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AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT
By and Between
CITY OF FULLERTON
and
META DEVELOPMENT, LLC
Dated as of ______________, 2023
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18651856.3 a07/24/23 ATTACHMENT NO. 1A
AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT
THIS AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT (the “Agreement”) is made and entered into as of ___________________, 2023 (the “Effective Date ”), by and between the CITY OF FULLERTON, a California municipal corporation (the “City”), and META DEVELOPMENT, LLC, A C alifornia limited liability company (the ”Developer”). City and Developer are sometimes referred to hereinafter individually as a “Party” and collectively as the “Parties.”
RECITALS
A. City is the City of Fullerton, a California municipal corporation , organized and existing pursuant to and under the general laws of the State of California.
B. Developer is Meta Development, LLC, a California limited liability company.
C. City is the owner in fee of that certain real property located at 1600 W.
Commonwealth Avenue, in the City of Fullerton, County of Orange, State of California, more particularly described in the legal description attached hereto as Attachment No. 1A (collectively, the “City Property”).
D. In June 2020, City declar ed the City Property surplus pursuant to the California Surplus Land Act (Government Code section 54221 et seq.), and thereafter notified affordable housing developers and open space entities of the availability of the City Property for affordable housing, open space and park and recreation uses. After receiving no responses, City released an RFP for the City Property.
E. Following the RFP process, based on Developer’s submittal, City selected Developer.
F. Developer desires to acquire the portion of the City Property designated as “Parcel 1” on Attachment No. 1B (the “Property”) from City and construct and thereafter operate thereon an affordable rental housing development, consisting of sixty-five (65) residential dwelling units, with sixty-four ( 64) of such units restricted for rental and occupancy by income-eligible tenants at an a ffordable rent, and related improvements (collectively the “Project”).
G. The sale of the Property to Developer and Developer’s development and subsequent operation of the Project on the Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in furtherance of City’s goals to provide affordable housing in the City of Fullerton, are in the vital and best interests of the City of Fullerton and the welfare of its residents, and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements under which the Project has been undertaken. This Agreement is in conformity with that certain Stipulation for Entry of Judgment, filed July 20, 1992, in the case Nadene Ivens and Roy Kobayashi v. All Persons Interested in The Matter of The Validity of the Redevelopment
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Plan for Redevelopment Project No. 4, etc., et al. , Orange County Superior Court Case No. 670579.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, which are incorporated herein by this reference, and the mutual promises, covenants, and conditions herein contained, City and Developer hereto agree as follows:
1. DEFINITIONS
As used in this Agreement, capitalized terms are defined where first used or as set forth in this Section 1. Capitalized terms used in an attachment attached hereto and not defined therein shall also have the meanings set forth in this Section 1. “Affiliate” means any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Developer which, if Developer is a partnership or limited liability company, shall include each of the constituent members or partners, respectively thereof. The term “control” as used in the immediately preceding sentence, means, with respect to a person that is a corporation, the right to the exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled person. “Annual Financial S tatement” means the financial statements prepared by Developer for each calendar year, including a balance sheet, income statement, statement of retained earnings, statement of cash flow, and footnotes thereto, prepared in accordance with generally accepted accounting pr inciples consistently applied, as audited by an independent certified public accountant.
“Bond Proceeds ” mean s proceeds from 2010 taxable tax allocation housing bonds, which bonds were issued on or about October 2010, by the former Fullerton Redevelopment Agency. The Bond Proceeds are expressly stated to be for the following uses: (i) to pay the costs of issuing the bonds; (ii) to fund a debt service reserve account for the bonds; and (iii) to improve or increase the supply of low and moderate income housing in the City of Fullerton.
“Building Permit ” means all permits issued by the Cit y and required for commencement of construction of the Project.
“CEQA” means the California Environmental Quality Act, Public Resources Code Section 21000, et seq.
“CEQA Claims” means any appeals or protests (including litigation) taken or filed with respect to City’s (or the Fullerton Planning Commission’s, as applicable) findings, determinations, and/or certifications pursuant to CEQA in connection with City’s approval of this Agreement and in connection with the City’s approval, conditional approval, or denial, of the Land Use Entitlements.
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“City” means the City of Fullerton.
“City Bond Loan” has the meaning set forth in Section 5.2 of this Agreement. “City Bond Loan Deed of Trust” means a deed of trust substantially in the form attached hereto and incorporated herein as Attachment No. 8 A, to be executed by Developer pursuant to Section 6.2(s) in order to secure repayment of the City Bond Loan Note.
“City Bond Loan Note” means a promissory note substantially in the form attached hereto and incorporated herein as Attachment No. 7 A, to be executed by Developer in favor of City to evidence the obligation of Developer to repay the City Bond Loan.
“City HOME Loan Agreement” means that certain Affordable Housing and Loan Agreement (HOME Funds) to be entered into by and between City and Developer as a condition to closing.
“City HOME Loan” means the loan of HOME Investment Partnership Act (“HOME”) program funds City has agreed to loan to Developer pursuant to the City HOME Loan Agreement.
“City Land Loan Deed of Trust” means a deed of trust substantially in the form attached hereto and incorporated herein as Attachment No. 8 B, to be executed by Developer pursuant to Section 6.2(s) in order to secure repayment of the City Land Loan Note.
“City Land Loan Note” means a promissory note substantially in the form attached hereto and incorporated herein as Attachment No. 7 B, to be executed by Developer in favor of City to evidence the obligation of Developer to repay the City Land Loan.
“City/Lender Subordination Agreement” means, with respect to the Closing, (i) a subordination agreement between City and the Construction Lender, pursuant to which City agrees to subordinate the City Loans to the Construction Loan Security Documents, and the Construction Lender agrees to subordinate the Construction Loan Security Documents to the City Regulatory Agreement and, with respect to the closing of the Take- Out Loan at conversion, (ii) a subordination agreement between City and the Take-Out Lender, pursuant to which City agrees to subordinate the City Loans to the documents securing the Take -Out Loan, and the Ta ke-Out Lender agrees to subordinate the documents securing the Take-Out Loan to the City Regulatory Agreement. “City Loans” means, collectively, the City Bond Loan and City Land Loan. “City Manager” means the person duly appointed to the position of City Manager, or his or her designee. The City Manager shall represent City in all matters pertaining to this Agreement. Whenever a reference is made herein to an action or approval to be
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undertaken by City, the City Manager is authorized to act unless this Agreement specifically provides otherwise or the context should otherwise require. “City Notes” means, collectively, the City Bond Loan Note and City Land Loan Note.
“City Regulatory Agreement” means a regulatory agreement substantially in the form attached hereto and incorporated herein as Attachment No. 10, which will establish certain restrictive covenants against the Property.
“City Title Policies” has the meaning set forth in Section 6.2(t) of this Agreement. “Closing” means the close of the Escrow pursuant to which City shall convey the Property to Developer and Developer shall close on all of its construction financing. “Closing Date” means the date that the Grant Deed is recorded in the Official Records, which shall occur, if at all, no later than the Outside Closing Date. “Construction Contract ” has the meaning set forth in Section 6.2(g) of this Agreement.
“Construction Lender ” means the first trust deed lender that provides the Construction Loan to Developer to finance the Project through the construction period (e.g., until a “conversion date”). The Construction Lender may or may not also be the Take-Out Lender. The Construction Lender shall be an Institutional Lender. “Construction Loan” means the construction loan for the Project, which shall be in the approximate amount of Thirty Million Seven Hundred Fifty Thousand Dollars ($30,750,000). The Construction Loan is secured by the Construction Loan Security Documents.
“Construction Loan Security Documents ” means the documents and instruments required by the Construction Lender to secure the Construction Loan. “County” means the County of Orange, California.
“Conversion Date” has the meaning set forth in the Construction Loan Security Documents, or, if such term is not defined therein, means the date the Construction Loan converts from a construction loan to a permanent loan.
“Developer” has the meaning set forth in the opening paragraph of this Agreement.
“Developer Title Policy ” has the meaning set forth in Section 6.3(g) of this Agreement.
“Escrow” means the escrow through which the Closing is conducted.
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“Escrow Holder” means Fidelity National Title , with its offices located at 555 S Flower Street, Suite 4420 , Los Angeles, CA 90071 , or such other escrow company as may be agreed to by Developer and the City Manager.
“Event of Default” has the meaning set forth in Section 12.1 of this Agreement. “Final Construction Documents ” means the final plans, drawings and specifications upon which the Building Permit is issued. “FIRPTA Affidavit” means and refers to an affidavit complying with Section 1445 of the United States Internal Revenue Code (“IRC 1445”) evidencing that neither Developer nor Escrow Holder is required to withhold City’s closing funds pursuant to IRC 1445.
“Form 593” means and refers to a California Franchise Tax Board Form 593 -W evidencing that neither Developer nor Escrow Holder is required to withhold City’s closing funds pursuant to California Revenue and Taxation Code Section 18662e). “General Contractor ” has the meaning set forth in Section 6.2(f) of this Agreement.
“Governmental Requirements ” means all laws, ordinances, statutes, codes, rules, regulations, requirements, orders and decrees, of the United States, the State of California, the County of Orange, City, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, Developer, the Property, and/or the Project.
“Grant Deed” means a grant deed substantially in the form attached hereto and incorporated herein as Attachment No. 5, by which City will transfer fee title to the Property to Developer at the Closing.
“Hazardous Materials ” means any substance, material, or waste which is or becomes regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a “hazardous waste”, “acutely hazardous waste”, “extremely hazardous waste”, or “restricted hazardous waste” under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter
6.5 (Hazardous Wa ste Control Law), (ii) defined as a “hazardous substance ” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a “hazardous material”, “hazardous substance”, or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a “hazardous substance” under Section 25281 of the Califor nia Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) polychlorinated biphenyls, (viii) listed under Article 9 or defined as “hazardous” or “extremely hazardous ” pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20, (ix) designated as “hazardous substances” pursuant to Section
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311 of the Clean Water Act (33 U.S.C. Section 1317), (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. (42 U.S.C. Section 6903), (xi) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (xii) methyl -tertiary butyl ether, (xiii) perchlorate or (xiv) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment. For purposes hereof, “Hazardous Materials” excludes materials and substances in quantities as are commonly used in the construction and operation of an apartment complex, provided that such materials and substances are used in accordance with all applicable laws. “HCD” means the California Department of Housing and Community Development.
“HUD” means the United States Department of Housing and Urban Development. “Indemnitees” means City and City’s officers, officials, members, employees, representatives, agents and volunteers.
“Institutional Lender” means any of the following institutions having assets or deposits in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California chartered bank; a bank created and operated under and pursuant to the laws of the United States of America; an “incorporated admitted insurer” (as that term is used in Section 1100.1 of the California Insurance Code); a “foreign (other state) bank” (as that term is defined in Section 1700(1) of the California Financial Code); a federal savings and loan association (Cal. Fin. Code Section 8600); a commercial finance lender (within the meaning of Sections 2600 et seq. of the California Financial Code) ; a “foreign (other nation) bank ” provided it is licensed to maintain an office in California, is licensed or otherwise authorized by another state to maintain an agency or branch office in that state, or maintains a federal agency or federal branch in any state (Section 1716 of the California Financial Code); a bank holding company or a subsidiary of a bank holding company which is not a bank (Section 3707 of the California Financial Code); a trust company, savings and loan association, insurance company, investment banker; college or university; pension or retirement fund or system, either governmental or private, or any pension or retirement fund or system of which any of the foregoing shall be trustee, provided the same be organized under the laws of the United States or of any state thereof; and a Real Estate Investment Trust, as defined in Section 856 of the Internal Revenue Code of 1986, as amended, provided such trust is listed on either the American Stock Exchange or the New York Stock Exchange.
“Investor” means the limited partner of the Partnership. “Land Use Entitlements ” means all of the discretionary and/or ministerial governmental permits necessary to allow Developer to develop the Project in the manner required by this Agreement including, without limitation, a Major Site Plan, General Plan
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Revision, Zoning Amendment, and Initial Study/Mitigated Negative Declaration . Prior to the Effective Date , Developer submit ted to City and process ed an application or applications for and obtained the Land Use Entitlements. “Land Use Entitlement Approval Date” means the date that all of the Land Use Entitlements have been approved by each required governmental agency with jurisdiction over the Property and/or the construction of the Project, and all appeal and protest periods have expired with no appeals or protests (including litigation) taken or filed (“ Land Use Entitlement Claims”), or, if any are so taken or filed, then upon the resolution of the Land Use Entitlement Claims upon terms acceptable to each of City and Developer, in their respective sole and absolute discretion.
“Management Agreement” has the meaning set forth in Section 6.2(p) of this Agreement.
“Notice of Affordability” means a Notice of Affordability Restrictions on Transfer of Property substantially in the form attached hereto and incorporated herein as Attachment No. 1 1, to be executed by City and Developer and recorded in the Official Records to notify members of the public regarding the affordability restrictions for the Project.
“Notices” has the meaning set forth in Section 13 of this Agreement. “Official Records” means the Official Records of the County. “Outside Closing Date” ” means the date that is one hundred eighty (180) days after Developer receives a reservation of an allocation of Tax Credits. “Partnership Agreement” means the agreement that sets forth the terms of the limited partnership established by Developer to develop and operate the Project, as such agreement may be amended from time to time (so long as any and all amendments that materially affect the cash flow priorities are consistent with this Agreement and subject to prior submissions to the City Manager for review and approval (which approval shall not be unreasonably withheld or delayed)). The Partnership Agreement shall include provisions which incorporate, defer to or otherwise substantially conform to the cash flow priorities set forth in the City Notes.
“Permitted Transfer” means and refers to any of the following types of Transfer, where the Person to which such Transfer is made, acquires the Property or a portion thereof and expressly assumes the obligations of Developer under this Agreement with respect to the Property so Transferred in a written instrument satisfactory to City or acquires an equity interest in Developer:
(a) the conveyance or dedication of any portion of the Property to City, or other appropriate governmental agency, including public utilities, where the granting of such conveyance or easement permits or facilitates the development of the Project on the Property;
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(b) the transfer of the Project and Property to an Affiliate of Developer; (c) the transfer of the Project and Property to a limited partnership in which Developer or an Affiliate of Developer is a general partner or to a limited liability company in which Developer or an Affiliate of Developer is the managing member; (d) during the time Developer is in the form of a limited partnership, the transfer of the limited partner interests in Developer to an Affiliate of Developer; (e) any mortgage, deed of trust, sale and leaseback, or other form of conveyance required for any reasonable method of financing or refinancing the development of the Project on the Property that is contemplated in the Project Budget or has otherwise been approved, in writin g, by the City Manager, including all direct and indirect costs related thereto, and any refinancing of such mortgage, deed of trust, sale and leaseback, or other form of conveyance provided such refinancing has been approved, in writing, by the City Manager;
(f) transfer of title to the Property and Project in connection with a foreclosure, a deed in lieu of foreclosure, or similar conversion of such mortgage, deed of trust, sale and leaseback, or other form of conveyance referenced in clause (e) above; (g) transfers resulting from the death or mental or physical incapacity of an individual;
(h) transfers in trust for the benefit of a spouse, children, grandchildren, or other family member, or for charitable purposes;
(i) transfers of stock in a publicly -held corporation or of the beneficial interest in any publicly-held partnership or real estate investment trust; (j) during the time Developer is in the form of a limited partnership, the admission of the Investor as an up to 99.99% Tax Credit limited partner; (k) during the time Developer is in the form of a limited partnership, the transfer of limited partnership interests by the Investor to an affiliate of the Investor; (m) during the time Developer is in the form of a limited partnership, the removal by the Investor of one or more general partner for a default under the Partnership Agreement; provided, however, that if the replacement General Partner is not an Affiliate of the Investor, the replacement general partner must be reasonably satisfactory to City; (n) the transfer of all or any part of the Project or Property after expiration of the fifteen (15) year compliance period to a general partner of Developer pursuant to a purchase option entered into in accordance with the Partnership Agreement; and (o) Developer’s “resyndication,” or application for a new allocation of Tax Credits, for the Project at any time after expiration of the fifteen (15) year compliance period, provided that Developer has, prior to such time, prepared and submitted to City, a nd the
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City Council of City has approved, a capital needs assessment for the Project which demonstrates the need for capital repairs estimated to cost more than the funds available in the “Capital Replacement Reserve” (as that term is defined in the City R egulatory Agreement).
“Person” means and refers to 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. “Project” means Developer ’s construction of a n affordable rental housing development consisting of sixty-five (65) residential dwelling units and all required on-site improvements necessary to serve the development in accordance with this Agreemen t, including, without limitation, in accordance with the Scope of Development, the Land Use Entitlements, and the Final Construction Documents. The Project is depicted in the Site Plan.
“Project Architect” means Studio 111 or such other architect or architectural firm as may be approved by the City Manager.
“Project Budget ” means that certain budget attached hereto and incorporated herein as Attachment No. 9.
“Project Costs” means all costs of any nature incurred in connection with the planning, design, and development of the Project.
“Project Financing” has the meaning set forth in Section 5.1 of this Agreement. “Property” has the meaning set forth in Recital F of this Agreement. “Purchase Price” means the purchase price to be paid by Developer to City for the purchase of the Property. The Purchase Price is Ten Million Seven Hundred Thousand Dollars ($10,700,000).
“Release of Construction Covenants” means a release document substantially in the form attached hereto and incorporated herein as Attachment No. 13, to be executed by City and recorded in the Official Records upon Developer’s completion of the Project, as described in Section 9.17.
“Request for Notice ” has the meaning set forth in Section 6.2(r) of this Agreement
“Schedule of Performance ” means the Schedule of Performance attached hereto and incorporated herein as Attachment No. 3. The Schedule of Performance sets forth the times by which the Parties are required to perform certain obligations set forth in this Agreement.
“Scope of Development” means the Scope of Development attached hereto and incorporated herein as Attachment No. 4.
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“Sources and Uses of Funds Statement ” means the Sources and Uses of Funds statement attached to the Project Budget.
“Site Plan ” means the site plan attached hereto and incorporated herein as Attachment No. 2A.
“Take-Out Lender” means the institution that makes the Take -Out Loan. The Take-Out Lender may or may not also be the Construction Lender. The Take-Out Lender shall be an Institutional Lender.
“Take-Out Loan ” means permanent financing to be obtained by Developer in order to take out the Construction Loan.
“Tax Credits” has the meaning set forth in Section 5.1(b) of this Agreement. “Tax Credit Program ” means the low -income housing tax credit program authorized pursuant to Internal Revenue Code Section 42, California Health and Safety Code Sections 50199.6 -50199.19, Revenue and Taxation Code Sections 17057.5, 17058, 23610.4, 23610.5, and applicable federal and State regulatio ns such as 4 California Code of Regulations Sections 10300-10340.
