DEED OF TRUST
Page S-1
2211\08\5050003.2
FIRST AMENDMENT TO
AFFORDABLE HOUSING
GRANT AND LOAN AGREEMENT
by and between
CITY OF COSTA MESA,
a California municipal corporation
and
AM
ERICAN FAMILY HOUSING,
a California nonprofit, public benefit corporation
1 400 BRISTOL PROJECT
1400 Bristol Street
Costa Mesa, California
ATTACHMENT 1
2 FIRST AMENDMENT TO
AFFORDABLE HOUSING GRANT AND LOAN AGREEMENT
This FIRST AMENDMENT TO AFFORDABLE HOUSING GRANT AND LOAN AGREEMENT (“First Amendment”) is made and entered into on _______________________, 2026, by and between the CITY OF COSTA MESA, a California municipal corporation (“City”), and AMERICAN FAMILY HOUSING, a California nonprofit , public benefit corporation (“Developer”).
RECITALS
A. On February 28, 2025, the City and Developer entered into that certain Affordable Housing Grant and Loan Agreement (“Original Agreement”).
B. In conjunction with the execution of the Original Agreement, the County of Orange (“County”) acquired the buildings and related structures located at 1400 Bristol Street, Costa Mesa California (“Property”) and leased the Property to Developer.
C. The Original Agreement provided, among other things, for the City providing a grant and loan to Developer who would rehabilitate, construct and operate seventy -six (76) affordable units (“Affordable Units”) for households experiencing homelessness or who are at risk of homelessness (as defined in Part 578.3 of Title 24 of the Code of Federal Regulations), who are impacted by the COVID -19 pandemic, and who earn thirty percent (30%) or less of the Area Median Income (AMI), plus supportive facilities and two unrestricted Manager’s Units (collectively, “Project”).
D. The City provided financial assistance to Developer in the form of a loan in an amount not to exceed Two Million Five Hundred Thousand Dollars ($2,500,000) from the Housing Authority of the City of Costa Mesa ’s Low to Moderate Income Housing Asset Fund (“City Loan”) and a grant of City ARPA funding in an amount not to exceed One Million Five Hundred Thousand Dollars ($1,500,000) (“ARPA Grant” or “City Grant”).
E. Concurrently with the Original Agreement, Developer executed several other documents in favor of the City in connection with the Project, which included, among other things, a Promissory Note, Deed of Trust, and Joint Regulatory Agreement. The Deed of Trust , dated February 28, 2025, and recorded on February 28, 2025, as Instrument No. 2025000068071 in the Official Records of Orange County, California, secured the Original Agreement, the Promissory Note, Joint Regulatory Agreement and other Project related documents.
F. Developer has requested additional financing from the City of the development of the Project. The City has agreed to loan to Developer an additional Three Hundred Fifty Thousand Dollars ($350,000) from the City’s HOME Investment Partnership Funds . With these additional funds, the total amount of financial assistance from the City will be Four Million Three Hundred Fifty Thousand Dollars ($4,350,000).
3 G. The Parties now desire to amend the Original Agreement to provide for the terms associated with the additional loan, including, among other things, HOME regulations, change in the percentage of residual receipts, a new promissory note and deed of trust.
NOW, THEREFORE, the Parties amend the Original Agreement as follows:
1. Section G of the Recitals, is hereby amended in its entirety and replaced wit h the following:
“G. Developer has requested assistance from the City and Authority in order to assist Developer to lease, rehabilitate, manage and maintain the Project as long-term affordable housing at an Affordable Rent throughout the Affordability Period, as set forth in more detail in this Agreement and the Regulatory Agreement. The City and Authority desire to assist Developer by providing financial assistance to Developer in the form of a loan of in an amount not to exceed Two Million Five Hundred Thousand Dollars ($2,500,000) from the Authority’s LMIHAF fund (“City Loan”), a loan in the amount of Three Hundred Fifty Thousand Dollars ($350,000) from the City’s HOME I nvestment Partnership Funds (“HOME Loan”) and a grant of City ARPA funding in an amount not to exceed One Million Five Hundred Thousand Dollars ($1,500,000) (“ARPA Grant” or “City Grant”).
The City Loan, HOME Loan and the City Grant are being utilized by Developer to finance the development of the Property, as well as the eligible construction costs associated with completing the Project. The permitted income levels of the tenants of each Qualified Housing Unit and the permissible rents to be charged for t enancy and occupancy of each Qualified Housing Unit are set forth in this Agreement in order to ensure compliance with the HOME Program and the requirements of the HSC and ARPA.”
2. Section J of the Recitals, is hereby amended in its entirety and replaced with the following:
“J. With the City Loan, HOME Loan, and ARPA Grant, the Project will be subject to this Agreement, the Regulatory Agreement, and other associated documents and requirements as set forth in this Agreement.”
3. Section 1.2, of the Definitions, is hereby amended in its entirety and replaced with the following:
“Section 1.2 “Affordability Period” shall mean the duration of the affordable housing requirements and other covenants of and as required by this Agreement and as set forth in the Regulatory Agreement. The Affordability Period shall be the earlier of: (a) fifty-five (55) years from the date the Notice of Affordability Restrictions is issued by City and caused to be recorded in the Official Records against the Property; or (b) if not able to be determined, fifty -seven (57) years after the date of this Agreement. The Affordability Period is comprised of two periods: (a) the HOME Compliance Period, which is also referred to as the “First Affordability Period ,” and (b) tha t portion of the Affordability Period which follows the First Affordability Period, which portion is also referred to and defined herein as the “Second Affordability Period,” so long as the cumulative number of years for the Affordability Period is fifty-five (55) years.” 4 4. Section 1.5, of the Definitions, is hereby amended in its entirety and replaced with the following:
“1.5 “Agreement” shall mean this Affordable Housing Grant and Loan Agreement and First Amendment between City and Developer, including all Attachments, exhibits and other documents attached hereto.”
5. Section 1.15, of the Definitions, is hereby amended in its entirety and replaced with the following:
“1.17 “City Deed of Trust” shall mean a deed of trust securing the City Note and other obligations of Developer hereunder substantially in the form of Attachment No. 7, attached hereto and fully incorporated herein by this reference. The City Deed of Trust shall be a fourth mortgage deed of trust, subordinate only to a loan or loans issued by an approved lender. Developer has been awarded a Twenty -Nine Million Dollars ($29,000,000) Homekey Award (“Homekey”). Developer also obtained certain loans from the County of Orange in the total amount of Ten Million Eight Hundred Eighty- One Thousand Five Hundred and Twenty Dollars ($10,881,520) (“County Loan”), a loan from the City of Newport Beach in the amount of Three Million Two Hundred Sixty- Two Thousand Five Hundred Dollars ($3,262,500), and deferred development fees in the amount of One Million Thirty Thousand Six Hundred and Nine Dollars ($1,030,609). The County Loan shall be known as the “Primary Loan.” In the event Developer were to obtain a new loan or funding that is not approved by or otherwise permitted under this Agreement without the prior written consent of the City, the City Note and City Deed of Trust shall not be subordinated and shall be and remain a senior lien and encumbrance against the Property and Project, subordinate only to the Regulatory Agreement.”
6. Section 1.42, of the Definitions, is hereby amended in its entirety and replaced with the following:
“Prescribed Rent Levels” shall mean, based upon the most restrictive requirements of all Project funding sources, for the seventy- six (76) Affordable Units, Affordable Rent calculated at no more than thirty percent (30%) of AMI (HCD rents). Further, the City is designating one (1) studio and one (1) one-bedroom unit as floating Low HOME units at Low HOME rents; however, HCD rents are more restrictive and shall apply.”
7. Sections 1.58 HOME Deed of Trust , 1.59 HOME Loan , 1.60 HOME Note, 1.61 HOME Compliance and First Affordability and 1.62 Second Affordability Period are added to the Definitions as follows:
“1.58 “HOME Deed of Trust” shall mean a deed of trust securing the HOM E Note and other obligations of Developer hereunder substantially in the form of Attachment No. 7A, attached hereto and fully incorporated herein by this reference. The HOME Deed of Trust shall be a fifth mortgage deed of trust, subordinate only to a loan or loans issued by the approved lenders shown in Section 2.9 below. In the event Developer were to obtain a new loan or funding that is not approved by or otherwise permitted under this Agreement without the prior written consent of the City, the HOME Note and HOME Deed of Trust shall not be subordinated and shall be and remain a senior lien and encumbrance against the Property and Project, subordinate only to the Regulatory Agreement. 5 1.59 “HOME Loan” shall mean and consist of the financial assistance of Three Hundred and Fifty Thousand Dollars ($ 350,000) sourced solely from the City’s HOME funds, as more particularly provided in Section 2.2. The HOME Loan is evidenced by the HOME Note and is secured by the HOME Deed of Trust.
1.60 “ HOME Note” shall mean the promissory note, substantially in the form of Attachment No. 6A attached hereto and fully incorporated herein by this reference, which evidences the HOME Loan consisting of HOME funds.”
1.61 “HOME Compliance Period” and “First Affordability Period” means the period of time commencing upon the date the first unit is rented to a Qualified Household and ending on the twentieth (20th) anniversary of the issuance of the final certificate of occupancy for the Project by the City. As defined herein, the Second Affordability Period commences at the end of the HOME Compliance Period and ends on the fifty-fifth (55th) anniversary of the recordation in the Official Records of the Notice of Affordability Restrictions. The end of the HOME Compliance Period in no manner affects the fifty-five (55) year Affordability Period under this Agreement and the Regulatory Agreement.
1.62 “Second Affordability Period” shall mean the period commencing at the end of First Affordability Period and ending on the date that is the fifty- fifth (55th) anniversary of the date the recordation in the Official Records of the Notice of Affordability Restrictions, subject to and so long as the cumulative number of years that comprise the Affordability Period is fifty -five (55) years under this Agreement, the Regulatory Agreement, and other Project Documents.”
8. Article 2, Financing, Section 2.2, City Loan, is hereby amended in its entirety and replaced with the following:
“2.2 City Loan and HOME Loan. The City hereby agrees to loan to Developer and Developer hereby agrees to borrow from the City the sum of up to Two Million Five Hundred Thousand Dollars ($2,500,000) (“ City Loan”) of LMIHAF, and Three Hundred Fifty Thousand Dollars ($350,000) of HOME funds, subject to the terms and conditions set forth in this Agreement, and subject further to the terms and conditions set forth within the Project Documents, including the City Note, City Loan, Deed of Trust, the HOME Note, HOME Loan, HOME Deed of Trust, and Regulatory Agreement.
Combined, the ARPA Grant, City Loan and HOME Loan (“City Funds”) represent a total contribution by the City of Four Million Three Hundred Fifty Thousand Dollars ($4,350,000).
