PERMANENT LOCAL HOUSING GRANT
LOAN AGREEMENT
(441 SOUTH STREET)
This Affordable Housing Loan Agreement (“Agreement”) is entered into as of _______, 2023 (Effective Date) by and between the CITY OF FORT BRAGG, a California municipal corporation (“City”) and FORT BRAGG SOUTH STREET LP, a California limited partnership (“Borrower”).
RECITALS
Borrower acquired certain real property located in Fort Bragg, California, as more particularly described in Exhibit A, attached hereto and incorporated herein by this reference (the “Property”) upon which it will develop a multifamily housing facility to be known as The Plateau Housing Project (the “Project”).
The Project is an affordable multifamily housing project with three components:
(i) 20 units of permanent supportive housing, plus a manager’s unit; (ii) 23 single-story senior residential cottages; and (iii) 25 workforce/family residential units and associated amenities.
The City received a Homeless Emergency Aid Program (HEAP) grant of Three Million Dollars ($3,000,000) (the “HEAP Grant”) from the County of Mendocino Health and Human Services Agency as the administrative entity for the Mendocino County Homeless Continuum of Care (MCHCOC). In addition, the City, in its capacity as the Housing Successor to the former Redevelopment Agency of the City of Fort Bragg committed Two Hundred Fifty Thousand Dollars ($250,000) from its Low- and Moderate-Income Housing Fund for the Project. The HEAP Grant and the Pre-Development Loan were memorialized in a Loan Agreement dated November 1, 2020 (collectively “HEAP Loan Agreement”).
In connection with the HEAP Loan Agreement, the parties executed a Regulatory Agreement and Declaration of Restrictive Covenants dated November 1, 2020, and recorded in the official records of Mendocino County, California, on November 25, 2020, as instrument number 2020-16121 (“Regulatory Agreement”).
On September 13, 2021, the City Council of the City of Fort Bragg adopted Resolution No. 4441-2021 authorizing the application for Permanent Local Housing Allocation (PLHA) Program Non-Entitlement Local Government Competitive Component to support the “Project.” On August 30, 2022, the City was awarded $2,400,000 in PLHA program funds (PLHA Award”) and entered Agreement Number 21-PLHACOM-17075. From the PLHA Award, $2,280,000 is being loaned to Borrower herein for the Project. The remainder is being retained by the City for its administrative costs.
The City desires to enter into this Agreement to make a loan to Borrower in the amount of $2,280,000, subject to the terms and conditions as set forth in this Agreement.
NOW, THEREFORE, City and Borrower hereby agree as follows:
AGREEMENT
DEFINITIONS
Terms. The following terms, as used in this Agreement, shall have the meaning ascribed them in this Section:
“Additional Borrower Financing” has the meaning set forth in Section 401.
“Affiliate” means any other Person Controlling or Controlled by or under common Control with a specified Person.
“Agreement” means this Affordable Housing Loan Agreement. “Annual Operating Expenses” means for each calendar year, the costs reasonably and actually incurred for operation and maintenance of the Project, which shall generally include: (i) Property taxes and assessments imposed on the Project; (ii) debt service due on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Project) on the Approved Financing; (iii) on-site service provider fees for supportive housing social services, provided the City has approved, in writing, the plan and budget for such services before such services begin; (iv) property management fees and reimbursements, on–site property management office expenses, and salaries of property management and maintenance personnel, not to exceed amounts that are standard in the industry and which are pursuant to a management contract approved by the City; (vi) annual partnership/asset management fees of $7,500, escalated by 3% annually, to the limited partner, and $10,000, escalated by 3% annually, to the general partner; (viii) fees for accounting, audit, and legal services incurred by Borrower's general partner in the asset management of the Project, not to exceed amounts that are standard in the industry, to the extent such fees are not included in the approved partnership/asset fees; (ix) premiums for insurance required to satisfy the requirements of any lender of Approved Financing; (x) utility services not paid for directly by tenants, including water, sewer, and trash collection; (xi) maintenance and repair expenses and services; (xii) any annual license or certificate of occupancy fees required for operation of the Project; (xiii) security services; (xiv) advertising and marketing; (xv) cash deposited into the Replacement Reserve Account in the amount set forth in this Agreement; (xvi) cash deposited into the Operating Reserve Account to maintain the amount set forth in this Agreement (excluding amounts deposited to initially capitalize the account); (xvii) payment of any previously unpaid portion of any developer fee approved by the City (without interest); (xviii) extraordinary operating costs specifically approved in writing by the City; (xix) payments of deductibles in connection with casualty insurance claims not normally paid from reserves, the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves, and other ordinary and reasonable operating expenses approved in writing by the City and not listed above; (xx) loans made by partners of the Borrower to the Borrower in accordance with Borrower’s Partnership Agreement; (xxi) tax credit adjuster payments due to the Borrower’s limited partner in accordance with Borrower’s Partnership Agreement; and (xxii) other ordinary and reasonable operating expenses approved in writing by the City and not listed above. Annual Operating Expenses do not include the following: depreciation, amortization, depletion or other non-cash expenses, initial deposits to capitalize a reserve account, any amount expended from a reserve account, and any capital cost associated with the Project. “Approved Financing” means the Loan and the Additional Borrower Financing approved by the City and any Refinanced Indebtedness, as defined in Section 608. “Automobile Liability Insurance” means insurance coverage against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used by Borrower regarding the Project, with minimum limits for bodily injury and property damage of One Million Dollars ($1,000,000). Such insurance shall be provided by a business or commercial vehicle policy and may be provided through a combination of primary and excess or umbrella policies, all of which shall be subject to pre-approval by City, which approval shall not be unreasonably withheld. “Borrower” has the meaning set forth in the introduction to this Agreement.
“Borrower’s Partnership Agreement” means that certain Amended and Restated Agreement of Limited Partnership of Borrower dated as of September 1, 2020. “Builder’s Risk Insurance” means builder’s risk or course of construction insurance covering all risks of loss, less policy exclusions, on a completed value (non-reporting) basis, in an amount sufficient to prevent coinsurance, but in any event not less than one hundred percent (100%) of the completed value of the construction of the Project, including cost of debris removal (subject to a policy sublimit), but excluding foundation and excavations. Such insurance shall also: (a) grant permission to occupy; and (b) cover, for replacement cost, all materials on or about any offsite storage location intended for use in, or in connection with, the Property (subject to a policy sublimit). “City” means the City of Fort Bragg.
“Claim” means any claim, loss, cost, damage, expense, liability, Lien, action, cause of action (whether in tort, contract, under statute, at law, in equity or otherwise), charge, award, assessment, fine or penalty of any kind. “Commencement of Construction” means the commencement by Borrower of any alteration, construction, demolition, development, expansion, reconstruction, repair, restoration, or other work affecting the Property. “Conditions Precedent to Disbursement” has the meaning set forth in Section 204.1.
“Control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person and contractually bind such Person, whether by ownership of Equity Interests, by contract, or otherwise. “Construction” means any alteration, construction, excavation, demolition, grading, development, expansion, reconstruction, redevelopment, repair, restoration, or other work affecting the Property. “Construction Contract” means the contract to be entered into by Borrower and a licensed general contractor for the performance of the construction of the Project on the Property. “Deed of Trust” means that certain Deed of Trust executed by Borrower in substantially the form attached hereto as Attachment No. 3 that will encumber the Property to secure repayment of the Loan. “Effective Date” means the date first set forth in this Agreement above. “Environmental Claim” means any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including reasonable attorney’s fees and costs and costs of environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever, directly or indirectly, relating to or arising from any actual or alleged violation of any Environmental Law or Hazardous Substance Discharge. “Environmental Document” means any exemption determination, any Negative Declaration (mitigated or otherwise) or any Environmental Impact Report (including any addendum or amendment to, or subsequent or supplemental Environmental Impact Report) required or permitted pursuant to the National Environmental Policy Act (codified as 42 U.S.C. §§ 4321 et seq.) or the California Environmental Quality Act (codified as Public Resources Code Sections 21000 et seq.), as applicable, to issue any discretionary Approval required to approve this Agreement. “Environmental Law” means any Federal or California law regarding any of the following at, in, under, above, or upon the Property: (a) air, environmental, ground water, or soil conditions; or (b) clean-up, remediation, control, disposal, generation, storage, release, discharge, transportation, use of, or liability or standards of conduct concerning, Hazardous Substances, as now or may, at any later time, be in effect. “GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the United States accounting profession, which are applicable to the circumstances as of the date of determination. “Governmental Requirements” means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees, of the United States, the state, the county, City, or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, Borrower or the Property. “Gross Revenue” means for each calendar year, all revenue, income, receipts, and other consideration actually received from the operation and leasing of the Project. Gross Revenue includes, but is not limited to: (i) all rents, fees and charges paid by tenants; (ii) Section 8 payments or other rental subsidy payments received for the dwelling units; (iii) deposits forfeited by tenants; (iv) all cancellation fees; (v) price index adjustments and any other rental adjustments to leases or rental agreements; (vi) net proceeds from vending and laundry room machines; (vii) the proceeds of business interruption or similar insurance not paid to senior lenders; (viii) the proceeds of casualty insurance not used to rebuild the Project and not paid to senior lenders; and (ix) condemnation awards for a taking of part or all of the Project for a temporary period. Gross Revenue does not include tenants' security deposits, loan proceeds, capital contributions or similar advances. “Hazardous Substance” means any flammable substances, explosives, radioactive materials, asbestos, asbestos-containing materials, polychlorinated biphenyls, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, medical wastes, toxic substances or related materials, explosives, petroleum, petroleum products and any “hazardous” or “toxic” material, substance or waste that is defined by those or similar terms or is regulated as such under any Law, including any material, substance or waste that is: (a) defined as a “hazardous substance” under Section 311 of the Water Pollution Control Act (33 U.S.C. § 1317), as amended; (b) substances designated as “hazardous substances” pursuant to 33 U.S.C. § 1321; (c) defined as a “hazardous waste” under Section 1004 of the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., as amended; (d) defined as a “hazardous substance” or “hazardous waste” under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq., or any so-called ‘superfund” or ‘superlien” law; (e) defined as a “pollutant” or “contaminant” under 42 U.S.C. § 9601(33); (f) defined as “hazardous waste” under 40 C.F.R. Part 260; (g) defined as a “hazardous chemical” under 29 C.F.R. Part 1910; (h) any matter within the definition of “hazardous substance” set forth in 15 U.S.C. § 1262; (i) any matter, waste or substance regulated under the Toxic Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; (j) any matter, waste or substance regulated under the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; (k) those substances listed in the United States Department of Transportation (DOT) Table [49 C.F.R. 172.101]; (l) any matter, waste or substances designated by the EPA, or any successor authority, as a hazardous substance [40 C.F.R. Part 302]; (m) any matter, waste or substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code; (n) any substance defined as a “hazardous substance” in Section 25316 of the California Health and Safety Code; (o) any matter, waste, or substance that is subject to any other Law regulating, relating to or imposing obligations, liability or standards of conduct concerning protection of human health, plant life, animal life, natural resources, property or the enjoyment of life or property free from the presence in the environment of any solid, liquid, gas, odor or any form of energy from whatever source; or (p) other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under Law or in the regulations adopted pursuant to said Law, including manure, asbestos, polychlorinated biphenyl, flammable explosives and radioactive material. Notwithstanding the foregoing, “Hazardous Substances” shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner generally used in other comparable residential developments, or substances commonly ingested by a significant population living within the Project, including, without limitation, alcohol, aspirin, tobacco and saccharine. “Hazardous Substance Discharge” means any deposit, discharge, generation, release, or spill of a Hazardous Substance that occurs at on, under, into or from the Property, or during transportation of any Hazardous Substance to or from the Property, or that arises at any time from the Construction, use or operation of the Project or any activities conducted at on, under or from the Property, whether or not caused by a Party. “Land Use Laws” has the meaning set forth in Section 502. “Liability Insurance” means commercial general liability insurance provided by an insurance carrier having a rating of Best A-7 or better against claims for bodily injury, personal injury, death, or property damage occurring upon, in, or about the Property, the Project or adjoining streets or passageways, at least as broad as Insurance Services Office Occurrence Form CG0001, with a minimum liability limit of Two Million Dollars ($2,000,000) for any one occurrence and which may be provided through a combination of primary and excess or umbrella insurance policies. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Project or the general aggregate limit shall be twice the required minimum liability limit for any one occurrence. “Loan” has the meaning set forth in Section 200.
