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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Corona
400 S. Vicentia Avenue
Corona, CA 92882
Attn: ________________
Space above this line for Recorder’s use.
SECOND AMENDMENT TO OPERATION AND MAINTENANCE AGREEMENT (CORONA DEL REY APARTMENTS)
THIS SECOND AMENDMENT TO OPERATION AND MAINTENANCE
AGREEMENT (the “Amendment”) is to be dated for reference purposes as ________________ 2026, and is between the City of Corona Housing Authority as successor-in-interest to the former Redevelopment Agency of the City of Corona, a public body, corporate and politic (the “Housing Authority”), and National Community Renaissance of California, a California nonprofit public benefit corporation formerly known as and doing business as The Southern California Housing Development Corporation (“Owner”). Owner and Housing Authority may be referred to herein individually as “Party” or collectively as “Parties.”
RECITALS
A. On or about June 1, 1996, The Southern California Housing Development Corporation, a California nonprofit public benefit corporation (“SCHDC”) and the Redevelopment Agency of the City of Corona (the “Redevelopment Agency”) entered into an Affordable Housing Agreement (“AHA”). Among other things, the AHA provided for certain financial assistance to SCHDC to assist SDHDC in acquisition, rehabilitation and management of an affordable multifamily apartment rental community formerly known as the “Corona West Apartments” and currently known as “Corona del Rey” located at 204-340 Garfield Avenue and 204-345 Grant Avenue in the City of Corona, California (the “Project”). The AHA was amended through that certain First Amendment to the Affordable Housing Agreement, dated May 23, 1998 for reference purposes, to provide for additional financial assistance and time to construct the Project, which financial assistance was evidenced by that certain Promissory Note Secured by a Deed of Trust dated August 25, 1998 in the original principal amount of $1,200,000 (of which only $347,936.05 was actually disbursed) (the “Note”) secured by the Construction Deed of Trust, Security, Agreement and Fixture Filing with Assignment of Rents and Agreements (“Rehabilitation Deed of Trust”). In connection with and as a condition precedent to receipt of the financial assistance, SCHDC and the Redevelopment Agency entered into that certain Regulatory Agreement and Declaration of Restrictive Covenants dated June 1, 1996 (“Regulatory Agreement”) which requires that the Project be operated as an affordable housing rental project. SDHDC and the 2 JAMIER\01200.20005\10320953.7
Redevelopment Agency also entered into that certain Deed of Trust, Security Agreement and Fixture Filing (with Assignment of Rents) (“Trust Deed”) dated June 1, 1996. The Regulatory Agreement, the AHA, the Note, the Rehabilitation Deed of Trust and the Trust Deed are collectively referred to as the “Related Agreements.”
B. On or about June 1, 1996, SCHDC and the Redevelopment Agency entered into that certain Corona West Apartments Operation and Maintenance Agreement, which was recorded in the Official Records of Riverside County (the “Official Records”) on June 13, 1996 as document number 218507 and was subsequently amended by that certain unrecorded First Amendment to Operation and Maintenance Agreement Corona West Apartments dated January 31, 2011, which amendment, among other matters, allowed for the construction of a preschool and the use of funds from the reserve accounts to pay for the construction costs of the preschool (as amended, “Agreement”).
C. The Redevelopment Agency was dissolved in 2012, and all rights, powers, assets, liabilities, duties, and obligations associated with the housing activities of the Redevelopment Agency were transferred to the Housing Authority pursuant to Health and Safety Code section 34176, as provided in Resolution No. 2012-005 of the City Council of the City of Corona, dated January 18, 2012, and Resolution No. 2012-006 of the Oversight Board to the Successor Agency to the Redevelopment Agency of the City of Corona, dated April 5, 2012. As such, the Housing Authority has assumed all Redevelopment Agency’s rights and obligations in the Agreement and the Related Agreements. Effective January 18, 2012, all references to the “Agency” in any of the Related Agreements shall mean the Housing Authority.
D. SCHDC formally changed its name to National Community Renaissance of California, a California nonprofit public benefit corporation, on February 15, 2007.