2.2.1 City Note , City Deed of Trust , HOME Note and HOME Deed of Trust. The City Loan and HOME Loan shall be evidenced by the City Note and HOME Note, respectively, and secured by the City Deed of Trust and HOME Deed of Trust, which shall be recorded against the Property in the Official Records of the County in a position junior and subordinate to the lenders set forth in Section 2.9.
2.2.2 Terms of City Note and HOME Note . The City Note and HOME Note shall be for a term commencing upon the date of initial disbursement of funds at 6 Closing and continuing for a period of fifty-five (55) years after the date of recordation of the Release of Construction Covenants (“Maturity Date”). The City Note and HOME Note shall bear simple in terest at the rate of three percent (3%) per annum from the date of disbursement of the City Funds. Commencing the calendar year immediately after the recordation of the Release of Construction Covenants and annually on or before June 1 of each succeeding year, Developer shall make annual payments to City allocable from City’s share of Residual Receipts, until the Maturity Date. On the Maturity Date of the City Note and HOME Note, all principal and interest shall be due in full by Developer to C ity (without regard to Residual Receipts calculation).
a. The City Note and HOME Note shall be repaid through an annual Residual Receipts calculation based on operation of the Project. The City Note and HOME Note shall be payable from the City’s Proportionate Share of fifty percent (50%) of Residual Receipts , which is anticipated to be collectively nine and eighty- eight thousandths percent (9.088%), for the Project until the City Note and HOME Notes have been paid in full, but all amounts due, including the full principal amount principal and any and all accrued interest, shall be due and payable in full on the Maturity Date.
Developer shall make annual payments on the City Loan and HOME Loan payable from the City’s Proportionate Share of fifty percent (50%) of Residual Receipts, which is anticipated to be collectively nine and eighty-eight thousandths percent (9.088%), received from operation of the Project until the City Loan and the HOME Loan matures and full payment, principal and any accrued and unpaid interest, is due on the City Loan and HOME Loan as set forth in the their respective Notes. In the event that the City’s Proportionate Share of fifty percent (50%) of Residual Receipts , is insufficient to provide for payment of the entire annual interest payment due under the City Note and the HOME Note, then such unpaid interest (referred to as the “past -due interest amount”) shall begin to accrue interest from the date on which such interest payment was due at the interest rate applicable to outstanding principal under the City Note and the HOME Note . The next annual payment shall be increased by the amount of the past -due interest amount plus interest accrued thereon. All past -due interest amounts shall continue to accrue interest until all such amounts and accrued interest thereon have been paid to City.
b. The City Note and the HOME Note shall be accelerated and due in full in the event Developer refinances to take cash out or transfers the Project or any part thereof (but excluding residential leases to tenants and Permitted Transfers), without prior written approval of the City, and the City Note and HOME Note shall be paid in full from Refinancing Net Proceeds, if any, immediatel y upon any refinancing of the Project (or any part thereof) or as applicable from Transfer Net Proceeds (excluding Permitted Transfers), if any, immediately upon any transfer in whole or in part of the Project (excluding residential leases to tenants). The terms of the City Loan and HOME Loan are more particularly described in the City Note and HOME Note, respectively.
c. Notwithstanding any provision to the contrary, the
determination of Residual Receipts, in accordance with the documents evidencing the 7 County Loan and the Ground Lease, shall be deemed to comply with and satisfy the requirements to determine Residual Receipts under this Agreement.
2.2.3 Security for City Loan and HOME Loan. The City Loan shall be secured by the City Deed of Trust , Attachment No. 7, which Deed of Trust has been recorded in the O fficial Records of Orange County, California on February 28, 2025, as Instrument No. 2025-000068071. The HOME Loan shall be secured by the HOME Deed of Trust, Attachment No. 7A, which shall be recorded against the Leasehold Interest in the Property in the Official Records of the County in fifth lien position.
2.2.4 Request for Notice of Default. The City hereby requests that a copy of any notice of default and that a copy of any notice of sale hereunder be mailed to it at the address set forth in Section 10.2 of this Agreement . City shall record a Request for Notice of Default in the O fficial Records of Orange County, California, in a form similar to the Request for Notice of Default attached hereto as Attachment No. 8.
2.2.4. Consent Required for Assignment and Assumption. Except for Permitted Transfers and other Transfers permitted pursuant to Article 8 below, the City Note and HOME Note shall not be assignable or assumable by any successor or assignee of Developer without the prior written consent of City, which consent may be withheld in the sole and absolute discretion of the City Manager.”
9. Article 2, Financing, Section 2.4, Permissible Use of City Loan and ARPA Grant; Eligible Expenses, is hereby amended in its entirety and replaced with the following:
“2.4 Permissible Use of City Loan, HOME Loan and ARPA Grant; Eligible Expenses .
Pursuant to all of the terms and conditions of this Agreement, Developer shall be permitted to use the City Loan, HOME Loan and ARPA Grant proceeds only for the Eligible Expenses that are actually and reasonably incurred by Developer and approved by the City (such approval not to be unreasonably withheld or delayed), and for no other purpose, consistent with the ARPA requirements and HOME regulations, terms, conditions, and eligible uses. The proceeds of the City Loan, HOME Loan and ARPA Grant shall not be used for Project reserve accounts, monitoring, or servicing and origination fees, or for expenditures incurred more than one year after the issuance of the Release of Construction Covenants.”
10. Article 2, Financing, Section 2.9, Additional Financing, is hereby amended i n its entirety and replaced with the following:
2.9 Additional Financing.
2.9.1 Sources of Financing. Developer and City anticipate the following funding sources to be obtained by Developer and utilized in addition to the City Loan, HOME Loan and ARPA Grant for the Rehabilitation and operation of the Project. The final sources and amounts of funding for the Project as well as the final cost estimates with respect to the Rehabilitation and operation of the Project shall be set forth in the Final Budget. 8 a. Homekey award in the amount of Twenty- Nine Million Dollars ($29,000,000).
b. Developer will enter into loans with the County of Orange in an approximate combined original principal amount of Ten Million Eight Hundred Eighty- One Thousand Five Hundred and Twenty Dollars ($10,881,520). c. Developer will enter into a loan with the City of Newport Beach in the amount of Three Million Two Hundred Sixty- Two Thousand Five Hundred Dollars ($3,262,500).
d. Developer will be obtaining a CalOptima Health grant in the amount of Nine Hundred Eighty-One Thousand Six Hundred and Sixty Dollars ($981,660). e. Developer will be receiving One Million Thirty Thousand Six Hundred and Nine Dollars ($1,030,609) in deferred developer fees.
11. Article 7, ARPA Language is hereby amended in its entirety and replaced with the following:
“A RTICLE 7. ARPA LANGUAGE AND HOME REGULATIONS”
“7.1 ARPA Requirements. Developer, in the performance of this Agreement and as a sub-recipients of ARPA funds, as well as all of its contractors, consultants and subcontractors, must comply with the following:
a. Developer, and any and all of its contractors, consultants and subcontractors, must ensure that they do not deny benefits, services or otherwise discriminate on the basis of race, color, national origin (including limited English proficiency), disability, age, or sex (including sexual orientation and gender identity) in accordance with Title VI of the Civil Rights Act of 1964, Public Law 88- 352, 42 U.S.C. 2000d-1 et seq., and the Department’s implementing regulations, 31 CFR part 22; Section 504 of the Rehabilitation Act of 1973 (Section 504), Public Law 93 -112, as amended by Public Law 93-516, 29 U.S.C. 794; Title IX of the Education Amendments of 1972 (Ti tle IX), 20 U.S.C. 1681 et seq., and the Department’s implementing regulations, 31 CFR part 28; Age Discrimination Act of 1975, Public Law 94- 135, 42 U.S.C. 6101 et seq., and the Department implementing regulations at 31 CFR part 23. Developer will be required to submit data showing compliance with the above.
b. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards found at 2 CFR Part 200 Appendix II. c. The Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33 U.S.C. 1251et seq.) and all applicable standards, orders, or regulations. d. The Byrd Anti -Lobbying Amendment (31 U.S.C. 1352) regulations regarding restrictions on lobbying and required certificates. 9 e. Section 2 CFR 200.323 regarding Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act (EPA guidelines at 40 CFR Part 247.
f. Section 200.322 of 2 CFR 200.322, Domestic preferences for procurements.
7.2 HOME Program. Because the City HOME Loan to Developer will be provided with HOME Program funds, Developer shall carry out the rehabilitation of the Housing Units and the operation of the Project in conformity with all requirements of the HOME Program to the extent applicable to the Project. In the event Developer desires to change the affordable housing or maintenance requirements for the Property from the specific requirements set forth in this Agreement in order to comply with a subsequently enacted amendment to the HOME Program, Developer shall notify the City in writing of such proposed change and the amendment related thereto at least thirty (30) days prior to implementing such change. In the event the City disapproves of such change and Developer’s inter pretation of the amendment related thereto, the City shall notify Developer of its disapproval in writing and the parties shall seek clarification from the appropriate HUD Field Office. Only if HUD concurs with Developer’s interpretation of the HOME Program shall Developer be permitted to implement the proposed change.
7. 3 Federal Funding. Due to the source of funding for the HOME Loan from HOME Program funds and the ARPA Grant from the Coronavirus State and Local Fiscal Recovery American Rescue Plan Act Funding, 31 CFR Part 35 funds, which funds are a federal revenue source, Developer shall comply with all applicable federal law and including, without limitation, the following "Federal Program Limitations":
7.3.1 Property Standards. Developer agrees to ensure that rehabilitation of the Project will comply with all applicable requirements of the HOME Program regulations, including 24 CFR §92.251, including, but not limited to, the following requirements:
a. The Project and all Housing Units and common areas at the Property shall meet all applicable State and local codes, ordinances, and zoning requirements, including all applicable requirements set forth in the Costa Mesa Municipal Code and all applicable State and local residential and building codes. The Project and all Housing Units and common areas at the Property must meet all such applicable requirements upon Project completion.
b. The Project and all Housing Units and common areas at the Property shall also meet the requirements described in paragraphs (i) through (iv) as follows:
(i) The Project and all Housing Units and common areas at the Property shall meet the accessibility requirements of 24 CFR part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and Titles II and III of the Americans with Disabilities Act (42 U.S.C. 12131- 12189) implemented at 28 CFR parts 35 and 36, as applicable. Covered multifamily dwellings, as defined at 24 CFR 100.201, 10 must also meet any applicable design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619). (ii) Where relevant, the Project must be constructed to mitigate the impact of potential disasters (e.g., earthquakes, hurricanes, flooding, and wildfires), in accordance with State and local codes, ordinances , or other State and local requirements, or such other requirements as HUD may establish.
(iii) The material subcontracts and the Rehabilitation Plans must describe the construction work to be undertaken in adequate detail so that City can conduct inspections in accordance with the HOME Regulations. Developer shall also provide written cost estimates for construction for City’s review; City shall determine whether such cost estimates are reasonable.
