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HomeMy WebLinkAboutFOUNTAINS HUNTINGTON BEACH, LLC. - SENIOR APARTMENT COMPLEX - 2002-01-22d� - R FOS, %P. NV - (a � C'. PLlym) ibN-w- CouncillAgency Meeting Held: Deferred/Continued to: Approved ❑ Conditionally Approved O enie i y Cler Signature Council Meeting Date: .January 22, 2002 Department ID Number: ED 02-02 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGEN6y- MEMBERS mar-_ D '7Z: SUBMITTED BY: RAY SILVER, Executive Director Cl �yI 4. 4 PREPARED BY: DAVID C. BIGGS, Deputy Executive Director ) n SUBJECT: Adopt a Resolution Approving an Owner Participation Agreement with Fountains Huntington Beach, LLC. For the Development of the Fountains Huntington Beach Senior Apartment Complex i Smen�of ssue, Funding Source, Recommended Action, Alternative Action(s). Anatysls, Environmental Status, Attachment(s) Statement of Issue: An Owner Participation Agreement (OPA) 1 Affordable Housing Agreement between the Redevelopment Agency and Fountains Huntington Beach, LLC., is submitted for Redevelopment Agency approval. This agreement provides for a residual receipts loan in the amount of $2 million of Redevelopment Agency Housing set aside funds for the purpose of reducing the rents on 80 units for low and lower income senior households for a period of 60 years in The Fountains Huntington Beach Senior Apartments. The project is being built on the property located at the southwest corner of Main Street and Gothard Street (formerly Clay Avenue), immediately behind the new Seacliff Shopping Center. Two Redevelopment Agency resolutions are submitted for adoption: (1) A Resolution approving the Owner Participation Agreement/Affordable Housing Agreement allowing the Agency to invest in low and moderate income housing outside the Project Area, and (2) A Resolution allowing the Agency to substitute bond proceeds as the source of financing for this project, at a later date, should it become feasible and necessary. Funding Source: Up to $2 million of Agency Housing set aside funds are budgeted in the Fiscal Year 2001-2002 budget, account number 30680301.82000. Agency Recommended Action: Motion to: 1. Adopt Resolution No. 329 approving the Owner Participation Agreement/Affordable Housing Agreement by and between the Redevelopment Agency of the City of Huntington Beach and Fountains Huntington Beach, LLC. REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: January 22, 2002 DEPARTMENT ID NUMBER: ED 02-02 2. Adopt Resolution No. 330, of the Redeve!opment Agency of the City of Huntington Beach declaring an intention to reimburse expenditures from the proceeds of tax-exempt obligations and directing certain actions. 3. Authorize execution and recordation of the OPA, all attachments, and other necessary documents by the Agency Chairman, Agency Clerk, and the Executive Director, when advised by the Agency's General Counsel. 4. Temporarily waive the Agency's insurance requirements for the purpose of approving the Agency loan. Direct staff to ensure that insurance requirements as described in the Owner Participation Agreement are met by Fountains Huntington Beach, LLC. by the close of escrow. Alternative Action(s): Do not approve the Owner Participation Agreement and refer back to staff for changes. Analysis: Pacific Gulf Properties, LLC has acquired the property located on the southwest comer of Main Street and Gothard Street (formerly Clay Avenue), immediately behind the Seacliff Shopping Center. Fountain Glen has been approved by the Planning Commission to develop the property for a 271-unit, senior apartment complex. The proposal includes 80 units to be reserved for Very -Low and Lower -income seniors and charge affordable housing rents. The balance of the units will become market rate units. The developer may be submitting an application for tax credits and/or obtaining multi family Fannie Mae Public Facility Bonds in order to finance part of the costs of the project. The sum of $2 million is being requested in assistance from the Redevelopment Agency of the City of Huntington Beach in order to reduce the rents of the 80 units to affordable levels. These 80 low-income units will be kept affordable for a period of 60 years. The mix of affordable units will be as follows: 1. Forty-one (41) of the one -bedroom units must be rented to households earning less than 50% of the County Median Income (Very Low Income). 2. Nineteen (19) of the one -bedroom units must be rented to households earning less than 80% of the County Median Income (Lower Income). 3. Fourteen (14) of the two -bedroom units must be rented to households earning less than 50% of the County's Median Income (Very Low Income). 4. Six (6) of the two -bedroom units must be rented to households earning 80% or less than 80% of the County Median Income (Lower Income). IiwoodRCA -2- 111410211:14 AM REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: January 22, 2002 DEPARTMENT ID NUMBER: ED 02-02 The County Median Incomes for the Year 2001 are as follows: Number of Persons Very Low Income Lower Income Maximum Allowable per Household 50% of Median 80% of Median Rent Income Income 1 $25,800 $36.750 1 Br. $736.88 2 $29,500 $42,000 2 Br. $829.38 Incomes are adjusted annually by the Department of Housing and Urban Development (HUD) and reflect incomes in the Orange County area. The Ardency will provide a $2 million residual re;.eipts loan at a rate of 5% simple interest. There will be annual payments on the note equivalent to 1.67% of the principal amount, plus accrued interest. The Agency shall waive the payment to be made by Fountains Huntington Beach, LLC, so long as the Fountains Huntington Beach is not in default of its obligation under the OPA. The loan will be funded after 20 affordable units are placed in operation and occupied by Very Low and Lower Income seniors. A restrictive covenant will be recorded and secured against the property. The Developer will be required to file annual reports with the Agency on tenant income and eligibility for residency in restricted units. It will also be required to guarantee $150 per unit per year for reserve for replacement. Annual audit reports will be required to ascertain the above -mentioned information. In addition, the Agency will annually monitor the information submitted by the Developer for compliance with project requirements. The Developer has 120 days from the execution of the OPA in which to begin construction, which is already under way, and 24 months in which to complete it. The project will be constructed in accordance with City approved plans and entitlements. The Agency will have the right to approve any subsequent buyers of the property. Environmental Status: None for this action. Attachments 1. Redevelopment Agency Resolution No. 2. 3 4 approving an Owner Participation Agreement/Affordable Housing Agreement with the Fountains Huntington Beach, LLC. 2. Redevelopment Agency Resolution No. 350 . declaring its intention to reimburse expenditures from the proceeds of tax-exempt obligations and direct certain actions. 3. Owner Participation Agreement/Affordable Housing Agreement by and Between Redevelopment Agency of the City of Huntington Beach and Fountains Huntington Beach, LLC. RCA Author: Gus Duran X1529 HWoodRCA -3- 1/1410211:14 AM Resolution Approving an Owner Participation Agreement/Affordable Housing Agreement with the Fountains Huntington Beach, LLC ATTACHMENT #1 RESOLUTION NO. 329 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVING AN OWNER PARTICIPATION AND AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND FOUNTAINS HUNTINGTON BEACH, LLC WHEREAS, Cala., ornia Health and Safety Code Section 33334.2 and the Redevelopment Plan for the Huntington Beach Redevelopment Project ("Project Area") authorize and direct the Redevelopment Agency of the City of Huntington Beach ("Agency") to expend not less than twenty percent (20%) of all taxes which are allocated to the Agency pursuant to California Health and Safety Code Section 33670 (all section references herein are to the Health and Safety Code unless otherwise specified) for the purpose of increasing, improving and preserving the community's supply of low and moderate income housing available at affordable housing cost to persons and families of low and moderate income, lower income, and very low income; and Pursuant to applicable law, the Agency has established a Low and Moderate Income Housing Fund ("Housing Fund"); and Pursuant to Section 33334.2(e), in carrying out its affordable housing activities, the Agency is authorized to provide subsidies to or for the benefit of very low income and lower income households, or persons and families of low and moderate income to the extent those households cannot obtain housing at affordable costs on the open market; and Pursuant to Section 33334.2(g), City Council Resolution No. 6026 dated June 26, 1989, and Agency Resolution No. 174 dated June 26, 1989, the Agency is authorized to make expenditures from the Housing Fund outside redevelopment project areas if such use will be of benefit to one or more of the project areas; and The Agency is required pursuant to Section 33413 to rehabilitate, develop or construct replacement dwelling units for those units housing persons and families of lower income which have been destroyed or removed from the lower income housing market as part of a redevelopment project; and The Agency has destroyed and removed certain units which housed persons of lower income within the Project Area; and In order to carry out and implement the redevelopment plan for the Project and the affordable housing requirements thereof, the Agency proposes to enter into an Owner Participation Agreement ("OPA") «ith Fountains Huntington Beach, LLC, a Delay; -are limited liability company ("Developer'), for the development of affordable housing on a site located outside the Project Area ("Site"), as described in the OPA; and PDA: 2002 Resol: Fountains 1-7-02 Res. No. 329 The Agency has duly considered all terms and conditions of the proposed OPA and believes that the development of the Site pursuant to the OPA is in the best interests of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable State and local law requirements; and Pursuant to Section 15326 of the Guidelines to the California Environmental Quality Act, the rehabilitation project is categorically exempt under CEQA; and The Agency has considered the report of Agency staff on the proposed rehabilitation project to be carried out pursuant to the OPA; NOW, THEREFORE, the Redevelopment Agency of the City of Huntington Beach does hereby resolve as follows: 1. The Agency finds that the Agreement is categorically exempt under CEQA, pursuant to Section 15326 of the Guidelines to the California Environmental Quality Act. 2. The Agency finds and determines that expenditures from the Housing Fund as contemplated by the Agreement will directly and specifically benefit, improve, and preserve the community's supply of louver income housing «7thin the meaning of Section 33334.2. 3. The Agency finds and determines that expenditures from the Housing Fund as contemplated by the Agreement are of benefit to the Project Area. 4. The Agency finds and determines that the housing units to be developed by the Agreement which are restricted to persons and families of lower income qualify as replacement dwelling units for those dwelling units in the Project Area which were destroyed and removed pursuant to the Redevelopment Project. 5. The Chairman of the Agency is hereby authorized to execute the OPA and related documents on behalf of the Agency. A copy of the OPA when executed by the Agency shall be placed on file in the office of the Secretary of the Agency. 6. The Executive Director of the Agency (or his or her designee) is hereby authorized, on behalf of the Agency, to sign all documents necessary and appropriate to carry out and implement the OPA and to administer the Agency's obligations, responsibilities and duties to be performed under the OPA and related documents. PDA: 2002 Rcsol: Fountains 1-7-02 Res. No. 329 PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the 22nd_ day of January , 2002. ATTEST: Agency Clerk 01;gs-02 REVIEWED AND APPROVED: Execu,IL ve Director 3 PDA. 2002 Rcsol: Fountains 1-7-02 APPROVED AS TO FORM: Jz 4 ,aAAgency General Counsel INITIATED AND APPROVED: ✓'� 7, $trL-ct Deputy Executive Director Res. No. 329 STATE OF CALIFORNIA y COUNTY OF ORANGE ) ss CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at a regular meeting of said Redevelopment Agency held on the 22nd day of January, 2002 and that it was so adopted by the following vote: AYES: Green, Dettloff, Bauer, Cook, Boardman NOES: None ABSENT: Houchen ABSTAIN: None - Clerk of the Redevelopment Agency of the City of Huntington Beach, CA Resolution Approving declaring its intention to reimburse expenditures from the proceeds of tax-exempt obligations and direct certain actions ATTACHMENT #2 RESOLUTION NO. 330 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH DECLARING INTENTION TO REIMBURSE EXPENDITURES FROM THE PROCEEDS OF TAX-EXEMPT OBLIGATIONS AND DIRECTING CERTAIN ACTIONS WHEREAS, the Redevelopment Agency of the City of Huntington Beach or a public entity associated therewith (the "Issuer") intends to issue tax-exempt obligations (the "Obligations') for the purpose, among other things, cf assisting in the financing of the development of an affordable senior housing residential facility generally located at the southwest corner of Main Street and Clay Avenue in the City of Huntington Beach, California (the "Projecf); and United States Income Tax Regulations secticr,1.103-18 provides generally that proceeds of tax-exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, among which is a requirement that (with certain exceptions), prior to the payment of any such expenditure, the issuer must declare an intention to reimburse such expenditure; and It is in the public interest and for the public benefit that the issuer declare its official intent to reimburse the expenditures referenced herein; NOW, THEREFORE, BE IT RESOLVED that the Redevelopment Agency of the City of Huntington Beach DECLARES and ORDERS as follows: 1. The Issuer intends to issue the Obligations for the purpose of paying the costs of financing the acquisition and development of the Project. 2. The Issuer hereby approves the financing of the Project with the proceeds of the Obligations subject to the approval by the Issuer of the bond documents to be executed in connection therewith. 3. The Issuer hereby declares that it reasonably expects that a portion of the proceeds of the Obligations will be used for reimbursement of expenditures for the acquisition and development of the Project that are paid before the date of initial execution and delivery of the Obligations. 4. The maximum amount of proceeds of the Obligations to be used for reimbursement of expenditures for the acquisition, rehabilitation and development of the Project that are paid before the date of initial execution and delivery of the Obligations is $2,000,000.00. 5. The foregoing declaration is consistent with the budgetary and financial circumstances of the Issuer, in that there are no funds (other than proceeds of the Obligations) PDA: 2001 Resol: Agency -Declaring Intention RLS 2001-0385 5R&'01 Res. No. 330 that are reasonably expected to be (i) reserved, (ii) allocated or (iii) otherwise set aside, on a long-term basis, by or on behalf of the issuer, or any public entity controlled by or associated with the Issuer for the expenditures for the acquisition and development of the Projects that are expected to be reimbursed from the proceeds of the Obligations. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the 22nd day of January , 20W ATTEST• Agency Clerk al- oz REVIEWED AND APPROVED: Excodive Director 2 FDA: 2001 Resol: Agency-Dcclaring intention RLS .1001-0383 W28.'01 Chairman APPROVED AS TO FORM: gency General Counsel0 for {� 1Nff TED AND APPROVED: C. )w Deputy Execut' •e Director Res. No. 330 STATE OF CALIFORNIA ] COUNTY OF ORANGE ] ss CITY OF HUNTINGTON BEACH ) i, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at a regular meeting of said Redevelopment Agency held on the 22nd day of January, 2002 and that it was so adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: Green, Dettloff, Bauer, Cook, Boardman None Houchen None Clerk of the Redevelopment Agency of the City of Huntington Beach, CA Owner Participation Agreement/Affordable Housing Agreement by and between the Redevelopment Agency of the City of Huntington Beach and Fountains Huntington Beach, LLC. ATTACHMENT #3 OWNER PARTICIPATION AGREEMENT By and Between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic and FOUNTAINS HUNTINGTON BEACH, LLC, n Delaware limited liability company k/ 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 PIan 6 2.3 Reserved 5 2.4 Term of Agreement 6 2.5 Prohibition Against Transfers; Rights of First Refusal 6 SECTION 3. FINANCING AND OWNERSHIP OF THE SITE 8 3.1 Ownership of the Site 8 3.2 Agency Financial Assistance 8 3.3 Form of Agency Financial Assistance; 8 Purpose of Note and Security 3.4 Escrow 8 3.5 Agency's Condition to Closing 10 3.6 Participant's Conditions to Closing 10 3.7 Broker's Fees 11 3.8 Conventional Lender First Deed of Trust 11 3.9 Subordination Agreemen,(s) 11 3.10 Subordination to Other Financing 12 SECTION 4. DEVELOPMENT OF THE SITE: 12 4.1 General 12 4.2 Construction of the Project 11 4.3 Insurance 13 4.4 Indemnification 14 4.5 Hazardous Materials 15 4.6 Security Financing; Right of Holders 15 SECTION 5. USE OF THE SITE 16 5.1 No Inconsistent Uses 16 5.2 Regulatory Agreement 16 5.3 Relocation 16 5.4 Maintenance of the Site 16 5.5 Nondiscrimination 16 5.6 Form of Nondiscrimination and Nonsegregation Clauses 17 5.7 Effect and Duration of Covenants 17 5.9 Creation of Capital Reserve Accounts 18 5.9 Capital Reserves 18 5.10 Reserved 18 5.11 Financial Statements 18 5.12 Operation of Project 18 5.13 Lead -Based Paint 19 5.14 Barriers to the Disabled 19 SECTION 6. DEFAULTS AND REMEDIES 19 6.1 Participant Defaults 19 6.2 Agency Defaults 19 6.3 Notice of Default 20 6.4 Agency's Remedies 20 6.5 Participant's Remedies 20 6.6 Rights and Remedies are Cumulative 20 SECTION 7. GENERAL PROVISIONS 21 7.1 Participant's Warranties 21 7.2 Governing Law 21 7.3 Attorneys' Fees 21 7.4 Notices, Demands and Communications 22 Between Parties 7.5 Acceptance of Service of Process 22 7.6 Conflicts of Interest 22 7.7 Titles and Captions 22 7.8 Gender 22 7.9 Modifications 22 7.10 Merger of Prior Agreements and Understandings 23 7.11 No Third Parties Benefited 23 7.12 Assurances to Act in Good Faith 23 7.13 Warranty Against Payment of Consideration 23 for Agreement 7.14 Nonliability of Agency Officials and Employees 23 7.15 Interpretation 23 7.16 Counterparts 23 7.17 Severability 23 7.18 Extension of Times of Performance 23 7.19 Inspection of Books and Records 23 7.20 Waivers 24 SECTION 8. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE 24 ii P- - Exhibits Exhibit A Legal Description Exhibit B Site Map Exhibit C Fannie Mae Subordination Agreement Affordable Housing Form 4503 Exhibit D Schedule of Performance Exhibit E Promissory Note Exhibit F Deed of Trust Exhibit G Regulatory Agreement Exhibit H Subordination Agreement in OWNER PARTICIPATION AGREEMENT THIS OWNER PARTICIPATION AGREEMENT ("Agreement") is entered into as of January 22 , M ("Effective Date") by and between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"), and FOUNTAINS HUNTINGTON BEACH, LLC, a Delaware limited liability company ("Participant"). RECITALS A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (California 11ealth and Safely Cocle Section 33000 et seq.). B. Participant is the owner of the "Site" (as such term is defined herein) and intends to develop the "Project" (as such term is defined herein) on the Site in accordance with the terms of this Agreement. C. Agency desires to meet its affordabl-- housing goals pursuant to the California Community Redevelopment Law by assisting Participant in the development of affordable housing on the Site and to facilitate the continued affordability of 80 of the 271 total units on the Site. After construction, the affordable units for Project shall be rented to tenants whose household incomes do not exceed low income and very low income as defined by California law. Agency's assistance shall be in the form of a loan in the amount of TWO MILLION DOLLARS (S2,000,000) to assist Participant in meeting the cost of providing and maintaining affordable units on the Site. D. Pursuant to the California Redevelopment Law, Agency has established a Housing Set Aside Fund and has deposited therein certain tar revenues made available to the Agency exclusively for the purpose of increasing and improving the community's supply of affordable low and moderate income housing, including very low income housing ("Set Aside Funds"). Agency's loan to Participant shall be funded from Set Aside Funds. 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: PDA's: 2)01 Agrcc: Fountains 11unlington Dcach: OPA RLS 2000-626 12-27-01 The tens "Affordable Units" shall mean the eighty (80) dwelling units to be rented to Eligible Tenants in the Project and subject to rent restrictions as set forth in the Regulatory Agreement. 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 Alain Street, Huntington Beach, CA 92648, and any assignee of, or successor to, the rights, powers, and responsibilities of Agency. The tern "Agency Deed of Trust" shall mean the Deed of Trust attached as Exhibit "F"' hereto. The term "Agency Loan" shall mean the Agency's loan to Participant in the amount of Two Million Dollars ($2,000,000) of Set Aside Funds, as evidenced by the Agency Note and secured by the Agency Deed of Trust. The term ",Agreement" or any reference to this "Agreement" shall mean this Owner Participation Agreement executed by and between Agency and Participant, including all exhibits attached hereto, which exhibits are incorporated herein by this reference and all other documents incorporated herein by reference. The term "Cite" shall mean the City of Huntington Beach, a municipal corporation, having its offices at 2000 Main Street, Huntington Beach, CA 92648. The term "Confirming Appraisal Process" shall mean the process by which the Agency promptly retains, at its cost, an MAi appraiser to estimate the value of the Site (including all improvements thereon) in a second written appraisal. Upon completion of the second appraisal, it shall be forwarded to both the Agency and the Parlicipant for review. If the Participant agrees with the value determined in the second appraisal, then that value shall be the Value for purposes of this Agreement. If the second appraisal is deemed unacceptable by the Participant, then the Participant shall so notify the Agency in writing within seven (7) calendar days of delivery of said second appraisal to the Participant. The notice to the Agency shall describe the specific objections of the Participant to the second appraisal. If the Agency and the second appraiser agree to remedy the objections made by the Participant, or if the Participant fails to object to the second appraisal in writing prior to the end of the seven-day period, then the second appraisal shall stand and the value set forth therein shall be the Value for purposes of this Agreement. If the Agency or the appraiser do not agree to remedy the objections made by the Participant, then the Participant shall promptly retain a third MAI appraiser, at its cost, to estimate the value of the subject property in a third written appraisal. The third appraisal shall be sent to both the Participant and the Agency. Upon delivery of the third appraisal, the Agency and the Participant shall promptly calculate the Value for purposes of this Agreement as the average value of the two closest appraisals. The term "Conventional Lender" shall mean one or more lenders of Participant's choice providing funds for Participant's acquisition, construction, equipping or refinancing of the Project as follows. (a) during the first ten (10) years following the Effective Date, in an amount PD,%,!s: 2001 Agree: rwmains I luminpwn Beach: OPA RLS 2003-626 12-27-01 t� not to exceed seventy-five percent (75%) of the Value of the Site; and (b) at any time following the tenth (IUh) anniversary of the Effective Date, in an amount not to exceed eighty percent (80%) of the Value of the Site. The term "Conventional Loan" shall mean a loan from a Conventional Lender in connection with the Project in which the participant grants a mortgage, deed of trust, or otherwise conveys the Site as security for such loan. 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 speci Pied. '! The term Effective Date shall mean the first day of the month, in the yearN h following the date the Agency's governing body approves this Agreement and authorizes its Chairman to sign it; which date shall be inserted into the preamble of this Agreement. The term "Eligible Tenant" shall mean any person entitled to rent a Unit as set forth in the Regulatory Agreement. The term "Executive Director" shall mean the individual duly appointed to the position of Executive Director of the Agency, or authorized designee. Whenever an administrative action is required by Agency to implement the terms of this Agreement, the Agency Executive Director, or an authorized designee, shall have authority to act on bchal f of Agency, except with respect to matters reserved under California law wholly for Agency Board determination. The term "First Deed of Trust" shall mean a deed of trust securing the Conventional Loan. The term "Force Nlajeure" shall mean any war; insurrection; strike; lock -out; labor dispute; riot; flood; earthquake; fire; casualty; Act of God; act of the public enemy; epidemic; quarantine; restriction; freight embargo; unavoidable lack of transportation; governmental restriction; unusually severe weather; inability to secure necessary labor, materials, or tools; delay of any contractor, subcontractor or supplier; economic or market conditions; lack of tenant commitments or tenant changes; inability to secure satisfactory financing; act of the other party including act or failure to act of City or any other public or governmental agency or entity (except that any act or failure to act of City or Agency shall not excuse performance by Agency); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. The term "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 PI ,Vs: 2001 Agree: Fountains Iluntinpon Beach: OPA R!S 2000-626 12-27-01 disposed of in the manner and in amounts that are consistent with normal practice and legal standards. The term "HUD" means the United States Department of Housing and Urban Development. The term "Lease" means the lease or rental agreement entered into between Participant and a tenant of a Unit in the Project. The term "Low Income Ilouseholds" shall mean a family or individual whose annual income does not exceed eighty percent (80°!0) of the median income for the Orange County Metropolitan Statistical Area (PMSA) as determined by HUD with adjustments for smaller and larger families. The term "Median Income" means the median income for the Orange County Primary Metropolitan Statistical Area (PMSA), with adjustments for household size, as determined from time to time by the U.S. Department of Housing and Urban Development (HUD) pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. The term "'Note" shall mean that certain Promissory Note securing by that certain Deed of Trust attached here to as Exhibit "E." The term "Participant" shall mean Fountains Huntington Beach, LLC, a Delaware limited liability company, whose address is 4220 Von Karman, Second Floor, Newport Beach, CA 92660, or its successors or assigns. The term "Project" shall mean generally the construction of 271 apartment units on the Site and the subsequent rental of eighty (80) Units therein to Eligible Tenants, pursuant to the procedures set forth herein and more particularly described in the Scope of Development. The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions attached hereto as Exhibit "G." The term "Schedule of Performance" shall mean that certain schedule attached hereto as Exhibit "D" setting forth the times upon which performance by the parties under this Agreement is clue. The term "Set Aside Funds" shall mean the fund established by Agency pursuant to California Redevelopment Law, wherein certain tax revenues have been deposited and made available to the Agency exclusively for the purpose of increasing and improving the community's supply of affordable low and moderate income housing, including very low income housing. 