“Loan Documents” means the documents, instruments and agreements evidencing and securing the Loan including, but not limited to, this Agreement, the Promissory Note, the Deed of Trust and the Regulatory Agreement, and any amendments thereto as mutually agreed upon by the Parties. “Maturity Date” has the meaning set forth in Section 202.1. “Official Records” means the Official Records of the County of Mendocino, State of California. “Operating Reserve Account” means an account established and maintained by Borrower that is available to fund operating deficits (which is the amount by which Annual Operating Expenses exceed Gross Revenue for any period). Borrower shall capitalize the Operating Reserve Account in the amount required by the California Tax Credit Allocation Committee (“TCAC”), but not less than three months of Annual Operating Expenses; provided, however that if Borrower’s partnership agreement or the documents evidencing the one or more senior loans for the Project require the Operating Reserve Account to be capitalized and replenished in an amount greater than the TCAC requirement, Borrower shall capitalize and replenish the Operating Reserve Account as required by the partnership agreement or the documents evidencing the such loan, as applicable, for as long as the partnership agreement or such loan, as applicable, is outstanding. ii. “Permitted Transfers” shall have the meaning set forth in Recital E. above.
“Person” means any association, corporation, governmental entity or agency, individual, joint venture, joint-stock company, limited liability company, partnership, trust, unincorporated organization or other entity of any kind. “Prevailing Wage Action” means any of the following: (a) any determination by the California Department of Industrial Relations that prevailing wage rates should have been paid, but were not; (b) any determination by the California Department of Industrial Relations that higher prevailing wage rates than those paid should have been paid; (c) any administrative or legal action or proceeding arising from any failure to comply with the Federal Davis-Bacon Act (codified as 40 U.S.C. §§ 3141 et seq.) or California Labor Code Sections 1720 through 1781, as amended from time to time, regarding prevailing wages, including maintaining certified payroll records; or (d) any administrative or legal action or proceeding to recover wage amounts at law or in equity. “Project” shall have the meaning set forth in Recital B, above. “Project Documents” means all construction and design contracts, plans and drawings, including all architectural documents, related to the Project. “Property” means the property located at 441 South Street, Fort Bragg, California, as described in the Legal Description of Property, attached hereto and incorporated herein as Attachment No. 1. “Property Insurance” means insurance providing coverage for the Property and all improvements on or to the Property against loss, damage, or destruction by fire and other hazards encompassed under the broadest form of property insurance coverage then customarily used for like properties in the County of Mendocino, in an amount equal to one hundred percent (100%) of the replacement value (without deduction for depreciation) of all improvements comprising the Project (excluding excavations and foundations) and in any event sufficient to avoid co-insurance and with no co-insurance penalty provision, with “ordinance or law” coverage. To the extent customary for like properties in the County of Mendocino at the time, such insurance shall include coverage for explosion of steam and pressure boilers and similar apparatus located on the Property; an “increased cost of construction” endorsement; and an endorsement covering demolition and cost of debris removal, all subject to policy sublimits. “Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants (441 South Street) executed by Borrower and City pursuant dated November 1, 2020 in connection with the HEAP Loan, and to recorded on November 25, 2020, as instrument number 2020-16121 in the Official Records of Mendocino County, California, for the purpose of ensuring that the Project shall be operated as an affordable multi-family residential development as provided herein and in the Regulatory Agreement, for the full term of this Loan and the HEAP Loan, in accordance with the terms of the Agreements. “Replacement Reserve Account” means an account established and maintained by Borrower that is available for capital expenditures for repairs and replacement necessary to maintain the Project in the condition required by the Loan Documents. Borrower shall make annual deposits to the Replacement Reserve Account and replenish the Replacement Reserve Account in the amounts required in a future partnership agreement and/or the documents evidencing one or more component of the Additional Borrower Financing, whichever is greater. In no event shall the annual amount deposited in the Replacement Reserve Account exceed TWO MILLION TWO HUNDRED THOUSAND EIGHTY DOLLARS ($2,280,000.00) per unit, or such greater amount required in connection with such partnership agreement or any Additional Borrower Financing, and approved by the City. “TCAC” means the California Tax Credit Allocation Committee. “Third Person” means any Person that is not a Party, an Affiliate of a Party, or an elected official, officer, director, manager, shareholder, member, principal, partner, employee or agent of a Party. vv. Workers Compensation Insurance. Workers compensation insurance complying with the provisions of California law and an employer’s liability insurance policy or endorsement to a liability insurance policy, with a minimum liability limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease, covering all employees of Borrower.
LOAN AGREEMENT
Loan. City hereby agrees to make a loan (the “Loan”) to Borrower in a total amount not to exceed TWO MILLION TWO HUNDRED THOUSAND EIGHTY DOLLARS ($2,280,000.00), which amount includes the Pre-Development Loan previously made, as described in Recital E., above, and subject to the terms and conditions of the Loan Documents.
Evidence of Loan. The Loan shall be evidenced by, and repayable in accordance with, the Amended and Restated Promissory Note (the “Amended and Restated Promissory Note”), in a principal amount of TWO MILLION TWO HUMDRED THOUSAND EIGHTY DOLLARS ($2,280,000.00), which amounts may be used to pay for the acquisition of the Property and construction of the Project, provided that the disbursement of the Loan shall be subject to satisfaction of certain conditions precedent as more specifically set forth in Section 204.1 of this Agreement. The Promissory Note shall be secured by the Deed of Trust. City and Borrower shall execute the Promissory Note and the Deed of Trust concurrently with the execution of this Agreement by City, and the Deed of Trust shall thereafter be immediately recorded in the Official Records.
Repayment of Loan.
Maturity Date. The Promissory Note, including principal and accrued interest, shall be due and payable in full fifty-five (55) years after the certificate of occupancy of the Project (the “Maturity Date”).
Interest Rate. The Loan Funds shall be repaid pursuant to the terms of the Amended and Restated Promissory Note, and shall bear simple interest at the rate of three percent (3%) per annum commencing on the date of the Promissory Note.
Use of Funds. The Loan Funds may be used only to pay costs of acquisition of the Property and construction of the Project.
Disbursement of Loan Funds.
Conditions Precedent to Disbursement. The Loan shall be disbursed (the “Loan Disbursement”) through the escrow established for closing of the Additional Borrower Financing for the acquisition of the Property by Borrower and the construction of the Project. City’s obligation to make the Loan Disbursement is conditioned upon the satisfaction or waiver by City of each and all of the conditions precedent described below (“Conditions Precedent to Disbursement”), which are solely for the benefit of the City, and which shall be fulfilled or waived by the time periods provided for herein. The Conditions Precedent to Disbursement include:
Subject to expiration of any applicable cure period, Borrower shall not be in default of any of its obligations under the terms of this Agreement.
Execution and delivery of the Amended and Restated Promissory Note, the Regulatory Agreement and the Deed of Trust.
Delivery of a binding commitment by a title insurance company acceptable to the City to issue a 1970 or 1987 ALTA LP-10 lender’s policy of Title Insurance with any endorsements the City may reasonably require, including but not limited to endorsement nos. 100, 116 and 12.5/102.7, insuring the City in the principal amount set forth in the Promissory Note, of the validity and priority of the Deed of Trust upon the Property, and liens and matters of record approved by the City in writing, and showing fee simple title to the Property in the name of the Borrower.
Borrower shall have provided the City with a copy of the resolution of the Borrower approving and authorizing execution of this Agreement and all documents contemplated hereby on behalf of Borrower and with such other documentation required by the City regarding Borrower’s creation, status and authority to enter into this transaction.
Borrower shall have provided City with a certificate showing it to be in good standing under the laws of the State of California.
Deposit of all funds and properly executed documents into the escrow account established for this transaction as necessary to effect the conveyance of the Property to Borrower and closing of the Approved Borrower Financing for the Project.
Borrower shall have satisfied all of the applicable terms and conditions set forth in this Agreement, including without limitation providing evidence that it possesses the insurance required by Section 405 of this Agreement.
All of the representations and warranties made by the Borrower in this Agreement and in the Promissory Note, the Deed of Trust and the Regulatory Agreement shall be true and correct in all material respects as of the date of the Disbursement.
City Not Liable. In no event shall City be liable to Borrower or any other party, including but not limited to any lender, contractor or subcontractor, for any damage whatsoever which may result in whole or in part from any action or inaction of City hereunder, including without limitation, failure or delay in making any disbursement of Loan funds, except to the extent of City’s gross negligence or willful misconduct.
REPRESENTATIONS AND WARRANTIES
City Representations. City represents and warrants to Borrower as follows:
Authority. City has full power and authority to execute and deliver this Agreement, to execute and deliver all applicable Loan Documents and to perform and observe the terms and provisions of all of the above.
No Conflict. To the best of City’s knowledge, City’s execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which City is a party or by which it is bound.
No Bankruptcy. City is not the subject of a bankruptcy proceeding.
No Condemnation. No condemnation proceeding or moratorium is pending or threatened against the Property or any portion thereof that would impair the use, occupancy or full operation of the Property in any manner whatsoever.
Borrower’s Representations. To induce City to enter into the Loan and provide the Loan funds pursuant hereto, Borrower hereby makes the following representations and warranties to City. The Borrower shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section not to be true, immediately provide written notice of such fact or condition to City.
Organization. Borrower is a limited partnership in good standing under the laws of the State of California.
Authority to Borrow. Borrower has full power and authority to execute and deliver this Agreement, to make and accept the Loan contemplated hereunder, to execute and deliver all applicable Loan Documents and to perform and observe the terms and provisions of all of the above.
Authority of Persons Executing Documents. The applicable Loan Documents have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all actions required under the Borrower’s organizational documents and applicable governing law for the authorization, execution, delivery and performance of the Loan Documents have been duly taken.
No Conflict. The execution, delivery and performance by Borrower of the Loan Documents to which it is a party will not (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to Borrower or the Property; or (ii) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which any of its properties may be bound or, except as specifically contemplated herein, result in the creation of any lien on any asset of Borrower.
Compliance with Laws; Consent and Approvals. The construction of the Project shall comply with all Governmental Requirements, including all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency as applicable.
Valid Binding Agreement. The Loan Documents executed by Borrower constitute, or if not yet executed, will constitute when so executed, legal, valid and binding obligations of Borrower enforceable by and against it in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the rights of creditors generally and general principals of equity.
Pending Proceedings. Borrower is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Borrower, materially and adversely affect Borrower’s ability to repay the Loan or construct the Project.
Financial Statements. All financial statements and information delivered to City by or on behalf of Borrower, including information relating to the financial condition of Borrower and the Property, fairly and accurately represent the financial condition of the subject thereof and have been prepared in accordance with GAAP, consistently applied, or another sound accounting practice consistently applied as previously submitted by Borrower to City and approved by City. Borrower acknowledges and agrees that City may request and obtain additional information from third parties.
No Material Adverse Event. There has been no material adverse change in the value or physical condition of the Property or in the financial condition of Borrower since the dates of the latest financial statements of Borrower furnished to City, and except as otherwise disclosed to City in a specified writing, Borrower has not entered into any material transaction that is not disclosed in such financial statements.
Accuracy. All reports, documents, instruments, information and forms of evidence delivered to City concerning the Loan or security for the Loan or required by the Loan Documents are accurate, correct and sufficiently complete to give City true and accurate knowledge of their subject matter and do not contain any misrepresentation or omission.
Disclosure of Information. All material information concerning the Property known to Borrower, or that should have been known to Borrower in the exercise of reasonable care, has been disclosed to City. There are no facts or information known to Borrower, or that should have been known to Borrower in the exercise of reasonable care, that would make any of the information furnished to City by Borrower inaccurate, incomplete, or misleading in any material respect.
No Condemnation. No condemnation proceeding or moratorium is pending or threatened against the Property or any portion thereof that would impair the use, occupancy or full operation of the Property in any manner whatsoever.
FIRPTA. Borrower is not a “Foreign Person” within the meaning of the Foreign Investment in Real Property Tax Act (FIRPTA), or is exempt from the provisions of FIRPTA, and Borrower has complied and will comply with all of the requirements under FIRPTA.