E. Under applicable provisions of the AHA and the Agreement, Owner is obligated to maintain certain reserve accounts in connection with operation of the Property including: (i) a Capital Replacement Reserve Account, (ii) an Operating Reserve Account, and (iii) Debt Service Reserve Account (collectively, the “Accounts”). Owner is obligated to make ongoing deposits into the Capital Replacement Reserve Account.
F. Under the current terms of the Agreement, the threshold balance in the Operating Reserve Account was set at $640,000 based on initial capitalization estimates and has increased based on annual deposits from net operating income produced from operation of the Project. The threshold balance in the Debt Service Reserve Account was set at $173,500 based on an estimate of six (6) months debt service payments on the permanent loan and was initially capitalized with $160,000. As of December 31, 2025, with deposits and interest accruals, the balances in the Accounts are as follows:
Capital Replacement Reserve Account $78,992.46
Operating Reserve Account $652,418.60
Debt Service Reserve Account $178,475.74
Total $909,886.80
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G. In December of 2024, a substantial rehabilitation of the Project (the “Rehabilitation Work”) was completed using $7.45 million in proceeds provided under the Loan Agreement between Southern California Housing Development Corporation of the Inland Empire and National Community Renaissance of California, dated March 24, 2023 (the “SCHDC-IE Loan”) and additional construction loans of approximately $3.8 million (collectively, the “National Core Loan”).
H. The Rehabilitation Work funded by the SCHDC-IE Loan and National Core Loan will be refinanced with a new loan from J.P. Morgan Chase Bank in the anticipated approximate amount of $11,500,000, which loan will have hard debt payments (the “Chase Loan”).
I. The Chase Loan will be used to pay off, among other things, the National Core Loan and an existing loan from the County of Riverside HOME funds (the “County Loan”). As of January 3, 2026, the balance of the County Loan is $37,677.25 J. The Note has a maturity date of January 31, 2000. It is the Parties understanding that such maturity date was extended but they are unable to locate any amendment reflecting such extension and now desire to extend the maturity date to December 31, 2078, which extension will be effectuated through an amended and restated promissory note being executed concurrently herewith. Through such amendment, the parties will additionally reduce the interest rate to 3% simple and adjust the repayment terms as more particularly set forth therein.
K. Lastly, both the Owner and Housing Authority desire to delete the requirement for Owner to maintain the Operating Reserve Account and the Debt Service Reserve Account and transfer their respective account balances into the “Supplemental Replacement Reserve Account” which term is hereinafter defined.
L. Unless expressly provided otherwise, all capitalized terms and phrases used in this Amendment shall have the same meanings set forth in this Amendment, the Agreement or the Related Agreements.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and in consideration of the foregoing recitals and the mutual covenants and promises set forth herein, the Parties hereto agree as follows:
1. Definitions. For purposes of this Amendment, the Related Agreements and the Agreement, the following terms shall have the following meanings:
“Capital Replacement Reserve Deposit” shall mean an annual amount of $300 per rental unit per year ($48,000) that Owner shall be required to deposit in monthly installments of $4,000 pursuant to Section 2.11(b) into the Capital Replacement Reserve Account for repair and replacement of the Project.
“Chase” shall mean JPMorgan Chase Bank, N.A., a national banking association. “Chase Loan” shall mean that certain loan from Chase to NCRC CDR LLC, a California limited liability company, in the anticipated original principal amount of $11,500,000. 4 JAMIER\01200.20005\10320953.7
“City Loan” shall mean that certain loan from the Agency to the Owner in the original principal amount of $1,200,000.
“County Loan” shall mean that certain loan from the County of Riverside to the Owner in the original principal amount of $5,000,000.
“Net Operating Income” shall mean all money and income from the Project remaining annually after the payment of Senior Debt, the Capital Replacement Reserve Account Deposit, and all normal and necessary expenses of operation of the Project, including but not limited to the following:
(1) utility fees and costs not paid by tenants;
(2) insurance on the Project;
(3) ad valorem taxes and assessment payments; expenses and costs, as well as the cost of social programs at the Project and compliance monitoring/reporting, and management fees in the initial amount of $75 per Unit per month, which management fee shall be adjusted annually by a percentage equal to the annual increase in rents permitted by HUD and may be deferred and accrued;
(4) all other fees and expenses which may be permitted by the annual budget approved by the Agency; and
(5) Operating expenses will be considered "normal and necessary" if incurred generally for similarly structured, financed, and restricted rental properties operated by similar entities.
