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Home My WebLink AboutColette's Children's Home, Inc. - Pacific Sun Apartments CIC, L.P. - 2008-12-15This Document was electronically recorded by City of Huntington Beach RECORDING REQUESTED BY: Pacific Sun Apartments CIC, L.P. 17301 Beach Boulevard, Suite 23 Huntington Beach, CA 92647 AFTER RECORDING MAIL TO: Pacific Sun Apartments CIC, L.P. 17301 Beach Boulevard, Suite 23 Huntington Beach, CA 92647 Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder Illlll I I111111111111111111111111111111111 I111111111N0 FEE 2012000188766 02:41 pm 04/03/12 66 422 S13 18 0.00 0.00 0.00 0.00 51.00 0.00 0.00 0.00 ABOVE SPACE FOR RECORDING USE ASSESSOR'S PARCEL NO. 165-234-14 SUBORDINATION AGREEMENT This Subordination Agreement dated )40A /L 03 , 2012 is made by the City of Huntington Beach in its capacity as Successor Agency to the Redevelopment Agency of the City of Huntington Beach (the "Successor Agency" herein), in favor of the Owners (as defined herein). RECITALS: A. The former Redevelopment Agency of the City of Huntington Beach (the "Redevelopment Agency") made a loan to Colette's Children Home, Inc., a California nonprofit corporation ("Borrower") which loan is secured by that certain Deed of Trust recorded February 25, 2009, as Document No. 2009000088035 in the office of the County Recorder in the County of Orange, State of California ("Deed of Trust"). The Deed of Trust created a lien on certain real property owned by the Borrower in Orange County, California, more particularly described in Exhibit A attached hereto (the "Property"). B. That certain Reciprocal Easement Agreement ("Easement") recorded on March 11, 2011 as Document No. 2011000133129 in the office of the County Recorder in the County of Orange, State of California, was entered into by and among Borrower and Pacific Sun Apartments CIC, L.P., a California limited partnership ("Pacific Sun"), which, among other things, established certain easements for a pedestrian walkway and for pedestrian access, ingress and egress upon and across a portion of the Property and a portion of the adjacent property owned in fee by Pacific Sun (such property defined in the Easement as the "Partnership Property"). A copy of the Easement has been provided to Successor Agency and is attached as Exhibit B hereto. Borrower and Pacific Sun are collectively referred to herein as the "Owners." C. As a condition to the development of a 6-unit apartment complex on the Partnership Property by Pacific Sun, the lien of the Deed of Trust must be subordinated to the Easement to the extent that, in the event of a foreclosure of the Deed of Trust or a transfer in lieu of foreclosure of any portion of the Property, the purchaser at any such foreclosure or the transferee under any deed in lieu of foreclosure shall take title to the Property subject to all of the terms and conditions of the Easement. D. The City Council of the City of Huntington Beach (the "City") adopted Resolution No. 2012-01 on January 9, 2012, electing the City to serve as the Successor Agency to the Redevelopment Agency of the City of Huntington Beach upon the dissolution of the Redevelopment Agency pursuant to Assembly Bill No. 26 (2011-2012 1" Ex. Sess.) (the "AB X1 26"); and E. Pursuant to AB X1 26, on February 1, 2012, the Redevelopment Agency dissolved and the Successor Agency succeeded to all of the assets, properties, contracts, and leases of the former Redevelopment Agency, and all rights and obligations of the former Redevelopment Agency set forth therein, by operation of law. F. The Successor Agency is willing to subordinate the lien of the Deed of Trust to the Easement in order to facilitate the development of the Partnership Property and in light of the benefits of the Easement to the Property. NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and intending to be legally bound hereby, Successor Agency agrees as follows: I. The lien of the Deed of Trust shall be subject and subordinate to the Easement and subject to the rights of the Owners to enforce the terms and conditions of the Easement, with the same force and effect as if the Easement had been executed and recorded prior to the execution and recording of the Deed of Trust. 2. Successor Agency agrees that in the event of a foreclosure of the Deed of Trust or a transfer in lieu of foreclosure of any portion of the Property, the purchaser at any such foreclosure or the transferee under any deed in lieu of foreclosure shall take title to the Property subject to all of the terms and conditions of the Easement. 3. This Agreement shall be binding upon Successor Agency and its successors and assigns. 4. This Agreement shall be construed and enforced in accordance with the laws of California. Dated this J." day of A/4- , 2012. SUCCESSOR AGENCY: THE CITY OF HUNTINGTON BEACH IN ITS CAPACITY AS SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF TH CITY OF HUNTINGTON BEACH 4;9L City Manager ATTEST: City AS TO FORM: NV` City Attorney 3 . �,► d KANE, BALLMER & BE MAN City Special Counsel ACKNOWLEDGMENT STATE OF CALIFORNIA } } ss COUNTY OF D�� } On M, JZ_ 03 , 2012, before me, ?�, L. Z—::S Pn t 24 , a Notary Public in , and for said State, personally appeared a7(,YOV4.� Lprovided to me on the basis of satisfactory evidence to be the persooss whose name 440 subscribed to the within instrument and acknowledged to me that the executed the same in -his�he their authorized capacity res , and that by 4is4w<signaturqW the instrument the person or the entity upon behalf of which the persoroacted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. P L. ESPARZA Commission # 1857021 Z •'� Notary Public - California D Orange County r my Comm. ;=ug 4, 2013 . Exhibit A Property Legal Description PARCEL 2 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 143 PAGE 43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. Exhibit B Easement Agreement Recording Requested Hy; DPS On Dewrof '. DPS" RECORDING REQUESTED BY: RECURRED REQUEST OF First American Title SUBDIVISION MAPPING DEPT. Recorded in official Records, orange County Tom Daly, Clerk -Recorder 111111111111111111111111111111111111111111111111111111111111 39.00 2011000133129 04:30p m 03/11/11 42 414 Al2 12 0.00 0.00 0.00 0.00 33.00 0.00 0.00 0.00 DZIDA, CAREY & STEINMAN (SJD) 3 Park Plaza, Suite 750 Irvine, California 92614 3U5919-7-ce J (Space Above far Recorder's Use) RECIPROCAL EASEMENT AGREEMENT THIS RECIPROCAL EASEMENT AGREEMENT ("Agreement's is entered into by and between and among PACIFIC SUN APARTMENTS CIC, L.P., a California limited partnership (the "Partnership"), and COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation (the "Corporation"), with reference to the following facts: PREAMBLE: A. The Partnership is the fee owner of real property described as Parcel 1 of Parcel Map No. 79-577 filed in Book 143, Page 43 of Parcel Maps, in the Official Records of Orange County, California (the "Partnership Property"). B. The Corporation is the fee owner of real property described as Parcel 2 of Parcel Map No. 79-577 filed in Book 143, Page 43 of Parcel Maps, in the Official Records of Orange County, California (the "Corporation Property"). C. tt is the purpose and intent of the Partnership and the Corporation by way of this Agreement to establish the easements described in this Agreement pursuant to a general plan of improvement for the Partnership Property and the Corporation Property (collectively, the "Property") for the mutual benefit of the present and future owners of any and all portions of the Property and their respective heirs, executors, successors, assigns, grantees, mortgagees and tenants. NOW, THEREFORE, the Parties agree as follows: Definitions. 1.1 "Default bate" shall mean the maximum nonusurious rate of interest under applicable California law. DPC%VS75.0001\396949.1214n411 1.2 "Improvements" means any improvements constructed or installed above or below ground within the exterior boundaries of the Property, including without limitation all walkways, curbs, gutters, fences, walls, signs, exterior lighting and lighting standards, hedges, berms, landscaping, trees, shrubs, ramps, utility lines, pipes and conduits, and any replacements, additions, repairs or alterations thereto of any kind whatsoever. 1.3 "Lot" means any separate legal lot or parcel in the Property now existing or hereafter created, whether by a legal split, subdivision or parcelization of a Lot, lot line adjustment or by combination or merger of one or more Lots. 1.4 "Mortgage" means any recorded mortgage or deed of trust or other conveyance of a Lot or other portion of the Property to secure the performance of an obligation, which conveyance will be reconveyed upon the completion of such performance. The term "Deed of Trust" when used shall be synonymous with the term "Mortgage." 1.5 "Mortgagee" means a person to whom a Mortgage is made and shall include the beneficiary of a Deed of Trust. The term "Beneficiary" shall be synonymous with the term "Mortgagee." 1.6 "Owner" means the Partnership, the Corporation and any other Person (defined below) having or acquiring a fee title ownership interest in the Property, or any portion of it, or their successors in interest as shown by the Official Records of the Orange County Recorder. Such reference shall also include any Person designated in writing by any Owner to act on behalf of such Owner in the exercise of the powers granted to such Owner under this Agreement. 1.7 "Person"or "Persons" means and includes individuals, partnerships, firms, associations, joint ventures, corporations or any other legal entities and trustees, heirs, executors, administrators and other personal representatives. 2. Easements. The Partnership grants to the Corporation for its benefit and for the benefit of each Owner of any Lot within the Corporation Property a nonexclusive easement in, to and over the portion of the Partnership Property described on Exhibit "A" and depicted on Exhibit "B" attached to and made a part of this Agreement (the "Partnership Property Easement Area"). which easement shall be appurtenant to the Corporation Property and each Lot within the Corporation Property and which easement shall be for a pedestrian walkway and for pedestrian access, ingress and egress. The Corporation grants to the Partnership for its benefit and for the benefit of each Owner of any Lot within the Partnership Property a nonexclusive easement in, to and over the portion of the Corporation Property described on Exhibit "C" and depicted on Exhibit "D" attached to and made a part of this Agreement (the "Corporation Property Easement Area"), which easement shall be appurtenant to the Partnership Property and each Lot within the Partnership Property and which easement shall be for a pedestrian walkway and for pedestrian access, ingress and egress. No changes may be made in the location of Improvements within the Partnership Property Easement Area or the Corporation Property Easement Area existing as of the recordation of this Agreement without the prior written consent of each Owner of any Lot within the Property. DPCM0575.000R396649.1 2/4/2()11 _2_ Maintenance. 3.1 Maintenance Standards. The Owner of the Partnership Property shall maintain the Partnership Property Easement Area in good, clean and unobstructed condition. The Owner of the Corporation Property shall maintain the Corporation Property Easement Area in good, clean and unobstructed condition. Such maintenance shall include, without limitation, removal of debris, asphalt repair, sea] coating, striping, concrete curb repair, stamped concrete paving repair and directional arrow repainting. The real property taxes and assessments on a Lot shall be paid by the Owner of that Lot. 3.2 Failure to Maintain. If any Owner ("Defaulting Party") fails to perform its obligations under this Agreement, any Owner may notify the Defaulting Party of such failure in writing and demand that the Defaulting Party perform such obligations. If the Defaulting Party does not perform its obligations within thirty (30) days of such notice, the demanding Owner may perform those obligations and bill the Defaulting Party for all expenses incurred to cure the breach. The Defaulting Party shall be obligated to reimburse the demanding Owner for all such expenses within thirty (30) days of demand with interest at the Default Rate from the date of demand until the date paid, along with any reasonable court costs and attorneys' fees incurred to collect such expenses and interest. 3.3 Insurance. Each Owner shall keep in full force and effect. at its sole expense, Commercial General Liability policies of insurance insuring against all liability with respect to the use, maintenance and occupancy of such Owner's Lot, in which the limits of public liability shall be not less than One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000) in the aggregate. Each policy shall insure the Owner with respect to his own Lot and shall add each other Owner as additional insureds. Each policy shall contain a clause that the insurer will not cancel or change the insurance without first giving the other Owners thirty (30) days prior written notice. The insurance shall be with an insurance carrier licensed to do business in California and having a commercially reasonable rating in Best's Insurance Guide. 4. General Provisions. 4.1 Rights of Mortgagees. Notwithstanding any other provision of this Agreement, no amendment or violation of this Agreement shall operate to defeat or render invalid the rights of the Beneficiary under any Mortgage upon any Lot in the Property made in good faith and for value, provided that, after the foreclosure of any such Mortgage, such Lot shall remain subject to this Agreement, as amended. 4.2 Amendment and Termination. This Agreement may be amended or terminated only by written instrument executed by all Owners of the Property and shall be effective when such written instrument is recorded. 4.3 Easements Appurtenant. Each of the easements reserved in this Agreement shall be appurtenant to, and shall pass with title to, the Lot or Lots benefited thereby. Each and all of the foregoing covenants, conditions and restrictions (i) shall run with the land; (ii) shall be binding upon, and shall inure to the benefit of, the Partnership, the Corporation and DPCM575.0001L396849.12/412011 -3- any Person having or acquiring any interest in any portion of the Property and all of their respective successive owners and assigns; and (iii) shall be binding upon, and shall inure to the benefit of, the Property and every portion of it and interest in it. 4.4 No Dedication. Nothing contained in this Agreement shall be deemed to be a gift or dedication of any portion of the Property to or for the general public or for any public purpose whatsoever. 4.5 Notice. Any notice, report or demand required, permitted or desired to be given under this Agreement shall be in writing and addressed to the Owners at the Lot(s) owned by such Owners or at such other addresses as each shall supply to the others in the manner provided in this Section. All notices given pursuant to this Agreement by personal delivery or by certified or registered mail, return receipt requested, postage prepaid, shall be deemed received upon delivery or attempted delivery, if delivery is refused. All notices sent by overnight courier service shall be deemed received upon expiration of one (1) business day after pickup by such overnight courier service, unless actually received sooner. Upon the transfer of any Lot the Owner of such Lot shall notify the other Owners in writing of the transferee's address for purposes of notice under this Agreement. An Owner may change its address for notices by giving written notice to the other Owners in the manner provided in this Section. The initial addresses for notices under this Agreement are as follows: To the Partnership: Pacific Sun Apartments CIC, L.P. 5993 Avenida Encinas, Suite 101 Carlsbad, CA 92008 Attn: James Schmid, President Facsimile No.: (760) 456-6001 With a copy to: Pillsbury Winthrop Shaw Pittman LLP 50 Fremont Street San Francisco, CA 94105 Attention: Gary Downs, Esq. Fax No.: (415) 983-1200 To the Corporation: Collette's Children Home, Inc. 17301 Beach Boulevard, Suite 1 1 Huntington Beach, CA 92647 Attention: William O'Connell Facsimile No.: (714) 848-1866 With a copy to: Dzida, Carey & Steinman 3 Park Plaza, Suite 750 Irvine, CA 92614 Attn: Steven J. Dzida, Esq. Facsimile No.: (949) 399-0361 aPC1V575.0001 \396849.1 2l42011 -4- This Agreement is dated L' ' , 2011, for identification purposes only and shall be effective upon recordation in Official Records of Orange County, California. COLETTE'S CHILDREN HOME, PACIFIC SUN APARTMENTS CIC, L.P., INC., a California nonprofit public a California limited partnership benefit eoLn By: Colette's Children Home, Inc., a By: California nonprofit public benefit corporation Its: Its margingeneral partner "Corporation" By: Its:t'�c7'C By: CIC Pacific Sun Apartments, LLC, a California limited liability company Its administrative general partner By: Chelsea Investment Corporation, a California corporation Its mana er By: James J. S i President "Partnership" 17VOTARYACIi;IVOWLEDGMENTS ONPOLL 0WING PAGES) DP030575.0001\396849.12l412011 -5- State of Califorpla' County of On 31,0,112o before, personally appeared G. R. M114ERS Corwrilssion 0 1903168 j4pNotary Public • California San Diego County AA Comm. Ex rev Se 6. 2014 - who proved to me on the basis of satisfactory evidence to be the persomW whose name} is/am subscribed to the within instrument and acknowledged to me that-Ose/shelthep executed the same in i%Wher/theirs 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature: +� �gp Signature of Notary Public OPi!ONAL I'- — Though the information below is not required bylaw, 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 (Document Title or Type of Document: Place Notary Seal Above Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Individual El Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee O Guardian or Conservator O Other: Signer is Representing: Number of Pages: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Individual ❑ Partner — ❑ Limited 0 General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator Cl Other: Signer Is Representing c 2009 National Notary Association • NationatNotary.org • 1-800-US NOTARY (I-800-876-6827) Item e5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of personally appeared / 74 G. R. WITHERS Cornrfli sft * 19031 S$ giddy Public - Cotitaaoiu Son Die" county My Comm. MM Sep S 2014 who proved to me on the basis of satisfactory evidence to be the persort(s) whose names) istafe-- subscribed to the within instrument and acknowledged to me that helsheAftey executed the same in his/herhtteir- authorized capacitp(ies), and that by his/heNtheir signature(e) on the instrument the person(W or the entity upon behalf of which the persona acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. 157 Signature: Kir Place Notary Seal Above Signature of Notary Public OPTIONAL 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 doccment. Description of Attached Document Title or Type of Document: Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Titie(s): O Individual ❑ Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney In Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: Number of Pages: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Individual O Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 13 Other: Signer Is Representing: 0 2009 National Notary Assoc4ktion - NadomiNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #6907 71 1 State of California County of --Seal On 7 Date ` personally appeared who proved to me on the basis of satisfactory evidence to be the person(gr whose nargeW is/aff 0-101 subscribed to the within instrument and acknowledged G. g. =IDS to me that he/sheAhey- executed the same in coffmd * 11011169 hisJtaer{th& authorized capacity(ies), and that byNotary . Pow - c his/he&Meit si So pion„ Cc"g natur airs) on the instrument the Corm E lane 8 i 14 person(; or the entity upon behalf of which the persons) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. E -Lure Signature: .0 Piece Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by Caw, it may prove vaivabie to persons relying 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: Document Date: Signer(s) Other Than Named Above: _ Capaclty(tes) Claimed by Signer(s) Signer's Name: CJ Corporate Officer — Title(s): ❑ Individual ❑ Partner — ❑ Uinited L7 General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: Number of Pages. Signer's Name: ❑ Corporate Officer — Title(s): ❑ Individual • Partner — ❑ Limited O General Top of thumb here Q Attorney in Fact ❑ Trustee 17 Guardian or Conservator ❑ Other: Signer Is Representing: 20W National Notary Association • NafionalNotam nrn . 1 _am.0 is auirnov ,. e.....,.... ---- Item 45907 EXHIBIT iiwp LEGAL DESCRIPTION FOR COMMON WALKWAY EASEMENT ON PARCEL 1 OF PARCEL MAP NO.79-577 THE LAND REFERRED TO HEREIN IS SITUATED IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING A STRIP OF LAND LYING WITHIN THE WESTERLY 122.83 FEET OF THE NORTHERLY 4.17 FEET OF PARCEL 1 OF PARCEL MAP NO. 79-677 FILED IN BOOK 143, PAGE 43 OF PARCEL MAPS, RECORDS OF SAID COUNTY OF ORANGE. CONTAINING AN AREA OF 611.80 SQUARE FEET MORE OR LESS SUBJECT TO: ALL COVENANTS, RIGHTS, RIGHTS OF WAY AND EASEMENTS OF RECORD. EXHIBIT "B': ATTACHED AND BY THIS REFERENCE MADE A PART HEREOF. PREPARED UNDER THE SUPERVISION OF: A / `� - • r f a No. 2168T A/ADA .C.E. 21687 exp. 09I3p/18 ,EXPIRES 9-30-11 a i PARCEL 3 �-- N89'14'S4'E 133.00' o PARCEL 2 g N'L Y P/L PARCEL 1 $ N8914'54"E 133-00' 122.83' z a N8974'S4"E �le `* COMMON WALKWAY 0i n EASEMENT ON PARCEL t 'V 4 PARCEL l g � 4 V tn L=50.18 z R=32.00 tS=89'50'38" _ Ton=31.91 SHEET 1 OF 1 N8974'16"E 101.09' I m oQz� SLATM AVE. N$9 24'16"E 493.08' ---- GRAPHIC SCALE 30 0 15 ]0 60 120 EXHIBIT lAc99 LEGAL DESCRIPTION FOR COMMON WALKWAY EASEMENT ON PARCEL 2 OF PARCEL MAP NO. 79-577 THE LAND REFERRED TO HEREIN IS SITUATED IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA. BEING A STRIP OF LAND LYING WITHIN THE WESTERLY 122.83 FEET OF THE SOUTHERLY 3.71 FEET OF PARCEL 2 OF PARCEL MAP NO. 79-577 FILED IN BOOK 143, PAGE 43 OF PARCEL MAPS, RECORDS OF SAID COUNTY OF ORANGE. CONTAINING AN AREA OF 455.50 SQUARE FEET MORE OR LESS SUBJECT TO: ALL COVENANTS, RIGHTS, RIGHTS OF WAY AND EASEMENTS OF RECORD. EXHIBIT "D": ATTACHED AND BY THIS REFERENCE MADE A PART HEREOF. PREPARED UNDER THE SUPERVISION OF: J A4AMS, R.C.E. 21687 EXPI RES 9-30-11 30 SHEET 1 OF 1 PARCEL 3 133, 00' a -m PARCEL 2 p`b o COMMON WALKWAY ao EASEMENT ON PARCEL 2 ^ '� z N8914 `54 "E 122.83' 122.83' N8914'54"E 133.00, . S`L Y P/L PARCEL 2 41, 41 4 PARCEL 0 z 3 L=50.18 R=32.00 d=89150'38" Ton=31.91 N89 24'16"E f TO1.09' 0 8LAT'ER AVE. N8974'16"E 493.08' GRAPHIC SCALE 15 30 so ,2a LAW CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICATION TO: HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL FROM: JENNIFER McGRATH, City Attorney DATE: December 15, 2008 SUBJECT: Late Communication December 15, 2008 Agenda Item 39 An additional action is recommended for the above -referenced Agenda Item, which item contemplates approval of the Affordable Housing Agreement between the Redevelopment Agency and Colette's Children Home, Inc. At this time, it is anticipated that the Agency will be asked to enter into an agreement with the bank that is financing the balance of project costs. Such an agreement identifies the respective rights of the lending parties and provides for priority of the affordability covenants above all other obligations. In order to facilitate the immediate closing of escrow, we ask that the Agency Board also authorize the following action: / Authorize the Agency Executive Director to execute a subordination agreement, as may �"TM�C� be necessary to obtain financing for the project, and that may include removal of the �n� affordability covenant in the event of foreclosure if, and only if, the Agency elects not to cure the default. JENNIFER McGRATH City Attorney Jn c: Joan Flynn, City Clerk Stanley Smalewitz, Director of Economic Development AT'd a I f� M 3q Number�5, �o�� OB-180100129091 �� y RECORDING REQUEMD BY L#Y TALE Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder Illllllllllilllllllllllllllllllllllllllllllllllllllllllllllll NO FEE 2009000088037 04:30pm 02/25/09 230 59 S13 13 Order No. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Escrow No. Loan No. ) WHEN RECORDED MAIL TO: } Clearinghouse Community Development ) Financial Institution ) 23861 El Toro Rd., Suite 401 ) Lake Forest, CA 92630 Attn: Annie Mooney ) SPACE ABOVE THIS LINE FOR RECORDER'S USE EXEMPT FROM RECORDING FEE PER GOV. CODE § 27383 APN: 165-234-14; 165-234-15 -PRIORITY AND SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN A SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER INSTRUMENT. This Priority and Subordination Agreement ("Agreement") is entered into as of December 15. 2008, by and among COLETTE'S CHILDREN HOME, INC., a California non- profit public benefit corporation ("Borrower"), the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Junior Lender"), and CLEARINGHOUSE. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION ("Senior Lender"). Borrower, Junior Lender, and Senior Lender are individually referred to in this Agreement as a "P_ arty" and are collectively referred to in this Agreement as the "Parties." Senior Lender and Junior Lender are individually referred to in this Agreement as a "Lender" and are collectively referred to in this Agreement as the "Lenders." RECITALS A. Borrower has executed or is about to execute a Deed of Trust "(the "Senior Lender Deed of Trust") for the benefit of Senior Lender, to secure a promissory note in the amount of $560,000.00. The Senior Lender Deed of Trust encumbers, among other things, the real property more particularly described in Exhibit A attached to this Agreement (the "Land") and is to be recorded concurrently herewith against the Property (as defined below) in the Official Records of Orange County, California ("Official Records"). The Land, together with all improvements now or hereafter located on the Land and all fixtures and personal property located on the Land and SUBORDINATION AGREEMENT PAGE I Agree: Colette's Children Home, Inc. - 1743247442 Keelson Lane Document Number: 2009000088037 Page: 1 of 13 encumbered by any of the Recorded Items (as defined below) are referred to, collectively, as the "Pro e " B, Borrower has executed or is about to execute an Agency Loan Deed of Trust With Assignment of Rents (the "Junior Lender Deed of Trust") for the benefit of Junior Lender, to secure a promissory note in the amount of $2,262;833.00. The Junior Lender Deed of Trust encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. C. Borrower has executed or is about to execute that certain Assignment of Rents and Leases ("Junior Lender Assignment of Rents") for the benefit of the Junior Lender, which encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. D. Junior Lender and Borrower have executed or are about to execute that certain Regulatory Agreement and Declaration of Covenants and Restrictions ("Affordability Restrictions") which encumber the Property and are to be recorded concurrently herewith against the Property in Official Records. E. Junior Lender has executed that certain Notice of Affordability Restrictions on Transfer ofProperty ("Notice of Affordability Restrictions") which encumbers the Property and is to be recorded concurrently herewith against the Property in Official Records. F. The Affordability Restrictions, the Notice of Affordability Restrictions, the Senior Lender Deed of Trust, the Junior Lender Deed of Trust and the Junior Lender Assignment of Rents are collectively referred to in this Agreement as the "Recorded Items." G. It is the intent of the Parties that the order of priority of the Recorded Items as liens on or charges. against the Property shall be as follows:. 1. Affordability Restrictions 2. Notice of Affordability Restrictions 3. Senior Lender Deed of Trust 4. Junior Lender Deed of Trust 5. Junior Lender Assignment of Rents. In consideration of the mutual benefits accruing to the Parties and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce each Party to enter the Recorded Items to which it is a party, the Parties agree as follows: SUBORDINATION AGREEMENT PAGE 2 Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane Document Number: 2009000088037 Page: 2 of 13 AGREEMENT Priority and Subordination. (a) Subject to Paragraph L(b) below, each Recorded Item, and any and all renewals and extensions thereof, shall unconditionally be and remain at all times a lien or charge on the Property, having the relative priority with respect to the other Recorded Items as set forth in Recital G above. In addition, the Senior Lender Deed of Trust shall be senior and prior to any and all Uniform Commercial Code Financing Statements filed by or on behalf of Junior Lender with the Office of the California Secretary of State and/or recorded by or on behalf of Junior Lender in Official Records. Subject to Paragraph L(b) below, each Party intentionally and unconditionally waives, relinquishes and subordinates the lien or charge ofthe Recorded Items to which it is a party in favor of the lien or charge upon the Property of the other Recorded Items to the extent necessary so that the Recorded Items have the relative priority set forth in Recital G above, provided that the indebtedness secured by the Senior Lender Deed of Trust does not exceed the sum of the principal amount of Five Hundred Sixty Thousand Dollars ($560,000.00) plus interest and all other amounts accruing pursuant to the terms of the promissory note secured by the Senior Lender Deed of Trust and/or the terms of the Senior Lender Deed of Trust, plus costs and expenses, including attorneys' fees, of collection under that note and/or under the Senior Lender Deed of Trust. . (b) Notwithstanding anything in Paragraph L(a) above to the contrary, the Parties agree that, if there is an occurrence of breach or default under the Senior Lender Deed of Trust which Borrower fails to cure and which the Junior Lender fails to cure pursuant to Section 5 below, then the Junior Lender shall promptly take such actions as are necessary to release the lien or charge upon the Property of the Affordability Restrictions and the Notice of Affordability Restrictions. It is the Parties' intent that, not later than five (5) days prior to the scheduled date for a sale of the Property pursuant to aToreclosure, as such term.is defined in Section 5.(b)(1) below, Junior Lender shall release the lien of the Affordability Restrictions and the Notice of Affordability Restrictions and those documents shall terminate and shall thereafter be of no further force or effect. The Parties agree to execute all documents and instruments and take such actions as are needed to carry out the intent of this paragraph. (c) Each Party acknowledges that it has been offered a satisfactory opportunity to review each of the Recorded Items and related documents to the extent that it wishes to review them. 2. Reliance. The Parties would not enter into the Recorded Items to which they are parties without this Agreement. 3. Recording. Each Party consents to the recording of each of the Recorded Items and this Agreement. SUBORDINATION AGREEMENT PAGE 3 Agree! Colette's Children Home, Inc. — 17432-17442 Keelson Lane Document Number: 2009000088037 Page: 3 of 13 4. No Obligation. No Lender is under any obligation to the other Lender to, nor has either Lender represented that it will, see to the application of any proceeds of any loan secured by any of the Recorded Items except as may otherwise be set forth in a written agreement (other than this Agreement) executed by the Lender sought to be charged with such an obligation. 5. Notice of Default; Opportunity to Cure. (a) Senior Lender shall give the Junior Lender notice of an occurrence of breach or default under the Senior Lender Deed of Trust concurrently with giving such notice to Borrower and, in any event, prior to enforcing remedies for such default against Borrower or the Property and Senior Lender agrees that it will not commence foreclosure proceedings until sixty (60) days after Junior Lender's receipt of such notice. (b) Junior Lender shall have each of the following rights so long as the Junior Lender Deed of Trust encumbers any portion of the Property or interest therein: (i) To cure any breach or default under the Senior Lender Deed of Trust at any time prior to: (a) a judicial foreclosure of the Senior Lender Deed of Trust; or (b) a non - judicial foreclosure by trustee sale under the Senior Lender Deed of Trust; or (c) the recordation in Official Records of a deed in lieu of foreclosure with respect to the Senior Lender Deed ofTrust (the events referenced in (a), (b), and (c) above are collectively referred to herein as a "Foreclosure and (ii) To negotiate with the Senior Lender in good faith regarding the noticed default at any time prior to the foreclosure of the Senior Lender Deed of Trust or other lien (without any party having an obligation to continue or enter into any final agreement). (iii) To negotiate with Borrower -in good faith to purchase the Property from Borrower at any time prior to a Foreclosure of the Senior Lender Deed of Trust, subject to the Senior Lender Deed of Trust and without the consent of the holder of the Senior Lender Deed of Trust (without any Party having an obligation to continue or enter into any final agreement). (c) If, prior to a Foreclosure ofthe Senior Lender Deed ofTrust, the Junior Lender takes title to the Property and cures the default under the Senior Lender Deed of Trust, then Senior Lender will not exercise any right it may have to accelerate the indebtedness secured by the Senior Lender Deed of Trust solely by reason of that transfer (or will accept reinstatement if acceleration has already occurred). 6. Miscellaneous. (a) Entire Agreement, This Agreement constitutes the entire agreement among the Parties with respect to the priority of the lien and charge of the Recorded Items against the SUBORDINATION AGREEMENT PAGE 4 Agree: Colette's Children Home, Inc. - 17432-17442 Keelson Lane Document Number: 2009000088037 Page: 4 of 13 Property and all prior understandings and agreements on that subject, if any, are superseded and replaced by this Agreement. (b) Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California. (c) Successors, Assignment. This Agreement is for the benefit of the Lenders and their respective successors and assigns, and any provision hereof may be waived or modified by written agreement of the Lenders without the consent ofBorrower, and without affecting the priority of the liens and charges of the Recorded Items as provided in this Agreement. "The heirs, administrators, assigns and successors -in -interest of the Parties shall be bound by this Agreement. This Agreement may be assigned by a Party only as a part of an assignment of such Party's interest i-: the Property. (d) Notices. All notices to be given pursuant to this Agreement shall be in writing and shalt be deemed given when hand -delivered, or two business days after deposit in the U.S. mail, postage prepaid, to the Parties at the addresses set forth below the Parties' signatures at the end of this Agreement, or to such other place as a Party may from time to time designate for itself by notice to the other Parties. No successor or assign of a Party shall be entitled to notices or opportunity to cure defaults hereunder unless notice of the transfer is given in accordance with this subsection. (e) Amendment. This Agreement may be amended only by a writing signed by the Parties, but this clause shall not impair the validity of any further agreements among fewer than all of the Parties as among themselves. (f) Legal Costs. In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement; each party shall bear its own costs and expenses of suit, including attorneys' fees,.expert witness fees and all costs incurred.in each and every such action, suit or other proceeding, including -any and all appeals or petitions therefrom. (g) Severability. Ifany term, provision, condition or covenant ofthis Agreement or the application thereof to any Party or circumstances shall, to any extent, be held invalid or unenforceable, then the remainder of this instrument, or the application of such term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. (h) Counterparts. This Agreement may be executed in any number of counterparts, all ofwhich taken together shall constitute one and the same instrument and whether or not all Parties execute each counterpart. SUBORDINATION AGREEMENT PAGE 5 Agree: Colette's Children Home, Inc. — {7432-17442 Keelson Lane Document Number: 2009000088037 Page: 5 of 13 (i) Completion of Recording Information. Ifthis Agreement is signed without completion of certain recording information called for above, any Party or any escrow agent or title insurance company acting on the instructions of any Party is hereby authorized to insert such information prior to recording this Agreement. (Remainder of page intentionally left blank) SUBORDINATION AGREEMENT PAGE 6 Agrees Colette's Children Home, Inc_ — 17432-17442 Keelson Lane Document Number: 2009000088037 Page: 6 of 13 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT. .JUNIOR LENDER: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: i Chairper2s611 ATT.