HomeMy WebLinkAboutApprove Middle Income Housing Program by Adopting Resolution qnl/�� CGKL
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City of Huntington Beach APF)wVED So- /
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File #: 21-531 MEETING DATE: 7/20/2021
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Oliver Chi, City Manager
PREPARED BY: Ursula Luna-Reynosa, Director of Community Development
Subject:
Approve Middle Income Housing Program by adopting Resolution No. 2021-43 and Resolution
No. 2021-44; Authorize the City Manager to enter into Public Benefit Agreements and execute
Middle-Income Housing Program agreements, and determine that these actions are not
subject to the California Environmental Quality Act
Statement of Issue:
City Council approval is requested for the following items related to the Middle Income Housing
Program, in order to enable the acquisition and conversion of two market-rate apartment complexes
into workforce housing within the City of Huntington Beach:
1. Resolutions approving, authorizing, and directing execution of joint exercise of powers
agreements supporting the issuance of bonds for the production, preservation, and protection
of essential middle-income rental housing;
2. Joint Exercise of Powers Agreements;
3. Public Benefit Agreements, which may result in the City receiving surplus revenue from the
future sale of the projects; and
4. Regulatory Agreements and Declaration of Restrictive Covenants.
Financial Impact:
If approved, the Middle Income Housing Program would result in the creation of 649 middle income
housing units at the two current market-rate apartment complexes in question. Based on the terms
of the program, the identified units would be created at an average cost of $23,169 per door, which is
an efficient and cost-effective way of establishing affordable housing units.
Based on current market conditions, the estimated cost of acquiring and rehabilitating 649 units and
income restricting them at "middle income" levels would be between $56,000 and $85,000 per door.
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depending on the level of income targeting. For further comparative purposes, the City's recent
experience with an affordable housing project being developed by Jamboree Housing for permanent
supportive units resulted in an approximate cost of $70.000 per door cost, and the City of Santa
Ana's average subsidy is approximately $90,000 per door for similarly restricted units.
To fund the Middle Income Housing Program, the City would have to forgo future property tax
revenues for up to a 30 year period, with the first year amount estimated at $370,655. Assuming a
2% increase in property values annually, the average annual property tax subsidy over a 30 year
period would be $501 ,225. However, of note, between Year 15 and Year 30 (the end of the life of the
bonds), the City, at its sole discretion, may force a sale of the middle-income rental housing projects
and the City would receive the sale proceeds. Over a 30-year period, the City could realize
S647,620,251 in proceeds at Year 30, following payoff of debt.
Recommended Action:
A) Adopt Resolution Nos. 2021-43 and 2021-44 approving, authorizing, and directing execution of
joint exercise of powers agreements relating to the CMFA Special Finance Agency VII and VIII
(collectively the "Agency") supporting the Agency's issuance of bonds for the production,
preservation, and protection of essential middle-income rental housing ("Middle-Income Housing
Program"); and.
B) Authorize and direct the City Manager to enter into Public Benefit Agreements, substantially in the
form attached, with the Agency, which may result in the City receiving surplus revenue from the future
sale of the Projects; and.
C) Authorize and direct the City Manager to execute related documents and take any additional
actions that may be required to implement the Middle-Income Housing Program; and.
D) Determine that this action is not subject to the California Environmental Quality Act (CEQA)
pursuant to CEQA Guidelines Sections 15060(c)(2) and 15060(c)(3), because it will not result in a
direct or reasonably foreseeable indirect physical change in the environment, and it is not a "project"
pursuant to Section 15378(b)(5) of the State CEQA Guidelines.
Alternative Action(s):
Do not adopt the resolutions, enter into the Public Benefit Agreements, or execute related documents.
or take any additional actions that may be required to implement the Middle-Income Housing
Program.
Analysis:
A. BACKGROUND
City Council held a work study session on February 16, 2021. to evaluate a middle income workforce
housing program as a means of achieving the public policy objective to create a continuum of
affordable housing. Middle income housing is designed for persons earning 80% and up to 120% of
area median income (AMI). This segment is considered the "missing middle" between lower income
(!580% AMI) affordable housing and market-rate (>120% AMI) housing since no funding sources exist
for this housing population. At their January Strategic Planning Session, the City Council expressed
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the importance of providing middle income workforce housing as a means to transition people out of
lower-income affordable housing. Currently, one-third of the City's affordable housing portfolio, or
660 units, are moderate income units between 110% - 120% AMI. Of the 660 units, half are rental
units and half are for-sale units.
California Community Housing Agency (CaICHA), working with Catalyst as the project sponsor, was
the first Joint Powers Authority (JPA) to acquire a residential apartment project with tax-exempt
"essential government bonds". They have since closed on nine transactions. There are other JPAs
and other project sponsors doing similar transactions. As a public agency, the JPA is a tax-exempt
entity that is not required to pay property taxes. This property tax abatement, coupled with the tax-
exempt financing, provides a significant advantage in terms of cash flow, which allows the JPA to
compete with market-rate buyers, and enables the JPA to make the units available to low and
moderate income households. The typical split of units is one third at 80% AMI, one third at 100%
AMI, and one third at 120% AMI. It is important to note that a non-government entity could acquire a
property and restrict units to 80% AMI, and those units would qualify for the "welfare exemption" and
would not have to pay property taxes on any units at 80% AMI or less.
The project sponsor acts on behalf of the JPA as the asset manager. For all intents and purposes,
the residents of these projects interface with the project sponsor or their designated property
management firm. Annual rent increases would be capped at no more than 4%, which is less than
the rent limits under AB1482, the recently adopted State tenant protection legislation. It is important
to note, existing tenants are not displaced, regardless of household income, as the conversion of
market-rate units to middle income units occurs over a few years as leases expire and current
tenants move on to other housing opportunities.
The JPA issues the tax exempt governmental bonds. As the bond issuer, the JPA will oversee the
underwriting of the bonds prior to issuance and the performance of the project sponsor during the life
of the bonds.
Opportunity to Acquire Two Existing Apartment Complexes
Catalyst has approached the City with an opportunity to acquire two existing apartment complexes in
Huntington Beach and convert them into "workforce housing" units, as market-rate leases come due.
Elan and Breakwater are the two apartment complexes (the "Properties"), where the rents range from
S1,984 - S3,255 per month. Collectively, between the Properties, there are a total of 676 dwelling
units that generate a combined $2,647,536 annually of basic levy property tax revenue. The City's
annual 14% share is $370,655. Based upon the current valuation (2020-21 Secured Property Tax)
and a two percent annual increase in valuation, the City would have reduced property tax revenue of
an estimated S6,409,893 over 15 years, and $15,036,763 over 30 years for the Projects.
Elan is located at 18504 Beach Boulevard, Huntington Beach and is comprised of a total of 274 units
(27 units are restricted at 110% AMI per the City's Inclusionary Zoning Ordinance). This project was
completed in 2015 and generates $1 ,253,400 annually of basic levy property tax revenue. The City
receives 14% which equates to $175,476 annually. The market-rate units rent in the range of $1,984
- $3,034 with a current overall vacancy rate of 5.11%. This property last sold in July 2016 for
S131 ,000,000. Catalyst has negotiated a sales price of S136,000,000.
Breakwater is located at 16761 Viewpoint Lane, Huntington Beach and is comprised of a total of 402
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units (all market rate). This project was completed in 1972 and generates S1 ,394,136 annually of
basic levy property tax revenue. The City's annual 14% share is $195,179. The rents range from
$2,319 - $3,255 with a current vacancy rate of 5.77%. This property last sold in December 2017 for
$134,000,000. Catalyst has negotiated a sales price of $185,000,000. Since the 2017 sale, the
current owner has invested significantly in renovations and capital improvements.
California Municipal Finance Authority
California Municipal Finance Authority (CMFA) is the City's preferred JPA whose track record and fee
structure are appealing. CMFA was created on January 1, 2004 pursuant to a joint exercise of
powers agreement to promote economic, cultural and community development, through the financing
of economic development and charitable activities throughout California. CMFA is the largest issuer
in the State for all conduit bond financing. They have a 16 year track record with zero housing
defaults on over 1,000 transactions of which 600 are affordable housing projects. To date, over 325
municipalities, including the City of Huntington Beach, have become members of CMFA. CMFA is
the only financing authority which has granted over $25M dollars directly to local governments and
501c3 nonprofit organizations during the past sixteen years. CMFA will grant 25% of the issuance
fees to the general fund of the City. Such grant may be used for any lawful purpose of the City.
CMFA will donate 25% of the issuance fees to a charitable organization of the City's choice within the
host municipality for each transaction.
Execution of the Joint Exercise of Powers Agreement
In order for the Agencies to have the authority to serve as the issuer of the bonds for the Properties, it
is necessary for the City of Huntington Beach to become a member of the Agency (CMFA Special
Finance Agency VII and Vill).
The Joint Exercise of Powers Agreement provides that the Agency is a public entity, separate and
apart from each member executing such agreement. The debts. liabilities and obligations of the
Agency do not constitute debts, liabilities or obligations of the members executing such agreement.
The bonds to be issued by the Agency for the Properties will be the sole responsibility of the
borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for
Properties or the repayment of the bonds for the financing of the Properties. All financing documents
with respect to the issuance of bonds will contain clear disclaimers that the bonds are not obligations
of the City or the State of California, but are to be paid for solely from funds provided by the borrower.
There are no costs associated with membership in the Agency and the City will in no way become
exposed to any financial liability by reason of its membership in the Agency. In addition, participation
by the City in the Agency will not impact the City's appropriations limits and will not constitute any
type of indebtedness by the City.
B. ANALYSIS
The Properties require a City subsidy in the form of forgone property taxes for the duration of the
essential governmental bonds over a thirty-year period. Due to the required subsidy, City staff, with
the support of the National Development Council (NDC) who serves as the City's technical advisor,
has independently evaluated the public benefit of the Middle Income Housing Program as it relates to
the Properties as well as preliminary project feasibility analysis.
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Public Benefit
To evaluate the public benefit, staff has reviewed whether the amount of subsidy is appropriate for
the level of affordability in terms of the proposed "cost per door' for each unit. In the City's recent
experience with an affordable housing project being developed by Jamboree Housing, the City
subsidy represented a cost of approximately $70,000 per door for permanent supportive housing (33
units at 30% AMI, 9 units at 50% AMI, and one manager's unit). The City of Santa Ana's average
subsidy is approximately $90,000 per door for similarly restricted units. The city subsidy is leveraged
with other funding sources so the total subsidy per door is much greater than the city subsidy alone.
Some of the units are currently rent restricted at 110% AMI with 55 year covenants. Excluding the
restricted units there are 649 market-rate units within the Properties. The City currently receives
approximately S370,655 annually in property taxes for the Properties. As previously stated, the City
will forego approximately $15,036,763 in property taxes over 30 years ($23,169 per door) to create
649 middle income rent restricted units. These figures assume a 2% annual increase in property
taxes and represent the City's 14% share of the base tax levy. Further, these numbers don't factor in
a net present value calculation and simply assume the City has access to 100% of the foregone
property tax revenue today, which clearly is not the case. If a 3% net present value calculation is
applied, the cost per door is approximately S7,000 per door less.
The above per door subsidy calculations are not a compatible comparison as the per door examples
are for new construction and extremely low and very low income levels. If an affordable housing
developer were to approach the City with a proposal to acquire and rehabilitate 649 units and income
restrict them at "middle income" rents, staff expects that the requested subsidy, assuming that the
City is the sole funding source, would be between $56,000 and $85,000 per door depending on the
level of income targeting. This subsidy is calculated by subtracting an average, blended restricted
rent from the average, blended market rent to determine the revenue gap (due to the artificial
restriction on rents) on the 649 units over 30 years. As an example, if the blended rental rate was
$200 less than the market-rate rent over 30 years, this would amount to a subsidy of $72,000 per
unit. Therefore, this range of $56,000 to $85,000 is significantly higher than the cost per door utilizing
the essential government bonds program. Further, the City would likely be reluctant to utilize
restricted affordable housing funds on moderate income units and would prefer to use such funds on
more deeply restricted units, such as very low and low income units. Staffs conclusion is that this
essential government bond program to provide middle income housing units is a cost effective way to
create such housing units.
While staff is overall supportive of this program should the City Council desire to further middle
income or workforce housing, it should be noted that the foregone property tax revenue is
unrestricted, General Fund revenue and can fund public safety services as well as parks and other
infrastructure needs. It is a policy decision to prioritize the public benefits that can be achieved with
this money. Further, while there is pending legislation, as of today, under State Law, these units
cannot count toward the City's Regional Housing Needs Allocation (RHNA) for the 2021-2029 cycle.
If Assembly Bill 787 were to pass, the bill would authorize the City to include qualifying converted
units in its annual progress report and reducing the City's share of regional housing need for the
income category of the converted units on a unit for unit basis. The bill would apply only to
converted units that meet specified requirements, including that the rent for the unit prior to
conversion was not affordable to very low, low-, or moderate-income households and the initial post
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conversion rent for the unit is at least 10% less than the average monthly rent charged over the 12
months prior to conversion. Based on the current draft legislation, approximately 232 of the units
would meet the specified requirements.
Public Eguity
Beyond the public benefit of creating the restricted middle income units, the Properties also represent
an investment opportunity with long term financial benefits for the City in the form of public equity.
Under a recorded Public Benefit Agreement, the City, at its sole discretion, may force a sale of the
Properties between year 15 and year 30 (the end of the life) of the bonds, and the City would receive
the net sale proceeds. Since the Properties are financed through the issuance of tax-exempt bonds
and there are no equity partners, all excess sale proceeds after payoff of the bonds go the City. Over
a 30-year period the Properties could realize $647,620,251 in valuation at the end of year 30
(assuming an annual appreciation of 1.8%). The City could realize significant value in owning major
real estate assets that could be sold to market-rate buyers, thereby maximizing value to the City. Or
the assets could be sold to affordable housing developers to be rehabilitated with new, more deeply
restricted affordable housing covenants recorded on the Properties. This decision could be made in
the future depending upon the City's needs and policy priorities.
From an investment perspective, if the City were to invest the foregone property taxes in the Local
Agency Investment Fund (LAIF) at 3%, the average annual rate of return over the past 30 years, the
City's investment would grow to 518,163,088 over 30 years. The average rate of appreciation for real
estate in California is approximately 6% annually. If the City were to invest the foregone property
taxes in real estate instead of LAIF, and assume a 6% annual rate of return, the City's investment
would grow to $31,061,511 (a difference of almost $13 million). Investing the foregone property taxes
in real property will create significant public equity that can help secure the financial stability of the
City of Huntington Beach.
Environmental Status:
Pursuant to Sections 15060(c)(2) and 15060(c)(3) of the California Environmental Quality Act
(CEQA) guidelines, CEQA does not apply to this action because it will not result in a direct or
reasonably foreseeable indirect physical change in the environment and it is not a "project" pursuant
to Section 15378(b)(5) of the State CEQA Guidelines.
Strategic Plan Goal:
Strengthen long-term financial and economic sustainability
Attachment(s):
1. Resolution No. 2021-43 for The Elan
2. Resolution No. 2021-44 for The Breakwater Apartments
3. Public Benefit Agreement by and between CMFA Special Finance Agency VII and the City of
Huntington Beach relating to the issuance of Essential Housing Revenue Bonds for The
Breakwater Apartments
4. Public Benefit Agreement by and between CMFA Special Finance Agency VIII and the City of
Huntington Beach relating to the issuance of Essential Housing Revenue Bonds for The Elan
5. Joint Exercise of Powers Agreement relating to the CMFA Special Finance Agency VIII for The
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Elan
6. Joint Exercise of Powers Agreement relating to the CMFA Special Finance Agency VII for The
Breakwater Apartments
7. Regulatory Agreement and Declaration of Restrictive Covenants by and between CMFA
Special Finance Agency Vill and Wilmington Trust, National Association, as Trustee relating to
The Elan
8. Regulatory Agreement and Declaration of Restrictive Covenants by and between CMFA
Special Finance Agency VI and Wilmington Trust, National Association, as Trustee relating to The
Breakwater Apartments
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ATTACHMENT # 1
RESOLUTION NO. 2021-43
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF HUNTINGTON BEACH APPROVING, AUTFIORIZIN'G AND DIREC"PING
EXECUTION OF A JOINT EXERCISE OF POWERS AGREEMENT RELATING TO THE
CNIFA SPECIAL FINANCE AGENCY VIII AND THE FORM OF A PUBLIC BENEFIT
AGREEMENT: AND APPROVING THE ISSUANCE OF REVENUE BONDS BY SAID
AGENCY FOR THE PURPOSE OF FINANCING THE ACQUISITION, CONSTRUCTION
OR IMPROVE1\4ENT OF THE PROJECT DESCRIBED HEREIN
WHEREAS, pursuant to Chapter 5 of Division 7 of Title I of the Government Code of
the State of California (the "Act"), the City of Huntington Beach (the "City") and the California
Municipal Finance .Authority (the "CtIM A" and together with the City, the "Members") propose
to enter into a Joint Exercise of Powers Agreement Relating to the CNIFA Special Finance
Agency VIII (the "Agreement") in order to form the CMFA Special Finance Agency VIII (the
"Agency") for the purpose of promoting economic, cultural and community development and in
order to exercise any powers common to the Members or granted by the Act, including by the
issuance of bonds, notes or other evidences of indebtedness; and
The City has determined that it is in the public interest and for the public benefit that the
City become a Member of the Agency in order to facilitate the promotion of economic, cultural
and community development activities in the City, including the financing of a project therefor
by the Agency; and
The Agreement has been filed with the City, and the members of the City Council of the
City (the "City Council"), with the assistance of its staff, have reviewed said document; and
The Agency, the Agency proposes to issue from time to time its governmental purpose
revenue bonds (the `Bonds") solely to finance or refinance the acquisition, construction,
development and certain related costs of a middle-income multifamily rental housing
development within the City located at 15504 Beach Boulevard, known as "Elan Huntington
Beach" (the "Project"); and
The Agency proposes to grant to the City in connection with the financing of the Project
the right to cause the Agency to sell the Project to the City or its designee, starting upon the date
fifteen (15) years from the issuance of the Bonds pursuant to a Public Benefit Agreement (the
"Public Benefit Agreement'), by and between the Agency and the City, substantially in the form
that has been filed with the City Council; subject to such immaterial modifications as have been
approved by the City Manager and approved as to form by the City Attorney; and
It is in the publics interest and for the public benefit that the City Council approve the
issuance of the Bonds by the Agency for the aforesaid purposes; and
Section 3(A) of the Agreement, in according with Section 6505.1 of the California
Government Code, expressly provides that the Bonds, and other debts. liabilities and obligations
of the Agency do not constitute debts; liabilities or obligations of any Members;
21-9706/254672 1
Resolution No. 2021-41
NOW, THEREFORE, THE City Council of the City of Huntington Beach does hereby
resolve as follows:
1. The foregoing recitals are true and correct; and
2. The City hereby requests to become a Member of the Agency. The Agreement is
hereby approved and the Mayor or the designee thereof is hereby authorized and directed to
execute said document, and the City Clerk or such Clerk's designee is hereby authorized and
directed to attest thereto.
3. The proposed foml of Public Benefit Agreement on file with the City Council is
hereby approved. In connection with the Project, the City Manager or the designee thereof is
herebv authorized and directed to execute an agreement in substantially said form, with such
immaterial changes therein as such officer executing the sane may require consistent with this
Resolution and its basic purpose, and subject to the approval as to form of the City Attorney,
such approval to be conclusively evidenced by the execution and delivery thereof Any material
changes to the form of Public Benefit Agreement must be approved by the City Council. The
City Council hereby approves the issuance of Bonds by the Agency from time to time prior to
the date that is the two year-anniversary of the date hereof.
4. The issuance of Bonds shall be subject to the approval of the Agency of all
financing documents relating thereto to which the Agency is a party. Pursuant to Section 3(A) of
the Agreement and Section 13(C) of the Public Benefit Agreement, the City shall have no
responsibility or liability whatsoever with respect to the Bonds or any other debts, liabilities and
obligations issued by the Agency, and such Bonds and any other debts. liabilities and obligations
of the Agency do not constitute debts, liabilities or obligations of any Members including the
City.
5. The adoption of this Resolution shall not obligate the City or any department
thereof to (i) provide any financing to acquire or construct the Project or any refinancing of the
Project; (ii) approve any application or request for or take any other action in connection with
any planning approval, permit or other action necessary for the acquisition, construction,
rehabilitation or operation of the Project; (iii) make any contribution or advance any funds
whatsoever to the Agency; or (iv) except as provided in this Resolution, take any further action
with respect to the Agency or its membership therein.
6. The executing ofTicers(s), the City Clerk and all other proper officers and officials
of the City are hereby authorized and directed to execute such other agreements, documents and
certificates, and to perform such other acts and deeds, as may be necessary or convenient to
effect the purposes of this Resolution and the transactions herein authorized.
7. The City Clerk shall forward a certified copy of this Resolution and an originally
executed Agreement to the Agency:
21-9980/261866
Resolution No. 2021-43
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Ronald E. Lee, Esq.
S. This resolution shall take effect immediately upon its passage.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 20th day of July /l , 2021.
—'�(L�// .Mayor
APPROVED VIE\ 'E r rll t\ RO\J D:` APPROVED AS TO FORAM:
nl- - -� U�
City \Manager o,City Attorney
INITIATED AND APPROVED:
swkukL
Director of Community Development
21-9980/261866
Res. No. 2021-43
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is six; that the foregoing resolution was passed and adopted by
the affirmative vote of at least a majority of all the members of said City Council at
a Regular meeting thereof held on July 20, 2021 by the following vote:
AYES: Delgleize, Carr, Posey, Moser, Kalmick
NOES: Peterson
ABSENT: None
RECUSE: None
e44Ot,
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
ATTACHMENT #2
RESOLUTION NO. 2021-44
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF HUNTINGTON BEACH APPROVING, AUTHORIZING AND DIRECTING
EXECUTION OF A JOINT EXERCISE OF 130WERS AGREEMENT RELATING TO THE
CMFA SPECIAL FINANCE AGENCY VII AND THE FORM OF A PUBLIC BENEFIT
AGREEMENT: AND APPROVING THE ISSUANCE OF REVENUE BONDS BY SAID
AGENCY FOR ,rI-IE PURPOSE OF FINANCING THE ACQUISITION CONSTRUCTION
OR IMPROVEMENT OF THE PROJECT DESCRIBED HEREIN
WHEREAS, pursuant to Chapter 5 of Division 7 of Title I of the Government Code of
the State of California (the "Act '), the City of Huntington Beach (the "City') and the California
Municipal Finance Authority (the "CMFA" and together with the City, the "Members') propose
to enter into a Joint Exercise of Powers Agreement Relating to the CMFA Special Finance
Agency VII (the "Agreement") in order to form the CMFA Special Finance Agency V11 (the
"Agency') for the purpose of promoting economic, cultural and community development and in
order to exercise any powers common to the Members or granted by the Act, including by the
issuance of bonds, notes or other evidences of indebtedness; and
The City has determined that it is in the public interest and for the public benefit that the
City become a Member of the .Agency in order to facilitate the promotion of economic, cultural
and community development activities in the City, including the financing of projects therefor by
the Agency; and
The Agreement has been filed with the City, and the members of the City Council of the
City (the "City Council'), with the assistance of its staff. have reviewed said document; and
The Agency proposes to issue from time to time its governmental purpose revenue bonds
(the "Bonds") solely to finance or refinance the acquisition, construction. development and
certain related costs of a middle-income multifamily rental housing development within the City
located at 16761 Viewpoint Lane, known as "The Breakwater Apartments" (the "Project"); and
The Agency proposes to grant to the City in connection with the financing of the Project
the right to cause the Agency to sell the Project to the City or its designee, starting upon the date
fifteen (15) years from the issuance of the Bonds pursuant to a Public Benefit Agreement (the
"Public Benefit Agreement"), by and between the Agency and the City, substantially in the form
that has been filed with the City Council, subject to such immaterial modifications as have been
approved by the City Manager and approved as to form by the City Attorney; and
It is in the public's interest and for the public benefit that the City Council approve the
issuance of the Bonds by the Agency for the aforesaid purposes: and
Section 3(A) of the Agreement; in according with Section 6508.1 of the California
Government Code, expressly provides that the Bonds, and other debts, liabilities and obligations
of the Agency do not constitute debts; liabilities or obligations of an}, Members;
21-9980/261947 1
Resolution No. 2021-44
NOW, THEREFORE, THE City Council of the City of Huntington Beach does hereby
resolve as follows:
I. The foregoing recitals are true and correct; and
2. The City hereby requests to become a Member of the Agency. The Agreement is
hereby approved and the Mayor or the designee thereof is hereby authorized and directed to
execute said document, and the City Clerk or such Clerk's designee is hereby authorized and
directed to attest thereto.
IThe proposed forni of Public Benefit Agreement on file with the City Council is
hereby approved. In connection with the Project, the City Manager or the designee thereof is
hereby authorized and directed to execute an agreement in substantially said form, with such
immaterial changes therein as such officer executing the same may require consistent with this
Resolution and its basic purpose, and subject to the approval as to form of the City Attorney,
such approval to be conclusively evidenced by the execution and delivery thereof. Any material
changes to the form of Public Benefit Agreement must be approved by the City Council. The
City Council hereby approves the issuance of Bonds by the Agency from time to time prior to
the date that is the two year-anniversary of the date hereof.
4. The issuance of Bonds shall be subject to the approval of the Agency of all
financing documents relating thereto to which the Agency is a party. Pursuant to Section )(A) of
the Agreement and Section 13(C) of the Public Benefit Agreement, the City shall have no
responsibility, or liability whatsoever with respect to the Bonds or any other debts, liabilities and
obligations issued by the Agency, and such Bonds and any other debts, liabilities and obligations
of the Agency do not constitute debts, liabilities or obligations of any Members including the
City.
5. The adoption of this Resolution shall not obligate the Citv or any department
thereof to (i) provide any financing to acquire or construct the Project or any refinancing of the
Project; (ii) approve any application or request for or take any other action in connection with
any planning approval, permit or other action necessary for the acquisition, construction,
rehabilitation or operation of the Project: (iii) make any contribution or advance any funds
whatsoever to the r\gene,: or (iv) except as provided in this Resolution, take any further action
with respect to the Agency or its membership therein.
6. The executing officers(s), the City Clerk and all other proper officers and officials
of the City are hereby authorized and directed to execute such other agreements, documents and
certificates, and to perform such other acts and deeds, as may be necessary or convenient to
effect the purposes of this Resolution and the transactions herein authorized.
21-9980/261947 2
Resolution No. 2021-44
7. The City Clerk shall forward a certified copy of this Resolution and an originally
executed Agreement to the .Agency:
,[ones Hall. A Professional Law Corporation
475 Sansome Street. Suite 1700
San Francisco. California 941 11
Attention: Ronald E. Lee, Esq.
S. This resolution shall take effect immediately upon its passage.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 20th day of July 2021.