“TCAC” means the California Tax Credit Allocation Committee. “Title Company” means Fidelity National Title , with its offices located at 555 S Flower Street, Suite 4420, Los Angeles, CA 90071, or such other title insurance company as may be agreed to by Developer and the City Manager.
“Transfer” means and refers to any of the following:
(a) Any total or partial sale, assignment, conveyance, trust, power, or transfer in any other mode or form, by Developer of more than a 49% interest in Developer’s interest in this Agreement, the Property, or the Project or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest in Developer’s interest in this Agreement, the Property, or the Project; or (b) Any total or partial sale, assignment, conveyance, or transfer in any other mode or fo rm, of or with respect to any interest in Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest in any interest in Developer; or
(c) Any merger, consolidation, sale or lea se of all or substantially all of the assets of Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest of all or substantially all of the assets of Developer; or
(d) The recordation of any deed of trust, mortgage, lien or similar encumbrance against all or any portion of the Property or the Project other than a loan that has been approved by City pursuant to the terms of this Agreement.
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2. PARTIES
2.1 City. City is the City of Fullerton, a California municipal corporation , organized and existing pursuant to and under the general laws of the State of California.
2.2 Developer. Developer is Meta Development , LLC, a California limited liability company , and any successor to its rights, powers, and responsibilities.
Developer’s principal offices are located 11150 West Olympic Blvd, Suite 620, Los Angeles, CA 90064.
3. OPENING OF ESCROW; INDEPENDENT CONTRACT CONSIDERATION Within five (5) days after the Effective Date, the Parties shall open the Escrow, by delivering a copy of this Agreement, fully executed, to Escrow Holder. Concurrently with the opening of the Escrow, Developer shall de posit with Escrow Holder the sum of One Hundred Dollars ($100) in cash or other immediately available funds (the “Independent Contract Consideration”). The Independent Contract Consideration shall be released immediately to City as consideration for City’s execution and delivery of this Agreement and Developer’s right to approve or disapprove any Developer contingencies set forth in this Agreement with respect to the Property. The Independent Contract Consideration is in all respects nonrefundable to Developer.
4. DUE DI LIGENCE PERIOD; PERMISSION TO ENTER PROPERTY; AS -IS;
PHYSICAL AND ENVIRONMENTAL CONDITION
4.1 Due Diligence Period . City represents to Developer that prior to the Effective Date, City has provided Developer with hard copies, electronic files, or other access to all reports, plans, studies and other similar records with respect to the Property (collectively, “Property Reports”) that are in City’s possession and reasonably known to City. Developer acknowledges and agrees that (i) although City has reviewed City’s real property files for Property Reports, City has not conducted a comprehensive search of all City files for Property Reports, and (ii) the Property Reports are provided for inf ormation and disclosure purposes only, without any representation or warranty . City shall permit Developer and Developer ’s representatives and agents to enter onto the Property commencing on the Effective Date and continuing for a period of ninety (9 0) days thereafter (“Due Diligence Period ”), for purposes of enabling Developer to examine, inspect, and investigate the physical and environmental condition of the Property, including any foundations, soil, subsurface soils, drainage, seismic and other geolo gical and topographical matters, location of asbestos, toxic substances, Hazardous Materials, if any, and, at Developer’s sole and absolute discretion, to enable Developer to determine whether the Property is acceptable to Developer and suitable for Develo per’s intended use; provided, however, in no event shall Developer conduct any intrusive testing procedures on the Property without the prior written consent of City, which consent may not be unreasonably withheld. Developer and Developer ’s representatives and agents shall also be entitled to enter onto the Property to conduct additional examinations and investigations at any time after expiration of the Due Diligence Period and through the Closing.
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As a condition to Developer’s entry onto the Property prior to the Closing, whether before or after the expiration of the Due Diligence Period, Developer shall provide to City a copy of all reports, studies and test results prepared by Developer’s consultants, without representation or warranty. Developer shall notify City, in writing, at least twenty-four (24) hours prior to any entry by Developer or Developer ’s representatives on the Property.
City shall have the right, but not the obligation, to accompany Developer during such investigations. As an additional condition of such entry, Developer shall (i) conduct all work or studies in a diligent, expeditious, and safe manner and not allow any dange rous or hazardous conditions to occur on the Property during or after the investigation; (ii) obtain any required governmental permits and comply with all applicable laws and governmental regulations; (iii) keep the Property free and clear of all materialmen’s liens, lis pendens and other liens arising out of the entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers ’ compensation insurance (or state approved self -insurance) for all persons entering the Property in the amounts required by the State of California; and (v) provide to City prior to initial entry a certificate of insurance evidencing that Developer and/or the persons entering the Property have procured and have in effect commercial general liability insuran ce that satisfies the requirements set forth in Section 9.8 hereof. Developer shall, in a timely manner, repair any and all damage to the Property caused by such inspections or investigations and shall indemnify, defend, and hold harmless the Indemnitees from and against any claims, liabilities, and losses arising from the entries of Developer and its representatives and agents on the Property pursuant to this Section 4.1.
Notwithstanding Developer’s right to enter the Property after expiration of the Due Diligence Period pursuant to the second sentence in the first paragraph of this Section
4.1, Developer shall notify City in writing on or before the expiration of the Due Diligence Period of Developer’s approval or disapproval of the physical and environmental condition of the Property and Developer ’s investigations with respect thereto. Developer ’s disapproval shall constitute Developer’s election to terminate this Agreement and cancel the Escrow. Developer’s failure to deliver notice to City on or before the expiration of the Due Diligence Period shall be conclusively deemed Developer’s approval thereof.
4.2 “AS-IS”. Developer acknowledges and agrees that it has been provided with copies of the Property Reports, and that Developer is purchasing the Property from City solely in reliance on its own investigation, and that no representations and/or warranties of any kind whatsoever, express or implied, have been made by City or by any of City’s officers, officials, members, employees, representatives or agents. Developer further acknowledges and agrees that Developer will be purchasing the Property in “AS IS” condition with all faults and conditions then existing in and on the Property, whether known or unknown. Notwithstanding the foregoing, City acknowledges and agrees that neither this Section 4.2, nor any other term, provision or condition of this Agreement obligates Developer, prior to the Closing, to remediate, or to incur any cost to remediate, any Hazardous Materials that were released o r existed on the Property prior to the Closing. Developer acknowledges and agrees that, as between it and City, nothing in this Agreement or in the City Regulatory Agreement shall ever be deemed, construed, or interpreted to obligate City to remediate, or to incur any expense to remediate, any
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Hazardous Materials discovered on the Property either before or after the Closing unless and until City expressly agrees to do so in writing.
4.3 Developer Indemnity and Release . Upon the Closing, Developer shall indemnify, defend, and hold the Indemnitees harmless from and against any and all claims, suits, penalties, expenses, losses, damages, attorney ’s fees, judgments, or any other action or damage of any kind or nature arising out of or related to any of the matters described in Section 4.2, except for (i) the presence on the Property or any portion thereof of Hazardous Materials placed or otherwise caused to be placed thereon by City, or (ii) any defect or adverse physical or environmental condition of the Property directly caused by City. Subject to the foregoing limitation, notwithstanding any other provision of this Agreement to the contrary, Developer ’s indemnification as set forth in this Section 4.3 shall survive any termination of this Agreement and the Closing; provided, however, that City shall cooperate, at no cost to City, in Developer’s defense under this Section 4.3.
With the exception of the presence on the Property or any portion thereof of Hazardous Materials placed or otherwise caused to be pla ced thereon by City, Developer shall be deemed conclusively to have released and discharged the Indemnitees from any and all damages, losses, demands, claims, debts, liabilities, obligations, causes of action and rights, whether known or unknown, by Develo per regarding the physical condition of the Property, including, but not limited to, the environmental condition of the Property.
Developer agrees that, with respect to the General Release contained in the immediately preceding paragraph, the general release extends to all matters regarding the Property, whether or not claimed or suspected, to and including the date of execution hereof, and constitutes a waiver of each and all the provisions of the California Civil Code § 1542, which reads as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
DEVELOPER’S INITIALS: ________ ________
Developer herein acknowledges that the effect and import of the provisions of Civil Code § 1542 have been explained to it by its own counsel. Developer understands and acknowledges the significance and the consequence of such specific waiver of unknown claims and hereby assumes full responsibility for any injuries, damages, losses or liabilities that it may hereinafter incur from the waiver of these unknown claims.
4.4 Materiality. Developer acknowledges and agrees that the defense, indemnification, protection and hold harmless obligations of Developer for the be nefit of City set forth in this Agreement are a material element of the consideration to City under
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this Agreement, and that City would not have entered into this Agreement unless Developer’s obligations were as provided for herein.
4.5 Review of Title of Property. Within thirty (30) days after the Effective Date, City shall cause the Title Company to deliver to Developer a standard preliminary title report dated no earlier than the Effective Date (the “Preliminary Title Report ”) with respect to the title to the Property, together with legible copies of the documents underlying the exceptions ( “Title Exceptions”) set forth in the Preliminary Title Report.
Developer shall have the right to approve or disapprove the Title Exceptio ns and any proposed encumbrances to the Property in the exercise of its sole discretion; provided, however, that Developer hereby approves the following Title Exceptions:
(a) The standard printed exceptions and exclusions contained in the Preliminary Title Report.
(b) The lien of any non -delinquent property taxes and assessments (to be prorated at Closing).
(d) All documents to be recorded at the Closing pursuant to this Agreement.
Developer shall have fifteen (15) days after the later of (i) the date of its receipt of the Preliminary Title Report, or (ii) the date Developer receives the documents underlying the Title Exceptions, to give written notice to City and Escrow Holder of Developer’s approval or disapproval of any of such Title Exceptions. Develo per’s failure to give written disapproval of any of the Title Exceptions in the Preliminary Title Report within such time limit shall be deemed Developer ’s approval of the Preliminary Title Report. If Developer notifies City of its disapproval of any Title Exceptions in the Preliminary Title Report, City shall have the right, but not the obligation, to remove any such disapproved Title Exceptions within thirty (30) days after receiving written notice of Developer’s disapproval or provide assurances satisfactory to Developer that such disapproved Title Exception(s) will be removed on or before the Closing. If City cannot or does not agree to remove any of the disapproved Title Exceptions before the Closing, Developer shall have fifteen (15) days after the expiration of such thirty (30) day period to either give City written notice that Developer elects to proceed w ith the purchase of the Property subject to the disapproved Title Exceptions or to give City written notice that Developer elects to terminate this Agreement. Developer ’s failure to give written notice of its election within such fifteen (15) day period sh all be deemed to be an election to proceed with the purchase of the Property subject to the disapproved Title Exceptions. The condition of title, including all of the Title Exceptions approved (or deemed approved) by Developer as provided herein shall hereinafter be referred to as the “Condition of Property Title.” From and after the Effective Date hereof, and continuing until the earlier of (i) the Closing, or (ii) termination of this Agreement, City shall not further encumber the Property with additional Title Exceptions without Developer ’s prior written consent. Developer shall have the right to approve or disapprove any further Title Exceptions reported by the Title Company after Developer has approved the Condition of Property Title (which are not
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created by Developer). Developer and the City Manager, on behalf of City, shall have the authority to extend the foregoing fifteen (15) day period by written agreement.
5. FINANCING PLAN FOR THE PROJECT
5.1 Financing Plan . It is contemplated that the Partnership (i n its role as Developer) will finance the Project (the “Project Financing”) through a combination of funds from the proceeds of the following:
(a) Construction Loan. The Construction Loan;
(b) 9% Tax Credits . E quity, consisting of equity raised by the syndication to reputable investors of 9% federal low-income housing credits and obtained pursuant to 26 U.S.C. §42 , in the anticipated amount of approximately _____________________ Dollars ($___________) (the “Tax Credits”); (c) City Loans. The City Loans, as more particularly provided in Section
5.2 below;
(d) City HOME Loan;
(e) Take-Out Loan. The Take-Out Loan; and
Notwithstanding the foregoing, Developer shall continue to pursue additional sources of funds that may be available to assist with the costs of developing the Project, including, without limitation, funds from HCD and from the Federal Home Loan Bank’s Affordable Housing Program. To the extent Developer receives funding from any such additional source, subject to TCAC consent (if such consent is required), the City Bond Loan or the City HOME Loan (as elected by City) shall be reduced on a dollar- for-dollar basis by the amount of such additional funding, unless Developer provides evidence that the full amount of the City Bond Loan or City HOME Loan (as applicable) is still required to make the Project financially feasible.
5.2 City Loans. Subject to the terms and conditions of this Agreement, City agrees to make the following loans to Developer:
(a) A loan in an amount of up to Seven Hundred Seventeen Thousand Seven Hundred Thirty -Seven Dollars and Ninety -Nine Cents ($717,737.99) (the “ City Bond Loan”). The City Bond Loan is sourced from Bond Proceeds. The City Bond Loan shall be evidenced by the City Bond Loan Note, and shall be secured by the City Bond Loan Deed of Trust.
(b) A loan in the amount of the Purchase Price (the “ City Land Loan”).
The City Land Loan shall be evidenced by the City Land Loan Note, and shall be secured by the City Land Loan Deed of Trust.
5.3 Application to TCAC . Within th e time set forth in the Schedule of Performance, Developer shall (a) prepare and submit a complete application to TCAC for
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an allocation of 9% Tax Credits; and (b) apply to reputable institutional investors and syndicators qualified to act as the Investor. If despite Developer’s diligent efforts and due to no fault of Developer , Developer does not receive an allocation of 9% Tax Credits in Developer’s first application, Developer shall be permitted to prepare a submit a second complete application to TCAC for an allocation of 9% Tax Credits in the next round of applications. If despite Developer’s diligent efforts and due to no fault of Developer, Developer does not receive an allocation of 9% Tax Credits in Developer’s second application, Developer shall be permitted to prepare a submit a third complete application to TCAC for an allocation of 9% Tax Credits. If Developer does not receive an allocation of 9% Tax Credits in Developer’s third application, either Party shall have the right to terminate this Agreement by providing a written notice of termination to the other Party.
Developer agrees to promptly submit to City all of the following documents not less than ten (10) days prior to submittal to TCAC or other applicable body or when such documents are received by Developer:
(1) A true and correct copy of the preliminary reservation letter from TCAC, a copy of the letter of intent from the Investor reflecting the total amount of the syndication proceeds and the timing of the payment of such proceeds. (2) A complete copy of the Tax Credit Regulatory Agreement (4 California Code of Regulations § 10340(c)). (As more fully discussed in Section 4.1 5 of City Regulatory Agreement, should City be prevented by a final order of a court of competent jurisdiction, applicable and binding appellate opinion, or regulatory body with jurisdiction from enforcing, for any reason, the affordability restrictions set forth in this Agreement, City shall be a third -party beneficiary under said agreement and shall have full authority to enforce any breach or default by the Partnership, in its role as Developer thereunder, in the same manner as though it were a breach or default under this Agreement.)
(3) Complete copies of all correspondence or transmittals from TCAC or other jurisdiction (such as the Internal Revenue Service) containing any notification regarding the Project’s noncompliance with applicable provisions of the Tax Credit Program.
5.4 Project Budget . The Project Budget includes all of the following: (i) a detailed budget; (ii) a Sources and Uses of Funds Statement; (iii) a cash flow projection; and (iv) a first year operating budget.
5.5 Developer Submittals.
Promptly upon Developer’s receipt of a notification of an award of any of the financing described in the Project Budget, Developer shall submit to the City Manager copies of all of the corresp ondence and other documentation received by Developer in connection with the same.
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Within five (5) days after the Effective Date, Developer shall provide to City a copy of Developer’s most recently prepared Annual Financial Statement, and a copy of Developer’s most recent internally prepared, unaudited financial statement, which shall include a balance sheet, income statement, statement of retained earnings, statement of cash flows, and footnotes thereto, prepared in accordance with generally accepted accounting principles consistently applied.
5.6 Financing Commitments. Not later than the time provided in the Schedule of Performance, Developer shall submit to the City Manager preliminary commitments obtained by Developer for the Project Financing from reputable entities on commercially reasonable terms.
5.7 Disbursement of City Bond Loan. With the exception of the sum of Seventy- One Thousand Seven Hundred Seventy -Four Dollars ($71,774) (the “ Retention Amount”) The proceeds of the City Bond Loan shall be disbursed pursuant to the process set forth in this Section 5.7 . Concurrently with or following the Closing, Developer may request a disbursement of the proceeds of the City Bond Loan by submitt ing to City (i) a disbursement request in a form reasonably acceptable to City, (ii) written evidence of previously paid invoices, such as receipts from the vendor and written evidence that the invoices and receipts are for actual development costs that have been incurred as a result of development of the Project, and (iii) conditional lien releases (to the extent such disbursement relates to hard costs of construction) covering the work to be reimbursed or paid. Within thirty (30) days after City's receipt o f a complete disbursement request, City shall disburse the amount requested . The Retention Amount shall be disbursed to Developer when City issues a Release of Construction Covenants to Developer.
6. DISPOSITION OF PROPERTY
6.1 Agreement to Sell Property to Developer. City, subject to the conditions set forth in Section 6.2 below, agrees to sell the Property to Developer, and Developer, subject to the conditions set forth in Section 6.3 below, agrees to purchase the Property from City. Subject to each Party’s reserved rights hereunder, the Parties shall cooperate with one another and shall exercise commercially reasonable diligence in an effort to ensure that the conditions precedent set forth in Sections 6.2 and 6.3 are timely satisfied.
6.2 Conditions for City’s Benefit . City’s obligation to sell and convey the Property to Developer shall be subject to satisfaction of all of the following conditions precedent or City’s written waiver of such conditions precedent in its sole and absolute discretion:
(a) Organizational Documents. The City Manager shall have received and approved a copy of such portions of the organizational documents of Developer or Developer’s successor-in-interest as the City Manager deems reasonably necessary to document the power and authority of Developer to perform its obligations set forth in this Agreement. Developer shall have made full disclosure to City of the names and addresses of all persons and entities that have a beneficial interest in Developer.
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(b) Insurance. Developer shall have submitted to City and City shall have approved Developer ’s evidence of the liability insurance required pursuant to Section 9.8 hereof.
