Recording Requested by
and when Recorded, return to:
City of Cotati
201 West Sierra Avenue
Cotati, CA 94931-4217
Attn: City Clerk
EXEMPT FROM RECORDING FEES
PER GOVERNMENT CODE §§6103 &
27383
Space above this line for Recorder’s use.
AFFORDABLE HOUSING REGULATORY AGREEMENT
AND
DECLARATION OF RESTRICTIVE COVENANTS
This Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (this “Agreement”) is dated as of ____________, 20___, by and between the City of Cotati, a municipal corporation (“City”) and Diamond Boulevard, a Limited Liability Corporation (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties” and as a “Party” individually. This Agreement shall be effective as of the date this Agreement is recorded (“Effective Date”).
RECITALS
A. Developer owns that certain property located in the City of Cotati, California (APNs 144-040-011 & 144-040-021) more particularly described as Exhibit “A” attached hereto and incorporated herein by reference (the “Property”).
B. Developer intends to construct, own and operate on the Property a mixed-use project (the “Development”) known as Cotati Village Community 2 consisting of two apartment buildings containing 126 residential rental units comprised of forty-six (46) onebedroom units, sixty-four (64) two-bedroom units, and thirteen (13) three-bedroom units.
The Development also consists of a 2,250 square foot commercial building, frontage improvements, vehicle and bicycle parking, landscaping, and ancillary improvements.
C. Government Code Section 65915 authorizes Developer to request certain density increases, parking reductions, concessions, and waivers of development standards in exchange for various amounts of affordable housing. Pursuant to Government Code Section 65915, Owner has agreed that the Development will result in fifteen percent (15%) of the total units of the housing development being available for rent to Very LowIncome households; and has requested a density bonus of fifty-percent (50%) in allowable density.
D. The Property is located within the CG (Commercial, Gravenstein Corridor) zoning district which allows up to 84 units on the 5.62-acre Property (the base density). State Cotati Village 1 Affordable Housing Regulatory Agreement Page 2 of 27 density bonus regulations specify that an applicant can receive up to a fifty percent (50%) density bonus if fifteen percent (15%) of the Development’s base density units are restricted for occupancy by Very Low-Income Households for a period of not less than fifty-five (55) years (the “Restricted Units”).
E. The Development qualifies for a 50% increase in allowable density (up to 126 total units) because Developer has agreed to restrict occupancy of eighteen (13) of the base density units to Very Low-Income households and charge monthly rents that are considered affordable for those households.
F. The eighteen (13) Restricted Units shall be comprised of five (5) one-bedroom Restricted Units, five (5) two-bedroom Restricted Units, and three (3) three-bedroom Restricted Units.
G. Prior to the issuance of building permits to allow construction of the Development, the Parties will execute this Agreement for recordation in the Official Records of the County of Sonoma (the “Official Records”).
H. The above recitals relating to the Development are for information purposes only, and in no way affect the Developer’s and City’s rights and obligations under this Agreement with respect to the Property. The above recitals also are not intended to relieve the Developer of any additional inclusionary obligations the Developer may incur as a result of modifications to development plans existing as of the date of this Agreement.
I. In connection with the granting of such permits and entitlements for the Project, the City will impose certain development impact fees and charges (“Impact Fees”).
J. The Parties have agreed to enter into and record this Agreement in order to satisfy the conditions described in the foregoing Recitals. The Parties agree that the covenants set forth in this Agreement run with the land and are binding upon Developer and Developer’s successors in interest and assigns for a period of not less than fifty-five (55) years from the date of first occupancy of the Development.
NOW THEREFORE, in consideration of the foregoing, and other valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.
1. Definitions. The following terms have the meanings set forth in this Section wherever used in this Agreement or the attached exhibits. “Actual Household Size” means the actual number of persons in the applicable household.
“Adjusted for Family Size Appropriate to the Unit” shall be determined consistent with Section 50052.5(h) of the California Health and Safety Code and applicable federal rules, including the rules and regulations applicable to the use of federal low-income housing tax credits.
Cotati Village 1 Affordable Housing Regulatory Agreement Page 3 of 27 “Adjusted Income” means the total anticipated annual income of all persons in a household including nonrelated individuals, as calculated by HUD or TCAC. “Affordable Rent” means that the gross monthly rent payable by the tenant does not exceed one-twelfth of thirty percent (30%) of the applicable AMI limit, Adjusted for Family Size Appropriate to the Restricted Unit, as specified in Section 2.2, less a reasonable utility allowance.
“Area Median Income” or “AMI” means the median gross yearly income adjusted for Actual Household Size (to qualify residents) or Assumed Household Size (to calculate rents), as applicable, in the County of Sonoma, California, as published from time to time by HCD. In the event that such income determinations are no longer published or are not updated for a period of at least eighteen (18) months, the City shall provide Developer with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by HCD.
“Assumed Household Size” shall have the meaning set forth in Section 2.2. The definition is utilized to calculate Affordable Rent and is not intended to be a limit on the number of persons occupying a unit. The minimum Assumed Household Size shall be the number of bedrooms plus one, or the actual size of the household, whichever is greater. “Claims” is defined in Section 10.
“Eligible Household” means a household for which gross household income upon initial occupancy does not exceed the applicable maximum income level for a Restricted Unit, as specified in Section 2.1.
“Indemnitees” is defined in Section 10.
“HCD” means the California Department of Housing and Community Development.