4 PD.Vs: 2001 Agm: Fountains IluntinFton Beach: OPA RLS 2000-626 t 2-27-01 ;L11 The term "Site" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California, Huntington Beach, California, and legally described in Exhibit "A" and depicted on the Site Map, and all improvements thereon or thereto. The term `Site Map" shall mean the map attached hereto as Exhibit "B" depicting the location of the Site. The term "Subordinated Deed of Trust" shall mean the form of Subordinated Deed of Trust attached hereto as Exhibit "F." The term "Subordination Agreement" shall mean the form of Subordination Agreement attached hereto as Exhibit " ll." The term "Value" shall mean the fair market value of the Site (including all improvements thereon) as determined by a duly qualified and licensed MAI real estate appraiser in a report issued no later than six months prior to the date of determination. The Participant shall select the appraiser and all fees and costs of the appraiser shall be borne by the Participant. The appraisal report prepared by the appraiser shall be delivered to the Agency for its review. If the appraisal is deemed unacceptable by the Agency, then the Agency shall so notify the Participant in writing within seven (7) calendar days of delivery of said appraisal to the Agency. The notice to the Participant shall describe the speci fic objections of the Agency to the appraisal. If the Participant and the appraiser agree to remedy the objections made by the Agency, or if the Agency fails to object to the appraisal in writing prior to the end of the seven-day period, then the appraisal shall stand and the value set forth therein shall be the Value for purposes of this Agreement. If the Participant or the appraiser do not agree to remedy the objections made by the Agency, the Agency and the Participant shall, no later than five (5) calendar days after receipt of the written objections, conduct the Confirming Appraisal Process, and the value determined under said Confirming Appraisal Process shall be the Value for purposes of this Agreement. The tern "Very Low Income Ilouseholds" shall mean a family or individual whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Metropolitan Statistical Area as determined by HUD with adjustments for smaller and larger families. SECTION 2. SUBJECT OF THIS AGREENIFN'r 2.1 Purpose of the Agreement (a) The purpose of this Agreement is to implement the Community Redc%-elopment Law by providing the Agency Loan to assist Participant in the development of affordable housing in the City of Huntington Beach, in the amount of Two Million Dollars ($2,000,000), as evidenced by the Note secured by the Agency Deed of Trust, which Agency Loan is composed of Set Aside Funds. PDX's: 2001 Agee: rountains I luntington Brach: OPA RI.S 2000-626 12-27-01 (b) This Agreement is intended to facilitate Participant's development of affordable housing on the Site and maintain 80 Units at affordable levels for rental to Eligible Tenants, as that term is defined herein. 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 80 of the Units restricted to occupancy to Low Income Households and Very Low Income Households in accordance with the Regulatory Agreement. 2.2. The Redevelopment Plan. This Agreement is made in accordance with the Huntington Beach Redevelopment Project (the "Merged Redevelopment Projecf) which was approved by adoption of Ordinance No. 3343 on December 16, 1996, and which merged together four different, previously approved project areas. The Site is Iocated 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 Reserved. 2.4 Term of AMement. The tern of this Agreement shall be for a period of sixty (60) years or until the Agency Loan is paid, prepaid or converted to a grant in full, whichever occurs later; with such period commencing on the Effective Date of this Agreement. 2.5 Prohibition Against Transfers, Right of First Refusal. (a) The qualifications and identity of the Participant are of particular concern to the Agency. it is because of those qualifications and identity that the Agency has entered into this Agreement with the Participant. No voluntary or involuntary successor in interest of the Participant shall acquire any rights or powers under this Agreement except as expressly set forth in subparagraph (i) bclow or otherwise as sct forth herein. (b) Participant agrees that Participant shall not sell the Site during the term of this Agreement, unless and until Participant has given to Agency notice in %&Titing of its intent to sell, specifying the identity of the prospective buyer and the price and terms of the contemplated sale. Within ninety (90) days after Participant gives Agency written notice of Participant's intent to sell, Agency shall have the right to purchase the Site at the same price and on the same terms and conditions set forth in Participant's written notice of intent to sell. To exercise its option, Agency must, within the same ninety day period, deposit in escrow with any escrow company in Orange County, California, all moneys and instruments required by the terms of the offer to be paid or delivered to Participant on close of escrow and shall also give Participant written notice of the deposit. In the event Agency does not exercise the option to purchase in accordance with the provisions of this Section, Participant may sell the Site to the third party malting the offer on the same terms and conditions set forth in that offer. if for any reason the Site is not sold to the PDA,'s: 2001 Agree: rountains IIunting:on beach: oPA RLS 2o00-626 12-27-01 party making the offer, Participant shall give Agency the same right to purchase the Site on receiving any subsequent offer from any unrelated third party that is acceptable to Participant. (c) Other than as set forth in paragraph (i) below, for the reasons cited above, the Participant represents and agrees for itself and any successor in interest that without the prior written approval of the Agency, there shall be no si�tificant change in the ownership of the Participant or in the relative proportions thereof, or with respect to the idcntity of the parties in control of the Participant or the degree thereof, by any method or means. (d) The Participant shall promptly notify the Agency of any and all changes whatsoever in the identity of the parties in ownership and/or in control of the Participant or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge of information. Except for a transfer described in paragraph (i) below, this Agreement may be terminated by the Agency and the Agency may exercise its remedies pursuant to the Note and Agency Deed of Trust, if there is any significant change (voluntary or involuntary) in membership, ownership, management or control, of the Participant (other than such changes occasioned by the death or incapacity of any individual) without the written consent of the Agency. (e) Participant shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any right hercin. 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, except as expressly permitted by this Agreement including subparagraph (i) below. Consent to a Transfer shall not result in acceleration of the Note. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Participant. Any such proposed transferee, by instrument in writing satisfactory to the Agency and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the Agency shall expressly assume all of the obligations of the Participant under this Agreement and agree to be subject to all conditions and restrictions applicable to the Participant in this Agreement. There shall be submitted to the Agency for review all instntments and other legal documents proposed to effect any such Transfer, and if approved by the Agency its approval shall be indicated to the Participant in writing. (f) In the absence of specific written agreement by the Agency, no unauthorized Transfer, or approval thereof by the Agency, shall be deemed to relieve the Participant or any other party from any obligations under this Agreement. (g) Consent to any 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. 7 PD,Vs: 2001 Agree: Fountains 11untintton Ocach: OPA R[S 2000-620 12-27-01 (i) The Agency acknowledges that the Participant is currently conducting a corporate restructuring and that the Participant intends to transfer the Project to a new entity. Accordingly, notwithstanding the foregoing or anything else in this Agreement to the contrary, the Participant may Transfer the Site or the Project to (i) any affiliated entity or (ii) any other entity that shares substantially the same management as the management of the Participant on the Effective Date of this Agreement, without obtaining the consent of the Agency or otherwise complying with paragraphs (a) through (h) of this Section 2.5. SECTON 3. FINANCING AND OWNERS111I' OF T11F. SITE. 3.1 Ownership of the Site. As of the Effective Date of this Agreement, Participant is the owner of the Site and as such Participant qualifies as an `owner -participant" within the meaning of the Community Redevelopment Law (11calth cf Safety Code § 33000 et seq.). 3.2 Agency Financial Assistance. The Agency in accordance with the terms of this Agreement, shall provide to Participant the Agency Loan. Upon Close of Escrow, the Agency Loan shall be disbursed to Participant. 3.3 Form of Agency Financial Assistance, Purpose of Note and Security. In the event Participant is in Material Default of any of its obligations hereunder, including its obligations under the Regulatory Agreement, the entire principal balance of the Agency Loan including all accrued 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 accrued interest; or (b) foreclose on the Site under the Agency Deed of Trust. 3.4 Escrow, This Agreement, once deposited in Escrow, shall constitute joint escrow instructions of Agency and Participant. The Escrow agent, the First American Title Company, is hereby empowered to act under the Agreement upon indicating its acceptance in writing to Agency and Participant within five (5) days after receipt of this Agreement; provided, however, that any undertaking by the Escrow agent of any of the acts or services set forth in this Agreement shall constitute acceptance of the obligation to perform as Escrow agent under this Agreement. Any amendment to the Escrow instructions contained herein shall be in writing and signed by both Agency and Participant. (a) Closing Date. On or before the date established in the Schedule of Performance, the parties shall satisfy the conditions described in Sections 3.5 and 3.6 and complete the Close of Escrow. If, for any reason, the Close of Escrow has not occurred by the date provided therefor in the Schedule of Performance, either party may terminate this Agreement, by providing written notice of termination to the other party, or may extend the date scheduled for Close of Escrow with the consent of the other party. (b) Delivery of Documents and Funds by Participant. On or before twelve noon on the last business clay prior to the scheduled Closing Date, Participant shall deposit or cause to be deposited with the Escrow agent the following: s PMNA: 2001 Agree: Fountains I luntinglon Beach: OPA RIS 200)-626 12-27-01 V (i) the Note, executed by Participant; (ii) the Agency Deed of Trust, including the Rider thereto, executed and acknowledged by Participant; (iii) the Regulatory Agreement, executed and acknowledged by Participant; and (iv) All funds, other documents, and deposits Participant is required to deposit with Escrow agent in order to close the Escrow and disburse the funds to Participant. (c) Deliveryof 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 and acknowledged by Agency; (ii) the Regulatory Agreement, executed and acknowledged by Participant; and (iii) the proceeds of the Agency Loan. (d) Recordation. Escrow agent is directed, on the Closing Date, to record against the Site the following documents in the following order of priority: (i) the Agency Deed of Trust; and (ii) the Regulatory Agreement. One or more Subordination Agreements, if required to effectuate the proper priority of the deeds of trust of the Conventional Lenders and the Agency, and the Regulatory Agreement, shall be recorded at the direction of Participant in accordance with the terms of this Agreement. (e) Escrow Agent Duties. The Escrow agent shall (i) record the documents as provided in subparagraph (d); and (ii) at Closing, deliver the original Note to Agency and a conformed copy of same to Participant, and upon recordation deliver to Agency the original of the Agency Deed of Trust and the Regulatory Agreement and a conformed copy of each document to Participant. (f) Interest Bearing Accounts. Escrow agent shall hold all funds received in an interest bearing account with the interest accrued paid at Closing to the party depositing such funds. (g) Title insurance. Escrow agent shall deliver to Agency at Closing a CLTA standard form lender's policy of title insurance, in the amount of the Agency Loan and any Conventional Loans, issued by a title insurer acceptable to Agency, insuring in favor of Agency the priority of the Agency Deed of Trust and Regulatory Agreement in accordance with PDAIs: 2001 Ague: Fountains I luntingum Brach: OPA RLs 200-626 12-27-01 the priority established by this Agreement. The cost of said policy shall be shared equally between the parties. 3.5. Agency's Conditions to Closing. The 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) Participant has deposited in escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow; (b) Escrow agent, at Closing, holds the Note, Deed of Trust, Regulatory Agreement, and Title Insurance Policy. (c) Participant shall deliver evidence acceptable to the Agency Executive Director that Participant has obtained the insurance policies as required by Section 4.3 of this Agreement. (d) Participant shall deliver to the Agency a good standing certificate issued by its state of organization indicating that Participant exists in good standing. (e) The: construction of the Project shall have been completed and no fewer than twenty (20) of the Affordable Units shall have been rented to Eligible Tenants as described in the Regulatory Agreement. (0 The Agency shall determine that Participant is in full compliance with the terms and conditions of this Agreement and all documents and instruments referred to herein or executed by Participant in furtherance of this Agreement. In the event any of the Agency's Conditions to Closing are not satisfied (or not waived by Agency), and provided Agency has fully performed its obligations hereunder, Agency may either a) cancel the Escrow and terminate this Agreement by delivering written notice to Participant and the Escrow agent, or b) extend the Closing Date of Escrow by ten (10) calendar days during which Participant may (at no cost to Agency) attempt to cure any unsatisfied Agency's Conditions to Closing and notifies the Escrow agent of such cure. In the event the Agency then determines the Agency's Conditions to Closing have been satisfied, and so notifies the Escrow agent and the Participant, the Escrow agent shall close the Escrow. In the event of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Participant or Agency shall be returned to it with any accrued interest earned on such funds; (H) Participant shall be responsible for any escrow cancellation fees imposed by the Escrow agent; and (iii) this Agreement shall be terminated and the parties hereto shall have no further rights or obligations hereunder. 3.6 Participant's Conditions To Closing. Participant's obligations to close Escrow shall be conditioned and contingent upon satisfaction, or Participant's waiver, of each of the following conditions precedent (collectively, the "Participant's Conditions to Closing"): 10 PDA's: 2001 Agree: Fountains 11untin6ton Beach: OPA ILLS 20(0-626 L 2-27-01 (a) Agency has deposited in Escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow, including but not limited to the proceeds of the Agency Loan described in Section '3.4(c), the Agency Deed of Trust, Regulatory Agreement, and such Subordination Agreements as may be required to effect the priority required by this Agreement. (b) The Participant shall determine that Agency is in full compliance with the terms and conditions of this Agreement and all documents and instruments referred to herein or executed by Agency in furtherance of this Agreement. In the evert any of the Participant's Conditions to Closing are not satisfied (or not waived by Participant), and provided Participant has fully performed its obligations hereunder, Participant may either a) cancel the Escrow and terminate this Agreement by delivering written notice to Agency and the Escrow agent, or b) extend the Closing Date of Escrow by ten (10) calendar days during which Agency may (at no cost to Participant) attempt to cure any unsatisfied Participant's Conditions to Closing and notifies the Escrow agent of such cure. In the event the Participant then determines the Participant's Conditions to Closing have been satisfied, and so notifies the Escrow agent and the Agency, the Escrow agent shall close the Escrow. In the evert of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Participant or Agency shall be returned to it with any accrued 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. 3.7 Broker's Fees. Participant and Agency shall each indemnify, defend, and hold harmless the other from any claims or damages for payment of any real estate commissions or broker's fees or finder's fees arising out of the acts or representations of the other with respect to any of the transactions contemplated by this Agreement. 3.8 Conventional Lender First Dccd of Trust. Prior or subsequent to the Close of Escrow, Participant may obtain a loan or loans from one or more Conventional Lenders to be used in connection with the Project. Such loan or loans maybe memorialized by a note and a First Deed of Trust. During the first ten (10) years following the Effective Date, the total amount of such loan or loans shall not exceed seventy-five percent (75%) of the Value of the Site. At any time following the tenth (10t) anniversary of the Effective Date, such loan or loans shall not exceed eighty percent (80%) of the Value of the Site. The Value of the Site shall be determined by a duly qualified and licensed MAI real estate appraiser, whose fees, if any, shall be paid by Participant. Agency shall have the right to review any appraisal or report produced by such appraiser as set forth hereinabove and through the Confirming Appraisal Process. 3.9 Subordination Aereement(s). Pursuant to Section 33334.14 of the Health and Safety Code, Agency is permitted to subordinate the Agency Deed of Trust and the Regulatory Agreement to superior deeds of trust, regulatory agreements and other related documents including but not limited to those required by the Conventional Lender, if certain findings are PDA/s: 2001 Agree: Fountains Huntington Beach: oPA RLS 2000.626 12 27-01 made and certain written commitments are obtained from such Conventional Lender. In accordance with said Section 33334.14, the Agency hereby finds that no economically feasible alternative method of financing the Project on substantially comparable terms and conditions without subordination is reasonably available, and the Agency has obtained written commitments to protect the Agency's investment in the event of a default by Participant. Therefore, the Agency hereby agrees to subordinate the Agency Deed of Trust and the Regulatory Agreement to the Conventional Lender's First Deed of Trust and such other related documents as Conventional Lender may require, in the amount of the Conventional Lender's First Deed of Trust. If Participant desires to increase the amount of indebtedness above seventy-five percent (75%) of the Value of the Site during the ten (10) year period following the Effective Date, or above eighty percent (80° o) following the tenth (10"') anniversary of the Effective Date, Participant may apply to the Agency to increase said indebtedness, which approval the Agency shall not unreasonably withhold. The priority of such deeds of trust shall be effected through the order of recordation documents as set forth in Section 3.4(d). Such Subordination Agreement shall provide for: (i) A right of the Agency to cure a default on the Conventional Lender's First Deeds) of Trust; (ii) A right of the Agency to negotiate with any lenders after notice of default from the lender; (iii) An agreement that if prior to foreclosure of any lenders' loans, the Agency takes title to the Site and cures the default on the loan, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to the Agency; and (iv) A right of the Agency to purchase the Site from the Participant at any time after an uncured event of default on the loan. If a Subordination Agreement is required to effectuate the foregoing order of priority, such agreement shall be generally in the form set forth as Exhibit II. 3.10 Subordination to Other Financing. Notwithstanding anything in this Agreement to the contrary, in addition to the Agency Loan or any Conventional Loan, the Participant may seek financing for some or all of the Project from Fannie Mac or Freddie Mac (each, a "Lender"). In connection with any such Lender financing, the Agency shall execute and deliver in substantially the form required by such Lender all necessary documents to allow the Participant to obtain Lender financing, including, but not limited to a subordination agreement in substantially the form of the Subordination Agreement For Affordable housing (Form 4503), a copy of which is attached hereto as Exhibit "C" (the "Lender Documents"). The Agency acknowledges that the Lender's forms may include an agreement that subordinates the Agency Loan and the Agency Deed of Trust to the Lender's security documents, and that the Agency may be prohibited from exercising its foreclosure remedies set forth in the Agency Deed of Trust in the event of a default by the Participant. SECTION 4. DEVF.I.OP',%TF 'T OFTHE SITE. 4.1 General. The Project shall consist of the development of affordable housing on the Site and the continued use of the Site as an affordable rental apartment complex in accordance with this Agreement and the Regulatory Agreement. 12 PDA1/s: 2001 Agree: Fountains 13untinrton 13c-ach: CPA RIS 2000-626 12-27-01 4.2 Construction of the Project. (a) Development of the Site. As completed, the Project shall comply with all applicable laws and ordinances of all governmental authorities, including, without limitation, all Federal Housing Quality Standards as set forth at Section 982.401 of Title 24 of the Code of Federal Regulations. Construction must begin within 120 days following the Effective Date of this Agreement. All Units must be developed no later than twenty-four (24) months from the commencement of construction. This time period may be extended but only by written agreement of the parties, which agreement shall be deemed a modification of this Agreement. (b) Governmental Permits. Participant shall, at its own expense and before commencement of construction or rehabilitation of any buildings, structures, or other work of improvement upon the Site, secure or cause to be secured any and all permits and approvals which may be required by any governmental agency affected by such construction, development, or work to be performed by Participant, including but not limited to, necessary building permits and all approvals required under the California Environmental Quality Act ("CEQA"). In constructing the Project, Participant shall comply with all applicable development standards in City's Municipal Code and shall comply with all building code landscaping, signage, and parking requirements (except as may be permitted through approved variances and modifications). (c) Agency Assistance. So long as Participant is not in Material Default of any term or provision of this Agreement, Agency agrees to provide reasonable assistance to Participant, at no cost to Agency, in the processing of Participant's submittals required under this Agreement in order that Participant may obtain a final City action on such matters on or before the date set forth in the Schedule of Performance; provided that Agency does not warrant or represent that such approval shall be obtained. (d) Cost of Construction. Participant shall bear all costs for the Project, including, but not limited to any and all costs for preparing or obtaining the plans and permits, environmental remediation, interim and permanent financing, broker's and leasing commissions, and fees or charges for development and building, except as specifically provided herein. (e) Project Schedule. Participant shall commence and complete the construction of the Project within the times set forth in the Schedule of Performance. 4.3 Insurance. Participant shall procure and maintain, during the term of this Agreement, at its sole cost and expense, until the date that Agency waives any such insurance requirement or requirements, the following policies of insurance: (a) Workers' Compensation Insurance. Pursuant to California Labor Code Section 1861, Participant acknowledges awareness of Section 3700 et seq. of said code, which requires every employer to be insured against liability for workers' compensation. Participant covenants that it will comply with such laws and provisions prior to commencing any work of construction or rehabilitation on the Site. Participant shall maintain such Workers' Compensation Insurance in an amount not less than ONE HUNDRED T110USAND DOLLARS 13 PDA's: 2001 Agrre: Fountains Iluntinpwi Bcach: OPA R1S 2%)-626 ! 2-27-0I ($100,000.00) bodily injury, each occurrence, ONE HUNDRED THOUSAND DOLLARS ($100,000.00) bodily injury by disease, each.employee, and TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) bodily injury by disease, policy limit, at all times incident thereto, in forms and underwritten by insurance companies admitted in California, or if not admitted in California then reasonably acceptable to Agency. Participant shall require all subcontractors to provide such Workers' Compensation Insurance for all of the subcontractor's employees. Participant shall furnish Agency with a certificate of waiver of subrogation under the terms of the Workers' Compensation Insurance and Participant shall similarly require all subcontractors to waive subrogation. (b) General Liability Insurance. Participant shall carry general commercial liability insurance, including coverage for bodily injury, property damage, products/completed operations and blanket contractual liability in an amount not less than ONE MILLION DOLLARS ($1,000,000.00), combined single limit. Such insurance shall also include automotive bodily injury and property damage liability insurance. All such insurance shall be provided by insurance companies admitted in California, or if not admitted in California, then reasonably acceptable, to Agency. Such insurance shall name the City and Agency and their officers, agents, and employees acting in their official capacity, as additional insureds pursuant to a pre-1990 CG 20 10 11 85 endorsement form. In the event of aggregate coverage, such limit shall be no less than ONE MILLION DOLLARS ($1,000,000.00). Participant shall require its insurer to waive its subrogation rights against Agency and shall provide certificates of insurance evidencing same. (c) Property Insurance. Participant shall obtain and maintain in force, all - perils (to include Fire, vandalism and, if available, earthquake protection) property insurance with extended coverage endorsements thereon, on the Site, in an amount equal to the full replacement costs and/or value thereof; this policy shall contain a replacement cost endorsement naming Agency as the insured and shall not contain a coinsurance penalty provision. The policy shall contain a special endorsement that such proceeds shall be used to repair or rebuild any Units or other improvements situated on the Site so damaged or destroyed; and, if not so used, such proceeds shall be paid to Agency. The proceeds of any such insurance payable to Agency shall be used for rebuilding or repair as necessary to restore the site at the discretion of Agency. The policy shall name Agency and City, their officers, agents and employees acting in their official capacity as additional insureds. (d) Certificate of Insurance; Additional Insured Endorsements. Prior to Close of Escrow, Participant shall furnish to Agency certificates of insurance and additional insured endorsements evidencing the foregoing insurance coverages as required by this Agreement. Such certificates and endorsements shall be subject to the reasonable approval of the City Attorney and shall provide the name and policy number of each carrier and policy and shall state that the policy is currently in force and shall promise to provide that such policies will not be cancelled without thirty (30) days prior written notice to Agency. 