(c) Lot Line Adjustment. Developer and City shall have processed a lot line adjustment establishing the Property as a legal parcel. (d) Partnership Agreement. Developer shall have submitted to City and City shall have approved the Partnership Agreement
(e) Evidence of Project Financing . Developer shall have received a reservation of Tax Credits, and th e City Manager shall have received and reasonably approved commitments from all Project Financing sources, as evidenced by letters of commitment and/or true and complete copies of loan documents, and such financing shall be prepared to close concurrently with the Closing . The City Manager shall be required to approve any such commitments provided they are from reputable entities on commercially reasonable terms.
(f) General Contractor . The general contractor for th e Project (the “General Contractor”) shall have been approved by the City Manager, which approval shall not be unreasonably withheld . City hereby approves ______________________. as the General Contractor.
(g) Construction Contract. City shall have received a true and complete copy of a contract by and between Developer and the General Contractor pursuant to which the General Contractor has agreed to construct the Project at a cost consistent with the costs set forth therefor in the Project Budget (the “ Construction Contract”) and the City Manager shall have reasonably approved said Construction Contract. (h) Final Construction Documents . City shall have approved the Final Construction Documents for the Project and City shall have received a full set thereof. (i) Completion Bond. If the Construction Lender or the Investor require that a completion bond be posted by the General Contractor, then such completion bond shall name City as a co-obligee.
(j) Completion Guaranty . If the Construction Lender or the Investor require a completion guaranty from Developer, or any Affiliate thereof, then City shall have also received a completion guaranty from Developer in similar form and content. (k) Building Permit. The Building Permit for the Project shall have issued or shall be ready to issue subject only to the payment of applicable fees, the posting of required security, or both.
(l) Construction to Commence. The City Manager shall be reasonably satisfied that construction of the Project will commence not later than thirty (30) days after the Closing and thereafter will be pursued to completion in a diligent and continuous manner.
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(m) Assignment of Final Construction Documents. Developer shall have conditionally assigned to City (to be effective as of the Closing) the Final Constructi on Documents for the Project by an instrument substantially in the form attached hereto and incorporated herein as Attachment No. 6, which assignment shall be subordinated to any pledge or assignment to the Construction Lender. Developer shall have also delivered to City the written consent of the other party to each such Final Construction Document to said assignment in the form included as part of said Attachment No. 6, including, without limitation, to the use by City of the Final Construction Documents , as well as the ideas, designs, and concepts contained within them.
(n) Assignment of Construction Contract . Developer shall have conditionally assigned to City (to be effective as of the Closing) the Construction Contract by an instrument substantially in t he form attached hereto and incorporated herein as Attachment No. 6 , including obtaining the consent thereto of the General Contractor, which assignment shall be subordinated to any pledge or assignment to the Construction Lender.
(o) Management Plan . Developer shall have submitted a comprehensive management plan for the Project to the City Manager in accordance with Section 7 of the City Regulatory Agreement and the City Manager shall have reasonably approved the same.
(p) Management Agreement . Developer shall h ave submitted an executed agreement by and between Developer and a property manager approved by City for management of the Project (the “Management Agreement”), which Management Agreement shall be consistent with this Agreement and the requirements of Sect ion 7 of the City Regulatory Agreement, and the City Manager shall have reasonably approved the same.
(q) Resident Services Plan. Developer shall have submitted a detailed resident services plan for the Project to the City Manager , including any specialized supportive services to be provided to targeted populations, if applicable, and the City Manager shall have reasonably approved the same.
(r) Request for Notice of Default . Escrow Holder shall be ready to record a request for notice of default pursuant to Civil Code Section 2924(b), requesting that any beneficiaries of liens securing the Project Financing notify City of any default under the instrument creating the lien (the “Request for Notice”). (s) Documents Executed. Developer shall have duly executed the Grant Deed, the City Bond Loan Note, the City Bond Loan Deed of Trust, the City Land Loan Note, the City Land Loan Deed of Trust, the City Regulatory Agreement, and the Notice of Affordability, with signatures acknowledged (as appli cable), and all of the foregoing documents shall have been deposited into the Escrow.
(t) City Title Policies. Title Company is prepared to issue:
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(i) a lender’s policy of title insurance naming City as the insured, in a policy amount not less than the principal amount of City Bond Loan, showing Developer as holding fee title to the Property and insuring the City Bond Loan Deed of Trust to be a valid lien on the Property subject only to exceptions approved by City (the “City Bond Loan Title Policy”); and
(ii) a lender’s policy of title insurance naming City as the insured, in a policy amount not less than the principal amount of City Land Loan, showing Develop er as holding fee title to the Property and insuring the City Land Loan Deed of Trust to be a valid lien on the Property subject only to exceptions approved by City (the “ City Land Loan Title Policy,” and collectively with the City Bond Loan Title Policy, the “City Title Policies.” (u) Total Project Cost . Nothing shall have come to the attention of Developer and/or City to indicate that the Project cannot be completed at a cost consistent with the Project Budget and, if there has been such an indication, Developer has provided evidence, reasonably satisfactory to the City Manager , of the availability of funding sources other than City to complete the Project. If Developer becomes aware of any such information, Developer shall promptly give notice thereof to City. (v) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the Close of Escrow as though made on and as of that date and, if requested by the City Manager, City shall have received a certificate to that effect signed by Developer. (w) Settlement Statement . City shall have reasonably approved the Escrow Holder’s final estimated closing/settlement statement. (x) Delivery by Developer. Developer shall have deposited all of the items into the Escrow required by Section 7.1.
(y) Performance by Developer. Developer shall have performed all of its material obligations required to be performed by Developer under this Agreement prior to the Closing; and is not in default of any of its obligations under this Agreement. (z) Closing Under City HOME Loan Agreement. All conditions to closing in favor of City under the City HOME Loan Agreement shall have been satisfied, or waived by City, and the closing thereunder shall have occurred or shall occur concurrently with the Closing hereunder.
(aa) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the Closing as though made on and as of that date and, if requested by the City Manager, City shall have received a certificate to that effect signed by Developer.
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(bb) No Default. No Event of Default by Developer shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer and, if requested by the City Manager, City shall have received a certificate to that effect signed by Developer.
6.3 Conditions for Developer’s Benefit. Developer’s obligation to purchase the Property from City shall be subject to satisfaction of all of the following conditions precedent or Developer’s written waiver of such conditions precedent in its sole and absolute discretion:
(a) Land Use Entitlements . The Land Use Entitlement Approval Date shall have occurred.
(b) Lot Line Adjustment. Developer and City shall have processed a lot line adjustment establishing the Property as a legal parcel. (c) Condition of Property. Developer shall have approved, or have been deemed to have approved, the condition of the Property, in accordance with Section 4.1, and no material changes shall have occurred after the Effective Date with respect to the condition of the Property.
(d) Evidence of Project Financing . The Developer shall have received commitments for the Construction Loan, Tax Credit Financing, and Take-Out Loan in form and substance acceptable to the Developer, and the Construction Loan and Tax Credit financing shall close concurrently with the Closing.
(e) Total Project Cost . Nothing shall have come to the attention of Developer and/or City to indicate that the Project cannot be completed at a cost consistent with the Project Budget and, if there has been such an indication, Developer has provided evidence, reasonably satisfactory to the Plannin g Director, of the availability of funding sources other than City to complete the Project.
(f) Building Permit. The Building Permit for the Project shall have issued or shall be ready to issue subject only to the payment of applicable fees, the posting of required security, or both.
(g) Title Insurance . The Title Company shall be unconditionally committed to issue its ALTA owner’s form policy of title insurance, with liability in the amount not less than the total of the equity raised from the sale of the Tax Credits plus the principal amounts of the Take -Out Loan and County Loan, showing fee title to the Property vested in Developer, in the Condition of Property Title, with no other encumbrances or title exceptions, except (i) the documents being recorded at the Close of Escrow pursuant to the terms of this Agreement, (i i) the lien of the Construction Loan Security Documents, and ( iii) the standard conditions and exceptions contained in an ALTA standard owner ’s policy of title insurance that is regularly issued by the Title Company in transactions similar to the one contemplated by this Agreement (the “Developer Title Policy”). The Title Company shall provide City with a copy of Developer Title Policy.
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(h) No Termination. Developer shall not have timely elected to terminate the Escrow and this Agreement pursuant to the provisions in Section 4.1. (i) Land Use Entitlement Approval Date . The occurrence of the Land Use Entitlement Approval Date.
(j) Delivery by City. City shall have deposited all of the items into the Escrow required by Section 7.2.
(k) Settlement Statement. Developer shall have reasonably approved the Escrow Holder’s final estimated closing/settlement statement. (l) Performance by City. City shall have performed all of its material obligations required to be performed by City under this Agreement prior to the Closing; and is not in default of any of its obligations under this Agreement. (m) Closing Under City HOME Loan Agreement. All conditions to closing in favor of Developer under the City HOME Loan Agreement shall have been satisfied, or waived by Developer, and the closing thereun der shall have occurred or shall occur concurrently with the Closing hereunder.
(n) No Default. No Event of Default by City shall then exist, and no event shall then exist which, with only the giving of notice or the passage of time or both, would constitute an Event of Default by City.
6.4 Developer Right to Terminate . If, by the time provided in the Schedule of Performance, any of the c onditions set forth in Section 6 .3 have not been satisfied, or waived by Developer, then Developer, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section 12.1), may terminate this Agreement by giving thirty (30) days’ written notice to City.
6.5 City Right to Terminate . If, by the time provided in the Schedule of Performance, any of the conditions set forth in Section 6.2 have not been satisfied, or waived by City, then City, provid ed that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section 12.1), may terminate this Agreement by giving thirty (30) days’ written notice to Developer.
6.6 Waiver of Conditions. The conditions set forth in Section 6.2 are for City’s benefit only and the City Manager may waive all or any part of such rights by written notice to Developer. The conditions set forth in Section 6.3 are for Developer’s benefit only and Developer may waive all or any part of such rights by written notice to City.
7. CLOSING; ESCROW EXPENSES
7.1 Developer’s Escrow Deposits . Following satisfaction or waiver of each of Developer’s conditions to the Closing set forth in Section 6.3, at least three (3) business days prior to the Closing Date scheduled by the Escrow Holder in a writing delivered to
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each of the Parties, Developer shall deposit the following funds and documents into the Escrow and, concurrently, provide a copy of each such document to City:
(a) Closing Funds. Any funds required to be deposited into the Escrow by Developer under the terms of this Agreement to close the Escrow, all in immediately available funds;
(b) Closing Documents . The Grant Deed, City Bond Loan Note, City Bond Loan Deed of Trust, City Land Loan Note, City Land Loan Deed of Trust, City Regulatory Agreement, Notice of Affordability, and City/Lender Subordination Agreement, with signatures acknowledged (as applicable); and
(c) PCO Report. A Preliminary Change of Ownership Report executed by the authorized representative(s) of Developer (“PCO Report”).
7.2 City’s Escrow Deposits . Following satisfaction or waiver of each of City’s conditions to Clos ing set forth in Section 6.2, at least one (1) business day prior to the Closing Date scheduled by the Escrow Holder in a writing delivered to each of the Parties, City shall deposit the following funds and documents into the Escrow and, concurrently, provide a copy of each such document to Developer:
(a) Closing Documents. The Grant Deed, City Regulatory Agreement, Notice of Affordability, and City/Lender Subordination Agreement , with signatures acknowledged (as applicable);
(b) FIRPTA Affidavit. The FIRPTA Affidavit completed and executed by the authorized representative( s) of City; and
(c) Form 593. A Form 593 executed by the authorized representative(s) of City.
7.3 Closing. Upon receipt by the Escrow Holder of all funds and documents required to conduct the Closing in accordance with this Agreement, and when the conditions precedent described in Section 6.2 have been satisfied, or waived by the City Manager, and the conditions precedent described in Section 6.3 have been satisfied, or waived by Developer, the Escrow Holder shall insert the Closing Date into the Grant Deed, City Bond Loan Deed of Trust, City Regulatory Agreement, Notice of Affordability, and City/Lender Subordination Agreement and any other documents Escrow Holder has received from City or Developer as appropriate, and take all of the following actions:
(a) Recordation. Escrow Holder shall file the PCO Report with the County Recorder of Orange County and record the following documents in the Official Records in the following order:
(i) the Grant Deed;
(ii) the City Regulatory Agreement;
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(iii) the Construction Loan Security Documents;
(iv) the City Bond Loan Deed of Trust;
(v) the Request for Notice;
(vi) one or more (as applicable) t he City/Lender
Subordination Agreements;
(vii) the Notice of Affordability; and
(viii) such other documents required to close the Escrow in accordance with this Agreement;
(b) Deliveries to City. Escrow Holder shall deliver to City:
(i) a conformed copy of each of the documents
recorded pursuant to paragraph (a) above; and
(ii) the City Title Policies.
(c) Deliveries to Developer. Escrow Holder shall deliver to Developer:
(i) Developer Title Policy;
(ii) The FIRPTA Report;
(iii) The Form 593; and
(iv) a conformed copy of each of the documents recorded pursuant to paragraph (a) above.
7.4 Closing. The Closing shall occur on or before the Outside Closing Date. If for any reason the Closing has not occurred on or before the Outside Closing Date, then any Party not then in default of this Agreement may cancel the Escrow and terminate this Agreement, without liability to the other Party or any other person for such cancellation and termination, by delivering written notice of termination to both the other Party and the Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section 7.5. Without limiting the right of either Party to cancel the Escrow and terminate this Agreement pursuant to the preceding sentence, if the Escrow does not close on or before the Outside Closing Date, and neither Party has exercised its contractual right to c ancel the Escrow and terminate this Agreement before such time, then the Escrow shall close as soon as reasonably possible following the first date on which the Escrow Holder is in a position to close the Escrow, pursuant to the terms and conditions of this Agreement.
7.5 Escrow Cancellation Charges . If the Escrow fails to close due to City’s material default under this Agreement, City shall pay all ordinary and reasonable cancellation charges relating to the Escrow and the Developer Title Policy. If the Escrow
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fails to close due to Developer’s material default under this Agreement, or for any reason other than the material default of City, Developer shall pay all ordinary and reasonable cancellation charges relating to the Escrow and the Developer Title Policy.
7.6 Escrow Cancellation . If the Escrow is cancelled and this Agreement is terminated pursuant to a contractual right granted to a Party in this Agreement to cancel the Escrow and terminate this Agreement, other than due to the default of another Party, the Parties shall do each of the following:
(a) Cancellation Instructions. The Parties shall, within three (3) business days following receipt of the Escrow Holder’s written request, execute any reasonable Escrow cancellation instructions requested by the Escrow Holder; (b) Return of Funds and Documents . Within ten (10) days following receipt by the Parties of a settlement statement from the Escrow Holder of cancellation charges regarding the Escrow, and the Developer Title Policy, if any: (i) Developer or the Escrow Holder shall return to City any documents previously delivered by City to Developer or the Escrow Holder regarding the Escrow, (ii) City or the Escrow Holder shall return to Developer all documents previously delivered by Developer to City or the Escrow Holder regarding the Escrow; and (iii) the Escrow Holder shall return to Developer any funds deposited into the Escrow, except as otherwis e provided in this Agreement, less the customary and reasonable Escrow and title order cancellation charges regarding the Escrow and the Developer Title Policy, if any.
7.7 Land Use Entitlement Claims; CEQA Claims. If any Land Use Entitlement Claims and/or CEQA Claims are taken or filed, then Developer shall have the right to elect to either defend the same or not defend the same, at Developer’s cost, including, without limitation, all of the court costs, attorney fees, 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 .
If Developer elects to so defend the same, then Developer shall appoint counsel and direct strategy ; provided, however, that such counsel shall be acceptable to City. If Developer elects not to so defend, then either City or Developer shall have the right to terminate this Agreement.
7.8 Escrow Closing Costs . Developer shall pay any and all documentary transfer taxes and recording fees, and Developer and City shall each pay half of the Escrow fees and such other costs as the Escrow Holder may charge for the conduct of the Escrow. The Escrow Holder shall notify Developer and City of the costs to be borne by each of Developer and City at the Close of Escrow by delivering the Escrow Holder’s estimated closing/settlement statement to both City and Developer, at least, four (4) business days prior to the Closing Date. City shall pay the premium charged by the Title Company for the Developer Title Policy, with standard coverage; provided, however, that Developer shall pay the costs of any endorsements or other supplements to the coverage of the Developer Title Policy that may be requested by Developer, including the additional cost for extended ALTA coverage, if such coverage is elected by Developer.
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7.9 Instruction to Escrow Holder Regarding Waiver of Transfer Taxes and Recording Fees . The Escrow Holder is hereby instructed to seek such waivers and exemptions from transfer taxes and recording fees as are available pursuant to Revenue and Taxation Code Section 11922 and Government Code Sections 6103 and 27383, respectively.
7.10 Broker’s Commissions . Developer represents and warrants to City that Developer has not engaged any broker, agent or finder in connection with this Agreement, and Developer agrees to indemnify, protect, hold harmless, and defend the Indemnitees from any claim by any brokers, agents or finders retained by Developer. City represents and warrants to Developer that City has not engaged any broker, agent, or finder in connection with this Agreement, and City agrees to indemnify, protect, hold harmless, and defend Developer and its officers, officials, members, employees, representatives, agents, and volunteers from any claim by any brokers, agents, or finders retained by City.
8. OTHER ESCROW INSTRUCTIONS
8.1 Funds in Escrow . All funds received in the Escrow shall be deposited by the Escrow Holder in a general escrow account with any state or national bank doing business in the State of California and reasonably approved by the City Manager and Developer, and such funds may be combined with other escrow funds of the Escrow Holder. All disbursements shall be made on the basis of a thirty (30) day month.
8.2 Amendments. Any amendment to these Escrow instructions shall be in writing and signed by the City Manager or legal counsel to City and Developer. At the time of any amendment, the Escrow Holder shall agree to carry out its duties as the Escrow Holder under such amendment.
8.3 Notices. All Notices from the Escrow Holder to City or Developer shall be given in the manner provided in Section 13.
8.4 Liability. The liability of the Escrow Holder unde r this Agreement is limited to performance of the obligations imposed upon it under Section 3, and Sections 6, 7 and 8 and such additional general or special instructions as may be prepared by the Escrow Holder and approved and executed by the Parties.
9. DEVELOPMENT OF THE PROJECT
9.1 Scope of Development . Developer shall construct the Project on the Property in accordance wit h all applicable Governmental Requirements, the approved Land Use Entitlements, and the Scope of Development. In the event of any conflict between the approved Land Use Entitlements and the Scope of Development, the approved Land Use Entitlements shall go vern and control. Subject to Section 1 6.12 below, Developer shall commence and complete construction of the Project on the Property by the respective times established therefor in the Schedule of Performance.