“Management and Marketing Plan” is defined in Section 6.4. “Regulations” means Title 25 of the California Code of Regulations. “Rent” means the total of monthly payments by the residents of a Unit (other than the manager’s Unit) for the following: (1) use and occupancy of the Unit and land and related improvements, including parking; (2) any separately charged fees or service charges assessed by the Developer which are required of all tenants, other than security deposits; (3) the cost of an adequate level of service for utilities paid by the tenant, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service, cable service or any other utility or service permitted to be excluded from the calculation of Rent pursuant to the terms of 25 California Code of Regulations Section 6918; and (4) any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than the Developer, and paid by the tenant.
Cotati Village 1 Affordable Housing Regulatory Agreement Page 4 of 27 “Restricted Unit” means a dwelling unit which is reserved for occupancy at an Affordable Rent by a household of not more than a specified household income in accordance with and as set forth in Section 2.1.
“Very Low-Income Household” shall mean a household with an Adjusted Income that does not exceed fifty percent (50%) of Area Median Income. “Very Low-Income Rent” shall mean the rent permitted to be charged for a Very Low-Income Unit pursuant to Section 2.2 below.
“Very Low-Income Units” shall mean the Units, which, pursuant to Section 2.1 below, are required to be occupied by Very Low-Income Households.
2. Affordability Requirements
2.1 Use and Affordability Restrictions. Developer hereby covenants and agrees, for itself and its successors and assigns, that thirteen (13) units in the Development shall be used solely for the operation of an affordable residential rental development for Eligible Households. Developer represents and warrants that it has not entered into any agreement that would restrict or compromise its ability to comply with the occupancy and affordability restrictions set forth in this Agreement, and Developer covenants that it shall not enter into any agreement that is inconsistent with such restrictions without the express written consent of City.
Thirteen (13) of the units in the Development shall be rented to and occupied by, or, if vacant, available for occupancy by Eligible Households as further set forth in Recitals D and E (the “Restricted Units”), subject to Section 2.4, for a term of fifty-five (55) years commencing upon the date of issuance of a final certicate of occupancy for each building in the Development, set forth in Exhibit C. The City and the Developer acknowledge that other financing sources for the Development may impose additional affordability restrictions on the Development.
2.2 Rents for Restricted Units.
(a) Affordable Rent. Subject to the provisions of Section 2.4 below, the Rent charged to residents in the Restricted Units shall not exceed:
i. Very Low-Income Unit Rent. One-twelfth (1/12th) of thirty percent (30%) of fifty percent (50%) of Area Median Income, adjusted for Assumed Household Size.
(b) In calculating the allowable Rent for the Restricted Units, Assumed Household Size shall be the federally mandated household size assumptions as set forth in federal statutes or regulations for programs also providing financial assistance to the Development (“Assumed Household Size”) and as further defined in the definition of Assumed Household Size in this Agreement.
Cotati Village 1 Affordable Housing Regulatory Agreement Page 5 of 27 (c) The Rent for Restricted Units may only be increased one time per year (unless otherwise approved in writing by the City) and the Rent level following an increase, or upon a new occupancy, shall not exceed the Rent level set forth in subsection (a) above, as applicable. Eligible Households occupying Restricted Units shall be given at least sixty (60) days written notice prior to any increase in the Rent. Copies of said notice shall be provided to the City upon request.
(d) Notwithstanding anything to the contrary contained in this Agreement, if the other lenders, tax credit investor, or regulatory agencies require stricter household income eligibility or affordability requirements than those imposed hereby, the requirements of such other lenders, tax credit investor, or regulatory agencies shall prevail, but such requirements and the requirements of this Agreement shall be reconciled to the greatest extent possible. In meeting all such income and affordability requirements, the Developer may count each unit at a specific income eligibility level as meeting the same specific income eligibility level requirement in each of the lender, tax credit, or regulatory agency regulatory agreements.
2.3 Tenant Eligibility and Selection
2.3.1 Local Preference Policy. Pursuant to Government Code Section 7061 and the City’s Housing Element Program 4-1, and assuming all other factors being equal, priority for available Restricted Units shall be extended to Eligible Households that: 1.
Currently live or work in the City of Cotati; 2. Have children who attend a school within the Cotati-Rohnert Park Unified School District; 3. Are members of a local Native American Tribe, including the Federated Indians of Graton Rancheria (FIGR); or 4. Are an employee of Sonoma State University, over other persons to rent or purchase deedrestricted affordable housing units, in the order of priority with which the categories are listed.
2.3.2 Selection of Tenants. The Developer shall fill available Restricted Units by the following methods, in priority order, and in compliance with any rules approved by the City, including the City’s Local Preference Policy:
a. Selection from a list of Eligible Households maintained by the City or its designee;
b. Selection of Eligible Households from the City’s Section 8 Housing Choice Voucher Waiting List;
c. Selection of other Eligible Households, as long as the Developer complies with the publication requirements in Section 2.3.3.
2.3.3 Publication of Availability of Units. Whenever a Restricted Unit becomes available and the City advises the Developer that it may pursue the selection method described in Section 2.3.3(a), the Developer shall publish notices of the availability of Restricted Units via email to the City’s “Housing Interest List” in addition to other methods Developer reasonably deems practical and consistent with standard property Cotati Village 1 Affordable Housing Regulatory Agreement Page 6 of 27 management practices commonly used to widely publicize below market rate units. The notice should briefly explain what Restricted Units are, state the applicable income requirements, indicate where applications are available, state when the application period opens and closes, and provide a telephone number and email for questions.