COVENANTS OF BORROWER
Additional Borrower’s Financing. In addition to the Loan provided for herein, the Borrower has obtained financing commitments to finance the construction of the Project (the “Additional Borrower Financing”) including an Infill Infrastructure Grant from the California Department of Housing and Community Development in the amount of Three Million Eight- Nine Thousand Dollars ($3,089,000.00); and a reservation of low-income housing tax credits as follows: (annual federal tax credits for each of 10 years in the amount of One Million Seventeen Thousand Nine Hundred Nine Dollars ($1,017,909.00); and (ii) total state tax credits of Six Million Eight Hundred Twenty-One Thousand Four Hundred Eighty-Six Dollars ($6,821,486.00) to be taken over four (4) years. The City agrees to reasonably consider requests to subordinate this Loan Agreement, the Deed of Trust and Regulatory Agreement to Additional Borrower Financing. Further, as described in Recital C above, the City provided Borrower an additional loan in the amount of $3,250,000.
Construction of Project. Once Borrower has secured the Additional Borrower Financing and satisfied all Governmental Requirements necessary to commence construction, Borrower shall complete the Project in accordance with the provisions of this Agreement and in a good and worker-like manner in accordance with sound building practices as well as all Governmental Requirements. Borrower shall comply with all existing and future Governmental Requirements and other laws, regulations, orders, building codes, restrictions and requirements of, and all agreements with and commitments to, all governmental, judicial or legal authorities having jurisdiction over the Property, including those pertaining to the construction of the Project, and with all recorded covenants and restrictions affecting the Property. In the event of any material deviations from the terms of this Agreement, unworker-like performance, the use of defective materials, or the filing of any unapproved liens, City may order that the construction cease immediately, and Borrower agrees immediately to correct and remedy the same at its sole expense.
Permits, Licenses and Approvals. Borrower shall properly obtain, comply with and keep in effect all permits, licenses and approvals which are required to be obtained in order to construct the Project.
Notices to City. Borrower shall promptly notify City in writing of:
Any litigation affecting Borrower, where the amount claimed is One Hundred Thousand Dollars ($100,000.00) or more; Any communication, whether written or oral, that Borrower may receive from any governmental, judicial or legal authority, giving notice of any claim or assertion that any portion of the Property or the Project fail in any respect to comply with any Governmental Requirement; Any material default by any contractor, design professional, subcontractor, material supplier or surety in the performance of its or their obligations with respect to the construction, or any material adverse change in the financial condition or operations of any of them; Any material adverse change in the physical condition of the Property (including any damage suffered as a result of earthquakes or floods), or in Borrower’s business condition (financial or otherwise), operations, properties or prospects, or Borrower’s ability to repay the Loan; or The institution of any litigation, arbitration or governmental proceeding, or the rendering of a judgment or decision in such litigation or proceeding, which may cause a material adverse effect to Borrower, the Property or the completion of the construction.
Insurance.
Required Insurance. Borrower shall maintain, to protect City against all insurable Claims resulting from the actions of Borrower in connection with this Agreement, the Property and the Project, at the sole cost and expense of Borrower, the following insurance (or its then reasonably available equivalent): (a) Liability Insurance; (b) Automobile Liability Insurance; (c) Property Insurance; (d) Builder’s Risk Insurance; and (e) Workers Compensation Insurance.
Nature of Insurance. All Liability Insurance, Property Insurance, Workers Compensation Insurance and Automobile Liability Insurance policies required by this Agreement shall be issued by carriers that: (a) are listed in the then current “Best’s Key Rating Guide—Property/Casualty—United States & Canada” publication (or its equivalent, if such publication ceases to be published) with a minimum financial strength rating of “A-” and a minimum financial size category of “XI” (exception may be made for the California Compensation Insurance Fund when not specifically rated); and (b) are authorized to do business in California. A Party may provide any insurance under a “blanket” or “umbrella” insurance policy, provided that: (i) such policy or a certificate of such policy shall specify the amount(s) of the total insurance allocated to the Property and the Project, which amount(s) shall equal or exceed the amount(s) required by this Agreement; and (ii) such policy otherwise complies with this Agreement.
Policy Requirements and Endorsements. All insurance policies required by this Agreement shall contain (by endorsement or otherwise) the following provisions:
Insured. Liability Insurance and Automobile Liability Insurance policies shall name City or its successor in interest, as applicable, as “additional insured.” Property Insurance and Builder’s Risk Insurance policies shall name City as a “loss payee.” To the extent that Borrower has a tenant or tenants on the Property that are required to secure Liability insurance under the terms of their lease with Borrower, such tenants shall similarly name City or its successor in interest as “additional insured”, and shall list City as a “loss payee” on Property Insurance and Builder’s Risk Insurance policies as required under terms of their lease. The coverage afforded to City shall be at least as broad as that afforded to Borrower (or Borrower’s tenant, as applicable) regarding the Property and the Project and may not contain any terms, conditions, exclusions, or limitations applicable to City that do not apply to Borrower.
Primary Coverage. Any insurance or self-insurance maintained by City or its successor in interest shall be in excess of all insurance required under this Agreement and shall not contribute to any insurance required under this Agreement.
Contractual Liability. Liability Insurance policies shall contain contractual liability coverage, for Borrower’s indemnity obligations under this Agreement. Borrower’s obtaining or failure to obtain such contractual liability coverage shall not relieve Borrower from nor satisfy any indemnity obligation of Borrower under this Agreement.
Deliveries to City. Borrower shall deliver to City evidence of all insurance policies required by this Agreement as set forth in Section 505.1 and original endorsements for additional insured effecting coverage under this Agreement. Builder’s Risk Insurance shall commence prior to commencement of Construction of the Project. No later than three (3) days before any insurance required by this Agreement expires, is cancelled or its liability limits are reduced or exhausted, Borrower shall deliver to City evidence of that Party’s maintenance of all insurance this Agreement requires. Each insurance policy required by this Agreement shall be endorsed to state that coverage shall not be cancelled, suspended, voided, reduced in coverage or in limits, except after thirty (30) calendar days” advance written notice of such action has been given to City by certified mail, return receipt requested; provided, however, that thirty (30) days advance written notice shall be required for any such action arising from non-payment of the premium for the insurance. Phrases such as “endeavor to” and “but failure to mail such Notice shall impose no obligation or liability of any kind upon the company” shall not be included in the cancellation wording of any certificates or policies of insurance applicable to City pursuant to this Agreement.
Waiver of Certain Claims. Borrower shall cause each insurance carrier providing any Liability Insurance, Builder’s Risk Insurance, Worker’s Compensation Insurance, Automobile Liability Insurance or Property Insurance coverage under this Agreement to endorse their applicable policy(ies) with a Waiver of Subrogation with respect to City, if not already in the policy. To the extent that Borrower obtains insurance with a Waiver of Subrogation, the Parties release each other, and their respective authorized representatives, from any Claims for damage to any Person or property to the extent such Claims are paid by such insurance policies obtained pursuant to and in satisfaction of the provisions of this Agreement.
No Claims Made Coverage. None of the insurance coverage required under this Agreement may be written on a claims-made basis.
Fully Paid and Non-Assessable. All insurance obtained and maintained by Borrower pursuant to this Section 505 shall be fully paid for and non-assessable. However, such insurance policies may be subject to insurer audits.
City Option to Obtain Coverage. During the continuance of a Default arising from the failure of Borrower to carry any insurance required by this Agreement, City may, at its sole option, purchase any such required insurance coverage and City shall be entitled to immediate payment from the defaulting Party of any premiums and associated reasonable costs paid by City for such insurance coverage. Any amount becoming due and payable to City under this Section 505 that is not paid within fifteen (15) calendar days after written demand from City for payment of such amount, within an explanation of the amounts demanded, will bear interest from the date of the demand at the rate of eight percent (8%) per annum or the maximum interest rate allowed by applicable law, whichever is less. Any election by City to purchase or not to purchase insurance otherwise required by the terms of this Agreement to be carried by any Party shall not relieve that Party of its obligation to obtain and maintain any insurance coverage required by this Agreement.
Separation of Insured. All Liability Insurance and Automobile Liability Insurance shall provide for separation of insured for Borrower and the City. Insurance policies obtained in satisfaction of or in accordance with the requirements of this Agreement may provide a cross-suits exclusion for suits between named insured persons, but shall not exclude suits between named insured persons and additional insured persons.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions under insurance policies required by this Agreement shall be declared to and approved by City. Borrower shall pay all such deductibles or self-insured retentions regarding City or, alternatively, the insurer under each such insurance policy shall eliminate such deductibles or self-insured retentions with respect to City.
No Separate Insurance. Borrower shall carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Agreement, unless City is made an additional insured thereon, as required by this Agreement.
Insurance Independent of Indemnification. The insurance requirements of this Agreement are independent of the Parties” indemnification and other obligations under this Agreement and shall not be construed or interpreted in any way to satisfy, restrict, limit, or modify the Parties” indemnification or other obligations or to limit the Parties” liability under this Agreement, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall the provision of such insurance preclude City from taking such other actions as are available to it under any other provision of this Agreement or otherwise at law or in equity.
Indemnity.
Borrower Indemnity Obligations. Subject to Section 23 of the Amended and Restated Promissory Note, Borrower shall indemnify City against any claim to the extent such claim arises from any wrongful intentional act or negligence of Borrower. Borrower shall also indemnify City against any and all of the following: (a) any application made by or at Borrower’s request; (b) any agreements that Borrower (or anyone claiming by or through Borrower) makes with a Third Person regarding the Property or the Project; (c) any workers compensation claim or determination relating to any employee of Borrower or their contractors; (d) any Prevailing Wage Action relating to this Agreement or the Project; and (e) any Environmental Claim attributable to any action or failure to act by Borrower. Borrower assumes the risk of delays and damages that may result to Borrower from any Third Person legal actions related to City’s approval of this Agreement or any associated approvals, even in the event that an error, omission or abuse of discretion by City is determined to have occurred. If a Third Person files a legal action regarding City’s approval of this Agreement or any associated approval (exclusive of legal actions alleging violation of Government Code Section 1090 by elected officials of City), Borrower shall indemnify City against such Third Person legal action, including all legal costs, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. City shall reasonably cooperate in its defense in any legal action subject to this Section 406 subject to Borrower’s indemnity obligations for such legal action. Nothing contained in this Section 406 is intended to be nor shall be deemed or construed to be an express or implied admission that City may be liable to Borrower or any other party for damages or other relief regarding any alleged or established failure of City to comply with any law. Any legal action that is subject to this Section 406 (including any appeal periods and the pendency of any appeals) shall constitute an Enforced Delay and the time periods for performance by any Party under this Agreement may be extended pursuant to the provisions of this Agreement in Section 803.
Independence of Insurance Obligations. The indemnification obligations made by Borrower under this Agreement shall not be construed or interpreted as in any way restricting, limiting, or modifying Borrower insurance or other obligations under this Agreement. Borrower’s obligation to indemnify City under this Agreement is independent of Borrower’s insurance and other obligations under this Agreement. Borrower’s compliance with its insurance obligations and other obligations under this Agreement shall not in any way restrict, limit, or modify Borrower’s indemnification obligations under this Agreement and are independent of Borrower’s indemnification and other obligations under this Agreement.
Survival of Indemnification and Defense Obligations. The indemnity and defense obligations of the Parties under this Agreement shall survive the expiration or earlier termination of this Agreement, until any and all actual or prospective claims regarding any matter subject to an indemnity obligation under this Agreement are fully, finally, absolutely and completely barred by applicable statutes of limitations.
Indemnification Procedures. Wherever this Agreement requires any Party to indemnify the other Party:
Prompt Notice. The indemnifying Party shall promptly notify the other Party of any claim.
Selection of Counsel. The indemnifying Party shall select counsel reasonably acceptable to the other Party. Counsel to indemnifying Party’s insurance carrier that is providing coverage for a claim shall be deemed reasonably satisfactory, except in the event of a potential or actual conflict of interest for such counsel regarding such representation or such counsel proves to be incompetent regarding such representation. Even though the indemnifying Party shall defend the claim, the other Party may, at its option and its own expense, engage separate counsel to advise it regarding the claim and its defense. The other Party’s separate counsel may attend all proceedings and meetings. The indemnifying Party’s counsel shall actively consult with the other Party’s separate counsel. The indemnifying Party’s counsel shall, however, control the defense, except to the extent that the other Party waives its rights to indemnity and defense of such Claim.