The Scope of Development shall be deemed to i nclude any plans and specifications submitted to City for approval, and shall incorporate or show compliance with all mitigation
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measures required by the Initial Study/Mitigated Negative Declaration prepared and adopted by City as part of the Land Use Entitlements.
9.2 Architectural Plans . Within the time set forth in the Schedule of Performance, Developer shall prepare or cause to be prepared and submit to City for review and approval the architectural plans and related documents for the Project, and Developer shall exercise reasonable diligence to obtain City’s approval of same. The architectural plans shall include the sizes, heights, and locations of all buildings; building elevations; construction materials; construction colors; site plan configuration/dimensions; parking; conceptual landscape and irrigation plan; and lighting concept. Developer acknowledges that notwithstanding City’s approval of the Land Use Entitlements and thi s Agreement , all design, architectural, and building plans for the Project shall be subject to the review and approval of City , which shall not be unreasonably withheld, and any other governmental agency with jurisdiction over the Property and/or Project, and that by its execution of this Agreement, City is not committing itself to or agreeing to undertake any acts or activities requiring the subsequent independent exercise of discretion by the City or any agency or department thereof.
9.3 Final Construction Dr awings. Within the time set forth in the Schedule of Performance, Developer shall submit or cause to be submitted to City for review and approval a complete set of final construction drawings, plans and specifications for the Project, in conformity with t he previously approved architectural plans. The final plans and drawings shall contain all information required to obtain a Building Permit.
9.4 Additional Governmental Permits and Approvals.
(a) Before commencement of construction or development of any buildings, structures or other works of improvement upon the Property by Developer, Developer shall, at its own expense, secure or cause to be secured any and all permits and approvals not included in the Land Use Entitlements which may be required by City or any other governmental agency affected by or with jurisdiction over such construction, development or work.
(b) The landscaping and finish grading plans shall be prepared by a professional landscape architect or registered civil engineer who may be the same firm as Developer’s architect or civil engineer. During the preparation of all drawings and plans, staff of City and Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of drawings, plans and related documents by City. The staff of City and Developer shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to City can receive prompt and speedy consideration. Developer shall be responsible to cause representatives of the Partnership to attend such meetings and participate in any such communications.
(c) Developer shall pay or cause to be paid all necessary fees and timely submit or cause to be submitted to the C ity Final Construction Documents with final corrections required by the City to obtain a Building Permit.
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9.5 Review and Approval of Plans, Drawings, and Related Documents . If City determines that any submittal by Developer is not substantially complete or not in accordance with procedures, such tender shall not be deemed to constitute a submittal for purposes of satisfying the Schedule of Performance. If Developer desires to make any substantial changes in the construction plans after their approval by City, Developer shall submit or cause to be submitted the proposed change to City for approval. If the construction plans, as modified by the proposed change, conform to the requirements of this Section 9.5, the Land Use Entitlements, the Scope of Development, and all Governmental Requirements, City shall approve the proposed change, and shall notify Developer in writing within fifteen (15) business days after submission to City. For purposes of this Section 9.5, a “substantial change” change is a change that (a) requires review by the City Building Department or other City department pursuant to standard City procedures, or (b) constitutes a material change in the architectural design, structural design, quality, or configuration of the improvements, or (c) would modify the number of residential units in the Project or materially change the exterior appearance of the Project, or (d) would result in an increase in the cost of construction in excess of One Hundred Thousand Dollars ($100,000) individually and in excess of Three Hundred Fifty Thousand Dollars ($350,000) in aggregate.
9.6 Cost of Development. Developer acknowledges and agrees that all Project Costs shall be borne exclusively by Developer. Developer shall also bear all costs related to discharging the duties of Developer set forth in this Agreement. Developer shall also be responsible for all fees associated with development of the Pro ject, including, but not limited to, development impact fees.
9.7 Indemnity. Developer shall defend (by counsel selected by City and reasonably satisfactory to Developer), assume all responsibility for and hold the Indemnitees harmless from all claims or suits for, and damages to, property and injuries to persons, including accidental death (including expert witness fees, attorney’s fees and costs), which may be caused by the activities or performance of Developer or any of Developer’s employees, agents, representatives, contractors, or subcontractors under or with respect to (i) this Agreement, (ii) the making of the City Loans; (iii) a claim, demand or cause of action that any person has or asserts against Developer; (iv) any act or omission of Developer, any of Developer ’s contractors, subcontractors or material suppliers, engineers, architects or other persons with respect to the Property; or (v) the ownership, occupancy or use of the Property by Developer, whether such damage shall accrue or be discover ed before or after termination of this Agreement. The obligations and indemnifications in this Section 9.7 shall constitute covenants running with the land.
9.8 Insurance Requirements.
(a) Commencing on the date of the Closing and continuing until the expiration of the City Regulatory Agreement, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the City Manager , the following policies of insurance:
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(i) Commercial General Liability Insurance covering
bodily injury, property damage, personal injury and advertising injury written on a per -occurrence and not a claims -made basis containing the following minimum limits: (i) general aggregate limit of Five Million Dollars ($ 5,000,000); (ii) products -completed operations aggregate limit of Three Million Dollars ($3,000,000); (iii) personal and advertising injury limit of Three Million Dollars ($3,000,000); and (iv) each occurrence limit of Three Million Dollars ($3,000,000). Said policy shall include the following coverages: (i) blanket contractual liability (specifically covering the indemnification clause contained in Section 9.7 hereof); (ii) products and completed operations; (iii) independent contractors; (iv) Owner ’s broad form property damage; (v) sever ability of interest; (vi) cross liability; and (vii) property damage liability arising out of the so -called “XCU” hazards (explosion, collapse and underground hazards). The policy shall be endorsed to have the general aggregate apply to this Project only.
(ii) A policy of worker’s compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for City and Developer against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by Developer in the course of carrying out the work or services contemplated in this Agreement, and Employers Liability Insurance in an amount not less than One Million Dollars ($1,000,000) combined single limit for all damages arising from each accident or occupational disease. (iii) A policy of comprehensive automobile liability
insurance written on a per-occurrence basis in an amount not less than Two Million Dollars ($2,000,000) combined single limit covering all owned, non-owned, leased and hired vehicles used in connection with the work.
(b) Commencing on the date of the Closing and continuing until City issues a Construction Covenants for the Project, Developer shall procure and maintain, at its sole cost and expense, in a form and content reasonably satisfactory to the City Manager, Builder’s Risk (course of construction) insurance coverage in an amount equal to the full cost of the hard construction costs of the Proj ect. Such insurance shall cover, at a minimum: all work, materials, and equipment to be incorporated into the Project; the Project during construction; the completed Project until such time as (i) the City issues a final certificate of occupancy , and (ii) City issues a Release of Construction Covenants, for the Project, and storage and transportation risks. Such insurance shall protect/insure the interests of Developer/owner and all of Developer’s contractor(s), and subcontractors, as each of their interests may appear. If such insurance includes an exclusion for “design error,” such exclusion shall only be for the object or portion which failed. City shall be a
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loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement.
(c) Prior to commencing any activities hereunder, Developer shall cause any general contractor with whom it has contracted for the performance of work on the Property to secure and thereafter to maintain insurance that satisfies all of t he requirements of this Section 9.8.
(d) Commencing on the date City issues a Release of Construction Covenants, and continuing until the expiration of the City Regulatory Agreement, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the City Manager, the following types of insurance:
(i) Insurance against fire, extended coverage,
vandalism, and malicious mischief, and such other additional perils, hazards, and risks as now are or may be included in the standar d “all risk” form in general use in Orange County, California, with the standard form fire insurance coverage in an amount equal to full actual replacement cost thereof, as the same may change from time to time. The above insurance policy or policies shal l include coverage for earthquakes to the extent generally and commercially available at commercially reasonable rates, if such insurance is generally obtained for affordable housing developments in Orange County. City shall be a loss payee under such pol icy or policies and such insurance shall contain a replacement cost endorsement. (ii) Business interruption and extra expense insurance to protect Developer and City covering loss of revenues and/or extra expense incurred by reason of the total or partial suspe nsion or delay of, or interruption in, the operation of the Project caused by loss or damage to, or destruction of, any part of the insurable real property structures or equipment as a result of the perils insured against under the all risk physical damage insurance, covering a period of suspension, delay or interruption of at least twelve (12) months, in an amount not less than the amount required to cover such business interruption and/or extra expense loss during such period.
(iii) Boiler and machinery insuran ce in the aggregate
amount of the full replacement value of the equipment typically covered by such insurance.
(e) The following additional requirements shall apply to all of the above policies of insurance:
(i) All of the above policies of insurance shall be primary insurance and, except the Worker ’s Compensation, Employer
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Liability insurance, and automobile liability insurance, shall name the Indemnitees as additional insureds on an ISO Form CG 20:10 (current version) or substantially similar form and not an ISO Form CG 20:09. The insurer shall waive all rights of subrogation and contribution it may have against the Indemnitees and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled w ithout providing thirty (30) days’ prior written notice to City. In the event any of said policies of insurance are cancelled, Developer shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the City Manager. Not later than the Effective Date, Developer shall provide the City Manager with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders shall be subject to the reasonable approval of the City Manager.
(ii) The policies of insurance required by this Agreement shall be satisfactory only if issued by companies of recognized good standing authorized to do business in California, rated “A-” or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the City Manager due to unique circumstances. (iii) The Developer agrees that the provisions of this Section shall not be construed as limiting in any way City’s right to indemnification or the extent to which Developer may be held responsible for the payment of damages to any persons or property resulting from Developer’s activities or the activities of any person or persons for which Developer is otherwise responsible.
9.9 Remedies for Defaults Re: Insurance . In addition to any other remedies City may have, if Developer commits a default hereunder by failing to provide or maintain any insurance policies or policy endorsements to the extent and within the time herein required, City may at its sole option, obtain such insurance and invoice the Developer for the amount of said premium. Exercise of the remedy set forth herein, however, i s an alternative to other remedies City may have and is not the exclusive remedy for Developer’s failure to maintain insurance or secure appropriate endorsements.
9.10 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance. If the Project shall be totally or partially destroyed or rendered uninhabitable by fire or other casualty required to be insured against by Developer, Developer shall, subject to the rights of the Construction Lender , promptly proceed to obtain all available insurance proceeds and, to the extent proceeds are available, take all steps necessary to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Project to substantially the
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same condition as it existed prior to the casualty, and Developer shall complete or cause to be completed the same as soon as possible thereafter so that the Project can be operated in accordance with this Agreement. City shall cooperate with Developer, at no expense to City, in an effort to obtain any governmental permits required for such repair, replacement, or restoration.
9.11 Rights of Access . For purposes of assuring compliance with this Agreement, representatives of City shall have the right of access to the Property without charges or fees, at normal business hours during the construction of the Project (subject to reasonable job safety rules as may be imposed by Developer and/or the General Contractor, including, but not limited to, the inspection of the work being performed in constructing the Project, so long as they comply with all safety rules. Such representatives of City shall be those who are so identified in writing by the City Manager.
9.12 Compliance with Laws; Compliance with Prevailing Wage Laws. (a) Compliance with Laws. Developer shall carry out the construction, development and operation of the Project in conformity with all Governmental Requirements, including without limitation all applicable labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq.
(b) Compliance with Prevailing Wage Laws.
(i) Developer shall carry out the construction through completion of the Project and the overall development of the Property in conformity with all applicable Governmental Requirements relating to the payment of prevailing wages and compliance with prevailing wage rules, including, without limitation, if applicable, the requirements to pay prevailing wages under federal law (the Davis-Bacon Act, 40 U.S.C. Section 3141, et seq., and the regulations promulgated thereunder set forth at 29 CFR Part 1 (collectively, “Davis-Bacon”)) and Californ ia law (Labor Code Section 1720, et seq.) (“California Prevailing Wage Law”).
The Parties acknowledge that a financing structure utilizing certain federal and/or state funding sources and financing scenarios may trigger compliance with applicable state and federal prevailing wage laws and regulations. Developer shall determine the applicability of federal, state, and local prevailing wage laws based upon the final financing structure and sources of funding of the Project, as approved by the City Manager.
(ii) Developer shall be solely responsible, expressly or impliedly and legally and financially, for determining and
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effectuating compliance with all applicable federal, state, and local public works requirements, prevailing wage laws, and labor laws and standards, and City makes no representation, either legally and/or financially, as to the applicability or non -applicability of any federal, state, and local laws to the construction of the Project.
Developer expressly, knowingly, and voluntarily acknowledges and agrees that City has not previously represented to Developer or to any representative, agent, or Affiliate of Developer, or any contractor(s) or any subcontractor(s) for the construction or development of the Project, in writing or otherwise, in a call for bids or otherwise, that the work and construction of the Project is (or is not) a “public work,” as defined in Section 1720 of the Labor Code or under Davis-Bacon.
(iii) Developer knowingly and voluntarily agrees that
Developer shall have the obligat ion to provide any and all disclosures or identifications as required by Labor Code Section 1781 and/or by Davis-Bacon, as the same may be amended from time to time, or any other similar law or regulation. Developer shall indemnify, protect, pay for, defe nd, and hold harmless the Indemnitees, with legal counsel reasonably acceptable to City, from and against any and all loss, liability, damage, claim, cost, expense, and/or “increased costs” (including reasonable attorney’s fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (i) the noncompliance by Developer or its contractor with any applicable local, state, and/or federal law or regulation, including, without limitation, any applicable federal and/or state labor laws or regulations (in cluding, without limitation, if applicable, the requirement to pay state and/or federal prevailing wages and hire apprentices); (ii) the implementation of Section 1781 of the Labor Code and/or of Davis-Bacon, as the same may be amended from time to time, or any other similar law or regulation; and/or (iii) failure by Developer to provide any required disclosure or identification as required by Labor Code Section 1781 and/or by Davis -Bacon, as the same may be amended from time to time, or any other similar law or regulation. It is agreed by the Parties that, in connection with the development and construction (as defined by applicable law or regulation) of the Project, including, without limitation, any and all public works (as defined by applicable law or r egulation), Developer shall bear all risks of payment or non -payment of prevailing wages under applicable federal, state, and local law or regulation and/or the implementation of Labor Code Section 1781 and/or by Davis -Bacon, as the same may be amended fro m time
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to time, and/or any other similar law or regulation. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the construction and development of the Project by Developer.
(iv) “Increased costs,” as used in this Section 9.12, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time.
9.13 Anti-Discrimination. Developer for itself and its successors and assigns, agrees, that in the construction of the Project on the Property or other performance under this Agreement, Developer shall not discriminate against any employee or applicant for employment on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are d efined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code . Notwithstanding the immediately preceding sentence, with respect to familial status, the immediately preceding sentence shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding sentence shall be construed to affect Sections 51.2, 51 .3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding sentence.
9.14 Taxes and Assessments . After the Closing, Developer shall pay prior to delinquency all real estate taxes and assessments on the Property so long as Developer retains any interest therein. Notwithstanding the above, Developer shall have the right to contest the validity or amounts of any tax, assessment, or encumbrance available to Developer in respect thereto, or obtain any available exemptions.
9.15 Right of City to Satisfy Other Liens on the Property(s). At any time prior to the completion of construction, and after Developer has had written notice and has failed after a reasonable time, but in any event not le ss than t wenty (20) days, to challenge, cure, adequately bond against, or satisfy any liens or encumbranc es on the Property which are not otherwise permitted under this Agreement, City shall have the right but no obligation to satisfy any such liens or encumbrances. Notwithstanding the above, Developer shall have the right to contest the validity or amounts of any tax, assessment, or encumbrance available to Developer in respect thereto.
9.16 Non-liability of City. Developer acknowledges and agrees that:
(a) City neither undertakes nor assumes any responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter in connection with the Project, including matters relating to: (i) the Final Construction Documents, (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them, and/or (iii) the progress of the Project
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and its conformity with the Final Construction Documents; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledge s that any review, inspection, supervision, approval or information supplied to Developer by City in connection with such matters is solely for the protection of City and that neither Developer nor any third party is entitled to rely on it;
(b) City is not a partner, joint venturer, alter -ego, manager, contr olling person or other business associate or participant of any kind of Developer and City does not intend to ever assume any such status; and City shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; (c) City shall not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or property resulting from any construct ion on, or occupancy or use of, the Property whether arising from: (i) any defect in any building, grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer ’s agents, employees, contractors, lic ensees or invitees; or (iii) from and after the Closing any accident on the Property or any fire or other casualty or hazard thereon not caused by the Indemnitees; and
(d) By accepting or approving anything required to be performed or given to City under this Agreement, including any certificate, financial statement, survey, appraisal or insurance policy, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone.
9.17 Release of Construction Covenants . Promptly after completion of construction of the Project by Developer in conformity with this Agreement, City shall furnish Developer with a Release of Construction Covenants upon written request therefor by Developer. City shall not unreasonably withhold such Release of Construction Covenants. Such Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the construction required by this Agreement and the Release of Construction Covenants shall so state. The Release of Construction Covenants shall be in the form attached hereto as Attachment No. 14 or such other similar form as to permit it to be recorded in the Official Records. If City refuses or fails to furnish a Release of Construction Covenants for the Project after written request from Developer, City shall, within fifteen (15) days of written request therefor, provide Developer with a written statement of the reasons City refused or failed to furnish the requested Release of Construction Covenants. The statement shall also contain City’s opinion of the actions Developer must take to obtain the Release of Construction Covenants. If the reason for such refusal is confined to the immediate unavailability of specific items of materials for landscaping or other minor “punch list” items, City shall issue its Release of Construction Covenants upon the posting of cash, a bond, or other security acceptable to City in City’s sole discretion by Developer with City in an amount representing the fair value of the work not yet completed, and Developer shall thereafter complete the “punch list” work with reasonable diligence and in no event later than sixty (60) days after City’s issuance of the Release of Construction Covenants. A Release of Construction Covenants shall not constitute evidence of comp liance with or satisfaction of any obligation of Developer to
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any holder of any mortgage or any insurer of a mortgage securing money loaned to finance the improvements, or any part of this Agreement, or a release of any obligations under this Agreement which survives issuance of the Release of Construction Covenants.
A Release of Construction Covenants is not a notice of completion as referred to in the California Civil Code Section 3093.
9.18 Developer Fee. The Parties acknowledge and agree that Developer shall be entitled to the maximum development fee permitted by TCAC for developing the Project, the amount of which shall be set forth in the Project Budget.