4.4 Indemnification. During the entire term of this Agreement, Participant agrees to and shall protect, defend, indemnify and hold the Agency and City harmless from and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and 14 PDA/s: 2001 Agree: Fountains Huntington Beach: OPA RLS 2000-626 12-27-01� \N court costs) arising from or as a result of (i) Participant's failure to perform any obligations as and when required by this Agreement or any document referred to herein, and (ii) the death of any person or any accident, injury loss, or damage whatsoever caused to any person or to the property of any person which shall occur on the Site and which shall be directly or indirectly caused by the acts of, or any errors or omissions of, the Participant or its officers, shareholders, directors, members, agents, servants, employees, contractors, or invitees. Participant shall not be responsible for, and the Agency shall protect, defend, hold harmless and indemnify Participant against any liability, loss, damage, cost, or expense (including reasonable attorney's fees and court costs) arising from or as a result of the active concurrent negligence, sole negligence or sole willful misconduct of the Agency or the City or their respective members, officers, officials, employees, agents, representatives, servants, or contractors. 4.5 Hazardous Materials (a) Inspection and Abatement. Participant shall inspect the Site for Hazardous Materials in accordance with all Federal, state and local laws and regulations. Any Hazardous Materials identified must be abated as part of the development of the Site. (b) Indemnification. Participant, from and afler the Close of Escrow, and until a transfer, sale, or assignment of the Site upon which the following covenant shall then be the obligation of the transferee, purchaser, or assignee, shall indemnify, defend, and hold harmless Agency and City and their respective officers, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all liabilities (including penalties, fines and monetary sanctions) arising from a violation of state or federal law pertaining to (i) the storage of Hazardous Materials on the Site or (ii) contamination of the Site by a release of Hazardous Materials. Participant, prior to the Closing Date, shall provide to Agency a copy of any notices, orders, or reports concerning the presence of any Hazardous Materials on or affecting the Site that is in Participant's possession. 4.6 Security Financing: Right of Holders (a) Permitted Encumbrances. Participant, prior or subsequent to Close of Escrow may enter into one or more Conventional Loans and execute one or more First Deeds of Trust for the purpose of securing loans of funds without the consent of the Agency as follows: (a) during the first ten (10) years following the Effective Date, in an amount not to exceed seventy-five percent (75%) of the Value of the Site; and (b) at any time following the tenth (1 Oth) anniversary of the Effective Date, in an amount not to exceed eighty percent (80%) of the Value of the Site, provided such conveyance (i) is for the purposes permitted herein and (ii) is given to a financial or lending institution or other acceptable person or entity capable of performing or causing to be performed Participant's obligations under this Agreement, including without limitation a pension fund, insurance company, or real estate investment trust. I(Participant desires to increase the amount of indebtedness above seventy-five percent (75%) of the Value of the Site during the ten (10) year period following the Effective Date, or above eighty percent (80%) following the tenth (i0'h) anniversary of the Effective Date, Participant may apply to the Agency to increase said indebtedness, which approval the Agency shall not unreasonably withhold. 15 PDAIs: 2001 Agree: Fountains Ifuntington Beach: OPA RLS 20OM26 12-27-01 III (b) Holder Not Obligated to Construct Improvements. The holder of any mortgage or deed of trust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the improvements or to guarantee such construction or completion; nor shall any covenant or any provision in the Regulatory Agreement be construed to so obligate such holder. (c) Notice of Default to Mortgage. Deed of Trust or Other Security Interest Holders, Right to Cure. Whenever Agency shall deliver any notice or demand to Participant with respect to any breach by Participant in completion of construction of the improvements, Agency shall at the same time deliver a copy of such notice or demand to each approved holder of record of any mortgage, deed of trust, or other security interest which has previously requested such notice in writing. Each such holder shall (insofar as the rights of Agcncy 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. SECTION 5. USE OF THE SITE. 5.1 No Inconsistent Uses. Participant covenants and agrees, for itself, its successors, its assigns, and every successor in interest to the Site, or any part thereof, that for the period beginning on the Close of Escrow and ending on the expiration date of the Regulatory Agreement, Participant and such successors shall not devote the Site to uses inconsistent with the applicable zoning restrictions, this Agreement, and the Regulatory Agreement; provided that, in the event of any inconsistency, the provisions of the Regulatory Agreement shall prevail over this Agreement. 5.2 Regulatory Agreement. At the Close of Escrow the Regulatory Agreement shall be recorded against the Site in the priority set forth in the Section 3.4(d). 5.3 Relocation. As the Project is new construction, no relocation of tenants living on the Site as of the Effective Date of this Agrecment is contemplated by the parties hereto or is required to occur as a result of this Agreement. 5.4 Maintenance of the Site. After completion of the construction, all Units must be maintained in compliance with Federal Housing Quality Standards (24 CFR § 982.401) and other applicable state and local laws and codes. In addition, Participant shall maintain the Site in accordance with the terms of the Regulatory Agreement. The Agency shall have the right at all reasonable times to enter and inspect the Site in order to ensure compliance with the foregoing requirements. In the event Participant fails to maintain the Site as required by this Section, Participant shall, within thirty (30) days after Agency's notification or Participant's own discovery of any deficiency, take all necessary steps to correct such deficiency. 5.5 Nondiscrimination. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, 16 PD,Vs: 2001 Agree: Founlains 11un ingnon (leach: OPA RLS 2000-626 12-27-01 le/ occupancy, tenure or enjoyment of the Site, or any part thereof, or in the awarding of contracts for the Project, nor shall Participant, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof, or in the awarding of contracts for the Project. Participant shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Participant shall conduct affirmative marketing and minority outreach activities as required by Federal regulations. 5.6 Form of Nondiscrimination and Nonsegregation Clauses. The Participant shall refrain from restricting the rental or lease of any of the Units on the property on the basis of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All such leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: (a) In Leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land or premises herein leased nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with -reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or vendces in the land or premises herein leased." (b) In Contracts: "There shall be no discrimination against or segregation of any p.-rson, or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises or land, nor shall the transferee himself or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the lessees, subtenants, sublessees or vendees of the premises or land" 5.7 Effect and Duration of Covenants. The Participant has, concurrently with the execution of this Agreement, executed in recordabl.: form the Regulatory Agreement. Every coverant and condition and restriction contained in the Regulatory Agreement shall remain in effect for sixty (60) years from the Effective Date of this Agreement (regardless of whether the Agency Loan has been repaid prior to the end of such 60-year period), except that the covenants against discrimination set forth in Sections 5.5 and 5.6 shall remain in effect in perpetuity. If, at the end of the 60-year period, an unpaid balance remains on the Agency Loan, Participant may choose to do either of the following: (a) Participant may choose to continue to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in 17 PDA/s: 2001 Agrcc: Fountains Ifuntingum Dcach: OPA RLs 20W-626 12 27-01 AV which case the Agency stall not require repayment of the balance of the Agency Loan and such Agency Loan shall not accrue any interest for the period during which said covenants, conditions and restrictions are maintained; or (b) Participant may choose not to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the entire remaining principal balance of the Agency Loan plus all accrued interest on the Agency Loan shall immediately become due and payable. 5.8 Creation of Capital Reserve Accounts. No later than thirty (30) days after the Close of Escrow, Participant shall create a "Capital Reserve Account." No later than thirty (30) days after the Capital Reserve Account has been created, Participant shall provide to Agency a pro forma statement concerning the account, for Agency's review and approval. At any time thereafter during the term of this Agreement, Agency, on ten (10) days prior written notice to Participant, may request that Participant submit to it updated, revised Capital Reserve Account statement. Agency, at its own expense, may audit any updated, revised Capital Reserve Account statement submitted to it by Participant. 5.9 Capital Reserves. Commencing on the date of the completion of the construction of the Project, and every succeeding year during the term of this Agreement, Participant shall deposit a minimum of One Hundred Fifty Dollars (S150.00) per Unit of Participant's Net Operating Income into the Capital Reserve Account for maintenance repairs to the Site. The Capital Reserve Account shall at all times be maintained at a level sufficient to adequately fund the cost of all repairs and improvements to the Site and to maintain the Site in compliance with the requirements of Section 5.4. Should Participant believe Project revenues to be insufficient to permit Participant to make such a full deposit in any year, Participant may appeal to the Agency to have the payment reduced, suspended, renegotiated, or forgiven. Participant shall carry the burden of proof, in this regard. Agency shall have the unfettered discretion to reduce, suspend, renegotiate, or forgive the payment based on the evidence submitted by Participant. 5.10 Reserved. 5.11 Financial Statements. Commencing 21 the end of Participant's fiscal year following the Close of Escrow, Participant shall submit to Agency, on a yearly basis, a true and correct copy of Participant's audited financial statements for the Project clearly identifying the status of the Project's operating reserve account and cash flow. Before such statements are submitted to Agency, they should (but are not required to) be reviewed and certified by Participant's governing board, if any. After receipt of Participant's audited financial statements for the Project, Agency may, at its expense, request additional financial analyses from Participant, or obtain a third party review of Participant's financial statements at Agency's expense, for the Project to verify the accuracy of the deposits by Participant into the Capital Reserve Account pursuant to Section 5.9. 5.12 Operation of Proiect. Participant shall operate and manage the Project in full conformance with the terms of this Agreement and specifically the Regulatory Agreement. Not later than sixty (60) days after Close of Escrow, Participant shall submit to Agency, for Agency's re%'iew and approval, an annual budget outlining each proposed service to be offered by PDA!s: 2001 Agm: Fountains Iluntinglon Beach: Of A RL5 20("26 12-27-0: 18 A,/ 1 Participant in operating and managing the Project, and the anticipated cost of each such service. The first such proposed budget shall cover the period from the Close of Escrow to the beginning of the second year following the Close of Escrow. Not later than sixty (60) days after the beginning of the second year following the Close of Escrow, and for every year thereafter during this Agreement's term, Participant shall submit an annual, proposed budget to Agency, for the latter's review and approval. 5.13 Lead -Based Paint. Participant shall ensure that it and its contractors and subcontractors shall not use lead -based paint in the construction or maintenance of the Project. Participant shall insert this provision in all contracts and subcontracts for work performed on the Project which involve the application of paint. 5.14 Barriers to the Disabled. Participant shall ensure that the Project shall be developed and the Property shall be maintained to comply with all applicable federal, state, and local requirements for access for disabled persons. SECTION 6. DEFAULTS AND RFAIFDIF.S. 6.1 Participant Defaults. The occurrence of anyone or more of the following events shall constitute a "Material Default" by Participant hereunder if, after receiving written notice from Agency as provided in Section 6.3 below identifying such event, Participant fails to cure said event within thirty (30) days from the receipt of said notice; provided that if such default is not reasonably capable of being cured within thirty (30) days, Participant commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default, the Participant shall have such additional reasonable time to cure such default before the default becomes a "Material Default": (a) Participant fails to observe or perform any material term of this Agreement or any agreement incorporated hereunder by reference within the time set forth in this Agreement or any of the documents referred to herein; or (b) Participant knowingly and intentionally makes or delivers to Agency any statement, report, or certificate that is not true or correct in any material respect. In no event shall Agency be precluded from exercising remedies if the default is not cured within one hundred eighty (l 80) days, or Agency's rights under this Agreement becomes or is about to become materially jeopardized by any failure to cure a default. 6.2 Acency Defaults. The occurrence of any one or more of the following events shall constitute a "Material Default" by Agency hereunder if, after receiving written notice from Participant as provided in Section 6.3 below identifying such event, Agency fails to cure said event within thirty (30) days from the receipt of said notice; provided that if such default is not reasonably capable of being cured within thirty (30) clays, Agency commences to cure said event within. thirty (30) days and diligently and in good faith continues to cure the event of default, the Agency shall have such additional reasonable time to cure such default before the default becomes a "Material Default": 19 MAN: 2001 Agree: Fountains I luntington Dcach: OPA RlS 200-626 12-27-01 (a) Agency fails to observe or perform any material term of this Agreement or any agreement incorporated hereunder by reference within the time set forth in this Agreement or any of the documents referred to herein; or (b) Agency knowingly and intentionally makes or delivers to Participant any statement, report, or certificate that is not true or correct in any material respect. In no event shall Participant be precluded from exercising remedies, if the default is not cured within one hundred eighty (180) days, or Participant's rights under this Agreement becomes or is about to become materially jeopardized by any failure to cure a default. 6.3 Notice of Default. The non -defaulting party shall give written notice of any default under Section 6.1 or 6.2 to the defaulting party, clearly specifying the default. Copies of any notice of default given to the defaulting party shall also be given to any permitted lender requesting such notice. Any failure or delay in giving such notice or in asserting any of either party's rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive either party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 6.4 Agency's Remedies. (a) The Agency, at its option, may terminate this Agreement prior to the Close of Escrow in the event of any Material Default that the Participant fails to cure within the time set forth in Section 6.1 (subject to the right of notice and expiration of applicable cure periods). (b) Following the Close of Escroxv, in the event of any Material Default, the entire principal balance of the Agency Loan including all accrued 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 accrued interest; (b) foreclose on the Site under the Agency Deed of Trust. 6.5 Participant's Remedies. Upon a Material Default of this Agreement by Agency, Participant may bring an action for specific performance of this Agreement or any term or provision hereof, or may terminate this Agreement. Participant may not sue for monetary damages. 6.6 Rights and Remedies are Cumulative. Except as othenvise 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 di fferent times, of any other rights or remedies for the same Material Default or any other Material Default by another party. 20 PDAIs: 2001 Agree: Fountains Iluntington Beach: OPA RLS 2000-626 12-2.7-0I ! (t/ SECTION 7. GENERAL PROVISION'S 7.1 Warranties. Participant represents and warrants, as of the Effective Date, (1) that it has access to professional advice and support to the extent necessary to enable Participant to fully comply with the terms of this Agreement; (2) that it is duly organized, validly existing and in good standing under the laws of the State of Delaware; (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 Participant; (5) except as disclosed to the Agency in writing, there are no actions or proceedings pending or, to the best of the Participant's knowledge, threatened against the Participant before any court or administrative agency in any way connected with the Site or the Project which could adversely affect the Participant's ability to perform the activities contemplated hereunder; (6) to the best of the Participant's knowledge neither this Agreement nor anything provided to be done hereunder violates or shall violate any contract, agreement or instrument to which the Participant is a party or which affects the Project or any part thereof-, and (7) the Participant is not in Material 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 Material Default under this Agreement; and (8) the Participant has not entered into any agreements which will adversely affect the title (excluding Conventional Loans or other Project related funding) to the Project or the Participant's right to develop and use the Project as provided in this Agreement, and the Participant will not enter into any such agreements after the date hereof. Agency represents and warrants (1) that it has access to professional advice and support to the extent necessary to enable Agency 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 make the Agency Loan 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 Agency; (5) except as disclosed to the Participant in writing, there are no actions or proceedings pending or, to the best of the Agency's knowledge, threatened against the Agency before any court or administrative agency in any way connected with the Site or the Project which could adversely affect the Agency's ability to perform the obligations contemplated hereunder; (b) to the best of the Agency's knowledge neither this Agreement nor anything provided to be done hereunder violates or shall violate any contract, agreement or instrument to which the Agency is a party or which affects the Project or any part thereof; and (7) the Agency is not in Material 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 Material Default under this Agreement. 7.2 Governing Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 7.3 Attorneys' Fees. In the event of litigation between the parties arising out of this Agreement, each party shall bear its own attorneys' fees, and other costs. The prevailing 21 PDAls: 2001 Agree: Fountains Iluntington Deach: OPA RLS M-0-626 12-27-0 At/ party shall not be entitled to recover its attorney's fees and other costs from the non -prevailing ply. 7.4 Notices, D--mands—and_ Communications Between the Parties. Formal notices, demands, and communications between Agency and Participant 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 Participant: Fountains Huntington Beach, LLC. 4220 Von Karman, Second Floor Newport Beach, CA 92660 If to Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Executive Director Notices personally delivered or delivered by courier shall be effective upon receipt or refusal to accept delivery. Mailed notices shall be effective on the earlier of (i) receipt or refusal to accept delivery, or (ii) noon on the second calendar day following deposit in the United States mail. 7.5 Acceptance of Service of Process. In the event that any legal action is commenced by Participant against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Participant, service of process on Participant shall be made by in any manner provided by law, and shall be valid whether made within or without the State of California. 7.6 Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest in this Agreement, nor participate in any decision relating to this Agreement, that is in violation of any applicable law, regulation or ordinance. 7.7 Titles and Captions. Titles and captions are for convenience only and shall not be construed to limit or extend the meaning of this Agreement. 7.8 Gender. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 7.9 Modifications. Any amendment, alteration, change, or modification of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto or such party's successors or assigns, by their authorized representativc(s). 22 PDA's: 2001 Agree: Fountains Iluntington Beach: OPA RLS 2000-626 12-27-01 i it/ 7.10 Merger of Prior Agreements and Understandings. This Agreement and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, including but not limited to a "Project Deal Points" Memorandum, if any, approved by Participant and the Agency and/or City Council of the City of Huntington Beach, are merged herein and shall be of no further force or effect. 7.11 No Third Parties Benefited. This Agreement shall create no third -party beneficiary rights or any other rights in favor of any persons, firms or corporations, except as maybe expressly stated in this Agreement. This Agreement is for the sole use and benefit of the parties hereto or their authorized successors and assigns, and is not for the use or benefit of any other person or entity. 7.12 Assurances to Act in Good Faith. Participant and Agency each agree to execute all documents and instruments and to take all action, including timely depositing funds as required hereby, and shall use their respective best efforts to perform their respective obligations under this Agr.-emcnt. 7.13 Warranty Against Payment of Consideration for Agreement. Except as provided in this Agreement, Participant warrants that it has not paid or given, and will not pay or give, any person any money or other consideration for obtaining this Agreement that is in violation of any law. 7.14 Nonliability of Agency Officials and Employ. No member, official, or employee of the Agency shall be personally liable to the Participant or any successor in interest, in the event of any default or breach by the Agency or for any amount which may become due to the Participant or to its successor, or on any obligations under the terms of this Agreement. 7.15 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 7.16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 7.17 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 7.18. Extension of Times of Performance. Notwithstanding anything in this Agreement to the contrary, in addition to the specific provisions of this Agreement, performance 23 PDA.'s: 2001 Agrcc: rountains Ilunting•.on 13cach:OPA RIS 2000-626 12-27-01 k1 by either party hereunder shall not be deemed to be in default during an event of Force Majeure. An extension of time for an event of Force Majeure shall be limited to the 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. Timcs of performance under this Agreement may also be extended by mutual written agreement by Agency and Participant. The Executive Director of the Agency shall have the authority on behal f of Agency to approve such extensions of time that do not exceed a cumulative total of one (1) year. 7.19 Inspection of Books and Records. The Agency or its designee has the right at all reasonable times to inspect the books, records and/or other documents of the Participant pertaining to the Site and/or the Project as pertinent to the purposes of this Agreement. 7.20 Waivers. The waiver by Agency or Participant of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. SECTION & EXECUTION OF AGRF.F.MF.N"f• TIME FOR ACCEPTANCE: This Agreement consists of twenty-five (25) pages and eight (8) exhibits, labeled Exhibits "A" through "11" inclusive, which constitute the entire understanding and agreement of the parties. This Agreement does not take effect until executed by the Participant and Agency. This Agreement, when executed by the Participant and delivered to the Agency, must be authorized, executed and delivered by the Agency within forty-five (45) days after the date of signature by the Participant, or this Agreement may be terminated by the Participant on written notice to the Agency. The Agency Executive Director is hereby authorized and directed to take such other and further actions, and sign such other and further agreements and documents on behalf of the Agency as may be necessary or proper to effect the terms of the Owner Participation Agreement on behalf of the Agency. 