£S� :+ ' C r. Bv- �, Zjkggriey Secretary APPRO t'AS TO FORM: By:r (. General Cou l { y� BALLMER & BERKMAN Agency Special Counsel Address: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (Signature Page of Subordination Agreement) Agree: Colette's Children Horne, Inc. — 17432-17442 Keelson Lane Document Number: 2009000088037 Page: 7 of 13 STATE OF CALIFORNIA COUNTY OF ORANGE ACKNOWLEDGMENT ss } On January 28, 2009 before me, P. L. Esparza, Notary Public, personally appeared Robin Lugar and Keith Bohr who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. �N(Nota Signa ) Document Number: 2009000088037 Page: 8 of 13 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT. BORROWER: COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation By, Pamela Hope,�nt Address: 17301 Beach Blvd., 423 Huntington Beach, CA 92647 (Signature Page of Subordination Agreement) Agree: Cole"e's Children Home, Inc. — t7432-17442 Keelson Lane Document Number: 2009000088037 Page: 9 of 13 State of California County of Orange } P On i { �-Lt Z before me, �-�- 4�u� a Notary Public, personally app aced 0. ---� who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) ism subscribed to the within instrument and acknowledged to me that k/shejhey executed the same in l}is/her/tl>aif authorized capacity(ies), and that by his/herhbzifr-signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PE RY under the laws of the State of California that the foregoing paragraph is true and corn ct. WITN SS my h rid�and o eal. PATRICIA J. GARCIA CQRRRA.#174903T tdbRft Signature- -(Seal} � ORMW oowrf Cantu EV,.hale M.2011 State of California County of Orange On before me, a Notary Public, personally appeared , who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Subordination Agreement Document Number: 2009000088037 Page: 10 of 13 SENIOR LENDER: CLEARINGHOUSE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION 12 By: 5 ' 'r "�, TO Its: Address: 23861 El Toro Rd., Suite 401 Lake Forest, CA 92630 Attn: Annie Mooney (Signature Page of Subordination Agreement) Agree: Colette's Children Home, Inc. — 17432.17442 Keelson Lane Document Number: 2009000088037 Page: 11 of 13 State of California County of Orange On January 30, 2009 before me, Kristen S. 011endorff, a Notary Public, personally appeared Douglas J. Bystry, who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. gRWMwN S, ()L4M RFF ,. GouI1j 1697032 +p GYaRV ur cow. Y. WITNESS my hand and official seal. Agree: Colene's Children Home, Inc. — 17432-17442 Keelson Lane Document Number: 2009000088037 Page: 12 of 13 EXHIBIT A LEGAL DESCRIPTION Legal Description of Property Commonly Known As 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS snowN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 .AVI- — 1--,- 1— : ' ' ',- ;A A I! 0i - � Agrm Colette's Children Home, Inc. — 17432-17442 Keelson Lane Document Number: 2009000088037 Page: 13 of 13 THIS IS ATRUE CERTIFIED COPY OF THE �a��,ERti•I��co COUNl•Y t'LERK•RECORDER RECORD MIT BEARS THE SEAL, U J`� �►� mpRINTF6IN PURPLE. OF THE ORANGE SON :OUNTY CLERK -RECORDER c ORANGE COUNTY STATE OF CALIFORNIA CERTIFICATION FEE: c��Dum I C�' Council/Agency Meeting Held: Deferred/Continued to: A! proved Q Conditional) A p oved ❑ _Den -IQ \z,41t� Citelerk's ignatu Council Meeting Date: 12/15/2008 Department ID Number: ED 08-52 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY MEMBERS SUBMITTED BY: FRED A. WILSON, Ex 0 a Director PREPARED BY: STANLEY SMALEWITZ, Deputy Executive Director ' p� 4 SUBJECT: Approve Affordable Housing Agreement with Colette's Children Home, Inc. for Acquisition and. Rehabilitation of 17432-17442 Keelson Lane Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: An Affordable Housing Agreement between the Agency and Colette's Children Home, Inc., is submitted for approval. This Agreement will facilitate the acquisition and rehabilitation of a 10-unit apartment complex comprised of the two adjacent properties at 17432-17442 Keelson Lane. Approval of the Agreement includes financial assistance from the Redevelopment Housing Set Aside Funds. Funding Source: Redevelopment Housing Set Aside Funds (account 30680301.89250) in an amount not to exceed $2,262,833, which will be used for the acquisition of two multifamily properties. Recommended Action: Motion to: Redevelopment Agency Action: 1. Approve the Affordable Housing Agreement between Colette's Children Home, Inc. and the Redevelopment Agency; 2. Appropriate $2,262,833 from the unappropriated, undesignated Fund Balance of the Low Income Housing Set Aside Funds into account 30680301.89250; and 3. Authorize the Executive Director (or designee) and the Agency Chairperson to take any action and execute any and all documents and agreements necessary to implement the Agreement upon satisfaction of all contingencies. LA-iE CO,41M C6 T-/o•J bA-7" Alternative Action(s): Do not approve the Housing Agreement and direct staff to renegotiate the deal terms with Colette's Children Home Inc. �� s REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION MEETING DATE: 12/15/2008 DEPARTMENT ID NUMBER: ED 08-52 Analysis: The property located at 17432-17442 Keelson Lane, is a 10-unit apartment complex located in the southwesterly portion of the Oakview neighborhood. Colette's Children Home, Inc. (Developer) has entered into escrow for acquisition of the properties and is asking the Agency for assistance with property acquisition costs in exchange for long-term affordability covenants on all 10 units. The property consists of two multifamily apartment buildings comprised of four one -bedroom units, four two -bedroom units, and two five -bedroom units. The Developer will provide the 10 affordable units to low and very low income households for a minimum of 60 years. The affordability assigned to the units will be as follows: Affordability Level One Bedroom Two Bedroom Five Bedroom Very Low Income 2 2 0 Low Income 2 2 2 The Developer has over twenty years experience in developing clean, attractive and affordable housing with supportive services for low and very low income families. The Keelson Lane acquisition will be the Developer's third acquisition/rehabilitation project within the city of Huntington Beach, this time in the form of permanent housing. The Agreement provides that, upon completion of all rehabilitation, the Developer will manage the property and provide on -site management of the complex to ensure the continued maintenance on the site. The Agreement calls for the following terms: • Units to be affordable for a minimum of 60 years. • Six units to be leased to very low income households (50% of average medium income). • Four units to be leased low income households (80% of average medium income). • The total project acquisition cost is $2,186,788. • Income qualified households that are currently residing in the building will remain at the site and be accommodated during construction and rehabilitation of their unit as necessary. • Households that exceed the low and very low income requirements will be relocated by the Developer. If any Agency funds remain after acquisition of the properties, the funds may be used to pay for relocation costs, upon Agency approval. • The basic rehabilitation costs are estimated at $257,000 or $25,700 per unit. -2- 12/1/2008 10:15 AM REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION MEETING DATE: 12/15/2008 DEPARTMENT ID NUMBER: ED 08-52 • The Developer will endeavor to provide green initiatives on the site where possible, including energy saving appliances and lighting. • Prior to funding, Agency to review and approve Phase One and other environmental reports, property appraisal, and project relocation plan. The project is an opportunity for the Agency to physically improve and create 10 units of affordable housing, thereby enhancing the quality of life for a significant number of lower income families. Activities such as the Keelson Lane project are listed in the Agency Housing Strategy, adopted on December 17, 2007. Also, large families, categorized in the City's Housing Element, adopted on June 16, 2008, as a special needs population because of the limited availability of affordable and adequate sized rental housing, will benefit by having available two affordable, five bedroom apartment units. The term of the Agency loan shall be sixty (60) years with no interest. The Agency loan is to be repaid with annual payments from residual receipts. Residual receipts are defined as the amount by which the gross revenue exceeds annual operating expenses. The amount of the annual payment to the Agency by the Developer will be determined each year after receipt and analysis of the Developer's annual, audited financial statements. If the Agency approves the Affordable Housing Agreement, escrow will close before December 31, 2008 with rehabilitation commencing within one hundred eighty (180) days thereafter. The Economic Development Committee has reviewed the proposed project and approved it for Agency consideration. The Agency's fiscal consultant, Keyser Marston Associates, Inc., has reviewed the project and recommends the financing provided in the Agreement. Strategic Plan Goal: L-3 "Preserve the quality of our neighborhoods." Environmental Status: Categorically excluded under the National Environmental Protection Act (NEPA). Categorically exempt under the California Environmental Quality Act (CEQA), Section 15061 (b) (3). Attachment(s): .- .- 1. ®- Site Map 2. Affordable Housing Agreement 3. Keyser Marston Associations- Delaware Apartments: Financial Gap Analysis dated September 4, 2008 4. Fiscal Impact Statement -3- 12/2/2008 5:22 PM Site Map 17432 — 17442 Keelson Lane Huntington Beach, CA 92647 --r---Z. 0 Slater Avenue a m U cci 17432 - 17442 Keelson STREET NAMES Lane CITY BOUNDARY 11 ' Map produced by information contained in the City of.�r Huntington Beach Information Services Department STREET CENTERLINES (C1A55), a Geographic Information System. Information warranted for /✓ Sma tstreet City use only. Huntington Beach does not guarantee its i✓ Major Collector completeness or accuracy. ' Map Produced on 11118/2008 �✓ Secondary - Residential Travelway LL- t ISOBATHS t:_��. 0 120 240 HARBOR One inch equals 120 feet ATTACHMENT #2 AFFORDABLE HOUSING AGREEMENT By and Between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, and COLETTE'S CHILDREN HOME, INC., a California non-profit public benefit corporation (17432-17442 Keelson Lane) TABLE OF CONTENTS Page SECTION 1. DEFINITIONS.................................................................................................. 1 SECTION 2. SUBJECT OF THIS AGREEMENT.............................................................. 5 2.1 Purpose of the Agreement.............................................................................................. 5 2.2. The Redevelopment Plan................................................................................................ 6 2.3 Developer........................................................................................................................6 2.4 Term of Agreement......................................................................................................... 6 2.5 Prohibition Against Transfers; Right of First Refusal .................................................... 6 SECTON 3. FINANCING AND ACQUISITION OF THE SITE ..................................... 8 3.1 Ownership of the Site..................................................................................................... 8 3.2 Agency Financial Assistance.......................................................................................... 8 3.3. Disbursement of Agency Loan....................................................................................... 9 3.4 Form of Agency Financial Assistance; Purpose of Note and Security ........................... 9 3.5 Escrow............................................................................................................................9 3.6. Agency's Conditions to Closing................................................................................... 12 3.7 Developer's Conditions To Closing............................................................................. 13 3.8 Broker's Fees................................................................................................................ 14 3.9 Use of Excess Proceeds of Conventional Loan............................................................ 14 SECTION 4. ACQUISITION AND REHABILITATION OF THE SITE ....................... 14 4.1 General..........................................................................................................................14 4.2 Rehabilitation of the Units............................................................................................ 14 4.3 Insurance....................................................................................................................... 15 4.4 Indemnification............................................................................................................. 16 4.5 Hazardous Materials..................................................................................................... 16 4.6 Security Financing; Right of Holders........................................................................... 17 4.7 Refinancing of Senior Loans........................................................................................ 17 4.8 Developer Fee............................................................................................................... 17 4.9 Legal Requirements...................................................................................................... 18 4.10 Release of Construction Covenants.............................................................................. 19 SECTION 5. USE OF THE SITE......................................................................................... 20 5.1 No Inconsistent Uses.................................................................................................... 20 5.2 Regulatory Agreement.................................................................................................. 20 5.3 Relocation..................................................................................................................... 20 5.4 Maintenance of the Site................................................................................................ 20 5.5 Nondiscrimination........................................................................................................21 5.6 Form of Nondiscrimination and Nonsegregation Clauses ............................................ 21 5.7 Effect and Duration of Covenants................................................................................ 22 5.8 Creation of Capital Reserve Account........................................................................... 22 5.9 Capital Reserves........................................................................................................... 22 5.10 Payment of Portion of Residual Receipts..................................................................... 23 5.11 Financial Statements..................................................................................................... 24 5.12 Operation of Project...................................................................................................... 24 5.13 Lead -Based Paint.......................................................................................................... 24 5.14 Barriers to the Disabled................................................................................................ 24 SECTION 6. DEFAULTS AND REMEDIES..................................................................... 24 6.1 Developer Defaults....................................................................................................... 24 6.2 Agency Defaults........................................................................................................... 25 6.4 Notice of Default.......................................................................................................... 25 6.5 Agency's Remedies...................................................................................................... 25 6.7 Developer's Remedies.................................................................................................. 26 6.8 Rights and Remedies are Cumulative........................................................................... 26 SECTION 7. GENERAL PROVISIONS........................................................................... 26 7.1 Developer's Warranties................................................................................................ 26 7.2 Governing Law............................................................................................................. 26 7.3 Attorneys' Fees............................................................................................................. 27 7.4 Notices, Demands, and Communications Between the Parties .................................... 27 7.5 Acceptance of Service of Process................................................................................. 27 7.6 Conflicts of Interest...................................................................................................... 27 7.7 Titles and Captions....................................................................................................... 27 7.8 Gender...........................................................................................................................28 7.9 Modifications................................................................................................................ 28 7.10 Merger of Prior Agreements and Understandings........................................................ 28 7.11 No Third Parties Benefited........................................................................................... 28 7.12 Assurances to Act in Good Faith.................................................................................. 28 7.13 Warranty Against Payment of Consideration for Agreement ....................................... 28 7.14 Nonliability of Agency Officials and Employees......................................................... 28 7.15 Interpretation................................................................................................................. 28 7.16. Counterparts..................................................................................................................28 7.17 Severability................................................................................................................... 28 7.18. Extension of Times of Performance............................................................................. 29 7.19 Inspection of Books and Records................................................................................. 29 7.20 Waivers......................................................................................................................... 29 SECTION 8. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE ........... 29 it Exhibits Exhibit A Legal Description Exhibit B Site Map Exhibit C Scope of Development Exhibit D Project Budget Exhibit E Schedule of Performance Exhibit F Promissory Note Exhibit G Deed of Trust Exhibit H Regulatory Agreement Exhibit I Notice of Affordability Restrictions Exhibit J Environmental Indemnity Exhibit K Assignment of Agreements Exhibit L Assignment of Rents and Leases Exhibit M UCC 1 Exhibit N Release of Construction Covenants Exhibit O Disbursement Agreement iii AFFORDABLE HOUSING AGREEMENT THIS AFFOVABLE HOUSING AGREEMENT ("Agreement") is entered into as of 1% E /'al ./ 2008 ("Effective Date") by and among REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"), and COLETTE'S CHILDREN HOME, INC., a California non-profit public benefit corporation ("Developer"). RECITALS A. Developer has entered into a Purchase and Sale Agreement to acquire the "Site" (as such term is defined herein) from Phillip Ngo (the "Seller") and intends to implement the "Project" (as such term is defined herein) on the Site in accordance with the terms of this Agreement. B. 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.). C. Pursuant to Community Redevelopment Law, Agency has established a Housing Set Aside Fund and has deposited therein certain tax revenues made available to the Agency exclusively for the purpose of increasing and improving the community's supply of affordable low and moderate income housing, including very low income housing ("Set Aside Funds"). D. Agency desires to meet its affordable housing goals pursuant to Community Redevelopment Law by making a loan of Set Aside Funds in the approximate amount of TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY- THREE DOLLARS ($2,262,833.00) (the "Agency Loan") to assist Developer in funding the acquisition and rehabilitation of the Site, which will be maintained for not less than 60 years as ten affordable rental housing units for very low and low income persons and families, more specifically, the Project as hereinafter defined. NOW, THEREFORE, in consideration of the promises and covenants contained herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: AGREEMENT SECTION 1. DEFINITIONS The following terms, as used in this Agreement, shall have the meanings given unless expressly provided to the contrary: The term "Affordable Low Income Unit" shall mean one of the six (6) rental dwelling units in the Project restricted to occupancy by Low Income Households, consisting of two (2) Agree: Colette's Children Home — 17432-17442 Keelson Lane one -bedroom units, two (2) two -bedroom units and two (2) five -bedroom units. The term "Affordable Low Income Unit" and "Affordable Low Income 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 "Affordable Rent" shall mean, for Affordable Low Income Units, rental rates not to exceed "lower income" affordable rent as defined by California Health & Safety Code Section 50053(b)(3) or its successor and for Affordable Very Low Income Units, rental rates not to exceed "very low income" affordable rent as defined by California Health & Safety Code Section 50053(b)(2) or its successor. Affordable Rent shall include a reasonable utility allowance for tenant -paid utilities based on the Orange County Housing Authority's published utility schedules. The term "Affordable Very Low Income Unit" shall mean one of the four (4) rental dwelling units in the Project restricted to occupancy by Very Low Income Households, consisting of two (2) one -bedroom units and two (2) two -bedroom units. The term "Affordable Very Low Income Unit" and "Affordable Very Low Income 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 "Affordable Unit" shall mean one of the ten (10) rental dwelling units in the Project restricted to occupancy by Low Income and Very Low Income Households. The term "Affordable Unit" and "Affordable 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 "Agency" shall mean the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any assignee of, or successor to, the rights, powers, and responsibilities of Agency. The term "Agency Deed of 'Trust" shall mean the Deed of Trust attached as Exhibit "G" hereto, securing the Agency Loan. The term "Agency 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 determination by the Agency's governing body. The term "Agency Loan" shall mean the Agency's loan to Participant in an amount not to exceed TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS ($2,262,833.00) of Set Aside Funds, as evidenced by the Agency Note and secured by the Agency Deed of Trust. The term "Agency Note" shall mean that certain Promissory Note attached here to as Exhibit "F." 2 Agree: Colette's Children Home — 17432-17442 Keelson Lane The term "Agreement" or any reference to this "Agreement" shall mean this Affordable Housing Agreement executed by and between Agency and Developer, including all exhibits attached hereto, which exhibits are incorporated herein by this reference and all other documents incorporated herein by reference. The term "Conventional Deed of Trust" shall mean a deed of trust securing the Conventional Loan. The term "Conventional Lender" shall mean an institutional lender approved by the Agency and providing funds for Developer's implementation of the Project. The term "Conventional Loan" shall mean the loan provided to Developer by the Conventional Lender in the amount of FIVE HUNDRED SIXTY THOUSAND DOLLARS ($560,000) for payment of a portion of the acquisition cost of the Site. Developer shall endeavor to maximize the amount of the Conventional Loan, but such amount shall not be less than the amount set forth in the Project Budget attached as Exhibit "D" without prior written approval by the Agency. The term "Days" shall mean calendar days and the statement of any time period herein shall be calendar days and not working days, unless otherwise specified. The term "Developer" shall mean COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation, whose address is 17301 Beach Blvd., #23, Huntington Beach, CA 92647. The term "Effective Date" shall mean the date the governing body of the Agency approves this Agreement and authorizes its execution; which date shall be inserted into the preamble of this Agreement. The term "Eligible Tenant" shall mean any person entitled to rent an Affordable Unit as set forth in the Regulatory Agreement. The term "Escrow" shall mean that certain escrow with Beach Pacific Escrow, Inc., which has been established to convey the Site from the Seller to Developer, and into which Agency shall deposit the Agency Loan funds described in Section 3.2 in accordance with the terms of this Agreement. The term "Force 1VMajeure" 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 any public or governmental agency or entity (except that any act or failure to act of Agency shall not excuse performance by Agency unless otherwise provided Agree: Colette's Children Home — 17432-17442 Keelson Lane herein); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. The term "Grant Deed" shall mean that certain Grant Deed that conveys the Site from the current owner, the Seller, to Developer. 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, area formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not include substances that are used or consumed in the normal course of developing, operating, or occupying a housing project, to the extent and degree that such substances are stored, used, and disposed of in the manner and in amounts that are consistent with normal practice and legal standards. The term "Lease" means the lease entered into between Developer and an Eligible Tenant of an Affordable Unit in the Project. The term "Low Income Households" shall mean persons and families whose income does not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the California Department of Housing and Community Development. If the federal standards are discontinued, the term "Low Income Households" shall mean persons and families whose income does not exceed 80% of Median Income adjusted for family size. The term "Median Income" shall mean the area median income of the Orange County metropolitan statistical area (PMSA), with adjustments for household size, as estimated annually by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937 as amended and published by California's Housing and Community Development Department pursuant to'Health and Safety Code section 50093. The term "Notice of Restrictions" shall mean Notice of Affordability Restrictions Upon Transfer of Real Property in the form attached as Exhibit "I", which will be recorded against the Site in accordance with Community Redevelopment Law. The term "Project" shall mean generally the acquisition, rehabilitation and operation of the existing apartment buildings on the Site, consisting of ten Units, and the subsequent rental of the Affordable Units to Eligible Tenants, all at Affordable Rent for a period of not less than 60 years, pursuant to the procedures set forth herein and more particularly described in the Scope of Development and Regulatory Agreement. The term "Project Budget" shall mean the sources and uses of funds for acquisition of the Site and the rehabilitation and operation of the Units as set forth in Exhibit "D." The Project Budget and Developer's proposed method of financing shall be subject to change from time-to- 4 Agree: Colette's Children Home — 17432-17442 Keelson Lane time, subject to the prior written approval of Developer and the Agency Executive Director and subject to and conditioned on such further review and approval by the Agency's governing board as is needed to satisfy applicable law, policies and procedures, upon which approval the Project Budget shall be replaced by the approved revised Project Budget. The term "Project Costs" shall mean those costs and expenses incurred or to be incurred in connection with the acquisition, rehabilitation and operation of the Project, as set forth in the Project Budget, which is hereby approved by the Agency. The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions attached hereto as Exhibit "H." The term "Sale Price" shall mean the sale price for the Site set forth in the Purchase and Sale Agreement between Seller and Developer, being the amount of TWO MILLION ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($2,175,000.00). The term "Schedule of Performance" shall mean that certain schedule attached hereto as Exhibit "E" setting forth the times upon which performance by the parties under this Agreement is due. The term "Scope of Development" shall mean that certain exhibit attached hereto as Exhibit "C." The term "Seller" shall mean Phillip Ngo, an individual. 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 17432-17442 Keelson Lane, Huntington Beach, California, and legally described in Exhibit "A" and depicted on the Site Map attached hereto as Exhibit `B". The term "Units" shall mean the four (4) one -bedroom, four (4) two -bedroom and two (2) five -bedroom dwelling units comprising the Project. The term "Very Low Income Households" shall mean persons and families whose income does not exceed the qualifying limits for very low income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the California Department of Housing and Community Development. If the federal standards are discontinued, the term "Very Low Income Households" shall mean persons and families whose income does not exceed 50% of Median Income adjusted for family size. SECTION 2. SUBJECT OF THIS AGREEMENT 2.1 Purpose of the Agreement (a) The purpose of this Agreement is to promote affordable housing by providing the Agency Loan in the amount of TWO MILLION TWO HUNDRED SIXTY-TWO Agree: Colette's Children Home—17432-17442 Keelson Lane THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS ($2,262,833.00), as evidenced by the Agency Note secured by the Agency Deed of Trust to assist Developer in the acquisition, rehabilitation and operation of affordable housing in the City of Huntington Beach. (b) This Agreement is intended to facilitate Developer's acquisition of the Site and existing buildings, containing a total of ten (10) rental units, located thereon for rehabilitation and rental to Very Low Income Households and Low Income Households for a period of not less than 60 years. The Project pursuant to this Agreement and the fulfillment generally of this Agreement are in the best interests of the City and the welfare of its residents, and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements under which the Project has been undertaken and is being assisted. (c) The Project will be used and operated for not less than sixty (60) years as rental housing, with all ten of the Units restricted to occupancy by Very Low Income Households and Low Income Households in accordance with the Regulatory Agreement. 2.2. The Redevelopment Plan. This Agreement conforms to the Redevelopment Plan for the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December 16, 1996, and which merged together four different, previously approved project areas. The Site is located inside of the Merged Redevelopment Project. Agency intends this Agreement to meet its obligations pursuant to Health and Safety Code Sections 33413, 33334.2 and 33413(b)(2)(A)(ii). 2.3 Developer. The Developer is COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation, whose address is 17301 Beach Blvd., #23, Huntington Beach, CA 92647. 2.4 Term of Agreement. As required by California Health and Safety Code Section 33334.3, this Agreement shall remain in effect for not less than the longer of. (a) fifty-five (55) years from the date on which a Release of Construction Covenants for the Project is issued by the Agency; or (b) sixty (60) years from the Effective Date of the Housing Agreement. . 2.5 Prohibition Against Transfers; Right of First Refusal. (a) The qualifications and identity of the Developer are of particular concern to the Agency. It is because of those qualifications and identity that the Agency have entered into this Agreement with the Developer. No voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. (b) Developer agrees that Developer shall not sell the Site during the term of this Agreement, unless and until Developer has given to Agency notice in writing of its intent to sell, specifying the identity of the prospective buyer and the price and terms of the contemplated sale. Within ninety (90) days after Developer gives Agency written notice of Developer's intent to sell, Agency shall have the right to purchase the Site at the same price and on the same terms and conditions set forth in Developer's written notice of intent to sell. To exercise this right, Agree: Colette's Children Home — 17432-17442 Keelson Lane Agency must, within the same ninety (90) day period, deposit in escrow with any escrow company in Orange County, California, all moneys and instruments required by the terms of the Developer's notice of intent to sell to be paid or delivered to Developer on close of escrow and shall also give Developer written notice of the deposit. If Agency does not exercise the right in accordance with the provisions of this Section, Developer may sell the Site to the prospective buyer for the price and on the terms contained in the notice; provided, however, that Developer has made every reasonable effort to sell the Site to another nonprofit housing corporation with Developer's similar experience and reputation in the field of low-income housing (including the management of properties with income and affordability restrictions), and provided further that Agency has approved such prospective buyer in advance in writing. If at any time during the term of this Agreement Developer receives from any third party a bona fide offer to purchase the Site on terms acceptable to Developer, Developer shall give written notice of the offer to Agency. Within ninety (90) days after Developer gives Agency written notice of the third -party offer, Agency shall have the right to purchase the Site at the same price and on the same terms and conditions set forth in the third -party offer. To exercise its right, Agency must, within the same ninety (90) day period, deposit in escrow with any escrow company in Orange County, California, all moneys and instruments required by the terms of the offer to be paid or delivered to Developer on close of escrow and shall also give Developer written notice of the deposit. In the event Agency does not exercise its right to purchase in accordance with the provisions of this Section, Developer may sell the Site to the third party making the offer on the same terms and conditions set forth in that offer; provided, however, that Developer has made every reasonable effort to sell the Site to another nonprofit housing corporation with Developer's similar experience and reputation in the field of low- income housing (including the management of properties with income and affordability restrictions), and provided further that Agency has approved such prospective buyer in advance in writing. If for any reason the Site is not sold to the party making the offer, Developer shall give Agency the same right to purchase the Site on receiving any subsequent offer from any third party that is acceptable to Developer. (c) 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. (d) The Developer shall promptly notify the Agency of any and all changes whatsoever in the identity of the parties in ownership and/or in control of the 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 any and all available remedies if there is any significant change (voluntary or involuntary) in membership, ownership, management or control, of the Developer (other than such changes occasioned by the death or incapacity of any individual) without the prior written consent of the Agency. 