Mayor
3VIEyl tD A IKROV APPROVED AS TO FORIM:
I
Citv A9anager 'A City Attorney
INITIATED AND APPROVED:
'Director of Community Development
2 1-9980/26 1947 3
Res. No. 2021-44
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is six; that the foregoing resolution was passed and adopted by
the affirmative vote of at least a majority of all the members of said City Council at
a Regular meeting thereof held on July 20, 2021 by the following vote:
AYES: Delgleize, Carr, Posey, Moser, Kalmick
NOES: Peterson
ABSENT: None
RECUSE: None
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
ATTACHMENT #3
Recorded in Official Records, Orange County
Hugh Nguyen, Clerk-Recorder
1 IIIIIIIII 111111 I 11111111111111111111111111111111111 NO FEE
* $ R 0 0 1 3 0 9 5 3 0 7 $ *
RECORDING REQUESTED BY 202100052300311:08 am 08/19/21
CMFA Special Finance Agency VII 90 RW9A Al 14
0.00 0.00 0.00 0.00 39.00 0.00 0.000.000.00 0.00
WHEN RECORDED RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Josh D. Anzel
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383
OF THE CALIFORNIA GOVERNMENT CODE
PUBLIC BENEFIT AGREEMENT
By and Between
CMFA SPECIAL FINANCE AGENCY VII
and
CITY OF HUNTINGTON BEACH
Dated as of August 1, 2021
Relating to
CMFA SPECIAL FINANCE AGENCY VII
SENIOR ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021A-1
(THE BREAKWATER APARTMENTS)
CMFA SPECIAL FINANCE AGENCY VII
JUNIOR ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021A-2
(THE BREAKWATER APARTMENTS)
and
CMFA SPECIAL FINANCE AGENCY VII
SUBORDINATE ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021B
(THE BREAKWATER APARTMENTS)
RECORDING REQUESTED
AND WHEN RECORDED MAIL TO:
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Josh D. Anzel THIS SPACE IS FOR RECORDERS USE ONLY
PUBLIC BENEFIT AGREEMENT
(Title of Document)
Per Government Code 27388.1 (a)(1) "A fee of$75 dollars shall be paid at the time of recording
of every real estate instrument, paper, or notice required or permitted by law to be recorded,
except those expressly exempted from payment of recording fees, per each single transaction
per parcel or real property. The fee shall not exceed two hundred twenty-five dollars ($225)"
Reason for Exemption:
❑ Exempt from fee per GC 27388.1 (a) (2); recorded concurrently "in connection with" a
transfer subject to the imposition of documentary transfer tax (DTT).
❑ Exempt from fee per GC 27388.1 (a) (2); recorded concurrently "in connection with" a
transfer of real property that is a residential dwelling to an owner-occupier.
❑ Exempt from fee per GC 27388.1 (a) (1); fee cap of$225.00 reached.
❑ Exempt from the fee per GC 27388.1 (a) (1); not related to real property.
Failure to include an exemption reason will result in the imposition of the $75.00 Building
Homes and Job Act Fee.
RECORDING REQUESTED BY
CMFA Special Finance Agency VII
WHEN RECORDED RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Josh D. Anzel
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383
OF THE CALIFORNIA GOVERNMENT CODE
PUBLIC BENEFIT AGREEMENT
By and Between
CMFA SPECIAL FINANCE AGENCY VII
and
CITY OF HUNTINGTON BEACH
Dated as of August 1, 2021
Relating to
CMFA SPECIAL FINANCE AGENCY VII
SENIOR ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021A-1
(THE BREAKWATER APARTMENTS)
CMFA SPECIAL FINANCE AGENCY VII
JUNIOR ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021A-2
(THE BREAKWATER APARTMENTS)
and
CMFA SPECIAL FINANCE AGENCY VII
SUBORDINATE ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021 B
(THE BREAKWATER APARTMENTS)
PUBLIC BENEFIT AGREEMENT
This PUBLIC BENEFIT AGREEMENT("Agreement") is dated as of August 1, 2021, by and
between the CMFA SPECIAL FINANCE AGENCY VII, a joint exercise of powers agency
organized and existing under the laws of the State of California (including its successors and
assigns, "Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation
and charter city ("Host').
BACKGROUND
WHEREAS,the Owner proposes to issue Bonds (as hereinafter defined)to finance Owner's
acquisition of the certain multifamily rental housing projects (collectively, the "ProiecY') located at
16761 Viewpoint Lane in the City of Huntington Beach, California, located on the real property
site described in Exhibit A hereto; and
WHEREAS, the Owner has executed a Regulatory Agreement and Declaration of
Restrictive Covenants between Owner and Wilmington Trust, National Association, dated
concurrently and recorded in the official records of the County of Orange, California (the
"Count '), which imposes requirements upon the Project with respect to maximum income levels
of tenants, maximum rents payable by tenants, maintenance of the Project in accordance with
industry standards, and certain other matters, and Host is entering into this Agreement in reliance
on Owner's compliance with such requirements; and
WHEREAS, the Owner intends to sell the Project at the instigation of the Host or upon the
retirement of all Project Debt (as defined herein) pursuant to this Agreement.
AGREEMENT
In consideration of the mutual covenants herein contained, and such other good and
valuable consideration the receipt and sufficiency of which is hereby acknowledged, Owner and
Host mutually agree as follows:
Section 1. Right to Cause Sale. Host shall have the right to cause ("Sale RighY') the
Owner to sell the Property (as herein defined) to Host or Host's designee upon payment by the
Purchaser (as herein defined) of the Sale Price (as herein provided) within the Sale Right Term
(as herein defined) and in compliance with and observance of all of the terms and conditions of
this Agreement.
Section 2. Definitions. Capitalized terms used in this Agreement shall have the
meanings assigned to them in this Section 2; capitalized terms used in this Agreement and not
defined in this Section 2 or elsewhere herein shall have the meanings assigned to them in the
Indenture (herein defined).
(a) "Bonds"—collectively, (i)the CMFA Special Finance Agency VII Senior Essential
Housing Revenue Bonds, Series 2021A-1 (The Breakwater Apartments), (ii) the CMFA Special
Finance Agency VII Junior Essential Housing Revenue Bonds, Series 2021A-2 (The Breakwater
Apartments), and (iii) the CMFA Special Finance Agency VII Subordinate Essential Housing
Revenue Bonds, Series 2021 B (The Breakwater Apartments) (the "Series B Bonds"), with such
other series and sub-series designations as may be set forth in the Indenture, originally issued to
finance Owner's acquisition of the Project and related transaction costs. The original principal
amount of the Series B Bonds shall not exceed $5,000,000.
1
(b) "Bond Trustee" — Wilmington Trust, National Association, or any successor
trustee under the Indenture.
(c) "Closin ' —shall have the meaning set forth in Section 8 hereof.
(d) "Conveyance" —that transaction or series of transactions by which Owner shall
transfer, bargain, sell and convey any and all right, title or interest in and to the Property.
(e) "Exercise Notice" —shall have the meaning set forth in Section 4(a) hereof.
(f) "Extraordinary Costs and Expenses" — shall have the meaning set forth in the
Indenture.
(g) "Host Indemnified Person" — the Host and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(h) "Indenture" — the Trust Indenture between Owner, as issuer, and the Bond
Trustee, as trustee, pursuant to which the Bonds were issued.
(i) "Minimum Sale Price" — means the lowest price at which the Property may be
sold, as described in Section 4(c) hereof.
0) "Outstanding' — with respect to Bonds, as of any given date, all Bonds which
have been authenticated and delivered by the Trustee under the Indenture, except: (i) Bonds
cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such
date for cancellation; (ii) Bonds deemed to be paid in accordance with Article Vill of the Indenture;
and (iii) Bonds in lieu of which other Bonds have been authenticated under the Indenture.
(k) "Owner Indemnified Person" — the Owner and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(1) "Project Administratoe' — Catalyst Housing Group LLC and its successors and
assigns.
(m) "Project Debf' — any debt secured by the Project and incurred to finance or
refinance Owner's acquisition of the Project and related transaction costs, including any portion
of the Bonds and any bonds, notes or other indebtedness issued by Owner to improve the Project
or to refund the Bonds in whole or in part.
(n) "Pro pert ' — means all of Owner's right, title and interest (which includes fee
simple title to the real property) in and to all property and assets used in or otherwise related to
the operation of the Project including, without limitation, all real property and interests in real
property, all tangible and intangible personal property including furniture, fixtures, equipment,
supplies, intellectual property, licenses, permits, approvals, and contractual rights of any kind or
nature together with the right to own and carry on the business and operations of the Project.
(o) "Purchasee'— means the purchaser of the Property in a sale thereof.
(p) "Regulatory Agreement" — means the Regulatory Agreement and Declaration of
Restrictive Covenants by and between the Owner and the Bond Trustee, relating to the Bonds.
2
(q) "Sale Price" — purchase price of the Property to be paid by the Purchaser upon
sale of the Property by the Owner pursuant to the Sale Right in compliance with Section 4 hereof
or sale by the Owner pursuant to Section 5 hereof.
(r) "Sale Right'—means the right of the Host to cause the Owner to sell the Property
pursuant to Section 1 hereof.
(s) "Sale Right Exercise Date" —the date fifteen (15) years from the issuance of the
Bonds.
(t) "Sale Right Term"—shall commence on the Sale Right Exercise Date and, if not
exercised, shall terminate at 11:59 p.m. local time on the date that is the earlier of: (i) fourteen
(14) years from the Sale Right Exercise Date or (ii) the date on which no Project Debt remains
Outstanding.
(u) "Transaction Costs" —to the extent not otherwise described herein, any costs or
expenses of any kind or nature associated with or incurred by Owner and Bond Trustee in
connection with the consummation of the Conveyance, regardless of whether such costs and
expenses are customarily borne by the seller or purchaser in any such transaction, including but
not limited to taxes, recording fees and other impositions, Owner's and Bond Trustee's legal and
other professional fees, fees for verification agents, bidding agents, escrow agents, custodians or
trustees, assumption fees, prepayment fees, the cost of the appraisal, brokers' fees and
expenses, surveys, inspections, title commitments, title insurance premiums and other title-
related fees, and all amounts required for indemnification of Owner, Trustee and Project
Administrator.
Section 3. Effectiveness; Term and Termination. The Sale Right shall become
effective on the Sale Right Exercise Date and may be exercised during the Sale Right Term.
Owner agrees that it will not enter into any agreement to sell all or any part of the Property during
the Sale Right Term other than as may be required by the Indenture (e.g., in the event of default),
without the specific written request of the Host and delivery of an Opinion of Bond Counsel to the
Owner substantially to the effect that such sale will not, in and of itself, adversely affect the
exclusion of interest on the Bonds from gross income for purposes of federal income taxation.
Section 4. Exercise of Sale Right.
(a) Host's Notice. To exercise the Sale Right, Host shall provide a notice (an
"Exercise Notice") to Owner(with a copy to the Project Administrator) at any time during the Sale
Right Term.
(b) Owner's Best Efforts to Sell. Unless Host notifies Owner in writing that it is
withdrawing its Exercise Notice within fifteen (15) business days of delivering the Exercise Notice
under Section 4(a) hereof, Owner shall exercise its best efforts to enter into a purchase agreement
for the sale of the Property in accordance with Section 7(d) and to sell and convey good and
marketable title to the Property to Host or its designee within ninety (90) days following receipt of
the Exercise Notice, or as soon as possible thereafter, in accordance with the purchase
agreement, but only if it can sell at or above the Minimum Sale Price. The obligation of the Owner
to enter into the purchase agreement for the sale and conveyance of the Property to Host or its
designee shall be on a best efforts basis. The Owner shall endeavor to sell the Property at a
commercially reasonable price, subject to subsection (c) of this Section, by such means as the
parties to the purchase agreement shall determine to be suitable for such purpose; provided that
3
Section 6. Surplus Cash; Surplus Conveyance Proceeds. Upon a Conveyance of
the Property, the Owner shall apply the proceeds of such Conveyance (i) to redeem the Bonds
then Outstanding, (ii) to prepay, redeem in whole or fully defease any other Project Debt, and (iii)
to pay any fees or other amounts listed in Section 4(c)(ii)—(iv). Any proceeds remaining following
the foregoing payments(such remaining amounts hereinafter referred to as"Surplus Conveyance
Proceeds") shall be transferred to the Host (11.99095% of Surplus Conveyance Proceeds), the
County of Orange (the "Count ') (73.65871% of Surplus Conveyance Proceeds), Coast
Community College District (2.72452% of Surplus Conveyance Proceeds), Ocean View School
District (2.17978% of Surplus Conveyance Proceeds), Huntington Beach Union High School
(2.01362% of Surplus Conveyance Proceeds), Huntington Beach Employee Retirement
(1.28474% of Surplus Conveyance Proceeds), Orange County Vector Control District (0.00628%
of Surplus Conveyance Proceeds), Municipal Water District of Orange County (0.30992% of
Surplus Conveyance Proceeds) and Orange County Sanitation District (5.83147% of Surplus
Conveyance Proceeds), up to a maximum amount of foregone property tax revenue for each local
agency, plus interest calculated from the date of foregone property tax payments at the Local
Agency Investment Fund interest rate as determined by Host. After payment of the foregoing
foregone amounts, any remaining Surplus Conveyance Proceeds shall be payable to Host.
Section 7. Terms of Conveyance.
(a) The Conveyance shall be in the nature of a grant deed to Purchaser in which
Owner shall deliver one or more deeds, bills of sale, or other instruments of transfer without
recourse or warranty of any kind or nature.
(b) The Property will be conveyed to Purchaser in AS IS CONDITION, WITH ALL
FAULTS, and without representations or warranties of any kind or nature as to the condition of
the Property, except as may otherwise be set forth in the purchase agreement.
(c) There shall be no partial transfer and that, upon consummation of the
Conveyance, Owner shall be fully divested of any and all right, title or interest in and to the
Property.
(d) Upon Host's delivery of the Exercise Notice, Owner shall deliver to Purchaser a
purchase agreement for the Property, and the parties shall negotiate in good faith towards a
mutually satisfactory purchase agreement form and substance satisfactory to Owner and
Purchaser and their counsel subject to the terms and conditions of this Agreement. The purchase
agreement shall permit Purchaser to conduct physical inspections of the Property and conduct
due diligence related to the purchase of the Property, including without limitation its value and
physical and environmental condition, and shall provide Purchaser a due diligence approval
period of not less than sixty (60) days after the date of the purchase agreement. The purchase
agreement shall provide for Owner to deliver to Purchaser copies of all plans, studies, records,
reports, governmental notices and approvals, and other written materials related to the use,
occupancy or condition of the Property that Owner has in its possession, including without
limitation environmental, structural, mechanical, engineering and land surveys. Purchaser shall
provide Owner with comments to the form of purchase agreement within fifteen (15) business
days of its receipt thereof, and Owner and Purchaser shall use good faith efforts to negotiate,
draft and execute a mutually acceptable purchase agreement as soon as practicable thereafter.
The purchase agreement shall provide for closing for the conveyance to Purchaser of good and
marketable title to the Property at the Sales Price within the time set forth in Section 8(a) hereof.
5
Owner shall incur no liability to any party as a result of or otherwise in connection with the sale or
failure to sell. Subject to subsection (c), nothing herein shall require or prevent Owner selling the
Property subject to the restrictions set forth in the Regulatory Agreement. The Owner shall direct
the Bond Trustee in the foregoing as and to the extent necessary or appropriate.
(c) Sale Price. The Sale Price shall be at least equal to the sum of the amounts set
forth below (net of any adjustments or prorations of the type described in Section 8(b)) (the
"Minimum Sale Price"):
i. an amount sufficient to either prepay, redeem in whole or fully defease for
redemption on the earliest call date all Project Debt; plus
ii. any fees or other amounts not identified in clause(i)that may be necessary
to effect the complete release from and discharge of any lien, mortgage or
other encumbrance on the Property; plus
iii. any amounts due to Owner (including the Owner Indemnified Persons, as
provided in the Indenture), the Bond Trustee or any predecessor or
successor, or any other Person under any indenture, loan agreement,
bond, note or other instrument relating to any Project Debt (including,
without limitation, indemnification amounts, Owner's Extraordinary Costs
and Expenses, recurrent and extraordinary fees and expenses, and
reimbursable costs and expenses of any kind or nature); plus
iv. Transaction Costs; minus
V. Any funds held by or for Owner under the Indenture applied to the
retirement of Project Debt. Owner may retain such portion of moneys in the
Extraordinary Expense Fund or similar fund under the Indenture it deems
reasonable as a reserve against future expected costs and expenses of the
type described in subparagraph (iii). Owner's determination of this amount
shall be final and incontestable.
Section 5. Mandatory Conveyance. Upon the retirement of all Project Debt, the Owner
shall use its best efforts to effect a Conveyance within ninety (90) days thereafter, subject to
Section 4(c) hereof. Owner shall give notice to Host of its intent to convey the Property, and Host
(or its designee) shall have the first right to acquire the Property by delivery of an Exercise Notice
to Owner within thirty (30) days after receipt of Owner's notice. Nothing herein shall require or
prevent Owner selling the Property subject to the restrictions set forth in the Regulatory
Agreement.
4
Section 8. Closing.
(a) The closing of the Conveyance ("Closin ') shall take place, in the case of a
Conveyance pursuant to Section 4 hereof, not later than the ninetieth (90th) calendar day
following the Owner's receipt of the Exercise Notice, or as soon as possible thereafter, and in the
case of a mandatory conveyance pursuant to Section 5 hereof, not later than the ninetieth (90th)
calendar day following the retirement of all Project Debt, or as soon as possible thereafter.
(b) All general and special real property taxes and assessments, and rents shall be
prorated as of the Closing, with Purchaser responsible for all such items to the extent arising or
due at any time following the closing. General real property taxes shall be prorated at the time of
Closing based on the net general real property taxes for the year of Closing.
Section 9. Recording.This Agreement, and any amendment thereto, shall be recorded
with the recorder's office of the County; provided, that upon termination of the term of this
Agreement, Host shall cooperate with Owner to remove any such recorded Agreement or
amendment thereto from title to the Property upon Owner's reasonable request therefor and, in
any event, by no later than thirty (30) days after the expiration of the original term of this
Agreement.
Section 10. Subordination. This Agreement shall be subordinate to any claim, pledge
or interest in the Property securing the Bonds or any Project Debt.
Section 11. [Reserved]
Section 12. Assignment. Neither party to this Agreement shall assign its interests,
obligations, rights and/or responsibilities under this Agreement without the prior written consent
of the other party, except as provided herein.
Section 13. Limitation on Liability.
(a) The Owner and Host shall not be directly, indirectly, contingently or
otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable
kind on any conceivable theory, under or by reason of or in connection with this Agreement or
any sale or Conveyance or failure or price thereof or application of proceeds thereof, except only
as to moneys available therefor under and in accordance with the Indenture or this Agreement.
(b) No Owner Indemnified Person or Host Indemnified Person shall be
individually or personally liable for the payment of any sum hereunder or be subject to any
personal liability or accountability by reason of the execution and delivery of this Agreement, or
by any proceedings for the sale or Conveyance or failure or price thereof, or Host's exercise or
waiver of same, or otherwise except in the case of such Owner Indemnified Person's own willful
misconduct.
(c) The Bonds will not be a debt, liability or obligation of Host but rather, solely
indebtedness of the Owner, limited to the Trust Estate pledged and available therefor under the
Indenture. Under no circumstances shall Host be obligated to (i) provide any financing to acquire
or construct the Project or any refinancing of the Project; (ii) approve any application or request
for or take any other action in connection with any planning approval, permit or other action
necessary for the acquisition, construction, rehabilitation or operation of the Project; or (iii) make
any contribution or advance any funds whatsoever to the Owner.
6
Section 14. Notices, Governing Law, Binding Effect and Other Miscellaneous
Provisions.
(a) Notices. All notices provided for in this Agreement shall be in writing and
shall be given to Owner or Host at the address set forth below or at such other address as they
individually may specify thereafter by written notice in accordance herewith:
If to Owner or: CMFA Special Finance Agency VII
Designated Agent 2111 Palomar Airport Road, Suite 320
Carlsbad, California 92011
Attention: Financial Advisor
With a copy to: Catalyst Housing Group LLC
21 Ward Street, Suite 2
Larkspur, California 94939
Attention: Jordan Moss
If to Host: City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Attention: City Manager
Such notices shall be deemed effective upon actual delivery or upon the date that any such
delivery was attempted and acceptance thereof was refused, or if mailed, certified return receipt
requested, postage prepaid, properly addressed, three (3) days after posting.
(b) Consents and Approvals. All consents and approvals and waivers required
or asserted hereunder shall be in writing, signed by the party from whom such consent, approval,
waiver or notice is requested.
(c) Non-Liability of Host or Owner Officers and Employees. No officer or
employee of the Host shall be personally liable to the Owner, or any successor in interest, in the
event of any default or breach by Host of any obligation of the terms of this Agreement. No officer
or employee of the Owner shall be personally liable to Host, or any successor in interest, in the
event of any default or breach by Owner of any obligation of the terms of this Agreement.
(d) Pronouns. Where appropriate to the context, words of one gender include
all genders, and the singular includes the plural and vice versa.
(e) Amendments. This Agreement may not be modified except in a written
instrument signed by Host and Owner.
(f) Complete Agreement; Benefits. This Agreement together with all
schedules and exhibits attached hereto and made part thereof supersedes all previous
agreements, understandings and representations made by or between the parties hereto. This
Agreement shall inure solely and exclusively to the benefit of the Owner and Host, and no other
party shall have any right, remedy or claim under or by reason of this Agreement.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts of law principles.
7
All claims of whatever character arising out of this Agreement, or under any statute or common
law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings
between Owner and any other party hereto, if and to the extent that such claim potentially could
or actually does involve Owner, shall be filed and maintained in the Superior Court of California,
County of San Diego, California. By executing and delivering this Agreement, each party hereto
irrevocably: (i) accepts generally and unconditionally the exclusive jurisdiction and venue of such
court; (ii) waives any defense of forum non-conveniens; and (iii) agrees not to seek removal of
such proceedings to any court or forum other than as specified above. The foregoing shall not be
deemed or construed to constitute a waiver by Owner of any prior notice or procedural
requirements applicable to actions or claims against or involving governmental units and/or
political subdivisions of the State of California that may exist at the time of and in connection with
such matter.
(h) Legal Construction. In case any one or more of the provisions contained
in this Agreement shall for any reason be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such invalid provision shall be deemed severable, and
shall not affect the validity or enforceability of any other provisions of this Agreement, all of which
shall remain fully enforceable.
(i) Term. This Agreement shall terminate upon the Conveyance.
0) Captions. The captions used in this Agreement are solely for convenience
and shall not be deemed to constitute a part of the substance of the Agreement for purpose of its
construction.
(k) Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original;
and all such counterparts shall together constitute but one and the same Agreement.
(1) Regulatory Agreement. Owner shall not amend the Regulatory Agreement
to increase the maximum income levels or maximum rents of the Affordable Units, or to revise
the percentages of units to be rented as Low Income Units, Median Income Units and Moderate
Income Units, without the prior written approval of Host, which approval shall not unreasonably
be withheld.
(m) Except with respect to any nonresidential space existing as of the date of
issuance of the Bonds, for the term of the Regulatory Agreement, the Owner hereby represents,
covenants, warrants and agrees as follows: (i) the Project will be owned and operated for the
purpose of providing multifamily residential rental property; and (ii)the Owner will own, and cause
the Project to be managed and operated, as a project to provide multifamily residential rental
property comprised of a building or structure or several interrelated buildings or structures,
together with any functionally related and subordinate facilities.
(n) The Agency, or the Bond Trustee on its behalf, shall pay to the City an
annual monitoring fee of $25.00 per unit on each anniversary of the date hereof, commencing
with the first anniversary, provided, however, that such fee shall be payable solely from revenues
of the Project, and the Agency shall not otherwise be liable therefor.
[SIGNATURE PAGE TO FOLLOW]
8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth
above.
CMFA SPECIAL FINANCE AGENCY VII
By:
Edward J. Becker
Executive Director
CITY OF HUNTINGTON BEACH
By:
Oliver Chi
City Manager
Approved as to Form:
By:
City Attorney
[Signature Page—Public Benefit Agreement—The Breakwater Apartments]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth
above.
CMFA SPECIAL FINANCE AGENCY VII
By: _
Edward J. Becker
Executive Director
CITY O U INGTON BEAC
By:
Oliver Chi
City Manager
Approved as to Form:
By:
;y City Attorney
[Signature Page—Public Benefit Agreement—The Breakwater Apartments]
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of San Bernardino
On July 22, 2021 before me, Aline Lopez , Notary Public
(insert name and title of the officer)
personally appeared Edward I Becker
who proved to me on the basis of satisfactory evidence to be the persons}whose names) is/afe
subscribed to the within instrument and acknowledged to me that hem executed the same in
his'"^,,, 'gym authorized capacity0es), and that by hisihei:A#ei signatureW on the instrument the
person(f), or the entity upon behalf of which the person(o acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
ALINE LOPEZ
�
o »`, COMM.02348639
WITNESS my hand and official eal. Notary Public-Califomia is
San Bernardino COUNTY o
;. My Comm.Exp.FEB.23,2025
Signature (Seal)
A notary public or other officer completing this certificate verifies only the_identity
of the individual who signed the document to which this certificate is attached, and
not the truthfulness, accuracy, or validity of that document.
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE )
On 7/21/2021 before me, Donna Switzer, Notary Public, personally appeared
Oliver Chi who proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
DONNA SVNTZER
ORAWA COUNT
coissioN r 23110p1
WITNESS my hand and official seal. X. Notary Public.Coftr �
My comet.E oa Nov.5,2023n�
(Seal)
(Notary Signature)
Exhibit "A"
Legal Description
Real property in the City of Huntington Beach, County of Orange, State of California, described as
follows:
PARCEL 1, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER
MAP FILED IN BOOK 38, PAGE 15 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
EXCEPT THEREFROM ALL CRUDE OIL, PETROLEUM, GAS, BREA, ASPHALTUM AND ALL KINDRED
SUBSTANCES AND OTHER MINERALS UNDER AND IN SAID LAND BELOW A DEPTH OF 500 FEET
WITHOUT, HOWEVER, THE RIGHT OF SURFACE ENTRY, AS RESERVED BY JAMES MADDUX, ET AL., IN
DEED RECORDED JULY 21, 1971 IN BOOK 9727, PAGE 77 OF OFFICIAL RECORDS
APN: 142-181-05
ATTACHMENT #4
Recorded in Official Records, Orange County
Hugh Nguyen, Clerk-Recorder
IIII I III I II IIIII III III I I I III I II II II I II II I III 55.00
* $ R 0 0 1 3 1 2 9 6 1 1 $ *
2021000547105 3:20 pm 08/31/21
320 PP2A Al 16
0.00 0.00 0.00 0.00 45.00 0.00 0.000.000.00 3.00
RECORDING REQUESTED
AND WHEN RECORDED MAIL TO:
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention:Josh D.Anzel THIS SPACE IS FOR RECORDERS USE ONLY
PUBLIC BENEFIT AGREEMENT
(Title of Document)
Per Government Code 27388.1 (a)(1) `A fee of$75 dollars shall be paid at the time of recording
of every real estate instrument,paper, or notice required or permitted by law to be recorded,
except those expressly exempted from payment of recording fees,per each single transaction
per parcel or real property. The fee shall not exceed two hundred twenty-five dollars($225)"
Reason for Exemption:
❑ Exempt from fee per GC 27388.1 (a) (2); recorded concurrently"in connection with"a
transfer subject to the imposition of documentary transfer tax (DTT).