Applications may require the name, address, and telephone number of the applicant; the number of persons to occupy the household; household income; information regarding the City’s Local Preference policy and any other information relevant to determine whether the applicant is eligible to occupy a Restricted Unit. The owner shall submit proof of publication to the City.
2.3.4 Income Certification. The Developer shall be responsible for certifying the income of the tenants of Restricted Units to the City at the time of initial rental, and annually thereafter. This shall be completed by viewing acceptable documentation, including income tax statements or a W-2 for the previous calendar year, and submitting, on a form approved by the City, a certification that the tenant qualifies as an Eligible Household.
2.3.5 Occupancy. A household that occupies a Restricted Unit shall occupy the unit as its principal residence.
2.4 Changes in Tenant Income. If after moving into a Restricted Unit the tenant’s income eventually increases such that the tenant no longer qualifies as an Eligible Household, the tenant shall be given one year’s notice to vacate the unit. If within that year, another comparable unit in the Development is vacated, the Developer may, at the Developer’s option, allow the tenant to remain in the original unit and raise the tenant’s rent to market rate and designate the newly vacated unit as a new Restricted Unit at the applicable Affordable Rent. Unless the tenants household situation has changed, the new Restricted Unit must be comparable in size (i.e., number of bedrooms, bathrooms, square footage, etc.) and location (i.e., comparable floor, comparable view, etc.) to the original Restricted Unit.
In the event of inconsistency between the provisions of this Section and the rules applicable to the Development in connection with low-income housing tax credits, taxexempt bond financing, or financing or rent subsidies provided to the Development by a federal, State, or other public agency, the rules applicable pursuant to such financing or subsidy source shall prevail.
2.5 No Condominium Conversion. Developer shall not convert the Development to condominium or cooperative ownership or sell condominium or cooperative rights to the Development or any part thereof during the term of this Agreement without the express authorization and approval from the City of Cotati, which consent shall be conditioned upon Developer’s agreement to ensure that the Restricted Units remain available as affordable housing to Eligible Households. Prior to conveyance of any Restricted Unit(s), the buyer(s) of the for-sale Units shall enter into an affordable housing agreement, in a form approved by the City Manager and City Attorney, that Cotati Village 1 Affordable Housing Regulatory Agreement Page 7 of 27 maintains the affordability of the unit for the minimum term set forth in this Agreement or in California law, whichever is greater.
2.6 Non-Discrimination; Compliance with Fair Housing Laws.
2.6.1 Fair Housing. Developer shall comply with state and federal fair housing laws in the marketing, leasing, and management of the units in the Development. Developer shall accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing Section 8 program or any successor thereto, however Developer at his sole discretion, may limit the total units rented to tenants under the Section 8 program to a maximum of eighteen (13) units.
2.6.2 Non-Discrimination. The Developer shall apply the same rental terms and conditions to tenants of Restricted Units as are applied to all other tenants, except as otherwise to comply with this Agreement and/or government subsidy programs. Discrimination based on subsidies received by the prospective tenant is prohibited. Developer shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Developer covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those biases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code in, the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Developer or any person claiming under or through Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or part thereof. Developer shall include such provision in all deeds, leases, contracts and other instruments executed by Developer, and shall enforce the same diligently and in good faith.
3. Reporting Requirements.
3.1 Tenant Certification. Developer or Developer’s authorized agent shall obtain from each household prior to initial occupancy of each Restricted Unit, and on every anniversary thereafter, a written certification on a form approved by the City containing all of the following, and with supporting documentation including income tax statements or a W-2 for the previous calendar year:
(a) The identity of each household member; and
(b) The total gross household income; and
Cotati Village 1 Affordable Housing Regulatory Agreement Page 8 of 27 (c) Household compliance with Local Preference Policy consistent with Section
2.3.2 if applicable.
Developer shall retain such certificates for not less than five (5) years from the date of the last Tenant Certification for a specific unit, and annually upon City’s requested date and time, shall provide copies of such certificates to City and make the originals available for City inspection.
3.2 Annual Report; Inspections. By not later than April 30 of each year during the term of this Agreement, Developer shall submit an annual report (“Annual Report”) to the City for the prior calendar year in a form satisfactory to City, together with a certification that the Development is in compliance with the requirements of this Agreement. The Annual Report shall, at a minimum, include the following information for each dwelling unit in the Development as of the date of the Annual Report: (i) unit number; (ii) number of bedrooms; and (iii) current rent and other charges, specifying the amount chargeable to the Tenant. In addition, the Annual Report shall, at a minimum include the following information for each Restricted Unit in the Development as of the date of the Annual Report: (i) number of people residing in the unit as reported to the Developer; (ii) total gross household income of residents; (iii) documentation of source of household income in the form of occupants’ tax returns or other generally acceptable income verification documents; (iv) the information required by Section 3.1; and (v) dates of any vacancies of Restricted Units during the previous year.
The Annual Report shall include a site improvement (if any) and maintenance plan and shall include a report on the current waitlist for Restricted Units, including number of households, unit size desired, and typical wait period. Developer shall include with the Annual Report an income recertification for each Eligible Household, documentation verifying tenant eligibility and such additional information as City may reasonably request from time to time in order to demonstrate compliance with this Agreement. The Annual Report shall conform to the format requested by City; provided however, during such time that the Development is subject to a regulatory agreement restricting occupancy and/or rents pursuant to requirements imposed in connection with the use of state or federal lowincome housing tax credits or tax-exempt bond financing or grants, Developer may satisfy the requirements of this Section by providing City with a copy of compliance reports required in connection with such financing or grants.
