Agreement Containing Covenants. The rents for the twenty (20) units shall not exceed the "affordable housing cost" for Very Low Income Households, as specified at California Health &: Safety Code Section 50052.5 and the implementing regulations specified at Section 6910 el seq. of Title 25 of the California Code of Regulations, whichever is less. H. [§ 508] Lead -Based Paint Developer shall ensure that it and its contractors and subcontractors shall not use lead - based paint in the construction or maintenance of the Property. Developer shall insert this provision in all contracts and subcontracts for work performed on the Project which involved the application of paint. I. [§ 5091 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. J. [§ 510] Maintenance of the Property All Units must meet Federal Housing Quality Standards (24 CFR § 982.401) while occupied. Further, Participant shall maintain the Property in accordance with the terns of the Regulatory Agreement. K. [§ 511 ] Term of Agency Cons+ruction Loan. 1. [§ 512] Amount. The Agency Construction Loan shall be evidenced by the Agency Note in the amount of Nl\'E HUNDRED THOUSAND DOLLARS ($900,000) subject to a dollar for dollar reduction to the extent Developer obtains County or alternative financing, if any. The Loan shall accrue interest at a simple rate of interest equal to THREE PERCENT (3%) per annum for the term of the Agency Note. 2. [§513] Tern. The tern of the Agency Note shall be sixty (60) years, commencing on the effective date of the Lease. 3. [§ 514] Repayment. Beginning on the third anniversary date of the Agency Note, and on each annual anniversary date of the Agency Note thereafter until the Agency Construction Loan is paid in full or otherwise canceled or forgiven pursuant to its terms, Developer shall pay to Agency an amount equal to FIFTY PERCENT (50%) of the Project's Net Operating Income for the preceding year. After the sixtieth (W) anniversary date of the 52 SF 2001 Agree: BoN%en Coun: DDA 6,11101 - 10:38 AM Agency Note, all remaining unpaid principal and interest on the Agency Construction Loan shall immediately become due and payable, and the Agreement Containing Covenants shall terminate. 4. [§ 515] Definition of Net Operating Income. As used herein, the term "Net Operating Income of the Project" shall mean, for any reporting period (calendar year or fiscal year), (a) all Gross Income, minus (b) all Operating Expenses. 5. [§ 516] Reserved. L. [§ 5171 Financial Statements. Developer shall submit to Agency, on an annual basis, a true and correct copy of Developer's audited financial statement for the Project. After receipt of Developer's audited financial statements for the Project, Agency may, at its cost, request additional financial analyses or obtain a third party review of Developer's financial statement for the Project to verify the accuracy of Developer's payments made to the Agency pursuant to Section 515. VI. [§ 600] DEFAULTS, REMEDIES AND TERMINATION A. [§ 6011 Default Subject to the provisions of Section 603, each of the following shall constitute a "Default" under this Agreement: 1. Failure or delay by a party to perform any term or provision of this Agreement following the expiration of the notice and cure period set forth in Section 603 (Attachment No. 3). 2. Failure of the Developer to construct the Work of Improvement on the Property substantially in accordance with the Scope of Development (Attachment No. 4), plans and construction drawings previously approved by the Agency without the approval of such changes by the Agency. 3. Breach of any material covenant, material warranty or material agreement contained in this Agreement and the failure of the Developer to cure the same within the cure period set forth in Section 603. Subject to the extensions of time set forth in Section 603, the party who fails to perform, or delays performance of, any term or provision of this Agreement must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. B. [§ 6021 Notice If a Default under this Agreement occurs, the injured party shall give written notice (a "Default Notice") of the Default to the party in default, specifying the nature of the default. 53 SF-2001 Agree: Down Court: DDA 6'1/01 - 10:38 Alit Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it operate as a waiver of any rights or remedies of the injured party, but the injured party shall have no right to exercise any remedy hereunder without delivering the Default Notice as provided herein. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. C. [§ 6031 Cure Period With respect to defaults or events for which a specific cure period is provided elsewhere in this Agreement, the specific cure period in that Section shall be applicable in lieu of the cure periods provided in this Section 603 and in no event shall the cure periods set forth in this Section 603 be added onto any other cure period set forth in this Agreement. The injured party shall have no right to exercise a right or remedy hereunder unless the subject event of default continues uncured for a period of sixty (60) days after delivery of the Default Notice with respect thereto, or, where the default is of a nature which cannot be cured within such sixty- (60) day period, the defaulting party fails to commence such cure within sixty (60) days and to diligently proceed to complete the same, but in no event more than one hundred twenty (120) days from receipt of the Default Notice. Notwithstanding the foregoing, any event of default occurring as a result of the failure by any party to ay a sum of money shall be cured within thirty (30) days. If any event of default is not cured, or commenced to be cured if such default is of a nature which cannot be cured within sixty (60) or thirty (30) days, as appropriate, by such party within said sixty (60) or thirty (30) days, as appropriate, of receipt of the Default Notice, the non - defaulting party, at its option, may institute an action for specific performance of the terms of this Agreement or pursue such other rights and remedies as it may have. D. [§ 604] Rights and Remedies Upon the occurrence of an Event of Default and the expiration of the applicable cure period provided herein or by law, the injured party shall have all rights and remedies against the defaulting party as may be available at law or in equity to cure, correct or remedy any default, to obtain specific performance, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such rights and remedies are cumulative, and except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the exercise of one or more of such rights or remedies shall not preclude the exercise, at the same or different times, of any other rights or remedies for the same default or any other default by the defaulting party. 54 SF-2001 Agree: Bowen Court: DDA 611101 - 10:33 Ali E. [§ 605] Legal Actions 1. [§ b06] Institution of Legal Actions Except as specified in Sections 609 and 610, and in addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy in law or equity consistent with the purposes of this Agreement. All legal actions must be instituted in the Superior Court of the County of Orange, State of California, in any other appropriate court of that county, or in the Federal District Court in the Central District of California. 2. [§ 6071 Service of Process Service of process on the Agency shall be made by personal service upon the Secretary of the Agency, or in such other manner as may be provided by law. Service of process on the Developer shall be made by personal service upon the Developer or in such manner as may be provided by law, whether made within or without the State of California. 3. [§ 608] Applicable Law The laws of the State of California shall govem the interpretation and enforcement of this Agreement. F. [§ 609] Damages If either party defaults with regard to any of the provisions of this Agreement, the non - defaulting party shall serve written notice of such d--fault upon the defaulting party. If the default is not commenced to be cured within thirty (30) days after service of the notice of default and is not cured promptly in a continuous and diligent manner within a reasonable period of time after commencement, the defaulting party shall be liable to the non -defaulting party for any damages caused by such default, and the non -defaulting party may thereafter (but not before) commence an action for damages against the defaulting party with respect to such default. G. [§ 6101 Specific Performance If either party defaults with regard to any of the provisions of this Agreement, the non - defaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty (30) days after service of the notice of default and is not cured promptly in a continuous and diligent manner within a reasonable period of time after commencement the defaulting party, at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Agreement pertaining to such default. 55 Sr-2001 Agrec: Bowen court: DDA 6r1101 - 10.38 AEI 11. [§ 611] Rights of Termination Upon termination of this Agreement, except as expressly provided herein, neither party shall have further rights or obligations to the other party. 1. [§ 612] Termination by Developer Notwithstanding any provision of this Agreement to the contrary, in the event that the Agency does not convey the Leasehold Estate or fund the Agency Construction Loan to the Developer in the manner and condition, and by the date provided in the Schedule of Performance (Attachment No. 3), and any such failure shall not be cured within ninety (90) days after the date that «ritten demand by Developer is received by the Agency, then this Agreement and the Lease shall, at the option of the Developer, be terminated by written notice thereof to the Agency. 2. [§ 613] Termination by Agency The Agency at its option may terminate this Agreement in the event that, prior to the Lease Closing and in violation of this Agreement: a. The Developer (or any successor in interest) assigns or attempts to assign the Agreement or any right therein, or in the Property, or portion thereof, or any of the improvements thereon contrary to any provision in this Agreement; or b. The Developer fails to submit certificates and endorsements of insurance, as required by this Agreement by the dates respectively provided in this Agreement and the Schedule of Performance (Attachment No. 3) therefore; or C. The Developer is otherwise in default under this Agreement; If any default or failure referred to in this Section 613 shall not be cured within thirty (30) days after the date of transmission of written by the Agency, then this Agreement and any rights of the Developer, or any assignee or transferee, in this Agreement, or arising therefrom with respect to the Agency, shall at the option of the Agency, be terminated by the Agency by written notice to the Developer. 1. [§ 614] Aeenc.+�ghts of Reentry Prior to the recordation of the Certificate of Completion, the Agency shall have the right, at its option, to reenter and take possession of the Leasehold Estate with all improvements thereon, and to terminate and revest in the Agency the estate theretofore conveyed to the Developer, subject to the lien and effect of all Permitted Mortgages, if the Developer (or its successors in interest) for any reason: 56 5F-2001 Agree:l3owen Court: DDA 61VOI - 10:38 AM 1. fails to commence construction of the Development as required by this Agreement for a period of thirty (30) days after written notice to proceed from the Agency subject to Force Majeure delays; or 2. abandons or suspends or fails to diligently proceed with construction of the improvements on the Property for a period of thirty (30) days after written notice of such abandonment or suspension or failure to diligently proceed from the Agency subject to Force Majeure Delays; or 3. fails to complete the construction of the Development in accordance with this Agreement subject to Force Majeure delays; or 4. assigns or attempts to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer of the Leasehold Estate, or any part thereof, in violation of this Agreement, and such violation shall not be cured within thirty (30) days after the date of receipt of written notice thereof by the Agency to the Developer. The right to reenter, repossess, terminate, reNest and repurchase the Leasehold Estate shall be subject and limited by and shall not defeat, render invalid or limit: 1. any mortgage, deed of trust or other security interests permitted by this Agreement; 2. any rights or interests provided in this Agreement for the protection of the holders of such mortgages, deeds of trust or other security interests. Upon the revesting in the Agency of title to the Property, or any part thereof, as provided in this Section 614, the Agency shall, pursuant to its responsibilities under state law, use its best efforts to resell the Leasehold Estate, or any part thereof, as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the Agency), who will assume the obligation of making or completing the Development, or such other improvements in their stead, as shall be satisfactory to the Agency and in accordance with the uses specified for the Property, or any part thereof, in the Redevelopment Plan. Upon such resale of the Leasehold Estate, or any part thereof, the proceeds thereof shall be applied. 1. first, to reimburse the Agency on its o%;•n behalf or on behalf of the City for all costs and expenses incurred by the Agency including but not limited to: a. salaries to personnel, in connection with the recapture, management and resale of the Property, or part thereof, less any gain or income derived, withdrawn or made by the Agency from the Property or part thereof, or from the improvements thereon; 57 Sr-200: Agree: Dowen Court: DDA WLDI - 10:38 AH1 b. all taxes, assessments and water and sewer charges with respect to the Property or part thereof, any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; and d. any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Property or part thereof; and C. any amounts otherwise owing to the Agency by the Developer, or its successors or transferees; and 2. second, to reimburse the Developer, or its successor or transferee, up to the amount equal to the costs incurred for the development of the Property, or part thereof, pursuant to this Agreement at the time of reentry and repossession (not including amounts which the Developer has not actually paid, such as amounts financed), less any gains or income withdrawn or made by the Developer from the Property or the improvements thereon. Any balance remaining after such reimbursements shall be retained by the Agency as its property. The rights established in this Section 614 are to be interpreted in light of the fact that the Agency will convey the Leasehold Estate to the Developer for development and not for speculation in undeveloped land. VII. [§ 7001 GENERAL PROVISIONS A. [§ 7011 Notices, Demands and Communications between the Parties Formal notices, demands and communications between the Agency and the Developer shall be sufficiently given if personally delivered or if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and the Developer, as designated in Sections 106 and 107 hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section 601. In addition, a copy of any notice shall be sent to the following: 58 SF-2001 Agree: Doarn Court: DDA 611101 - 10:38 Ant For the Agency: City Attorney 2000 Main Street Huntington Beach, CA 92648 For the Developer: Bowen Court, L.P. Merit housing, Inc. Attn: Eunice Bobert 414 East Chapman Avenue Orange, CA 92866 B. [§ 7021 Conflict of interest No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is, directly or indirectly, interested. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. C. [§ 703] Nonliability of Agency Officials and Employccs No member, official, employee or consultant of the Agency or the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Agency or for any amount which may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement. D. [§ 704] Enforced Dela • Extension of Time of Performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, third -party litigation, unusually severe weather, inability to secure necessary labor, materials or tools, delays of any contractor, subcontractor or suppliers, acts of the other party, acts or failure to act of the City or any other public or governmental agency or entity (other than that act or failure to act of the Agency or the City shall not excuse performance by the Agency) or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of actual knowledge of the commencement of the cause. Times of 59 SF-2001 Agree: Mwen Court: DDA 60,101 - 10:33 AM perfo. mancc under this Agreement may also be extended in writing by the Agency and the Developer. E. [§ 705] Inspection of Books and Records The Agency has the right at all reasonable times to inspect the books and records of the Developer pertaining to the Property as pertinent to the purposes of this Agreement. The Developer also has the right at all reasonable times to inspect the books and records of the Agency pertaining to the Property as pertinent to the purposes of this Agreement. F. [§ 706] Real Estate Commissions The Agency shall not be liable for any real estate commissions, brokerage fees or finders fees which may arise from the sale of the Leasehold Estate to the Developer. The Developer hereby agrees to defend, release, indemnify and hold harmless the Agency, the City and their employees, agents and consultants from any claim, liability, and/or cost (including attorneys' fees) which may arise out of or in connection with any claim that such fees are due based upon its involvement with the broker. G. [§ 707] Plans and Data In the event this Agreement is terminated, the Developer shall deliver to the Agency any and all plans and data concerning the Property. In such event, the Agency or any person or entity designated by the Agency to receive such plans and data, subject to the rights reserved by the architect or other draftsmen of such plans, to use such plans and data provided their use shall only be for the development of the Property. The Agency use of such plans and specifications shall be without any warrants or representation by the Developer or its agents. The Developer's agreement with the architect shall reflect the provisions of this Section 607. H. [§ 708] Not a Joint Venture or Partnership Agreement It is not the intent of the parties to create a joint venture or partnership by entering into this Agreement. VIll. [§ 800] SPECIAL PROVISIONS A. [§ 801] Agreement Containing Covenants The Property was acquired by the Agency with moneys from the Agency's Low and Moderate Income Housing Fund. Since the Agency is assisting the Developer in the Developer's construction and redevelopment of the twenty (20) dwelling units pursuant to this Agreement, the Community Redevelopment Law, requires that the twenty (20) dwelling units remain available at affordable housing costs to persons and families of low and moderate income households in perpetuity. Accordingly, in order to implement this requirement, the Developer agrees to execute and deliver to the Agency an Agreement Containing Covenants in substantially 60 5F 2001 Agm: Bowen Court: DDA 6'6101-4:01PNr the form attached hereto as Attachment No. G. The Agreement Containing Covenants shall be recorded against the Leasehold Estate with the Lease hereunder upon the close of escrow. 1X. [§ 900) ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS This Agreement shall be executed in three (3) dgiicate originals each of which is deemed to be an original. This Agreement includes S1Xn-TWQ( pages and nine (9) attachments which constitute the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the Property. All waivers of the provisions of this Agrecmcnt must be in writing and signed by the appropriate authorities of the Agency or the Developer, and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Developer. This Agreement and any provisions hereof may be amended by mutual written agreement by Developer and the Agency and such amendment sha'.1 not require the consent of any other fee owner, tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust , or any other person or entity having an interest in the Property. X. (§ 10001 TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY; OF AGREEMENT DATE This Agreement, when executed by the Developer and delivered to the Agency, must be authorized, executed and delivered by the Agency within sixty (60) days thereafter, or this Agreement may be terminated by the Developer on written notice to the Agency. The date of this Agreement shall be the date it is signed by the Agency. [Signatures on following page] bl sr-2001 Agree: Bowen Court: DDA 611101 - 10:38 AM Dated: 0, z6 t APPROVED AS TO FORM: By: _ T Gail Hutton Sr vl Agency General Counscl f 1 Dated: W , 200 k 62 SF 2001 Agree: Bowen Court: DDA 6.11/01 - 11:37 AM REDEVELOPMENT AGENCY OF THE CITY OF H[NTINGTON BEACH ("Agency") By: lC Pam Julien fradchcri, Chairperson ATTEST" By: -Connie Brockway Agency Clerk BOWEN COURT, L.P., a California limited partnership ("Developer") By: ]MERIT HOUSING, INC., a California Nonprofit Corporation, its General Partner By: Eunice Bol crt Chief Executive Officer CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of / './ /1 lr�r�� �rJ County of On �,-f�' ,lee7Z before me, Daro , Name and Tale of othow (e 7.Alkie Doe. Notary PuN personally appeared N>mels) of Sgnegs) personally known to me — OR — ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) Ware subscribed to the within instrument and acknowledged to me that JxVslT6/they executed the same in bis'ber/their authorized capacity(ies), and that by pis/W/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, CHt;1STiNE CLEARY executed the instrument. Conv,*dw i 125M Mkiry i 4 —C WITNESS my hand and official seal. My0or;mb0es ]arrM= S"Iufe Of Notary Pubrc 01, OPTIONAL Though the information below is not required by law, N may prove va,u3ble to persons relying on the document and could pre nt fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Numb of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: I Sig ZNa ❑ Individual ❑ Corporate Officer Titla (s): ❑ Partner — ❑ Limited ❑ General ❑ Attorney -in -Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is ❑ Individual ❑ Corporate Officer Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Attomey-in-Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing Top Of thumb here 0 1995 Natv.-nel Notary Association - $236 Rommet Ave., P.J. Box 718i - Canoga Park, CA 91309-71 B3 Prod. No. 5907 Reorder. Can Toll -Free 1.800-8-64W CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California 5S. County of On .l���/��- _��, before me, —LOAur r 1 U� • Mama rid TeM of ORKm la g .'Jana Doe. .olary Public-) personally appeared Etlsj-s cw Na"s) of sgnar(e) G personally known to me >Cproved to me on the basis of satisfactory evidence to be the personN whose name( QaFe— subscribed to the within instrument and CA:RAA.NELSON acknowledged to meth ,E sho4he executed C*Wrbslan the Same in s kQtahtaix. authorized cftrg7rt.ounty capacity(ioa), and that byir- MVCO" .Fj,%& Mn=jsignature(4on the instrument the person(5), or the entity upon behalf of which the person(!-q} acted, executed the instrument. ?NAL SS and and official seal. Place Notary Seal Above Signature of Notary Public OPT Though the information below is not required by law, it may prove valuable to persons retying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document. Title or Type of Document: --p tsp.,vtz ."`� vWC. lti'# !��✓�LY�1GM Document Date: 9 IL �'�fl, Number of Pages: 6 Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name:�.11tilta�I?l�� ❑ Individual Iop f# mu7ttf Here }o Corporate Officer — Tille(s): ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact.'__ -='- ❑ Trustee _ ❑ Guardian or Conservator ❑ Other: Signer Is Representing: DIM. NM* W Nowy AN *0m • 9MD Da Saco Ara.. PO Box M • fYyq+rora6 rA 913134402 • %.ra n,r~wftq arg Prod No, 9907 Neader Gee TZ&Fna Id004T6-U27 ATTACHMENT 1 (Legal Description) ALTA OWNERS POLICY EXHIBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS: LOTS 1 TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A MAP FILED IN BOOK 673. PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4. 1988 AS INSTRUMENT NO.83-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEbiBER 4, 1988 AS INSTRUMENT NO. 88-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021. PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTON BEACH COMPANY QUITCLkIMED ALLITS RIGHT TO DRILL SLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET, MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOL:T THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED. HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE "SUB-500 PORTION) GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND/OR DRILL NVELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL, GAS AND OTHER MINERALS IN AND UNDER SUCH SUR-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. I WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY I, 1989, AND GRANTOR AGREES THAT, NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1, 1989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY S. 1988 AS INSTRUMENT NO.83-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT 2 (Site Plan) 'ran S !• } • ! w. y . �.C• �. •S{7] ,q/.Cl •µ/ •C • LOPS II.%'J/ swat+ %-OK• 'xa TRACT N0i13920 M.M.673/14-16 s•s IsTV 'i _.• lots w.►+cs s c.+.-<•ca...i �,sc> wr,. ,•t CKf' 'K a .alp• �v•{;t 4sr K• 7.t' w w ')US rr 4971 J{- I3•Cz.7.7s p aow.r; EOwr• Oc!r ll a' J.,..s ".do {i. ►•c rr -.L s•...c9 '• C [ •f.OT "! PCy C' UT .• ..L boVw ::+�c•s -,� 10 rn -Me .c:c►•..cc Or .+•crt+c-m *' •0. /+( +••• •/C sr•..P[0 '• CC 'f.Ot r ir Y.c • r•f••ci !'•/•/'[1 '• : t f•aY -I cE W .. •.a..2r :c•'K•s S +Et? [C,•t•. rt . sKcrc••s .0 s. CC S. /.0 r. O"•ri 00.11 cc CCwRlq stir s0 MZ .rR• aCcU.-a Y •+•O.C.[r•S _&- Z*Atn V*00 ipwwt.r 43 wto S I C a.0 { M 1/..+i Ml r. • vN• r. -. • 1{ a1 III ,~e Owe rd'"I •rrl• �1/ � 1♦ d/•J/ LIr. _ 1 Jr�• �Y�4'�• w S 1 Iw Jr+r.r ►/ `1 ham► N ?/rr. 1 M jrr'I y M* !i•1- *SA c. "4v Ap. 11�1■ � F w •� r � a ' u i y , 0-et- -- ,per .. ` • -, , a •• �,, w.••,..,, p +' \ kiY i' +M .ir/Yr.M •• r• •• �rwr� i wl+nq/ri! v • z f •- f i .1- r J- 33 _ r.b .+•� �d r K '1! r r t s r,'• P � • �ccEr s;3 � �r w•M•!! rr•r. l.� Jy • urICA AVENUE I t. s_ __ f k• • I: r .i 1lMr ti r.i :JiAvri •r�ti• w�. /Nrr r N t� LLff/!+w Y r . rf ll I First American Title Insurance Company THIS MAP 11 GCS INFOtMATIC„ ONLY AND IS NOT A FART 100 THIS TRU 9VII34 dC.! ATTACHMENT NO.3 SCHEDULE OF PEI'TORMANCE i. GENERAL PROVISIONS 1. Execution of Agreement by Agency. Agency shall hold a public hearing on this Agreement, authorize execution and execute this Agreement, and shall deliver this Agreement to Developer. Within sixty (60) days alter this Agreement is executed by Developer and submitted to Agency. 2. Submittal of Insurance. Developer Prior to Lease Closing. shall submit all insurance certificates required under Section 410 of the Agreement. 3. Agency Approval of Insurance. Prior to Lease Closing. Agency shall approve or reject the insurance certificates and endorsements submitted. 4. Submission — Development and Within thirty (30) days after receipt of Management Team. Developer shall preliminary reservation for Section 42 Tax submit to Agency for approval of the Credits (the "Reservation'). names and qualifications of its development and management team. 5. Aj)proval — Development and Within fifteen (15) days after submission by Management Teams. Agency shall the Developer. approve or disapprove the development and management team. 6. Submission — Basic Concent Drawines. Developer shall prepare and submit to Agency for approval the basic concept drawings and related documents for the Property and pay all fees pertinent thereto. Already completed by Developer. SF-2001 Ag►cc: Dorn Court: DDA — Attach 3 6/1101 7. Approval — Basic Concert Drawings. Already approved by Agency. Developer shall prepare and submit to Agency for approval the basic concept drawings and related documents for the Property. 8. Submission — Preliminaly Landsca in Within sixty (60) days after the Reservation. and Grading Plans. Developer shall prepare and submit to Agency for approval preliminary landscaping and grading plans for the Property. 9. Approval -- PrcliminaryLandscaning and Grading Plans. Agency shall approve or disapprove preliminary landscaping and grading plans. 10. Submission — Final Landscaping and Grading Plans. Developer shall prepare and submit to Agency for approval final landscaping and grading plans for the Property and pay all fees pertinent thereto. 11. Approval - Final Landscaping and Grading Plans. Agency shall approve or disapprove final landscaping and grading plans. 12. Submission — Preliminary Construction Drawings and Related Documents. Developer shall prepare and submit to Agency for approval the preliminary construction drawings and related documents for the Property. 13. Approval — Preliminary Construction Drawings and Related Documents. Agency shall approve or disapprove preliminary construction drawings and related documents. Within ten (10) days following receipt of the preliminary landscaping and grading plans. Within sixty (60) days following approval by the Agency of the preliminary landscaping and grading, plans. Within ten (10) days following receipt of the final landscaping and grading plans. Within ninety (90) days after the Reservation. Within ten (10) days following receipt of the preliminary construction drawings and related documents. 2 Sr-2001 agree: so%%en court: DDA —Attach 3 611101 14. Submission — Final Constriction Drawings and Related Documents. Developer shall prepare and submit to Agency for approval the final construction drawings and related documents for the Property. 15. Approval — Final Construction Drawings and Related Documents. Agency shall approve or disapprove final construction drawings and related documents. II. CONVEYANCE AND CONSTRUCTION Within sixty (60) days following approval of the Agency of the preliminary construction drawings and related documents. Within five (5) days following receipt of the final construction drawings and related documents 1. Opening of Escrow. Agency shall open No later than June 9, 2001. an escrow for conveyance of the Leasehold Estate. Irk 3. 4. 5 2 7. Conveyance of Title. Agency shall convey title and possession of the Leasehold Estate to Developer, and Developer shall accept such conveyance. Evidence of Financing. Developer shall submit to Agency the Reservation and the Evidence of Financing referred to in Section 312 of this Agreement. Approval of Financing. Agency shall approve or disapprove the submission of Developer's Evidence of Financing, and shall so notify Developer. Project Budget. Developer shall submit a Project Budget as required under Section 408 of this Agreement. Av,ency Approval of Project Budget Agency Construction Loan. Agency shall fund the Construction Loan. SF-2001 Agree: Bowen Court: DDA — Attach 3 6/1 ro1 June 11, 2001. By no later than December 3I, 2002, but in no event Iater than 90 days after issuance of the Reservation.. Within ten (10) days after receipt of submission of Evidence of Financing by Developer. Within thirty (30) days of Agency approval of the Evidence of Financing. Within fifteen (15) days of submittal Within thirty (30) days of Agency approval of the Project Budget, but in no event later than 150 days after issuance of the Reservation.. 8. Commencement of Construction. The Within thirty (30) days after funding the Developer shall commence Agency Construction Loan. construction of the Work of Improvement on the Property. 9. Completion of Construction. The Within 18 months after Agency Construction Developer shall complete construction Loan closing. of the Work Improvement on the Property. 4 SF-2001 Agrce: Bowen Court: DDA — Attach 3 611101 ATTACHMENT NO.4 SCOPE OF DEVELOPMENT A. GENERAL DESCRIPTION The Property is specifically delineated on the Site Map (Attachment No. 2) and legally described in the Legal Description (Attachment No. 1). B. DEVELOPMENT The Project on the Property shall consist of the construction of a new two-story building on the Site consisting of a recreation room, kitchen, restrooms and twenty (20) one - bedroom for -rent dwelling units, as shown in the Basic Concept Drawing attached as Exhibit A hereto (which may be modified by the Final Construction Drawings).. As part of the Project, the Developer shall also provide on -site parking, as necessary and appropriate for the proposed Development, and all appropriate landscaping. The Project (including the parking and landscaping) shall be constructed and redeveloped all in accordance with plans approved by Agency. The Developer shall commence and complete the Project within the times established in the Schedule of Performance. C. DEVELOPMENT STANDARDS The Project shall conform to local zoning and applicable provisions of the Huntington Beach Municipal Code, the Redevelopment Plan and the Huntington Beach General Plan. D. PUBLIC IMPROVEMENTS AND UTILITIES The Developer shall, at its own cost and expense, provide or cause to be provided within the time set forth in the Schedule of Performancc for the completion of the Project, all on- and off -site public improvements required by the City of Huntington Beach as part of the entitlement process. E. SUBDIVISION MAP Agency shall obtain a subdivision or parcel reap for the Property. Sr-2001 Agree: Bowen Court: DDA — Attach 4 6'1.01 ATTACHIIENT NO.5 GROUND LEASE Table of Contents Preamble and Recitals ARTICLE 1. LEASE OF PREMISES AND TERM OF LEASE § 1.01. Agreement to Lease § 1.02. Status of Title § 1.03. Term of Lease § 1.04 Ownership of Improvements ARTICLE 2. RENT § 2.01. Minimum Rent § 2.02. Time and Place for Payment of Rent ARTICLE 3. USE OF PREMISES § 3.01. Permitted Use § 3.02. Maintenance ARTICLE 4. TAXES AND UTILITIES § 4.0I. Tenant to Pay Taxes § 4.02 Proration of First and Last Year Taxes § 4.03. Payment Before Delinquency § 4.04. Taxes Hold -Harmless Clause § 4.05 Utilities § 4.06 Payment by Landlord ARTICLE 5. ENCUMBRANCE OF LEASEHOLD ESTATE § 5.01. Tenant's Right to Encumber Leasehold Estate § 5.02. Notices to Leasehold Mortgagee; Leasehold Mortgagee's Right to Cure § 5.03. Landlord's Consents § 5.04. No Voluntary Surrender; Subordination; Modification § 5.05. Prohibition Against Change in Ownership Management and Control of Tenant § 5.06. Permitted Transfer § 5.07. Notices of Default § 5.05. No Merger § 5.09. Estoppel Certificates § 5.10. Waiver of Subrogation § 5.11. Amendments § 5.12. Non -Disturbance of Subleases § 5.13. New Lease to Leasehold Mortgagee § 5.14. No Fee Mortgages Attachment No. 5 Page 1 of 17 SF-2001 Agree: Bowen Court: Ground Lease V1.'01 ARTICLE 6. LEASE TERMINATION § 6.01. Lease Termination for Inability to Finance § 6.02. Quitclaim Deed ARTICLE 7. DISCRIMINATION PROHIBITED § 7.01. Discrimination Prohibited § 7.02. Discrimination Prohibited in Assignments ARTICLE S. OTHER PROVISIONS § 8.01. Attorneys' Fees § 8.02. Notices to Landlord § 8.03. Notices to Tenant § 8.04. Governing Law § 8.05. Binding on Heirs and Successors § 8.06. Memorandum of Lease for Recording § 8.07. Special Notice to Limited Partners Lease Attachments 1) Legal 2) Site 3) Memorandum of Lease Attachment No. 5 Page 2 of 17 5F-2001 Agrec: Bowen Court: Ground Lease Gr 1/01 LEASE: Preamble and Recitals This Lease is entered into as of June 11, 2001 by and between the REDEVELOPMENT AGENCY OF THE CITE' OF HUNTINGTON BEACH, a public body corporate and politic, of the State of California, herein called "Landlord," acting under the Community Redevelopment Law (California Health and Safety Code §§ 33000, err seq.) of the State of California, and BOWEN COURT, L.P., a California limited partnership corporation, herein called "Tenant." A. Landlord is the owner of certain real property in the County of Orange, State of California, legally described on Attachment 1, and depicted on the Site Map as Attachment 2, which are attached and made a part of this Lease (referred to in this Lease as "the Premises`). B. Tenant desires to lease the Premises (together with certain appurtenant rights and easements) for the purpose of constructing and operating an affordable senior housing project (collectively referred to in this lease as "the Improvements") in accordance with the Disposition and Development Agreement dated June 11, 2001, by and between the parties (the "DDA"). The Premises are located inside the boundaries of the Huntington Beach Redevelopment Project Area ("Project Area") in the City of Huntington Beach ("City"), State of California, and are leased in furtherance of the provisions of (1) the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December 16,1996, and which merged together four different, previously approved project areas; (2) the Disposition and Development Agreement by and between the Landlord and Tenant relating to the Premises (the "DDA"); and (3) the General Plan of the City of Huntington Beach. Said Ordinances, DDA and the General Plan arc fully incorporated herein by the aforementioned reference and made a part hereof as though they are fully set forth herein. ARTICLE 1 LEASE OF PREMISES AND TERM OF LEASE Agreement to Lease Section 1.01. For and in consideration of the rents to be paid and covenants to be performed by Tenant under this Lease, Landlord agrees to lease the Premises to Tenant, and Tenant agrees to lease the Premises from Landlord, on the terms and conditions set forth in this Lease. Except as expressly otherwise provided in this Lease, "the Premises" includes the real property plus any appurtenances and easements described in Attachment 1 of this Lease, exclusive of any improvements (the "Improvements") now or subsequently located on the Premises, notwithstanding that any Improvements may or shall be construed as affixed to and as constituting part of the described Premises, and without regard to whether ownership of the Improvements is in Landlord or in Tenant. Notwithstanding the foregoing, the Improvements are, and shall be treated as real property. Attachment No. 5 Page 3 of 17 SF-2001 Agree: Bowrn Court: Ground Lease 611101 Status of Title Section 1.02. Title to the Leasehold Estate created by this lease is subject to all exceptions, easements, rights, rights -of -way, and other matters of record set forth on the Preliminary Title Report issued by Chicago Title Insurance, dated May 22, 2001. Term of Lease Section 1.03. The term of this Lease shall be for a period of sixty (60) years commencing on June 11, 2001 and continuing 60 years until June 10, 2061, unless terminated earlier as provided in this lease. The Lease may be extended for a term not exceeding forty (40) years if Tenant gives written notice to Landlord at least one (1) year prior to the expiration of this Lease that Tenant will continue to operate the Premises as a senior, affordable housing project, pursuant to the DDA and the Agreement Containing Covenants. Ownership of Improvements Section 1.04. Title to the Improvements to be constructed on the Premises by Tenant shall be owned by Tenant until expiration of the term or earlier termination of this Lease. Upon expiration of the term or earlier termination of this Lease, the Improvements shall, without compensation to Tenant, then automatically and without any act of Tenant or any third party become Landlord's property. Tenant shall surrender the Project to Landlord at the expiration of the term or earlier termination of this Lease, free and clear of all liens and encumbrances, other than those, if any, permitted under this Lease, the DDA or otherwise created or consented to by Land'ord. Tenant agrees to execute, acknowledge, and deliver to Landlord any instrument requested by Landlord as reasonably necessary in Landlord's opinion to perfect Landlord's right, title, and interest to the Project and the Premises following termination of this Lease. ARTICLE 2 RENT Minimum Rent Section 2.01. Tenant agrees to pay to Landlord annual rent for each year during the term of this Lease in the amount of One Dollar (51.00). Attachmcnt No. 5 Page 4 of 17 SF-2001 Agree: Bourn Court: Ground Lease W1101 Time and Place for Payment of Rent Section 2.02. The Rent shall be paid for the first year of the Lease at the close of escrow, and thereafter on June I 1 of each subsequent year. All rent required under this Lease shall be paid to Landlord at Huntington Beach City ]-tall, 2000 Main Street, Huntington Beach, California, or any other place or places that Landlord may designate by written notice to Tenant. ARTICLE 3 USE OF PREMISES Permitted Use Section 3.01. The Premises shall be devoted only to the development permitted and the uses specified in the applicable provisions of the Redevelopment Plan, General Plan, and this Lease, whichever document is more restrictive. Maintenance Section 3.02. Solely at Tenant's expense, Tenant or Tenant's successor in interest shall reasonably maintain the improvements on the Premises in good condition and appearance. Tenant shall keep the Premises reasonably free from any accumulation of graffiti, debris or waste materials. If, at any time, Tenant fails to maintain the Premises as required by this Section, and such failure is not corrected within thirty (30) days after the date of written notice from the Landlord, Landlord or the City may perform the maintenance, or other actions and Tenant shall pay all costs incurred for such maintenance. ARTICLE 4 TAXES AND UTILITIES Tenant to Pay Taxes Section 4.01. Subject to any exemption obtained by Tenant, Tenant shall pay during the term of this Lease, without abatement, deduction, or offset, any and all real and personal property taxes, general and special assessments, and other changes (including any possessory interest tax) of any description levied or assessed during the term of this Lease by any governmental agency or entity on or against the Premises, the Improvements located on the Premises, personal property located on or in the Premises or Improvements, and the Leasehold Estate created by this Lease. Proration of First and Last Year Taxes Section 4.02. Notwithstanding the provisions of Section 4.01 of this Lease, all taxes, assessments, or other charges levied or assessed during the tax years in «•hich the term of this Lease commences and ends shall be prorated between Landlord and Tenant as of 12:01 A.M. on Attachment No. 5 Page 5 of 17 Sr-2001 Agree: Bowen Court: Ground Lease 6r1,01 the date the term commences and on the date the term ends, respectively, on the basis of tax years that commence on July 1 and end on June 30 of each year. Landlord shall pay the taxes, assessments, or other charges for the year in which the term of this Lease commences and Tenant shall promptly, on service of written request by Landlord, reimburse Landlord for Tenant's share of those taxes, assessments, or other charges. Tenant shall pay the taxes, assessments, and other charges for the year in which this Lease is to end; and Landlord shall promptly, on service of written request by Tenant, reimburse Tenant for Landlord's share of those taxes, assessments, and other charges. Payment Before Delinquency Section 4.03. Any and all taxes and assessments and installments of taxes and assessments required to be paid by Tenant under this Lease shall be paid by Tenant at least ten (10) clays before each such tax, assessment, or installment of tax or assessment becomes delinquent. Tenant shall deliver to Landlord the official and original receipt evidencing the payment of any taxes, assessments, and other charges required under this Article. Tax flold-Harmless Clause Section 4.04. Tenant shall indemnify and hold Landlord and Landlord's property, including the Premises and any Improvements now or subsequently located on the Premises, free and harmless from any liability, loss, or damage resulting from any taxes, assessments, or other charges required by this Article to be paid by Tenant and from all interest, penalties, and other sums imposed thereon and from any sales or other proceedings to enforce collection of any such taxes, assessments, or other charges. Utilities Section 4.05. Tenant shall pay or cause to be paid, and hold Landlord and the Premises free and harmless from, all charges for the furnishing of gas, water, electricity, telephone service, and other public utilities to the Premises during the Lease's term and for the removal of garbage and rubbish from the Premises during the term of this Lease. Payment by Landlord Section 4.06. Should Tenant fail to pay within the time specified in this Article any taxes, assessments, or other charges required by this Article to be paid by Tenant, and subject to the right of Tenant to contest the payment of the same, Landlord may, upon thirty (30) days prior written notice to Tenant, pay, discharge, or adjust that tax, assessment, or other charge for the benefit of Tenant. In that event, Tenant shall promptly on written demand of Landlord reimburse Landlord for the full amount paid by Landlord in pa)7ng, discharging, or adjusting that tax, assessment, or other charge together with interest thereon at the ten -maximum legal rate from the date of payment by Landlord until the date of repayment by Tenant. If this Article does not speci fy the time within which Tenant must pay any charge required by this Article, Tenant shall pay that charge before it becomes delinquent. Attachment To. 5 Page 6 of 17 SF•-2001 Agree: Bowen Court: Ground Lease 6/M l ARTICLE 5 ENCUMBRANCE OF LEASEHOLD ESTATE Tenant's Right to Encumber Section 5.01. Tenant's Right to Encumber Leasehold Estate. Tenant shall have the right, at any time, or from time to time, without Landlord's consent, to mortgage or otherwise encumber its interest in this Lease and in the Leasehold Estate created hereunder and/or in the Improvements (hereinafter referred to as a "Leasehold Mortgage," with the mortgagee or beneficiary under such Leasehold Mortgage being hereinafter referred to as a "leasehold Mortgagee"). No Leasehold Mortgage shall constitute an assignment or transfer prohibited under this Lease nor shall a Leasehold Mortgagee, as holder of a Leasehold Mortgage, be deemed an assignee or transferee of this Lease so as to require such Leasehold Mortgagee to assume the performance of any of the terms, covenants or conditions on the part of Lessee to be performed hereunder. Section 5.02. Notices to Leasehold Nlortgnt;ee, Leasehold Mortgagee's Right to Cure. (a) Notices to Leasehold Mortgagee. Landlord shall send to each Leasehold Mortgagee, by certified or registered mail, a true, correct and complete copy of any notice to Tenant of a default by Tenant under this Lease at the same time as and whenever any such notice of default shall be given by Landlord to Tenant, addressed to such Leasehold Mortgagee at the address last furnished to Landlord by Tenant or such Leasehold Mortgagee. No notice by Landlord to Tenant of a default by Tenant under this Lease shall be deemed to have been given unless and until a copy thereof shall have been so given to and received by such Leasehold Mortgagee. Tenant irrevocably directs that Landlord accept, and Landlord agrees to accept, performance and compliance by any such Leasehold Mortgagee of and with any term, covenant, agreement, provision, condition or limitation on Tenant's part to be kept, observed or performed hereunder with the same force and effect as though kept, observed or performed by Tenant. (b) Leasehold Mortgagee's Right to Cure. Notwithstanding anything stated to the contrary in this Lease, this Lease shall not be terminated because of a default or breach hereunder on the part of Tenant until and unless (i) written notice of any such default or breach has been delivered to Leasehold Mortgagee in accordance with the provisions of Section 5.02(a) above, and (ii) with respect to a default or breach that is curable solely by the payment of money, Leasehold Mortgagee and Tenant have failed to cure such default or breach within thirty (30) days following the expiration of any of Tenant's notice and cure periods set forth herein, and (iii) with respect to a default or breach that is not curable solely by the payment of money, Leasehold Mortgagee and Tenant have failed to cure such default or breach Attachment No. 5 Page 7 of 17 SF-2001 Ague: Bourn Court: Ground Lcase 6'1/01 within sixty (60) days following the expiration of any of Tenant's notice and cure periods set forth herein or, if such default or breach is curable but cannot be cured within such time period, (A) Leasehold Mortgagee has failed to notify Landlord within such time period that Leasehold Mortgagee intends to cure such default or breach, (B) Leasehold Mortgagee fails to diligently commence to cure such default or breach, or (C) Leasehold Mortgagee fails to prosecute such cure to completion. It is expressly understood and agreed that no Leasehold Mortgagee shall have any obligation hereunder to cure or complete any cure of any breach or default by Tenant hereunder. Section 5.03 Landlord's Consents. Landlord hereby consents to, and agrees that any Leasehold Mortgage may contain provisions for any or all of, the following: (a) An assignment of Tenant's share of the net proceeds from available insurance coverage or from any award or other compensation resulting from a total or partial taking of the Premises by condemnation. (b) The entry by the Leasehold Mortgagee upon the Premises during business hours, without notice to Landlord or Tenant, to vie", the state of the Premises. (c) A default by Tenant under this Lease being deemed to constitute a default under the Leasehold Mortgage. (d) An assignment of Tenant's right, if any, to terminate, cancel, modify, change, supplement, alter or amend this Lease, including without limitation Tenant's right under Section 365(h)(1) of the Federal Bankruptcy Code to elect to treat this Lease as terminated, and an assignment of all of Tenant's other rights under the Federal Bankruptcy Code. (e) An assignment of any sublease to which the Leasehold Mortgage is subordinated. (f) _ The following rights and remedies to be available to the Leasehold Mortgagee upon any default under any Leasehold Nortgage: (i) The foreclosure of the Leasehold Mortgage pursuant to a power of sale, by judicial proceedings or other lawful means and the sale of the Leasehold Estate hereunder to the purchaser at the foreclosure sale and a subsequent sale or sublease of the Leasehold Estate hereunder by such purchaser if the purchaser is the Leasehold Mortgagee or its nominee or designee. (ii) The appointment of receiver, irrespective of whether the Leasehold Mortgagee accelerates the maturity of all indebtedness secured by the Leasehold Mortgage. (iii) The right of the Leasehold Mortgagee or the receiver appointed under subparagraph (ii) above to enter and take possession of the Premises, to manage and operate the same, to collect the subrentals, issues and profits therefrom and any other income Attachment No. 5 Page 8 of 17 SF-2001 Agree: M),A cn Court: Ground Lease 611101 generated by the Premises or the operation thereof and to cure any default under the Leasehold Mortgage or any default by Tenant under this Lease. (iv) An assignment of Tenant's right, title and interest under this Lease in and to any deposit of cash, securities or other property which may be held to secure the performance of covenants, conditions and agreements contained in this Lease, in the premiums for or dividends upon any insurance provided for the benefit of any Leasehold Mortgagee or required by the terms of this Lease, as well as in all refunds or rebates of tares or assessments upon or other charges against the Premises, whether paid or to be paid. Section 5.04. No Vol untary_Surrender, Subordination: Modification. Without the written consent of all Leasehold Mortgagees, Landlord agrees not to accept a voluntary surrender of this Lease at any time while the Leasehold Mortgage of any Leasehold Mortgagee shall remain a lien on the Leasehold Estate hereunder. Section 5.05 Prohibition against Change in Ownership, Management and Control of Tenant (a) The Tenant represents and agrees that its lease of the Leasehold Estate and its other undertakings pursuant to this Lease are, and will be used, for the purpose of redevelopment of the Premises and not for speculation in landholding. The Tenant further recognizes that, in view of- (i) the importance of the redevelopment of the Premises to the general welfare of the community; (ii) the public aid that has been made available by law and by the government for the purpose of making such redevelopment possible, and (iii) the fact that a significant change in identity of the Tenant, excepting the substitution of a purchaser at a foreclosure sale, is for practical purposes, a transfer or disposition of the Leasehold Estate; the qualifications and identity of the Tenant is of particular concern to the community and the Landlord. The Tenant further recognizes that it is because of such qualifications and identity that the Landlord is entering into the Lease with the Tenant. Accordingly, except pursuant to a Permitted Transfer (as that term is defined in the DDA), the Tenant shall not assign or transfer or attempt to assign or transfer all or any part of this Agreement, or any rights herein, without the express written consent of the Landlord. (b) After the issuance of the Certificate of Completion pursuant to Section 434 of the DDA: Attachment No. 5 Page 9 of 17 sr-2oo1 Agrce: Bowen Coun: Ground Lcasc &TIT 1 (i) Except in connection with a Permitted Transfer, the Tenant shall not assign all or any part of this Lease without the prior written approval of the Landlord. (ii) For the reasons cited above, the Tenant represents and agrees for itself and any successor in interest that without the prior written approval of the Landlord, except for a Permitted Transfer there shall be no significant change in the ownership of the Tenant or in the relative proportions thereof, or with respect to the identity of the parties in control of the Tenant or the degree thereof, by any method or means. (iii) The Tenant shall promptly notify the Landlord of any and all changes whatsoever in the identity of the parties in control of the Tenant or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. This Lease may be termina'ed by the Landlord if there is any significant change (voluntary or involuntary) in membership, management or control of the Tenant (other than such changes occasioned by the death or incapacity of any individual or occasioned by a Permitted Transfer). (iv)' Tenant shall not, except as permitted by this Lease and except pursuant to a Permitted Transfer, assign or attempt to assign this Lease or any right herein, nor except pursuant to a Permitted Transfer, make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Leasehold Estate (referred to hereinafter as a "Transfer'), without prior written approval of the Agency, except as expressly permitted by this Lease. Consent to a Transfer shall not result in acceleration of the Agency Note. Consent to one such Transfer shall not be deemed to be a waiver of the right to require consent to future or successive Transfers. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Tenant. Any such proposed transferee, by instrument in writing satisfactory to the Landlord and in form recordable among the land records, for itself and its successor and assigns, and for the benefit of the Landlord shall expressly assume all of the obligations of the Tenant in this Lease as of the date of such assumption, and agree to be subject to all conditions and restrictions applicable to the Tenant in this Lease. There shall be submitted to the Landlord for review all instruments and other legal documents proposed to effect any such Transfer, and if approved by the Landlord its approval shall be indicated to the Tenant in writing. Attachment t:a. 5 Page 10 of 17 sr-2001 Agree: Doarn Court: Ground Lea.w 611MI (v) In the absence of specific written agreement by the Landlord, no unauthorized Transfer, or approval thereof by the Landlord shall be deemed to relieve the Tenant or any other party from any obligations under this Lease. Section 5.06. Permitted Transfers. (a) Notwithstanding anything stated to the contrary in this Lease, the following transfers shall be permitted and shall not require the approval or consent of Landlord: (i) A transfer of this Lease at foreclosure sale under the Leasehold Mortgage, whether pursuant to the power of sale contained therein or a judicial foreclosure decree, or by an assignment in lieu of foreclosure, or (ii) Any subsequent transfer by the Leasehold Mortgagee or its nominee or designee if the Leasehold Mortgagee, or such nominee or designee, is the purchaser at such foreclosure sale or under such assignment in lieu of foreclosure. (b) Any such transferee shall be liable to perform the obligations of Tenant under this Lease only so long as such transferee holds title to the Leasehold Estate hereunder, provided that upon any conveyance of title, such transferee's transferee expressly assumes and agrees to perform all of the obligations of this Lease first arising alter the date of such conveyance. (c) Following the transfer, if any, described in Section 5.06(a)(i) above, all non -curable defaults existing under the Lease prior to such transfer shall be deemed waived without further notice or action of any party. Section 5.07. Notices of Default. Upon and immediately after the recording of a Leasehold Mortgage, Landlord, at Landlord's expense, may cause to be recorded in the office of the County Recorder of Orange County, California, a «•ritten request duly executed and acknowledged by Landlord for a copy of any notice of default and of any notice of sale under the Leasehold Mortgage as provided by the statutes of the State of California. Section 5.08. No Mereer. If title to Landlord's estate and to Tenant's estate shall be acquired by the same person, firm or entity, other than as a result of termination of this Lease, no merger shall occur, if the effect of such merger would extinguish or in any «•ay impair the lien of any Leasehold Mortgage. Section 5.08. Estoppel Certificates. Within twenty (20) days following Tenant's written request, Landlord shall execute and deliver to any person, firm or entity specified by Tenant (a) provided that such be the case, a certificate stating teat this Lease is in full force and effect, that Tenant is not in default under this Lease, that this Lease has not been modified or supplemented in an), way and containing such other certifications and agreements as such person, fine or entity Avachment No. 5 Page 1 I of 17 Sr-2001 Agrcc_ Bowen Court: Ground Lease W1101 may reasonably request, and (b) copies of the documents creating or evidencing the Leasehold Estate hereunder certified by Landlord as being true, correct and complete copies thereof. Section 5.10. Waiver of Subrogation. Any policy of hazard insurance insuring Landlord shall contain an endorsement waiving the insurer's right of subrogation as against the Leasehold Mortgagee and Tenant. Section 5.11. Amendments. If, in connection with any financing or refinancing of the Leasehold Estate hereunder by Tenant, any Leasehold Mortgagee requests any changes or additions to this Lease, Landlord and Tenant shall amend this Lease to include such changes or additions, provided that such changes or additions do not materially impair Landlord's rights hereunder, materially increase Landlord's obligations hereunder, or materially decrease the value of this Lease. Notwithstanding anything to the contrary contained in this Lease, this Lease shall not b-- amended or modified without the written consent of all Leasehold Mortgagees. Section 5.12. Non -Disturbance of Subleases. Upon any termination of this Lease for any reason whatsoever, neither Landlord nor any mortgagee (to the extent permitted under Section 5.14 below) of the Landlord's revisionary fee interest in the Premises shall disturb the possession of any of Leasehold Mortgagee's sublessees of the Premises, as permitted under Section 5.03(f)(i) above, so long as such sublessees are not in default tinder their respective subleases. Section 5.13. New Lease to Leasehold Mortgagee. If this Lease is terminated for any reason (including, without limitation, Tenant's default hereunder), then any Leasehold Mortgagee may elect to demand a new lease of the Premises by written notice to Landlord within thirty (30) days after such termination. Upon any such election, the following provisions shall apply: (a) The new lease shall be for the remainder of the term of this Lease, effective on the date of termination, at the same rent and shall contain the same covenants, agreements, conditions, provisions, restrictions and limitations as are then contained in this Lease. Such new lease shall be subject to all existing subleases. (b) The new lease shall be executed by Landlord within thirty (30) days after receipt by Landlord of written notice of the Leasehold Mortgagee's or such other acquiring person's election to enter into a new lease. (c) If Tenant refuses to surrender possession of the Premises, Landlord shall, at the request of the Leasehold Mortgagee or such other acquiring person, institute and pursue diligently to conclusion of the appropriate legal remedy or remedies to oust or remove Tenant and all subtenants actually occupying the Premises or any part thereof who are not authorized to remain in possession hereunder. Any such action taken by Landlord at the request of the Leasehold Mortgagee or such other acquiring person shall be at the Leasehold Mortgagee's or such other acquiring person's sole expense. Attachment No. 5 Page 12 of 17 SF-2001 Agree: Bowen Court Ground Lease 611101 If there is more than one Leasehold Mortgagee seeking to obtain a new lease under this Section 5.12, the Leasehold Mortgagee with the most senior Leasehold Mortgage shall have the right to enter into the new lease. Section 5.14. No Fee Morteaees. Notwithstanding anything to the contrary contained in this Lease, Landlord shall not encumber Landlord's fee simple interest in the Premises or any part thereof with a deed of trust, mortgage or other security instrument without the prior written consent of Tenant and all Leasehold Mortgagees, which consent may be withheld in their sole and absolute discretion. ARTICLE 6 LEASE TERMINATION Lease Termination for Inability to Finance Section 6.01. Notwithstanding anything stated to the contrary in this Lease, Landlord and Tenant shall each have the right to terminate this Lease upon thirty (30) days prior %tiTitten notice to the other if, prior to September 30, 2001, Tenant fails to obtain a written commitment for UX credit financing in accordance with the provisions of Section 312 of the DDA. Further, Tenant shall have the right to terminate this Lease upon thirty (30) days prior written notice to Landlord at any time prior to the Agency Construction Loan Closing (as such term is defined in the DDA). Quitclaim Deed Section 6.02. If Landlord or Tenant terminates this Lease pursuant to Section 6.01, Tenant shall execute and deliver to Landlord a quitclaim deed in favor of the Landlord, which shall relinquish all of Tenant's right, title, and interest in, to, and under this Lease and the Premises. In the event Landlord terminates this Lease under this section, Landlord shall have the right to immediately record the quitclaim deed. ARTICLE 7 DISCRIMINATIO.N PROHIBITED Section 7.01. Tenant covenants and agrees for itself, its successors, its assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Premises, nor shall Tenant itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Premises. The foregoing covenants shall run with the land. Attachment No. S Page 13 of 17 SF-2001 Agree: Bowen Court: Ground Lease G11M Discrimination Prohibited in Assignments Section 7.02. All deeds, ]cases or contracts made relative to the Premises, improvements thereon, or any part thereof, shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In Deed: `The Tenant herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Tenant itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In Leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, national origin, or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall lessee itself or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased." (c) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land." In amplification and not in restriction of the provisions set forth hereinabove, it is intended and agreed that the Landlord shall be deemed a beneficiary of the agreements and covenants provided hereinabove both for and in its own right and also for the purpose of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of the Landlord, and such covenants shall run in favor of the Landlord for the entire period during which such covenants shall be in force and effect, without regard to whether the Landlord is or remains an owner of any land or Attachment No. 5 Page 14 of 17 5F-2001 Agree: DoNrn Coun: Ground Lease 6/1101 interest therein to which such covenants relate. Landlord shall have the right in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any actions at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Lease shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest permitted by Article 5 of this Lease; provided, however, that any subsequent owner of the Premises shall be bound by such remaining covenants, conditions, restrictions, limitations, and provisions, whether such oti,.mer's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. None of the terms, covenants, agreements or conditions heretofore agreed upon in writing in other instructions between the parties to this Lease with respect to obligations to be performed, kept or observed by Tenant or Landlord in respect to the Premises or any part thereof after this conveyance of the Premises shall be deemed to be merged with this Lease until such time as a Certificate of Completion issued by the Landlord pursuant to the DDA is recorded for the Premises conveyed hereby or such part thereof. ARTICLE 8 OTHER PROVISIOtiS Attorneys' Fees Section 8.01. Should any litigation be commenced between the parties to this Lease concerning the Premises, this Lease, or the rights and duties of either in relation thereto, each party shall bear its own attorneys' fees. Notices to Landlord Section 8.02. Except as otherwise expressly provided bylaw, any and all notices or other communications required or permitted by this Lease or by law to be served on or given to Landlord by Tenant or an), Lender described in Article 5 of this Lease shall be in writing and shall be deemed duly served and given when personally delivered to Landlord, to any managing employee of Landlord, or, in lieu of personal service, when deposited in the United States mail, first-class postage prepaid, and sent by express mail that allows for tracking, addressed to Landlord at 2000 Main Street, Huntington Beach, California 92648. Landlord may change Landlord's address for the purpose of this section by giving written notice of that change to Tenant in the manner provided in Section8.03; Tenant shall then transmit a copy of that notice to any Lender described in Article 5 of this Lease. Notices to Tenant Section 8.03. Except as otherwise expressly provided bylaw, any and all notices or other communications required or permitted by this Lease or by law to be served on or given to Tenant by Landlord shall be in writing and shall be deemed duly served and given when Attachment No. 5 Page 15 of 17 SF-2001 Agrec: QoK-cn Coun: Ground Lease 611.'01 personally delivered to Tenant, any managing employee of Tenant, or, in lieu of personal services, when deposited in the United States mail, first-class postage prepaid, and sent by express mail that allows for tracking, addressed to 'Tenant at Merit Housing, Inc., Attn: Eunice Bobert, 414 East Chapman Avenue, Orange, California. Tenant may change its address for the purpose of this section by giving written notice of that change to Landlord in the manner provided in Section 8.02 of this Lease. Governing Lair' Section 8.04. This Lease, and all matters relating to this Lease, shall be governed by the laws of the State of California in force at the time any need for interpretation of this Lease or any decision or holding concerning this Lease arises. Binding on ]Heirs and Successors Section 8.05. This Lease shall be binding on and shall inure to the benefit of the heirs, executors, administrators, successors, and assigns of the parties hereto, but nothing in this section shall be construed as a consent by Landlord to any assignment of this Lease or any interest in the Lease by Tenant except as permitted in the DDA or in this Lease. Memorandum of Lease for Recording Section 8.06. Landlord and Tenant shall execute a memorandum or "short form" of his Lease for purposes of recordation in the form of Attachment 4 hereto. The memorandum or "short form" of this Lease shall be recorded at the close of the escrow described in the DDA. Special Notice to Limited Partners Section 8.07. Notwithstanding anything to the contrary contained in this Lease, prior to declaring any default or taking any remedy permitted under this Lease or applicable law based upon an alleged default under this Lease by Tenant, each limited partner in Tenant at the time of such default shall have any additional period of not less than (a) ten (10) days to cure such alleged default if of a monetary nature, and (b) thirty (30) days to cure such alleged default if on a non -monetary nature. Attachment No. 5 Page 16 of 17 Sr-2001 Agrce: BoNrn Court: Ground Lease 61VOI IN WITNESS WHEREOF, the Landlord and Tenant have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized this 114k! day oflxhy- , 2001. 116 ATTEST: Agency Secretary APPROVED AS TO FORM: Agency General Counsel r, 410, Dated: 6 A , zoo/ Landlord REDEVELOPMENT AGENCY OF THE CITY OF I IUNTINGTON BEACH By - cu., 4EIR'-ecutive Director By: /a, Q,&I, Cha person Tenant BOWEN COURT, L.P., a California limited partnership By: MERIT HOUSING, INC., a California Nonprofit Corporation, its General Partner By: �-4r_ . Eunice Bobert Chief Executive Officer Attachment No. 5 Page 17 of 17 Sr-2001 Agree: bourn Court: Ground Lease 611 P0I CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of 0 u �/�/�i _ On'Jjj�� , before me, �r_�,�iii✓r� �' ►V Dh - N.," end Title of 00 cer (e 9. 'Jww DoeAoury Putar ) personally appeared CtLA' C f O;OD e f , tAtiRA A. NSMN Cormfton to 122" -� r+otw t'ubfti.—t: cltnTrlia My Comm^.. EOes Jul 23. MM )C personally known to me pi"ved to rpe on evidence to be the persorrcQ whose name(,c.a jDa-e subscribed to the within instrument and acknowledged to me that&%Ae4Jgey executed the same in Pi 1}l haf -em authorized capacity(ies), anhat by &het-t� signature(&) on the instrument the person(}, or the entity upon behalf of which the person(4- ac!ed, executed the instrument. WITNESS my d and official seal. Plow Notary Seal Abwa 5gnaRwre ut Notary Pudic oPrfo . t Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document - Description of Attached Do meet Title or Type of Document: Document Date: �� l 9 Number of Pages: —' Signer(s) Other Than Named Above:�_� Capacity(les) Claimed by Siger Signer's Name: �_tL 1� 06 ❑ Individual -4 Corporate Officer — Title(s): �,jtr��� Top o1 pltmo nero ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee = N � ❑ Guardian or Conservator ❑ Other:; - Signer Is Representing: it �3 a 190 W b W Na" Anamwn • 9350 D. Solo Are . PO. Sm 26W • Owft rh CA 91313,242 • w-w Prod W 5907 Be~ CH Tp4Fr" 14OD4764827 STATE OF CALIFORNIA ss. COUNTY OF ORANGE On �,� '%, before me, � �i��_j�/ Z&ja,,eg2y Personally appeared / ' /rr �r /,,ice �,.,�,r �� , personally kndxvn to me (oFff veer- _ _ is of satisfac 'deuce) to be the person(s) whose name(s)-Ware subscribed to the within instrument and acknowledged to me that bc/shelthey executed the same in bisWetltheir authorized capacity(ies), and that byhisler/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. Signature i 1- F� STATE OF CALIFORNIA } } ss. COUNTY OF ORANGE } On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in hislher'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. Signature ATTACHMENT 1 (Lcgal Description) ALTA OWNERS POUCY EXHIBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS: LOTS I TO 5 INCLUSIVE OF TRACT NO. 13920. AS SHOWN ON A MAP FILED IN BOOK 673. PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FRO;1 SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY. AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4. 1988 AS INSTRUMENT NO. 88-569347 OF OFFICIAL RECORDS. NOTE I: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021, PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTON BEACH COMPANY QUITCLAIMED ALL ITS RIGHTTO DRILL SLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET, MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (SW) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE "SUB-500 PORTION-) GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND/OR DRILL. WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, 1N ORDER TO REACH AND PRODUCE THE OIL. GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. 1 WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1. 1989. AND GRANTOR AGREES THAT. NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1. 1989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY 5, 1988 AS INSTRUMENT NO.88-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT 2 (Site Plan) .C[a.q • K r aG • loR Dar[ � Slan(r JCR.C.. etas { 1 TRACT N0.13920 M.M.673I14-16 SASS n $_aa %cs a[A..cs Ste•• -fOCOa aa[ ..S[a CIO•r 164 C[rt" or WC tWC. x %C %0a�. a0.t.s• W' a[•' ...a +p rJxs .r astr if JJ at:Oaat O. paw.0 COV•.r` /ale"b«w ys•ar A' • � /: • Y .� . _r. •�� a.,•�sra .f r'r� c•-ar'••J. sr. sr- an r a ra l -u .sr•.Jr rr.^r .. ♦ f . r J ..JI J I / . -� .J .1 J OETAll -A' r-c..r .••a. �C�_r.E�rT �rG'ES a,> - .•al -% •.G r..+[o 'a C c +••Of •'a K UT at y1 DDy.p.w :3-mat .rts.J 90 ]-+t a/ -[a .Cc[Mr.Cf W ..04T.lr[rK [ r• a0.r a•ri t•r •aC tr.•rt0 '*cc ra.of oa r ta+[ • •4y.te vftocz ail •+•a7 -a K :.. sc- .r ra .a* saas. S'rtn t[�.r[at•+[ .aastcro•s f i 1 cc IS. " .� 0%40 a0r.tf Cr CdrraOC wnw 90 Dan AM* aCCClr•Jtl x �wp(r[r.K -A,- %cow[s row o ronrr[wr as ror" l 1 C..0 • .. wae.0 ma K , tsr• r MC! n al I 1 l RI s"r.r .N:a 1 1 r ' • of k7o , Ns.rr i .ar a...IV M pl..+ ♦J//Ja Y w. JJr/ r /t! NIYt I/ r .�.— ... ,a- � [ r+r way • ..s 11I Kt rr y,•r w.r ref•• .+ ra/1 r a oaJ!rx 'TrAEFT •.rl. l {i� r `r rI.I H•r/ � y r.•�rN.( UT/CA i4VENUE was Jrr •aa u .r .. ;, ar•/a rs I ..w.....rrrr /•i:7 ww �' 4•. s• w• r•w•. +rarer+w First American Title Insurance Company TMIS MAP IS FOI INFOIJrIATION ONLY AND IS 1407 A }AIT Cf SMtS tOU [VItK%C.[ ArrACF{MEmr NO.3 (Memorandum of Lease) This Document was electronically recorded by Chicago Title Commercial RECORfIC�AGO � �NiPANY� OFFICIAL BUSINESS Document entitled to free Recording per Government Code Section6103 Recording Requested by and When Recorded Mail to: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street, PO Box 190 Huntington Beach, CA 92648 Attn: Agency Secretary Recorded in Official Records,County of Orange Gary L. Granville, Clerk -Recorder NO FEE 20010385887 04:06pm 06/12/01 120 48 M11 9 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Space above this line for recording use MEMORANDUM OF LEASE MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE is made and entered into as of June 11, 2001 by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic, of the State of California, herein called "Landlord," acting under the Community Redevelopment Law (California Health and Safety Code §§ 33000, et seq.) of the State of California, and BOWEN COURT, L.P., a California limited partnership, herein called "Tenant." Landlord hereby leases to Tenant for a term of sixty (60) years, commencing on Junel 1, 2001 and ending on June 10, 2061, on the terms and conditions set forth in the Lease by and between the parties hereto dated June 11, 2001, all the terms and conditions of which are made a part of this Memorandum of Lease as though fully set forth herein, the premises in the County of Orange, State of California, legally described on Attachment 1, and depicted on the Site Map as Attachment 2, which are attached and made part of this Memorandum of Lease. IN WITNESS WHEREOF, the Landlord and Tenant have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized this day of lwe , 2001. ATTEST: Agency Secretary_: APPROVED AS TO FORM: a Agency General Counsel Dated: d/ Landlord REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: t�cc. xecutive Director By :A.�M"/, hairperson Tenant BOWEN COURT, L.P., a California limited partnership By: MERIT HOUSING, INC., a California Nonprofit Corporation, its General Partner By: 46�� Eunice Bobert Chief Executive Officer SF-2001 Agree: Bowen Court: Ground Lease — Attach 4 Memorandum of Lease Page 1 of 1 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On _before &lr� ,l/�ir�L/��, personally appeared &tti;e ZSyz «,u,,f,�5,'/v�r, Q�.,Tu/,2. personally known to me (er- e .tam 16fact6rrt.v4dc=) to be the person(s) whose names) W, are subscribed to the within instrument and acknowledged to me tliataae/sWthey executed the same in jhi�r!their authorized capacity(ies), and that byhisler/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. CHR=NE CLEARY Signature C�an�r�on# r� Nokly nk4c • C&kMb WCoffmb wjarsvL=4 I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Al 151, ne— Date commission expires: /f Ag Commission number: V�5 041g Vendor number: WMP(J County where bond is filed: a(`Q Place of execution: Irvine, CA Date: Chicago Title Company CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California f S5. County of 0 _f �e/ On µ f—iil�iD�, before me, t, &tt m. A. Die Plams rq Tr" of Off-" (a p .'Jaya Doa.Nm" Put-,O IJ personally appeared , i UA I it., �_ W4 Na--(s) 01 SVwOs) LAMA A trasar( C&"Misfw # 12um My Comfnt. fxz*w Jut 23, 200 impersonally known to me ❑ 1 of saiisfe ry evidence to be the personN) whose name( (D". subscribed to the within instrument and acknowledged to me tha W4 l executed the same in D1�#,� authorized capacity(ies), and that by herfthe� sicratureN on the instrument the person(b), or the entity upon behalf of which the persons) acted, executed the instrument. WI-INESS ffl and and ociat seal. PLwo WAq Seel Above bgnat�ro d teolary Pude OPT! AL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment or this form to another document. Description of Attached Document ! Title or Type of Document:,-tTu./>F Document Date: _L 01 _ Number of Pages: Signer(s) Other Than Named Above: jt�V'Cf Capacity(les) Claimed by Signe Signer's Name: em fL1i�,(� , ❑ individual Corporate Officer -- Titles ,o Top Of Mwm Here ❑ Partner — ❑ Limited ❑ General M ❑ Attorney in Fact Fti------` ❑ Trustee - - ❑ Guardian or Conservator - ❑ Other: Signer Is Representing, FLAC.T L f- P" e _ 01999'Uno W No" AssocoWn - 9350 Do Sot Ave. PO. box 2402 • Chm orft CA 91313-24M • air nemWntry uq Prad Ns. 5W A"do CAO To&Frm I-D)M 6Ed?7 ATTACHMENT 1 (Legal Description) ALTA OWNERS POLICY EXHIBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS: LOTS 1 TO 5 INCLUSIVE OF TRACT NO. 13920. AS SHOWN ON A MAP FILED IN BOOK 673. PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WTIHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4,1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1983 AS INSTRUMENT NO. 8€-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021. PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTON BEACH COMPANY QUITCLAIMED ALL ITS RIGHT TO DRILLSLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET, MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (5C0) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE "SUB-500 PORTION-) GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND:OR DRILL WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL, GAS AND OTHER MINERALS 1N AND UNDER SUCH SUE000 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. I WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1, 1989. AND GRANTOR AGREES THAT. NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WALLS PRIOR TO SUCH JANUARY 1. 1989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY 5, 1988 AS INSTRUMENT NO.88-31969E OF OFFICIAL RECORDS. PAGE ATTACHMENT 2 (Site Plant) rare+� - aC• a'4 -•Yi .. • .Ct••f{ • N7 ■C • � pan o•a � +w•t: xrosa. •x+ i TRACT NO.13920 M.m . 673/ 14 --16 leas IS ^• ' a• vG5 w_�_„T�� tit)�LS -rta..rt +•st2.00.. wt ecrtw•,c a �•c s*rrr x+c w.r �v •.:r t,s+ +t• ,r .o .ri•• .. •):r 'If ss+cco•2s - •7• a'rc -"• ••C r•..+c� ••c c +.•or •7 K ALLJow"W 0 Mt�l,D• a• owcanfr :rim -n— W :h.•i me •Cctr+..c( or wcvtrtrK i +• •a. •+c _w. ••c S•_. C.2 *Oct -*-or G• r sr+c • .,s•t+ s•wrta • : t ••.+r a K cr .• r .7r tt"4s c••cc• cc-.+t•,_.c . cncc^o.ti • c s c c s. a.0 ra o"•c■ •oa••s tX ca•+•ow w • m go o•+S mnd. •cctr•.ct IJ do • �.' •* -+� - aPG•iS rare .,aq.rt":.s ftwo l ! 1 rs e r Iea..• .." •• .7+r• wl.+I n �r ps e I Q S 1 + 1 r y r/ rr-.Irr• Ia:/ I. 'QLyt s•r�.ri Ord, 1iy t' v Y•r (. / �� ./ I. 7oa .fN/ N �rf�r1 = J f ` ; !r•)1 4.9 OfrAjL ar �\ ` • �`�_ �+• !� 4y�y� jfJ 16 .r. 1, • •' ■!. .. .+.or AVER � s , ., .e•.. �,• � II h+ta rr y vs., 19•r by a I• ar 0 Ifl6rr N I I i.. � fa ~�a•f•a "• I.Z7� Pee 7000p= M'+IIJ/sid ., a�.e •+•r � + . w lu 1 d1k V f ed ! Z .. r.a rI•a. t/r '�(51 r 4 � .A 1c/■f .../ � SO do V al•. " PdI:K .rREET is a s a ALLEY ....• if w do f•..rf .•w/•• �earw• rr. r~l +,r ysf +Ia/h•If L `�. r +.rfff /aIM...I f rr'N J•f fN� ��� Ira Yf qK� .ff OJ r//rII tI /� /I Na• wrN: J y sYr+ 4 r/• fllJ�.1M/ /.• rflJ ~/Iw 1r V Nl�p /Mr �lvr -' First American Title Insurance Company - --- ONLY "D K NOT A "ll all T" TcTU iV C"" tWIS MAP IS fOt INFORMATION ' This Document was electronically recorded by Chicago Title Commercial RECORDED AT THE REQUEST OF EHICAGO TITLE COMPANY OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by and When Recorded Mail to: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street, P.O. Box 190 Huntington Beach, CA 92648 Attn: Agency Secretary Recorded in Official Records,County of Orange Gary L. Granville, Clerk -Recorder 11111111111111111111111 NO FEE 20010385889 04:06pm 06/12/01 120 48 Al 18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Space above this line for recording use AGREEMENT CONTAINING COVENANTS This AGREEMENT CONTAINING COVENANTS (the "Agreement") is made this _ day of avrit , 2001, by and between BOWEN COURT, L.P., a California limited partnership ("Developer") and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"). RECITALS A. For the purpose of providing housing that will be affordable to Very -Low Income seniors, Developer and Agency entered into that certain Disposition and Development Agreement (the "DDA") to which this Agreement is attached as Attachment No.6. Pursuant to the DDA, Agency has leased to Developer that certain real property (the "Site") located in the City of Huntington Beach, more particularly described in Attachment No. 1, which is attached hereto and incorporated herein by this reference, and is commonly referred to as 1968-82 Lake Street, Huntington Beach, California. B. The DDA describes the Project, which consists of Developer's construction and operation on the Site of twenty (20) affordable senior housing residential units. C. Agency and Developer now desire to place restrictions upon the use and operation of the Project, in order to ensure that the Project shall be operated continuously as an affordable housing project available for rental in accordance with the terms set forth below for the term of this Agreement. Attachment No. 6 Page 1 of 10 SF-2001 Agree: Bowen Court: Agmt. Containing Covenants RLS 00-302 6/1/01 TERMS 1. Definitions The following terms, as used in this Agreement, shall have the meanings given unless expressly provided to the contrary: The term "Affordable Rent" shall mean annual rentals whose amount does not exceed the maximum percentage of income that can be devoted to rent as specified in the "affordable housing cost" for Very Low Income Households, as specified at California health & Safety Code Section 50053, or its successor and the implementing regulations specified at Section 6910 et seq., of Title 25 of the California Code of Regulations, whichever is less. Generally, Affordable Rent shall not exceed thirty percent (30100) times fifty percent (50%) of the Orange County median income, adjusted for family size appropriate for the Unit, as set forth in the regulations issued by HCD at 25 Cal. Administrative Code Section 6910 et seq. (the "HCD Regulations'). The term "Agency" shall mean the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, having its offices at 2000 plain Street, Huntington Beach, CA 92648, and any assignee of, or successor to, the rights, powers, and responsibilities of Agency. The term "DDA" shall mean the Disposition and Development Agreement executed by and betvecn Agency and Developer, including all exhibits attached thereto. The term "City" shall mean the City of Huntington Beach, a municipal corporation, having its offices at 2000 Main Street, litlntington Beach, CA 92648. The term "Eligible Tenant" shall mean Eligible Very Low Income Tenants who are eligible to rent a Unit. The term "Eligible eery Low Income Tenant" means one or two individuals whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Primary Metropolitan Statistical Area (PMSA) as determined by the U.S. Department of Housing and Urban Development (HUD) with adjustments for smaller and larger families and whose age is fitly -five (55) years or older. The term "Force Alajeure" or "Force Majeure Event" shall mean the following events, provided that any one or more of such event(s) actually delays or interferes with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interfcrencc: war, insurrection, strikes, lock -outs, riots, floods, earthquakes, Gres, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the other party, acts or failure to act of the City of Huntington Beach or any Attachmcnt No. 6 Page 2 of 10 SF-2001 Agree: Bowen Court: Agmt. Containing Covenants RLS 00-302 WWI other public or governmental agency or entity (except that acts or failure to act of Agency shall not excuse performance of Agency), or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event and reasonably determines that such event shall result in a delay. The term "I IUD" means the United States Department of fiousing and Urban Development. The term "Lease" means the lease entered into between Developer and an Eligible Tenant of a unit. The term "Median Income" means the median income for the Orange County PMSA, with adjustments for household size, as determined from time to time by HUD pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. The Term "Project" shall mean generally the development and operation of a twenty (20) unit sz-nior apartment complex on the Site at affordable rents to Eligible Very Low Income Tenants, pursuant to the procedures set forth herein and more particularly described in the DDA. The term "Site Map" shall mean the map attached hereto as Attachment No. 2 depicting the location of the Site. The term "Unit" and "Units" shall mean the twenty (20) dowelling units comprising the Project and subject to rent restrictions as set forth in the Regulatory Agreement. 2. Use of Site. Developer, on behalf of itself and its successors, assigns, and each successor in interest to the Site or any part thereof, hereby covenants and agrees that the Site shall be developed and used exclusively as rental housing for Eligible Very Low Income Tenants. Said rental housing shall consist of the development of a new two-story building on the Site of twenty (20) for -rent dwelling units with a minimum of 540 square feet per unit and including a recreation room. The rental housing shall also include all necessary on -site parking and appropriate landscaping, all as more particularly described in the DDA. All of the Units in the Project shall contain facilities adequate for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state and local laws and codes. None of the Units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park without the Agency's prior written consent. Attachment No. 6 Page 3 of 10 SF-2001 Ague: BoKrn Court: Agmt. Containing Covenants RES 00-302 6!'1101 I 3. Maximum Incomes. All of the Units shall be restricted to Eligible Very Low Income Tenants with incomes not exceeding fifty percent (50%) of the area median income, adjusted for family size appropriate for the Unit. The maximum incomes of eligible tenants shall be determined on the basis of the area median income for Orange County Metropolitan Statistical Area, issued approximately annually by HUD and published by the California Department of Housing and Community Development ("HCD"). 4. Maximum Rents. a. Any rents charged to an Eligible Very Low Income Tenant shall not exceed "Affordable Rents'. Calculations of Affordable Rent are subject to adjustment from time to time as provided below. b. Upon request, the Agency Executive Director shall notify Developer of the maximum rents that may be charged (not to exceed "Affordable Rent") and the maximum income of persons who are eligible to occupy the Sitc, based on the then -current HUD figures for the area median income and the HCD Regulations. C. Developer, its successors and assigns shall not charge rents in excess of the amounts determined as set forth in this Section 4 5. Income Computation. Immediately prior to the prospective Very Low Income Eligible Tenant's occupancy of a Unit, Developer shall obtain and maintain on file an income computation and certification form for each such prospective Very Low Income Eligible Tenant dated immediately prior to the date of initial occupancy in a Unit. Developer shall use its best efforts to verify that the income information provided by an applicant is accurate by taking one or more of the following steps as a part of the verification process: (i) obtain two (2) pay stubs for the most recent pay periods; (ii) obtain a written verification of income and employMcnt from applicant's current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income as is reasonably satisfactory; or (v) obtain such other information as maybe reasonably required. Developer shall update the foregoing records annually and shall provide copies of updated tenant eligibility records and monthly rental records annually and shall provide copies of updated tenant eligibility records and monthly rental records to Agency for review. Upon review of such records, Agency may at its option perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. For each tenant, Developer shall retain the records described in this Section for a period of three years after such tenant no longer resides at the Site. 6. Rentinu Vacant Units. When a Unit becomes available as a result of a tenant vacating the Unit, Developer shall rent the Unit to an Eligible Tenant in accordance with the following procedure: SF-2001 Agree: Rowan Court: Agent. Containing Covenants RLS 00-302 G1101 Attachment No. 6 Page 4 of 10 (a) First, Developer shall rent the Unit to persons who have been displaced by Agency activities, pursuant to California Health and Safety Code Section 33411.3, provided that Agency provides Developer with reasonable notice. (b) Except as set forth above, Units shall be rented to Eligible Tenants on a first -come, first-scrvcd basis; provided, however, that Developer may, in Developer's sole discretion, maintain an "interest list" or "eligibility list" of potential tenants. 7. Seniors. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site or any part thereof, that Developer, its successors and assignees shall use the Site exclusively to provide affordable housing to seniors. All of the Units shall be restricted to Eligible Very Low Income Tenants who are senior persons or households. For purposes of this Agreement, "senior" means a family in which the head of the household is 55 years of age or older or a single person who is 55 years of age or older. No more than two (2) persons may reside in any Unit. 8. Maintenance. The Developer shall maintain the improvements on the Site in compliance with all applicable State and local housing quality standards and local code requirements, and shall keep the Site free from any unreasonable accumulation of debris or waste materials. 9. Maintenance of Records. Developer shall maintain complete and accurate records pertaining to the Units, and shall permit any duly authorized representative of the Agency to inspect the books and records of Developer pertaining to the Project including, but not limited to, those records pertaining to tenant eligibility and occupancy of the Units. Records pertaining to the Project and Units shall be retained for a period of five (5) years after the termination of this Agreement; records pertaining to tenant and eligibility shall be retained for the period set forth in Section 5. 10. Reliance on Tenant Representations. Each tenant lease shall contain a provision to the effect that Developer has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of a Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 11. Conflicts. The rental priority provision set forth in Section G shall apply only in the event, and to the extent, such provisions are not in conflict with any applicable federal or state law or any regulatory agreement affecting the Project that is recorded in superior priority to this Agreement. 12. A1;ency Rights. Agency shall have the right to enter upon the Site to inspect both the interiors and exteriors of the Project, upon seventy-two (72) hours' notice to Developer. Agency may perform or cause to be performed the maintenance necessary to cure any default of these maintenance covenants and Developer shall be liable for payment to Agency for Agency's reasonable costs (excluding staff salaries and overhead and other similar costs) to perform such Attachment No. b Page 5 of 10 SF-2001 Agree: Bowen Court: Agmt. Containing Covenants RIS 00.302 611101 required maintenance; provided, however, that Developer first be given written notice by Agency of the actions required to cure any default, and Developer, after receipt of such notice, shall have thirty (30) days to cure such defaults, but Developer shall not be deemed in default of the foregoing maintenance covenant if such default cannot reasonably be cured within the thirty (30) day period referenced above so long as Developer has commenced to cure such default within the same thirty (30) day period and is diligently proceeding with the work to cure such default. Notwithstanding the foregoing, if any property conditions are reasonably identified by Agency after a property inspection attended by a representative of Developer that pose an immediate danger to life or limb, Developer shall have three (3) days to effect corrections of such condition(s) to Agency's reasonable satisfaction. 13. Annual Renort. Developer covenants and agrees to submit to the Agency an annual report (the "Annual Report") required by California health and Safety Code Section 3341S. The Annual Report shall include for each Unit the rental rate and the income and family size of the occupants, and shall also include the records described in Sections 5 and 7 herein and the audited financial statements described in Section 517 of the DDA. The income information shall be supplied by the tenant in a certified statement on a form provided by the Agency. The Developer shall submit the Annual Report on or before the end of the first calendar quarter of the year following the year covered by the Annual Report. The Developer shall provide for the submission of such information in its leases with tenants. Agency shall not charge Developer a fee for reviewing the Annual Report, or for Agency's or Developer's compliance with Hcalth and Safety Code § 33418. 14. Management Plan. Prior to the issuance of a Certificate of Completion pursuant to the DDA, Developer shall prepare and submit to the Agency Executive Director a management plan in accordance with the following ("Management Plan"): (a) The Management Plan, including such amendments as may be approved in writing by the Agency, shall remain in effect for the term of this Agreement. Developer shall not amend the Management Plan or any of its components without the prior written consent of the Agency. The components of the Management Plan shall include: (1) Management Agent. The name and qualifications of the proposed management agent. The Agency shall approve or disapprove the proposed management agent in writing based on the experience and qualifications of the management agent. The management agent shall have demonstrated experience in operating affordable housing comparable to the Project. (2) N(ana ement Pro ram. A description of the proposed management, maintenance, tenant selection and occupancy policies and procedures for the Units. (3) Management Agreement. A copy of the proposed management agreement specifying the amount of the management fee and the relationship and division of responsibilities between Developer and management agent. Attachment No. 6 Page 6 of 10 sr-2001 Agrm: Bowen Court: Agmt. Containing Covenants RLs 00-302 6/1101 (4) Tenant Lease or Rental Agreement. A copy of the proposed tenant lease or rental agreement to be used in renting the Units. (5) Annual Operating Btld Prior to the completion of construction and annually thereafter not later than fifteen (15) days prior to the beginning of the next fiscal year of the Project, Developer shall submit a projected operating budget to the Agency Executive Director for review and approval. The Agency shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder, and such matter shall be deemed approved unless the Agency provides to Developer its written disapproval within thirty (30) days after receipt of a request for approval, provided Developer includes with its request, a written notice, in capital letters, stating as follows: NOTICE: PURSUANT TO SECTION 14 OF THE AGREEMENT CONTAINING COVENANTS BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND MERIT HOUSING CORPORATION, FAILURE BY THE AGENCY TO APPROVE OR DISAPPROVE THE NATTER SUBMITTED WITH THIS REQUEST WITHIN 30 DAYS SHALL BE DEEMED AN APPROVAL. Any disapproval shall be in writing and contain the Agency's reasons for disapproval. (b) Agency shall have the right, at any time and from time to time, to give notice to Developer if the Agency determines that the Project is not being managed or maintained in accordance with the Management Plan. The Agency may require the Developer to change management practices or to terminate the management agent and retain a different management agent, approved by the Agency. The Agency agrees that prior to requiring the Developer to change its management agent or the management practices the Agency shall informally consult with Developer, in an attempt to resolve the dispute. If the Agency determines that such an attempt at informal resolution has been unsuccessful, it shall give the Developer thirty (30) days written notice to change the management agent or practice, as the case may be. If Developer fails to do as requested by the Agency in the written notice, the Agency may then require the immediate change of the management practice or agent, as the case may be. The management agreement shall provide that it is subject to termination by the Developer without penalty, upon thirty (30) days prior written notice, at the direction of the Agency. Within ten (10) days following a direction of the Agency to replace the management agent, the Developer shall select another management agent or make other arrangements satisfactory to the Agency for continuing management of the Project. The Developer shall notify the Agency upon learning that there is a voluntary change in the management or control of the management agent, and, if the change is unsatisfactory to the Agency, the Agency shall be entitled to Attachment No. 6 Page 7 of 10 Sr-2001 Agree: Bowen Court: Agmt. Containing Covenants Rt.S 00-302 611101 require the Developer to change the management agent in accordance with the terms of this paragraph. 15. Enforcement. In the event Developer defaults in the performance or obscr•ance of any covenant, agreement or obligation of Developer pursuant to this Agreement, and if such default remains uncured for a period of thirty (30) days after written notice thereof (or such longer period as may apply to the specific alleged default) shall have been given by Agency, or, in the event said default cannot be cured within said time period, Developer has failed to commence to cure such default within said thirty (30) days and diligently prosecute said cure to completion, then Agency shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (a) By mandamus or other suit, action or proceeding at law or in equity, require Developer to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at law or in equity as may appcar necessary or desirable to enforce the obligations, covenants and agreements of Developer hereunder, including foreclosure pursuant to the Agency Deed of Trust. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. 16. Subordination. This Agreement shall be junior and subordinate to the liens of the deeds of trust identified in the DDA as Permitted Mortgages and such other and further documents, including regulatory agreements (including those required by Fannie Mae and the California Tax Credit Allocation Committee) or other lenders may require. If, from time to time and at one or more times, Developer seeks to refinance the loan secured by any deed of trust which is either superior or junior to this Agreement, Agency shall have the right to approve such refinancing and deed of trust pursuant to Section 428 of the DDA. Agency agrees to execute such subordination agreements as may be required to effect the priority set forth in this Section. 17. Attorneys' Fees. If any action or proceeding is brought by either party against the other under this Agreement, whether for interpretation, enforcement or otherwise, the prevailing party shall be entitled to receive from the other party all costs and expenses for such action or proceeding, including the fees of attorneys and any expert witnesses. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. 18. Amendments. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Orange. Attachment No. 6 Page 8 of 10 SF-2001 Agree: Bowen Court: Agmt. Containing Covenants RLS 00-302 64'01 19. Notice. Any notice required to be given hereunder shall be made in writing and shall be given by (i) personal delivery, (ii) courier service that provides a receipt showing date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Agency: Redevelopment Agency of the City of Huntington Beach Attn: Agency Secretary 2000 Main Street Huntington Beach, CA 92648 Developer: Bowen Court, L.P. Merit Housing, Inc. Attn: Eunice Bobert 414 East Chapman A,,enue Orange, CA 92866 Notices personally delivered or delivered by courier shall be effective upon receipt. Mailed notices shall be effective on the earlier of receipt or Noon on the second business day following deposit in the United States mail. 20. Severability/Waiver/Integration. (a) Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. (b) Waiver. A waiver by either party of the performance of any covenant or condition herein shall not invalidate this Agreement nor shall it be considered a waiver of any other covenants or conditions, nor shall the delay or forbearance by either party in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. (c) Intearation. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 21. Governing Law. This Agreement shall be governed by the laws of the State of California. Attachment No. 6 Page 9 of 10 SF-2001 Agree: Bowen Court: Agmt. Containing CRVCnants RLS 00-302 6/Irol 22. Counterparts, This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. IN WITNESS WHEREOF, the Agency and the Developer have executed this Agreement. Dated: �IAV q �, -7.001 _ APPROVED AS TO FORM: Agency General Counsel 5 6JI�Q( Dated: ,1 -1 Zoo SF 2001 Ag=: Bowen Court: Agml. Containing Covenants RLS 00-302 611.101 REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agencf ) By: — . - /J Executive Director By: 't ! ATTEST: V Chairperson -0, _ _ Agency Secretary BOWEN COURT, L.P. ("Developer") BY: MERIT HOUSING, INC., a California Nonprofit Corporation, its General Partners Eunice Bobert Chief Executive Officer Attachment No. 6 Page 10 of 10 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California �. ss. County of On IM 1 , before me, � Date1 Name er,d Tme of olt.oer {e q . -Jar ooe. � c ) personally appeared tw�P ✓✓✓ Names) or &Wwls) K. personally known to me ❑ pron Hie ba.Dis of satisf=Ty evidence to be the person(%) whose name(L) I"�'2tL''- subscribed to the within instrument and acknowledged to me that&sheftj-� executed tAURAtitMs0N the same in /!heath. authorized �cr capacity(i), an that by hi beotMm— ofance caray signature(4on the instrument the personN. or the entity upon behalf of which the person(} acted, executed the instrument. WiTNES y hand and official seal. Puce Notary Seai Above Sgretxe of Notary pt"K OPT! NAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reaLachment of this form to another document - Description of Attached Iloqument d% 3c ie� CM-.V Title or Type of Document; rlGWlElyt� J �Vt+!�Q� Document bate: ___iG IAI 0 Number of Pages: 10 Signer(s) Other Than Named Above:-4_ 1!« Capacity(ies) Signer's Name: ❑ Individual X Corporate O ❑ Partner — ❑ Attorney in 0 Trustee ❑ Guardian or ❑ Other. Signer Is Repre Claimed by Sign fficer — Title(s): _ -kI C,j,L. C"'_ roo a uxlmb Here ❑ Limited ❑ General Fact Conservator senting:ii� L'1�• ;" O 19F9 N.wW Notary Auowxn • M De Seo Me . Po Bm M • Cho wort%. CA 9131 S2w2 • • ndonshotry a9 Rod Na SKI Re~ Cal Tp kw 14W4764877 STATE OF CALIFORNIA } Ss. COUNTY OF ) On C[' before me, ' r lre r lr�, personally appeared erson ly known to me (or�+ed tery-euidenec) to be the person(sjwhose name(s)1x/are subscribed to the within instrument and acknowledged to me that he, she/they executed the same in brs`Iher.Rheir authorized capacity(ies), and that by1iiVW/their signature(s) on the instrument the person(s), or the entity upon behalf of which the persons) acted, executed the instrument. WITNESS my hand and official seal. Signature . &Z41"Uz�'e &&&-X STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons)) 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. Signature I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Date commission expires: Commission number: Vendor number: �n aflo a5oL-� g t\-V� 4"A 1 County where bond is filed: QL Place of execution: Irvine, CA Date: (P - � 1— C By: Chicago Title Company STATE OF CALIFORNIA ) ss. COLJ.N7Y OF ) On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) istare subscribed to the within instrument and acknowledged to me that helshe/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. Signature ATTACHMENT I (Legal Description) ALTA OWNERS POLICY EMBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA. COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS. LOTS I TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A MAP FILED IN BOOK 673. PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY. CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SL4tILAR OR DISSP4tILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY. AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4, 1983 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO. 83-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29. 1957 IN BOOK 4021. PAGE 372 OF OFFICIAL RECORDS, THEHUNTINGTON BEACH COMPANY QUITCLkI4IED ALLITS RIGHTTO DRILLSLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET. MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN 1S INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER. THAT BELOW A DEPTH OF FIVE HUNDRED (530) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE 'SUB-500 PORTION-) GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND/OR DRILL WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN'THE SUB-500 PORTION OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL, GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS, IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. I WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY I. 1989, AND GRANTOR AGREES THAT, NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1, 1989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY 5. 1988 AS INSTRUMENT NO.88-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT 2 (Site Plan) •f•[(- S � 1 -gr.fA •N/ .0 LOM i TRACT NO.13920 M.M.673/14-16 +I45 s if .E..11-.cs s.c....cKo...c �r� .crl ..t ::•zw•.c r rr s-+er x.� .4•1 iC•\:� Eat K\ IW7 ..-p -0 •SSN .. 4saf r\- tY•CZgo-A a eal.cr covrft NOES •}• " ... •-c v-..fcs -ac c t+•or •o .c sr ./ .la JC-J41N •-r•s -nw 10 J•K an* Ccr►•.Kg o, . •a- •-r +a• •.c s•-Y.ca lee c •\-ar 90 r s.•c • fw-[. r..rc_ �• : [ •\-r -af •a x sr .1 ra .a* ::•-t.s Tce cr•.ry%--C .•[•tilc'e•s !c S. cc w A-n -MR-CCcr•r.Cf 3f •r•0•[•rYJS. -r4- .cwfcs rov.b -00 n -r a -01n I I :rc . r at.-•• .fa -w 'SA-' — Ml. n r1 u I �yy1 �ti • 1 i r �Oo 4/fKlr rIJ9/d C t f~r 7 V +__ •.fr /vr Jf• r Jrf• MN. L • . ! - 4 r � h[•t /�ri• y S fJi LI - !J . r 2 R,Q •rf/rrfJrJu iI •rM L r..�.Y. f±S � Y � Y F Re 1 vf�.e ..•r • • � • 11�1 ¢ v I'rF'Js .1 • M• aM cat PAA/cK rAEEr :y r/fJlt .J' •� 6 : A 4 ir+eJ f••r se i c% - v�• 2 � ? 16- S - • frre .+•� V AGGEY '+; t Q v ff C d g 6 r S • 2 . \ i 1v II .r r- J,,--J + ...! r�•q I• ! I.f' AVrENUE ... f.. V ti� .lN.lu-rf carry .•ri r...� i�r�•w/ //Y.. frI JrfL/f y J•.r.f • rN 1' aIi Yr/ r a-rr 2 w� 41 .. Ut•a /f1I/ y�NIJI./\ . rf sr 1 First American Title Insurance Company - -•- - - .. - TMIS NAP 11 FCt INFORiMATIOM ONLY ANO IS NOT A PART Of THIS TrrU 1VIC NC9 ATTACHMENT NO.7 AGENCY CONSTRUCTION LOAN AND PROMISSIORY NOTE SECURED BY DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED THERETO DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same, must be surrendered to Trustee for cancellation before reconveyancc will be made. PROMISSORY NOTE SECURED BY DEED OF TRUST Principal Loan Amount: $900,000.00 Note Date: , 2001 FOR VALUE RECEIVED, the undersigned ("Maker") hereby promises to pay to the order of the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Holder"), at a place designed by Holder, the principal sum of NINE HUNDRED THOUSAND DOLLARS AND NO CENTS ($900,000.00), with simple interest from the above date at the rate of three percent (3%) per annum, payable annually beginning on the third anniversary of this Note. This Note is entered into pursuant to the Disposition and Development Agreement (the "DDA") dated as of June , 2001 between Maker and Holder. The amount of this Loan shall b! reduced dollar for dollar, to the extent Maker obtains County or alternative financing (if any) as provided in the DDA. The obligation of the Maker to the Holder hereunder shall be secured by a deed of trust made by the Maker encumbering its leasehold interest in the site to be developed (the "Site') pursuant to the DDA and the Deed of Trust with Assignment of Rents dated , executed by the Maker and recorded in the Recorder's Office of Orange County, California, on , as Document No. (the "Trust Deed'). The obligation of the Maker set forth in this Note is subject to acceleration as set forth in the DDA. The DDA and the Trust Deed are public records on file in the offices of the Holder. Unless expressly defined herein, all capitalized terms used herein shall have the meaning ascribed to them in the DDA. 1. Agency Construction Loan. This Note evidences the obligation of the Maker to the Holder for the repayment of funds loaned to the Maker by the Holder (the "Agency Loan") to finance the development of the Property pursuant to the DDA. Except as otherwise permitted in the DDA, the Maker shall not make any sale, assignment or conveyance, or transfer in any other form, of Maker's Leasehold Interest in the Property, or any part thereof, or interest therein without the express written consent of the Holder. Attachment No. 7 Agency Residual Receipts Page 1 of 3 SF-2001 Agree: Bowtn Court: Prom. Note — Agency Construction Loan ti/ 1 /01 2. Terms of the Residual Receipts. (a) Term. The tern of this Note shall be sixty (60) years, commencing on the effective date of the Lease that is attached to the DDA. (b) Repayment. Beginning on the third anniversary date of this Note, and on each annual anniversary date of this Note thereafter until the Agency Loan is paid in full, Maker shall pay to Holder an amount equal to FIFTY PERCENT (50%) of the Project's Net Operating Income for the immediate preceding year. Each payment shall be credited first on interest then due and the remainder on principal. Immediately thereafter, interest shall cease on the principal so credited. Principal and interest are payable in lawful money of the United States. After the sixtieth (601h) anniversary date of this Note, all remaining unpaid principal and interest on the Agency Loan shall immediately become due and payable. Should default be made in payment of any installment when due, or in the performance of any of the agreements contained in the Deed of Trust securing this Note, the whole sum of principal and interest shall become immediately du.- and payable at Holder's option. Failure by Holder to exercise this option shall not constitute a waiver of the right to exercise it in the event of any subsequent default. At the end of the term of this Note and discharge of this Note as set forth above, Holder shall mark this Note "PAID IN FULL' and shall then deliver this Note to the Trustee of the Deed of Trust that secures this Note for the Trustee's delivery to Maker in conjunction with the reconveyance of the Deed of Trust. (c) Disbursement of the Agency Loan. Holder shall disburse the Agency Loan as set forth in the DDA. 3. Prepayment. The Note may be prepaid in whole or in part at any time without the payment of any prepayment penalty. In the event Maker prepays the entire balance of this Note including all accrued interest at any time after the date of this Note, the covenants, conditions and restrictions imposed on the Site by the Agreement Containing Covenants and DDA shall remain in full force and effect for the terms set forth therein. 4. Acceleration of Obliization. Upon the occurrence of a uncured material Default of Maker under this Note, the Trust Deed or any obligation secured thereby (including the obligations in the DDA and the Agreement Containing Covenants, or in any other instrument now or hereafter securing the obligations evidenced hereby), and the expiration of any notice and cure period provided for therein or herein, then, and in any of such events, Holder may, at its option, and upon thirty (30) days prior written notice to Maker, declare this Note and the entire obligations hereby evidenced to be immediately due and payable and collectible then or thereafter as Holder may elect, regardless of the date of maturity. Attachment No. 7 Agency Residual Receipts Page 2 of 3 SF-2001 Agree: Do,*cn Court: Prom. Note — Agency Construction Loan 611101 S. Default Interest. If any event occurs giving Holder the right to accelerate this Note pursuant to Section 4 above, the entire unpaid and unforgiven principal owing hereunder shall, as of the date of such default, commence to accrue interest at a rate equal to two percentage points above the reference rate published by Bank of America N.A., or the maximum non -usurious interest rate permitted by law, whichever is less. 6. Collection Costs Attom sue. If any attorney is engaged by fIolder because of any event of an uncured material Default under this Agency Note or the Trust Deed or to enforce any provisions of either instrument, whether or not suit is filed hereon, Holder shall bear its own attorney's fees and costs. 7. Severability. The unenforceability or invalidity of any provision or provisions of this Tote as to any persons or circumstances shall net render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 8. Modifications. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally, nor shall any waiver of any provision hereof be effective by an instrument in writing signed by Maker and Holder. 9. Usury. Notwithstanding any provision in this Agency Note, Trust Deed or other document securing same, the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 10. Governing Law. This Note has been executed and delivered by Maker in the State of California and is not be governed and construed in accordance with the laws thereof. IN WITNESS WHEREOF, Maker has executed this Note as of the date and year first above Witten. "NMAKER" BOWEN COURT, L.P., a California limited partnership BY: MERIT HOUSING INC., a California Nonprofit Corporation, its General Partner Dated: , By: Eunice Bobert Chief Executive Officer Attachment No. 7 Agency Residual Receipts Page 3 of 3 SF-2001 Ag=: Dowcn Court: Prom. Note — Agency Construction Loan 611i'01 ATTACHMENT 1 (Legal Description) ALTA OWNERS POLICY EMBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS. LOTS 1 TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A MAP FILED IN BOOK 673. PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY. CALIFORNIA. EXCEPTING THEREFROM ALL OIL. GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET. WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1989 AS INSTRUMENT NO. 83.569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021, PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTON BEACH COMPANY QUITCLAIMED ALL ITS RIGHT TO DRILL SLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET, MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE 'SUB-500 PORTION-) GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND/OR DRILL WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-5CO PORTION) OF SUCH LANDS. IN ORDER TO REACH AND PRODUCE THE OIL, GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. 1 WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND 1S PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1, 1989. AND GRANTOR AGREES THAT, NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1, I989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION 1N A DEED RECORDED JULY 5,1988 AS INSTRUMENT NO.88-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT (Site Plan) iit' i :• i Y •CCL•rA • Mr .[ { a01% o.a ;or %&. 4r x•p.ca. taa 'RACY NO.13920 M.M.673/14-16 gas S 'r -?_a■ %CS n,r+ct sfi+ •i•COw N.0 S•sa slow rK :t•rZL�•K Cr Unc S-•[r-.E .0 ..o•'' �v•.x w+ •c• i.:' .•r •q .�saa .. astJ ta-.i•ccrx W Oa•�cC COI.•^ .� a•ar `r•r` K � I t r fh. •A Oc+I/! ra 1.1 Cl ..'-1 1• lr '1 OfTAlf A �.C�.�E•.r '•07c5 .• " •■C -s ••C S•r+C7 '• CC ...Of "! aK Sr ar ,L W AC.I. :]L'C•S a. SO Z••S O"Co •CCCr•••CC or ■—CK..C.11 r• Low •.0 Sr•..at0 't CC •a.Of 71 / S•••C • ■.S.f• T...M '.: C •I -Or '3 K sC' •• wLL .Or ::••i•s iRC'• CC,-T.L.0 w't•SCC•'0+7 SC S. CC S. -4 ..L 0•d■ • ftrs CI C0.1"X rn-w a0 0•.% •/rt■ •CCLp...ct 2r •a'rM•[wR �•- •CC++fI r*dr.0 rdw04..r Lf +0� S 1. Ciy. 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IIJ{ h. rs-♦!•arsr. r ....! i It, 4p First American Title Insurance CompanyTHIS MAP 11 FOR INF40*PAATION ONLY AND IS NOT A ►AIT Of TMtS IUU 1fl04 C1 ATTACHMENT NO.8 No fee: Recording requested pursuant to Government Code Section 27383 Recording Requested By, and When Recorded, Return to: Redevelopment Agency of the Agency of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary (space above this line for Recorder's use only) AGENCY CONSTRUCTION LOAN DEED OF TRUST «'ith Assignment of Rents THIS DEED OF TRUST, is made this day of , 2001, by and between Bowen Court, L.P., a California limited partnership (the "Borrower"), as trustor, the City of Huntington Beach, a California municipal corporation, ("Trustee"), and the Redevelopment Agency of the City of Huntington Beach, (the "Beneficiary"), a public body, corporate and politic, as beneficiary, and is executed to secure the obligations contained in that certain Agency Construction Loan and Promissory Note Secured by Deed of Trust executed by Trustor in favor of Beneficiary and dated (the "Note), that certain Agreement Containing Covenants by and between Trustor and Beneficiary dated (the "Covenants"}, and that certain Disposition and Development Agreement by and between Trustor and Beneficiary dated (the "DDA" ). All capitalized terms not otherwise defined herein shall have the means ascribed to them in the DDA. I. GRANT IN TRUST AND PROPERTY AGREEMENT. For valuable consideration, Trustor irrevocably grants, transfers and assigns to Trustee, in trust, with power of sale, for the benefit of Beneficiary, the following property (the "Property"): (a) Borrower's interest in the real property described in Attachment A attached to this Deed of Trust and incorporated in this Deed of Trust by reference (the "Land"); and (b) all buildings, structures and other improvements now or in the future located or to be constructed on the Land (the "Improvements"); and Attachment No. 8 (Page t of 10) 5F-2001 Asrcc: Dourn Court: Agency Const. Loan-Dccd of Trust 6/1MI -#; (c) all tenements, hereditaments, appurtenances, privileges and other rights and interests now or in the future benefiting or otherwise relating to the Land or the Improvements, including easements, rights -of -way, development rights, mineral rights, wat.