❑ Exempt from fee per GC 27388.1 (a)(2); recorded concurrently"in connection with"a
transfer of real property that is a residential dwelling to an owner-occupier.
D4 Exempt from fee per GC 27388.1 (a) (1);fee cap of$225.00 reached.
❑ Exempt from the fee per GC 27388.1 (a)(1); not related to real property.
Failure to include an exemption reason will result in the imposition of the$75.00 Building
Homes and Job Act Fee.
i
RECORDING REQUESTED BY
CMFA Special Finance Agency VIII
WHEN RECORDED RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Josh D. Anzel
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383
OF THE CALIFORNIA GOVERNMENT CODE
PUBLIC BENEFIT AGREEMENT
By and Between
CMFA SPECIAL FINANCE AGENCY VIII
and
CITY OF HUNTINGTON BEACH
Dated as of August 1, 2021
Relating to
CMFA SPECIAL FINANCE AGENCY Vlll
SENIOR ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021A-1
(ELAN HUNTINGTON BEACH)
CMFA SPECIAL FINANCE AGENCY VIII
JUNIOR ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021A-2
(ELAN HUNTINGTON BEACH)
and
CMFA SPECIAL FINANCE AGENCY VIII
SUBORDINATE ESSENTIAL HOUSING REVENUE BONDS, SERIES 2021 B
(ELAN HUNTINGTON BEACH)
_I
PUBLIC BENEFIT AGREEMENT
This PUBLIC BENEFIT AGREEMENT("Agreement")is dated as of August 1, 2021, by and
between the CMFA SPECIAL FINANCE AGENCY VIII, a joint exercise of powers agency
organized and existing under the laws of the State of California (including its successors and
assigns, "Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation
and charter city ("Host').
BACKGROUND
WHEREAS,the Owner proposes to issue Bonds(as hereinafter defined)to finance Owner's
acquisition of the certain multifamily rental housing projects (collectively, the "ProiecY') located at
18504 Beach Boulevard in the City of Huntington Beach, California, located on the real property
site described in Exhibit A hereto; and
WHEREAS, the Owner has executed a Regulatory Agreement and Declaration of
Restrictive Covenants between Owner and Wilmington Trust, National Association, dated
concurrently and recorded in the official records of the County of Orange, California (the
"Count '), which imposes requirements upon the Project with respect to maximum income levels
of tenants, maximum rents payable by tenants, maintenance of the Project in accordance with
industry standards, and certain other matters, and Host is entering into this Agreement in reliance
on Owner's compliance with such requirements; and
WHEREAS, the Owner intends to sell the Project at the instigation of the Host or upon the
retirement of all Project Debt (as defined herein) pursuant to this Agreement.
AGREEMENT
In consideration of the mutual covenants herein contained, and such other good and
valuable consideration the receipt and sufficiency of which is hereby acknowledged, Owner and
Host mutually agree as follows:
Section 1. Right to Cause Sale. Host shall have the right to cause ("Sale Right') the
Owner to sell the Property (as herein defined) to Host or Host's designee upon payment by the
Purchaser (as herein defined) of the Sale Price (as herein provided) within the Sale Right Term
(as herein defined) and in compliance with and observance of all of the terms and conditions of
this Agreement.
Section 2. Definitions. Capitalized terms used in this Agreement shall have the
meanings assigned to them in this Section 2; capitalized terms used in this Agreement and not
defined in this Section 2 or elsewhere herein shall have the meanings assigned to them in the
Indenture (herein defined).
(a) "Bonds" — collectively, (i) the CMFA Special Finance Agency VIII Senior
Essential Housing Revenue Bonds, Series 2021A-1 (Elan Huntington Beach), (ii) the CMFA
Special Finance Agency VIII Junior Essential Housing Revenue Bonds, Series 2021A-2 (Elan
Huntington Beacn), and (iii) the CMFA Special Finance Agency VIII Subordinate Essential
Housing Revenue Bonds, Series 2021 B (Elan Huntington Beach) (the "Series B Bonds"), with
such other series and sub-series designations as may be set forth in the Indenture, originally
issued to finance Gviner's acquisition of the Project and related transaction costs. The original
principal amour., of the Series B Bonds shall not exceed $5,000,000.
1
(b) "Bond Trustee" — Wilmington Trust, National Association, or any successor
trustee under the Indenture.
(c) "Closing'—shall have the meaning set forth in Section 8 hereof,
(d) "Conveyance'—that transaction or series of transactions by which Owner shall
transfer, bargain, sell and convey any and all right, title or interest in and to the Property.
(e) "Exercise Notice"—shall have the meaning set forth in Section 4(a) hereof.
(f) "Extraordinary Costs and Expenses" — shall have the meaning set forth in the
Indenture.
(g) "Host Indemnified Person" — the Host and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(n) "indenture" — the Trust Indenture between Owner, as issuer, and the Bond
Trustee, as trustee, pursuant to which the Bonds were issued.
(i) yi'nimum Sale Price" — means the lowest price at which the Property may be
sold, as described in Section 4(c) hereof.
(i) "Outstanding' — with respect to Bonds, as of any given date, all Bonds which
have been autnenticated and delivered by the Trustee under the Indenture, except: (i) Bonds
cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such
date for cancellation; (ii) Bonds deemed to be paid in accordance with Article Vill of the Indenture;
and (iii) Bonds in lieu of which other Bonds have been authenticated under the Indenture.
(et) "")weer Indemnified Person" — the Owner and each of its officers, governing
members, directors, officials, employees, attorneys, agents and members.
(i) ',project Administrator" — Catalyst Housing Group LLC and its successors and
assigns.
(m) "rroiect Debt' — any debt secured by the Project and incurred to finance or
refinance Owner's acquisition of the Project and related transaction costs, including any portion
of the Bonds anc. any bonds, notes or other indebtedness issued by Owner to improve the Project
or to refund the Bonds in whole or in part.
(n) "_Pro ert ' — means all of Owners right, title and interest (which includes fee
simple title to the real property) in and to all property and assets used in or otherwise related to
the operation of -_he Project including, without limitation, all real property and interests in real
property, all tangible and intangible personal property including furniture, fixtures, equipment,
supplies, intellectual property, licenses, permits, approvals, and contractual rights of any kind or
nature together w'th the right to own and carry on the business and operations of the Project.
(o) `,:�z,lrchaser"—means the purchaser of the Property in a sale thereof.
(p) :- eajlatory Agreement"—means the Regulatory Agreement and Declaration of
Restrictive Covenants by and between the Owner and the Bond Trustee, relating to the Bonds.
2
(q) "Sale Price" — purchase price of the Property to be paid by the Purchaser upon
sale of the Property by the Owner pursuant to the Sale Right in compliance with Section 4 hereof
or sale by the Owner pursuant to Section 5 hereof.
(r) "Sale Right"—means the right of the Host to cause the Owner to sell the Property
pursuant to Section 1 hereof.
(s) `Sale Right Exercise Date"—the date fifteen (15)years from the issuance of the
Bonds.
(t) "Sale Right Term"—shall commence on the Sale Right Exercise Date and, if not
exercised, shali terminate at 11:59 p.m. local time on the date that is the earlier of: (i) fourteen
(14) years from the Sale Right Exercise Date or (ii) the date on which no Project Debt remains
Outstanding.
(u) "Transaction Costs"—to the extent not otherwise described herein, any costs or
expenses of any kind or nature associated with or incurred by Owner and Bond Trustee in
connection with the consummation of the Conveyance, regardless of whether such costs and
expenses are customarily borne by the seller or purchaser in any such transaction, including but
not limited to taxes, recording fees and other impositions, Owner's and Bond Trustee's legal and
other professional fees, fees for verification agents, bidding agents, escrow agents, custodians or
trustees, assumption tees, prepayment fees, the cost of the appraisal, brokers' fees and
expenses, surveys; inspections, title commitments, title insurance premiums and other title-
related fees, and all amounts required for indemnification of Owner, Trustee and Project
Administrator.
Section 3. EVectiveness; Term and Termination. The Sale Right shall become
effective on the Saie Right Exercise Date and may be exercised during the Sale Right Term.
Owner agrees that it wiil not enter into any agreement to sell all or any part of the Property during
the Sale Riant Ter to other than as may be required by the Indenture (e.g., in the event of default),
without the specific written request of the Host and delivery of an Opinion of Bond Counsel to the
Owner substantially to the effect that such sale will not, in and of itself, adversely affect the
exclusion of interest on li^,e Bonds from gross income for purposes of federal income taxation.
Sect on r'. Exercise of Sale Right.
(2) Host's Notice. To exercise the Sale Right, Host shall provide a notice (an
"Exercise Nc_ric '_e ? to 0%iilrier (with a copy to the Project Administrator)at any time during the Sale
Right Term_
1h) "wner s Best Efforts to Sell. Unless Host notifies Owner in writing that it is
withdrawing its Exercise Notice within fifteen (15) business days of delivering the Exercise Notice
under Section:4'a; nersof, Owner shall exercise its best efforts to enter into a purchase agreement
for the sale of in_a Property in accordance with Section 7(d) and to sell and convey good and
marketable title to the Property to Host or its designee within ninety(90) days following receipt of
the Exercise, notice; or as seen as possible thereafter, in accordance with the purchase
agreement, bUt^niy if it can sell at or above the Minimum Sale Price.The obligation of the Owner
to enter into the : ,r:+ase agreement for the sale and conveyance of the Property to Host or its
designee sr;,-:!. )e cn a best efforts basis. The Owner shall endeavor to sell the Property at a
commercially re-�3sonahie price, subject to subsection (c) of this Section, by such means as the
oarties to the purchase agreement shall determine to be suitable for such purpose; provided that
3
Owner shall incur no liability to any party as a result of or otherwise in connection with the sale or
failure to sell. Subject to subsection (c), nothing herein shall require or prevent Owner selling the
Property subject':o the restrictions set forth in the Regulatory Agreement. The Owner shall direct
the Bond Trustee n the foregoing as and to the extent necessary or appropriate.
(c) Sale Price. The Sale Price shall be at least equal to the sum of the amounts set
forth below (nat of any adjustments or prorations of the type described in Section 8(b)) (the
"Minimum SaJe Ice"):
i. an amouni sufficient to either prepay, redeem in whole or fully defease for
redemption on the earliest call date all Project Debt; plus
any fees or other amounts not identified in clause(i)that may be necessary
to effect the complete release from and discharge of any lien, mortgage or
otner encumbrance on the Property; plus
iii. any amounts due to Owner (including the Owner Indemnified Persons, as
provided in the Indenture), the Bond Trustee or any predecessor or
successor, or any other Person under any indenture, loan agreement,
bond, note or other instrument relating to any Project Debt (including,
without limitation, indemnification amounts, Owner's Extraordinary Costs
and Expenses, recurrent and extraordinary fees and expenses, and
reimbursable costs and expenses of any kind or nature); plus
iv. Transaction Costs; minus
V. Any funds held by or for Owner under the Indenture applied to the
retirement of Project Debt. Owner may retain such portion of moneys in the
Extraordinary Expense Fund or similar fund under the Indenture it deems
reasonable as a reserve against future expected costs and expenses of the
type described in subparagraph (iii). Owner's determination of this amount
shall be final and incontestable.
Section 5. Mandatory Conveyance. Upon the retirement of all Project Debt, the Owner
shall use its best efforts to effect a Conveyance within ninety (90) days thereafter, subject to
Section 4(c) hereof. Owner shall give notice to Host of its intent to convey the Property, and Host
(or its designee)shall have the first right to acquire the Property by delivery of an Exercise Notice
to Owner within thirty (30) days after receipt of Owner's notice. Nothing herein shall require or
prevent Owner seliina the Property subject to the restrictions set forth in the Regulatory
Agreement.
4
Section 6. Surplus Cash; Surplus Conveyance Proceeds. Upon a Conveyance of
the Property, the Owner shall apply the proceeds of such Conveyance (i) to redeem the Bonds
then Outstanding, (ii)to prepay, redeem in whole or fully defease any other Project Debt, and (iii)
to pay any fees or other amounts listed in Section 4(c)(ii)—(iv).Any proceeds remaining following
the foregoing payments (such remaining amounts hereinafter referred to as"Surplus Conveyance
Proceeds") sh II be transferred to the Host (12.08090% of Surplus Conveyance Proceeds), the
County of Orange (the "Count ') (74.2'i 125% of Surplus Conveyance Proceeds), Coast
Community College District(2.74495%of Surplus Conveyance Proceeds), Huntington Beach City
School District 12.11502% of Surplus Conveyance Proceeds) Huntington Beach Union High
School (2.02873% of Surplus Conveyance Proceeds), Huntington Beach Employee Retirement
(1.29438% of Surplus Conveyance Proceeds), Municipal Water District of Orange County
(.30392% of Surplus Conveyance Proceeds), Orange County Vector Control District(.01552%of
Surplus Conveyance Proceeds); %ilunicipal Water District of Orange County(.00190% of Surplus
Conveyance ;;---,ceeds) and Orange County Sanitation District (5.20533% of Surplus
Conveyance F'-,ceeds). up to a maximum amount of foregone property tax revenue for each local
agency, plus '.n: rest calculated from the date of foregone property tax payments at the Local
Agency Invest nen, R= nd interest rate as determined by Host. After payment of the foregoing
foregone amo!:ris, any rem?i:: nc Surplus Conveyance Proceeds shall be payable to Host.
Sectior: 7 T: i,ns or Convevance.
(a', !I-,e Conveyance shall be in the nature of a grant deed to Purchaser in which
Owner shah aeilver one or more deeds, bills of sale, or other instruments of transfer without
recourse or warranty of any kir;d or nature.
(b; The ; .U-per,-y VUlil be conveyed to Purchaser in AS IS CONDITION, WITH ALL
FAULTS, a7id v✓:':rout representations or warranties of any kind or nature as to the condition of
the Property, except as may otherwise be set forth in the purchase agreement.
(c) There shall be no partial transfer and that, upon consummation of the
Conveyance, Owner shall be fully divested of any and all right, title or interest in and to the
Property.
(d) upon Host's deiivery of the Exercise Notice, Owner shall deliver to Purchaser a
purchase agreement for the Property, and the parties shall negotiate in good faith towards a
mutually satisfactory purchase agreement form and substance satisfactory to Owner and
Purchaser and their counsel subject to the terms and conditions of this Agreement. The purchase
agreement shall permit Purchaser to conduct physical inspections of the Property and conduct
due diligence related _o the purchase of the Property, including without limitation its value and
physical and environmental condition, and shall provide Purchaser a due diligence approval
period of no, less than sixty (60) days after the date of the purchase agreement. The purchase
agreement shah r,ovioe for Owner to deliver to Purchaser copies of all plans, studies, records,
reports, governmental notices and approvals, and other written materials related to the use,
occupancy or condition of the Property that Owner has in its possession, including without
limitation en\/ronr nental, structural; mechanical, engineering and land surveys. Purchaser shall
provide Owner vll`n comments to the form of purchase agreement within fifteen (15) business
days of its rece pt. thereof, ar,d Owner and Purchaser shall use good faith efforts to negotiate,
draft and execu-a, a mutually acceptable purchase agreement as soon as practicable thereafter.
The purchase ry.eer ent shah provide for closing for the conveyance to Purchaser of good and
marketable Title ic, to. Propert\, at the Sales Price within the time set forth in Section 8(a) hereof.
5
Section. S, Closing.
(a.; "ne closing of the Conveyance ("Closin ") shall take place, in the case of a
Conveyance pursuant to Section 4 hereof, not later than the ninetieth (90th) calendar day
following the Ow!�er's receipt of the Exercise Notice, or as soon as possible thereafter, and in the
case of a manratory conveyance pursuant to Section 5 hereof, not later than the ninetieth (90th)
calendar day feliowing Lne retirement of all Project Debt, or as soon as possible thereafter.
(b) -\il general and special real property taxes and assessments, and rents shall be
prorated as o� tn. Closing, with Purchaser responsible for all such items to the extent arising or
due at any time +.glowing the closing. General real property taxes shall be prorated at the time of
Closing based :cn the net general real property taxes for the year of Closing.
Secti^o. 9. Rego din:.This Agreement, and any amendment thereto, shall be recorded
with the recur - dice of t-ie County; provided, that upon termination of the term of this
Agreement „ sr^ail cooperate with Owner to remove any such recorded Agreement or
amendment : r_,. I.-orr title to the Property upon Owners reasonable request therefor and, in
any event, by i::: .aer than thirty (30) days after the expiration of the original term of this
Agreement.
S86bc , S bboordidec-.t on. This Agreement shall be subordinate to any claim, pledge
or interest in �erty sect,-ing the Bonds or any Project Debt.
Section I':. t�eservedl
Sect' Y: =s`eax t '. Neither party to this Agreement shall assign its interests,
obligations, .r u rc v� ,si�ilities under this Agreement without the prior written consent
of the ocher :�, :,xcep,as p,-cvided herein.
Sec�::Ion 'i on Liability.
r and Host shall not be directly, indirectly, contingently or
otherwise liLbl r.Dr affV costs; expenses, losses, damages, claims or actions, of any conceivable
Kind on any conceivable theory, under or by reason of or in connection with this Agreement or
any sale or Conveyance or failure or price thereof or application of proceeds thereof, except only
as to moneys available hereior under and in accordance with the Indenture or this Agreement.
(0) No O%,-er Indemnified Person or Host Indemnified Person shall be
individually or parsoraliy iiabia Tor the payment of any sum hereunder or be subject to any
personal liability or accountability by reason of the execution and delivery of this Agreement, or
by any proceedincs for the sale or Conveyance or failure or price thereof, or Host's exercise or
waiver of same, or otherwise except in the case of such Owner Indemnified Person's own willful
misconduct.
(c; he Bonds will not be a debt, liability or obligation of Host but rather, solely
indebtedness of the Owner, limited to the Trust Estate pledged and available therefor under the
indenture. Under no circumstances shall Host be obligated to (i) provide any financing to acquire
or construct the Project or any refinancing of the Project; (ii)approve any application or request
for or take any other action in connection with any planning approval, permit or other action
necessary for 11h6 acqu'.siticn, construction, rehabilitation or operation of the Project; or(iii) make
any contrib Rio- or advance any funds whatsoever to the Owner.
6
Section Notices, Governing Law, Binding Effect and Other Miscellaneous
Provisions.
(a) Notices. All notices provided for in this Agreement shall be in writing and
shall be giver to ^caner or Host at the address set forth below or at such other address as they
individually mav specify thereafter by written notice in accordance herewith:
if to Owner or: CM FA Special Finance Agency VIII
i'esi nateu Agent 2111 Palomar Airport Road, Suite 320
Carlsbad, California 92011
Attention: Financial Advisor
VVitil-i a copy to: Catalyst Housing Group LLC
21 Ward Street, Suite 2
Larkspur, California 94939
Attention: Jordan Moss
r t� Host: City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Attention: City Manager
Such notices sh !I be deemed effective upon actual delivery or upon the date that any such
delivery was G_«r pled and acceptance thereof was refused, or if mailed, certified return receipt
requested, pos: c; prepaid, properly addressed, three (3) days after posting.
(b) Consents and Approvals. All consents and approvals and waivers required
or asserted here rder shall be in writing, signed by the party from whom such consent, approval,
waiver or no_;c i� rec nested.
tc won-Liability of Host or Owner Officers and Employees. No officer or
employee of'_he ' ost shall be personally liable to the Owner, or any successor in interest, in the
event of any default or D-each oy iiosi of any obligation of the terms of this Agreement. No officer
or employee o`the Owner shall be personally liable to Host, or any successor in interest, in the
event of at,y :ei ult or breach by Owner of any obligation of the terms of this Agreement.
(n) Pronouns. Where appropriate to the context, words of one gender include
all genders, anC the sif-�gular includes the plural and vice versa.
(e) Amendments. This Agreement may not be modified except in a written
instrument signee by Host and Owner.
k'rf �'o.moiete Agreement: Benefits. This Agreement together with all
schedules and exhibits attached hereto and made part thereof supersedes all previous
agreements, understandings and representations made by or between the parties hereto. This
Agreement shall inure soieiy ar!d exclusively to the benefit of the Owner and Host, and no other
party shall have any rignt, remedy or claim under or by reason of this Agreement.
;g' ove ni 2 Law. iris Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts of law principles.
7
All claims of wnaiever character arising out of this Agreement, or under any statute or common
law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings
between Owner and any other party hereto, if and to the extent that such claim potentially could
or actually does involve Owner, shall be filed and maintained in the Superior Court of California,
County of San Diego, California. By executing and delivering this Agreement, each party hereto
irrevocably (.; accepts generally and unconditionally the exclusive jurisdiction and venue of such
court; (ii) waives any defense of forum non-conveniens; and (iii) agrees not to seek removal of
such proceedings to any court or forum other than as specified above. The foregoing shall not be
deemed or construed to constitute a waiver by Owner of any prior notice or procedural
requirements 2pn11cable to actions or claims against or involving governmental units and/or
political subdivisions of the Stete of California that may exist at the time of and in connection with
such matter
�r L e aq I Construction. In case any one or more of the provisions contained
in this Aareern r, shall for any reason be held by a court of competent jurisdiction to be invalid,
illegal or in any respect, such invalid provision shall be deemed severable, and
shall not affect .,a!;dity or en crceability of any other provisions of this Agreement, all of which
shall remain f-i , n`orcaabie.
i m. i i s Agreement shall terminate upon the Conveyance.
:a ticn The captions used in this Agreement are solely for convenience
and shall rot ,Dr-, oeemec to constitute a part of the substance of the Agreement for purpose of its
construction.
�-ounteroa.rts. This Agreement may be executed in any number of
counterpa .:. ; :c of siliclirl counterparts shall for all purposes be deemed to be an original;
and all ogether constitute but one and the same Agreement.
it Regulatory Agreement. Owner shall not amend the Regulatory Agreement
to increase t.,e -i,,axirn-: m income levels or maximum rents of the Affordable Units, or to revise
the percen poFs ,)f units to be rented as Low Income Units, Median Income Units and Moderate
Income Ur)- ho! e nric, writien approval of Host, which approval shall not unreasonably
De
(r-, —xcept -h respect to any nonresidential space existing as of the date of
issuance or' ie cncis :or_ ,e term of the Regulatory Agreement, the Owner hereby represents,
covenants ac!-,Fes as follows (I) the Project will be owned and operated for the
irpose _ :. ifar ,i;y r esioentiai rental property; and (ii)the Owner will own,and cause
the Project to managed and operated, as a project to provide multifamily residential rental
property ccmprised of a building or structure or several interrelated buildings or structures,
tooether wfi r, am/functionally related and subordinate facilities.
;Iner �!rd it lost understand and acknowledge that a possessory interest
-rsx may be ir;;pcseu on the co i mercial components of the Project upon the Owner's acquisition
of the Pro iect pursuant.to California Revenue and Taxation Code Section 107, et seq. Owner is
advised th�.t it may have certain obligations pursuant to California Revenue and Taxation Code
Section 1 is p,-ovid.e notice to current and/or future commercial tenants stating that the leased
property mad-be subjec to property taxation, and Owner may be subject to damages for its failure
to do so. iNoihir,c it this Agreement shall be construed to impose any obligations for payment of
possessory interest saxes cn ,ost.
8
(o) The Agency, or the Bond Trustee on its behalf, shall pay to the City an
annual monitoring fee of $25.00 per unit on each anniversary of the date hereof, commencing
with the first anniversary; provided, however, that such fee shall be payable solely from revenues
of the Project, ar, ' the Agency shall not otherwise be liable therefor.
I;SIGNA-rURE PAGE TO FOLLOW]
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth
above.
CMFA SPECIAL FINANCE AG,EN&Vill
;1--
By: —�"'
Edward J. Becker
Executive Director
CITY OF.JdUNTINGTON BEACH
By:
Oliver Chi
City Manager
Approved as to Form:
Ci Attorney
3't
[Signature Page—Public Benefit Agreement—Elan Huntington Beach]
A notary public or other officer completing this certificate verifies only the identity
of the individual who signed the document to which this certificate is attached, and
not the truthfulness, accuracy, or validity of that document.
ACKNOWLEDGMENT
STATE OF C JFOR:NIA )
) ss
COUNTY OF OR,.NG )
On 7/21/202' hofore me,Donna Switzer, Notary Public, personally appeared
Oliver Chi who proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrumer_*Ll^e riarsen, or the entity upon behalf of which the person acted,
executed the ;«strument.
I certify under- 'r�F:\TA?,TY OF PERJURY under the laws of the State of California
that the fore2r, n paragraph is true and correct.
DONNA SIMTZER
WITNESS my rand and official seat. COMMISSIONs2311001
E Notary Public-Califamia
ORANGE COUNTY
My Comm Ezpres Nov.S.2023
(Seal)
IN WITNESS WPEREOF, the parties have executed this Agreement as of the date set forth
above.
CMFA SPECIAL FINANCE AGE Y VIII
By: �
Edward J. Becker
Executive Director
CITY OF HUNTINGTON BEACH
By:
y '' f Oliver Chi
City Manager
Approved as to Form:
By:
Cite,attorney
[Signature Page—Public Benefit Agreement—Elan Huntington Beach]
-I
ACKNOWLEDGMENT
A notary pudic or oiher officer compieting this
certificate verifies only the identity of the individual
who signed the document to which This ce.,tificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of CaCrcr lie
County of S�n 3ernar-jino
On July 22, 2C2-1 before me, Aline Lopez , Notary Public
(insert name and title of the officer)
personally appe�r�c otolWara .i. Becker
who proved to me on the basis of satisfactory evidence to be the person(s}whose name(*iskafe
subscribed ic. t',c ,,iithin instrument and acknowledged to me that homey executed the same in
hisl'�, a aumorized capacity{+es3, and that by his4heAgip signature(64 on the instrument the
person(s}, or tiie entity upon behalf of which the persons}acted, executed the instrument.
I certify under PeNAL T Y OF PENJURY under the laws of the State of California that the foregoing
paragraph is tr;; .^nd correct.