(iv) Developer shall permit and facilitate progre ss and final inspections of the Rehabilitation by City to ensure that work is done in accordance with the applicable codes, the contract(s), subcontracts, Scope of Rehabilitation and approved construction plans.
c. City has established property standards for rental housing (“City Property Standards”), which standards include all inspectable items and inspectable areas specified by HUD based on the HUD physical inspection procedures (Uniform Physical Condition Standards (UPCS)) prescribed by HUD pursuant to 24 CFR 5.705. Developer shall ensure that the Project, including all Housing Units and common areas at the Property, shall comply with City’s Property Standards throughout the Affordability Period. In accordance with City’s Property Standards, Developer shall maintain the Project, including all Housing Units and common areas at the Property: (i) as decent, safe, and sanitary housing in good repair, (ii) free of all health and safety defects and all life -threatening deficiencies, and (iii) in compliance with the lead-based paint regulations and requirements in 24 CFR Part 35.
d. In accordance with the HOME Regulations, City shall undertake ongoing inspections of the Project in accordance with §92.504(d). City has developed written inspection procedur es and procedures for ensuring that timely corrective and remedial actions are taken by Developer to address identified deficiencies.
7.3.2 Handicapped Accessibility . Developer shall comply with, as and to the extent applicable, (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR Part 8 Subpart C governing accessibility of projects assisted with federal funds; and (b) the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR Part 35–36 in order to provide handicapped accessibility to the extent readily achievable; and (c) the Uniform Federal Accessibility Standards (UFAS) pursuant to the Architectural Barriers Act of 1968, 42 U.S.C. 4151-4157, as amended.
7.3.3 Use of Debarred, Suspended, or Ineligible Participants . Developer shall comply with the provisions of 24 CFR Part 24 relating to the employment, engagement of 11 services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. Developer, each subcontractor, and any other contractors or subcontractors or agents of Developer (subject to compliance with 24 C FR Part 135) shall have provided to City the certification in appendix B of 24 CFR Part 24 that neither it nor its principals is presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation from this Project, and City shall be responsible for determining whether each contractor has been debarred.
7.3.4 Maintenance of Drug- Free Workplace. Developer shall certify that Developer will provide a drug-free workplace in accordance with 2 CFR Part 2429.
7.3.5 Lead-Based Paint. City, as a recipient of federal funds, has modified and conformed all of its federally funded housing programs to the Lead- Based Paint (LBP) Poisoning Prevention Act, Title X of the 1992 Housing and Community Development Act, 42 U .S.C. §4800, et seq., specifically §§4821 4846, and the implementing regulations thereto. In this regard, Developer shall comply with all applicable federal requirements relating to lead-based paint. On December 28, 2021, Partner Engineering and Science, Inc. submitted to Developer a Limited Asbestos & Lead-Based Paint Survey Report identifying the presence of LBP at the Property, as well as steps that must be taken to mitigate potential hazards.
7.3.6 Affirmative Marketing. Affirmative marketing steps consist of actions to provide information and otherwise attract eligible persons in the housing market area to the available housing without regard to race, color, national origin, sex, religion, familial status, or disability. Developer shall adopt and im plement affirmative marketing procedures and requirements at the Property in accordance with Section 92.351 of the HOME Regulations.
7.3.7 Nondiscrimination, Equal Opportunity and Fair Housing. Developer shall carry out the Project and perform its obligations under this Agreement in compliance with all of the federal laws and regulations regarding nondiscrimination equal opportunity and fair housing described in 24 CFR 92.350 and 24 CFR 5.105.
7.3.8 Energy Conservation Standards . As applicable to the Project, Developer shall cause the Property to meet the cost -effective energy conservation and effectiveness standards in 24 CFR 965 and 24 CFR 990.185.
7.3.9 Displacement and Relocation. Developer acknowledges and agrees that, pursuant to Federal Program Limitations and consistent with the other goals and objectives of that part and pursuant to a Relocation Plan, City must ensure that it has taken all reasonable steps to minimize the displacement of persons as a result of the Rehabilitation work. Furthermore, to the extent feasible, and subject to the tenant screening criteria set forth in the Management Plan, residential tenants must be provided a reasonable opportunity to lease and oc cupy a suitable, decent, safe, sanitary and affordable Housing Unit at the Property or comparable outside property upon completion of the Construction 12 work. Developer shall cause all Relocation of tenants and occupants of the Property to be conducted in accordance with the Relocation Laws and all Federal Program Limitations, including 24 CFR 92.353. Developer further agrees to cooperate with City in meeting the requirements of the Federal Program Limitations and shall take all actions and measures reasonably required by the Director (or his or her duly authorized representative) in connection therewith.
7.3.10 Requests for Disbursements of Funds . Developer may not request disbursements of HOME Loan funds hereunder until the funds are needed for payment of eligible costs of the Project. The amount of each request shall be limited to the amount needed for the acquisition of the Property and the Rehabilitation as set forth in the Final Budget and to be paid in installments as set forth in Section 2.5.
7.3.11 Eligible Costs. Developer shall only use HOME Program funds to pay costs defined as “eligible costs” under Federal Program Limitations.
7.3.12 Records and Reports . Developer shall maintain and from time to time submit to City such records, reports and information as the Director may reasonably require in order to permit City to meet the recordkeeping and reporting requirements required of them under 24 CFR 92.508. Without limiting the following, Developer shall maintain records and submit annual r eports as required by this Agreement and Exhibit C to the Regulatory Agreement.
7.3.13 Conflict of Interest. Developer shall comply with and be bound by the conflict of interest provisions set forth at 24 CFR 92.356(f). No owner, developer, or sponsor of a project assisted with HOME funds (or officer, employee, agent, elected or appointed official, or consultant of the owner, developer, or sponsor or immediate family member or immediate family member of an officer, employee, agent, elected or appointed official, or consultant of the owner, developer, or sponsor) whether private, for -profit or nonprofit (including a community housing development organization (CHDO) when acting as an owner, developer, or sponsor) may occupy a HOME-assisted affordable housing unit in a project during the required period of affordability specified in § 92.252(e) or §
92.254(a)(4). This provision does not apply to an individual who receives HOME funds to acquire or rehabilitate his or her principal residence or to an employee or agent of the owner or developer of a rental housing project who occupies a housing unit as the project manager or maintenance worker.
7.3.14 Conflicts between and among Federal Program Limitations and State or Local Law. If and to the extent applica ble for any source of federal revenue expended to implement the Project and in the event of any conflict or inconsistency between applicable Federal Program Limitations and/or and State or local law, then the more stringent requirement(s) shall control.
7.3.15 Layering Review. Developer acknowledges that a layering review will be performed in accordance with Federal Program Limitations. In connection with such review Developer acknowledges and agrees it shall be required to represent and certify to 13 City that no government assistance other than the City Loan, the additional financing included in Section 2.9.1, the welfare exemption under California Revenue and Taxation Code Section 214(g), and the HAP Contract assistance has been obtained or is contemplated to be obtained for the acquisition, Rehabilitation and operation of the Property. If such layering review is conducted, Developer agrees to notify City in the event that it applies for or proposes to use governmental funds, other than as listed in the previous sentence, for the Property or the Project.
7.4. Section 3 Compliance. Developer agrees to comply with and to cause each and all of its contractors and subcontractors and any and all or agents of Developer or any Affiliate of Developer to comply with the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. §1701u, and the implementing regulations at 24 CFR Part 75, in connection with the construction of the Project to the extent applicable. D eveloper shall submit to City each subcontract with appropriate provisions providing for the Rehabilitation of the Project in conformance with the terms of this Agreement, including the Section 3 Clause.
7.4.1 Section 3 Checklist . City has prepared a Section 3 “checklist” and other forms related to Section 3 compliance, attached hereto as Attachment No. 14 and fully incorporated by this reference; and as provided by City to Developer, and its contractor(s) or subcontractor(s), if any, and as applicable , such forms shall be utilized in all contracts and subcontracts to which Section 3 applies. Developer hereby acknowledges and agrees to take all responsibility for compliance with all Section 3 Clause federal requirements as to Developer, and each and all of its contractors and subcontractors, and other agents.
Developer shall provide or cause to be provided to each and all of its contractors and subcontractors and other agents the checklist for compliance with the Section 3 Clause federal requirements p rovided by City, to obtain from Developer and each and all of its contractors and subcontractors, and other agents all applicable items, documents, and other evidence of compliance with the items, actions, and other provisions within the checklist, and to submit all such completed Section 3 Clause documentation and proof of compliance to the Director. To the extent applicable, Developer shall comply and/or cause compliance with all Section 3 Clause requirements for the Project. For example, when and if Developer or its contractor(s) hire(s) full time employees, rather than volunteer labor or materials, Section 3 is applicable and all disclosure and reporting requirements apply.
7.5. Violence Against Women Act (VAWA). Developer agrees to comply with the core statutory protections of VAWA that prohibit denial or termination of assistance or eviction solely because an applicant or tenant is a victim of domestic violence, dating violence, sexual assault, or stalking became applicable upon enactment of VAWA 2013 on March 7, 2013. Compliance with the VAWA regulatory requirements under § 24 CFR 92.359 and § 24 CFR part 5, subpart L, are required for any rental housing project for which the date of the HOME funding commitment is on or after December 16, 2016. For HOME-assisted rental housing, the requirements shall apply to the owner of the housing for the duration of the affordability period.
14 7.5.1. Violence Against Women Act (VAWA) Bifurcation of lease requirements:
For the purposes of this part, the following requirements shall apply in place of the requirements at § 24 CFR 5.2009(b) . If a family living in a HOME -assisted rental unit separates under § 24 CFR 5.2009(a), the remaining tenant(s) may remain in the HOME - assisted unit.
7.5.2. V iolence Against Women Act (VAWA) Emergency Transfer plan: The Developer must develop and implement an emergency transfer plan and must make the determination of whether a tenant qualifies under the plan. The plan must meet the requirements in § 24 CFR 5.2005(e), as supplemented by this section.
7.6 F
ees: Project owners are prohibited from charging fees that are not customarily charged in rental housing such as laundry room access fees, and other fees. However, rental project owners may charge reasonable application fees to prospective tenants may charge parking fees to tenants only if such fees are customary for rental housing projects in the neighborhood; and may charge fees for services such as bus transportation or meals, as long as such services are voluntary.”
12. Attachments 4 and 5 hereby amended in their entirety and replaced with the new Attachments 4 and 5 attached hereto and incorporated herein by reference.
13. New Attachments 6A, 7A and 14, attached hereto and incorporated herein by reference, are hereby added to the Original Agreement.
Signatures on following page.
15 IN WITNESS WHEREOF, City and Developer have executed this First Amendment to Affordable Housing Grant and Loan Agreement as of the date set forth above.