-r rights and water stock (the "Appurtenances"). 2. OBLIGATIONS SECURED. The Borrower makes this grant for the purpose of securing the following obligations: A. Repayment of the indebtedness of the Borrower to Beneficiary of the Loan, in accordance with the terms of the Note or as much as has been disbursed to the Borrower tinder the Note and the DDA, along with any extensions, amendments, modifications, or renewals to the Note; and B. Payment of any sums advanced by Agency to protect the Property and priority of this Deed of Trust; and C. Payment of any sums advanced by Agency following a breach of the Borrower'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 the Borrower contained in this Deed of Trust, the Note, the DDA, and the Covenants, including all modifications, extensions and renewals of these obligations; and E. Performance of any other obligation or repay mcnt of any other indebtedness of the Borrower to Beneficiary, where such evidence of obligation or indebtedness specifically recites that it is secured by this Deed of Trust. 3. ASSIGNMENT OF RENTS AND RIGHT TO POSSESSION. As additional security, the Borrower hereby assigns to Beneficiary: (a) all of the rents, revenues, profits, and income from the Property, any deposits now or hereafter in the Borrower's possession which have been collected with respect to the Property, and any reserve or capital funds now or hereafter held by the Borrower with respect to construction or operation of the Property (collectively, the "Rents"); and (b) the right to enter, take possession of, and manage the Property; provided however that the Borrower shall have, before an Event of Default, the exclusive right to possess the Property and to collect Rents and use them in accordance with the DDA and Note. This assignment is intended to be an absolute and present transfer of the Borrower's interest in existing and future Rents, effective as of the date of this Deed of Trust. 4. ENFORCEMENT. Upon the happening of a Default (as such term is defined in the DDA) and written notice to the Borrower, Agency may, in addition to other rights and remedies permitted by the DDA, the Covenants, this Deed of Trust, or applicable law, (a) enter upon, take possession of, and manage the Property, either in person as a mortgagee -in -possession, by agent, or by a receiver appointed by a court, and do any act3 which it deems necessary or desirable to preserve the value, marketability or rentability of the Property, (b) collect all Rents, including Attachment No. 8 (Page 2 of 10) SF-2001 Agree: r3aurn Court: Agency Const. Moan -Deed of Trust those past due and unpaid, and apply the same to pay for the costs and expenses of operation of the Property, 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 Property, and complete construction of any improvements on the Property as provided for in the Plans and Specifications approved under the DDA or any modifications to the Plans and Specifications or the Project that Beneficiary in its sole discretion believes is appropriate. Beneficiary may make, cancel, enforce, and modify ]eases 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 Property. 5. APPOINTIMENT OF A RECEIVER. In any action to enforce this assignment, Beneficiary may apply for the appointment of a receiver to take possession of the Property and take whatever measures are necessary to preserve and manage the Property for the benefit of Beneficiary and the public interest. The Borrower hereby consents to the appointment of a receiver following the occurrence of a Default. The receiver shall have all of the authority over the Property that Beneficiary would have if Beneficiary took possession of the Property 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 Property 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 Property 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. COMMERCIAL CODE. PROPERTY 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 Property which under applicable law may be subject to a security interest pursuant to the Commercial Code, and the Borrower 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 Property. The Borrower 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. The Borrower shall pay all costs of filing such financing statements and shall pay all reasonable costs of any record searches for financing statements and releases. Without the prior written consent of Beneficiary, the Borrower shall not create or permit any other security interest in said items. S. REMEDIES. Upon the occurrence of a Default, Beneficiary shall have the remedies of a secured party under the Commercial Code and at Beneficiary's option may also invoke the Attachment No. 8 (Page 3 of 10) S17-21001 Agree: Bowen Court: Agency Const. Loan-R-cd of Trust &110i -#4 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 spccified above separately or together and in any ord.-r whatsoever. a ' RIGHTS AND 0131.1GATIONS OF TRUSTOR 9. PERFORMANCE OF SECURED OBLIGATION. The Borrower shall promptly perform each obligation secured by this Deed of Trust. 10. PAYMENT OF PRINCIPAL AND INTEREST. The Borrower shall promptly pay when due the principal and interest on the indebtedness evidenced by the Note. 11. MAINTENANCE OFTHE PROPERTY. The Borrower shall, at the Borrower's own expense, maintain and preserve the Property or cause the Property to be maintained and preserved in good condition, in good repair, and in a decent, safe, sanitary, habitable and tenantable condition. The Borrower 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 Property. The Borrower shall not commit or permit waste on or to the Property. The Borrower shall not abandon the Property. Beneficiary shall have no responsibility over maintenance of the Property. In the event the Borrower fails to maintain the Property in accordance with the standards in this Deed of Trust, the Covenants or the DDA, Beneficiary, after at least sixty (60) days, except in health and safety emergencies, in which case, after at least three (3) days prior written notice to the Borrower, may, but shall be under no obligation to, make such repairs or replacements as are necessary and provide for payment thereof. Any amount so advanced by Beneficiary, together with interest thereon from the date of such advance nt 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 the Borrower to Beneficiary and shall be secured by this Deed of Trust. 12. INSPECTION OF THE PROPERTY. The Borrower shall permit Beneficiary to enter and inspect the Property for compliance with these obligations upon 24 hours advance notice of such visit by Beneficiary to the Borrower cr the Borrower's management agent. 13. DEFENSE AND NOTICE OF CLAIMS AND ACTIONS. Following the occurrence of a Default, the Borrower shall appear in and defend, at its own expense, any action or proceeding purporting to affect the Property and`or the rights of Beneficiary. The Borrower 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 Property. 14. SUITS TO PROTECT THE PROPERTY. Beneficiary shall have power to institute and maintain such suits and proceedings as it may dcem expedient (a) to prevent any impairment of the Property or the rights of Beneficiary, (b) to preserve or protect its interest in the Property and in the Rents, and (c) to restrain the enforcement of or compliance with any Attachment No. 8 (Page 4 of 10) SF-2001 Agree: Dowcn Court: Agency Const. loan-Mcd of Trust governmental legislation, regulation, or order, if the enforcement of or compliance with such legislation, regulation, or order would impair the Property or be prejudicial to the interest of Beneficiary. 15. DAMAGE TO PROPERTY. The Borrower shall give Beneficiary and Trustee prompt notice in writing of any damage to the Property. If any building or improvements erected on the Property is damaged or destroyed by an insurable cause, the Borrower shall, at its cost and expense, 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 and, if such insurance proceeds shall be insufficient for such purpose, the Borrower shall make up the deficiency. 16. TITLE. Borrower warrants that to the best of Borrower's knowledge, the Borrower lawfully has legal title to the Leasehold Estate in the Property, and Borrower has the right to encumber the same with that Deed of Trust. 17. GRANTING OF F,ASEI<IENTS. The Borrower may not grant easements, licenses, rights -of -gray or other rights or privileges in the nature of easements with respect to the Property except those required or desirable for installation and maintenance of public utilities including water, gas, electricity, se,.►•er, cable television, telephone, or those required by law. 18. TAXES AND LEVIES. The Borrower 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 Property. However, the Borrower 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) the Borrower maintains reserves adequate to pay any contested liabilities. In the event that the Borrower fails to pay any of the foregoing items, Beneficiary may, but shall be under no obligation to, pay the same, after Beneficiary has notified the Borrower of such failure to pay and the Borrower fails to fully pay such items within seven 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 the Borrower to Beneficiary and shall be secured by this Deed of Trust. 19. 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 Property under assertion of the power of eminent domain ("Funds") are hereby assigned to and shall be paid to Beneficiary. Beneficiary is authorized (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 maybe released to the Borrower upon such conditions as Beneficiary may impose for its disposition. Attachment No. 8 (Page 5 of 10) Sr-2001 Agree: Bowen Court: Agency Const. loan -peed of Trust &1ro1 -lid 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. 20. ACCELERATION ON TRANSFER OF PROPERTY; ASSUMPTION. In the event that the Borrower, without the prior written consent of the Beneficiary, sells, agrees to sell, transfers, or conveys its interest in the Property 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 DDA; or B. sale or transfer of fixtures or personal property pursuant to the grant provisions in this Deed of Trust; or C. any Permitted Transfer (as such term is deftned in the DDA) or any other transfer permitted under the tams of the DDA or the Ground Lease pursuant to which Borrower's leasehold interest in the Property is created. 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. 21. RECONVEYANCE BY TRUSTEE. This Deed of 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 and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by the Borrower of Trustee's reasonable fees, Trust.-e shall rcconvey the Property to the Borrower, or to the person or persons legally entitled thereto. DEFAULT AND IZENTF,DIES 22. EVENTS OF DEFAULT. Any of the events listed in the DDA as an Event of Default shall also constitute an Event of Default under this Deed of Trust. 23. ACCELERATION OF MATURITY. Upon the happening of an Event of Default which has not be cured within the times and in the manner provided in the DDA, Beneficiary may declare all sums advanced to the Borrower under the Note and this Deed of Trust immediately due and payable. 24. BENEFICIARY'S REMEDIES. Upon the happening of an Event of Default which has not be cured within the times and in the manner provided in the DDA, Beneficiary may, in addition to other rights and remedies permitted by the DDA, the Note, or applicable law, proceed with any or all of the following remedies: Attachment No. S (Page 6 of 10) SF-2001 Agree: Rowen Court: Agency Const. Loan-Dccd of Trust 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 Property and collect Rents; B. Enter the Property and take any actions necessary in its judgment to complete construction on the Property as permitted in the assignment of rents and right to possession in this Deed of Trust, either in person or through a receiver appointed by a court; C. Disburse from Agency Loan proceeds any amount necessary to cure any monetary default under this Deed of Trust, the DDA, or Note; D. 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 Property, including the authority to complete construction of improvements; E. Deliver to Trustee a written declaration of Default and demand for sale, and a written Notice of Default and election to cause the Borrower's interest in the Property to be sold, which notice Trustee or Beneficiary shall duly file for record in the Official Records of Orange County, and exercise its power of sale as provided for below; or F. Pursue any other rights and remedies allow at law or in equity. 25. FORECLOSURE BY PO«'ER 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 arc additionally secured hereby as Trustee may require. Upon receipt of such notice from Beneficiary, Trustee shall cause to be recorded, published and delivered to the Borrower such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on the Borrower, 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 given as required by law, sell the Property, 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 the Borrower, 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, the Borrower, Trustee, or Beneficiary, may purchase at the sale. Attachment No. S (Page 7 of 10) SF-2001 Agree: Bowen Court: Agency Const. Loan -Deed of Trust 6/1/01 -Rd 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 Dced 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. 26. REIIEDIES 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 27. GOVERNING LANV. 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. 28. 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 attomeys' 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. 29. STATEMENT OF OBLIGATION. Lender may collect a fee not to exceed the maximum allowable under applicable law for furnishing a statement of obligations as provided in the California Civil Code. 30. CONSENTS AND APPROVALS. Any consent or approval of Beneficiary required under this Deed of Trust shall not be unreasonably withheld. 31. TIME. Time is of the essence in this Deed of Trust. 32. NOTICES, DEMANDS AND CO:*IMUNiCATIONS. Formal notices, demands and communications between the Borrower 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 the Borrower and Beneficiary as follows: Attachment No. 8 (Page 8 of 10) SF-2001 Agree: Boutn Court: Agency Const. tmn-Dccd of Trust 6i 1 /01 - #3 Beneficiary: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary The Borrower: Bowen Court, L.P. 414 East Chapman Avenue Orange, CA 92866 Attn: Eunice Bobert 33. 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 the Borrower, Trustee, and Beneficiary. 34. WAIVER. Any waiver by Beneficiary of any obligation of the Borrower in 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 the Borrower or to pursue any remedy allowed under the Deed of Trust or applicable law. Any extension of time granted to the Borrower to perform any obligation under this Deed of Trust shall not operate as a waiver or release the Borrower from any of its obligations under this Deed of Trust. Consent by Beneficiary to any act or omission by the Borrower 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. 35. AMENUMENTS 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 the Borrower. 36. DISPOSITIO`' AND DEVELOPMENT AGREEMENT CONTROLS. If there is any contradiction between this instrument and the DDA, the terns of the DDA shall control, except that the Borrower shall have no defense or claim that this instrument does not establish a valid Iien on the Property or the Property. 37. DEFINITIONS. Capitalized terms not otherwise defined in this Deed of Trust shall have the same meaning as defined terns in the DDA. 38. PROOFS OF CLAIM. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, recomposition or other proceedings affecting the Borrower, 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 the Borrower hereunder after such date. 39. 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 Attachment No. 8 (Page 9 of 10) sr-2001 Agree: Dowen Court: Agency Const. Loan -Deed of Trust 61401 - #4 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 Property, 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. 40. SUBSTITUTION OF TRUSTEES. Bcneliciary 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. BORROWER: BOWEN COURT, L.P. a California limited partnership ("Developer") By: MERIT HOUSING INC., a California Nonprofit Corporation, its General Partner Dated: By: Eunice Bobert Chief Executive Officcr Attachment No. 8 (Page 10 of 10) SF-2001 Agree: Do%en Court: Agcncy Const. Loan -Drat of Trust :trot -A4 ATTACHMENT NO. A TO DEED OF TRUST Borrower's leasehold interest under that certain Ground Lease dated June , 2001, executed by and between Beneficiary, as Lessor, and Borrower, as Lessce, a memorandum of which Ground Lease was recorded June , 2001, as Instrument No. in the Official Records of Orange County, California, and which Ground Lease convey the real property described in Attachment 1 hereto. ATTACHMENT I (Legal Description) ALTA OWNERS POLICY EXHIBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND 1S DESCRIBED AS FOLLOWS. LOTS 1 TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A MAP FILED IN BOOK 673. PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY. CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY. AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY 1N DEED RECORDED NOVE.4IBER 4, 1988 AS INSTRUMENT NO. 88-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021, PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTON BEACH COMPANY QUITCLAIMM ED ALL ITS RIGHT TO DRILL SLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET. MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED. GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE 'SUB-500 PORTION') GRANTEE MAY SLNNT DRILL UNDER SUCH LANDS, AND/OR DRILL WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL. GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT' NO. I WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINER--%L INTERESTS: GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1, 1989. AND GRANTOR AGREES THAT, NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1. 1989. AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY 5. 1988 AS INSTRUMENT NO.83-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT 2 (Site Plan) T. . [o's n.a 2F wf.R• xt,K._ .,,, TRACT NC.13920 Nl.N1.673I 14 -1 f(,I.41 S-C— -rlo•+ [r! 1" UAQ'- '-C a w! %-- (C' +! ••6 .04Y ]O•,:f W. •14J l.- 63,C:.Y9S 0[ C%. A L01h^ !�•JL .l DeTAII -A' J.—f 'f.. 'f+• R! Jam.-/ r /►! C,,w I V rr Y,. r�.�., t I•r /1.6/ , Jl/�• ++ i7l/ ' f1•I! h !� i +.00 � V• r. A •J•- OssJtK� ��TRE_ rr (r f►' � 1..�e r n+ .•! -+ •[e •• CC ..Ior ro K sC .• .; �arq.w• f •' mom " -•. - s—a-co 'met 'f+or oe r sa-t ...L'Cf r[.IO '• C C •wr '] K IC' •* +� .2•=�••!•s- T'KL+ CL^•RR+c .,X.UC"o'.w f C 7- ! C • -•0 .y O'••!. /•pwrf Cr CG.[Y0. -n•Y 90 W+S .!'.i■ KCV+..•CL - V .0004.k•R% •• 'c'e TJ PC.* .b.MA.(.f of -010 S IL ;.� �- 1 ' 2•� I!O lJYit / r _✓ M! f K i r i♦ �f1 AL�fMlE o e r rM . ~ f •wf w/J 1 • ,. frr0 r `y `� /iwrrr r. •i.A• �rr Jr .N/f1 V "IF:...'. •...f.•y. !I-1r Z. t, .r- �J• fr � 4 �C M'r ! i • ✓w ' ^..� .• 4v � C ft A. AVeNUE to a is �/y. � W /�V • �..•/rf rw1f..rr - r J•.w/ ..wry! rr•r �'..\ I tu •f 1, v arcs •.'� First American Title Insurance Company .. - tNIS MAP IS FOt IµFOtMA11OM ONLY AND IS NOT A POW OF 1"IS SITES SYJ04%cs ATTACHMENT NO.9 OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by and When Recorded Mail to: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street, P.O. Box 190 Huntington Beach, CA 92648 Attn: Agency Secretary Space above this line for recording use CERTIFICATE OF COMPLETION WHEREAS, BOWEN COURT, L.P., a California limited partnership ("Developer') and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency) have entered into that certain Disposition and Development Agreement, dated as of (hereinafter referred to as the "DDA"), relating to the lease, construction, management and operation of the Bowen Court Affordable Senior Housing Project in the City of Huntington Beach, California (the "Project"); and WHEREAS, pursuant to the DDA, Agency has [eased to Developer that certain real property (the "Property') located in the City of Huntington Beach, more particularly described in Attachment No. 1 which is attached hereto and incorporated herein by this reference; and WHEREAS, the DDA describes the Project, which consists of Developer's construction and operation on the Property of twenty (20) affordablc senior housing residential units; and WHEREAS, Section 434 of the DDA provides that promptly upon completion of construction of the Project in accordance with the DDA and satisfaction of related conditions set forth in said Section 434, Agency shall issue to Developer and record a Certificate of Completion, conclusively determining that construction of the Project, as required by the DDA, has been completed and the Project has been opened for business; and WHEREAS, Developer has completed the Project and satisfied the related conditions, as required by the DDA. Attachment 9 Certificate of CompIction Page l of 2 SF-2001 Agrce: Bowen Court: DDA - Cert of Completion NOW, THEREFORE, AGENCY CERTIFIES AS FOLLOWS: 1. As provided in the DDA, Agency does hereby cbrtify that the conditions precedent to the issuance of a Certificate of Completion set forth in Section 434 of the DDA have been fully satisfied. Execution of this Certificate by the Agency constitutes "Completion" as defined in the DDA. 2. This Certificate shall not constitute evidence of compliance with or satisfaction of any obligation of Developer or any other party to a Eolder of a mortgage or deed of trust securing money loaned to finance the construction of the Project or any part thereof, or any other obligation to any other party, other than the obligation of Developer to the Agency to construct and open the Project in accordance with the DDA. 3. This Certificate of Completion is not a "Notice of Completion" as referred to in Section 3093 of the California Civil Code. 4. The execution and delivery of this Certificate of Completion shall constitute the Agency's agreement that Developer is not in default under the terms of the DDA and that Developer (nor any other party) shall no longer be bound by any of the terns and conditions of the DDA, all such terms and conditions being deemed void, other than the provisions of Section 208, 309, 410(a) and 428 of the DDA; provided, however, notwithstanding the termination of the DDA as provided herein, all cross references to Sections in the DDA and/or defined terms (including, without limitation, the term "Permitted Transfers") in the DDA contained in any of the other documents executed in connection with the execution and delivery of the DDA shall continue to be applicable and effective for purposes of such other documents notwithstanding that the DDA itself has been terminated and is no longer effective. IN WITNESS WHEREOF, the Agency has executed this Certificate, in Orange County, California, as of REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH UO-7 ATTEST: By: Agency Clerk: APPROVED AS TO FORM: By: Agency General Counsel Executive Director Attachment 9 Certificate of Completion Page 2 of 2 SF-2001 Agrec: Bowen Coun: DDA - Con of Completion ATTACHMENT 1 (Legal Description) ALTA OWNERS POLICY EXHIBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA. COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS: LOTS 1 TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A NIAP FILED LEI BOOK 673, PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY. CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSI`iILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET. WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4.1998 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4. 1988 AS INSTRUMENT NO. 83-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29. 1957 IN BOOK 4021, PAGE 372 OF OFFICIAL RECORDS. THE HUNTINGTON BEACH COMPANY QUITCLAIMED ALL ITS RIGHT TO DRILL SLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET. MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE 'SUB-500 PORTION') GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND/OR DRILL ' WELL OR WELLS O; f LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL, GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. 1 WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND 1S PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1. 1989, AND GRANTOR AGREES THAT, NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1, 1989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION I`1 A DEED RECORDED JULY 5, 1988 AS INSTRUMENT NO.83-3I9693 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT 2 (Site Plan) rt..<.ms.+r...�.+ . . ■aR a•n y w•�c* xtac+ •+++ \ TRACT N0415920 M.M.673 /14-16 3aS S :r a r.s vG5 .c•r-•cs 9-0— -Mo. +K USC$ ,fo,f 9-c r we s- c, a •c .04% 30•11f "I rc• ".0 r..r -4 .JJ■! +. NJ/ as. II Kzr?s a o+-,fA can• rarer ••udo .�'■+'` ar'r_ .. t t t r.. . • of.-r/r .AA. / .ro • .r.-J.....rr r rr••-r• frm o~ el N OETAIL A- A...f %P:ti.■-Eri 0-ES •7. M[ r« •-c t•-. "* ,a c L N-or wl K UT -..■a �O.r.O.�• :*W-cos ram.•. 10 7-' -4'1• cic"..cc Or r—".ir.i • •O, S-c .,. --c s•-•.rco ••cc •..Or 90 r sr-c a ..l•rr T ft oca +_c '..or '3 K � a+ rs .37 S:••4•s S+IR Cc'••t-t.c .,*Um"f : S c c S. --a t. 3140 rp,rr% cr ca..+OL r..-, to o-•S -Me-cctr-cc ar ...04.9-M -..h- •C CA n r0 wd c I c", Y rr{W �l •.r ,1r.f w+ M.fR A TOb J, rMJ, .0 r V rr. : r -rlrrf i_ r /rr• +a/ 11•ft i' l� _cW xo A, Jrr J rr — .M/\r ±lot. IfI y /.rOr ! A..r Ke rein rr rffrA. .+r+ . � 11.1f r N � r•1 t4 %ff V a .• f u �- r •: r. AVfE. r 1 'f� V�• ti r �w r� ' Y rrr rf 0 a -■ :.3:•0 �-l.nJll/JI! y iR --Jvr. •.- X�'tL� •� -v J—,- AWo �"• rN//r Y J 33 + yM .wf \ • � fir'• � /• N .J■r • ,�.�� � . 1'.s yr•r V '.ir r• r � QaRK aLGEr �; 4 w ~ a as Z � 2 ,, -#r4r fs f r -ro t � +bf w • Jvs r�rrJ �f ..n i r ..rrrr r fI1_• UT/CA �• AVENUE +■r 1Mr r f/r..'rrrrN'J- l! ww � ... . .. Ir'a N « ,rr Ir _r rr II 4 4•. /lna�J�I / fJf if • wr�: � W J rr • •...•rr.\ •r.. ww A.wrrJ .l«r.rr r- rrr..vr I •--r•rl f R ,' ■ 1 i ;+ • •rr0 f.r•r - . w a Z a• r A•••d Y.r !f f• .Zr a r s •� , I ...rrn..•r se First American Title Insurance Company - - - T141S JAA! It FOR 1l1fOtMAiION OMIT AND 15 MOT' A CART Of T'NIS TI U 9Y10triCR RECORDED AT THE REQUEST OF CHICAGO TITLE COMPANY OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by and When Recorded Mail to: This Document was electronically recorded by Chicago Title Commercial Recorded in Official Records,County of Orange Gary L. Granville, Clerk -Recorder IIII Jill 111111IIIIII111111IIIIII11111IIIII11 NO FEE 20010385888 04:06pm 06/12/01 12048M109 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 REDEVELOPMENT AGENCY OF THE —" CITY OF HUNTINGTON BEACH x 2000 Main Street, P.O. Box 190 �? Huntington Beach, CA 92648 Attn: Agency Secretary Space above this line for recording use LL� �J MEMORANDUM OF DISPOSITION AND DEVELOPMENT AGREEMENT FOR BOWEN COURT THIS MEMORANDUM OF DISPOSITION AND DEVELOPMENT AGREEMENT FOR BOWEN COURT is made and entered into as of June 4, 2001 by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic, of the State of California, herein called "Agency," acting under the Community Redevelopment Law (California Health and Safety Code § § 33000, et seq.) of the State of California, and BOWEN COURT, L.P., a California limited partnership, herein called "Developer." Agency and Developer hereby enter into a Disposition and Development Agreement for Bowen Court ("DDA"), commencing as of June 4, 2001, on the terms and conditions set forth in the DDA on file with the City Clerk of the City of Huntington Beach, all terms and conditions of which are made a part of this Memorandum of DDA and are applicable to the Property located in the County of Orange, State of California, legally described on Attachment 1, and depicted on the Site Map as Attachment 2, which are attached to and made part of this Memorandum of DDA. Memorandum of DDA Page 1 of 2 SF-2001 Agree: Bowen Court: Memo of DDA IN WITNESS HWEREOF, the Agency and Developer have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of this 41h day of June, 2001. ATTEST: Agency Secretary Agency REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: Exetfftive Director APPROVED AS TO FORM: Agency General Counsel 1<1171o/ Developer BOWEN COURT, L.P., a California limited partnership By: MERIT HOUSING, INC., a California Nonprofit Corporation, its General Partner Dated: E h L ` By Eunice Bobert Chief Executive Officer Memorandum of DDA Page 2 of 2 SF-2001 Agree: Bowen Court: Memo of DDA CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of , County of On before me, D to Name arw RM of oltker (a p.. Jana ric ry POW) persor Ily appeared&_1&z?Ze1 itY.)N 'tom personally known to me — OR —❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) Mare subscribed to the within instrument and acknowledged to me that j6/sPd/they executed the same in W.'Per/their authorized capacity(ies), and that by rtheir signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. r,60 CHiZ MNE CLEARy � 0 WITNESS my hand and official seal. 1 Q&jW *=V&CM* sgmt ure o1 Nolary Puow OPTIONAL Thougn the information below Is not required bylaw, it may prove valuable to persons relying on the document and could prev nt fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: ber of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer ❑ Corporate Officer Title(s):Z Title(s): ❑ Palner — ❑ LimiteZDGe al ❑ Partner -- ❑ Limited ❑ General ❑ Attorney -in -Fact ❑ Attomey-in-Fact ❑ Trustee ❑ Trustee ❑ Guardian or Cons ❑ Guardian or Conservator r ❑ Other: Top of thumb here ❑ Other: Top of tnurno here Signer Is Representing: Signer Is Representing: 0 1995 National Notary AssoclatiDn -8235 Remmet Ave.. P0. Box 7184 -Canopy Park CA 91309-7184 Prod. No_ 5907 Reorder. Ca11 Toll -Free 1.800-87648V I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Date commission expires: Commission number: Vendor number: ` County where bond is filed: Oca Place of execution: Irvine, CA Date: �0 Chicago Title Company CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of On h-� �. before me,NSA /W'1 ` date Nam* *nd Toe of OK w {e g .'Jane Doe. Notary Pubhc-) personally appeared ''��= Narn"s) of 5.8ryrtsl tALWA A. Nam" Cofrrrtitdon t 177 OmrwcWry Cot— 8t b !tA z! 27G7 personally known to me ❑ provAdisfactory evidence to be the person(} whose names) �t`7s Fe — subscribed to the within instrument and acknowledged to me thq&siaeabe�Lexecuted the same in t ii hcr}Hzeir- authorized capacity(tes), and that by Q is heOtheir signature(&) on the instrument the person(, or the entity upon behalf of which the person(&) acted, executed the instrument. WITNESS hand and official seal. Place Notary Seal Abora f We Notary Pupt.c OPT! NAL Though the information below is not required by law, it mat Drove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Q cument r� Title or Type of Document: Document Date: lD Signer(s) Other Than Named Above: Ed Number of Pages. v a,. -A 6mn.j Capacity(ies) Ciaj�ed by Sign Signer's Name: IA N ❑ Individual ` lop of thumb hero ❑ Corporate Officer --- Tdle(s): ❑ Partner —❑ Limited ❑ General ❑ Attorney in Factti� ��== ❑ Trustee 1 r= ❑ Guardian or onservptor� Other: F�• tK�e (, -JIVf_ y'} u_ Signer Is Representing: 0iM%wwNowyAaK*wn•WWNSoWA%*.PO.Sw24M•Chao.orftCA913t3.24M- wwtiarrinrryag pmdM&5W7 F4ddrCal TatFn*ti74/>6'6et7 ATTACHMENT I (Legal Description) ALTA OWNERS POUCY EMBIT "A" OR-9360z98 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA. COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH. AND IS DESCRIBED AS FOLLOWS - LOTS I TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A NIAP FILED IN BOOK 673, PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS. ASPHALTUM. AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SLMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4. 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO. E8-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021. PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTOV BEACH COMPANY QUITCLAIMED ALLITS RIGHTTO DRILLSLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET, MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT. WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER. INCLUDING. BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING. PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED. HOWEVER. THAT BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE (HEREIN -AFTER CALLED THE "SUB-500 PORTION-) GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND/OR DRILL WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL, GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE. CERTAIN WELLS KNOWN AS THE ELLIOTT NO. 1 WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1, 1989. AND GRANTOR AGREES THAT. NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH. GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1. 1989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS. AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY 5.1988 AS INSTRUMENT NO.88-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT 2 (Site Plan) Ya[ % `• 1 . K[.•CA •MI •C a [OR TRACT NO.13920 M.M.673/14 16 e-s s v •c,• %cs .[afrCi %.Cw .[KC+ •f[ U90 %0" a•[ i'K[• K •i .:•V =-I.f Wr n- •-W -1- -o •,%%' .. /,f[/ l/-77 +[:o•is O/ OlaK[ Co.Ir^ - �t••r W:%.Uc,.r r0'ES •y..+[ a+ •K st—r ci •a cc **-or •7 1[ SCr .r ya smAc_I ::+•[•S +-- •O ia'S •f•[• K:[Ma-C[ of V+'Lr[.C�•t z 1' •o- ••-c .- ••a sr•_•co ••c [ •%-or I•. r sY•c • .wt• r+�c7 '•C[ •••Or '3 K ic• •r Z -9r C7•+t+S T-•1 [T C[".•[R.c r'tauc_••7 1 C Y. [ C 1. •r.o ra A^c• 00-IS CI CO••/•OL +r._. rq Us .M.1 •[C[r-cl -r- -own IQ.. Wa W.r .S •OIL* [ 1 crc• r •fa_a• •r. -n •7K•... a-4.1.0 n it t 1 �. „•.... 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Section 33433 Summary Report ATTACHMENT #2 SUMMARY REPORT PURSUANT TO SECTION 33433 of the CALIFORNIA COMMUNITY REDEVELOPMENT LAW on a DISPOSITION AND DEVELOPMENT AGREEMENT by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH and MERIT HOUSING CORPORATION The following Summary Report has been prepared pursuant to Section 33433 of the California Health and Safety Code. This report sets forth certain details of the proposed Disposition and Development Agreement (Agreement) between Merit Housing Corporation (Developer) and the Redevelopment Agency of the City of Huntington Beach (Agency). The proposed transaction requires the Agency to convey the .75-acre site located at Yorktown Avenue and Lake Street (Site) to the Developer. The Agreement requires the Developer to construct 20-apartment units with adjacent garages and a community building; all 20-units must be allocated to very -low income senior citizen households (Project). This Summary Report is based upon information contained within the Agreement; and is organized into the following seven sections: I. Salient Points of the Agreement: This section identifies the major responsibilities imposed on the Developer and the Agency by the Agreement. ll. Cost of the Agreement to the Agency: This section details and quantifies the costs to be incurred by the Agency to implement the Agreement. Ill. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted Under the Redevelopment Plan: This section estimates the value of the interests to be conveyed determined at the highest use permitted under the existing zoning and the requirements imposed by the Yorktown -Lake Redevelopment Project Redevelopment Plan (Redevelopment Plan). IV. Estimated Reuse Value of the Interests to be Conveyed: This section estimates the value supported by the Site based on the required scope of development and the other conditions and covenants required by the Agreement. 0'. 050xx.HTB;KHH:gbd 14066.001b=:211I2001 V. Consideration Received and Comparison with the Fair Reuse Value: This section describes the compensation to be received by the Agency, and explains the reasons for any difference between the compensation and the established fair reuse value of the Site. VI. Blight Elimination: This section describes the blighting conditions on the Site, and explains how the implementation of the Agreement will alleviate the blighting influence. VII. Conformance with the AB1290 Implementation Plan: This section explains how the Agreement complies with the redevelopment strategy identified in the Agency's adopted AB1290 Implementation Plan. This report and the Agreement are to be made available for public inspection prior to the approval of the Agreement. I. SALIENT POINTS OF THE AGREEMENT A. Developer Responsibilities 1. The Developer must ground lease the Site from the Agency for a 60-year term. The Developer can extend the ground lease term indefinitely as long as the defined income and affordability standards are maintained. 2. The Developer must construct a 20-unit senior citizen apartment complex plus a community building. The Project must emulate the massing of the adjacent single-family home residential tract. In addition, the Developer must complete the following activities: a. The Developer must remediate the hazardous conditions exhibited on the Site. b. The units must include 540 square feet of living area plus outdoor decks or patios. C. The units must be outfitted with window coverings throughout. The kitchens must be equipped with an energy efficient ovenlrange, a frost free refrigerator, a dishwasher, a garbage disposal, cable television access and an emergency call system in each unit. d. The Project must conform to the California Title-24 Energy Conservation Measures. 01050xa.HT13;KHH:gbd 2 14 066.001 hooc:211/2001 e. The Project must be designed to accommodate the special needs exhibited by senior citizen tenants. f. The Project must be constructed with post4ensioned concrete slab, and framed with wood, to achieve a Type V non -rated construction classification. All the units and the garages must be sprinklered in accordance with the City of Huntington Beach (City) ordinance. 3. The Agreement requires the Developer to allocate 100% of the units in the Project to very -low income households over a 60-year period. The income standards must comply with the requirements imposed by California Health and Safety Code Section 50053 (Section 50053). 4. Once the Project reaches stabilized occupancy, the Developer must establish a replacement reserve account equal to at least $150 per unit per year. As capital repairs become necessary, the costs must first be funded from the reserve account, and then from the Project's cash flow. 5. The Developer is contractually required to limit the occupancy in the units to a maximum of two -person households. 6. The sources of Project financing must include the following: a. $1.78 million in net Low Income Housing Tax Credit proceeds (tax credits); b. $725,000 in conventional financing, and; C. A $900,000 residual receipts loan from the Agency. 7. The Developer must make a good faith effort to obtain up to a $400,000 loan from the Orange County Housing and Community Development Department (County). If any funds are received from the County, the Agency loan to the Project will be reduced on a doll ar-fo r-do'lar basis. 8. Any outstanding principal and interest balance on the Agency's residual receipts loan must be fully repaid at the end of a 60-year loan term. 9. The Developer must provide the Agency with audited financial statements for each year of the Project's operation. B. Agency Responsibilities 01050xx.rrrs;KHRgbd 3 14066.001 h=:2/1 /2001 1. The Agency must convey the Site to the Developer in the form of a long-term ground lease. No ground lease payments will be assessed to the Project over the 60-year ground lease term. 2. The Agency must provide a below market interest loan of up to $900,000 to the Project. Il. COST OF THE AGREEMENT TO THE AGENCY The Agency costs to implement the Agreement consist of the Site assemblage costs and the Agency loan that will be funded under the terms identified in the Agreement. The Agency costs are off -set by the debt service payments received for the Agency loan. The resulting net Agency revenuel(cost) to implement the Agreement are estimated as fo'.lows: Nominal Present Terms Value Terms' Agency Costs Site Acquisit;on Costs $885,000 $885,000 Residual Receipts Loan 900,000 900,000 Total Agency Cost $1,785,000 $1,785,000 Agency Revenue $2,019,000 $226,000 Net Aoency Revenue/(Cost $234,000 $1 559 000 III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN Section 33433 of the California Health and Safety Code requires the Agency to identify the value of the interests being conveyed at the highest use allowed by the Site's zoning and the requirements Imposed by the Redevelopment Plan. The valuation must be based on the assumption that near -term development is required, but the valuation does not take into consideration any extraordinary use and/or quality restrictions being imposed on the development by the Agency. This valuation must be based on the assumption that the Site is vacant, and is in a developable state. The Agency obtained an appraisal for the Site in 2000, which set the value at $925,000. This value is based on the assumption that a detached singre-family home project, at a density of approximately seven units per acre, represents the highest and best use of the Site from a financial perspective. ' A 7% discount rate is applied to estimate the present values. 2 Equal to the present value of the projected debt service payments on the Agency loan. 01050xx.KTB;KHH: flbd 4 14066.001 h=;21112001 Keyser Marston Associates, Inc. (KMA), the Agency's financial consultant, estimated the current fair market value of the Site at $1.0 million, based on the assumption that the value has increased by 8% over the course of the past year. This value equates to $30 per square foot of land area for the Site.. IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED In a pro forma analysis dated May 2001, KMA evaluated the financial characteristics of the proposed Project. This analysis determined that given the scope of development, the income/affordability requirements imposed by the Agreement, and the assistance to be provided by the Agency and outside funding sources, the fair reuse value of the Site is negative $7,000. V. CONSIDERATION RECEIVED AND COMPARISON WITH THE FAIR REUSE 011211L;� The Agreement requires the Agency to convey the Site to the Developer in the form of a long-term ground lease with payments set at $1 per year. Given that the fair reuse value of the Site is estimated at negative $7,000, KMA has concluded that the Agreement provides the Agency vrith fair compensation for the interests being conveyed. VI. BLIGHT ELIMINATION The Project includes the development of 20 senior citizen apartment units that must be rented to very -low income households. In accordance with the California Redevelopment Law, as portrayed in the California Health and Safety Code Section 33433, the sale of property that results in the provision of housing for low- or moderate - income persons satisfies the blight elimination criteria imposed by Section 33433. Thus, the Project fulfills the blight elimination requirement. VII. CONFORMANCE WITH THE AB1290 IMPLEMENTATION PLAN The Agency's 1999 to 2004 AB1290 Implementation Plan specifically Identifies the Project as a development to be undertaken to fulfill a portion of the Agency's affordable housing requirements. Thus, it is clear that the Project conforms with the AS1290 Implementation Plan that was adopted by the Agency. 01050xx.HTB;KHH:gbd 5 14 066.001 hoar; 211 l2001 City Council Resolution Number 00/-3 y Approving the Disposition and Development Agreement ATTACHMENT #3----.,, RESOLUTION NO. 200. 1-34 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH BOWEN COURT, L.P., FOR THE CONSTRUCTION OF LOW COST HOUSING WHEREAS, the Redevelopment Agency of the City of Huntington Beach (the "Agency") is engaged in activities necessary to carry out and imp'ement the Redevelopment Plan for the Merged Redevelopment Project Areas of the City of Huntington Beach (collectively the "Redevelopment Plan"); and In order to carry out and implement the Redevelopment Plan, the Agency proposes to enter into a Disposition and Development Agreement (the "Agreement") with Bowen Court, L.P., (the "Developer'), which establishes terms and conditions for the construction of low-cost housing (the "Project") by the Developer within the boundaries of the area set forth with particularity in the Agreement (the "Site"); and The Developer has submitted to the Agency zr-d the City Council copies of said proposed Agreement in a form desired by Developer; and Pursuant to the California Community Redevelopment Law (California Health and SajeV Code, Section 33000 et seq.) the Agency and the City Council held a joint public hearing on the Agreement, having duly published notice of such public hearing and having made copies of -the proposed Agreement and other reports and documents (including the summary referred to in Section 33433) available for public inspection and eop)ing; and The City Council has duly considered all terms and conditions of the proposed transaction, and believes that it is in the best interests of the Project area and the City and the SF-2001 Resolutions: City - BOKrn COL:n OG-'01 %Ol Res. No. 200I-34 health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable State and local law and requirements; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: SECTION 1. The City Council hereby finds and determines that the consideration to be paid by Developer for the purchase of the Site conveyed to it by the Agency is not less than the fair reuse value at the uses and with the covenants and conditions and development costs authorized by the sale. SECTION 2. The City Council hereby finds and determines that the sale of the Site %vithin the Project area pursuant to the Agreement will assist in the elimination of blight, and provide housing for low-income persons. SECTION 3. The Agency hereby finds and determines that the sale of the Site pursuant to the Agreement is consistent with the implementation plan adopted pursuant to Section 33490 of the Health and Safety Code. SECTION 4. The proposed Agreement is hereby approved in substantially the form presented at this meeting, with such minor changes as may be approved by the Executive Director of the Agency with the approval as to form by the Agency General Counsel. 2 SF 2001 Resolutions: City - Souen Court 06 0 U01 Res. No. 2001-34 PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 4th of June, 2001. ATTEST - City Clerk 6-07--9 REVIEWED AND APPROVED: City dministrator 3 SF-2001 Resolutions: City - Bo%%vn Court C6,101.ro1 Mayor ~� APPROVED AS TO FORM: City Attorney 617s INITIATED AND APPROVED: Al"I (,-)- "-K� D recior of Economic Development Res. No. 2001-34 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH j I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular meeting thereof held on the 4th day of June, 2001 by the following vote: AYES: Green, Boardman, Cook, Dettloff, Bauer NOES: Julien Houchen ABSENT: Garofalo ABSTAIN: None City Cleric and ex-officio Clerk of the City Council of the City of Huntington Beach, California lwr-�- — - RESOLUTION NO. 2001-34 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTIJGTON BEACH APPROVING A DkSPOSITION AND DEVELOPMENT AGREEMENT WITH \Red OURT, L.P., FOR THE CONSTRUCTION OF LOW COST HOUSING WHEREAS, elopment Agency of the City of Huntington Beach (the "Agency) is engaged in activities neccssary)Q carry out and implement the Redevelopment Plan for the Merged Redevelopment Project Areas f the City of Huntington Beach (collectively the "Redevelopment Plan'); and In order to carry out and implement the edevelopment Plan, the Agency proposes to enter into a Disposition and Development Agreement (the "Agreement") with Bowen Court, L.P., (the "Developer"), which establishes terms and conditions for the construction of lo«--cost housing {the "Project"} by the Developer within the boundal�'es of the area set forth with particularity in the Agreement (the "Site"); and The Developer has submitted to the Agency and the City Co cil copies of said proposed Agreement in a form desired by Developer; and Pursuant to the California Community Redevelopment Law {Californ?kffealth and Safety Coyle, Section 33000 et seq.) the Agency and the City Council held a joint public hearing on the Agreement, having duly published notice of such public hearing and having made copies of the proposed Agreement and other reports and documents (including the summary referred to Section 33433) available for public inspection and copying; and The City Council has duly considered all terms and conditions of the proposed transaction, and believes that it is in the best interests of the Project area and the City and the SF-200i Resolutions: City - Down Court O&D1,rot health, kfety, morals and welfare of its residents, and in accord with the public purposes and provisions o`kapplicable State and local law and requirements; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: SECTION 1. The City Council hereby finds and determines that the consideration to be paid by Developer for the pitfchase of the Site conveyed to it by the Agency is not less than the fair reuse value at the uses and lv�jth the covenants and conditions and development costs authorized by the sale. SECTION 2. The City Council,hereby finds and determines that the sale of the Site within the Project area pursuant to the provide housing for low-income persons. ent will assist in the elimination of blight, and SECTION 3. The Agency hereby finds atiadetermines that the sale of the Site pursuant to the Agreement is consistent with the implementatior3 plan adopted pursuant to Section 33490 of the )wealth and Safety Code. SECTION 4. The proposed Agreement is hereby appraved in substantially the form resented at this meeting, with such minor changes as may be a lved b the Executive P g S Y pp Y Director of the Agency with the approval as to form by the Agency Gei`leral Counsel. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 4th of June, 2001. ATTEST: City Clerk Sr-2001 Resolutions: City - BoKen Court WA) 1•101 Mayor APPROVED AS TO FORM: City Attorney 2 Agency Resolution Number 3L2 Approving the Disposition and Development Agreement ATTACHMENT #4 RESOLUTION NO. 32a A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTUGTON BEACH APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH BOWEN COURT, L.P., FOR THE CONSTRUCTION OF LOW COST HOUSING WHEREAS, the Redevelopment Agency of the City of Huntington Beach (the "Agency") is engaged in activities necessary to carry out and implement the Redevelopment Plan for the Merged Redevelopment Project Areas of the City of Huntington Beach (collectively the "Redevelopment Plan'); and In order to carry out and implement the Redevelopment Plan, the Agency proposes to enter into a Disposition and Development Agreement (the "Agreement") ,.vith Bowen Court, L.P., (the "Developer"), which establishes terms and conditions for the construction of low-cost housing (the "Project") by the Developer within the boundaries of the area set forth with particularity in the Agreement (the "Site"); and The Developer has submitted to the Agency and the City Council copies of said proposed Agreement in a form desired by Developer; and Pursuant to the California Community Redevelopment Law (California Health and Safety Code, Section 33000 et seq.) the Agency and the City Council held a joint public hearing on the Agreement, having duly published notice of such public hearing and having made copies of the proposed Agreement and other reports and documents (including the summary referred to in Section 33433) available for public inspection and copying; and The Agency has duly considered all terms and conditions of the proposed transaction, and believes that it is in the best interests of the Project area and the City and the health, safety, SF-2001 RewTutions: Agncy - Bowen Court 06 01lol Res. No. 320 morals and welfare of its residents, and in accord vdth the public purposes and provisions of applicable State and local law and requirements; NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency of the City of Huntington Beach as follo«!s: SECTION 1. The Agency hereby finds and determines that the consideration to be paid by Developer for the purchase of the Site conveyed to it by the Agency is not less than the fair reuse value at the uses and with the covenants and conditions and development costs authorized by the sale. SECTION 2. The Agency hereby finds and determines that the sale of the Site within the Prq;ect area pursuant to the Agreement will assist in the elimination of blight, and provide housing for low-income persons. SECTION 3. The Agency hereby finds and determines that the sale of the Site pursuant to the Agreement is consistent with the implementation plan adopted pursuant to Section 33490 of the Health and Safety Code. SECTION 4. The proposed Agreement is hereby approved in substantially the form presented at this meeting, «with such minor changes as may be approved by the Executive Director of the Agency with the approval as to form by the Agency General Counsel. SECTION S. The Chairman of the Agency and the Agency Clerk are hereby authorized to execute and alter the Agreement on behalf of the Agency. A copy of the Agreement «•hen executed by the Agency shall be placed on file in the Office of the Agency Clerk. 2 SF-2001 Resolutions: Agency. Bowen Court 0601101 Res. No. 320 SECTION G. The Executive Director of the Agency (or his designee) is hereby authorized, on behalf of the Agency, to sign all documents (including but not limited to grant deeds) necessary and appropriate to carry out and implement the Agreement, and to administer the Agency's obligations, responsibilities and duties to be performed thereunder. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the 4th of June, 2001. ATTEST: Agency Clerk do-17 ) REVIEWED AND APPROVED: Rf f r _ Exe tive Director 3 airman APPROVED AS TO 1~ORIv1: Agency General Counsel VITIATED AND APPROVED: &&d �O Director of Economic Development SF 2001 Resolutions: Agency - Sow en Court 06'01,'O1 Res. No. 320 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF HUNTINGTON BEACH J 1, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at a regular meeting of said Redevelopment Agency held on the 4th day of June, 2001 and that it was so adopted by the following vote: AYES: Green, Boardman, Cook, Dettloff, Bauer NOES: Julien Houchen ABSENT: Garofalo ABSTAIN: None Cc . Clerk of the Redevelopment Agency of the City of Huntington Beach, CA Agency Resolution Number'L� I Declaring Intention to Reimburse Expenditures ATTACHMENT #5 RESOLUTION NOS_ A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH DECLARING INTENTION TO REMMURSE EXPENDITURES FROM THE PROCEEDS OF TAX-EXEMPT OBLIGATIONS AND DIRECTING CERTAIN ACTIONS WHEREAS, the Redevelopment Agency of the City of Huntington Beach or a public entity associated therewith (the "Issuer") intends to issue tax-exempt obligations (the "Obligations") for the purpose, among other things, of assisting in the financing of the development of a multifamily housing residential facility generally located at 1968 Lake Street, Huntington Beach, California, (the "Project"); and United States Income Tax Regulations section 1.103-18 provides generally that proceeds of tax-exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, among which is a requirement that (with certain exceptions), prior to the payment of any such expenditure, the issuer must declare an intention to reimburse such expenditure; and It is in the public interest and for the public benefit that the Issuer declare its official intent to reimburse the expenditures referenced herein; NOW, THEREFORE, BE IT RESOLVED that the Redevelopment Agency of the City of Huntington Beach DECLARES and ORDERS as follows: l . The Issuer intends to issue the Obligations for the purpose of paying the costs of financing the acquisition and development of the Project. 2. The Issuer hereby approves the financing of the Project with the proceeds of the Obligations subject to the approval by the Issuer of the bond documents to be executed in connection therewith. 3. The Issuer hereby declares that it reasonably expects that a portion of the proceeds of the Obligations will be used for reimbursement of expenditures for the acquisition and development of the Project that are paid before the date of initial execution and delivery of the Obligations. 4. The maximum amount of proceeds of the Obligations to be used for reimbursement of expenditures for the acquisition, rehabilitation and development of the Project that are paid before the date of initial execution and delivery of the Obligations is S900,000. PDA:-20C 1 Reso1: Agency — Bo%%en Cot n RLS 2001.0385 5.22.01 Res. No. 321 5. The foregoing declaration is consistent with the budgetary and financial circumstances of the Issuer, in that there are no funds (other than proceeds of the Obligations) that are reasonably expected to be (i) reserved, (ii) allocated or (iii) otherwise set aside, on a Iona -term basis, by or on behalf of the Issuer, or any public entity controlled by or associated with the Issuer for the expenditures for the acquisition and development of the Projects that are expected to be reimbursed from the proceeds of the Obligations. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the kith day June , 2001. ATTEST: Agency Clerk a� 7-121 REVIEWED AND APPROVED: - c,;,P.- Z� Exe utive Director Chairman .j APPROVED AS TO FORM: 5,-V4�gency General Counsel INITIATED AND APPROVED: -- &) el kffl Deputy Exec tive Director PDA:-2001 Resol. agency - Bowen Court R LS 2001-0385 52 01 Res. No. 321 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF HUNTINGTON BEACH ) i, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at a regular meeting of said Redevelopment Agency held on the 4th day of June, 2001 and that it was so adopted by the following vote: AYES: Green, Boardman, Cook, Dettloff, Bauer NOES: Julien Houchen ABSENT: Garofalo ABSTAIN: None Clerk of the Redevelopment Agency of the City of Huntington Beach, CA Project Deal Points ATTACHMENT #6 PROJECT DEAL POINTS BY AND BETWEEN THE CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY AND BOWEN COURT, L.P. (MERIT HOUSING, INC.) BOWEN COURT SENIOR APARTMENTS 1968 LAKE STREET AS OF MAY 3112001 1. The Redevelopment Agency will provide a residual receipts loan to Merit Housing Corporation in an amount not to exceed $900,000 with 3% annual simple interest using Agency Housing Set Aside funds. The Agency's loan will be reduced dollar for dollar to the extent County of Orange or alternative additional financing is available for the project. Merit Housing will be expected to demonstrate to the satisfaction of the Agency's Executive Director that a diligent and good faith effort was made to obtain additional financing and that such financing is not achievable. The Agency's assistance will be used to develop an affordable senior housing project to be known as Bowen Court Senicr Apartments located at 1968-1982 Lake Street. 2. The Agency will lease the .75-acre parcel located at 1968-1982 Lake Street to Merit Housing at a rate of $1 per year for 60 years. The lease will contain a provision for an extension of the lease period should Merit Housing choose to continue operating the property as an affordable senior housing project beyond the affordability period. If Merit Housing Corporation is unsuccessful in obtaining Tax Credit financing, either party may terminate the lease with 30 days notice. If the project does not receive a reservation of Tax Credits by December 30, 2002, the lease will automatically terminate. 