“Senior Debt” shall mean payments of principal and interest and other mandatory payments on amortized loans and indebtedness senior to the City Loan, which have been approved in writing by the Agency.”
2. Amendments to Section 2.11. Section 2.11(b) and (c) of the Agreement are hereby amended and restated in their entirety as follows:
“(b) Capital Replacement Reserve Account. An account to be funded from interim financing for the Project in the annual amount of $48,000 and through regular monthly deposits in the initial amount of $4,000 per month from the General Operating Account (“Capital Replacement Reserve Account Deposit”), which has a balance of $78,992.46 as of December 31, 2025, for the payment of repair and replacement of capital items, as provided more specifically in Section 3.2 below 3.2 below. Notwithstanding the foregoing, the Agency agrees that so long as the Chase Loan remains outstanding, the Agency will recognize the replacement reserve funded by Borrower to be held by Chase in accordance with the loan documents of the Chase Loan as satisfying the monthly deposits into the Capital Replacement Reserve Account under this Section 2.11(b), provided such amounts equals or exceeds the amounts required to be held by the Agency hereunder; Formatted: Indent: Left: 0.5"
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(c) OperatingSupplemental Replacement Reserve Account. An account to be funded from Available Reserve Net Income as provided in Section 3.6 below; and
3. Amendments to Section 3.6. Section 3.6 of the Agreement is hereby amended and restated in its entirety as follows:
“ 3.6 Creation of Supplemental Replacement Operating Reserve Account, Debt Service Reserve Account , Future Project Reserves Account and Allocation of Project Cash Flows.
(a) Project Cash Flow. Owner agrees that all Project “Net Operating Income,” meaning (i) all Project revenues (ii) minus actually expended operating expenses for the Project and (iii) minus payment of any monthly debt service payment on permanent taxexempt financing (as described in Section 3.2(a) above, shall be paid monthly onehalfannually as set forth below:
(a)(1) First, up to fifty percent (50%) to Agency, after deduction for the Owner’s administrative expenses pursuant to subsection (e) below, and one-half (50%) of such of the Net Operating Income or an amount necessary to reach the Supplemental Replacement Reserve Account Threshold defined in Section 3.6(b), whichever is less, shall be deposited monthly by Owner into reserve accounts to be established for the Project as provided in subparagraph (b) below. The funds Supplemental Replacement Reserve Account which make up this 50% of Net Operating Income to be deposited into the reserve accountsamount shall be referred to herein as the “Available Reserve Net Income.””.
Agency acknowledges that upon Owner’s satisfaction of its obligations under Section
3.6(b) (to deposit the current balances in the Operating Reserve Account and the Debt Service Reserve Accounts into the Supplemental Replacement Reserve Account), the Supplemental Replacement Reserve Account will have reached the Supplemental Replacement Reserve Account Threshold as a result of the transfer of funds from the Operating Reserve Account and the Debt Service Reserve Account to the Supplemental Replacement Reserve Account.
(2) Second, fifty percent (50%) of that portion of the Net Operating Income remaining after the deposit of the Available Reserve Net Income shall be paid to the Agency as repayment on that certain Amended and Restated Promissory Note dated substantially concurrently herewith as secured by Construction Deed of Trust, which was recorded in the Official Records of Riverside County (the “Official Records”) on October 14, 1998 as document number 444260 executed by Owner, or Owner’s predecessor in interest in favor of the Agency or Agency’s predecessor in interest (“Agency Note”) until paid in full; twenty-five percent (25%) of that portion of the Net Operating Income remaining after the deposit of the Available Reserve Net Income shall be used to repay the County Loan until paid in full; and, twenty-five percent (25%) of that portion of the Net Operating Income remaining after the deposit of the Available Reserve Net Income shall be paid to Formatted: Indent: Left: 0"
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the Owner to repay any Owner loans for the Property, the Project and/or administrative expenses.