“CITY”
CITY OF COSTA MESA,
a California municipal corporation
By: ____________________________ Date: ___________________________ City Manager
ATTEST:
By:_____________________________ Date: ____________________________ City Clerk
APPROVED AS TO FORM:
By:_____________________________ Date: ____________________________ City Attorney
“DEVELOPER”
AMERICAN FAMILY HOUSING,
a California nonprofit, public benefit corporation
By: ______________________________ Date:_____________________________ Name: Myles Anthony Peinemann II
Title: Chief Executive Officer
16 ATTACHMENT NO. 4
PROJECT BUDGET
17 1400 Bristol
Construction Development Budget
18 ATTACHMENT NO. 5
DEVELOPER’S PRO FORMA
19 20
21 22
23 24
25 26
27 28
29 ATTACHMENT 6A
HOME NOTE
30 PROMISSORY NOTE SECURED BY
GROUND LEASEHOLD DEED OF TRUST
$350,000.00 Costa Mesa, California July ____ 2026
FOR VALUE RECEIVED, AMERICAN FAMILY HOUSING, a California non - profit, public benefit corporation) (“Developer”), promises to pay to the CITY OF COSTA MESA, a California municipal corporation (“City”), at its offices at City Hall, 77 Fair Drive, Costa Mesa, California 92626, or at such other place as City may from time to time designate in writing, (a) the principal sum of Three Hundred Fifty Thousand Dollars ($350,000.00) (or so much of the proceeds as have been disbursed by City to Developer) from the HOME Partnership Investment Funds pursuant to the Agreement (defined below) but in no event to exceed Three Hundred Fifty Thousand Dollars ($350,000.00) (“Note Amount”); and (b) all costs and expenses payable hereunder.
RECITALS
A. This Promissory Note Secured by Ground Leasehold Deed of Trust (“Note”) is made pursuant to that certain First Amendment to Affordable Housing Grant and Loan, dated concurrently herewith, which amends that Affordable Housing Grant and Loan dated February 28, 2025, by and between Developer and City ( collectively, the “Agreement”) in relation to the property located at 1400 Bristol Street , Costa Mesa , California, Assessor’s Parcel Number 439 - 312-12.
B. Developer has, concurrently with this Note, executed an Amend ed and Restated Promissory Note Secured by Ground Leasehold Deed of Trust in favor of the City in connection with a LMIFAF loan given by the City (“City Note”).
C. Capitalized terms used in this Note shall have the meaning set forth in the Agreement, unless expressly otherwise defined herein.
NOW, THEREFORE, for good valuable consideration, receipt of which is hereby acknowledged, Developer agrees as follows:
1. Agreement. The principal sums hereunder have been and are being loaned by City to Developer in accordance with and pursuant to the Agreement, which is a public record on file in the office of the City Clerk. The proceeds of the HOME Loan shall be disbursed only to pay for the items and in accordance with the disbursement procedures, and the terms and conditions set forth in the Agreement. The Agreement is incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein. In the event of any inconsistencies between the terms of this Note a nd the terms of the Agreement or any other document related to the Note Amount, the terms of this Note shall prevail. (a) A default by Developer under any of the provisions of the Agreement, the HOME Deed of Trust of even date herewith, or any of the other Project Documents shall, after the 31 expiration of the applicable cure period(s) under the respective agreement, be a default hereunder, and a default hereunder after applicable cure periods shall be a default under the Project Documents.
2. Interest. Interest at the rate of three percent (3%) shall accrue on the Note Amount, except as set forth in Section 10 hereof as to the Default Rate, which Default Rate shall begin to accrue upon an Event of Default by Developer as set forth herein and in the Agreement.
3. Term; Payment Obligations . This Note shall be for a term that commences on the date of initial disbursement of funds at Closing and continues for a period of fifty- five (55) years after the recordation of the Notice of Affordability Restrictions (as defined in the Agreement) (“Maturity Date”).
(a) This Note shall be repaid through an annual Residual Receipts calculation based on operation of the Project, except (i) in the Event of Default by Developer, or (ii) on the Maturity Date, in which case, (i) or (ii), the outstanding balance of this Note is due in full immediately without regard to Residual Receipts.
(b) Commencing on or before June 1 after the calendar year in which the date of recordation of the Notice of Affordability Restrictions occurs and on the 90 th day of each succeeding calendar year, Developer shall make cause to be prepared and submitted to the City its Annual Financial Statement, including the Residual Receipts Report evidencing Developer’s calculation of Residual Receipts.
(c) Commencing upon June 1 after the calendar year in which the date of recordation of the Notice of Affordability Restrictions occurs, Developer shall make annual payments on this Note and the City Note sourced from the City’s Proportionate Share of fifty percent (50%) of Residual Receipts, which is anticipated to be collectively nine and eighty- eight thousandths percent (9.0 88%), and which amount shall be allocated and remitted to City. Each annual payment by Developer to City of the City’s Proportionate Share of Residual Receipts shall be credited by City to pay down the outstanding balance of this Note and the City Note. (i) The annual payments by Developer to the City of the City’s Proportionate Share of Residual Receipts shall continue until full repayment of this Note. (ii) In all events upon the earlier to occur of (A) the Maturity Date or (B) the Event of Default by De veloper and acceleration of this Note, if it were to occur, the outstanding balance, if any, shall be due immediately and paid in full by Developer to City without regard to Residual Receipts.
(d) Notwithstanding the allocation of Residual Receipts, the full Note Amount may be accelerated as set forth in Section 10 below.
32 4. Calculation of Residual Receipts in Connection with Note Repayment. (a) Residual Receipts Report; Allocation and Remittance of Residual Receipts. Developer agrees to calculate, allocate and remit Residual Receipts in accordance with the Agreement and provide to City the Annual Financial Statement and Residual Receipts Report evidencing the same.
(i) After the calendar year in which the date of recordation of the Notice of Affordability Restrictions occurs and annually on or before June 1 of each succeeding calendar Year until the Maturity Date, Developer shall make annual payments to City of the City’s Proportionate Share of fifty percent (50%) of Residual Receipts, which is anticipa ted to be collectively nine and eighty-eight thousandths percent (9.088%), (which includes this Note and the City Note), if any and when due, as set forth below and in the Agreement. (ii) On the first to occur of (A) HOME Loan Maturity Date, or (B) acceleration of this Note due to Developer’s Event of Default, the outstanding principal amount (plus accrued interest, if any) shall be due in full by Developer to City, all without regard to Residual Receipts calculation.
(iii) In addition, subject to the terms of the Agreement, this Note shall be paid from Refinancing Net Proceeds or from the Transfer Net Proceeds in the applicable percentages stated in the Agreement.
(iv) Notwithstanding the foregoing, the full Note Amount may be accelerated as set forth in Section 10 below.
5. Consent Required for Assignment and Assumption. Except for Transfers permitted pursuant to Article 8 of the Agreement, this Note shall not be assignable or assumable by any successor or assignee of Developer without the prior written consent of City, which consent may be withheld in the sole and absolute discretion of the City Manager (or if the City Manager elects in his or her discretion to present such request to the City Council.)
6. Form of Payments . All amounts due hereunder are payable in immediately available funds and lawful monies of the United States of America.
7. Application of Payments. All payments shall be applied (a) first, to costs and fees owing hereunder, (b) second, to the payment of accrued interest , (c) third, to the payment of principal, and (d) fourth, and if applicable, the accrual and payment of Default Rate of interest in the event of Default as defined and described in Section 10 below.
8. Prepayment. At any time, Developer may prepay in whol e or in part the outstanding principal balance under this Note, together with all accrued interest, if any, and unpaid fees, costs and expenses, if any, payable hereunder, without penalty or premium. In the event of prepayment by Developer, the Regulatory Agreement, in particular the covenants with respect to affordable housing for Extremely Low-Income Households during the Affordability Period as set 33 forth in the Agreement and the Regulatory Agreement, shall remain intact, and shall be unaffected by the prepayment of this Note by Developer.
9. Security. This Note and all amounts payable hereunder are secured by the HOME Deed of Trust of even date herewith executed by Developer in favor of City, which HOME Deed of Trust shall only be subordinate to: (a) the Regulatory Agreement of record as the senior encumbrance, and (b) those certain deeds of trust executed by Developer, as borrower, in favor Primary Lenders, and (c) such other encumbrances approved by the City in writing in its sole discretion. The terms of the HOME Deed of Trust are incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein. A default under any of the provisions of the HOME Deed of Trust shall be a default hereunder, a nd a default hereunder shall be a default under the HOME Deed of Trust. (a) Subordinate Note. The indebtedness evidenced by this Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a promissory note for the Primary Loans executed by Developer, as set forth in the Agreement.
10. Acceleration and Other Remedies. If elected by City pursuant to the following sentence, the entire balance due under this Note shall be paid to City upon the earlier of an Event of Default, including without limitation: (i) the uncured default of Developer under this Note, the Agreement, Regulatory Agreement, HOME Deed of Trust, or other of the Project Documents, in each case, after delivery of notice and expiration of the applicable cure period provided in the respective agreement or instrument; or (ii) the sale, lease or other transfer or conveyance (other than the permitted rentals and other transfers and/or conveyances expressly permitted under the Agreement) of all or any part of the Project, or any interest therein (individually or collectively a “Transfer”), without the prior written consent of City in accordance with the Agreement, in each case, after delivery of notice and expiration of the applicable cure period provided in the applicable Project Document.
(a) Upon the occurrence and during the continuance of an Event of Default, the Note Amount, and all outstanding amounts due under this Note (and the Agreement, the HOME Deed of Trust and other Project Documents) shall accrue interest at the default rate of ten percent (10%) per annum, based on a calendar year (360 days) and charged on the basis of the actual number of days elapsed (“Default Rate”).
(b) In addition, upon and during the continuance of an Event of Default, City may, at City’s option, declare the outstanding principal amount of this Note, together with the then accrued and unpaid interest, if any, all sums secured by the HOME Deed of Trust, and other charges, if any, due under applicable Project Documents; such sums shall be due and payable immediately upon such declaration, and Default Rate shall immediately become and be due and payable without demand or notice, all as further set forth in the HOME Deed of Trust. All costs of collection, including, but not limited to, reasonable attorneys’ fees, consulting fees, and all expenses incurred in connection with protection of, or realization on, the security for this Note, may be added to the principal hereunder, and shall accrue interest at the Default Rate as provided herein.
34 (c) City shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as City may consider appropriate, without waiving any rights with respect to any of the sec urity. Any delay or omission on the part of City in exercising any right hereunder, under the Agreement, the Project Documents or under the HOME Deed of Trust shall not operate as a waiver of such right, or of any other right. No single or partial exerci se of any right or remedy hereunder or under the Agreement, the Project Documents, the HOME Deed of Trust or any other document or agreement shall preclude other or further exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such payment shall not be a waiver of City’s right to either require prompt payment when due of all other sums payable hereunder or to declare an Event of Default for failure to make prompt or complete payment.