9.19 Cost Savings Obligation. Subject to the requirements of TCAC and other lenders providing loans to the Project that have been approved by City, Developer hereby agrees to provide and pay to City a “Cost Savings” payment for the Project in an amount to be determined based on the “Audit” (as those terms are described in subparagraph (a) below) to be conducted upon completion of construction of the Project. (a) Audit to Determine Cost Savings Amount. The actual amount of Cost Savings to be paid to City shall be determined after the Audit, as hereafter described, and the amount of such Cost Savings shall be equal to the amount by which the total sources of permanent financing for the Project (which financing includes, but is not limited to, the City Loans, the City HOME Loan, the Take-Out Loan, and the equity raised by the sale of the Tax Credits) exceed the costs of development incurred for the Project (which costs include, but are not limited to, the hard and soft costs incurred by Developer to perform predevelopment activities and construct the Project, and the amount spent to reduce the principal balance of the Construction Loan to the principal balance of the Take-Out Loan).
Within one hundred twenty (120) days following Developer’s completion of the Project, as evidenced by City’s issuance of a final certificate of occupancy, Developer shall cause its certified public accountant(s) to perform a final audit of the costs of development of the Project in accordance with the requirements of the Tax Credits and generally accepted accounting principles (“ GAAP”) and generally accepted auditing standards (herein referred to as “ Audit”). If the Audit determines that the total sources of permanent financing for the Project (which financing includes, but is not limited to, the City Loans, the City HOME Loan, the Take-Out Loan, and the equity raised by the sale of the T ax Credits) exceed Developer’s total costs to develop the Project (which costs include, but are not limited to, the hard and soft costs incurred by Developer to perform predevelopment activities and construct the Project, and the amount spent to reduce the principal balance of the Construction Loan to the principal balance of the Take-Out Loan), such excess shall be considered the “Cost Savings” for the Project. (b) Cost Savings Payment as Payment of Principal on City Loan(s).
Subject to the requirements of TCAC and other lenders providing loans to the Project that have been approved by City, the Cost Savings for the Project, once determined by the Audit pursuant to Section 9.19(a) above and subject to Section 9.19(c) below, shall be due and paid by Developer to City and allocated and credited as a principal payment on the City Land Loan, City Bond Loan, and/or City HOME Loan (as elected by City) as and when paid.
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(c) Timing of Payment of Cost Savings . The Cost Savings for the Project shall become due and payable by Developer to City within one hundred twenty (120) days after Developer’s completion of the Pro ject, as evidenced by City’s issuance of a final Release of Construction Covenants.
10. AFFORDABILITY COVENANTS
As more particularly provided in the City Regulatory Agreement, thirty (30) of the dwelling units in the Project shall be rented to qualified households whose incomes do not exceed the maximum limit for very low income households, as determined to pursuant to Health and Safety Code section 50105, seven (7) of the dwelling units in the Project shall be rented to qualified households whose incomes do not exceed the maximum limit for low er income households, as determined to pursuant to Health and Safety code section 50079.5, and twenty-seven (27) of the dwelling units in the Project shall be rented to qualified households whose incomes do not exceed the maximum limit for moderate income households, as determined pursuant to Health and Safety Code section with all of such dwelling units rented at an affordable rent, pursuant to Health and Safety Code Section 50053(b). One (1) unit in the Project shall be an unrestricted manager’s unit.
11. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
11.1 Developer’s Formatio n, Qualification and Compliance . Developer represents and warrants that (a) it is validly existing and in good standing under the laws of the State of California, (b) it has all requisite authority to conduct its business and own its properties, (c) it has all requisite authority to execute and perform its obligations under this Agreement, (d) this Agreement is binding upon Developer in accordance with its terms, and (e) the individuals executing this Agreement on behalf of Developer are duly authorized to execute and deliver this Agreement on behalf of Developer.
11.2 Litigation. Developer represents and warrants that there are no actions, lawsuits or proceedings pending or, to the best of Developer ’s knowledge, threatened against or affecting Developer, the a dverse outcome of which could have a material adverse effect on Developer’s ability to perform its obligations under this Agreement.
11.3 City. City represents and warrants that (a) it is validly existing and in good standing under the laws of the State of Ca lifornia, (b) it has all requisite authority to conduct its business and own and sell its properties, (c) it has all requisite authority to execute and perform its obligations under this Agreement, (d) this Agreement is binding upon City in accordance with its terms, and (e) the individuals executing this Agreement on behalf of City are duly authorized to execute and deliver this Agreement on behalf of City.
12. DEFAULTS AND REMEDIES
12.1 Event of Default. Any of the following events or occurrences with respect to either Party shall constitute a material breach of this Agreement and, after the expiration of any applicable cure period, shall constitute an “Event of Default” by such Party:
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(a) The failure by ei ther Party to pay any amount in full when it is due under this Agreement, if the failure has continued for a period of ten (10) days after the Party entitled to payment demands in writing that the other Party cure that failure. (b) The failure by either Party to perform any other obligation under this Agreement, if the failure has continued for a period of thirty (30) days after demand in writing that such Party cure the failure. If, however, by its nature the failure cannot reasonably be cured within said time period, such Party may have such longer period of time as is reasonably necessary to cure the failure, provided that such Party commences said cure within said thirty (30)-day period, and thereafter diligently prosecutes said cure to completion.
12.2 No Waiver. Except as otherwise expressly provided in this Agreement, any failure or delay by either Party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default, or of any such rights or remedies, or deprive any such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.
12.3 Rights and Remedies are Cumulative . Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same time or differen t times, of any other rights or remedies for the same default or any other default by the other Party.
12.4 Attorneys’ Fees. If either Party to this Agreement is required to initiate or defend litigation in any way connected with this Agreement, the prevailing Party in such litigation, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to reasonable attorneys’ fees. If either Party to this Agreement is required to initiate or defend litigation with a third party because of the violation of any term or provision of this Agreement by the other Party, then the Party so litigating shall be entitled to reasonable attorneys ’ fees from the other Party to this Agreement. Attorneys ’ fees shall include attorney’s fees on any appeal, and in addition a Party entitled to attorney’s fees shall be entitled to all other reasonable costs for investigating such action, retaining expert witnesses, taking depositions and discovery, and all other necessary costs incurred with respect to such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment.
12.5 Reimbursement of City. Within fifteen (15) days after its receipt of written demand from City, Developer shall reimburse City for all costs reasonably incurred by City (including the reasonable fees and expens es of attorneys, accountants, appraisers and other consultants) in connection with City enforcement of th is Agreement, the City Bond Loan Note, City Bond Loan Deed of Trust, City Land Loan Note, City Land Loan Deed of Trust, or City Regulatory Agreement (collectively, the “Project Documents”) and all related matters, including, without limitation, the following: (a) City’s commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the Parties to any of the Project Documents; and (b) all claims, demands,
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causes of action, liabilities, losses, and other costs against which any of the Indemnitees is indemnified under the Project Documents. Such reimbursement obligations shall bear interest from the date occurring fifteen (15) days after City makes written demand to Developer at the rate of ten percent (10%) per annum or the maximum legal rate, whichever is less. Such reimbursement obligations shall survive termination of this Agreement.
12.6 Investor Right to Cure . City agrees to give Investor a ny written notice of default provided to Developer by City pursuant to Section 12.1(a) and/or Section 12.1(b), and an opportunity, at the Investor’s option, to cause the cure of such default within the cure periods set forth below, prior to exercising any remedies under this Agreement. City agrees the Investor will have an additional ten (10) days (following exp iration of Developer’s cure period) to cure, or cause the cure of a monetary default under Section
12.1(a), and an additional thirty (30) days (following expiration of Developer’s cure period) to cure or cause the cure of a non-monetary default under this Agreement, or such longer period as is reasonably necessary for the Investor to cause cure, provided that cure is commenced within the above cure period and diligently prosecuted. City agrees to accept cure by the Investor Limited Partner as if such cure were made by Developer.
13. NOTICES
All notices, consents, demands, approvals and other communications (the “Notices”) that are given pursuant to this Agreement shall be in writing to the appropriate Party and shall be deemed to have been fully given when deli vered, including personal delivery, delivery by reputable commercial delivery service that provides a receipt with the time and date of delivery, or if deposited in the United States mail, certified or registered, postage prepaid, within t hree (3) days aft er deposit. All Notices shall be addressed as follows:
If to Developer:
Meta Development, LLC
11150 West Olympic Blvd, Suite 620
Los Angeles, CA 90064
Attention: Christopher Maffris,
Executive Vice President
with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 West Fifth Street, 64th Floor
Los Angeles, CA 90071
Attention: Nicole Deddens
If to City:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attention: City Manager
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with a copy to
Rutan & Tucker, LLP
18575 Jamboree Road, 9th Floor
Irvine, CA 92612
Attn: Allison LeMoine-Bui
Addresses for notice may be changed from time to time by notice to the other P arty.
Notwithstanding that Notices shall be deemed given when delivered, the non -receipt of any Notice as the result of the intended recipient’s refusal of delivery, or of a change of address of which the sending P arty was not notified shall be deemed rec eipt of such Notice.
14. ASSIGNMENT
14.1 Generally Prohibited . Except for Permitted Transfers as otherwise expressly provided to the contrary in this Agreement, Developer shall not Transfer any of its rights or delegate any of its duties under this Agreement, nor shall any changes occur with respect to the ownership and/or control of Developer, including, without limitation, stock transfers, or transfers, sales or issuances of membership or ownership interests, or statutory conversions, without the prior written co nsent of the City Manager , which consent may be withheld in his or her sole and absolute discretion. Any such Transfer or delegation without such consent shall, at City’s option, be void.
14.2 Release of Developer . Upon any such assignment made in complian ce with Section 14.1 above which is evidenced by a written assignment and assumption agreement in a form approved by City legal counsel in his or her reasonable discretion , the transferor shall be released from any liability under this Agreement arising from and after the effective date of such assignment, shall have no obligation to pay the City Loans or the City Notes, and shall have no further obligations with respect to the Project, except with respect to any actions and/or omissions of the transferor occurring, and/or claims arising, prior to the date of such assignment . In the event City legal counsel does not approve the form of assignment and assumption agreement pre sented, such counsel shall inform the assignor in writing within thirty (30) days of receipt of the reasons for such disapproval.
15. ADMINISTRATION
Following approval of this Agreement by City, this Agreement shall be administered and executed on behalf of City by the City Manager. The City Manager shall have the authority to issue interpretations, waive terms and conditions, enter into one or more City/Lender Subordination Agreements, enter into subordination agreements with public funding sources where the public funding source ’s regulations require such subordination, and enter into implementing agreements and amendments of this Agreement (including, without limitation, to the Project Budget and the Schedule of Performance) on behalf of City provided that such actions do not substantially change the uses or development permitted on the Property, materially add to the costs or obligations, increase the risk of liability, or impair the rights or remedies , of City provided herein, or
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materially decrease the revenues or other compensation to be received by City hereby.
All other waivers or amendments shall require the formal consent of the Fullerton City Council.
16. MISCELLANEOUS
16.1 Counterparts. This Agreement may be executed in counterparts, all of which, taken together, shall be deemed to be one and the same document.
16.2 Prior Agreements; Amendments . This Agreement contains the entire agreement between City and Developer with respect to the Project and the Property, and all prior negotiations, understandings and agreements are superseded by this Agreement.
No modification of this Agreement (including waivers of rights and conditions) shall be effective unless in writing and signed by the Party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given. City agrees to consider in good faith making reasonable modifications to this Agreement that are necessary to finance the development of the Project.
16.3 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of California, without regard to conflict of law principles.
16.4 Acceptance of Service of Proce ss. In the event that any legal action is commenced by Developer against City, service of process on City shall be made by personal service upon the City Manager or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on Developer shall be made in such manner as may be provided by law.
16.5 Severability of Provisions. No provision of this Agreement that is held to be unenforceable or invalid shall affect the remaining provisions if and to the extent that the primary purposes of this Agreement can still be accomplished without materially impairing the rights or increasing the obligations or risks of each P arty, as reasonably determined by that Party.
16.6 Interpretation. Both P arties have participated in the drafting of this Agreement and any ambiguities in this Agreement shall not be c onstrued for or against either Party on account of the authorship or presumed authorship hereof. Article and section headings are included in this Agreement for convenience of reference only and shall not be used in construing this Agreement. Any defined term used in the plural in this Agreement shall refer to all members of the relevant class and any defined term used in the singular shall refer to any of the members of the relevant class. References herein to Articles, Sections, and Attachments shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be con strued as references to the same Section in which the reference appears. The terms “including” and “include” mean “including (include) without limitation.”
16.7 Accounting Principles . Any accounting term used and not specifically defined in this Agreement shal l be construed, and all financial data required to be
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submitted under this Agreement shall be prepared, in conformity with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City.
16.8 Attachments Incorporated . All attachments to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference.
16.9 Time of the Essence. Time is of the essence of this Agreement.
16.10 Warranty Against Payment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement.
16.11 Non-liability of City Officials and Employees. No member, director, officer, employee, or volunteer of City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Developer or successor, or o n any obligation under the terms of this Agreement.
16.12 Force Majeure . In addition to specific provisions of this Ag reement, performance by either Party hereunder shall not be deemed to be in default 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; litigation beyond the reasonable control of a Party; unusually severe weather; inability, despite co mmercially reasonable efforts, to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier beyond the reasonable control of a Party; acts of the other Party; acts or the failure to act of any public or governmental en tity (except that acts or the failure to act of City shall not excuse performance by City); or any other acts or causes beyond the reasonable control of the Party claiming an extension of time to perform. 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. Force Majeure shall serve also to extend the time by which any condition, for the benefit of either Party, shall be satisfied under this Agreement. Notwithstanding any provision of this Agreement to the contrary, in no event shall adverse market conditions, interest ra tes, the lack of funding or difficulty obtaining the financing necessary to complete the Project constitute grounds of enforced delay pursuant to this Section.
16.13 Developer Covenant to Defend this Agreement . Developer acknowledges that City is a “public entity” and/or a “public agency” as defined under applicable California law. Therefore, City must satisfy the requirements of certain California statutes relating to the actions of public entities, including, without limitation, CEQA. Also, as a California public body, City’s action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. Developer assumes the risk of delays and damages that may result to Developer from any third-party legal actions related to City’s
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approval of this Agreement or the pursuit of the activities contemplated by this Agreement, including, without limitation, the City’s approval of any Project approvals and issuance of any permits required for development of the Project, even in the event that an error, omission or abuse of discretion by City is determined to have occurred. If a third -party files a legal action re garding City’s approval of this Agreement or the pursuit of the activities contemplated by this Agreement, including, without limitation, the City’s approval of any Project approvals and issuance of any permits required for development of the Project, City may terminate this Agreement on thirty (30) days written notice to Developer of City’s intent to terminate this Agreement, referencing this Section 16.13, without any further obligation to perform the terms of this Agreement and without any liability to Developer resulting from such termination, unless Developer unconditionally agrees to indemnify and defend City and City Personnel, with legal counsel selected by City and reasonably acceptable to Developer, against such third -party legal action, as provide d hereinafter in this Section 16.13. Within thirty (30) days after receipt of City’s notice of intent to terminate this Agreement, as provided in the preceding sentence, Developer may in Developer’s sole and absolute discretion offer to defend City, with legal counsel selected by City and reasonably acceptable to Developer, in the third -party legal action and pay all of the court costs, attorney fees, 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. At the request of Developer, City shall cooperate with and assist Developer in its defense of any such third-party legal action, provided that City shall not be obligated to incur any expense in connection with such cooperation or assistance.
16.14 Nondiscrimination Covenants.
(a) Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the grantee or any person claiming under or through him or her, establish or permit any pract ice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. The foregoing covenants shall run with the land.
(b) Notwithstanding paragraph (a), with respect to familial status, paragraph (a) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (a) shall be construed t o affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (a).
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(c) Developer shall refrain from restricting the rental, sale or lease of the Property on any of the bases listed above in this Section 1 6.14. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(i) In deeds:
(A) “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdiv ision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
(B) Notwithstanding paragraph (a), with respect to familial status, paragraph (a) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (a) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (a).
(ii) In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
(A) “That there shall be no discrimination against or
segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivi sion (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself
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or herself , or any person claiming under or through him or her, 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, sublessees, subtenants, or vendees in the premises herein leased.”
(B) Notwithstanding paragraph (a), with respect to familial status, paragraph (a) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to f amilial status, nothing in paragraph (a) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (a).
(iii) In contracts:
(A) “There shall be no discrimination against or
segregation of, any person or group of persons on account of any basis lis ted in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
(B) Notwithstanding paragraph (a), with respect to familial status, paragraph (a) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (a) shal l be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (a).
The covenants established in this Section 1 6.14 shall, without regard to technical classification and designation, be binding for the benefit and in favor of City and its successors and assigns, and shall remain in effect in perpetuity.
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16.15 Consents and Approvals . Unless otherwise expressly set forth in t his Agreement, any consents or approvals to be given by a Party under this Agreement shall not be unreasonably withheld, conditioned or delayed.
16.16 No Third Party Beneficiar ies. No person or entity other than City and Developer and the permitted successors and assigns of each of them, shall be authorized to enforce the provisions of this Agreement.
[End of Agreement – Signature page follows]
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IN WITNESS WHEREOF , the Parties hereto have caused this Agreement to be duly executed.