ALINE LOPEZ
l'� CON1M.g2348639
WITNESS my ha,,u a;id official seal. ; , NocaryPuaic-califomia
=f
San Bemardino COUNTY
My Comm.Exp.FEB.23,2025
Signature �� Y (Seal)
_ I
EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
The Land referred to herein is situated in the State of California, County of Orange, City of
Huntington Beach, and described as follows:
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF HUNTINGTON
BEACH, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS
FOLLOWS:
A PORTION OF THE NORTH HALF OF THE NORTHWEST QUARTER OF THE NORTHWEST
QUARTER OF T SCU T HWEST QUARTER OF SECTION 36, TOWNSHIP 5 SOUTH, RANGE
11 WEST, S AN 3ERNARDINO MERIDIAN, IN THE CITY OF HUNTINGTON BEACH, COUNTY
OR ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 51, PAGE 13 OF
MISCELLANEOUS DAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
MORE DESCRIBED AS FOLLOWS:
COMMENC!N .',.' -i iE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF SAID
SECTION 36, S,=110 _OC RNER BEING THE INTERSECTION OF THE CENTERLINE OF BEACH
BOULEVAR "':' rF THE CENTERLINE OF ELLIS AVENUE AS SHOWN ON THAT CERTAIN
RECC-RD ��i= -_�__�F._',. EY _1\10. 2013-1028 FILED IN BOOK 264, PAGE 20 OF RECORD OF
SURVEY tAAF S, ry -i HE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE
ALONC S."."D CF E'LL!S AVENUE, NORTH 89' 36' 01" EAST 118.47 FEET,
THENCE D C-,NTERLINE AT RIGHT ANGLES, SOUTH 00° 23' 59 EAST 40.00
FEET TO ;; P:-' ^.T ON! THE: S31,11THERLY RIGHT-OF-WAY LINE OF ELLIS A VENUE AS
EST P ai �S! i -)2CUl\/!Ef•<1" RECORDED APRIL 24, 1984 IN BOOK 7018 PAGE 850 OF
Ui-)Y, AND AS SHOWN ON SAID RECORD OF SURVEY,
SHE TRUE POINT OF BEGINNING OF THE HEREIN DESCRIBED
PARCEL; T ?.._^NC. ^,1D SOUTHERLY RIGHT-OF-WAY LINE, NORTH 890 36' 01'
E,"ST STERLY LINE OF THE EASTERLY 160 FEET OF SAID NORTH
!�:=\LF: THE ' '_ ,=.1- :N'2 SA1D `IVESTERL Y LINE, SOUTH 000 47' 56" EAST 290.21 FEET TO
-' 'HE r CI - c ,!� �!C? H HALF; THENCE, ALONG SAID SOUTHERLY LINE,
ST 382.14 FEES" TO THE WESTERLY LINE OF THE EASTERLY 160
L.rT '.�t -�ENCc, ALONG SAID WESTERLY LINE SOUTH 00° 47' 56"
AS-'- 290_2'. T�Ll ~ " ' , -iERLY L;NE OF SAID NORTH HALF; THENCE ALONG
t. ,._
SA;D SC'_j '-' ± 83' 36' 2.5" WEST 412.43 FEET TO THE EASTERLY LINE
0;= FEE"i OF SA!D NORTH HALF, SAID EASTERLY LINE ALSO BEING
-;,C= E L CH iC:"JLEV.aRD AS SHOWN ON SAID RECORD OF SURVEY,
L NE; NORTH 00' 46' 47" WEST 259.96 FEET OT THE
i=G!N��'���, GEi�'T 3 .0 FOOT RADIUS CURVE, CONCAVE SOUTHEASTERLY;
NC._ '. ; S, CL"�``: `_, 'O'UGH A CENTRAL ANGLE OF 90° 22'48"AND AN ARC
ST All I 1C= ;- :-F,L! : THE ?O!NT OF BEGINNING.
ATTACHMENT #5
JOINT EXERCISE OF POWERS AGREEMENT
RELATING TO THE CMFA SPECIAL FINANCE AGENCY VIII
THIS AGREEMENT, dated as of July 1, 2021, among the parties executing this
Agreement(all such parties, except those which have withdrawn as provided herein, are referred
to as the "Members" and those parties initially executing this Agreement are referred to as the
"Charter Members"):
WITNESSETH
WHEREAS, pursuant to Title 1, Division 7, Chapter 5 of the California Government Code
(in effect as of the date hereof and as the same may from time to time be amended or
supplemented, the "Joint Exercise of Powers Acf'), two or more public agencies may by
agreement jointly exercise any power common to the contracting parties; and
WHEREAS, each of the Members is a "public agency" as that term is defined in
Section 6500 of the Joint Exercise of Powers Act; and
WHEREAS, each of the Members is empowered by law to promote economic, cultural
and community development, including, without limitation, the promotion of opportunities for the
creation or retention of employment, the stimulation of economic activity, the increase of the tax
base, and the promotion of opportunities for education, cultural improvement and public health,
safety and general welfare; and
WHEREAS, each of the Members may accomplish the purposes and objectives described
in the preceding preamble by various means; and
WHEREAS, each Member is also empowered by law to acquire, construct, improve,
operate and dispose of real property for a public purpose; and
WHEREAS, the Joint Exercise of Powers Act authorizes the Members to create a joint
exercise of powers entity with the authority to exercise any powers common to the Members, as
specified in this Agreement, and to exercise the additional powers granted to it in the Joint
Exercise of Powers Act and any other applicable provisions of the laws of the State of California;
and
WHEREAS, a public entity established pursuant to the Joint Exercise of Powers Act is
empowered to issue or execute bonds, notes, commercial paper or any other evidences of
indebtedness, leases, installment sale or other financing agreements, obligations or certificates
of participation therein (each and all herein referred to as "Bonds"), and to otherwise undertake
financing programs under the Joint Exercise of Powers Act or other applicable provisions of the
laws of the State of California to accomplish its public purposes; and
WHEREAS, the Members have determined to specifically authorize a public entity
authorized pursuant to the Joint Exercise of Powers Act to issue Bonds pursuant to the Joint
Exercise of Powers Act or other applicable provisions of the laws of the State of California; and
WHEREAS, it is the desire of the Members to use a public entity established pursuant to
the Joint Exercise of Powers Act to undertake the financing and/or refinancing of projects of the
acquisition, construction, development and certain related costs of a middle-income multifamily
rental housing development within the City located at 18504 Beach Boulevard, known as "Elan
Huntington Beach" (the "Project"); and
WHEREAS, by this Agreement, each Member desires to create and establish the "CMFA
Special Finance Agency VIII" for the purposes set forth herein and to exercise the powers
provided herein;
NOW, THEREFORE, the Members, for and in consideration of the mutual promises and
agreements herein contained, do agree as follows:
Section 1. Purpose.
This Agreement is made pursuant to the provisions of the Joint Exercise of Powers Act.
The purpose of this Agreement is to establish a public entity for the joint exercise of powers
common to the Members and for the exercise of additional powers given to a joint powers entity
under the Joint Exercise of Powers Act or any other applicable law, including, but not limited to,
the issuance of Bonds, , solely to finance or refinance the Project. Such purpose will be
accomplished and said power exercised in the manner hereinafter set forth.
Section 2. Term.
This Agreement shall become effective in accordance with Section 17 as of the date hereof
and shall continue in full force and effect until such time as it is terminated in writing by all the
Members; provided, however, that this Agreement shall not terminate or be terminated until all
Bonds issued or caused to be issued by the Agency (defined below) shall no longer be
outstanding under the terms of the indenture, trust agreement, resolution or other instrument
pursuant to which such Bonds are issued.
Section 3. Authority.
A. CREATION AND POWERS OF AUTHORITY.
There is hereby created pursuant to the Joint Exercise of Powers Act a joint
exercise of powers authority and public entity to be known as the "CMFA Special Finance
Agency VIII."As provided in the Joint Exercise of Powers Act, the Agency shall be a public
entity separate and apart from the Members. The Bonds or any other debts, liabilities and
obligations of the Agency shall not constitute debts, liabilities or obligations of any
Member, and Bonds issued by the Agency shall be non-recourse to the Agency except
only as and to the extent moneys or other assets are pledged by the Agency to the Bonds
by the indenture, trust agreement, resolution or other instrument pursuant to which such
Bonds are issued. Notwithstanding any other provision of this Agreement, the Agency
shall not have the power to incur any debt, liability or obligation that is not subject to the
preceding sentence and shall not have the power to and shall not enter into any retirement
contract with any public retirement system (as defined in Section 6508.2 of the Joint
Exercise of Powers Act) for any reason. The provision in this paragraph is intended to
benefit Members and to be a confirming irrevocable obligation of the Agency which may
be enforced by Members individually or collectively.
2
Within 30 days after the effective date of this Agreement or any amendment hereto,
the Agency will cause a notice of this Agreement or amendment to be prepared and filed
with the office of the Secretary of State of the State in the manner set forth in Section
6503.5 of the Joint Exercise of Powers Act. Such notice shall also be filed with the office
of the Finance Director of the State.
The Board shall be the administering agency of this Agreement and, as such, shall
be vested with the powers set forth herein, and shall administer this Agreement in
accordance with the purposes and functions provided herein.
B. BOARD.
The Agency shall be administered by the Board of Directors (the "Board," or the
"Directors" and each a "Director') consisting of, ex officio, the board of directors of the
California Municipal Finance Authority(the "CMFA"). Any alternate members of the board
of directors of the CMFA shall be, ex officio, alternate members of the Board, and may act
as a member of the Board on the same terms as such alternate member may act as a
voting member of the board of directors of the CMFA. The term of office as a member of
the Board shall terminate when such member of the Board shall cease to hold his or her
respective office as a regular or alternate member of the board of directors of the CMFA,
and the successor to such member of the board of directors of CMFA shall become a
member of the Board, upon assuming such office.
Members of the Board shall not receive any compensation for serving as such but
shall be entitled to reimbursement for any expenses actually incurred in connection with
serving as a member if the Board shall determine that such expenses shall be reimbursed
and there are unencumbered funds available for such purpose.
Notwithstanding the preceding two paragraphs, the Board may by resolution or
bylaws provide for changes in the qualifications, composition and number of directors on
the Board, the appointment of successors, their respective terms of office and any other
provisions relating to the qualification and office of the Board.
C. OFFICERS; DUTIES; OFFICIAL BONDS.
The officers of the Agency shall be the Chair, Vice Chair, Executive Director,
Secretary and Treasurer, and one or more Assistant Secretaries and Assistant
Treasurers. The Chair, Vice Chair, Executive Director, Secretary, Treasurer, Assistant
Secretaries and Assistant Treasurers of the CMFA, respectively, shall be such officers of
the Agency, ex officio.
The Chair of the Agency shall be the chair of the board of directors of the CMFA,
ex officio. The term of office of the Chair shall be the same as the term of the chair of the
board of directors of the CMFA. The Chair shall preside at all meetings of the Agency and
shall submit such information and recommendations to the Board as he or she may
consider proper concerning the business, policies and affairs of the Agency.
The Vice Chair shall be the vice chair of the board of directors of the CMFA, ex
officio. The term of office of the Vice Chair shall be the same as the term of the vice chair
of the board of directors of the CMFA. The Vice Chair shall perform the duties of the Chair
3
in the absence or incapacity of the Chair. In case of the absence, unavailability,
resignation or death of the Chair, the Vice Chair shall perform such duties as are imposed
on the Chair, until such time as a new Chair is selected or appointed.
The executive director of the CMFA is hereby designated as the Executive Director
of the Agency, ex officio, and shall be responsible for execution and supervision of the
affairs of the Agency. Except as otherwise authorized by resolution of the Board, any
member of the Board, the Executive Director or any designee thereof shall sign all
contracts, deeds and other instruments executed by the Agency.
The secretary of the CMFA is hereby designated as the Secretary of the Agency,
ex officio. The Secretary shall keep the records of the Agency, shall act as Secretary at
the meetings of the Agency and record all votes, and shall keep a record of the
proceedings of the Agency in a journal of proceedings to be kept for such purpose, and
shall perform all duties incident to the office.
The treasurer of the CMFA is hereby designated, ex officio, as the Treasurer of the
Agency.
Subject to the applicable provisions of any resolution, indenture, trust agreement
or other instrument or proceeding authorizing or securing Bonds (each such resolution,
indenture, trust agreement, instrument and proceeding being herein referred to as an
"Indenture") providing for a trustee or other fiscal agent, and except as may otherwise be
specified by resolution of the Board, the Treasurer is designated as the depositary of the
Agency to have custody of all money of the Agency, from whatever source derived and
shall have the powers, duties and responsibilities specified in Sections 6505, 6505.5 and
6509.5 of the Joint Exercise of Powers Act.
The Treasurer of the Agency is designated as the public officer or person who has
charge of, handles, or has access to any property of the Agency, and such officer shall file
an official bond with the Secretary of the Agency in the amount specified by resolution of
the Board but in no event less than $1,000.
The Board shall have the power to appoint such other officers and employees as
it may deem necessary and to retain independent counsel, consultants and accountants.
The Board shall have the power, by resolution, to the extent permitted by the Joint
Exercise of Power Act or any other applicable law, to delegate any of its functions to one
or more of the Directors or officers, employees or agents of the Agency and to cause any
of said Directors, officers, employees or agents to take any actions and execute any
documents or instruments for and in the name and on behalf of the Board or the Agency.
D. MEETINGS OF THE BOARD.
(1) Ralph M. Brown Act.
All meetings of the Board, including, without limitation, regular,
adjourned regular, special, and adjourned special meetings shall be called,
noticed, held and conducted in accordance with the provisions of the Ralph
M. Brown Act (commencing with Section 54950 of the Government Code
of the State of California), or any successor legislation hereinafter enacted
4
(the "Brown AcF).
(2) Regular Meetings.
The Board shall provide for its regular meetings; provided, however,
it shall hold at least one regular meeting each year. The date, hour and
place of the holding of the regular meetings shall be fixed by resolution of
the Board. To the extent permitted by the Brown Act, such meetings may
be held by telephone conference.
(3) Special Meetings.
Special meetings of the Board may be called in accordance with the
provisions of Section 54956 of the Government Code of the State of
California. To the extent permitted by the Brown Act, such meetings may
be held by telephone conference.
(4) Minutes.
The Secretary of the Agency shall cause to be kept minutes of the
regular, adjourned regular, special, and adjourned special meetings of the
Board and shall, as soon as possible after each meeting, cause a copy of
the minutes to be forwarded to each Director.
(5) Quorum.
A majority of the Board shall constitute a quorum for the transaction
of business. No action may be taken by the Board except upon the
affirmative vote of a majority of the Directors present at the meeting, except
that less than a quorum may adjourn a meeting to another time and place.
E. RULES AND REGULATIONS.
The Agency may adopt, from time to time, by resolution of the Board such bylaws,
policies or rules and regulations for the conduct of its meetings and affairs as may be
required. In the absence of such a resolution, the conflict of interest code, investment
policy, and debt management policy of CMFA shall be the conflict of interest code,
investment policy and debt management policy of the Agency, to the extent required or
permitted by law to be adopted by the Agency.
Section 4. Powers.
In order to achieve the purpose described in section 1 hereof, the Agency shall have the
power, in its own name, to exercise the common powers of the Members and to exercise all
additional powers given to a joint powers entity under any of the laws of the State of California,
including, but not limited to, the Joint Exercise of Powers Act, for any purpose authorized under
this Agreement. Such powers shall include the common powers specified in this Agreement and
may be exercised in the manner and according to the method provided in this Agreement. The
Agency is hereby authorized to do all acts necessary for the exercise of such power, including,
but not limited to, any of all of the following: to make and enter into contracts; to employ agents
and employees; to acquire, construct, improve, own, maintain and operate, or provide for
5
maintenance and operation, and sell, lease, pledge, assign, mortgage or otherwise dispose, of
any property, improvements, commodities, leases, contracts, receivables, bonds or other revenue
streams or assets of any kind; to exercise the power of condemnation; to incur debts, liabilities or
obligations; to receive gifts, contributions and donations of property, funds, services, and other
forms of assistance from person, firms, corporations and any governmental entity; to sue and be
sued in its own name; to establish and collect fees; to form public benefit nonprofit corporations
or other affiliate entities to accomplish any of its purposes; to make grants, loans or provide other
financial assistance to governmental, nonprofit and for profit organizations to accomplish any of
its purposes; and generally to do any and all things necessary or convenient to accomplish its
purposes. The boundaries of the Agency shall encompass the boundaries of all the Members
and the powers of the Agency may be exercised anywhere within those boundaries or to the
extent permitted by the laws of the State of California, including, but not limited to the Joint
Exercise of Powers Act, outside of those boundaries, which may be outside of the State of
California, provided that the power of condemnation may only be exercised within the jurisdictional
boundaries of the Charter Members.
Without limiting the generality of the foregoing, the Agency may issue or cause to be
issued Bonds (including Bonds that refund Bonds previously issued by the Agency) for the
Project, and pledge any property or revenues as security to the extent permitted under the Joint
Exercise of Powers Act, or any other applicable provision of law.
The manner in which the Agency shall exercise its powers and perform its duties is and
shall be subject to the restrictions upon the manner in which a California city could exercise such
powers and perform such duties. The manner in which the Agency shall exercise its powers and
perform its duties shall not be subject to any restrictions applicable to the manner in which any
other public agency could exercise such powers or perform such duties, whether such agency is
a party to this Agreement or not.
Section 5. Fiscal Year.
For the purposes of this Agreement, the term "Fiscal Yeas' shall mean the fiscal year as
established from time to time by resolution of the Board, being, at the date of this Agreement, the
period from July 1 to and including the following June 30, except for the first Fiscal Year which
shall be the period from the date of this Agreement to June 30, 2022.
Section 6. Disposition of Assets.
At the end of the term hereof or upon the earlier termination of this Agreement as set forth
in Section 2, after payment of all expenses and liabilities of the Agency, all property of the Agency
both real and personal shall automatically vest in the Members in the manner and amount
determined by the Board in its sole discretion and shall thereafter remain the sole property of the
Members; provided, however, that any surplus money on hand shall be returned in proportion to
the contributions made by the Members.
Section 7. Bonds.
From time to time the Agency shall issue Bonds, in one or more series, for the purpose of
financing or refinancing the Project.
The services of bond counsel, financing consultants and other consultants and advisors
working on the projects and/or their financing or refinancing or on post-issuance compliance or
6
administration may be used by the Agency. The expenses of the Board shall be paid from the
proceeds of the Bonds, payments made by Bond obligors or other third parties, project revenues,
or any other unencumbered funds of the Agency available for such purpose.
Section 8. Bonds Only Limited and Special Obligations of Agency.
The Bonds, together with the interest and premium, if any, thereon, shall not be deemed
to constitute a debt of any Member or pledge of the faith and credit of the Members or the Agency.
The Bonds shall be only special obligations of the Agency, and the Agency shall under no
circumstances be obligated to pay the Bonds except from revenues and other funds pledged
therefor. Neither the Members nor the Agency shall be obligated to pay the principal of, premium,
if any, or interest on the Bonds, or other costs incidental thereto or related to any project or
program financed or refinanced with Bonds, except the Agency from the assets, revenues and
funds pledged and available therefor, and neither the faith and credit nor the taxing power of the
Members nor the faith and credit of the Agency shall be pledged to the payment of the principal
of, premium, if any, or interest on the Bonds, or any costs related thereto or to any project or
program financed or refinanced thereby, nor shall the Members or the Agency in any manner be
obligated to make any appropriation for such payment.
No covenant or agreement contained in any Bond or related document shall be deemed
to be a covenant or agreement of any Director, or any officer, employee or agent of the Agency
in his or her individual capacity, and neither the Board of the Agency nor any Director or officer
thereof executing the Bonds shall be liable personally on any Bond or be subject to any personal
liability or accountability by reason of the issuance of any Bonds or by reason of any project or
program financed or refinanced with Bonds.
Section 9. Accounts and Reports.
All funds of the Agency shall be strictly accounted for. The Agency shall establish and maintain
such funds and accounts as may be required by good accounting practice and by any provision
of any Indenture (to the extent such duties are not assigned to a trustee of Bonds). The books
and records of the Agency shall be open to inspection at all reasonable times by each Member.
The Treasurer of the Agency shall cause an independent audit to be made of the books
of accounts and financial records of the Agency by a certified public accountant or public
accountant in compliance with the provisions of Section 6505 of the Joint Exercise of Powers Act.
In each case the minimum requirements of the audit shall be those prescribed by the State
Controller for special districts under Section 26909 of the Government Code of the State of
California and shall conform to generally accepted auditing standards. When such an audit of
accounts and records is made by a certified public accountant or public accountant, a report
thereof shall be filed as a public record with each Member and also with the county auditor of
each county in which a Member is located; provided, however, that to the extent permitted by law,
the Agency may, instead of filing such report with each Member and such county auditor, elect to
post such report as a public record electronically on a website designated by the Agency. Such
report if made shall be filed within 12 months of the end of the Fiscal Year or Years under
examination.
The Treasurer is hereby directed to report in writing on the first day of July, October,
January, and April of each year to the Board and the Charter Members which report shall describe
the amount of money held by the Treasurer for the Agency, the amount of receipts since the last
such report, and the amount paid out since the last such report(which may exclude amounts held
7
by a trustee or other fiduciary in connection with any Bonds to the extent that such trustee or other
fiduciary provided regular reports covering such amounts.)
Any costs of the audit, including contracts with, or employment of, certified public
accountants or public accountants in making an audit pursuant to this Section, shall be borne by
the Agency and shall be a charge against any unencumbered funds of the Agency available for
that purpose.
In any Fiscal Year the Board may, by resolution adopted by unanimous vote, replace the
annual special audit with an audit covering a two-year period.
Section 10. Funds.
Subject to the applicable provisions of any Indenture, which may provide for a trustee or
other fiduciary to receive, have custody of and disburse Agency funds, the Treasurer of the
Agency shall receive, have the custody of and disburse Agency funds pursuant to the accounting
procedures developed under Sections 3C and 9, and shall make the disbursements required by
this Agreement or otherwise necessary to carry out any of the provisions of purposes of this
Agreement.
Section 11. Notices.
Notices and other communications hereunder to the Members shall be sufficient if
delivered to the clerk of the governing body of each Member; provided that,to the extent permitted
by law, the Agency may provide notices and other communications and postings electronically
(including, without limitation, through email or by posting to a website).
Section 12. Additional Members/Withdrawal of Members.
Qualifying public agencies may be added as parties to this Agreement and become
Charter Members upon: (1) the filing by such public agency with the Agency of an executed
counterpart of this Agreement, together with a copy of the resolution of the governing body of
such public agency approving this Agreement and the execution and delivery hereof; and
(2) adoption of a resolution of the Board approving the addition of such public agency as a Charter
Member. Upon satisfaction of such conditions, the Board shall file such executed counterpart of
this Agreement as an amendment hereto, effective upon such filing.
Qualifying public agencies may also be added as non-Charter Members ("Additional
Members") of the Agency upon: (1) the filing by such public agency with the Agency of a
resolution of the governing body of such public agency requesting to be added as an Additional
Member of the Agency, and (2) adoption of a resolution of the Board approving the addition of
such public agency as an Additional Member. An Additional Member may limit in the
aforementioned resolution the scope of its Additional Membership to what is necessary or
appropriate to facilitate the financing or refinancing of one or more specified projects or programs.
8
A Member may withdraw from this Agreement upon written notice to the Board; provided,
however, that (i) at least one Member shall be a Charter Member, (ii) no such withdrawal shall
result in the dissolution of the Agency so long as any Bonds remain outstanding and (iii) no such
withdrawal shall cause the loss of the property tax exemption of the Project. Any such withdrawal
shall be effective only upon receipt of the notice of withdrawal by the Board, which shall
acknowledge receipt of such notice of withdrawal in writing and shall file such notice as an
amendment to this Agreement effective upon such filing.
Section 13. Indemnification.
To the full extent permitted by law,the Board may authorize indemnification by the Agency
of any person who is or was a Director or an officer, employee or other agent of the Agency, and
who was or is a party or is threatened to be made a party to a proceeding by reason of the fact
that such person is or was such a Director or an officer, employee or other agent of the Agency,
against expenses, including attorneys' fees, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with such proceeding, if such person acted in good
faith in a manner such person reasonably believed to be in the best interests of the Agency and,
in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such
person was unlawful and, in the case of an action by or in the right of the Agency, acted with such
care, including reasonable inquiry, as an ordinarily prudent person in a like position would use
under similar circumstances. The Board may purchase a policy or policies of insurance in
furtherance of any indemnification obligation created or otherwise in protection of Directors,
officers, employees or other agents.
Section 14. Contributions and Advances.
Contributions or advances of public funds and of the use of personnel, equipment or
property may be made to the Agency by the Members for any of the purposes of this Agreement.
Payment of public funds may be made to defray the cost of any such contribution or advance.
Any such advance may be made subject to repayment, and in such case shall be repaid, in the
manner agreed upon by the Agency and the Member making such advance at the time of such
advance. It is mutually understood and agreed to that no Member has any obligation to make
advances or contributions to the Agency to provide for the costs and expenses of administration
of the Agency, even though any Member may do so. The Members understand and agree that a
portion of the funds of the Agency that otherwise may be allocated or distributed to the Members
and the funds of the Agency constituting fee or other revenues with respect to Bonds or Projects
may instead be used to make grants, loans or provide other financial assistance to governmental
units and to nonprofit organizations to accomplish any of the governmental unit's or nonprofit
organization's purposes.
9
Section 15. Immunities.
All of the privileges and immunities from liabilities, exemptions from laws, ordinances and
rules, and other benefits which apply to the activity of officers, agents or employees of Members
when performing their respective functions within the territorial limits of their respective public
agencies, shall apply to the same degree and extent to the Directors, officers, employees, agents
or other representatives of the Agency while engaged in the performance of any of their functions
or duties under the provisions of this Agreement.
None of the officers, agents or employees, if any, directly employed or engaged by the
Agency shall be deemed, by reason of their employment or engagement by the Agency, to be
employed or engaged by any Member or, by reason of their employment or engagement by the
Agency, to be subject to any of the requirements of any Member.
Section 16. Amendments.
Except as provided in Sections 3B and 12 above, this Agreement shall not be amended,
modified, or altered, unless the written consent of each of the Charter Members is obtained;
provided that no amendment shall materially adversely affect the interests of any Additional
Member unless the negative consent of that Additional Member is also obtained. To obtain the
negative consent of each such Additional Member, the following negative consent procedure shall
be followed: (a)the Agency shall provide each such Additional Member with a notice at least
sixty (60) days prior to the date such proposed amendment is to become effective explaining the
nature of such proposed amendment and this negative consent procedure; (b)the Agency shall
provide each such Additional Member who did not respond a reminder notice with a notice at least
thirty (30) days prior to the date such proposed amendment is to become effective; and (c) if no
such Additional Member objects to the proposed amendment in writing within sixty(60)days after
the initial notice, the proposed amendment shall become effective with respect to all Members.
Section 17. Effectiveness.
This Agreement shall become effective and be in full force and effect and a legal, valid
and binding obligation of each of the Members on the date that the Board shall have received
from two of the Charter Members an executed counterpart of this Agreement, together with a
certified copy of a resolution of the governing body of each such Charter Member approving this
Agreement and the execution and delivery hereof.
Section 18. Partial Invalidity.
If any one or more of the terms, provisions, promises, covenants or conditions of this
Agreement shall to any extent be adjudged invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, each and all of the remaining terms, provisions,
promises, covenants and conditions of this Agreement shall not be affected thereby, and shall be
valid and enforceable to the fullest extent permitted by law.
Section 19. Successors.
This Agreement shall be binding upon and shall inure to the benefit of the successors of
the parties hereto. Except to the extent expressly provided herein, no Member may assign any
right or obligation hereunder without the consent of the other Members.
10
Section 20. Miscellaneous.
This Agreement may be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
The section headings herein are for convenience only and are not to be construed as
modifying or governing the language in the section referred to.
Wherever in this Agreement any consent or approval is required, the same shall not be
unreasonably withheld.
This Agreement shall be governed under the laws of the State of California.
This Agreement, including its recitals which are incorporated herein, is the complete and
exclusive statement of the agreement among the Members, which supersedes and merges all
prior proposals, understandings, and other agreements, whether oral, written, or implied in
conduct, between and among the Members relating to the subject matter of this Agreement.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their duly authorized representatives as of the day and year first above written.
Charter Member:
California Municipal Finance Authority
By
Name:
Title: L x&Fc-v-n V 0 L4AL-c-rV
Charter Member:
City of Huntington Beach
By
Name: Kim Carr
Title: Mayor
ATTEST:
Clerk
COUNTERPART
[Signature Page-Joint Exercise of Powers Agreement Relating to the CMFA Special Finance Agency Vill]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their duly authorized representatives as of the day and year first above written.