11. Waivers. Except to the extent notice is required under any of the Project Documents, Developer and all endorsers, guarantors and sureties hereof jointly and severally waive presentment, demand, notice of protest and nonpayment, notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the rights or interests in or to any and all property securing this Note, and the benefit of any exemption under any homestead exemption laws, if applicable. Developer expressly agrees that this Note or any payment hereunder may be extended from time to time at City’s sole discretion and that City may accep t security in consideration for any such extension or release any security for this Note at its sole discretion all without in any way affecting the liability of Developer. No extension of time for payment of this Note made by agreement by City with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Developer under this Note, either in whole or in part. The obligations of Developer under this Note shall be absolute and Developer waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever. No previous waiver and no failure or delay by City in acting with respect to the terms of this Note or the HOME Deed of Trust shall constitute a waiver of any breach, default, or failure or condition under this Note, the Deed of Trust or the obligations secured thereby. A waiver of any term of this Note, the HOME Deed of Trust or any of the obligations sec ured thereby must be made in writing and shall be limited to the express written terms of such waiver.
12. Consents. Developer and all endorsers, guarantors and sureties consent to: (a) any renewal, extension or modification (whether one or more, and subject to the terms and provisions of the Agreement relating to modification, extension, and/or amendment) of the terms of the Agreement as such terms relate to this Note or the terms or time of payment under this Note, (b) the release or surrender or exchange or substitution of all or any part of the security, whether real or personal, or direct or indirect, for the payment hereof to the extent requested or approved by Developer, (c) the granting of any other indulgences to Developer, and (d) the taking or releasing of other or additional parties primarily or contingently liable hereunder. Except as otherwise set forth above, any such renewal, extension, modification, release, surrender, exchange or substitution may be made without notice to Developer or to any endorser, guarantor or surety hereof, and without affecting the liability of said parties hereunder. 35 13. Successors and Assigns. Whenever “City” is referred to in this Note, such reference shall be deemed to include City and its successors and assigns , including, without limitation, any subsequent assignee or holder of this Note. All covenants, provisions and agreements by or on behalf of Developer, and on behalf of any makers, endorsers, guarantors and sureties hereof which are contained herein shall inure to the benefit of City and its successors and assigns. City may, at its option, assign its right to receive payment under this Note without necessity of obtaining the consent of Developer. Whenever “Developer” is referred to in this Note, such ref erence shall be deemed to include American Family Housing, a California nonprofit, public benefit corporation, and its approved successors and assigns, including, without limitation, any approved subsequent assignee or obligor of this Note, if such approval is given in accordance with the Agreement. In no event shall Developer assign or transfer any portion of this Note without the prior express written consent of City, except as permitted in the Agreement.
14. Usury. It is the intention of Developer and City to conform strictly to the Interest Law, as defined below, applicable to this loan transaction. Accordingly, it is agreed that notwithstanding any provision to the contrary in this Note, or in any of the documents securing payment hereof or otherwise relating hereto, the aggregate of all interest and any other charges or consideration constituting interest under the applicable Interest Law that is taken, reserved, contracted for, charged or received under this Note, or under any of the other aforesaid agreements or otherwise in connection with this loan transaction, shall under no circumstances exceed the maximum amount of interest allowed by the Interest Law applicable to this loan transaction. If any excess of interest in such respect is provided for in this Note, or in any of the documents securing payment hereof or otherwise relating hereto, then, in such event:
(a) the provisions of this paragraph shall govern and control; (b) neither Developer nor Developer’s heirs, legal representatives, success ors or assigns shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest allowed by the Interest Law applicable to this loan transaction; (c) any excess shall be deemed canceled automatically and, if theretofore paid, shall be credited on this Note by City or, if this Note shall have been paid in full, refunded to Developer; and
(d) the effective rate of interest shall be automatically subject to reduction to the Maximum Legal Rate of Interest (as defined below), allowed under such Interest Law, as now or hereafter construed by courts of appropriate jurisdiction. To the extent permitted by the Interest Law applicable to this loan transaction, all sums paid or agreed to be paid to City for the use, forbearance or detention of the indebtedness evidenced hereby shall be amortized, prorated, allocated and spread throughout the full term of this Note. For purposes of this Note, “Interest Law” shall mean any present or future law of the State of California, the United States of America, or any other jurisdiction which has application to the interest and other charges under this Note.
The “Maximum Legal Rate of Interest” shall mean the maximum rate of interest that City may from time to time charge Developer, and under which Developer would have no claim or defense of usury under the Interest Law.
36 15. Costs of Enforcement. Developer agrees to pay upon demand all reasonable costs and expenses, including attorneys’ fees, expert witness fees, and costs of suit (including appeals), incurred by City to enforce the terms hereof. In addition to the foregoing award of attorneys’ fees, City shall be entitled to its reasonable attorneys’ fees incurred in any post -judgment proceedings to enforce any judgment in connection with this Note. This provision is separate and several and shall survive the merger of this provision into any judgment.
16. Miscellaneous. Time is of the essence hereof. If this Note is now, or hereafter shall be, signed by more than one pa rty or person, it shall be the joint and several obligations of such parties or persons (including, without limitation, all makers, endorsers, guarantors and sureties), and shall be binding upon such parties and upon their respective successors and assigns.
This Note shall be governed by and construed under the laws of the State of California. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as City hereof may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Note. Developer also waives any objection regarding personal or in rem jurisdiction or venue to the extent such action is filed in the above -referenced courts. In the event of a conflict between the provisions of this Note and the Agreement, this Note shall control.
17. Non-Recourse Obligation. In the Event of Default under the te rms of this Note, the sole recourse of City therefor shall be Developer’s interest in the Property and the Project and Developer and Affiliates shall not be personally liable for the payment of any obligations under this Agreement; provided, however, that the foregoing shall not in any way affect any rights City may have hereunder, or any right of City to recover or collect funds, damages or costs (including without limitation reasonable attorneys’ fees and costs) incurred by City as a result of fraud, intentional misrepresentation or bad faith waste, and/or any costs and expenses incurred by City in connection therewith (including without limitation reasonable attorneys’ fees and costs).
IN WITNESS WHEREOF , Developer has caused this Promissory Note Secured by Ground Leasehold Deed of Trust executed on the date first set forth above.
DEVELOPER:
AMERICAN FAMILY HOUSING,
a California nonprofit, public benefit corporation
By: ______________________________
Myles Anthony Peinemann II
Chief Executive Officer
37 ATTACHMENT NO. 7A
HOME DEED OF TRUST
38 Recording Requested By and
When Recorded Mail To:
City of Costa Mesa
77 Fair Drive
Costa Mesa, California 92626
Attention: City Clerk
APN: 439-312-12
(Space above for Recorder’s use.)
This document is exempt from payment of recording
fees per Government Code §§ 6103 and
27383.
GROUND LEASEHOLD
DEED OF TRUST AND ASSIGNMENT OF RENTS
HOME FUNDS
This GROUND LEASEHOLD DEED OF TRUST AND ASSIGNMENT OF RENTS, HOME FUNDS (“Deed of Trust”) is dated as of _________, 202 6 and duly executed AMERICAN FAMILY HOUSING , a California nonprofit, public benefit corporation (“Trustor`”), as trustor, whose address is 15161 Jackson Street, Midway City, California 92655, in favor of COMMONWEALTH LAND TITLE INSURANCE COMPANY (“Trustee”), as trustee, for the benefit of the CITY OF COSTA MESA, a California municipal corporation (“Beneficiary”), as beneficiary, whose address is 77 Fair Drive, Costa Mesa, California 92626.
Each capitalized term used herein and not otherwise defined herein shall have the meaning given such term in that certain Affordable Housing Grant and Loan Agreement (“Agreement”), which is an unrecorded contract as defined in Section 2.1(b), below. Any capitalized terms not defined therein shall have the respective meanings set forth therefor in the Agreement. A copy of the Agreement is on file with the Beneficiary as a public record.
ARTICLE I
GRANT OF SECURITY
1.1 Grant of Security. FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt and adequacy of which are hereby acknowledged, Trustor hereby irrevocably grants, transfers and assigns to Trustee, 39 IN TRUST, WITH POWER OF SALE, AND RIGHT OF ENTRY AND POSSESSION, for the benefit and security of Beneficiary, all rights, titles, interests, estates, powers and privileges that Trustor now has or may hereafter acquire in or to the following property and interests therein (collectively, the “Property”):
(a) That certain real property located at 1400 Bristol Street, Costa Mesa California, Assessor’s Parcel Number 439 -312-12 (“Land” or “Property”), as more particularly described in the Legal Description attached hereto as Exh ibit A, and incorporated herein by reference;
(b) All buildings and other improvements now or hereafter located on the Land, including, but not limited to, the Fixtures (as defined below) and any and all other equipment, machinery, appliances and other art icles attached to such buildings and other improvements (collectively, the “Improvements”);
(c) All fixtures (collectively, the “Fixtures”) now or hereafter located on, attached to, installed in or used in connection with the Land and the Improvements, inc luding all awnings, boilers, furnaces, pipes, plumbing, elevators, cleaning, call and sprinkler systems, fire extinguishing machinery and equipment, water tanks, heating, ventilating, air conditioning and air cooling machinery and equipment, gas and electr ic machinery and equipment, and other equipment, machinery and appliances and other fixtures of every kind and nature; (d) All rights, rights-of-way, easements, licenses, profits, privileges, tenements, hereditaments and appurtenances now owned or hereafte r acquired by Trustor and used in connection with the Land and the Improvements or as a means of access to either or both; (e) All of Trustor’s right, title and interest now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Land, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Land and Improvements;
(f) All oil, gas and other mineral rights in or relating to the Land, and all royalty, leasehold and other rights of Trustor in or relating thereto; (g) All water, water rights and riparian rights (including, without limitation, shares of stock evidencing the same) in or relating to the Land; (h) All leases and subleases relating to all or any part of the Land and the Improvements or any interest therein, now or hereafter existing or entered into, including all deposits, advance rentals and other payments of a similar nature but not including the Rents, as defined and separately assigned in Article 4;
(i) All options to purchase or lease all or any part of the Land or Improvements or any interest therein (and any greater estate in the Land or Improvements now owned or hereafter acquired pursuant thereto); and
40 (j) All other estates, easements, licenses, interests, rights, titles, claims or demands, both in law and in equity, which Trustor now has or may hereafter acquire in the Land and the Improvements, including, without limitation, (1) any and all awards made for the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of all or any part of the Property, including any award resulting from a change of grade of streets and any award for severance damages, and (2) any and all proceeds of any insurance covering the Property.