24 PDA/a: 2001 Agrcs: Fountains Ilunlington ticach: OPA RLS 2000-626 12-27-01 1 IN WITNESS WII EREOF, the parties hereto have executed this Agreement as of the Effective Date. "PARTICIPANT" FOUNTAINS HUNTINGTON BEACH, LLC, a Delaware limited liability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member By - Glenn L. Carpenter President and Chief Executive Officer 25 PDA's: 2001 Agree: fountains Ifuntingtun Dcach: CPA RLS 200IM26 12-27.01 "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: _ _ �/_ Chairman ATTEST: By: - =` :Agency Clerk - APPROVED AS TO FORT`►: By: g, Agency General Counsel VL- REVIEWED AND APPROVED: By: Exec -we Director INITIATED AND APPROVED: By: e�& - Deputy Executi veb irector /W Legal Description EXHIBIT #A CITY OF HUNTINCTON BEACH . LOT LINE ADJUSTMENT LL 00 -02 OWNERS EXISTING PARCELS PROPOSED PARCELS AP NUMBER REFERENCE NUMBER SHEA VICKERS DEVELOPMENT LLC .023-010-27 . PARCEL 1 VICTORIA WOODS-FESTNAL, LLC 023-010;40 & 023-010-27 PARCEL 2 GN• PROPOSED LOT LINES FXISTUVC tar LINES — -�-- — -- REMOVED LOT LINES ca.1 PONT O FARCE L ! PARCEL 1 0.895 ACRES EXHIBIT "B" VF�f►��IL4L ti71 11�� 1 /1VNf 1 K/�\ T/r IV fur, RNrHyy %l • 1111 "� I U 952.02• PL13 Iv 24 W 809.76' 723.95. CLAY AVENUE PARCEL 2 GZ29 AMES � r a�-�--- SHEET 1 OF 2 - I 10.0pr, CITY OF HUNTINGTON BEACH LOT UNE ADJUSTMENT . LL 00 - 02 LEGAL DESCRIPTION IOWNERS I EXIAPNG PARCNUM13 R� 4 REFERENCE NUMBPROPOSED ER SHEA VICKERS DEVELOPMENT LLC 023-010-27 PARCEL 1 VICTORIA WOODS-MESWNAL, LLC 023-010-10 & 023-010-27 PARCEL 2 . PARCEL 2 BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL 4, SAID POINT ALSO BEING ON THE CENTERLINE OF MAIN STREET, 120.00 FEET WIDE AS SHOWN ON THAT CERTAIN CERTIFICATE OF COMPLIANCE NO. 96-3, RECORDED FEBRUARY 281 1996 AS INSTRUMENT NO. 19960095324 OF OFFICIAL RECORDS; THENCE SOUTH 19015'35" WEST •524.14 FEET ALONG SAID CENTERLINE OF SAID MAIN STREET; THENCE LEAVING SAID CENTERLINE NORTH 89040'01" WEST 63.43 FEET TO THE WEST RIGHT OF WAY OF MAIN STREET -AS . SHOWN ON SAID CERTIFICATE 'OF COMPLIANCE; THENCE SOUTH 19°15'35" WEST 97.66 FEET ALONG SAID WEST RIGHT OF WAY OF SAID MAIN STREET TO THE -MOST SOUT7•IF.RLY CORNER 'OF- SAID PARCEL 4; THENCE NORTH 76°57'53 WEST 243.09 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHERLY, HAVING A RADIUS OF 435.00 FEET; THENCE SOUTHWESTERLY 298.45 FEET ALONG SAID CURVE THROUGH A_ CENTRAL ANGLE OF 39018136" TO THE BEGINNING OF ' A' REVERSE CURVE CONCAVE NORTHWESTERLY, HAVING A RADIUS OF 222.00 FEET, A RADIAL LINE TO SAID POINT BEARS NORTH 26016'29" WEST; ?HENCE WESTERLY 60.04 'FEET ALONG SAID CURVE THROUGH A' CENTRAL ANGLE OF 15029'43" TO THE BEGINNING OF A COMPOUND CURVE, CONCAVE NORTHEASTERLY HAVINGA RADIUS OF 35.00 FEET, A RADIAL LINE TO SAID POINT BEARS SOUTH 10°46'46" EAST; THENCE NORTHERLY 61.58 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 100048'02" TO THE WEST LINE OF SAID PARCEL 4; THENCE NORTH 00°01'16" EAST 204.41 FEET TO A TANGENT CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 120.50 FEET; THENCE NORTHEASTERLY-1S137 FEET ALONG SAID CURVE THROUGH A CENTitAL ANGLE OF 71°58'27"; THENCE NORTH 00*18136" EAST 235.57. FEET TO THE CENTERLINE OF CLAY AVENUE AS SHOWN ON SAID CERTIFICATE OF COMPLIANCE; THENCE SOUTH 89041'24" EAST 809.76 FEET ALONG SAID CENTERLINE OF CLAY AVENUE TO THE POINT OF BEGINNING. PARCEL 2 CONTAINING 415,067 SQUARE FEET OF §.529 ACRES, MORE OR LESS. ALL AS SHOWN ON EXHIBIT "B" ATTACHED HERETO AND MADE A PART HEREOF. SHEET 2 OF 2 Site Map EXHIBIT #B KkP wrllni'!lr � r a � 1 R ,t i �'F1t ='^� •� ? •i ��l � ��l )yy � * 7� ��, 1 s ��, -1 �'� � +.,� �5 .►, � MI7� i � fr '.tyi ��ISi ,y �,�,4 yP1 r' 7::, �: `�►�w' �r •}""l l 1L Raw ' w%�^.'!.° � .� I � ;s'i ♦ � � � `•S I'�%��y„I � ��I�+e,� i �'i '.il� � ,��f S.tfl+ s • „L '" • d�, i S:a " J "�� eeI'��. � ``.. ��i,'��nN w .. �ti+wt I � i.:.Ls� A1f yli 1 xl' J. �io1o1 y s i �T� :3+'Iv"�i '� S" •�'x�' . SI N- ia, •op ��. iif'I�. [:� �� t r y r �aYy 3110 •. ).�1'�. •'Ab * p�' ♦.v' ,M 4..r�IuICS�P st.iiit`5a'P`1L��� y ,y y�!♦ �.I .�►(�h,r +y �T"�,�; 1' ,.� ••T' ,`�` r�r' taE r +.mr #r`. sky, tir 'll�! ;Y15CY. tia.?! L * 'J t p_ �� �a ' }+�K iy'! I +'lam •� I t �� I. rtawi • 'Iwrip �! "y 7ff':) �yJ, ", y Iwtw�t. rre boy " i' "' .• � x—� "� -901 SA i.. lar 4Y ,•i,;,• %J Y w1.Y � r%•f Ar a'M' '� Lt51�Y Irltrir .. BG�W7 . � r•wle4 u N NNrnl U 1 �Lr [M r•A�1 wAJ [7 +' nLe �5 7 •: (� ^Is `� p OD .• �a u as r�.� n r�•.�.. (. a7i,., i. 4 �. Jokkkkk—Iia..',+ r , r • r �r.Nlwl..tr Nf.u+Maw4.m,Iwo �M,iir �'rZ Sf P• '•M r,s, �•''•' :•�' ,:�� 1 m.+nlr w Y M r. ffv tr f M.r ON ., % }'.�.. f irt' t' f' r• ..;. y� /dYNsKl [y 16Ill-L CN r>.r R.•LN �, • r, la y'',..5 ) ",'v, l`J ,' ,'\ INaa�rNY N�w,rlY y61 rtrm a / w IN "LOW. Y n',AFIF • i Ai� CAP Ei D'' � AY � '•.� L 'tut '1 : t:{^�.:� {�'* �'A� �`�,h .•_�� a 4 "'rw.el+r" t y Ad �'\rI' i I ,y Y�..If y;' 'll[S r i �p . 1■d'� ryl i �q,t ' yrr�}' 4.: • Q .1t p * it : N `• r, �, _ ,. ,�..p , 'ti .. " � ,ss '� YONxT �c i �y 51TE Cox i �.��! ,M1 ar;�w� 1 -.� a � �,La Q �'h ,•:,� vial+� Ir, milli y, 'P y'M'r T;•��C11 IA. Ns»KJa..t, �• w ,��; 1. ;= .Tar ; C t?S'° �:}:'•y �,' �v �� tits.:.( '� , . j'� r■ , , �� ,,:� �,� (3' � jlllrrlNcrow ° M` r :' * ' wiIs AL C1Tti � ly J Fannie Mae Subordination Agreement EXHIBIT #C SUIBORDINATIO\ AGREENIENI T THIS SUBORDINATION day of _ AGREEMENT by and _ (the "Senio (the r Recitals A. The Senior Lender has made or is malting a loan (the "First Mortgage Loan") to the Borrower in the original principal amount of S . The First Mortgage Loan is or will be secured by a first mortgage lien (the "First Mortgage") on a multifamily housing project located in (the "Property"). The Property is more fully described in Exhibit A attached hereto. The Borrower's obligation to repay the First Mortgage Loan is evidenced by a Multifamily Note slated , (the "First Mortgage Note"), and is due in fall on , B. The Borrower has requested the Sensor Lender to permit the Subordinate Lender to make a subordinate loan to Borrower in the amount of S (the "Subordinate Loan") and to secure the Subordinate Loan by, among other things, placing a mortgage lien against the Property. C. The Senior Lender has agreed to permit the Subordinate Lender to make the Subordinate Loan and to place a subordinate mortgage lien against the Property subject to all of the conditions contained in this Agrecment. D. The Senior Lendcr intends to sell, transfer and deliver the First Mortgage Note and assign the First Mortgage to Fannie Mac. NOW, THEREFORE, in order to induce the Senior Lender to permit the Subordinate Lender to make the Subordinate Loan to the Borrower and to place a subordinate mortgage Lien against the Property, and in consideration thereof, the Senior Lender, the Subordinate Lendcr and the Borrower agree as follows: 1. Definitions. In addition to the terms defined in the Recitals to this Agreement, for purposes of this Agreement the following terms have the respective meanings set forth bolo«•: Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 1) Affordable Housing "Affiliate" means, when used with respect to a Person, any corporation, partnership, joint venture, limited liability company, limited liability partnership, trust or individual controlled by, under common control with, or which controls such Person (the term "control" for these purposes shall mean the ability, whether by the ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to make management decisions on behalf of, or independently to select the managing partner of, a partnership, or othewise to have the power independently to remove and then select a majority of those individuals exercising managerial authority over an entity, and control shall be conclusively presumed in the case of the ownership of 50% or more of the equity interests). "Borrower" means the Person named as such in the first paragraph of this Agreement and any other Person (other than the Senior Lender) who acquires title to the Property after the date of this Agreement. "Business Day" means any day other than Saturday, Sunday or a day on which the Senior Lender is not open for business. "Default Notice" means: (a) a copy of the wTitten notice from the Senior Lender to the Borrower stating that a First Mortgage Loan Default has occurred under the First Mortgage Loan; or (b) a copy of the written notice from the Subordinate Lender to the Borrower stating that a Subordinate Loan Default has occurred under the Subordinate Loan. Each Default Notice shall specify the default upon which such Default Notice is based. "First Mortgage Loan Default" means the occurrence of [a default by the Borrower in performing or observing any of the terms, covenants or conditions in the First Mortgage Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the First Mortgage Loan Documents for curing the default] [an "Event of Default" as that term is defined in the First Mortgage Loan Documents]. "First Mortgage Loan Documents" means the First Mortgage Note and all other documents evidencing, securing or otherwise executed and delivered in connection with the First Mortgage Loan. "Person" means an individual, estate, trust, partnership, corporation, limited liability company, limited liability partnership, governmental department or agency or any other entity which has the legal capacity to own property. "Senior Lender" means the Person named as such in the first paragraph on page 1 of this Agreement. When Fannie Mae or any other Person becomes the legal holder of the First Mortgage Note, Fannie Mae or such other Person shall automatically become the Senior Lender. Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 2) Affordable Housing Ik "Subordinate Lender' means the Person named as such in the first paragraph on page I of this Agreement and any other Person who becomes the legal holder of the Subordinate Note after the date of this Agreement. "Subordinate Loan Default" means a default by the Borrower in performing or observing any of the terms, covenants or conditions in the Subordinate Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the Subordinate Loan Documents for curing the default. "Subordinate Loan Documents" means the Subordinate Note, the Subordinate Mortgage, and all other documents evidencing, securing or otherwise executed and delivered in connection with the Subordinate Loan. "Subordinate Mortgage" means the mortgage or deed of trust encumbering the Property as security for the Subordinate Loan, which the Subordinate Lender will cause to be recorded among; the applicable land record; immediately before this Agreement. "Subordinate Note" means the promissory note of even date herewith issued by the Borrower to the Subordinate Lender, or order, to evidence the Subordinate Loan. 2. Permission to Place Mortgage Lien Against Property. The Senior Lender agrees, notwithstanding the prohibition against inferior liens on the Property contained in the First Mortgage Loan Documents and subject to the provisions of this Agreement, to permit the Subordinate Lender to record the Subordinate Mortgage and other recordable Subordinate Loan Documents against the Property (which are subordinate in all respects to the lien of the First Mortgage) to secure the Borrower's obligation to repay the Subordinate Note and all other obligations, indebtedness and liabilities of the Borrower to the Subordinate Lender under and in connection with the Subordinate Loan. Such permission is subject to the condition that each of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 is true and correct on the date of this Agreement and on the date on which the proceeds of the Subordinate Loan are disbursed to the Borrower. If any of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 is not true and correct on both of those datcs, the provisions of the First Mortgage Loan Documents applicable to unpermittcd Iiens on the Property shall apply. 3. Borrower's and Subordinate Lender's Representations and Warranties. The Borrower and the Subordinate Lender each makes the following representations and warranties to the Senior Lender: Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 3) Affordable Housing 0 (a) Subordinate Note. The Subordinate Note contains the following provision: The indebtedness evidenced by this Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a Multifamily Note of even date herewith in the original principal amount of S issued by and payable to ("Senior Lender"), or order, to the extent and in the manner provided in that certain Subordination Agreement of even date herewith between the payee of this Note, and the Senior Lender and (the "Subordination Agreement"). The Mortgage [Deed of Trust] securing this Note is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Multifamily Mortgage [Deed of Trust] securing the Multifamily Note as more fully set forth in the Subordination Agreement. The rights and remedies of the payee and each subsequent holder of this Note under the Mortgage [Deed of Trust] securing this Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of this Note shall be deemed, by virtue of such holder's acquisition of the Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the Subordinate Lender under the Subordination Agreement. (b) Relationship of Borrower to Subordinate Lender and Senior Lender. The Subordinate Lender is not an Affiliate of the Borrower and is not in possession of any facts which would lead it to believe that the Senior Lender is an Affiliate of the Borrower. (c) Term. The term of the Subordinate Note does not end before the term of the First Mortgage Note. (d) Subordinate Loan Documents. The executed Subordinate Loan Documents are substantially in the same forms as those submitted to, and approved by, Fannie Mae prior to the date of this Agreement. Upon execution and delivery of the Subordinate Loan Documents, Borrower shall deliver to Senior Lender an executed copy of each of the Subordinate Loan Documents, certified to be true, correct and complete. (e) Senior Loan Documents. The executed Senior Loan Documents are substantially in the same forms as, when applicable, those submitted to, and approved by, Fannie Mae prior to the date of this Agreement. Upon execution and delivery of the Senior Loan Documents, Borrower shall deliver to Subordinate Lender an executed copy of each of the Senior Loan Documents, certified to be true, correct and complete. Fannie Mae Subordination Agreement « Form 4503 10/98 (Page 4) Affordable Housing 4. Terms of Subordination. (a) Agreement to Subordinate. The Senior Lender and the Subordinate Lender agree that: (i) the indebtedness evidenced by the Subordinate Loan Documents is and shall be subordinated in right of payment, to the extent and in the manner provided in this Agreement to the prior payment in full of the indebtedness evidenced by the First Mortgage Loan Documents, and (ii) the Subordinate Mortgage and the other Subordinate Loan Documents are and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the First Mortgage and the other First Mortgage Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the First Mortgage and the other First Mortgage Loan Documents (including but not limited to, all sums advanced for the purposes of (1) protecting or further securing the lien of the First Mortgage, curing defaults by the Borrower under the First Mortgage Loan Documents or for any other purpose expressly permitted by the First Mortgage, or (2) constructing, renovating, repairing, furnishing, fixturing or equipping the Property). (b) Subordination of Subrogation Rights. The Subordinate Lender agrees that if, by reason of its payment of real estate taxes or other monetary obligations of the Borrower, or by reason of its exercise of any other right or remedy under the Subordinate Loan Documents, it acquires by right of subrogation or otherwise a lien on the Property which (but for this subsection) would be senior to the lien of the First Mortgage, then, in that event, such lien shall be subject and subordinate to the lien of the First Mortgage. (c) Payments Before First Mortgage Loan Default. Until the Subordinate Lender receives a Default Notice of a First Mortgage Loan Default from the Senior Lender, the Subordinate Lender shall be entitled to retain for its own account all payments made under or pursuant to the Subordinate Loan Documents. (d) Payments After First Mortgage Loan Default. The Borrower agrees that, after it receives notice (or otherwise acquires knowledge) of a First Mortgage Loan Default, it will not make any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorneys fees, or any other sums secured by the Subordinate Mortgage) without the Senior Lcndees prior written consent. The Subordinate Lender agrees that, after it receives a Default Notice from the Senior Lender with written instructions directing the Subordinate Lender not to accept payments from the Borrower on account of the Subordinate Loan, it will not accept any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorneys fees, or any other sums secured by the Subordinate Mortgage) without the Senior Lender's prior written consent. if the Subordinate Lender receives written notice from the Senior Lender that the First Mortgage Loan Default which gave rise to the Subordinate Lender's obligation not to accept payments Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 5) Affordable Housing #4—� has been cured, waived, or otherwise suspended by the Senior Lender, the restrictions on payment to the Subordinate Lender in this Section 4 shall terminate, and the Senior Lender shall have no right to any subsequent payments made to the Subordinate Lender by the Borrower prior to the Subordinate Lender's receipt of a new Default Notice from the Senior Lender in accordance with the provisions of this Section 4(d). (e) Remitting Subordinate Loan Payments to Senior Lender. If, after the Subordinate Lender receives a Default Notice from the Senior Lender in accordance with subsection (d) above, the Subordinate Lender receives any payments under the Subordinate Loan Documents, the Subordinate Lender agrees that such payment or other distribution will be received and held in trust for the Senior Lender and unless the Senior Lender otherwise notifies the Subordinate Lender in writing, will be promptly remitted, in kind to the Senior Lender, properly endorsed to the Senior Lender, to be applied to the principal of, interest on and other amounts due under the First Mortgage Loan Documents in accordance with the provisions of the First Mortgage Loan Documents. By executing this Agreement, the Borrower specifically authorizes the Subordinate Lender to endorse and remit any such payments to the Senior Lender, and specifically waives any and all rights to have such payments returned to the Borrower or crcditcd against the Subordinate Loan. Borrower and Senior Lender acknowledge and agree that payments received by the Subordinate Lender, and remitted to the Senior Lender under this Section 4, shall not be applied or otherwise credited against the Subordinate Loan, nor shall the tender of such payment to the Senior Lender waive any Subordinate Loan Default which may arise from the inability of the Subordinate Lender to retain such payment or apply such payment to the Subordinate Loan. (f) Agreement Not to Commence Bankruptcy Proceeding. The Subordinate Lender agrees that during the term of this Agreement it will not commence, or join with any other creditor in commencing any bankruptcy reorganization, arrangement, insolvency or liquidation proceedings with respect to the Borrower, without the Senior Lender's prior written consent. 5. Default Under Subordinate Loan Documents. (a) Notice of Default and Cure Rights. The Subordinate Lender shall deliver to the Senior Lender a Default Notice within five Business Days in each case where the Subordinate Lender has given a Dcfault Notice to the Borrower. Failure of the Subordinate Lender to send a Default Notice to the Senior Lender shall not prevent the exercise of the Subordinate Lender's rights and remedies under the Subordinate Loan Documents, subject to the provisions of this Agreement. The Senior Lender shall have the right, but not the obligation, to cure any Subordinate Loan Default within 60 days following the date of such notice; provided, however that the Subordinate Lender shall be entitled, during such 60-day period, to continue to pursue its rights and remedies under the Subordinate Loan Documents. All amounts paid by the Senior Lender in accordance with the First Mortgage Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 6) Affordable Housing /v Loan Documents to cure a Subordinate Loan Default shall be deemed to have been advanced by the Senior Lender pursuant to, and shall be secured by the lien of, the First Mortgage. (b) Subordinate Lender's Exercise of Remedies After Notice to Senior Lender. if a Subordinate Loan Default occurs and is continuing, the Subordinate Lender agrees that, without the Senior Lendees prior written consent, it will not commence foreclosure proceedings with respect to the Property under the Subordinate Loan Documents or exercise any other rights or remedies it may have under the Subordinate Loan Documents, including, but not limited to accelerating the Subordinate Loan, collecting rents, appointing (or seeking the appointment of) a receiver or exercising any other rights or remedies thereunder unless and until it has given the Senior Lender at least 60 days' prior written notice; during such 60 day period, however, the Subordinate Lender shall be entitled to exercise and enforce all other rights and remedies available to the Subordinate Lender under the Subordinate Loan Documents and'or under applicable laws, including without limitation, rights to enforce covenants and agreements of the Borrower relating to income, rent, or affordability restrictions contained in the Land Use Restriction Agreement. (c) Cross Default. The Borrower and the Subordinate Lender agree that a Subordinate Loan Default shall constitute a First Mortgage Loan Default under the First Mortgage Loan Documents and the Senior Lender shall have the right to exercise all rights or remedies under the First Mortgage Loan Documents in the same manner as in the case of any other First Mortgage Loan Default. If the Subordinate Lender notifies the Senior Lender in writing that any Subordinate Loan Default of which the Senior Lender has received a Default Notice has been cured or waived, as determined by the Subordinate Lender in its sole discretion, then provided that Senior Lender has not conducted a sale of the Property pursuant to its rights under the First Mortgage Loan Documents, any First Mortgage Loan Default under the First Mortgage Loan Documents arising solely from such Subordinate Loan Default shall be deemed cured, and the First Mortgage Loan shall be reinstated, provided, however, that the Senior Lender shall not be required to return or otherwise credit for the benefit of the Borrower any default rate interest or other default related charges or payments received by the Senior Lender during such First Mortgage Loan Default. 6. Default Under First Mortgage Loan Documents. (a) Notice of Default and Cure Rights. The Senior Lender shall deliver to the Subordinate Lender a Default Notice within five Business Days in each case where the Senior Lender has given a Default Notice to the Borrower. Failure of the Senior Lender to send a Default Notice to the Subordinate Lender shall not prevent the exercise of the Senior Lcndees rights and remedies under the Senior Loan Documents, subject to the provisions of this Agreement. The Subordinate Lender shall have the right, but not the obligation, to cure Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 7) Affordable Housing any such First Mortgage Loan Default within 60 days following the date of such notice; provided, however, that the Senior Lender shall be entitled during such 60-day period to continue to pursue its remedies under the First Mortgage Loan Documents. Subordinate Lender may have up to 90 days from the date of the Default Notice to cure a non -monetary default if during such 90-day period Subordinate Lender keeps current all payments required by the First Mortgage Loan Documents. In the event that such a non -monetary default creates an unacceptable level of risk relative to the Property, or Senior Lender's secured position relative to the Property, zs determined by Senior Lender in its sole discretion, then Senior Lender may exercise during such 90-day period all available rights and remedies to protect and preserve the Property and the rents, revenues and other proceeds from the Property. All amounts paid by the Subordinate Lender to the Senior Lender to cure a First Mortgage Loan Default shall be deemed to have been advanced by the Subordinate Lender pursuant to, and shall be secured by the lien of, the Subordinate Mortgage. (b) Cross Default. The Subordinate Lender agrees that, notwithstanding any contrary provision contained in the Subordinate Loan Documents, a First Mortgage Loan Default shall not constitute a default under the Subordinate Loan Documents if no other default occurred under the Subordinate Loan Documents until either (i) the Senior Lender has accelerated the maturity of the First Mortgage Loan, or (ii) the Senior Lender has taken affirmative action to exercise its rights under the First Mortgage to collect rent, to appoint (or seek the appointment of) a receiver or to foreclose on (or to exercise a power of sale contained in) the First Mortgage. At any time after a First Mortgage Loan Default is determined to constitute a default under the Subordinate Loan Documents, the Subordinate Lender shall be permitted to pursue its remedies for default under the Subordinate Loan Documents, subject to the restrictions and limitations of this Agreement. If at any time the Borrower cures any First Mortgage Loan Default to the satisfaction of the Senior Lender, as evidenced by written notice from the Senior lender to the Subordinate Lender, any default under the Subordinate Loan Documents arising from such First Mortgage Loan Default shall be deemed cured and the Subordinate Loan shall be retroactively reinstated as if such First Mortgage Loan Default had never occurred. 7. Conflict. The Borrower, the Senior Lender and the Subordinate Lender each agrees that, in the event of any conflict or inconsistency behvecn the terms of the First Mortgage Loan Documents, the Subordinate Loan Documents and the terms of this Agreement, the terms of this Agreement shall govern and control solely as to the following: (a) the relative priority of the security interests of the Senior Lender and the Subordinate Lender in the Property; (b) the timing of the exercise of remedies by the Senior Lender and the Subordinate Lender under the First Mortgage and the Subordinate Mortgage, respectively; and (c) solely as between the Senior Lender and the Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations which Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 8) Affordable Housing the Senior Lender and the Subordinate Lender have agreed to as expressly provided in this Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not, and shall not be deemed to: extend Borrower's time to cure any First Mortgage Loan Default or Subordinate Loan Default, as the case may be; give the Borrower the right to notice of any First Mortgage Loan Default or Subordinate Loan Default, as the case may be other than that, if any, provided, respectively under the First Mortgage Loan Documents or the Subordinate Loan Documents; or create any other right or benefit for Borrower as against Senior Lender or Subordinate Lender. 8. Rights and Obligations of the Subordinate Lender Under the Subordinate Loan Documents and of the Senior Lender under the First Mortgage Loan Documents. Subject to each of the other terms of this Agreement, all of the following provisions shall supersede any provisions of the Subordinate Loan Documents covering the same subject matter: (a) Protection of Security Interest. The Subordinate Lender shall not, without the prior written consent of the Senior Lender in each instance, take any action which has the effect of increasing the indebtedness outstanding under, or secured by, the Subordinate Loan Documents, except that the Subordinate Lender shall have the right to advance funds to cure First Mortgage Loan Defaults pursuant to Section 6(a) above and advance funds pursuant to the Subordinate Mortgage for the purpose of paying real estate taxes and insurance premiums, making necessary repairs to the Property and curing other defaults by the Borrower under the Subordinate Loan Documents. (b) Condemnation or Casualty. In the event of. a taking or threatened taking by condemnation or other exercise of eminent domain of all or a portion of the Property (collectively, a "Taking"); or the occurrence of a fire or other casualty resulting in damage to all or a portion of the Property (collectively, a "Casualty"), at any time or times when the First Mortgage remains a lien on the Property the following provisions shall apply- (1) The Subordinate Lender hereby agrees that its rights (under the Subordinate Loan Documents or otherwise) to participate in any proceeding or action relating to a Taking and/or a Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a Taking or a Casualty shall be and remain subordinate in all respects to the Senior Lender's rights under the First Mortgage Loan Documents with respect thereto, and the Subordinate Lender shall be bound by any settlement or adjust -Went of a claim resulting from a Taking or a Casualty made by the Senior Lender; provided, however, this subsection anWor anything contained in this Agreement shall not limit the rights of the Subordinate Lender to file any pleadings, documents, claims or notices with the appropriate court with jurisdiction over the proposed Taking and/or Casualty, and Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 9) Affordable Housing iv (2) all proceeds received or to be received on account of a Taking or a Casualty, or both, shall be applied (either to payment of the costs and expenses of repair and restoration or to payment of the First Mortgage Loan) in the manner determined by the Senior Lender in its sole discretion; provided, however, that if the Senior Lender elects to apply such proceeds to payment of the principal of, interest on and other amounts payable under the First Mortgage Loan, any proceeds remaining after the satisfaction in full of the principal of, interest on and other amounts payable under the First Mortgage Loan shall be paid to, and may be applied by, the Subordinate Lender in accordance with the applicable provisions of the Subordinat:. Loan Documents, proxided however, the Senior Lender agrees to consult with the Subordinate Lender in determining the application of Casualty proceeds, provided further however that in the event of any disageement between the Senior Lender and the Subordinate Lender over the application of Casualty proceeds, the decision of the Senior Lender, in its sole discretion, shall prevail. (c) No Modification of Subordinate Loan Documents. The Borrower and the Subordinate Lender each agrees that, until the principal of, interest on and all other amounts payable under the First Mortgage Loan Documents have been paid in full, it will not, without the prior written consent of the Senior Lender in each instance, increase the amount of the Subordinate Loan, increase the required payments due under the Subordinate Loan, decrease the term of the Subordinate Loan, increase the interest rate on the Subordinate Loan, or otherwise amend the Subordinate Loan terms in a manner that creates an adverse effect upon the Senior Lender under the First Mortgage Loan Documents. Any unauthorized amendment of the Subordinate Loan Documents or assignment of the Subordinate Lender's interest in the Subordinate Loan without the Senior Lendcr's consent shall be void ab initio and of no effect whatsoever. 