Cooperation. The other Party shall reasonably cooperate with the indemnifying Party’s defense of the other Party.
Settlement. The indemnifying Party may only settle a claim without the consent of other Party, if the claim is within the policy limits of applicable insurance policies provided in satisfaction of the requirements of this Agreement and such settlement procures a release of other Party from the subject claims, does not require other Party to make any payment to the claimant and neither the indemnified Party nor indemnifying Party on behalf of the indemnified Party admits any liability.
Insurance Proceeds. The indemnifying Party’s obligations shall be reduced by any net insurance proceeds actually received by the other Party for the matter giving rise to the indemnification obligation.
Financial Statements and Reports. Borrower shall furnish to City, on an annual basis on or before the anniversary of the execution of the Initial Promissory Note, the financial statements of Borrower, which may be internally prepared, on a consolidating and consolidated basis and in conformity with GAAP, consisting of at least statements of income, cash flow, changes in financial position and stockholders” equity, and a consolidated balance sheet, setting forth in each case in comparative form corresponding figures from the previous financial statements delivered to City pursuant to this Section.
Books and Records. Borrower shall maintain on a current basis complete records pertinent to expenditures incurred under this Agreement, including books of original entry, source documents supporting accounting transactions, service records, a general ledger, canceled checks, and related documents and records to assure proper accounting of funds and performance under this Agreement, for a period of three (3) years after the termination of all activities funded under this Agreement, or after the resolution of all Federal audit findings, whichever occurs later. Records for non-expendable property acquired with funds under this Agreement shall be retained for three (3) years after final disposition of such property. Records for any displaced person must be kept for three (3) years after he/she has received final payment. Such records shall be kept in a form approved by City. Borrower shall furnish any and all information and reports which may be required by City and the U.S. Department of Housing and Urban Development (HUD). Borrower shall permit access to books, records and accounts by City or its representatives and employees and by HUD, for the purposes of investigation to ascertain compliance with all applicable rules, regulations and orders, and for the purpose of evaluating and monitoring Borrower’s performance and compliance with the provisions of this Agreement.
Compliance. Borrower shall comply and shall cause the Property and Project to comply at all times in all material respects with all Governmental Requirements to which they may be subject.
DEVELOPMENT OF PROJECT
Project Entitlements. Borrower acknowledges and agrees that the Project shall be subject to the City’s zoning, building and land use regulations (whether contained in ordinances, the municipal code of the City, conditions of approval or elsewhere) (collectively, “Land Use Laws”). No action by City with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any Land Use Laws required for the construction of the Project as applicable to Borrower, any successor in interest of Borrower, or any successor in interest to the ownership, use or occupancy of the Property. Land Use Laws may only be changed or waived by modification or variance approved by the City.
Cost of Construction Work. All cost and expense in performing the construction of the Project, and for all materials and equipment related thereto, shall be borne solely by Borrower.
Licensed General Contractor. The Construction Work must be performed by a licensed general contractor approved by City in writing, which approval City shall not unreasonably withhold.
Construction Contract. The licensed contractor(s) selected by Borrower, and approved by City under Section 503, shall perform the Construction Work pursuant to a construction contract (the “Construction Contract”) entered into by and between the applicable Borrower and contractor. The Construction Contract must be approved by City in writing, which approval shall not be unreasonably withheld, prior to the Commencement of Construction.
Permits and Approvals. Before Commencement of Construction, and except with respect to any contemplated or necessary demolition activities, Borrower shall secure or cause to be secured any and all land use and other entitlements, permits and approvals which may be required pursuant to any Governmental Requirements related to construction of the Project. City staff will work cooperatively with Borrower to assist in coordinating the expeditious processing and consideration of all necessary permits, entitlements and approvals.
Anti-Discrimination. Borrower, for itself and its successors and assigns, agrees that, in performing the construction of the Project, it shall not discriminate against any employee or applicant for employment because of race, color, sexual orientation and/or gender identity, creed, religion, ancestry, political affiliation or opinion, national origin, sex, physical condition, medical condition, pregnancy or pregnancy-related condition, or condition of physical or mental disability or other handicap, age, marital status, military or veterans status, or status with regard to public assistance. Borrower will take affirmative action to insure that all employment practices are free from such discrimination. Such employment practices include but are not limited to the following: hiring, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff, termination, rates of pay or other forms of compensation and selection for training, including apprenticeship. Borrower agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting agency setting forth the provisions of this nondiscrimination clause.
USE AND MAINTENANCE OF THE PROPERTY; NONDISCRIMINATION; RIGHTS OF SECURITY FINANCING HOLDERS Restrictive Covenants. Borrower covenants and agrees for itself, its successors, assigns, and every successor in interest to devote the Property to an affordable housing project in accordance with the terms of the Regulatory Agreement and this Agreement for the period of time specified therein. The foregoing covenant shall run with the land.
Maintenance of the Property. For the period of time set forth in Section 606, Borrower shall keep the Property in good condition, order and repair and shall not commit waste or permit impairment, demolition or deterioration of the Property; shall comply with all applicable state and federal regulations addressing the physical condition of the Property and buildings located on the Property and all applicable standards of the City including but not limited to building standards, planning regulations, and utilities code; shall complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed and to pay when due all claims for labor performed and materials furnished; shall maintain the buildings in a habitable condition; and do all other acts which from the character or use of the Property may be reasonably necessary. City shall have the right to inspect the Property during normal business hours, provided Borrower and the occupant are given at least seventy-two (72) hours written notice prior to any such inspection.
Property Management Agreement/Plans. Borrower covenants that it shall maintain (i) a comprehensive management plan for the Project, including a fair housing component; and (ii) a reputable and experienced property manager who is experienced in managing affordable housing projects (“Designated Property Manager”) for management of the Project. The management plan, Designated Property Manager, and property management agreement must be approved by the City, in its reasonable discretion. The City hereby approves Danco Property Management as the initial Designated Property Manager. Any changes in the Designated Property Manager or modifications or amendment to the management plan or the property management agreement shall be subject to review and approval by the City. Borrower shall provide City with the name, title and necessary contact information for the Designated Property Manager who may be contacted at any time, and update such information whenever necessary. If in City’s commercially reasonable judgment, the Designated Property Manager is not performing in a manner consistent with the terms of this Covenant, then City may notify Borrower, and Borrower, City and the Designated Property Manager shall meet to discuss the Designated Property Manager’s performance and the actions needed so the terms of this Agreement are complied with.
Tenant Leases. Borrower shall submit its proposed form of lease for review by City and may use approved standard residential lease forms if the following conditions are met:
Borrower, acting in good faith and exercising due diligence, determines that each residential tenant qualifies an eligible household in the appropriate income category for the applicable unit, as shall be more specifically set forth in the Regulatory Agreement; If the Project receives and allocation of low income housing tax credits, the lease meets the standards required by Section 42 of the Internal Revenue Code; The lease meets the requirements of the City, the tax credit investor and any other lender on the Project; and City receives a copy of the executed lease within 15 days of written request to Borrower.
Obligation to Refrain from Discrimination.
Borrower will not discriminate against any employee or applicant for employment because of race, color, sexual orientation and/or gender identity, creed, religion, ancestry, political affiliation or opinion, national origin, sex, physical condition, medical condition, pregnancy or pregnancy-related condition, or condition of physical or mental disability or other handicap, age, marital status, military or veterans status, or status with regard to public assistance. Borrower will take affirmative action to insure that all employment practices are free from such discrimination. Such employment practices include but are not limited to the following: hiring, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff, termination, rates of pay or other forms of compensation and selection for training, including apprenticeship. Borrower agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting agency setting forth the provisions of this nondiscrimination clause.
Borrower agrees that there shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, sexual orientation and/or gender identity, creed, religion, ancestry, political affiliation or opinion, national origin, sex, physical condition, medical condition, pregnancy or pregnancy-related condition, or condition of physical or mental disability or other handicap, age, marital status, military or veterans status, or status with regard to public assistance in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Borrower itself or any person claiming under or through Borrower, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property.
Rights of Access. For the purposes of assuring compliance with this Agreement, representatives of the City shall have the reasonable right of access to the Property without charges or fees for the purpose of inspection of the Property as to maintenance of the improvements thereon. Such representatives of the City shall be those who are so identified in writing by the City Manager, or his/her designee.
Effect and Duration of Covenants. Commencing with the date the Regulatory Agreement is recorded on the Property, the covenants contained in Sections 601 and 602 of this Agreement shall remain in effect for fifty-five (55) years from the issuance of a certificate of occupancy for the twenty-three (23) senior residential cottages, twenty-five (35) workforce/family residential units and twenty (20) supportive housing units. The covenants against discrimination contained in Section 603 of this Agreement shall remain in effect in perpetuity. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding on the part of the Borrower and any successors and assigns to the Property or any part thereof, and the tenants, lessees, sublessees and occupants of the Property, for the benefit of and in favor of the City and any successor in interest thereto.
Subordination. The City shall subordinate the obligations of this Agreement and the Note, Deed of Trust and Regulatory Agreement to construction or permanent financing obligations for the Project. Borrower and City shall cooperate in the execution of any such subordination agreement required to perfect such subordinations. Notwithstanding anything to the contrary contained in the Loan Documents, Borrower may refinance that certain senior lien construction and permanent financing provided to Borrower by the California Municipal Finance Authority, on or about the date of this Agreement (the “Senior Indebtedness”), without the prior written consent of City (the “Refinanced Indebtedness”), and City hereby agrees to subordinate the Loan and all documents securing or evidencing the Loan including, but not limited to, the Deed of Trust and the Regulatory Agreement to the Refinanced Indebtedness and the lien of any deed of trust or mortgage securing the Refinanced Indebtedness, provided that the principal balance of the Refinanced Indebtedness does not exceed the then-outstanding principal balance of the Senior Indebtedness plus the costs of refinancing the Senior Indebtedness.
DEFAULTS AND REMEDIES
Default. A party to this Agreement shall be in default if it fails to perform or satisfy any obligation or requirement set forth (A) herein after thirty (30) days of receiving written Notice from the non-defaulting party of such default, provided that in the case of a default that cannot with reasonable diligence be cured within thirty (30) days after the effective date of such Notice, such thirty (30) day period shall automatically be extended if and only for so long as Borrower does all of the following: (i) within thirty (30) days after Notice of such default, advise the City of the intention of Borrower to take all reasonable steps to cure such default; (ii) duly commence such cure within such period, and then diligently prosecute such cure to completion; and (iii) complete such cure within a reasonable time under the circumstances; or (B) under any applicable Loan Document after any applicable cure period. The limited partner of Borrower shall have the right, but not the obligation, to effect a cure on behalf of Borrower within the cure periods afforded to Borrower as set forth herein, and City shall accept such cure as if it had been made by Borrower.
Remedies.
City. Upon default by Borrower subject to applicable notice and cure periods, City shall not be obligated to disburse any Loan proceeds pursuant to this Agreement and Borrower shall immediately remit to City all cost and expense, interest and principal due City under the Amended and Restated Promissory Note. Further, in the event of a default prior to the close of escrow on the Additional Borrower Financing and failure to cure, Borrower shall deposit with the City and assign to the City for the City’s use, all contracts, documents, reports, surveys, materials, architectural drawings and specifications, and any information related to the Project. City shall have the right to accept or reject any of the foregoing and shall not be liable under any of the foregoing contracts unless the City accepts the contracts in writing.
Borrower. Upon default by City, Borrower’s sole remedy for such breach shall be to institute an action at law or equity to seek specific performance of the terms of this Agreement. Borrower shall not be entitled to recover damages for any default by City hereunder. Such legal actions must be instituted in the Superior Court of the County of Mendocino, State of California, or in the United States District Court for the District of California in which Mendocino County is located.
Rights and Remedies Cumulative. The rights and remedies of City hereunder are cumulative, and the exercise by City of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default caused by Borrower.
GENERAL PROVISIONS
Notices. Any notice required or authorized under this Agreement, or service of process, shall be effective if, and only if, in writing and if, and only if, personally served or mailed, postage prepaid, by registered or certified mail, to the party in question at the address shown below:
Borrower:
Fort Bragg Street South, L.P.
5251 Ericson Way
Arcata, California 95521
And a copy to:
c/o Red Stone Equity Partners 1100 Superior Avenue, Suite 1640 Cleveland, OH 44114 Attn: General Counsel
Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor Los Angeles, CA 90017 Attn: Kyle Arndt, Esq.