ARTICLE II
SECURED OBLIGATIONS
2.1 Secured Obligations. This Deed of Trust, and the lien created hereby, is made for the purpose of securing the following obligations (collectively, the “Secured Obligations”):
(a) the payment and performance by Trustor of all indebtedness and other obligations evidenced by that certain Promissory Note Secured by Ground Leasehold Deed of Trust (“Note”) dated of even date herewith, made by Trustor to the order of Beneficiary, in the original principal amount of Three Hundred Fifty Thousand Dollars ($350,000.00) together with interest on such indebtedness and costs of enforcement according to the terms of the Note; (b) the payment and performance of all indebtedness and each and every promise, agreement, covenant, and obligation of Trustor to Beneficiary contained in (i) that certain unrecorded Affordable Housing Grant and Loan Agreement dated February 28, 2025, between Beneficiary and Trustor, as amended by that First Amendment to Affordable Housing Grant and Loan Agreement dated concurrently herewith ( collectively “Agreement”), (ii) that certain Joint Regulatory Agreement dated February 28, 2025, by and between the City of Newport Beach, Beneficiary and Trustor and recorded against the Property on February 28, 2025, as instrument no. 2025000068064, in the Official Records of Orange County as a senior, non-subordinate encumbrance, (iii) this Deed of Trust, and (v) the other “Project Documents” (as defined in the Agreement), whether or not the total amount thereof may exceed the face amount of the Note, shall be secured hereby to the same extent as though said Agreement, Regulatory Agreement, Note, and other Project Documents were fully incorporated in this Deed of Trust; (c) the payment and performance of all indebtedness and other obligations of Beneficiary, or its successors or assigns, when such indebtedness and obligations are contained in a document which recites that the obligations thereunder are secured by this Deed of Trust; (d) the payment by Trustor of all amounts advanced by or on behalf of Beneficiary or Trustee to improve, protect or preserve the Property or the security of this Deed of Trust, with interest thereon as provided herein; and
(e) the payment and performance of all amendments, modifications, extensions, renewals and replacements of or for any of the foregoing (including, without limitation, (i) amendments or modifications of the required principal payment dates or interest payment dates, or both, as the case may be, accelerating or deferring such interest payment dates in whole or in part, or (ii) amendments, modifications, extensions or renewals at a different rate of interest), 41 whether or not any such amendment, modification, extension, renewal or replacement is evidenced by a new or additional promissory note or other document.
ARTICLE III
COVENANTS
3.1 Payment of Secured Obligations. Trustor shall pay and perform the Secured Obligations when due.
3.2 M aintenance, Repair, Alterations . Trustor shall maintain and preserve the Property in good condition and repair, reasonable wear and tear excepted; Trustor, except upon the prior written consent of Beneficiary, and except as expressly contemplated and aut horized under the Agreement, shall not remove, demolish or materially alter any of the Improvements, other than to make repairs in the ordinary course of business of a non-structural nature which serve to preserve or increase the value of the Property; Tru stor shall complete promptly and in a good and workmanlike manner any Improvement which may be now or hereafter constructed on the Land, shall promptly restore in like manner any Improvement which may be damaged or destroyed thereon from any cause whatsoever, and shall pay when due all claims for labor performed and materials furnished therefor; Trustor shall comply with all laws, ordinances, rules, regulations, orders, covenants, conditions, restrictions and “Permitted Encumbrances” (as hereinafter defined) now or hereafter affecting the Property, or any part thereof, or the conduct or operation of Trustor’s business; Trustor shall not commit, suffer or permit any act to be done in, upon or to all or any part of the Property in violation of any such laws, ordinances, rules, regulations, orders, covenants, conditions or Permitted Encumbrances now or hereafter affecting the Property; Trustor shall not commit or permit any waste or deterioration of the Property, and shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; Trustor shall not take any commercially unreasonable action, which if taken would increase in any way the risk of fire or other hazard occurring to or affecting the Property or which otherwise would impair the security of Beneficiary in the Property; Trustor shall comply with the provisions of all leases, if any, constituting a portion of the Property; Trustor shall not abandon the Property or any portion thereof or leave the Property unprotected, unguarded, vacant or deserted; Trustor shall not initiate, join in or consent to any change in any zoning ordinance, general plan, specific plan, private restrictive covenant or other public or private restriction limiting the uses which may be made of the Property by Trustor or by the owner thereof without the prior written consent of Beneficiary; Trustor shall secure and maintain in full force and effect all permits necessary for the use, occupancy and operation of the Property; except as otherwise prohibited or restricted by the Project Documents, or any of them, Trustor shall do any and all other acts which may be reasonably necessary to protect or preserve the value of the Property and the rights of Trustee and Beneficiary with respect thereto.
3.3 I
nsurance . Trustor shall at all times maintain in full force and effect, at Trustor’s sole cost and expense, policies of insurance in form, substance, amounts and with companies as required by the Agreement. In the event of any damage or destruction to the Property, all insurance proceeds shall be applied in accordance with the terms and provisions of the Agreement or, in the absence thereof, as required by law.
42 3.4 Condemnation and Other Awards. Upon learning of the condemnation or other taking for public or quasi -public use of, or of the institution or the threatened institution of any proceeding for the condemnation or other taking for public or quasi -public use of, all or any part of the Property, Trustor shall promptly notify Beneficiary and Trustee of such fact. Subject to the requirements under Primary Loan documents, Trustor shall take all actions reasonably required by Beneficiary or Trustee in connection therewith to defend (using counsel reasonably acceptable to Beneficiary) and protect the interests of Trustor, Beneficiary and/or Trustee in the Property. At Beneficiary’s option, Beneficiary or Trustor may be the nominal party in such proceeding but in any event Beneficiary shall be entitled, without regard to the adequacy of its security, to participate in and to control its own defense and any settlement affecting the Beneficiary’s interest in the Property and to be represented therein by counsel of its choice. Subject to the requirements under the Primary Loan documents, Trustor hereby assigns to Beneficiary, as security for the Secured Obligations, all compensation, awards, damages and other amounts payable to Trustor in connection with any condemnation or other taking of all or any part of the Property for public or semi-public use (including, but not limited to, the proceeds of any settlement, regardless of whether or not condemnation or other taking proceedings are instituted in connection therewith).
Upon receipt, subject to the requirements under Primary Loan documents, Trustor shall immediately deliver all such compensation, awards, damages and other amounts to Beneficiary.
All such proceeds shall first be applied to reimburse Beneficiary and Trustee for all costs and expenses, including reasonable attorneys’ fees, incurred in connection with the collection of such award or settlement. The balance of such award or settlement shall be applied as required by law.
Application or release of such proceeds as provided herein shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3.5 T
axes and Impositions. Trustor shall be responsible to and shall pay, prior to delinquency, all of the following (collectively, the “Impositions”): (i) all general and special real property taxes and assessments imposed on the Property; and (ii) all other taxes and assessments and charges of every kind that are assessed upon the Property and that create or may create a lien upon the Property (or upon any personal property or fixtures used in connection with the Property), including non-governmental levies and assessments pursuant to applicable covenants, conditions or restrictions. If permitted by law, Trustor may pay any Imposition in installments (together with any accrued interest).
(a) R
ight to Contest. Trustor shall not be required to pay any Imposition so long as (a) the validity of such Imposition is being actively contested in good faith and by appropriate proceedings, and (b) either (i) Trustor has demonstrated to Beneficiary’ s reasonable satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings could not result in conveyance of any parcel in satisfaction of such Imposition or otherwise impair Beneficiary’s interests under the Project Documents, or (ii) Trustor has furnished Beneficiary with a bond or other security satisfactory to Beneficiary in an amount not less than 120% of the applicable claim (including interest and penalties).
(b) E vidence of Payment . Upon demand by the Beneficiary from time to time, Trustor shall deliver to the Beneficiary within thirty (30) days following the due date of any Imposition, evidence of payment of said Imposition reasonably satisfactory to the Beneficiary, 43 unless Trustor is contesting the imposition in conformi ty with Section 3.5(a). In addition, upon demand by Beneficiary from time to time, Trustor shall furnish to Beneficiary a tax reporting service for the Property of a type and duration, and with a company, reasonably satisfactory to Beneficiary.
3.6 Utilities. Except to the extent paid directly by tenants, Trustor shall promptly pay all gas, electricity, water, sewer and other utility charges which are incurred for the benefit of the Property or which may become a lien against the Property and all other assessments and other charges of a similar nature, public or private, relating to the Property or any portion thereof, regardless of whether or not any such charge is or may become a lien thereon.
3.7 L
iens . Trustor shall not cause, incur, suffer or permit to exist or become effective any lien, encumbrance or charge upon all or any part of the Property or any interest therein (except for permitted liens, encumbrances and charges as shown on Beneficiary’s title insurance policy).
Trustor shall pay and promptly discharge, at Trustor’s sole cost and expense, all liens, encumbrances and charges upon all or any part of the Property or any interest therein. If Trustor shall fail to remove and discharge any such lien, encumbrance or charge, then, in addition to any other right or remedy of Beneficiary, Beneficiary may, but shall not be obligated to, discharge the same, without notice to or demand on Trustor, and without inquiring into the validity of such lien, encumbrance or charge or the existence of any defense or offset thereto, either by paying the amount claimed to be due, or by procuring the discharge of such lien, encumbrance or charge by depositing in a court a bond or the amount claimed or otherwise giving security for such claim, or in any other manner permitted or required by law. The Trustor shall, within twenty (20) days after demand therefor by Beneficiary (together with sufficient evidence substantiating such expenditures by Beneficiary), pay to Beneficiary an amount equal to all costs and expenses incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing right to discharge any such lien, encumbrance or charge, together with interest thereon from the date of such expenditure until paid at the “Default Rate” of ten percent (10%) per annum (as defined and further described in the Note.)
3.8 S
ale or Lease of Property . Except for any Commercial Lease and as otherwise permitted under the Agreement, Trustor shall not sell, lease or otherwise transfer all or any part of the Property or any interest therein without the prior written consent of Beneficiary.
3.9 I
nspections . Beneficiary, Trustee and their respective agents, representatives and employees, are each authorized, upon notice reasonable under the circumstances (which may be written or oral) and subject to the rights of tenants of the Property, to enter at any time upon any part of the Property during normal business hours for the purpose of inspecting the same and for the purpose of performing any of the rights and obligations under the law that Beneficiary and/or Trustee are authorized to perform hereunder or under the terms of any of the Project Documents.
Such entry by the Beneficiary shall be upon 72- hours’ prior notice, and shall be undertaken at Beneficiary’s expense, with Beneficiary holding harmless the Trustor from any claims or injuries which occur in connection with the exercise of the Beneficiary’s rights pursuant to this Section 3.9.
The rights of Beneficiary to enter and inspect pursuant to this Section 3.9 are in addition to and do not limit City’s rights to conduct building inspections. 44 3.10 Defense of Actions. Trustor, at no cost or expense to Beneficiary or Trustee, shall appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust, any of the other Project Documents, all or any part of the Property or any interest therein, any additional or other security for the obligations secured hereby, or the interests, rights, powers or duties of Beneficiary or Trustee hereunder, provided that Trustee or Beneficiary shall have first tendered the defense to Trustor. If Beneficiary or Trustee elects to become a party to such action or proceeding, or is made a party thereto, Trustor shall indemnify, defend and hold Trustee and Beneficiary harmless from all liability, damage, cost and expense incurred by Trustee and Beneficiary, or either of them, by reason of such action or proceeding (including, without limitation, reasonable attorneys’ fees and expenses), whether or not such action or proceeding is prosecuted to judgment or decision.