3. Merit Housing Corporation will obtain Tax Credit financing in an amount anticipated to be $1,782,436 and conventional financing in an amount anticipated to be $725,000. Merit Housing will attempt to obtain Orange County Housing and Community Development financing or alternative financing of $400,000. The sum of all financing received by Merit Housing must ensure that no more than $900,000 is required from the Agency to fully fund the project. The conventional financing will be secured in first position, the County's financing may be secured in second position, and the Agency's loan will be secured in third position. If Merit Housing Corporation is unsuccessful in obtaining County financing, the Agency's loan will be subordinated only to the conventional loan. 4. Merit Housing Corporation will be required to demonstrate evidence of Tax Credit proceeds of approximately $1,782,436 and conventional financing of approximately $725,000 for the project before the Agency will fund its loan. Evidence of conventional financing may be in the form of commitment letters from the construction and permanent lenders. 5. At the end of the third year of the residual receipts loan agreement, and continuing for the duration of the agreement, Merit Housing Corporation will make annual payments to the Agency on its residual receipts loan. Such payments shall be fifty percent (50%) of the project's end -of -year net income (also known as cash flow by Page 1 of 3 Merit Housing). After the 60th year of the project's required affordability period, all outstanding principal and interest owed to the Agency will be due. 6. Upon achievement of stabilized occupancy within the project, Merit Housing Corporation will establish a replacement reserve at a sufficient level to fund repairs and improvements to the properties so as to ensure that the buildings remain in compliance with HUD Housing Quality Standards along with City and State laws and codes. Merit Housing Corporation will invest at least $150 per unit per year into the replacement reserves. As capital repairs become necessary, all expenses must be paid first through replacement reserves then from cash flow. 7. In the event Merit Housing Corporation wishes to refinance the original first lien, the Agency will have authority to approve or deny such request. Although approval of such a request shall not be unreasonably withheld, the Agency will consider various factors including the following: compliance with Agency loan terms, the capitalization rate used to value the property, the projected income based on restricted rents that used to value the property, and the percent of debt to equity that will be established under the new loan. The Agency will support a request to refinance that will improve loan terms. 8. For a period not less than 60 years, all 20 units in the property will be subject to tenant household income and rent affordability restrictions. All units will be rented to very low-income households, and rents may not exceed affordability standards established by California Health and Safety Code Section 50053. The maximum allowable rent will be adjusted annually upon receipt of updated federal department of Housing and Urban Development (HUD) income and rent standards. All tenant paid utilities must be subtracted from the maximum allowable rents for the project. 9. To verify that tenant households meet the very low-income limit, Merit Housing Corporation will maintain records that clearly document tenant eligibility. These records will be updated at least annually and will be maintained for a period not less than three years after a tenant no longer resides at the property. Verification of tenant income will be performed in compliance with the Agency's Housing Rehabilitation loan Program Policies and Procedures. If a tenant household's gross income increases and thus the household no longer qualifies for residency in the restricted unit, that tenant will be given 90 days to relocate. Should a tenant face extraordinary hardship satisfying this requirement, a written appeal may be submitted to the Agency. Upon receipt of a written appeal and at the sole discretion of the Agency's Deputy Executive Director, this period may be extended for a period not to exceed 90 additional days. 10. The maximum number of persons in a household that may occupy a single one - bedroom residential unit may not exceed two persons. It will be the responsibility of Merit Housing Corporation to enforce this occupancy limit. 11. Merit Housing Corporation will maintain the properties in compliance with HUD Housing Quality Standards along with City and State laws and codes. The Agency may perform inspections of the property to ensure compliance with this requirement. Should Merit Housing Corporation fail to adequately maintain the property, any deficiencies identified by the Agency must be addressed within 30 days and cured within a reasonable time thereafter. Page 2 of 3 12. At the end of each year while income and affordability restrictions apply to the project, Merit Housing Corporation will provide the Agency with copies of audited financial statements along with cash flows of the project. These financial statements must clearly show the status of the project's replacement reserve account and end of year cash balance. Upon review of the financial statements, the Agency may at its option perform a comprehensive review of appropriate records to verify the accuracy of such records. 13. At the end of each year while income and affordability restrictions apply to the project, Merit Housing Corporation will provide the Agency with copies of monthly rent records and tenant eligibility certifications. These reports shall be in a format provided by the Agency. Upon review of such records, the Agency may at its option perform an audit of tenant files to verify compliance with income and affordability requirements. 14. Merit Housing Corporation will provide adequate insurance to protect the Agency from loss due to fire or other standard property hazards. The property must be insured for an amount equal to the replacement cost of the entire project site, and the insurance must include a guarantee for full replacement of the site. 15. Merit Housing Corporation will comply with all federal, state, and local nondiscrimination, fair housing, and equal opportunity requirements. Reviewed and Accepted: i C ///Zzo/ Eunice Bobert Date President of Bowen Court, L.P. Chief Executive Officer of Merit Housing, Inc., its General Partner C. David Biggs Huntington Beach Redevelopment Agency Deputy Executive Director 6/1 / wpt Date Page 3 of 3 CITY OF HUNTING"CON BEACH Inter -Department Communication N C 15 _ C-1."� nzn To: HON. MAYOR AND MEMBERS OF THE CITY COUNCIL_ a-<nm From: GAIL HUTTON, City Attorney �> M- cnn =o T DAVID BIGGS, Director of Economic Development ;-- Date: June 4, 2001 z=' Subject: LATE COl1IMUNICATION REGARDING ITEM NO. D-I ON THE CITY COUNCIL/REDEVELOPMENT AGENCY AGENDA FOR THE JUNE 4, 2001 CITY COUNCIL/REDEVELOPINIENT AGENCY MEETING -- BOWEN COURT SENIOR AFFORDABLE HOUSING FACILITY At the request of the developer and with the concurrence of the City Attorney and the Director of Economic Development, it is requested that certain minor changes be made to the Development and Disposition Agreement regarding Bowen Court, as well as Attachment No. 6 to the Agreement, entitled "Agreement Containing Covenants." Attached hereto please find both pages indicating the changes made, along %with corrected pages to be substituted into the Black -lined two Agreements. GAIL HUTTON City Attorney Attachments: As noted ��� C4MMvNvToN D-1 F. The Agency will lease the Property to Developer for sixty (60) years. The fair market value of the Property is Eight Hundred and Eighty-five Thousand Dollars (5885,000). G. Developer will obtain (i) tax credit financing, and (ii) conventional financing of approximately 5725,000, which together with the (iii) Agency's loans and any (iv) County Loan will be used for construction of the Project on the Property. Developer will obtain tax credit financing in such an amount that, when added to the Agency Loan, and conventional financing, and the Orange County or alternative financing, if any, will be sufficient to complete construction of the project. The Agency will provide Nine Hundred Thousand Dollars ($900,000) to Developer in�the form of a 60-year Agency Construction Loan secured by a trust deed. There will be an annual1% simple interest charge applied to the outstanding loan balance during the term of the note. In addition, the Developer shall use its best effort to obtain County of Orange or alternative sources of financing up to Four Hundred Thousand Dollars (5400,000). The Agency Construction Loan shall be reduced dollar for dollar, by the amount of said financing, if any. H. If Develo .r does not obtain commitment for tax credit financing p t e e f cing by December 31, 2002, in an amount that, when added to the Agency Construction Loan, conventional financing, and the Orange County or alternative financing, if any, will be sufficient to complete construction of the project, Agency may; upon thirty (30) days written notice to Developer, terminate this Agreement and the Lease, in which case Developer will quit claim the Leasehold Estate to the Agency. 1. At the end of the third year of the Agency Construction Loan, and continuing for the duration of the Loan, Developer will matte annual payments to the Agency on its Construction Loan. Such payments shall be fifty percent (50%) of the project's end -of -year net income. J. After the 60th year of the project's required affordability period, should Developer wish to continue operating the project with income and affordability restrictions of the Property Lease, the Agency will extend the term of the Loan. NOW, THEREFORE, in consideration of the promises and covenants contained herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which arc hereby acknowledged, the parties hereto agree as follows: �. 7-�� SF-2001 Agree: Bowen Court: DDA W1101 - 11:00 AM ACREEI1IF,h'T \1.,§00] DEFINiT10NS A. \] s l 01 ] Defined Terms. All capitalized terms used in this Agreement and the exhibits attached hereto, and not expressly defined oth�dwise, have the respective meanings set forth in the following list of defined terms: "Affiliate" shall mean :(�I) any Person directly or indirectly controlling, controlled by or under common control with another Person; (2) any Person owning or controlling ten percent (10%) or more of the outstanding rting securities of such other Person; and (3) if that other Person is an officer, director, member or partner, any company for which such Person acts in any such capacity. The term "control" as used in the immediately preceding sentence, shall mean the power to direct the management. It shaft be a presumption that control with respect to a corporation or limited liability company is\the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or.�tirectly, of the power to direct or cause the direction of the management or policies of the controlled entity. "Agency" means the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic. Unless specifically providcd 0thcrn,,•ise in this Agreement, any requirement in this Agreement that a matter is to be approved by "Agency" shall be satisfied by the written approval by th-- Director (defined below). "Agency Construction Loan" shall mean the loan to be ma a by the Agency to the Developer pursuant to the Schedule of Performance, in a principal amount not to exceed Nine Hundred Thousand Dollars ($900,000), which shall be reduced, dollar or dollar, by the amount of the County or alternative loan, if any. \ "Agency Construction Loan Closing" shall mean the closing of the Agency Construction Loan as evidenced by the recording of the Agency Deed of Trust. \ "Agency Deed of Trust" shall mean the deed of trust securing the Residual Receipts Loan substantially in the form attached hereto as Exhibit No. S. "Agency Note" shall mean the promissory note evidencing the Residual Re substantially in the form attached hereto as Exhibit No. 7. "Agreement Containing Covenants" shall mean the Agreement Containing substantially in the form attached to this Agreement as Attachment No.G. "Approved Exceptions" shall mean those titl.- matters shown as exceptions PTR which are approved by Developer under Section 305 of this Agreement 5F-2001 Agree: Bowen Court: DDA W1101 - 10:38 Ali reasonably determined by the Director, (B) an endorsement for broad form property damage, breach of warranty, demolition costs and debris removal, and (C) a "Replacement Cost Endorsement" in amount sufficient to prevent Developer from becoming a co-insurer under the terms of the policy, but in any event in an amount not less than 100% of the then full replacement cost, to be determined at least once annually and subject to reasonable approval by the Director. The replacement cost coverage shall be for work performed and equipment, supplies and materials furnished to the Property or any adjoining sidewalks, streets and passageways, or to any bonded warehouse for storage pending incorporation into the work, without deduction for physical depreciation and with a deductible not exceeding S25,000 per occurrence (except that earthquake coverage, if obtained, shall carry a deductible not to exceed 25% of the policy amount, or such 'ether deductible amount as Director may reasonably determine is acceptable, in light of the cost of the premium for�uch insurance). (iii) Worker's Compensation Insurance. Worker's compensation insurance, to be carried by Developer, the General Contractor, all subcontractors and consultants, in an amount ana form sufficient to meet all applicable Governmental Requirements, and employer's liability coverage to a limit�of not less than $1,000,000, with respect to personal injury or deto any one or more persons or damage to property. Such ch policies shall cover all persons providing labor or services to or on behalf of Developer, the General Contractor, subcontractors or consultants and all risks to such persons arising out of construction, use or occupancy of the Property or repair of or entry onto the Project, prior to Completion. (c) Each Insurance Policy required under Section 4 0(b) (or the particular Insurance Policies specified below) shall: (i) Be in form and substance as is then standard in California for policies of like coverage; (ii) Be issued by insurance carriers qualified and licensed to engage in the insurance business in the State of California and having a current Policyholder's Management and Financial Size Category Rating of not less than "A V 36 SF-2001 Agree: Botm Court: DDA ` 61101 - 10.38 AN1 (iii) Primary coverage: "Said policy and coverage as is afforded to the City of Huntington Beach and the Redevelopment Agency of the City of Huntington Beach, their elective and appointive boards, officers, agents and employees shall be primary insurance and not contributing with any other insurance maintained by the City of Huntington Beach or the Redevelopment Agency of the City of Huntington Beach" (e) Prior -.to the Lease Closing, and not less than 30 days prior to the expiration date of each Insurance Policy required under subsection (b), Developer shall cause to be delivered to Agency: (i) a complete certified copy of each such Insurance Policy or renewal or replacement Insurance Policy, provided, however, that delivery of a certificate of insurance shall be sufficient for purposes of this clause (i); Jii� satisfactory evidence of payment of the premium therefor; and (iii) a statement of noncancellatlon consistent with Section 410 (d); and (iv) the endorsement described at Section 410(d). If Developer has not provided Agency with the foregoing proof of coverage and payment within ten (10) Business Days after receipt of written request therefor, Agency may, in addition to any other -available remedy, without obligation and without further inquiry as to whether such insurance is actually in force, and upon ten (10) days prior written notice to Developer, obtain such an Insurance Policy and Developer shall reimburse Agency for this cost thereof upon demand. (f) if on account of Developer's failure to comply with the provisions of this Section 410, Agency is adjudged to be a co-insurer by an insurance tamer, then any loss or damage it shall sustain by reason thereof shall be borne by Developer, and Developer shall immediately pay the same upon receipt of written demand therefor and evidence of such joss or damage. (g) Developer shall observe and comply with the requirements of all Insurance Policies. Developer also shall perform and satisfy the reasonable requirements of insurance companies writing such types of Insurance Policies so that at all times -companies of good standing and meeting; the requirements of subsection (b) shall be willing to write or to continue such coverage. Developer shall at all times comply with all rules, regulations, orders and requirements of any recognized organization which establishes fire ratings for structures such as the improvements at the Project. \ (h) Any insurance coverage required in this Section 410 may be \ effected by a policy or policies of blanket insurance; provided that (a) the Project (or, in the case of builder's risk and errors and omissions coverage, the Work of Improvement) is specifically identi Pied therein, by endorsement or otherwise, as included in the coverage provided; (b) the amount of the total insurance allocated to the Project (or contract) shall be such as to furnish protection equivalent to that which would be afforded by separate Insurance Policies in the amounts herein required; and (c) in all other respects any such blanket policy or policies shall comply with all other provisions of this Section 410. In any such case Developer shall delivery to Agency a certified copy of such policy or a certificate evidencing such insurance. 38 Sr-2001 Agree: Bowen Court: DDA 611101- 10:38 Aft require the Developer to change the management agent in accordance with the terms of this paragraph. 15. Enforcement. In the event Developer defaults in the performance or observance of any coven t, agreement or obligation of Developer pursuant to this Agreement, and if such default remain\uncured for a period of thirty (30) days after written notice thereof (or such longer period as may apply to the specific alleged default) shall have been given by Agency, or, in the event said default cannot be cured within said time period, Developer has failed to commence to cure suc� default within said thirty (30) days and diligently prosecute said cure to completion, then Agency shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (a) By mandamus or other suit, action or proceeding at law or in equity, require Developer to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of Developer hereunder, including foreclosure pursuant to the Agency Deed of Trust and/or terminating the Lease between the Agency and Developer. \ Except as otherwise expressly stated in this A�reemcnt, the rights and remedies of the parties are cumulative, and the exercise by any party of bne or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. 16. Subordination. This Agreement shall be junio \d subordinate to the liens of the deeds of trust identified in the DDA as Permitted Mortgages and such other and further documents, including regitlatory agreements (including those required.by Fannie Mae and the California Tax Credit Allocation Committee) or other lenders may require. If, from time to time and at one or more times, Developer seeks to refinance the loan secured by any deed of trust which is either superior or junior to this Agreement, Agency shall have the right to approve such refinancing and deed of trust pursuant to Section 428 of the DDA. Agency agrees to execute such subordination agreements as may be required to effect the priority set forth in this Section. 17. Attorne. sue. If any action or proceeding is brought by either party against the other under this Agreement, whether for interpretation, enforcement or otherwise, the prevailing party shall be entitled to receive from the other party all costs and expenses forsuch action or proceeding, including the fees of attorneys and any expert witnesses. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. 18. Amendments. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real properl records of the County of Orange. Attachment No. 6 Page 8 of 10 SF-2001 Agme: Bowen Court: Agmt. Containing Covenants RLS 00.302 611101 JUN 04 'el 09:34 FR MAYER EROWN PLATT LA7213 625 0248 TO 817143741590 P.04i13 G---V F. The Agency will lease the operty to Developer for sixty (60) years. The fair market value of the Property is Eight dred and Eighty-five Thousand Dollars ($885,000). G. Developer will o financing (i) tax credit f=cing, and (ii) conventional of approximately S725,000, whi together with the (in) Agency's loans and any (iv) County Loan will be used for constructio of the Project on the Property. Developer will obtain tax credit Enancing in such an arno t that, when added to the Agency Loan, and conventional financing, _ and the Grge Coun r alternative financing, if any, will be suffidert to complete construction of the project. The Agency will provide Nine Hundred Thousand Dollars (S900,000) to Developer in the form of a 60-year Agency Construction Loan secured by a trust deed. There will be an annual 3%simple interest cha.-ge applied to the outstanding loan b — orals the term of the note. In addition, the Developer shall use its best effort to obtain o� tufty 1....d or alternative sources of financing up to Four Hundred Thousand Dollars (S400,000). The Agency Construction Loan shall be reduced dollar for dollar, by the amount of said fnancing, if any. 11,441 H. If Developer does not obtain a writtedlc�omrn ent for tax credit financing by December 31, 2002, in an amount that, when ad d to the Agency Construction Loan, conventional fi=cing, and theme Cour. or alternative financing, if any, will be sufficient to complete construction of the project, Agency may, upon thirty (30) days written notice to Developer, terminate this Agreement and the Lease, in which case Developer will quit claim the L=chold Estate to the Agency. I. At the end of the third year of the Agency Construction Loan, and continuing for the duration of the Loan, Developer will make annual payments to the Agency on its Construction Loan. Such payments shall be fifty percent (50%) of the project's end -of -year net income. J. After the 60ei year of the project's required affordability period, should Developer wish to continue operating the project with income and affordability restrictions of the Property Lease, the Agency will extend the term of th 44,5 2 NOW, THEREFORE, in consideration of the promises and covenants contained Herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 7 5F 2001 Agree: Bowen Court: DDA 611101. I Its A.M �' a irs,s, r•rT� T �°� JLN-04-2021 09:39 213 625 0248 96% P.04 JUN 04 101 09:34 FR MAYER BROWN PLATT L.A7213 625 0248 TO 817143741590 P.05i13 AGREEMENT i �30 l AA a I. j§ 100] DEFINITIONS kr A. : )§ 101] Defined Term. All capitalized terms used in this Agreement and the exhibits attached hereto, and not expressly defined otbmvise, have the respective meanings set forth in the following list of defined terms: "Affiiate" shall mean (1) any Person directly or indirectly controlling, controlled by or under common control with another Person; (2) att} Person owning or controlling ten percent (10%) or more of the outstanding voting securities of such other Person; and (3) if tLat other Person is an officer, director, member or partner, any company for which such Person acts is any su: h capacity._ The term "control" as used in the immediately preceding sentence, shall mcaa the power to direct the management. It shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individuzl, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity. "Agency" means the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic. Unless specifically provided otherwise in this Agreement, any requirement in this Agreement that a matter is to be approved by "Agency" shall be satisfied by the written approval by the Director (defined below). "Agency Cons on Loan" shall mean the loan to be made by the Agency to the Developer t to the S We of Performance, in a principal amount not to exceed Nine Hundred to (S9 0,000). which sbaJ be reduced, dollar for dollar, by the amount of the C ty, o � tte==tive 1 if any. + 0.0 All " ency Co .tction Loan Closing" shall r;teart the closing of the Agency Construction Lean as evidenced by t .e recording of the Agency Deed of Trust. "Agency Deed of Trust" shall mean the deed of trust securing the Residual Receipts Loan substantially in the form attached hereto as Exhibit No. S. "Agency Note" shall mean the promissory note evidencing the ipts Loan, substantially in the form attached hereto as Exhibit No. 7. pCtA- Cy eo-+ -$I— Ctr-Z. "Agreement Containing Covenants" shall mean the Agreement Containing Covenants substantially in the form attached to this Agreement as Attachment No.6. "Approved Exceptions" shall mean those title matters shown as exceptions to title on the PTR which are approved by Developer tinder Section 305 of this Agreement -- 8 SF,2001 Agree: Bown court: DDw 6/Iro1 - 11:58 tiM J N-04-Z021 09:43 213 625 0249 F,t:5 JlN e4 -01 10:56 FR MAYER BROWN PLATT LA7213 625 0248 TO 817143741590 P.02/02 glass breakage and such other causes as are covered by such form of insurance. Such policy shall include (A) an endorsement for earthquake, unless earthquake insurance is not commercially available at a reasonable cost, as reasonably determined by the Director, (B) an endorsement for broad form property damage, breach of warranty, -� demolition costs and debris removal, and (C) a "Replacement Cost Endorsement" in amount sufficient to prevent Deve'.oper from becoming a co-insurer under the terms of the policy, but in any event in an amount not less than 100% of the then full replacement cost, to be determined at East once annually and subject to reasonable approval by the Director. The replacement cost coverage shall be for work performed and equipment, supplies and materials furnished to the Property or any adjoining sidewalks, streets and passageways, or to any bonded warehouse for storage pending incorporation into the work, without deduction for physical depreciation and with a deductible not exceeding S25,000 per occurrence (except that earthquake coverage, if obtained, shall carry a deductible not to exceed 25% of ti:e policy amount, or such other deductible amount as Director may reasonably determine is acceptable, in light of the cost of the premium for such insurance). (iii) Worker's Compensation Insurance. Worker's compensation insurance, to be carried by Developer, the General Contractor, s, in an amount and form sufficient to meet all applicable Governmental Requirements. and employer's liability coverage to a limit of not less than S 1,000,000, with respect to personas injury or death to any one or more persons or damage to property. Such policies shall cover all persons providing labor or services to or on behalf of Developer, the General Contractor, s and all risks to such persons arising out of construction, use or occupancy of the Property or repair of or entry onto the Project, prior to Completion. (c) Each Insurance Policy required under Section 410(b) (or the particular Insurance Policies specified below) shall: SP-2001 Agee- Bowen Court: VDA 614,101- 10:50 AIM DDA.6x 060401 1049P (i) Be in form and substance as is then standard in Califomia for policies of like coverage; 38 JUN-04-2021 11:02 ** TOTAL PAGE.e2 213 625 0249 96% P.02 r— JUN 04 '81 09:38 FR MAYER BROWN PLATT LA7213 625 0249 TO 817143741590 P.11/13 (1) Primary coverage: "Said policy and coverage as is afforded to the City of Huntington Beach and the Redevelopment Agency of the City of Huntington Beach, their elective and appointive boards, ofbcers, agents and employees shall be pHrnary insurance and not contributing with imy other insurance : -- maintained by the City of Huntington Beach or the Redevelopnxnt Agency of tl,.e City of Huntington Beach." (e) Prior to the Lease Closing, and not less than 30 days prior to the expiration date of each Insurance Policy required under subsection (b), Developer shall cause to be delivered to Agency: (i) a complete certified copy of each such Insurance Policy or renewal or replacement Imsuranee Policy, provided, however, that delivery of a certificate of insurance sha11 be sufficient for purposes of this clause (i); (i) satisfactory evidence of payment of the premium therefor; and (ii1) a statement of noncancellation consistent with Section 410 (d); and (iv) the endorsement desenbed at Section 410(d). If Developer has not provided Agency with the foregoing proof of coverage: and payment within ten (10) Business Days after receipt of written request therefor, Agency may, in addition to any other available remedy, without obligation and without further inquiry as to whether such insurance is actually in force, and upon tea (10) days r r)� prior written notice to Developer, obtain] such an Insurance Policy and Developer shall reimburse l� Agency for this cost thereo a er s ure to co provislo �9�secti=410, Agency is adjudged to be a co-ia - , t any loss or damage it shall sustain b roe by Developer, and Developer shall 1p�t art � irnmedia same upon receipt of written demand therefor and evidence of such loss or (g) Developer shall observe and comply with the requirements of all Insurance Policies. Developer also shall perform and satisfy the reasonable requirements of insurance companies writing such types of Insurance Policies so that at all times companies of good standing and meeting the requirements of subsection (b) shall be wiling to write orto continue such coverage. Developer shall at all times comply with all rules, regulations, orders and requirements of any recognized organization which establishes fire ratings for structures such as the improvements at the Project. (h) Any insurance coverage required in this Section 410 may be eff_cted by a policy or poLcies of blanket insurance; provided that (a) the Project (or, in the case of builder's risk and errors and omissions coverage, the Work of Improvement) is specifically identified therein, by endorsement or othemise, as included in the coverage provided; (b) the w ount of the total it wance allocated to the Project (or contract) shall be such as to f=, 'sh protection equivalent to that which would be afforded by separate Insurance Policies in the amounts herein required; and (c) in all other respects any such blanket policy or policies shall comply with all other provisions of this Section 410. In any such case Developer shall delivery to Agency a certified copy of such policy or a certificate evidencing such insurance. -- 38 SF-2M I Agrw. Sawn Court DDA 6/1n] - 1211 PN JUN-04-2021 09'44 213 E25 2248 97% P.11 require the Developer to change the management agent in accordance with the terms of this paragraph. ' 15. Enforcerrent. In the event Developer defauks in the performance or observance of any covenant, agreement or obligation of Developer pursuant to this Agreement, and if such default remains uncured for a period of thirty (30) days after written notice thereof (or such longer period as may apply to the specific alleged default) shall have been given by Agency, or, : in the event said default cannot be cued within said time period, Developer has failed to commence to cure such default within said thirty (30) days and diligently prosecute said cure to completion, then Agency shall declare an "Evert of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (a) By mandamus or other suit, action or proceeding at law or in equity, require Developer to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of Developer hereunder, including foreclosure pursuant to the Agency Deed of T y Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. 16. Subordination. This Agreement sha'.1 be junior and subordinate to the liens of the deeds of trust identified in the DDA as Permitted Mortgages and such other and further documents, including regulatory agreements (including those required by Fannie Mae and the California Tax Credit Allocation Committee) or othar lenders may require. If* from time to time and at one or more times, Developer seeks to refinance the loan secured by any deed of trust which is either superior or junior to this Agreement, Agency shall have the right to appr6ve such refinancing and deed of tnlst pursuant to Section 428 of the DDA. Agency agrees to execute such subordination agre=ents as cagy be required to effect the priority set forth in this Section. 17. Attorn s' Fees. If any action or proceeding is brought by either party against the other under this Agreement, whether for interpretation4 enforcement or otherwise, the prevailing party shall be entitled to receive from the other party all costs and expenses for such action or proceeding, including the fees of attorneys and any expert witnesses. This provision shall also apply to any postjudgment action by either party, including %%ithout limitation efforts to enforce a judgment. 18. Amendments. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Orange. Attachment No. 6 Page E of to $F4001 Ague' Ba-= CouR: Ag -t. Cenmiaug Covenants RLS 00-302 6/3.G 1 JLJN-04-2001 09:39 213 625 2248 97% F.03 °j. nie CITY OF HUNTINGTON BEACH InterOffi ce Communication Economic Development Department _ On May 17, 2001, the Bowen Court DDA and Section 33433 Summary Reportwere made available for public review. Since that time, it became necessary for staff to revise several deal terms with the project developer. As revisions were agreed upon, portions of the DDA and the Summary Report were modified. For any person who may have reviewed the original DDA, the following summary describes the changes that were made in the version to be considered by the City Council and Redevelopment Agency at the June 4, 2001 public: hearing. 1. Structure of Redevelopment Agency Loan: The original DDA described two loans that the Agency would make to Merit Housing. One loan would be in the form of a second trust deed in the amount of $100,000 that would be repaid over a 30-year term. The second loan would be in the form of a residual receipts note that would be either $400,000 or $800,000 with a 60-year term. The amount of the residual receipts loan would depend on the ability of Merit housing to obtain other financing. As Merit Housing intends to apply to the State for Tax Credits, staff %%w advised that the proposed Agency loan terms did not meet the State's criteria. In order to maintain the projects ability to receive Tar Credits, the Agency's loans were restructured. The current DDA describes one residual receipts loan in an amount not to exceed $900,000, which will be reduced dollar - for -dollar to the extent Merit Housing receives other financing. 2. Loan Repayment: The original DDA allowed for repayment of the Agency's residual receipts loan beyond its 60-year term if Merit Housing would continue operating the project site as affordable senior housing. Because the State �} Y � U� Cr)MNVN1CP0N/ considered this loan structure incompatible with Tax Credit rules, the DDA was revised to require repayment of all outstanding Agency loan principal and interest at the end of the loan's 60-year term. 3. Environmental Study: Recent Geotechnical Reports on the project site indicate hydrocarbon "stains" on the property. At the request of the project developer, a provision was added to the DDA, which requires the Agency to conduct a "Phase II" environmental assessment. If this environmental study determines that soil contamination exists on the site, the developer will have an option to terminate the DDA. 4. Tenant's Right to Encumber Lease: In order for Merit Housing to obtain financing from a conventional lender for a construction loan and subsequently for a permanent loan, the DDA was revised to allow Merit Housing to mortgage or otherwise encumber its interest in the site lease. Staff would be glad to explain in further detail any of the above changes to the DDA and Summary Report upon request. Thank You. Bowen Court Senior Apartments Affordable Housing Project City of Huntington Beach June 4, 2001 Agenda Item D-1 Bowen Court Senior Apartments Proposed .Site is a Vacant .75 Acre Lot Owned by the Agency at Yorktown Avenue & Lake Street. Site is in the Yorktown -Lake Redevelopment Project Subarea. Site is Deed Restricted for Affordable Senior Housing up to 25 Units. 1 BackgroundAgo h v Lw t BT s Merit Housing was selected a project developer through a Request for Proposals in 1994. c� Bowen Court received entitlements in 1997. Merit Housing negotiated deal points with the Agency and pursued various financing options. a After Merit Housing did not secure financing in 1999, project was postponed indefinitely. °}=37- Background Cont. i an! • Merit Housing partnered with the Related Companies of California for their financial backing and affordable housing experience. • Financing for project is now attainable. ® Merit Housing will submit an application for Tax Credit financing later this month. • Agency DDA must be in place for project to be eligible for Tax Credits. 2 Financing Summary ® Financing sources include: • Tax Credits $1,782,436 • Conventional First Trust Deed $725,000 • Agency Residual Receipts Loan $900,000 0 Proposed Agency Residual Receipts Loan may decrease to $500,000 if alternative financing is secured. Proposal Summary • Agency will lease site to Merit Housing for 60 years (originally acquired for $885,000). • Merit Housing will build project and maintain affordability for 60 year lease term. • Agency will provide residual receipts loan up to $900,000 at 3% interest. • Loan repayment begins in year 3 with annual payments of 50% of the project's net income. • After 60 years, all outstanding loan principal and interest must be repaid. • Merit Housing may extend lease term if project will continue to be affordable senior housing. V E 3 ODA Terms • During Construction-•--�• -- --___._ _._. • If Merit Housing does not receive Tax Credits, the Agency may terminate the DDA • Site will be assessed for environmental contamination. • Buildings and landscaping will be compatible with surrounding neighborhood as approved by the Agency. • After Construction • All tenants must be very low-income. . 50% for households earning 50% median income. . 50% for households earning 45% median income. • Rents must be affordable. • Maximum unit occupancy limits must be enforced. •ti .- • The property must be well maintained. T Tenant Income Limits Household Size 45% of Median 50% of Median 1 $23,220 $25,800 2 $26,528 $29,500 Housing Affordability Unit Size Tenant Income Level Number of Units Restricted Rent 1 Bedroom, 45% 9 $582 150% I ---T 10 $651 [Total Number of Units 19 (plus 1 manager unit) M," 4 Addressing�Fr.-; Housing'' Needs pro: f 0 Satisfies Agency s= lnclusionary Housing y .. "' obligation created by the Huntington Classics. 0 Provides high -quality deeply -affordable senior housing close to many amenities. 0 Reduces households overpaying for rent. 0 Helps meet the City's high demand for affordable senior housing. Recommended City Action 1. Temporarily waive the City's insurance requirements until the close of escrow. This will allow the Agency to approve the DDA now. 2. Adopt Resolution Number 2001-34 approving the DDA between the Redevelopment Agency and Merit Housing Corporation for the construction of Bowen Court Senior Apartments. 5 Recommended Agency Action 1. Adopt Resolution Number 320 approving the DDA between the Redevelopment Agency and Merit Housing Corporation for the construction of Bowen Court Senior Apartments. 2. Authorize the Agency Chairman and Clerk to execute/record the loan agreement and related documents. 3. Adopt Resolution No. 321, which would allow the Agency to consider issuing future housing bonds for this project. L. U14z) The End 6 TABLE OF CONTENTS I. [§ 100 DEFINITIONS A. [ 013 Defined Terms H. [§ 200] UBJECT OF AGREEMENT A. [§ 201] Purpose of the Agreement. B. [§ 2021 The Redevelopment Plan/General Plan. C. [§ 2033 The Project Area D. [§ 2043 operty E. [§ 205] Pa ies to the Agreement. 1. [§ 2 ] Agency. 2. [§ 20 The Developer. F. [§ 2083 Prohibit n Against Change in Ownership Managem t and Control of Developer. III. [§ 3003 DISPOSITION OFT PROPERTY. A [§ 3013 Representations nd Warranties of Developer. B. [§ 3023 Representations a Warranties of Agency C. [§ 3033 Lease . D. [§ 304] Escrow. E. [§ 3051 Condition of Title F. [§ 306] Title Insurance G. [§ 307] Taxes and Assessments If. [§ 3083 Occupants of the Property 1. [§ 309] Condition of the Property J. [§ 3101 Deposit of the Purchase Price an greement Containing Covenants and Recorda ' n of the Grant Deed and Agreement Containin Covenants K. [§ 31 I ] Prcliminary Work by the Developer . L. [§ 3121 Submission of Evidence of Financing M. [§ 3133 Agency Financing , IV. {§ 4001 DEVELOPMENT OF THE PROPERTY. A. [§ 401] Development of the Property.. I. [§ 4023 Agreement to Design and Construct 2. [§ 4033 Scope of Development 3. [§ 404] Approval of Development and Management Teams 4. [§ 4041 Basic Concept Drawings 5. [§ 4051 Landscaping and Finish Grading Plan G. [§ 4063 Construction Drawings and Related Documents for the Property . 2 Sr-2001 Agree: Botm Court: DDA 611,101 - 10:51 AM Page 7. [§ 4071 Agency Approval of Plans, Drawings and Related Documents 8. [§ 408] Cost of Development 9. [§ 409] Schedule of Performance 10. [§ 410] Indemnification; BodilyInjuryand Property Damage Insurance . 11. [§ 411 ] Anti -discrimination during Construction [§ 4121 Local, State and Federal Laws 13. [§ 413] City and Other Governmental Agency Permits 14. 414] Rights of Access, Inspections and hieetin;s 15. [§ 4 Books, Records and Audits 16. [§ 416 Reports 17. [§ 4171 Required Notifications 18. [§ 418] Payment of Claims, Costs and Taxes . 19. [§ 4191 Additional Documents 20. [§ 420] eplacement of Third Parties. 21. [§ 421] C ection of Defects . 22. [§ 422] Stor t;e of Materials 23. [§ 423] Signs nd Publicity B. [§ 424] Subdivision of Propert C. [§ 4251 Taxes, Assessments an\kn,, D. [§ 4261 Maintenance of Properity E. [§ 4271 Security Financing; Rilolders . 1. [§ 428] No Encs except Mortgages, Deeds , nvcyances and Leases-r Ot r Conveyance for Finaor De elopment 2. [§ 429] Holder ligated Construct Improv.3. [§ 430 Notice ult to Mort nee, Deed of Trust or Other Security I crest Holders; Right to Cure 4. [§ 431] Failure of Holder to Complete Development . 5. [§ 432] Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default F. [§ 4331 Rights of Agency to Satisfy Other Liens on the Property After Title Passes. G. [§ 434] Certificate of Completion. 3 sr-2001 Agree: Mmen court: DDA 611ro1 - 10:51 A\t V. USE OF THE PROPERTY 501] Uses 502] Maintenance of the Property. . 503] Obligation to Refrain from Discrimination. . 04] Form of Nondiscrimination and Nonsegregation Clauses. 50 \507] Effect and Duration of Covenants. 50G] Rights of Access —Public Improvements and Facilities . 507] Operation of Project 508] ead-Based Paint 509] B 'ers to the Disabled 510] Mai <enance of the Property . K. [§ 511] Term d Residual Receipts Loan 1. [§ 512] Amount 2. [§ 513] Term 3. [§ 514] Repayment 4. [§ 515] efinition of Net Operating Income . 5. [§ 516] A 'ustment of Payment to Agency L. [§ 517] Financial Statemen § . , VI. [§ 600] DEFAULTS, REMEDIES ANP TERMINATION A. [§ 601] Default. , B. [§ 602] Notice . C. [§ 603] Cure Period D. [§ 604] Rights and Remedies . E. [§ 605] Legal Actions . 1. [§ 606] Institution of Legal ctions 2. [§ 607] Service of Process 3. [§ 608] Applicable Law . F. [§ 609 ] Damages G. [§ 610] Spccilic Performance . H. [§ 6111 Rights of Termination 1. [§ 612] Termination by Developer 2. [§ 613] Termination by Agency I. [§ 614] Agency's Rights of Reentry VII. [§ 700] GENERAL PROVISIONS A. [§ 701] Notices, Demands and Communications between the Parties B. [§ 702] Conflict of Interest C. [§ 703] Nonliability of Agency Officials and Employees D. [§ 704] Enforced Delay-, Extension of Time of Performance . E. [§ 705] Inspection of Books and Records F. [§ 706] Real Estate Commissions 4 SF-2001 Agree: [;omen Court: DDA 611M - 10:51 AM r _ i G. Plans and Data. Not a Joint Venture or Partnership Agrecment VPECIAL PROVISIONS Agrcemcnt Containing Covenants IxNTIRE AGREEMENT, WAIVERS AND AMENDMENTS XIME FOR ACCEPTANCE OF AGREEMENT Y AGENCY; OF AGREEMENT DATE ATTACHMENTS ATTACHMENT NO. I - I-ErA61, DESCRIPTION OF PROPERTY ATTACHMENT NO.2 - PRO RTY MAP ATTACHMENT NO.3 - SCHE YLE OF PERFORMANCE ATTACHMENT NO. 4 - SCOPE a DEVELOPMENT ATTACHMENT NO.5 - LEASE ATTACHMENT NO.6 - AGREEME \OF TAINING COVENANTS ATTACHMENT NO.7 - AGENCY NO ATTACHMENT NO.8 - AGENCY DETRUST ATTACHMENT NO.9 - CERTIFICATOMPLETION SF-2001 Agree: Bourn Court: DDA 611/01 - 10:51 ANI under this Agreement may also be extended in writing by the Agency and the [§ 705] Inspection of Books and Records The Al, ncy has the right at all reasonable times to inspect the books and records of the Developer perta ing to the Property as pertinent to the purposes of this Agreement. The Developer also ha he right at all reasonable times to inspect the books and records of the Agency pertaining to a Property as pertinent to the purposes of this Agreement. F. [§ 706] \ Real Estate Commissions The Agency shall not N liable for any real estate commissions, brokerage fees or finders fees which may arise from the sb e of the Leaschold Estate to the Developer. The Developer hereby agrees to defend, release, i emnify and hold harmless the Agency, the City and their employees, agents and consultants m any claim, liability, and/or cost (including attorneys' fees) which may arise out of or in con ction with any claim that such fees are due based upon its involvement with the broker. G. [§ 607] In the event this Agreement is terminate the Developer shall deliver to the Agency any and all plans and data concerning the Property. In uch event, the Agency or any person or entity designated by the Agency to receive such plans and ata, subject to the rights reserved by the architect or other draftsmen of such plans, to use such lans and data provided their use shall only be for the development of the Property. The Agen use of such plans and specifications shall be without any warrants or representation by the De toper or its agents. The Developer's agreement with the architect shall reflect the provisions of is Section 607. H. [§ 708] It is not the intent of the parties to create a joint venture orJVrtnership by entering into this Agreement. Vill. [§ 800] SPECIAL PROVISIONS A. [§ 8011 Agreement Containing Covenants The Property was acquired by the Agency with moneys from the Agenc Low and Moderate Income Housing Fund. Since the Agency is assisting the Developer in \Develo r's construction and redevelopment of the twenty (20) dwelling units pursuant to thi the Community Redevelopment Law requires that the twenty (20) dwelling units available at affordable housing costs to persons and families of low and moderate households in perpetuity. Accordingly, in order to implement this requirement, thagrees to execute and deliver to the Agency an Agreement Containing Covenantslly 60 sr 100I Agree: Dowen Caen: Dan NI.'01 - 10:38 AM PROOF OF PUBLICATION STATE OF CALIFORNIA) .. ) SS. County of Orange ) I am a Citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the below entitled matter. I am a principal clerk of the HUNTINCTON BEACH INDEPENDENT, a newspaper of general circulation, printed and published in the City of Huntington Beach, ' County of Orange, State of California, and that attached Notice is a true and complete copy as was printed and published in the Huntington Beach and Fountain Valley issues of said newspaper to wit the issue(s) of: May 17, 2001 May 24, 2001 -_I declare, under penalty of perjury, -that the foregoing is true and correct. Executed on . May 24 2001 at Costa !Mesa, California. Signature NOTICE OF JOINT PUBLIC HEARING By THE CITY COtIWX OF THE CrrY Hurm"OTON BEACH AND THE REDEVELOPMENT AGENCY OF THE HUNT N Ta OF BEACH ON A PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT PROVIDINO FOR THE LEASE OF REW"M PETHERTY MERGED REDEVELOPMENT PROJECT ARSA OF 4 THE CITY OF HUNTINGTON BEACH TO MERIT HOuSS"o CORPORATION ' NOTICE IS HEREBY G VEN THAT THE City Council 01 %a Crty of Huntington Beach. Cali- fornia (the 'City") and the Redevelopment Agency of the City of Huntington . Bosch the Agency") wfii hot a Joint public treating on .bins 4, 2001, el the hour of 7:00 PM. -or soon !hereafter as the matter can be heard, at Oty Hail. 2000 Main Street, Hunitic000xxn %"Ili. Cali- hxma Gort+in t tyo Ceti Redevelopment . ((►►itaafial1aa�� find Satiety Code Sedpri 33000. et m q-) for the purpose of sun. sicioning the ofpr proposed Di�spova ion and Development Agreement (the "DDA") between the Agency and Ment Housing Corpo- ration (the "DovelopeO. The Disposition and Development Agree. ment (the "DDA"} with Mein Housing tpo ration (the 'Developer') concerns .the 4*oowbDn of piape� have been or may be a0glired by the Redevelopment Agency of the City of Huntington Beach and leased to Mont ii Corporation. Tiro DD provdes l the lease of approximately 1.4 saes of parcels commonly known as 19WII%'2 Lake Street. The DDA inctudee the terms for dwetopnwrN of a senior affordable housing facil- ity of egproximatety 20 residential one -bedroom units. The purpose of the Joint public hearing Is to consider: 1. The proposed fosse of real property by the Agency to the de- l11 re' proposed terms and conditions of such lease of reel property. 3- The proposed s- position and Develop - merit Agreement e. AN evidence and testimony tot and against the approval of the Gapoismon and De- velopment Agreement and Cie lease of real property snd the terms and conditions there- fore. The Agency has epmed a Summary in connection the that 660 The ed value 'd the lnforeets to be Maaad. c. The purchase price of tie property to be feared. d. An explanation of thet� VA in the *Mutation of a.v other pertinent The ewnvirorrne" bn- pooq of the proposed pprrrojeeLcttd have boon d wwworwron- tat Impact ntpoon documents. At the above stated day. hour, and place, potsons hhaving �ob�rot�lotis to or xpress tha Ix :1 posfiorn and Develop- ment Agree 10M. the proposed lease of real pnw-ty or the proposed terms and SOndmtianY !Hereof may appear and 1: a heard L�e�or. the Agency and the City Councl an the voposed Disposition and De- velopmery Agreement. ny person desinng to to treetd at " hearing wA be allorde7 an op- portunity to be heard. The documents w tarred to above are availsble for public irt- specbon and copying h rs pvw = Of the Gay CWwk and Ine Clerk' of Ills Redevelopment Agerxy. CM HAmtinYOEtO Main Street. Hugton Beach. Camonnia. Dated May 14. 2001 CONNIE BROCKWAY , HurttlrrlTtaa perdt sn0' Clrrk d Mte - Hurrtlflptonb�iad►� of Published Hunlmglon Beach -Fountain Valley Independent May 17. 24. 21>at . _ .._. _ 451-835 41;.11_a' �V,A 0-7-01 �r2�,s1 NOTICE OF JOINT PUBLIC HEARING BY THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AND THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ON A PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT PROVIDING FOR THE LEASE OF REAL PROPERTY WITHIN THE MERGED REDEVELOPMENT PROJECT AREA OF THE CITY OF HUNTINGTON BEACH TO MERIT HOUSING CORPORATION NOTICE IS HEREBY GIVEN THAT THE City Council of the City of Huntington Beach, California (the "City") and the Redevelopment Agency of the City of Huntington Beach (the "Agency") will hold a joint public hearing on June 4, 2001, at the hour of 7:00 PM, or soon thereafter as the matter can be heard, at City Hall, 2000 Main Street, Huntington Beach, California, pursuant to California Community Redevelopment Law (Health and Safety Code Section 33000, et seq.) for the purpose of considering the approval of proposed Disposition and Development Agreement (the "DDA") between the Agency and Merit Housing Corporation (the "Developer„). The Disposition and Development Agreement (the "DDA") with Merit Housing Corporation (the "Developer") concerns the disposition of property which have been or may be acquired by the Redevelopment Agency of the City of Huntington Beach and leased to Merit Housing Corporation. The DDA provides for the lease of approximately 1.4 acres of parcels commonly known as 1986-1982 Lake Street. The DDA includes the terms for development of a senior affordable housing facility of approximately 20 residential one -bedroom units. The purpose of the joint public hearing is to consider: 1. The proposed lese of real property by the Agency to the developer. 2. The proposed terms and conditions of such lease of real property. 3. The proposed Disposition and Development Agreement 4. All evidence and testimony for and against the approval of the Disposition and Development Agreement and the lease of real property and the terms and conditions therefore. The Agency has prepared a Summary Report in connection with the Agreement that describes the specifics: Q. `k The cost of the DDA to the Agency. b. r%. The estimated value of the interests to be leased. c. 'X. The purchase price of the property to be leased. d_ 'S. An explanation of why the lease will assist in the elimination of blight. e- S, Other pertinent analysis. The environmental impacts of the proposed project have been analyzed in environmental impact reports and documents. At the above stated day, hour, and place, any and all persons having objections to or wishing to express support of the proposed Disposition and Development Agreement, the proposed lease of real property or the proposed terms and conditions thereof may appear and be heard before the Agency and the City Council on the proposed Disposition and Development Agreement. Any person desiring to be heard at the hearing will be afforded an opportunity to be heard.' The documents referred to above are available for public inspection and copying during the regular office hours at the office of the City Clerk and the Clerk of the Redevelopment Agency, City Hall, 2000 Main Street, Huntington Beach, California. Dated May 14, 2001 CONNIE BROCKWAY City Clerk of the City of Huntington Beach and Clerk of the Redevelopment Agency of the City of Huntington Beach. It H CITY OF HUNTINGTON BEACH Interoffice Communication Economic Development Department TO: Connie Brockway, City Clerk FROM: David Biggs, Director of Economic Development 00 DATE: May 10, 2001 SUBJECT: Public Notice for Redevelopment Agency Hearing on 614 The Redevelopment Agency will conduct a public hearing to consider a Disposition and Development Agreement for an affordable housing project on June 4, 2001. We are required by State law to publicly notice this hearing for two consecutive weeks prior to the Agency's meeting date. This means that our notice should be made; on both May 17, 2001 and May 24, 2001. My staff prepared the attached public notice, which, if it is in sufficient form, may be used for this hearing. Should you have any questions, feel free to contact Steve Holtz at extension 5901. Thank you. ;-ZV-t•-e 7) S, Redev'E hearing senior NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that on Monday, June 4, 2001, the ,nt Agency of the City of Huntington Beach, California will hold a public respect to the proposed Disposition and Development Agreement for a We housing project. Merit Housing, Inc. intends to lease land from the .nt Agency on which it will build 20 one -bedroom apartments for low- income seniok The project is known as "Bowen Court Senior Apartments" and is located at 196 Lake Street, Huntington Beach, California 92648, in the City of Huntington Beach\California. The heb(ng will commence at 7:00 p.m., or as soon thereafter as possible, and will be held at the Council Chambers located in the Civic Center at 2000 Main Street, Huntington b ach, California. Interested persons wishing to express their views on the project or on7T nature and location of the facility proposed will be given an opportunity to do so at the public hearing or may, prior to the time of the hearing, submit written comments to th City Clerk at 2000 Main Street, Huntington Beach, Califcrnia 92648. May 17, 2001. ` ��' l �o���J� C �20�✓� 5/ 77o - 7 L 1 NOTICE OF PUBLIC HEARING "BOWEN COURT SENIOR APARTMENTS" Proposed Senior Affordable Housing Project NOTICE IS HEREBY GIVEN that on Monday, June 4, 2001, the Redevelopment Agency of the City of Huntington Beach, California will hold a public heating with respect to the proposed Disposition and Development Agreement for a senior affordable housing project. Merit Housing, Inc. intends to lease land from the Redevelopment Agenc�\on which it will build 20 one -bedroom apartments for low- income seniors. The project is known as "Bowen Court Senior Apartments" and is located at 1968 Lake Street, Huntington Beach, California 92648, in the City of Huntington Beach, California. \ Further information may be obtained from the Deputy Executive Director at the Economic Development Department, 5t' Floor, 2000 Main Street, and Huntington Beach or by telephone at (714) 536-59b9. The hearing will commend at 7:00 p.m., or as soon thereafter as possible, and will be held at the Council Chambers located in the Civic Center at 2000 Main Street, Huntington Beach, California. Interested persons wishing to express their views on the project or on the nature and location' of the facility proposed will be given an opportunity to do so at the public hearing or may, prior to the time of the hearing, submit written comments to the City Clerk at 2000\t{Vlain Street, Huntington Beach, California 92648. \ May 17, 2001 By: Connie Brockway Clerk of the Redevelopment Agency PUBLISH TWICE MAY 17 MAY 24 RON' AIEETING DATE: DEPARTMENT REQUESTING: Economic Development ZOO I SUBJECT: Disposition and Development AGreement for Bowen Court Senior Apartments TODAY'S DATE May 11, 2001 VERIFIED BY ADIIININSTRATION: U APPIIO*v'ED BY: Ray Silver City Administrator 5111101 3:24 PN1 Date:May 18, 2001@ 9:30 a.m. Re: Summary Report Pursuant to Section 33433 of the California Community Redevelopment Law on a Dlsposltlon and Development Agreement by and between the Redevelopment Agency of the City of Huntington Beach and Merit Housing Corporation. This Summary Report was due to be filed on Thursday, May 17, 2001 with the Office of the City Clerk. The Report was provided to the City Clerk's Office on Friday, May 18, 2001. There were no inquiries or requests for this report. There have been no inquiries or requests to date. SUMMARY REPORT PURSUANT TO SECTION 33433 of the CALIFORNIA COMMUNITY REDEVELOPMENT LAW on a DISPOSITION AND DEVELOPMENT AGREEMENT by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH and MERIT HOUSING CORPORATION The following Summary Report has been prepared pursuant to Section 33433 of the California Health and Safety Code. This report sets forth certain details of the proposed Disposition and Development Agreement (Agreement) between Merit Housing Corporation (Developer) and the Redevelopment Agency of the City of Huntington Beach (Agency). The proposed transaction requires the Agency to convey the .75-acre site located at Yorktown Avenue and Lake Street (Site) to the Developer. The Agreement requires the Developer to construct 20-apartment units with adjacent garages and a community building; all 20-units must be allocated to very -low income senior citizen households (Project). This Summary Report is based upon information contained within the Agreement; and is organized into the following seven sections: I. Salient Points of the Agreement: This section identifies the major responsibilities imposed on the Developer and the Agency by the Agreement. It. Cost of the Agreement to the Agency: This section details and quantifies the costs to be incurred by the Agency to implement the Agreement. Ill. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted Under the Redevelopment Plan: This section estimates the value of the interests to be conveyed determined at the highest use permitted under the existing zoning and the requirements imposed by the Yorktown -Lake Redevelopment Project Redevelopment Plan (Redevelopment Plan). IV. Estimated Reuse Value of the Interests to be Conveyed. This section estimates the value supported by the Site based on the required scope of development and the other conditions and covenants required by the Agreement. 