City :
City of Fort Bragg
416 North Franklin Street Fort Bragg, CA 95437
Attn: Peggy Ducey, City Manager
An address set forth in this Section may be changed by the respective party providing the other party with written notice indicating the new address for purposes of this Section.
Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.
Enforced Delay; Extension of Times for Performance. In addition to specific provisions of this Agreement, performance by a party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; inability to secure necessary labor, materials or tools; acts or omissions of the other party; acts or failures to act of City or any other public or governmental agency or entity (other than the acts or failures to act of City which shall not excuse performance by City); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and Borrower. Notwithstanding any provision of this Agreement to the contrary, the lack of funding to complete the construction of the Project on the Property shall not constitute grounds of enforced delay pursuant to this Section.
Transfers of Interest in Property or Agreement.
Prohibition. The qualifications and identity of Borrower are of particular concern to City. It is because of those unique qualifications and identity that City has entered into this Agreement with Borrower. Borrower shall not transfer, assign, sell or grant any interest in this Agreement or any portion of the Property except as expressly set forth herein.
Permitted Transfers. City approval of a transfer of this Agreement or an interest in the Property, or any part thereof, shall not be required in connection with any of the following transfers (“Permitted Transfers”):
The conveyance or dedication of any portion of the Property to City or other appropriate governmental agency, or the granting of easements or permits, to facilitate the construction of the Project; Any requested assignment for purposes of financing the construction of improvements upon the Property; Any mortgage, deed of trust, or other form of conveyance for all or any portion of the Approved Financing, but Borrower shall notify City in advance of any such mortgage, deed of trust or other form of conveyance for financing pertaining to the Property; Any mortgage, deed of trust or other form of conveyance for restructuring or refinancing of any amount of indebtedness described in subsection (c) above; A sale or transfer resulting from or in connection with a reorganization as contemplated by the provisions of the Internal Revenue Code of 1986, as amended or otherwise, in which the ownership interests of a corporation are assigned directly or by operation of law to a person or persons, firm or corporation which acquires the control of the voting capital stock of such corporation or all or substantially all of the assets of such corporation; (A) Sale, transfer, conveyance or pledge of limited partnership interests in the Borrower, or (B) the removal of a general partner of Borrower by Borrower in accordance with Borrower’s Partnership Agreement and the appointment by the partners of the Borrower of an additional or substitute general partner in accordance with the partnership agreement of the Borrower; provided the Borrower delivers prior written notice thereof to the City, and such additional or substitute general partner shall be subject to the approval of the City, which approval shall not be unreasonably withheld, provided that such approval shall not be required if the substitute general partner is an Affiliate of the limited partner of the Borrower; The transfer (A) of an interest in and/or of a partner in the Borrower to another existing partner of the Borrower, or (B) of an interest in a general partner of the Borrower to an Affiliate of any general partner, or (C) of an interest in a general partner of the Borrower so long as such transfer, together with any prior transfer of an interest or interests in such general partner, do not result in more than forty-nine percent (49%) of the interest in such general partner having been transferred since the date hereof; The lease of residential units at the Project to qualified tenants; Transfer of the Project, Property or partnership interests in the Borrower to a general partner of the Borrower or an Affiliate thereof at the end of the fifteen year tax credit initial compliance period; The transfer of the partnership interest of the limited partner of the Borrower to another party, or the redemption of the limited partner of the Borrower’s interest in the Borrower provided that, prior to any such transfer, limited partner of the Borrower has paid in full its capital contribution to the Borrower as and to the extent required in the Borrower’s partnership agreement; and The Transfer of the Project and/or Property to a limited partnership in which Borrower or its affiliate acts as a general partner; In the event of a transfer by Borrower under subparagraphs (a) through (k), inclusive except for subparagraph (h), above, not requiring City’s prior approval, Borrower nevertheless agrees that at least ten (10) days prior to such assignment it shall give written notice to City of such transfer and satisfactory evidence that the transferee has assumed the obligations of this Agreement, if applicable.
Relationship Between City and Borrower. It is hereby acknowledged that the relationship between City and Borrower is not that of a partnership or joint venture and that City and Borrower shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein, City shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Property. Borrower agrees to indemnify, hold harmless and defend City from any claim made against City arising from a claimed relationship of partnership or joint venture between City and Borrower with respect to the development, operation, maintenance or management of the Property.
No Third Party Beneficiaries. This Agreement is made for the sole protection of City and Borrower and their respective permitted successors and assigns, and no other person or persons shall have any right of action hereon, nor should any laborer, materialman, subcontractor, or other third party rely upon the funds deposited hereunder as a source of payment for work done or labor and/or materials supplied in respect to the improvements contemplated hereunder or otherwise, notwithstanding any representation to the contrary made by Borrower or any other person. This Agreement and the other Loan Documents contain all of the terms and conditions agreed to by Borrower, and no other agreement regarding the subject matter of this Agreement, unless it is in writing and signed by the City and Borrower, shall be deemed to exist or to bind any party hereto.
Signs. During the construction of the Project on the Property City may place or require to be placed signs upon the Property, for public display, stating City is providing financing for the development.
City Implementation. The City shall implement this Agreement through its City Manager. The City Manager is hereby authorized by the City to issue approvals, interpretations, waivers and enter into certain amendments to this Agreement on behalf of the City, to the extent that any such action(s) does/do not increase the obligations or liabilities of the City. All other actions shall require the consideration and approval of the City Council. Nothing in this Section shall restrict the submission to the City Council of any matter within the City Manager’s authority under this Section, in the City Manager’s sole and absolute discretion, to obtain the City Council’s express and specific authorization on such matter. The specific intent of this Section is to authorize certain actions on behalf of the City by the City Manager, but not to require that such actions be taken by the City Manager, without further consideration by the City Council.
Counterparts. This Agreement may be executed in any number of counterparts and by different signatories hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument, for the same effect as if all signatories hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages.
Integration. This Agreement and the Loan Documents contain the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into the Loan Documents and shall be of no further force or effect. Each party is entering into the Loan Documents upon the representations set forth in the Loan Documents and upon each party’s own independent investigation of any and all facts such party deems material.
Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise.
Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word “including” shall be construed as if followed by the words “without limitation.” This Agreement shall be interpreted as though prepared jointly by both parties.
No Waiver. City may at any time and from time to time waive any one or more of the terms or conditions contained in this Agreement, but any such waiver shall be deemed to be made pursuant to this Agreement and not in modification thereof, and any such waiver in any instance or under any particular circumstances shall not be construed a waiver of such term or condition or of any subsequent default. In order to be effective, all such waivers must be in writing. The failure of City to promptly exercise its rights or remedies shall not be deemed to be a waiver or grounds for the claim of estoppel.
Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party.
Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law.
Incorporation of Recitals. The recitals set forth above, and all defined terms set forth in such recitals and in the introductory paragraph preceding the recitals, are hereby incorporated into this Agreement as if set forth in full.
Incorporation of Attachments. All attachments referenced in this Agreement are hereby incorporated into this Agreement by this reference.
Legal Advice. Each party represents and warrants to the other the following: they have carefully read the Loan Documents, and in signing the Loan Documents, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in the Loan Documents, or have knowingly chosen not to consult legal counsel as to the matters set forth in the Loan Documents; and, they have freely signed the Loan Documents without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in the Loan Documents, and without duress or coercion, whether economic or otherwise.
Time of Essence. Time is expressly made of the essence with respect to the performance by City and Borrower of each and every obligation and condition of the Loan Documents.
Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, shall execute any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements.
Conflicts of Interest. No member, official or employee of City shall have any personal interest, direct or indirect, in the Loan Documents, nor shall any such member, official or employee participate in any decision relating to the Loan Documents which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested.
Time for Acceptance of Agreement. This Agreement, when executed by Borrower and delivered to City, must be authorized, executed and delivered by City on or before forty-five (45) days after signing and delivery of this Agreement by Borrower or this Agreement shall be void, except to the extent that Borrower shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement.
Agreement Binding. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto.
Non-Liability of Officials and Employees of City. No member, official or employee of City shall be personally liable to Borrower, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Borrower or its successors, or on any obligations under the terms of the Loan Documents. Borrower hereby waives and releases any claim it may have against the members, officials or employees of City with respect to any default or breach by City or for any amount which may become due to Borrower or its successors, or on any obligations under the terms of the Loan Documents. Borrower makes such release with full knowledge of Civil Code Section 1542 and hereby waives any and all rights thereunder to the extent of this release, if such Section 1542 is applicable. Section 1542 of the Civil Code provides as follows:
“A general release does not extend to claims which the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her, will have materially affected his or her settlement with the debtor or released party.” [Signatures to appear on the following page.]
IN WITNESS WHEREOF, City and Borrower have executed this Agreement on the respective dates set forth below.
Date:
Attest:
City Clerk
Approved as to Form:
City Attorney
CITY:
CITY OF FORT BRAGG, a municipal corporation By:
City Manager
-AND-
Date:
BORROWER:
Fort Bragg South Street LP,
a California Limited Partnership
By: Community Revitalization and Development Corporation, a California nonprofit public benefit corporation, Its Managing General Partner By: David Rutledge, President
By: Johnson & Johnson Investments, LP,
a California limited liability company, Its Administrative General Partner By: Daniel J. Johnson, Managing Member
By: Danco Communities, a California Corporation Its Co-Administrative General Partner By: Daniel J. Johnson, President
ATTACHMENT NO. 1
LEGAL DESCRIPTION
For APN/Parcel ID(s): 018-340-04-00 and 018-340-06-00
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF FORT BRAGG, COUNTY OF MENDOCINO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
PARCEL ONE:
That certain real property situated in the City of Fort Bragg, County of Mendocino, State of California and being a portion of Sections 7 and 18, Township 18 North, Range 17 West, Mount Diablo Meridian, more particularly described as follows:
Commencing at the section corner common to Sections 1 and 12, Township 18 North, Range 18 West and Sections 6 and 7, Township 18 North, Range 17 West, Mount Diablo Meridian; thence East, 2,670 feet; thence South 5,310 feet; thence West 320 feet to the true point of beginning (said true point of beginning also being the North corner common to Lots 70 and 71 of Union Lumber Company Suburban Lots as shown on that certain Record of Survey Map filed for record February 3, 1967 in Map Case 2, Drawer 8, Page 22, Mendocino County Records).
Thence from said point of beginning and along exterior boundaries of the following described parcel, North 88° 40' 20" West, 320.00 feet to the Northwest corner of said Lot 71; thence along the Westerly line of said Lot 71, South 01° 19' 40" West, 511.40 feet to the Southwest corner of said Lot 71 and the Northerly line of South Street; thence along the Southerly line of said Lot 71 and Lot 70 and said Northerly line of South Street, South 71° 44' 00" East, 341.01 feet; thence leaving said Northerly line of South Street, North 22° 28' 54" East, 297.48 feet; thence South 88° 40' 20" East, 206.42 feet to a point on the Easterly line of the lands of Joe J. Rossi as shown on aforesaid Record of Survey Map; thence along said Easterly line, North 43° 12' 00" East, 287.91 feet; thence North 00° 40' 20" West, 119.00 feet to the North line of said lands of Joe J. Rossi and the Northerly line of said Lot 70; thence along said Northerly line of said Lot 70, North 88° 40' 20" West, 508.00 feet to the true point of beginning.
The above legal description is pursuant to the City of Fort Bragg Lot Line Adjustment #1-94. This Lot Line Adjustment was completed of record by Quitclaim Deed dated March 19, 1994 and recorded May 23, 1994 in Book 2177, Page 587, Mendocino County Records.
PARCEL TWO:
That part of the North one half (N1/2) of the Northwest Quarter (NW 1/4) of Section Eighteen (18), Township Eighteen (18) North, Range Seventeen (17) West, M.D.B.&M., particularly described as follows: to wit:
Commencing at the Southwesterly corner of Lot Seven One (71) of a certain Subdivision in said North one half (N1/2) of Northwest Quarter (N1/4) of said Section Eighteen (18) Township Eighteen (18) North, Range Seventeen (17) West for the point of beginning; thence around the piece or parcel of land to be conveyed by the following courses and distances:
Northerly and along the Westerly boundary line of said Lot Seventy-One (71) five hundred (500) feet more or less to the Northerly boundary line of Lot Seventy-One (71); thence Westerly twenty (20) feet to the Easterly boundary line of Lot Seventy-Two (72); thence Southerly and along the Easterly boundary line of Lot Seventy-Two (72) five hundred (500) feet more or less, to the Southerly boundary line of Lot Seventy-Two (72); thence Easterly and along the Northerly boundary line of a certain lane, or road, twenty (20) feet, more or less, to the point of beginning.