3.11 P
rotection of Security. If Trustor fails to make any payment or to do any act as and in the manner provided in this Deed of Trust or any of the other Project Documents, Beneficiary and/or Trustee, each in its own discretion, without obligation so to do, without further notice or demand, and without releasing Trustor from any obligation, may make or do the same in such manner and to such extent as either may reasonably deem necessary to protect the security of this Deed of Trust. In connection therewith (without limiting their general powers), Beneficiary and Trustee shall each have and are hereby given the right, but not the obligation and subject to the terms and conditions set forth herein: (i) to enter upon and take possession of the Property; (ii) to make additions, alterations, repairs and improvements to the Property which in the judgment of either may be necessary or proper to keep the Property in good condition and repair; (iii) to appear and participate in any action or proceeding affecting or which may affect the security hereof or the rights or powers of Beneficiary or Trustee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt which in the judgment of either may affect or appears to affect the security of this Deed of Trust or may be, or to appear to be, prior or superior hereto; and (v) in exercising such powers, to pay all necessary or appropriate costs and expenses and employ necessary or desirable consultants.
3.12 B
eneficiary’s Powers . Without affecting the liability of Trustor or any other person liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon any portion of the Property not then or theretofore released as security for the full amount of all Secured Obligations, Beneficiary may, from time to time and without notice (i) release any person so liable, (ii) extend the maturity or alter any of the terms of any such obligation (provided, however, that the consent of Trustor shall be required with respect to the extension or alteration of any unpaid obligation of Trustor to Beneficiary), (iii) waive any provision contained herein or grant other indulgences, (iv) release or reconvey, or cause to be released or reconveyed at any time at Beneficiary’s option any parcel, a portion or all of the Property, (v) take or release any other or additional security for any obligation herein mentioned, or (vi) make compositions or other arrangements with debtors in relation thereto. By accepting payment or performance of any obligation secured by this Deed of Trust after the payment or performance thereof is due or after the filing of a notice of default and election to sell, Beneficiary shall not have thereby waived its right to require prompt payment and performance, when due, of all other obligations secured hereby, or to declare a default for failure so to pay or perform, or to proceed with the sale under any notice of default and election to sell theretofore given by 45 Beneficiary, or with respect to any unpaid balance of the indebtedness secured hereby. The acceptance by Beneficiary of any sum in an amount less than the sum then due shall not constitute a waiver of the obligation of Trustor to pay the entire sum then due.
3.13 Costs, Fees and Expenses. Upon the occurrence of an Event of Default and following any applicable notice and cure period, Trustor shall pay, on demand, all costs, fees, expenses, advances, charges, losses and liabilities paid or incurred by Beneficiary and/or Trustee under or in connection with this Deed of Trust, the enforcement of this Deed of Trust, the collection of the Secured Obligations, and/or the exercise of any right, power, privilege or remedy given Beneficiary and/or Trustee under this Deed of Trust, including, (a) foreclosure fees, trustee’s fees and expenses, receiver’s fees and expenses and trustee’s sale guaranty premiums, (b) costs and expenses paid or incurred by Beneficiary and/or Trustee and/or any receiver appointed under this Deed of Trust in connection with the operation, maintenance, management, protection, preservation, collection, sale or other liquidation of the Property, (c) advances made by Beneficiary and/or Trustee to complete or partially construct all or any part of any improvements which may have been commenced on the Land or otherwise to protect the security of this Deed of Trust, (d) costs of evidence of title, costs of surveys and costs of appraisals, and (e) the fees, costs and expenses of attorneys, accountants and other consultants; together with interest thereon from the date of expenditure until so paid at the Default Rate.
ARTICLE IV
ASSIGNMENT OF RENTS, ISSUES AND PROFITS
4.1 Assignment of Rents, Issues and Profits. While this Deed of Trust is outstanding, Trustor hereby absolutely and irrevocably assigns and transfers to Beneficiary all of its right, title and interest in and to all rents, issues, profits, royalties, income and other proceeds and similar benefits derived from the Property (collectively, the “Rents”), and hereby gives to and confers upon Beneficiary the right, power and authority to collect such Rents. Until the reconveyance of this Deed of Trust, Trustor irrevocably appoints Beneficiary its true and lawful attorney-in-fact, at the option of Beneficiary, at any time and from time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in its name or in the name of Trustor, for all Rents, and to apply the same to the obligations secured hereby; provided, however, that Trustor shall have a license to collect Rents (but not more than one month in advance unless the written approval of Beneficiary has first been obtained), and to retain and enjoy the same, so long as an Event of Default shall not have occurred hereunder and be continuing. The assignment of the Rents in this Article 4 is intended to be an absolute assignment from Trustor to Beneficiary and not merely the passing of a security interest.
4.2 C
olle ction Upon Default. Upon the occurrence and during the continuance of an Event of Default hereunder following any applicable notice and cure period, Trustor’s license to collect the Rents shall automatically terminate and Beneficiary may, at any time with out notice, either in person, by agent or by a receiver appointed by a court, and without regard to the adequacy of any security for the obligations hereby secured, enter upon and take possession of the Property, or any part thereof, and, with or without taking possession of the Property or any part thereof, in its own name sue for or otherwise collect such Rents (including those past due and unpaid, and all 46 prepaid Rents and all other monies which may have been or may hereafter be deposited with Trustor by any lessee or tenant of Trustor to secure the payment of any Rent or for any services thereafter to be rendered by Trustor or any other obligation of any tenant to Trustor arising under any lease, and Trustor agrees that, upon the occurrence of any Event of Default hereunder, Trustor shall promptly deliver all Rents and other monies to Beneficiary), and Beneficiary may apply the same, less costs and expenses of operation and collection, including, without limitation, attorneys’ fees, whether or not suit is brought or prosecuted to judgment, upon any indebtedness or obligation of Trustor secured hereby, and in such order as Beneficiary may determine notwithstanding that said indebtedness or the performance of said obligation may not then be due. The collection of Rents, or the entering upon and taking possession of the Property, or the application of Rents as provided above, shall not cure or waive any default or notice of default hereunder or invalidate any act performed in response to such default or pursuant to such notice of default or be deemed or construed to make Beneficiary a mortgagee-in-possession of all or any part of the Property.
ARTICLE V
REMEDIES UPON DEFAULT
5.1 Events of Default . The term “Event of Default” is defined in the Agreement and includes without limitation the occurrence of any of the following events or conditions hereunder:
5.1.1 Trustor shall fail to pay any amount owing under the Note when due, and such failure is not cured within ten (10) days after Beneficiary gives Trustor notice of such failure;
5.1.2 Trustor shall fail to observe or perform any other obligation contained in this Deed of Trust, and such failure is not cured within thirty (30) days after Beneficiary gives Trustor notice of such failure; provided that, if cure cannot reasonably be effected within such 30- day period, such failure shall not be an Event of Default so long as Borrower promptly (in any event, within thirty (30) days after receipt of such notice) commences cure, and thereafter diligently prosecutes such cure to completion;
5.1.3 The occurrence of an “Event of Default” under the Agreement, the Regulatory Agreement, the Note, or other Project Documents;
5.1.4 A default under any other document or agreement secured hereby, subject to any applicable cure period; or
5.1.5 City exercises City’s right to cure a default by Developer under the Primary Loan or other financing senior to the City Loan and Developer does not reimburse City for the cost to cure such default within ten (10) days following written demand for payment from City.
5.2 Acceleration Upon Default; Additional Remedies. Upon the occurrence and during the continuance of an Event of Default, Beneficiary may, at its opti on, terminate its obligations under the Project Documents and declare all Secured Obligations to be immediately due and payable without any presentment, demand, protest or further notice of any kind; and whether or not Beneficiary exercises said option, Beneficiary may:
47 5.2.1 Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Property, or any part thereof, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to complete the construction of the Improvements on the Land, to preserve the value, marketability or rentability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Property, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection including attorneys’ fees, upon any Secured Obligations, all in such order as Beneficiary may determine. The entering upon and taking possession of the Property, the collection of such Rents and the application thereof as aforesaid , shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession by Trustee, Beneficiary or a receiver of all or any portion of the Property or the collection, receipt and application of any of the Rents, the Trustee or Beneficiary shall be entitled to exercise every right provided for in any of the Project Documents or by law upon occurrence of any Event of Default, including the right to exercise the power of sale;
5.2.2 Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants contained herein;
5.2.3 Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor’s interest in the Property to be sold, which notice Trustee or Beneficiary shall cause to be duly filed for record in the official records of the County in which the Property are located;
5.2.4 Exercise any and/or all of the rights and remedies available to a secured party under the California Uniform Commercial Code in such order and in such manner as Beneficiary, in its sole discretion, may determine (including, without limitation, requiring Trustor to assemble the collateral and make the collateral available to Beneficiary at a reasonably convenient location); provided, however, that the expenses of retaking, holding, preparing for sale or the like as provided thereunder shall include reasonable attorneys’ fees and other expenses of Beneficiary and Trustee and shall be additionally secured by this Deed of Trust; and/or
5.2.5 Exercise all other rights and remedies provided herein, in any Project Document or other document or agreement now or hereafter securing all or any portion of the obligations secured hereby, or provided by law or in equity.
5.3 Foreclosure By Power of Sale.
5.3.1 Should Beneficiary elect to foreclose by exercise of the power of sale herein contained, Beneficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust and the Note and such receipts and evidence of expenditures made and secured hereby as Trustee may require.
48 5.3.2 Upon receipt of notice from Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such notice of default and election to sell as is then required by law. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such notice of default and after notice of sale having been given as required by law, sell the Property at the time and place of sale fixed by it in said notice of sale, either as a whole, or in separate lots or parcels or items and in such order as Beneficiary may direct Trustee so to do, at public auction to the highest bidder for cash in lawful money of the United States of America payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matter or fact shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale.
5.3.3 After deducting all fees, costs and expenses incurred by Beneficiary or Trustee in connection with such sale, including costs of evidence of title, Beneficiary shall apply the proceeds of sale in the following priority, to payment of (i) first, all amounts expended under the terms hereof, not then repaid, with accrued interest at the Default Rate; (ii) second, all other Secured Obligations; and (iii) the remainder, if any, to the person or persons legally entitled thereto.
5.3.4 Subject to applicable law, Trustee may postpone the sale of all or any portion of the Property by public announcement at the time and place of sale, and from time to time thereafter may postpone such sale by public announcement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale.
5.3.5 A sale of less than the whole of the Property or any defective or irregular sale made hereunder shall not exhaust the power of sale provided for herein; and subsequent sales may be made hereunder until all obligations secured hereby have been satisfied, or the entire Property sold, without defect or irregularity.