01050xx.HT8:KHH.gbd 14066.0011xxx;21112001 V. Consideration Received and Comparison with the Fair Reuse Value: This section describes the compensation to be received by the Agency, and explains the reasons for any difference between the compensation and the established fair reuse value of the Site. VI. Blight Elimination: This section describes the blighting conditions on the Site, and explains how the implementation of the Agreement will alleviate the blighting influence. VII. Conformance with the AB1290 Implementation Plan: This section explains how the Agreement complies with the redevelopment strategy identified in the Agency's adopted AB1290 Implementaton Plan. This report and the Agreement are to be made available for public inspection prior to the approval of the Agreement. I. SALIENT POINTS OF THE AGREEMENT A. Developer Responsibilities 1. The Developer must ground lease the Site from the Agency for a 60-year term. The Developer can extend the ground lease term indefinitely as long as the defined income and affordability standards are maintained. 2. The Developer must construct a 20-unit senior citizen apartment complex plus a community building. The Project must emulate the massing of the adjacent single-family home residential tract. In addition, the Developer must complete the following activities: a. The Developer must remediate the hazardous conditions exhibited on the Site. b. The units must include 540 square fee of living area plus outdoor decks or patios. C. The units must be outfitted with window coverings throughout. The kitchens must be equipped with an energy efficient ovenlrange, a frost free refrigerator, a dishwasher, a garbage disposal, cable television access and an emergency call system in each unit. d. The Project must conform to the California Title-24 Energy Conservation Measures. Ot 05oxx.HTB;KHH:gbd 2 14o66.001/xxx:tilnoo1 e. The Project must be designed to accommodate the special needs exhibited by senior citizen tenants. f. The Project must be constructed with post -tensioned concrete slab, and framed with wood, to achieve a Type V non -rated construction classification. All the units and the garages must be sprinktered in accordance with the City of Huntington Beach (City) ordinance. 3. The Developer must obtain $1.78 million in net Low Income Housing Tax Credit proceeds (tax credits), $725,000 in conventional financing and a $400,000 grant from the Orange County Housing and Community Development Department (County). However, if the funds are nct obtained from the County, the Developer may request additional assistance from the Agency. This request for additional funding can be accepted or declined at the Agency's sole discretion. 4. The Agreement requires the Developer to allocate 100% of the units in the Project to very -low income households over a 60-year period. The income standards must comply with the requirements imposed by California Health and Safety Code Section 50053 (Section 50053). 5. Once the Project reaches stabilized occupancy, the Developer must establish a replacement reserve account equal to at least $150 per unit per year. As capital repairs become necessary, the costs must first be funded from the reserve account, and then from the Projects cash flow. 6. The Agreement requires the Developer to repay a $100,000 fixed -payment Agency loan and up to a $400,000 Agency residual receipts loan. 7. The Developer is contractually required to limit the occupancy in the units to a maximum of two -person households. 8. The Developer must provide the Agency with audited financial statements for each year of the Project's operation. B. Agency Responsibilities The Agency must convey the Site to the Developer in the form of a long-term ground lease. No ground lease payments will be assessed to the Project over the 60-year ground lease term. 2. The Agency must provide two loans to the Project. These loans can be described as follows: 01050xx.HTB;KHH:gbd 3 14066.001hax;2J112001 a. A $100,000 loan will be provided to the Developer at a 5% interest rate. This loan must be repaid in level annual payments over a 30-year amortization period, b. Up to S400,000 in loan funds will be provided in the form of a residual receipts loan to the Project. This loan will carry 3% simple interest, and will be repaid from the cash flow generated by the Project. 11. COST OF THE AGREEMENT TO THE AGENCY The Agency costs to implement the Agreement consist of the Site assemblage costs and the Agency loans that will be funded under the terms identified in the Agreement. The Agency costs are off -set by the debt service payments received for the two Agency loans. The resulting net Agency revenuel(cost) to implement the Agreement are estimated as follows: Agency Costs Site Acquisition Costs Agency Assistance Fixed -Payment Loan Residual Receipts Loan Total Agency Cost Agency Revenue et Nominal Terms Present Value Terms' $885,000 $885.000 $100,000 $100,000 400,000 400,000 $1,385,000 $1,385,000 $1,029,000 $227,000 III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN Section 33433 of the California Health and Safety Code requires the Agency to identify the value of the interests being conveyed at the highest use allowed by the Site's zoning and the requirements imposed by the Redevelopment Plan. The valuation must be based on the assumption that near -term development is required, but the valuation does not take into consideration any extraordinary use and/or quality restrictions being Imposed on the development by the Agency. This valuation must be based on the assumption that the Site is vacant, and in a developable state. ' A 7% discount rate is applied to estimate the present values. 2 Equal to the present value of the projected debt service payments on the two Agency loans. 01050xx.HT13;KHH:gbd 4 14066.001/xxx;21 /2001 Keyser Marston Associates, Inc. (KMA), the Agency's financial consultant, estimated the fair market value of the Site at $1.0 million, or approximately $30 per square foot of land value. This valuation is based on the assumption that a detached single-family home project, at a density of approximately seven units per acre, represents the highest and best use of the Site from a financial perspective. . IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED In a pro forma analysis dated May 2001, KMA evaluated the financial characteristics of the proposed Project. This analysis determined that given the scope of development, the income/affordability requirements imposed by the Agreement, and the assistance to be provided by outside funding sources, the fair reuse value of the Site is negative $7,000. V. CONSIDERATION RECEIVED AND COMPARISON WITH THE FAIR REUSE VALUE The Agreement requires the Agency to convey the Site to the Developer in the form of a long-term ground lease with no required payments. Given that the fair reuse value of the Site is estimated at negative $7,000, KMA has concluded that the Agreement provides the Agency with fair compensation for the interests being conveyed. VI. BLIGHT ELIMINATION The Project includes the development of 20 senior citizen apartment units that must be rented to very -low income households. In accordance with the California Redevelopment Law, as portrayed In the California Health and Safety Code Section 33433, the sale of property that results in the provision of housing for low- or moderate income persons satisfies the blight elimination criteria imposed by Section 33433. Thus, the Project fulfills the blight elimination requirement. VII. CONFORMANCE WITH THE AB1290 IMPLEMENTATION PLAN The Agency's 1999 to 2004 AB1290 Implementation Plan specifically identifies the Project as a development to be undertaken to fulfill a portion of the Agency's affordable housing requirements. Thus, it is clear that the Project conforms with the AB1290 Implementation Plan that was adopted by the Agency. 01050xx.HT6;KHH:gbd rj 14066.0011xxx;21112001 DISPOSITION AND DEVELOPMENT AGREEMENT FOR BONVEN COURT by and between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTNGTON BEACH, AGENCY, and MERIT HOUSING CORPORATION, DEVELOPER. TABLE OF CONTENTS I. [§ 100] DEFINITIONS A. [§ 101] Defined Terms II. [§ 200] SUBJECT OF AGREEMENT A. [§ 20I ] Purpose of the Agreement. B. [§ 202] The Redevelopment Plan/General Plan. C. [§ 203] The Project Area D. [§ 204] Property E. [§ 205] Parties to the Agreement. 1. [§ 206] Agency. 2. [§ 207] The Developer. F. [§ 208] Prohibition Against Change in Ownership Management and Control of Developer. M. [§ 300] DISPOSITION OF THE PROPERTY. A [§ 301] Representations and Warranties of Developer. B. [§ 3021 Representations and Warranties of Agency C. [§ 303] Lease . D. [§ 3041 Escrow. E. [§ 3051 Condition of Title F. [§ 3061 Title Insurance G. [§ 307] Taxes and Assessments H. [§ 308] Occupants of the Property I. [§ 3091 Condition of the Property J. [§ 310] Deposit of the Purchase Price and Agreement Containing Covenants and Recordation of the Grant Deed and Agreement Containing Covenants K. [§ 311] Preliminary Work by the Developer . L. [§ 312] Submission of Evidence of Financing M. [§ 313] Agency Financing IV. {§ 400] DEVELOPMENT OF THE PROPERTY. A. [§ 401] Development of the Property.. 1. [§ 402] Agreement to Design and Construct . 2. [§ 403] Scope of Development 3. [§ 404] Approval of Development and Management Teams 4. [§ 404] Basic Concept Drawings 5. [§ 405] Landscaping and Finish Grading Plan 6. [§ 406] Construction Drawings and Related Documents for the Property . 2 Page SF-2001 Agree: Bowen Court: DDA 5,17/01 - - 4:33 PM 04 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. B. [§ 424] C. [§ 425] D. [§ 426] E. [§ 427] 1. 2. 3. 4. 5. F. [§ 433] G. [§ 434] [§ 407] Agency Approval of Plans, Drawings and Related Documents [§ 408] Cost of Development [§ 409] Schedule of Performance [§ 410] Indemnification; Bodily Injury and Property Damage Insurance . [§ 411] Anti -discrimination during Construction [§ 412] Local, State and Federal Laws [§ 413] City and Other Governmental Agency Permits [§ 414] Rights of Access, Inspections and Meetings [§ 415] Booms, Records and Audits [§ 416] Reports [§ 4171 Required Notifications [§ 4181 Payment of Claims, Costs and Taxes. [§ 4191 Additional Documents [§ 420] Replacement of Third Parties . [§ 421 ] Correction of Defects . [§ 422] Storage of Materials [§ 423] Signs and Publicity Reserved Taxes, Assessments and Liens Maintenance of Property Security Security Financing; Right of Holders. [§ 428] No Encumbrances except Mortgages, Deeds of Trust, Conveyances and Leases -Back or Other Conveyance for Financing for Development [§ 4291 Hold.-rNot Obligated to Construct Improvements . [§ 430 Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure [§ 431] Failure of Holder to Complete Development . [§ 432] Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default Rights of Agency to Satisfy Other Liens on the Property After Title Passes. Certificate of Completion. SF 2001 Agree: Bowen Court: DDA 55/17/31 - -4:33 PM as V. [§ 500] USE OF THE PROPERTY A. [§ 501] Uses B. [§ 502] Maintenance of the Property.. C. [§ 503] Obligation to Refrain from Discrimination. . D. [§ 504] Form of Nondiscrimination and Nonsegregation Clauses. E. [§ 505] Effect and Duration of Covenants. F. [§ 506] Rights of Access — Public Improvements and Facilities . G. [§ 507] Operation of Project H. [§ 508] Lead -Based Paint I. [§ 509] Barriers to the Disabled J. [§ 510] Maintenance of the Property . K. [§ 511] Term of Residual Receipts Loan 1. [§ 5121 Amount 2. [§ 513] Term 3. [§ 514] Repayment 4. [§ 515] Definition of Net Operating Income . 5. [§ 516] Adjustment of Payment to Agency L. [§ 517] Financial Statements . VI. [§ 600] DEFAULTS, REMEDIES AND TERMINATION A. [§ 601] Default. B. [§ 602] Notice . C. [§ 603] Cure Period D. [§ 604] Rights and Remedies . E. [§ 605] Legal Actions . 1. [§ 606] Institution of Legal Actions 2. [§ 607] Service of Process 3. [§ 608] Applicable Law F. [§ 609 ] Damages G. [§ 610] Specific Performance . H. [§ 611] Rights of Termination 1. [§ 612] Termination by Developer , 2. [§ 6131 Termination by Agency I. [§ 614] Agency's Rights of Reentry VH. [§ 700] GENERAL PROVISIONS A. [§ 701] Notices, Demands and Communications bet«,een the Parties B. [§ 702] Conflict of Interest C. [§ 703] Nonliability of Agency Officials and Employees D. [§ 704] Enforced Delay-, Extension of Time of Performance . E. [§ 705] Inspection of Books and Records F. [§ 706] Real Estate Commissions SF-2001 Agree: Bowcn Court: DDA 5/17/01 - - 4:33 Pit #4 G. [§ 707] Plans and Data. H. [§ 7081 Not a Joint Venture or Partnership Agreement VIII. [§ 800] SPECIAL PROVISIONS A. [§ 801] Agreement Containing Covenants IX. [§ 9001 ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS X. [§ I000] TMIE FOR ACCEPTANCE OF AGREEMENT BY AGENCY; OF AGREEMENT DATE ATTACHMENTS ATTACHMENT NO. l - LEGAL DESCRIPTION OF PROPERTY ATTACHMENT NO.2 - PROPERTY MAP ATTACHMENT NO.3 - SCHEDULE OF PERFORMANCE ATTACHMENT NO.4 - SCOPE OF DEVELOPMENT ATTACHMENT NO.5 - LEASE ATTACHMENT NO.6 - AGREEMENT CONTAINING COVENANTS ATTACHMENT NO.7 - AGENCY NOTE ATTACHMENT NO.8 - AGENCY DEED OF TRUST ATTACHMENT NO.9 - CERTIFICATE OF COMPLETION SF-2001 Agree: Down Court: DDA 5117/01- -4:33 PM #4 DISPOSITION AND DEVELOPMENT AGREEMENT FOR BO`VEN COURT This Disposition and Development Agreement ("Agreement') is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic (the "Agency"), and MERIT HOUSING CORPORATION, a California nonprofit corporation (the "Developer'). The Agency and the Developer agree as follows: RECITALS A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (California Health and Safety Code Section 33000 et seq). B. Agency is the owner of that certain real property in the City of Huntington Beach (the "Property'), described in the Legal Description attached hereto as Attachment No. 1 and depicted in the Property Map attached hereto as Attachment No. 2, which exhibits are incorporated herein by this reference. C. Agency wishes to facilitate the development of a twenty (20) unit affordable senior housing project on the Property (the "Project') by taking the following actions, subject to all of the terns and conditions of this Agreement: (1) lease the Property to Developer; and (2) provide limited construction and permanent financing for the Project as provided in this Agreement. D. The Property is located inside the boundaries of the Huntington Beach Redevelopment Project Area ("Project Area") in the City of Huntington Beach ("City"), State of California, and is to be redeveloped in furtherance of the provisions of (1) the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December 16, 1996, and which merged together four different, previously approved project area; (2) this Agreement; and (3) the General Plan of the City of Huntington Beach. E. The purpose of this Agreement is to effectuate the Redevelopment Plan by providing for the disposition of the Property and development of the Project. The accomplishment of the Project, and the fulfillment generally of this Agreement, are in the vital and best interests of the City of Huntington Beach and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state, and local laws and requirements. Further, Agency desires to meet its affordable housing goals pursuant to the Redevelopment Law by assisting Developer in the acquisition and construction of a 20-unit senior rental housing project on the Property. 6 SF-2001 Agree: Bowen Court: DDA 5117,411 - - 4:33 PM #4 F. The Agency will lease the Property to Developer. The fair market value of the Property is Eight Hundred and Eighty-five Thousand Dollars ($885,000). Developer will obtain tax credit financing of approximately $1,782,436, conventional financing of approximately $725,000, and Orange County Housing and Community Development financing of approximately $400,000, which together with the Agency's loans will be used for construction of the Project on the Property. The Agency will provide Five Hundred Thousand Dollars (5500,000) to Developer in the form of a 60-year Residual Receipts Loan secured by a trust deed. There will be an annual 3% simple interest charge applied to the outstanding loan balance during the term of the note. H. If Developer does not obtain tax credit financing by December 31, 2002, this Agreement, and the Lease will terminate and Developer will quit claim the Property to the Agency. I. If Developer is unsuccessful in obtaining County financing, it may request in writing additional loan funds from the Agency, which amount will be added to the residual receipts loan. The Agency Board will have sole authority to approve such a request. J. At the end of the third year of the Residual Receipts Loan, and continuing for the duration of the Loan, Developer will make annual payments to the Agency on its residual receipts Ioan. Such payments shall be fifty percent (50%) of the project's end -of -year net income. After the 60th year of the project's required affordability period, should Developer wish to continue operating the project with income and affordability restrictions, the unpaid balance of the loan will not require repayment and will not accrue further interest charges for whatever period Developer maintains the income and affordability restrictions on the property. Any time after the 60-year affordability period, should Developer choose not to continue operating the project as affordable senior housing, the Property Lease will expire and all outstanding principal and interest owed to the Agency will be due. NOW, THEREFORE, in consideration of the promises and covenants contained herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 7 SF-2001 Agree: Bowen Court: DDA 5117101 - -4:33 F%1 04 AGREEMENT I. [§ 100] DEFINITIONS A. ]§ 101] Defined Terms. All capitalized terms used in this Agreement and the exhibits attached hereto, and not expressly defined otherwise, have the respective meanings set forth in the following list of defined terms: "Affiliate" shall mean (1) any Person directly or indirectly controlling, controlled by or under common control with another Person; (2) any Person owning or controlling ten percent (101/o) or more of the outstanding voting securities of such other Person; and (3) if that other Person is an officer, director, member or partner, any company for which such Person acts in any such capacity. The term "control" as used in the immediately preceding sentence, shall mean the power to direct the management. It shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity. "Agreement Containing Covenants" shall mean the Agreement Containing Covenants substantially in the form attached to this Agreement as Attachment No.S. "Approved Exceptions" shall mean those title matters shown as exceptions to title on the PTR which are approved by Developer under Section 3.7 of this Agreement "Architect" shall mean the architect for the Project selected by Developer. "Business Day" shall mean a day which is not a Saturday or Sunday or a day on which banking institutions located in New York or California are authorized or required to remain closed. "Certificate of Completion" means the certificate to be issued by Agency upon its determination that Developer has completed the Work of Improvement in satisfaction of all requirements of this Agreement, substantially in the form attached hereto as Exhibit No. 11, which is incorporated herein by this reference, as provided in Section 7.2 of this Agreement. "City" shall mean the City of Huntington Beach, California. "Closing" or "Close of Escrow" shall mean the point in time when Agency conveys possession if the leasehold interest in the Property to Developer. 8 5F-2031 Agree: Bowen Court: DDA 5/17lQI - -4:33 PM sa "Agency" means the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic. Unless specifically provided otherwise in this Agreement, any requirement in this Agreement that a matter is to be approved by "Agency" shall be satisfied by the written approval by the Director (defined below). - "Agency Deed of Trust" shall mean the deed of trust securing the Residual Receipts Loan substantially in the form attached hereto as Exhibit No. 8. "Agency Loan" shall mean the loan to be made by the Agency to the Developer pursuant to the Schedule of Performance, in a principal amount not to exceed Five Hundred Thousand Dollars (5500,000), which in the discretion of the Agency Board, may be increased not to exceed Nine Hundred Thousand Dollars ($900,000) to replace Orange County Housing and Community Development financing. "Agency Note" shall mean the promissory note evidencing the Residual Receipts Loan, substantially in the form attached hereto as Exhibit No. 7. "Completion" shall mean the point in timewhen all of the following shall have occurred: (1) issuance of a permanent certificate of occupancy for the Project by the City; (2) recordation of a Notice of Completion by Developer or Developer's contractor for the Project; (3) the Architect certifies that construction of the Project has been completed in a good and workmanlike manner and substantially in accordance with the approved plans and specifications; (4) the expiration of the statutory period(s) within which valid mechanic's liens, materialman's liens and/or stop notices may recorded and/or served by reason of the construction of the Project, or, alternatively, Agency's receipt of valid, unconditional releases thereof from all persons entitled to record said liens or serve said stop notices, or, alternatively, Agency's receipt of notice of recordation of lien release bonds pursuan: to Civil Code Section 3143 relating to all mechanic's liens, materialman's liens and/or stop notices which may have been recorded and/or served by reason of the construction of the Project and which have not been released; and (5) Agency issues the Certificate of Completion pursuant to Section 434 of this Agreement. "Construction Contract" shall mean a general contract for the construction of the Project. "Construction Period" shall mean the period of time between the Closing and the Completion. "DDA" or "Agreement" shall mean this document fully executed by Agency and Developer. "Default" shall have the meaning set forth in Section 601 of this Agreement. "Defect" means any defect or deficiency in siting, design, layout, suitability, construction, installation, materials, workmanship or operation of or relating to the Project.. "Developer" shall mean Merit Housing Corporation, a California nonprofit corporation, or any assignee permitted by this Agreement. 9 SF-20)1 Agree: Bowen Court: DDA 3/1VC I - - 4:33 FM a4 "Development Costs" means costs incurred by Developer in connection with the Project to the extent set forth in the approved Project Budget. "Director" means the City Administrator and Executive Director of the Redevelopment Agency of the City of Huntington Beach. . "Escrow Agent" shall mean agent mutually acceptable to Agency and Developer. Title Company, or another escrow "Force Majeure" or "Force Majeure Event" shall mean the following events, provided that any one or more of such event(s) actually delays or interferes with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interference: war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the other party, acts or failure to act of the City of Huntington Beach or any other public or governmental agency or entity (except that acts or failure to act of Agency shall not excuse performance of Agency), or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event and reasonably determines that such event shall result in a delay. "Force Majeure Delay" shall mean any delay in commencing construction of the work of Improvement or in completion of such construction by the Scheduled Completion Date, proximately caused by the occurrence of any Force Majeure Event. "Governmental Approval" shall mean any and all special use permits, general plan amendments, zoning approvals or changes, required approvals and certifications under the California Environmental Quality Act and any other applicable Iaws and regulations relating to environmental conditions, tentative and final tract maps, variances, conditional use permits, special use permits, demolition permits, excavatiorJfoundation permits, grading permits, building permits, inspection reports and approvals, certificates of occupancy, and other approvals, permits, certificates, authorizations, consents, orders, entitlements, filings or registrations, and actions of any nature whatsoever required from any Governmental Authority in order to commence construction, construct the Project, occupy the completed Project and operate the Project therein. 14 Sr-20)1 Agree: Bowen Court: DDA 3/17/CI - -4:33 PM #4 "Governmental Authority" means the United States of America, the State of California, the County of Orange, the City of Huntington Beach, or any other political subdivision in which the Project is located, and any court or political subdivision, agency or instrumentality having jurisdiction over the Project or the Work of Improvement. "Gross Income" shall mean the gross rental income from the Property, and any other income to the Developer derived from the ownership, operation and management of the Property. "Hazardous Materials" shall mean (i) any chemical, compound, material, mixture or substance that is now or hereafter defined or listed in, or otherwise classified pursuant to, any laws as a "hazardous waste," "extremely hazardous substance," "extremely hazardous waste;' "acutely hazardous waste," "hazardous substance," "hazardous material," "radioactive waste," "infectious waste," "biohazardous waste," "pollutant," "toxic pollutant," "contaminant" or "toxic substance," as well as any formulation not mentioned herein intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "El' toxicity," or " TCLP toxicity"; (ii) petroleum, natural gas, natural gas liquids, liquefied natural gas, synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas) and ash produced by a resource recovery facility utilizing a municipal solid waste stream, and drilling fluids, produced waters and other waters associated with the exploration, development or production of crude oil, natural gas, or geothermal resources; (iii) "hazardous substance" as defined in Section 25281(f) of the California Health and Safety Code; (iv) "waste" as defined in Section 13050(d) of the California Water Code; (v) asbestos in any form; (vi) urea formaldehyde foam insulation; (vii) polychlorinated biphenyl ("PCBs ); (viii) radon; and (ix) any other chemical, material, or substance that, because of its quantity, concentration, or physical or chemical characteristics, exposure to which is limited or regulated for health and safety reasons by any Governmental Authority, or which poses a significant present or potential hazard to human health and safety, or to the environment, if released into the work place or the environment. "HUD" shall mean the U.S. Department of Housing and Urban Development. "Insurance Policies" shall have the meaning set forth in Section 410 of this Agreement. "Lease" means the instrument by which Agency shall convey title to the Property to the Developer, substantially in the form attached hereto as Attachment No. 5. "Legal Description" shall mean the legal description of the Property attached to this Agreement as Attachment No. 1 which is incorporated herein by this reference. "Operating Expenses" shall mean actual, reasonable and customary costs, fees and expenses directly attributable to the operation, maintenance, tares and management of the Property, expressly including, without Iimitation: payment of principal and interest, all periodic fees and costs attributable to any Permitted Financing; onsite administrative costs (including salaries and benefits); maintenance costs (including materials and labor); reasonable payments to an operating reserve account; reasonable payments to a replacement reserve account; painting, 11 Sr-20)t Agree: Bowen court: DDA 5/I 7ro t - - 4:33 PM M4 cleaning, repairs and alterations; landscaping; utilities; rubbish removal; certificates, permits and licenses; sewer charges; real and personal property taxes and assessments; insurance; security; advertising, promotion and publicity; office, janitorial, cleaning and building supplies; cable television, satellite and similar facilities; recreational amenities, supplies and services; a reasonable property management fee, not to exceed five percent (5%) of Gross Income; purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves); fees and expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party; and the amortized value of tenant improvements. The calculation of Operating Expenses shall be subject to the reasonable approval of the Agency.. "Owner's Title Insurance Policy" shall mean any title insurance policy requested to be issued to Developer at the Closing as provided in Section 306 of this Agreement. "Permitted Financing" shall mean any construction loan or take-out loan, secured by a Permitted Mortgage. "Permitted Mortgage" means a conveyance of a security interest in the Property to a lender (a "Permitted Lender"), or the conveyance of the Property to the lender or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan, all of which shall be subject, prior to Completion, to the terms and conditions set forth in Section 428 of this Agreement. "Permitted Transfer" means, prior to Completion, any of the following: a. An assignment of this Agreement and all of Developer's interests in any of the Property to an Affiliate; b. The inclusion of equity participation in Developer by transfer of partnership interests, shares of stock or limited liability shares or addition of additional partners, shareholders or members to Developer or similar mechanism; C. Any Permitted Mortgage; and d. The leasing of any apartment units for occupancy. Any Transfer described in clauses a. through c. shall be subject to the reasonable approval of the Director or designee, which shall be granted if the applicable conditions for approval described in this Agreement are satisfied. "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign. "Plans" means the final working drawings and specifications in the form of reproducible masters setting forth 12 SF-2001 Agree: Ro%en Court: DDA 5117101 - - 4:33 PN! u4 all details, requirements, standards and materials for the siting, physical layout and construction of the Project prepared by the Architect and as modified or supplemented from time to time and approved by the Executive Director, the City, and to the extent necessary, by each Governmental Authority. The Plans shall be consistent with the Scope of Development, and any plans previously approved by the City planning department or planning commission, and shall be prepared according to best industry practice. The Plans shall include as necessary, but not be limited to, site plans, demolition plans, excavation and foundation plans, structural plans with all elevations, building floor plans, building roof plans, building exterior plans, electrical plans, plumbing plans, mechanical plans, floor and ceiling plans, furniture plans, lighting plans, parking landscaping and irrigation plans, sign plans and all other plans and detailed information necessary to obtain a Construction Contract and all necessary building permits for the Work of Improvement. "Predevelopment Loan" shall mean the predevelopment loan to be made to Developer by Agency in accordance with the Method of Financing, evidenced by the Predevelopment Loan Note. "Project" shall mean the senior affordable housing residential apartment including approximately 20 one-bed/one-bath units. "Property" shall mean the real property described and depicted in the Legal Description and the Property Map. "PTR" mean the preliminary title report. "Redevelopment Law" means the Community Redevelopment Law of the State of California, set forth in Division 24, Part 1 of the California Health and Safety Code, beginning at Section 33000. "Schedule of Performance" shall mean the schedule attached to this Agreement as Attachment No.3, which is incorporated herein by this reference. "Scheduled Closing Date" shall mean the date that is June 14, 2001, subject to Force Majeure Delays. "Scheduled Completion Date" shall mean the date that is eighteen (18) months after Developer receives written commitment of the Tax Credit Financing. "Scope of Development" shall mean the document by that name attached to this Agreement as Attachment No. 4. "Property Map" means the document which is attached to this Agreement as Exhibit No. 2 and is incorporated herein by this reference. "Title Company" shall mean Title Company, or another title insurance company mutually acceptable to Agency and Developer. 13 SF-20)1 Agin: Bourn Court: DDA 511710 1 - - 4:33 PM #4 '"Title Policies" shall mean the Owner's Title Insurance Policy, Agency's Title Insurance Policy and Lender's Title Insurance Policy. "Transfer" shall mean any assignment or attempt to assign this Agreement or any right herein, or any total or partial sale, transfer, conveyance or assignment of the Property, any portion thereof or interest therein. II. [§ 200] SUBJECT OF AGREEMENT A. [§ 201] Pu1pose of the Agreement The purpose of this Agreement is to effectuate the Redevelopment Plan for Huntington Beach Redevelopment Project Area (the Yorktown Subarea) by providing for the disposition of certain real property (the "Property) and the redevelopment of the Property as an affordable senior housing project consisting of approximately twenty (20) for -rent dwelling units (the "Project") pursuant to the Schedule of Performance and Scope of Development, attached hereto as Attachment No. 3 and Attachment No. 4, respectively. As part of the Development, the Developer shall also provide all parking on -site, as necessary and appropriate for the proposed Development along with all appropriate landscaping. The Development is more particularly described in this Agreement and its attachments. The redevelopment and operation of the Property for such uses pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the City of Huntington Beach ("City") and the health, safety and welfare of its residents and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. B. [§ 202] The Redevelopment Plan/General Plan This Agreement is made in accordance with the Huntington Beach Redevelopment Project (the `Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December 16, 1996, and which merged together four different, previously approved project areas. The Property is within the Merged Redevelopment Project. Agency intends this Agreement to meet its obligations pursuant to Health and Safety Code Sections 33413, 33334.2 and 33413(b)(2)(A)(ii). This Agreement is also subject to the provisions of that certain General Plan for the City of Huntington Beach (the "General Plan'). Any amendment hereinafter to the Redevelopment Plan and/or the General Plan which changes the uses or development permitted on the Property as required by this Agreement or the restrictions or controls which apply to the Property shall require the prior written consent of the Developer. Except as provided in this paragraph, no other amendments to the Redevelopment Plan and/or the General Plan shall require the consent of the Developer. 14 SF-2001 Agree: Bourn Court: DDA 5/17101 - -4.33 P-104 C. [§ 203] The Proiect Area The Huntington Beach Redevelopment Project Area (the "Project Area") is located in the City of Huntington Beach, County of Orange, California. The exact boundaries of the Project area are specifically and legally described in the Redevelopment Plan. D. [§ 204] Property The Property is that certain real property located at 1968-82 Lake Street in the City of Huntington Beach, California. The Property is comprised of approximately .75 acres in land area. The Property is located within the Project Area and is designated and illustrated as such on the Property Map which is attached hereto as Attachment No. 2 and incorporated herein by this reference and is legally described as set forth in the Description of the Property which is attached hereto as Attachment No. 1 and incorporated herein by this reference. E. [§ 205] Parties to the Agreement 1. [§ 206] Agency. The Agency is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California (California Health and Safety Code §§ 33000, et seq.). The address of the Agency for purposes of this Agreement is Economic Development Department, City of Huntington Beach, 2000 Main Street, Huntington Beach, California 92648, Attention: Executive Director. "Agency" as used in this Agreement, includes the Redevelopment Agency of the City of Huntington Beach, and any public body that is an assignee of or successor to its rights, powers and responsibilities. 2. [§ 2071 The Developer The Developer is Merit Homes Corporation, a California nonprofit corporation. The principal office of the Developer for purposes of this Agreement is , California , Attention Wherever the term "Developer" is used herein, such term shall include any permitted nominee, assignee or successor in interest as herein provided. F. [§ 208] Prohibition against Change in Ownership Management and Control of Developer 1. The Developer represents and agrees that its purchase of the Property and its other undertakings pursuant to this Agreement are, and will be used, for the purpose of 15 SF 2U?1 Agree: Bon -en Court: DDA 5/17101- - 4:33 PM 04 redevelopment of the Property and not for speculation in landholding. The Developer further recognizes that, in view of: (a) the importance of the redevelopment of the Property to the general welfare of the community; (b) the public aid that have been made available by law and by the government for the purpose of making such redevelopment possible; and (c) the fact that a significant change in identity of the Developer, excepting the substitution of a purchaser at a foreclosure sale or the grantee of a deed property then owned by the Developer; the qualifications and identity of the Developer is of particular concern to the community and the Agency. The Developer further recognizes that it is because of such qualifications and identity that the Agency is entering into the Agreement with the Developer. Accordingly, no voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. For the reasons cited above, the Developer represents and agrees that prior to issuance by the Agency of a Certificate of Completion for the Property pursuant to Section hereof, the Developer shall not assign or transfer or attempt to assign or transfer all or any part of this Agreement, or any rights herein, without the express written consent of the Agency. 2. After the issuance of the Certificate of Completion pursuant to Section 434 of this Agreement: (a) The Developer shall not assign all or any part of this Agreement without the prior written approval of the Agency. (b) For the reasons cited above, the Developer represents and agrees for itself and any successor in interest that without the prior written approval of the Agency, there shall be no significant change in the ownership of the Developer or in the relative proportions thereof, or with respect to the identity of the parties in control of the Developer or the degree thereof, by any method or means. (c) The Developer shall promptly notify the Agency of any and all changes whatsoever in the identity of the parties in control of the Developer or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. This Agreement may be terminated by the Agency and the Agency may exercise its remedies pursuant to the Lease and Agency Deed of Trust, if there is any significant change (voluntary or involuntary) in membership, management or control of the 16 5F-2001 Agin: Bowen Coun: DDA 5/17101 - -4:33 I'M Ra Developer (other than such changes occasioned by the death or incapacity of any individual). (d) Developer shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any right herein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property (referred to hereinafter as a "Transfer'), without prior written approval of the Agency, except as expressly permitted by this Agreement. Consent to a Transfer shall not result in acceleration of the Agency Notes. Consent to one such Transfer shall not be deemed to be a waiver of the right to require consent to future or successive Transfers. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Developer. Any such proposed transferee, by instrument in writing satisfactory to the Agency and in form recordable among the land records, for itself and its successor and assigns, and for the benefit of the Agency shall expressly assume all of the obligations of the Developer in this Agreement and agree to be subject to all conditions and restrictions applicable to the Developer in this Aryeement. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such Transfer, and if approved by the Agency its approval shall be indicated to the Developer in writing. (e) In the absence of specific written agreement by the Agency, no unauthorized Transfer, or approval thereof by the Agency, shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. (f) The provisions of this Section 208 shall be of no force or effect as of the expiration or earlier termination of the Regulatory Agreement. III. [§ 300] DISPOSITION OF THE PROPERTY A. [301] Representations and Warranties of Develo er As an inducement to Agency to enter into this Agreement and perform all of the Agency Obligations, Developer hereby represents and warrants to Agency, which representations and warranties are true and correct as of the date of this Agreement and which shall survive the Closing: 17 SF-2001 Agree: BowCn Court: DDA 5/17/01 - - 4:33 PAI N4 1. Developer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby; 2. This Agreement and all documents required hereby to be executed by Developer are, and shall be, valid, legally binding obligations of and enforceable against Developer in accordance with their terms, subject only to applicable Debtor Relief Laws or equitable principles affecting or limiting the rights of contracting parties generally; 3. There is no charter, bylaw, or capital stock provision of Developer, and no provision of any indenture, instrument, or agreement, written or oral, to which Developer is a party or which governs the actions of Developer or which is otherwise binding upon Developer or Developer's property, nor is there any. statute, rule or regulation, or any judgment, decree, or order of any court or agency binding on Developer or Developer's property which would be contravened by the execution, delivery or performance of this Agreement or any documents required hereby to be executed by Developer; 4. There is no action, suit, or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, or, to the knowledge of Developer, threatened against or affecting Developer, or any properties or rights of Developer, which, if adversely determined, would materially impair the right of Developer to execute or perform its obligations under this Agreement or any documents required hereby to be executed by Developer, or would materially adversely affect the financial condition of Developer; 5. Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement and the documents referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreements or instruments to which Developer is a party; 6. To the best of Developer's knowledge, there are no pending, threatened or contemplated actions, suits, arbitrations, claims or proceedings, at law or in equity, in which Developer or and Affiliate is, or to the best of Developer's knowledge will be, a party, including, but not limited to, judicial, municipal or administrative proceedings in eminent domain, unlawful detainer or tenant evictions, collections, alleged building code, health and safety or zoning violations, employment discrimination or unfair labor practices, breach of contract, or workers' compensation, personal injuries or property damages; 7. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Developer, nor are any of such proceedings contemplated by Developer; 8. All reports, documents, instruments, information and forms of evidence delivered to Agency by Developer concerning or required by this Agreement are accurate, 18 SF-2001 Agree: Bowen Court: DDA 5/17/01 - - 4:33 PM #4 correct and sufficiently complete to give Agency true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission; 9. No representation, warranty or statement of Developer in this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements or facts contained therein not misleading; and 10. If Developer receives any notice that any representation or warranty made herein is false or misleading, Developer shall immediately notify Agency in writing. 11. Whenever a statement concerning the factual matters herein is qualified by the phrase "to the best of Developer's knowledge" or similar words, it is intended to indicate that no information that would give the Developer current actual knowledge of the inaccuracy of such factual statement has come to the attention of the Developer. The Developer has not undertaken any independent investigation to determine the accuracy of any such factual statement, and any limited inquiry undertaken by the Developer should not be regarded as such an investigation. B. [302] Representations and Warranties ofA_eenncy As an inducement to Developer to enter into this Agreement, accept a conveyance of title to the Property from Agency and develop the Project thereon, Agency hereby represents and warrants to Developer, which representations and warranties are true and correct as of the date of this Agreement and which shall survive the Closing: 1. Agency has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby; 2. This Agreement and all documents required hereby to be executed by Agency are, and shall be, valid, Iegally binding obligations of and enforceable against Agency in accordance with their terms, subject only to applicable bankruptcy, insolvency, reorganization, moratorium laws or similar laws or equitable principles affecting or limiting the rights of contracting parties generally; 3. There is no provision of any indenture, instrument, or agreement, written or oral, to which Agency is a party of which governs the actions of Agency or which is otherwise binding upon Agency or Agency's property, nor is there any statute, rule or regulation, or any judgment, decree, or order of any court or agency binding on Agency or Agency's property which would be contravened by the execution, delivery or performance of this Agreement or any documents required hereby to be executed by Agency. 4. There is no action, suit, or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, or, to the knowledge of Agency, threatened against or affecting Agency, or any properties or rights of Agency, which, if adversely determined, would materially impair the right of Agency to execute or perform its obligations 19 SF-2001 Ague: ©owrn Court: t)aA 5/1VOI - -4:33 Plc #4 under this Agreement or any documents required Hereby to be executed by Agency, with the exception of eminent domain actions which may be filed, as contemplated by this Agreement; S. Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement and the documents referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, Iease or other agreements or instruments to which Agency is a party; 6. To the best of Agency's knowledge, there are no pending, threatened or contemplated actions, suits, arbitrations, claims or proceedings, at law or in equity, in which Agency is, or to the best of Agency's knowledge will be, a party, including, but not limited to, judicial, municipal or administrative proceedings in eminent domain (except as contemplated by this Agreement), unlawful detainer or tenant evictions, collections, alleged building code, health and safety or zoning violations, employment discrimination or unfair labor practices, breach of contract, or workers' compensation, personal injuries or property damages, which may or will materially affect the Property or Agency's ability to perform its obligations hereunder; 7. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Agency, nor are any of such proceedings contemplated by Agency-, S. All reports, documents, instruments, information and forms of evidence delivered to Developer concerning or required by this Agreement are accurate, correct and sufficiently complete to give Developer true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission; 9. Subject to all applicable Governmental Approvals, and without prejudice to the rights of the City to exercise its discretion with respect to any land use approval, the use of the Property for the Project is an allowable land use under the Redevelopment Plan; 10. Agency has not received written notice from any Governmental Authority that Agency or any of the Property (or any portion thereof) is or are in violation of any governmental or other legal requirements; 11. To the best of Agency's knowledge, Agency owns the Property free and clear of all liens and encumbrances (except for the matters shown on the PTR delivered to Developer) and there are no claims pending, or to the best of Agency's knowledge, threatened, which would result in the creation of any lien against any of the Property, including without limitation, mechanic's liens and liens of water, sewer, street or electrical power improvements in progress or contemplated; 12. To the best of Agency's knowledge, all water, sewer, gas and electric and other utilities necessary to service the Property are to will be at the Closing located in the streets 20 SF-2C01 Agree: Flow en Coun: DDA 5:17101 - - 4:33 PINt #4 adjoining the Property, ready for tap in by Developer, subject to payment of all applicable hook- up fees; 13. Agency has not received any written notice of and has no actual knowledge of any violation of any law, ordinance, regulation, order or requirement applicable to the Property, including without limitation, requirements imposed under any recorded covenants, conditions, restrictions, easements or other rights affecting the Property; 14. No representation, warranty or statement of Agency in this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements or facts contained therein not misleading; and 15. If Agency receives any notice that any representation or warranty made herein is false or misleading, Agency shall immediately notify Developer in writing. Whenever a statement concerning factual matters rerein is qualified by the phrase "to the best of Agency's knowledge" o. similar words, it is intended to indicate that no information that would give Agency current actual knowledge of the inaccuracy of such factual statements has come to the attention of Agency. Agency has not undertaken any independent investigation to determine the accuracy of any such factual statement, and any limited inquiry undertaken by Agency should not be regarded as such an investigation. C. [§ 3031 Lease In accordance with and subject to all the terms, covenants, and conditions of this Agreement, the Agency agrees to lease to the Developer and the Developer pursuant to the Lease set forth in Attachment No. 5. The Developer shall pay to the Agency One Dollar (S 1.00) per year as the rent for the Property. The first rent payment shall be paid by the Developer at or prior to the Close of Escrow hereunder. D. [§304] Escrow 1. The Agency agrees to open an escrow for conveyance of the Property with Title Insurance Company and its escrow department, or another escrow company acceptable to both the Agency and the Developer, which acceptance shall not be unreasonably withheld, as escrow agent (the "Escrow Agent'), within the time provided in the Schedule of Performance which is attached hereto as Attachment No. 3 and incorporated herein by this reference. This Agreement constitutes the joint escrow instructions of the Agency and the Developer, and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon the opening of the escrow. The Agency and the Developer shall provide such additional escrow instructions consistent with this Agreement as shall be necessary. The Escrow Agent hereby is empowered to act under such instructions, and upon indicating its acceptance thereof in writing, delivered to the Agency and to the Developer within five (5) days after the opening of the escrow, the Escrow Agent shall carry out its duties as Escrow Agent hereunder. 21 SF-2001 Agrce' Bowen Court: DDA 5117101 - -4:33 PM PJ b. Closing Date. On or before the date established in the Schedule of Performance, the parties shall satisfy the conditions described below and complete the Close of Escrow. If, for any reason, the Close of Escrow has not occurred by the date provided therefore in the Schedule of Performance, either party may terminate this Agreement, by providing notice of termination to the other party. (c) Delivery of Documents and Funds by Developer. On or before twelve noon on the last business day prior to the scheduled Closing Date, Developer shall deposit or cause to be deposited with the Escrow Agent the following: (i) the Lease; (ii) the Agreement Containing Covenants, executed and acknowledged by Developer; and (iii) all funds, documents, and deposits Developer is required to deposit with Escrow Agent in order to close the Escrow conveying the Property to Developer. (iv) Developer shall deliver copies of formation documents relating to Developer and its general partner(s), including, without limitation and as applicable: limited partnership agreement and any amendments thereto; articles of incorporation; State of California Limited Liability Company Articles of incorporation (LLC-1), Statement of Information (including any amendments thereto); copies of all resolutions or other necessary actions taken by such entity to authorize the execution of this Agreement and related documents; a certificate of status issued by the California Secretary of State; and a copy of any Fictitious Business Name Statement, if any, as published and filed with the Clerk of Orange County. (d) Delivery of Documents by AQency. On or before twelve noon on the last business day prior to the scheduled Closing Date, Agency shall deposit or cause to be deposited with the Escrow Agent the following: (i) the Lease; (ii) the Agreement Containing Covenants, executed and acknowledged by Agency. 22 SF-2001 Agree: Bourn Court: DDA 5117/01 - - 4:33 P► 94 2. Upon delivery of the Rent, the Agreement Containing Covenants (Attachment No. 6), the Lease and the Memorandum of Lease attached thereto (Attachment No. 5) for the Property (the "Closing Documents") to the Escrow Agent in compliance with this Section, the Escrow Agent shall record the Memorandum of Lease and Agreement Containing Covenants in accordance with these escrow instructions, provided that title to the Property can be vested in the Developer in accordance with the terms and provisions of Section 305 of this Agreement. The Escrow Agent shall pay, affix and cancel any transfer stamps required by law. 3. The Developer shall pay in escrow to the Escrow Agent the following fees, charges and costs promptly after the Escrow Agent has notified the Developer of the amount of such fees, charges and costs, but not earlier than five (5) days prior to the scheduled date for the close of escrow: (a). the escrow fees; (b) costs necessary to place the title to the Property in the condition for conveyance required by the provisions of this Agreement; (c) the premium for all title insurance policies to be purchased with respect to the of the Property by the Developer as set forth in Section of this Agreement; and (c) any State, County or City documentary stamps or transfer tax imposed respect to the Property; provided however that the Agency agrees to use its reasonable best efforts to obtain a waiver of any such transfer taxes. 4. The Agency shall timely and properly execute, acknowledge and deliver a Memorandum of Lease for the Property in substantially the form established in Section 303 of this Agreement, leasing the Property to the Developer in accordance with the requirements of Section 303 of this Agreement. 5. The Escrow Agent is authorized to: (a) Pay and charge the Developer for any fees, charges and costs payable under this Section 304. Before such payments are made, the Escrow Agent shall notify the Agency and the Developer of the fees, charges and costs necessary to clear title and close the escrow. (b) Disburse the Rent and deliver the Memorandum of Lease, Agreement Containing Covenants and other Closing Documents to the parties entitled thereto when the conditions of this escrow have been fulfilled by the Agency and the Developer with respect to the Property. 23 SF-2C01 Agree: 8o%ken Court: DDA 5 17/01 - -4:33 PA1 X4 (c) Record any instruments delivered through this escrow if necessary or proper to vest title in the Developer in accordance with the terms and provisions of the escrow instructions. 6. All funds received in this escrow shall be deposited by the Escrow Agent in a separate interest bearing account acceptable to the Developer and the Agency with any state or national bank doing business in the State of California and reasonably approved by the Developer and the Agency, and all interest accruing on the account shall be payable to the Developer. 7. If this escrow is not in condition to close on or before the time for conveyance established in the Schedule of Performance (Attachment No. 3) of this Agreement, either party who then has fully performed the acts to be performed before the conveyance of title may, in writing, demand the return of its money, papers and/or documents from the Escrow Agent. No demand for return shall be recognized until twenty (20) days after the Escrow Agent (or the party making such demand) shall have mailed copies of such demand to the other party or parties at the address of its principal place of business. Objections, if any, shall be raised by written notice to the Escrow Agent and to the other party within the twenty- (20) day period, in which event the Escrow Agent is authorized to hold all money, papers and documents with respect to the Property, as the case may be, until instructed by a mutual agreement of the parties or, upon failure thereof, by a court of competent jvrisdiction. If no such demands are made, the escrow shall be closed as soon as possible. 8. If objections are raised as above provided for, the Escrow Agency shall not be obligated to return any such money, papers, or documents except upon the written instructions of both Agency and Developer, or until the party entitled thereto has been determined by a final decision of a court of competent jurisdiction. If no such objections are made within said l0-day period the Escrow Agency shall immediately return the demanded money, papers, or documents. 9. The parties understand they may be required to execute additional standard form escrow instructions required by the Escrow Agency ("General Instructions'). In the event of a conflict between this Agreement and any such General Instructions, this Agreement shall control. The parties agree, however, that they will refuse to sign General Instructions which (1) purport to relieve the Escrow Agency of liability for negligence or intentional wrong -doing; (2) excuse the Escrow Agent from strict compliance with each and all of the provisions of this document and the General Instructions; or (3) purport to authorize the Escrow Agency to follow the instructions or directive of any person not a direct signatory party to this Agreement. 10. Any amendment to the escrow instructions shall be in writing and signed by both the Agency and the Developer. At the time of any amendment the Escrow Agent shall agree to cant' out its duties as Escrow Agent under such amendment. 