Charter Member:
California Municipal Finance Authority
By
Name:
Title:
Charter Member:
City of Huntington Beach
Name: Kim Carr
Title: Mayor
ATT T: L /�
Clerk
Robin Estanislau
[Signature Page-Joint Exercise of Powers Agreement Relating to the CMFA Special Finance Agency VIII]
ATTACHMENT #6
JOINT EXERCISE OF POWERS AGREEMENT
RELATING TO THE CMFA SPECIAL FINANCE AGENCY VII
THIS AGREEMENT, dated as of July 1, 2021, among the parties executing this
Agreement(all such parties, except those which have withdrawn as provided herein, are referred
to as the "Members" and those parties initially executing this Agreement are referred to as the
"Charter Members IT
WITNESSETH
WHEREAS, pursuant to Title 1, Division 7, Chapter 5 of the California Government Code
(in effect as of the date hereof and as the same may from time to time be amended or
supplemented, the "Joint Exercise of Powers Act"), two or more public agencies may by
agreement jointly exercise any power common to the contracting parties; and
WHEREAS, each of the Members is a "public agency" as that term is defined in
Section 6500 of the Joint Exercise of Powers Act; and
WHEREAS, each of the Members is empowered by law to promote economic, cultural
and community development, including, without limitation, the promotion of opportunities for the
creation or retention of employment, the stimulation of economic activity, the increase of the tax
base, and the promotion of opportunities for education, cultural improvement and public health,
safety and general welfare; and
WHEREAS, each of the Members may accomplish the purposes and objectives described
in the preceding preamble by various means; and
WHEREAS, each Member is also empowered by law to acquire, construct, improve,
operate and dispose of real property for a public purpose; and
WHEREAS, the Joint Exercise of Powers Act authorizes the Members to create a joint
exercise of powers entity with the authority to exercise any powers common to the Members, as
specified in this Agreement, and to exercise the additional powers granted to it in the Joint
Exercise of Powers Act and any other applicable provisions of the laws of the State of California;
and
WHEREAS, a public entity established pursuant to the Joint Exercise of Powers Act is
empowered to issue or execute bonds, notes, commercial paper or any other evidences of
indebtedness, leases, installment sale or other financing agreements, obligations or certificates
of participation therein (each and all herein referred to as "Bonds"), and to otherwise undertake
financing programs under the Joint Exercise of Powers Act or other applicable provisions of the
laws of the State of California to accomplish its public purposes; and
WHEREAS, the Members have determined to specifically authorize a public entity
authorized pursuant to the Joint Exercise of Powers Act to issue Bonds pursuant to the Joint
Exercise of Powers Act or other applicable provisions of the laws of the State of California; and
WHEREAS, it is the desire of the Members to use a public entity established pursuant to
the Joint Exercise of Powers Act to undertake the financing and/or refinancing of the acquisition,
construction, development and certain related costs of a middle-income multifamily rental housing
development within the City located at 16761 Viewpoint Lane, known as "The Breakwater
Apartments" (the "Project"); and
WHEREAS, by this Agreement, each Member desires to create and establish the "CMFA
Special Finance Agency VII"for the purposes set forth herein and to exercise the powers provided
herein;
NOW, THEREFORE, the Members, for and in consideration of the mutual promises and
agreements herein contained, do agree as follows:
Section 1. Purpose.
This Agreement is made pursuant to the provisions of the Joint Exercise of Powers Act.
The purpose of this Agreement is to establish a public entity for the joint exercise of powers
common to the Members and for the exercise of additional powers given to a joint powers entity
under the Joint Exercise of Powers Act or any other applicable law, including, but not limited to,
the issuance of Bonds, solely to finance or refinance the Project. Such purpose will be
accomplished and said power exercised in the manner hereinafter set forth.
Section 2. Term.
This Agreement shall become effective in accordance with Section 17 as of the date hereof
and shall continue in full force and effect until such time as it is terminated in writing by all the
Members; provided, however, that this Agreement shall not terminate or be terminated until all
Bonds issued or caused to be issued by the Agency (defined below) shall no longer be
outstanding under the terms of the indenture, trust agreement, resolution or other instrument
pursuant to which such Bonds are issued.
Section 3. Authority.
A. CREATION AND POWERS OF AUTHORITY.
There is hereby created pursuant to the Joint Exercise of Powers Act a joint
exercise of powers authority and public entity to be known as the "CMFA Special Finance
Agency VII."As provided in the Joint Exercise of Powers Act, the Agency shall be a public
entity separate and apart from the Members. The Bonds or any other debts, liabilities and
obligations of the Agency shall not constitute debts, liabilities or obligations of any
Member, and Bonds issued by the Agency shall be non-recourse to the Agency except
only as and to the extent moneys or other assets are pledged by the Agency to the Bonds
by the indenture, trust agreement, resolution or other instrument pursuant to which such
Bonds are issued. Notwithstanding any other provision of this Agreement, the Agency
shall not have the power to incur any debt, liability or obligation that is not subject to the
preceding sentence and shall not have the power to and shall not enter into any retirement
contract with any public retirement system (as defined in Section 6508.2 of the Joint
Exercise of Powers Act) for any reason. The provision in this paragraph is intended to
benefit Members and to be a confirming irrevocable obligation of the Agency which may
be enforced by Members individually or collectively.
2
Within 30 days after the effective date of this Agreement or any amendment hereto,
the Agency will cause a notice of this Agreement or amendment to be prepared and filed
with the office of the Secretary of State of the State in the manner set forth in Section
6503.5 of the Joint Exercise of Powers Act. Such notice shall also be filed with the office
of the Finance Director of the State.
The Board shall be the administering agency of this Agreement and, as such, shall
be vested with the powers set forth herein, and shall administer this Agreement in
accordance with the purposes and functions provided herein.
B. BOARD.
The Agency shall be administered by the Board of Directors (the "Board," or the
"Directors" and each a "Director") consisting of, ex officio, the board of directors of the
California Municipal Finance Authority(the"CMFA"). Any alternate members of the board
of directors of the CMFA shall be, ex officio, alternate members of the Board, and may act
as a member of the Board on the same terms as such alternate member may act as a
voting member of the board of directors of the CMFA. The term of office as a member of
the Board shall terminate when such member of the Board shall cease to hold his or her
respective office as a regular or alternate member of the board of directors of the CMFA,
and the successor to such member of the board of directors of CMFA shall become a
member of the Board, upon assuming such office.
Members of the Board shall not receive any compensation for serving as such but
shall be entitled to reimbursement for any expenses actually incurred in connection with
serving as a member if the Board shall determine that such expenses shall be reimbursed
and there are unencumbered funds available for such purpose.
Notwithstanding the preceding two paragraphs, the Board may by resolution or
bylaws provide for changes in the qualifications, composition and number of directors on
the Board, the appointment of successors, their respective terms of office and any other
provisions relating to the qualification and office of the Board.
C. OFFICERS; DUTIES; OFFICIAL BONDS.
The officers of the Agency shall be the Chair, Vice Chair, Executive Director,
Secretary and Treasurer, and one or more Assistant Secretaries and Assistant
Treasurers. The Chair, Vice Chair, Executive Director, Secretary, Treasurer, Assistant
Secretaries and Assistant Treasurers of the CMFA, respectively, shall be such officers of
the Agency, ex officio.
The Chair of the Agency shall be the chair of the board of directors of the CMFA,
ex officio. The term of office of the Chair shall be the same as the term of the chair of the
board of directors of the CMFA. The Chair shall preside at all meetings of the Agency and
shall submit such information and recommendations to the Board as he or she may
consider proper concerning the business, policies and affairs of the Agency.
The Vice Chair shall be the vice chair of the board of directors of the CMFA, ex
officio. The term of office of the Vice Chair shall be the same as the term of the vice chair
of the board of directors of the CMFA. The Vice Chair shall perform the duties of the Chair
3
in the absence or incapacity of the Chair. In case of the absence, unavailability,
resignation or death of the Chair, the Vice Chair shall perform such duties as are imposed
on the Chair, until such time as a new Chair is selected or appointed.
The executive director of the CMFA is hereby designated as the Executive Director
of the Agency, ex officio, and shall be responsible for execution and supervision of the
affairs of the Agency. Except as otherwise authorized by resolution of the Board, any
member of the Board, the Executive Director or any designee thereof shall sign all
contracts, deeds and other instruments executed by the Agency.
The secretary of the CMFA is hereby designated as the Secretary of the Agency,
ex officio. The Secretary shall keep the records of the Agency, shall act as Secretary at
the meetings of the Agency and record all votes, and shall keep a record of the
proceedings of the Agency in a journal of proceedings to be kept for such purpose, and
shall perform all duties incident to the office.
The treasurer of the CMFA is hereby designated, ex officio, as the Treasurer of the
Agency.
Subject to the applicable provisions of any resolution, indenture, trust agreement
or other instrument or proceeding authorizing or securing Bonds (each such resolution,
indenture, trust agreement, instrument and proceeding being herein referred to as an
"Indenture") providing for a trustee or other fiscal agent, and except as may otherwise be
specified by resolution of the Board, the Treasurer is designated as the depositary of the
Agency to have custody of all money of the Agency, from whatever source derived and
shall have the powers, duties and responsibilities specified in Sections 6505, 6505.5 and
6509.5 of the Joint Exercise of Powers Act.
The Treasurer of the Agency is designated as the public officer or person who has
charge of, handles, or has access to any property of the Agency, and such officer shall file
an official bond with the Secretary of the Agency in the amount specified by resolution of
the Board but in no event less than $1,000.
The Board shall have the power to appoint such other officers and employees as
it may deem necessary and to retain independent counsel, consultants and accountants.
The Board shall have the power, by resolution, to the extent permitted by the Joint
Exercise of Power Act or any other applicable law, to delegate any of its functions to one
or more of the Directors or officers, employees or agents of the Agency and to cause any
of said Directors, officers, employees or agents to take any actions and execute any
documents or instruments for and in the name and on behalf of the Board or the Agency.
D. MEETINGS OF THE BOARD.
(1) Ralph M. Brown Act.
All meetings of the Board, including, without limitation, regular,
adjourned regular, special, and adjourned special meetings shall be called,
noticed, held and conducted in accordance with the provisions of the Ralph
M. Brown Act (commencing with Section 54950 of the Government Code
of the State of California), or any successor legislation hereinafter enacted
4
(the "Brown Act").
(2) Regular Meetings.
The Board shall provide for its regular meetings; provided, however,
it shall hold at least one regular meeting each year. The date, hour and
place of the holding of the regular meetings shall be fixed by resolution of
the Board. To the extent permitted by the Brown Act, such meetings may
be held by telephone conference.
(3) Special Meetings.
Special meetings of the Board may be called in accordance with the
provisions of Section 54956 of the Government Code of the State of
California. To the extent permitted by the Brown Act, such meetings may
be held by telephone conference.
(4) Minutes.
The Secretary of the Agency shall cause to be kept minutes of the
regular, adjourned regular, special, and adjourned special meetings of the
Board and shall, as soon as possible after each meeting, cause a copy of
the minutes to be forwarded to each Director.
(5) Quorum.
A majority of the Board shall constitute a quorum for the transaction
of business. No action may be taken by the Board except upon the
affirmative vote of a majority of the Directors present at the meeting, except
that less than a quorum may adjourn a meeting to another time and place.
E. RULES AND REGULATIONS.
The Agency may adopt, from time to time, by resolution of the Board such bylaws,
policies or rules and regulations for the conduct of its meetings and affairs as may be
required. In the absence of such a resolution, the conflict of interest code, investment
policy, and debt management policy of CMFA shall be the conflict of interest code,
investment policy and debt management policy of the Agency, to the extent required or
permitted by law to be adopted by the Agency.
Section 4. Powers.
In order to achieve the purpose described in section 1 hereof, the Agency shall have the
power, in its own name, to exercise the common powers of the Members and to exercise all
additional powers given to a joint powers entity under any of the laws of the State of California,
including, but not limited to, the Joint Exercise of Powers Act, for any purpose authorized under
this Agreement. Such powers shall include the common powers specified in this Agreement and
may be exercised in the manner and according to the method provided in this Agreement. The
Agency is hereby authorized to do all acts necessary for the exercise of such power, including,
but not limited to, any of all of the following: to make and enter into contracts; to employ agents
and employees; to acquire, construct, improve, own, maintain and operate, or provide for
5
maintenance and operation, and sell, lease, pledge, assign, mortgage or otherwise dispose, of
any property, improvements, commodities, leases, contracts, receivables, bonds or other revenue
streams or assets of any kind; to exercise the power of condemnation; to incur debts, liabilities or
obligations; to receive gifts, contributions and donations of property, funds, services, and other
forms of assistance from person, firms, corporations and any governmental entity; to sue and be
sued in its own name; to establish and collect fees; to form public benefit nonprofit corporations
or other affiliate entities to accomplish any of its purposes; to make grants, loans or provide other
financial assistance to governmental, nonprofit and for profit organizations to accomplish any of
its purposes; and generally to do any and all things necessary or convenient to accomplish its
purposes. The boundaries of the Agency shall encompass the boundaries of all the Members
and the powers of the Agency may be exercised anywhere within those boundaries or to the
extent permitted by the laws of the State of California, including, but not limited to the Joint
Exercise of Powers Act, outside of those boundaries, which may be outside of the State of
California, provided that the power of condemnation may only be exercised within the jurisdictional
boundaries of the Charter Members.
Without limiting the generality of the foregoing, the Agency may issue or cause to be
issued Bonds (including Bonds that refund Bonds previously issued by the Agency) for the
Project, and pledge any property or revenues as security to the extent permitted under the Joint
Exercise of Powers Act, or any other applicable provision of law.
The manner in which the Agency shall exercise its powers and perform its duties is and
shall be subject to the restrictions upon the manner in which a California city could exercise such
powers and perform such duties. The manner in which the Agency shall exercise its powers and
perform its duties shall not be subject to any restrictions applicable to the manner in which any
other public agency could exercise such powers or perform such duties, whether such agency is
a party to this Agreement or not.
Section 5. Fiscal Year.
For the purposes of this Agreement, the term "Fiscal Yeas' shall mean the fiscal year as
established from time to time by resolution of the Board, being, at the date of this Agreement, the
period from July 1 to and including the following June 30, except for the first Fiscal Year which
shall be the period from the date of this Agreement to June 30, 2022.
Section 6. Disposition of Assets.
At the end of the term hereof or upon the earlier termination of this Agreement as set forth
in Section 2, after payment of all expenses and liabilities of the Agency, all property of the Agency
both real and personal shall automatically vest in the Members in the manner and amount
determined by the Board in its sole discretion and shall thereafter remain the sole property of the
Members; provided, however, that any surplus money on hand shall be returned in proportion to
the contributions made by the Members.
Section 7. Bonds.
From time to time the Agency shall issue Bonds, in one or more series, for the purpose of
financing or refinancing the Project.
The services of bond counsel, financing consultants and other consultants and advisors
working on the projects and/or their financing or refinancing or on post-issuance compliance or
6
administration may be used by the Agency. The expenses of the Board shall be paid from the
proceeds of the Bonds, payments made by Bond obligors or other third parties, project revenues,
or any other unencumbered funds of the Agency available for such purpose.
Section 8. Bonds Only Limited and Special Obligations of Agency.
The Bonds, together with the interest and premium, if any, thereon, shall not be deemed
to constitute a debt of any Member or pledge of the faith and credit of the Members or the Agency.
The Bonds shall be only special obligations of the Agency, and the Agency shall under no
circumstances be obligated to pay the Bonds except from revenues and other funds pledged
therefor. Neither the Members nor the Agency shall be obligated to pay the principal of, premium,
if any, or interest on the Bonds, or other costs incidental thereto or related to any project or
program financed or refinanced with Bonds, except the Agency from the assets, revenues and
funds pledged and available therefor, and neither the faith and credit nor the taxing power of the
Members nor the faith and credit of the Agency shall be pledged to the payment of the principal
of, premium, if any, or interest on the Bonds, or any costs related thereto or to any project or
program financed or refinanced thereby, nor shall the Members or the Agency in any manner be
obligated to make any appropriation for such payment.
No covenant or agreement contained in any Bond or related document shall be deemed
to be a covenant or agreement of any Director, or any officer, employee or agent of the Agency
in his or her individual capacity, and neither the Board of the Agency nor any Director or officer
thereof executing the Bonds shall be liable personally on any Bond or be subject to any personal
liability or accountability by reason of the issuance of any Bonds or by reason of any project or
program financed or refinanced with Bonds.
Section 9. Accounts and Reports.
All funds of the Agency shall be strictly accounted for. The Agency shall establish and maintain
such funds and accounts as may be required by good accounting practice and by any provision
of any Indenture (to the extent such duties are not assigned to a trustee of Bonds). The books
and records of the Agency shall be open to inspection at all reasonable times by each Member.
The Treasurer of the Agency shall cause an independent audit to be made of the books
of accounts and financial records of the Agency by a certified public accountant or public
accountant in compliance with the provisions of Section 6505 of the Joint Exercise of Powers Act.
In each case the minimum requirements of the audit shall be those prescribed by the State
Controller for special districts under Section 26909 of the Government Code of the State of
California and shall conform to generally accepted auditing standards. When such an audit of
accounts and records is made by a certified public accountant or public accountant, a report
thereof shall be filed as a public record with each Member and also with the county auditor of
each county in which a Member is located; provided, however, that to the extent permitted by law,
the Agency may, instead of filing such report with each Member and such county auditor, elect to
post such report as a public record electronically on a website designated by the Agency. Such
report if made shall be filed within 12 months of the end of the Fiscal Year or Years under
examination.
The Treasurer is hereby directed to report in writing on the first day of July, October,
January, and April of each year to the Board and the Charter Members which report shall describe
the amount of money held by the Treasurer for the Agency, the amount of receipts since the last
such report, and the amount paid out since the last such report(which may exclude amounts held
7
by a trustee or other fiduciary in connection with any Bonds to the extent that such trustee or other
fiduciary provided regular reports covering such amounts.)
Any costs of the audit, including contracts with, or employment of, certified public
accountants or public accountants in making an audit pursuant to this Section, shall be borne by
the Agency and shall be a charge against any unencumbered funds of the Agency available for
that purpose.
In any Fiscal Year the Board may, by resolution adopted by unanimous vote, replace the
annual special audit with an audit covering a two-year period.
Section 10. Funds.
Subject to the applicable provisions of any Indenture, which may provide for a trustee or
other fiduciary to receive, have custody of and disburse Agency funds, the Treasurer of the
Agency shall receive, have the custody of and disburse Agency funds pursuant to the accounting
procedures developed under Sections 3C and 9, and shall make the disbursements required by
this Agreement or otherwise necessary to carry out any of the provisions of purposes of this
Agreement.
Section 11. Notices.
Notices and other communications hereunder to the Members shall be sufficient if
delivered to the clerk of the governing body of each Member; provided that,to the extent permitted
by law, the Agency may provide notices and other communications and postings electronically
(including, without limitation, through email or by posting to a website).
Section 12. Additional Members/Withdrawal of Members.
Qualifying public agencies may be added as parties to this Agreement and become
Charter Members upon: (1) the filing by such public agency with the Agency of an executed
counterpart of this Agreement, together with a copy of the resolution of the governing body of
such public agency approving this Agreement and the execution and delivery hereof; and
(2) adoption of a resolution of the Board approving the addition of such public agency as a Charter
Member. Upon satisfaction of such conditions, the Board shall file such executed counterpart of
this Agreement as an amendment hereto, effective upon such filing.
Qualifying public agencies may also be added as non-Charter Members ("Additional
Members") of the Agency upon: (1) the filing by such public agency with the Agency of a
resolution of the governing body of such public agency requesting to be added as an Additional
Member of the Agency, and (2) adoption of a resolution of the Board approving the addition of
such public agency as an Additional Member. An Additional Member may limit in the
aforementioned resolution the scope of its Additional Membership to what is necessary or
appropriate to facilitate the financing or refinancing of one or more specified projects or programs.
8
A Member may withdraw from this Agreement upon written notice to the Board; provided,
however, that (i) at least one Member shall be a Charter Member, (ii) no such withdrawal shall
result in the dissolution of the Agency so long as any Bonds remain outstanding and (iii) no such
withdrawal shall cause the loss of the property tax exemption of the Project. Any such withdrawal
shall be effective only upon receipt of the notice of withdrawal by the Board, which shall
acknowledge receipt of such notice of withdrawal in writing and shall file such notice as an
amendment to this Agreement effective upon such filing.
Section 13. Indemnification.
To the full extent permitted by law,the Board may authorize indemnification by the Agency
of any person who is or was a Director or an officer, employee or other agent of the Agency, and
who was or is a party or is threatened to be made a party to a proceeding by reason of the fact
that such person is or was such a Director or an officer, employee or other agent of the Agency,
against expenses, including attorneys' fees, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with such proceeding, if such person acted in good
faith in a manner such person reasonably believed to be in the best interests of the Agency and,
in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such
person was unlawful and, in the case of an action by or in the right of the Agency, acted with such
care, including reasonable inquiry, as an ordinarily prudent person in a like position would use
under similar circumstances. The Board may purchase a policy or policies of insurance in
furtherance of any indemnification obligation created or otherwise in protection of Directors,
officers, employees or other agents.
Section 14. Contributions and Advances.
Contributions or advances of public funds and of the use of personnel, equipment or
property may be made to the Agency by the Members for any of the purposes of this Agreement.
Payment of public funds may be made to defray the cost of any such contribution or advance.
Any such advance may be made subject to repayment, and in such case shall be repaid, in the
manner agreed upon by the Agency and the Member making such advance at the time of such
advance. It is mutually understood and agreed to that no Member has any obligation to make
advances or contributions to the Agency to provide for the costs and expenses of administration
of the Agency, even though any Member may do so. The Members understand and agree that a
portion of the funds of the Agency that otherwise may be allocated or distributed to the Members
and the funds of the Agency constituting fee or other revenues with respect to Bonds or Projects
may instead be used to make grants, loans or provide other financial assistance to governmental
units and to nonprofit organizations to accomplish any of the governmental unit's or nonprofit
organization's purposes.
9
Section 15. Immunities.
All of the privileges and immunities from liabilities, exemptions from laws, ordinances and
rules, and other benefits which apply to the activity of officers, agents or employees of Members
when performing their respective functions within the territorial limits of their respective public
agencies, shall apply to the same degree and extent to the Directors, officers, employees, agents
or other representatives of the Agency while engaged in the performance of any of their functions
or duties under the provisions of this Agreement.
None of the officers, agents or employees, if any, directly employed or engaged by the
Agency shall be deemed, by reason of their employment or engagement by the Agency, to be
employed or engaged by any Member or, by reason of their employment or engagement by the
Agency, to be subject to any of the requirements of any Member.
Section 16. Amendments.
Except as provided in Sections 313 and 12 above, this Agreement shall not be amended,
modified, or altered, unless the written consent of each of the Charter Members is obtained;
provided that no amendment shall materially adversely affect the interests of any Additional
Member unless the negative consent of that Additional Member is also obtained. To obtain the
negative consent of each such Additional Member,the following negative consent procedure shall
be followed: (a)the Agency shall provide each such Additional Member with a notice at least
sixty (60) days prior to the date such proposed amendment is to become effective explaining the
nature of such proposed amendment and this negative consent procedure; (b) the Agency shall
provide each such Additional Member who did not respond a reminder notice with a notice at least
thirty (30) days prior to the date such proposed amendment is to become effective; and (c) if no
such Additional Member objects to the proposed amendment in writing within sixty(60)days after
the initial notice, the proposed amendment shall become effective with respect to all Members.
Section 17. Effectiveness.
This Agreement shall become effective and be in full force and effect and a legal, valid
and binding obligation of each of the Members on the date that the Board shall have received
from two of the Charter Members an executed counterpart of this Agreement, together with a
certified copy of a resolution of the governing body of each such Charter Member approving this
Agreement and the execution and delivery hereof.
Section 18. Partial Invalidity.
If any one or more of the terms, provisions, promises, covenants or conditions of this
Agreement shall to any extent be adjudged invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, each and all of the remaining terms, provisions,
promises, covenants and conditions of this Agreement shall not be affected thereby, and shall be
valid and enforceable to the fullest extent permitted by law.
Section 19. Successors.
This Agreement shall be binding upon and shall inure to the benefit of the successors of
the parties hereto. Except to the extent expressly provided herein, no Member may assign any
right or obligation hereunder without the consent of the other Members.
10
Section 20. Miscellaneous.
This Agreement may be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
The section headings herein are for convenience only and are not to be construed as
modifying or governing the language in the section referred to.
Wherever in this Agreement any consent or approval is required, the same shall not be
unreasonably withheld.
This Agreement shall be governed under the laws of the State of California.
This Agreement, including its recitals which are incorporated herein, is the complete and
exclusive statement of the agreement among the Members, which supersedes and merges all
prior proposals, understandings, and other agreements, whether oral, written, or implied in
conduct, between and among the Members relating to the subject matter of this Agreement.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their duly authorized representatives as of the day and year first above written.
Charter Member:
California Municipal Finance Authority
By e-,"
Name: =d J- (,3 c�cc;ti
Title: ai/Lc%cfo/K
Charter Member:
City of Huntington Beach
By
Name: Kim Carr
Title: Mayor
ATTEST:
Clerk
COUNTERTART
[Signature Page-Joint Exercise of Powers Agreement Relating to the CMFA Special Finance Agency VII]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their duly authorized representatives as of the day and year first above written.
Charter Member:
California Municipal Finance Authority
By
Name:
Title:
Charter Member:
City of Huntington Beach
By
Name: Kim Carr
Title: Mayor
ATTES�� � o
lac...•
Clerk
Robin Estanislau
COUNTERPART
[Signature Page-Joint Exercise of Powers Agreement Relating to the CMFA Special Finance Agency VII]
ATTACHMENT #7
RECORDING REQUESTED
AND WHEN RECORDED MAIL TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111 THIS SPACE IS FOR RECORDERS USE ONLY
Attention: Josh D. Anzel, Esq.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Title of Document)
Per Government Code 27388.1 (a)(1) "A fee of$75 dollars shall be paid at the time of recording
of every real estate instrument, paper, or notice required or permitted by law to be recorded,
except those expressly exempted from payment of recording fees, per each single transaction
per parcel or real property. The fee shall not exceed two hundred twenty-five dollars ($225)"
Reason for Exemption:
❑ Exempt from fee per GC 27388.1 (a) (2); recorded concurrently "in connection with" a
transfer subject to the imposition of documentary transfer tax (DTT).
❑ Exempt from fee per GC 27388.1 (a) (2); recorded concurrently "in connection with" a
transfer of real property that is a residential dwelling to an owner-occupier.
❑ Exempt from fee per GC 27388.1 (a) (1), fee cap of$225.00 reached.
❑ Exempt from the fee per GC 27388.1 (a) (1); not related to real property.
Failure to include an exemption reason will result in the imposition of the $75.00 Building
Homes and Job Act Fee.