PARCEL THREE:
A non-exclusive easement for ingress, egress and other purposes as more particularly described and set forth in that certain document entitled “Access Easement Agreement” recorded concurrently herewith as Instrument No. 2020-16115 of Official Records.
ATTACHMENT NO. 2
PROMISSORY NOTE
(441 South Street – PLHA Loan)
$2,280,000.00 ____________, 2023 Fort Bragg, California FUNDAMENTAL PROVISIONS.
This Promissory Note is executed by Borrower in the amount of Two Million Two Hundred Eighty Thousand Dollars ($2,280,000.00) in favor of Lender, in connection with the award of Permanent Local Housing Allocation (“PLHA”) funds from the California Department of Housing and Community Development (“HCD”). The following terms will be used as defined terms in this Secured Promissory Note (as it may be amended, modified, extended, and renewed from time to time, this "Note"):
Lender/Payee:
City of Fort Bragg, a California municipal corporation.
Borrower/Maker:
Fort Bragg South Street LP, a California limited partnership Principal Amount:
Two Million Two Hundred Eighty Thousand and 00/100 Dollars ($2,280,000.00).
Interest Rate:
Three percent (3%) per annum simple interest.
Default Interest Rate:
Six percent (6%) per annum.
Maturity Date:
Fifty-five (55) years from the date of receipt of a Certificate of Occupancy for the Project unless the Maturity Date is accelerated as otherwise provided in this Note.
Business Day:
Any day of the year other than Saturdays, Sundays and legal holidays on which Lender's main office at 416 North Franklin Street, Fort Bragg, CA 95437, is closed.
Deed of Trust:
That certain Deed of Trust, Assignment of Rents Security Agreement and Fixture Filing of even date herewith executed by Borrower, as "Trustor," for the benefit of Lender, as "Beneficiary".
Loan Documents:
The Standard Agreement, this Note, the Deed of Trust, the Regulatory Agreement, and all other documents securing the repayment of the Note, and instruments executed by the Borrower.
Loan:
The loan from Lender to Borrower in the Principal Amount and evidenced by this Note and/or the Loan Documents.
Standard Agreement:
That certain Standard Agreement No. 21-PLHACOM-17075 between Lender, Danco Communities, and Community Revitalization and Development Corporation dated September 15, 2022.
Regulatory Agreement:
The covenant to be executed by Maker in favor of HCD reflecting the Use Restrictions set forth in the Standard Agreement.
PROMISE TO PAY.
For value received, Borrower promises to pay to the order of Lender, at its office at 416 North Franklin Street, Fort Bragg, CA 95437, or at such other place as the Lender hereof may from time to time designate in writing, the Principal Amount together with interest thereon, and all other sums due under and secured by the Deed of Trust or by any other Loan Documents.
REPAYMENT.
This Note shall be due and payable in full on the Maturity Date. No other regular payments of principal or interest shall be otherwise payable hereunder.
Prior to any sale of all or any portion of the Project or refinancing of all or any portion of the outstanding debt from the Project, and so long as there is any outstanding amount due and owing under this Note, Borrower shall notify Lender of any such proposed or intended sale or refinancing. In such event, Borrower and Lender shall meet and confer, and shall use good faith efforts, to determine the feasibility of the payoff or restructuring of the remaining balance owing under this Note as part of any such sale or refinancing in order to provide for repayment of this Note sooner than the 55-year repayment period.
Notwithstanding anything in this Note or the Agreement to the contrary, the entire outstanding amount due under this Note, including principal and all accrued and unpaid interest, may, at the option of the Lender, become immediately due and payable upon the occurrence of an event of default under the Standard Agreement, this Note, the Deed of Trust, or the Regulatory Agreement, after expiration of any applicable cure period.
PREPAYMENT.
Borrower may prepay the Loan, in whole or in part, at any time and from time to time without premium or penalty.
In no event shall Borrower be entitled to re-borrow any amounts prepaid.
LAWFUL MONEY.
Principal and interest are payable in lawful money of the United States of America.
APPLICATION OF PAYMENTS/LATE CHARGE.
All prepayments shall be applied to the indebtedness owing hereunder in such order and manner as Lender may from time to time determine in its sole discretion.
If any payment due hereunder or under the Deed of Trust is not received by the Lender hereof within fifteen (15) days of when such payment is due, then in addition to the remedies conferred upon the Lender hereof pursuant to the provisions of this Note and/or the Loan Documents, a late charge of six percent (6%) of the amount of the payment due will be due and owing by the Borrower and will be added to the delinquent amount to compensate the Lender hereof for the costs, expenses, and damages of the Lender related to the delinquency of the Borrower in making such payment, regardless of any notice and/or cure periods (if any). Acceptance of any late charge will not constitute a waiver of default with respect to the overdue payment, and will not prevent or delay Lender from exercising any of its rights or remedies available under this Note and/or the Loan Documents.
Upon the occurrence, and during the continuance, of an Event of Default, including the failure to pay upon final maturity, Lender, may at its option and in its sole discretion: (i) increase the applicable Interest Rate on this Note to the Default Interest Rate, and/or (ii) add any unpaid accrued interest to principal and such sum will bear interest therefrom until paid at the Default Interest Rate. The undersigned acknowledges that, during the time that any amount is in default, Lender will incur losses that are impracticable, costly, and inconvenient to ascertain. Those losses include, without limitation, the ability to invest amounts then due at the current rate of return and the unavailability of liquid funds. The undersigned agrees that the interest payable hereunder represents a reasonable sum considering all of the circumstances existing on the date of the execution of this Note and represents a reasonable estimate of the losses Lender will incur by reason of late payment. The undersigned further agrees that proof of actual losses would be costly, inconvenient, impracticable, and extremely difficult to fix. Acceptance of the interest will not constitute a waiver of the default with respect to the overdue installment and will not prevent Lender from exercising any of the other rights and remedies available under this Note and/or the Loan Documents. Notwithstanding anything contained herein, the interest rate will not exceed the maximum rate permitted by applicable law.
SECURITY.
This Note is secured, among other security, by security instruments covering real property and personal property of the undersigned located in California, including, without limitation, the Deed of Trust, which Deed of Trust creates a lien on that certain real and personal property described therein.
EVENT OF DEFAULT.
The occurrence of any of the following shall be deemed to be an event of default ("Event of Default") hereunder:
default in the payment of principal and/or interest, and/or any other sum advanced by Lender pursuant to the terms and provisions of this Note and/or the Loan Documents within five (5) days from the date due; and/or the failure to perform any of the other terms, provisions, and obligations of the Borrower and/or any indemnitor pursuant to the Loan Documents within thirty (30) days from the receipt of written notice from the Lender (the "30 Day Notice") that such performance was due; provided, however that if such failure is not reasonably susceptible to cure within said thirty (30) days from receipt of the 30 Day Notice and provided that (i) Borrower shall have in good faith undertaken such cure within said thirty (30) day period and (ii) Borrower shall have diligently prosecuted such cure thereafter, Borrower shall have additional time to prosecute such cure, such additional time not to exceed the one hundred twenty (120) days, from receipt by Borrower of the 30 Day Notice; and/or if any event occurs that is an Event of Default under any of the Loan Documents.
REMEDIES.
Upon the occurrence, and during the continuance, of an Event of Default, then at the sole election and option of the Lender hereof, the entire balance of principal together with all accrued interest thereon, and all other amounts payable by Borrower under the Loan Documents shall, without demand or notice, immediately become due and payable. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal hereof, together with all accrued interest thereon, all other amounts due under the Loan Documents, and any judgment for such principal, interest, and other amounts due under the Loan Documents, shall bear interest at the Default Interest Rate, subject to the limitations contained in Section 14 hereof. No delay or omission on the part of the Lender hereof in exercising any right or remedy under this Note and/or under any of the other Loan Documents hereof shall operate as a waiver of such right.
Lender hereby agrees that any cure of any default made or tendered hereunder by Borrower's limited partner shall be accepted or rejected on the same basis as if made or tendered by Borrower.
WAIVER.
Borrower hereby waives diligence, demand for payment, presentment for payment, protest, notice of nonpayment, notice of protest, notice of intent to accelerate, notice of acceleration, notice of dishonor, and all other notices or demands of any kind (except notices specifically provided for in the Loan Documents, if any). Borrower waives to the full extent permitted by law, the right to plead any and all statutes of limitations and/or any defenses relating to marshaling of assets as a defense.
CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
No provision of this Note may be changed, discharged, terminated, or waived except in a writing signed by the party against whom enforcement of the change, discharge, termination, or waiver is sought. No failure on the part of the Lender hereof to exercise and no delay by the Lender hereof in exercising any right or remedy under this Note and/or the Loan Documents and/or under the law shall operate as a waiver thereof.
ATTORNEY'S FEES.
The undersigned agrees to pay all reasonable costs including, without limitation, reasonable attorney fees, incurred by the Lender of this Note in enforcing payment, whether or not suit is filed, including, without limitation, all costs, attorney fees, and expenses incurred by the Lender of this Note in connection with any bankruptcy, reorganization, arrangement, or other similar proceedings involving the undersigned that in any way affects the exercise by the Lender of this Note of its rights and remedies under this Note. All costs incurred by the Lender of this Note in any action undertaken to obtain relief from the stay of bankruptcy statutes are specifically included in those costs and expenses to be paid by the undersigned. Borrower will pay to Lender all attorney fees and other costs referred to in this Section 12 on demand, together with interest from the date of the demand at the Default Rate until paid.
SEVERABILITY.
If any provision of this Note is unenforceable, the enforceability of the other provisions shall not be affected and they shall remain in full force and effect.
INTEREST RATE LIMITATION.
Borrower hereby agrees to pay an effective rate of interest that is the sum of the interest rate provided for herein, together with any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the Loan. Lender and Borrower agree that none of the terms and provisions contained herein or in any of the Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California. In such event, if any Lender of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate on this Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of California, all such sums deemed to constitute interest in excess of such maximum rate shall, at the option of the Lender, be credited to the payment of other amounts payable under this Note and/or the Loan Documents or returned to Borrower.
NUMBER AND GENDER.
In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa.
HEADINGS.
Headings at the beginning of each numbered section of this Note are intended solely for convenience and are not part of this Note.
CHOICE OF LAW.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES.
INTEGRATION.
The Loan Documents contain the complete understanding and agreement of the Lender hereof and Borrower and supersede all prior representations, warranties, agreements, arrangements, understandings, and negotiations.
BINDING EFFECT.
The Loan Documents will be binding upon, and inure to the benefit of, the Lender hereof, Borrower, and their respective successors and assigns. Borrower may not assign its obligations under the Loan Documents.
TIME OF THE ESSENCE.
Time is of the essence with regard to each provision of the Loan Documents as to which time is a factor.
SURVIVAL.
The representations, warranties, and covenants of the Borrower in the Loan Documents shall survive the execution and delivery of the Loan Documents and the making of the Loan.
NONRECOURSE.