24 SF-2C01 Agree: Bowen Court: DDA 517,1)1 - -4.33 P%1 04 11. AlI communications from the Escrow Agent to the Agency or the Developer shall be directed to the addresses and in the manner established in Section 701 of this Agreement for notices, demands, and communications between the Agency and the Developer. E. [§ 3051 Condition of Title The Agency shall lease the Property to the Developer free and clear of all liens, encumbrances, assessments, easements, leases and taxes; except those which are otherwise consistent with this Agreement; provided however that no covenants, conditions, restrictions or equitable servitudes shall prohibit or limit the development permitted by the Scope of Development (Attachment No. 3), the development set forth in the Lease (Attachment No. 5), and Agreement Containing Covenants (Attachment No. 6) and by plans that have been approved by the Agency. The Developer hereby shall take possession to the Property subject to the following exceptions (the "Approved Exceptions")" (1) The Redevelopment Plan; (2) The lien of any non -delinquent property taxes and assessments (to be prorated at the Close of Escrow); (3) all taxes for the period subsequent to the conveyance of title; (4) any assessments for street lighting, downtown maintenance, or other similar obligations of property owners, which shall be the responsibility of Developer; (5) title exceptions set forth in the PTR and not specifically disapproved by Developer, which disapproved exceptions shall be the responsibility of the Agency; and (6) any other exceptions which are otherwise consistent with this Agreement and which are accepted in %ATiting by Developer. Title to the Property shall be subject to the exclusion therefrom (to the extent now or hereafter validly excepted and reserved by the parties named in deeds, leases and other documents of record, other than reservations made by the Agency) of all oil, gas, hydrocarbon substances and minerals of every kind and character lying more than 500 feet below the surface, together with the right to drill into, through, and to use and occupy all parts of the Property lying more than 500 feet below the surface thereof for any and all purposes incidental to the exploration for and production of oil, gas, hydrocarbon substances or minerals from the Property, but without, however, any right to use or disturb either the surface of the Property or any portion thereof within 500 feet of the surface for any purpose or purposes whatsoever. In tape event the Agency tenders possession as herein provided, the Developer shall deposit the Rent in escrow in accordance with the provisions of Section 304, accept the right of possession 25 SF-2001 Agree: Bowen Court: DDA 5117/01 - - 4:33 PM #4 to the Property and proceed with the redevelopment of the Property in accordance with the Scope of Development (Attachment No. 3). F. [§ 306] Title insurance Concurrent with the recordation of the Memorandum of Lease or instruments conveying possession to the Property and the Agreement Containing Covenants, Title Insurance Company ("Title Company') shall provide and deliver to the Developer a CLTA owner's title insurance policy issued by Title Company insuring that fee title to the Property is vested in the Developer in the condition required by Section of this Agreement. The Title Company shall provide the insurance policy in the amount of Eight Hundred Eighty -Five Thousand Dollars (S885,000). The Developer shall be responsible for the payment of all title insurance premiums pursuant to Section . In addition, the Developer shall pay for all other premiums for title insurance, including those for any extended coverage or special endorsements which it may request. G. [§ 307] Taxes and Assessments Ad valorem taxes and assessments, if any, on the Property, and taxes upon this Agreement or any rights hereunder, levied, assessed or imposed for any period, commencing after conveyance of title or possession of the Property, shall be borne by the Developer. H. [§ 308] Occupants of the Property The Agency agrees that the Property shall be conveyed free of any possession or right of possession except that of the Developer, unless «vaived by the Developer in writing. I. [§ 309] Condition of the Properly The Property, and any improvements thereon, shall be conveyed in an "as is" condition, with no warranty, express or implied, by the Agency as to the condition of the soil, its geology or the presence of known or unknown faults. It shall be the sole responsibility of the Developer, at the Developer's expense, to investigate and determine the soil conditions of the Property, and any portion thereof, for the development to be constructed by the Developer. If the soil conditions of the Property, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the sole responsibility and obligation of the Developer to take such action or cause such action to be taken by others as may be necessary to place the Property, or any portion thereof, and the soil conditions thereof in all respects in a condition entirely suitable for the development thereof as described in the Scope of Development (Attachment No. 3), and this Agreement, which may include demolishing, clearing or moving buildings, structures or other improvements, and removal of hazardous, toxic and/or contaminating materials. The Developer agrees to defend, release, indemnify and hold harmless the Agency, the City, their officers, employees and consultants, from any and all claims, actions, liability, fines, penalties, charges, damages and costs whatsoever (including attorneys' fees), arising out of or in 20 SF-2001 Agree: Bourn Court: DDA V17101 - -4:33 PAr 04 connection with any work or activity of or for the Developer on or around the Property, and/or relating to the existence and/or removal of hazardous, toxic and/or contaminating materials in or on the Property. The Developer further acknowledges receipt of the "Supplemental Geotechnical Investigation, Bowen Court Senior Apartments, Yorktown -Lake Redevelopment Project Subarea, Southeast Corner of Lake Street and Yorktown Avenue, City of Huntington Beach, California," prepared by Petra Engineering, and dated August 30, 2000. J. [§ 3101 Deposit of the Purchase Price and A eement Containing Covenants and Recordation of the Grant Deed and Agreement Containinz Covenants The Developer shall promptly deposit the Rent and Agreement Containing Covenants (Attachment No.6) with the Escrow Agent upon or prior to the date for the close of escrow, provided that Escrow Agent shall have notified the Developer in writing that the Lease, properly executed and acknowledged by the Agency, has been delivered to the Escrow Agent and that possession is in condition to be conveyed in conformity with the provisions of Section 305 of this Agreement. The Escrow Agent shall deliver the Rent to the Agency immediately following the delivery to the Developer of the title insurance policy set forth in Section 304 of this Agreement and the filing of the Lease and Agreement Containing Covenants for recordation among the land records in the Office of the County Recorder for Orange County. K. [§3111 Preliminary Work by the Developer 1. Prior to the conveyance of title of the Property, representatives of the Developer shall have the right of access to and enL-y upon the Property, at all reasonable times, for the purposes of obtaining data and making surveys and tests necessary to carry out this Agreement. 2. Investigations may be performed by Developer on and beneath the Property and all improvements thereon for the presence of hazardous, toxic and/or contaminating materials. Developer agrees to pay the entire costs of such investigations. L. [§312] Submission of Evidence of Financing Not later than December 31, 2002, Developer shall demonstrate to Agency that Developer has obtained a binding commitment of the tax credit, conventional and Orange County financing necessary for the development of the Property as described in the Recitals, provided that if the tax credit commitment is not obtained by September 30, 2001, either party may terminate this Agreement and the Lease upon thirty (30) days written notice. The Agency shall approve or disapprove such evidence of tax credit financing within the time established in the Schedule of Performance. Such approval shall not be unreasonably withheld, conditioned or delayed. If Agency shall disapprove any such evidence of financing, Agency shall do so by written notice to Developer stating the reasons for such disapproval. 27 SF-2001 Agree: Dowen Coun: DDA M 7,01 - - 4:33 PM #4 The Developer shall promptly obtain and submit to the'Agency new evidence of financing in the same manner and within the same times established in this Section 312 for the approval or disapproval of the evidence of financing as initially submitted to the Agency. Such evidence of financing shall include the following: I. (a) The financing documents for the construction of the Project (as defined in the Scope of Development, Attachment No. 3), certified by the Developer to be a true and correct copy or copies thereof; or (b) A copy of the commitment or commitments obtained by the Developer for the tax credit financing in the amount of not less than $1,750,000.00, conventional financing in the amount of $725,000 and the Orange County Housing and Community Development financing in the amount of $400,000; collectively, sufficient to finance Project construction, and certified by the Developer to be a true and correct copy or copies thereof. The commitments for financing shall be in such form and content acceptable to the Agency as reasonably evidences a legally binding, firm and enforceable commitment; provided however, such commitments may be subject to standard and customary conditions (including, but not limited to, conditions regarding the status of title, receipt of all required consents, licenses, and permits and approvals of pla-is, specifications and studies); and 2. A copy of the contract between the Developer and a California licensed gen_ml contractor containing a cost estimate of the construction costs for the Development, certified by the Developer to be a true and correct copy thereof; 3. A financial statement as evidence of other sources of capital sufficient to demonstrate that the Developer has adequate funds to cover the difference, if any, between construction cost minus financing authorized by mortgage Ioans. The Agency shall approve the financial statement as evidence of sources of equity capital if such is approved by the lender making the mortgage loan and the Agency approves such mortgage Iender; and M. [§ 3131 Agency Financing. Upon receiving evidence of the tax credit financing, the Executive Director may authorize a predevelopment loan in the amount equal to fifty percent (50%) of the predevelopment costs, as described in the Project Budget required pursuant to Section 407. Said predevelopment loan shall be a part of the Residual Receipts Loan, as evidenced by the Agency Note and secured by the Agency Deed of Trust. 28 SF-2001 Agree: Dom Coun: DDA MITI --4:33I'M #4 Subsequently, the Executive Director shall establish a disbursement procedure for releasing the Residual Receipts Loan to the Developer to finance the construction of the Project. N. [§ 4001 DEVELOPMENT OF THE PROPERTY A. [§ 4011 Development of the Propert. 1. (402) Agreement to Design and Construct. (a) Developer shall cause the design and construction of the Project in accordance with this Agreement, the Scope of Development and the Basic Concept Drawings approved by Agency and any changes thereto that are approved by Agency, the Schedule of Performance and all Governmental Approvals and applicable requirements of any Governmental Authority. (b) Developer shall perform or cause to be performed all such design and construction work diligently, continuously and without interruption strictly in accordance with the Schedule of Performance, subject, however, to any Force Majeure Delay specified hereunder. Developer shall commence or cause the Project to be commenced within the time provided therefor in the Schedule of Performance. Developer shall perform or cause to be performed all such design and construction work i-i a good and workmanlike manner and in accordance with sound engineering and construction practices. Developer shall not cause or permit cessation of work for a period in excess of ten (10) consecutive Business Days, except cessation caused by Force Majeure Events, without the prior written consent of the Agency. 2. [§ 403] Scope of Development The Property shall be developed by the Developer in accordance with and within the limitations established in this Agreement, including, but not limited to the Scope of Development (Attachment No. 3), and in accordance with and pursuant to all plans approved by the Agency pursuant to this Agreement. 3. [§ 404] Approval of Development and Management Teams Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall provide to the Agency, in detail satisfactory to the Agency, information relative to the construction management for the redevelopment of the Property and the general contractor, who shall be properly licensed by the State of California. Said information shall include, but not be limited to, a description of the entities having responsibility for the management of rehabilitation and construction and the general contracting, a description of previous developments of a size and scope at least comparable to the redevelopment contemplated by this Agreement which have been successfully completed by such entities, and copies of contracts for the management of the rehabilitation and construction and the general contracting which each of the entities are prepared to enter into. Within thirty (30) days of receipt of such information, the Agency shall either approve or disapprove such entities; provided however, that the Agency shall not disapprove any contractor or construction manager 29 SF-2001 Agree: Dowry Court: DDA 5I17101 - - 4:33 Pbl i4 demonstrating the proper credentials (i.e., contractor's license) and successful experience in the rehabilitation and construction of a senior affordable housing project of a similar size and in a similar location as the redevelopment provided for in the Scope of Development (Attachment No. 3). In the event of disapproval, the Developer shall submit comparable information for another entity within thirty (30) days after such disapproval which information shall be reviewed by the Agency in accordance with the provisions of this Section 304 relating to the original submission of information. Developer or its general contractor shall post performance and payment bonds for the completion of all construction activity to be performed on the Property by the Developer as provided for in this Agreement. 4. [§404] Basic Concept Drawings Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall cause the architect to prepare and submit Basic Concept Drawings and related documents for the development of the Property to the Agency for review and written approval or disapproval. The Basic Concept Drawings and related documents shall include: (1) a site plan showing the placement and number of square feet of the Development to be constructed on the Property, the uses of the improvements thereon, parking area and capacity, and general landscaping treatment and Iocation; (2) rough elevations from each of the streets abutting the Property and from properties abutting the Property; (3) a general description of the architectural theme of the improvements; and (4) a description of the devices to be used to reduce the impact of the development on nearby residences. The parties intend that the Plans shall contain sufficient detail so that, on the basis of such Plans, Developer will be able to obtain complete bids for all of the Project Improvement to be performed by a Contractor, and al necessary permits for the Project. The Property shall be developed as established in the Basic Concept Drawings and related documents except as changes maybe approved in writing by both the Developer and the Agency. Any such changes shall be within the limitations of the Scope of Development (Attachment No. 3). 5. [§ 405] Landscaping,, and Finish Grading Plans Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall prepare and submit to the Agency for its approval preliminary and final landscaping and preliminary and finish grading plans for the Property. The landscaping plans shall be prepared by a professional landscape architect and the grading plans shall be prepared by a licensed civil engineer. Such landscape architect and/or civil engineer maybe the same firm as the Developer's architect provided that such landscape architect and/or civil engineer are appropriately licensed by the State of California to perform such work: Within the times established in the Schedule of Performance (Attachment No. 3), the Developer shall submit to the Agency for approval or disapproval the names and qualifications of its architect, landscape architect and civil engineer. 30 SF-2001 Agree: Bowen Court: DDA 5117;0I . - 4:33 PM #4 6. [§ 406) Construction_ Drawings and Related Documents for the Pr_ operty Within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall prepare and submit construction drawings and related documents (collectively called "Drawings") for the Development to the Agency for reasonable architectural review and written approval as set forth in the Schedule of Performance (Attachment No. 3). Such construction drawings and related documents shall be submitted in two states: preliminary and final working drawings. Preliminary drawings are hereby defined as design for development drawings. Final construction drawings are hereby defined as those in sufficient detail to obtain a building permit. Approval of progressively more detailed drawings and specifications will be promptly granted by the Agency if developed as a logical evolution of drawings or specifications theretofore approved. Any items so submitted and approved by the Agency shall not be subject to subsequent disapproval. During the preparation of all drawings and plans, the Agency and the Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of, construction plans and related documents by the Agency. The Agency and the Developer shall communicate and consult informally as frequently as is necessary to ensure that the formal submittal of any documents to the Agency can receive prompt and speedy consideration. If any substantial revisions or corrections of plans approved by the Agency shall be required by any government official, agency, department or bureau having jurisdiction over the development of the Property, the Developer and the Agency shall cooperate in efforts to comply, obtain waiver of such requirements (whenever possible and merited under the circumstances) or to develop a mutually acceptable alternative. 7. [§ 407) Agency Approval of Plans, Drawings and Related Documents The Agency shall have the right of architectural review and approval of all plans and submissions, including any material proposed changes therein. The Executive Director of the Agency, or his designee, shall have authority to determine on behalf of the Agency if a proposed revision or change to any plans, drawings or other documents previously approved by the Agency is a material change requiring Agency approval. If the Executive Director, or his designee, determines that the proposed revision or change is not material, no approval by the Agency of such revision or change will be necessary. The Agency shall reasonably approve or disapprove the plans, drawings and related documents referred to in Section 404, 405 and 406 of this Agreement and any material revisions thereto within the times established in the Schedule of Performance (Attachment No. 3). The Agency's review is intended to insure that the plans, drawings and related documents are consistent with the Scope of Development (Attachment No. 3) and with the Basic Concept Drawings. 31 SF-2C01 Agm: 13ouen Court: DDA 5/17/01 - - 4:33 PM #4 Failure by the Agency to either approve or disapprove within the times established in the Schedule of Performance (Attachment No. 3), shall be deemed an approval, if the request for such approval is in writing, delivered to Agency, and includes the following notice, in bold print and capitalized letters: NOTICE: FAILURE BY AGENCY TO DISAPPROVE THE SUBMITTED PLANS «'ITHIN 10 BUSINESS DAYS AFTER RECEIPT SHALL BE DEEMED APPROVAL PURSUANT TO SECTION 4070F TIIE DDA DATED , BETWEEN THE REDEVELOPMENT AGENCY OF TIIE CITY OF HUNTINGTON BEACH AND MERIT HOUSING CORPORATION, DEVELOPER. Any disapproval shall state in writing the reasons for disapproval and the changes which the Agency requests to be made. Such reasons and such changes must be consistent with the Scope of Development (Attachment No. 3) and any items previously approved or deemed approved hereunder. The Developer, upon receipt of a disapproval based upon powers reserved by the Agency hereunder, shall revise the plans, drawings and related documents, and shall resubmit to the Agency as soon as possible after receipt of the notice of disapproval; provided that in no case shall the Agency be entitled to require changes which are inconsistent with the Scope of Development, or inconsistent with the most recently applicable previously approved or deemed approved items. 8. [§ 408] Cost of DevcloT)ment (a) The parties anticipate the sources and use of funds for the Project to be as set forth in the Project Budget, which shall be submitted to the Agency for approval pursuant to the Schedule of Performance. As delineated in the Project Budget, the Development Costs consist of "Construction Costs" and "Soft Costs." On the basis of actual bids received that relate to Construction Costs, and on the basis of actual Soft Costs, Developer shall update, as necessary, and submit to the Director for approval any proposed changes to the Project Budget, and shall demonstrate the sufficiency of sources of financing to pay all Development Costs to the reasonable satisfaction of the Director, and upon the approval of the Director, the Project Budget, as revised, shall be deemed the final Project Budget. (b) The development of the Project shall be financed with the combination of funds described in this Agreement- (c) The cost of developing the Property shall be bome by the Developer, including, but not limited to, the payment of all costs for permits and any necessary approvals, as well as those costs for demolition, clearance, grading, preparing, designing, financing and constructing on the Property all of the improvements provided in this Agreement. 32 SF-Ml Agm: Down Court: DDA 5 1V01 - -4:33 PSI #4 9. [§ 409] Schedule of Performance (a) Developer shall promptly obtain all approvals required for the development of the Property, and after the conveyance of possession of the Property, begin and thereafter diligently prosecute to completion the construction of the Development, as provided in the Scope of Development (Attachment No. 3). The Developer shall begin and complete all construction and development within the times specified in the Schedule of Performance with such reasonable extensions of said dates as may be granted by the Agency. (b) During periods of construction, the Developer shall submit to the Agency a written report of the progress of the construction when and as reasonably requested by the Agency. The report shall be in such form and detail as may be reasonably required by the Agency and shall include a reasonable number of construction photographs (if requested) taken since the last report by the Developer. For purposes of this Agreement, construction shall be deemed to have commenced when grading has commenced on the Property pursuant to all legally required permits. 10. [§ 410] Indemn_i_fication;_Bodily Iniury and Property amage Insurance The Developer agrees to and shall indemnify and hold the Agency and the City harmless from and against all liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person directly or indirectly caused by any acts done thereon or any errors or omissions of the Developer or its agents, servants, employees or contractors, except for proportional negligence or willful misconduct of the Agency. The Developer shall furnish or cause to be famished to the Agency within the time set forth in the Schedule of Performance, duplicate originals or appropriate certificates of insurance as follows: (a) Comprehensive general Iiability (bodily injury and property damage), automobile liability, including o%Nmed, hired and non - owned vehicles, blanket contractual liability, and personal injury liability, all with limits not less than S1,000,000 combined single limit per occurrence. (b) Endorsements shall be obtained for the policies providing the above insurance for the following three provisions: (1) AdditionaI named insured: "The City of Huntington Beach and the Redevelopment Agency of the City of Huntington Beach, their elective and appointive boards, officers, agents and employees are 33 SF-20C 1 Agree: Bouen Court: DDA 511IID' - - 4.33 PM 04 added as additional name insureds with respect to this subject project and contract with the Agency." (2) Notice: Said policy shall not terminate nor shall it be canceled or the coverage reduced until after thirty (34) days written notice is given to the City and the Agency." (3) Primary coverage: "Said policy and coverage as is afforded to the City of Huntington Beach and the Redevelopment Agency of the City of Huntington Beach, their elective and appointive boards, officers, agents and employees shall be primary insurance and not contributing with any other insurance maintained by the City of Huntington Beach or the Redevelopment Agency of the City of Huntington Beach." 11. [§ 411] Anti -discrimination during Construction The Developer for itself and its successors and assigns agrees that in the construction of the Development on the Property, or any portion thereof, provided for in this Agreement, the Developer will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, creed, religion, national origin or ancestry. 12. [§ 412] Local, State and Federal Laws The Developer shall carry out the construction of the Development on the Property in conformitywith all applicable laws, including all applicable federal and state labor standards. 13. [§ 413] City and Other Governmental Agency Permits Before commencement of construction or redevelopment of any buildings, structures or other work of improvement upon any portion of the Property, and within the time set forth in the Schedule of Performance (Attachment No. 3), the Developer shall, at its o,.vn expense, secure or cause to be secured, any and all permits which may be required by the City or any other governmental agency affected by such construction, development or work. It is understood that the Developer's obligation is to pay all necessary fees and to timely submit to the City final drawings with final corrections to obtain a building permit. The Agency shall provide all proper assistance to the Developer in securing these permits. 14. [§ 414] SF-20C1 Agree: Dom" Court: DDA 3117101 - - 4:33 PM #4 Rights of Access, Inspections and Meetings 34 (a) Representatives of the Agency and the City shall have the reasonable right of access to the Property, with reasonable prior notice without charges or fees, at normal construction hours during the period of construction for any purpose deemed necessary by the Agency for carrying out the purposes of this Agreement, or the provisions of the Redevelopment PIan and the General Plan, including, but not limited to, the inspection of the work being performed in constructing the Development. Such representatives of the Agency and other visitors to the Property, shall observe any reasonable rules adopted by Developer for purposes of maintaining safety on the Property, including requirements that such representatives or visitors be escorted. (b) Developer shall schedule, coordinate and attend regularly scheduled construction progress meetings and cause Architect, engineer and General Contractor to attend and cooperatively participate. Such meetings shall be scheduled at a regular time and date, to be selected by Developer. The purposes of such meetings shall include but not be limited to discussing and furthering the construction of the Project, discussing, reviewing and deciding upon budgetary matters, value engineering matters, changes, delays, and extensions, reviewing work progress in relation to the Schedule of Performance, sharing new information, reporting on progress and on any significant events or developments, and othenvise carrying out the purposes of this Agreement. Developer shall provide all parties at least 24 hours' prior notice (written or telephonic) of any changes in the time or date of each such regular meeting. 15. [§ 415] Books, Records and Audits. (a) Developer shall, and shall cause the General Contractor to, keep and maintain at the Property or at offices in Southern California, true and complete records and double -entry books of account relating to the Project in such manner as to enable a formal audit and preparation of audited financial statements therefrom and in accordance with sound accounting practices. Developer shall retain and cause the General Contractor to retain all such books, records and accounts for a period of two years after Completion. All such books, records and accounts shall be supported by original, authenticated, receipted bills and/or invoices, checks, vouchers, tickets, bank statements, purchase orders, bills of lading, certified payrolls and other documents of entry, shall be maintained separately from books and records concerning other business or property and shall include a general ledger and journals with chronological entries. (b) Agency, at Agency's sole cost, may at any reasonable time during the term of this Agreement and for two years after Completion, upon at least five (5) Business Days' prior written notice, examine, copy and audit (or cause to be examined, copied and audited by a professional consultant it selects) such records and books of account for the purpose of verifying costs and expenses and other facts and information pertaining to the Project. In addition, Agency, or its representatives, may from time to time, upon five (5) Business Days' prior written notice, conduct a re -audit and observe the business operations of Developer and/or the General Contractor to confirm the accuracy of books and records. After Completion, each party's rights to examine, copy and audit shall be exercisable not more often than once every Calendar Year. Agency agrees to be reasonable in exercising its right to require audits pursuant to this provision. 35 SF-2001 Agree: Bowen Court: DDA 5/17101 - -4:33 PM #4 16. [§ 416] Reports. Not later than 20 days after the end of each calendar month prior to Completion, Developer shall prepare and submit to Agency a narrative report on the progress of the design, financing and construction of the Project since the immediately preceding report, describing in detail all significant activities concerning design, Governmental Approvals, new contracts and subcontracts, identifying the parties, scope and amount, construction and construction progress, and discovery and correction of Defects. Such report shall include a discussion of the Schedule of Performance and compliance therewith, of any new or continuing delays, and the causes thereof and a summary of any new Changes and shall include a reasonable number of construction photographs (if requested) taken since the fast report. 17. [§ 417] Required Notifications. Each party shall promptly after obtaining knowledge thereof, notify the other party in writing of the following: (a) As to Developer, any litigation affecting Developer, any of Developer's Affiliates or the Project, and as to Agency, any litigation affecting the Project; (b) Any communication, whether written or oral, received from any Governmental Authority claiming or asserting that any aspect of the Work of Improvement fails in any respect to comply with any Governmental Requirements, or threatening to suspend or revoke any Governmental Approval; (c) Any material adverse change in the physical condition of the Property or the Project, the financial condition or operations of Developer, the financial condition of any Guarantor, or the financial condition or operations of Agency, but only to the extent such changes affect Agency's obligations to the Property pursuant to this Agreement; (d) Any material default by the General Contractor, Architect, any engineer or by any subcontractor, vendor or supplier, having a contract in excess of $100,000, any material adverse change in the financial condition or operations of Agency, but only to the extent such changes affect Agency's obligations to the Property pursuant to this Agreement; (e) Any cessation in development of the Project in excess of five (5) Business Days; (0 Any damage to or destruction of any portion of the Project where the cost to repair and restore will exceed $25,000; (g) Any defect where the cost to correct will require a Change or the delay that will be caused will exceed five (5) Business Days; (h) Any fact or circumstance which may render the Project Budget inaccurate in any material respect; 36 SF-20)1 Agree: Bourn Court: DDA 5117101 - - 4:33 PM 44 (i) Any lien, charge or encumbrance affecting the Project not expressly permitted hereby; 0) Any event or condition, oth=r than matters affecting the economy generally, which may materially adversely affect the development, leasing or operation of the Project; (k) As to Developer, any change in (i) the location of Developer's business; (ii) the legal, trade or fictitious business names used by Developer; or (iii) the nature of Developer's business; (1) The existence of any material default or failure to perform an obligation by any party under any contract relating to the Project; and (m) As to each party, the existence of any Default by such party, or of any condition or event which with the giving of notice or passage of time, or both, would constitute such Default, the nature thereof, and the corrective steps such party is taking with respect thereto. 18. [§ 418] Payment of Claims Costs and Taxes (a) Developer shall pay or cause to be paid when due all costs and expenses relating to the Project. (b) Developer shall keep title to the Property free and clear of any and all liens (except Permitted Mortgages), claims or charges for labor, services, materials or equipment furnished to it in connection with the Project, shall remove, or shall have removed, any levy or attachment made on the Property (or any portion thereof), or shall assure the satisfaction thereof within a reasonable time but in any event prior to a foreclosure. (c) Developer shall pay prior to delinquency all real estate takes and assessments assessed and levied on or against the Property or any portion thereof subsequent to the conveyance to Developer of the Property. (d) Nothing herein contained shall be deemed to prohibit Developer from contesting the validity or amount of any tax, assessment, encumbrance or lien, nor to limit the remedies available to Developer in respect thereto. 19. [§ 419] Additional Documents. Each party shall promptly execute and deliver to the other party, from time to time, such other documents as the requesting party may deem reasonably necessary or desirable for the purposes of this Agreement. 37 SF-2Co1 Agree: Bowen Court: DDA 3117101 - - 4:33 PAI #4 20. [§ 420] Replacement of Third Parties. Subject to the consent of Agency pursuant to this Agreement, Developer shall promptly replace or cause to be replaced any General Contractor, Architect, engineer, subcontractor, vendor or supplier which commits a material default that is not promptly cured, or which is the subject of a petition, voluntary or otlierwise, under any Debtor Relief Law. Developer shall promptly deliver to Agency the name and address of each replacement and copies of any documents required under this Agreement with respect to the replacement. Each replacement shall have the financial ability and expertise to fulfill the requirements of its contract. 21. [§ 421] Correction ofDefe--ts. During the course of construction, Developer shall promptly correct or cause to be corrected to the reasonable satisfaction of Agency (a) any defect in the Project; (b) any material departure of the Project from the approved Plans and approved Changes thereto, Governmental Requirements, Governmental Approvals or sound building practices; and (c) any encroachment by any part of the Project on any building line, easement, property line or restricted area. If Agency, in its reasonable judgment, determines that any such circumstance exists, it may require the work to be stopped until the matter is corrected. If this occurs, Developer shall promptly undertake such corrective work and pending completion of such corrective work shall not allow any other work to proceed which could interfere with its completion or reinspection. 22. [§ 422] Storage of Materials. Developer shall cause all materials supplied for, or intended to be utilized in, the construction of the Project, but not affixed to or incorporated into the Project, to be stored at the Property or at such other location as may be approved by Agency, with adequate safeguards to prevent and insure against loss, theft, damage or commingling with other materials or projects. Agency shall reasonably cooperate with Developer to designate a construction staging area on land owned by Agency adjacent to the Property which Agency determines is appropriate for construction staging, subject to the execution by Agency and Developer of a "Right of Entry" agreement containing such reasonable conditions as Agency may determine are reasonably necessary with respect thereto. 23. [§ 423] Sims and Publicity. Developer, without cost or expens-. to Agency, shall provide, periodically update (but not more frequently than upon changes in the membership of Agency or City Council) and maintain construction site signs identifying the development, giving recognition to Agency, the City Council and their members. Agency and Developer may refer to the Project in their own promotional and advertising materials and press releases. B. [§ 424] Reserved. 3s SF-2C01 Agree: Bowen Court: DDA 51'17101 - -4:33 Phi #a C. [§ 425]T_axes, Assessments and Liens. The Developer shall pay prior to delinquency all real estate taxes and assessments assessed and levied on or against the Property subsequent to the conveyance of the title or possession of the Property. The Developer shall remove, or shall have removed, any levy or attachment made on the Property (or any portion thereof), except those created by work of the Agency, or shall assure the satisfaction thereof within a reasonable time but in any event prior to a sale thereunder. Nothing herein contained shall be deemed to prohibit the Developer from contesting the validity or amount of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Developer in respect thereto. The covenants of the Developer set forth in this Section 316 relating to the placement of any unauthorized mortgage, trust deed, encumbrance or lien, shall remain in effect only until a Certificate of Completion of construction has been recorded with respect to the Property or the portion thereof upon which any unauthorized mortgage, trust deed, encumbrance or lien might be placed. D. [§426] Maintenance of Property Security At all times prior to the completion of the construction of the Development on the Property, the Developer shall, at its expense, provide for and maintain adequate construction fencing and security with respect to the Property, to the satisfaction of the Agency. E. [§427] Security FinancingiRight of Holders 1. [§428] No Encumbrances except Mortgages, Deeds of Trust, Conveyances and Leases -Back or Other Conveyance for Financirn7 for Development Notwithstanding Section 208, mortgages, deeds of trust, conveyances and leases -back, or any other form of conveyance required for any reasonable method of financing are permitted before the recordation of the Certificate of Completion (referred to in Section 434 of this Agreement), but only for the purpose of securing loans of funds to be used for financing the acquisition of the Property, and/or the construction of the Project on the Property, and any other expenditures necessary and appropriate to develop the Property pursuant to this Agreement. The Developer shall notify the Agency in advance of any mortgage, deed of trust, conveyance and lease -back, or other forms of conveyance for financing if the Developer proposes to enter into the same before the recordation of the Certificate of Completion. The Developer shall not enter into any such conveyance for financing or credit enhancement without the prior written approval of the Agency, which approval the Agency agrees to give if any such conveyance is given to a responsible financial or lending institution or other acceptable person or entity. The Agency shall automatically approve of a "responsible financial or lending institution" if such institution is one of the twenty-five (25) largest banking institutions doing business in the State of California or one of the twenty-five (25) largest insurance lending institutions in the United States qualified to do business in the State of California, or if the institution in question is a bank, savings and loan association, insurance company or pension fund with assets of at least 5150,000,000. Such lender shall be deemed approved unless rejected in writing by the Agency within ten (10) days after receipt of notice thereof by the Agency. Such lender approved by the 39 SF-2001 Agree: Dowen Court: DDA - 517101--4.33PMN4 Agency pursuant to this section 320, shall not be round by any amendment, implementation or modification to this Agreement subsequent to its approval without such lender giving its prior written consent. Notwithstanding anything contained herein to the contrary, the Developer shall promptly notify the Agency of any mortgage, dead of trust, conveyance and lease -back, or other financing, conveyance, encumbrance or lien that has been created or attached to the Property (or any portion thereof) prior to completion of the construction of the Development whether by voluntary act of the Developer or otherwise. The words "mortgage" and "deed of trust" as used herein include all other appropriate modes of financing real estate acquisition, constru=tion and land development, and any other expenditures necessary and appropriate to develop the Property under this Agreement, which involves the granting of a security interest, except where such financing is as a result of an assignment allowed pursuant to Section 208 hereinabove. 2. [§ 429] Holder Not Obligated to Construct Improvements The holder of any mortgage, deed of trust or other security interest authorized by this Agreement (the "Holder") shall in no way be obligated by the provisions of this Agreement to construct or complete the Development or to guarantee such construction or completion, nor shall any covenants or any other provision in the Lease or Agreement Containing Covenants be so construed as to so obligate such Holder. No holder of any security agreement in the Property or any part thereof or any improvements thereon sltall devote the Property to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. 3. [§ 430] Notice of Default to Mortgage, Deed of Trust or Other Security Interest flolders: Right to Cure Whenever the Agency shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in completion of construction of the Development, or any other default, the Agency shall at the same time deliver to any lender approved by the Agency pursuant to Section 438 hereof and each Holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement, a copy of such notice or demand. Each such Holder shall have the right at its option within sixty (60) days after the receipt of the notice, to cure or remedy, or commence to cure or remedy, any such default and to add the cost thereof to the security interest debt and the lien of its security interest. If such default shall be a default which can only be remedied or cured by such Holder upon obtaining possession, if such Holder has elected to cure the default then such Holder shall seek to obtain possession with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default within sixty (60) days after obtaining possession; provided that in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced within such sixty- (60) day period, such Holder shall have such additional time as reasonably necessary to remedy or cure such default with diligence and continuity; and provided further that such Holder shall not be required to remedy or cure any non -curable default of the Developer. 40 SF-2001 Agrec: Bowen Court: DDA 5%17,14 --4:33I'MR4 Nothing contained in this Agreement shall be deemed to permit or authorize such Holder to undertake or continue the construction or completion of the Development (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the Developer's obligations, to the Agency by written agreement reasonably satisfactory to the Agency. Such Hold.:r in that event must agree to reasonably complete, in the manner provided in this Agreement, the improvements to which the lien or title of such Holder relates, and submit evidence reasonably satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. A Holder shall be deemed approved by the Agency unless rejected in writing by the Agency within thirty (30) days after receipt of such evidence by the Agency. Any such Holder properly completing the Development shall be entitled, upon written request made to the Agency, to a Certificate of Completion from the Agency. Provided that such Holder has given prior written notice of its name and address to the Agency, the notices of default to the Developer set forth herein, to be valid and effective as to the Holder and the Developer, shall be delivered by the Agency simultaneously to such Holder and the Developer. Breach of any of the covenants, conditions, restrictions or reservations contained in this Agreement shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Property or any part thereof or interest therein, whether or not said mortgage or deed of trust is subordinated to this Agreement, but unless otherwise herein provided, the terms, conditions, covenants, restrictions and reservation of this Agreement shall be binding and effective against the Holder and any owner of the Property, or any part thereof, whose title thereto is acquired by foreclosure, trustee's sale or otherwise. No purported rules, regulations, modification, amendment and/or termination of this Agreement affecting the right of a Holder shall be binding upon any Holder holding a mortgage or deed of trust from and after the date of recordation of such mortgage or deed of trust until the written consent of such Holder is obtained. 4. [§43I] Failure of Holder to Complete Development In any case where, thirty (30) days after default by the Developer in completion of construction of the Development under this Agreement, the holder of any mortgage or deed of trust creating a lien or encumbrance upon the Property or any part thereof has not expressly assumed the Developer's obligations to the Agency under this Agreement as provided in Section 430 hereof, or if it has assumed such obligations but has not proceeded diligently with construction, the Agency may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid mortgage or deed of trust by payment to the holder of the amount of the unpaid mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust relating to acquisition and development of the Property pursuant to this Agreement. If the ownership of the Property has vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance from the holder to the Agency upon payment'to the holder of an amount equal to the sum of the following: 41 SF-2031 Agree: Bowen Court: DDA 5/17/C I - - 4:33 PM #4 (a) The unpaid mortgage or deed of trust at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received by the holder during foreclosure proceedings); (b) All expenses with respect to foreclosure; (c) The net expense, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Property or any part thereof; (d) The cost of any improvements made by such holder; and (e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage or deed of trust and such debt had continued in existence to the date of payment by the Agency. 5. [§ 4321 Right of Agency_to Cure Mortgage Deed of Trust or Other Security Interest Default In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the Property (or any portion thereof) prior to the issuance of a Certificate of Completion by the Agency, and the holder with respect to the Property (or any portion thereof) has not exercised its option to complete the development, the Agency may cure the default prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be entitled to a lien upon the Property (or portion thereof) to the extent of such costs and disbursements. Any such lien shall be subordinate and subject to mortgages, deeds of trust or other security instruments permitted by Section hereof. F. [§ 4331 Right of Agency to Satisfy Other Liens on the Property After Title Passes Prior to the recordation of the Certificate of Completion (referred to in Section 434 of this Agreement), and after the Developer has had a reasonable time to challenge, cure or satisfy any liens or encumbrances on the Property (or any portion thereof), the Agency shall have the right to satisfy any such liens or encumbrances after thirty (30) days prior written notice to the Developer; provided however, that nothing in this Agreement shall require the Developer to pay or make provisions for the payment of any tax, assessment, lien or charge so long as the Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Property (or any portion thereof) to forfeiture or sale. 42 SF-2001 Agree: BoNen Court: DDA 5117101 - - 4:33 PA1 #4 G. [§ 434] Certificate of Comnletion Promptly after completion of all construction and redevelopment to be completed by the Developer for the Development on the Property, as set forth in the Scope of Development (Attachment No. 3), the Agency shall furnish the Developer with a Certificate of Completion upon written request therefore by the Developer. The Agency shall not unreasonably withhold any such Certificate of Completion. The Certificate of Completion shall be, and shall state that it is, aconclusive determination of satisfactory completion of the construction and redevelopment required by this Agreement for the Property. The Certificate of Completion shall not constitute a determination of satisfactory compliance with any other provision of this Agreement. The Certificate of Completion shall be in the form of Attachment No. 9, and may be recorded in the Office of the Recorder of the County of Orange. If the Agency refuses or fails to fumish a Certificate of Completion after written request from the Developer, the Agency shall, within thirty (30) days of receipt of the written request, provide the Developer with a written statement which details the reasons the Agency refused or failed to furnish a Certificate of Completion. The statement shall also contain the Agency's opinion of the actions the Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to the immediate availability of specific items for landscaping, the Agency will issue its Certificate of Completion upon the posting of a bond by the Developer with the Agency in an amount representing the fair market value of the work not yet completed. If the Agency fails to provide the written statement within said thirty- (30) day period, the Developer shall be deemed entitled to the Certificate of Completion. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Development, nor any part thereof. Such a Certificate of Completion is not notice of completion as referred to in Section 3093 of the California Civil Code, ror does it constitute evidence of compliance with or satisfaction of any obligation of the Developer with respect to requirements imposed by any governmental entity other than the Agency. V. [§ 500) USE OF THE PROPERTY A. [§ 501 ] Uses The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that the Property shall be developed as twenty (20) senior, affordable, for -rent dwelling units as set forth in the Scope of Development (Attachment No. 3). In addition, the Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that during construction and development of the Project and thereafter the Developer, its successors and assignees, shall develop and devote the Property to the uses specified in the Redevelopment Plan, the Scope of Development (Attachment No. 3), the Lease (Attachment No. 5), the Agreement 43 SF-2001 Agree: Roaen Court: DDA 5117/01 - - 4:33 NNI #4 Containing Covenants (Attachment No. 6) and all plans approved by the Agency pursuant to'this Agreement. B. [§ 502) Maintenance of the Property Commencing at the time the Developer acquires title or possession to the Property, and solely at the Developer's expense, the Developer or the Developer's successor in interest shall reasonably maintain the improvements thereon in good condition and appearance. The Developer shall keep the Property reasonably free from any accumulation of graffiti, debris or waste materials. The Developer shall also maintain the landscaping on the Property required to be planted under the Scope of Development (Attachment No. 3) in a reasonably healthy condition. If, at any time, the Developer fails to maintain the Property as required by this Section 502, and such failure is not corrected within thirty (30) days after the date of written notice from the Agency, either the Agency or the City may perform the necessary landscape or other maintenance, or other actions and the Developer shall pay all costs incurred for such maintenance. C. [§ 503] Oblieation to Refrain from Discrimination The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or portion thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or any part thereof nor shall the Developer itself or any person claiming under or through it establish'or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property or any part thereof. D. [§ 5041 Form of Nondiscrimination and Nonsegegation Clauses The Developer shall refrain from restricting the rental, sale or lease of the Property on the basis of sex, marital status, race, color, creed, religion, ancestry or national origin of any person. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 1. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregating of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the 44 SF-2C01 Agree: Bowen Court: DDA 5-17101 - - 4:33 Phi N4 selection, location, number, use or occupancy of t.-nants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 2. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: . That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall lessee himself or herself, or any person claiming under or through him or her, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." 3. In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land." E. [§ 5051 Effect and Duration of Covenants The covenants established in this Agreement, the Lease (Attachment No. 5) and Agreement Containing Covenants (Attachment No. 6) shall, without regard to technical classification and designation, be binding on the Developer and any successor in interest to the Property or any part thereof perpetuity for the benefit and in favor of the Agency, its successors and assigns, and the City. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is, an owner of any land or interest therein in the Property or in the Project Area. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintair. any actions or suits at lacy or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. Breach of any of the covenants, conditions, restrictions or reservations contained in the Lease or Agreement Containing Covenants shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Property whether or not said mortgage or deed of trust is subordinated to the Grant Deed or Agreement Containing 45 SF-2COI Agree: Dowen Court: Mrk 5 17101 - - 4:33 PM N4 Covenants, but unless otherwise herein provided, the terms, conditions, covenants, restrictions and reservations of the Lease and Agreement Containing Covenants shall be binding and effective against any holder of any interest in the Property and any owner of the Property, or any part thereof, whose title thereto is acquired by foreclosure, trustee's sale or otherwise. F. [§ 5061 Rights of Access — PubIic Improvements and Facilities Notwithstanding the Developer's obligation to maintain the improvements on the Property as set forth in Section 502 above, the Agency for itself, and for the City and other public agencies, as their sole risk and expense, reserves the right to enter the Property or any part thereof at all reasonable times and with as little interference as possible, for the purposes of construction, reconstruction, maintenance, repair or service of any public improvements or public facilities located on the Property. Representatives of the Agency, the City and other visitors to the Property shall observe any reasonable rules adopted by the Developer for purposes of maintaining safety on the Property, including requirements that such representatives or visitors be escorted. Any such entry shall be made only after reasonable notice to the Developer. Any damage or injury to the Property or any portion thereof resulting from such entry shall be promptly repaired at the sole expense of the public agency responsible for the entry. G. [§ 5071 Operation of Project Participant shall lease, operate and manage the Project in full conformance with the terms of this Agreement and the Agreement Containing Covenants. The rents for the twenty (20) units shall not exceed the "Very Low Income" rent specified in the HOME Program, as set forth at Section 92.252 of Title 24 of the Code of Federal Regulations, or the "affordable housing cost" for Very Low Income Households, as specified at California Health & Safety Code Section 50052.5 and the implementing regulations specified at Section 6910 et seq. of Title 25 of the California Code of Regulations, whichever is less. H. [§ 5081 Lead -Based Paint Developer shall ensure that it and its contractors and subcontractors shall not use lead - based paint in the construction or maintenance of the Property. Developer shall insert this provision in all contracts and subcontracts for work performed on the Project which involved the application of paint. I. [§ 5091 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. 46 SF-2001 Agree: Bowen Coun: DDA 5117l01 - - 4:33 PM #4 J. [§ 510] Maintenance of the_Prop= All Units must meet Federal Housing Quality Standards (24 CFR § 992.401) while occupied. Further, Participant shall maintain the Property in accordance with the terms of the Regulatory Agreement. K. [§ 5111 Term of Residual Recei tom. 1. [§ 512) Amount. The Residual Receipts Loan shall be evidenced by the Residual Receipts Note in the amount of FIVE HUNDRED THOUSAND DOLLARS (S500,000) and shall accrue interest at a rate of THREE PERCENT (31%) per annum for the term of the Agency Note. 2. [§513] Term. The term of the Agency Note shall be sixty (60) years, commencing on the effective date of the Lease. 3. [§ 514] Repayment. Beginning on the third anniversary date of the Agency Note, and on each annual anniversary date of the Agency Note thereafter until the Agency Loan is paid in full or otherwise canceled or forgiven pursuant to its terms, Developer shall pay to Agency an amount equal to FIFTY PERCENT (50%) of the Project's Net Operating Income for the preceding year. After the sixtieth (601h) anniversary date of the Agency Note, all remaining unpaid principal and interest on the Agency Loan shall immediately become due and payable, and the Agreement Containing Covenants shall terminate; provided, however, if Developer provides thirty (30) days prior written notice to Agency stating that Developer shall continue maintain all the restrictions of the Agreement Containing Covenants on the Property beyond its 60-year term, then the unpaid principal and interest on the Agency Loan shall not require payment and shall not accrue further interest for the period during which Developer continuously maintains the restrictions of the Agreement Containing Covenants on the Property, up to a maximum of forty (40) years. 