7 Agree: Colette's Children Home— 17432-17442 Keelson Lane (e) 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 Site (referred to hereinafter as a "Transfer"), without prior written approval of the Agency Executive Director, except as expressly permitted by this Agreement. Consent to a Transfer shall not result in acceleration of the Agency Note. Any 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 successors and assigns, and for the benefit of the Agency shall expressly assume all of the obligations of the Developer under this Agreement and agree to be subject to all conditions and restrictions applicable to the Developer in this Agreement. There shall be submitted to the Agency for review all instruments and other legal documents proposed to affect any such Transfer, and if approved by the Agency Executive Director, its approval shall be indicated to the Developer in writing. (f) In the absence of specific written agreement by the Agency, no unauthorized Transfer, or approval thereof by the Agency, shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. (g) Consent to any Transfer shall not be deemed to be a waiver of the right to require consent to future or successive Transfers. (h) The provisions of this Section 2.5 shall be of no force or effect as of the expiration of the Regulatory Agreement. SECTION 3. FINANCING AND ACQUISITION OF THE SITE. 3.1 Ownership of the Site. As of the Effective Date of this Agreement, Developer is in escrow to acquire the Site from the Seller. 3.2 Agency Financial Assistance. The Agency, pursuant to the terms of this Agreement, shall provide to Developer the Agency Loan. Upon satisfaction of all conditions precedent (or waiver by Agency) to Agency's obligation to deposit the Agency Loan into Escrow under this Agreement, Agency shall deposit the approximate amount of TWO MILLION TWO HUNDRED FORTY THOUSAND SIX HUNDRED TWENTY NINE DOLLARS ($2,240,629.00) of the Agency Loan funds into Escrow for payment of (i) the Site acquisition and closing costs in the estimated amount of $2,186,788.00 (which amount includes reimbursement to Developer of the $20,000.00 deposit paid by Developer to Seller); (ii) the initial payment of the Developer Fee in the amount of $41,666.00; (iii) Developer's estimated cost of preparing the Relocation Plan for the Project in the amount of $5,000.00; and (iv) reimbursement to Developer of expenses incurred, including environmental services, Conventional Lender fees and appraisal costs in the estimated amount of $7,175.00. The balance of the Agency Loan in the estimated amount of $22,204.00 (the "Relocation Funds") will be retained by the Agency for disbursement as needed to pay for approved relocation costs that are incurred after the Close of Escrow. 8 Agree: Colette's Children Home — 17432-17442 Keelson Lane 3.3. Disbursement of Agency Loan. Upon Close of Escrow, the Escrow Agent shall disburse the Sale Price to the Seller from the Conventional Loan funds and the Agency Loan funds deposited into Escrow. The Escrow Agent shall pay from the Agency Loan funds the Developer's share of closing costs, the Developer's pro -rated taxes and assessments on the Site, and the cost of the Agency's Lender's Title Policy. The Escrow Agent shall reimburse to Developer from the Agency Loan funds the $20,000.00 deposit paid by Developer to Seller and shall disburse to Developer from the Agency Loan funds the amounts set forth in clauses (ii), (iii) and (iv) of Section 3.2 above. The remaining balance, if any, of that portion of the Agency Loan funds deposited with the Escrow Agent shall be refunded to the Agency. The Agency shall disburse to Developer the balance of the Agency Loan pursuant to the Disbursement Agreement between the Agency, the Developer and the Conventional Lender attached hereto as Exhibit "O" or in a form approved by the Agency Executive Director. The Agency's disbursement of any portion of the Agency Loan to Developer will be conditioned upon (1) the Agency's prior review and approval of an updated Project Budget, (2) Agency review and approval of the final signed loan documents for the Conventional Loan, (3) Agency approval of an application for disbursement of funds that sets forth the amount requested and the specific expenses to be paid and provides accompanying documentation reasonably acceptable to the Agency, and (4) will be further conditioned upon Developer remaining in full compliance with the terms and conditions of this Agreement and all documents and instruments referred to herein or executed by Developer in furtherance of this Agreement. The Relocation Funds will be disbursed by the Agency (i) to Developer to reimburse for any portion of the cost of preparing the Relocation Plan that was not reimbursed at the Close of Escrow; and (ii) directly to, or for the benefit of, those persons who meet the eligibility requirements of the Uniform Relocation Act and the California Relocation Assistance Act and the guidelines promulgated in connection therewith. 3.4 Form of Agency Financial Assistance; Purpose of Note and Security. In the event Developer is in Material Default of any of its obligations hereunder or under the Regulatory Agreement, the entire principal balance of the Agency Loan plus any default interest due thereon shall immediately become due and payable, and Agency shall have the right, at its sole option, to: (a) demand full payment of the principal balance of the Agency Loan plus all default interest; (b) take over ownership and management of the Site; and/or (c) foreclose on the Site under the Agency Deed of Trust. 3.5 Escrow. This Agreement, once deposited in Escrow, shall constitute joint escrow instructions of Agency and Developer. The Escrow agent is hereby empowered to act under the Agreement and upon indicating its acceptance in writing to Agency and Developer within five (5) days after receipt of this Agreement; provided, however, that any undertaking by the Escrow agent of any of the acts or services set forth in this Agreement shall constitute acceptance of the obligation to perform as Escrow agent under this Agreement. Any amendment to the Escrow instructions contained herein shall be in writing and signed by Agency and Developer. (a) ClosingDte. On or before the date established in the Schedule of Performance, the parties shall satisfy the conditions described in Sections 3.5(b), 3.6 and 3.7 and complete the Close of Escrow. If, for any reason, the Close of Escrow has not occurred by the 9 Agree: Colette's Children Home — 17432-17442 Keelson Lane date provided therefor in the Schedule of Performance, either party may terminate this Agreement, by providing written notice of termination to the other parties. (b) 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 Grant Deed executed in recordable form by the Seller; (ii) the Agency Note, executed by Developer; (iii) the Agency Deed of Trust, including the Rider thereto, executed in recordable form by Developer; (iv) the Regulatory Agreement, executed in recordable form by Developer; (v) the Environmental Indemnity in the form attached as Exhibit "J", executed by Developer; (vi) the Assignment of Agreements in the form attached as Exhibit "K", executed by Developer; (vii) the Assignment of Rents and Leases in the form attached as Exhibit "L", executed in recordable form by Developer; (viii) the Disbursement Agreement in the form attached as Exhibit "O", executed by Developer and Conventional Lender; and (ix) all funds, documents, and deposits Developer is required to deposit with Escrow agent in order to close the Escrow conveying the Site to Developer. (c) Delivery of Documents and Funds by Agency. On or before twelve noon on the last business day prior to the scheduled Closing Date, Agency shall deposit or cause to be deposited with the Escrow agent the following: (i) the Agency Deed of Trust, including the Rider thereto, executed in recordable form by Agency; (ii) the Regulatory Agreement, executed in recordable form by Agency; and (iii) the Agency Loan funds described in Section 3.2. (d) Recordation and Subordination. If the Director of Economic Development finds and determines that it is necessary to subordinate the Agency Loan to the 10 Agree: Colette's Children Home — 17432-17442 Keelson Lane Conventional Loan (including any refinancing permitted by this Agreement) because no economically feasible alternative method of financing the Project on substantially comparable terms and conditions, but without subordination, is reasonably available, the Agency shall subordinate the Agency Loan (but not the Regulatory Agreement) but only if the Conventional Lender provides written commitments in the subordination agreement reasonably designed to protect the Agency's investment in the event of a default. Such written commitments shall provide for, but not necessarily be limited to,: (i) A right of the Agency to cure a default on the Conventional Deed of Trust; (ii) A right of the Agency to negotiate with lender after notice of default from lender; (iii) An agreement that if prior to foreclosure of lender's loan, the Agency takes title to the Site and cures the default on the loan, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to the Agency; and (iv) A right of the Agency to purchase the Site from the Developer at any time after a default on the loan. (i) If the Agency agrees to subordinate the Agency Loan, Escrow agent is directed, on the Closing Date, to record against the Site the following documents in the following order of priority: (i) the Grant Deed; (ii) the Regulatory Agreement; (iii) the Notice of Restrictions; (iv) the Conventional Deed of Trust and then any other documents required to be recorded by the Conventional Lender; (v) the Agency Deed of Trust; and (vi) the Assignment of Rents and Leases. One or more Subordination Agreements, if required to effectuate the approved priority of the foregoing deeds of trust and Regulatory Agreement, shall be recorded at the direction of the Agency and Developer in accordance with the terms of this Agreement. (ii) If the Agency does not agree to subordinate the Agency Loan, Escrow agent is directed, on the Closing Date, to record against the Site the following documents in the following order of priority: (i) the Grant Deed; (ii) the Regulatory Agreement; (iii) the Notice of Restrictions; (iv) the Agency Deed of Trust; (v) the Assignment of Rents and Leases and (vi) the Conventional Deed of Trust and then any other documents required to be recorded by the Conventional Lender. (e) Escrow Agent Duties. The Escrow agent shall (i) record the documents as provided in subparagraph (d); (ii) file the UCC 1 attached as Exhibit "M" with the Office of the Secretary of State; and (iii) at Closing, deliver the original Agency Note to Agency and a copy of same to Developer and upon recordation deliver to Agency and Developer conformed copies of the Grant Deed, Agency Deed of Trust, the Conventional Deed of Trust and any other documents required to be recorded by the Conventional Lender, and the Regulatory Agreement. (f) Interest Bearing Accounts. Escrow agent shall hold all funds received in an interest bearing account with the interest accrued paid at Closing to the party depositing such funds. 11 Agree: Colette's Children Home — 17432-17442 Keelson Lane (g) Title Insurance. Escrow agent shall deliver to Agency at Closing an ALTA standard form lender's policy of title insurance in the amount of TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS ($2,262,833.00), issued by United Title Company, insuring in favor of Agency the priority of the Agency Deed of Trust and Regulatory Agreement in accordance with the priority established by this Agreement, with such endorsements as are requested by the Agency. 3.6. Agency's Conditions to Closing. Agency's obligations to deposit the Agency Loan funds described in Section 3.2 in Escrow for disbursement at Closing shall be conditioned and contingent upon satisfaction or Agency's waiver of each of the following conditions precedent (collectively, the "Agency's Conditions to Closing"): (a) Agency shall have in its account TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS ($2,262,833.00) of readily available Set Aside Funds. (b) Developer shall have completed the inspection of the Site for lead -based paint and asbestos hazards as required by Section 4.5(a) and shall have delivered the inspection report to the Agency; (c) The Agency shall have approved the final form of the Conventional Loan documents and Conventional Lender shall have deposited into Escrow the recordable Conventional Deed of Trust and other instruments to be recorded in connection with the Conventional Loan or Developer shall have delivered to Agency evidence satisfactory to Agency that Developer has obtained a binding loan commitment for the Conventional Loan from a lender satisfactory to Agency. If the Conventional Deed of Trust is recorded after the Close of Escrow for conveyance of the Site to Developer, then Developer shall provide to Agency at that time copies of the Conventional Loan documents and conformed copies of the Conventional Deed of Trust and any other documents required to be recorded by the Conventional Lender; (d) Developer shall have deposited in Escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow; (e) Developer shall have delivered to Agency and Agency shall have approved a Purchase and Sale Agreement between Developer and Seller and any amendments thereto, which provides for the sale of the Site to Developer for a purchase price equal to the lesser of (i) the appraised value of the Property as established by an appraisal prepared by a state - certified appraiser and approved by the Agency, or (ii) the amount of $2,175,000.00; (f) Developer shall have submitted to Agency and Agency shall have approved a Relocation Plan that complies with the requirements of Section 6038 of Title 25 of the California Code of Regulations. (g) Developer shall have delivered to Agency and Agency shall have approved a Phase 1 Environmental Site Assessment for the Site and the results of the inspection required by Section 4.5(a). 12 Agree: Colette's Children Home—17432-17442 Keelson Lane (h) Developer shall have delivered evidence acceptable to the Agency that Developer has obtained the insurance policies required by Section 4.3 of this Agreement. (i) Agency shall have approved the architect and general contractor for the Project; 0) Developer shall have delivered to the Agency a current certificate of good standing issued by the California Secretary of State's office and shall have delivered to the Agency a certified resolution of its Board of Directors authorizing Developer's execution and implementation of this Agreement; (k) The Agency shall have determined that Developer is in full compliance with the terms and conditions of this Agreement and all documents and instruments referred to herein or executed by Developer in furtherance of this Agreement; and (1) All conditions to Closing set forth in (i) the Purchase and Sale Agreement and any amendments thereto between Developer and the Seller for conveyance of the Site; and (ii) agreements and financing documents pertaining to Developer's financing of the Project have been satisfied (or waived by the appropriate party). In the event any of the Agency's Conditions to Closing are not satisfied (or waived by Agency), Agency may cancel the Escrow and terminate this Agreement by delivering ten (10) days prior written notice to Developer and the Escrow agent. Developer may nullify Agency's notice to terminate if, within such ten (10) day period Developer (at no cost to Agency) cures any unsatisfied Agency Conditions to Closing and notifies the Escrow agent of such cure. In the event of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Agency shall be returned to it with any interest earned on such funds; (ii) Developer shall be responsible for any escrow cancellation fees imposed by the Escrow agent; and (iii) this Agreement shall be terminated and the parties hereto shall have no further rights or obligations hereunder. 3.7 Developer's Conditions To Closing_ Developer's obligations to close Escrow shall be conditioned and contingent upon satisfaction or Developer's waiver of each of the following conditions precedent (collectively, the "Developer's Conditions to Closing"): (a) The Seller shall have executed the Grant Deed in recordable form and shall have deposited same in Escrow; (b) Agency shall have deposited in Escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow, including but not limited to the Agency Loan funds described in Section 3.2, the Agency Deed of Trust and the Regulatory Agreement; (c) All conditions to Closing set forth in (i) the Purchase and Sale Agreement and any amendments thereto between Developer and the Seller for conveyance of the Site; and 13 Agree: Colette's Children Home — 17432-17442 Keelson Lane (ii) agreements and financing documents pertaining to Developer's financing of the acquisition of the Site have been satisfied (or waived by the appropriate parry). In the event any of the Developer's Conditions to Closing are not satisfied (or waived by Developer), and provided Developer has fully performed its obligations hereunder, Developer may cancel the Escrow and terminate this Agreement by delivering ten (10) days prior written notice to Agency and the Escrow agent. Agency may nullify Developer's notice to terminate if, within such ten (10) day period Agency (at no cost to Developer) cures any unsatisfied Developer's Conditions to Closing and notifies the Escrow agent of such cure. In the event of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Developer shall be returned to it with any interest earned on such funds; (ii) Agency shall be responsible for any escrow cancellation fees imposed by the Escrow agent; and (iii) this Agreement shall be terminated and the parties hereto shall have no further rights or obligations hereunder. 3.8 Broker's Fees. Developer and Agency shall each indemnify, defend, and hold harmless the other from any claims or damages for payment of any real estate commissions or broker's fees or finder's fees arising out of the acts or representations of the other with respect to any of the transactions contemplated by this Agreement. 3.9 Use of Excess Proceeds of Conventional Loan. The proceeds of the Conventional Loan must be used exclusively for the payment of Project Costs pursuant to this Agreement; provided that, if the Conventional Loan is in an amount that, when added to the Agency Loan, exceeds Project Costs, then Developer shall either deposit such excess proceeds into the Capital Reserve Account or shall, if directed by the Agency, apply such excess proceeds to repayment of the Agency Loan. Developer acknowledges and agrees that the Agency Loan is intended to be gap financing and Developer must endeavor to maximize the amount of the Conventional Loan. SECTION 4. ACQUISITION AND REHABILITATION OF THE SITE. 4.1 General. The Project shall consist of the acquisition of the existing building containing a total of ten (10) units on the Site and the use of the Site as an affordable rental apartment complex in accordance with this Agreement and the Regulatory Agreement. It is anticipated that Developer will contract for performance of specific activities, including but not limited to activities such as relocation services, site inspections, and management of the Units. Such contracts shall not in any way diminish or waive Developer's obligations under this Agreement. 4.2 Rehabilitation of the Units. Developer shall obtain all necessary entitlements and permits and shall commence rehabilitation of the Units within the time set forth in the Schedule of Performance. Developer shall diligently prosecute its work so as to achieve completion of rehabilitation and rent up of the Project within the time set forth in the Schedule of Performance. Rehabilitation of the Units shall be planned and performed in a manner that will bring the Units into compliance with all applicable federal, state and local laws and requirements and in conformance with a Rehabilitation Plan approved by the Agency. 14 Agree: Colette's Children Home — 17432-17442 Keelson Lane 4.3 Insurance. Developer shall procure and maintain, during the term of this Agreement, at its sole cost and expense, until the date that Agency waives any such insurance requirement or requirements in writing, the following policies of insurance on a Project specific basis: (a) Workers' Compensation Insurance. Pursuant to California Labor Code Section 1861, Developer acknowledges awareness of Section 3700 et seq. of said code, which requires every employer to be insured against liability for workers' compensation. Developer covenants that it will comply with such laws and provisions prior to commencing any work of construction or rehabilitation on the Site. Developer shall maintain such Workers' Compensation Insurance in an amount not less than the statutory requirements in California for bodily injury and disease and must maintain employer's liability coverage in an amount not less than ONE MILLION DOLLARS ($1,000,000.00). Developer shall require all contractors to provide such Workers' Compensation Insurance for all of the subcontractor's employees. Developer shall furnish Agency with a certificate of waiver of subrogation under the terms of the Workers' Compensation Insurance and Developer shall similarly require all subcontractors to waive subrogation. (b) General Liability and Auto Insurance. Developer shall carry general commercial liability insurance, including coverage for bodily injury, property damage, products/completed operations and blanket contractual liability in an amount not less than TWO MILLION DOLLARS ($2,000,000.00) per occurrence and FOUR MILLION DOLLARS ($4,000,000.00) annual aggregate, combined single limit for bodily injury and property damage. All such insurance shall be provided by insurance companies admitted in California, or if not admitted in California, then reasonably acceptable to Agency. Such insurance shall name the Agency, the City of Huntington Beach, and their respective officers, contractors, agents, and employees acting in their official capacity, as additional insureds. Developer shall carry automobile insurance, including liability coverage for bodily injury and property damage in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence. Developer shall require its insurer to waive its subrogation rights against Agency and shall provide certificates of insurance evidencing same. (c) Property Insurance. Developer shall obtain and maintain in force, all - perils (to include fire and vandalism protection) property insurance with extended coverage endorsements thereon, on the Site, in an amount equal to the full replacement costs and/or value thereof; this policy shall contain a replacement cost endorsement naming the Agency as an insured and shall not contain a coinsurance penalty provision. The policy shall contain a lender's loss payable endorsement that such proceeds shall be used to repair or rebuild any Units or other improvements situated on the Site so damaged or destroyed; and, if not so used, such proceeds shall be paid to Agency. The proceeds of any such insurance payable to Agency shall be used for rebuilding or repair as necessary to restore the Site at the sole discretion of Agency. The policy shall name the Agency and the City of Huntington Beach and their respective officers, contractors, agents and employees acting in their official capacity as additional insureds. 15 Agree: Colette's Children Home — 17432-17442 Keelson Lane (d) Certificate of Insurance; Additional Insured Endorsements. Prior to the close of escrow, Developer shall furnish to Agency certificates of insurance and additional insured endorsements evidencing the foregoing insurance coverages as required by this Agreement. Such certificates and endorsements shall be subject to the reasonable approval of the City Attorney and shall provide the name and policy number of each carrier and policy and shall state that the policy is currently in force and shall promise to provide that such policies will not be cancelled without thirty (30) days prior written notice to Agency. 4.4 Indemnification. During the term of this Agreement, Developer agrees to and shall protect, defend, indemnify and hold the Agency and the City of Huntington Beach harmless from and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of (i) Developer's failure to perform any obligations as and when required by this Agreement or any document referred to herein, and (ii) the death of any person or any accident, injury loss, or damage whatsoever caused to any person or to the property of any person which shall occur on the Site and which shall be directly or indirectly caused by the acts of, or any errors or omissions of, the Developer or its officers, shareholders, directors, members, agents, servants, employees, contractors, or invitees. Developer shall not be responsible for, and the Agency shall protect, defend, hold harmless and indemnify Developer against any liability, loss, damage, cost, or expense (including reasonable attorney's fees and court costs) arising from or as a result of the gross negligence or willful misconduct of the Agency or its members, officers, officials, employees, agents, representatives, servants, or contractors. 4.5 Hazardous Materials (a) Lead -Based Paint and Asbestos Containing Materials. Before acquiring the Site, Developer shall inspect for lead -paint and asbestos hazards in accordance with Title X of the 1992 Housing and Community Development Act and the deliver the results of such testing to the Agency. Any lead -paint and asbestos hazards identified must be abated as part of the rehabilitation of the Site. In the event the full abatement cost for such hazards causes the rehabilitation costs in the Project Budget to increase in an amount that exceeds the sum of the available Agency Deposit Balance and the Deferred Developer Fee, Developer may request additional Set Aside funds to pay for such additional cost. The Agency Board of Directors, in its sole discretion, shall approve or disapprove any such loan request upon the recommendation of the Agency Executive Director and the Director of Economic Development. (b) Indemnification. Developer, from and after the Close of Escrow, and until a transfer, sale, or assignment of the Site upon which the following covenant shall then be the obligation of the transferee, purchaser, or assignee, shall indemnify, defend, and hold harmless the Agency and the City of Huntington Beach and their respective officers, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all liabilities (including penalties, fines and monetary sanctions) arising from a violation of state or federal law pertaining to (i) the storage of Hazardous Materials on the Site or (ii) contamination of the Site by a release of Hazardous Materials. Developer, prior to the Closing Date, shall provide to Agency a copy of any notices, orders, or reports concerning the presence of any Hazardous Materials on or affecting the Site that is in Developer's possession. As a condition 16 Agree: Colette's Children Home— 17432-17442 Keelson Lane precedent to the funding of the Agency Loan, Developer shall execute and deliver to the Agency an Environmental Indemnity, substantially in the form of Exhibit No. "J" to this Housing Agreement. 4.6 Security Financing; Right of Holders (a) Permitted Encumbrances. Developer shall be permitted to enter into mortgages, deeds of trust, conveyances, and leases -back or any other form of conveyance in which the Site is used as security for the purpose of securing loans of funds to be used for the implementation of the Project provided such conveyance (i) is for the purposes permitted herein and (ii) is given to a financial or lending institution or other acceptable person or entity capable of performing or causing to be performed Developer's obligations under this Agreement, including without limitation a pension fund, insurance company, or real estate investment trust. Any and all such loan amounts and security conveyances shall be subject to the prior approval of the Agency's Executive Director. (b) Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure. Whenever Agency shall deliver any notice or demand to Developer with respect to any breach by Developer in performance of this Agreement, it shall at the same time deliver a copy of such notice or demand to each approved holder of record of any mortgage, deed of trust, or other security interest which has previously requested such notice in writing. Each such holder shall (insofar as the rights of Agency are concerned) have the right, at its option within ninety (90) days after the receipt of the notice, to commence and thereafter to diligently proceed to cure or remedy such default and add the cost thereof to the security interest debt and the lien on its security interest. Any holder completing the improvements in accordance with this Agreement shall be entitled to a Release of Construction Covenants upon written request made to Agency. 4.7 Refinancing of Senior Loans. Developer shall have the right to refinance such senior loans as have been previously approved by the Agency, provided that Agency approves such refinancing in writing. Developer shall not obtain, and Agency shall have no obligation to approve, a new loan in an amount greater than 125% of the amount of the original loan from Conventional Lender. Any net proceeds obtained as a result of a refinancing must be used exclusively to implement physical improvements to the Site that have been approved by the Agency and Developer shall not take equity from the Project for any other purpose. 4.8 Developer Fee. Developer shall be entitled to receive a fee of ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000.00) to be earned and paid as follows: (1) $41,666.00 upon close of Escrow for acquisition of the Site, (2) $41,666.00 upon 100% qualification and acceptance of Eligible Tenants for the Affordable Units, and (3) $41,668.00 upon recordation of the Release of Construction Covenants. Developer agrees to defer any theretofore unpaid portion of its Developer Fee to the extent needed to pay for any cost overruns not funded and contingencies not otherwise funded by the sources of funds as described herein (the "Deferred Developer Fee"). The Deferred Developer Fee will be payable from Net Operating Income as described in Section 5.10 of this Agreement. 17 Agree: Colette's Children Home — 17432-17442 Keelson Lane 4.9 Legal Requirements. Developer hereby agrees to carry out acquisition, rehabilitation, construction (as defined by applicable law) and operation of the Project on the Site, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any requirement to pay state prevailing wages). It is the intent of the parties that, notwithstanding any other provisions of this Agreement, Developer's obligation applies only to the extent that a particular statute or regulation referenced herein or in the Regulatory Agreement applies to the Project. Developer hereby expressly acknowledges and agrees that the Agency has never affirmatively represented to the Developer or its contractor(s) for the Project in writing or otherwise, in a call for bids or otherwise, that the work to be covered by the bid or contract is not a "public work," as defined in Section 1720 of the Labor Code. Developer hereby agrees that it shall have the obligation to provide any and all disclosures, representations, statements, re -bidding, and/or identifications to the extent the Project triggers a requirement under Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that it shall have the obligation to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which to the extent the Project triggers a requirement under the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that it shall have the obligation, at its sole cost, risk and expense, to obligate any party to the extent the Project triggers a requirement under Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer shall indemnify, protect, defend and hold harmless the Agency and the City of Huntington Beach and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to Agency and City, from and against any and all loss, liability, damage, claim, cost, expense, and/or "increased costs" (including labor costs, penalties, reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in direct connection with the acquisition, construction (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Developer of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure by Developer to provide any required disclosure, representation, statement, re -bidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Developer to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by Developer to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. It is agreed by the parties that, in connection with the acquisition, construction (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), Developer shall bear all risks 18 Agree: Colette's Children Home— 17432-17442 Keelson Lane of payment or non-payment of state prevailing wages and/or the implementation Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. "Increased costs" as used in this Section shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. The foregoing indemnity shall survive termination of this Agreement. 4.10 Release of Construction Covenants. (a) Promptly after completion of the rehabilitation of the Units, as generally and specifically required by this Agreement and in particular the Scope of Development, the Agency shall furnish Developer with a Release of Construction Covenants in the form of Exhibit "N" to this Agreement upon written request therefor by Developer. Completion of the rehabilitation of the Units is understood and agreed to mean the point in time that: (1) the entire rehabilitation work, including all minor corrective items, is fully and finally complete, including full and final completion of the work of the general contractor and all subcontractors on the Project; (2) all approvals, inspections and certificates required to be issued by governmental authorities for the full occupancy and use of the Project have been issued; (3) all clean up at the Site is complete; (4) Developer has submitted and Agency has approved an audited cost certification setting forth the rehabilitation costs of the Project; and (5) the Project has been accepted by the Agency as having been completed in accordance with the approved Rehabilitation Plan. The Agency shall not unreasonably withhold such Release of Construction Covenants and such Release of Construction Covenants shall be issued so long as Developer has rehabilitated the Units in accordance with this Agreement and the Rehabilitation Plan approved by the Agency pursuant hereto. Such Release of Construction Covenants shall be, and shall so state, conclusive determination of satisfactory completion of all of the construction required by this Agreement. (b) The Release of Construction Covenants shall be in such form as to permit it to be recorded in the Recorder's Office of Orange County. A Release of Construction Covenants for less than the completed rehabilitation of all of the Units in the Project shall not be recorded. (c) If the Agency refuses or fails to furnish a Release of Construction Covenants after written request from Developer, the Agency shall, within twenty (20) working days of the written request, provide Developer with a written statement of the reasons the Agency refused or failed to furnish a Release of Construction Covenants. The statement shall also contain the Agency's opinion of the action Developer must take to obtain a Release of Construction Covenants. If the reason for such refusal is confined to the immediate availability of specific items or materials for landscaping, and/or minor items, the Agency will issue its Release of Construction Covenants upon the posting of a bond by Developer in an amount representing the fair value of the work not yet completed. If the Agency shall have failed to provide such written statement within said 20-working-day period, the Agency shall be deemed to have furnished the Release of Construction Covenants and, notwithstanding the last sentence of Section 4.10(b), shall execute same for recordation. (d) Such Release of Construction Covenants shall not constitute evidence of compliance with, or satisfaction of any obligation of Developer to the beneficiary of any Deed of 19 Agree: Colette's Children Home — 17432-17442 Keelson Lane Trust securing third party financing of the Project. A Release of Construction Covenants is not a notice of completion under Section 3093 of the California Civil Code. SECTION 5. USE OF THE SITE. 5.1 No Inconsistent Uses. Developer covenants and agrees, for itself, its successors, its assigns, and every successor in interest to the Site, or any part thereof, that for the period beginning on the Close of Escrow and ending on the expiration date of the Regulatory Agreement, Developer and such successors shall not devote the Site to uses inconsistent with the applicable zoning restrictions, this Agreement, and the Regulatory Agreement; provided that, in the event of any inconsistency, the provisions of the Regulatory Agreement shall prevail over this Agreement. 5.2 Reizulatory Agreement. At the Close of Escrow the Regulatory Agreement shall be recorded against the Site in the Priority set forth in Section 3.5(d). 