This Note is a nonrecourse obligation of Borrower. Neither Borrower nor any of its officers, directors, members, or general and limited partners shall have any personal liability for repaying the principal or interest of the Note. In any action brought to enforce the obligations of Maker under this Note, the Deed of Trust or any other instrument or agreement evidencing, securing or relating to the indebtedness evidenced by this Note, the judgment or decree shall be enforceable against Borrower solely and only to the extent of its interest in the property described in the Deed of Trust or its interest in any other security provided by Borrower as security for this Note, and Lender shall not seek any deficiency judgment against the Borrower. The foregoing provisions shall not prevent recourse to the collateral security for the loan, including but not limited to all contracts, documents, reports, surveys, materials, architectural drawings and specifications and other information related to the Project, or constitute a waiver, release or discharge of or otherwise affect the obligation to pay, any indebtedness evidenced by the loan documents executed in connection with the Project or limit the right of any person to name the Maker or any other person claiming an interest in or right to such collateral as party defendant in any action or suit for judicial foreclosure or in the exercise of any other remedy, including injunctive or other equitable relief, under any of the loan documents executed in connection with this Project so long as no deficiency judgment shall be sought against the Maker. [Signatures on following page]
MAKER/ BORROWER:
Fort Bragg South Street LP,
a California Limited Partnership
By: Community Revitalization and Development Corporation, a California nonprofit public benefit corporation, Its Managing General Partner
By:____________________
David Rutledge, President
By: Johnson & Johnson Investments, LLC, a California limited liability company, Its Administrative General Partner By: Daniel J. Johnson, Managing Member
By: Danco Communities, a California Corporation Its Co-Administrative General Partner By:
Daniel J. Johnson, President
ATTACHMENT NO. 3
FORM OF DEED OF TRUST
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:City of Fort Bragg 416 North Franklin Street Fort Bragg, CA 92101 Attn: Title:RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:City of Fort Bragg 416 North Franklin Street Fort Bragg, CA 92101 Attn: Title:
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
City of Fort Bragg
416 North Franklin Street Fort Bragg, CA 92101 Attn: Title:
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
City of Fort Bragg
416 North Franklin Street Fort Bragg, CA 92101 Attn: Title:
Space above line for Recorder’s use only Exempt from Recording Fees pursuant to Govt. Code § 27383
CITY OF FORT BRAGG
DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING This Deed of Trust is made as of _____________ 1, 2023, among FORT BRAGG SOUTH STREET LP, a California limited partnership ("TRUSTOR"), whose address is 5251 Ericson Way, Arcata, CA 95521; Fidelity National Title Company, whose address is 10969 Trade Center Drive, Suite 107, Rancho Cordova, CA 95670 ("TRUSTEE"); and the CITY OF FORT BRAGG ("BENEFICIARY"), whose address is 416 North Franklin Street, Fort Bragg, California 9210 I.
Trustor irrevocably grants, conveys, transfers, and assigns to Trustee in trust, with power of sale and right of entry and possession, all of Trustor's estate, right, title, and interest in, to and under the following property (collectively, the "Property"): (a) the real property in Mendocino County, California, described on Exhibit A attached hereto and incorporated herein by this reference, together with all existing and future easements and rights affording access to it (the "Land"), (b) together with all buildings, structures, and improvements now existing or hereafter constructed thereon (the "Improvements"), (c) together with all articles of personal property now or hereafter attached to, placed upon for an indefinite term, or used in connection with the Land and/or Improvements, together with all goods and other property that are, or at any time become, so related to the Property that an interest in them arises under real estate law, or they are otherwise adjudged to be a "fixture" under applicable law (each a "Fixture," collectively "Fixtures"), (d) together with all other property and interests of any kind or character which may be reasonably necessary or desirable to promote the present and future beneficial use and enjoyment of such real property and improvements.
1. Secured Obligations. Trustor makes the grant, conveyance, transfer, and assignment herein for the purpose of securing the following obligations (the "Secured Obligations"): (a) payment of the sum of Two Million Two Hundred Eighty Thousand Dollars ($2,280,000.00) with interest thereon according to the terms of a promissory note (the "Note") of even date herewith, executed by Trustor in favor of Beneficiary or order and any extension or renewals thereof; (b) payment of such further sums as the then record owner of the Property may borrow from Beneficiary, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust; and (c) performance of each agreement and obligation of Developer under that certain Standard Agreement No. 21-PLHACOM-17075 between developer Danco Communities, and Community Revitalization and Development Corporation dated __________, (the "Standard Agreement"), providing for the construction of improvements on the Property and operation of the Property and improvements thereon as affordable housing (the "Project"); (d) obligations under that certain Regulatory Agreement in favor of Beneficiary, dated November 1, 2020, and recorded on November 25, 2020, as instrument number 2020-16121; and (e) obligations under the Regulatory Agreement in favor of the California Department of Housing and Community Development (the "Regulatory Agreement") to be recorded against the Property. The payment of the amount owing pursuant to the terms of the Note by Trustor does not extinguish the rights of the Beneficiary under the Regulatory Agreement. This Deed of Trust shall secure the Beneficiary against any default under the Regulatory Agreement for the term of the Regulatory Agreement.
Maintenance and Repair. Trustor shall (a) keep the Property in good condition and repair and not remove or demolish any building except as may be necessary to construct the Project; (b) complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed; (c) pay when due all claims for labor performed and materials furnished; (d) comply with all laws affecting the Property or requiring any alterations or improvements to be made; (e) not commit or permit waste; and (t) cultivate, irrigate, fertilize, fumigate, prune, and do all other acts which from the character or use of the Property may be reasonably necessary.
Insurance. Trustor shall maintain hazard insurance against loss by fire, hazards included with the term "extended coverage," and any other hazards for which Beneficiary requires insurance, and liability insurance as set forth in the Regulatory Agreements. The insurance carrier and the insurance policies and amounts of coverage shall comply with the terms of the Regulatory Agreements or shall otherwise be acceptable to Beneficiary, the policies shall name Beneficiary as a loss payee or an additional insured, as applicable, the policies shall include Beneficiary as an additional insured, as applicable.
Defense of Security. Trustor shall appear in and defend any action or proceeding purporting to affect the security or the rights or powers of Beneficiary or Trustee. Trustor shall pay all costs and expenses, including costs of evidence of title and attorneys' fees, in any such action or proceeding in which Trustee or Beneficiary may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust.
Payment of Taxes and Liens. Trustor shall pay (a) at least 10 days before delinquency, all non-abated taxes and assessments affecting the Property, including water stock assessments; (b) when due, all encumbrances, charges, and liens, with interest, on the Property, which are or appear to be prior or superior to this Deed of Trust; and (c) upon demand all reasonable and documented costs, fees, and expenses of this Deed of Trust. If Trustor fails to make any payment or to do any act provided for in this Deed of Trust after written notice of such failure by Beneficiary and a reasonably opportunity to cure, then Beneficiary or Trustee may, without obligation to do so, and with or without notice to or demand upon Trustor, and without releasing Trustor from any obligation under this Deed of Trust: (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security, Beneficiary or Trustee being authorized to enter upon the Property for such purposes; (b) appear in or commence any action or proceeding purporting to affect the security, or the rights or powers of Beneficiary or Trustee; (c) pay, purchase, contest or settle any encumbrance, charge or lien which in the judgment of either appears to be senior to this Deed of Trust; and (d) in exercising any such powers, pay allowable expenses, including attorneys' fees.
Reimbursement of Costs. Trustor shall pay upon demand all reasonable and documented sums expended by Beneficiary or Trustee provided for in this Deed of Trust or allowed by law, with interest from date of expenditure at the maximum rate provided in the Note.
No Waiver. By accepting payment of any sum after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums or declare a default for failure to pay.
Reconveyance. That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and said note or notes to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals of such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." Assignment of Rents. Subject to the rights of senior lenders, Trustor hereby absolutely and unconditionally assigns to Beneficiary all of the rents, issues, profits, royalties, revenues, income, and other benefits (collectively, the "Rents") derived from the Property, whether now due, past due or to become due, and hereby gives to and confers upon Beneficiary, either directly or through a receiver, the right, power, and authority, but not the obligation, to collect the Rents, and to sue, either in the name of Trustor or Beneficiary, for all such Rents and to apply the same to the indebtedness secured hereby in such order as Beneficiary may determine in its sole discretion. This assignment of Rents is intended to create and shall be construed to create an absolute assignment to Beneficiary of all of Trustor's right, title, and interest in the Rents. So long as no default exists by Trustor in the payment of any indebtedness secured hereby, or in any other covenant contained herein, or in said note or notes or in any other document evidencing or securing such indebtedness, Trustor shall have the right to collect all Rents from the Property and to retain, use, and enjoy the same. Upon the occurrence of such a default beyond any applicable notice and cure periods, without the necessity of demand or other notice to Trustor or any other act to enforce Beneficiary's interest pursuant to this assignment, Trustor shall have no interest whatsoever in the Rents that are received by Trustor after a default, and all such Rents shall be received and held by Trustor in constructive trust for Beneficiary and delivered promptly to Beneficiary, or to a court-appointed receiver for the Property, without the necessity for further notice to, or demand upon, Trustor. Upon the occurrence of such a default, beyond any applicable notice and cure periods, and at any time thereafter during the continuance thereof, Beneficiary may, at its option, send any tenant of the Property a notice to the effect that: (a) a default has occurred; (b) Beneficiary has elected to exercise its rights under this assignment; and (c) such tenant is thereby directed to thereafter make all payments of Rents to or for the benefit of Beneficiary or as Beneficiary shall direct. Any such tenant shall be entitled to rely upon any notice from Beneficiary and shall be protected with respect to any payment of Rents made pursuant to such notice, irrespective of whether a dispute exists between Trustor and Beneficiary with respect to the existence of a default or the rights of Beneficiary hereunder. Any such tenant shall not be required to investigate or determine the validity or accuracy of such notice or the validity or enforceability of this assignment. Trustor hereby agrees to indemnify, defend, and hold any such tenant harmless from and against any and all losses, claims, damages or liabilities arising from or related to any payment of Rents by such tenant made in reliance on and pursuant to such notice.
10. Default and Foreclosure. Upon default by Trustor in payment or performance of any Secured Obligation, subject to any applicable notice and cure period, Beneficiary may declare all sums secured immediately due and payable by delivery to Trustee of a declaration of default and demand for sale and of a notice of default and of a notice of sale, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, said note or notes, and all documents evidencing expenditures secured by this Deed of Trust. Upon default of any obligation secured by this Deed of Trust and acceleration of all sums due, Beneficiary may instruct Trustee to proceed with a sale of the Property under the power of sale granted in this Deed of Trust, noticed and held in accordance with California Civil Code Sections 2924, et seq., as such statutes may be amended from time to time. Trustor waives all rights it may have to require marshaling of assets or to require sales of assets in any particular order, including any rights under California Civil Code Sections 2899 and 3455.
Beneficiary hereby agrees that any cure of any default made or tendered hereunder by Trustor's limited partner shall be accepted or rejected on the same basis as if made or tendered by Trustor.
Distribution of Foreclosure Proceeds. The proceeds generated by any Foreclosure ("Proceeds") shall be distributed as follows: (i) First, senior liens and encumbrances (if any) on the Project shall be fully paid from the Proceeds; (ii) Second, City shall be fully paid any amounts owing under the Secured Obligations; (iii) Third, to the Borrower to the extent the Borrower or its affiliate has unreimbursed predevelopment costs advanced in connection with the Project; (iv) Fourth, City shall be paid the difference between the appraised value of the completed Project (applicable portion thereof) as restricted by the Regulatory Agreement ("Restricted Value") and the Proceeds ("Differential"); (v) Fifth, any remaining Proceeds shall be distributed in accordance with California Civil Code Section 2924(k). The Differential shall be deposited in City's housing fund. Borrower expressly acknowledges and agrees that the Agreement and this Deed of Trust constitutes a lien against the Project and the Differential, including in accordance with California Civil Code Sections 2872, 2924 to 2924h, inclusive ("Differential Lien"). In the event of a Foreclosure, for purposes of distribution of the Differential only, the Differential Lien shall be considered a junior lien or encumbrance within the meaning of California Civil Code section 2924k(a)(3). Borrower hereby irrevocably instructs any holder of the Differential or similar proceeds generated by Foreclosure to immediately disburse the Differential to City, and agrees to defend, indemnify and hold City and such holder harmless from any and all claims related to such distribution. As used herein, "Foreclosure" means any judicial or non-judicial foreclosure, trustee's sale, deed-in-lieu transfer, short sale, or similar transaction.
Substitution of Trustee. Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers, and duties. Said instrument must contain the name of the original Trustor, Trustee, and Beneficiary hereunder, the book and page where this Deed of Trust is recorded, and the name and address of the new Trustee.
Successors 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. The term "Beneficiary" shall mean the owner and holder, including pledgees, of the secured note or notes, whether or not named as Beneficiary herein.