“City”
CITY OF FULLERTON, a California
municipal corporation
By:
Eric Levitt, City Manager
Attest:
By:
Lucinda Williams, MMC, City Clerk
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
By:
Allison LeMoine-Bui
Special Counsel
“Developer”
META DEVELOPMENT, LLC, A California
limited liability company
By:
Christopher Maffris, Executive Vice
President
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ATTACHMENTS
1 - Legal Description of Property
2A - Site Plan
2B - Proposed LLA
3 - Schedule of Performance
4 - Scope of Development
5 - Form of Grant Deed
6 - Form of Assignment of Architectural Agreements
7A - Form of City Bond Loan Note
7B Form of City Land Loan Note
8A - Form of City Bond Loan Deed of Trust
8B Form of City Land Loan Deed of Trust
9 - Project Budget
10 - Form of City Regulatory Agreement
11 - Form of Notice of Affordability
12 - Form of City HOME Loan Agreement
13 - Form of Release of Construction Covenants
882/036753-0123
18651856.3 a07/24/23 ATTACHMENT NO. 1A
ATTACHMENT NO. 1A
LEGAL DESCRIPTION OF CITY PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
FULLERTON IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
ALL THAT PORTION OF THE SOUTH HALF OF THE NORTHWEST QUARTER OF SECTION 32, TOWNSHIP 3 SOUTH, RANGE 10 WEST, IN THE RANCHO LOS
COYOTES, IN THE CITY OF FULLERTO N, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 7 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A BOLT SET IN THE PAVEMENT TO MARK THE N ORTHEAST
CORNER OF THE SOUTH HALF OF THE NORTHWEST QUARTER OF SAID SECTION 32, SAID BOLT BEING ALSO THE CENTER LINE INTERSECTION OF WEST
COMMONWEALTH AVENUE AND NORTH BASQUE AVENUE, AS SAME IS SHOWN ON THE RECORDS OF THE CITY ENGINEER OF FULLERTON, CALIFOR NIA;
THENCE FROM SAID POINT OF BEGINNING ALONG THE EAST LINE OF THE SOUTH HALF OF THE NORTHWEST QUARTER OF SAID SECTION 32, SOUTH 0° 11' 15" WEST 228.60 FEET TO THE NORTHEASTERLY CORNER OF PARCEL 1
CONVEYED TO THE SUNNY HILLS MUTUAL WATER COMPANY BY DEED RECORDED APRIL 1, 1942 IN BOOK 1133, PAGE 525 OFFICIAL RECORDS; THENCE ALONG THE NORTHERLY AND WESTERLY BOUNDARY LINE OF SAID PARCEL 1, NORTH 89° 48' 45" WEST 51.00 FEET; THENCE SOUTH 0° 11' 15" WEST 85.05 FEET TO THE SOUTHWESTERLY CORNER OF SAID PARCEL 1, SAID POINT BEING ALSO
ON THE NORTHEASTERLY SIDE OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY RIGHT OF WAY, 100.00 FEET IN WIDTH AS DESCRIBED IN THE DEED RECORDED MAY 4, 1962 IN BOOK 6098, PAGE 397 OFFICIAL RECORDS; THENCE ALONG SAID LAST MENTIONED RIGHT OF WAY LINE, NORTH 76° 45' 30" WEST 1421.13 FEET TO AN INTERSECTION WITH THE NORTH LINE OF THE SOUTH HALF OF THE NORTHWEST QUARTER OF SAID SECTION 32, SAID LINE
BEING ALSO THE CENTER LINE OF WEST COMMONWEALTH AVENUE ABOVE MENTIONED; THENCE EASTERLY, ALONG SAID CENTER LINE SOUTH 89° 31' 10" EAST 1435.42 FEET TO THE POINT OF BEGINNING.
EXCEPT THAT PORTION THEREOF DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE SOUTHERLY RIGHT OF WAY LINE OF WEST COMMONWEALTH AVENUE, 80.00 FEET WIDE, WITH T HE
NORTHEASTERLY RIGHT OF WAY LINE OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY 100.00 FEET WIDE, AS PER MAP OF TRACT 1393 RECORDED IN BOOK 42, PAGES 11 AND 12 OF MISCELLANEOUS MAPS; THENCE ALONG SAID SOUTH LINE, EAST 389.45 FEET; THENCE PERPENDICULAR TO SAID SOUTHERLY LINE, SOUTH 2.00 FEET; THENCE SOUTH 88° 22' 22" WEST 96.68 FEET; THENCE
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SOUTH 83° 52' 19" WEST 125.00 FEET; THENCE SOUTH 79° 39' 54" WEST 49.25
FEET TO SAID NORTHEASTERLY RIGHT OF WAY LINE OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY; THENCE NORTH 77° 21' 00" WEST 122.99 FEET
TO THE POINT OF BEGINNING, AS CONVEYED TO THE CITY OF FULLERTON BY DEED RECORDED MAY 22, 1961 IN BOOK 5727, PAGE 596 OF OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED TWENTY -FIVE PER CENT (25%) INTEREST OF ALL
MINERALS, ORES AND PRECIOUS AND USEFUL METALS, SUBSTANCES AND
HYDROCARBONS OF EVERY KIND AND CHARACTER, INCLUDING PETROLEUM,
OIL GAS, ASPHALTUM AND TAR, IN OR UNDER SAID LAND OR ANY PART THEREOF, RESERVED AND EXCEPTED IN DEED FROM SUNNY HILLS RANCH, INC.
RECORDED JUNE 30, 1945 IN BOOK 1317, PAGE 227 OF OFFICIAL RECORDS.
APN: 030-290-22
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18651856.3 a07/24/23 ATTACHMENT NO. 1B
ATTACHMENT NO. 1B
DEPICTION OF PROPERTY
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18651856.3 a07/24/23 ATTACHMENT NO. 2
ATTACHMENT NO. 2
SITE PLAN
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ATTACHMENT NO. 3
-1-
ATTACHMENT NO. 3
SCHEDULE OF PERFORMANCE
Task/Event Time for Performance
1. Submittal - Operating Budget .
Developer has submitted to City and City
has approved the Operating Budget for
the first year of operation.
Not later than thirty days before the
Closing.
2. Submittal - Final Construction
Drawings and Specifications.
Developer has submitted to City and
City has approved the Final Construction
Drawings and Specifications.
Not later than thirty days before the
Closing.
3. Submittal - Management Plan .
Developer has submitted to City for
approval and C ity has approved
Developer’s proposed Management
Plan for the Project.
Not less than thirty days before the
Closing.
4. Submittal - Evidence of Financing.
Developer has submitted to the City and
City has approved substantially final
Loan Documents for the construction
financing, a written commitment for the
permanent loan and documentation of
Developer equity, consistent with the
Project Budget.
Not less than ten days before the
Closing.
5. Closing. All conditions precedent to the
Closing have been satisfied.
Not later than 180 days after the
Developer receives an award of Tax
Credits.
6. Commencement of Construction .
Developer commences construction of
the Project on the Property.
Within thirty (30) days after the
Closing.
7. Completion of Construction .
Developer completes construction of
the Project on the Property.
Not later than twenty-four months after
commencement of construction.
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ATTACHMENT NO. 3
-2-
8. Submittal - Tenant Lease. Developer
has prepared and submitted to City and
City has approved the proposed tenant
lease for the Project.
At least two months before beginning
tenant selection for lease up of the
Project.
9. Submittal-Tenant Selection and
Eligibility Plan. Developer has
prepared and submitted to City and City
has approved the proposed tenant
selection and eligibility plan for the
Project.
At least two months before beginning
tenant selection for lease up of the
Project.
10. Lease-Up. Developer has achieved
lease-up of at least 90% of the units in
the Project.
Not later than six months after
completion of construction.
11. 12.
13. 14.
15. 16.
17. 18.
19 It is expressly understood and agreed by the Parties that the foregoing schedule of performance is subject to all of the terms and conditions set forth in the text of the Agreement including, without limitation, extension due to Force Majeure. Times of performance under the Agreement may be extended by request of any Party memorialized by a mutual written agreement between the Parties, which agreement may be granted or denied in the non -requesting Party’s sole and absolute discretion (subject to events of force majeure set forth in this Agreement.
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18651856.3 a07/24/23 ATTACHMENT NO. 4
ATTACHMENT NO. 4
SCOPE OF DEVELOPMENT
General
The Project site is located at 1600 West Commonwealth Avenue in the City of Fullerton.
The Project consists of a 65-unit multifamily rental development to be constructed in one building with two - to three-story stepping building masses, and will include an elevator.
The Project will include 29 one -bedroom units (at least 575 square feet each), 19 two - bedroom units (at least 830 square feet each), and 17 three-bedroom units (at least 1,125 square feet each), and ancillary facilities. Each residential unit will have individual heating and cooling controls, separate living, eating, sleeping, bathroom and cooking areas. The building’s common areas will include a community room, comput er lab, on-site property management office, and shared laundry facilities. Common open space amenities for residents include a barbeque area, recreation space, and tot lot/play area.
Primary vehicular access to the Project site will be provided via a sing le driveway at the east end of the site. A total of 108 parking spaces will be provided in a surface parking lot on site which will include 7 accessible, 33 electric vehicle ready, and 7 guest parking spaces.
The architecture of the Project has been designed to incorporate a contemporary concept that will blend with the surrounding community. The form of the building includes pitched roofs and building materials to contextually blend the architecture with the single -family residences located to the north. Additionally, the building massing steps down towards the single -family homes to respect their scale and blend itself into the neighborhood.
Given the triangular form of the site, various resident courtyard spaces have been strategically incorporated into the site design including a resident tot -lot space at the narrow west side of the site. Architectural distinction will be accomplished through the use of a variety of building materials such as smooth painted stucco, accent horizontal siding, asphalt shingle roofing, and decorative metal guardrails. To maximize daylight exposure, storefront windows will be provided on the first floor at resident amenity spaces.
Standards and Requirements
Owner shall be responsible for complying with all permit and fee requirements of the City of
Fullerton and compliance with all conditions of approval for the Project, including the construction of required off-site public improvements.
Standards, controls and restrictions regarding construction and development including, but not limited to, maximum land coverage, setbacks, and building construction shall be as required by the Fullerton General Plan, Zoning Ordinance, Municipal Code, and approved Land Use Entitlements, and in compliance with the approved construction drawings, plans and specifications, approved conceptual development standards and the Site Plan Review plans and standards, including conditions of approval and environmental mitigation measures.
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On-Site Improvements
Owner shall construct and install all utilities on the Property required by the City of Fullerton, and all other on-site public improvements necessary for the Project, including, but not limited to: sewers, storm drains, electricity, gas, telephone, water, curbs, gutters, and sidewalks.
Off-Site Improvements
Owner shall construct and install all off -site improvements required by Conditions of Approval, including, but not limited to:
(1) grind and overlay the existing asphalt pavement on the south side of Commonwealth Avenue between the edge of concrete pavement east of the underpass to the intersection of Basque Ave./Commonwealth Ave., and the new limits of the left-turn lane to the intersection;
(2) the median along the project’ s frontage shall be improved with new landscaping including irrigation improvements;
(3) water facilities to maintain water service to the adjacent City property; (4) modifications to the center median on Commonwealth Avenue west of Basque Avenue to provide a new westbound left-turn lane into the project driveway; (5) modifications to the street lighting facilities directly impacted by the new left -turn lane leading into the project and new lighting required for the project; (6) roadway striping modifications along the south side of Commonwealth Avenue; (7) safety lighting at the signalized intersection of Commonwealth Avenue and Basque Avenue.
Accessibility
At a minimum, the Project shall comply with the accessibility requirements at 24 CFR Part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and, if applicable, the design and construction requirements at 24 CFR 100.205 for covered multifamily dwellings, as defined at 24 CFR 100.201, which implements the Fair Housing Act (42 U.S.C. 3601 -3619). Additionally, all built elements will comply with the latest version of the California Building Code at the time in which the project is submitted for permit.
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18651856.3 a07/24/23 ATTACHMENT NO. 5
ATTACHMENT NO. 5
GRANT DEED
[See following document]
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RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO
________________________
c/o Meta Housing Corporation
11150 West Olympic Blvd, Suite 620
Los Angeles, CA 90064
Attention: ___________________
AND ALL TAX STATEMENTS TO:
SAME AS ABOVE
(Space Above for Recorder’s Use)
Exempt from Recordation Fee per Gov. Code § 27383
DOCUMENTARY TRANSFER TAX IS
$__________ Computed on the consideration or
value of property conveyed.
The undersigned declares exemption under the
following: Exempt from fee per Government Code
Section 27388.1 (a)(2); recorded concurrently in
connection with a transfer subject to the
imposition of documentary transfer tax
GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, CITY OF FULLERTON, a California municipal corporation (“Grantor”), hereby grants to ________________________, a California limited partnership (“Grantee”), the real property located in the City of Fullerton, County of Orange, State of California, described on Exhibit 1 attached hereto and made a part hereof (the “ Property”), with all improvements thereon, subject to all matters of record and subject to the following:
Grantee, on behalf of itself and its successors and assigns to all or any portion of the Property, covenants and agrees as follows:
1. Nondiscrimination Covenants.
(a) That there shall be no discrimination against or segregation of any person, or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any part thereof, nor shall Grantee, or any person claiming under or through him or her, 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, or any part thereof.
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(b) Notwithstanding paragraph (a), with respect to familial status, paragraph (a) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (a) shall be construed to affect Sections 51.2, 51.3,
51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (a).”
(c) The foregoing covenants shall run with the land.
2. Nondiscrimination Clauses in Agreements . Grantee agrees for itself and any successor in interest that Grantee shall refrain from restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national origin of any person.
All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds:
(i) “The grantee herein covenants by and for himself or herself, his or her heirs, executors , administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occu pancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” (ii) Notwithstanding paragraph (i), with respect to familial status, paragraph (i) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (i) shall be construed to affect Sections
51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Co de, relating to housing for senior citizens. Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (i).” (iii) The foregoing covenants shall run with the land.”
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(b) In leases:
(i) “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: “That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premise s herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, 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, sublessees, subtenants, or vendees in the premises herein leased.”
(ii) Notwithstanding paragraph (i), with respect to familial status, paragraph (i) shall not be construed to apply to housing for older persons, as defined in S ection 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (i) shall be construed to affect Sections
51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (i).” (c) In contracts relating to the sale, transfer, or leasing of the land or any interest therein:
(i) “There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 1292 6.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, subl essees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” (ii) Notwithstanding paragraph (i), with respect to familial status, paragraph (i) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (i) shall be construed to affect Sections
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51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (i).” The foregoing nondiscrimination covenants shall remain in effect in perpetuity. [Signatures on next page]
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GRANTOR:
CITY OF FULLERTON,
a California municipal corporation
Dated: ____________________ By:____________________________ Eric Levitt, City Manager
ATTEST:
By:
Lucinda Williams, MMC, City Clerk
GRANTEE:
____________________________________,
a California limited partnership
[insert signature block before execution]
Dated: ____________________ By:____________________________
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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 Orange )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A Notary Public or other officer completing this certificate verifies only the id entity 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 Orange )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
882/036753-0123
18651856.3 a07/24/23
Exhibit 1 to Grant Deed
Legal Description
Real property in the City of Fullerton, County of Orange, State of California, described as follows:
882/036753-0123
18651856.3 a07/24/23 ATTACHMENT NO. 6
ATTACHMENT NO. 6
ASSIGNMENT OF ARCHITECTURAL AGREEMENTS
[See following document]
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ASSIGNMENT OF ARCHITECTURAL AGREEMENTS
AND PLANS AND SPECIFICATIONS
FOR VALUE RECEIVED, the undersigned, _________________, L.P., a California limited partnership ( “Developer”), assigns to City of Fullerton, a California municipal corporation (“City”), all of its right, title and interest in and to:
1. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, “Architectural Agreements”), and
2. All plans and specifications, blueprints, sketches, shop drawings, working drawings, landscape plans, utilities plans, soils reports, noise studies, environmental assessment reports, and grading plans, and all amendments, modifications, changes, supplements, general conditions and addenda thereto ( collectively, “Plans and Specifications”), heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity (collectively, “Architect”), for or on behalf of Developer in connection with the Real Property described on Exhibit “A” attached hereto. The Plans and Specifications, as of the date hereof, are those which Developer have heretofore, or will hereafter deliver to City. The Architectural Agreements include, but are not limited to, the architectural agreement or con tract between __________ and ____________________, dated ________________.
This ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND SPECIFICATIONS ( “Assignment”) constitutes a present, absolute and unconditional assignment to City.
Developer acknowledges that by accepting this Assignment, City does not assume any of Developer ’s obligations under the Architectural Agreements with respect to the Plans and Specifications , including, but not limited to, the obligation to pay for the preparation of the Architectural Agreements and the Plans and Specifications, unless and until City shall exercise its rights hereunder.
Developer represents and warrants to City that: (a) no default by Developer, or event which would constitute a default by Developer after notice or the passage of time, or both, exists with respect to said Architectural Agreements, and (b) all copies of the Architectural Agreements and Plans and Specifications delivered to City are complete and correct. Developer has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications. Notwithstanding the foregoing, this Assignment shall be subordinated to any assignment required to be made by Developer to the “Construction Lender ” (as that term is defined in that certain Affordable Housing and Property Disposition Agreement entered into by and between City and Developer on or about __________ (the “AHPDA”)) at the “Closing” (as that term is defined in the AH PDA). Further, as long as no Event of Default by Developer has occurred under the AHPDA, Developer shall have the right to exercise all of its rights
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under the Architectural Agreements. City shall not exercise its rights under this Assignment until the occurrence and during the continuation of an Event of Default under the AHPDA. Upon the occurrence and during the continuation of such an Event of Default, City may, at its option, upon written not ice to Architect, exercise all of its rights granted under this Assignment.
This Assignment shall be governed by the laws of the State of California, except to the extent that federal laws preempt the laws of the State of California, and Developer consents to the jurisdiction of any federal or state court within the State of California having proper venue for the filing and maintenance of any action arising hereunder and agrees that the prevailing party in any such action shall be entitled, in addit ion to any other recovery, to reasonable attorneys’ fees and costs.
This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors-in-interest of Developer and City.
The attached Architect’s/Engineer’s Consent and Exhibit “A” are incorporated by reference.
Executed by __________ on ____________________, 20__.
Date: , 20__
“Developer”
____________________________, L.P.,
a California limited partnership
By: _________________________________
Its: _________________________________
“City”
CITY OF FULLERTON, a California
municipal corporation
By:
Eric Levitt, City Manager
Attest:
By:
Lucinda Williams, MMC, City
Clerk
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APPROVED AS TO FORM
RUTAN & TUCKER, LLP
By:
Allison LeMoine-Bui
Special Counsel
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ARCHITECT’S/ENGINEER’S CONSENT
The undersigned Architect has prepared the Plans and Specifications, hereby consents to the above assignment and represents that Architect has received payment in full for services rendered to date for the Plans and Specifications and accordingly hereby waives Architect’s lien rights, if any, with respect to the services rendered to date for the Plans and Specifications, and subordinates Architect’s lien rights, if any, in the Plans and Specifications for any future services rendered to the lien of City. Architect also agrees that in the event of any breach by Developer under the Architectural Agreement s, Architect shall give written notice thereof to City and City shall have the right, but not the obligation, to cure same within sixty (60) days following receipt of such written notice.
Architect also agrees that in the event of default by Developer under the City Bond Loan Note, City Bond Loan Deed of Trust, City Land Loan Note, City Land Loan Deed of Trust, or any other loan documents, Architect, at Devel oper's request, shall continue performance under the Architectural Agreement s in accordance with the terms hereof, provided that Architect shall be reimbursed in accordance with the Architectural Agreements for all services rendered on City's behalf.