5.3 Relocation (a) Relocation Plan. Developer shall use reasonable efforts to avoid displacing any existing tenants and/or persons residing in or on the Site. In the event, however, that off -Site relocation of existing tenants and/or persons residing in or on the Site becomes necessary as a result of Developer's implementation of the Project, Developer shall submit a relocation plan to Agency for review and approval ("Relocation Plan"). The Relocation Plan shall comply with the requirements of the California Relocation Assistance Act and any guidelines promulgated in connection therewith and shall also include the name, gender, age, ethnicity, household income, and amount of relocation payment to be paid; provided, however, that Developer shall not be obligated to provide any of the foregoing referenced personal information about relocatees if such relocatees refuse to provide such information or the gathering or provision of such information is contrary to applicable law. Developer shall comply with the requirements of all applicable relocation laws, including, but not limited to, the California Relocation Assistance Act, and shall comply with related tenant notice requirements and shall provide the Agency with true and correct copies of such notices to tenants. Developer shall also retain all required records and the originals and/or copies of tenant notices in its files as mandated by applicable law. No relocation payments may be made without the Agency's prior written approval. The relocation requirements of this Section do not apply to any tenants who qualify as Eligible Tenants (as such term is defined in the Regulatory Agreement) at the initiation of their tenancy but who are later required to move as a result of an increase in such tenant's household income. (b) Relocation Cost. Developer shall submit an application for disbursement of relocation payments supported by documentation acceptable to the Agency supporting the amount and use of such funds. 5.4 Maintenance of the Site. After acquisition and rehabilitation of the Site and for the remaining term of this Agreement, all Units must be maintained in compliance with Federal Housing Quality Standards (24 CFR § 982.401) and other applicable state and local laws 20 Agree: Colette's Children Home — 17432-17442 Keelson Lane and codes. In addition, Developer shall maintain the Site in accordance with the terms of the Regulatory Agreement. The Agency shall have the right at all reasonable times to enter and inspect the Site in order to ensure compliance with the foregoing requirements. In the event Developer fails to maintain the Site as required by this Section, Developer shall, within thirty (30) days after Agency's notification or Developer's own discovery of any deficiency, take all necessary steps to correct such deficiency, provided that, if such deficiency is not reasonably capable of being cured within thirty (30) days, Developer shall commence to cure said deficiency within thirty (30) days and diligently and in good faith continue to take all necessary steps to correct such deficiency. 5.5 Nondiscrimination. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, age, class; income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, or in the awarding of contracts for the Project, nor shall Developer, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof, or in the awarding of contracts for the Project. Developer shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Developer shall conduct affirmative marketing and minority outreach activities as required by Federal regulations. 5.6 Form of Nondiscrimination and Nonsegregation Clauses. The Developer shall refrain from restricting the rental, sale or lease of the property on the basis of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: (a) In Deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any 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 herein conveyed. The foregoing covenants shall run with the land.". (b) In Leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: 21 Agree: Colette's Children Home — 17432-17442 Keelson Lane That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c) In Contracts: "There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, 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 him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the land." 5.7 Effect and Duration of Covenants. The Developer has, concurrently with the execution of this Agreement, executed in recordable form the Regulatory Agreement. Every covenant and condition and restriction contained in the Regulatory Agreement shall remain in effect for sixty (60) years from the Effective Date of this Agreement (regardless of whether the Agency Loan has been repaid prior to the end of such 60-year period), except that the covenants against discrimination set forth in Sections 5.5 and 5.6 shall remain in effect in perpetuity. If, at the end of the 60-year period, an unpaid balance remains on the Agency Loan, Developer may choose to do either of the following: (a) Developer may choose to continue to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the Agency shall not require repayment of the balance of the Agency Loan and such loan shall not accrue any interest for the period during which said covenants, conditions and restrictions are maintained; or (b) Developer may choose not to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the entire principal balance of the Agency Loan plus all accrued interest on such loan shall immediately become due and payable. 5.8 Operating Reserves. Commencing with the year of completion of the Project, and every succeeding calendar year during the term of this Agreement, Developer shall deposit a minimum of ONE HUNDRED FIFTY DOLLARS ($150.00) per Unit, to the extent available from Net Operating Income (defined below), into the Operating Reserve Account. The Operating Reserve Account shall only be used to fund approved operating expenses and debt service that exceed the funds available from Net Operating Income. 5.9 Capital Reserves. Prior to the Agency's issuance of the Release of Construction Covenants for the Project, Developer shall deposit a minimum of ELEVEN 22 Agree: Colette's Children Home—17432-17442 Keelson Lane THOUSAND DOLLARS ($11,000.00) into the Capital Reserve Account for repairs and improvements to the Site. No later than thirty (30) days after the Capital Reserve Account has been created, Developer shall provide to Agency a pro forma statement concerning the account, for review and approval. Commencing with the year of completion of the Project, and every succeeding calendar year during the term of this Agreement, Developer shall deposit a minimum of THREE HUNDRED DOLLARS ($300.00) per Unit, to the extent available from Net Operating Income (defined below), into the Capital Reserve Account. The Capital Reserve Account shall only be used to fund the cost of repairs and improvements to the Site and to maintain the Site in compliance with the requirements of Section 5.4. Developer shall exhaust funds in the Capital Reserve Account prior to utilizing operating revenues to pay for repairs and improvements to the Site. Interest earned on the Capital Reserve Account shall remain in said account and be used as Capital Reserves. At any time during the term of the Regulatory Agreement, Agency, on ten (10) days prior written notice to Developer, may request that Developer submit to it updated, revised Capital Reserve Account statement. Agency, at its own expense, may audit any updated, revised Capital Reserve Account statement submitted to it by Developer. 5.10 Payment of Portion of Residual Receipts. (a) Payment to Agency. Commencing on the third anniversary of the Effective Date of this Agreement, and every succeeding year during the term of this Agreement, Developer must utilize FIFTY PERCENT (50%) of Net Operating Income for the previous one- year period ("Available Net Operating Income") to repay the Agency Loan. However, Developer may first utilize 100% of Available Net Operating Income to make payment of any theretofore unpaid portion of the Deferred Developer Fee, until paid in full. If a payment on the Agency Note is required by Developer pursuant to the terms hereof, Developer shall make such payment no later than one hundred twenty (120) days following the end of the applicable calendar year. (b) Definition of Net Operating Income. As used herein, the term "Net Operating Income" shall mean, for any reporting period (typically a calendar year), all income derived from the Site, including without limitation all tenant rent, fees and charges (excepting tenants' security deposits but including deposits forfeited by tenants), any rental subsidy payments received for the Units, the proceeds of business interruption and similar insurance, and the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project but excluding any interest income earned on the Capital Reserve Account and the tenant security deposits, less (i) payments of principal and interest, if any, required to be paid in such year by Developer with respect to any note, mortgage, or deed of trust (excepting the Agency Note) with respect to the Site or Project, (ii) all reasonable and customary expenses actually incurred (or to be incurred if accounted for on an accrual basis) in leasing, managing, operating, maintaining, and repairing the Site, (iii) all capital expenses incurred pertaining to the Site excepting those to be paid from the Capital Reserve Account, (iv) the required deposits into the Capital Reserve Account, and (v) reasonable and customary property management fees, social services and resident services fees, administrative costs, salaries, benefits, overhead costs, and such other and further reasonable and customary operating and management expenses incurred in operating the Site. Depreciation expenses shall not be a reduction against Net Operating Income. 23 Agree: Colette's Children Home — 17432-17442 Keelson Lane 5.11 Financial Statements. On a yearly basis, Developer shall submit copies of its annual tax return and annual audit and current audited financial statements, including an audited income and expense statement, balance sheet and statement of all changes in financial position, signed by an authorized officer of Developer. Developer shall also submit to Agency, on a yearly basis, a true and correct copy of Developer's financial statements for the Project clearly identifying the Project revenues, operating expenses, deposits to and withdrawals from the Project's Capital Reserve Account and Operating Reserve Account, and cash flow available for residual receipts payments. Before such statements are submitted, they must be reviewed and certified by an independent certified public accountant approved by the Agency to have been prepared in accordance with Generally Accepted Accounting Principles. After receipt of financial statements for the Project, Agency may request additional financial analyses or obtain a third party review at Agency's own expense, of financial statements for the Project to verify the accuracy of the payments by Developer on the Agency Note or the deposits into the Operating Reserve Account and Capital Reserve Account. 5.12 Operation of Project. Borrower shall lease, operate and manage the Project in full conformance with the terms of this Agreement and specifically the Regulatory Agreement. Further, all of the Units in the Project shall be designated as Affordable Units. Rents for the Affordable Units shall not exceed the applicable Affordable Rents. Not later than sixty (60) days after Close of Escrow, and for every year thereafter during this Agreement's term, Developer shall submit an annual, proposed budget to Agency for review and approval. 5.13 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 Project. Developer shall insert this provision in all contracts and subcontracts for work performed on the Project which involves the application of paint. 5.14 Barriers to the Disabled. Developer shall ensure that the Project shall be rehabilitated and operated to comply with all federal, state, and local requirements for access for disabled persons that apply to the acquisition and rehabilitation of existing multi -family rental units. SECTION 6. DEFAULTS AND REMEDIES. 6.1 Developer Defaults. The occurrence of any one or more of the following events shall constitute a "Material Default" by Developer hereunder if, after receiving written notice from the Agency as provided in Section 6.3 below identifying such event, Developer fails to cure said event within thirty (30) days; provided that if such default is not reasonably capable of being cured within thirty (30) days, Developer commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: (a) Developer has failed to Close Escrow to acquire fee title to the Site within sixty (60) days after the time set forth in the Schedule of Performance; (b) Developer fails to complete rehabilitation of the Units within the time set forth in the Schedule of Performance, as such time may be extended pursuant to this Agreement; 24 Agree: Colette's Children Home—17432-17442 Keelson Lane (c) Developer fails to observe or perform any material term of this Agreement or any agreement incorporated hereunder by reference including, but not limited to, the Regulatory Agreement, the Agency Note or the Agency Deed of Trust within the time set forth in this Agreement or any of the documents referred to herein; or (d) Developer knowingly and intentionally makes or delivers to Agency any statement, report, or certificate that is not true or correct in any material respect. In no event shall Agency be precluded from exercising remedies if the default is not cured within one hundred twenty (120) days, or Agency's rights under this Agreement become or are about to become materially jeopardized by any failure to cure a default. 6.2 Agency Defaults. The occurrence of any one or more of the following events shall constitute a "Material Default" by Agency hereunder if, after receiving written notice from Developer as provided in Section 6.3 below identifying such event, Agency fails to cure said event within thirty (30) days; provided that if such default is not reasonably capable of being cured within thirty (30) days, Agency commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: (a) Agency fails to observe or perform any material term of this Agreement within the time set forth in this Agreement, including but not limited to timely deposit into Escrow of the required portion of Agency Loan funds; or (b) Agency knowingly and intentionally makes or delivers to Developer any statement, report, or certificate that is not true or correct in any material respect. In no event shall Developer be precluded from exercising remedies, if the default is not cured within one hundred twenty (120) days, or Developer's rights under this Agreement become or are about to become materially jeopardized by any failure to cure a default. 6.3 Notice of Default. The non -defaulting party shall give written notice of any default under this Section to the defaulting party, clearly specifying the default. Copies of any notice of default given to the defaulting party shall also be given to any permitted lender requesting such notice. Any failure or delay in giving such notice or in asserting any of any party's rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive any party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 6.4 Ahencv's Remedies. (a) The Agency, at its option, may terminate this Agreement prior to the Close of Escrow in the event of any Material Default that the Developer fails to cure within the time set forth in Section 6.1 (subject to the right of notice and expiration of applicable cure periods). 25 Agree: Colette's Children Home — 17432-17442 Keelson Lane (b) Following the Close of Escrow, in the event of any Material Default that the Developer fails to cure within the time set forth in Section 6.1 (subject to the right of notice and expiration of applicable cure periods), the entire principal balance of the Agency Loan including all interest shall immediately become due and payable, and Agency shall have the option to: (a) demand full payment of the principal balance of the Agency Loan including all interest; (b) take over ownership and management of the Site; or (c) foreclose on the Site under the Agency Deed of Trust. 6.5 Developer's Remedies. Subject to any applicable cure periods and the general right to notice provided for in this Agreement, upon a default or breach of this Agreement by Agency, Developer may bring an action for specific performance of this Agreement or any term or provision hereof, or, if prior to the Close of Escrow, may terminate this Agreement. Developer may not sue for monetary damages. 6.6 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties hereto are cumulative, and the exercise by any 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. SECTION 7. GENERAL PROVISIONS 7.1 Developer's Warranties. Developer represents and warrants (1) that it has access to professional advice and support to the extent necessary to enable Developer to fully comply with the terms of this Agreement; (2) that it is duly organized, validly existing and in good standing under the laws of the State of California; (3) that it has the full power and authority to undertake the Project and to execute this Agreement; (4) that the persons executing and delivering this Agreement are authorized to execute and deliver such documents on behalf of Developer; (5) except as disclosed to the Agency in writing, there are no actions or proceedings pending or, to the best of the Developer's knowledge, threatened against the Developer before any court or administrative agency in any way connected with the Site or the Project which could adversely affect the Developer's ability to perform the activities contemplated hereunder; (6) neither this Agreement nor anything provided to be done hereunder violates or shall violate any contract, agreement or instrument to which the Developer is a party or which affects the Project or any part thereof; (7) the Developer is not in default in respect of any of its obligations or liabilities pertaining to this Agreement, nor is there any state of facts or circumstances or conditions or events which, after notice, lapse of time, or both, would constitute or result in any such default under this Agreement; and (8) the Developer has not entered into any agreements which will adversely affect the title to the Project or the Developer's right to develop and use the Project as provided in this Agreement, and the Developer will not enter into any such agreements after the date hereof. 7.2 Governing Law. The internal laws of the State of California shall govern the interpretation and enforcement of this Agreement. 26 Agree: Colette's Children Home — 17432-17442 Keelson Lane 7.3 Attorneys' Fees. In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. 7.4 Notices, Demands, and Communications Between the Parties. Formal notices, demands, and communications between Agency and Developer shall be sufficiently given i£ (i) personally delivered; (ii) delivered by same day or overnight courier (acknowledged by receipt showing date and time of delivery); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: If to Developer: Colette's Children Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 Attn: Pamela Hope, President If to Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Executive Director With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Notices personally delivered or delivered by courier shall be effective upon receipt or refusal to accept delivery. Mailed notices shall be effective on the earlier of (i) receipt of refusal to accept delivery, or (ii) noon on the second business day following deposit in the United States mail. 7.5 Acceptance of Service of Process. In the event that any legal action is commenced by Developer against Agency, service of process on Agency shall be made by personal service upon the Executive Director or the Agency Secretary, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Developer, service of process on Developer shall be made by in any manner provided by law, and shall be valid whether made within or without the State of California. 7.6 Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest in this Agreement, nor participate in any decision relating to this Agreement, that is in violation of any applicable law, regulation or ordinance. 7.7 Titles and Captions. Titles and captions are for convenience only and shall not be construed to limit or extend the meaning of this Agreement. 27 Agree: Colette's Children Home—17432-17442 Keelson Lane 7.8 Gender. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 7.9 Modifications. Any amendment, alteration, change, or modification of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. 7.10 Merger of Prior Agreements and Understandings. This Agreement and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written. 7.11 No Third Parties Benefited. This Agreement shall create no third -party beneficiary rights or any other rights in favor of any persons, firms or corporations, except as may be expressly stated in this Agreement. This Agreement is for the sole use and benefit of the parties hereto and is not for the use or benefit of any other person or entity. 7.12 Assurances to Act in Good Faith. Developer and Agency agree to execute all documents and instruments and to take all action, including timely depositing funds as required hereby, and shall use their respective best efforts to accomplish the acquisition and rehabilitation of the Site in accordance with the provisions hereof. 7.13 Warranty Against Payment of Consideration for Agreement. Except as provided in this Agreement, Developer warrants that it has not paid or given, and will not pay or give, any person any money or other consideration for obtaining this Agreement that is in violation of any law. 7.14 Nonliability of Agency Officials and Employ. No member, official, or employee of the Agency 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. 7.15 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against any party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 7.16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 7.17 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such 28 Agree: Colette's Children Home — 17432-17442 Keelson Lane provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 7.18. Extension of Times of Performance. Notwithstanding the foregoing, in addition to the specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in default during an event of Force Majeure. An extension of time for an event of Force Majeure shall be limited to the period of such event, and shall commence to run from the time of the commencement of the cause, provided notice by the party claiming such extension is sent to the other party within sixty (60) days of the commencement of the cause. In the event of such delay, the party delayed shall continue to exercise reasonable diligence to minimize the period of delay. Times of performance under this Agreement may also be extended by mutual written agreement by Agency and Developer. In addition, the Agency Executive Director shall have the authority on behalf of Agency to approve extensions of time not to exceed a cumulative total of one (1) year. 7.19 Inspection of Books and Records. The Agency or its designee shall have the right at all reasonable times to inspect the books, records and/or other documents of the Developer pertaining to the Site and/or the Project as pertinent to the purposes of this Agreement. 7.20 Waivers. The waiver by Agency or Developer of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. SECTION 8. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE This Agreement consists of thirty (30) pages and fifteen (15) attachments which constitute the entire understanding and agreement of the parties. This Agreement does not take effect until executed by the Developer and Agency. This Agreement, when executed by the Developer and delivered to the Agency, must be authorized, executed and delivered by the Agency within thirty (30) days after the date of signature by the Developer, or this Agreement may be terminated by the Developer on written notice to the Agency. The Agency Executive Director is hereby authorized and directed to take such other and further actions, and sign such other and further agreements and documents on behalf of the Agency as may be necessary or proper to effect the terms of this Agreement. [SIGNATURES APPEAR ON NEXT PAGE] 29 Agree: Colette's Children Home — 17432-17442 Keelson Lane IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "DEVELOPER" COLETTE' S CHILDREN HOME, INC., a California nonprofit public benefit corporation By: William O'Connell Its: Executive Director Agree: Colette's Children Home — 17432-17442 Keelson Lane "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: Chairperson ATTEST: By: Agency Secretary APPROVED AS TO FORM: By: General Counsel By: KANE, BALLMER & BERKMAN Agency Special Counsel 30 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "DEVELOPER" COLETTE' S CHILDREN HOME, INC:, a California nonprofit public benefit corporation Lo William O'Connell Its: Executive Director "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: 9�� 13 0-14- Chairperson A TTT7[1T. By: 1 14 t2.1 01i 'GeralCounkll Pt2,1101op Lo KANE, BALLMER & BERKMAN Agency Special Counsel 30 Agree: Colette's Children Home — 17432-17442 Keelson Lane >EXXHIBIT A Legal Description Legal Description of Property Commonly Known As 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL CALIFORNIA. APN: 165-234-14; 165-234-15 MAPS, RECORDS OF ORANGE COUNTY, Legal Description EXHIBIT B Site Map 17432-17442 Keelson Lane Huntington Beach, California [Behind This Page] Site Map Site Map 17432 —17442 Keelson Lane Huntington Beach, CA 92647 I(U'J Slater Avenue I lb s U 2 m 17432 - 17442 Keelson STREET NAMES ti Lane CITYBOUNDARY A/ Map produced by information contained in the City of Hundngton Beach Information Services Department STREET CENTERLINES (CLASS) e o Geographic Information System. Information warranted for City use only. Huntington Beach does not its Smadstreet Majoi +y 17 �i guarantee i✓ Collector •, completeness or accuracy, Map Produced on 11118/2008 /✓ Primary Secondary s. ��_ w s V �✓ Residential Travelway Allev \� ISOBATHS 0 120 240 HARBOR One inch equals 120 feet EXHIBIT "C" SCOPE OF DEVELOPMENT Developer's acquisition of the existing apartment buildings consisting of a total of ten (10) units located at 17432-17442 Keelson Lane in the City of Huntington Beach, the rehabilitation of those units in conformity with the Rehabilitation Plan approved by the Agency and applicable requirements of local, state and federal laws, rules and regulations, and the subsequent rental of the Units to Very Low Income Households and Low Income Households at Affordable Rents for a period of not less than 60 years, as further described in the Affordable Housing Agreement and the Regulatory Agreement. Scope of Development Page 1 of 1 EXHIBIT D PROJECT BUDGET SOURCES Agency Loan (Set Aside Funds) $ 2,262,833.00 Mortgage Loan $ 560,000.00 Total Sources $ 2,822,833.00 USES Acquisition & Closing Costs $ 2,186,788.00 Relocation Costs (incl. Relocation Plan preparation) 200,000.00 Rehabilitation Costs 257,000.00 Other Soft Costs 54,045.00 Developer Fee 125,000.00 Total Uses $ 2,822,833.00 Project Budget EXHIBIT "E" SCHEDULE OF PERFORMANCE ITEM OF PERFORMANCE TIME OF PERFORMANCE REFERENCE 1. Developer and Agency execute all Not later than twelve noon on the § 3.4(b); § 3.4(c). documents and deposit all documents and business day immediately prior to the funds into Escrow as required by this scheduled Closing Date. Agreement. 2. Closing Date. Not later than December 31, 2008. § 3.4(a). 3. Developer obtains the Approved Project Within one hundred eighty (180) days § 4.2 Plans and Permits for the Project and after the Closing Date. commences the rehabilitation work on the Site. 4. Developer submits a Management Plan and Within ninety (90) days after the § 4.4 of Regulatory Rehabilitation Plan to the Agency. Closing Date. Agreement Exhibit H 5. Developer completes rehabilitation of the Within one year after commencement of § 4.2 improvements on the Site and achieves rent the rehabilitation work on the Site. up of the Units. 6. Developer submits annual financial Within one hundred twenty (120) days § 5.11 statements and rent records/tenant eligibility after the end of each calendar year. certifications to the Agency. It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text of the Agreement. The summary of the items performance, in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule of Performance and the text of the Agreement, the text shall govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by the Developer and the Agency. The Agency Executive Director shall have the authority to approve extensions of time without action of the Agency's governing board, not to exceed a cumulative total extension of one (1) year. Schedule of Performance Page 1 of 1 EXHIBIT F Promissory Note [behind this page] Promissory Note [AGENCY LOAN] PROMISSORY NOTE SECURED BY DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED THERETO DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same, must be surrendered to Trustee for cancellation before reconveyance will be made. PROMISSORY NOTE SECURED BY DEED OF TRUST Principal Loan Amount: $2,262,833.00 Interest: 0% Huntington Beach, California Note Date: i /6e/5, 2008 FOR VALUE RECEIVED, the undersigned ("Maker") hereby promises to pay to the order of the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic ("Holder"), at a place designated by Holder, the principal sum of TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY- THREE DOLLARS ($2,262,833) or such portion thereof as is advanced from Holder to Maker rsuant to an Affordable Housing Agreement (the "Agreement") dated as of /� , 2008 by and between Maker ("Developer" therein) and Holder ("Agency" therein), plus interest at the rate of ZERO PERCENT (0%) simple interest,. The Agreement is hereby incorporated by reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement. 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 (th "Site") pursuant to the Agreement and the Deed of Trust and Assignment of Rents datede1l l__.IT-, 2008, executed by the Maker,("Trustor" therein) and recorded in the Recorder's Office of Orange County, California on geyq 45j;Z ) , as Document No.&QgQQ®a980� (the "Agency Deed of Trust"). The obligatio of the Maker set forth in this Note is subject to acceleration as set forth in the Agreement. The Agreement and the Agency Deed of Trust are public records on file in the offices of the Holder. 1. Agency Loan. This Note evidences the obligation of the Maker to the Holder for the repayment of Set Aside Funds loaned to the Maker by the Holder (the "Agency Loan") to finance the acquisition of the Site and implementation of the Project pursuant to the Agreement. The Maker shall not make any sale, assignment or conveyance, or.transfer in any other form, of the Site, or any part thereof, or interest therein without the express written consent of the Holder as set forth in Section 2.5 of the Agreement. 2. Payment of Obligation. Commencing on the third anniversary of the Effective Date of the Agreement, and every succeeding year during the 60-year term of this Agency Promissory Note Page 1 of 4 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane Note, Maker must utilize FIFTY PERCENT (50%) of Net Operating Income for the previous one-year period ("Available Net Operating Income") to repay the Agency Loan. However, Maker may first utilize 100% of Available Net Operating Income to make payment of any theretofore unpaid portion of the Deferred Developer Fee, until paid in full. If a payment on this Note is required by Maker pursuant to the terms hereof, Maker shall make such payment no later than one hundred (120) days following the end of the applicable calendar year. The term "Net Operating Income" shall mean all income derived from the Site, including without limitation all tenant rent, fees and charges (excepting tenants' security deposits but including deposits forfeited by tenants), any rental subsidy payments received for the Units, the proceeds of business interruption and similar insurance, and the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project, but excluding any interest income earned on the Capital Reserve Account and on the tenant security deposits, less (i) payments of principal and interest, if any, required to be paid in such year by Maker with respect to any note, mortgage, or deed of trust (excepting this Note) with respect to the Site or Project, (ii) all reasonable and customary expenses actually incurred (or to be incurred if accounted for on an accrual basis) in leasing, managing, operating, maintaining, and repairing the Site, (iii) all capital expenses incurred pertaining to the Site excepting those to be paid from the Capital Reserve Account, (iv) the required deposits into the Capital Reserve Account, and (v) reasonable and customary property management fees, social services and resident services fees, administrative costs, salaries, benefits, overhead costs, and such other and further reasonable and customary operating and management expenses incurred in operating the Site. Depreciation expenses shall not be a reduction against Net Operating Income. Prepayment (a) Penalties. Maker may prepay the principal balance of this Note at any time during its 60-year term without penalty. However, even if Maker prepays the entire balance of this Note including all accrued interest, the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement shall remain in full force and effect for the full 60-year term as specified therein and Maker shall not be entitled to a reconveyance of the Agency Deed of Trust so long as the Regulatory Agreement remains in effect. (b) Effect on Covenants. If, at the end of the 60-year term of this Note, an unpaid balance remains on this Note, Maker may choose to do either of the following: (a) Maker may choose to continue to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the Holder shall not require repayment of the balance of this Note and the Agency Loan shall not accrue any interest for the period during which said covenants, conditions and restrictions are maintained; or (b) Maker may choose not to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the entire principal balance of the Agency Loan plus all accrued interest on the Agency Loan shall immediately become due and payable. 4. Acceleration of Obli ag tion. Upon the occurrence of a uncured Material Default of Maker under this Note, the Agency Deed of Trust or any obligation secured thereby (including the Agency Promissory Note Page 2 of 4 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane obligations in the Agreement and the Regulatory Agreement), or in any other instrument now or hereafter securing the obligations evidenced hereby, then, and in any of such events, Holder may, at its option, declare this Note and all the obligations hereby evidenced 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. 6. Collection Costs; Attorne sue' Fees. If any attorney is engaged by Holder because of any event of an uncured Material Default under this Note or the Agency Deed of Trust or to enforce any provision of either instrument, whether or not suit is filed hereon, Holder shall bear its own attorney's fees and costs. 7. Severability. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 8. Modifications. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder. 9. Us a. Notwithstanding any provision in this Note, Agency 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 to be governed and construed in accordance with the laws thereof. [Remainder of Page Intentionally Left Blank; Signature On Following Page] Agency Promissory Note Page 3 of 4 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane written. IN WITNESS WHEREOF, Maker has executed this Note as of the date and year first above "MAKER" COLETTE' S CHILDREN' S HOME, INC., a California nonprofit public benefit corporation By Pamela pe, President Agency Promissory Note Page 4 of 4 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane EXHIBIT G Deed of Trust [behind this page] Deed of Trust ®y Recorded in Official Records, Orange County RECORDING REQUEM 9i Tom Daly, Clerk -Recorder LAWYERSTI E 11111111111111111111111111111111!111111111111111111111111111 NO FEE 2009000088035 04:30pm 02/25/09 230 59 DI A36 13 Order No. -3 a?2-363q—JT— ) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 } Escrow No. } Loan No. ) WHEN RECORDED MAIL TO: } } Redevelopment Agency of the } City of Huntington Beach ) 2000 Main Street ) Huntington Beach, CA 92648 ) Attn: Agency Secretary zry) ) SPACE ABOVE THIS LINE FOR RECORDER'S USE] EXEMPT FROM RECORDING FEE PER GOV. CODE § 273831 APN: 165-234-14; 165-234-15 [AGENCY LOAN] DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO This DEED OF TRUST WIT ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO ("Deed of Trust"), made A�'2008, between COLETTE'S CHILDREN' S HOME, INC., a California non-profit public benefit corporation, herein called TRUSTOR, whose address is 17301 Beach Blvd., #23, Huntington Beach, CA 92647; and THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, herein called TRUSTEE, and THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, herein called BENEFICIARY, WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the City of Huntington Beach, County of Orange, State of California, described as: SEE EXHIBIT "A" ATTACHED HERETO together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS ($2,262,833) with interest thereon, according to the terms of that certain promissory note of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the performance of Trustor's obligations under that certain "Affordable Housing Agreement" by and between Trustor ("Developer" therein) and Beneficiary ("Agency" therein) Agency Deed of Trust Agree: Colette's Children's Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA Document-Year.DoclD 2009.88035 Page: 1 of 13 Order: dan Comment: dated,, EC.45 7a--4z., /.j , 2008; (3) the performance of Trustor's obligations under that certain "Regulatory Agreement and Declaration of Covenants and Restrictions", by and between Trustor ("Owner" therein) and Beneficiary ("Agency" therein) dated,,�a! =r�J - /5- , 2008; (4) the performance of each agreement of Trustor incorporated by reference or contained herein; and (5) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or its successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County September 17, 1964, and in all other counties September 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely: COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 566 Kings 958 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 1I0 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solana 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427 Calaveras 185 338 Madera 911 136 San Benito 300 405 stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 l Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 E1 Dorado 704 635 Merced 1660 753 Salt Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6625 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633 Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774 shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivisions A and B (identical in all counties, and printed on pages 4, 5 and 6 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law. The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth. Agency Deed of Trust Agree Colette's Children's Home, Inc. — 17432.17442 Keelson Lane Description: Orange,CA Document—Year.DocID 2009.88035 Page: 2 of 13 Order: dan Comment: DO NOT RECORD The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein. A. To protect the security of this Deed of Trust, Trustor agrees: 1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary lire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder to invalidate any act done pursuant to such notice. 3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same is such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. Agency Deed of Trust Agree. Colette's Children's Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA Document-Year.DoclD 2009.88035 Page: 3 of 13 Order: dan Comment: B. It is mutually agreed: 1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition or proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid and that all other obligations secured hereby, including but not limited to Trustor's obligations under the Regulatory Agreement and Declaration of Covenants and Restrictions, have been performed as agreed, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or be a receiver to the appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. b) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. Agency Deed of Trust Agree: Colette's Children's Home, Inc, — 17432.17442 Keelson bane Description: Orange,CA Document-Year.DocID 2009.88035 Page: 4 of 13 Order: dan Comment: After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. 7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledges, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. Agency Deed of Trust Agree: Colette's Children's Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA Document-Year.DocID 2009.88035 Page: 5 of 13 Order: dan Comment: DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO TRUSTEE: The undersigned is the legal owner and holder of the note or notes of all indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied and all other obligations secured by the foregoing Deed of Trust, including but not limited to Trustor's obligations under the Regulatory Agreement and Declaration of Covenants and Restrictions, have been performed as agreed; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, and all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated Please mail Deed of Trust, Note and Reconveyance to Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. Agency Deed of Trust Agree: Colette's Children's Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA Document-Year.DoclD 2009.88035 Page: 6 of 13 Order: dan Comment: DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH a public body, corporate and politic TRUSTEE Agency Deed of Trust Agree: Colette's Children's Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA Document-Year.Doc1D 2009.88035 Page: 7 of 13 Order: dan Comment: STATE OF CALIFORNIA COUNTY OF ORANGE On Z. , 200_1 before me, f -(�,� Y C:.ta� . T - a NQtary Public, personally appeared Ag :!a a.- tt,0 rq-e_ , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/Fw subscribed to the within instrument and acknowledged to me that he/she&hey executed the same in hislher/,eir authorized capacity(ies), and that by hig/herAheir-signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California-tla,t the foregoing paragraph i5,.true and corre t. Signature of Trustor COLETTE'S CHILDREN'S HOME, INC., a California nonprofit public benefit corporation i By - „— Pamela Ho e, Pre ' ent Agency Deed of Trust Agree: Colette's Children's Home, Inc.-17432-17442 Keelson Lane ] PATRICIA T GARC AI COMM. 01749037 cwlurrcoaratrr (This space for official notarial seal) Description: Orange,CA Document-Year.DoclD 2009.88035 Page: 8 of 13 Order: dan Comment: RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS RIDER TO DEED OF TRUST WITH RIDER ATTACHED ("Rider"), is made as of2008, by COLETTE'S CHILDREN'S HOME, INC., a California nonprofit public benefit corporation ("Trustor") and THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Beneficiary"), as follows: 1. Part of Deed of Trust. This Rider is made a part of that certain Deed of Trust With Assignment of Rents ("Deed of Trust"), of even date hereof, to which this Rider is attached. 2. Conflict. In the event of any conflict between the terms of this Rider and the terms of the Deed of Trust, the terms of this Rider shall control. lIntentionally Omitted.l 4, Condemnation. Section B.1 of the Fictitious Deed of Trust incorporated into the Deed of Trust shall be modified to provide that Beneficiary shall not be entitled to any awards or . damages payable directly or indirectly by reason of a condemnation or proposed condemnation affecting all or any part of, or any interest in, the Property, brought by or pursuant to the direction of Beneficiary. 5. Default. The term "default" as used in the Deed of Trust shall mean a "Material Default" as defined in the Agreement or Regulatory Agreement. IN WITNESS WHEREOF, Trustor and Beneficiary have executed this Rider to Deed of Trust With Assignment of Rents as of the date of Beneficiary's acknowledgement hereinbelow, to be effective for all purposes as of the day and year first set forth above. [end — signature page follows) Agency Deed of Trust Agee: Colette's Children's Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA DOcument-year.DoclD 2009.88035 Page: 9 of 13 Order: dan Comment: "TRUSTOR" COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation G � By Pamela Hope resident `BENEFICIARY" THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, �:• """ a public body, corporate and politic By: Chairperson ;f. ATTEST- 4 Agency Secretary REVIEWED AND APPROVED AS TO FORM: By., •1,1 . Cl General Counsel By. Lel KA E BALLMER & BERKMAN Agency Special Counsel Agency Deed of Trust Agree: Colem's Children Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA Document-year.DoclD 2009.88035 Page: 10 of 13 Order: dan Comment: ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE } On January 28, 2009 before me, P. L. Esparza, Notary Public, personally appeared Robin Lugar and Keith Bohr who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seat. P Maaza'° Commiselon # 1599179 Nofcuy PLOC - Callfolft carps County My Comm. Fxplra Aug 4. 2W9 _ v (Notary Signatur Description: Orange,CA Document-Yeaz-.DOCID 2009.88035 Page: 11 of 13 Order: dan Comment: State of California County of Orange f ) On �t Y Z 2 Y before me, I LA4V i 1j a- a Notary Public, personally ap are who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/ subscribed to the within instrument and acknowledged to me that l-Ishe/they executed the same in"/her/tbosif authorized capacity(ies), and that by IarSlher/theft signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify u er PENALTY ¢ia PERJURY der the laws of the State of California that the foregoing aragraph is jie and correct. WITNES my h a �o 1 Signature (Seal) PA J �c�a } "} COS. 91749037 State of California County of Orange On before me, , a Notary Public, personally appeared I , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) isfare 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature, Agency Deed of Trust Agree: Colette's Children's ):come, Inc. — 17432-17442 Keelson Lane (Seal) Description: 0range,C-4 Document-Year.DocID '009.88035 Page: 12 of 13 Order: dan Comment: EXHIBIT "A" TO DEED OF TRUST LEGAL DESCRIPTION OF PROPERTY COMMONLY KNOWN AS 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 Agency Deed of Trust Agree: Colette's Childma's Home, Inc. - 17432-17442 Keelson Lane Description: Orange,CA Document-Year.DoCID '009.88035 Page: 13 of 13 Order: dan comment: EXHIBIT H Regulatory Agreement [behind this page] Regulatory Agreement RECORDING REQUESTED BY LAWYERS TITLE FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City C.'.l-&-i'K (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code §27383) APN: 165-234-14; 165-234-15 This Document was electronically recorded by Lawyers Title Company B Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder 11111111111111111111111111111111111111111111111111111111111111111 NO FEE 2009000088031 04:30pm 02/25/09 230 59 Al2 D02 20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement") is made and entered into this /,STD day of , 2008, by and among THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency") and COLETTE'S CHILDREN' S HOME, INC., a California nonprofit public benefit corporation ("Owner"). RECITALS: A. Agency is responsible for the use of certain low- and moderate -income housing funds pursuant to California's Community Redevelopment Law [California Health & Safety Code §§33000, et seq.] ("Set Aside Funds"). B. Agency and Owner ("Developer" therein) have entered into that certain Affordable Housing . Agreement, , dated2008 (the "Housing Agreement"), concerning Owner's acquisition and rehabilitation of that certain real property, to be owned in fee by Owner, more particularly described in Attachment No. 1 attached hereto and incorporated by reference herein (the "Site"). The Housing Agreement describes the "Project" which generally consists of Owner's acquisition of the existing apartment buildings consisting of a total of ten (10) dwelling units on the Site and subsequent rehabilitation and management thereof as an affordable rental housing complex, each of the dwelling units to be restricted to Very Low Income Households and Low Income Households. The Housing Agreement is hereby incorporated herein by this reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to such terms in the Housing Agreement. C. Owner has executed that certain promissory note (the "Agency Note") dated 2008, pursuant to which Agency has provided Owner with a loan of Set Aside Funds in the principal amount of TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS ($2,262,833) ("Agency Regulatory Agreement Page 1 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane Loan"). The Agency Note is secured by a Deed of Trust With Assignment of Rents With Rider Attached dated on or about the date of the Note, naming Agency as beneficiary ("Agency Deed of Trust"). D. Agency and Owner 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 to Very Low Income Households and Low Income Households at Affordable Rent in accordance with the terms set forth below for the term of this Agreement. AGREEMENT: NOW, THEREFORE, the Owner and Agency declare, covenant and agree, by and for themselves, their heirs, executors, administrators and assigns, and all persons claiming under or through them, that the Site, for the term of this agreement, shall be held transferred, encumbered, used, sold, conveyed, leased and occupied, subject to the covenants and restrictions hereinafter set forth: 1. DEFINITIONS. 1.1 Affordable Low Income Unit. As used in this Agreement, the term "Affordable Low Income Unit" shall mean one of the six (6) rental dwelling units in the Project restricted to occupancy by Low Income Households, consisting of two (2) one -bedroom units, two (2) two -bedroom units and two (2) five -bedroom units. The term "Affordable Low Income Unit" and "Affordable Low Income Units" shall be used as the context mandates and shall be reasonably interpreted in light of the context in which the term appears. 1.2 Affordable Rent. As used in this Agreement, the term "Affordable Rent" shall mean, for Affordable Low Income Units, rental rates not to exceed "lower income" affordable rent as defined by California Health & Safety Code Section 50053(b)(3) or its successor and for Affordable Very Low Income Units, rental rates not to exceed "very low income" affordable rent as defined by California Health & Safety Code Section 50053(b)(2) or its successor. Affordable Rent shall include a reasonable utility allowance for tenant -paid utilities based on the Orange County Housing Authority's published utility schedules. 1.3 Affordable Very Low Income Unit. As used in this Agreement, the term "Affordable Very Low Income Unit" shall mean one of the four (4) rental dwelling units in the Project restricted to occupancy by Very Low Income Households, consisting of two (2) one - bedroom units and two (2) two -bedroom units. The term "Affordable Very Low Income Unit" and "Affordable Very Low Income Units" shall be used as the context mandates and shall be reasonably interpreted in light of the context in which the term appears. 1.4 Affordable Unit. As used in this Agreement, the term "Affordable Unit" shall mean one of the ten (10) rental dwelling units in the Project restricted to occupancy by Low Income and Very Low Income Households. The term "Affordable Unit" and "Affordable Units" Regulatory Agreement Page 2 of 17 Agree: Colette's Children's Home, Inc.—17432-17442 Keelson Lane shall be used as the context mandates and shall be reasonably interpreted in light of the context in which the term appears. 1.5 Eligible Tenant. As used in this Agreement, the term "Eligible Tenant" shall mean any person eligible to rent an Affordable Unit as set forth in this Agreement. 1.6 Low Income Households. As used in this Agreement, the term "Low Income Households" shall mean persons and families whose income does not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the California Department of Housing and Community Development. If the federal standards are discontinued, the term "Low Income Households" shall mean persons and families whose income does not exceed 80% of Median Income adjusted for family size. 1.7 Median Income or Orange County Median Income. For purposes of this Agreement, the terms "Median Income" and "Orange County Median Income" shall mean the median income for the Orange County Primary Metropolitan Statistical Area, with adjustment for household size, as estimated annually by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937 as amended and published by California's Housing and Community Development Department pursuant to Health and Safety Code section 50093. 1.8 Unit and Units. As used in this Agreement, the term "Unit" shall mean one of the ten (10) dwelling units in the Project, and the term "Units" shall mean two or more of the ten (10) 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. 1.9 Very Low Income Households. As used in this Agreement, the term "Very Low Income Household" shall mean persons and families whose income does not exceed the qualifying limits for very low income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the California Department of Housing and Community Development. If the federal standards are discontinued, the term "Very Low Income Households" shall mean persons and families whose income does not exceed 50% of Median Income adjusted for family size. 2. TERM OF AGREEMENT, PRIORITY OF AGREEMENT; USE OF PROPERTY. As required by California Health and Safety Code Section 33334.3, this Agreement shall remain in effect for not less than the loner of. (a) fifty-five (55) years after the date on which a Release of .Construction Covenants for the Project is issued by the Agency; or (b) sixty (60) years after the Effective Date of the Housing Agreement, notwithstanding the payment in full of the Agency Loan. This Agreement is secured by the Agency Deed of Trust and Owner shall not be entitled to a reconveyance of the Agency Deed of Trust prior to the expiration of the 60-year term of this Agreement. This Agreement shall unconditionally be and remain at all times prior and superior to the lien created by the Conventional Deed of Trust and Regulatory Agreement Page 3 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane any other of the Conventional Loan documents and all of the terms and conditions contained therein and to the lien of any new mortgage debt which is for the purpose of refinancing all or any part of the Conventional Loan. Owner hereby covenants and agrees that the Project will be owned, managed, and operated as affordable rental housing for Very Low Income Households and Low Income Households for the term of this Agreement and that the Affordable Units will be rented to Eligible Tenants at rents that do not exceed Affordable Rents. To that end, and for the term of this Agreement, the Owner hereby represents, covenants, warrants and agrees as follows: 2.1 Schedule. The Project activities shall be accomplished within the time provided in the Schedule of Performance, which is attached to the Housing Agreement. 2.2 Construction Covenant. Owner hereby covenants and agrees on behalf of itself and its successors and assigns in the Site or any portion thereof or any improvements thereon or any interest therein that Owner and such successors and assigns shall rehabilitate the Units in accordance with the Housing Agreement (including but not limited to the Scope of Development), the Redevelopment Plan for the Huntington Beach Redevelopment Project, this Agreement, and plans approved by the City of Huntington Beach. 2.3 Facilities. All of the Units in the Project shall contain facilities adequate for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state and local laws, codes and regulations. The rehabilitation and maintenance of the Units shall comply with the City's building code, as applicable, and all other applicable local codes, rehabilitation standards, ordinances and zoning ordinances in effect, and the Units shall be decent, safe and sanitary and shall conform to the building, electrical, plumbing, mechanical and energy codes that have been adopted by the City of Huntington Beach. To the extent applicable, the Project shall comply with the accessibility requirements at 24 CFR Part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and, if applicable, the design and construction requirements at 24 CFR 100.205 for covered multifamily dwellings, as defined at 24 CFR 100.201, which implements the Fair Housing Act (42 U.S.C. 3601-3619). 2.4 Residential Use. None of the Units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park, or any other use that is inconsistent or incompatible with this Regulatory Agreement. 2.5 Conversion of Units. No part of the Project will at any time be owned by a cooperative housing corporation nor shall the Owner take any steps in connection with the conversion to such ownership or uses to condominiums, or to any other form of ownership without prior written approval by Agency. 2.6 Tenant Preference. All of the Affordable Units will be made available to Eligible Tenants at Affordable Rent in accordance with the terms of this Agreement, and the Owner shall not give preference to any particular class or group in renting the Affordable Units Regulatory Agreement Page 4 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane in the Project, except to the extent that the Affordable Units are required to be leased or rented to Eligible Tenants and except as provided in Section 3.6 below. 2.7 Tenant Protections. Owner shall comply with the following tenant protection provisions: a. The lease of an Affordable Unit must be for not less than one year, unless by mutual agreement between tenant and Owner. b. The lease may not contain any of the following provisions: (1) Agreement by the tenant to be sued, to admit guilt or to a judgment in favor of Owner in a lawsuit brought in connection with the lease; (2) Agreement by the tenant that the Owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the Unit after the tenant has moved out of the Unit. The Owner may dispose of this personal property in accordance with state law. (3) Agreement by the tenant not to hold the Owner or the Owner's agents legally responsible for any action or failure to act, whether intentional or negligent; (4) Agreement by the tenant that the Owner may institute a lawsuit without notice to the tenant; (5) Agreement by the tenant that the Owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; (6) Agreement by the tenant to waive any right to a trial by jury; (7) Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and (8) Agreement by the tenant to pay attorney's fees or other legal costs if the tenant wins in a court proceeding by the Owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. 2.8 Termination of Tenancy. Owner, its successors or assigns, may not terminate the tenancy or refuse to renew the lease of a tenant, except (i) for serious or repeated violation of the terms and conditions of the lease; (ii) for violation of applicable federal, state, or local law; (iii) violation of occupancy rules as described in Section 3 below; or (iv) for other Regulatory Agreement Page 5 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane good cause. Any termination or refusal to renew must be preceded by not less than 30 days by the Owner's service upon the tenant of a written notice specifying the grounds for the action. 3. OCCUPANCY OF PROJECT BY ELIGIBLE TENANTS. Owner hereby represents, warrants, and covenants as follows: 3.1 Income Restrictions. Except as expressly provided herein, throughout the term of this Agreement, the Affordable Units shall be rented only to, and occupied only by, Very Low Income Households and Low Income Households, as needed to achieve the required mix of Affordable Very Low Income and Affordable Low Income Units. One of the two -bedroom Affordable Low Income Units may be occupied by a resident manager who qualifies as an Eligible Tenant. Each Affordable Unit shall be rented at a rate not to exceed the applicable Affordable Rent. 3.2 Rental Rates. Owner shall rent the Affordable Units to Eligible Tenants at no more than the allowable Affordable Rents for a household size appropriate to the Unit, which is the number of bedrooms in the Unit plus one. Therefore, for example, a two -bedroom Affordable Very Low Income Unit shall be rented at no more than the Affordable Rent for a three -person Very Low Income Household. The rental rates for the Affordable Units shall be adjusted annually based upon annual updates of the applicable income and rent standards, including but not limited to updates published by the California Housing and Community Development Department and the United States Department of Housing and Urban Development. In no event shall any of the Affordable Units be rented at a rate greater than the applicable Affordable Rent for the Unit. Failure to comply with the affordability requirements of this Agreement is an event of default under the terms of the Agency Loan. Subject to the right to cure, the Agency Loan of Set Aside Funds will be due and payable immediately if the Affordable Units do not meet the affordability requirements of this Agreement. 3.3 OccupancyBy Eligible Tenant. An Affordable Very Low Income Unit initially occupied by an Eligible Tenant shall be deemed occupied by an Eligible Tenant until such Affordable Unit is vacated, even if the tenant's household income subsequently increases to an amount that exceeds the maximum allowable income level for a Very Low Income Household, so long as satisfactory actions are taken to ensure that all vacancies are filled in accordance with this Agreement until the noncompliance is corrected. While an increase in an Eligible Tenant's household income may, after initially qualifying, subsequently exceed the allowable income level for a Very Low Income Household, such a subsequent increase in household income shall not exceed the allowable income level for a Low Income Household. If at any time a tenant's household income increases, resulting in disqualification of such tenant as a Low Income Household such tenant shall have a period of one hundred eighty (180) 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 Regulatory Agreement Page 6 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane the time period within which the tenant must relocate. If the City's Director of Economic Development, acting on behalf of the Agency, determines in his or her sole discretion that a hardship exception is justified by the circumstances, he or she may extend the relocation period for up to a maximum of ninety (90) additional days. The provisions set forth in this Section 3.3 shall apply only to the extent such provisions are not in conflict with any applicable federal or state law or any regulatory agreement affecting the Project that is recorded in superior priority to this Agreement. 3.4 Maximum Occupancy. The following maximum occupancy limits shall apply. The maximum number of persons that may occupy a one -bedroom Unit is three, the maximum number of persons that may occupy a two -bedroom Unit is five and the maximum number of persons that may occupy a five -bedroom unit is eleven. Owner shall be responsible for enforcing this maximum occupancy limit. Upon discovery of a violation of this Section 3.4, Owner shall immediately notify the Eligible Tenant of record in writing ("Occupancy Violation Notice"). In the Occupancy Violation Notice, Owner shall inform the Eligible Tenant of the occupancy violation and provide the Eligible Tenant with an opportunity to cure the violation within thirty (30) days from the date of the Notice. It shall not be a violation of this Agreement if a household occupying a Unit in the Project prior to Initial Rehabilitation (as defined in Section 3.6(a)) exceeds the maximum occupancy limit; provided that, any subsequent increase in the size of such a household or any change in the composition of such a household that results in a household size that continues to exceed the maximum occupancy limit for the Unit shall be a violation of this Agreement. In addition to the maximum occupancy limits set forth in this Section, Owner agrees that it will not rent a five -bedroom Unit to a household consisting of fewer than five persons. 3.5 Income Computation. Immediately prior to a prospective tenant's occupancy of an Affordable Unit, Owner shall obtain and maintain on file an income computation and certification form from such prospective tenant dated immediately prior to the date of initial occupancy of an Affordable Unit by such prospective tenant. Owner shall verify that the income information provided by an applicant is accurate by following all applicable Agency policies and procedures and by taking one or more of the following steps as a part of the verification process: (i) obtain two (2) pay stubs from the most recent pay periods; (ii) obtain a written verification of income and employment from applicant's current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income as is reasonably satisfactory; or (v) obtain such other information as may be reasonably required. Owner shall update the foregoing records annually and shall provide copies of updated tenant eligibility records and monthly rental records to 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. Costs for such an audit performed by the Agency shall be deemed a Project Operating Expense, deductible from the Project's Revenue (as such term is defined in Regulatory Agreement Page 7of17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane the Agency Note). Owner shall retain the records described in this Section for a period of three (3) years after the date the respective records were created. 3.6 Rental Priority. Subject to Owner's policies and procedures for screening potential tenants, which must be approved by the Agency, the Affordable Units shall be rented according to the following priorities: a. Tenants living in the Project prior to Owner's rehabilitation of the Units under the Housing Agreement ("Initial Rehabilitation") who are Eligible Tenants meeting the applicable income restrictions of the Affordable Units shall be given first priority in re- leasing Affordable Units in the Project following completion of the Initial Rehabilitation. b. When an Affordable Unit becomes available as a result of a.tenant vacation, Owner shall give first priority in renting the Affordable Unit to an Eligible Tenant who has been displaced by activities of the Agency, pursuant to California Health & Safety Code Section 33411.3. Except as otherwise set forth above, Affordable Units shall be rented to Eligible Tenants on a first -come, first -served basis; provided, however, that Owner shall maintain an "interest list" or "eligibility list" of potential tenants. The rental priority provision set forth in this Section 3.6 shall apply only to the extent such provisions are not in conflict with any applicable federal or state law or any regulatory agreement affecting the Project that is recorded in superior priority to this Agreement. 3.7 Maintenance of Records. Owner shall maintain complete and accurate records pertaining to the Affordable Units, and shall permit any duly authorized representative of the Agency to inspect the books and records of Owner pertaining to the Project including, but not limited to, those records pertaining to tenant eligibility and occupancy of the Affordable Units. Records pertaining to the Project and the Affordable Units shall be retained until four (4) years after the termination of this Agreement; records pertaining to tenant eligibility shall be retained for the period set forth in Section 3.5. Owner shall prepare, maintain and submit to the Agency the following records and reports: a. Records which demonstrate that the Site meets the property standards established by the United States Department of Housing and Urban Development and specified in 24 CFR 92.251 and the lead -based paint requirements of 24 CFR 92.355; b. Records which demonstrate that the Site meets the affordability and income targeting requirements of California Health and Safety Code Sections 50079.5, 50105 and 50053 for the duration of this Agreement. Records shall be kept for each household occupying a Unit; C. Records which demonstrate that each lease complies with the tenant and participant protections, as specified in Section 2.7. Records shall be kept for each household occupying a Unit; Regulatory Agreement Page 8 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane d. Equal opportunity and fair housing records, including, as applicable: (1) data on the extent to which each racial and ethnic group and single -headed household (by gender of household head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with Set Aside Funds; (2) documentation of the actions taken to affirmatively further fair housing; e. Affirmative Marketing and MBE/WBE records, including documentation and data on the steps taken by Owner to implement the Agency's outreach programs as set forth in applicable Agency policies and procedures and documentation of the Owner's affirmative steps to assure that minority business and women's business enterprises have an equal opportunity to obtain or compete for contracts and subcontracts as sources of supplies, equipment, construction and services; f. Records which demonstrate compliance with legal requirements relating to displacement, relocation and real property acquisition, including project occupancy lists identifying the name and address of all persons occupying or moving into the Site on and after the date on which Owner obtained Site control; and g. Records demonstrating compliance with the labor requirements of the Housing Agreement, including contract provisions and payroll records. Owner shall retain all books and records relevant to the Housing Agreement for a minimum of five years after the project completion date, except that records of individual tenant income verifications, project rents and project inspections shall be retained for the most recent three-year period until three years after the affordability period terminates, or until the conclusion or resolution of any and all audits or litigation relevant to the Housing Agreement, whichever is later. The Agency and any of its representatives shall have the right of access to any pertinent books, documents, papers or other records of the Owner, in order to make audits, examinations, excerpts and transcripts. 3.8 Reliance on Tenant Representations: Each tenant lease shall contain a provision to the effect that Owner has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of an Affordable Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 4. MAINTENANCE 4.1 Maintenance Covenant. (a) Owner agrees to maintain all interior and exterior improvements, including landscaping, on the Site in good condition and repair (and, as to landscaping, in a Regulatory Agreement Page 9 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane healthy condition), reasonable wear and tear excepted, and in accordance with all applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction. In addition, Owner shall assure that the Site meets the Federal Housing Quality Standards as set forth in 24 C.F.R. 982.401 and shall also keep the Site free from all graffiti and any accumulation of debris or waste material. Owner shall make all repairs and replacements necessary to keep the improvements in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable materials. The maintenance covenant contained in this Section shall remain in effect for the term of this Agreement. (b) The Project shall comply with the lead -based paint standards in 24 C.F.R. §92.355. The Owner hereby agrees to and shall be responsible for testing and abatement activities specified in the Lead -Based Paint Poisoning Prevention Act (42 U.S.C. Section 4821, et se and the regulations set forth at 24 Code of Federal Regulations Part 35 with respect to the rehabilitation of the Site. 4.2 Agency Rights. The Agency shall have the right to enter upon the Site to inspect the Site and both the interiors and exteriors of the Units, upon seventy-two (72) hours notice to Owner. The Agency may, but is not required to, perform or cause to be performed the maintenance necessary to cure any default of the maintenance covenants and Owner shall be liable for payment of reasonable costs (excluding staff salaries and overhead and, other similar administrative costs) to perform such required maintenance; provided, however, that Owner first be given written notice of the actions required to cure any default, and Owner, after receipt of such notice, shall have thirty (30) days to cure such defaults, but Owner shall not be deemed in default of the foregoing maintenance covenant if such default cannot reasonably be cured within the thirty (30) day period referenced above so long as Owner has commenced to cure such default within the same thirty (30) day period and is diligently proceeding with the work to cure such default. Notwithstanding the foregoing, if any property conditions are identified by Agency that pose an immediate threat to public health or safety, Owner shall have three (3) days to effect correction of such conditions to Agency's reasonable satisfaction. 4.3 Annual Report. Owner covenants and agrees to submit to the City and the Agency an annual report (the "Annual Report"), which shall include the information required by Section 3.5 of this Agreement and by California Health & Safety Code Section 33418. The Annual Report shall include for each Affordable Unit the rental rate and the income and household size of the occupants, and shall also include the records described in Section 3.5 herein and the financial statements described in Section 5.11 of the Housing Agreement. The income information shall be supplied by the tenant in a certified statement on a form provided by the Agency. The Owner shall submit the Annual Report on or before April 30 of the year following the year covered by the Annual Report. The Owner shall require the submission of such income and household size information in its leases with tenants. 