(b) (b) Creation of Additional ProjectSupplemental Replacement Reserve Accounts. Owner will cause to be established from funds made available to Owner, as described specifically in Article 2 of the Affordable Housing Agreement, an Operating Reserve Account and a Debt Service Reserve a Supplemental Replacement Reserve Account (which shall be referred to collectively as the “Supplemental Replacement Reserve AccountsAccount”) which shall be funded and maintained as provided herein. .
With the approval of the Agency, Owner shall increase the initial deposits into said Reserve Accounts up to, but not to exceed, the thresholds established under this Section 3.6(b).
On the later to occur of March 18, 2026 or the date the Chase Loan is funded and provided to Owner, Owner shall deposit the current balances in the Operating Reserve Account and the Debt Service Reserve Accounts ($830,894.34 as of December 31, 2025), into the Supplemental Replacement Reserve Account and thereafter the Operating Reserve Account and the Debt Service Reserve Account shall be closed and any reference in this Agreement, or the Related Agreements, to the Operating Reserve Account and Debt Service Reserve Account shall no longer be applicable.
After creation of suchthe Supplemental Replacement Reserve AccountsAccount, to the extent that Available Reserve Net Operating Income from the Project is available, Owner shall, on an annual basis, allocate to and deposit up to fifty percent 50% of such Available Reservethe Net Operating Income into the Operating Reserve Account and 50% of such Available Reserve Net Income into the Debt ServiceSupplemental Replacement Reserve Account until the balance in the Operating Reserve Account has reached a total of $640,000 (“Operating Reserve Account Threshold”) and the balance in the Debt Service Reserve Supplemental Replacement Reserve Account has reached athe total amount of $173,500 (“Debt Service Reserve Account Threshold”).
The Operating820,000.00 (the “Supplemental Replacement Reserve Account Threshold has been initially established based on an estimated average replacement/reconstruction cost of $40,000 per apartment unit for the units in the Project, and is calculated at 10% % of the cost of replacing/rebuilding the Project based thereon. The Operating Reserve Account Threshold may be adjusted from time to time with the agreement of the Agency to reflect the estimated replacement cost of the Project as the same may increase from time to time.”).
The Debt Service Reserve Account Threshold has been set based on an estimate of six (6) months debt service payments on the permanent loan encumbering the Project as described in Article 2 of the Affordable Housing Agreement. Owner and Agency shall adjust the Project Debt Service Reserve Account Threshold from time to time to meet the six (6) month debt service goal.
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(c) (c) Withdrawals from Reserve Accounts. On the Annual Operating Budget submitted to and approved by the Agency, Owner shall reflect anticipated cash requirements which will need to be withdrawn from either the OperatingCapital Replacement Reserve Account or the Debt ServiceSupplemental Replacement Reserve Account. (collectively, the “Reserve Accounts”). Amounts so budgeted and approved by the Agency may be withdrawn by Owner from the indicated Reserve Account without further Agency approval. Other withdrawals for unbudgeted, unanticipated or emergency Project expenditures in an amount, singly or cumulatively for a calendar year, of less than Ten Thousand Dollars ($10,000) may be withdrawn by Owner without prior Agency approval, but Owner shall notify Agency in writing within ten (10) days after withdrawal.
All amounts so withdrawn by Owner shall be expended on the Project and in accordance with Sections 3.2, 3.7 and 3.8 of this Agreement. Withdrawals for unbudgeted, unanticipated or emergency Project expenses in excess of Ten Thousand Dollars ($10,000) shall be subject to the Agency’s, reasonable approval.
In the event that Owner is required to and is authorized to make withdrawal from either the Operating Supplemental Replacement Reserve Account or , Owner shall deposit into the Debt ServiceSupplemental Replacement Reserve Account, future Available Reserve Net up to fifty percent (50%) of the Net Operating Income of the Project shall be deposited by Owner into such Reserve Accounts to restore the balances thereof to the thresholds described herein. The funding levels of the Supplemental Replacement Reserve AccountsAccount shall be analyzed ten (10) years from the date hereof, and at five (5) year intervals thereafter, by Agency and Owner to determine if the amounts deposited into such Reserve Accounts should be increased or decreased. The funding levels shall also be reviewed more frequently if requested by either the Agency or the Owner to determine if such amounts may be increased or decreased.