9. Modification or Refinancing of First Mortgage Loan. The Subordinate Lender consents to any ageement or arrangement in which the Senior Lender waives, postpones, extends, reduces or modifies any provisions of the First Mortgage Loan Documents, including any provision requiring the payment of money. Subordinate Lender further agrees that its agreement to subordinate hereunder shall extend to any new mortgage debt which is for the: purpose of refinancing all or any part of the First Mortgage Loan (including reasonable and necessary costs associated with the closing and/or the refinancing); and that all the terms and covenants of this Ageement shall inure to the benefit of any holder of any such refinanced debt; and that all references to the First Mortgage Loan, the First Mortgage Note, the First Mortgage, the First Mortgage Loan Documents and Senior Lender shall mean, respectively, the refinance loan, the refinance note, the mortgage securing the refinance note, all documents evidencing securing or otherwise pertaining to the refinance note and the holder of the refinance note. Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 10) Affordable Housing X C/ 10. Default by the Subordinate Lender or Senior Lender. If the Subordinate Lender or Senior Lender d.-faults in performing or observing any of the terms, covenants or conditions to be performed or observed by it under this Agreement, the other, non -defaulting lender shall have the right to all available legal and equitable relief. 11. Notices. Each notice, request, demand, consent, approval or other communication (hereinafter in this Section referred to collectively as "notices" and referred to singly as a "notice") which the Senior Lender or the Subordinate Lender is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if: (a) personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered); or (b) sent by Federal Express (or other similar national overnight courier) designating early morning delivery (any notice so delivered shall be deemed to have been received on the next Business Day following receipt by the courier); or (c) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent shall be deemed to have been received two days after mailing in the United States), addressed to the respective parties as follows: SENIOR LENDER: Attention: With a copy to: Fannie Mae Attention: Multifamily Operations - Asset Management Drawer AM 3900 Wisconsin Avenue, N.W. Washington, DC 20016 SUBORDINATE LENDER: Fannie Mae Subordination Agreement — Form 4503 10/98 (Page 11) Affordable Housing Attention: Either party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses for its notices, but notice of a change of address shall only be effective upon receipt. 13. General. (a) Assign ment/Successors. This Agreement shall be binding upon the Borrower, the Senior Lender and the Subordinate Lender and shall inure to the benefit of the respective legal successors and assigns of the Senior Lender and the Subordinate Lender. (b) No Partnership or Joint Venture. The Senior Lender's permission for the placement of the Subordinate Loan Documents does not constitute the Senior Lender as a joint venturer or partner of the Subordinate Lender. Neither party hereto shall hold itself out as a partner, agent or Affiliate of the other party hereto. (c) Senior Lender's and Subordinate Lender's Consent. Wherever the Senior Lender's consent or approval is rcqui-rcd by any provision of this Agreement, such consent or approval may be granted or denied by the Senior Lender in its sole and absolute discretion, unless othcr%vise expressly provided in this Agreement. 1herever the Subordinate Lender's consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by the Subordinate Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. (d) Further Assurances. The Subordinate Lender, the Senior Lender and the Borrower each agree, at the Borrower's expense, to execute and deliver all additional instruments and/or documents reasonably required by any other party to this Agreement in order to evidence that the Subordinate Mortgage is subordinate to the lien, covenants and conditions of the First Mortgage, or to further evidence the intent of this Agreement- (e) Amendment. This Agreement shall not be amended except by written instrument signed by all parties hereto. Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 12) Affordable Housing (0 Governing Law. This Agreement shall be governed by the laws of the State in which the Property is located. (g) Severable Provisions. If any provision of this Agreement shall be invalid or unenforceable to any extent, then the other provisions of this Agreement, shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (h) Term. The term of this Agreement shall commence on the date hereof and shall continue until the earliest to occur of the following events: (i) the payment of all of the principal of, interest on and other amounts payable under the First Mortgage Loan Documents; (ii) the payment of all of the principal of, interest on and other amounts payable under the Subordinate Loan Documents, other than by reason of payments which the Subordinate Lender is obligated to remit to the Senior Lender pursuant to Section 4 hereof; (iii) the acquisition by the Senior Lender of title to the Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the First Mortgage; or (iv) the acquisition by the Subordinate Lender of title to the Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the Subordinate Mortgage, but only if such acquisition of title does not violate any of the terms of this Agreement. 0) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one and the same instrument. Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 13) Affcrdable Housing IN' WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. SENIOR LENDER: By: Name: Title: SUBORDINATE LENDER: By: Name: Title: BORROWER: By: Name: Title: [Jurats to be edded] Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 14) Aitcrdable Housing Schedule of Performance EXHIBIT #D EXHIBIT "D" SCHEDULE OF PERFORMANCE 1. Delivery of First Units One (1) year after obtaining all building permits 1 2. Completion of All Units Sixteen (16) months after obtaining all building permits It is understood that this Schedule of Performance is subject to all of the terms and conditions of the t.-xt of the Agreement. The Summary of the items performance in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule of Performance and the text of the Agreement, the text shall govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by both the Participant and the Agency. The Executive Director of Agency shall have the authority to approve extensions of time without action of the Board of Directors of Agency, provided such extensions do not exceed a cumulative total of one (1) year. Schedule of Performance Page 1 of 1 vromissory Note 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: $2,000,000 Interest: 5% Note Date: January 28 2004 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 DOLLARS ($2,000,000) at the rate of FIVE PERCENT (5%) simple interest, or such lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof, pursuant to an Owner Participation Agreement (the "OPA") dated as of 1n #, I'Z ut , 2001 by and between Maker and Holder. The OPA is hereby incorporated by reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to them in the OPA. The obligation of the Maker to the Holder hereunder shall be secured by a deed of trust made by the Maker encumbering the Site to be developed (the "Site") pursuant to the OPA and the Deed of Trust and Assignment of Rents dated January 28 200 4, executed by the Maker and recorded in the Recorder's Office of Orange County, California on January 28, 2004 as Document No. 04-000066548 (the "Deed of Trust"). The obligation of the Maker set forth in this Note is subject to acceleration as set forth in the'OPA. The OPA and the Deed of Trust are public records on file in the offices of the Holder. 1. Agency Loan. This Note evidences the obligation of the Maker to the Holder for the repayment of funds loaned to the Maker by the Holder (the "Agency Loan") pursuant to the OPA. The Maker shall not make any sale, assignment or conveyance, or transfer in any other form, of the Site, or any part thereof, or interest therein without the express written consent of the Holder -except as set forth in the OPA. 2. Payment of Obligation. There shall be annual payments on the Note in the amount of 1.67% of principal amount plus accrued interest thereon' (each an "Annual Payment"), commencing on the first anniversary of this Note, and every succeeding anniversary during the term of the OPA. However, provided that thirty (30) calendar days prior to the then current anniversary date Holder determines that Maker is not in Material Default under the OPA, Holder shall provide notice to Maker not later than fifteen (15) calendar days prior to the anniversary date that the then current year Annual Payment shall be waived, and the Maker shall have no obligation to pay said Annual Payment to the Agency. The Deputy Executive Director of Holder Promissory Note Page 1 of 3 1 /9/04 is hereby authorized to make such determination regarding Material Default and provide such notice on behalf Holder. Upon the total payment or waiver of Annual Payments on this Note as set forth above, Holder shall mark this Note "PAID IN FULL" and shall deliver this Note to the Trustee of the Deed of Trust that secures this Note for the Trustee's delivery to Maker in conjunction with the reconveyance of the Deed of Trust. 3. No Prepayment. There shall be no prepayment of this Note. If, at the end of the 60- year term of the OPA, an unpaid balance remains on this Note, Maker may choose to do either of the following: (a) Maker may choose to continue to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the Holder shall not require repayment of the balance of this Note and the 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 remaining principal balance of the Agency Loan plus all accrued interest on this Note, if any, 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 Deed of Trust or any obligation secured thereby (including the obligations in the OPA and the Regulatory Agreement), or in any other instrument now or hereafter securing the obligations evidenced hereby, then, Holder may, at its option, declare this Note and all the obligations hereby evidenced that have not been forgiven, waived, and discharged pursuant to Section 2 above, to be immediately due and payable and collectible then or thereafter as Holder may elect, regardless of the date of maturity. 5. Default Interest. If any event occurs giving Holder the right to accelerate this Note pursuant to Section 4 above, the entire unpaid and unforgiven principal owing hereunder shall, as of the date of such acceleration, commence to accrue interest at a rate equal to two percentage points above the reference rate published by Bank of America N.A., or the maximum non -usurious interest rate permitted by law, whichever is less. 6. Collection Costs, Attorneys' Fees. If any attorney is engaged by Holder because of any event of a Material Default under this Note or the Deed of Trust or to enforce any provision of either instrument, whether or not suit is filed hereon, Holder shall bear its own attorney's fees and costs. 7. Severability. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 8. Modifications. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder. Promissory Note Page 2 of 3 1/9/04 9. Usu . Notwithstanding any provision in this Note, Deed of Trust or other document securing same, the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 10. Governing Law. This Note has been executed and delivered by Maker in the State of California and is to be governed and construed in accordance with the laws thereof. IN WITNESS WHEREOF, Maker has executed this Note as of the date and year first above written. au/_�:��lii FOUNTAINS HUNTINGTON BEACH, LLC, a Delaware limited liability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member By: Glenn L. Carpenter, President and Chief Executive Officer Promissory Note Page 3 of 3 1/9/04 Deed of Trust EXHIBIT #F This Document was electronically recorded by First American Title B Recorded in Official Records, County of Orange Tom Daly, Clerk -Recorder NO FEE 2004000066548 04:01pm 01/28/04 0 00 0.00 0.00 000 0.00 0.00 0.00 0.00 WHEN RECORDED MAIL TO: ) Redevelopment Agency of the ) City of Huntington Beach ) 2000 Main Street j Huntington Beach, CA 92648 ) Attn: Agency Secretary ) SPACE: ABOVE nIIS LINE FOR RECORDER'S USQ 1 EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103] awwr N�+t w tmt �.C�iwr �1r11r�cwuttrrcprwar SUBORDINATED DEED OF TRUST 1VITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO NOTICE: THIS SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO CONTAINS A SUBORDINATION CLAUSE WHICH MAY RESULT IN YOUR SECURITY INTEREST IN THE PROPERTY BEING SUBJECT TO A LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. This DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO ("Deed of Tnlst"), made Z-`$� 2004, between FOUNTAINS HUNTINGTON BEACH, LLC, a Delaware limited liability company, herein called TRUSTOR, whose address is 4220 Von Karman, Second Floor, Newport Beach, CA 92660; and THE CITY OF HUNTINGTON BEACH, a California corporation, herein called TRUSTEE, and REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, herein called BENEFICIARY, WITNESSETH: That Trustor grants to Trustee in trust, «7th power of sale, that property in the City of Huntington Beach, County of Orange, Stag 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 DOLLARS ($2,000,000.00) 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 each agreement of Trustor incorporated by reference or contained herein; and (3) payment of additional sums and interest thereon which 1 Subordinated Deed of Trust PDA: 2001 Agree: Fountains Iluntington Beach: Subordinated Deed ofTru:t 12-27.01 may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory • note or notes reciting that they are secured by this Deed of Trust. To protect the security of this Deed of Trust, and mith 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 COMM BOOK PAGE COUNTY BOOT: PAGE COUNTY BOOK PAGE Alameda 1288 566 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130.31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amadix 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427 Calarcras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 hlarin 1949 122 San Bernardino 6213 769 Sutter 655 595 Contra Costa 4684 1 Mariposa 90 453 San Francisco A-904 396 Tchama 457 133 DO Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity l08 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2S30 108 Fresno 5052 623 Modoc 191 93 San Mateo 4779 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 206S 981 Ventura 2607 237 Humboldt 80t 83 Monterey 357 239 Santa Clara 66ZS 664 Yoto 769 16 ImperiA 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 m ithin 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 it at its address hereinbefore set forth. NOTICE: THIS SUBORDINATED DEED OF TRUST N�WH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO CONTAINS A SUBORDINATION CLAUSE WHICH MAY RESULT IN YOUR SECURITY INTEREST IN THE PROPERTY BEING SUBJECT TO A LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. 2 Subordinated t7aed of Trust PDA: 2001 Agree: Fountains I luntington Beach: Subordinated Deed orTrust 12-27-01 Signature of Trustor FOUNTAINS HUNTINGTON BEACH, LLC, A Delaware limited liability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member By: Glenn L. Carpenter President and Chief Executive Officer STATE OF CALIFORNIA ) COUNTY OF ORANGE ) } On �3naar-aq4 26o4 before me, . rnlcn_ M. Wh ana personally appeared g/Gm 1- . Ldr personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(g) whose name(g) is/arc subscribed to the within instrument and acknowledged to me that he/4keltlley executed the same in his/herAheir authorized capzcity(ks) and that by hisAte� signature( on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. S ignatur (nits area for official notarial seal) CARo NY M. WHANG,� i} COMM. #1325676 0 `�"t NOTARY PUBLIC - CALIFOgNIA F- ORANGECOUNTY My Comm. E=pMes Oct Ia 29J5 � 3 Subordinated Deed of Trust PDA: 2001 Agree: Fountains }tuntin;ton Beach: subordinated Deed of Tnr,t l2 27-01 Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 2, AS SHOWN ON EXHIBIT "B" ATTACHED TO LOT LINE ADJUSTMENT LL 00-02 RECORDED APRIL 25, 2000 AS INSTRUMENT NO.00-213264 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPT ALL MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND ALL UNDERGROUND WATER IN OR UNDER OR WHICH MAY BE PRODUCED FROM SAID LAND WHICH UNDERLIES A PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF SAID LAND, FOR THE PURPOSE OF PROSPECTING FOR, THE EXPLORATION, DEVELOPMENT, PRODUCTION, EXTRACTION AND TAKING OF SAID MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER FROM SAID LAND BY MEANS OF MINES, WELLS, DERRICKS AND/OR OTHER EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR NEIGHBORING LAND OR LYING OUTSIDE OF THE ABOVE DESCRIBED LAND, IT BEING UNDERSTOOD THAT THE OWNER OF SUCH MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER, AS SET FORTH ABOVE, SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OF THE ABOVE DESCRIBED LAND NOR TO USE ANY OF THE SAID LAND OR ANY PORTION THEREOF ABOVE SAID PLANE~ PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE SAID LAND FOR ANY PURPOSE WHATSOEVER, AS RESERVED BY THE HUNTINGTON BEACH COMPANY, A CALIFORNIA CORPORATION, RECORDED OCTOBER 31, 1990 AS INSTRUMENT NO.90-577992 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM ALL RIGHTS TO WATER WITHIN, UNDERLYING OR PRODUCED FROM THE LAND AND ADJOINING STREETS, ROADS AND HIGHWAYS AND THE USE AND ENJOYMENT THEREOF, EXCLUDING ONLY THOSE RIGHTS TO SURFACE WATER THAT ARE NOT ATTACHED TO OR A PART OF RIGHTS TO SUBSURFACE WATER, WITHOUT, HOWEVER, ANY RIGHTS OF SURFACE ENTRY OTHER THAN THOSE SET FORTH IN CLAUSES (B) AND (C) OF THE HEREINAFTER REFERRED TO GRANT DEEDS AS RESERVED BY PACIFIC COAST HOMES, A CALIFORNIA CORPORATION IN THE GRANT DEEDS RECORDED MAY 9, 1996 AS INSTRUMENT NOS. 96-234740 AND 96-234741, BOTH OF OFFICIAL RECORDS. PARCEL B: AN APPURTENANT, PERPETUAL AND EXCLUSIVE EASEMENTS FOR PEDESTRIAN INGRESS, EGRESS AND ACCESS PURPOSES, AS SAID EASEMENTS ARE SET FORTH IN THAT CERTAIN EASEMENT AGREEMENT RECORDED MARCH 19, 2002 AS INSTRUMENT NO. 02-226103 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 023-010-34 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 fire 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 attorneys 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 or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same 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. B. It is mutually agreed: 4 Subordinated Deed of Trust PDA: 2001 Agree: Fountains I luntington Beach: Subordinated peed of Trust 12-27-01 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 stun 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 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. 6) That upon default by Trustor in payinent 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. 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 5 Subordinated DeM of Trust PDA: 2001 Agra: Fountains Huntingnon 13cach: Subordinatcd Dccd orTr.*t 12-27-01 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, Truster:, 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 Iaw in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled 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, v4ithout 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. 5 Subordinated Eked of Trust PDA: 2001 Agree: Fountains Iluntington Beach: Subordinated Deed of Tmst 12-27-01 DO NOT RECORD RF, LJF.ST FOR FULL RF.CON'VF.YANCF. 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 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 %vith the said Deed of Trust, and to reconvey, Mthout 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. 7 Subordinated Deed of Trust PDA: 2001 Agme: Fountains t1untington Scach: Subordinalcd aced of Trust 12-27-01 DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED CITY OF HUNTINGTON BEACH A California municipal corporation TRUSTEE S Subordinated Deed of Trust PDA: 2001 Agrcc: Fountains Huntington Qeach: Subordinatcd Dccd of Trust 12-27-01 RIDER TO SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS RIDER TO SUBORDINATED DEED OF TRUST WITH i RIDER ATTACHED ("Rider"), is made as of , 2004, by FOUNTAINS IIUNTIN'GT0,1 BEACH, LLC, a Delaware limited liability company ("Trustor"), and REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Beneficiary"), as follows: 1. Part of Deed of Trust. This Rider is made a part of that certain Subordinated Deed of Trust With Assignment of Rents ("Deed of Trust"), of even date hereof, to which this Rider is attached. 2. Conflict. In the event of any conflict between the terms of this Rider and the terms of the Deed of Trust, the terms of this Rider shall control. 3. Priority Subordination. Truster and Beneficiary entered into that certain Owner Participation Agreement, dated January 22, 2002 (the "OPA"), pursuant to which Beneficiary (named the "Agency" in the OPA) agreed to subordinate this Deed of Trust to the liens of the deeds of trust identified in the OPA as the Conventional Lender's deeds of trust, and to such other and further documents as may be required by such lenders, including but not limited to regulatory agreements. The lien of this Deed of Trust therefore shall be junior and subordinate to the lien of the foregoing listed deeds of trust and such other and further documents as such lenders may require. Beneficiary agrees to execute such subordination agreements, in the forms attached as Exhibits "C" or " ll" to the OPA, as are necessary to effect such subordination of the lien of this Deed of Trust. 4. Condemnation. Section B.1 of the Fictitious Deed of Trust incorporated into the Deed of Trust shall be modified to provide that Beneficiary shall not be entitled to any awards or damages payable directly or indirectly by reason of a condemnation or proposed condemnation affecting all or any part of, or any interest in, the Property, brought by or pursuant to the direction of Beneficiary or the City of Huntington Beach, California. S. Default. The term "default" as used in the Deed of Trust shall mean a "Material Default" as defined in the OPA. IN WITNESS WI IEREOF, Trustor and Beneficiary have executed this Rider to Subordinated Deed of Trust With Assignment of Rents as of the date of Trustor's acknowledgement hereinbelow, to be effective for all purposes as of the day and year first set forth above. [end — signature page follows] 9 Subordinated Deed of Trust PDA-. 2001 Agree: Fountains I luntington 11cacb: Subordinated Dced of Urn 12-27-01 "TRUSTOW' FOUNTAINS HUNTINGTON BEACH, LLC, A Delaware limited Iiability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member By Glenn L. Carpenter President and Chief Executive Officer "BENEFICIARY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: Chairman ATTEST: By: Agency Clerk REVIEWED AND APPROVED AS TO FORM: By Agency Counsel 1 REVIEWED AND A ROVE By: Executive Director INITIATE AND APPROVED Deputy Executive Directo Ia Subordinated Deed of Trust PDA: 2001 Agin: Fountains Fluntington Beach: Subordinated Deed orTtwt 12-27-0I "TRUSTOR" 'FOUNTAINS HUNTINGTON BEACH, LLC, A Delaware limited liability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member By: Glenn L. Carpenter President and Chief Executive Officer "BENEFICIARY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic ATTEST:Aye Y L 6O(Ar l _ Acencv Mrk / REVIEWED AND APPROVED AS TO FORM: r /By Agecy Counsel l REVIEWED AND TROVE By 1 Executive Director 1� INITIATE AND APPROVED By: Deputy xecutive Directo 10 Subordinated DeeJ of Trust PDA: 2001 Agree: Fountains Huntington Beach: Subordinated Deed of Tmit 12 27-0l to (','4jtr STATE OF CALIFORNIA } ss. COUNTY OF ORANGE ) On nUd 1 R 200 before me, M personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person( whose name() is/am subscribed to the iNithin instrument and acknowledged to me that he/sheAhoy executed the same in hi%theF4heir authorized capacity(ies), and that by his/htr/+eiT signature(A) on the instrument the person(g) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. r �.. CAROLYN M. WHANG' (� r COMM. #1325676 ^ [SEAL] o Kati NOTARY PUBLIC -CALIFORNIA ORANGE COUNTY 0 ' My Comm. Expires Oct.16. 2005 STATE OF CALIFORNIA SS. COUNTY OF ORANGE; J On , before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/shelthey executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] I Subordinated Dced of Trust FDA: 2)01 Agee: Fountains Huntingon Beach: Subordinated Dced of Trust 12-27-01 . STATE OF CALIFORNIA COUNTY OF ORANGE. On - ©�r, before me, personally appeared personally kno «t to me to be a person(s) whose name(s) isssubscribed to the within instrument and acknowledged to me that he/shqFeP executed the same in hisbe •t eir uthorized 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. Ss. Witness my hand and official seal. [SEAL] KELLY LOUISE MANDIC Commission R 13728W S)MyCorm-60esSep Notary Public - Califomio Orange County 1.20D6 STATE OF CALIFORNIA ss. COUNTY OF ORANGE On before me, - _ , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 11 Subordinated Deed of Trust PDA: 2001 Agree: Fountains 1luntington Beach: Subordinated Deed of Trutt 12-27.01 Order No. ) 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 ) SPACE ABOVE TI IIS LIVE FOR RECORDER'S USE] EXEMPT FROM RECORDING FEE PER GOV. CODE § 61031 SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO NOTICE: THIS SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO CONTAINS A SUBORDINATION CLAUSE WHICH MAY RESULT IN YOUR SECURITY INTEREST IN THE PROPERTY BEING SUBJECT TO A LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. This DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO ("Deed of Trust"), made , 2001, between FOUNTAINS HUNTINGTON BEACH, LLC, a Delaware limited liability company, herein called TRUSTOR, whose address is 4220 Von Karman, Second Floor, Newport Beach, CA 92660; and THE CITY OF HUNTINGTON BEACH, a California corporation, herein called TRUSTEE, and REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, herein called BENEFICIARY, WITI\ ESSETH: That Trustor grants to Trustee in tr;rst, 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 DOLLARS ($2,000,000.00) 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 each agreement of Trustor incorporated by reference or contained herein; and (3) payment of additional sums and interest thereon which I Subordinated Deed of Trust PD.1: 2001 Agrcc: Fountains Iluntington Beach: Subordinalcd Dccd or Trust 12-27-01 v may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. To protect the security of this Deed of Trust, and -,vith 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 I7, 1964, and in all other counties September I8,1964, 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 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 take 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 62I Buite 1330 513 Los Angeles T-3878 874 S=2rnento 5039 124 Sonoma 2067 427 Calavens 185 338 Madera 911 136 San Benito 30D 405 Stanislaus 1970 56 CoTusa 323 391 h1arin 1849 122 San Bernardino 6213 768 Sutter 655 $85 Contra Costa 4684 1 Alariposa 90 453 San Francisco A-804 596 Tchama 457 183 Del Norte lot 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 EI Dtw3Io 704 635 Alerred 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 hlodoc 191 93 San Nlatco 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2005 881 Ventura 2607 237 llumboldt 80I 83 hlontcrcy 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 it at its address hereinbeforc set forth. NOTICE: THIS SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO CONTAINS A SUBORDINATION CLAUSE WHICH MAY RESULT IN YOUR SECURITY INTEREST IN THE PROPERTY BEING SUBJECT TO A LONER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. 