4.4 Management Plan; Quarterly Report. Owner shall prepare, submit to Agency and to City's Director of Economic Development .(as a representative of the Agency) Regulatory Agreement Page 10 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane within ninety (90) days after recordation of this Agreement and maintain in effect a management plan in accordance with the following ("Management Plan"): (a) The Management Plan, including such amendments as may be approved in writing by the Agency, shall remain in effect for the term of this Agreement. Owner 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 property manager, which may include but shall not be limited to Owner. The Agency shall approve or disapprove the proposed management agent, if other than Owner, in writing based on the experience and qualifications of the management agent. The management agent shall have demonstrated experience in operating affordable housing comparable to the Project. (2) Management Program. A description of the proposed management, maintenance, tenant selection and occupancy policies and procedures for the Affordable Units. (3) Management Agreement. A copy of the proposed management agreement specifying the amount of the management fee and the relationship and division of responsibilities between Owner and management agent. (4) Tenant Lease or Rental Agreement. A copy of the proposed tenant lease or rental agreement to be used in renting the Affordable Units. (5) Annual Operating Budget. Prior to the completion of rehabilitation of the Units and annually thereafter not later than fifteen (15) days prior to the beginning of the next fiscal or calendar year of the Project, Owner shall submit a projected operating budget to the Agency for review and approval. After Owner's initial projected operating budget submittal, Owner shall annually reconcile each previous year's projected budget with actual operating results for the Project ("Budget Reconciliation"). In each Budget Reconciliation, Owner shall set forth an explanation for any major discrepancies between projected and actual budgets. For purposes of this Agreement, a "major discrepancy" shall mean a line item difference between projected and actual budgets of 20% or more. The Agency shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder, but such matter shall be deemed disapproved unless the Agency provides to Owner its written approval within thirty (30) days after receipt of a request for approval. Any express disapproval shall be in writing and contain the Agency's reasons for disapproval. (b) Owner hereby covenants and agrees the Agency shall have the right, at any time and from time to time, to give notice to Owner if the Agency determines that the Project is not being managed or maintained in accordance with the Management Plan. The Agency may require the Owner to change management practices or to terminate the management Regulatory Agreement Page 11 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane agent and retain a different management agent, approved by the Agency. The Agency agrees that prior to requiring the Owner to change its management agent or the management practices the Agency shall informally consult with Owner, 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 Owner thirty (30) days written notice to change the management agent or practice, as the case may be. If Owner 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 Owner without penalty, upon thirty (30) days prior written notice. Within ten (10) business days following a direction of the Agency to replace the management agent, the Owner shall select another management agent or make other arrangements satisfactory to the Agency for continuing management of the Project. The Owner shall notify the Agency upon learning that there is a voluntary change in the management or control of the management agent, and, if the change is unsatisfactory to the Agency, the Agency shall be entitled to require the Owner to change the management agent in accordance with the terms of this paragraph. (c) Beginning on the date of first occupancy, and for each fiscal year thereafter during the term of this Agreement, Owner shall submit on a quarterly basis a quarterly report for the management of the Site (the "Quarterly Report"). The Quarterly Report shall include a profit and loss statement, budget to date figures, and occupancy report and shall clearly show project revenues, operating expenses, deposits to and withdrawals from the Project's Capital Reserve Account, and cash flow available for residual receipts payments. The Quarterly Report shall be in a form that is reasonably acceptable to the Agency Executive Director. The Agency Executive Director, in his/her sole discretion may waive the requirement of the Quarterly Report for one or more quarterly reporting periods. However, such waiver shall not operate to waive any subsequent requirement of the Quarterly Report for the Restricted Period. 4.5 Additional Requirements. a. Low- and Very Low -Income Employment, Affirmative Marketing. Owner shall provide, to the greatest extent feasible, training, employment and contracting opportunities generated by the financial assistance to low- and very -low income persons and business concerns owned by low- or very -low income persons, or which employ low- or very - low income persons. Owner hereby agrees to comply with the Agency's minority and women business outreach program and the Agency's Affirmative Marketing requirements. b. Drug -free Work Ip ace. Owner shall comply with the Drug -Free Workplace Act of 1988 (41 U.S.C. 701 et seq.). C. Displacement, Relocation and Acquisition. Owner shall prepare a project -specific relocation plan and shall certify that, to the extent applicable, it will comply or has complied with California's relocation, displacement and acquisition rules governing the Project, which are contained in the California Relocation Assistance Act and the guidelines promulgated in connection therewith. Regulatory Agreement Page 12 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane d. Interest of Employees, Officers and Officials. No employee, agent, consultant, officer or elected official or appointed official of the Agency, or employee, agent, consultant or officer of Owner, and no other public official of the Agency who exercises any functions or responsibilities with respect to the activities assisted with Set Aside Funds or who are in a position to participate in a decision making process or gain inside information with regard to these activities, during their tenure and for one year thereafter, may obtain a financial interest or benefit from the Project or have an interest in any contract or subcontract, or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties. Owner shall incorporate, or cause to be incorporated, in all such contracts or subcontracts a provision prohibiting such interest pursuant to the purposes of this Section. e. Consultant Activities. No person providing consultant services in an employer -employee type relationship shall receive more than a reasonable rate of compensation for personal services paid for with Set Aside Funds. Such services shall be evidenced by written agreements between the parties which detail the responsibilities, standards and compensation. 5. ENFORCEMENT. If Owner defaults in the performance or observance of any covenant, agreement or obligation of Owner pursuant to this Agreement, and if such default remains uncured for a period of thirty (30) days (or such longer period as may apply to the alleged default) after written notice thereof has been given by Agency, or, if the default cannot be cured within said time period, Owner has failed to commence to cure the default within said thirty (30) days and diligently prosecute the cure to completion, then the Agency may 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 Owner to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of participant hereunder, including foreclosure of the 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. 6. NONDISCRIMINATION. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, or in the awarding of contracts for the Project, nor shall participant, or any person claiming under or Regulatory Agreement Page 13 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof, or in the awarding of contracts for the Project (except as permitted by this Agreement). Owner shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Owner shall conduct affirmative marketing and minority outreach activities as required by this Agreement. 6.1 Civil Rights, Fair Housing, and Age and Disability Discrimination Acts Assurances. During the performance of the Housing Agreement, Owner assures that no otherwise qualified person shall be excluded from participation or employment, denied program benefits, or be subjected to discrimination based on race, color, national origin, sex, age, handicap, religion, or religious preference, under any program or activity funded by the Housing Agreement, as required by the Fair Housing Act (42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et seq.; the Age Discrimination Act of 1975 (42 U.S.C. 6101- 6107) and implementing regulations at 24 CFR part 146; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; and Title VI of the Civil Rights Act of 1964 and all implementing regulations. 6.2 Form of Nondiscrimination and Nonsegregation Clauses. The Owner shall refrain from restricting the rental, sale or lease of the property on the basis of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any 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 herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or 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 any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of Regulatory Agreement Page 14 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c). In contracts: There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, 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 him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the land." 7. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the Site to the covenants, reservations, and restrictions set forth in this Agreement. Agency and Owner hereby declare their express intent that all such covenants, reservations, and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon the Owner's successors in title to the Site; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire, except the nondiscrimination covenants contained in Section 6 shall remain in perpetuity. All covenants without regard to technical classification or designation shall be binding for the benefit of the City of Huntington Beach and the Agency, and such covenants shall run in favor of the City and Agency for the entire term of this Agreement, without regard to whether the City or Agency is or remains an owner of any land or interest therein to which such covenants relate. 8. ATTORNEYS' FEES. In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. 9. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Orange. 10. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by (i) personal delivery, (ii) courier service that provides a receipt showing date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Regulatory Agreement Page 15 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Secretary With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Owner: Colette's Children's Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 Attn: Pamela Hope, President 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. Notices, requests and submittals that are required to be given to both the Agency and the City shall be deemed given if such notices, requests and submittals are given to either the Agency or the City and, with regard to notices and requests, a copy is provided to the City Attorney's Office. 11. SEVERABILITY/WAIVER/INTEGRATION. 11.1 Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. 11.2 Waiver. 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. 11.3 Integration. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 12. GOVERNING LAW. This Agreement shall be governed by the internal laws of the State of California. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. Regulatory Agreement Page 16 of 17 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane IN WITNESS WHEREOF, Agency and Owner have executed this Regulatory Agreement and declaration of Covenants and Restrictions by duly authorized representatives on the date first written hereinabove. "OWNER" "AGENCY" COLETTE'S CHILDREN HOME, INC., REDEVELOPMENT AGENCY OF THE a California nonprofit public benefit CITY OF HUNTINGTON BEACH, a corporation public body, corporate and politic O:f , By: Chairperson Pam el - ope� Its: President ATTEST: 4 Agency Secreta~` ;,. APPROVED AS TO FORM: U c�j General Coun t; log l / E, BALLMER & BERKMAN Agency Special Counsel Regulatory Agreement Page 17 of 17 Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On January 28, 2009 before me, P. L. Esparza, Notary Public, personally appeared Robin Lugar and Keith Bohr who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal P. L. ESPARZA _ ` Commission # 1599179 Notary Public - CallkwVa Orange County My Comm. Expires Aug 4, 20 IIi��www (Notary Signature) State of California County of Orange ) On -Z, ZoDq before me, 1,�iV, xcu a Notary Public, personally appeared e k t)-e— , who 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 Wshe/tjie->y'executed the same in his/her/.their authorized capacity(ies), and that by Ws/her/their-signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF'PERJURY under the laws of the State of California that the foregoing/paragraph is true and correct.,/ WITNESS my hand and offigilseal. �x . PATRICIA J. GARCIA �. COMAA. #17�9037 � `` o � r`••:. Rlpl$1yPI�hC-C86IOi1N8 �o Si nature Seal �' ° ' oRaroc,�counm d g (Seal) " Comm. Jwta 19, i099 State of California County of Orange On before me, a Notary Public, personally appeared , who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature Regulatory Agreement Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane (Seal) ATTACHMENT 1 LEGAL DESCRIPTION OF SITE Legal Description of Property Commonly Known as 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 Regulatory Agreement Legal Description Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane ATTACHMENT 1 LEGAL DESCRIPTION OF SITE Legal Description of Property Commonly Known as 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 Regulatory Agreement Legal Description Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane EXHIBIT I Notice of Affordability Restrictions (behind this page) Notice of Affordability Restrictions This Document was electronically recorded by Lawyers Title Company B RECORDING REQUESTED BY LAWYERS TITLE FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City L72� 3 0� 23 63 (Space Above Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code §27383) APN: 165-234-14; 165-234-15 Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder 1111111111111111111111111111111111111111111111I111111111111111 NO FEE 2009000088032 04:30pm 02/25/09 230 59 NO3 7 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY NOTICE IS HEREBY GIVEN that pursuant to Health & Safety Code Section 33334.3(f), the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, is recording this Notice of Affordability Restrictions on Transfer of Property (hereinafter the "Notice") with regard to the property located at 17432-17442 Keelson Lane, Huntington Beach, California and more particularly described in Exhibit "A" attached hereto (the "Site"). The Site is subject to the Regulatory Agreement and Declaration of Covenants and Restrictions (the "Regulatory Agreement") recorded concurrently herewith, which restricts the use of the Site as follows: (1) Two (2) one -bedroom units and two (2) two -bedroom units shall be rented exclusively to Very Low Income households at an Affordable Rent as provided in California Health and Safety Code Section 50053. (2) Two (2) one -bedroom units, two (2) two -bedroom units and two (2) five -bedroom units shall be rented exclusively to Low Income NOTICE OF AFFORDABILITY RESTRICTIONS PAGE 1 OF 4 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane households at an Affordable Rent as provided in California Health and Safety Code Section 50053. The maximum incomes of eligible tenants shall be determined on the basis of the income limits for Very Low Income and Low Income households in Orange County, published approximately annually by the California Department of Housing and Community Development ("HCD"). If HCD discontinues publishing such income limits, the term "Very Low Income" shall mean a household income that does not exceed 50% of the area median income, adjusted for family size and the term "Low Income" shall mean a household income that does not exceed 80% of the area median income, adjusted for family size. Any rents charged to a tenant shall not exceed rents that are affordable to Very Low Income and Low Income Households, as applicable. The maximum rents, including a reasonable utility allowance for utilities and services (excluding telephone) to be paid by Very Low Income and Low Income Households are as follows: (i) In the case of any Very Low Income Household, the maximum rent shall be a rent that does not exceed 30 percent of fifty percent (50%) of the area median income adjusted for household size appropriate to the unit, as determined by the California Department of Housing and Community Development. (ii) In the case of any Low Income Household, the maximum rent shall be a rent that does not exceed 30 percent of sixty percent (60%) of the area median income adjusted for household size appropriate to the unit, as determined by the California Department of Housing and Community Development. The affordability restrictions imposed on the Site by the Regulatory Agreement are scheduled to expire on the date that is the later of: (a) fifty-five (55) years after the date on which a Release of Construction Covenants for the Project NOTICE OF AFFORDABILITY RESTRICTIONS PAGE 2 OF 4 Agree: Colette's Children's Home, Inc. — 17432-17442 Keelson Lane is issued by the Agency; or (b) sixty (60) years after the Effective Date of the Affordable Housing Agreement between the Agency and the Developer. This Notice is recorded for the purpose of providing notice only and in no way modifies the provisions of the Regulatory Agreement. "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH,,a public body, corporate and politic w ' Chairperson ATTE-ST: e � "7Agency Secretary APPROVED AS TO FORM: (, General Coun 11 �,Itoj KANE, BALLMER & BERKMAN Agency Special Counsel NOTICE OF AFFORDABILITY RESTRICTIONS PAGE 3 OF 4 Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane COLETTE' S CHILDREN HOME, INC., a California nonprofit public benefit corporation By Pamela Hope, Pr i'den Address: 17301 Beach Blvd., #23 Huntington Beach, CA 92647 NOTICE OF AFFORDABILITY RESTRICTIONS PAGE 4 OF 4 Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane ACKNOWLEDGMENT STATE OF CALIFORNIA ss COUNTY OF ORANGE On January 28, 2009 before me, P. L. Esparza, Notary Public, personally appeared Robin Lugar and Keith Bohr who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. � , X, (Notary Signatur ' P.1. WAVA Cofnn** n # 1699179 � c My Came. ExphftA Q 4, 2009 State of California County of Orange On c.CCt+`. 2 Y before me, (TC�`Vi C'`< - V11'CX01' a Notary Public, personally appeared ` . M P a _ , who proved to me, on the basis of satisfactory evidence to be the person(s) whose name(s) is>r-e-subscribed to the within instrument and acknowledged to me that ,ie/she/tlaeey executed the same in-11i'�/her/their authorized capacity(ies), and that by li/her/their-§ignature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF —PERJURY under the laws of the State of California that the foregoing ,paragraph is true' and correct. S my haxid and off*rl seal. State of California County of Orange On PATRICIA J. GARCIA eal ' � COMM. $1749037 � g':: Lamm. Fay ,tiara 9g. 2091 before me, a Notary Public, personally appeared , who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Notice of Affordability Restrictions Exhibit "A" Legal Description of Property Commonly Known as 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 Exhibit "A" Legal Description of Property Commonly Known as 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 EXHIBIT J Environmental Indemnity [Behind This Page] Environmental Indemnity ENVIRONMENTAL INDEMNITY BY COLETTE'S CHILDREN'S HOME, INC. IN FAVOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH THIS ENVIRONMENTAL INDEMNITY (this "Indemnity"), dated ,,AC-� , 2008, and made by COLETTE' S CHILDREN' S HOME, INC., a California nonprofit public benefit corporation (referred to as "Borrower"), whose address for purposes of giving notices is 17301 Beach Blvd., #23, Huntington Beach, CA 92647, in favor of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (the "Agency"), whose address for purposes of giving notice is 2000 Main Street, Huntington Beach, California 92648. WITNESSETH WHEREAS, Borrower is the owner of the real property in the City of Huntington Beach described on Exhibit "A" attached hereto and made a part hereof, and the improvements thereon (collectively referred to as the "Property"); WHEREAS Borrower and the Agency, entered into that certain Affordable Housing Agreement, dated��7'7l�aZ4 2008 (the "Housing Agreement"), pursuant to which the Agency agreed to make a loan to Borrower for the purpose of rehabilitating a 10-unit multifamily rental housing project on the Property (the "Loan") (the Housing Agreement and the documents and instruments referred to therein which are being executed by Borrower concurrently herewith are referred to collectively as the "Loan Documents"); WHEREAS, Borrower has agreed to execute and deliver to the Agency this Indemnity to induce the Agency to make the Loans. NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Borrower hereby agrees with the Agency as follows: DEFINITIONS For the purpose of this Indemnity, "Hazardous Materials" or "Hazardous Substances" shall include, but not be limited to, oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances defined as "extremely hazardous substances," "hazardous substances," "hazardous materials," "hazardous waste" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, including the Superfund Amendments and Reauthorization Act of 1986, 42 ENVIRONMENTAL INDEMNITY PAGE 1 Agree: Colette's Children's Home — 17432-17442 Keelson Lane U.S.C. Sections 9601 et seq. ("CERCLA"); the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Sections 6901, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as emended, 33 U.S.C. Section 1251 et se _; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; the Emergency Planning and Community Right -to -Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seg.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and those substances defined as "hazardous waste" in Section 25117 of the California Health and Safety Code, as "infectious waste" in Section 25117.5 of the California Health and Safety Code, or as "hazardous substances" in Section 25316 of the California Health and Safety Code or "hazardous materials" as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and orders and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity shall have the meanings ascribed to them in the Housing Agreement with the same force and effect as if set forth in full below. 2. COVENANTS AND INDEMNITY The following covenants, and indemnities are hereby given and made by Borrower: 2.1 Covenants. (a) Borrower covenants that it will strictly comply with any and all laws, regulations, and/or orders which may be promulgated from time to time relating to Hazardous Materials ("Hazardous Materials haws"), to immediately take, at Borrower's sole expense, all remedial action required by any Hazardous Materials Law or any judgment, consent decree, settlement or compromise in respect to any Hazardous Materials Claim (as defined herein below), and to keep the Property free of any lien imposed pursuant to any Hazardous Materials Law or in relation to any Hazardous Materials Claim. (b) Borrower covenants that the Property will not, while Borrower is the owner of any portion thereof, be used for any activities involving, directly or indirectly, the use, generation, treatment, storage, release, transportation, presence, discharge or disposal of any Hazardous Materials, except for de minimis quantities used at the Property in strict compliance with all Hazardous Materials Laws and required in connection with the routine rehabilitation, operation and maintenance of the Property. (c) The Agency shall have the right, at any time, to conduct an environmental audit of the Property at the Agency's expense, unless Hazardous Materials are found, then at Borrower's sole cost and expense, and Borrower shall cooperate in the conduct of any such environmental audit. Other than in an emergency, such audit shall be conducted only after prior notice has been given to Borrower and only in the presence of a representative of Borrower. ENVIRONMENTAL INDEMNITY PAGE 2 Agree: Colette's Children's Home — 17432-17442 Keelson Lane Borrower shall give the Agency and its agents and employees access to the Property to remove, or otherwise to mitigate the effects of, Hazardous Materials and Borrower shall not unreasonably delay or condition such access. (e) Borrower shall not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by any Hazardous Materials Laws, and, with respect to any such material currently present in the Property, Borrower shall promptly either (i) remove or cause to be removed any material that such Hazardous Materials Laws deem hazardous and require to be removed, or (ii) otherwise comply with such Hazardous Materials Laws, all at Borrower's sole cost and expense. If Borrower shall fail to so do within the cure period permitted under applicable law, regulation, or order, the Agency may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with all Hazardous Materials Laws, and the costs thereof shall be added to the Obligations (as hereinafter defined) of Borrower under this Section 2. (f) Borrower shall immediately advise the Agency in writing of any of the following: (i) any pending or threatened claim against Borrower or the Property by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws ("Hazardous Materials Claims"), (ii) any condition or occurrence on the Property that (A) results in noncompliance by Borrower with any Hazardous Materials Laws, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any Hazardous Materials Law, or (C) could reasonably be anticipated to form the basis of a Hazardous Materials Claim against the Property or Borrower. 2.2 Indemnity. Borrower hereby agrees to defend, indemnify, protect, and hold harmless the Agency and the City of Huntington Beach and their respective members, officers, officials, employees, agents, representatives, servants, contractors, successors and assigns from and against any and all damages, losses, liabilities, obligations, penalties, claims (including, without limitation, any third party tort claims), litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, attorneys' and experts' fees and disbursements) of any kind or of any nature whatsoever, whether foreseeable or unforeseeable, (collectively, the "Obligations") which may at any time be imposed upon, incurred by or asserted or awarded against the Agency or the City as a direct or indirect consequence of: (a) The presence of any Hazardous Materials on, in, under, or affecting all or any portion of the Property or any surrounding areas; (b) The breach .of any covenant made by Borrower in Section 2.1 hereof; or (c) The enforcement by the Agency or the City of any of the provisions of this Section 2.2 or the assertion by Borrower of any defense to its obligations hereunder. ENVIRONMENTAL INDEMNITY PAGE 3 Agree: Colette's Children's Home — 17432-17442 Keelson Lane BORROWER'S UNCONDITIONAL OBLIGATIONS 3.1 Unconditional Obligations. Borrower hereby agrees that the Obligations will be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Loan Documents or affecting any of the rights of the Agency with respect thereto. The obligations of Borrower hereunder shall be absolute and unconditional irrespective of, and Borrower waives any defense based upon, (a) The validity, regularity, or enforceability of the Loan Documents or any other instrument or document executed or delivered in connection therewith; (b) Any alteration, amendment, modification, release, termination, or cancellation of any of the Loan Documents, or any change in the time, manner, or place of payment of, or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Loan Documents; (c) Any extension of the maturity of the Loans or any waiver of, or consent to any departure from, any provision contained in any of the Loan Documents; (d) Any exculpatory provision in any of the Loan Documents limiting the Agency's recourse to property encumbered by the Deed of Trust securing the Loan, or to any other security, or limiting the Agency's rights to a deficiency judgment against Borrower; (e) Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the Loans, or any release, amendment, waiver of, or consent to any departure from any provision of, any other surety or guarantee given in respect of the Loan; (f) The insolvency or bankruptcy of Borrower or Borrower's officers or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the Loan; or (g) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower, Borrower's officers, or any other indemnitor or guarantor with respect to the Loan or any or all of the Obligations. 3.2 Continuation. The term of this Indemnity will continue until such time as no legal action can be successfully brought against the Agency or the City due to applicable statutes of limitation. This Indemnity (a) is a continuing indemnity and shall remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the payment in full of the Loans or the release or other extinguishment of the Deeds of Trust, or any other security for the ENVIRONMENTAL INDEMNITY PAGE 4 Agree: Colette's Children's Home — 17432-17442 Keelson Lane Loans); and (b) shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Agency upon the insolvency, bankruptcy, or reorganization of Borrower or otherwise, all as though such payment had not been made. 3.3 Survival. Borrower's duty to indemnify shall survive any judicial or non judicial foreclosure under the Agency Deed of Trust or transfer of the Property in lieu thereof, the release and reconveyance or cancellation of the Agency Deed of Trust, and the satisfaction of all of Borrower's obligations under the Loan Documents. 4. WAIVER Borrower acknowledges that possible defenses to the enforceability of the Obligations may presently exist and/or may arise hereafter and as part of the Agency's consideration for entering into the Housing Agreement, the Agency has specifically bargained for the waiver and relinquishment by Borrower of all such defenses. Borrower agrees that it has had the opportunity to seek and receive legal advice from skilled legal counsel of its choosing and represents and confirms that Borrower is fully informed regarding, and thoroughly understands, the nature of such possible defenses, the circumstances under which they may arise, the benefits that they might confer upon Borrower and the legal consequences to Borrower of waiving such defenses. Borrower makes this Indemnity with the intent that this Indemnity and all of the waivers herein shall each and all be fully enforceable by the Agency and that the Agency is induced to enter into the Housing Agreement in material reliance upon such presumed full enforceability. Without limitation to the foregoing, Borrower hereby waives the following: (a) Promptness and diligence; (b) Notice of acceptance and notice of the incurrence of any Obligation by Borrower; (c) Notice of any action taken by the Agency, Borrower, or any other interested party under any Loan Document or under any other agreement or instrument relating thereto; (d) All other notices, demands, and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Borrower of its Obligations hereunder; (e) The right to a trial by jury with respect to any dispute arising under, or relating to, this Indemnity; ENVIRONMENTAL INDEMNITY PAGE Agree: Colette's Children's Home — 17432-17442 Keelson Lane (0 Any requirement that the Agency protect, secure, perfect, or insure any security interest or lien in or on any property subject thereto; (g) Any requirement that the Agency exhaust any right or take any action against Borrower or any other person or collateral; and (h) Any defense that may arise by reason of: (1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons; (2) The failure of the Agency to file or enforce any claim against the estate (in probate, bankruptcy, or any other proceedings) of any person or persons; or (3) Any defense based upon an election of remedies by the Agency, including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of Borrower or any other right of Borrower to proceed against a guarantor by the operation of Section 580d of the California Code of Civil Procedure or otherwise. NOTICES Any notice, demand, statement, request, or consent made hereunder shall be in writing and shall be personally served, mailed by first-class registered mail, return receipt requested, to the address set forth in the first paragraph of this Indemnity, above, or given by electronic facsimile ("fax") transmission to the fax numbers stated below, with confirmations mailed by first class registered mail, return receipt requested to the address set forth above, of the party to whom such notice is to be given (or to such other address as the parties hereto, shall designate in writing): In the case of the Agency: 7 714-374-1590 In the case of Borrower: 714-771-0394 Any notice that is transmitted by fax transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. ENVIRONMENTAL INDEMNITY PAGE 6 Agree: Colette's Children's Home — 17432-17442 Keelson Lane 6. MISCELLANEOUS 6.1 Borrower shall make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to the Agency at its address specified in the first paragraph hereof. 6.2 No amendment of any provision of this Indemnity shall be effective unless it is in writing and signed by Borrower and the Agency, and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, shall be effective unless it is in writing and signed by the Agency, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 6.3 No failure on the part of the Agency to exercise, and no delay in exercising, any right hereunder or under any Loan Document shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Agency provided herein and in the Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Agency hereunder or under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Agency to exercise any of its rights hereunder or under any other Loan Document against such party or against any other person or collateral. 6.4 If any provision of this Indemnity shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, then that provision shall, as to such jurisdiction, be deemed ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction. 6.5 This Indemnity shall (a) be binding upon Borrower, and Borrower's successors and assigns; and (b) inure, together with all rights and remedies of the Agency hereunder, to the benefit of the Agency and the City, their respective directors, officers, employees, and agents, any successors to the Agency's interest in the Property, any other person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of the Agency's rights and remedies under the Loan Documents, any successors to any such person, and all directors, officers, employees, and agents of all of the aforementioned parties. Without limiting the generality of clause (b) of the immediately preceding sentence, the Agency may, subject to, and in accordance with, the provisions of the Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under any Loan Document, to any other person, and such other person shall thereupon become vested with all of the rights and obligations in respect thereof that were granted to the Agency herein or otherwise. None of the rights or obligations of Borrower hereunder may be assigned or otherwise transferred without the prior written consent of the Agency. ENVIRONMENTAL INDEMNITY PAGE 7 Agree: Colette's Children's Home — 17432-17442 Keelson Lane 6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Orange County in any action or proceeding arising out of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non conveniens or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in such California or federal court. Borrower irrevocably consents to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity or in any other manner provided by law. Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. 6.7 The title of this document and the captions used herein are inserted only as a matter of convenience and for reference and shall in no way define, limit, or describe the scope or the intent of this Indemnity or any of the provisions hereof. 