3.3 On-Site Inspection and Monitory Fee. Developer shall permit representatives of City to enter and inspect the Property, the Development, and the property management records, in order to monitor compliance with this Agreement during normal business hours upon two business days advance notice of such visit to Developer or to Developer’s management agent.
The Development shall be subject to an annual monitoring fee of $125 per Restricted Unit, or as adjusted from time to time pursuant to the City’s Master Fee Schedule. If compliance monitoring is conducted by a third party, the true cost of said compliance up to $125 per unit, as may be adjusted from time to time. Upon approval of the City, the Developer may elect to engage a qualified third party for monitoring Cotati Village 1 Affordable Housing Regulatory Agreement Page 9 of 27 compliance pursuant to this Agreement, and the City shall not unreasonably withhold approval of this election by the Developer.
4. Term of Agreement.
4.1 Term of Restrictions. This Agreement shall remain in effect through the 55th anniversary of the date of issuance of a final certicate of occupancy for each building in the Development, per Exhibit C, unless the term is extended by mutual agreement of the Parties.
4.2 Effectiveness Succeeds Conveyance of Property. This Agreement shall remain effective and fully binding for the full term hereof, as such may be extended pursuant to Section 4.1, regardless of any sale, assignment, transfer, or conveyance of the Property or the Development or any part thereof or interest therein.
4.3 Reconveyance. Upon the termination of this Agreement, the Parties agree to execute and record appropriate instruments to release and discharge this Agreement; provided, however, the execution and recordation of such instruments shall not be necessary or a prerequisite to the termination of this Agreement upon the expiration of the term as such may be extended pursuant to Section 4.1.
5. Binding Upon Successors; Covenants to Run with the Land. Developer hereby subjects its interest in the Property and the Development to the covenants and restrictions set forth in this Agreement. The City and Developer hereby declare their express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of Developer and City, regardless of any sale, assignment, conveyance or transfer of the Property, the Development or any part thereof or interest therein. Any successor-in-interest to Developer, including without limitation any purchaser, transferee or lessee of the Property or the Development (other than the tenants of the individual dwelling units within the Development) shall be subject to all of the duties and obligations imposed hereby for the full term of this Agreement. Each and every contract, deed, or other instrument affecting or conveying the Property or the Development or any part thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of whether such covenants, restrictions, duties and obligations are set forth in such contract, deed, or other instrument. If any such contract, deed, or other instrument has been executed prior to the date hereof, Developer hereby covenants to obtain and deliver to City an instrument in recordable form signed by the parties to such contract, deed, or other instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby.
Developer agrees for itself and for its successors that in the event that a court of competent jurisdiction determines that the covenants herein do not run with the land, such covenants shall be enforced as equitable servitudes against the Property and the Development in favor of City.
Cotati Village 1 Affordable Housing Regulatory Agreement Page 10 of 27
6. Property Management; Repair and Maintenance; Marketing.
6.1 Management Responsibilities. Developer shall be responsible for all management functions with respect to the Property and the Development, including without limitation the selection of tenants, certification and recertification of household income and eligibility, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security.
City shall have no responsibility for management or maintenance of the Property or the Development.
6.2 Management Entity. City shall have the right to review and approve the qualifications of the management entity proposed by Developer for the Restricted Units in the Development. The contracting of management services to a management entity shall not relieve Developer of its primary responsibility for proper performance of management duties.
6.3 Repair, Maintenance and Security. Throughout the term of this Agreement, Developer shall at its own expense, maintain the Property and the Development in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Development and the Property (including without limitation, the residential units, common areas, meeting rooms, landscaping, driveways, parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or at the Development. Developer shall prevent and/or rectify any physical deterioration of the Property and the Development and shall make all repairs, renewals and replacements necessary to keep the Property and the improvements located thereon in good condition and repair. Developer shall provide adequate industry standard security services for occupants of the Development. The Management and Marketing Plan shall provide for the installation of a security camera system at initial occupancy of each building. Nothing in the proceeding sentence shall require the continued use of a camera system if the parties agree upon a different or updated security system.
6.3.1 City’s Right to Perform Maintenance. In the event that Developer breaches any of the covenants contained in Section 6.3, and such default continues for a period of ten (10) business days after written notice from City (with respect to graffiti, debris, and waste material) or thirty (30) days after written notice from City (with respect to landscaping, building improvements and general maintenance), then City, in addition to any other remedy it may have under this Agreement or at law or in equity, shall have the right, but not the obligation, to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and the landscaped areas on the Property. All costs expended by City in connection with the foregoing, shall constitute an indebtedness and shall be paid by Developer to City upon demand. All such sums remaining unpaid thirty (30) days following delivery of City’s invoice therefor shall Cotati Village 1 Affordable Housing Regulatory Agreement Page 11 of 27 bear interest at the lesser of ten percent (10%) per annum or the highest rate permitted by applicable law.
6.4 Management and Marketing Plan. The Developer shall be responsible for creating and maintaining a plan for managing the Property and marketing the units for rent in the Project (the “Management and Marketing Plan”). The Management and Marketing Plan shall be updated every five (5) years and be available to the City for review upon request. Updates and revisions to the Management and Marketing Plan may be subject to prior approval of Developer’s investors, limited partners and/or project lenders before being implemented.