Architect certifies to City that (i) the Plans and Specifications have been approved by all appropriate local governmental authorities, and that the Plans and Specifications are the plans and specifications to be used in actual construction of the Project, and (ii) the Architectural Agreements are in full force and effect, no defaults exist thereunder, and all conditions to the effectiveness or continuing effectiveness thereof required to be satisfied as of the date hereof have been satisfied.
Except as otherwis e defined herein, the terms used herein shall have the meanings given them in the above assignment.
Executed on _______________________, 20__.
“Architect”
______________________________________,
a ____________________________________
By:
Name:
Its:
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Architect’s Address:
Phone No.: (_____)
Fax No.: (_____)
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18651856.3 a07/24/23
EXHIBIT “A”
PROPERTY DESCRIPTION
882/036753-0123
18651856.3 a07/24/23 ATTACHMENT NO. 7A
ATTACHMENT NO. 7A
CITY BOND LOAN NOTE
[See following document]
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CITY PROMISSORY NOTE
(Bond Loan)
(1600 W. Commonwealth)
$717,738
_____________, 20__ Orange, California
FOR VALUE RECEIVED, _______________________, L.P., a California limited partnership ( “Borrower”), as maker and obligor, promises to pay to the CITY OF FULLERTON, a California municipal corporation (“City”), as holder and beneficiary, or order, at City’s office at 303 W. Commonwealth Avenue , Fullerton, CA 92832 , or such other place as City may designate in writing, the sum of (a) Seven Hundred Seventeen Thousand Seven Hundred Thirty-Eight Dollars ($717,738), or so much thereof as may be disbursed pursuant to the “Agreement” (as defined below) (“Note Amount”), and (b) all costs and expenses payable hereunder, in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts.
1. Agreement. This City Promissory Note (“Note”) is given in accordance with that certain Affordable Housing and Property Disposition Agreement executed by City and Meta Development, LLC, a California limited liability company (“Meta”), as “Developer”, and thereafter assigned by Meta to Borrower on or about the same date hereof (“Agreement”). The rights and obligations of Borrower and City under this Note shall be governed by the Agreement and by the additional terms set forth in this Note. In the event of any inconsistencies between the terms of this Note and the terms of the Agreement or any other document r elated to the Note Amount, the terms of this Note shall prevail.
Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Agreement. An Event of Default by Developer under any of the provisions of the Agreement, and/or a default under any and all attachments and all breakout documents executed, attested and/or recorded in implementation of the Agreement, including, without limitation, the City Bond Loan Deed of Trust, City Land Loan Note, City Land Loan Deed of Trust, City Regulatory Agreement, City HOME Loan Agreement or any of the attachment documents executed by Borrower in connection therewith, or the income and/or rent restrictions as set forth in the regulatory agreement which may be required to be recorded against the Property with respect to the issuance of Tax Credits for the Project (collectively, the “Transaction Documents”) shall, after the expiration of any cure period under the respective agreement or document, be a default under this Note (a “Default”), and a default under this Note, after notice and expiration of a ten (10) day cure period, shall be an Event of Default under the Agreement and a default under the Transaction Documents. Notwithstanding anything to the contrary set forth herein, City shall not exercise any right hereunder without providing the limited partner of Borrower with not less than thirty (30) days prior written notice and right to cure any default giving rise to the exercise of said remedy. City agrees that any cure tendered b y the limited partner of Borrower shall be accepted or rejected on the same terms and conditions as if tendered directly by Borrower.
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2. Disbursement of Note Amount . The Note Amount shall be disbursed pursuant to Section 5.7 of the Agreement.
3. Interest. The Note Amount shall bear simple interest at three percent (3%) per annum.
4. Repayment of Note Amount . The Note Amount shall be paid by the Borrower’s annual payment to City of fifty percent (50%) of the Residual Receipts from operation of the Project, as determined by a Residual Receipts calculation from the operation of the Proj ect the preceding calendar year; provided, however, that said fifty percent (50%) shall be divided proportionately with any other lenders with loans payable from Residual Receipts or net cash flow, if any such loans are obtained by Developer.
Annual Residual Receipts payments shall be made by the Borrower by cashier ’s check and shall be delivered on or before May 1st for each year during the term of this Note commencing in the first fiscal year following the date construction of the Project has been completed, and continuing until the Note Amount and all unpaid interest thereon has been repaid in full. Additionally, the Note Amount shall be paid by any or all of the following: (i) seventy-five percent (75%) of the Refinancing Net Proceeds immediately upon any refinancing of the loans secured by the Property (or any part thereof), (ii) seventy-five percent (75%) of the Transfer Net Proceeds immediately upon any transfer in whole or in part of the Project, and (iii) any Cost Savings, pursuant to Section 9.19 of the Agreement. Notwithstanding the foregoing, in the event of a re -syndication of the Project by an affiliate of the Borrower after the expiration of the Tax Credit compliance period, City may, in its sole and absolute discretion, agree to allow the City Loans to be assumed and remain outstanding.
As used herein, “Affiliate” means any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Borrower which, if Borrower is a partnership or limited liability company, shall include each of the constituent members or general partners, respectively thereof. The term “control” as used in the immediately preceding sentence, means, with respect to a person that is a corporation, the right to the exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled person.
As used herein, “Annual Financial Statement ” means each certified financial statement of Borrower for the Project using generally accepted accounting principles (“GAAP”), as separately accounted for this Project, including Operatin g Expenses and Annual Project Revenue, prepared annually at Borrower ’s expense, by an independent certified public accountant reasonably acceptable to City.
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As used herein, “Annual Project Revenue ” means all gross income and all revenues of any kind from the Project in a calendar year, of whatever form or nature, whether direct or indirect, with the exception of the items excluded below, actually received by or paid to or for the account or benefit of Borrower or any Affiliate of Borrower or any of their agents or employees, from any and all sources, resulting from or attributable to the ownership, operation, leasing and occupancy of the Project, determined on the basis of generally accepted accounti ng principles applied on a consistent basis, and shall include, but not be limited to: (i) gross rentals paid by tenants of the Project under leases, and payments and subsidies of whatever nature, including without limitation any payments, vouchers or subs idies from the U.S. Department of Housing and Urban Development or any other person or organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of the Project to Borrower or any Affiliate of Borrower on account of Operating Expenses for further disbursement by Borrower or such Affiliate to a third party or parties, (iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions, vending machines, coin laundry and similar sources, (v) other fees, charges or payments not denominated as rental but payable to Borrower in connection with the rental of office, retail, storage, or other space in the Project, (vi) consideration received in whole or in part for the cancellation, modification, extension or renewal of leases, and (vii) interest and other investment earnings on security deposits, reserve accounts and other Project accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the foregoing, gross incom e shall not include the following items: (a) security deposits from tenants (except when applied by Borrower to rent or other amounts owing by tenants); (b) capital contributions to Borrower by its members, partners or shareholders (including capital contr ibutions required to pay any Deferred Developer Fee); (c) condemnation or insurance proceeds; (d) funds received from any source actually and directly used for initial development of the Project; (e) receipt by an Affiliate of management fees or other bona fide arms-length payments for reasonable and necessary Operating Expenses associated with the Project; (f) Transfer Net Proceeds; or (g) Refinancing Net Proceeds.
As used herein “Capital Replacement Reserve” shall have the meaning ascribed thereto in the City Regulatory Agreement.
As used herein, “CPI Adjustment” means the increase in the cost of living index, as measured by the Consumer Price Index for All Urban Consumers, Los Angeles - Riverside-Orange County statistical area, all items (1982 -84 = 100) published by the United States Department of Labor, Bureau of Labor Statistics ( “CPI”) in effect as of the date on which the Certificate of Occupancy is issued for the Project to the CPI in effect as of the date on which an adjustment is made. If such index is discontinued or revised, such other index with which such index is replaced (or if not replaced, another index which reasonably reflects and monitors consumer prices) shall be used in order to obtain substantially the same results as would have been obtained if the discontinued index had not been discontinued or revised. If the CPI is changed so that the base year is other than 1982 -84, the CPI shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics.
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As used herein, “Debt Service” means payments made in a calendar year pursuant to the approved Construction Loan or the Take-Out Loan, as applicable, obtained for the construction/development, and ownership of the Project, as set forth in the Project Budget, or any permitted refinancing or modification thereof, but excluding payments made pursuant to this Note.
As used herein, “Deferred Developer Fee ” means the portion of the Borr ower’s development fee, if any, that is payable out of the Annual Project Revenue and not from capital sources, as set forth in the Project Budget. Disbursement of the Deferred Developer Fee (all or any part thereof) shall be subject to the provisions of the next paragraph.
In connection with Borrower’s eligibility to disburse all or any part of the Deferred Developer Fee, in the event the cost of completing the Project exceeds the amount set forth in the final Budget; then, to the extent necessary, the fu nds otherwise available to pay the developer fee from capital sources shall be expended and used to pay the remaining costs of completing the Project to the extent necessary to ensure the completion of the Project and the balance of the developer fee shall be paid as Deferred Developer Fee in accordance with the priority set forth in the Partnership Agreement, and/or payable from the proceeds of any approved refinancing or transfer of the Property and/or the Project. In no event shall Borrower be eligible for disbursement of the Deferred Developer Fee or any part thereof prior to completion of the Project, as approved by the City Manager as evidenced by the issuance by City of the Release of Construction Covenants.
As used herein, “Operating Expenses” means actual, reasonable and customary (for comparable high quality rental Projects in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Project in a calendar yea r, which are in accordance with the annual Operating Budget approved by City pursuant to Section 9 of City Regulatory Agreement, including, without limitation, painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance, security, advertising and promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings, fees and expenses of property management, fees and expenses of accountants, attorneys and other professionals, and other actual, reasonable and customary operating costs which are directly incurred and paid by Borrower, but which are not paid from or eligible to be paid from the Operating Reserve or any other reserve accounts. In addition, Operating Expenses shall include payment annually of (a) a property management fee in an amount not to exceed ___________ Dollars ($___) per unit, increasing by ___________ percent (_%) each year following the first year of operation ; and ( b) a social services fee in an amount not to exceed ______________ Dollars ($_____) per year, inc reasing by ______ percent (_%) each year following the first year of operation, provided Borrower provides the social services described in (1) the Tenant Services Agreement that was included in Borrower’s tax credit application, and ( 2) the Scope of Development . Operating Expenses shall not in clude any of the following: (i) salaries of employees of Borrower or Borrower’s general overhead
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expenses, or expenses, costs and fees paid to an Affiliate of Borrower, to the extent any of the foregoing exceed the expenses, costs or fees that would be payable in a bona fide arms’ length transaction between unrelated parties in the Orange County area for the same work or services; (ii) any amounts paid directly by a tenant of the Project to a third party in connection with expenses which, if incurred by Bo rrower, would be Operating Expenses; (iii) optional or elective payments with respect to the Construction Loan; (iv) any payments with respect to any Project -related loan or financing that has not been approved by City; (v) expenses, expenditures, and char ges of any nature whatsoever arising or incurred by Borrower prior to completion of the Project with respect to the development of the Project, or any portion thereof, including, without limitation, all predevelopment and preconstruction activities conducted by Borrower in connection with the Project, including without limitation, the preparation of all plans and the performance of any tests, studies, investigations or other work, and the construction of the Project and any on site or off site work in connection therewith; or (vi) depreciation, amortization, and accrued principal and interest expense on deferred payment debt.
As used herein, “Operating Reserve” shall have the meaning ascribed thereto in the City Regulatory Agreement.
As used herein, “Partnership Agreement” means the agreement which sets forth the terms of the Borrower’s limited partnership, as such agreement may be amended from time to time.
As used herein, “Refinancing Net Proceeds” means the proceeds of any approved refinancing of the Construction Loan or other approved financing secured by the Property, net of the following actual costs and fees incurred: (i) the amount of the financing which is satisfied out of such proceeds, (ii) reasonable and customary costs and expenses incurred in connection with the refinancing, (iii) the balance, if any, of the Defe rred Developer Fee, and (iv) the amount of proceeds required to be reserved for the repair, rehabilitation, reconstruction or refurbishment of the Project.
As used herein, “Reserve Deposits ” means any payments to the Capital Replacement Reserve account and payments to the Operating Reserve account pursuant to Sections 10 and 11, respectively, of the City Regulatory Agreement or such higher amounts as may be otherwise required by (i) any lender of a Project-related loan that has been approved by City, or (ii ) the Investor, pursuant to the terms of the Partnership Agreement.
As used herein, “Residual Receipts” means Annual Project Revenue less the sum of:
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve; (iv) Reserve Deposits to the Operating Reserve;
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(v) Asset/partnership management fees payable to Borrower's partners in an amount not to exceed, cumulatively, Twenty Thousand Dollars ($20,000), increased by three percent (3%) each year following the first year of operation; and (vi) Deferred Developer Fees.
In the event any calculation of Annual Project Revenue less subsections (i) through (vi) inclusive above results in a negative number, then Residual Receipts shall be zer o ($0) for that year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item. The calculation of Residual Receipts shall be conducted at Borrower’s sole cost and expense, by a third party auditor and submitted to Borrower annually, along with Borrower’s payment of Residual Receipts.
As used herein, “Transfer Net Proceeds” means the proceeds of any sale or other transfer, in whole or part, of the Property or Borrower’s interests therein, net only of (i) the reasonable and customary costs and expenses incurred in connection with such transfer; (ii) the amount of the financing which is satisfied out of such proceeds, (iii) the balance, if any, of the Deferred Developer Fee , and (iv) the amount of proceeds required to be reserved for the repair, rehabilitation, reconstruction or refurbishment of the Project.
Notwithstanding anything to the contrary in this Note, City’s total share of Residual Receipts due and payable hereunder, under the City Land Loan Note, and under the promissory note securing the City HOME Loan shall all be allocated towards repayment of the Land Loan Note until the Land Loan Note is fully repaid, at which time, one hundred percent (100%) of City’s total share of Residual Receipts shall be allocated to repayment of th is Note until this Note has been fully repaid, at which time one hundred p ercent (100%) of City’s total share of Residual Receipts shall be allocated to repayment of th e note evidencing the City HOME Loan.
5. Security. Borrower’s obligations under this Note and the Agreement shall, at all times during which any amount remains outstanding hereunder, be secured by the City Bond Loan Deed of Trust, which City Bond Loan Deed of Trust shall only be subordinated to the approved deed(s) of trust for the Construction Loan and Take-Out Loan, and such encumbrances approved by City in writ ing, pursuant to a written subordination agreement in a form approved by the City Attorney. Upon execution of the same, the terms of the City Bond Loan Deed of Trust are incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein.
6. Maturity. This Note shall be due and payable on the fifty -fifth (55 th) anniversary of the date the Construction Loan converts to a Take-Out Loan.
7. Application of Payments. All payments shall be applied (i) first, to costs and fees owing under this Note, (ii) second, to the payment of unpaid accrued interest owing under this Note for each calendar year in which no payment was made by Borrower
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pursuant to Section 4 above, (iii) third, to the payment of accrued interest for the preceding calendar year, and (iv) fourth, to payment of principal.
8. Waivers.
(a) Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time at City’s sole discretion and that City may accept security in consideration for any such extension or release any security for this Note at its sole discretion all without in any way affecting the liability of Borrower. (b) No extension of time for payment of this Note made by agreement by City with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever.
(d) Borrower waives presentment, demand, notice of protest and nonpayment, notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the rights or interests in or to properties securing this Note, and the benefit of any exemption under any homestead exemption laws, if applicable. (e) No previous waiver and no failure or delay by City in acting with respect to the terms of this Note or the City Bond Loan Deed of Trust shall constitute a waiver of any breach, default, or failure or condition under this Note, the City Bond Loan Deed of Trust or the obligations secured thereby. A waiv er of any term of this Note, the City Bond Loan Deed of Trust or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
9. Attorneys’ Fees and Costs . Borrower agrees that if any amounts due under this Note are not paid when d ue, Borrower will pay all costs and expenses of collection and reasonable attorneys’ fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed.
10. Joint and Several Obligation. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs, successors and assigns.
11. Amendments and Modifications. This Note may not be changed orally, but only by an amendment approved by City and evidenced in a writing signed by Borrower and by City.
12. City May Assign. City may, at its option, assign its right to receive payment under this Note without necessity of obtaining the consent of the Borrower.
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13. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer any portion of this Note without the prior express written consent of City, which consent shall not unreasonably be withheld, except pursuant to a transfer that is authorized under Section 14 of the Agreement.
14. Acceleration and Other Remedies . Upon the occurrence of a Default, City may, at City’s option, declare the outstanding principal amount of this Note, together with the then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured by the City Bond Loan Deed of Trust, to be due and payable immediately, and upon such declaration, such principal and interest and other sums shall immediately become and be due and payable without demand or notice, all as further set forth in the City Bond Loan Deed of Trust. All costs of collection, including, but not limited to, reasonable attorneys’ fees and all expenses incurred in connection with protection of, or realization on, the security for this Note, may be added to the principal hereunder, and shall accrue interest as provided herein. City shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as City may consider appropriate, without waiving any rights with respect to any of the security.
Any delay or omission on the part of City in exercising any right hereunder, under the Agreement or under the City Bond Loan Deed of Trust shall not operate as a waiver of such right, or of any other right. No single or partial exercise of any right or remedy hereunder or under the Agreement or any other docu ment or agreement shall preclude other or further exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such payment shall not be a waiver of City’s right to either require prompt payment when due of all other sums payable hereunder or to declare a Default for failure to make prompt or complete payment.
15. Alternate Rate. Upon the occurrence of any Default, or upon the maturity hereof (by acceleratio n or otherwise), the entire unpaid principal sum, at the option of City, shall bear interest, from the date of occurrence of such Default or maturity and after judgment and until collection, at the “Alternate Rate”, such rate being the highest interest rate then permitted by law. Interest calculated at the Alternate Rate, when and if applicable, shall be due and payable immediately without notice or demand. Borrower agrees that in the event of any Default, City will incur additional expense in servicing the loan evidenced by this Note and will suffer damage and loss resulting from such Default.
Borrower agrees that in such event City shall be entitled to damages for the detriment caused thereby, which damages are extremely difficult and impractical to asc ertain.
Therefore, Borrower agrees that the Alternate Rate (as applied to the unpaid principal balance, accrued interest, fees, costs and expenses incurred) is a reasonable estimate of such damages to City, and Borrower agrees to pay such sum on demand.