6.8 This Indemnity shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of California applicable to contracts made and to be performed therein, except to the extent that the laws of the United States preempt the laws of the State of California. 6.9 This Indemnity may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one agreement. [SIGNATURES APPEAR ON FOLLOWING PAGE] ENVIRONMENTAL INDEMNITY PAGE 8 Agree: Colette's Children's Home — 17432-17442 Keelson Lane IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date set forth below. COLETTE' S CHILDREN' S HOME, INC., a California nonprofit public benefit corporation Date: � !'� �i By: /,11,/1 ),.Ilx--�� Pam��fa`Hope Its: Pr7sident ENVIRONMENTAL INDEMNITY PAGE 9 Agree: Colette's Children's Home — 17432-17442 Keelson Lane EXHIBIT A LEGAL DESCRIPTION Legal Description of Property Commonly Known As 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 ENVIRONMENTAL INDEMNITY LEGAL DESCRIPTION Agree: Colette's Children's Home — 17432-17442 Keelson Lane EXHIBIT K Assignment of Agreements [Behind This Page] Assignment of Agreements ASSIGNMENT OF AGREEMENTS FROM COLETTE'S CHILDREN'S HOME, INC. TO THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 1. FOR VALUE RECEIVED, the undersigned, COLETTE'S CHILDREN'S HOME, INC., a California nonprofit public benefit corporation ("Developer"), assigns to THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, (the "Assignee"), all of its right, title and interest in and to: a. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, "Architectural Agreements"); and b. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively "Plans and Specifications") heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity, for or on behalf of Developer in connection with the rehabilitation of the Improvements on the Property described in Exhibit A attached. This assignment is subject to the prior rights, if any, of a lender whose lien is senior to the Deed of Trust held by Assignee. The Plans and Specifications, as of the date hereof, are those which Developer has heretofore, or will hereafter deliver to Assignee. 2. This ASSIGNMENT OF AGREEMENTS ("Assignment") constitutes a present and absolute assignment to Assignee as of the Effective Date, subordinate to a lender whose lien is senior to the Deed of Trust held by Assignee ("Senior Lender"); provided, however, Assignee confers upon Developer the right to enforce the terms of the Architectural Agreements and Developer's rights to the Plans and Specifications so long as no Default or event which would constitute a Default after notice or the passage of time, or both, has occurred under the Affordable Housing Agreement dated /„j 2008 between Assignee and Developer (the "Housing Agreement"). Upon the occurrence of a Default or event which would constitute a Default after notice or the passage of time, or both, under the Housing Agreement, Assignee may, in its sole discretion, give notice to the creator of the Plans and Specifications of its intent to enforce its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Developer acknowledges that by accepting this Assignment, Assignee does not assume any of Developer's obligations with respect to the Plans and Specifications. 3. Developer represents and warrants to Assignee, as of the Effective Date, that: (a) all copies of the Plans and Specifications delivered to Assignee are complete and correct; ASSIGNMENT OF AGREEMENTS PAGE 1 Agree: Colette's Children's Home — 17432-17442 Keelson Lane and (b) Developer has not assigned any of its rights with respect to the Plans and Specifications except as expressly permitted by the Housing Agreement. 4. Developer agrees not to further assign (other than assignment in connection with a loan which is senior in priority to Assignee's assignment), for security or any other purposes, its rights with respect to the Plans and Specifications without Assignee's prior written consent. 5. This Assignment secures performance by Developer of all obligations of Developer under the Housing Agreement. This Assignment is supplemented by the provisions of the Housing Agreement and said provisions are incorporated herein by reference. 6. The term "Housing Agreement" as used herein shall mean the Affordable Housing Agreement dated:YL& /,x"2008 between Developer and Assignee, as well as any future amendments and implementation agreements between Developer and Assignee which refer to this Assignment. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Housing Agreement. 7. This Assignment shall be governed by the internal laws of the State of California, except to the extent that Federal laws preempt the laws of the State of California, and Developer consents to the jurisdiction of any Federal or State. Court within the State of California having proper venue for the filing and maintenance of any action arising hereunder. If Assignee should bring any action to enforce its rights hereunder at law or at equity, Developer shall reimburse Assignee for all reasonable attorneys' fees and costs expended in connection therewith. 8. This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors -in -interest of Developer and Assignee; provided, however, this shall not be construed and is not intended to waive any restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by Developer contained in the Housing Agreement. 9. The attached Consent, Schedule 1 and Exhibit A are incorporated by reference. 10. The Effective Date of this Assignment shall be the date it is executed by Developer. [Signature On Next Page] ASSIGNMENT OF AGREEMENTS PAGE 2 Agree: Colette's Children's Home — 17432-17442 Keelson Lane IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the date set forth below. Date: 4bLpI COLETTE'S CHILDREN'S HOME, INC., a California nonprofit public benefit corporation By: Pamela H,oq/e Its: Preside iY ASSIGNMENT OF AGREEMENTS PAGE 3 Agree: Colette's Children's Home — 17432-17442 Keelson Lane CONSENT The undersigned hereby consents to the foregoing Assignment to which this Consent is part, and acknowledges that there presently exists no unpaid claims due to the undersigned except as set forth on Schedule 1 attached hereto, arising out of the preparation and delivery of the Plans and Specifications to Developer. The undersigned agrees that if, at any time, Assignee, pursuant to its rights under the Housing Agreement or the loan documents, elects to undertake or cause the completion of the rehabilitation of the Improvements on any portion of the Property, in accordance with the Plans and Specifications, and gives the undersigned written notice of such election; THEN, Assignee may, at its option, use and rely on the Plans and Specifications for the purposes for which they were prepared. The undersigned further agrees that, in the event of a breach by Developer of any agreement entered into with the undersigned in connection with the Plans and Specifications, so long as Developer's interest in the Plans and Specifications is assigned to Assignee, the undersigned will give written notice to Assignee of such breach at the address shown below. Assignee shall have thirty (30) days from the receipt of such written notice of default to remedy or cure said default. Nothing herein shall require Assignee to cure said default or to undertake completion of the rehabilitation of the Improvements. The undersigned warrants and represents that it/he/she has no knowledge of any prior assignment(s) of any interest in the Plans and Specifications. Except as otherwise defined herein, the terms used herein shall have the meanings given them in the Assignment. Dated as of the date set forth below. STARLIGHT CONSTRUCTION Date: 2008 By. C- .- --�� Its: ASSIGNMENT OF AGREEMENTS CONSENT - Agree: Colette's Children's Home — 17432-17442 Keelson Lane Assignee's Address: The Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Agency Executive Director With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 ASSIGNMENT OF AGREEMENTS CONSENT Agree: Colette's Children's Home — 17432-17442 Keelson Lane SCHEDULE OF UNPAID CLAIMS Schedule 1 to Assignment of Agreements dated �EC�i�ltaCyi _ 1Y , 2008 between COLETTE'S CHILDREN'S HOME, INC., as Developer and THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, as Assignee. ASSIGNMENT OF AGREEMENTS CONSENT Agree: Colette's Children's Home — 17432-17442 Keelson Lane PROPERTY DESCRIPTION Exhibit A to Assignment of Agreements dated LF_IyL�� 2008, between COLETTE'S CHILDREN'S HOME, INC., as Developer and THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH. Legal Description of Property Commonly Known As 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 ASSIGNMENT OF AGREEMENTS Agree: Colette's Children's Home — 17432-17442 Keelson Lane EXHIBIT L Assignment of Rents and Leases [Behind This Page] Assignment of Rents and Leases This Document was electronically recorded by, Lawyers Title Company B RECORDING REQUESTERBY tA1N MTITLE Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder FREE RECORDING REQUESTED BY 111111111111111111111111111111111111111111111111111111111111111NO FEE AND WHEN RECORDED MAIL TO: 2009000088036 04:30pm 02/25/09 230 59 A34 A36 11 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City 30123 �_:3` _312_ (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code §27383) APN: 165-234-14; 165-234-15 ASSIGNMENT OF RENTS AND LEASES FROM COLETTE'S CHILDREN'S HOME, INC. TO THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH � THIS ASSIGNMENT OF RENTS AND LEASES (the "Assignment") dated /-5- , 2008 is made by COLETTE'S CHILDREN'S HOME, INC., a California nonprofit public benefit corporation ("Assignor"), in favor. of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic (the "Assignee"). RECITALS A. Assignor is or will become the owner of the real property described in Exhibit "A" attached hereto and the owner of all of the personalty, fixtures, and improvements now or hereafter located thereon or attached thereto now existing or to be constructed thereon. Said real property, personalty, fixtures, and the improvements are herein referred to collectively as the "Premises". B. The Assignee has agreed to make a loan to Assignor in the original principal amount of TWO MILLION TWO HUNDRED SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS ($2,262,833.00) (the "Loan"), pursuant to the terms, of that certain Affordable Housing Agreement by and between Assignor and Assignee datedC�7�7C. /.S— , 2008 (the "Housing Agreement"). The Agency Loan is evidenced by a Residual Receipts Promissory Note Secured by Deed of Trust, of even date herewith, .executed by Assignor in favor of Assignee, (the "Note"). The Loan is secured by a Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents), of even date herewith, executed by Assignor, as Trustor, for the benefit of Assignee, as Beneficiary (the%IDeed of Trust"). ASSIGNMENT OF RENTS AND LEASES PAGE 1 Agree: Colette's Children's Home — 17432-17442 Keelson Lane In order to induce Assignee to make the Loan to Assignor, Assignor has agreed to execute this Assignment. NOW THEREFORE, with reference to the foregoing and in reliance thereon and for good and valuable consideration, the receipt of which is hereby acknowledged, Assignor agrees as follows: AGREEMENT 1. All initially capitalized terms used herein, unless otherwise defined or required by context, shall have the meaning ascribed to them in the Housing Agreement. 2. Subject to the prior rights, if any, of a lender whose lien is senior to the Deed of Trust held by Assignee ("Senior Lender"), Assignor hereby absolutely grants, sells, assigns, transfers, and sets over to Assignee, by this Assignment, all of Assignor's interests, whether now existing or hereafter acquired, in all leases and other occupancy agreements of any nature, now or hereafter covering all or any part of the Premises, together with all extensions, renewals, modifications, or replacements of said leases and occupancy agreements, and together with any and all guarantees of the obligations of the lessees and occupants (the "Lessees") thereunder, whether now existing or hereafter executed, and all extensions and renewals of said guarantees. (Said leases and occupancy agreements, together with any and all guarantees, modifications, extensions and renewals thereof, are hereinafter referred to collectively as the "Leases" and individually as a "Lease".) 5-,.+d, aRee. uwre nor Died✓. 3. Assignor's purpose in making this Assignment is to relinquish to Assignee its right to collect and enjoy the rents, royalties, issues, profits, income, and other benefits at any time accruing by virtue of the Leases (hereinafter called "Rents and Profits"). 4. The parties intend that this Assignment shall be a present, absolute and unconditional assignment and shall, immediately upon execution, give the Assignee the right to collect the Rents and Profits and to apply them in payment of the principal and interest and all other sums payable on the indebtedness and other obligations under the Note and other loan documents, as well as all other sums payable under the Deed of Trust or any other instrument given as security for the indebtedness. However, the Assignee hereby grants to Assignor a license to collect and use, subject to the provisions set forth below, the Rents and Profits as they respectively become due and to enforce the Leases, so long as there is no Default by Assignor in performance of the terms, covenants, or provisions of the Deed of Trust, the Note, or the Housing Agreement, this Assignment or any other loan document. Nothing contained herein, nor any collection of Rents and Profits by Assignee or by a receiver, shall be construed to make Assignee a "mortgagee in possession" of the Premises so long as Assignee has not entered into actual possession of the Premises. ASSIGNMENT OF RENTS AND LEASES PAGE 2 Agree: Colette's Children's Home — 17432-17442 Keelson Lane 5. Upon the occurrence of any Default or Event of Default under the terms and conditions of this Assignment, the Note, the Deed of Trust, the Housing Agreement or any other loan document, this Assignment shall constitute a direction and full authority to each Lessee under any Lease and each guarantor of any Lease to pay all Rents and Profits to Assignee without proof of the Default relied upon. Assignor hereby irrevocably authorizes each Lessee and guarantor to rely upon and comply with any notice or demand by Assignee for the payment to Assignee of any Rents and Profits due or to become due. 6. Assignor represents and warrants as to each Lease now or hereafter covering all or any portion of the Premises, unless Assignee has been otherwise advised in writing by Assignor: a. That each Lease is in full force and effect; b. That no material default exists on the part of the Lessee thereunder or Assignor; C. That no rent in excess of one month's rent has been collected in advance; d. That no Lease or any interest therein, except to the extent required by the lender of the loan obtained by the issuance of tax-exempt bonds proceeds, has been previously assigned or pledged; and e. That all rent due to date under each Lease has been collected and no concession has been granted to any Lessee in the form of a waiver, release, reduction, discount, or other alteration of rent due or to become due except as previously disclosed to Assignor in writing. 7. Assignor agrees with respect to each Lease: a. If any Lease provides for a security deposit paid by the Lessee to Assignor and subject to the prior rights, if any, of a Senior Lender, this Assignment transfers to Assignee all of Assignor's right, title, and interest in and to each such security deposit; provided, however, that Assignor shall have the right to retain said security deposit so long as Assignor is not in Default under this Assignment, the Deed of Trust, the Note, the Housing Agreement or any other Loan Document; and provided further that Assignee shall have no obligation to the Lessee with respect to such security deposit unless and until Assignee comes into actual possession and control of said security deposit. b. If any Lease provides for the abatement of rent during repair of the leased premises by reason of fire or other casualty, Assignor shall furnish rental insurance to Assignee, the policies to be with companies and in form, content, policy limits, and ASSIGNMENT OF RENTS AND LEASES PAGE 3 Agree: Colette's Children's Home — 17432-17442 Keelson Lane terms as are customary in the case of entities owning similar property or assets similarly situated. C. Each Lease shall remain in full force and effect despite any merger of the interest of Assignor and any Lessee thereunder. Except as otherwise provided in the Housing Agreement, Assignor shall not terminate any Lease (except pursuant to the terms of the Lease upon a default by any Lessee thereunder), or materially modify or amend any Lease or any of the terms thereof, or grant any concessions in connection therewith or accept a surrender thereof, without the prior written consent of Assignee, which consent shall not be unreasonably withheld. d. Assignor shall not collect any Rents and Profits more than thirty (30) days in advance of the date on which they become due under the terms of any Lease. e. Assignor shall not discount any future accruing Rents and Profits. f. Assignor shall not consent to any assignment of any Lease, or any subletting thereunder, whether or not in accordance with its terms, on any terms less favorable than those that would reflect an arm's length transaction in light of prevailing market conditions (subject to the rent restrictions applicable to the Premises), without the prior written consent of Assignee, except as otherwise provided in the Housing Agreement. g. Except as otherwise provided in the Housing Agreement, Assignor shall not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law. h. Assignor shall faithfully perform and discharge all obligations of the lessor under each Lease, and shall give prompt written notice to Assignee of any notice of Assignor's default received from any Lessee or any other person and furnish Assignee with a complete copy of said notice. Assignor shall appear in and defend, at no cost to Assignee, any action or proceeding arising under or in any manner connected with any Lease. If requested by Assignee, Assignor shall enforce each Lease and all remedies available to Assignor against the Lessee in the case of default under the Lease by the Lessee. i. Except as otherwise provided in the Housing Agreement, and except for residential leases entered into in the ordinary course of business, Assignor shall give Assignee written notice immediately upon entering into a Lease of any part of the Premises and shall promptly upon request of Assignee provide to Assignee a true and correct copy of each executed Lease. Upon written notice from Assignee to Assignor, such Lease shall be deemed included in this Assignment as though originally listed herein. At Assignee's option, such notice may be recorded, without cost to Assignor, in the Official Records of Orange County, California, which notice shall refer to this Assignment. ASSIGNMENT OF RENTS AND LEASES PAGE 4 Agree: Colette's Children's Home — 17432-17442 Keelson Lane j. Except as otherwise provided in the Housing Agreement, Assignor shall not hire, retain, or contract with any third party for property management services with respect to the Premises without the prior written approval of Assignee, at Assignee's option, of such party and the terms of its contract for management services. k. Nothing herein shall be construed to impose any liability or obligation on Assignee under or with respect to any Lease. Assignor shall indemnify, defend, and hold Assignee, its officers, directors, agents, employees, and representatives (the "Indemnitee(s)") harmless from and against any and all liabilities, losses, and damages that any Indemnitee may incur under any Lease or by reason of this Assignment, and of and from any and all claims and demands whatsoever that may be asserted against any Indemnitee by reason of any alleged obligations to be performed or discharged by Assignee under any Lease or this Assignment, unless any of the foregoing arises from or results from the active concurrent negligence, sole negligence or sole willful misconduct of any Indemnitee. Should any Indemnitee incur any liability, loss, or damage under any Lease or by reason of this Assignment and such liability, loss, or damage falls within the foregoing indemnification, Assignor shall immediately upon demand reimburse such Indemnitee for the amount thereof together with all costs and expenses and reasonable attorneys' fees and court costs incurred by such Indemnitee. All of the foregoing sums shall bear interest at the maximum rate permitted by law from demand by Indemnitee until paid. Any Rents and Profits collected by Assignee may be applied by Assignee, in its discretion, in satisfaction of any such liability, loss, damage, claim, demand, cost, expense, or fees. 8. Assignor hereby grants to Assignee the following rights: a. Upon an Event of Default as defined in the Housing Agreement, Assignee shall be deemed to be the creditor of each Lessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership, or other debtor relief proceedings affecting such Lessee, without obligation on the part of Assignee, however, to file timely claims in such proceedings or otherwise pursue creditor's rights therein. b. Assignee shall have the right to assign Assignor's right, title, and interest in the Leases to any subsequent holder of the Deed of Trust or any participating interest therein or to any person acquiring title to all or any part of the Premises through foreclosure or otherwise. Any subsequent assignee shall have all the rights and powers herein provided to Assignee. C. Assignee shall have the right (but not the obligation), upon any Event of Default under the Deed of Trust or the Housing Agreement, to take any action as Assignee may deem necessary or appropriate to protect its security, including but not limited to appearing in any action or proceeding and performing any obligations of the lessor under any Lease; and Assignor agrees to pay, on demand, all costs and expenses, ASSIGNMENT OF RENTS AND LEASES PAGE 5 Agree: Colette's Children's Home — 17432-17442 Keelson Lane including without limitation reasonable attorneys' fees and court costs incurred by Assignee in connection therewith, together with interest thereon at the rate of ten percent (10%) per annum. d. Upon any Default under this Assignment, the Deed of Trust, the Note, the Housing Agreement, or any other loan document, and without notice to or consent of Assignor, Assignee shall have the following rights (none of which shall be construed to be obligations of Assignee): i. Assignee shall have the right under this Assignment to use and possess, without rental or charge, the Fixtures, Equipment, and Personal Property of the Assignor located in or on the Premises and used in the operation or occupancy thereof. Assignee shall have the right to apply any of the Rents and Profits to pay installments due for Personal Property rented or purchased on credit, insurance premiums on Personal Property, or other charges relating to Personal Property in or on the Premises. However, this Assignment shall not make Assignee responsible for the control, care, management, or repair of the Premises or any Personal Property or for the carrying out of any of the terms or provisions of any Lease. ii. Assignee shall have the right to apply the Rents and Profits and any sums recovered by Assignee hereunder to the outstanding Indebtedness, as well as to charges for taxes, insurance, improvements, maintenance, and other items relating to the operation of the Premises. iii. Assignee shall have the right to take possession of the Premises, manage and operate the Premises and Assignor's business thereon, and to take possession of and use all books of account and financial records of Assignor and its property managers or representatives relating to the Premises. iv. Assignee shall have the right to execute new Leases of any part of the Premises, including Leases that extend beyond the term of the Deed of Trust. V. Assignee shall have the right to cancel or alter any existing Leases. vi. Assignee shall have the irrevocable authority, as Assignor's attorney -in -fact, such authority being coupled with an interest, to sign the name of Assignor and to bind Assignor on all papers and documents relating to the operation, leasing and maintenance of the Premises. e. All of the foregoing rights and remedies of Assignee are cumulative, and Assignee shall also have upon the occurrence of any such Default or Event of Default all other rights and remedies provided under the Note, the Housing Agreement, the Deed of Trust, or any other loan document or other agreement between Assignor and Assignee, or otherwise available at law or in equity or by statute. ASSIGNMENT OF RENTS AND LEASES PAGE 6 Agree: Colette's Children's Home — 17432-17442 Keelson Lane 9. Failure of Assignee to avail itself of any terms, covenants, or conditions of this Assignment for any period of time or for any reason shall not constitute a waiver thereof. 10. Notwithstanding any future modification of the terms of the Note, the Deed of Trust, the Housing Agreement, or any other loan document, this Assignment and the rights and benefits hereby assigned and granted shall continue in favor of Assignee in accordance with the terms of this Assignment. 11. This Assignment shall be binding upon and inure to the benefit of the respective heirs, legal representatives, successors, and assigns of the parties hereto (including without limitation in the case of Assignee, any third parties now or hereafter acquiring any interest in the Indebtedness or other obligations of Assignor under the Note or Deed of Trust or a part thereof, whether by virtue of assignment, participation, or otherwise). The words Assignor, Assignee, and Lessee, wherever used herein, shall include the persons and entities named herein or in any Lease and designated as such and their respective heirs, legal representatives, successors and assigns, provided that any action taken by the named Assignee (or any successor designated as such by an instrument recorded in the Official Records of Orange County, California referring to this Assignment) shall be sufficient for all purposes notwithstanding that Assignee may have theretofore assigned or participated any interest in the obligation to a third party. All words and phrases shall be taken to include the singular or plural number, and the masculine, feminine, or neuter gender, as may fit the case. 12. Any change, amendment, modification, abridgment, cancellation, or discharge of this Assignment or any term or provision hereof shall be invalid without the written consent of Assignee. 13. Upon payment to Assignee of the full amount of the Indebtedness and other obligations secured hereby and by the Note and Deed of Trust, as evidenced by a recorded satisfaction or release of the Deed of Trust, this Assignment shall be void and of no further effect. In such event, Assignee shall cooperate with Assignor to execute such instruments as may be reasonably necessary to remove the lien of this instrument from the Official Records of Orange County. 14. All notices, demands, approvals, and other communications provided for in this Assignment shall be sufficiently given if: (i) personally delivered; (ii) delivered by same day or overnight courier (acknowledged by receipt showing date and time of delivery); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: If to Assignor: Colette's Children's Home, Inc. 17301 Beach Blvd., #23 Huntington Beach, CA 92647 ASSIGNMENT OF RENTS AND LEASES PAGE 7 Agree: Colette's Children's Home — 17432-17442 Keelson Lane If to Assignee: The Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Executive Director With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Notices personally delivered or delivered by courier shall be effective upon receipt or refusal to accept delivery. Mailed notices shall be effective on the earlier of (i) receipt of refusal to accept delivery, or (ii) noon on the second business day following deposit in the United States mail. 15. This Assignment may be recorded in the Official Records of Orange County, California, and Assignor shall pay all fees, charges, costs, and expenses of such recording. 16. If any provision hereof is determined to be illegal or unenforceable for any reason, the remaining provisions hereof shall not be affected thereby. 17. This Assignment shall be governed by and construed in accordance with the internal laws of the State of California. 18. If Assignee should bring any action to enforce its rights hereunder at law or at equity, Assignor shall reimburse Assignee for all reasonable attorneys' fees and costs expended in connection therewith. [SIGNATURES. APPEAR ON FOLLOWING PAGE] ASSIGNMENT OF RENTS AND LEASES PAGE 8 Agree: Colette's Children's Home — 17432-17442 Keelson Lane IN WITNESS WHEREOF, the undersigned Assignor has executed this Assignment as of the date set forth below. Date: Z 1�- COLETTE' S CHILDREN' S HOME, INC., a California nonprofit public benefit corporation B (.- y: Pamela, ope i Its: P " ent ASSIGNMENT OF RENTS AND LEASES PAGE 9 Agree: Colette's Children's Home— 17432-17442 Keelson Lane State of California County of Orange On 1-f c)C rjl before me, Cks�✓j h ty�.~ _ - � . a Notary Public, personally appeared zV'i!'jE ,GS-1--k- f- — , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) ism subscribed to the within instrument and acknowledged to me that,he/she/ Iley executed the same in ha,3/her/their authorized capacity(ies), and that by */her/ Mr signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY�OF"PERJURY under the laws of the State of California that the foregoing paragraphi's true and correct. WITNESS my hand d and i ial -ea. PATRICIA J. GARCIA rr COAAM. €1749037 rNa Signature (Seal) s, Cpatm. 1S, �99 State of California County of Orange ,V, before me, a Notary Public, personally appeared , who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) ASSIGNMENT OF RENTS AND LEASES Agree: Colette's Children's Home — 17432-17442 Keelson Lane EXHIBIT A LEGAL DESCRIPTION Legal Description of Property Commonly Known As 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 ASSIGNMENT OF RENTS AND LEASES Agree: Colette's Children's Home — 17432-17442 Keelson Lane EXHIBTI' M [Behind This Page] UCC FINANCING STATEMENT FOLLOW INSTRUCTIONS (front and back) CAREFULLY A. NAME & PHONE OF CONTACT AT FILER [optional] 714-842-4594 B. SEND ACKNOWLEDGMENT TO: (Name and Address) Beach Pacific Escrow, Inc. DOCUMENT NUMBER: 20211520002 17301 Beach Boulevard, Suite 2A FILING NUMBER: 09-7188982103 Huntington Beach, CA 92647 FILING DATE: 02/27/2009 10:44 USA IMAGE GENERATED ELECTRONICALLY FOR WEB FILING THE ABOVE SPACE IS FOR CA FILING OFFICE USE ONLY 1. DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1 b) - do not abbreviate or combine names 1a. ORGANIZATION'S NAME OR Colette's Children's Home, Inc., a California nonprofit ublic benefit corporation 1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 1c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 17301 Beach Blvd. #23 Huntington Beach CA 92647 USA 1d. SEE INSTRUCTIONS ORGANIZATION I DD'L DEBTOR INFO 1e. TYPE OF 1f. OF ICaliforn JURISDICTION ORGANIZATION 1g. ORGANIZATIONAL ID#, if any 1jNONE corporation is 2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name 2a or 2b - do not abbreviate or combine names 2a. ORGANIZATION'S NAME OR 2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY d. SEE ADD'L DEBTOR INFO e. TYPE OF T2f. JURISDICTION g ORGANIZATIONAL ID#, if any INSTRUCTIONS ORGANIZATION OF ORGANIZATIONNONE 3. SECURED PARTY'S NAME or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P - insert only one secured party name 3a or 3b 3a. ORGANIZATION'S NAME Redevelopment Agency of the City of Huntington Beach, California, a public body, corporate and politic OR 3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME UFFIX 3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 2000 Main Street Huntington Beach CA 92648 USA 4. This FINANCING STATEMENT covers the following collateral: See Attachment(s) S. ALT DESIGNATION: I -LESSEE/LESSOR CONSIGNEE/CONSIGNOR BAILEE/BAILOR r-,SELLER/BUYER L AG. LIEN I�NOWUCC FILING 176. This FINANCING STATEMENT is to be filed [for record] (or 7. Check to REQUEST SEARCH REPORT(S) on Debtor(s) recorded) in the REAL ESTATE RECORDS [ADDITIONAL FEE] [optional] rAll Debtors rlDebtor 1 I7Debtor 2 Attach Addendum if applicable] 8. OPTIONAL FILER REFERENCE DATA Attn: City Clerk / Re: Colette's Children's Home - 17432-17442 Keelson Lane FILING OFFICE COPY SCHEDULE "A" Item 4. Collateral Description All buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Property; and Together with the rents, issues and profits thereof, and together with all buildings and improvements of every kind and description now or hereafter erected or placed thereon, and -all fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and "Together with all building materials and equipment now or hereafter delivered to said premises and intended to be installed therein; and Together with all plans, drawings, specifications, etc., and articles of personal property now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the completion and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner. Debtor's interest in all property located on or acquired in connection with the rehabilitation, operation and maintenance of the real estate described in Exhibit "a", including, without limitation, the collateral described on Schedule "A" UCC-1 ATTACHMENT SCHEDULE A - C:OLLATERAL DESCRIPTION Agree: Colette's C:hildren's Home— 17432-17442 Keelson bane EXHIBIT "A" LEGAL DESCRIPTION Legal Description of Property Commonly Known As 17432-17442 Keelson Lane Huntington Beach, California All of the following real property in the City of Huntington Beach, Orange County, State of California (the "Property"): PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 UCC-1 ATTACHMENT EXHIBIT A — LEGAL DESCRIPTION Agree' Colette's Children's Dome— 17432-17442 Keelson Lane UCC FINANCING STATEMENT OF CONTACT AT FILER [optional] B. SEND ACKNOWLEDGMENT TO: (Name and Address) F City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City C t L.� THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 1. DEBTOR'S EXACT FULL LEGAL NAME - insert onlv one debtor name (ta or IN - do not abbreviate or combine names la. ORGANIZATION'S NAME Colette's Children's Home, Inc., a California nonprofit public benefit Corporation OR 1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 1c. MAILING ADDRESS CITY STATE COUNTRY 17301 Beach Blvd., #23 Huntington Beach CA IPOSTALCODE 92647 US 1d. TAX ID #: SSN OR EIN ADD'L INFO RE 1e. TYPE OF ORGANIZATION 1f. JURISDICTION OF ORGANIZATION 1g. ORGANIZATIONAL ID ff, if any ORGANIZATION corporation P California DEBTOR NONE 2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME -insert oniv one debtor name (2a or 2b) -do not abbreviate or combine names 2a. ORGANIZATION'S NAME OR 2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 2c. MAILING ADDRESS CITY STATE IPOSTALCODE COUNTRY 2d, TAX ID #: SSN OR EIN ADD'L INFO RE 12e. TYPE OF ORGANIZATION 2f. JURISDICTION OF ORGANIZATION 2g. ORGANIZATIONAL ID #, if any ORGANIZATION DEBTOR I I I NONE 3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR SIP) - insert oniv one secured oartv name (3a or 3b) 3a.ORGANIZATION'S NAME Redevelopment Agency of the City of Huntington Beach, California, a public body, corporate and politic OR 3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 3c. MAILING ADDRESS CITY STATE COUNTRY 2000 Main Street Huntington Beach CA IPOSTALCODE 92648 US 4. This FINANCING STATEMENT covers the following collateral: Debtor's interest in all property located on or used or acquired in connection with the rehabilitation, operation and maintenance of the real estate described in the attached Exhibit "A", including, without limitation, the collateral described on Schedule "A" attached hereto and made part hereof. 5. ALTERNATIVE DESIGNATION [if applicable] LESSEE/LESSOR CONSIGNEE/CONSIGNOR BAILEE/BAILOR SELLER/BUYER AG. LIEN NON-UCC FILING 6, s is to e wed or recor or recorded)m t e 7. ec to on a for s cererc oernone ear, eawe..a��.., it,�....r.--1 re nmm��ie� ❑cci r....;. 