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Josh D. Anzel, Esq.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
By and Between
CMFA SPECIAL FINANCE AGENCY VIII
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
Dated as of 1, 2021
Relating to
CMFA Special Finance Agency VIII
Senior Essential Housing Revenue Bonds, Series 2021A-1
(Elan Huntington Beach)
CMFA Special Finance Agency VIII
Junior Essential Housing Revenue Bonds, Series 2021A-2
(Elan Huntington Beach)
and
CMFA Special Finance Agency VIII
Subordinate Essential Housing Revenue Bonds, Series 2021E
(Elan Huntington Beach)
TABLE OF CONTENTS
Clause Page
Section 1. Definitions and Interpretation ..............................................................................1
Section 2. Representations, Covenants and Warranties of the Owner.................................4
Section 3. Residential Rental Project...................................................................................4
Section 4. Tenants; Income Requirements..........................................................................5
Section 5. Affordable Rental Requirements, Limitations on Rent Increases; Rent
Reductions.......................................................................................................7
Section 6. Tax-Exempt Status of Bonds ..............................................................................8
Section 7. Requirements of the Owner................................................................................8
Section 8. Modification of Covenants...................................................................................8
Section 9. Indemnification ...................................................................................................9
Section 10. Consideration .....................................................................................................9
Section11. Reliance .............................................................................................................9
Section 12. Transfer of the Project ........................................................................................9
Section13. Term.................................................................................................................10
Section 14. Covenants to Run With the Land ......................................................................11
Section 15. Burden and Benefit...........................................................................................11
Section 16. Uniformity; Common Plan.................................................................................11
Section 17. Default; Enforcement........................................................................................11
Section18. [Reserved] ........................................................................................................12
Section 19. Recording and Filing.........................................................................................12
Section20. Reserved ..........................................................................................................12
Section 21. Governing Law; Venue .....................................................................................12
Section 22. Amendments; Waivers......................................................................................12
Section23. Notices .............................................................................................................13
Section 24. Severability.......................................................................................................13
Section 25. Multiple Counterparts........................................................................................13
Section 26. Limitation on Liability ........................................................................................13
Section 27. Annual Reporting Covenant..............................................................................13
Section 28, Regulatory Agreement Subject to Existing Affordable Housing Agreement.......14
EXHIBIT A DESCRIPTION OF REAL PROPERTY
EXHIBIT B FORM OF INCOME CERTIFICATION
EXHIBIT C FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS
(as supplemented and amended from time to time, this "Regulatory Agreement") is made and
entered into as of 1, 2021, by and between the CMFA SPECIAL FINANCE
AGENCY VIII, a joint exercise of powers authority duly organized and existing under the laws of the
State of California, as issuer of the Bonds (as further defined herein) and as owner of the Project
identified herein (together with any successor to its rights, duties and obligations hereunder, the
"Owner"), and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association,
as trustee (together with its successors in trust and assigns, the "Trustee").
WITNESSETHi
WHEREAS, pursuant to Chapter 5 of Division 7 of Title 1 of the California Government Code
(the"Act"), the Owner proposes to issue its Senior Essential Housing Revenue Bonds, Series 2021A-
1 (Elan Huntington Beach) (the "Series 2021A-1 Bonds"), Junior Essential Housing Revenue Bonds,
Series 2021A-2 (Elan Huntington Beach) (together with the Series 2021A-1 Bonds, the "Series A
Bonds"), and Subordinate Essential Housing Revenue Bonds, Series 2021B (Elan Huntington
Beach) (together with the Series A Bonds, the "Bonds") pursuant to a Trust Indenture, dated as of
1, 2021 (as supplemented and amended from time to time, the "Indenture"),
between the Owner and the Trustee;
WHEREAS, a portion of the proceeds of the Bonds will be used to provide, in part, financing
for the acquisition of the multifamily rental housing project known as Elan Huntington Beach, located
on the real property site described in Exhibit A hereto (as further described herein, the "ProiecC);
WHEREAS, to satisfy the public purposes for which the Bonds are authorized to be issued
under the Act, and in furtherance of certain specific public purposes of the Owner, previously
approved by the Owner's Resolution No. 21- , which include supporting, preserving
and providing low income, median income and moderate income multifamily rental housing in areas
in which demand for such housing is not currently being adequately met, certain limits on the
occupancy of units in the Project need to be established and certain other requirements need to be
met;
NOW, THEREFORE, in consideration of the issuance of the Bonds by the Owner and the
mutual covenants and undertakings set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Owner and the Trustee hereby agree
as follows:
Section 1. Definitions and Interpretation. Unless the context otherwise requires, the
capitalized terms used herein shall have the respective meanings assigned to them in the recitals
hereto, in this Section 1, or in the Master Glossary of Terms, dated as of 1,
2021.
"Administrator" means any administrator or program monitor appointed by the Owner to
administer this Regulatory Agreement, and any successor administrator appointed by the Owner.
"Area" means the Metropolitan Statistical Area or County, as applicable, in which the Project
is located, as defined by HUD.
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"Bonds" has the meaning given to it in the recitals hereto.
"Certificate of Continuing Program Compliance" means the Certificate to be filed by the
Owner with the Administrator, pursuant to Section 4(e) hereof, which shall be substantially in the
form attached as Exhibit C hereto or in such other comparable form as may be provided by the
Owner.
"City" means the City of Huntington Beach, California.
"Closing Date" means 2021, the date the Bonds are issued and
delivered to the initial purchaser thereof.
"Compliance Period" means the period beginning on the Closing Date and ending on the first
date on which there are no Bonds Outstanding.
"County" means the County of Orange, California.
"Deed of Trust" means the Deed of Trust, Assignment of Leases and Rents, Security
Agreement, and Fixture Filing dated as of the Closing Date, by the Owner granting a lien on its fee
simple interest in the Property, subject to Permitted Encumbrances, to the Trustee for the benefit of
the holders from time to time of the Bonds, as the same may be modified, amended or supplemented
from time to time, or any deed of trust (or similar security instrument) containing a power of sale
clause reflecting a valid, perfected first priority lien on the fee interest in the Project delivered by the
Owner to secure the Owner's obligations to a third-party lender.
"Gross Income" means the gross income of a person (together with the gross income of all
persons who reside with such person in one residential unit) as calculated in the manner prescribed
by Section 8 of the Housing Act.
"Housing Act" means the United States Housing Act of 1937, as amended, or its successor.
"HUD" means the United States Department of Housing and Urban Development.
"Income Certification" means a Tenant Income Certification and a Tenant Income
Certification Questionnaire in the form attached as Exhibit B hereto or in such other comparable form
as may be provided by the Owner.
"Low Income Tenant" means a tenant occupying a Low Income Unit.
"Low Income Unit" means any available unit if the aggregate Gross Income of all tenants
therein does not exceed eighty percent (80%) of median gross income for the Area, with adjustments
for family size. The determination of an available unit's status as a Low Income Unit shall be made
by the Owner upon commencement of each lease term with respect to such unit, and annually
thereafter, on the basis of an Income Certification executed by each tenant.
"Management Agreement" means that certain Property Management Agreement, dated as
of the date hereof, by and among the Owner and the Manager.
"Manager" means and any other Person who is an assignee of
the initial Management Agreement.
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"Moderate Income Tenant" means (i) a tenant occupying a Moderate Income Unit or (ii) an
Over Income Tenant if such tenant occupied an available unit on the effective date of this Regulatory
Agreement.
"Moderate Income Unit" means any available unit if the aggregate Gross Income of all tenants
therein does not exceed one hundred and twenty percent (120%) of median gross income for the
Area, with adjustments for family size. The determination of an available unit's status as a Moderate
Income Unit shall be made by the Owner upon commencement of each lease term with respect to
such unit, and annually thereafter, on the basis of an Income Certification executed by each tenant.
"Over Income Tenant" means a tenant occupying an Over Income Unit.
"Over Income Unit" means any occupied unit in which the aggregate gross income of all
tenants therein exceeds one hundred twenty percent (120%) of median gross income for the Area,
with adjustments for family size.
"Project" means the 274-unit multifamily rental housing development to be located in the City
on the real property site described in Exhibit A hereto, consisting of those facilities, including real
property, structures, buildings, fixtures or equipment situated thereon, as it may at any time exist,
the acquisition of which facilities is to be financed, in whole or in part, from the proceeds of the sale
of the Bonds, and any real property, structures, buildings, fixtures or equipment acquired in
substitution for, as a renewal or replacement of, or a modification or improvement to, all or any part
of the facilities described in the Deed of Trust.
"Regulations" means the Income Tax Regulations of the Department of the Treasury
applicable under the Code from time to time.
"Regulatory Agreement" means this Regulatory Agreement and Declaration of Restrictive
Covenants, as it may be supplemented and amended from time to time.
"Rental Payments" means the rental payments paid by the occupant of a unit, excluding any
supplemental rental assistance to the occupant from the State, the federal government, or any other
public agency.
"Tax-Exempt" means with respect to interest on any obligations of a state or local
government, including the Bonds, that such interest is excluded from gross income for State of
California personal income and federal income tax purposes; provided, however, that such interest
may be includable as an item of tax preference or otherwise includable directly or indirectly for
purposes of calculating other tax liabilities, including any alternative minimum tax or environmental
tax, under the Code.
"TCAC" means the California Tax Credit Allocation Committee.
"Transfer" means the conveyance, assignment, sale or other disposition of all or any portion
of the Project; and shall also include, without limitation to the foregoing, the following: (1) an
installment sales agreement wherein Owner agrees to sell the Project or any part thereof for a price
to be paid in installments; and (2) an agreement by the Owner leasing all or a substantial part of the
Project to one or more persons or entities pursuant to a single or related transactions.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words
of any gender shall be construed to include each other gender when appropriate and words of the
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singular number shall be construed to include the plural number, and vice versa, when appropriate.
This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate
the purposes set forth herein and to sustain the validity hereof.
The titles and headings of the sections of this Regulatory Agreement have been inserted for
convenience of reference only and are not to be considered a part hereof and shall not in any way
modify or restrict any of the terms or provisions hereof or be considered or given any effect in
construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any
question of intent shall arise.
The parties to this Regulatory Agreement acknowledge that each party and their respective
counsel have participated in the drafting and revision of this Regulatory Agreement. Accordingly, the
parties agree that any rule of construction to the effect that ambiguities are to be resolved against
the drafting party shall not apply in the interpretation of this Regulatory Agreement or any supplement
or exhibit hereto.
Section 2. Representations, Covenants and Warranties of the Owner.
(a) The Owner hereby incorporates herein, as if set forth in full herein, each of the
representations, covenants and warranties of the Owner contained in the Tax Certificate and the
Indenture relating to the Project.
(b) The Owner hereby represents and warrants that the Project is located entirely within
the City.
(c) The Owner acknowledges, represents and warrants that it understands the nature
and structure of the transactions contemplated by this Regulatory Agreement; that it is familiar with
the provisions of all of the documents and instruments relating to the Bonds to which it is a party or
of which it is a beneficiary; that it understands the financial and legal risks inherent in such
transactions.
Section 3. Residential Rental Project. For the term of this Regulatory Agreement, the
Owner hereby represents, covenants, warrants and agrees as follows:
(a) The Project will be owned and operated for the purpose of providing multifamily
residential rental property. The Owner will own, and cause the Project to be managed and operated,
as a project to provide multifamily residential rental property comprised of a building or structure or
several interrelated buildings or structures, together with any functionally related and subordinate
facilities, in accordance with such requirements as may be imposed thereby on the Project from time
to time. The Owner shall cause the Project to be maintained in a good, habitable and safe (so as to
not threaten the health or safety of the Project's tenants or their invited guests) condition and repair
(reasonable wear and tear excepted) and shall create and fund a Capital Expense Fund and shall
cause Capital Repairs to be made on an annual basis during the Compliance Period. Capital Repairs
shall include, without limitation, the following: carpet and drape replacement; appliance replacement;
exterior painting, including exterior trim; hot water heater replacement, plumbing fixtures
replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and
heating replacement; asphalt repair and replacement, and seal coating, roofing repair and
replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line
replacement; water line replacement; gas line pipe replacement; lighting fixture replacement;
elevator replacement and upgrade work; miscellaneous motors and blowers, common area furniture
replacement, and common area and exterior repainting.
4
(b) Except as otherwise approved by the Owner, all of the dwelling units in the Project
(except for the units set aside for resident managers or other administrative uses) will be similarly
constructed units, and each dwelling unit in the Project will contain complete separate and distinct
facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including
a sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range,
refrigerator and sink.
(c) None of the dwelling units in the Project will ever be used as a hotel, motel, dormitory,
fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home or
trailer court or park, provided that the use of certain units for tenant guests on an intermittent basis
shall not be considered transient use for purposes of this Regulatory Agreement. Owner shall not
rent dwelling units for a term of 30 days or less, and shall use commercially reasonable efforts to
inform residents that short-term rentals of 30 days or less are prohibited.
(d) No part of the Project will at any time during the Compliance Period be owned by a
cooperative housing corporation, nor shall the Owner take any steps in connection with a conversion
to such ownership or use, and the Owner will not take any steps in connection with a conversion of
the Project to condominium ownership during the Compliance Period.
(e) All of the available units in the Project will be available for rental during the period
beginning on the date hereof and ending on the termination of the Compliance Period on a
continuous basis.
Section 4. Tenants; Income Requirements. The Owner shall comply, or shall cause the
Manager to comply, with the following requirements:
(a) During the Compliance Period, except for units occupied by residential managers, for
which no income or rent restrictions shall apply, the Owner shall ensure that the following income
restrictions are met at all times:
(i) no less than forty percent (40%) of the completed residential units in the
Project shall be Low Income Units;
(ii) [reserved]; and
(iii) no less than fifty percent (50%) of the completed residential units in the
Project shall be Moderate Income Units;
provided, that any unit remaining vacant for at least 30 consecutive days may be offered and leased
as a Low Income Unit or Moderate Income Unit without regard for the requirements set forth in sub-
paragraphs (i) and (iii) above. For the avoidance of doubt, any vacant unit shall only be offered as a
Low Income Unit or Moderate Income Unit.
(b) No tenant shall be denied continued occupancy of a unit in the Project because, after
admission, the aggregate Gross Income of all tenants in the unit occupied by such tenant increases
to exceed the qualifying limit for the respective Low Income Unit or Moderate Income Unit initially
occupied by such tenant. However, if after a tenant's initial occupancy of a Low Income Unit or
Moderate Income Unit, as applicable, the aggregate Gross Income of tenants in such unit, as of the
most recent determination thereof, exceeds that which is defined for such unit occupied by the same
number of tenants, the next available unit of comparable or smaller size shall, subject to the
discretion of the Owner and Manager as described in the next succeeding paragraph, be rented (or
5
held vacant and available for immediate occupancy by) in a manner that would maintain the unit mix
required by Section 4(a) hereof. For the avoidance of doubt, this Section 4(b) shall apply to existing
tenants occupying the Project on the Closing Date.
Notwithstanding any provision of this Regulatory Agreement to the contrary, the Owner shall
verify, or cause the Manager to verify, all tenant incomes at least annually and shall continually re-
balance the mix of household incomes by leasing vacant units to Low Income Tenants or Moderate
Income Tenants as needed to meet the income set-aside requirements set forth in this Section 4(a).
(c) For the Compliance Period, the Owner shall cause the Manager to obtain, complete
and maintain on file Income Certifications for each tenant, including (i) an Income Certification dated
immediately prior to the initial occupancy of such tenant in the unit and a second Income Certification
dated one year after the tenant's initial move-in date, and (ii) thereafter, an annual verifiable self-
certification with respect to each tenant. The Owner shall, or shall cause the Manager to, provide
such additional information as may be required in the future by applicable rules, rulings, policies,
procedures, Regulations or other official statements now or hereafter promulgated, proposed or
made by the Department of the Treasury or the Internal Revenue Service with respect to Tax-Exempt
obligations. Upon request of the Administrator or the Trustee, copies of Income Certifications for
tenants commencing or continuing occupation of a residential unit shall be submitted to the
Administrator or the Trustee, as requested.
(d) The Owner shall cause the Manager to verify that the income information provided by
an applicant in an Income Certification is accurate by taking one or more of the following steps as a
part of the verification process: (1) obtain pay stubs for the three most recent pay periods, (2) obtain
an income tax return for the most recent tax year, (3) obtain a credit report or conduct a similar type
credit search, (4) obtain an income verification from the applicant's current employer, (5) obtain an
income verification from the Social Security Administration and/or the California Department of Social
Services if the applicant receives assistance from either of such agencies, or (6) if the applicant is
unemployed and does not have an income tax return, obtain another form of independent verification
reasonably acceptable to the Owner.
(e) The Owner shall prepare and submit or cause the Manager to prepare and submit to
the Administrator not less than annually, commencing not less than one year after the Closing Date,
a Certificate of Continuing Program Compliance executed by the Owner in substantially the form
attached hereto as Exhibit C.
(f) For the Compliance Period, all tenant leases or rental agreements shall be
subordinate to this Regulatory Agreement and the Deed of Trust. All leases shall contain clauses,
among others, wherein each tenant: (i) certifies the accuracy of the statements made by such tenant
in the Income Certification; (ii) agrees that the family income and other eligibility requirements shall
be deemed substantial and material obligations of the tenancy of such tenant, that such tenant will
comply promptly with all requests for information with respect thereto from the Owner or the
Administrator on behalf of the Owner, and that the failure to provide accurate information in the
Income Certification or self-certification or refusal to comply with a request for information with
respect thereto shall be deemed a violation of a substantial obligation of the tenancy of such tenant;
(iii) acknowledges that the Owner has relied on the statements made by such tenant in the Income
Certification and supporting information supplied by the tenant in determining qualification for
occupancy of a Low Income Unit or Moderate Income Unit, as applicable, and that any material
misstatement in such certification (whether or not intentional)will be cause for immediate termination
of such lease or rental agreement, and (iv) agrees that the tenant's income is subject to annual
certification in accordance with Section 4(c) and that if upon any such certification the aggregate
6
Gross Income of tenants in such unit exceeds the applicable income limit under Section 4(b), the
unit occupied by such tenant may cease to qualify as a Low Income Unit or Moderate Income Unit,
as applicable, and such unit's rent may be subject to increase.
(g) In reviewing and considering applications from prospective tenants, the Owner shall
provide a preference to households which include one or more persons who live, work, or have been
hired to work in the City, or are a veteran.
Section 5. Affordable Rental Requirements: Limitations on Rent Increases: Rent
Reductions. During the Compliance Period, except for units occupied by residential managers, for
which no income or rent restrictions shall apply, in addition to the other requirements set forth herein,
the Owner hereby agrees that it shall comply, or cause the Manager to comply, with the following:
(a) The Rental Payments for the Low Income Units paid by the tenants thereof shall not
exceed 30% of the Low Income limit for the County, adjusted for household size, as published
annually by HUD and utilized by TCAC.
(b) [reserved].
(c) The Rental Payments for the Moderate Income Units paid by the tenants thereof shall
not exceed 30% of the Moderate Income limit for the County, adjusted for household size, as
published annually by HUD and utilized by TCAC.
(d) The Owner shall accept as tenants, on the same basis as all other prospective
tenants, qualified low-income persons who are recipients of federal certificates or vouchers for rent
subsidies pursuant to the existing program under Section 8 of the Housing Act.
For purposes of this Section 5, base rents shall be adjusted for household size using the
following assumptions:
Unit Size Assumed Occupancy
studio 1
one-bedroom 2
two-bedroom 3
three-bedroom 4
four-bedroom 5
(e) The following limitations shall apply to annual rent increases for households
occupying available units in the Project:
(i) For a household qualifying as a Low Income Unit or a Moderate Income Unit,
as applicable, but for which annual rent payable is lower than the applicable limit set forth in
paragraph (a) or(c) above, respectively, rent shall not be increased more than 4% annually and then
only up to the applicable limit set forth in such paragraphs above.
(ii) For a household qualifying as a Low Income Unit or a Moderate Income Unit,
as applicable, but for which annual rent payable exceeds the applicable limit set forth in paragraph
(a) or (c) above, respectively, rent shall be decreased as soon as practicable to the applicable limit
set forth in such paragraphs above.
7
Except as set forth in Section 13 hereof, the covenants and conditions of this Regulatory
Agreement shall be binding upon successors in interest of the Owner.
Section 6. Tax-Exempt Status of Bonds. The Owner hereby represents, warrants and
agrees as follows:
(a) The Owner will not knowingly take or permit, or omit to take or cause to be taken,
as is appropriate, any action that would adversely affect the Tax-Exempt nature of the interest on
the Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will
take all lawful actions necessary to rescind or correct such actions or omissions promptly upon
obtaining knowledge thereof.
(b) The Owner will file of record such documents and take such other steps as are
necessary, in the written opinion of Bond Counsel filed with the Owner, in order to ensure that the
requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the
Project, including, but not limited to, the execution and recordation of this Regulatory Agreement in
the real property records of the County.
Section 7. Requirements of the Owner. In addition to other requirements set forth herein
and to the extent not prohibited by the requirements set forth in Sections 4 through 6 hereof, the
Owner hereby agrees to comply with each of the requirements set forth in this Section 7, as follows:
(a) All tenant lists, applications and waiting lists relating to the Project shall at all times
be kept separate and identifiable from any other business of the Owner and shall be maintained in a
reasonable condition for proper audit.
(b) The Owner shall appoint the Administrator to administer this Regulatory
Agreement and to monitor performance by the Owner of the terms, provisions and requirements
hereof. In the event that the Administrator resigns or is terminated, the Owner shall, following
consultation with the City, appoint a successor Administrator, experienced and capable, in the
judgment of the Owner, of performing the duties under the Project Administration Agreement. The
Owner shall comply with any reasonable request made by the Administrator to deliver to any such
Administrator any reports, notices or other documents required to be delivered pursuant hereto, and
to make the Project and the books and records with respect thereto available for inspection by the
Administrator. The fees and expenses of the Administrator shall be paid by the Owner.
Section 8. Modification of Covenants. The Owner and the Trustee hereby agree as
follows:
(a) To the extent any amendments to the Act, the Regulations or the Code shall, in the
written opinion of Bond Counsel filed with the Trustee and the Owner, retroactively impose
requirements upon the ownership or operation of the Project more restrictive than those imposed by
this Regulatory Agreement, and if such requirements are applicable to the Project and compliance
therewith is necessary to maintain the validity of, or the Tax-Exempt status of interest on the Bonds,
this Regulatory Agreement shall be deemed to be automatically amended to impose such additional
or more restrictive requirements.
(b) The Owner and the Trustee shall execute, deliver and, if applicable, file of record
any and all documents and instruments necessary to effectuate the intent of this Section 8.
8
Section 9. Indemnification. The Owner and the Trustee will be indemnified as required
by and pursuant to the Project Administration Agreement,
Section 10. Consideration. The Owner has agreed to issue the Bonds and to use the
proceeds thereof to, among other things, finance the acquisition of the Project. In furtherance of the
significant public benefits of the Project, the Owner has entered into this Regulatory Agreement and
has agreed to restrict the uses to which this Project can be put on the terms and conditions set forth
herein.
Section 11. Reliance. The Owner and the Trustee hereby recognize and agree that the
representations and covenants set forth herein may be relied upon by all persons, including but not
limited to the Administrator, interested in the legality and validity of the Bonds, in the exemption from
California personal income taxation of interest on the Bonds and in the Tax-Exempt status of the
interest on the Bonds. In performing their duties and obligations hereunder, the Owner and the
Administrator may rely upon statements and certificates of the tenants, and upon audits of the books
and records of the Owner pertaining to the Project. In addition, the Owner may consult with counsel,
and the opinion of such counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by the Owner hereunder in good faith and in conformity with such
opinion.
Section 12, Transfer of the Project. For the Compliance Period, except as permitted by
the Indenture or the Public Benefit Agreement, the Owner shall not Transfer the Project, in whole or
in part, unless the following conditions are satisfied: (A) the receipt by the Owner and the Trustee of
evidence acceptable to the Owner and the Trustee that (1) the Owner shall not be in default
hereunder, if in effect (which may be evidenced by a Certificate of Continuing Program Compliance),
or the transferee reasonably undertakes to cure any defaults of the Owner; (2) the continued
operation of the Project shall comply with the provisions of this Regulatory Agreement; (3) all rights,
responsibilities and duties of the transferor under the Project Administration Agreement shall have
been assigned to the transferee, or the transferee shall enter into a new project administration
agreement in the form of the current Project Administration Agreement, and (4) the person or entity
that is to acquire the Project does not have pending against it, and does not have a history of
significant and material building code violations or complaints concerning the maintenance, upkeep,
operation, and regulatory agreement compliance of any of its projects as identified by any local, state
or federal regulatory agencies; (B) the execution by the transferee of any document reasonably
requested by the Owner with respect to the assumption of the Owner's obligations under this
Regulatory Agreement, including without limitation an instrument of assumption hereof and thereof,
and delivery to the Owner of an opinion of such transferee's counsel to the effect that each such
document and this Regulatory Agreement are valid, binding and enforceable obligations of such
transferee, subject to bankruptcy and other standard limitations affecting creditor's rights; (C) receipt
by the Owner of an opinion of Bond Counsel to the effect that any such Transfer will not adversely
affect the Tax-Exempt status of interest on the Bonds; (D) receipt by the Owner of all fees and/or
expenses then currently due and payable to the Owner.
It is hereby expressly stipulated and agreed that any Transfer of the Project in violation of
this Section 12 shall be null, void and without effect, shall cause a reversion of title to the Owner,
and shall be ineffective to relieve the Owner of its obligations under this Regulatory Agreement.
Nothing in this Section shall affect any provision of any other document or instrument between the
Owner and any other party which requires the Owner to satisfy certain conditions or obtain the prior
written consent of such other party in order to Transfer the Project. Upon any Transfer that complies
with this Regulatory Agreement, the Owner shall be fully released from its obligations hereunder to
the extent such obligations have been fully assumed in writing by the transferee of the Project.
9
The foregoing notwithstanding, the Project may be transferred pursuant to a foreclosure,
exercise of power of sale or deed in lieu of foreclosure or comparable conversion under the Deed of
Trust without the consent of the Owner or compliance with the provisions of this Section 12.
For the Compliance Period, the Owner shall not: (1) encumber any of the Project or grant
commercial leases of any part thereof (excluding any commercial lease existing on the Closing Date
or entered into thereafter with respect to the commercial components of the Project that existed on
the Closing Date, both occupied and vacant), or permit the conveyance, transfer or encumbrance of
any part of the Project, except for (A) encumbrances permitted under the Deed of Trust, or (B) a
Transfer in accordance with the terms of this Regulatory Agreement, in each case upon receipt by
the Owner of an opinion of Bond Counsel to the effect that such action will not adversely affect the
Tax-Exempt status of interest on the Bonds (provided that such opinion will not be required with
respect to any encumbrance, lease or transfer relating to a commercial operation or ancillary facility
that will be available for tenant use and is customary to the operation of multifamily housing
developments similar to the Project); (2) demolish any part of the Project or substantially subtract
from any real or personal property of the Project, except to the extent that what is demolished or
removed is replaced with comparable property or such demolition or removal is otherwise permitted
by the Deed of Trust, or (3) permit the use of the dwelling accommodations of the Project for any
purpose except rental residences.
Section 13. Term. This Regulatory Agreement and all and several of the terms hereof
shall become effective upon its execution and delivery, and shall remain in full force and effect for
the period provided herein and shall terminate as to any provision not otherwise provided with a
specific termination date and shall terminate in its entirety at the end of the Compliance Period.