5.4 Appointment of Receiver. Upon the occurrence of an Event of Default under this Deed of Trust, Beneficiary, as a matter of right and without notice to Trustor or anyone claiming under Trustor, and without regard to the then value of the Property or the interest of Trustor therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Property, and Trustor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Beneficiary in case of entry as provided herein and shall continue as such and exercise all such powers until the date of confirmation of sale of the Property unless such receivership is sooner terminated.
5.5 A
pplication of Funds After Default. Except as otherwise herein provided, upon the occurrence of an Event of Default hereunder, Beneficiary may, at any time without notice, apply any or all sums or amounts received and held by Beneficiary to pay insurance premiums, Impositions, or either of them, or as rents or income of the Property, or as insurance or condemnation proceeds, and all other sums or amounts received by Beneficiary from or on account 49 of Trustor or the Property, or otherwise, upon any Secured Obligation, in such manner and order as Beneficiary may elect, notwithstanding that such Secured Obligation may not yet be due. The receipt, use or application of any such sum or amount shall not be construed to affect the maturity of any indebtedness secured by this Deed of Trust, or any of the rights or powers of Beneficiary or Trustee under the terms of the Project Documents, or any of the obligations of Trustor or any guarantor under the Project Documents; or to cure or waive any default or notice of default under any of the Project Documents; or to invalidate any act of Trustee or Beneficiary.
5.6 Remedies Not Exclusive. Trustee and Beneficiary, and each of them, shall be entitled to enforce payment and performance of any indebtedness or obligation secured hereby and to exercise all rights and powers under this Deed of Trust or under any Project Document or other agreement or any law now or hereafter in force, notwithstanding som e or all of the said indebtedness and obligations secured hereby may now or hereafter be otherwise secured, whether by guaranty, mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement whether by court action or pursuant to the power of sale or other powers herein contained, shall prejudice or in any manner affect Trustee’s or Beneficiary’s right to realize upon or enforce any other security now or hereafter held by Trustee or Beneficiary, it being agreed that Trustee and Beneficiary, and each of them, shall be entitled to enforce this Deed of Trust and any other security for the obligations hereby secured now or hereafter held by Beneficiary or Trustee in such order and manner as they may in their absolute discretion determine.
No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy herein, or granted to Beneficiary under any other agreement, or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or granted to Beneficiary under any other agreement, or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Pr oject Documents to the Trustee or Beneficiary or to which either of them may be otherwise entitled may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Trustee or Beneficiary, and either of them may pursue inconsistent remedies.
Trustor may be joined in any action brought by Beneficiary to foreclose under or otherwise enforce this Deed of Trust.
5.7 R
equest for Notice of Default. Trustor hereby requests that a copy of any notice of default and that a copy of any notice of sale hereunder be mailed to it at the address set forth in the first paragraph of this Deed of Trust.
ARTICLE VI
MISCELLANEOUS
6.1 Amendments . This instrument cannot be waived, modified, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, modification, discharge or termination is sought.
6.2 Wai
vers . Trustor waives, to the extent permitted by law, (i) the benefit of all laws now existing or that may hereafter be enacted providing for any appraisement before sale of any portion of the Property, and, whether now existing or hereafter arising or created, (ii) all rights of 50 valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshaling in the event of foreclosure of the liens hereby created, and (iii) all rights and remedies which Trustor may have or be able to assert by reason of the laws of the State of California pertaining to the rights and remedies of sureties: provided, however, nothing contained herein shall be deemed to be a waiver of Trustor’s rights under Section 2924, 2924b and 2924c of the California Civil Code, or under Sections 580a or 726 of the California Code of Civil Procedure.
6.3 Statements by Trustor. Trustor shall, within twenty (20) days after notice thereof from Beneficiary, deliver to Beneficiary a written statement setting forth the amounts Trustor understands to be unpaid and secured by this Deed of Trust and stating whether any offset or defense exists against such amounts.
6.4 S
tatements by Beneficiary . For any statement or accounting requested by Trustor or any other entitled person pursuant to Section 2943 or Section 2954 of the California Civil Code or pursuant to any other provision of applicable law, or for any other document or instrument furnished to Trustor by Beneficiary, Beneficiary may charge the maximum amount permitted by law at the time of the request therefor, or if there be no such maximum, then in accordance with Beneficiary’s customary charges therefor or the actual cost to Beneficiary therefor, whichever is greater.
6.5 R
econveyance by Trustee. Upon written request of Beneficiary stating that all obligations under the Note have been paid and fully performed, and upon surrender by Beneficiary of this Deed of Trust and the Note to Trustee for cancellation and retention and upon payment by Trustor of Trustee’s fees and the costs and expenses of executing and recording any requested reconveyance, Trustee shall reconvey to the person or persons legally entitled thereto, without warranty, any portion of the Property then held hereunder. The recitals in any such reconveyance of any matter or fact shall be conclusive proof of the truthfulness thereof. The grantee in any such reconveyance may be described as “the person or persons legally entitled thereto.”
6.6 N
otices . All notices, demands, approvals and other communications provided for herein shall be in writing and shall be personally delivered, delivered by reputable overnight courier service or mailed by United States mail, as certified or registered material, return receipt requested, postage prepaid, to the appropriate party at the address set forth in the first paragraph of this Deed of Trust. Addresses for notice may be changed from time to time by written notice to all other parties. All communications shall be effective when actually received: provided, however, that non-receipt of any communication as the result of a change of address of which the pending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.
6.7 A
cceptance by Trustee. Trustee accepts this trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law.
6.8 H eadings . Article and Section headings are included in this Deed of Trust for convenience of reference only and shall not be used in construing this Deed of Trust. 51 6.9 Severability. Every provision of this Deed of Trust is intended to be severable. In the event any provision hereof is declared to be illegal, invalid or unenforceable for any reason whatsoever by a court of competent jurisdiction, such illegality, invalidity or unenforceability shall not affect the legality, validity or enforceability of the remaining provisions hereof, which provisions shall remain binding and enforceable.
6.10 S
ubrogation. To the extent that proceeds of the Note are used, either directly or indirectly, to pay any outstanding lien, charge or prior encumbrance against the Property, Beneficiary shall be subrogated to any and all rights and liens held by any owner or holder of such outstanding liens, charges and prior encumbrances, irrespective of whether such liens, charges or encumbrances are released.
6.11 G
overning Law. This Deed of Trust shall be governed by, and construed in accordance with, the laws of the State of California.
6.12 S tatute of Limitations . The right to plead, use or assert any statute of limitations as a plea, defense or bar of any kind, or for any purpose, to any obligation secured hereby, or to any complaint or other pleading or proceeding filed, instituted or maintained for the purpose of enforcing this Deed of Trust or any rights hereunder, is hereby waived by Trustor to the full extent permitted by law.
6.13 I nterpretation. In this Deed of Trust the singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires; and the word “person” shall include corporation, partnership or other form of association. Any reference in this Deed of Trust to any document, instrument or agreement creating or evidencing an obligation secured hereby shall include such document, instrument or agreement both as originally executed and as it may from time to time be modified.
6.14 T
rust Irrevocable . The trust created hereby is irrevocable by Trustor. All amounts payable by Trustor pursuant to this Deed of Trust shall be paid without notice (except where notice is expressly required), demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Trustor hereby waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any amount secured hereby and payable by Trustor to Beneficiary or Trustee.
6.15 F
urther Assurances. Trustor agrees to do or cause to be done such further acts and things and to execute and deliver or to cause to be executed and delivered such additional assignments, agreements, powers and instruments, as Beneficiary or Trustee may reasonably require to correct any defect, error or omission in this Deed of Trust or the execution or acknowledgment of this Deed of Trust, to subject to the lien of this Deed of Trust any of Trustor’s property covered or intended to be covered hereby, to perfect and maintain such lien, to keep valid and effective the charges and lien hereof, to carry into effect the purposes of this Deed of Trust or to better assure and confirm to Beneficiary or Trustee their respective rights, powers and remedies hereunder.
52 6.16 Trustee’s Powers. At any time, and from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness or the performance of any other obligation secured hereby or the effect of this Deed of Trust upon the remainder of the Property, Trustee may (i) reconvey all or any part of the Property, (ii) consent in writing to the making of any map or plat thereof, (iii) join in granting any easement thereon, or (iv) join in any extension agreement, agreement subordinating the lien or charge hereof, or other agreement or instrument relating hereto or to all or any part of the Property.
6.17 S
ubstitution of Trustee . Beneficiary may, from time to time, by written instrument executed and acknowledged by Beneficiary and recorded in the county or counties where the Property are located, or by any other procedure permitted by applicable law, substitute a successor or successors for the Trustee named herein or acting hereunder.
6.18 S
uccessors and Assigns. This Deed of Trust applies to, inures to the benefit of and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns.
6.19 No
n -Recourse Obligation. In the Event of Default under the terms of the Agreement, the Note, this Deed of Trust, or any of the other Project Documents, the sole recourse of City for any such Default shall be Developer’s interest in the Property and the Project and Developer and its Affiliates shall not be personally liable for the payment of any obligations under this Agreement; provided, however, that the foregoing shall not in any way affect any rights City may have hereunder, or any right of City to recover or collect funds, damages or costs (including without limitation reasonable attorneys’ fees and costs) incurred by City as a result of fraud, intentional misrepresentation or bad faith waste, and/or any costs and expenses incurred by City in connection therewith (including without limitation reasonable attorneys’ fees and costs).
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust and Assignment of Rents as of the date set forth below.
AMERICAN FAMILY HOUSING,
a California nonprofit, public benefit corporation
By: ______________________________
Myles Anthony Peinemann II
Chief Executive Officer
LEGAL DESCRIPTION
EXHIBIT “A”
LEGAL DESCRIPTION
That real property located in the State of California, County of Orange, City of Costa Mesa, and described as follows:
PARCEL 2, IN THE CITY OF COSTA MESA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 24 PAGE 23 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM THAT PORTION CONVEYED TO MESA CONSOLIDATED WATER DISTRICT BY DEED RECORDED DECEMBER 31, 1986 AS INSTRUMENT NO. 86-656909, OFFICIAL RECORDS.
ALSO EXCEPTING ALL OIL, OIL RIGHTS, MINERALS, MINERAL R IGHTS, NATURAL
GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER
NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND
HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND REMOV ING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREI NABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTCKED OR DIRECTIONALLY DRILLED
WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR,
DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHO UT, HOWEVER, THE
RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AS RESERVED IN DEED FROM THE IRVINE COMPANY, A CORPORATION, RECORDED MARCH 5, 1968 IN BOOK 8535 PAGE 62 OF OFFICIAL RECORDS.
APN: 439-312-12
LEGAL DESCRIPTION
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 )
) ss.
COUNTY OF ORANGE )
On ___________________ before me, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 per son(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
ATTACHMENT NO. 14
SECTION 3 CHECKLIST