2 Subordinated Deed of Trust PDA: 2001 Agree: Fountains Lluntingum Beach: Subordinated Dent orTru-tt 12-27-01 STATE OF CALIFORNIA COUNTY OF ORANGE CST personally appeared before me, Signature of Trustor FOUNTAINS HUNTINGTON BEACH, LLC, A Delaware limited liability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member By: Glenn L. Carpenter President and Chief Executive Officer personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (This area for official notarial seal) 3 Subordinated Deed of Trust PDA: 2001 Agrec: Fountains Huntington Beach: Subordinated Ned of Trust 12-27-01 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 spcci fie enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy 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 or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same 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. S) 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 Wect 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. B. It is mutually agreed: 4 Subordinated Deed of Trust PDA: 20)1 AFrcc: Fountains Iluntingtun beach: 5utxxdinatcd Dced of Trust 12-27-01 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 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 o«m 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. 6) That upon default by Trustor in pay-mcnt 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. 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, «ithout 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 5 Subordinated Deed of Trust PDA: 2001 Agree: fountains Ifunting-on Beach: Subordinated Deed of Trust 12-27-C 1 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. S) 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 tern 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 bylaw. 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. G Subordinated Deed of Trust PDA: 2001 Agree: TounMins 1luntington Beach: Subordinated Deed or Trust 12-27-01 C/ DO NOT RECORD REQUEST FOR FULL RFCONVEYANCE 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 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 o f 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 TOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. 7 Subordinated Deed of Trust PDA: 2001 Agree: Fountains I luntington Bcach: Sutxxdinated Decd of TTu;t I2.27-01 DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED CITY OF HUNTINGTON BEACH A California municipal corporation TRUSTEE s Subordinated Deed of Trust PDA: 2001 Agree: fountains 1lunlington Beach: Subordinated Iked of Trust 12-27-01 i/ RIDERTO SUBORDINATED DEED OFTRUST WITH ASSIGN;IiENT OF RENTS THIS RIDER TO SUBORDINATED DEED OF TRUST WITH RIDER ATTACHED ("Rider"), is made as of , 2001, by FOUNTAINS HUNTENGTON BEACH, LLC, a Delaware limited liability company ("Trustor"), and REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Beneficiary"), as follows: 1. Part of Deed of Trust. This Rider is made a part of that certain Subordinated Deed of Trust With Assignment of Rents ("Deed of Trust"), of even date hereof, to which this Rider is attached. 2. Conflict. In the event of any conflict between the terms of this Rider and the terms of the Deed of Trust, the terms of this Rider shall control. 3. Priority-, Subordination. Trustor and Beneficiary entered into that certain O«-ner Participation Agreement, dated , 2001 (the "OPA'), pursuant to which Beneficiary (named the "Agency" in the OPA) agreed to subordinate this Deed of Trust to the liens of the deeds of trust identified in the OPA as the Conventional Lender's deeds of trust, and to such other and further documents as may be required by such lenders, including but not limited to regulatoryagreements. The lien of this Deed of Trust therefore shall be junior and subordinate to the lien of the foregoing listed deeds of trust and such other and further documents as such lenders may require. Beneficiary agrees to execute such subordination agreements, in the forms attached as Exhibits "C" or" FI" to the OPA, as arc necessary to effect such subordination of the lien of this Deed of Trust. 4. Condemnation. Section B.1 of the Fictitious Deed of Trust incorporated into the D.-ed 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 or the City of Huntington Beach, California. 5. Default. The term "default" as used in the Deed of Trust shall mean a"Material Default" as defined in the OPA. IN WITNESS WHEREOF, Trustor and Beneficiary have executed this Rider to Subordinated Deed of Trust With Assignment of Rents as of the date of Trustor's acknowledgement hereinbelow, to be effective for all purposes as of the day and year first set forth above. [end — signature page follows] 9 Subordinated Deed of Trust PDA: 2C01 Agrec: fountains 1luntington Beach: Subordinated Dccd of Trust 12-27.0 { /W "TRUSTOR" FOUNTAINS HUNTINGTON BEACH, LLC, A Delaware limited liability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member By: Glenn L. Carpenter President and Chief Executive Officer "BENEFICIARY" REDEVELOP141ENT AGENCY OF THE CITY OF HUNTNGTON BEACH, a public body corporate and politic By: Chairman ATTEST: By: Agency Clerk REVIE`VED AND APPROVED AS TO FORM: By Agency Counsel 10 Subordinated Deed of Trust PDA: 2001 Agree: Fountains I luntingum 1lc2ch: Subordinated Ned of Trust 12-27-01 I I/1/j[v STATE OF CALIFORNIA ss. COU\7Y OF ORANGE Oil , before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacitylies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ss. COUNTY OF ORANGE Notary Public On , before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the persons) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 11 Subordinated Deed of Trust PDA: 2001 Agrcc: Fountains Huntington Mach: Subordinated Dccd of Trust 12-2 T-01 P Regulatory Agreement EXHIBIT #G This Document was electronically recorded by First American Title B FRI''E RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: REDEVELOPMENT AGENCY OF THE CITY OF LIUNTINGTON BEACH 2000 Main Street Recorded In Official Records, County of Orange Tom Daly, Clerk -Recorder 11F. 1MM1J0fl[1 M1 NO FEE 2004000066549 04:01 pm 01/28/04 105 21 Al2 D0216 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Huntington Beach, CA 92648 Attn: Executive Director Lz2szg i (Space Above This Line for Recorder's Office Use Only) IIECOR� 1lFOt1E1ST�D itlr FPSTµERICµ Mt SAW (Exempt from Recording Fee per Gov Cale § 6103) 1 DFV"Pt REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement") is made and entered into this Z$ today of nuar,, 2004, by and between REDEVELOPMENT AGENCY OF THE CITY OF IIUNTIN1 TON BEACH, a public body, corporate and politic ("Agency") and FOUNTAINS HUNTNGTON BEACH, LLC, a Delaware limited liability company ('Participant'). RECITALS: A. Agency and Participant have entered into that certain Owner Participation Agreement, dated January 22, 2002 (the "OPA"), concerning Participant's development of that certain real property, owned in fee by Participant, more particularly described in Attachment No. 1 attached hereto and incorporated by reference herein (the "Site"). The OPA describes the "Project" which generally consists of Participant's construction of 271 rental housing units, of which eighty (80) units shall be restricted for rental to elderly tenants of low income and very low income, on the Site and subsequent management thereof as an affordable rental housing complex. The OPA is hereby incorporated herein by this reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to such terms in the 0PA. B. Participant has executed that certain promissory note (the "Note") dated ]4,,ew Z� , 2004, pursuant to which Agency has provided Participant with a loan in the principal amount of TWO MILLION DOLLARS ($2,000,000) ("Loan Amount"). The Note is secured by a Subordinated Deed of Trust With Assignment of Rents With Rider Attached dated on or about the date of the Note. C. Agency and Participant now desire to place restrictions upon the use and operation of the Project, in order to ensure that the Project shall be operated continuously as an affordable housing project available for rental in accordance with the terms set forth below for the term of this Agreement. Regulatory Agreement PDA: 2001 Agree: fountains I funtington Beach: Regulatory Agrce — Ex G — Rev iscd $12 RLS CO-626 12-27-01 AGREEMENT: NOW, THEREFORE, the Participant and Agency declare, covenant and agree, by and for themselves, their heirs, executors, administrators and assigns, and all persons claiming under or through them, that the Site, for the term of this Agreement, shall be held transferred, encumbered, used, sold, conveyed, leased and occupied, subject to the covenants and restrictions hereinafter set forth: I. DEFINITIONS. 1.1 Affordable Rent. As us.-d in this Agreement, the term "Affordable Rent" shall mean rental rates not to exceed thirty percent (30%) times fifty percent (50%) of median income for an Eligible Very Low Income Tenant, and rental rates not to exceed thirty percent (301/o) times eighty percent (80%) of median income for an Eligible Low Income Tenant. 1.2 Eli ible Tenant. As used in this Agreement, the term "Eligible Tenant" shall refer to persons who are a minimum of 55 years of age and who are Eligible Very Low Income Tenants or Eligible Low Income Tenants, and who are eligible to rent a Unit. 1.3 Eligible Low Income Tenant. As used in this Agreement, the term "Eligible Low Income Tenant" shall mean an Eligible Tenant whose annual income does not exceed eighty percent (801/6) of the median income for the Orange County Metropolitan Statistical Area as determined by the U.S. Department of Housing and Urban Development (HUD) with adjustments for smaller and larger families. 1.4 Eligible Very Low Income Tenant. As used in this Agreement, the term "Eligible Very Low Income Tenant" shall mean an Eligible Tenant whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Metropolitan Statistical Area as determined by the U.S. Department of Housing and Urban Development (HUD) with adjustments for smaller and larger families. I.5 Orange County Median Income. For purposes of this Agreement, the term "Orange County Median Income" shall mean the median income for the Orange County Primary Metropolitan Statistical Area, with adjustments for household size, as determined from time to time by HUD pursuant to the United States (lousing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. 1.6 Unit and Units. As used in this Agreement, the term "Unit" shall mean one of the eighty (80) rent restricted, affordable rental dwelling units in the Project, and the term "Units" shall mean two or more of the eighty (80) rent restricted, affordable rental dwelling units in the Project. The term "Unit" and "Units" shall be used as the context mandates and shall be reasonably interpreted in light of the context in which the term appears. 1.7 Utility Allowance. As used in this Agreement, the term "Utility Allowance" shall mean an allowance for utilities, including garbage collection, sewer, water, 2 Regulatory Agreement FDA: 2001 Agree: Fountains Huntington Beach: Regulatory Agree — Ex G — Revised N2 RI.S 00-626 12-27-01 electricity, gas and other heating, cooking and refrigeration fuels, but shall not include telephone service. In no event shall such Utility Allowance be less than the amount established by the Orange County Housing Authority per Unit per month. 2. TERM OF AGREEMENT: RESIDENTIAL RENTAL PROPERTY. The term of this Agreement shall be sixty (60) years from the Effective Date of the OPA. Participant hereby agrees that the Project is to be o%%med, managed, and operated as a project for Eligible Tenants for the term of this Agreement. To that end, and for the term of this Agreement, the Participant hereby represents, covenants, warrants and agrees as follows: 2.1 Purrose. The Site has been acquired and the Project developed for the purposes of providing Eligible Tenants affordable rental housing. 2.2 Facilities. All of the Units in the Project shall contain facilities adequate for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state and local la%vs and codes. 2.3 Residential Use. None of the Units in the Project will at any time be utilized on a transient basis or v ill ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park without the Agency's prior written consent. 2.4. Maximum Occupancy. The maximum number of persons in a household that may occupy any of the two -bedroom Units may not exceed five persons; the maximum number of persons in a household that may occupy any of the one -bedroom Units may not exceed two persons. 2.5 Conversion of Units. No put of the Project will at any time be owned by a cooperative housing corporation nor shall the Participant take any steps in connection with the conversion to such ownership or uses to condominiums, or to any other form of ownership, without the prior �witten approval of Agency. 2.6 Preference to Eligible Tenants. All of the Units wall be made available for rental in accordance with the terms of this Agreement, and the Participant shall not give preference to any particular class or group in renting the Units in the Project, except to the extent that the Units are required to be leased or rented to Eligible Tenants and except as provided in Section 3.3 below. 2.7 Liability of Participant. Participant and the management agent shall not incur any liability under this Agreement as a result of fraud or negligent or intentional misrepresentation by a tenant. 3. OCCUPANCY OF PROJECT BY ELiGiBLE TENANTS. Participant hereby represents, warrants, and covenants as follows: 3 Regulatory Agreement PDA. 2001 Agra: Fountains 11untinglon Bcach: Regulatory Agree —Ex G — Revised 02 RLS 00-626 12-27-01 3.1 Income Restrictions. Except as expressly provided herein, throughout the term of this Agreement, the eighty (80) rent restricted, affordable Units shall be rented only to Eligible Low Income Tenants and Eligible Very Low Income Tenants as follows: a. The eighty (80) rent restricted, affordable Units shall be comprised of sixty (60) one -bedroom units and twenty (20) two -bedroom units. b. Forty-one (41) of the sixty (60) one bedroom units shall be rented to Eligible Very Low Income Tenants. Nineteen (19) of the sixty (60) one -bedroom units shall be rented to Eligible Low Income Tenants. C. Fourteen (14) of the twenty (20) two -bedroom units shall be rented to Eligible Very Low Income Tenants. Six (6) of the twenty (20) two -bedroom units shall be rented to Eligible Low Income Tenants. 3.2 Rental Rates. Monthly rents for the Units (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) shall not exceed one -twelfth (1112) of the Affordable Rent adjusted for family size appropriate for the Unit. The rental rates for the Units shall be adjusted annually based upon current updates of HUD income and rent standards. In no event shall any of the Units be rented at a rate greater than the Affordable Rent applicable to the particular Unit. 3.3 Occupancy By Eligible Tenant. A Unit occupied by an Eligible Tenant at the time of this Agreement shall be treated as occupied by an Eligible Tenant until such Unit is vacated. A Unit previously occupied by an Eligible Tenant and then vacated shall be considered occupied by an Eligible Tenant until reoccupied, other than for a temporary period, at which time the character of the Unit shall be redetermined. In no event shall such temporary period exceed thirty-one (31) days. If at any time a tenant's household income increases, resulting in disqualification of such tenant as an Eligible Very Low Income Tenant, such tenant shalt have a period of ninety (90) days to relocate from the Site. The disqualified tenant shall be fully responsible for the costs and expenses related to the relocation. Should such tenant face extraordinary hardship in relocating from the Site, the tenant may submit a varitten appeal to the Agency requesting an extension of the time period within which the tenant must relocate. Upon receipt of the written appeal, the Agency Director of Economic Development in his sole discretion may extend the relocation period for up to a maximum of ninety (90) additional days. Pursuant to this Paragraph 3.3, Participant will at all times be deemed in compliance with this Regulatory Agreement during such disqualified tenant's relocation period, as extended. 3.4 Income Computation. Immediately prior to a prospective Eligible Tenant's occupancy of a Unit, Participant shall obtain and maintain on file an income computation and certification form from each such prospective Eligible Tenant dated immediately prior to the date of initial occupancy in a Unit by such prospective Eligible Tenant. Participant shall use its best efforts to verify that the income information provided by an 4 Regulatory Agreement PDA: 2001 Agree: Fountains Huntington Beach: Regulatory Agree — Ex G — Revised M2 RLs 00.626 12-27-01 applicant is accurate by following the Agency Housing Rehabilitation Loan Program 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. Participant shall update the foregoing records annually and shall provide copies of updated tenant eligibility records and monthly rental records to Agency for review. Upon a review of such records, Agency may at its option and expense perform an independent audit of the tenant eligibility records and monthly rental records to Agency for review. Upon review of such records, Agency may at its option and expense perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Participant shall retain the records described in this Section for a period of three years after the date the respective records were created. 3.5 Rental Priority. Units shall be rented to Eligible Tenants on a first. come, first -served basis; provided, however, that Participant may, in Participant's sole discretion, maintain an "interest list' or "eligibility list" of pot.-ntial tenants; provided, however, that Participant shall not be liable to Agency or any person, firm, or entity in the event a Unit is rented to a person who is not on any such list or is on such list but is listed lower than another person on such list. 3.6 Renting Vacant Units. When a Unit becomes available as a result of a tenant vacation, Participant shall rent the Unit to an Eligible Tenant in accordance with the following procedure: (a) First, Participant shall rent the Unit to persons who have been displaced by Agency activities, pursuant to California Health and Safety Code Section 33411.3, provided that Agency provides Participant with reasonable notice. (b) Second, Participant shall rent any vacant Unit in the order of priority as set forth in Section 3.5. 3.7 Maintenance of Records. Participant shall maintain complete and accurate records pertaining to the Units, and shall permit any duly authorized representative of the Agency to inspect the books and records of Participant pertaining to the Project including, but not limited to, those records pertaining to tenant eligibility and occupancy of the Units. Records pertaining to the Project and Units shall be retained for a period of five (5) years after the termination of this Agreement; records pertaining to tenant and eligibility shall be retained for the period set forth in Section 3.4. 3.8 Reliance on Tenant Representations: Each tenant lease shall contain a provision to the effect that Participant has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of a Unit, and that Regulatory Agreement PDA: 2001 Agree: Fountains Huntington Beach: Regulatory Agree - Ex G - Revised 82 RLs OC-626 12-27-01 any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 3.9 Conflicts. The rental priority provision set forth in Section 3.6 shall apply only in the event, and to the extent, such provisions are not in conflict «rith any applicable federal or state law or any regulatory agreement affecting the Project that is recorded in superior priority to this Agreement. 4. MAINTENANCE 4.1 Maintenance Covenant. Participant agrees to maintain all interior and exterior improvements, including landscaping, on the Site in good condition and repair (and, as to landscaping, in a healthy condition), reasonable wear and tear excepted, and in accordance with all applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction (including, but not limited to, Federal Housing Quality Standards as set forth in 24 C.F.R. 982.40I). In addition, Paticipant shall keep the Site free from all graffiti and any accumulation of debris or waste material. Participant shall make all repairs and replacements necessary to keep the improvements in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. The maintenance covenant contained in this Section shall remain in effect for the term of this Agreement. 4.2 Agency Rights. Agency shall have the right to enter upon the Site to inspect both the interiors and exteriors of the Site, upon seventy-two (72) hours notice to Participant. Agency may perform or cause to be performed the maintenance necessary to cure any default of these maintenance covenants and participant shall be liable for payment to Agency for Agency's reasonable costs (excluding staff salaries and overhead and other similar costs) to perform such required maintenance; provided, however, that Participant first be given written notice by Agency of the actions required to cure any default, and Participant, after receipt of such notice, shall have sixty (60) days to cure such defaults, but Participant shall not be deemed in default of the foregoing r.laintenance covenant if such default cannot reasonably be cured within the sixty (60) day period referenced above so long as Participant has commenced to cure such default within the same sixty (60) day period and is diligently proceeding with the work to cure such default. Notwithstanding the foregoing, if any property conditions are reasonably identified by Agency after a property inspection attended by a representative of Participant that pose an immediate danger to life or limb, Participant shall have three (3) days to effect corrections of such condition(s) to Agency's reasonable satisfaction. 4.3 Annual Report. Participant covenants and agrees to submit to the Agency an annual report (the "Annual Report") required by California Health and Safety Code Section 33418. The Annual Report shall include for each Unit the rental rate and the income and family size of the occupants, and shall also include the records described in Section 3.7 herein and the audited financial statements described in Section 5.11 of the OPA. The income information shall be supplied by the tenant in a certified statement on a form provided by the Agency. The Participant shall submit the Annual Report on or before the end of the first 6 Regulatory Agreement PDA: 2401 Agree: Fountains liunting on beach: Regulatory Agree — Ex G — Revised 12 RLS OO-626 12-27.01 calendar quarter of the year following the year covered by the Annual Report. The Participant shall provide for the submission of such information in its leases with tenants. Agency shall not charge Participant a fee for reviewing the Annual Report, or for Agency's or Participant's compliance with Health and Safety Code § 33418. 4.4 Management Plan. Participant shall prepare, submit to Agency Executive Director not less than one hundred twenty (120) calendar days prior to the date of completion of the first Unit and maintain in effect a management plan in accordance with the following ("Management Plan': (a) The Management Plan, including such amendments as may be approved in writing by the Agency, shall remain in effect for the term of this Agreement. Participant shall not amend the Management Plan or any of its components without the prior written consent of the Agency. The components of the Management Plan shall include: (1) Management Agent. The name and qualifications of the proposed management agent. The Agency shall approve or disapprove the proposed management agent in writing based on the experience and qualifications of the 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 Units. (3) Management Agreement. A copy of the proposed management agreement specifying the amount of the management fee and the relationship and division of responsibilities between Participant and management agent. (4) Tenant Lease or Rental Agreement. A copy of the proposed tenant lease or rental agreement to be used in renting the Units. (5) Annual Operating Budges. Prior to the completion of construction and annually thereafter not later than fifteen (I5) days prior to the beginning of the next fiscal year of the Project, Participant shall submit a projected operating budget to the Agency Executive Director for review and approval. The Agency shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder, and such matter shall be deemed approved unless the Agency provides to Participant its written disapproval within thirty (30) days after receipt of a request for approval, provided Participant includes with its request, a written notice, in capital letters, stating as follows: NOTICE: PURSUANT TO SECTION 4.4 OF THE REGULATORY AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND FOUNTAINS HUNTINGTON BEACH, LL.C, FAILURE BY THE AGENCY TO 7 Regulatory Agreement PDA.2DOI Agree: Fountains tluntington Brach: Regulatory Agree —Ex G— Revised #2 R15 00-626 12-27-C l APPROVE OR DISAPPROVE THE MATTER SUBMITTED WITH THIS REQUEST WITHIN 30 DAYS SHALL BE DEEMED AN APPROVAL. Any disapproval shall be in uniting and contain the Agency's reasons for disapproval. (b) Participant hereby covenants and agrees the Agency shall have the right, at any time and from time to time, to give notice to Participant if the Agency determines that the Project is not being managed or maintained in accordance with the Management Plan. The Agency may require the Participant to change management practices or to terminate the management agent and retain a different management agent, approved by the Agency. The Agency agrees that prior to requiring the Participant to change its management agent or the management practices the Agency shall informally consult with Participant, in an attempt to resolve the dispute. If the Agency determines that such an attempt at informal resolution has been unsuccessful, it shall give the Participant thirty (30) days written notice to change the management agent or practice, as the case may be. If Participant fails to do as requested by the Agency in the written notice, the Agency may then require the immediate change of the management practice or agent, as the case may be. The management agreement shall provide that it is subject to termination by the Participant without penalty, upon thirty (30) days prior written notice, at the direction of the Agency. Within ten (10) days following a direction of the Agency to replace the management agent, the Participant shall select another management agent or make other arrangements satisfactory to the Agency for continuing management of the Project. The Participant shall notify the Agency upon leaning that there is a voluntary change in the management or control of the management agent, and, if the change is unsatisfactory to the Agency, the Agency shall be entitled to require the Participant to change the management agent in accordance with the terms of this paragraph. 