(d) (d) Financial Model. A financial model reflecting the cash flow requirements set forth herein, and the projected levels and build-up of the Reserve Accounts, is attached to this Agreement as Exhibit E and incorporated herein by reference. This financial model is anticipated to represent the financial condition of the Project in the future and is intended to be illustrative of events which are anticipated at the Project, but is not intended to be a binding commitment of either minimal or maximum Project operation, condition or cash flows.
(e) Payment for Owner’s Overhead and Administrative Expenses. The Owner may withdraw the sum of Four Thousand Dollars ($4,000.00) per month from that fifty percent (50%) of Net Operating Income not used to fund the Reserve Accounts to reimburse itself for its general administrative overhead related to the Project. The remainder of that fifty percent (50%) portion of Net Operating Income shall be paid to the Agency, as more specifically set forth in subsection (a) of this Section 3.6.
The amount that Owner is permitted to withdraw pursuant to this subsection (e) may be adjusted no more often than once every five (5) years during the term of this Agreement to reflect the Formatted: Normal, Indent: Left: 0.5", First line: 0"
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cumulative change in the Consumer Price Index, All Items Indexes, All Urban Consumers for the Los Angeles - Anaheim - Riverside area (1982 - 84 = 100), occurring from and after the date of this Agreement until the date of said adjustment.
(f) Allocation of Net Operating Income After Reserve Account Thresholds Satisfied. Once the Operating Reserve Account Threshold and Debt Service Reserve Account Thresholds have been met, then all Net Operating Income shall be paid monthly to the Agency, after deduction of the amount set forth in subsection (e) above. If such thresholds are increased in accordance with the provisions of this Section 3.6, then fifty percent (50%) of Net Operating Income shall once again become Available Reserve Net Income and shall be used to fund the applicable Reserve Accounts until the modified thresholds have been reached. At that time, all Net Operating Income shall once again be paid monthly to Agency, after deduction of the amount set forth in subsection (e) above.
(e) Intentionally Deleted.
(f) Intentionally Deleted.
(g) Annual Financial Statements. Not later than one-hundred twenty (120) days after the end of the first calendar year (or partial year) covering the operation of the Project, and annually thereafter on the same day and month, Owner shall submit to the City the annual financial statement for the Project for the preceding calendar year. Based on the annual financial statement, Owner shall make the payments and deposits described in Section
3.6(a) from the Net Operating Income for such prior year on July 1 of each year. The amount will be determined by the Owner and subject to the Agency’s review and approval.”
4. Amendments to Sections 3.7 and 3.8. Sections 3.7 and 3.8 of the Agreement are hereby deleted in their entirety.
3.7. Disbursements From Operating Reserve Account. As described in Section 3.2(b) of this Agreement, unforeseen capital repair replacement expenses may be paid from the Operating Reserve Account to the extent that funds are unavailable in the Capital Replacement Reserve Account, subject to the limitations set forth in Section 3.6(c) hereof. Other unanticipated and unforeseen project expenses may also be paid from the Operating Reserve Account, subject to Section 3.6(c) hereof.
3.8 Disbursements From Debt Service Reserve Account. Withdrawal of any amount not budgeted in the approved Annual Operating Budget may be made from the Debt Service Reserve Account only in accordance with Section 3.6(c) hereof. Monies withdrawn from the Debt Service Reserve Account may be used only for payment of principal and interest on loans encumbering the Project, unless the Agency otherwise consents in writing.
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5. Severability. If any term or provision of the Agreement and/or this Amendment shall be held invalid, the remainder thereof shall not be affected.
6. Continuing Effect of Agreement. Except as set forth in this Amendment, the Agreement remains in full force and effect according to their terms. From and after the Amendment effective date, wherever the term “Agreement” appears in the Agreement, or Related Agreements, it shall be read and understood to mean the Agreement as amended by this Amendment.
7. Effectiveness. Owner acknowledges that this Agreement will not be effective until it is executed by the Housing Authority.
[SIGNATURES TO FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.
National Community Renaissance of
California, a California nonprofit public
benefit corporation
By: ______________________________
Name: ___________________________
Its: ______________________________
CITY OF CORONA HOUSING
AUTHORITY
By: _______________________________
Jacob Ellis
Executive Director
Attest:
By: _______________________________
Sylvia Edwards
Authority Secretary