The terms of this Regulatory Agreement to the contrary notwithstanding, the requirements of
this Regulatory Agreement shall terminate and be of no further force and effect in the event of
involuntary noncompliance with the provisions of this Regulatory Agreement caused by fire or other
casualty, seizure, requisition, foreclosure or transfer of title by deed in lieu of foreclosure, change in
a federal law or an action of a federal agency after the Closing Date, which prevents the Owner from
enforcing such provisions, or condemnation or a similar event, but only if, within a reasonable period,
either the Bonds are retired or amounts received as a consequence of such event are used to provide
a project that meets the requirements hereof; provided, however, that the preceding provisions of
this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any
time subsequent to the termination of such provisions as the result of the foreclosure or the delivery
of a deed in lieu of foreclosure or a similar event,the Owner or any related person (within the meaning
of Section 1.103-10(e) of the Regulations) obtains an ownership interest in the Project for federal
income tax purposes. The Owner hereby agrees that, following any foreclosure, transfer of title by
deed in lieu of foreclosure or similar event, neither the Owner nor any such related person as
described above will obtain an ownership interest in the Project for federal tax purposes.
Notwithstanding any other provision of this Regulatory Agreement, this Regulatory
Agreement may be terminated upon agreement by the Trustee and the Owner, upon receipt by the
Owner of an opinion of Bond Counsel to the effect that such termination will not adversely affect the
exclusion from gross income of interest on the Bonds for federal income tax purposes. Upon the
termination of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver
and record appropriate instruments of release and discharge of the terms hereof; provided, however,
that the execution and delivery of such instruments shall not be necessary or a prerequisite to the
termination of this Regulatory Agreement in accordance with its terms.
10
Section 14. Covenants to Run With the Land. Notwithstanding Section 1461 of the
California Civil Code, the Owner hereby subjects the Project to the covenants, reservations and
restrictions set forth in this Regulatory Agreement. The Trustee and the Owner hereby declare their
express intent that the covenants, reservations and restrictions set forth herein shall be deemed
covenants running with the land and shall pass to and be binding upon the Owner's successors in
title to the Project, provided, however, that on the termination of this Regulatory Agreement said
covenants, reservations and restrictions shall expire. Each and every contract, deed or other
instrument hereafter executed covering or conveying the Project or any portion thereof shall
conclusively be held to have been executed, delivered and accepted subject to such covenants,
reservations and restrictions, regardless of whether such covenants, reservations and restrictions
are set forth in such contract, deed or other instruments.
Section 15. Burden and Benefit. The Trustee and the Owner hereby declare their
understanding and intent that the burdens of the covenants set forth herein touch and concern the
land in that the Owner's legal interest in the Project is rendered less valuable thereby. The Trustee
and the Owner hereby further declare their understanding and intent that the benefits of such
covenants touch and concern the land by enhancing and increasing the enjoyment and use of the
Project by tenants, the intended beneficiaries of such covenants, reservations and restrictions, and
by furthering the public purposes for which the Bonds were issued.
Section 16. Uniformity, Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan
for the use of the site on which the Project is located.
Section 17. Default; Enforcement. If the Owner defaults in the performance or observance
of any covenant, agreement or obligation of the Owner set forth in this Regulatory Agreement, and
if such default remains uncured for a period of 60 days after notice thereof shall have been given by
the Manager, the Controlling Party or the Trustee to the Owner, or for a period of 60 days from the
date the Owner should, with reasonable diligence, have discovered such default, then the Trustee
shall declare an "Event of Default" to have occurred hereunder; provided, however, that if the default
is of such a nature that it cannot be corrected within 60 days, such default shall not constitute an
Event of Default hereunder so long as (i) the Owner institutes corrective action within said 60 days
and diligently pursues such action until the default is corrected, and (ii) in the opinion of Bond
Counsel, the failure to cure said default within 60 days will not adversely affect the Tax-Exempt status
of interest on the Bonds.
Following the declaration of an Event of Default hereunder, the Owner shall have the right,
in its sole and absolute discretion, to replace the Manager and terminate the Property Management
Agreement in accordance with its terms, and the Trustee, subject to the terms of the Indenture, may
take any one or more of the following steps, in addition to all other remedies provided by law or
equity:
(a) by mandamus or other suit, action or proceeding at law or in equity, including
injunctive relief, require the Owner to perform its obligations and covenants hereunder or enjoin any
acts or things that may be unlawful or in violation of the rights of the Trustee hereunder;
(b) have access to and inspect, examine and make copies of all of the books and records
of the Owner pertaining to the Project; and
(c) take such other action at law or in equity as may appear necessary or desirable to
enforce the obligations, covenants and agreements of the Owner hereunder.
11
The Owner hereby agrees that specific enforcement of the Owner's agreements contained
herein is the only means by which the Trustee may fully obtain the benefits of this Regulatory
Agreement made by the Owner herein, and the Owner therefore agrees to the imposition of the
remedy of specific performance against it in the case of any Event of Default by the Owner
hereunder.
The Trustee and the Owner hereby agree that cure of any Event of Default made or tendered
by the Manager shall be deemed to be a cure by the Owner and shall be accepted or rejected on the
same basis as if made or tendered by the Owner.
Section 18. [Reservedl.
Section 19. Recording and Filing. (a) The Owner shall cause this Regulatory Agreement
and all amendments and supplements hereto and thereto, to be recorded and filed in the real
property records of the County, and in such other places as the Owner may reasonably deem
necessary. The Owner shall pay all fees and charges incurred in connection with any such recording.
(b) The Owner and the Trustee will file of record such other documents and take such
other steps as are reasonably necessary, in the opinion of Bond Counsel, in order to ensure that the
requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the
Project.
(c) The Owner hereby covenants to include or reference the requirements and
restrictions contained in this Regulatory Agreement in any documents transferring any interest in the
Project to another person to the end that such transferee has notice of, and is bound by, such
restrictions, and, except in the case of a foreclosure or comparable involuntary conversion of the
Deed of Trust, whereby the Trustee becomes the owner of the Project, to obtain the agreement from
any transferee to abide by all requirements and restrictions of this Regulatory Agreement.
Section 20. [Reservedl.
Section 21. Governing Law: Venue. This Regulatory Agreement shall be construed in
accordance with and governed by the laws of the State of California applicable to contracts made
and performed in the State of California. This Regulatory Agreement shall be enforceable in the State
of California, and any action arising hereunder shall (unless waived by the Owner in writing) be filed
and maintained in the Superior Court of California, County of San Diego.
Section 22. Amendments: Waivers. Except as provided in Sections 8(a) hereof, this
Regulatory Agreement may 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, California,
and only upon (i) receipt by the Owner of an opinion from Bond Counsel that such amendment will
not adversely affect the Tax-Exempt status of interest on the Bonds and (ii) the written consent of
the Controlling Party, who shall receive a copy of any such amendment.
(a) Anything to the contrary contained herein notwithstanding, the Trustee and the
Owner hereby agree to amend this Regulatory Agreement to the extent required, in the opinion of
Bond Counsel, in order that interest on the Bonds remains Tax-Exempt. The parties requesting such
amendment shall notify the other parties to this Regulatory Agreement of the proposed amendment,
with a copy of such proposed amendment to Bond Counsel and a request that Bond Counsel render
to the Owner an opinion as to the effect of such proposed amendment upon the Tax-Exempt status
of interest on the Bonds. This provision shall not be subject to any provision of any other agreement
12
requiring any party hereto to obtain the consent of any other person in order to amend this Regulatory
Agreement.
(b) Any waiver of, or consent to, any condition under this Regulatory Agreement must
be expressly made in writing.
Section 23. Notices. Any notice required to be given hereunder shall be made in writing
and shall be given by personal delivery, overnight delivery, certified or registered mail, postage
prepaid, return receipt requested, or by telecopy, in each case at the respective addresses specified
in the Indenture, or at such other addresses as may be specified in writing by the parties hereto.
Unless otherwise specified by the Administrator, the address of the Administrator is:
To Owner: CMFA Special Finance Agency VIII
2111 Palomar Airport Road, Suite 320
Carlsbad, California 92011
Attention: Financial Advisor
Email: jstoecker@cmfa-ca.com
With a copy to: Catalyst Housing Group LLC
21 Ward Street, Suite 2
Larkspur, California 94939
Attention: Jordan Moss
The Administrator and the Owner may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other communications shall be sent.
Notice shall be deemed given on the date evidenced by the postal or courier receipt or other written
evidence of delivery or electronic transmission; provided that any telecopy or other electronic
transmission received by any party after 4:00 p.m., local time of the receiving party, as evidenced by
the time shown on such transmission, shall be deemed to have been received the following Business
Day.
Section 24. Severability. If any provision of this Regulatory 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.
Section 25. Multiple Counterparts. This Regulatory Agreement may be simultaneously
executed in multiple counterparts, all of which shall constitute one and the same instrument, and
each of which shall be deemed to be an original.
Section 26. Limitation on Liability. Notwithstanding the foregoing or any other provision or
obligation to the contrary contained in this Regulatory Agreement, the liability of the Owner under
this Regulatory Agreement to any person or entity, including, but not limited to, the Trustee or the
Controlling Party and their successors and assigns, is limited to moneys available therefor under and
in accordance with the Indenture.
Section 27. Annual Reporting Covenant. No later than January 31 of each calendar year
(commencing January 31, 2023), the Owner agrees to provide to the California Debt and Investment
Advisory Commission, by any method approved by the California Debt and Investment Advisory
Commission, the annual report information required by Section 8855(k)(1) of the California
Government Code. This covenant shall remain in effect until the later of the date (i) the Bonds are
no longer outstanding or (ii) the proceeds of the Bonds have been fully spent.
13
Section 28. Regulatory Agreement Subject to Existing Affordable Housing Agreement.
Notwithstanding anything contained herein to the contrary, this Regulatory Agreement is and shall
remain subject to the requirements of the Affordable Housing Agreement Restrictions-Rental
(Declaration of Covenants, Conditions and Restrictions for Property) (AHARR) by and between
Housing Authority of the City of Huntington Beach, the City, Elan Huntington Beach, LLC, dated as
of July 1, 2013, and recorded in the recorded official records of the County on July 9, 2013.
14
IN WITNESS WHEREOF, the Owner and the Trustee have executed this Regulatory
Agreement by duly authorized representatives, all as of the date first above written.
CMFA SPECIAL FINANCE AGENCY VIII
By:
Name: Edward J. Becker
Title. Executive Director
[Signature Page—Regulatory Agreement and Declaration of Restrictive Covenants—Elan Huntington Beach]
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
[Signature Page—Regulatory Agreement and Declaration of Restrictive Covenants—Elan Huntington Beach]
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF )
On before me, Notary Public,
Personally appeared
who proved to me on the basis of satisfactory evidence to be the
person(s)whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State
of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF )
On before me, Notary Public,
Personally appeared
who proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State
of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
[TO COME]
A-1
EXHIBIT B
FORM OF INCOME CERTIFICATION
Effective Date:
Move-In Date:
Household Size:
Floorplan:
Unit:
HOUSEHOLD COMPOSITION
Household Member Name Relationship Birthdate
1 Head
2
3
4
5
6
7
INCOME COMPOSITION (ANNUAL)
Household Employment/ Social Security/ Public Other
Member V es Pension Assistance Income
1
2
3
4
5
6
7
TOTALS $ $ $
TOTAL INCOME $
B-1
EXHIBIT C
FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
Witnesseth that on this day of 20_, the undersigned, on behalf of the
CMFA SPECIAL FINANCE AGENCY VIII (the "Owner"), does hereby certify with respect to the
multifamily rental housing development (the "Project") that:
1. During the preceding year (i) such Project was substantially and continually in
compliance with the Regulatory Agreement and (ii) _% of the units in the Project were
occupied by Low Income Tenants and _% of the units in the Project were occupied by
Moderate Income Tenants.
Set forth below are the unit numbers of Low Income Tenants and Moderate Income Tenants who
commenced or terminated occupancy during the preceding month.
Commenced Occupancy Terminated Occupancy
1 1.
2. 2.
3. 3.
4. 4.
5. 5.
6. 6.
7. 7.
8. 8.
9. 9.
10. 10.
11. 11.
12. 12.
13. 13.
14. 14.
15. 15.
16. 16.
17. 17.
18. 18.
19. 19.
20. 20.
Additional units that have commenced or terminated occupancy may be found in an additional
attached sheet
2. The units occupied by Low Income Tenants and Moderate Income Tenants are of
similar size and quality to other units and are dispersed throughout the Project. Attached is a
separate sheet listing the number of each unit and indicating which units are occupied by Low
Income Tenants and Moderate Income Tenants, the size, the number of bedrooms of such units
and the number of Low Income Tenants and Moderate Income Tenants who commenced
occupancy of units during the preceding month.
The representations set forth herein are true and correct to the best of the undersigned's
knowledge and belief.
C-1
Date: Owner:
C-2
ATTACHMENT #8
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Josh D. Anzel, Esq.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
By and Between
CMFA SPECIAL FINANCE AGENCY VII
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
Dated as of 1, 2021
Relating to
CMFA Special Finance Agency VII
Essential Housing Revenue Bonds, Series 2021A-1
(The Breakwater Apartments)
CMFA Special Finance Agency VII
Essential Housing Revenue Bonds, Series 2021A-2
(The Breakwater Apartments)
and
CMFA Special Finance Agency VII
Subordinate Essential Housing Revenue Bonds, Series 2021B
(The Breakwater Apartments)
TABLE OF CONTENTS
Clause Page
Section 1. Definitions and Interpretation ..............................................................................1
Section 2. Representations, Covenants and Warranties of the Owner.................................4
Section 3. Residential Rental Project...................................................................................4
Section 4. Tenants; Income Requirements..........................................................................5
Section 5. Affordable Rental Requirements; Limitations on Rent Increases;
RentReductions.................................................................................................7
Section 6. Tax-Exempt Status of Bonds ..............................................................................8
Section 7. Requirements of the Owner................................................................................8
Section 8. Modification of Covenants...................................................................................8
Section 9. Indemnification ...................................................................................................9
Section10. Consideration .....................................................................................................9
Section11. Reliance .............................................................................................................9
Section 12. Transfer of the Project ........................................................................................9
Section13. Term.................................................................................................................10
Section 14. Covenants to Run With the Land ......................................................................11
Section 15. Burden and Benefit...........................................................................................11
Section 16. Uniformity; Common Plan.................................................................................11
Section 17. Default; Enforcement.......................................................................................Al
Section18. (Reserved] ........................................................................................................12
Section 19. Recording and Filing.........................................................................................12
Section20. Reserved ..........................................................................................................12
Section 21. Governing Law; Venue .....................................................................................12
Section 22. Amendments; Waivers......................................................................................12
Section23. Notices .............................................................................................................13
Section24. Severability.......................................................................................................13
Section 25. Multiple Counterparts........................................................................................13
Section 26. Limitation on Liability ........................................................................................13
Section 27. Annual Reporting Covenant..............................................................................14
EXHIBIT A DESCRIPTION OF REAL PROPERTY
EXHIBIT B FORM OF INCOME CERTIFICATION
EXHIBIT C FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS
(as supplemented and amended from time to time, this "Regulatory Agreement") is made and
entered into as of 1, 2021, by and between the CMFA SPECIAL FINANCE
AGENCY VII, a joint exercise of powers authority duly organized and existing under the laws of the
State of California, as issuer of the Bonds (as further defined herein) and as owner of the Project
identified herein (together with any successor to its rights, duties and obligations hereunder, the
"Owner"), and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association,
as trustee (together with its successors in trust and assigns, the "Trustee").
WITNESSETH:
WHEREAS, pursuant to Chapter 5 of Division 7 of Title 1 of the California Government Code
(the "Act"), the Owner proposes to issue its Essential Housing Revenue Bonds, Series 2021A-1 (The
Breakwater Apartments) (the "Series 2021A-1 Bonds"), Essential Housing Revenue Bonds, Series
2021A-2 (The Breakwater Apartments) (together with the Series 2021A-1 Bonds, the "Series A
Bonds"), and Subordinate Essential Housing Revenue Bonds, Series 2021 B (The Breakwater
Apartments) (together with the Series A Bonds, the "Bonds") pursuant to a Trust Indenture, dated as
of 1, 2021 (as supplemented and amended from time to time, the "Indenture'),
between the Owner and the Trustee;
WHEREAS, a portion of the proceeds of the Bonds will be used to provide, in part, financing
for the acquisition of the multifamily rental housing project known as The Breakwater Apartments,
located on the real property site described in Exhibit A hereto (as further described herein, the
"ProiecP);
WHEREAS, to satisfy the public purposes for which the Bonds are authorized to be issued
under the Act, and in furtherance of certain specific public purposes of the Owner, previously
approved by the Owner's Resolution No. 21- , which include supporting, preserving
and providing low income, median income and moderate income multifamily rental housing in areas
in which demand for such housing is not currently being adequately met, certain limits on the
occupancy of units in the Project need to be established and certain other requirements need to be
met,
NOW, THEREFORE, in consideration of the issuance of the Bonds by the Owner and the
mutual covenants and undertakings set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Owner and the Trustee hereby agree
as follows:
Section 1. Definitions and Interpretation. Unless the context otherwise requires, the
capitalized terms used herein shall have the respective meanings assigned to them in the recitals
hereto, in this Section 1, or in the Master Glossary of Terms, dated as of 1,
2021.
"Administrator" means any administrator or program monitor appointed by the Owner to
administer this Regulatory Agreement, and any successor administrator appointed by the Owner.
"Area" means the Metropolitan Statistical Area or County, as applicable, in which the Project
is located, as defined by HUD.
1
"Bonds" has the meaning given to it in the recitals hereto.
"Certificate of Continuing Program Compliance" means the Certificate to be filed by the
Owner with the Administrator, pursuant to Section 4(e) hereof, which shall be substantially in the
form attached as Exhibit C hereto or in such other comparable form as may be provided by the
Owner.
"City" means the City of Huntington Beach, California.
"Closing Date" means 2021, the date the Bonds are issued and
delivered to the initial purchaser thereof.
"Compliance Period" means the period beginning on the Closing Date and ending on the first
date on which there are no Bonds Outstanding.
"County" means the County of Orange, California.
"Deed of Trust" means the Deed of Trust, Assignment of Leases and Rents, Security
Agreement, and Fixture Filing dated as of the Closing Date, by the Owner granting a lien on its fee
simple interest in the Property, subject to Permitted Encumbrances, to the Trustee for the benefit of
the holders from time to time of the Bonds, as the same may be modified, amended or supplemented
from time to time, or any deed of trust (or similar security instrument) containing a power of sale
clause reflecting a valid, perfected first priority lien on the fee interest in the Project delivered by the
Owner to secure the Owner's obligations to a third-party lender.
"Gross Income" means the gross income of a person (together with the gross income of all
persons who reside with such person in one residential unit) as calculated in the manner prescribed
by Section 8 of the Housing Act.
"Housing Act" means the United States Housing Act of 1937, as amended, or its successor.
"HUD" means the United States Department of Housing and Urban Development.
"Income Certification" means a Tenant Income Certification and a Tenant Income
Certification Questionnaire in the form attached as Exhibit B hereto or in such other comparable form
as may be provided by the Owner.
"Low Income Tenant" means a tenant occupying a Low Income Unit.
"Low Income Unit" means any available unit if the aggregate Gross Income of all tenants
therein does not exceed eighty percent (80%) of median gross income for the Area, with adjustments
for family size. The determination of an available unit's status as a Low Income Unit shall be made
by the Owner upon commencement of each lease term with respect to such unit, and annually
thereafter, on the basis of an Income Certification executed by each tenant.
"Management Agreement" means that certain Property Management Agreement, dated as
of the date hereof, by and among the Owner and the Manager.
"Manager" means and any other Person who is an assignee of
the initial Management Agreement.
2
"Median Income Tenant" means a tenant occupying a Median Income Unit.
"Median Income Unit" means any available unit if the aggregate Gross Income of all tenants
therein does not exceed one hundred percent (100%) of median gross income for the Area, with
adjustments for family size. The determination of an available unit's status as a Median Income Unit
shall be made by the Owner upon commencement of each lease term with respect to such unit, and
annually thereafter, on the basis of an Income Certification executed by each tenant.
"Moderate Income Tenant" means (i) a tenant occupying a Moderate Income Unit or (ii) an
Over Income Tenant if such tenant occupied an available unit on the effective date of this Regulatory
Agreement.
"Moderate Income Unit" means any available unit if the aggregate Gross Income of all tenants
therein does not exceed one hundred and twenty percent (120%) of median gross income for the
Area, with adjustments for family size. The determination of an available unit's status as a Moderate
Income Unit shall be made by the Owner upon commencement of each lease term with respect to
such unit, and annually thereafter, on the basis of an Income Certification executed by each tenant.
"Over Income Tenant" means a tenant occupying an Over Income Unit.
"Over Income Unit" means any occupied unit in which the aggregate gross income of all
tenants therein exceeds one hundred twenty percent (120%) of median gross income for the Area,
with adjustments for family size.
"Project" means the 402-unit multifamily rental housing development to be located in the City
on the real property site described in Exhibit A hereto, consisting of those facilities, including real
property, structures, buildings, fixtures or equipment situated thereon, as it may at any time exist,
the acquisition of which facilities is to be financed, in whole or in part, from the proceeds of the sale
of the Bonds, and any real property, structures, buildings, fixtures or equipment acquired in
substitution for, as a renewal or replacement of, or a modification or improvement to, all or any part
of the facilities described in the Deed of Trust.
"Regulations" means the Income Tax Regulations of the Department of the Treasury
applicable under the Code from time to time.
"Regulatory Agreement" means this Regulatory Agreement and Declaration of Restrictive
Covenants, as it may be supplemented and amended from time to time.
"Rental Payments" means the rental payments paid by the occupant of a unit, excluding any
supplemental rental assistance to the occupant from the State, the federal government, or any other
public agency.
"Tax-Exempt" means with respect to interest on any obligations of a state or local
government, including the Bonds, that such interest is excluded from gross income for State of
California personal income and federal income tax purposes; provided, however, that such interest
may be includable as an item of tax preference or otherwise includable directly or indirectly for
purposes of calculating other tax liabilities, including any alternative minimum tax or environmental
tax, under the Code.
"TCAC" means the California Tax Credit Allocation Committee.
3
"Transfer" means the conveyance, assignment, sale or other disposition of all or any portion
of the Project; and shall also include, without limitation to the foregoing, the following: (1) an
installment sales agreement wherein Owner agrees to sell the Project or any part thereof for a price
to be paid in installments; and (2) an agreement by the Owner leasing all or a substantial part of the
Project to one or more persons or entities pursuant to a single or related transactions.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words
of any gender shall be construed to include each other gender when appropriate and words of the
singular number shall be construed to include the plural number, and vice versa, when appropriate.
This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate
the purposes set forth herein and to sustain the validity hereof.
The titles and headings of the sections of this Regulatory Agreement have been inserted for
convenience of reference only and are not to be considered a part hereof and shall not in any way
modify or restrict any of the terms or provisions hereof or be considered or given any effect in
construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any
question of intent shall arise.
The parties to this Regulatory Agreement acknowledge that each party and their respective
counsel have participated in the drafting and revision of this Regulatory Agreement. Accordingly, the
parties agree that any rule of construction to the effect that ambiguities are to be resolved against
the drafting party shall not apply in the interpretation of this Regulatory Agreement or any supplement
or exhibit hereto.
Section 2. Representations. Covenants and Warranties of the Owner.
(a) The Owner hereby incorporates herein, as if set forth in full herein, each of the
representations, covenants and warranties of the Owner contained in the Tax Certificate and the
Indenture relating to the Project.
(b) The Owner hereby represents and warrants that the Project is located entirely within
the City.
(c) The Owner acknowledges, represents and warrants that it understands the nature
and structure of the transactions contemplated by this Regulatory Agreement, that it is familiar with
the provisions of all of the documents and instruments relating to the Bonds to which it is a party or
of which it is a beneficiary, that it understands the financial and legal risks inherent in such
transactions.
Section 3. Residential Rental Project. For the term of this Regulatory Agreement, the
Owner hereby represents, covenants, warrants and agrees as follows:
(a) The Project will be owned and operated for the purpose of providing multifamily
residential rental property. The Owner will own, and cause the Project to be managed and operated,
as a project to provide multifamily residential rental property comprised of a building or structure or
several interrelated buildings or structures, together with any functionally related and subordinate
facilities, in accordance with such requirements as may be imposed thereby on the Project from time
to time. The Owner shall cause the Project to be maintained in a good, habitable and safe (so as to
not threaten the health or safety of the Project's tenants or their invited guests) condition and repair
(reasonable wear and tear excepted) and shall create and fund a Capital Expense Fund and shall
cause Capital Repairs to be made on an annual basis during the Compliance Period. Capital Repairs
4
shall include, without limitation, the following: carpet and drape replacement; appliance replacement;
exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures
replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and
heating replacement, asphalt repair and replacement, and seal coating; roofing repair and
replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line
replacement; water line replacement; gas line pipe replacement; lighting fixture replacement,
elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture
replacement; and common area and exterior repainting.
(b) Except as otherwise approved by the Owner, all of the dwelling units in the Project
(except for the units set aside for resident managers or other administrative uses) will be similarly
constructed units, and each dwelling unit in the Project will contain complete separate and distinct
facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including
a sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range,
refrigerator and sink.
(c) None of the dwelling units in the Project will ever be used as a hotel, motel, dormitory,
fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home or
trailer court or park; provided that the use of certain units for tenant guests on an intermittent basis
shall not be considered transient use for purposes of this Regulatory Agreement. Owner shall not
rent dwelling units for a term of 30 days or less, and shall use commercially reasonable efforts to
inform residents that short-term rentals of 30 days or less are prohibited.
(d) No part of the Project will at any time during the Compliance Period be owned by a
cooperative housing corporation, nor shall the Owner take any steps in connection with a conversion
to such ownership or use, and the Owner will not take any steps in connection with a conversion of
the Project to condominium ownership during the Compliance Period.
(e) All of the available units in the Project will be available for rental during the period
beginning on the date hereof and ending on the termination of the Compliance Period on a
continuous basis.
Section 4. Tenants Income Requirements. The Owner shall comply, or shall cause the
Manager to comply, with the following requirements:
(a) During the Compliance Period, except for units occupied by residential managers, for
which no income or rent restrictions shall apply, the Owner shall ensure that the following income
restrictions are met at all times:
(i) no less than one-third (1/3) of the completed residential units in the Project
shall be Low Income Units;
(ii) no less than one-third (1/3) of the completed residential units in the Project
shall be Median Income Units, and
(iii) the balance of the completed residential units in the Project shall be Moderate
Income Units;
provided, that any unit remaining vacant for at least 30 consecutive days may be offered and leased
as a Low Income Unit, Median Income Unit or Moderate Income Unit without regard for the
requirements set forth in sub-paragraphs (i), (ii) and (iii) above. For the avoidance of doubt, any
5
vacant unit shall only be offered as a Low Income Unit, Median Income Unit or Moderate Income
Unit.