5. ENFORCEMENT. In the event Participant defaults in the performance or observance of any covenant, agreement or obligation of Participant pursuant to this Agreement, and if such default remains uncured for a period of sixty (60) days after written notice thereof (or such longer period as may apply to the specific alleged default) shall have been given by Agency, or, in the event said default cannot be cured within said time period, Participant has failed to commence to cure such default within said sixty (60) days and diligently prosecute said cure to completion, then Agency shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (a) By mandamus or other suit, action or proceeding at law or in equity, require Participant to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at la%v or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of Participant hereunder, including foreclosure pursuant to the OPA. 8 Regulatory Agreement PDA: 2041 Agree: Fountains }iuntington Beach: Rcguiatory Agree — Ex G — Revised 02 RLS OC-626 12-27-01 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, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, or in the awarding of contracts for the Project, nor shall Participant, or Any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof, or in the awarding of contracts for the Project (except as permitted by this Agreement). Participant shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Participant shall conduct affirmative marketing and minority outreach activities as required by federal regulations. 6.1 Form of Nondiscrimination end Nonsegregation Clauses. The Participant shall refrain from restricting the rental, sale or lease of the Property on the basis of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In Deeds: "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, that there shall be no discrimination against or segregation of, any persons or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. (b) In Leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the follovving conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein ]eased nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or 9 Regulatory Agreement PDA: 2DD1 Agree: Fountains 11untington Beach: Regulatory Agree — Ex 0 — Revised 02 RLS 00.626 12-27-C-1 segregation vvith reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased. (c) In Contracts: "There shall be no discrimination against or segregation of any person, or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation rvith reference to the lessees, subtenants, sublessees or vendees of the land." 7. COVENANTS TO RUN WITH THE LAND. Participant hereby subjects the Site to the covenants, reservations, and restrictions set forth in this Agreement. Agency and Participant hereby declare their express intent that all such covenants, reservations, and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon the Participant's successors in title to the Site; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire, except the nondiscrimination covenants contained in Section 6 and Section 6.1 shall remain in perpetuity. All covenants without regard to technical classification or designation shall be binding for the benefit of the Agency, and such covenants shall run in favor of the Agency for the entire term of this Agreement, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. 8. ATTORNEYS' FEES. In the event that a party to this Agreement brings an action against the other party hereto by reason of the breach of any covenant in this Agreement, or otherwise arising out of this Agreement, each party shall bear its own attorneys' fees, and the prevailing party in such action shall not be entitled to recover from the other reasonable attorneys' fees and costs. Attorneys' fees shall include attorneys' fees on any appeal, and in addition, all other reasonable costs for investigating such action, including the conducting of discovery, and expert witness fees. 9. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Orange. 10. NOTICE,. Any notice required to be given hereunder shall be made in writing and shall be given by (i) personal delivery, (ii) courier service that provides a receipt shoving date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk 10 Regulatory Agreement 1PDA: 2001 Agree: Fountains 1 luntinVon Beach: Regulatory Agra — Ex G — Revised N2 RLS 00fi26 12-27d11 Participant: Fountains Huntington Beach, LLC 4220 Von Karman, Second Floor Newport Beach, CA 92660 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 calendar day following deposit in the United Suites mail. 11. SEVERABILITYAVAIVER/INTEGRAT ON. 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. tion. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 12. GOVERNfNG LAW. This Agreement shall be governed by the laws of the State of California. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. IN WITNESS WHEREOF, the Agency and Participant have executed this Regulatory Agreement and declaration of Covenants and Restrictions by duly authorized representatives on the date first written hereinabove. [end — signature page follows] 11 Regulatory Agreement PDA: 2001 Agree: Fountains Huntington Beach: Regulatory Agree — Ex G -- Revised 02 RLS 00-626 12-27-C 1 "PARTICIPANT" "AGENCY" FOUNTAINS HUNTINGTON BEACH, REDEVELOPMENT AGENCY OF LLC, a Delaware limited liability company THE CITY OF HUNTINGTON BEACH, a public body corporate By: FountainGlen Properties LLC, and politic A Delaware limited liability company Its sole member By: CJhainkn By: ATTEST: Oy Glenn L. Carpenter CIS{awl" 'y"J /�.444 Cle t7 President and Chief Executive Officer - fvr 4;y: _Arrc-Ic-ce'ay Agency Clerk APPROVED AS TO FORM: a � 'j %A Agency dieLnneral Cou 1 REVIEW D AN APP VE By: tlx: . UI+ Executive Dire for t INITIATED AND APPROVED: By: &CW Deputy Executive Director 12 Regulatory Agreement PDA: 21)01 Agree: Fountains I luntington Beach: Regulatory Agree — Ex G — Revised K2 RLS OOfi26 !2 27-0I "PARTICIPANT" FOUNTAINS HUNTINGTON BEACH, LI.C, a Delaware limited Iiability company By: FountainGlen Properties LLC, A Delaware limited liability company Its sole member Glenn L. Carpenter President and Chief Executive Officer "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: Chairman ATTEST: By: Agency Clerk APPROVED AS TO FORM: By: Agency General Counsel �� 12.-dy REVIEW D AN A4'*A By: �(!� • V Execrative Di INITIATED AND APPROVED: By: C Deputy Executive Director 12 Regulatory Agreement PDA: 2001 Agree: Fountains Huntington Beach: Regulatory Agree —Ex G — Revlse4 N2 RLS 00-626 12-27-C I CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of 16 7.e _42'.1- SS. On 3plo R— '"Wore me, L•�L �� 1 � / DOW Nat re, atOfto (o 0 • '� Dow, NoWy P+ea7 personally appeared ,00V �� 4, f � air/personalty known to me 1(E112Y LOU"' MANDIC Cortimission tf 1372899 .� Notary Putatic - California Orange County N1y ,O,nrn. F.Vres Sep 1, 20 06 to be the person(s) whose name(s) i are subscribed to the within Instrument and acknowledged to me that he/sh :ney xecuted the same In his/he ..neir authorized capacity(ies), and that r his/he Pr signature(s) on the instrument the person the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and officialseal. syrw.r. ,x Lary 11- OPTIOUAL Though The infomlatian below is not required bylaw, # may prove vah,able to persons re" on the document and Could prevent traludulent removal and reattachment cf .hts lbim to another document. Description of Attached Document Title or T e of D ument: 4:� .� r �2.C� Document Date: Number of Pages: — Signers) Other Than Flamed Above: Capacity(les) Claimed by Signer Signer's Name: ❑ Individual W of °'u"4 two ❑ Corporate Officer — Title(s): ❑ Partner —❑ Limited ❑ General ❑ Attomey-in-Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other. Signer Is Representing: 0 19991uoorW NcrAq Ar 0M4n • 9350 Do Sea A.-. PO. Boa M • ChWa OrI l CA 91313.240Q . W. ramorahiOL ry wg Prod No 5907 FiWow Cal To4Fmo 14DD4766827 s CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California �� County of (!� ss., Qn �U q ,before me, __ %%}'7 • lcJG�t ste Nrrre and Troe o1 Officer Se 9-•'a��Y P++bw.) personally appeared __6?� L •coirpiffrcr CAROLYN M. WHANG' V ra• CCM,M.#1325676 n NOTARY PUBLIC - CALIFORNIA 0 ORANGE COUNTY i r'���T� My Gomm Expire7Oct. 16.2005 I'••T Place Notary Seal Above N.nws) of Sgpnrie1 (personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person) whose name(d) isleree subscribed to the within instrument and acknowledged to me that helehe*wey executed the same in hislheFilh r authorized capacity(iot), and that by hisAierAheir signature(4) on the instrument the person(, or the entity upon behalf of which the person 6) acted, executed the instrument. WITNESS m hand and official seat. al ie OfNotary PLOW 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 fort to another document. Description of Attache Title or Type of Document: Document Date: Number of Pages: 13 Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signe Signer's Name: 61C�- ❑ Individual X Corporate Officer — Tltle(s): ie �eatC E n Top a tm,,.,,t, me ❑ Partner --❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other h7�— Signer Is Representing: atnrC a']6&07n-_t±e-s 0 1997 National Notary Ammiation • OW De Soto Ave-, P.O. box 2402 • Ghatsword% CA 91313-2402 Prod. No, M7 Reoroer. Call Tog -Flee 1-OM76-MY Real property In the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL A: PARCEL 2, AS SHOWN ON EXHIBIT "B" ATTACHED TO LOT LINE ADJUSTMENT LL 00-02 RECORDED APRIL 25, 2000 AS INSTRUMENT NO.00-213264 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPT ALL MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND ALL UNDERGROUND WATER IN OR UNDER OR WHICH MAY BE PRODUCED FROM SAID LAND WHICH UNDERLIES A PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF SAID LAND, FOR THE PURPOSE OF PROSPECTING FOR, THE EXPLORATION, DEVELOPMENT, PRODUCTION, EXTRACTION AND TAKING OF SAID MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER FROM SAID LAND BY MEANS OF MINES, WELLS, DERRICKS AND/OR OTHER EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR NEIGHBORING LAND OR LYING OUTSIDE OF THE ABOVE DESCRIBED LAND, IT BEING UNDERSTOOD THAT THE OWNER OF SUCH MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER, AS SET FORTH ABOVE, SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OF THE ABOVE DESCRIBED LAND NOR TO USE ANY OF THE SAID LAND OR ANY PORTION THEREOF ABOVE SAID PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE SAID LAND FOR ANY PURPOSE WHATSOEVER, AS RESERVED BY THE HUNTINGTON BEACH COMPANY, A CALIFORNIA CORPORATION, RECORDED OCTOBER 31, 1990 AS INSTRUMENT NO.90-577992 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM ALL RIGHTS TO WATER WITHIN, UNDERLYING OR PRODUCED FROM THE LAND AND ADJOINING STREETS, ROADS AND HIGHWAYS AND THE USE AND ENJOYMENT THEREOF, EXCLUDING ONLY THOSE RIGHTS TO SURFACE WATER THAT ARE NOT ATTACHED TO OR A PART OF RIGHTS TO SUBSURFACE WATER, WITHOUT, HOWEVER, ANY RIGHTS OF SURFACE ENTRY OTHER THAN THOSE SET FORTH IN CLAUSES (B) AND (C) OF THE HEREINAFTER REFERRED TO GRANT DEEDS AS RESERVED BY PACIFIC COAST HOMES, A CALIFORNIA CORPORATION IN THE GRANT DEEDS RECORDED MAY 9, 1996 AS INSTRUMENT NOS. 96.234740 AND 96-234741, BOTH OF OFFICIAL RECORDS. PARCEL B: AN APPURTENANT, PERPETUAL AND EXCLUSIVE EASEMENTS FOR PEDESTRIAN INGRESS, EGRESS AND ACCESS PURPOSES, AS SAID EASEMENTS ARE SET FORTH IN THAT CERTAIN EASEMENT AGREEMENT RECORDED MARCH 19, 2002 AS INSTRUMENT NO.02-226103 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 023-010-34 FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: Executive Director (Srace Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code § 6103) REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement") is made and entered into this day of , 2001, by and between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency") and FOUNTAINS HUNTINGTON BEACH, LLC, a Delaware limited liability company ("Participant*). RECITALS: A. Agency and Participant have entered into that certain Owner Participation Agreement, dated , 2001 (the "OPA'), concerning Participant's development of that certain real property, owned in fec by Participant, more particularly described in Attachment No. 1 attached hereto and incorporated by reference herein (the "Site"). The OPA describes the "Project" which generally consists of Participant's construction of 271 rental housing units, of which eighty (80) units shall be restricted for rental to elderly tenants of low income and very low income, on the Site and subsequent management thereof as an affordable rental housing complex. The OPA is hereby incorporated herein by this reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to such terms in the OPA. B. Participant has executed that certain promissory note (the "Note) dated , 2001, pursuant to which Agency has provided Participant with a loan in the principal amount of TWO MILLION DOLLARS (S2,000,000) ("Loan Amount"). The Note is secured by a Subordinated Deed of Trust With Assignmeni of Rents With Rider Attached dated on or about the date of the Note. C. Agency and Participant now desire to place restrictions upon the use and operation of the Project, in order to ensure that the Project shall be operated continuously as an affordable housing project available for rental in accordance with the terms set forth below for the term of this Agreement. Regulatory Agreement PDA: 2001 Agree: Fountains I luntington Beach: Regulatory Agree — E• x G — Revised #2 R tS 00-626 12-27-01 AGREEMENT: NOW, THEREFORE, the Participant and Agency declare, covenant and agree, by and for themselves, their heirs, executors, administrators and assigns, and all persons claiming under or through them, that the Site, for the term of this Agreement, shall be held transferred, encumbered, used, sold, conveyed, leased and occupied, subject to the covenants and restrictions hereinafter set forth: 1. DEFINITIONS. 1.1 Affordable Rent. As used in this Agreement, the term "Affordable Rent" shall mean rental rates not to exceed thirty percent (30%) times fifty percent (50%) of median income for an Eligible Very Low Income Tenant, and rental rates not to exceed thirty percent (30%) times eighty percent (80%) of median income for an Eligible Low Income Tenant. 1.2 Eligible Tenant. As used in this Agreement, the term "Eligible Tenant' shall refer to persons who are a minimum of 55 years of age and who are Eligible Very Low Income Tenants or Eligible Low Income Tenants, and who are eligible to rent a Unit. 1.3 Eligible Low Income Tenant. As used in this Agreement, the term "Eligible Low Income Tenant" shall mean an Eligible Tenant whose annual income does not exceed eighty percent (80%) of the median income for the Orange County Metropolitan Statistical Area as determined by the U.S. Department of Housing and Urban Development (fIUD) with adjustments for smaller and larger families. 1.4 Eligible Vcry Low income Tenant. As used in this Agreement, the term "Eligible Very Low Income Tenant" shall mean an Eligible Tenant whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Metropolitan Statistical Area as determined by the U.S. Department of Housing and Urban Development (HUD) with adjustments for smaller and larger families. 1.5 Orange Counly Mcdian Income. For purposes of this Agreement, the term "Orange County Median Income" shall mean the median income for the Orange County Primary Metropolitan Statistical Area, with adjustments for household size, as determined from time to time by HUD pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. 1.6 Unit and Units. As used in this Agreement, the term "Unit" shall mean one of the eighty (80) rent restricted, affordable rental dwelling units in the Project, and the term "Units" shall mean two or more of the eighty (80) rent restricted, affordable rental dwelling units in the Project. The tern "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. 1.7 Utility Allowance. As used in this Agreement, the term "Utility Allowance" shall mean an allowance for utilities, including garbage collection, sewer, water, 2 Regulatory Agreement PD,%: 2001 Agree: Fountains Iluntinglon Beach: Regulatory Agree - Ex G - Revised #2 RLS 00-626 12-27-01 electricity, gas and other heating, cooking and refrigeration fuels, but shall not include telephone service. In no event shall such Utility Allowance be less than the amount established by the Orange County Housing Authority per Unit per month. 2. TERM OF AGREEMENT,• RESIDENTIAL RENTAL PROPERTY. The term of this Agreement shall be sixty (GO) years from the Effective Date of the OPA. Participant hereby agrees that the Project is to be owned, managed, and operated as a project for Eligible Tenants for the term of this Agreement. To that end, and for the term of this Agreement, the Participant hereby represents, covenants, warrants ar_d agrees as follows: 2.1 Purpose. The Site has been acquired and the Project developed for the purposes of providing Eligible Tenants affordabl-- rental housing. 2.2 Facilities. All of the Units in the Project shall contain facilities adequate for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state and local laws and codes. 2.3 Residential Use. None of the Units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park without the Agency's prior written consent. 2.4. Maximum Occupancy. The maximum number of persons in a household that may occupy any of the two -bedroom Units may not exceed five persons; the maximum number of persons in a household that may occupy any of the one -bedroom Units may not exceed two persons. 2.5 Conversion of Units. No part of the Project will at any time be owned by a cooperative housing corporation nor shall the Participant take any steps in connection with the conversion to such ownership or uses to condominiums, or to any other form of ownership, without the prior written approval of Agency. 2.6 Preference to Eligible Tenants. All of the Units will be made available for rental in accordance with the terms of this Agreement, and the Participant shall not give preference to any particular class or group in renting the Units in the Project, except to the extent that the Units are required to be ]eased or rent.-d to Eligible Tenants and except as provided in Section 3.3 below. 2.7 Liability of Participant. Participant and the management agent shall not incur any liability under this Agreement as a result of fraud or negligent or intentional misrepresentation by a tenant. 3. OCCUPANCY OF PROJECT BY ELIGIBLE TENANTS. Participant hereby represents, warrants, and covenants as follows: 3 Regulatory Agreement PDA: M 1 Agrcc: Fountains I Iuntingtan Mach: Rcgulatory Agra — Ex G — Rcvised #2 RLS 00.626 12-27-01 3.1 Income Restrictions. Except as expressly provided herein, throughout the term of this Agreement, the eighty (80) rent restricted, affordable Units shall be rented only to Eligible Low Income Tenants and Eligible Very Low Income Tenants as follows: a. The eighty (80) rent restricted, affordable Units shall be comprised of sixty (60) one -bedroom units and twenty (20) two -bedroom units. b. Forty-one (41) of the sixty (60) one bedroom units shall be rented to Eligible Very Low Income Tenants. Nineteen (19) of the sixty (60 ) one -bedroom units shall be rented to Eligible Low Income Tenants. C. Fourteen (14) of the twenty (20) two -bedroom units shall be rented to Eligible Very Low Income Tenants. Six (6) of the twenty (20) two -bedroom units shall be rented to Eligible Low Income Tenants. 3.2 Rental Rates. Monthly rents for the Units (including the Utility Allowance, and excluding any supplemental rental a.3sistance from the State of California, the federal government or any other public agency) shall not exceed one -twelfth (1112) of the Affordable Rent adjusted for family size appropriate for the Unit. The rental rates for the Units shall be adjusted annually based upon current updates of HUD income and rent standards. In no event shall any of the Units be rented at a rate greater than the Affordable Rent applicable to the particular Unit. 3.3 Occupancy By Eligible Tcnant. A Unit occupied by an Eligible Tenant at the time of this Agreement shall be treated as occupied by an Eligible Tenant until such Unit is vacated. A Unit previously occupied by an Eligible Tenant and then vacated shall be considered occupied by an Eligible Tenant until reoccupied, other than for a temporary period, at which time the character of the Unit shall be redetermined. In no event shall such temporary period exceed thirty-one (31) days. If at any time a tenant's household income increases, resulting in disqualification of such tenant as an Eligible Very Low Income Tenant, such tenant shall have a period of ninety (90) days to relocate from the Site. The disqualified tenant shall be fully responsible for the costs and expenses related to the relocation. Should such tenant face extraordinary hardship in relocating from the Site, the tenant may submit a written appeal to the Agency requesting an extension of the time period within which the tenant must relocate. Upon receipt of the written appeal, the Agency Director of Economic Development in his sale discretion may extend the relocation period for up to a maximum of ninety (90) additional days. Pursuant to this Paragraph 3.3, Participant will at all times be deemed in compliance with this Regulatory Agreement during such disqualified tenant's relocation period, as extended. 3.4 Income Computation. Immediately prior to a prospective Eligible Tenant's occupancy of a Unit, Participant shall obtain and maintain on file an income computation and certification form from each such prospective Eligible Tenant dated immediately prior to the date of initial occupancy in a Unit by such prospective Eligible Tenant. Participant shall use its best efforts to verify that the income information provided by an 4 Regulatory Agreement PDA: 2001 Arm: Fountains 1 iuntington Beach: Regulatory Agree — Ex G — Revised #2 RiS 00-626 12-27-01 applicant is accurate by following the Agency Housing Rehabilitation Loan Program 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 verifiation form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income as is reasonably satisfactory; or (v) obtain such other information as may be reasonably required. Participant shall update the foregoing records annually and shall provide copies of updated tenant eligibility records and monthly rental records to Agency for review. Upon a review or such records, Agency may at its option and expense perform an independent audit of the tenant eligibility records and monthly rental records to Agency for review. Upon review of such records, Agency may at its option and expense perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Participant shall retain the records described in this Section for a period of three years after the date the respective records were created. 3.5 Rental Priority. Units shall be rented to Eligible Tenants on a first - come, first -served basis; provided, however, that Participant may, in Participant's sole discretion, maintain an "interest list" or "eligibility list" of potential tenants; provided, however, that Participant shall not be liable to Agency or any person, firm, or entity in the event a Unit is rented to a person who is not on any such list or is on such list but is listed lower than another person on such list. 3.6 Renting Vacant Units. When a Unit becomes available as a result of a tenant vacation, Participant shall rent the Unit to an Eligible Tenant in accordance with the following procedure: (a) First, Participant shall rent the Unit to persons who have been displaced by Agency activities, pursuant to California Health and Safety Code Section 33411.3, provided that Agency provides Participant with reasonable notice. (b) Second, Participant shall rent any vacant Unit in the order of priority as set forth in Section 3.5. 3.7 Maintenance of Records. Participant shall maintain complete and accurate records pertaining, to the Units, and shall permit any duly authorized representative of the Agency to inspect the books and records of Participant pertaining to the Project including, but not limited to, those records pertaining to tenant eligibility and occupancy of the Units. Records pertaining to the Projcct and Units shall be retained for a period of five (5) years after the termination of this Agreement; records pertaining to tenant and eligibility shall be retained for the period set forth in Section 3.4. 3.8 Reliance on Tenant Representations: Each tenant lease shall contain a provision to the effect that Participant has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of a Unit, and that 5 Regulatory Agreement PDA: 2001 Agree: Fountains I luntingion Brach: Regulatory Agree — Ex G — Rc%ised 42 RLS 00-626 12-27.01 any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 3.9 Conflicts. The rental priority provision set forth in Section 3.6 shall apply only in the event, and to the extent, such provisions are not in conflict with any applicable federal or state law or any regulatory agreement affecting the Project that is recorded in superior priority to this Agreement. 4. MATNTENANCE 4.1 Maintenance Covenant. Participant agrees to maintain all interior and exterior improvements, including landscaping, on the Site in good condition and repair (and, as to landscaping, in a healthy condition), reasonable wear and tear excepted, and in accordance %,-ith all applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction (including, but not limited to, Federal Housing Quality Standards as set forth in 24 C.F.R. 982.401). In addition, Participant shall keep the Site free from all graffiti and any accumulation of debris or waste material. Participant shall make all repairs and replacements necessary to keep the improvements in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. The maintenance covenant contained in this Section shall remain in effect for the term of this Agreement. 4.2 Agency _Rig_hts. Agency shall have the right to enter upon the Site to inspect both the interiors and exteriors of the Site, upon seventy-two (72) hours notice to Participant. Agency may perform or cause to be performed the maintenance necessary to cure any default of these maintenance covenants and participant shall be liable for payment to Agency for Agency's reasonable costs (excluding staff salaries and overhead and other similar costs) to perform such required maintenance; provided, however, that Participant first be given written notice by Agency of the actions required to cure any default, and Participant, after receipt of such notice, shall have sixty (60) days to cure such defaults, but Participant shall not be deemed in default of the foregoing maintenance covenant if such default cannot reasonably be cured within the sixty (60) day period referenced above so long as Participant has commenced to cure such default %ithin the same sixty (60) day period and is diligently proceeding with the work- to cure such default. Notwithstanding the foregoing, if any property conditions are reasonably identified by Agency after a property inspection attended by a representative of Participant that pose an immediate danger to life or limb, Participant shall have three (3) days to effect corrections of such condition(s) to Agency's reasonable satisfaction. 4.3 Annual Report. Participant covenants and agrees to submit to the Agency an annual report (the "Annual Report") required by California Health and Safety Code Section 33418. The Annual Report shall include for each Unit the rental rate and the income and family size of the occupants, and shall also include the records described in Section 3.7 herein and the audited financial statements described in Section 5.11 of the OPA. The income information shall be supplied by the tenant in a certified statement on a form provided by the Agency. The Participant shall submit the Annual Report on or before the end of the first 6 Regulatory Agreement PDA: 2301 Agree: Fountains tluntingon Reach: Regulatory Agm — Ex G — Revised 42 RIS 00-626 12-27-01 calendar quarter of the year following the year covered by the Annual Report. The Participant shall provide for the submission of such information in its leases with tenants. Agency shall not charge Participant a fee for reviewing the Annual Report, or for Agency's or Participant's compliance with Health and Safety Code § 33418. 