4. [§ 515] Definition of Net Operating income. As used herein, the term "Net Operating Income of the Project" shall mean, for any reporting period (calendar year or fiscal year), (a) all income derived by Developer from the Property, including without limitation all tenant rent, (b) less (i) payments of principal and interest, if any, required to be paid in such year by Lessee with respect to any note, mortgage, or deed of trust with respect to the Property or Project; (ii) all expenses actually incurred (or to be incurred if accounted for on an accrual basis) by Developer in leasing, managing, operating, maintaining, and repairing the Property; (iii) all capital expenses incurred pertaining to the Property-, (iv) the deposits into the Capital Reserve Account; (v) property management fees, administrative costs, salaries, benefits, overhead costs, and such other and further operating and management expenses incurred in operating the Property. Depreciation expenses shall not be a reduction against income. 5. [§ 5161 Adjustment of Payment to Agency. In the event Developer determines that it cannot make the Agency payment as described in Section 518 and at the same time retain the economic viability of th. Project, Developer shall notify the Agency and request postponement, cancellation, forgiveness, or adjustment of the Agency payment. 47 SF-2001 Agree: Rosen Court: DDA 3:17101 - - 4:33 P%11k1 Developer shall provide financial and other evidence supporting its request. Agency may, in the exercise of its reasonable discretion and in light of its desire to see the Property used as an affordable rental apartment complex and maintained at the level required by the Agreement Containing Covenants, reduce, suspend, postpone, forgive, cancel, or renegotiate the terms of the Agency payment. L. [§ 517] Financial Statements. Developer shall submit to Agency, on an annual basis, a true and correct copy of Developer's audited financial statement for the Project. After receipt of Developer's audited financial statements for the Project, Agency may, at its cost, request additional financial analyses or obtain a third party review of Developer's financial statement for the Project to verify the accuracy of Developer's payments made to the Agency pursuant to Section 515. VI. [§ 6001 DEFAULTS, REMEDIES AND TERMINATION A. [§ 6011 Default Each of the following shall constitute an Event of Default under this Agreement: 1. Failure or delay by a party to perform any term or provision of this Agreement within the time provided herein or in the Schedule of Performance (Attachment ]No. 3). 2. Failure of the. Developer to construct the Development on the Property in accordance with the Scope of Development (Attachment No. 3), plans and construction drawings previously approved by the Agency without the approval of such changes by the Agency. 3. Breach of any covenant, warranty or agreement contained in this Agreement. Subject to the extensions of time set forth in Section 603, the party who fails to perform, or delays performance of, any term or provision of this Agreement must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. B. [§ 6021 Notice If an Event of Default under this Agreement occurs, the injured party shall give written notice (a "Default Notice") of the Event of Default to the party in default, specifying the nature of the default. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it operate as a waiver of any rights or remedies of the injured party, but the injured party shall have no right to exercise any remedy hereunder without delivering the Default Notice as provided herein. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any 48 SF-2001 Agree: Bowen Coun: DDA 5117101. -4:33 NO 04 actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. C. [§ 603] Cure Period With respect to defaults or events for which a specific cure period is provided elsewhere in this Agreement, the specific cure period in that Section shall be applicable in lieu of the cure periods provided in this Section 603 and in no event shall the cure periods set forth in this Section 603 be added onto any other cure period set forth in this Agreement. The injured party shall have no right to exercise a right or remedy hereunder unless the subject Event of Default continues uncured for a period of sixty (60) days after delivery of the Default Notice with respect thereto, or, where the default is of a nature which cannot be cured within such sixty- (60) day period, the defaulting party fails to commence such cure within sixty (60) days and to diligently proceed to complete the same, but in no event more than one hundred twenty (120) days from receipt of the Default Notice. Notwithstanding the foregoing, any Event of Default occurring as a result of the failure by any party to ay a sum of money shall be cured within thirty (30) days. If any Event of Default is not cured, or commenced to be cured if such default is of a nature which cannot be cured within sixty (60) or thirty (30) days, as appropriate, by such party within said sixty (60) or thirty (30) days, as appropriate, of receipt of the Default Notice, the non - defaulting party, at its option, may institute an action for specific performance of the terms of this Agreement or pursue such other rights and remedies as it may have. D. [§ 604] Rights and Remedies Upon the occurrence of an Event of Default and the expiration of the applicable cure period provided herein or by law, the injured party shall have all rights and remedies against the defaulting party as may be available at law or in equity to cure, correct or remedy any default, to obtain specific performance, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such rights and remedies are cumulative, and except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the exercise of one or more of such rights or remedies shall not preclude the exercise, at the same or different times, of any other rights or remedies for the same default or any other default by the defaulting party. E. [§ 605] LegalActions 1. J§ 606) Institution of Leval Actions Except as specified in Sections 609 and 610, and in addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy in law or equity consistent with the purposes of this Agreement. All legal actions must be instituted in the Superior Court of the 49 SF-2C01 Agree: Bourn Court: DDA 517101-.3:33M94 County of Orange, State of California, in any other appropriate court of that county, or in the Federal District Court in the Central District of California. 2. [§ 607] Service of Process Service of process on the Agency shall be made by personal service upon the Secretary of the Agency, or in such other manner as may be provided by law. Service of process on the Developer shall be made by personal service upon the Developer or in such manner as may be provided by law, whether made within or without the State of California. 3. [§ 608] Applicable Law The laws of the State of California shall govem the interpretation and enforcement of this Agreement. F. [§ 609] Damages If either party defaults with regard to any of the provisions of this Agreement, the non - defaulting party shall serve %%Titten notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty (30) days after service of the notice of default and is not cured promptly in a continuous and diligent manner within a reasonable period of time after commencement, the defaulting party shall be liable to the non -defaulting party for any damages caused by such default, and the non -defaulting party may thereafter (but not before) commence an action for damages against the defaulting party with respect to such default. G. [§610] Specific Performance' If either party defaults with regard to any of the provisions ofthis Agreement, the non - defaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty (30) days after service of the notice of default and is not cured promptly in a continuous and diligent manner within a reasonable period of time after commencement the defaulting party, at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Agreement pertaining to such default. H. [§ 611] Ri htsofTermination Upon termination of this Agreement, neither party shall have further rights or obligations to the other party. 1. [§ 612] Termination by Developer Notwithstanding any provision of this Agreement to the contrary, in the event that the Agency does not convey the Property to the Developer in the manner and condition, and by the 50 SF -MI Agree: Dow en Court: DDA $ 17/01 - - 4:33 PNt !4 date provided in the Schedule of Performance (Attachment No. 3), and any such failure shall not be cured %within ninety (90) days after the date that written demand by Developer is received by the Agency, then this Agreement shall, at the option of the Developer, be terminated by written notice thereof to the Agency. 2. [§ 6131 Termination by Agency - The Agency at its option may terminate this Agreement in the event that, prior to the conveyance and in violation of this Agreement: a. The Developer (or any successor in interest) assigns or attempts to assign the Agreement or any right therein, or in the Property, or portion thereof, or any of the improvements thereon contrary to any provision in this Agreement; or b. The Developer fails to submit certificates of insurance, Evidence of Financing, plans, drawings and related documents as required by this Agreement by the dates respectively provided in this Agreement and the Schedule of Performance (Attachment No. 3) therefore; or C. The Developer is otherwise in default under this Agreement; If any default or failure referred to in this Section 613 shall not be cured within thirty (30) days after the date of transmission of written by the Agency, then this Agreement and any rights of the Developer, or any assignee or transferee, in this agreement, or arising therefrom with respect to the Agency, shall at the option of the Agency, be terminated by the Agency by written notice to the Developer. I. [§ 614] Agency's Rights of Reentry The Agency shall have the right, at its option, to reenter and take possession of the Property with all improvements thereon, and to terminate and revest in the Agency the estate theretofore conveyed to the Developer, and prior to the recordation of the Certificate of Completion, the Developer (or its successors in interest) for any reason: 1. fails to commence construction of the Development as required by this Agreement for a period of thirty (30) days after written notice to proceed from the Agency; or 2. abandons or suspends or fails to diligently proceed with construction of the improvements on the Property for a period of thirty (30) days after written notice of such abandonment or suspension or failure to diligently proceed from the Agency; or . 51 5F-2001 Agree: powen Court: DDA 5117/01 - - 4:33 P%104 3. fails to complete the construction of the Development in accordance with ttlis Agreement; or 4. assigns or attempts to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer of the Property, or any part thereof, in violation of this Agreement, and such violation shall not be cured within thirty (30) days after the date of receipt of written notice thereof by the Agency to the Developer. The right to reenter, repossess, terminate, revest and repurchase the Property shall be subject and limited by and shall not defeat, render invalid or limit: ]. any mortgage, deed of trust or other security interests permitted by this Agreement; 2. any rights or interests provided in this Agreement for the protection of the holders of such mortgages, deeds of trust or other security interests. Upon the revesting in the Agency of title to the Property, or any part thereof, as provided in this Section 614, the Agency shall, pursuant to its responsibilities under state law, use its best efforts to resell the Property, or any part thereof, as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the Agency), who will assume the obligation of making or completing the Development, or such other improvements in their stead, as shall be satisfactory to the Agency and in accordance with the uses specified for the Property, or any part thereof, in the Redevelopment Plan. Upon such resale of the Property, or any part thereof, the proceeds thereof shall be applied. 1. first, to reimburse the Agency on its own behalf or on behalf of the City for all costs and expenses incurred by the Agency including but not limited to: a. salaries to personnel, in connection with the recapture, management and resale of the Property, or part thereof, less any gain or income derived, withdrawn or made by the Agency from the Property or part thereof, or from the improvements thereon; b. all taxes, assessments and water and sewer charges with respect to the Property or part thereof; C. any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; and 52 SF-2001 Agree: Down Coun: DDA 5/17{01 - - 4:33 PNi N-t d. any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Property or part thereof; and e. any amounts otherwise owing to the Agency by the Developer, or its successors or transferees; and 2. second, to reimburse the Developer, or its successor or transferee, up to the amount equal to the costs incurred for the development of the Property, or part thereof, pursuant to this Agreement at the time of reentry and repossession (not including amounts which the Developer has not actually paid, such as amounts financed), less any gains or income withdrawn or made by the Developer from the Property or the improvements thereon. Any balance remaining after such reimbursements shall be retained by the Agency as its property. The rights established in this Section 614 are to be interpreted in light of the fact that the Agency will convey the Property to the Developer for development and not for speculation in undeveloped land. VII. [§ 700] GENERAL PROVISIONS A. [§ 70I] Notices, Demands and Communications between the Parties Formal notices, demands and communications between the Agency and the Developer shall be sufficiently given if personally delivered or if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and the Developer, as designated in Sections 106 and 107 hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section 601. In addition, a copy of any notice shall be sent to the following: For the Agency: City Attorney 2000 Main Street Huntington Beach, CA 92648 For the Developer: Merit Housing Corporation 53 SF.2001 Agree: Foam Court: DDA 5117101 - - 4:33 PM 04 B. [§ 702] Conflict of Interest No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is, directly or indirectly, interested. . The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. C. [§ 7031 Nonliability of Agency Officials and Employ No member, official, employee or consultant of the Agency or the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Agency or for any amount which may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement. D. [§ 704] Enforced Delar, Extension of Time of Performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, third -party litigation, unusually severe weather, inability to secure necessary labor, materials or tools, delays of any contractor, subcontractor or suppliers, acts of the other party, acts or failure to act of the City or any other public or governmental agency or entity (other than that act or failure to act of the Agency or the City shall not excuse performance by the Agency) or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of actual knowledge of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the Agency and the Developer. E. [§ 7051 Inspection of Books and Records The Agency has the right at all reasonable times to inspect the books and records of the Developer pertaining to the Property as pertinent to the purposes of this Agreement. The Developer also has the right at all reasonable times to inspect the books and records of the Agency pertaining to the Property as pertinent to the purposes of this Agreement. F. [§ 706] Real Estate Commissions The Agency shall not be liable for any real estate commissions, brokerage fees or finders fees which may arise from the sale of the Property to the Developer. The Developer hereby 54 SF-2001 AV": Rouen Court: DDA 5 17A)l - - 4.33 Pit 04 agrees to defend, release, indemnify and hold harmless the Agency, the City and their employees, agents and consultants from any claim, liability, and/or cost (including attorneys' fees) which may arise out of or in connection with any claim that such fees are due. G. [§ 607] Plans and Data In the event this Agreement is terminated, the Developer shall deliver to the Agency any and all plans and data concerning the Property. In such event, the Agency or any person or entity designated by the Agency to receive such plans and data, subject to the rights reserved by the architect or other draftsmen of such plans, to use such plans and data provided their use shall only be for the development of the Property. The Agency use of such plans and specifications shall be without any warrants or representation by the Developer or its agents. The Developer's agreement with the architect shall reflect the provisions of this Section 607. H. [§ 7081 Not a Joint Venture or Partnership Agreement It is not the intent of the parties to create a joint venture or partnership by entering into this Agreement. VIll. [§ 800] SPECIAL PROVISIONS A. [§ 8011 Azrecment Containing Covenants The Property was acquired by the Agency with moneys from the Agency's Low and Moderate Income Housing Fund. Since the Agency is assisting the Developer in the Developer's construction and redevelopment of the twenty (20) dwelling units pursuant to this Agreement, the Community Redevelopment La«° requires that the twenty (20) dwelling units remain available at affordable housing costs to persons and families of low and moderate income households in perpetuity. Accordingly, in order to implement this requirement, the Developer agrees to execute and deliver to the Agency an Agreement Containing Covenants in substantially the form attached hereto as Attachment No. 6. The Agreement Containing Covenants shall be recorded against the Property with the Lease hereunder upon the close of escrow. IX. [§ 900] ENTIRE AGREEMENT, NVAIVERS AND AMENDMENTS This Agreement shall be executed in three (3) duplicate originals each of which is deemed to be an original. This Agreement includes forty (40) pages and five (5) attachments which constitute the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the Property. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Agency or the Developer, and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Developer. This Agreement and any provisions hereof may be amended by mutual written agreement by 55 SF•2001 Agree: Bowrn Court: DDA 5117101- -4:33 MI-1 #4 Developer and the Agency and such amendment shall not require the consent of any other fee owner, tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust , or any other person or entity having an interest in the Property. X. (§ 1000] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY; OF AGREEMENT DATE . This Agreement, when executed by the Developer and delivered to the Agency, must be authorized, executed and delivered by the Agency within sixty (60) days thereafter, or this Agreement may be terminated by the Developer on written notice to the Agency. The date of this Agreement shall be the date it is signed by the Agency. [Signatures on following page] 56 SF-2001 Agree: Bowe Court: DDA 5117101 - -4:33 PM N4 REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency"} Dated: By: APPROVED AS TO FORM: Gail Hutton Agency General Counsel Dated: , Dated: , 57 SF-2001 Agree: Bowen Court: DDA 5117101 - - 433 PNI B4 Pam Julien Houchen, Chairperson ATTEST" By: Connie Broc" ay Agency Clerk MERIT HOUSING CORPORATION ("Developer") By: Executive Director By: Treasurer SF-2011 Agree: Bourn Court: DDA 5117101 - p2 ATTACHMENT NO. 1 LEGAL DESCRIPTION o� ATTACHMENT NO.2 SITE MAP SF-24)1 Agree: Bowen Court: DDA 5/I71C 1 - 02 EXHIBIT A LEGAL DESCRIPTIONOF PROPERTY [to be aJded] 5F-2000 Agree: Bourn Court: DDA RL5 00-302 5117101 - # I OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by and When Recorded Mail to: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street, P.O. Box 190 Huntington Beach, CA 92649 Attn: Executive Director Space above this line for recording use AGREEMENT CONTAINING COVENANTS This AGREEMENT CONTAINING COVENANTS (the "Agreement") is made this day of , , by and between MERIT HOUSING CORPORATION, a California nonprofit corporation ("Developer") and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"). RECITALS A. Developer is the owner of that certain real property (the "Property") located in the City of Huntington Beach, more particularly described in Exhibit "A" which is attached hereto and incorporated herein by this reference. B. For the purpose of providing housing that will be affordable to Low and Moderate Income seniors, Developer and Agency entered into that certain Disposition and Development Agreement (the "DDA") to which this Agreement is attached as Attachment No. 5, which is incorporated herein by this reference. C. The DDA contains certain provisions relating to the use of the Property. Attachment No. 5 Page 1 of 7 SF-2000 Agee: Dow -en Court: DDA RLS (00-302 5117101 - N 1 TERMS 1. Definitions The following terms, as used in this Agreement, shall have the meanings given unless expressly provided to the contrary: . The term "Affordable Rent" shall mean annual rentals whose amount does not exceed the maximum percentage of income that can be devoted to rent as specified in the HOME Program, as set forth at Section 92.252 of Title 24 of the Code of Federal Regulations, or the "affordable housing cost" for Very Low Income Households, as specified at Califomia Health R Safety Code Section 50052.5 and the implementing regulations specified at Section 69I0 et seq., of Title 25 of the California Code of Regulations, whichever is less. The term "Agency" shall mean the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any assignee of, or successor to, the rights, powers, and responsibilities of Agency. The term "Agency Loan" shall mean the Agency's self-liquidating loan to Participant in the amount of Seven Hundred Forty-two Thousand Dollars (S742,000) as evidenced by the Note and secured by the Agency Deed of Trust. The term "Agreement" or any reference to this "Agreement" shall mean this Owner Participation Agreement executed by and between Agency and Participant, including all exhibits attached hereto, which exhibits are incorporated h:rein by this reference and all other documents incorporated herein by reference. The term "Approved Project Plans and Permits" shall mean all of the plans, permits, and approvals required for the Project, as approved by the Agency and/or the City including, but not limited to, preliminary and final drawings (final drawings shall be in sufficient detail to obtain a building permit), Property plans, building plans and elevations, grading plans, landscaping plans, parking plans, material pallets, a description of structural, mechanical, and electrical systems, and all other plans, drawings and specifications that City and Agency customarily require for such a Project, and including all required approvals and findings pursuant the California Environmental Quality Act of 1970, as amended, and regulations promulgated thereunder ("CEQA"), and, if applicable, the National Environmental Policy Act of 1969, as amended, and regulations promulgated thereunder. The term "City" shall mean the City of Huntington Beach, a municipal corporation, having its offices at 2000 Main Street, Huntington Beach, CA 92648. The term "Days" shall mean calendar days and the statement of any time period herein shall be calendar days and not working days, unless otherwise specified. Attachment No. 5 Page 2 of 7 SF-2COo Agree: Bourn Court: DDA RLS 00-302 517101 -fit The term "Effective Date" shall mean the date the Agency approves this Agreement; which date shall be inserted into the preamble of this Agreement. The term "Eligible Tenant" shall mean any person entitled to rent a Unit as set forth in the Regulatory Agreement. The term "Escrow" shall mean that certain escrow with Orange Coast Title Company, Escmw Division, which has been established to convey the Property from Seller to Participant, and into which Agency shall deposit the Agency Lain funds in accordance with the terms of this Agreement. The term "Executive Director" shall mean the individual duly appointed to the position of Executive Director of the Agency, or authorized designee. Whenever an administrative action is required by Agency to implement the terms of this Agreement, the Agency Executive Director, or an authorized designee, shall have authority to act on behalf of Agency, except with respect to matters reserved under California law wholly for Agency Board determination. The term "First Deed of Trust" shall mean the deed of trust recorded in first position at close of escrow as security for the loan obtained by Participant from the Agency in an amount not to exceed Seven Hundred Forty-two Thousand Dollars (S742,000), a copy of which is attached as Exhibit G. The term "Force Majeure" shall mean any war, insurrection; strike; lock -out; labor dispute; riot; flood; earthquake; fire; casualty; Act of God; act of the public enemy; epidemic; quarantine; restriction; freight embargo; unavoidable lack of transportation; governmental restriction; unusually severe weather; inability to secure necessary labor, materials. or tools; delay of any contractor, subcontractor or supplier; economic or market conditions; lack of tenant commitments or tenant changes; inability to secure'satisfactory financing; act of the other party including act or failure to act of City or any other public or governmental agency or entity (except that any act or failure to act of City or Agency shall not excuse performance by Agency); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. The term "Grant Deed" shall mean that certain Grant Deed that conveys the Property from Seller to Participant. The term "Hazardous Materials" means any hazardous or toxic substances, materials, wastes, pollutants, or contaminants which are defined, regulated, or listed as "Hazardous substances," "hazardous wastes," "hazardous materials," `pollutants," "contaminants," or "toxic substances," under federal or state environmental and health and safety laws and regulations, including without limitation petroleum and petroleum byproducts, flammable explosives, urea 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 Attachment No. 5 Page 3 of 7 SF-2030 Agee: Bowen Court: DDA R1S C0.302 5117/C1 - 0 1 disposed of in the manner and in amounts that are consistent with normal practice and legal standards. The term "II0ME" means the HOME Investment Partnership Program created by the National Affordable Housing Act of 1990. The term "I] UD" means the United States Department of Housing and Urban Development. The term "Lease" means the lease entered into between Participant and a tenant of a unit in the Project. The term "Aledian Income" means the median income for the Orange County Primary Metropolitan Statistical Area (PMSA), with adjustments for household size, as determined from time to time by the U.S. Department of Housing and Urban Development (HUD) pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. The term "Note" shall mean that certain Promissory Note Secured by Deed of Trust attached hereto as Exhibit "F". The term "Participant" shall mean INTERVAL HOUSE CRISIS SHELTERS, a California nonprofit corporation, whose address is F.O. Box 3356, Seal Beach, California 90740. The Term "Project" shall mean generally the rehabilitation of the existing six unit apartment complex on the Property and the subsequent operation of the Property as transitional housing, with the Units leased at affordable rents to Very Low Income Households, pursuant to the procedures set forth herein and more particularly described in the Regulatory Agreement and the Scope of Development. The term "Project Budget/Pro Forma" shall mean the sources and uses of funds for acquisition of the Property and the development of the Project as set forth in Exhibit "I". The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions attached hereto as Exhibit "H". The term "Release of Construction Covenants" shall mean that release attached hereto as Exhibit "E" issued by Agency to Participant pursuant to the provisions of Section 4.7 below. The term "Schedule of Performance" shall mean that certain schedule attached hereto as Exhibit "D" setting forth the times upon which performance by the parties under this Agreement is due. The term "Scope of Development" shall mean that certain exhibit attached hereto as Exhibit "C". Attachment No. 5 Page 4 of 7 SF-2000 Agree: Bowen Court: DDA RLs (10-302 5117101 -#t The term "SUP" shall mean U.S. Department of Housing and Urban Development's Shelter Housing Partnership Program. The term "Property" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California commonly known as 7922 Cypress Avenue, Huntington Beach, California, and legally described in Exhibit "A" and depicted on the Property Map. The term "Property Map" shall mean the map attached hereto as Exhibit "B" depicting the location of the Property. The term "Units" shall mean the six (6) dwelling units comprising the Project and subject to rent restrictions as set forth in the Regulatory Agreement. The term "Very Low Income Households" shall mean a family or individual whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Metropolitan Statistical Area as determined by HUD with adjustments for smaller and larger families. 2. Use. of Property. Developer, on behalf of itself and its successors, assigns, and each successor in interest to the Property or any part thereof, hereby covenants and agrees that the Property shall be redeveloped and used exclusively as rental housing for Low and Moderate Income seniors. Said rental housing shall consist of the rehabilitation of the building existing on the Property as of the date of the DDA to include twenty (20) for -rent dwelling units with a minimum of square feet per unit and the construction of a new two-story building on the Property consisting of recreation room, kitchen, restrooms and U two -bedroom for -rent dwelling units. The rental housing shall also include all necessary on- and off -site parking and appropriate landscaping, all as more particularly described in the DDA. For purposes of this Agreement, the twenty (20) d►velIing units shall be referred to as the "Units." 3. Maximum Incomes. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that Developer, its successors and assignees shall use the Property exclusively to provide affordable housing. All of the Units shall be restricted to Very Low Income persons or households with incomes not exceeding fifty percent (50%) of the area median income, adjusted for family size appropriate for the Unit. The maximum incomes of eligible tenants shall be determined on the basis of the area median income for Orange County Metropolitan Statistical Area, issued approximately annually by the United States Department of Housing and Urban Development (:HUD") and published by the California Department of Housing and Community Development ("HCD"). 4. Maximum Rents. a. Any rents charged to a tenant shall not exceed rents that are affordable to Very Low Income persons (as "Affordable Rent" is defined below). Calculations of Very Low Income and Affordable Rent are subject to adjustment from time to time as provided below. Attachment No. 5 Page 5 of SF-20DO Agrce: 13inen Court: DDA RLS OC6303 51171,01 -111 b. Rent for Love Income households plus a reasonable allowance for utilities (other than telephone) shall not exceed thirty percent (30%) times sixty percent (60%) of the area median income, adjusted for family size appropriate for the Unit, as set forth in the regulations issued by HCD at 25 Cal. Administrative Code Section 69I0 et seq. (the "HCD Regulations). C. Rent for Moderate Income households plus a reasonable allowance for utilities (other than telephone) shall not exceed thirty percent (30%) times one hundred ten percent (110%) of the area median income, adjusted for family size appropriate for the Unit, as set forth in the regulations issued by HCD in the HCD Regulations. d. Upon request, the Agency Executive Director shall notify Developer of the maximum rents that may be charged (not to exceed "Affordable Rent") and the maximum income of persons who are eligible to occupy the Property, based on the then -current HUD figures for the area median income and the HCD Regulations. e. Developer, its successors and assigns shall not charge rents in excess of the amounts determined as set forth in this Section 3. 5. Seniors. Developer covenants and agrees for itself, its Successors, its assigns and every successor in interest to the Property or any part thereof, that Developer, its successors and assignees shall use the Property exclusively to provide affordable housing to seniors. All of the Units shall be restricted to Low and Moderate Income senior persons or households. For purposes of this Agreement, "senior" means a family in which the head of the household is 60 years of age or older or a single person who is 60 years of age or older. 6. The Developer shall maintain the improvements on the Property in compliance with all applicable State and local housing quality standards and local code requirements, and shall keep the Property free from any unreasonable accumulation of debris or waste materials. 7. The covenants established in this Agreement and any amendments hereto approved by the Agency and the Developer shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, and the City of Huntington Beach. 8. The covenants set forth in Section 3 of this Agreement shall remain in effect for the longest feasible time, but not less than fifteen (15) years from the date hereof. 9. The Agency and the City are deemed beneficiaries of the terms and provisions of this Agreement and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit this Agreement and the covenants running with the land have been provided. The Agency shall have the right if the covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants are entitled. Attachment No. 5 Page 6 of 7 SF-2000 Agree! Dow'en Court: DDA RLS 00-302 5n7rot.at 10. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in anyway impair the lien or charge of any permitted deed of trust. 11. The covenants and agreements contained herein shall run with the land and not be personal obligations of the Developer. IN WITNESS WHEREOF, the Agency and the Developer have executed this Agreement. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency") Dated: By Executive Director APPROVED AS TO FORM: Agency General Counsel MERIT HOUSING CORPORATION ("Developer') Dated: By: Executive Director Dated: Attachment No. S Page 7 of 7 SF-2C00 Agree: Bo%en Court: DDA RL5 00-302 5171101 - A I Treasurer STATE OF CALIFORNIA } } ss. COUNTY OF ) On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Sipature STATE OF CALIFORNIA ) } ss. COUNTY OF ) On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature SF-2001 Agree: Bowen Court: DDA 5117101 - EM I STATE OF CALIFORNIA ) ss. COUNTY OF } On before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(i) 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. Signature SF-2001 Agree: Bowen Court: DDA 5117/01 - p 1 ATTACHMENT NO. I LEGAL DESCRIPTION SF-2001 Agree: Bowen Court: DDA 5/17,101 -#2 ALTA OWNERS POLICY EMBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS: LOTS I TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A MAP FILED IN BOOK 673. PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS. RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET. WITHOUT THE RIGHT OF SURFACE ENTRY. AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4,1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO. 93-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021. PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTON BEACH COMPANY QUITCLAIMED ALL ITS RIGHT TO DRILL SLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET, ]MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSEWHATSOEVER, INCLUDING. BUT NOT LIMITED TO DRILLING ANY WELL OR FELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE "SUB-500 PORTION-) GRANTEE MAY SLANT DRILL. UNDER SUCH LANDS, AND/OR DRILL WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL. GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. 1 WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1. 1989. AND GRANTOR AGREES THAT, NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1, 1989. AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY 5,1988 AS INSTRUMENT NO.88-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT NO.2 SITE MAP SF-2001 Agree: Bowen Court: DDA 5/17/01 - #2 SiR S :• 3 .a..0 • of l •C a tots o.a Of Whfa xro«r. OW TRACT N0.13920 M.M.673/14-16 US IL "I •.as•iGS w.t.,iEr� `.0'CS at..•.Ct S-0— wt.ta.i W Mft] V.C. W Cr Wt "Wat•c .a.•r ,1d.f.t- "T .t• 7K: ...W -0 ri"s rr fsi/ if- ti.t:O"- : r!r ..t w --c v—nP ••Ct 4s-or -a at St, .• KL R*,b./, ar 0%"4c CNN_ :a•♦as —I%" to yis Mlt .CCt.,.%CC or w•t,t. c.+S 7 •• •0•. •••t wti 'iG f•i.+t0 •aCc •f.er Or r S•.t ...f.d. rr..t7 •• : t •,•or -a aK Sr ., ..� .al _c+• f rtv tc�a•.r•t •�•xe•o.s .`►.,b OCT tt'L -.o fL or -to .own 4 COM wTM• fe 4•S .1�[. KCf <t . R•K~ •.r a� Y NOWK.Ekn f• f� -JI ♦C4Rf MAD rd,lrt+, .S kOfn ►r r, ..J•..,/• sire . 41. •OZ � �..�w.ri We A, r .. .., r.. r+r • •I , r0 ` .rlr .ram r�,rr 2 �1• +.•,r Sr. s:.•r i�.J. � �� s. .r{ow y�,yrjE 1 �`.r» ..• • . M MIS?, iwi rwraiNi !.� ~ � :f �r.rlrv: ' •'. a , `... r•....s.,~4 S � /,r.• ..r.. •.,/ i � i .s.•rryrsrr �/ �.•i� i . ibt ..,..,. . r.•arI-�, •• • f• � Via• w 14 • • T• � yi„p''' • t i. L •...•.� Y•-. � kj 1 1 1 N a I v ic, ii rlj• >t • ♦ �� • . • �3 el Ae'd [jl IJ• r v * • 'I r N.0 M-r V b •i ,• �ccEr ry v PAAJK �r3- 7 . � :. }� .....• "ems .. .• i. s Z � 1 SrAESr • , .. .. r..I/ y yy 1 � w ..WfI .//•JI / • / I M • .r � !/.../f M.CI� VrICA �• IKI r [rr^.Ml. Imo- - '•%M'1' [!� r�i •IJI..[d� I w. I.•iI ..'w Il,t• M .If J � 11.. w•.,.. •►rr.I w.r '- First American Title Insurance Company - --- -- - - - • ' - - •- -" THIS MAP 13 FOR INFORMATION ONLY ANb 15 NOT A PART OF THIS WtU IVID 4CA ATTACHMENT NO.3 SCHEDULE OF PERFORMANCE GENERAL PROVISIONS 1. Execution of Agreement by Agency. Agency shall hold a public hearing on this Agreement, authorize execution and execute this Agreement, and shall deliver this Agreement to Developer. Within sixty (60) days after this Agreement is executed by Developer and submitted to Agency. 2. Submittal of Insurance. Developer Prior to the close of escrow. shall submit all insurance certificates required under Section 410 of the Agreement. 3. Agency_ Approval of Insurance. Prior to the close of escrow. Agency shall approve or reject the insurance certificates and endorsements submitted. 4. Submission — Development and Within sixty (60) days of submittal of written Management Team. Developer shall commitment for tax credits financing as submit to Agency for approval of the referenced in Section 312. names and qualifications of its development and management team. 5. Approval — Development and Within thirty (30) days after submission by the Management Teams. Agency shall Developer. approve or disapprove the development and management team. 6. Submission — Basic Concept Drawings. Developer shall prepare and submit to Agency for approval the basic concept drawings and related documents for the Property and pay all fees pertinent thereto. SF 2001 Agree: Bowen Court: DDA — Attach 3 Within ninety (90) days after Agency approval of the development and management teams. 7. 91 a 10. Approval —Basic Concept Drawings. Developer shall prepare and submit to Agency for approval the basic concept drawings and related documents for the Property and pay all fees pertinent thereto. Submission — Preliminary Landscaping and Gradin Plans. Developer shall prepare and submit to Agency for approval preliminary landscaping and grading plans for the Property. Approval - Preliminary Landscapins? and Grading Plans. Agency shall approve or disapprove preliminary landscaping and grading plans. Submission — Final Landscaping and Grading Plans. Developer shall prepare and submit to Agency for approval final landscaping and grading plans for the Property and pay all fees pertinent thereto. 11. Approval — Final Landscaping and Grading Plans. Agency shall approve or disapprove final landscaping and grading plans. 12. Submission — PreliminaCy Construction Drawings and Related Documents. Developer shall prepare and submit to Agency for approval the preliminary construction drawings and related documents for the Property. 13. Approval — Preliminary_ Construction Drawings and Related Documents. Agency shall approve or disapprove preliminary construction drawings and related documents. SF-200I Agra: Bowen Court: DDA — Attach 3 Within sixty (60) days foilo«-ing receipt of the basic concept drawings. Within twcrity-five (25) days following approval by the Agency of the basic concept drawings. Within ten (10) days following receipt of the preliminary landscaping and grading plans. Within ten (10) days following approval by the Agency of the preliminary landscaping and grading plans. Within ten (10) days following receipt of the final landscaping and grading plans. Within twenty-five (25) days following approval by the Agency of the basic concept drawings. Within ten (10) days following receipt of the preliminary construction drawings and related documents. 14. Submission — Final Construction Drawings and Related Documents. Developer shall prepare and submit to Agency for approval the final construction drawings and related documents for the Property and pay all fees pertinent thereto. Within ten (10) days following approval of the Agency of the preliminary construction drawings and related documents. 15. Approval — Final Construction Within five (5) days following receipt of the Drawings and Related Documents. final construction drawings and related Agency shall approve or disapprove documents final construction drawings and related documents. II. CONVEYANCE AND CONSTRUCTION Opening of Escrow. Agency shall open Within thirty (30) days after execution of the an escrow for conveyance of the Agreement by the Agency. Property. 2. Conveyance of Title. Agency shall June 14, 2001. convey title and possession of the Property to Developer, and Developer shall accept such conveyance. 3. Evidence_ of Financing. Developer By no later than December 31, 2002. shall submit to Agency its Evidence of Financing referred to in Section 312 of this Agreement. 4. Approval of Financing. Agency shall Within thirty (30) days after receipt of approve or disapprove the submission submission of Evidence of Financing by of Developer's Evidence of Financing, Developer. and shall so notify Developer. 5. Project Budget. Developer shall submit Within thirty (30) days of Agency approval of a Project Budget as required under the Evidence of Financin;. Section 408 of this Agreement. b. Agencv Anoroval of Proiect Budget. 7. A¢enev Residual Receipts Loan. Agency shall fund the Residual Receipts Loan. SF-2001 Aucc- Bowcn Court: DDA - Anch 3 Within thirty (30) days of submittal Within thirty (30) days of Agency approval of the Project Budget. ATTACHMENT NO.4 SCOPE OF DEVELOPMENT A. GENERAL DESCRIPTION The Property is specifically delineated on the Site Map (Attachment No. 2) and described in the Description of the Property (Attachment No. 1). The Property is comprised of approximately square feet in land area. B. DEVELOPMENT The Project on the Property shall consist of the construction of a new two-story building on the Site consisting of a recreation room, kitchen, restrooms and twenty (20) one - bedroom for -rent dwelling units. As part of the Project, the Developer shall also provide all parking (on -site and/or off - site), as necessary and appropriate for the proposed Development, and all appropriate landscaping. The Project (including the parking and landscaping) shall be constructed and redeveloped all in accordance with plans approved by Agency. The Developer shall commence and complete the Project within the times established in the Schedule of Performance. C. DEVELOPMENT STANDARDS The Project shall conform to focal zoning and applicable provisions of the Huntington Beach Municipal Code, the Redevelopment Plan and the Huntington Beach General Plan. D. PUBLIC IMPROVEMENTS AND UTILITIES The Developer shall, at its own cost and expense, provide or cause to be provided within the time set forth in the Schedule of Performance for the completion of the Project, all on- and off -site public improvements required by the City of Huntington Beach as part of the entitlement process. E. SUBDIVISION MAP Not applicable. SF-2001 Agree: Dowen Court: DDA—Attach 4 ATTACHMENT NO.5 GROUND LEASE Table of Contents Preamble and Recitals ARTICLE 1. LEASE OF PREMISES AND TERM OF LEASE § 1.01. Agreement to Lease § 1.02. Status of Title § 1.03. Term of Lease § 1.04 Ownership of Improvements ARTICLE 2. RENT § 2.01. Minimum Rent § 2.02. Time and Place for Payment of Rent ARTICLE 3. USE OF PREMISES § 3.01. Permitted Use § 3.02. Maintenance ARTICLE 4. TAXES AND UTILITIES § 4.01. Tenant to Pay Taxes § 4.02 Proration of First and Last Year Taxes § 4.03. Payment Before Delinquency § 4.04. Taxes Hold -Harmless Clause § 4.05 Utilities ' § 4.06 Payment by Landlord ARTICLE 5. ENCUMBRANCE OF LEASEHOLD ESTATE § 5.01. Tenant's Right to Encumber ARTICLE 6. LEASE TERMINATION § 6.01. Lease Termination for Inability to Finance § 6.02. Reentry ARTICLE 7. DISCRIMINATION PROHIBITED § 7.01. Discrimination Prohibited § 7.02. Discrimination Prohibited in Assignments ARTICLE 8. OTHER PROVISIONS § 8.01. _ Attorneys' Fees § 8.02. Notices to Landlord § 8.03. Notices to Tenant § 8.04. Governing Law Attachment No. 5 Page 1 of 11 SF.2001 Agree: Bowen Court: Ground Lease § 8.05. Binding on Heirs and Successors § 8.06. Memorandum of Lease for Recording Lease Attachments 1) Legal 2) Site 3) Quit Claim 4) Memorandum of Lease Attachment No. 5 Page 2 of I I SF-2001 Agree: Bowen Court: Ground Lease LEASE Preamble and Recitals This Lease is entered into as of June 4, 2001 by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic, of the State of California, herein called "Landlord," acting under the Community Redevelopment Law -(California Health and Safety Code §§ 33000, et seq.) of the State of California, and MERIT HOUSING CORPORATION, a California nonprofit corporation, herein called "Tenant." A. Landlord is the owner of certain real property in the County of Orange, State of California, legally described on Attachment 1, and depicted on the Site Map as Attachment 2, which are attached and made a part of this Lease (referred to in this Lease as "the Premises"). B. Tenant desires to lease the Premises (together with certain appurtenant rights and easements) for the purpose of constructing and operating an affordable senior housing project (collectively referred to in this lease as "the Improvements") in accordance with the Disposition and Development Agreement elated June 4, 2001, by and between the parties (the "DDA" ). The Premises are located inside the boundaries of the Huntington Beach Redevelopment Project Area ("Project Area") in the City of Huntington Beach ("City"), State of California, and are leased in furtherance of the provisions of (1) tl:e Huntington Beach Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December 16,1996, and which merged together four different, previously approved project areas; (2) the Disposition and Development Agreement by and between the Landlord and Tenant relating to the Premises (the "DDA"); and (3) the General Plan of the City of Huntington Beach. Said Ordinances, DDA and the General Plan are fully incorporated herein by the aforementioned reference and made a part hereof as though they are fully set forth herein. ARTICLE 1 LEASE OF PREMISES AND TERM OF LEASE Agreement to Lease Section 1.01. For and in consideration of the rents to be paid and covenants to be performed by Tenant under this Lease, Landlord agrees to lease the Premises to Tenant, and Tenant agrees to lease the Premises from Landlord, on the terms and conditions set forth in this Lease. Except as expressly otherwise provided in this Lease, "the Premises" includes the real property plus any appurtenances and easements described in Attachment 1 of this Lease, exclusive of any Improvements now or subsequently located on the Premises, notwithstanding that any Improvements may or shall be construed as affixed to and as constituting part of the described Premises, and without regard to whether ownership of the Improvements is in Landlord or in Tenant. Attachment No. 5 Page 3 of 11 SF-201 Agree: Bowcn Court: Ground Lease Status of Title Section 1.02. Title to the leasehold estate created by this lease is subject to all exceptions, easements, rights, rights -of -way, and other matters of record set forth on the Preliminary Title Report issued by [title company], dated Term of Lease Section 1.03. The term of this Lease shall be for a period of sixty (60) years commencing on the date close of escrow for this transaction occurs (Escrow # , [escrow company & addressl and continuing 60 years after escrow closes, unless terminated earlier as provided in this lease. The Lease may be extended for a term not exceeding forty (40) years if Tenant gives written notice to Landlord at least one (1) year prior to the expiration of the lease that Tenant will continue to operate the Premises as a senior, affordable housing project, pursuant to the DDA and the Agreement Containing Covenants. Ownership of Improvements Section 1.04. Title to the Improvements to be constructed on the Premises by Tenant shall be owned by Tenant until expiration of the term or earlier termination of this Lease. Upon expiration of the term or earlier termination of this Lease, the Improvements shall, without compensation to Tenant, then automatically and without any act of Tenant or any third party become Landlord's property. Tenant shall surrender the Project to Landlord at the expiration of the term or earlier termination of this Lease, free and clear of all liens and encumbrances, other than those, if any, permitted under this Lease or otherwise created or consented to by Landlord. Tenant agrees to execute, acknowledge, and deliVcr to Landlord any instrument requested by Landlord as necessary in Landlord's opinion to perfect Landlord's right, title, and interest to the Project and the Premises. ARTICLE 2 RENT Minimum Rent Section 2.01. Tenant agrees to pay to Landlord annual rent for each year during the term of this Lease in the amount of One Dollars (S1.00). Attachment No. 5 Page 4 of t t SF-2001 Agree: Bowen Court: Ground [ease Time and Place for Payment of Rent Section 2.02. The Rent shall be paid for the first year of the Lease at the close of escrow, and thereafter on June 4 of each subsequent year. All rent required under this lease shall be paid to Landlord at Huntington Beach City Hall, 2000 Main Street, Huntington Beach, California, or any other place or places that Landlord may designate by written notice to Tenant. ARTICLE 3 USE OF PREMISES Permitted Use Section 3.01. Tenant shall use the Premises solely for the purpose of an affordable senior housing project pursuant to the DDA. The Premises shall be devoted only to the development permitted and the uses specified in the applicable provisions of the Redevelopment Plar., General Plan, DDA and this Lease, whichever document is more restrictive. Maintenance Section 3.02. Solely at Tenant's expense, Tenant or Tenant's successor in interest shall reasonably maintain the improvements on the Premises in good condition and appearance. Tenant shall keep the Premises reasonably free from any accumulation of graffiti, debris or waste materials. If, at any time, Tenant fails to maintain the Premises as required by this Section, and such failure is not corrected within thirty (30) days after the date of %%Titten notice from the Landlord, Landlord or the City may perform the maintenance, or other actions and Tenant shall pay all costs incurred for such maintenance. ARTICLE 4 TAXES AND UTILITIES Tenant to Pay Taxes Section 4.01. Tenant shall pay during the term of this Lease, without abatement, deduction, or offset, any and all real and personal property takes, general and special assessments, and other changes (including any possessory interest tax) of any description levied or assessed during the term of this Lease by any governmental agency or entity on or against the Premises, the Improvements located on the Premises, personal property located on or in the Premises or Improvements, and the leasehold estate created by this Lease. Proration of First and Last Year Taxes Section 4.02. Notwithstanding the provisions of Section 4.01 of this Lease, all taxes, assessments, or other charges levied or assessed during the tax years in which the term of this Lease commences and ends shall be prorated between Landlord and Tenant as of 12:01 A.M. on Attachment No. 5 Page 5 of 11 SF-2001 Agree: ©o%%vn Court: Ground Lease the date the term commences and on the date the term ends, respectively, on the basis of tax years that commence on July 1 and end on June 30 of each year. Landlord shall pay the taxes, assessments, or other charges for the year in which the term of this Lease commences and Tenant shall promptly, on service of written request by Landlord, reimburse Landlord for Tenant's share of those taxes, assessments, or other charges. Tenant shall pay the taxes, assessments, and other charges for the year in which this Lease is to end; and Landlord shall promptly, on service of written request by Tenant, reimburse Tenant for Landlord's share of those taxes, assessments, and other charges. Payment Before Delinquency Section 4.03. Any and all taxes and assessments and installments of taxes and assessments required to be paid by Tenant under this Lease shall be paid by Tenant at least ten (10) days before each such tax, assessment, or installment of tax or assessment becomes delinquent. Tenant shall deliver to Landlord the official and original receipt evidencing the payment of any taxes, assessments, and other charges required under this Article. Tax Hold -Harmless Clause Section 4.04. Tenant shall indemnify and hold Landlord and Landlord's property, including the Premises and any Improvements now or subsequently located on the Premises, free and harmless from any liability, loss, or damage resulting from any taxes, assessments, or other charges required by this Article to be paid by Tenant and from all interest, penalties, and other sums imposed thereon and from any sales or other proceedings to enforce collection of any such taxes, assessments, or other charges. Utilities Section 4.05. Tenant shall pay or cause to be paid, and hold Landlord and Landlord's property including the Premises free and harmless from, all charges for the furnishing of gas, water, electricity, telephone service, and other public utilities to the Premises during the Lease's term and for the removal of garbage and rubbish from the Premises during the term of this Lease. Payment by Landlord Section 4.06. Should Tenant fail to pay within the time specified in this Article any taxes, assessments, or other charges required by this Article to be paid by Tenant, Landlord may, without notice to or demand on Tenant, pay, discharge, or adjust that tax, assessment, or other charge for the benefit of Tenant. In that event, Tenant shall promptly on written demand of Landlord reimburse Landlord for the full amount paid by Landlord in paying, discharging, or adjusting that tax, assessment, or other charge together with interest thereon at the ten -maximum legal rate from the date of payment by Landlord until the date of repayment by Tenant. If this Article does not specify the time within which Tenant must pay any charge required by this Article, Tenant shall pay that charge before it becomes delinquent. Attachment No. 5 Page 6 of 11 SF-ZOCI Agree: Bowen Court: Ground Lease ARTICLE 5 ENCUMBRANCE OF LEASEHOLD ESTATE Tenant's Right to Encumber Section S.01. Tenant may not encumber, by deed of trust or mortgage or other security instrument, Tenant's interest under this Lease and the leasehold estate hereby created in Tenant except pursuant to the terms and conditions of the DDA. ARTICLE 6 LEASE TERMINATION Lease Termination for Inability to Finance Section 6.01. Notwithstanding any other provision of this Lease, the effectiveness of this Lease is expressly conditioned on the ability of Tenant to obtain a written, binding commitment for tax credit financing described in Section 312 of the DDA on or before December 31, 2001. Further, if a written, binding commitment for tax credit financing is not obtained by September 30, 2001, either party may terminate this Lease upon thirty (30) days written notice. In the event of termination, this Lease shall be null and void and neither party shall have any rights or obligations under this Lease. Concurrently with execution of this Lease, Tenant shall execute and deliver to Landlord a quitclaim deed in favor of the Landlord, in the form of Attachment 3, which shall relinquish all of Tenant's right, title, and interest in, to, and under this Lease and the Premises. In the event Landlord teiminates this Lease under this section, Landlord shall have the right to immediately record the quitclaim deed. Reentry Section 6.02. The Landlord shall have the right at its option to reenter and take possession of the Premises hereby conveyed with all Improvements thereon and to terminate and revest in the Landlord the Premises hereby conveyed to the Tenant if the Tenant (or its successors in interest) shall: (i) Fail to commence construction of the Improvements as required by this Lease for a period of thirty (30) days after written notice to proceed from the Landlord, provided that Tenant shall not have obtained an extension or postponement to which Tenant may be entitled; or (ii) Abandon or substantially suspend construction of the Improvements for a period of thirty (30) days after written notice of such abandonment or suspension from the Landlord, provided that Tenant shall not have obtained an extension or postponement to which Tenant may be entitled; or Attachment No. 5 Page 7 c f 11 SF-200I Agree: roam Court: Ground Lease (iii) Transfer, or suffer any involuntary transfer of the Premises, or any part thereof in violation of this Lease, and such violation shall not be cured within thirty (30) days after the date of the receipt of written notice thereof by the Landlord to the Tenant. The right to reenter, repossess, terminate and revest shall be subject to and be limited by and shall not defeat, render invalid, or limit: (i) Any mortgage or deed of trust or other security interest permitted by Section 5.01 of this Lease; or (ii) Any rights or interests provided for the protection of the holders of such mortgages, deeds of trust, or other security interests. ARTICLE 7 DISCRIMINATION PROHIBITED Section 7.01. Tenant covenants and agrees for itself, its successors, its assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Premises, nor shall Tenant itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Premises. The foregoing covenants shall run with the land. Discrimination Prohibited in Assignments Section 7.02. All deeds, leases or contracts made relative to the Premises, improvements thereon, or any part thereof, shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deed: "The Tenant herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Tenant itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." Attachment No. 5 Page 8 of 11 SF-2001 Agree: Dowen Court: Ground Lease (b) In Leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, national origin, or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall lessee itself or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased." (c) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land." In amplification and not in restriction of the provisions set forth hereinabove, it is intended and agreed that the Landlord shall be deemed a beneficiary of the agreements and covenants provided hereinabove both for and in its own right and also for the purpose of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of the Landlord, and such covenants shall run in favor of the Landlord for the entire period during which such covenants shall be in force and effect, without regard to whether the Landlord is or remains an owner of any land or interest therein to which such covenants relate. Landlord shall have the right in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any actions at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Lease shall defeat or render invalid or in any way impair the lien or change of any mortgage or deed of trust or security interest permitted by Article 8 of this Lease; provided, however, that any subsequent owner of the Premises shall be bound by such remaining covenants, conditions, restrictions, limitations, and provisions, whether such owner's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. None of the terms, covenants, agreements or conditions heretofore agreed upon in writing in other instructions between the parties to this Lease with respect to obligations to be performed, kept or observed by Tenant or Landlord in respect to the Premises or any part thereof after this conveyance of the Premises shall be deemed to be merged with this Lease until such time as a Attachment No. 5 Page 9 of t I sr-2001 Agee: Bowen Court: Ground Lease Certificate of Completion issued by the Landlord pursuant to the DDA is recorded for the Premises conveyed hereby or such part thereof. ARTICLE 8 OTHER PROVISIONS Attorneys' Fees Section 8.01. Should any litigation be commenced between the parties to this Lease concerning the Premises, this Lease, or the rights and duties of either in relation thereto, each party shall bear its own attorneys' fees. Notices to Landlord Section 8.02. Except as otherwise expressly provided by law, any and all notices or other communications required or permitted by this Lease or by law to be served on or given to Landlord by Tenant or any Lender described in Article 5 of this Lease shall be in ~writing and shall be deemed duly served and given when personally delivered to Landlord, to any managing employee of Landlord, or, in lieu of personal service, when deposited in the United States mail, first-class postage prepaid, and sent by express mail that allows for tracking, addressed to Landlord at 2000 Main Street, Huntington Beach, California 92648. Landlord may change Landlord's address for the purpose of this section by giving written notice of that change to Tenant in the manner provided in Section8.03; Tenant shall then transmit a copy of that notice to any Lender described in Article 5 of this Lease. Notices to Tenant Section 8.03. Except as otherwise expressly provided bylaw, any and all notices or other communications required or permitted by this Lease or by law to be served on or given to Tenant by Landlord shall be in writing and shall be deemed duly served and given when personally delivered to Tenant, any managing employee of Tenant, or, in lieu of personal services, when deposited in the United States mail, first-class postage prepaid, and sent by express mail that allows for tracking, addressed to Tenant at Tenant may change its address for the purpose of this section by giving written notice of that change to Landlord in the manner provided in Section 8.02 of this Lease. Governing Law Section 8.04. This Lease, and all matters relating to this Lease, shall be governed by the laws of the State of California in force at the time any need for interpretation of this Lease or any decision or holding concerning this Lease arises. Attachment No. 5 Page 10 of 11 SF-2001 Agree: Dowen Court: Groun3 Lease Binding on heirs and Successors Section 8.05. This Lease shall be binding on and shall inure to the benefit of the heirs, executors, administrators, successors, and assigns of the parties hereto, but nothing in this seciion shall be construed as a consent by Landlord to any assignment of this Lease or any interest in the Lease by Tenant except as provided in the DDA. Memorandum of Lease for Recording Section 8.06. Landlord and Tenant shall execute a memorandum or "short form" of his Lease for purposes of recordation in the form of Attachment 4 hereto. The memorandum or "short form" of this Lease shall be recorded at the close of the escrow described in the DDA. IN WITNESS WHEREOF, the Landlord and Tenant have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized this day of 92001. Date: Landlord REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: Executive Director Tenant MERIT HOUSING CORPORATION Executive Director By: Treasurer Attachment No. 5 Page I I of I I SF-2001 Agree: Bo%cn Court: Ground Lease o� STATE OF CALIFORNIA } } ss. COUNTY OF ORANGE ) On before me, , personally known to appeared , personally me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) islare 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. Signature STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/shelthey 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. Signature STATE OF CALIFORNIA } ss. COUNTY OF ORANGE ) On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose 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. Signature ATTACHMENT I (Legal Description) I.w ALTA OWNERS POLICY EXIRBIT "A" OR-9360198 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS: LOTS 1 TO 5 INCLUSIVE OF TRACT NO. 13920, AS SHOWN ON A MAP FILED IN BOOK 673, PAGES 14 TO 16 INCLUSIVE OF MISCELLANEOUS MAPS. RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED OR EXTRACTED OR TAKEN FROM SAID LAND BELOW A DEPTH OF 500 FEET, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN A DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO.88-569347 OF OFFICIAL RECORDS. ALSO EXCEPTING ALL WATER RIGHTS AS RESERVED BY THE HUNTINGTON BEACH COMPANY IN DEED RECORDED NOVEMBER 4, 1988 AS INSTRUMENT NO. 98-569347 OF OFFICIAL RECORDS. NOTE 1: BY A QUITCLAIM DEED RECORDED AUGUST 29, 1957 IN BOOK 4021, PAGE 372 OF OFFICIAL RECORDS, THE HUNTINGTON BEACH COMPANY QUITCLAIMED ALLITS RIGHTTO DRILLSLANTED WELLS FROM LANDS ADJACENT TO SAID LAND, INTO AND THROUGH THE TOP FIVE HUNDRED (500) FEET, MEASURED VERTICALLY IN DEPTH BELOW THE SURFACE OF SAID LAND. NOTE 2: EXCEPT AS HEREINAFTER SPECIFICALLY PROVIDED, GRANTEE AGREES THAT, WITHOUT THE CONSENT OF GRANTOR IN WRITING BEING FIRST OBTAINED, IT WILL NOT USE THE SURFACE OF THE LANDS DESCRIBED ABOVE OR THAT PORTION OF SAID LANDS FROM THE SURFACE TO FIVE HUNDRED (500) FEET BELOW THE SURFACE FOR ANY PURPOSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO DRILLING ANY WELL OR WELLS OR ANY OTHER ACTIVITY IN CONNECTION WITH DEVELOPING, PRODUCING OR OPERATING THE MINERAL INTERESTS (NOTHING HEREIN IS INTENDED TO PREVENT GRANTOR FROM USING CITY STREETS AND OTHER PUBLIC WAYS). IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT BELOW A DEPTH OF FIVE HUNDRED (SOO) FEET BENEATH THE SURFACE (HEREINAFTER CALLED THE "SUB-500 PORTION-) GRANTEE MAY SLANT DRILL UNDER SUCH LANDS, AND/OR DRILL WELL OR WELLS ON LANDS POOLED THEREWITH, AND OTHERWISE CONDUCT OPERATIONS WHICH DO NOT INVOLVE THE USE OF THE SURFACE (OR THAT PORTION OF THE SUBSURFACE OTHER THAN THE SUB-500 PORTION) OF SUCH LANDS, IN ORDER TO REACH AND PRODUCE THE OIL, GAS AND OTHER MINERALS IN AND UNDER SUCH SUB-500 PORTION OF SUCH LANDS. IT IS RECOGNIZED THAT THE CERTAIN WELLS KNOWN AS THE ELLIOTT NO. 1 WELL IS LOCATED ON THE ABOVE DESCRIBED LANDS AND IS PRODUCING OIL AND GAS ATTRIBUTABLE TO THE MINERAL INTERESSTS; GRANTEE AGREES TO PLUG AND ABANDON SUCH WELLS ON OR BEFORE JANUARY 1, 1989, AND GRANTOR AGREES THAT, NOTWITHSTANDING THE PRECEDING PORTION OF THIS PARAGRAPH, GRANTEE MAY USE THE SURFACE OF THE ABOVE DESCRIBED LANDS TO OPERATE SUCH WELLS PRIOR TO SUCH JANUARY 1, 1989, AND TO CONDUCT SUCH OPERATIONS AS MAY BE REQUIRED TO PLUG AND ABANDON SUCH WELLS, AS GRANTED TO ANGUS PETROLEUM CORPORATION IN A DEED RECORDED JULY 5, 1988 AS INSTRUMENT NO.88-319698 OF OFFICIAL RECORDS. PAGE 4 ATTACHMENT 2 (Site Plan) U[ta ] to 1 J k._Y W.r..0 r P.C• %• 44:} . tom as � s�•K* x�oat•. �+•. 