The Management and Marketing Plan shall describe the management team and shall address how the Developer and the management entity plan to manage and maintain the Property and the Development. The Management and Marketing Plan shall include the proposed management agreement and the form of rental agreement that Developer proposes to enter into with the Development’s tenants. The Management and Marketing Plan shall address in detail how Developer plans to market the Restricted Units to prospective Eligible Households, in conformance with fair housing laws and this Agreement and with Developer’s tenant selection criteria and shall include email notification of unit availability and the process to apply for occupancy of the unit to the City’s Housing Interest List. Additionally, the Management and Marketing Plan shall identify how Developer plans to certify the eligibility of Eligible Households, including implementation of the City’s Local Preference Policy. Developer shall abide by the terms of the Management and Marketing Plan in marketing, managing, and maintaining the Property and the Development, and throughout the term of this Agreement, shall submit proposed modifications to City for review and approval, which shall not be unreasonably withheld.
6.5 Approval of Amendments. If City has not responded to any submission of the Management and Marketing Plan, the proposed management entity, or a proposed amendment or change to any of the foregoing within thirty (30) days following City’s receipt of such plan, proposal or amendment, the plan, proposal or amendment shall be deemed approved by City.
6.6 Fees, Taxes, and Other Levies. Developer shall be responsible for payment of all fees, assessments, taxes, charges, liens and levies applicable to the Property or the Development, including without limitation possessory interest taxes, if applicable, imposed by any public entity, and shall pay such charges prior to delinquency. However, Developer shall not be required to pay any such charge so long as (a) Developer is contesting such charge in good faith and by appropriate proceedings, (b) Developer maintains reserves adequate to pay any contested liabilities, and (c) on final determination of the proceeding or contest, Developer immediately pays or discharges any decision or judgment rendered against it, together with all costs, charges and interest.
The Parties acknowledge that the Developer will apply for exemption from property tax for the affordable units under Revenue and Taxation Code Section 214.
Cotati Village 1 Affordable Housing Regulatory Agreement Page 12 of 27
6.7 Insurance Coverage. Throughout the term of this Agreement Developer shall at Developer’s expense, maintain in full force and effect insurance coverage as specified in Exhibit B and shall comply with all insurance requirements set forth in the Exhibit B.
6.8 Property Damage or Destruction. If any part of the Development is damaged or destroyed, Developer shall repair or restore the same, consistent with the occupancy and rent restriction requirements set forth in this Agreement. Such work shall be commenced as soon as reasonably practicable after the damage or loss occurs and shall be completed within one year thereafter or as soon as reasonably practicable, provided that insurance proceeds are available to be applied to such repairs or restoration within such period and the repair or restoration is financially feasible. During such time that lenders. low-income housing tax credit investors and State housing programs providing financing for the Development impose requirements that differ from the requirements of this Section the requirements of such lenders and investors shall prevail.
7. Recordation; Subordination. This Agreement shall be recorded in the Official Records of Sonoma County. Developer hereby represents, warrants and covenants that with the exception of easements of record, absent the written consent of City, this Agreement shall not be subordinated in priority to any lien (other than those pertaining to taxes or assessments), encumbrance, or other interest in the Property or the Development without the City’s approval. If at the time this Agreement is recorded, any interest, lien, or encumbrance has been recorded against the Development in position superior to this Agreement, upon the request of City, Developer hereby covenants and agrees to promptly undertake all action necessary to clear such matter from title or to subordinate such interest to this Agreement consistent with the intent of and in accordance with this Section 7, and to provide such evidence thereof as City may reasonably request. Notwithstanding the foregoing, the City agrees that City will not withhold consent to reasonable and industry standard requests for subordination of this Agreement pursuant to Section 8.3. Developer shall reimburse City for all costs, including but not limited to reasonable attorney’s fees, incurred in reviewing instruments and other legal documents proposed to effect a subordination under this Agreement within ten (10) days following City’s delivery of an invoice detailing such costs.
8. Transfer and Encumbrance.
8.1 Restrictions on Transfer and Encumbrance. During the term of this Agreement, except as permitted pursuant to this Agreement, Developer shall not directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the whole or any part of the Property, the Development, or the improvements located on the Property, without the prior written consent of the City, which approval shall not be unreasonably withheld. In addition, prior to the expiration of the term of this Agreement, except as expressly permitted by this Agreement, Developer shall not undergo any significant change of ownership without the prior written approval of City. For purposes of this Agreement, a “significant change of ownership” shall mean a transfer of the beneficial interest of more than twenty-five percent (25%) in aggregate of the present ownership Cotati Village 1 Affordable Housing Regulatory Agreement Page 13 of 27 and /or control of Developer, taking all transfers into account on a cumulative basis; provided however, neither the admission of an investor limited partner, nor the transfer by the investor limited partner to subsequent limited partners shall be restricted by this provision.
8.2 Permitted Transfers. Notwithstanding any contrary provision hereof, the prohibitions on Transfer set forth herein shall not be deemed to prevent: (i) the granting of easements or permits to facilitate development of the Property; (ii) the dedication of any property; (iii) the lease of individual dwelling units to tenants for occupancy as their principal residence, or the lease of commercial space to commercial tenants, if applicable; (iv) assignments creating security interests for the purpose of financing the acquisition, construction, or permanent financing of the acquisition or the Property in accordance with the Agreement, or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) a Transfer to a limited partnership in which the managing general partner is a tax-exempt entity under the direct control of or under common control with a qualified non-profit affordable housing company; (vi) the admission of limited partners and any transfer of limited partnership interests in accordance with Developer’s agreement of limited partnership (the “Partnership Agreement”), provided that the Partnership Agreement and/or the instrument of Transfer provides for development and operation of the Property and Development in a manner consistent with this Agreement; (vii) the removal of the general partner by the investor limited partner for a default under the Partnership Agreement, provided the replacement general partner is an affiliate of the limited partner or an entity which is reasonably satisfactory to City; or (viii) the transfer of the General Partner’s interest to a nonprofit entity that is or its member/manager is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended, provided such replacement general partner is reasonably satisfactory to City or (ix) the grant, exercise and subsequent the transfer of the Project or limited partner interests in Developer to a qualified non-profit affordable housing company or an affiliate thereof pursuant to the right of first refusal and/or option granted under Developer’s Partnership Agreement.