4.4 Management Plan. Participant shall prepare, submit to Agency Executive Director not less than one hundred twenty (120) calendar days prior to the date of completion of the first Unit and maintain in effect a management plan in accordance with the following ("Management Plan"): (a) The Management Plan, including such amendments as maybe approved in writing by the Agency, shall remain in effect for the term of this Agreement. Participant shall not amend the Management Plan or any of its components without the prior written consent of the Agency. The components of the Management Plan shall include: (1) ManagementAgent. The name and qualifications of the proposed management agent. The Agency shall approve or disapprove the proposed management agent in writing based on the experience and qualifications of the management agent. The management agent shall have demonstrated experience in operating affordable housing comparable to the Project. (2) Management Program. A description of the proposed management, maintenance, tenant selection and occupancy policies and procedures for the Units. (3) Management Agreement. A copy of the proposed management agreement specifying the amount of the management fee and the relationship and division of responsibilities between Participant and management agent. (4) Tenant Lease or Rental Agreement. A copy of the proposed tenant lease or rental agreement to be used in renting the Units. (5) Annual Operating Budget. Prior to the completion of construction and annually thereafter not later than fifteen (15) days prior to the beginning of the next fiscal year of the Project, Participant shall submit a projected operating budget to the Agency Executive Director for review and approval. The Agency shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder, and such matter shall be deemed approved unless the Agency provides to Participant its written disapproval within thirty (30) days after receipt of a request for approval, provided Participant includes with its request, a written notice, in capital letters, stating as follows: NOTICE: PURSUANT TO SECTION 4.4 OF THE REGULATORY AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND FOUNTAINS HUNTINGTON BEACH, LLC, FAILURE BY THE AGENCY TO 7 Regulatory Agreement PDA. 2031 Ague: Fountains l luntington Beach: Regulatory Agree — Ex G — Pxviscd N2 RLs 00-626 12-27-0I APPROVE OR DISAPPROVE THE MATTER SUBMITTED WITH THIS REQUEST WITHIN 30 DAYS SHALL BE DEEMED AN APPROVAL. Any disapproval shall be in writing and contain the Agency's reasons for disapproval. (b) Participant hereby covenants and agrees the Agency shall have the right, at any time and from time to time, to give notice to Participant if the Agency determines that the Project is not being managed or maintained in accordance with the Management Plan. The Agency may require the Participant to change management practices or to terminate the management agent and retain a different management agent, approved by the Agency. The Agency agrees that prior to requiring the Participant to change its management agent or the management practices the Agency shall informally consult with Participant, in an attempt to resolve the dispute. If the Agency determines that such an attempt at informal resolution has been unsuccessful, it shall give the Participant thirty (30) days written notice to change the management agent or practice, as the case maybe. I f Participant fails to do as requested by the Agency in the written notice, the Agency may then require the immediate change of the management practice or agent, as the case may be. The management agreement shall provide that it is subject to termination by the Participant without penalty, upon thirty (30) days prior written notice, at the direction of the Agency. Within ten (10) days following a direction of the Agency to replace the management agent, the Participant shall select another management agent or make other arrangements satisfactory to the Agency for continuing management of the Project. The Participant shall notify the Agency upon leaning that there is a voluntary change in the management or control of the management agent, and, if the change is unsatisfactory to the Agency, the Agency shall be entitled to require the Participant to change the management agent in accordance with the terms of this paragraph. 5. ENFORCEMENT. In the event Participant defaults in the performance or observance of any covenant, agreement or obligation of Participant pursuant to this Agreement, and if such default remains uncured for a period of sixty (60) days after written notice thereof (or such longer period as may apply to the specific alleged default) shall have been given by Agency, or, in the event said default cannot be cured within said time period, Participant has failed to commence to cur-- such default within said sixty (60) days and diligently prosecute said cure to completion, then Agency shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (a) By mandamus or other suit, action or proceeding at law or in equity, require Participant to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of Participant hereunder, including foreclosure pursuant to the OPA. 8 Regulatory Agreement PDA: 2001 Agrcc: Founwins I luntingtm Beach: Regulatory Agree — Ex G — Rcvisnl #2 RLS 00-626 12-27-01 Except as otherwise expressly stated in this Agreement, the rights and remedies of the parries 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, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, or in the awarding of contracts for the Project, nor shall Participant, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof, or in the awarding of contracts for the Project (except as permitted by this Agreement). Participant shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Participant shall conduct affirmative marketing and minority outreach activities as required by federal regulations. 6.1 Form of Nondiscrimination 2rd Nonse res;ation Clauses. The Participant shall refrain from restricting the rental, sale or lease of the Property on the basis of race, color, creed, 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 himscl f, his heirs, executors, administrators and assigns, and all persons claiming under or through him, that there shall be no discrimination against or segregation of, any persons or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or any person claiming under or through him, establish or pen -nit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. (b) In Leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or 9 Regulatory Agreement PDA: 2041 Agree: Fountains 1 iuntinglen Beach: Regulatory Agree — [x G — Revised 42 RLS 06-G25 12-27-01 t� segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased. (c) In Contracts: '7herc shall be no discrimination against or segregation of any person, or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the lessees, subtenants, sublessees or vendees of the land." 7. COVENANTS TO RUN WITH THE LAND. Participant hereby subjects the Site to the covenants, reservations, and restrictions set forth in this Agreement. Agency and Participant hereby declare their express intent that all such covenants, reservations, and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon the Participant's successors in title to the Site; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire, except the nondiscrimination covenants contained in Section 6 and Section 6.1 shall remain in perpetuity. All covenants without regard to technical classification or designation shall be binding for the benefit of the Agency, and such covenants shall run in favor of the Agency for the entire term of this Agreement, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. S. ATTORNEYS' FEES. In the event that a party to this Agreement brings an action against the other party hereto by reason of the breach of any covenant in this Agreement, or othenvise arising out of this Agreement, each party shall bear its own attorneys' fees, and the prevailing party in such action shall not be entitled to recover from the other reasonable attorneys' fees and costs. Attorneys' fees shall include attorneys' fees on any appeal, and in addition, all other reasonable costs for investigating such action, including the conducting of discovery, and expert witness fees. 9. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Orange. 10. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by (i) personal delivery, (ii) courier service that provides a receipt showing date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as maybe specified in writing by the parties hereto: Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk 10 Regulatory Agreement PD.A: 2001 Agree: Fountains I Tuntington Beach. RcguTatory Agree — Ex G — Fxviscd #2 RIS 00-626 t 2-27-01 41 Participant: Fountains Huntington Beach, LLC 4220 Von Karman, Second Floor Newport Beach, CA 92660 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 calendar day following deposit in the United States mail. 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 Inte rag tion. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 12. GOVERNING LAW. This Agreement shall be governed by the 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. IN WITNESS WilEREOF, the Agency and Participant have executed this Regulatory Agreement and declaration of Covenants and Restrictions by duly authorized representatives on the date first «Titten hereinabove. [end — signature page follows] 11 Regulatory Agreement PDA: 2001 Agree: Fountains l luntington Beach. Regulatory Agree — Ex G — Rev ised #2 RLS 00426 12-27-01 "PARTICIPANT" ":AGENCY" FOUNTAINS HUNTINGTON BEACH, REDEVELOPMENT AGENCY OF LLC, a Delaware limited liability company THE CITY OF HU[VTINGTON BEACH, a public body corporate By: FountainGlen Properties LLC, and politic A Delaware limited liability company Its sole member By: Chairman By: ATTEST: Glenn L. Carpenter President and Chief Executive Officer By: Agency Clerk APPROVED AS TO FORM: I3y: � '81 Agency General Counsel Q' i' REVIEWED AND APPROVED: By: Executive Director INITIATED AND APPROVED: By: Deputy Executive Director 12 Regulatory Agreement PDA: 2001 Agree: Fountains I luntingion Mach: Regulatory Agrce — £•x G — Revised H2 RlS 00-626 12 :7-01 ATTACFIMFNT I LEGAL DESCRIPTION OF SITE ri Subordination Aareement EXHIBIT #H WHEN RECORDED RETURN TO: FountainGlen Properties, LLC 4220 Von Karman, Second Floor Newport Beach, CA 92660 Attn: SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF S01IE OTHER OR LATER SECURITY INSTRUMENTS. THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this day of , 2001, by and among REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public agency, corporate and politic (the "Agency"), FOUNTAINS HUNTINGTON BEACH, LLC, a Delaware limited liability company ("Participant"); and ("Lender"). RECITALS: A. Participant owns fee title to the real property described on Attachment No. "I" (the "property") attached hereto and incorporated herein by reference. The Agency and Participant have entered into an Owner Participation Agreement dated as of , 2001 (the "OPA'). Pursuant to the terms of the OPA, Participant has executed a Note in favor of the Agency in the amount of TWO MILLION DOLLARS (S2,000,000.00) ("Agency Loan") to assist Participant in the development and maintenance of the Property as an affordable housing complex. The Agency Loan is to be secured by a Subordinated Deed of Trust With Assignment of Rents With Rider Attached encumbering the Property (the "Agency Deed of Trust"). The OPA is hereby incorporated by reference as though fully set forth herein. All capitalized terms not defined herein shall have the meanings ascribed to them in the OPA. B. Agency and Participant have also entered into that certain Regulatory Agreement and Declaration of Covenants and Restrictions recorded against the Property ("Agency Regulatory Agreement'), which Agency Regulatory Agreement contains, among other terms, certain use restrictions affecting the Property. Subordination Agreement PDA: 2C01 Agree: Fountains 11untingtun [leach: Subordination Agree RLS 00-626 12-27-0 C. Participant has obtained a loan from Lender in the amount of DOLLARS (S� ) (the "Lender Loan"). To repay the Lender Loan, Participant has executed or i3 about to execute a deed of trust encumbering the Property to secure a promissory note in the sum of the Lender Loan, payable upon the terms and conditions described in such note (respectively, the "Lender Deed of Trust" and "Lender Note'). In connection with the Lender Loan, Participant may also be required by Lender to execute a regulatory agreement to be recorded against the Property, which may contain among other terms, use restrictions affecting the Property (the "Lender Regulatory Agreement'). D. Lender is willing to make the Lender Loan provided the Lender Deed of Trust and Lender Regulatory Agreement arc a lien or charge upon the Property prior and superior to the lien or charge of the Agency Deed of Trust and Agency Regulatory Agreement, and provided that the Agency will specifically and unconditionally subordinate the lien or charge of the Agency Deed of Trust and Agency Regulatory Agreement to the lien or charge of the Lender Deed of Trust and the Lender Regulatory Agreement. E. It is to the mutual benefit of the Lender, Agency, and Participant that the Lender make the Lender Loan to Participant; and the Agency has agreed that the Lender Deed of Trust and Lender Regulatory Agreement shall, when recorded, constitute a lien or charge upon the Property which is unconditionally prior and superior to the lien or charge of the Agency Deed of Trust and Agency Regulatory Agreement, subject to the specific terms and provisions of this Subordination Agreement. NOW, THEREFORE, in consideration of the mutual benefits accruing to the Agency, Lender and Participant, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lender to make the Lender Loan, it is hereby declared, understood and agreed as follows: 1. Subordination by Agency 1.1 Subordination of Agency Deed of Trust and Agency Regulatory Agreement to Lender Deed of Trust and Lender Reg ilatory Agreement_ The Lender Deed of Trust (and any renewals or extensions of, or advances, including interest, thereunder), and the Lender Regulatory Agreement (and any amendments or modifications thereto) shall unconditionally be and remain at all times a lien or charge on the Property, prior and superior to (i) the lien or charge of the Agency Deed of Trust and the Agency Regulatory Agreement, (ii) all present and future indebtedness and obligations secured thereby, and (iii) all rights and privileges of Agency thereunder, provided that: (a) during the first ten (10) years following the Effective Date of the OPA, the total amount(s) secured by the Lender Deed of Trust together,%vith any other Conventional Loans (as defined in the OPA) (foes not exceed seventy-five percent (75%) of the Value of the Site; and (b) at any time following the tenth (101h) anniversary of the Effective Date of the OPA, the total amount(s) secured by the Lender Deed of Trust together with any other Conventional Loans (as defined in the OPA) does not exceed eighty percent (80%) of the Value of the Site. 2 Subordination Agreement PDA: 201 Agree: Fountains I luntingdm Beach: Subordination Agree RtS 00.626 12-27-01 % If Participant chooses to refinance the Lender Loan, and Agency approves the refinancing as set forth in the OPA, Agency agrees to subordinate the Agency Deed of Trust and the Agency Regulatory Agreement to the refinancing Lender's Deed of Trust under the same terms and conditions as set forth in this Agreement and the OPA. 1.2 Covenants of A ene . The Agency declares, agrees and acknowledges that: (a) The Agency consents to all provisions of the Lender Note and the Lender Deed of Trust, and (ii) all provisions of the Lender Regulatory Agreement. (b) To Agency's actual knowledge, there is no breach, event of default or default existing under the Agency Deed of Trust or Agency Regulatory Agreement, or any circumstances, event, omission or failure of condition which would constitute such a breach, default or event of default after notice or lapse of time, or both. 2. Reliance by Lender and Agency. The Lender would not make the Lender Loan and the Agency would not have agreed to subordinate the Agency Deed of Trust and Agency Regulatory Agreement without this Subordination Agreement and each of the undersigned understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for such reliance upon this waiver, relinquishment and subordination. 3. Notice to Aency. In the event of a breach or default by Participant under the terms of the Lender Deed of Trust, Lender shall provide the Agency with written notice of such breach or default concurrently with providing such notice to Participant. Upon receipt of such notice of breach or default, the parties hereto agree that Agency shall have each of the following rights so long as either the Agency Regulatory Agreement or the Agency Deed of Trust encumber any portion of the Property or interest therein: (a) To cure the noticed default at any time prior to the foreclosure of the Lender Deed of Trust or any lien under the Lender Regulatory Agreement. In connection therewith, the Lender agrees that (i) in the event of a monetary default, the Lender shall not foreclose Lender Deed of Trust or other lien prior to the date that is thirty (30) days after the date that the Lender would otherwise be legally entitled to foreclose Lender Deed of Trust and (ii) in the event of a nonmonetary default, the Lender shall not foreclose its Lender Deed of Trust or other lien prior to the date specified above for monetary defaults; provided that if said nonmonetary default is susceptible to being cured only when the Agency has obtained possession of the Property, the Agency shall have as long as necessary to obtain possession of the Property by either foreclosing the Agency Deed of Trust, and to cure the default, so long as the Agency does so with reasonable and continuous diligence. (b) To negotiate with the Lender regarding the noticed default at any time prior to the foreclosure of the Lender Deed of Trust or other lien. 3 Subordination Agreernent PDA: 2001 Agree: rountains I luntingtorn Beach: Subordination Agree 12-201 2-27-Od (c) To negotiate with the Participant to purchase the Property from Participant, subject to the Lender Deed of Trust without the consent of the holder of the Lender Deed of Trust or enforcing party under the Lender Regulatory Agreement. The Lender agrees that the exercise of any of the rights set forth in this Section by Agency shall not give rise to any right on the part of the Lender to exercise any right to accelerate the amounts due under the Lender Loan. 3.1 Foreclosure of Agency Deed of Trust. The Lender hereby agrees that in the event that Agency forecloses the Agency Deed of Trust, said foreclosure shall not give rise to any right on the part of the Lender to accelerate the amounts due on the Lender Loan. 3.2 Disbursements. Lender. in making disbursements of the proceeds of the Lender Loan, is under no obligation or duty to, nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom disbursements thereof are made and any application or use of such proceeds for purposes other than those provided in the documents evidencing and securing the Lender Loan shall not defeat the subordination herein made in whole or in part. 4. Miscellaneous 4.1 Entire Agreement. This Subordination Agreement shall be the whole and only agreement with regard to the matters set forth herein and shall supersede and cancel, but only insofar as would affect the priority between the Lender Deed of Trust and Lender Regulatory Agreement on the one hand, and the Agency Deed of Trust and Agency Regulatory Agreement on the other hand, any prior agreement as to such subordination including, but not limited to, those provisions, if any contained in the Agency Deed of Trust and Agency Regulatory Agreement, which provide for the subordination of the lien or charge thereof to another deed or deeds of trust or to another mortgage or mortgages, upon the Property. 4.2 Successors and Assigns. This Subordination Agreement shall inure to and bind the heirs, legatees, devisees, administrators, executors, successors and assigns of the parties hereto. 4.3 California Law. This Subordination Agreement shall be construed according to the laws of the State of California. 4.4 Severability. If any term, provision, condition or covenant of this Agreement or the application thereof to any party or circumstances shall, to any extent, be held invalid or unenforceable, the remainder of this instrument, or the application of such term, Provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Subordination Agreement PDA: 2001 Agree: Fountains Huntington Dcach: Subordination Agree Rt.S 00-626 12-27-0: 4.5 Notice. Any notice, demand, request, consent, approval or communication that any party desires or is required to give to another party or any other person must be in writing and may be given by (i) personal delivery, (ii) by courier service that provides a receipt showing date and time of delivery, or (iii) by registered or certified mail, return receipt requested, postage prepaid. Notices shall be directed at the address of such party hereinafter set forth, or such other address and to such other persons as the parties may hereafter designate. Any such notice shall be deemed given upon receipt if by personal delivery or courier service, or if by mail the earlier or (a) actual receipt or (b) forty-eight (48) hours after deposit in the United States mail. If to Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Executive Director If to Participant: Fountains Huntington Beach, LLC 4220 Von Karman, Second Floor Newport Beach, CA 92660 Attention: Glenn L. Carpenter If to Lender: 4.6 Attorney's Fees. In the event that any action, suit or other proceeding is brought to enforce the obligations of this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. 4.7 Counterparts. This Subordination Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one and the same document. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENTS. [end — signature pages follow] 5 Subordination Agreement PDA: 2001 Agree: Fountains Iluntington Beach: Subordination Agree RLS 00-620 l z-n-o l ATTEST: By: Agency Clerk REVIEWED AND APPROVED AS TO FORM: By: "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH a public body, corporate and politic By: Chairman REVIEWED AND APPROVED: By: Executive Director INITIG'1TED AND APPROVED: By: Agency General Counsel pt Deputy Executive Director ,t. "PARTICIPANT" FOUNTAINS HUNTINGTON BEACH, LLC, A Delaware limited liability company By: FOUNTAINGLEN PROPERTIES, LLC, A Delaware limited liability company Its Sole Member Glenn L. Carpenter President and Chief Executive Officer [signatures continued on following page] 6 Subordination Agreement PDA: MI Agree: Fountains Ifuntingtan Beach: Subordination Agree R1S 00-6:6 12-27-01 A, , "LENDER" Its: Subordination Agreement PDA: 2M Agree: Fountains Huntington Much: Subordination Agree RIS 00-626 12-27-01 %% ATTACHMENT 1 LEGAL DESCRIPTION OF SITE it/ RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Fountains Huntington Beach Senior Apartments COUNCIL MEETING DATE: January 22, 2002 RCA ATTACHMENTS STATUS Ordinance wlexhibits & e islative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (wlexhibits if applicable) Si ned in full by the Cky Attome Attached Subleases, Third Party Agreements, etc. (Approved as to form PZ City Attome Not Applicable Certificates of Insurance LApprovey Y the a Attome Not Applicable Financial Impact Statement Unbud et, over S5,000 Not Applicable Bonds if a licable Not Applicable Staff Report if applicable) Not Applicable Commission, Board or Committee Report if applicable) Not Applicable Find in s/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORM RDED Administrative Staff l� Assistant Ci Administrator Initial City Administrator Initial City_Clerk EXPLANATION FOR RETURN OF ITEM: .L RCA Author. Gus Duran X1529 RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Fountains Huntington Beach Senior Apartments COUNCIL MEETING DATE: January 22, 2002 RCA ATTACHMENTS STATUS Ordinance (wlexhibits & legislative draft if applicable) Not Applicable Resolution (wlexhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (Wexhibits if applicable) (Signed in full by the Et Attomey) Attached Subleases, Third Party Agreements, etc. (Approved as to form by CityAttomey) Not Applicable Certificates of Insurance (Approved by the CityAttomey) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff ( ) ( ) Assistant City Administrator (initial) ( ) ( } City Administrator (Initial) ( ) ( ) City Cleric ( ) EXPLANATION FOR RETURN OF ITEM: Cl : Y CLEHK CITY OF HUNTING i ON BEACH. CA ML hi The Fountains Huntington Beach 'or Apartment Complex Ow e r Participation A ment Redevelopm : ency Economic Develop m a tment Agenda Item January 22,�, Terms o-"�e Agreement • Owner Participation Ag;Mt ent /Affordable Housing Alree with the Fountains Huntington Beach, a unit of Fountain Glenn, LLC a R Estate Investment Trust. • Developer is to build a 271 unit apartment complex for seniors on the southwest corner of plain Street and Gothard Street (formerly Clay Avenue). • 80 Units are to be designated for Low and Lower Income senior households. P Q 2F I Terms of th-'ekAgreement • Redevelopment Agency to vide $2 million forgivable residual re s loan to reduce the rents of the 80 uni (525,000 per unit). • Period of loan and reduced rents `vil e for 60 years. • Loan will have an interest rate of 5%. • Loan payments to be made at the rate of 1.67% of principal amount on an annual basis, plus accrued interest. Terms of theAareement • The Agency will wave the an I payment so long as the develop of in default of its obligation under the • The loan will be funded after 20 affordable units are placed in operati and occupied by Low and Lower Inc o senior households. • A restrictive covenant will be recorded and secured against the property. r 2 AffordAbkHousing Units • Of the 271 units, 80 uni ill be made available to Low and Lowe come seniors. • 41 one -bedroom and 14 two -beds units are to be rented to household earning less than 50% of the Coun Median Income. • 19 one -bedroom and 6 two -bedroom units are to be rented to households earning Iess than 80% of the County's Median Income. Curr County Median in mes • Very Low Income 1 Person Household (50%) $25, - 2 Person Household (50%) $29,5 • Lower Income - 1 Person Household (80%) $36,750 - 2 Person Household (80%) $42,000 3 Current Ma 'mum Rents • Very Low Income Max Rent 1 Br. $736.88/Mo. 2 Br. $829.38/11Io. • Lower Income Max Rent - 1 Br. $918.75/Mo. 2 Br. $1,050/1%lo. Redevelopment Agency Actio • Adopt Resolution No. 329 ap Jng the Owner Participation Agreement Affordable Housing Agreement wi Fountain Huntington Beach, LLC. • Adopt Resolution No. 330 declaring its intention to reimburse expenditures fro the proceeds of tax-exempt obligations and direct certain actions. n n 1 � L, a CITY OF HUNTINGTON BEACH Le" 2000 MAIN STREET CAL.IFOR NIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK LETTER OF TRANSMITTAL OF ITF.AI APPROVED BY THE CITY COUNCILI REDEVEI,OPIMENT AGENCY OF THE CITY OF HUNTINGTON BEACII DATE: January 28, 2002 TO: Fountains Huntington Beach, LLC ATTENTION: Name _4220 Von Karman. ftgond FLQr DEPARTIIIENT: Sum Newport Beach, CA 92660 REGARDING: OPA City, State. Zip See Attached Action Agenda Item F-1 Date of Approval 1 /22/02 Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item. dme� Remarks: Connie Brockway City Clerk Attachments: Action Agenda Page x Agrcement x Bonds Insurance RCA Deed ether CC: G. Duran Econ. Dev, x x Name Department RCA A —reap Insurance Other D. Biggs Econ. Dev. x reso Name Department RCA Aa--,= Insurance Other Name RCA AS--- lamrNwe other Department Name RCA A lanai ue other Department Name RCA lauUmve Department (Telephone: 714-53"2Z7)