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I/. ...A10C, ?r1' �. � a' •r+0 r+•... •i • Cr • _ . � •O M •r V osslr.�s= a�nrtEEr •if • / `• �GcEr ..��,3=' � � rf as ! S Z � } r rN /N•IJ �y wr�.rt we &rfCA \• jSveNUE �rrfNr ill lf' r. i1'µ •a +. //� •V JK /-� /I+^'.'II�rI.•J� J1 M •.r.. t. /+ /1 N. 1 M M•Y-J1HpdNI f• .r I �•M .r "V 1fN ♦.t+ •.r •Jl..+ r .•. :.ff•JI JJ ' ! rr .1� .orr .fir s�ifn �s rr.r wr I•+r s rr•r First American Title Insurance Company • •-_.. .... _ . THIS MAr IS T•Of INf0t1MAT10M ONLY AND IS HOT A ►AiT Of 110% WU IVID(KCS ATTACHMENT 3 (Quitclaim Deed) OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by and NW.en Recorded Mail to: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street, P.O. Box 190 Huntington Beach, CA 92648 Attn: Executive Director Space above this tine for recording use QUITCLALVI DEED Merit Housing Corporation, a California nonprofit corporation, quitclaims to the Redevelopment Agency of the City of Huntington Beach all right, title, and interest in the real property situated in the City of Huntington Beach, County of Orange, California, legally described in Attachment 1 which is attached hereto and incorporated herein by this reference. Executed on - , at Date: GRANTOR MERIT HOUSING CORPORATION By: Executive Director By: Treasurer SF-M I Agree: Bowen Court: Ground lease — Attach 3 Quitclaim Deed Page 1 of 1 ATTACHMENT NO.4 (Memorandum of Lease) MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE is made and entered into as of June 4, 2001 by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic, of the State of California, herein called "Landlord," acting under the Community Redevelopment Law (California Health and Safety Code §§ 33000, et seq.) of the State of California, and MERIT HOUSING CORPORATION, a California nonprofit corporation, herein called "Tenant." Landlord hereby leases to Tenant for a term of sixty (60) years, commencing on June 4, 2001 and ending on June 3, 2061, on the terms and conditions set forth in the Lease by and between the parties hereto dated June 4, 2001, all the terms and conditions of which are made a part of this Memorandum of Lease as though fully set forth herein, the premises in the County of Orange, State of California, legally described on Attachment 1, and depicted on the Site Map as Attachment 2, which are attached and made part of this Memorandum of Lease. IN WITNESS WHEREOF, the Landlord and Tenant have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized this day of , 2001. Date: Landlord REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: Executive Director Tenant MERIT HOUSING CORPORATION By: Executive Director By: Treasurer SF-2001 Agree: Bowen Court: Ground Lease — Attach 4 Memorandum of Lease Page 1 of 1 ATTACHME`'T NO.6 OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by and When Recorded Mail to: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street, P.O. Box 190 Huntington Beach, CA 92648 Attn: Agency Secretary Space above this line for recording use AGREEMENT CONTALVING COVENANrTS This AGREEMENT CONTAINING COVENANTS (the "Agreement") is made this day of , 2001, by and between MERIT HOUSING CORPORATION, a California nonprofit corporation ("Developer') and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"). RECITALS A. For the purpose of providing housing that will be affordable to Very -Low Income seniors, Developer and Agency entered into that certain Disposition and Development Agreement (the "DDA') to which this Agreement is attached as Attachment No. 6, which is incorporated herein by this reference. Pursuant to the DDA, Agency has leased to Developer of that certain real property (the "Site") located in the City of Huntington Beach, more particularly described in Exhibit "A" which is attached hereto and incorporated herein by this reference. B. The DDA describes the Project, which consists of Developer's construction and operation on the Site of twenty (20) affordable senior housing residential units. C. Agency and Developer now desire to place restrictions upon the use and operation of the Project, in order to ensure that the Project shall be operated continuously as an affordable housing project available for rental in accordance with the terms set forth below for the term of this Agreement. Attachment No. 6 Page 1 of 10 SF-2001 Agree- Bowen Court: Agmt. Containing Covenants RB 00-302 5/17/C 1 - #3 TERMS I. Definitions The following terms, as used in this Agreerent, shall have the meanings given unless expressly provided to the contrary: . . The term "Affordable Rent" shall mean annual rentals whose amount does not exceed the maximum percentage of income that can be devoted to rent as specified in the HOME Program, as set forth at Section 92.252 of Title 24 of the Code of Federal Regulations, or the "affordable housing cost" for Very Low Income Households, as specified at California Health & Safety Code Section 50053, or its successor and the implementing regulations specified at Section 6910 et seq., of Title 25 of the California Code of Regulations, whichever is less. The term "Agency" shall mean the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, having its offices at 2000 Main Street, Huntington Bea:.h, CA 92648, and any assignee of, or successor to, the rights, powers, and responsibilities of Agency. The term "DDA" shall mean the Disposition and Development Agreement executed by and between Agency and Developer, including all exhibits attached thereto, which exhibits are incorporated herein by this reference and all other documents incorporated herein by reference. The term "City" shall mean the City of Huntington Beach, a municipal corporation, having its offices at 2000 Main Street, Huntington Beach, CA 92648. The term "Eligible Tenant" shall mean Eligible Very Low Income Tenants who are eligible to rent a Unit. The term "Eligible Very Low Income Tenant" means one or rivo individuals whose annual income does not exceed fifty percent (50°,b) of the median income for the Orange County Primary Metropolitan Statistical Area (PMSA) as cletermined by the U.S. Department of Housing and Urban Development (HUD) with adjustments for smaller and larger families and whose age is sixty (60) years or older. The term "Unit" and "Units" means one of the twenty (20) one -bedroom rental dwelling units in the Project. The term "Unit" and "Units" shall be used as the context mandates and shall be reasonably interpreted in light of the context in which the term appears. The term "HOINIE" means the HOME Investment Partnership Program created by the National Affordable Housing Act of 1990. The term "HUD" means the United States Department of Housing and Urban Development. Attachment No. 6 Page 2 of 10 SF-201)t Agree: Do%vn Court: Agmt. Containing Covenants RLS Oo-302 S/17101 -#3 The term "Lease" means the lease entered into between Developer and an Eligible Tenant of a unit. The tern " i<Iedian Income" means the median income for the Orange County PMSA, with adjustments for household size, as determined from time to time by HUD pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. The Term "Project" shall mean generally the development and operation of a twenty (20) unit senior apartment complex on the Site at affordable rents to Very Low Income Households, pursuant to the procedures set forth herein and more particularly described in the DDA. The term "Site" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California commonly known as 1968-82 Lake Street, Huntington Beach, California, and legally described in Attachment No. 1 and depicted on the Site Map. The term "Site Map" shall mean the map attached hereto as Attachment No. 2 depicting the location of the Site. The term "Units" shall mean the twenty (20) dwelling units comprising the Project and subject to rent restrictions as set forth in the Regulatory Agreement. 2. Use of Site. Developer, on behalf of itself and its successors, assigns, and each successor in interest to the Site or any part thereof, hereby covenants and agrees that the Site shall be developed and used exclusively as rental housing for Very Low Income seniors. Said rental housing shall consist of the development of a new two-story building on the Site of twenty (20) for -rent dwelling units with a minimum of square feet per unit and including a recreation room. The rental housing"shall also include all necessary off -site parking and appropriate landscaping, all as more particularly described in the DDA. All of the Units in the Project shall contain facilities adequate for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state and local laws and codes. None of the Units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park without the Agency's prior written consent. 3. Maximum Incomes. All of the Units shall be restricted to Very Low Income persons or households with incomes not exceeding fifty percent (50%) of the area median income, adjusted for family size appropriate for the Unit. The maximum incomes of eligible tenants shall be determined on the basis of the area median income for Orange County Metropolitan Statistical Area, issued approximately annually by HUD and published by the California Department of Housing and Community Development ("HCD"). Attachment No. 6 Page 3 of 10 SF-2001 Ague: powen Court: Agm;. Containing COYenants RLS CO.302 5/17/@I -03 a. Maximum Rents. a. Any rents charged to a tenant shall not exceed rents that are affordable to Very Low Income persons (as "Affordable Renf' is defined below). Calculations of Very Low Income and Affordable Rent are subject to adjustment from time to time as provided below. b. Rent for Low Income households plus a reasonable allowance for utilities (other than telephone) shall not exceed thirty percent (30%) times fifty percent (500/0) of the Orz.nge County median income, adjusted for family size appropriate for the Unit, as set forth in the regulations issued by HCD at 25 Cal. Administrative Code Section 6910 et seq. (the "BCD Regulations'). C. If at any time a tenant's household income increases, resulting in disqualification of such tenant as an Eligible Tenant, such tenant shall have a period of ninety (90) days to relocate from the Site. The disqualified tenant shall be fully responsible for the costs and expenses related to the relocation. Should such tenant face extraordinary hardship in relocating from the Site, the tenant may submit a written appeal to the Agency requesting an extension of time period within which the tenant must relocate. Upon receipt of the written appeal, the Agency Executive Director in his sold discretion may extend the relocation period for up to a maximum of ninety (90) additional days. d. Upon request, the Agency Executive Director shall notify Developer of the maximum rents that may be charged (not to exceed "Affordable Rent") and the maximum income of persons who are eligible to occupy the Site, based on the then -current HUD figures for the area median income and the HCD Regulations. e. Developer, its successors and assigns shall not charge rents in excess of the amounts determined as set forth in this Section 4 5. Income Computation. Immediately prior to the prospective Eligible Tenant's occupancy of a Unit, Developer shall obtain and maintain on file an income computation and certification form for each such prospective Eligible Tenant dated immediately prior to the date of initial occupancy in a Unit. Developer shall use its best efforts to verify that the income information provided by an applicant is accurate by following the Agency Housing Rehabilitation Loan Program Policies and Procedures and by taking one or more the following steps as apart of the verification process: (i) obtain two (2) pay stubs for the most recent pay period; (ii) obtain a written verification of income and employment from applicant's current employer; (iii) obtain an income verification form from the Social Security Administration and!or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income as is reasonably satisfactory; or (v) obtain such other information as may be reasonably required. Developer shall update the foregoing records annually and shall provide copies of updated tenant eligibility records and . monthly rental records annually and shall provide copies of updated tenant eligibility records and monthly rental records to Agency for review. Upon review of such records, Agency may at its Attaclunent No. 6 Page a of 10 SF-2001 Agree: Bogen Coun: Agm;. Containing Covenants RLS (10-303 5/17/01 - #3 option perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. For each tenant, Developer shall retain the records described in this Section for a period of three years after such tenant no longer resides at the Site. 6. Renting Vacant Units. When a Unit becomes available as a result of a tenant vacating the Unit, Developer shall rent the Unit to an Eligible Tenant in accordance with the following procedure: (a) First, Developer shall rent the Unit to persons who have been displaced by Agency activities, pursuant to California Health and Safety Code Section 33411.3, provided that Agency provides Developer with reasonable notice. (b) Except as set forth above, Units shall be rented to Eligible Tenants on a first -come, first -served basis; provided, however, that Developer may, in Developer's sole discretion, maintain an "interest list" or "eligibility list" of potential tenants. 7. Seniors. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site or any part thereof, that Developer, its successors and assignees shall use the Site exclusively to provide affordable housing to seniors. All of the Units shall be restricted to Very Low Income senior persons or households. For purposes of this Agreement, "senior" means a family in which the head of the household is 60 years of age or older or a single person who is 60 years of age or older. No more than two (2) persons may reside in any unit. 8. Maintenance. The Developer shall maintain the improvements on the Site in compliance with all applicable State and local housing quality standards and local code requirements, and shall keep the Site free from any uiureasonable accumulation of debris or waste materials. 9. Maintenance of Records. Developer shall maintain complete and accurate records pertaining to the Units, and shall permit any duly authorized representative of the Agency to inspect the books and records of Developer pertaining to the Project including, but not limited to, those records pertaining to tenant eligibility and occupancy of the Units. Records pertaining to the Project and Units shall be retained for a period of five (5) years after the termination of this Agreement; records pertaining to tenant and eligibility shall be retained for the period set forth in Section 3.5. 10. Reliance on Tenant Representations. Each tenant lease shall contain a provision to the effect that Developer has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of a Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. Attachrncrt No. 6 Page 5 of io SF-2001 Agree: Bowen Court: Agmt. Containing Covenants RLS 03.302 5mro 1- 03 1 l . Conflicts. The rental priority provision set forth in Section 6 shall apply only in the event, and to the extent, such provisions arc not in conflict with any applicable federal or state law or any regulatory agreement affecting the Project that is recorded in superior priority to this Agreement. 12. Agency Rights. Agency shall have the right to enter upon the Site to inspect both the interiors and exteriors of the Project, upon seventy-two (72) hours' notice to Developer. Agency may perform or cause to be performed the maintenance necessary to cure any default of these maintenance covenants and Developer shall be liable for payment to Agency for Agency's reasonable costs (excluding staff salaries and overhead and other similar costs) to perform such required maintenance; provided, however, that Developer first be given written notice by Agency of the actions required to cure any default, and Developer, after receipt of such notice, shall have thirty (30) days to cure such defaults, but Participant shall not be deemed in default of the foregoing maintenance covenant if such default cannot reasonably be cured within the thirty (30) day period referenced above so long as Developer has commenced to cure such default within the same thirty (30) day period and is diligently proceeding with the work to cure such default. Notwithstanding the foregoing, if any property conditions are reasonably identified by Agency after a property inspection attended by a representative of Developer that pose an immediate danger to Iife or limb, Developer shall have three (3) days to effect corrections of such condition(s) to Agency's reasonable satisfaction. 13. Annual Report. Developer covenants and agrees to submit to the Agency an annual report (the "Annual Report') required by California Health and Safety Code Section 33418. The Annual Report shall include for each Unit the rental rate and the income and family size of the occupants, and shall also include the records described in Sections 5 and 7 herein and the audited financial statements described in Section 517 of the DDA. The income information shall be supplied by the tenant in a certified statement on a form provided by the Agency. The Developer shall submit the Annual Report on or before the end of the first calendar quarter of the year following the year covered by the Annual Report. The Developer shall provide for the submission of such information in its leases with tenants. Agency shall not charge Developer a fee for reviewing the Annual Report, or for Agency's or Developer's compliance with Health and Safeyy Code § 33418. 14. Management Plan. Prior to the issuance of a Certificate of Completion pursuant to the DDA, Developer shall prepare and submit to the Agency Executive Director a management plan in accordance with the following ("Management Plan"): (a) The Management Plan, including such amendments as may be approved in writing by the Agency, shall remain in effect for the term of this Agreement. Developer shall not amend the Management Plan or any of its components without the prior written consent of the Agency. The components of the Management Plan shall include: (1) Management Agen . The name and qualifications of the proposed management agent. The Agency shall approve or disapprove the proposed management agent in «writing based on the experience and qualifications of the management agent. Attacluneni No. 6 Page 6 or 10 SF-2001 Agree: Bo%%en Court: Agmt. Containing Covenants RLS (I0-302 5117101 - #3 The management agent shall have demonstrated experience in operating affordable housing comparable to the Project. (2) Management Program. A description of the proposed management, maintenance, tenant selection and occupancy policies and procedures for the Units. • (3) Management Agreement. A copy of the proposed management agreement specifying the amount of the management fee and the relationship and division of responsibilities between Developer and management agent. (4) Tenant Lease or Rental Agreement. A copy of the proposed tenant lease or rental agreement to be used in renting the Units. (5) Annual Operating Budget. Prior to the completion of rehabilitation and annually thereafter not later than fifteen (15) days prior to the beginning of the next fiscal year of the Project, Developer shall submit a projected operating budget to the Agency Executive Director for review and approval.. The Agency shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder, and such matter shall be deemed approved unless the Agency provides to Developer its written disapproval within thirty (30) days after receipt of a request for approval, provided Developer includes with its request, a written notice, in capital letters, stating as follows: NOTICE: PURSUANT TO SECTION 12 OF THE AGREEMENT CONTAINING COVENANTS BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HiJ\"171NGTON BEACH AND MERIT HOUSING CORPORATION, FAILURE BY THE AGENCY TO APPROVE OR DISAPPROVE THE MATTER SUBMITTED WITH THIS REQUEST WITHIN 30 DAYS SHALL BE DEEMED AN APPROVAL. Any disapproval shall be in writing and contain the Agency's reasons for disapproval. (b) Agency shall have the right, at any time and from time to time, to give notice to Developer if the Agency determines that the Project is not being managed or maintained in accordance with the Management Plan. The Agency may require the Developer to change management practices or to terminate the management agent and retain a different management agent, approved by the Agency. The Agency agrees that prior to requiring the Developer to change its management agent or the management practices the Agency shall informally consult with Developer, in an attempt to resolve the dispute. If the Agency determines that such an attempt at informal resolution has been unsuccessful, it shall give the Developer thirty (30) days written notice to change the management agent or practice, as the case may be. If Developer fails to do as requested Attachment No. 6 Page 7 of 10 SF-2COt Agree: Douen Court: Agm:. Containing Covenants RLS 00-302 5117/01 - #3 by the Agency in the written notice, the Agency may then require the immediate change of the management practice or agent, as the case may be. The management agreement shall provide that it is subject to termination by the Developer without penalty, upon thirty (30) days prior written notice, at the direction of the Agency. Within ten (I0) days following a direction of the Agency to replace the management agent, the Developer shall select another management agent or make other arrangements satisfactory to the Agency for continuing management of the Project. The Developer shall notify the Agency upon Iearning that there is a voluntary change in the management or control of the management agent, and, if the change is unsatisfactory to the Agency, the Agency shall be entitled to require the Developer to change the management agent in accordance with the terms of this paragraph. 15. Enforcement. In the event Developer defaults in the performance or observance of any covenant, agreement or obligation of Developer pursuant to this Agreement, and if such default remains uncured for a period of thirty (30) days after written notice thereof (or such longer period as may apply to the specific alleged default) shall have been given by Agency, or, in the event said default cannot be cured within said time period, Developer has failed to commence to cure such default within said thirty (30) days and diligently prosecute said cure to completion, then Agency shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (a) By mandamus or other suit, action or proceeding at law or in equity, require Developer to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of Developer hereunder, including foreclosure pursuant to the Agency Deed of Trust and/or terminating the Lease between the Agency and Developer. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. 16. Attorneys'_Fees. If any action or proceeding is brought by either party against the other under this Agreement, whether for interpretation, enforcement or otherwise, Developer hereby expressly agrees to pay for all costs and expenses for such action or proceeding, including the fees of attorneys and any expert witnesses. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. 17. Amendments. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Orange. Attachment No. b page 8 or t o SF-2C01 Agree: Dov%en Court: Agmt. Containing Covenants RLS 00-302 517/O1 - n3 18. Notice. Any notice required to be given hereunder shall be made in writing and shall be given by (i) personal delivery, (ii) courier service that provides a receipt showing date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary Developer: Merit Housing Corporation Notices personally delivered or delivered by courier shall be effective upon receipt. Mailed notices shall be effective on the earlier of receipt or Noon on the second business day following deposit in the United States mail. 19. SeverabilityAVaiver/Integration. (a) Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. (b) Waiver. A waiver by either party of the performance of any covenant or condition herein shall not inva?idate this Agreement nor shall it be considered a waiver of any other covenants or conditions, nor shall the delay or forbearance by either party in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. (c) Integration. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 20. Governing Law. This Agreement shall be governed by the laws of the State of California. Attachment No. G Page 9 of 10 SF-2COt Agree: [low en Court: Agmt. Containing Covenants RLS 00-302 5 17ro1 - p3 21. Counte arts. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. IN WITNESS WHEREOF, the Agency and the Developer have executed this Agreement. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency') Dated: , By: Executive Director APPROVED AS TO FORM: Agency General Counsel MERIT HOUSING CORPORATION ("Developee) Dated: Executive Director Dated: By: Attachment No. 6 Page 10 of 10 SF-2001 Agree: Bowen Court: Agrat Containing Covenants P LS 00-302 5/17101 -#3 Treasurer STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA } } ss. COUNTY OF , ) On before me, — , personally appeared _ , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature EXHIBIT A LEGAL DESCRIPTION ATTACHMENT NO.7 AGENCY RESIDUAL RECEIPTS PROMISSIORY NOTE SECURED BY DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED THERETO DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same, must be surrendered to Trustee for cancellation before reconveyance will be made. PROMISSORY NOTE SECURED BY DEED OF TRUST Principal Loan Amount: S500,000.00 Note Date: , 2001 FOR VALUE RECEIVED, the undersigned ("Maker") hereby promises to pay to the order of the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Holder'), at a place designed by Holder, the principal sum of FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS (S500,000.00), or such lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof, pursuant to an Disposition and Development Agreement (the "DDA") dated as of June , 2001 between Maker and Holder. The obligation of the Maker to the Holder hereunder shall be secured by a deed of trust made by the Maker encumbering the Site to be developed (the "Site") pursuant to the DDA and the Deed of Trust with Assignment of Rents dated , executed by the Maker and recorded in the Recorder's Office of Orange County, California, on , as Document No. (the "Trust Deed'). The obligation of the Maker set forth in this Note is subject to acceleration as set forth in the DDA. The DDA and the Trust Deed are public records on file in the offices of the Holder. 1. Agency Residual Receipts Loan. This Note evidences the obligation of the Maker to the Holder for the repayment of funds loaned to the Maker by the Holder (the "Residual Receipts Loan") to finance the development of the Property pursuant to the DDA. The Maher shall not make any sale, assignment or conveyance, or transfer in any other form, of the Property, or any part thereof, or interest therein without the express written consent of the Holder as set forth in Section of the DDA. 2. Terms of the Residual Receipts, (a) Term. The term of this Note shall be sixty (60) years, commencing on the effective date of the Lease that is attached to the DDA. Attachment No. 7 Agency Residual Receipts Page 1 of 3 SF-2001 Agree: Bowen Court: Prom. tote — Agency Res. Receipts (b) Repayment. Beginning on the third anniversary date of this Note, and on each annual anniversary date of this Note thereafter until the Residual Receipts Loan is paid in full or otherwise canceled or forgiven pursuant to the terns of this Note, Maker shall pay to Holder an amount equal to FIFTY PERCENT (5001o) of the Project's Net Operating Income for the immediate preceding year. After the sixtieth (601h) anniversary date of this Note, all remaining unpaid principal and interest on the Agency Loan shall immediately become due and payable, and the Agreement Containing Covenants (Attachment No. 6 to the DDA) shall terrainate; provided, however, that if Maker provides thirty (30) days' prior written notice to Holder stating that Maker shall continue maintaining all the restrictions of the Agreement Containing Covenants on the Site beyond its 60-year term, then the unpaid principal and interest on the Agency Loan shall not require payment and shall not accrue further interest for the period during which Maker continuously maintains the restrictions of the Agreement Containing Covenants on the Site. (c) Disbursement of the Agency Loan. Holder shall disburse the Agency Loan as set forth in the DDA. At the end of the term of this Note and the forgiveness, waiver, and discharge of this Note as set forth above, Holder shall mark this Note "PAID 1N FULL" and shall then deliver this Note to the Trustee of the Deed of Trust that secures this Note for the Trustee's delivery to Maker in conjunction with the reconveyance of the Deed of Trust. 3. PrepayMent Penalties. In the even: Maker prepays the entire balance of this Note including all accrued interest within two years from the date of this Note, then Maker shall pay to Holder a prepayment penalty consisting of TWENTY-FIVE PERCENT (25%) of the original principal balance of this Note. Such prepayment penalty shall not apply upon a discharge or waiver of this Note. In the event Maker prepays, the entire balance of this Note including all accrued interest at any time after two years from the date of this Note, the covenants, conditions and restrictions imposed on the Site by the Agreement Containing Covenants and DDA shall remain in full force and effect for the terms set forth therein. 4. Acceleration of Obligation. Upon the occurrence of uncured Material Default of Maker under this Note, the Deed of Trust or any obligation secured thereby (including the obligations in the DDA and the Agreement Containing Covenants, or in any other instrument now or hereafter securing the obligations evidenced hereby, then, and in any of such events, Holder may, at its option, and upon thirty (30) days prior written notice to Maker, declare this Note and the entire obligations hereby evidenced that has not been forgiven, waived, and discharged pursuant to Section 2 above, to be immediately due and payable and collectible then or thereafter as Holder may elect, regardless of the date of maturity. 5. Default Interest. If any event occurs giving Holder the right to accelerate this Note pursuant to Section 4 above, the entire unpaid and unforgiven principal owing hereunder shall, as of the date of such default, commence to accrue interest at a rate equal to two percentage points above the reference rate published by Bank of America N.A., or the maximum non -usurious interest rate permitted by law, whichever is less. Attachment No. 7 Agency Residual Receipts Page 2 of 3 SF-2001 Agrec: Bowen Court: Prom. Note —Agency Res. Receipts 6. Collection Costs; Attome ' Fees. If any attorney is engaged by Holder because of any event of an uncured Material Default under this Note or the Deed of Trust or to enforce any provisions of either instrument, whe&.er or not suit is filed hereon, Holder shall bear its own attorney's fees and costs. 7. Severability. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 8. Modifications. Neither this Note nor any term hereof maybe waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective by an instrument in writing signed by Maker and Holder. 9. UsurY. Notwithstanding any provision in this Note, Deed of Trust or other document securing same, the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 10. Governing Law. This Note has been executed and delivered by Maker in the State of California and is not be governed and construed in accordance with the laws thereof. IN WITNESS WHEREOF, Maker has executed this Note as of the date and year first above written. "DEVELOPER' MERIT HOUSING CORPORATION a California nonprofit corporation By: Executive Director FA No President/CEO Attachment No. 7 Agency Residual Receipts Page 3 0: 3 SF-2001 Agree: Bowen Court: Prom. Note — Agency Res. Receipts ATTACHMENT NO.8 No fee: Recording requested pursuant to Government Code Section 27383 Recording Requested By, and When Recorded, Return to: Redevelopment Agency of the Agency of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary (space above this line for Recorder's use only) AGENCY RESIDUAL RECEIPTS DEED OF TRUST With Assignment of Rents THIS DEED OF TRUST, is made this day of , 2001, by and between Merit Housing Corporation, a California nonprofit corporation (the "Borrower"), as trustor, the City of Huntington Beach, a California municipal corporation, ("Trustee"), and the Redevelopment Agency of the City of Huntington Beach, (the "Beneficiary"), a public body, corporate and politic, as beneficiary, and is executed to secure the obligations contained in that certain Agency Residual Receipts Promissory Note Secured by Deed of Trust executed by Trustor in favor of Beneficiary and dated (the "Note"), that certain Agreement Containing Covenants by and between Trustor and Beneficiary dated (the "Covenants'), and that certain Disposition and Development Agreement by and between Trustor and Beneficiary dated (the "DDA'). The Note, Covenants and DDA are hereby incorporated herein by reference. All capitalized terms not otherwise defined herein shall have the means ascribed to them in the DDA. 1. GRANT IN TRUST AND PROPERTY AGREEMENT. For valuable consideration, Trustor irrevocably grants, transfers and assigns to Trustee, in trust, with power of sale, for the benefit of Beneficiary, the following property (the "Property"): (a) the real property described in Attachments attached to this Deed of Trust and incorporated in this Deed of Trust by reference (the "Land"); and (b) all buildings, structures and other improvements now or in the future located or to be constructed on the Land (the "Improvements'); and (c) all tenements, hereditaments, appurtenances, privileges and other rights and interests now or in the future benefiting or otherwise relating to the Land or the Attachment No. 8 (Page 1 of 10) SF-2001 Agree: Baum Court: Agency Resid. Receipts S/tbrol -#2 Improvements, including easements, rights -of -way, development rights, mineral rights, water rights and water stock (the "Appurtenances"). 2. OBLIGATIONS SECURED. The Borrower makes this grant for the purpose of securing the following obligations: A. Repayment of the indebtedness of the Borrower to Beneficiary of the Loan, in accordance with the terms of the Note or as much as has been disbursed to the Borrower under the Note and the DDA, along with any extensions, amendments, modifications, or renewals to the Agency Residual Receipts Note; and B. Payment of any sums advanced by Agency to protect the Property and priority of this Deed of Trust; and C. Payment of any sums advanced by Agency following a breach of the Borrower'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 the Borrower contained in this Deed of Trust, the Note, the DDA, and the Covenants, including all modifications, extensions and renewals of these obligations; and E. Performance of any other obligation or repayment of any other indebtedness of the Borrower to Beneficiary, where such evidence of obligation or indebtedness specifically recites that it is secured by this Deed of Trust. 3. ASSIGNMENT OF RENTS AND RIGHT TO POSSESSION. As additional security, the Borrower hereby assigns to Beneficiary: (a) all of the rents, revenues, profits, and income from the Property, any deposits now or hereafter in the Borrowers possession which have been collected with respect to the Property, and any reserve or capital funds now or hereafter held by the Borrower with respect to construction or operation of the Property (collectively, the "Rents"); and (b) the right to enter, take possession of, and manage the Property, provided however that the Borrower shall have, before an Event of Default, the exclusive right to possess the Property and to collect Rents and use them in accordance with the DDA and Note. This assignment is intended to be an absolute and present transfer of the Borrower'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 which is not cured within the cure period as set forth in the DDA and written notice to the Borrower, Agency may, in addition to other rights and remedies permitted by the DDA, this Deed of Trust, or applicable law, (a) enter upon, take possession of, and manage the Property, 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 Property, (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 Property, including attorneys' fees, and pay off any Attachment No. 8 (Page 2 or t o) 5F-2001 Agree: Bowen Court: Agency Raid. Receipts 5117/Gt - #2 ind:btedness secured by this Deed of Trust, all in such order as Beneficiary may determine, and/or (c) enter upon and take possession of the Property, and complete construction of any improvements on the Property as provided for in the Plans and Specifications approved under the DDA or any modifications to the Plans and Speci fications or the Project that Beneficiary in its sole discretion believes is appropriate. 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 Property. 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 Property and take whatever measures are necessary to preserve and manage the Property for the benefit of Beneficiary and the public interest. The Borrower hereby consents to the appointment of a receiver. The receiver shall have all of the authority over the Property that Beneficiary would have if Beneficiary took possession of the Property 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 PONNTR OF SALE. The entering upon and taking possession of the Property 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 Property 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. COMMERCIAL CODE PROPERTY 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 Property which under applicable law may be subject to a security interest pursuant to the Commercial Code, and the Borrower 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 Property. The Borrower 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. The Borrower shall pay all costs of filing such financing statements and shall pay all reasonable costs of any record searches for financing statements and releases. Without the prior written consent of Beneficiary, the Borrower shall not create or permit any other security interest in said items. 8. REMEDIES. Upon the Borrower'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 Attachmen- No. 8 (Page 3 of 10) 3F-2001 Agree: ©ouen Court: Agency Resid. Receipts V1710t -p2 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. The Borrower shall promptly perform each obligation secured by this Deed of Trust. 10. PAYMENT OF PRINCIPAL AND INTEREST. The Borrower shall promptly pay when due the principal and interest on the indebtedness evidenced by the Note. 11. MAINTENANCE OF THE PROPERTY. The Borrower shall, at the Borrower's own expense, maintain and preserve the Property or cause the Property to be maintained and preserved in good condition, in good repair, and in a decent, safe, sanitary, habitable and tenantable condition. The Borrower 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 Property. The Borrower shall not commit or permit waste on or to the Property. The Borrower shall not abandon the Property. Beneficiary shall have no responsibility over maintenance of the Property. In the event the Borrower fails to maintain the Property in accordance with the standards in this Deed of Trust, the Covenants or the DDA, Beneficiary, after at least sixty (60) days, except in health and safety emergencies, in which case, after at least three (3) days prior written notice to the Borrower, may, but shall be under no obligation to, make such repairs or replacements as are necessary and provide for payment 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 the Borrower to Beneficiary and shall be secured by this Deed of Trust. 22. INSPECTION OF THE PROPERTY. The Borrower shall permit Beneficiary to enter and inspect the Property for compliance with these obligations upon 24 hours advance notice of such visit by Beneficiary to the Borrower or the Borowces management agent. 13. DEFENSE AND NOTICE OF CLAIMS AND ACTIONS. The Borrower shall appear in and defend, at its own expense, any action or proceeding purporting to affect the Property and/or the rights of Beneficiary. The Borrower 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 Property. M. SUITS TO PROTECT THE PROPERTY. Beneficiary shall have power to institute and maintain such suits and proceedings as it may deem expedient (a) to prevent any impairment of the Property or the rights of Beneficiary, (b) to preserve or protect its interest in the Property 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 Attachment No. 8 (Page 4 of 10) SF-2001 Agree: Dowen Court: Agency Resid. Receipts VIVO] -#2 legislation, regulation, or order would impair the Property or be prejudicial to the interest of Beneficiary. I S. DAMAGE TO PROPERTY. The Borrower shall give Beneficiary and Trustee prompt notice in writing of any damage to the Property. If any building or improvements erected on the Property is damaged or destroyed by an insurable cause, the Borrower shall, at its cost and expense, 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 and, if such insurance proceeds shall be insufficient for such purpose, the Borrower shall make up the deficiency. 16. TITLE. The Borrower warrants that the Borrower lawfully has legal title to the Property without any limitation on the right to encumber. 17. GRANTING OF EASEMENTS. The Borrower may not grant easements, licenses, rights -of -way or other rights or privileges in the nature of easements with respect to the Property 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. 18. TAXES AND LEVIES. The Borrower 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 alien affecting the Property. However, the Borrower 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) the Borrower maintains reserves adequate to pay any contested liabilities. In the event that the Borrower fails to pay any of the foregoing items, Beneficiary may, but shall be under no obligation to, pay the same, after Beneficiary has notified the Borrower of such failure to pay and the Borrower fails to fully pay such items within seven 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 the Borrower to Beneficiary and shall be secured by this Deed of Trust. 19. 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 Property under assertion of the power of eminent domain ("Funds") are hereby assigned to and shall be paid to Beneficiary. Beneficiary is authorized (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 the Borrower 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. Attachment No. 8 (Page 5 of 10) SF-2001 Agree: Bowen Court: Agency Resid. Receipts 5.1VC, I -02 20. ACCELERATION ON TRANSFER OF PROPERTY; ASSUMPTION. In the event that the Borrower, without the prior written consent of the Beneficiary, sells, agrees to sell, transfers, or conveys its interest in the Property 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 DDA; or B. sale or transfer of fixtures or personal property pursuant to the grant provisions in this Deed of Trust. 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. 21. RECONVEYANCE BY TRUSTEE. This Deed of 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 and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by the Borrower of Trustee's reasonable fees, Trustee shall reconvey the Property to the Borrower, or to the person or persons legally entitled thereto. DEFAULT AND REMEDIES 22. EVENTS OF DEFAULT. Any of the events listed in the DDA as an Event of Default shall also constitute an Event of Default under this Deed of Trust. 23. ACCELERATION OF MATURITY. Upon the happening of an Event of Default which has not be cured within the times and in the manner provided in the DDA, Beneficiary may declare all sums advanced to the Borrower under the Note and this Deed of Trust immediately due and payable. 24. BENEFICIARY'S REMEDIES. Upon the happening of an Event of Default which has not be cured within the times and in the manner. provided in the DDA, Beneficiary may, in addition to other rights and remedies permitted by the DDA, 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 Property and collect Rents; B. Enter the Property and take any actions necessary in its judgment to complete construction on the Property as permitted under the Assignment of Development Rights executed by the Borrower (on file with Beneficiary) and the assignment of Attachment No. 8 (Page 6 of 10) SF•2001 Agree: Bowen Court: Agency Rend. Receipts 5117101 .112 rents and right to possession in this Deed of Trust, either in person or through a receiver appointed by a court; C. Disburse from Agency Loan proceeds any amount necessary to cure any monetary default under this Deed of Trust, the DDA, or Note; D. 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 Property, including the authority to complete construction of improvements; E. Deliver to Trustee a written declaration of Default and demand for sale, and a written Notice of Default and election to cause the Borrower's interest in the Property to be sold, which notice Trustee or Beneficiary shall duly file for record in the Official Records of Orange County, and exercise its power of sale as provided for below; or F. Pursue any other rights and remedies allow at law or in equity. 25. 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 Benef ciary, Trustee shall cause to be recorded, published and delivered to the Borrower such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on the Borrower, after lapse of such time as may then be required by la«• and after recordation of such Notice of Default and after Notice of Sale having been given as required by law, sell the Property, 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 the Borrower, at public auction to the highest bidder for cash in lawful money of the United States payabl-. 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, the Borrower, 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. Attachment No. 8 (Page 7 or 10) 5F-2001 Agree: Bowen Court: Agency Resid. Receipts 5117/01 -02 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. 26. 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 27. GOVERNING LANV. 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 lay%-. 28. 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. 29. STATEMENT OF OBLIGATION. Lender may collect a fee not to exceed the maximum allowable under applicable law for furnishing a statement of obligations as provided in the California Civil Code. 30. CONSENTS AND APPROVALS. Any consent or approval of Beneficiary required under this Deed of Trust shall not be unreasonably withheld. 31. TIME. Time is of the essence in this Deed of Trust. 32. NOTICES, DEMANDS AND COMMUNICATIONS. Formal notices, demands and communications between the Borrower 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 the Borrower and Beneficiary as follows: Beneficiary: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary Attachment No. 8 (Page 8 of 10) SF.200I Agree: Dowen Court: Agency Resid. Receipts VIVO -#2 The Borrower: Merit Housing Corporation. Attn: Executive Director 33. 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 the Borrower, Trustee, and Beneficiary. 34. WAIVER. Any waiver by Beneficiary of any obligation of the Borrower in 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 the Borrower or to pursue any remedy allowed under the Deed of Trust or applicable law. Any extension of time granted to the Borrower to perform any obligation under this Deed of Trust shall not operate as a waiver or release the Borrower from any of its obligations under this Deed of Trust. Consent by Beneficiary to any act or omission by the Borrower 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. 35. AAIENDi1IENTS AND AIODIFICATIONS. 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 the Borrower. 36. DISPOSITION AND DEVELOPMENT AGREEMENT CONTROLS. If there is any contradiction between this instrument and the DDA, the terms of the DDA shall control, except that the Borrower shall have no defense or claim that this instrument does not establish a valid lien on the Property or the Property. 37. DEFINITIONS. Capitalized terms not otherwise defined in this Deed of Trust shall have the same meaning as defined terms in the DDA. 38. PROOFS OF CLAIM. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, recomposition or other proceedings affecting the Borrower, 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 the Borrower hereunder after such date. 39. 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 Iien 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 Property, 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 Attachment No. 8 (Page 9 of 10) Sr-Ml Agree: Bowen Court: Agency Raid. Receipts 5117101 -#2 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. 40. 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 rcference to this Deed of Trust and its place of record, which when duly recorded in the Orange County Office of the Recorder shall be corclusive proof of proper appointment of the successor trustee. CO. Eel ..d . MERIT HOUSING CORPORATION, a California nonprofit corporation 57 Its: Executive Director By: Its: President/CEO Attachment No. 8 (Page 10 of 10) Sr-20)1 Agree: Bowen Court: Agency Raid. Receipts 5/17/C 1 - #2 ATTACHMENT NO.9 OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested by and When Recorded Mail to: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street, P.O. Box 190 Huntington Beach, CA 92648 Attn: Agency Secretary Space above this line for recording use CERTIFICATE OF COMPLETION WHEREAS, the MERIT HOUSING CORPORATION, A California nonprofit corporation ("Developer") and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency) have entered into that certain Disposition and Development Agreement, dated as of (hereinafter referred to as the "DDA), relating to the sale, construction, management and operation of the Bowen Court Affordable Senior Housing Project in the City of Huntington Beach, California (the "Project'); and ' WHEREAS, pursuant to the DDA, Agency has leased to Developer of that certain real property (the "Property) located in the City of Huntington Beach, more particularly described in Attachment No. I which is attached hereto and incorporated herein by this reference; and WHEREAS, the DDA describes the Project, which consists of Developer's construction and operation on the Site of twenty (20) affordable senior housing residential units; and j WHEREAS, Section 434 of the DDA provides that promptly upon completion of construction of the Project in accordance with the DDA and satisfaction of related conditions set forth in said Section 434, Agency shall issue to Developer and record a Certificate of Completion, conclusively determining that construction of the Project, as required by the DDA, has been completed and the Project has been opened for business; and WHEREAS, Developer has completed the Project and satisfied the related conditions, as required by the DDA. NOW, THEREFORE, AGENCY CERTIFIES AS FOLLOWS: Attachment 9 Certificate of Completion Page 1 of 2 SF-2001 Agrec: BoNen Court: DDA -Cent of Completion Attachment 9 Certificate of Completion Page 2 of 2 SF-2COt Agree: Dowen Court: DDA -Cent of Completion 1. As provided in the DDA, Agency does hereby certify that the conditions precedent to the issuance of a Certificate of Completion set forth in Section 434 of the DDA have been fully satisfied. Execution of this Certificate by the Agency constitutes "Completion" as defined in the DDA. 2. This Certificate shall not constitute evidence of compliance with or satisfaction of any obligation of Developer or any other party to a holder of a mortgage or deed of trust securing money loaned to finance the construction of the Project or any part thereof, or any other obligation to any other party, other than the obligation of Developer to the Agency to construct and open the Project in accordance with the DDA. 3. This Certificate of Completion is not a "Notice of Completion" as referred to in Section 3093 of the California Civil Code. IN WITNESS WHEREOF, THE agency has executed this Certificate, in Orange County, California, as of ATTEST: By: Agency Clerk - APPROVED AS TO FORM: Ln Agency General Counsel REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: Executive Director Attachment 9 Certificate of Completion Page 3 of 2 SF-20 )l Agree: Bowen Court: DDA - Cert of Completion