In addition, City shall not withhold its consent to the sale, transfer or other disposition of the Development, in whole or in part, provided that: (a) the Development is and shall continue to be operated in compliance with this Agreement; (b) the transferee expressly assumes all obligations of Developer imposed by this Agreement; (c) the transferee executes all documents reasonably requested by the City with respect to the assumption of the Developer’s obligations under this Agreement, and upon City’s request, delivers to the City an opinion of its counsel to the effect that such document and this Agreement are valid, binding and enforceable obligations of such transferee; and (d) either (A) the transferee has at least three (3) years’ experience in the ownership, operation and management of multifamily rental housing projects of similar size to that of the Development, without any record of material violations of nondiscrimination provisions or other state or federal laws or regulations applicable to such projects, or (B) the transferee agrees to retain a property management firm with the experience and record described in Section 6.4.
Cotati Village 1 Affordable Housing Regulatory Agreement Page 14 of 27 Unless waived by City, Owner shall reimburse City for all City costs, including but not limited to reasonable attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to affect a Transfer under this Agreement and in reviewing the qualifications and financial resources of a proposed successor, assignee, or transferee within ten (10) days following City’s delivery of an invoice detailing such costs.
8.3 Encumbrances; Subordination. City agrees that the City will not withhold consent to reasonable requests to subordinate this Agreement to a third-party lender providing loan proceeds for the acquisition, development, construction, rehabilitation and/or operation of the Development; provided, that Developer agrees to use best efforts to ensure that any subordination agreement recorded against the Property, the Development or part thereof for the benefit of a lender other than City (“Third-Party Lender”) shall contain each of the following provisions: (i) Third-Party Lender shall use its best efforts to provide to City a copy of any notice of default issued to Developer concurrently with provision of such notice to Developer; (ii) City shall have the reasonable right, but not the obligation, to cure any default by Developer within the same period of time provided to Developer for such cure. Developer agrees to provide to City a copy of any notice of default Developer receives from any Third-Party Lender within three (3) business days following Developer’s receipt thereof.
8.4 Mortgagee Protection. No violation of any provision contained herein shall defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon all or any portion of the Development or the Property. The purchaser at any trustee’s sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the acquisition of title by such purchaser. Promptly upon determining that a violation of this Agreement has occurred, City shall give written notice to the holders of record of any mortgages or deeds of trust encumbering the Development or the Property that such violation has occurred.
9. Default and Remedies.
9.1 Events of Default. The occurrence of any one or more of the following events shall constitute an event of default hereunder (“Event of Default”):
(a) The occurrence of a Transfer in violation of Section 8 hereof; (b) Developer’s failure to maintain insurance on the Property and the Development as required hereunder, and the failure of Developer to cure such default within ten (10) business days of written notice from City; (c) Subject to Developer’s right to contest the following charges, Developer’s failure to pay taxes or assessments due on the Property or the Development or failure to pay any other charge that may result in a lien on the Property or the Development, and Developer’s failure to cure such default within thirty (30) days of delinquency;
(d) A default has been declared under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property and remains Cotati Village 1 Affordable Housing Regulatory Agreement Page 15 of 27 uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan; (e) Developer’s default in the performance of any term, provision or covenant under this Agreement (other than an obligation enumerated in this Subsection
9.1), and unless such provision specifies a shorter cure period for such default, the continuation of such default for ten (10) days in the event of a monetary default or thirty (30) days in the event of a non-monetary default following the date upon which City shall have given written notice of the default to Developer, or if the nature of any such nonmonetary default is such that it cannot be cured within thirty (30) days, Developer’s failure to commence to cure the default within thirty (30) days and thereafter prosecute the curing of such default with due diligence and in good faith, but in no event longer than ninety (90) days from receipt of the notice of default or such longer period of time as City may allow.
The limited partners, investors, general partners and other lenders of Developer shall have the right to cure any default of Developer hereunder upon the same terms and conditions afforded to Developer. Provided that City has been given written notice of the address for delivery of notices to the limited partners, City shall provide any notice of default hereunder to the limited partners investors, general partners and other lenders concurrently with the provision of such notice to Developer, and as to the limited partners, et al, the cure periods specified herein shall commence upon the date of delivery of such notice in accordance with Subsection 11.3.
9.2 Remedies. Upon the occurrence of an Event of Default and its continuation beyond any applicable cure period, City may proceed with any of the following remedies:
A. Bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking declaratory relief;
B. For violations of obligations with respect to rents for Restricted Units, impose as liquidated damages a charge in an amount equal to the actual amount collected in excess of the Affordable Rent;
C. If, in connection with an Event of Default under Subsection 9.1(d), a lienholder of any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property exercises its right to foreclose on the Property, then the proceeds of any sale of the Property in connection with such foreclosure shall be used to pay all indebtedness, claims and liabilities due under this Agreement. The City’s rights under this paragraph shall be fully subordinated to the prior payment in full of any senior secured obligations to which this Agreement has been subordinated pursuant to Section 8.3;
D. Pursue any other remedy allowed at law or in equity.
Cotati Village 1 Affordable Housing Regulatory Agreement Page 16 of 27 Each of the remedies provided herein is cumulative and not exclusive. The City may exercise from time to time any rights and remedies available to it under applicable law or in equity, in addition to, and not in lieu of, any rights and remedies expressly provided in this Agreement.