11 I All DebtorsID.bt.,ll IDebtr2 8. FILING OFFICE COPY —NATIONAL UCC FINANCING STATEMENT (FORM UCC1) (REV. 07/29/98) SCHEDULE "A" Item 4. Collateral Description All buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Property; and Together with the rents, issues and profits thereof, and together with all buildings and improvements of every kind and description now or hereafter erected or placed thereon, and :all fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and Together with all building materials and equipment now or hereafter delivered to said premises and intended to be installed therein; and Together with all plans, drawings, specifications, etc., and articles of personal property now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the completion and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner. UCC-1 ATTACHMENT SCHEDULE A - COLLATERAL DESCRIPTION Agree: Colette's Children's Home — 17432-17442 Keelson Lane EXHIBIT "A" LEGAL DESCRIPTION Legal Description of Property Commonly Known As 17432-17442 Keelson Lane Huntington Beach, California All of the following real property in the City of Huntington Beach, Orange County, State of California (the "Property"): PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 UCC-1 ATTACHMENT EXHIBIT A - LEGAL DESCRIPTION Agree: Colette's Children's Home— 17432-17442 Keelson Lane EXHIBIT N Release of Construction Covenants [behind this page] Release of Construction Covenants This Document was electronically recorded by City of Huntington Beach Loan No. WHEN RECORDED MAIL TO: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk APN: 165-234-14; 165-234-15 Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder I��I�IIIIII � �I��I��II��II��IIIIII��IIIII�II��IIIIII��III III��I10.00 2012000223820 12:08pm 04/19/12 66 422 R08 4 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 SPACE ABOVE THIS LINE FOR RECORDER'S USE] RELEASE OF CONSTRUCTION COVENANTS WHEREAS, COLETTE' S CHILDREN HOME, a California nonprofit public benefit corporation (the "Developer") is the owner of that certain real property situated in the City of Huntington Beach, California described in Exhibit "A" which is attached hereto and made a part hereof (the "Site"), and has agreed to rehabilitate the existing improvements thereon (the "Improvements"); and WHEREAS, pursuant to the Affordable Housing Agreement ("Housing Agreement") entered into by and between the Redevelopment Agency of the City of Huntington Beach (the "Redevelopment Agency") and the Developer dated on or about December 15, 2008, the Redevelopment Agency is obligated to furnish the Developer with a Release of Construction Covenants ("Release") upon the completion of the rehabilitation of the improvements, and such certificate is to be in such form as to permit it to be recorded in the Recorder's Office of Orange County; and WHEREAS, the Housing Agreement states that the Release shall be conclusive determination of satisfactory completion of the rehabilitation of the Improvements as required by the Housing Agreement; and WHEREAS, the City Council of the City of Huntington Beach adopted Resolution No. 2012-02 on January 9, 2012, designating the Huntington Beach Housing Authority to serve as the successor housing entity to the Redevelopment Agency of the City of Huntington Beach (the "Successor Housing Agency") upon the dissolution of the Redevelopment Agency pursuant to Assembly Bill No. 26 (2011-2012 1st Ex. Sess.); and WHEREAS, the Huntington Beach Housing Authority adopted Resolution No. 01 on January 9, 2012, accepting the transfer of the housing assets and functions of the Redevelopment Agency of the City of Huntington Beach and agreeing to act as the Successor Housing Agency; and Release of Construction Covenants Page 1 Agree: Coleue's Children Home, Inc. — 17432-17442 Keelson Lane WHEREAS, the Huntington Beach Housing Authority acting in its capacity as the Successor Housing Agency has determined that the rehabilitation of the Improvements on the Site as required by the Housing Agreement has been satisfactorily completed. NOW THEREFORE, it is hereby acknowledged and agreed by the parties hereto that: 1. The Huntington Beach Housing Authority acting in its capacity as the Successor Housing Agency hereby certifies that the rehabilitation of the Improvements on the Site has been fully and satisfactorily performed and completed as required by the Housing Agreement. 2. Nothing contained in this instrument shall modify any provisions of the Housing Agreement. IN WITNESS WHEREOF, the Huntington Beach Housing Authority acting in its capacity as the Successor Housing Agency has executed this Release this 17foday of April, 2012. "SUCCESSOR HOUSING AGENCY" THE HUNTINGTON BEACH HOUSING AUTHORITY IN ITS CAPACITY AS SUCCESSOR HOUSING AGENCY TO THaREDEVELOPMENT AGENCY OF THE CITY AMUNTINGTON BEACH ve Director ks AS TO FORM: 1E,13ALLMER & BERKMAN Authority Special Counsel Release of Construction Covenants Page 2 Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane State of California County of Orange ) On before me, •�-•�; a Notary Pub ic, personally appeared . &)14zD& , who proved to me on the basis of satisfactory evidence to be the person whose name 1s are subscribed to the within instrument and acknowledged to me thaie s� executed the same 'Philrerftirerr authorized capacitys), and that b h her/their signatureon the instrument ersons ,, or the entity upon belfalf of which the person(4 acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. P.L. ESPARZA ro,oCommission # 1857021 Notary Public - California i Orange County M Comm. Expires Au 4, 2013 Signature • (Seal) State of California County of Orange ) On L, 1A before me, > L• ��S',,, dlyam a Notary Public, personally appeared ,,� L . a),4J , who proved to me on the basis of satisfactory evidence to be the person�8) whose name a*e, subscribed to the within instrument and acknowledged to me that-ire/6tliey executed the same in lei he k--k authorized capacity i4, and that b} ,�e 4eir signature on the instrument the persons), or the entity upon behalf of which the person(,a'f acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature .(—/1)X, P. L. ESPARZA Commission # 1857021 i -a Notary Public - California D Orange County (Seal) ]aw My Comm. Expires Au 4, 2013+ Release of Construction Covenants Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane EXHIBIT "A" LEGAL DESCRIPTION OF REAL PROPERTY LEGAL DESCRIPTION OF PROPERTY COMMONLY KNOWN AS 17432-17442 Keelson Lane Huntington Beach, California PARCELS 2 AND 3 OF PARCEL MAP NO. 79-577, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143 PAGE 43 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 165-234-14; 165-234-15 Release of Construction Covenants Legal Description Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane EXHIBIT O Disbursement Agreement [behind this page] Disbursement Agreement DISBURSEMENT AGREEMENT (17432-17442 Keelson Lane) THIS DISBURSEMENT AGREEMENT ("Agreement") is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"), COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation ("Borrower") and CLEARINGHOUSE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION ("Conventional Lender"), as of '-T&A �sAv4, , c1, ZOO? 2009. V RECITALS A. Agency and Borrower have heretofore entered into that certain Affordable Housing Agreement dated on or about December 15, 2008 ("Affordable Housing Agreement"), relating to that real property legally described in Exhibit A to the Affordable Housing Agreement (the "Property"). The Affordable Housing Agreement, the promissory note evidencing the Agency Loan (defined below), the deed of trust securing the Agency Loan, the Regulatory Agreement and Declaration of Covenants and Restrictions dated on or about the date hereof, and other instruments referred to in the Affordable Housing Agreement, are sometimes referred to collectively as the "Agency Loan Documents." Terms not defined herein shall have the meaning given to them in the Agency Loan Documents. B. In accordance with the Affordable Housing Agreement, Borrower intends to acquire and rehabilitate a residential development consisting of ten dwelling units, as described in the Scope of Development attached to the Affordable Housing Agreement as Exhibit C (the "Project"). The units will be rented to and occupied by Very Low and Low Income households. The costs of acquiring the Property and rehabilitating the Project are set forth in the Project Budget attached to the Affordable Housing Agreement as Exhibit D and incorporated herein by this reference (the "Project Budget"). The Project Budget shall be subject to amendment from time -to -time, subject to the prior written approval by the Conventional Lender and the Agency Executive Director or designee, upon which approval the Project Budget shall be replaced by the approved revised Project Budget. C. Pursuant to the Affordable Housing Agreement, Agency has agreed to make a loan of Set Aside Funds to Borrower in the original principal amount of $2,262,833.00 (the "Agency Loan") to be used to finance a portion of the Project Costs. D. Conventional Lender and Borrower have entered into that certain [insert title of loan agreement] ("Conventional Loan Agreement"), pursuant to which Conventional Lender has agreed to lend Borrower funds in the amount of approximately $560,000.00 (variously referred to as the "Conventional Loan" and the "Conventional Lender Funds") to finance a portion of the Project Costs. The Conventional Loan Agreement, the promissory note evidencing the Conventional Loan, the deed of trust securing the Conventional Loan and other instruments referred to in the Conventional Loan Agreement are sometimes referred to collectively as the "Conventional Loan Documents." DISBURSEMENT AGREEMENT Page I Agree: Colette's Children Home — 17432-17442 Keelson Lane E. The Agency Funds and the Conventional Lender Funds are referred to herein collectively as the "Project Funds." Agency and Conventional Lender are referred to herein collectively as the "Lenders." NOW, THEREFORE, the parties agree as follows: 1. Deposit and Use of Funds a. Agency Loan. The Agency Funds shall be held by the Agency as the Agency shall determine, to be disbursed as provided in the Agency Loan Documents and this Agreement. The Agency Funds are not pledged to the Conventional Lender or any other lender, nor shall they constitute security for the Conventional Loan or any other loan. b. Conventional Loan. The Conventional Lender Funds shall be deposited and held by the Conventional Lender as the Conventional Lender shall determine, to be disbursed as provided in the Conventional Loan Documents and this Agreement. The Conventional Lender Funds are not pledged to the Agency or any other lender, nor shall they constitute security for the Agency Loan or any other loan. 2. Disbursement. Each Lender shall disburse its respective Loan Funds as follows: a. Conventional Lender shall disburse the amount of $560,000 to pay a portion of the Acquisition and Closing Costs for Borrower's purchase of the Property. b. The Agency shall disburse the approximate amount of $1,680,129 of the Agency Loan to pay a portion of the Acquisition and Closing Costs for Borrower's purchase of the Property in the estimated amount of $1,626,788 (consisting of $1,615,000 in acquisition costs and $11,788 in closing costs), the initial payment of the Developer Fee in the amount of $41,666, the cost of preparing the Relocation Plan for the Project in the amount of $4,500 and reimbursement in the estimated amount of $7,175 of costs previously incurred by Developer for environmental services, Conventional Lender fees and appraisal costs. C. The Agency shall disburse to Borrower, over the course of one or more draws, the balance of the Agency Loan in the estimated amount of $195,500 for payment of approved Relocation Costs and $387,204 for approved Rehabilitation Costs. d. Borrower shall be responsible to provide funds if and as needed to pay for Project Costs necessary for the completion of the Project that exceed the amount set forth in the approved Project Budget. To the extent Borrower fails to provide such additional funds, the Lenders shall each, in addition to their other rights and remedies, have the right (but not the obligation) to advance additional money to pay such additional Project Costs as such Lender may deem necessary to protect its collateral and complete rehabilitation of the Project. Any additional amounts advanced by a Lender to pay additional Project Costs shall be added to the stated loan amount of the applicable Loan. To the extent Borrower funds are provided to pay additional approved Relocation Costs, such funds shall be deposited with the Agency and disbursed in accordance with the terms of this Agreement. DISBURSEMENT AGREEMENT Page 2 Agree: Colette's Children Home — 17432-17442 Keelson Lane 3. Each Lender shall determine whether or not the conditions precedent to its obligation to disburse its Loan Funds have been satisfied or whether or not to waive any condition precedent to its obligation to disburse its Loan Funds which such Lender determines has not been satisfied. 4. Documentation of Relocation and Rehabilitation Costs. Relocation Costs to be paid with Project Funds shall be consistent with the Relocation Plan that was approved by the Agency for the Project. Borrower shall utilize the services of a relocation consulting firm approved in writing by the Agency. The Agency hereby approves the firm of Pacific, Overland and Cutler, Inc. Disbursements of Project Funds for the payment of approved Relocation and Rehabilitation Costs shall be conditioned upon submission of a written itemized statement or draw request substantially in the form described in Section 4 below (the "Draw Request'). 5. Submittal of Draw Requests. Each Draw Request submitted to the Agency shall consist of the following: a. A cover letter signed by Borrower and dated as of the date of the Draw Request. The letter must include the Project name and address, the period covered by the Draw Request, the amount of the draw and a request for payment. Each Draw Request shall be sequentially numbered. b. A Project spreadsheet including detailed line items and conforming to the approved Project Budget. The spreadsheet must set forth the amounts of the initial funding of the Agency Loan at Close of Escrow, as well as all subsequent loan disbursements, including the current Draw Request, and must show the remaining loan balances. C. A summary invoice for the total amount requested, with the amount of each backup invoice shown on the summary as a separate line item. Consultant fees should be shown as separate line items from tenant relocation payment expenses. Line item descriptions for tenant relocation payments should set forth the name of the tenant and the Project unit number and should indicate if the payment is for temporary or permanent relocation expenses. d. Backup invoices or such other appropriate documentation to evidence, document, justify and support each line item in the summary invoice, with each backup item approved in writing by Borrower. Requests for payment for replacement dwellings must be supported by lease term sheets for the replacement unit, setting forth the monthly rent, required deposits, utilities to be paid by the tenant and additional tenant fees. e. Conditional and unconditional lien releases as required by the Agency and such other additional backup documentation and information as may be reasonably required by the Agency to determine the appropriateness of the expense for which payment is requested. The amount of each Draw Request shall, when added to the cumulative amount of previous disbursements, be an amount that does not exceed the amount of the corresponding line item in the Project Budget. DISBURSEMENT AGREEMENT Page 3 Agree: Colette's Children Home — 17432-17442 Keelson Lane Approval of Draw Requests; Disbursement of Funds. a. Approval of each Draw Request shall be subject to satisfaction of the requirements of this Agreement and the Agency Loan Documents. b. The Agency shall, within fifteen (15) business days after receipt of a Draw Request containing all of the items described in Sections 4 and 5 above, determine the amount of the Draw Request approved by the Agency and shall notify Borrower of such amount (the "Approved Draw"). C. With respect to disbursements of Agency Funds, Agency shall promptly disburse the Approved Draw, by check, in either of the following ways (as the Agency may determine in its sole discretion): (i) to Borrower, and Borrower shall promptly disburse such funds as provided in the Draw Request, or (ii) jointly to Borrower and to the persons entitled to payment; or (iii) to those persons entitled to payment as provided in the Draw Request. 7. Disapprovals. Any item in a Draw Request that is not specifically approved by the Agency within fifteen business days shall be deemed disapproved. In addition, on the basis of the conditions precedent to making disbursements contained in the Agency Loan Documents, Agency may disapprove all or part of a Draw Request. If Agency disapproves any portion of a Draw Request, the Agency shall promptly notify the Borrower of the disapproved amount and the reason therefor. If any Draw Request or portion thereof shall be disapproved or deemed disapproved, the representatives of the Borrower and the Agency shall meet promptly and in good faith to attempt to resolve the matter to their mutual satisfaction. 8. Disbursement of Undisputed Amounts. If there is a dispute over a portion of a Draw Request, the Agency shall disburse the amount of the Draw Request not in dispute and fund any disputed amounts promptly upon resolution of the dispute. 9. Right to Condition Disbursements. The Agency shall each have the right to condition approval of any Draw Request upon receipt and approval of such documentation, evidence or information that such Lender may request, including, but not limited to, vouchers and invoices. 10. Reservation of Rights. Nothing contained herein shall be construed as restricting, limiting, amending or modifying the rights of the parties in the Agency Loan Documents and the Conventional Loan Documents, as they relate to defaults or remedies, including, inter alia, the right of each party under its respective security instruments to foreclose on the Property, or to seek recourse under any guaranties. 11. Integrated Agreement. This Agreement is made for the sole benefit and protection of the parties hereto and no other person or persons shall have any right of action or right to rely hereon. As this Agreement contains all the terms and conditions agreed upon between the parties with respect to the disbursement of Project Funds for the payment of Project DISBURSEMENT AGREEMENT Page 4 Agree: Colette's Children Home — 17432-17442 Keelson Lane Costs, no other agreement regarding the subject matter hereof shall be deemed to exist or bind any party unless in writing and signed by the party to be charged. 12. Termination of this Agreement. This Agreement shall terminate when all of the Project Funds have been fully disbursed. 13. Counterparts. This Agreement may be signed by each party on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument with the same effect as if all signatories had executed the same instrument. 14. Binding _ Effect. This Agreement shall be binding on and inure to the benefit of the parties to this Agreement and their heirs, personal representatives, successors, and assigns, except as otherwise provided in this Agreement. 15. Governing Law. This Agreement has been negotiated and entered in the State of California, and shall be governed by, construed and enforced in accordance with the internal laws of the State of California, applied to contracts made in California by California domiciliaries to be wholly performed in California. 16. Titles and Captions. Titles or captions contained herein are inserted as a matter of conveniences and for reference, and in no way define, limit, extend or describe the scope of this Agreement or any provision hereof. 17. Interpretation. No provision in this Agreement is to be interpreted for or against either party because that party or his legal representatives drafted such provision. 18. Waiver; Amendments. No breach of any provision hereof may be waived unless in writing. Waiver of any one breach of any provision hereof shall not be deemed to be a waiver of any other breach of the same or any other provision hereof. This Agreement may be amended only by a written agreement executed by the parties in interest at the time of the modification. 19. Further Assurances. The parties hereto hereby agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Agreement. 20. Severance. If any provision of this Agreement is determined by a court of competent jurisdiction to be illegal, invalid or enforceable, such provision will be deemed to be severed and deleted from this Agreement as a whole and neither such provision, nor its severance and deletion shall in any way affect the validity of the remaining provisions of this Agreement. 21. Attorneys' Fees. In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. DISBURSEMENT AGREEMENT Page 5 Agree: Colette's Children Home — 17432-17442 Keelson Lane IN WITNESS WHEREOF, the Agency, the Conventional Lender and the Borrower have executed this Agreement as of the date set forth above. COLETTE' S CHILDREN HOME, INC., a California nonprofit public benefit corporation "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a' public body corporate and politic By: By: , Pam ope Chairperson Its: Pry dent <} tt- ! , 0 fi "CONVENTIONAL LENDER" CLEARINGHOUSE CDFI am Its: ATTEST: By: Agenc'-Secretar==y``° APPROVED AS TO FORM: By: General Couns 1 unit I(;I, 0 (' By:La :%� / KAN , BALLMER & BERKMAN Agency Special Counsel DISBURSEMENT AGREEMENT Signature Page Agree: Colette's Children Home — 17432-17442 Keelson Lane IN WITNESS WHEREOF, the Agency, the Conventional Lender and the Borrower have executed this Agreement as of the date set forth above. "BORROWER" COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation Pamela Hope Its: President "CONVENTIONAL LENDER" CLEARINGHOUSE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic ATTEST: Chairperson Agency Secretary APPROVED AS TO FORM: Q I By: — r Vrff It Ik,�Jrtt-�0t�-L General Counsel KANE, BALLMER & BERKMAN Agency Special Counsel DISBURSEMENT AGREEMENT Signature Page Agree: Colette's Children Home — 17432-17442 Keelson Lane SENIOR LENDER: CLEARINGHOUSE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION By: 4�A 4� Its: PC 'I'-- <,-,12ILL -r— Address: 23861 El Toro Rd., Suite 401 Lake Forest, CA 92630 Attn: Annie Mooney (Signature Page of Subordination Agreement) Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane State of California County of Orange On January 30, 2009 before me, Kristen S. 011endorff, a Notary Public, personally appeared Douglas J. Bystry, who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. ��,KRISTEN S. OLLENDORFF WITNESS my hand and official seal. Lov-,NoRYIPUBLIC�CA700RNIA32 ORANGE COUNTY MY Co AM. EXP. OCT. 29, 2010 Si Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane Seal) SENIOR LENDER: CLEARINGHOUSE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION By: L�3 o b Its: Address: 23861 El Toro Rd., Suite 401 Lake Forest, CA 92630 Attn: Annie Mooney (Signature Page of Subordination Agreement) Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane State of California County of Orange On January 30, 2009 before me, Kristen S. 011endorff, a Notary Public, personally appeared Douglas J. Bystry, who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. V KRIS EN S. ouENDORFF Cow. # 1697032 'n OMY NOTARY PUBLIC-CALIFORNIAORANGE COUNTY Comm. ExP, OCT. 29, 2010 Agree: Colette's Children Home, Inc. — 17432-17442 Keelson Lane IN WITNESS WHEREOF, the Agency, the Conventional Lender and the Borrower have executed this Agreement as of the date set forth above. "BORROWER" COLETTE'S CHILDREN HOME, INC., a California nonprofit public benefit corporation an Pamela Hope Its: President "CONVENTIONAL LENDER" CLEARINGHOUSE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION By: 0 Its: 1 ( C, "J p 9 "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: Chairperson ATTEST: By: Agency Secretary APPROVED AS TO FORM: By: General Counsel By: KANE, BALLMER & BERKMAN Agency Special Counsel DISBURSEMENT AGREEMENT Signature Page Agree: Colette's Children Home — 17432-17442 Keelson Lane IN WITNESS WHEREOF, the Agency, the Conventional Lender and the Borrower have executed this Agreement as of the date set forth above. COLETTE' S CHILDREN HOME, INC., a California nonprofit public benefit corporation an Pamela Hope Its: President "CONVENTIONAL LENDER" CLEARINGHOUSE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION By: > sten S. 011endorff Its: P) Q- o (- L v; "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: ATTEST: By: Chairperson Agency Secretary APPROVED AS TO FO General Counsel KANE, BALLMER & BERKMAN Agency Special Counsel DISBURSEMENT AGREEMENT Signature Page Agree: Colette's Children Home — 17432-17442 Keelson Lane ATTACHMENT #3 KEYSER Iv1ARSTON ASSOCIATES,. ADVISORS IN PUBLIC/PRIVATE REAL ESTATE DEVELOPMENT MEMORANDUM A DVISOI.� sN: To: Kellee Fritzal, Deputy Director REAL ESTATE REDFVELOPMFNT City of Huntington Beach AFFORDABLE HOUSING ECONOMIC DEVELOPMENT From: Kathleen Head SAN FRANC:ISCO A- TERRY KEYSER Andrea Castro TIMOTHY C. KELLY KATE EARLE FUNK DEBBIE M. KERN Date: September 4, 2008 ROBERT I. WETMORE REED T. KAWAHARA Subject: 17432 - 17442 Keelson Lane - Financial Gap Analysis LOS ANGFI ES CALVIN E. HOLLIS, II KATHLEEN H. HEAD At your request, Keyser Marston Associates, Inc. (KMA) prepared a financial gap DAMES A. RABE analysis for the Colette's Children's Home (Developer) proposed acquisition and PAUL C. AN➢F:RSON GREGORY D. Soo-HOO rehabilitation of the 10-unit apartment complex located at 17432 — 17442 Keelson Lane KEVIN E. ENGSTRUM (Project). The purpose of the KMA financial analysis is to quantify the amount of local 1 )� p p Y� q fY )ULIE L. ROMEY public assistance required to make the proposed Project financially feasible. SAN DIFGO GERAL➢ M. TRIMBLE PAULC.MARRA EXECUTIVE SUMMARY The Developer is proposing to acquire and rehabilitate the existing apartment project, and then to impose long-term income and affordability covenants on the units. The 10- unit Project is served by 22 parking spaces, and includes the following unit mix: 1. Four (4) one -bedroom units; 2. Four (4) two -bedroom units; and 3. Two (2) five -bedroom units. The Developer is requesting $2,263,000 in financial assistance from the Huntington Beach Redevelopment Agency (Agency) in return for allocating four units to very -low income households and six units to low income households. KMA preformed a financial gap analysis of the Project, and found that the Developer's assistance request is warranted by the Project's economic characteristics. If granted, the Agency assistance would be funded using Property Tax Increment Housing Set -Aside (Set -Aside) funds. 500 SOUTH GRAND AVENUE. SUITE 1480 D LOS ANGELES, CALIFORN IA 90071 > PHON E: 213 622 8095 > FAX: 213 622 5204 0808012:HTB:KHH:gbd W W W. KEYSERMA RSTON.COM 14066.005.030 To: Kellee Fritzal, City of Huntington Beach September 4, 2008 Subject: 17432 - 17442 Keelson Lane - Financial Gap Analysis Page 2 FINANCIAL GAP ANALYSIS KMA reviewed the pro forma analysis submitted by the Developer, and then independently prepared a financial gap analysis for the Project. The KMA pro forma analysis is presented at the end of this memorandum, and is organized as follows: Table 1: Estimated Development Costs Table 2: Stabilized Net Operating Income Table 3: Financial Gap Calculation ESTIMATED DEVELOPMENT COSTS (TABLE 1) Property Assemblage Costs The following assumptions are included in the KMA financial analysis: The Developer allocated $2.19 million for property acquisition costs, which includes $10,000 in closing costs. The identified costs represent the Developer's negotiated purchase price for the property. A property appraisal and purchase agreement are not currently available, but it is our understanding that this information will be provided for Agency review in the near future. 2. The Developer estimated the tenant relocation costs at $200,000. This estimate is based in part on the assumption that as many as five households may need to be permanently relocated due to overcrowding in the units. Additionally, the estimate includes a $50,000 contingency allowance. Recognizing that tenant relocation is ultimately the Agency's legal obligation, it would be prudent to obtain an independently prepared relocation plan prior to the commencement of the Project. Estimated Construction Costs The direct rehabilitation cost estimates were prepared by Starlight Construction, Inc. These estimates assume that State prevailing wage requirements will not be imposed on the Project. The KMA cost estimates are based on the following assumptions: Direct Costs a. The direct rehabilitation costs for the Project are estimated at $211,000, or approximately $21,100 per unit.' The rehabilitation scope includes the ' The costs include a 14% allowance for contractor's costs. 0808012:HTBXHH:gbd 14066.005.030 To: Kellee Fritzal, City of Huntington Beach September 4, 2008 Subject: 17432 - 17442 Keelson Lane - Financial Gap Analysis Page 3 removal and replacement of kitchen flooring and cabinets; removal and replacement of bathroom flooring, tubs, sinks and toilets; and the installation of dual pane windows. b. A $46,000 direct cost contingency allowance is provided; this equals 25% of the estimated rehabilitation costs. Given that a complete physical needs assessment has not yet been completed, an allowance of this size is appropriate. 3. Indirect Costs a. The architecture, engineering and consulting fees are estimated at 5.0% of direct costs. b. The public permits and fees are estimated at $940 per unit, or approximately $9,000. The City of Huntington Beach (City) staff should verify the accuracy of this estimate. C. A $5,000 allowance is provided for taxes, legal and accounting fees. d. The Developer estimated the insurance costs at $7,000, which equates to $700 per unit. e. The marketing and leasing costs are estimated at $1,000. f. The Developer Fee is set at $125,000 and is equal to approximately 5% of the total development costs; the estimate is in -line with industry standards. g. A soft cost contingency allowance equal to 5% of the indirect and financing costs is provided. 4. Financing Costs a. It is assumed that tenants will be allowed to remain in the units during the rehabilitation activities. The rent revenue received from the Project is anticipated to be sufficient to fund the debt service costs on the Project's financing. b. The construction and permanent loan origination fees are estimated at $14,000. C. A capital reserve equal to $11,000, o r $1,100 per unit is included. 0808012:HTB:KHH:gbd 14066.005.030 To: Kellee Fritzal, City of Huntington Beach September 4, 2008 Subject: 17432 - 17442 Keelson Lane - Financial Gap Analysis Page 4 As shown in Table 1, KMA estimated the total development costs at $2.84 million, or $283,700 per unit. The Developer's cost estimate is approximately equal at $2.82 million. Stabilized Net Operating Income (Table 2) Income Restrictions Any Agency assistance to the Project will be provided using Set-Asi de funds. The use of Set -Aside funds requires the Project to comply with the household income restrictions imposed by California Health and Safety Code (H&S) Section 50105 for very -low income households and Section 50079.5 for low-income households. Therefore, the Project will be subject to the following income restrictions: Income Restrictions # of Units Designated Requirements Very -Low Income 4 H&S Section 50105 Low Income 2 6 H&S Section 50079.5 Total 10 Affordable Rents The rents applied to all the units must comply with the calculation methodology defined in H&S Section 50053. The maximum allowable rents in 2008, net of the appropriate utility allowances, are as follows:3 One -Bedroom Two -Bedroom Five -Bedroom Units Units Units Very -Low Income Units $803 $899 N.A. Low Income Units $972 $1,089 $1,370 Net Operating Income (NOI) The gross income for the Project, including laundry and miscellaneous income, is estimated at $123,900. When the gross income is reduced by a 5% allowance for vacancy and collection expenses, the resulting effective gross income (EGI) is $117,700. KMA estimated the annual operating expenses for the Project as follows: 2 One low income unit will be reserved for an on -site manager. 3 Monthly Utility Allowance: $38 for one -bedroom units, $47 for two -bedroom units and $94 for five -bedroom units. 0808012:HTB:KHH:gbd 14066.005.030 To: Kellee Fritzal, City of Huntington Beach September 4, 2008 Subject: 17432 - 17442 Keelson Lane - Financial Gap Analysis Page 5 1. The general operating expenses are estimated at $4,500 per unit per year. 2. A management fee equal to 10% of the EGI is included. 3. The Developer will apply for the property tax abatement that is accorded to non- profit organizations that own and operate very -low and low income apartment units. The ongoing property tax expenses are related to any assessment overrides imposed on the property. 4. A $2,200 per year allowance is provided for annual tenant re certifications, audits and reports. 5. A $300 per unit per year allowance is provided for contributions to an operating reserve account. 6. A $250 per unit per year allowance is provided to fund a reserve account for future capital repairs. KMA estimated the total annual operating expenses are estimated at $66,100. This equates to $6,610 per unit. The NOI is equal to the difference between the EGI minus the operating expenses. Based on $117,700 in EGI and $66,100 in operating expenses, the stabilized NOI is estimated at $51,600. In contrast, the Developer estimated the NOI at $57,800. The primary reason for this $8,300 difference is that the Developer's operatin g expense estimates are lower than the KMA estimates. Financial Gap Calculation (Table 3) The financial gap is estimated by deducting the available outside funding sources from the Project costs. Based on the following assumptions, KMA estimates that the Project can support $562,000 in permanent financing: A 115% debt service coverage ratio; A 7.0% interest rate; and 3. A 30 year amortization period. Given the small size of the Project, it is not feasible and/or cost efficient to obtain outside assistance sources to leverage the Agency's assistance to the Project. Thus, the warranted Agency assistance is equal to the difference between the estimated Project costs and the $562,000 in available permanent financing. 0808012:HTBXHH:gbd 14066.005.030 To: Kellee Fritzal, City of Huntington Beach September 4, 2008 Subject: 17432 - 17442 Keelson Lane - Financial Gap Analysis Page 6 Based on current assumptions, the KMA financial gap calculations are as follows: Available Funding Sources $562,000 (Less) Total Development Costs 2,837,000) Financial Gap $2,275,000) As can be seen in the preceding table, the KMA analysis indicates that the Project requires $2.28 million in Agency assistance to achieve financial feasibility. Comparatively, the Developer has requested $2,263,000 in financial assistance. This $12,000 difference from the KMA estimate represents a less than 1% differential, which can be considered inconsequential. As such, it is the KMA conclusion that the Developer's request for $2,263,000 in Agency assistance is supported by the project economics. CONCLUSIONS/RECOMMENDATIONS The results of the KMA financial gap can be summarized as follows: The Developer's $2,263,000, or $226,300 per unit assistance request is warranted by the Project's economics. 2. The Agency staff should require the Developer to provide a copy of the appraisal and purchase agreement for the property as soon as the documents become available. Given that the relocation of tenants is ultimately the Agency's responsibility, the relocation of tenants and the associated costs should be evaluated by an independent relocation consultant en gaged by the Agency. In addition, the Agency should maintain authority over the distribution of proposed relocation budget and contingency. 0808012:HTB:KHH:gbd 14066.005.030 ! ATTACHMENT #4 i r✓'��,V^N iT rvc o a z_�coun�T ca�;� CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICATION FINANCE DEPARTMENT TO: FRED A. WILSON, CITY ADMINISTRATOR FROM: DAN T. VILLELLA, CPA SUBJECT: FIS 2008-09-03 Approve Affordable Housing Agreement with Colette's Children Home, Inc. for Acquisition and Rehabilitation of 17432-17442 Keelson Lane DATE: DECEMBER 2, 2008 As required by Resolution 4832, this Fiscal Impact Statement has been prepared for "Approve Affordable Housing Agreement with Colette's Children Home, Inc. for Acquisition and Rehabilitation of 17432-17442 Keelson Lane." If the City Council approves this action (total appropriation $2,262,833), the estimated undesignated fund balance of the Low Income Housing Fund at September 30, 2009 will be reduced to $2,480,000. an T. Villella, CPA DTV/rs INITIATING DEPARTMENT: Economic Development Department SUBJECT: Acquisition Rehabilitation 17432-17442 Keelson Lane- Colette's Children Home COUNCIL MEETING DATE: December 15, 2008 RCA ATTACHMENTS, STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Tract Map, Location Map and/or other. Exhibits Attached Not Applicable ❑ Contract/Agreement (w/exhibits if applicable) Attached (Signed in full by the City Attorney) Not Applicable ❑ Subleases, Third Party Agreements, etc. Attached ❑ (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not Applicable Fiscal Impact Statement (Unbudgeted, over $5,000) Attached Not Applicable ❑ Bonds (If applicable) Attached ❑ Not Applicable Staff Report (If applicable) Attached ❑ Not Applicable Commission, Board or Committee Report (If applicable) Attached ❑ Not Applicable Findings/Conditions for Approval and/or Denial Attached ❑ Not Applicable EXP LAHATIOH FOR (IVliv I=NG ATTACG;I�Ii EDITS REVIEWED RETURNED _,FOR*AjkDED Administrative Staff ( ) ) Deputy City Administrator (Initial) ( ) ) City Administrator (Initial) ) ( ) City Clerk ( ) I EXPLANATION FOR RETURN OF ITEM: I RCA Author: Terri King X8831