Trustee Acceptance. Trustee accepts this trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other deed of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
Further Assurances. Trustor shall, at its own cost and expense, do, execute, acknowledge, and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers, and assurances as Trustee or Beneficiary shall from time to time reasonably require, for better assuring, conveying, assigning, transferring, and confirming unto Trustee the Property and rights hereby conveyed or assigned or intended now or hereafter so to be, or which Trustor may be or may hereafter become bound to convey or assign to Trustee, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust, or for filing, registering, or recording this Deed of Trust. Trustor shall, on demand, execute and deliver, and hereby authorizes Trustee and Beneficiary, or either of them, to execute in the name of Trustor, to the extent it may lawfully do so, one or more financing statements, chattel mortgages, or comparable security instruments, to evidence more effectively the lien hereof. Immediately upon the execution and delivery of this Deed of Trust, and thereafter from time to time, Trustor shall cause this Deed of Trust, and any security instruments creating a lien or evidencing the lien hereof upon any personal property and each instrument of further assurance, to be filed, registered, or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien hereof upon, and the title of Trustee to, the Property encumbered hereby.
Condemnation and Insurance Proceeds. Immediately upon obtaining knowledge of the institution of any proceedings for the condemnation or other taking of all or any portion of the Property, or knowledge of any casualty damage to the Property, or damage in any other manner, Trustor shall immediately notify Beneficiary thereof. Trustor hereby authorizes and empowers Beneficiary as attorney-in-fact for Trustor to make proof of loss, to adjust and compromise any claim under the insurance policies covering the Property, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Beneficiary's expenses incurred in the collection of such proceeds; provided, however, that nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. Trustor hereby authorizes and empowers Beneficiary, at Beneficiary's option, as attorney-in-fact for Trustor, to commence, appear in, and prosecute, in Beneficiary's or Trustor's name, any action or proceeding relating to any condemnation or other taking of all or any part of the Property, whether direct or indirect, and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award payment or claim for damages, direct or consequential, in connection with any condemnation or other taking, whether direct or indirect, of the Property, or any part thereof, or for conveyances in lieu of the Property, or any part thereof, shall be paid to Beneficiary. The foregoing powers of attorney are coupled with an interest and are irrevocable. Trustor hereby authorizes Beneficiary to apply such awards, payments, proceeds or damages relating to condemnation of the Property and insurance covering the Property, after the deduction of Beneficiary's expenses incurred in the collection of such amounts, subject to the requirements of applicable law and the provisions hereof, to restoration or repair of the Property or to payment of the sums secured by this Deed of Trust. Beneficiary shall be under no obligation to question the amount of any compensation, awards, proceeds, damages, claims, rights of action, and payments relating to condemnation or other taking of the Property or insured casualty affecting the Property, and may accept the same in the amount in which the same shall be paid. Trustor shall execute such further evidence of assignment of any awards, proceeds, damages or claims arising in connection with such condemnation or taking or such insurance as Beneficiary may require. Notwithstanding the above, the Beneficiary shall release all insurance and condemnation proceeds to Trustor to be used to reconstruct the improvements on the Property provided that Beneficiary reasonably determines that such restoration, repair or rebuilding is economically feasible, provided, Beneficiary acknowledges and agrees that if any casualty affects the Property at any point after the execution of this Deed of Trust and prior to the construction of the Trustor's new Improvements, the Trustor shall not be obligated to reconstruct any improvements on the Property. If such insurance proceeds shall be insufficient for such purposes, Trustor shall make up the deficiency. If the Project is subject to a partial condemnation or taking, then the proceeds received therefrom shall be applied to restore the Project taken, provided the Beneficiary determines that such restoration is economically feasible and no default exists under the Loan Documents following the expiration of all applicable cure periods. If the Project is subject to a total condemnation, or if Beneficiary determines that restoration of the Project is not feasible following a partial condemnation, or if a default exists then the proceeds from any condemnation award or claim for damages shall be used first to repay all sums under the Note, with the excess, if any, paid to Trustor, subject to the rights of the senior lender.
Severability. If any one or more of the provisions contained in this Deed of Trust shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Deed of Trust, but this Deed of Trust shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein or therein, but only to the extent of such invalidity.
Estoppel Certificate. Trustor shall, within thirty (30) days of a written request from Beneficiary, furnish Beneficiary with a written statement, duly acknowledged, setting forth the sums secured by this Deed of Trust and any right of set-off, counterclaim or other defense which exists against such sums and the obligations of this Deed of Trust.
California Uniform Commercial Code Security Agreement; Fixture Filing. Trustor hereby grants Beneficiary a security interest in all personal property of Trustor located on the Property and wherever located and used in any way in connection with or in any way relating to the Property, and whether now owned or hereafter in existence, acquired or created (including equipment, inventory, goods, documents, instruments, general intangibles, chattel paper, accounts, accounts receivable, deposit accounts, and contract rights), and all fixtures of Trustor now owned or hereafter in existence, acquired or created on, of or relating to the Property, and all substitutions, replacements, additions, accessions, and proceeds (including insurance proceeds) of all of the foregoing (collectively, the "Personal Property"). Beneficiary may file this Deed of Trust, or a reproduction hereof, in the real estate records or other appropriate index, as a financing statement for the Personal Property. Any reproduction of this Deed of Trust or of any other security agreement or financing statement shall be sufficient as a financing statement. In addition, Trustor shall execute and deliver to Beneficiary, upon Beneficiary's request, any financing statements, as well as extensions, renewals, and amendments thereof, and reproductions of this Deed of Trust in such form as Beneficiary may require to perfect a security interest with respect to the Personal Property. Trustor shall pay all costs of filing such financing statements and any extensions, renewals, amendments, and releases thereof, and shall pay all reasonable costs and expenses of any record searches for financing statements Beneficiary may reasonably require. Upon Trustor's breach of any covenant or agreement of Trustor contained in this Deed of Trust, including the covenants to pay when due all sums secured by this Deed of Trust, Beneficiary shall have the remedies of a secured party under the California Uniform Commercial Code and, at Beneficiary's option, may also invoke any remedies provided in this Deed of Trust as to the Personal Property. In exercising any of such remedies, Beneficiary may proceed against the Property and any of the Personal Property separately or together and in any order whatsoever, without in any way affecting the availability of Beneficiary's remedies under the California Uniform Commercial Code or the remedies provided in the Deed of Trust. This Deed of Trust also covers goods which are or which are to become fixtures on the Property and constitutes and is filed as a fixture filing under the California Uniform Commercial Code.
Due-On-Sale or Encumbrance. Except for any transfer permitted by the Trustor’s Amended and Restated Agreement of Limited Partnership, if all or any part of the Property, or any interest therein, or any beneficial interest in Trustor (if Trustor is not a natural person or persons but is a corporation, partnership, trust, limited liability company or other legal entity), is sold, transferred, mortgaged, assigned, pledged, or further encumbered, whether directly or indirectly, whether voluntarily or involuntarily, or by operational law, Beneficiary may, at Beneficiary's option, declare all of the sums secured by this Deed of Trust to be immediately due and payable, and Beneficiary may invoke any remedies permitted by this Deed of Trust.
Three-Year Tax Credit Period. If the Project is assisted by federal tax credits and it is determined that Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, is applicable to the Beneficiary, the Beneficiary agrees to comply with the three-year extended use requirement set forth therein in the event that the Beneficiary takes ownership of the Project or any portion thereof as a result of a foreclosure. The Beneficiary further agrees to execute and record a subordination agreement, in a form reasonably approved by Beneficiary, subordinating the lien of the Deed of Trust to the California Tax Credit Allocation Committee's regulatory agreement.
The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to Trustor at Trustor's address hereinbefore set forth, and to Trustor's limited partner at its address set forth in the Loan Agreement entered into by and between Trustor and Beneficiary referenced in Section 1, above.
Signatures on following page.
TRUSTOR:
Fort Bragg South Street LP,
a California Limited Partnership
By: Community Revitalization and Development Corporation, a California nonprofit public benefit corporation, Its Managing General Partner
By: David Rutledge, President
By: Johnson & Johnson Investments, LLC, a California limited liability company, Its Administrative General Partner By: Daniel J. Johnson, Managing Member
By: Danco Communities, a California Corporation Its Co-Administrative General Partner By: Daniel J. Johnson, President
ACKNOWLEDGEMENT
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 thetruthfulness, accuracy, or validity of that document.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 thetruthfulness, accuracy, or validity of that document.
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.
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF ____________________ )
On _________________, 2023 before me, __________________________________, Notary Public, personally appeared _______________________________________who proved to me on the basis of satisfactory evidence to be the person whose name) is subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacity, and that by their signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: ___________________________________________ (seal)
ACKNOWLEDGEMENT
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 thetruthfulness, accuracy, or validitv of that document.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 thetruthfulness, accuracy, or validitv of that document.
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 validitv of that document.
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 validitv of that document.
STATE OF CALIFORNIA )
COUNTY OF ____________________ )
On _________________, 2023 before me, __________________________________, Notary Public, personally appeared _______________________________________who proved to me on the basis of satisfactory evidence to be the person whose name) is subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacity, and that by their signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: ___________________________________________ (seal)
EXHIBIT A
For APN/Parcel ID(s): 018-340-04-00 and 018-340-06-00
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF FORT BRAGG, COUNTY OF MENDOCINO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
PARCEL ONE:
That certain real property situated in the City of Fort Bragg, County of Mendocino, State of California and being a portion of Sections 7 and 18, Township 18 North, Range 17 West, Mount Diablo Meridian, more particularly described as follows:
Commencing at the section corner common to Sections 1 and 12, Township 18 North, Range 18 West and Sections 6 and 7, Township 18 North, Range 17 West, Mount Diablo Meridian; thence East, 2,670 feet; thence South 5,310 feet; thence West 320 feet to the true point of beginning (said true point of beginning also being the North corner common to Lots 70 and 71 of Union Lumber Company Suburban Lots as shown on that certain Record of Survey Map filed for record February 3, 1967 in Map Case 2, Drawer 8, Page 22, Mendocino County Records).
Thence from said point of beginning and along exterior boundaries of the following described parcel, North 88° 40' 20" West, 320.00 feet to the Northwest corner of said Lot 71; thence along the Westerly line of said Lot 71, South 01° 19' 40" West, 511.40 feet to the Southwest corner of said Lot 71 and the Northerly line of South Street; thence along the Southerly line of said Lot 71 and Lot 70 and said Northerly line of South Street, South 71° 44' 00" East, 341.01 feet; thence leaving said Northerly line of South Street, North 22° 28' 54" East, 297.48 feet; thence South 88° 40' 20" East, 206.42 feet to a point on the Easterly line of the lands of Joe J. Rossi as shown on aforesaid Record of Survey Map; thence along said Easterly line, North 43° 12' 00" East, 287.91 feet; thence North 00° 40' 20" West, 119.00 feet to the North line of said lands of Joe J. Rossi and the Northerly line of said Lot 70; thence along said Northerly line of said Lot 70, North 88° 40' 20" West, 508.00 feet to the true point of beginning.
The above legal description is pursuant to the City of Fort Bragg Lot Line Adjustment #1-94. This Lot Line Adjustment was completed of record by Quitclaim Deed dated March 19, 1994 and recorded May 23, 1994 in Book 2177, Page 587, Mendocino County Records.
PARCEL TWO:
That part of the North one half (N1/2) of the Northwest Quarter (NW 1/4) of Section Eighteen (18), Township Eighteen (18) North, Range Seventeen (17) West, M.D.B.&M., particularly described as follows: to wit:
Commencing at the Southwesterly corner of Lot Seven One (71) of a certain Subdivision in said North one half (N1/2) of Northwest Quarter (N1/4) of said Section Eighteen (18) Township Eighteen (18) North, Range Seventeen (17) West for the point of beginning; thence around the piece or parcel of land to be conveyed by the following courses and distances:
Northerly and along the Westerly boundary line of said Lot Seventy-One (71) five hundred (500) feet more or less to the Northerly boundary line of Lot Seventy-One (71); thence Westerly twenty (20) feet to the Easterly boundary line of Lot Seventy-Two (72); thence Southerly and along the Easterly boundary line of Lot Seventy-Two (72) five hundred (500) feet more or less, to the Southerly boundary line of Lot Seventy-Two (72); thence Easterly and along the Northerly boundary line of a certain lane, or road, twenty (20) feet, more or less, to the point of beginning.
PARCEL THREE:
A non-exclusive easement for ingress, egress and other purposes as more particularly described and set forth in that certain document entitled “Access Easement Agreement” recorded concurrently herewith as Instrument No. 2020-16115 of Official Records. 99 9
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