10. Indemnity. Notwithstanding any other provision in the Agreement or other documents executed in connection with the City funds, Developer shall indemnify, defend (with counsel approved by City) and hold City and their respective elected and appointed officers, officials, employees, agents, and representatives (collectively, the “Indemnitees”) harmless from and against all liability, loss, cost, expense (including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) arising directly or indirectly, in whole or in part, as a result of or in connection with Developer’s construction, management, or operation of the Property and the Development or any failure to perform any obligation as and when required by this Agreement. Developer’s indemnification obligations under this Section 10 shall not extend to Claims resulting solely from the gross negligence or willful misconduct of Indemnitees. It is further agreed that City does not and shall not waive any rights against Developer that it may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies’ proceeds described in this Agreement.
The provisions of this Section 10 shall survive the expiration or earlier termination of this Agreement.
11. Miscellaneous.
11.1 Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties.
11.2 No Waiver. Any waiver by City of any term or provision of this Agreement must be in writing. No waiver shall be implied from any delay or failure by City to take action on any breach or default hereunder or to pursue any remedy allowed under this Agreement or applicable law. No failure or delay by City at any time to require strict performance by Developer of any provision of this Agreement or to exercise any election contained herein or any right, power or remedy hereunder shall be construed as a waiver of any other provision or any succeeding breach of the same or any other provision hereof or a relinquishment for the future of such election.
11.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery; Cotati Village 1 Affordable Housing Regulatory Agreement Page 17 of 27 (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered upon receipt if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
City: City of Cotati
201 West Sierra Avenue
Cotati, CA 94931-4217
Attention: City Manager
Developer: Diamond Boulevard, LLC
855 Lakeville Street, Suite 200
Petaluma, CA 94952
Attention: Chris Scerri
11.4 Further Assurances. The Parties shall execute, acknowledge, and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement.
11.5 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another.
11.6 Action by the City. City Manager Authority. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent, or request by the City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by the City’s City Manager or by any person who shall have been designated by the City Manager, without further approval by the City Council. City hereby authorizes the City Manager or designee to take such other actions and negotiate and execute any additional agreements, including, without limitation, implementing agreements hereof and amendments hereto, as may be necessary or proper to satisfy the purpose and intent of this Agreement. Notwithstanding the foregoing, the City Manager shall maintain the right to submit to the City Council for consideration and action any action or additional agreement under the City Manager’s authority if the City Manager desires to do so.
11.7 Non-Liability of City Officials, Officers, Directors, Employees and Agents.
No member, official, employee or agent of the City shall be personally liable to Developer or any successor in interest, in the event of any default or breach by the City, or for any amount of money which may become due to Developer or its successor or for any obligation of City under this Agreement. No director, officer, employee, or agent of the Developer shall be personally liable to the City or any successor in interest, in the event of any default or breach by the Developer, or for any amount of money which may become Cotati Village 1 Affordable Housing Regulatory Agreement Page 18 of 27 due to the City or its successor or for any obligation of the Developer under this Agreement.
11.8 Headings; Construction. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party.
11.9 Time is of the Essence. Time is of the essence in the performance of this Agreement.
11.10 Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of California without regard to principles of conflicts of law. Any legal action shall be venued in the County of Sonoma.
11.11 Attorneys’ Fees and Costs. If any legal or administrative action is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover all reasonable attorneys’ fees and costs incurred in such action.
11.12 Severability. If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired thereby.
11.13 Entire Agreement. This Agreement contains the entire agreement of Parties with respect to the subject matter hereof and supersedes all prior oral or written agreements between the Parties with respect thereto.
11.14 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement.
SIGNATURES ON FOLLOWING PAGES.
Cotati Affordable Housing Regulatory Agreement Page 19 of 27 IN WITNESS WHEREOF, the Parties have executed this Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants as of the date first written above.
CITY
City of Cotati, a municipal corporation
By: _______________________
Damien O’Bid, City Manager
Attest:_______________________
City Clerk
Approved as to form:
__________________
City Attorney
DEVELOPER
Diamond Boulevard, a limited liability corporation
By: ________________________
Chris Scerri
Manager
SIGNATURES MUST BE NOTARIZED.
Cotati Affordable Housing Regulatory Agreement Page 20 of 27 A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
)
COUNTY OF SONOMA )
On , 20__, before me, ______________________, (here insert name and title of the officer), personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
Cotati Affordable Housing Regulatory Agreement Page 21 of 27 A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
)
COUNTY OF SONOMA )
On , 20__, before me, ______________________, (here insert name and title of the officer), personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
Cotati Affordable Housing Regulatory Agreement Page 22 of 27 Exhibit A
PROPERTY
Real property in the City of Cotati, County of Sonoma, State of California, described as follows:
Legal Description
Cotati Affordable Housing Regulatory Agreement Page 23 of 27 Exhibit B
Insurance Requirements
Throughout the term of this Agreement, Developer shall obtain and maintain, at Developer’s expense, the following policies of insurance.
A. Property Insurance. Insurance for the risks of direct physical loss, with minimum coverage being the perils insured under the standard Causes of Loss - Special form (ISO Form CP 10 30) or its equivalent, covering all improvements, all fixtures, equipment and personal property, located on or in, or constituting a part of, the Property (“Improvements”), in an amount equal to one hundred percent (100%) of the full replacement cost of all such property naming the City as a Loss Payee, as its interests may appear.