(b) No tenant shall be denied continued occupancy of a unit in the Project because, after
admission, the aggregate Gross Income of all tenants in the unit occupied by such tenant increases
to exceed the qualifying limit for the respective Low Income Unit, Median Income Unit or Moderate
Income Unit initially occupied by such tenant. However, if after a tenant's initial occupancy of a Low
Income Unit, Median Income Unit or Moderate Income Unit, as applicable, the aggregate Gross
Income of tenants in such unit, as of the most recent determination thereof, exceeds that which is
defined for such unit occupied by the same number of tenants, the next available unit of comparable
or smaller size shall, subject to the discretion of the Owner and Manager as described in the next
succeeding paragraph, be rented (or held vacant and available for immediate occupancy by) in a
manner that would maintain the unit mix required by Section 4(a) hereof. For the avoidance of doubt,
this Section 4(b) shall apply to existing tenants occupying the Project on the Closing Date.
Notwithstanding any provision of this Regulatory Agreement to the contrary, the Owner shall
verify, or cause the Manager to verify, all tenant incomes at least annually and shall continually re-
balance the mix of household incomes by leasing vacant units to Low Income Tenants, Median
Income Tenants or Moderate Income Tenants as needed to meet the income set-aside requirements
set forth in this Section 4(a).
(c) For the Compliance Period, the Owner shall cause the Manager to obtain, complete
and maintain on file Income Certifications for each tenant, including (i) an Income Certification dated
immediately prior to the initial occupancy of such tenant in the unit and a second Income Certification
dated one year after the tenant's initial move-in date, and (ii) thereafter, an annual verifiable self-
certification with respect to each tenant. The Owner shall, or shall cause the Manager to, provide
such additional information as may be required in the future by applicable rules, rulings, policies,
procedures, Regulations or other official statements now or hereafter promulgated, proposed or
made by the Department of the Treasury or the Internal Revenue Service with respect to Tax-Exempt
obligations. Upon request of the Administrator or the Trustee, copies of Income Certifications for
tenants commencing or continuing occupation of a residential unit shall be submitted to the
Administrator or the Trustee, as requested.
(d) The Owner shall cause the Manager to verify that the income information provided by
an applicant in an Income Certification is accurate by taking one or more of the following steps as a
part of the verification process: (1) obtain pay stubs for the three most recent pay periods, (2) obtain
an income tax return for the most recent tax year, (3) obtain a credit report or conduct a similar type
credit search, (4) obtain an income verification from the applicant's current employer, (5) obtain an
income verification from the Social Security Administration and/or the California Department of Social
Services if the applicant receives assistance from either of such agencies, or (6) if the applicant is
unemployed and does not have an income tax return, obtain another form of independent verification
reasonably acceptable to the Owner.
(e) The Owner shall prepare and submit or cause the Manager to prepare and submit to
the Administrator not less than annually, commencing not less than one year after the Closing Date,
a Certificate of Continuing Program Compliance executed by the Owner in substantially the form
attached hereto as Exhibit C.
(f) For the Compliance Period, all tenant leases or rental agreements shall be
subordinate to this Regulatory Agreement and the Deed of Trust. All leases shall contain clauses,
among others, wherein each tenant: (i) certifies the accuracy of the statements made by such tenant
6
in the Income Certification, (ii) agrees that the family income and other eligibility requirements shall
be deemed substantial and material obligations of the tenancy of such tenant, that such tenant will
comply promptly with all requests for information with respect thereto from the Owner or the
Administrator on behalf of the Owner, and that the failure to provide accurate information in the
Income Certification or self-certification or refusal to comply with a request for information with
respect thereto shall be deemed a violation of a substantial obligation of the tenancy of such tenant;
(iii) acknowledges that the Owner has relied on the statements made by such tenant in the Income
Certification and supporting information supplied by the tenant in determining qualification for
occupancy of a Low Income Unit, Median Income Unit or Moderate Income Unit, as applicable, and
that any material misstatement in such certification (whether or not intentional) will be cause for
immediate termination of such lease or rental agreement, and (iv) agrees that the tenant's income is
subject to annual certification in accordance with Section 4(c) and that if upon any such certification
the aggregate Gross Income of tenants in such unit exceeds the applicable income limit under
Section 4(b), the unit occupied by such tenant may cease to qualify as a Low Income Unit, Median
Income Unit or Moderate Income Unit, as applicable, and such unit's rent may be subject to increase.
(g) In reviewing and considering applications from prospective tenants, the Owner shall
provide a preference to households which include one or more persons who live, work, or have been
hired to work in the City, or are a veteran.
Section 5. Affordable Rental Requirements Limitations on Rent Increases; Rent
Reductions. During the Compliance Period, except for units occupied by residential managers, for
which no income or rent restrictions shall apply, in addition to the other requirements set forth herein,
the Owner hereby agrees that it shall comply, or cause the Manager to comply, with the following:
(a) The Rental Payments for the Low Income Units paid by the tenants thereof shall not
exceed 35% of the Low Income limit for the County, adjusted for household size, as published
annually by HUD and utilized by TCAC.
(b) The Rental Payments for the Median Income Units paid by the tenants thereof shall
not exceed 35% of the Median Income limit for the County, adjusted for household size, as published
annually by HUD and utilized by TCAC.
(c) The Rental Payments for the Moderate Income Units paid by the tenants thereof shall
not exceed 35% of the Moderate Income limit for the County, adjusted for household size, as
published annually by HUD and utilized by TCAC.
(d) The Owner shall accept as tenants, on the same basis as all other prospective
tenants, qualified low-income persons who are recipients of federal certificates or vouchers for rent
subsidies pursuant to the existing program under Section S of the Housing Act.
For purposes of this Section 5, base rents shall be adjusted for household size using the
following assumptions:
Unit Size Assumed Occupancy—]
studio 1
one-bedroom 2
o-bedroom 3
hree-bedroom 4
our-bedroom 5
7
(e) The following limitations shall apply to annual rent increases for households
occupying available units in the Project:
(i) For a household qualifying as a Low Income Unit, a Median Income Unit, or a
Moderate Income Unit, as applicable, but for which annual rent payable is lower than the applicable
limit set forth in paragraph (a), (b) or (c) above, respectively, rent shall not be increased more than
4% annually and then only up to the applicable limit set forth in such paragraphs above.
(ii) For a household qualifying as a Low Income Unit, a Median Income Unit, or a
Moderate Income Unit, as applicable, but for which annual rent payable exceeds the applicable limit
set forth in paragraph (a), (b) or (c) above, respectively, rent shall be decreased as soon as
practicable to the applicable limit set forth in such paragraphs above.
Except as set forth in Section 13 hereof, the covenants and conditions of this Regulatory
Agreement shall be binding upon successors in interest of the Owner.
Section 6. Tax-Exempt Status of Bonds. The Owner hereby represents, warrants and
agrees as follows:
(a) The Owner will not knowingly take or permit, or omit to take or cause to be taken,
as is appropriate, any action that would adversely affect the Tax-Exempt nature of the interest on
the Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will
take all lawful actions necessary to rescind or correct such actions or omissions promptly upon
obtaining knowledge thereof.
(b) The Owner will file of record such documents and take such other steps as are
necessary, in the written opinion of Bond Counsel filed with the Owner, in order to ensure that the
requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the
Project, including, but not limited to, the execution and recordation of this Regulatory Agreement in
the real property records of the County.
Section 7. Requirements of the Owner. In addition to other requirements set forth herein
and to the extent not prohibited by the requirements set forth in Sections 4 through 6 hereof, the
Owner hereby agrees to comply with each of the requirements set forth in this Section 7, as follows:
(a) All tenant lists, applications and waiting lists relating to the Project shall at all times
be kept separate and identifiable from any other business of the Owner and shall be maintained in a
reasonable condition for proper audit.
(b) The Owner shall appoint the Administrator to administer this Regulatory
Agreement and to monitor performance by the Owner of the terms, provisions and requirements
hereof. In the event that the Administrator resigns or is terminated, the Owner shall, following
consultation with the City, appoint a successor Administrator, experienced and capable, in the
judgment of the Owner, of performing the duties under the Project Administration Agreement. The
Owner shall comply with any reasonable request made by the Administrator to deliver to any such
Administrator any reports, notices or other documents required to be delivered pursuant hereto, and
to make the Project and the books and records with respect thereto available for inspection by the
Administrator. The fees and expenses of the Administrator shall be paid by the Owner.
Section 8. Modification of Covenants. The Owner and the Trustee hereby agree as
follows:
8
(a) To the extent any amendments to the Act, the Regulations or the Code shall, in the
written opinion of Bond Counsel filed with the Trustee and the Owner, retroactively impose
requirements upon the ownership or operation of the Project more restrictive than those imposed by
this Regulatory Agreement, and if such requirements are applicable to the Project and compliance
therewith is necessary to maintain the validity of, or the Tax-Exempt status of interest on the Bonds,
this Regulatory Agreement shall be deemed to be automatically amended to impose such additional
or more restrictive requirements.
(b) The Owner and the Trustee shall execute, deliver and, if applicable, file of record
any and all documents and instruments necessary to effectuate the intent of this Section 8.
Section 9. Indemnification. The Owner and the Trustee will be indemnified as required
by and pursuant to the Project Administration Agreement.
Section 10. Consideration. The Owner has agreed to issue the Bonds and to use the
proceeds thereof to, among other things, finance the acquisition of the Project. In furtherance of the
significant public benefits of the Project, the Owner has entered into this Regulatory Agreement and
has agreed to restrict the uses to which this Project can be put on the terms and conditions set forth
herein.
Section 11. Reliance. The Owner and the Trustee hereby recognize and agree that the
representations and covenants set forth herein may be relied upon by all persons, including but not
limited to the Administrator, interested in the legality and validity of the Bonds, in the exemption from
California personal income taxation of interest on the Bonds and in the Tax-Exempt status of the
interest on the Bonds. In performing their duties and obligations hereunder, the Owner and the
Administrator may rely upon statements and certificates of the tenants, and upon audits of the books
and records of the Owner pertaining to the Project. In addition, the Owner may consult with counsel,
and the opinion of such counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by the Owner hereunder in good faith and in conformity with such
opinion.
Section 12. Transfer of the Proiect. For the Compliance Period, except as permitted by
the Indenture or the Public Benefit Agreement, the Owner shall not Transfer the Project, in whole or
in part, unless the following conditions are satisfied: (A) the receipt by the Owner and the Trustee of
evidence acceptable to the Owner and the Trustee that (1) the Owner shall not be in default
hereunder, if in effect (which may be evidenced by a Certificate of Continuing Program Compliance),
or the transferee reasonably undertakes to cure any defaults of the Owner; (2) the continued
operation of the Project shall comply with the provisions of this Regulatory Agreement; (3) all rights,
responsibilities and duties of the transferor under the Project Administration Agreement shall have
been assigned to the transferee, or the transferee shall enter into a new project administration
agreement in the form of the current Project Administration Agreement; and (4) the person or entity
that is to acquire the Project does not have pending against it, and does not have a history of
significant and material building code violations or complaints concerning the maintenance, upkeep,
operation, and regulatory agreement compliance of any of its projects as identified by any local, state
or federal regulatory agencies; (B) the execution by the transferee of any document reasonably
requested by the Owner with respect to the assumption of the Owner's obligations under this
Regulatory Agreement, including without limitation an instrument of assumption hereof and thereof,
and delivery to the Owner of an opinion of such transferee's counsel to the effect that each such
document and this Regulatory Agreement are valid, binding and enforceable obligations of such
transferee, subject to bankruptcy and other standard limitations affecting creditor's rights; (C) receipt
by the Owner of an opinion of Bond Counsel to the effect that any such Transfer will not adversely
9
affect the Tax-Exempt status of interest on the Bonds; (D) receipt by the Owner of all fees and/or
expenses then currently due and payable to the Owner.
It is hereby expressly stipulated and agreed that any Transfer of the Project in violation of
this Section 12 shall be null, void and without effect, shall cause a reversion of title to the Owner,
and shall be ineffective to relieve the Owner of its obligations under this Regulatory Agreement.
Nothing in this Section shall affect any provision of any other document or instrument between the
Owner and any other party which requires the Owner to satisfy certain conditions or obtain the prior
written consent of such other party in order to Transfer the Project. Upon any Transfer that complies
with this Regulatory Agreement, the Owner shall be fully released from its obligations hereunder to
the extent such obligations have been fully assumed in writing by the transferee of the Project.
The foregoing notwithstanding, the Project may be transferred pursuant to a foreclosure,
exercise of power of sale or deed in lieu of foreclosure or comparable conversion under the Deed of
Trust without the consent of the Owner or compliance with the provisions of this Section 12.
For the Compliance Period, the Owner shall not: (1) encumber any of the Project or grant
commercial leases of any part thereof, or permit the conveyance, transfer or encumbrance of any
part of the Project, except for (A) encumbrances permitted under the Deed of Trust, or(B) a Transfer
in accordance with the terms of this Regulatory Agreement, in each case upon receipt by the Owner
of an opinion of Bond Counsel to the effect that such action will not adversely affect the Tax-Exempt
status of interest on the Bonds (provided that such opinion will not be required with respect to any
encumbrance, lease or transfer relating to a commercial operation or ancillary facility that will be
available for tenant use and is customary to the operation of multifamily housing developments
similar to the Project); (2) demolish any part of the Project or substantially subtract from any real or
personal property of the Project, except to the extent that what is demolished or removed is replaced
with comparable property or such demolition or removal is otherwise permitted by the Deed of Trust,
or (3) permit the use of the dwelling accommodations of the Project for any purpose except rental
residences.
Section 13. Term. This Regulatory Agreement and all and several of the terms hereof
shall become effective upon its execution and delivery, and shall remain in full force and effect for
the period provided herein and shall terminate as to any provision not otherwise provided with a
specific termination date and shall terminate in its entirety at the end of the Compliance Period.
The terms of this Regulatory Agreement to the contrary notwithstanding, the requirements of
this Regulatory Agreement shall terminate and be of no further force and effect in the event of
involuntary noncompliance with the provisions of this Regulatory Agreement caused by fire or other
casualty, seizure, requisition, foreclosure or transfer of title by deed in lieu of foreclosure, change in
a federal law or an action of a federal agency after the Closing Date, which prevents the Owner from
enforcing such provisions, or condemnation or a similar event, but only if, within a reasonable period,
either the Bonds are retired or amounts received as a consequence of such event are used to provide
a project that meets the requirements hereof; provided, however, that the preceding provisions of
this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any
time subsequent to the termination of such provisions as the result of the foreclosure or the delivery
of a deed in lieu of foreclosure or a similar event, the Owner or any related person (within the meaning
of Section 1.103-10(e) of the Regulations) obtains an ownership interest in the Project for federal
income tax purposes. The Owner hereby agrees that, following any foreclosure, transfer of title by
deed in lieu of foreclosure or similar event, neither the Owner nor any such related person as
described above will obtain an ownership interest in the Project for federal tax purposes.
10
Notwithstanding any other provision of this Regulatory Agreement, this Regulatory
Agreement may be terminated upon agreement by the Trustee and the Owner, upon receipt by the
Owner of an opinion of Bond Counsel to the effect that such termination will not adversely affect the
exclusion from gross income of interest on the Bonds for federal income tax purposes. Upon the
termination of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver
and record appropriate instruments of release and discharge of the terms hereof; provided, however,
that the execution and delivery of such instruments shall not be necessary or a prerequisite to the
termination of this Regulatory Agreement in accordance with its terms.
Section 14. Covenants to Run With the Land. Notwithstanding Section 1461 of the
California Civil Code, the Owner hereby subjects the Project to the covenants, reservations and
restrictions set forth in this Regulatory Agreement. The Trustee and the Owner hereby declare their
express intent that the covenants, reservations and restrictions set forth herein shall be deemed
covenants running with the land and shall pass to and be binding upon the Owner's successors in
title to the Project, provided, however, that on the termination of this Regulatory Agreement said
covenants, reservations and restrictions shall expire. Each and every contract, deed or other
instrument hereafter executed covering or conveying the Project or any portion thereof shall
conclusively be held to have been executed, delivered and accepted subject to such covenants,
reservations and restrictions, regardless of whether such covenants, reservations and restrictions
are set forth in such contract, deed or other instruments.
Section 15. Burden and Benefit. The Trustee and the Owner hereby declare their
understanding and intent that the burdens of the covenants set forth herein touch and concern the
land in that the Owner's legal interest in the Project is rendered less valuable thereby. The Trustee
and the Owner hereby further declare their understanding and intent that the benefits of such
covenants touch and concern the land by enhancing and increasing the enjoyment and use of the
Project by tenants, the intended beneficiaries of such covenants, reservations and restrictions, and
by furthering the public purposes for which the Bonds were issued.
Section 16. Uniformity: Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan
for the use of the site on which the Project is located.
Section 17. Default; Enforcement. If the Owner defaults in the performance or observance
of any covenant, agreement or obligation of the Owner set forth in this Regulatory Agreement, and
if such default remains uncured for a period of 60 days after notice thereof shall have been given by
the Manager, the Controlling Party or the Trustee to the Owner, or for a period of 60 days from the
date the Owner should, with reasonable diligence, have discovered such default, then the Trustee
shall declare an "Event of Default" to have occurred hereunder; provided, however, that if the default
is of such a nature that it cannot be corrected within 60 days, such default shall not constitute an
Event of Default hereunder so long as (i) the Owner institutes corrective action within said 60 days
and diligently pursues such action until the default is corrected, and (ii) in the opinion of Bond
Counsel, the failure to cure said default within 60 days will not adversely affect the Tax-Exempt status
of interest on the Bonds.
Following the declaration of an Event of Default hereunder, the Owner shall have the right,
in its sole and absolute discretion, to replace the Manager and terminate the Property Management
Agreement in accordance with its terms, and the Trustee, subject to the terms of the Indenture, may
take any one or more of the following steps, in addition to all other remedies provided by law or
equity:
11
(a) by mandamus or other suit, action or proceeding at law or in equity, including
injunctive relief, require the Owner to perform its obligations and covenants hereunder or enjoin any
acts or things that may be unlawful or in violation of the rights of the Trustee hereunder;
(b) have access to and inspect, examine and make copies of all of the books and records
of the Owner pertaining to the Project; and
(c) take such other action at law or in equity as may appear necessary or desirable to
enforce the obligations, covenants and agreements of the Owner hereunder.
The Owner hereby agrees that specific enforcement of the Owner's agreements contained
herein is the only means by which the Trustee may fully obtain the benefits of this Regulatory
Agreement made by the Owner herein, and the Owner therefore agrees to the imposition of the
remedy of specific performance against it in the case of any Event of Default by the Owner
hereunder.
The Trustee and the Owner hereby agree that cure of any Event of Default made or tendered
by the Manager shall be deemed to be a cure by the Owner and shall be accepted or rejected on the
same basis as if made or tendered by the Owner.
Section 18. [Reserved].
Section 19. Recording and Filing. (a) The Owner shall cause this Regulatory Agreement
and all amendments and supplements hereto and thereto, to be recorded and filed in the real
property records of the County, and in such other places as the Owner may reasonably deem
necessary. The Owner shall pay all fees and charges incurred in connection with any such recording.
(b) The Owner and the Trustee will file of record such other documents and take such
other steps as are reasonably necessary, in the opinion of Bond Counsel, in order to ensure that the
requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the
Project.
(c) The Owner hereby covenants to include or reference the requirements and
restrictions contained in this Regulatory Agreement in any documents transferring any interest in the
Project to another person to the end that such transferee has notice of, and is bound by, such
restrictions, and, except in the case of a foreclosure or comparable involuntary conversion of the
Deed of Trust, whereby the Trustee becomes the owner of the Project, to obtain the agreement from
any transferee to abide by all requirements and restrictions of this Regulatory Agreement.
Section 20. [Reservedl.
Section 21. Governing Law; Venue. This Regulatory Agreement shall be construed in
accordance with and governed by the laws of the State of California applicable to contracts made
and performed in the State of California. This Regulatory Agreement shall be enforceable in the State
of California, and any action arising hereunder shall (unless waived by the Owner in writing) be filed
and maintained in the Superior Court of California, County of San Diego.
Section 22. Amendments: Waivers. Except as provided in Sections 8(a) hereof, this
Regulatory Agreement may 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, California,
and only upon (i) receipt by the Owner of an opinion from Bond Counsel that such amendment will
12
not adversely affect the Tax-Exempt status of interest on the Bonds and (ii) the written consent of
the Controlling Party, who shall receive a copy of any such amendment.
(a) Anything to the contrary contained herein notwithstanding, the Trustee and the
Owner hereby agree to amend this Regulatory Agreement to the extent required, in the opinion of
Bond Counsel, in order that interest on the Bonds remains Tax-Exempt. The parties requesting such
amendment shall notify the other parties to this Regulatory Agreement of the proposed amendment,
with a copy of such proposed amendment to Bond Counsel and a request that Bond Counsel render
to the Owner an opinion as to the effect of such proposed amendment upon the Tax-Exempt status
of interest on the Bonds. This provision shall not be subject to any provision of any other agreement
requiring any party hereto to obtain the consent of any other person in order to amend this Regulatory
Agreement.
(b) Any waiver of, or consent to, any condition under this Regulatory Agreement must
be expressly made in writing.
Section 23. Notices. Any notice required to be given hereunder shall be made in writing
and shall be given by personal delivery, overnight delivery, certified or registered mail, postage
prepaid, return receipt requested, or by telecopy, in each case at the respective addresses specified
in the Indenture, or at such other addresses as may be specified in writing by the parties hereto.
Unless otherwise specified by the Administrator, the address of the Administrator is:
To Owner: CMFA Special Finance Agency VII
2111 Palomar Airport Road, Suite 320
Carlsbad, California 92011
Attention: Financial Advisor
Email: jstoecker@cmfa-ca.com
With a copy to: Catalyst Housing Group LLC
21 Ward Street, Suite 2
Larkspur, California 94939
Attention: Jordan Moss
The Administrator and the Owner may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other communications shall be sent.
Notice shall be deemed given on the date evidenced by the postal or courier receipt or other written
evidence of delivery or electronic transmission; provided that any telecopy or other electronic
transmission received by any party after 4:00 p.m., local time of the receiving party, as evidenced by
the time shown on such transmission, shall be deemed to have been received the following Business
Day.
Section 24. Severability. If any provision of this Regulatory 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.
Section 25. Multiple Counterparts. This Regulatory Agreement may be simultaneously
executed in multiple counterparts, all of which shall constitute one and the same instrument, and
each of which shall be deemed to be an original.
Section 26. Limitation on Liability. Notwithstanding the foregoing or any other provision or
obligation to the contrary contained in this Regulatory Agreement, the liability of the Owner under
13
this Regulatory Agreement to any person or entity, including, but not limited to, the Trustee or the
Controlling Party and their successors and assigns, is limited to moneys available therefor under and
in accordance with the Indenture.
Section 27. Annual Reporting Covenant. No later than January 31 of each calendar year
(commencing January 31, 2023), the Owner agrees to provide to the California Debt and Investment
Advisory Commission, by any method approved by the California Debt and Investment Advisory
Commission, the annual report information required by Section 8855(k)(1) of the California
Government Code. This covenant shall remain in effect until the later of the date (i) the Bonds are
no longer outstanding or (ii) the proceeds of the Bands have been fully spent.
14
IN WITNESS WHEREOF, the Owner and the Trustee have executed this Regulatory
Agreement by duly authorized representatives, all as of the date first above written.
CMFA SPECIAL FINANCE AGENCY VII
By:
Name: Edward J. Becker
Title: Executive Director
[Signature Page—Regulatory Agreement and Declaration of Restrictive Covenants—The Breakwater Apartments]
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
[Signature Page—Regulatory Agreement and Declaration of Restrictive Covenants—The Breakwater Apartments]
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
)
COUNTY OF )
On before me, Notary Public,
Personally appeared
who proved to me on the basis of satisfactory evidence to be the
person(s)whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State
of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF )
On before me, Notary Public,
Personally appeared
who proved to me on the basis of satisfactory evidence to be the
person(s)whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State
of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
[TO COME]
A-1
EXHIBIT B
FORM OF INCOME CERTIFICATION
Effective Date:
Move-In Date:
Household Size:
Floorplan:
Unit:
HOUSEHOLD COMPOSITION
Household Member Name Relationship Birthdate
1 Head
2
3
4
5
6
7
INCOME COMPOSITION (ANNUAL)
Household Employment/ Social Security/ Public Other
Member Wages Pension Assistance Income
� I I
2
3
4
5
6
7
TOTALS $ $
TOTAL INCOME $
B-1
EXHIBIT C
FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
Witnesseth that on this day of 20_, the undersigned, on behalf of the
CMFA SPECIAL FINANCE AGENCY VII (the "Owner'), does hereby certify with respect to the
multifamily rental housing development (the "Project') that:
1. During the preceding year (i) such Project was substantially and continually in
compliance with the Regulatory Agreement and (ii) % of the units in the Project were
occupied by Low Income Tenants, _% of the units in the Project were occupied by Median
Income Tenants _% of the units in the Project were occupied by Moderate Income Tenants.
Set forth below are the unit numbers of Low Income Tenants, Median Income Tenants and
Moderate Income Tenants who commenced or terminated occupancy during the preceding
month.
Commenced Occupancy Terminated Occupancy
1 1.
2. 2.
3. 3.
4. 4.
5. 5.
6. 6.
7. 7.
8. 8.
9. 9.
10. 10.
11, 11.
12. 12.
13. 13.
14. 14.
15. 15.
16. 16.
17. 17.
18. 18.
19. 19.
20. 20.
Additional units that have commenced or terminated occupancy may be found in an additional
attached sheet
2. The units occupied by Low Income Tenants, Median Income Tenants and Moderate
Income Tenants are of similar size and quality to other units and are dispersed throughout the
Project. Attached is a separate sheet listing the number of each unit and indicating which units
are occupied by Low Income Tenants, Median Income Tenants and Moderate Income Tenants,
the size, the number of bedrooms of such units and the number of Low Income Tenants,
Median Income Tenants and Moderate Income Tenants who commenced occupancy of units
during the preceding month.
C-1
The representations set forth herein are true and correct to the best of the undersigned's
knowledge and belief.
Date: Owner:
C-2
City of Huntington Beach
`'�`" . ' 2000 Main Street ♦ Huntington Beach, CA 92648
(714) 536-5227 ♦ N-,ivtiv.huntingtonbeachca.gov
" Office of the City Clerk
Robin Estanislau, City Clerk
August 5, 2021
Jones Hall. A Professional Law Corporation
Attn: Josh D. Anzel, Shareholder
475 Sansome Street, Suite 1700
San Francisco, CA 94111
Dear Mr. Anzel:
Enclosed please find certified copies of Resolution Nos. 2021-43 and 2021-44, partially
executed originals of the Joint Exercise of Powers Agreement Relating to the CMFA Special
Finance Agency Vlll (Elan) and Joint Exercise of Powers Agreement Relating to the CMFA
Special Finance Agency Vlll (Breakwater); three (3) partially executed originals of the Public
Benefit Agreement (Breakwater); and three (3) partially executed originals of the Public
Benefit Agreement (Elan) approved by the Huntington Beach City Council on July 20, 2021 .
Upon complete execution, please mail fully executed copies of the JPAs and one fully
executed original of each of the PBAs to us. Please mail the documents to:
Robin Estanislau
City Clerk
2000 Main Street, 2nd Floor
Huntington Beach CA 92648
Your attention to this matter is greatly appreciated.
Sincerely,
WAiu
Robin Estanislau, CMC
City Clerk
RE:ds
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RECEIPT wm/1-BM222-1811.