1. The insurance required hereunder shall be in amounts sufficient to prevent Developer from becoming a co-insurer under the terms of the applicable policies, with not more than a Ten Thousand Dollar ($10,000) deductible (or such higher deductible approved by the City, which approval shall not be unreasonably withheld) from the loss payable for any casualty.
B. Liability Insurance. Comprehensive general liability insurance on an “occurrence basis” covering all claims with respect to injury or damage to persons or property occurring on, in or about the Property and the Improvements. The limits of liability under this Paragraph B shall be not less than Two Million Dollars ($2,000,000) combined single limit per occurrence, with a deductible no greater than Ten Thousand Dollars ($10,000) or such higher deductible as may be approved by City, which approval shall not be unreasonably withheld.
1. The insurance shall also include coverage for:
(a) Liability for bodily injury or property damage arising out of the use, by or on behalf of Developer, of any owned, non-owned, leased or hired automotive equipment in the conduct of any and all operations conducted in connection with the Project or the Property;
(b) Premises and operations including, without limitation, bodily injury, personal injury, death or property damage occurring upon, in or about the Property or the Improvements on any elevators or any escalators therein and on, in or about the adjoining sidewalks, streets and passageways;
(c) Broad form property damage liability;
Cotati Affordable Housing Regulatory Agreement Page 24 of 27 (d) Additional insured and primary insured endorsements protecting the City and its respective elected and appointed officials, officers, employees and agents;
(e) Personal injury endorsement.
C. Worker’s Compensation Insurance. Worker’s compensation insurance, in the amount required under then applicable state law, covering Developer’s employees, if any, at work in or upon the Property or engaged in services or operations in connection with the Project or the Property. Developer shall require that any contract entered into by Developer with regard to work to be undertaken on the Property include a contractual undertaking by the contractor to provide worker’s compensation insurance for its employees in compliance with applicable state law.
D. Course of Construction Insurance. Course of construction insurance in the same amount as required in Paragraph A above for property insurance, covering all construction activities on the Property.
E. General Insurance Provisions.
1. All policies of insurance provided for in this Exhibit B shall be provided under valid and enforceable policies, in such forms and amounts as hereinbefore specified, issued by insurers licensed to do business in the State of California and having a rating of A-VII or better in Best Insurance Guide. Developer shall deliver to City certificates evidencing the insurance required to be carried by Developer under this Exhibit B. If requested by City, Developer shall deliver within ten (10) days following such request, certified, complete copies of the insurance policies required hereunder. Insurance policies to be provided hereunder shall meet the following requirements:
2. Each policy of insurance obtained pursuant to this Agreement, other than worker’s compensation insurance, shall contain endorsements which provide:
(a) A waiver by the insurer of the right of subrogation against City or Developer for negligence of any such person,
(b) A statement that the insurance shall not be invalidated should any insured waive in writing prior to the loss any or all right of recovery against any party for loss accruing to the property described in the insurance policy, and
(c) A provision that no act or omission of Developer which would otherwise result in forfeiture or reduction of the insurance therein provided shall affect or limit the obligation of the insurance company to pay the amount of any loss sustained.
Cotati Affordable Housing Regulatory Agreement Page 25 of 27 (d) By endorsement, City, and its elected and appointed officials, officers, employees and agents shall be named as additional insured under the liability insurance required to be maintained by Developer hereunder. City shall be named as loss payee on the property insurance policies required to be maintained hereunder.
3. Each policy required hereunder shall include a Notice of Cancellation or Change in Coverage Endorsement which shall provide that such policy shall not be cancelled or materially changed without at least thirty (30) days’ prior written notice by registered or certified mail to City.
4. All insurance policies shall provide that there shall be no exclusion from coverage for cross liability among the listed insureds.
5. Any certificate of insurance applicable to course of construction insurance to be maintained shall be deposited with City prior to commencement of construction of any Improvements.
6. Each policy shall contain an endorsement that provides that the insurance applies separately to each insured that is seeking coverage or against whom a claim is made, except with respect to the limits of liability.
7. Each policy shall be written as a primary policy not contributing with and not in excess of coverage that City may carry.
F. Blanket Policies. Any insurance provided for in this Exhibit B may be placed by a policy or policies of blanket insurance; provided, however, that such policy or policies provide that the amount of the total insurance allocated to the Property and the Project shall be such as to furnish protection the equivalent of separate policies in the amounts herein required, and provided further that in all other respects any such policy or policies shall comply with the other provisions of this Agreement.
G. Waiver of Subrogation. To the extent permitted by law and the policies of insurance required to be maintained hereunder, and without affecting such insurance coverage, City and Developer each waive any right to recover against the other:
1. Damages for injury or death of persons,
2. Damage to property,
3. Damage to the Property or the Improvements or any part thereof, or Cotati Affordable Housing Regulatory Agreement Page 26 of 27
4. Claims arising by reason of any of the foregoing, to the extent that such damages and/or claims are covered (and only to the extent of such coverage) by insurance actually carried by either City or Developer.
This provision is intended to restrict each party (as permitted by law) to recover against insurance carriers to the extent of such coverage, and waive fully, and for the benefit of each, any rights and/or claims which might give rise to a right of subrogation in any insurance carrier.
Cotati Affordable Housing Regulatory Agreement Page 27 of 27 Exhibit C
Building Number Date of Final Certificate of Occupancy
A ____________________________
B ____________________________