16. Consents. Borrower hereby consents to: (a) any extension (whether one or more) of the time of payment under this Note, (b) the release or surrender or exchange or substitution of all or any part of the security, whether real or personal, or direct or indirect, for the payment hereof, (c) the granting of any other indulgences to Borrower, and (d) the taking or releasing of other or additional parties primarily or contingently liable hereunder. Any such extension, release, surrender, exchange or substit ution may be
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made without notice to Borrower or to any endorser, guarantor or surety hereof, and without affecting the liability of said parties hereunder.
17. Interest Rate Limitation. City and Borrower stipulate and agree that none of the terms and provisions contained herein or in any of the loan instruments shall ever 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 holder 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 such holder, be credited to the payment of the sums due hereunder or returned to Borrower.
18. Successors and Assigns. Whenever “City” is referred to in this Note, such reference shall be deemed to include City and its successors and assigns, including, without limitation, any successor to its rights, powers, and responsibilities, and any subsequent assignee or holder of this Note. All covenants, provisions and agreements by or on behalf of Borrower, and on beh alf of any makers, endorsers, guarantors and sureties hereof which are contained herein shall inure to the benefit of City and City’s successors and assigns.
19. Miscellaneous. Time is of the essence hereof. This Note shall be governed by and construed under the laws of the State of California except to the extent Federal laws preempt the laws of the State of California. Borrower irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue.
20. Non-Recourse Obligation . Borrower and its partners shall not be personally liable for the payment of this Note or for the payment of any deficiency established after judicial foreclosure or trustee ’s sale; provided, however, that the foregoing shall not in any way affect any rights City may have (as a secured party or otherwise) hereunder or under the Agreement or the City Bond Loan Deed of Trust to recover directly from Borrower any amounts, or any funds, damages or costs (including without limitation reasonable attorneys ’ fees and costs) incurred by City as a result of fraud, intentional misrepresentation or bad faith waste, and any costs and expenses incurred by City in connection therewith (including without limitation reasonable attorneys’ fees and costs).
21. Accounting.
(a) Accounting Terms and Determinations . Unless otherwise specified herein, (i) all accounting terms used herein shall be interpreted, (ii) all accounting determinations hereunder shall be made, and (c) all books, records and
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financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP, consistently applied, except for changes approved by City. (b) Financial Reporting and Accounting Covenants. Borrower shall permit the representatives of City at any time or from time to time, upon twenty-four (24) hours’ notice and during normal business hours, to inspect, audit, and copy all of Borrower’s books, records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to City the following:
(i) Annual Financial Statement. Borrower shall submit to City, on or before May 1 of each year commencing in the first year after the issuance of the first certificate of occupancy for the Project, an Annual Financial Statement, with respect to the Project that has been reviewed by an independent certified public accountant, together with an expressed written opinion of the certified public accountant that such Annual Financial Statement presents the financial position, results of operations, and cash flows of the Project fairly and in accordance with GAAP. (ii) Tax Returns. As soon as available, but in no event later than thirty (30) days after the time of filing with the Internal Revenue Service, the federal tax returns (and supporting schedules, if any) of Borrower. (iii) Audit Reports . Not later than ten (10) days after receipt thereof by Borrower, copies of all reports submitted to Borrower by independent public accountants in connection with each annual, interim or special audit of the financial statements of Borrower, made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit. If any such audit report results in Borrower restating Residual Receipts upward for any fiscal year, then Borrower shall accompany delivery of such audit report to City with the additional payment to City resulting from said restatement pursuant to Section 4 of this Note. If any such audit report results in Borrower restating Residual Receipts downward for any fiscal year, Borrower may carry forward the overpayment made to City pursuant to such Section 4 as a credit against payments thereunder in subsequent fiscal years. (c) Late Payment. If any annual payment required pursuant to Section 4 above is not received by City within ten (10) calendar days after payment is due, Borrower shall pay to City a late charge of five percent (5%) of such payment, such late charge to be immediately due and payable without demand by City. (d) Dispute Regarding Annual Financial Statement . If City disputes any Annual Financial Statement, City shall notify Borrower of such dispute within sixty (60) days after receipt of an Annual Financial Statement and the parties shall cause their representatives to meet and confer concerning the dispute and to us e all reasonable efforts to reach a mutually acceptable resolution of the matter in question within thirty (30) days after City’s notice of such dispute. If the parties are unable to reach a mutually acceptable resolution within such thirty (30) day period, then, within twenty (20) days after the expiration of such period, Borrower and City shall appoint a national firm of certified public accountants to review the dispute and to make a determination as to the matter in
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question within thirty (30) days aft er such appointment. If the parties cannot, within ten (10) days, agree upon the firm to be appointed, then, upon the application of either party, such firm shall be appointed by the Presiding Judge of the Superior Court for the County of Orange , Californ ia. Such firm ’s determination shall be final and binding upon the parties. Such firm shall have full access to the books, records and accounts of Borrower and the Property.
(e) Underpayment. If any audit by City reports an underpayment by Borrower on th is Note, Borrower shall pay the amount of such underpayment, together with the late charge set forth in Section 21(c) of this Note, to City within ten (10) days after written notice thereof to Borrower or, in the event of a dispute, after timely notice to Borrower of the resolution of such dispute by the independent firm of certified public accountants, as the case may be, and if such underpa yment amounts to more than five percent (5%) of the disputed payment for the period audited, then, notwithstanding anything to the contrary in this section, Borrower shall pay to City, within ten (10) days after written demand, City’s reasonable costs and expenses in conducting such audit and exercising its rights under this Section 21 of this Note. [End of document – Signature page follows]
Date: , 20__
BORROWER:
___________________________, L.P.,
a California limited partnership
By:
Its:
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18651856.3 a07/24/23 ATTACHMENT NO. 7B
ATTACHMENT NO. 7B
CITY LAND LOAN NOTE
[See following document]
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CITY PROMISSORY NOTE
(City Land Loan)
(1600 W. Commonwealth)
$10,700,000
_____________, 20__ Orange, California
FOR VALUE RECEIVED, _______________________, L.P., a California limited partnership (“ Borrower”), as maker and obligor, promises to pay to the CITY OF FULLERTON, a California municipal corporation (“City”), as holder and beneficiary, or order, at City’s office at 303 W. Commonwealth Avenue , Fullerton, CA 92832 , or such other place as City may designate in writing, the sum of (a) Ten Million Seven Hundred Thousand Dollars ($10,700,000), or so much thereof as may be disbursed pursuant to the “Agreement” (as defined below) (“Note Amount”), and (b) all costs and expenses payable hereunder, in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts.
1. Agreement. This City Promissory Note (“Note”) is given in accordance with that certain Affordable Housing and Property Disposition Agreement executed by City and Meta Development, LLC a California limited liability company (“Meta”), as “Develop er”, and thereafter assigned by Meta to Borrower on or about the date hereof (“Agreement”).
The rights and obligations of Borrower and City under this Note shall be governed by the Agreement and by the additional terms set forth in this Note. In the event of any inconsistencies between the terms of this Note and the terms of the Agreement or any other document related to the Note Amount, the terms of this Note shall prevail. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Agreement. An Event of Default by Developer under any of the provisions of the Agreement, and/or a default u nder any and all attachments and all breakout documents executed, attested and/or recorded in implementation of the Agreement, including, without limitation, the City Bond Loan Deed of Trust, City Bond Loan Note, City Land Loan Deed of Trust, City Regulatory Agreement, City HOME Loan Agreement or any of the attachment documents executed by Borrower in connection therewith, or the income and/or rent restrictions as set forth in the regulatory agreement which may be required to be recorded against the Property with respect to the issuance of Tax Credits for the Project (collectively, the “Transaction Documents”) shall, after the expiration of any cure period under the respective agreement or document, be a default under this Note (a “Default”), and a default under this Note, after notice and expiration of a ten (10) day cure period, shall be an Event of Default under the Agreement and a default under the Transaction Documents. Notwithstanding anything to the contrary set forth herein, City shall not exercise a ny right hereunder without providin g the limited partner of Borrower with not less than thirty (30) days prior written notice and right to cure any default giving rise to the exercise of said remedy. City agrees that any cure tendered b y the limited partn er of Borrower shall be accepted or rejected on the same terms and conditions as if tendered directly by Borrower.
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2. Carryback Financing. The Note Amount represents the Purchase Price for the Property.
3. Interest. The Note Amount shall bear simple interest at three percent (3%) per annum.
4. Repayment of Note Amount . The Note Amount shall be paid by the Borrower’s annual payment to City of fifty percent (50%) of the Residual Receipts from operation of the Project, as determined by a Residual Receipts calculation from the operation of the Project the preceding calendar year; provided, however, that said fifty percent (50%) shall be divided proportionately with any other lenders with loans payable from Residual Receipts or net cash flow, if any such loans are obtained by Developer.
Annual Residual Receipts payments shall be made by the Borrower by cashier’s check and shall be delivered on or before May 1st for each year during the term of this Note commencing in the first fiscal year following the date construction of the Project has been completed, and continuing until the Note Amount and all unpaid interest thereon has been repaid in full. Additionally, the Note Amount shall be paid by any or all of the following: (i) seventy-five percent (7 5%) of the Refinancing Net Proceeds immediately upon any refinancing of the loans secured by the Property (or any part thereof), (ii) seventy-five percent (75%) of the Transfer Net Proceeds immediately upon any transfer in whole or in part of the Project, and (iii) any Cost Savings, pursuant to Section 9.19 of the Agreement. Notwithstanding the foregoing, in the event of a re -syndication of the Project by an affiliate of the Borrower after the expiration of the Tax Credit compliance period, City may, in its sole and absolute discretion, agree to allow the City Loans to be assumed and remain outstanding.
As used herein, “Affiliate” means any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Borrower which, if Borrower is a partnership or limited liability company, shall include each of the constituent members or general partners, respectively thereof. The term “control” as used in the immediately preceding sentence, means, with respect to a person that is a corporation, the right to the exercise , directly or indirectly, of more than fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direc t or cause the direction of the management or policies of the controlled person.
As used herein, “ Annual Financial Statement ” means each certified financial statement of Borrower for the Project using generally accepted accounting principles (“GAAP”), as separately accounted for this Project, including Operating Expenses and Annual Project Revenue, prepared annually at Borrower’s expense, by an independent certified public accountant reasonably acceptable to City.
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As used herein, “ Annual Project Revenue ” m eans all gross income and all revenues of any kind from the Project in a calendar year, of whatever form or nature, whether direct or indirect, with the exception of the items excluded below, actually received by or paid to or for the account or benefit of Borrower or any Affiliate of Borrower or any of their agents or employees, from any and all sources, resulting from or attributable to the ownership, operation, leasing and occupancy of the Project, determined on the basis of generally accepted accounting principles applied on a consistent basis, and shall include, but not be limited to: (i) gross rentals paid by tenants of the Project under leases, and payments and subsidies of whatever nature, including without limitation any payments, vouchers or subsid ies from the U.S. Department of Housing and Urban Development or any other person or organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of the Project to Borrower or any Affiliate of Borrower on account of Operating Expenses for further disbursement by Borrower or such Affiliate to a third party or parties, (iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions, vending machines, coin laundry and similar sources, (v) other fees, charges or payments not denominated as rental but payable to Borrower in connection with the rental of office, retail, storage, or other space in the Project, (vi) consideration received in whole or in part for the cancellation, modification, extension or renewal of leases, and (vii) interest and other investment earnings on security deposits, reserve accounts and other Project accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the foregoing, gross income shall not include the following items: (a) security deposits from tenants (except when applied by Borrower to rent or other amounts owing by tenants); (b) capital contributions to Borrower by its members, partners or shareholders (including capital contrib utions required to pay any Deferred Developer Fee); (c) condemnation or insurance proceeds; (d) funds received from any source actually and directly used for initial development of the Project; (e) receipt by an Affiliate of management fees or other bona fide arms-length payments for reasonable and necessary Operating Expenses associated with the Project; (f) Transfer Net Proceeds; or (g) Refinancing Net Proceeds.
As used herein “ Capital Replacement Reserve” shall have the meaning ascribed thereto in the City Regulatory Agreement.
As used herein, “CPI Adjustment” means the increase in the cost of living index, as measured by the Consumer Price Index for All Urban Consumers, Los Angeles - Riverside-Orange County statistical area, all items (1982 -84 = 100) pub lished by the United States Department of Labor, Bureau of Labor Statistics (“CPI”) in effect as of the date on which the Certificate of Occupancy is issued for the Project to the CPI in effect as of the date on which an adjustment is made. If such index is discontinued or revised, such other index with which such index is replaced (or if not replaced, another index which reasonably reflects and monitors consumer prices) shall be used in order to obtain substantially the same results as would have been obtained if the discontinued index had not been discontinued or revised. If the CPI is changed so that the base year is other than 1982 -84, the CPI shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics.
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As used herein, “Debt Service” means payments made in a calendar year pursuant to the approved Construction Loan or the Take-Out Loan, as applicable, obtained for the construction/development, and ownership of the Project, as set forth in the Project Budget, or any permitted refinancing or modification thereof, but excluding payments made pursuant to this Note.
As used herein, “ Deferred Developer Fee ” means the portion of the Borrower’s development fee, if any, that is payable out of the Annual Project Revenue and not from capital sources, as set forth in the Project Budget. Disbursement of the Deferred Developer Fee (all or any part thereof) shall be subject to the provisions of the next paragraph.
In connection with Borrower’s eligibility to disburse all or any part of the Deferred Developer Fee, in the event the cost of completing the Project exceeds the amount set forth in the final Budget; then, to the extent necessary, the funds otherwise available to pay the developer fee from capital sources shall be expended and used to pay the remaining costs of completing the Project to the extent necessary to ensure the completion of the Project and the balance of the developer fee shall be paid as Deferred Developer Fee in accordance with the priority set forth in the Partnership Agreement, and/or payable from the proceeds of any approved refinancing or transfer of the Property and/or the Project. In no event shall Borrower be eligible for disbursement of the Deferred Developer Fee or any part thereof prior to completion of the Project, as approved by the City Manager as evidenced by the issuance by City of the Release of Construction Covenants.
As used herein, “ Operating Expenses” means actual, reasonable and customary (for comparable high quality rental Projects in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Project in a calendar year, which are in accordance with the annual Operating Budget approved by City pursuant to Section 9 of City Regulatory Agreement, including, without limitation, painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance, security, advertising and promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings, fees and expenses of property managem ent, fees and expenses of accountants, attorneys and other professionals, and other actual, reasonable and customary operating costs which are directly incurred and paid by Borrower, but which are not paid from or eligible to be paid from the Operating Res erve or any other reserve accounts. In addition, Operating Expenses shall include payment annually of (a) a property management fee in an amount not to exceed ___________ Dollars ($___) per unit, increasing by ___________ percent (_%) each year following the first year of operation ; and ( b) a social services fee in an amount not to exceed ______________ Dollars ($_____) per year, inc reasing by ______ percent (_%) each year following the first year of operation, provided Borrower provides the social services described in (1) the Tenant Services Agreement that was included in Borrower’s tax credit application, and ( 2) the Scope of Development. Operating Expenses shall not include any of the following: (i) salaries of employees of Borrower or Borrower’s general overhead
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expenses, or expenses, costs and fees paid to an Affiliate of Borrower, to the extent any of the foregoing exceed the expenses, costs or fees that would be payable in a bona fide arms’ length transaction between unrelated parties in the Orange County area for the same work or services; (ii) any amounts paid directly by a tenant of the Project to a third party in connection with expenses which, if incurred by Borrower, would be Operating Expenses; (iii) optional or elective payments with respect to the Construction Loan; (iv) any payments with respect to any Project -related loan or financing that has not been approved by City; (v) expenses, expenditures, and charges of any nature whatsoever arising or incurred by Borrower prior to completi on of the Project with respect to the development of the Project, or any portion thereof, including, without limitation, all predevelopment and preconstruction activities conducted by Borrower in connection with the Project, including without limitation, the preparation of all plans and the performance of any tests, studies, investigations or other work, and the construction of the Project and any on site or off site work in connection therewith; or (vi) depreciation, amortization, and accrued principal and interest expense on deferred payment debt.
As used herein, “ Operating Reserve” shall have the meaning ascribed thereto in the City Regulatory Agreement.
As used herein, “ Partnership Agreement” means the agreement which sets forth the terms of the Borrower’s limited partnership, as such agreement may be amended from time to time.
As used herein, “Refinancing Net Proceeds” means the proceeds of any approved refinancing of the Construction Loan or other approved financing secured by the Property, net of the following actual costs and fees incurred: (i) the amount of the financing which is satisfied out of such proceeds, (ii) reasonable and customary costs and expenses incurred in connection with the refinancing, (iii) the balance, if any, of the Deferred Developer Fee, and (iv) the amount of proceeds required to be reserved for the repair, rehabilitation, reconstruction or refurbishment of the Project.
As used herein, “ Reserve Deposits ” means any payments to the Capital Replacement Reserve account and payments to the Operating Reserve account pursuant to Sections 10 and 11, respectively, of the City Regulatory Agreement or such higher amounts as may be otherwise required by (i) any lender of a Project-related loan that has been approved by City, or (ii) the I nvestor, pursuant to the terms of the Partnership Agreement.
As used herein, “Residual Receipts” means Annual Project Revenue less the sum of:
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve; (iv) Reserve Deposits to the Operating Reserve;
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(v) Asset management fees payable to Borrower's partners in an amount not to exceed, cumulatively, Twenty Thousand Dollars ($20,000), increased by three percent (3%) each year following the first year of operation; and (vi) Deferred Developer Fees.
In the event any calculation of Annual Project Revenue less subsections (i) through (vi) inclusive above results in a negative number, then Residual Receipts shall be zer o ($0) for that year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item. The calculation of Residual Receipts shall be conducted at Borrower’s sole cost and expense, by a third party auditor and submitted to Borrower annually, along with Borrower’s payment of Residual Receipts.
As used herein, “Transfer Net Proceeds” means the proceeds of any sale or other transfer, in whole or part, of the Property or Borrower’s interests therein, net only of (i) the reasonable and customary costs and expenses incurred in connection with such transfer; (ii) the amount of the financing which is satisfied out of such proceeds, (iii) the balance, if any, of the Deferred Developer Fee , and (iv) the amount of proceeds required to be reserved for the repair, rehabilitation, reconstruction or refurbishment of the Project.
Notwithstanding anything to the contrary in this Note, City’s total share of Residual Receipts due and payable hereunder, under the City Bond Loan Note, and under the promissory note securing the City HOME Loan shall all be allocated towards repayment of this Note until this Note is fully repaid , at which time, one hundred percent (100%) of City’s total share of Residual Receipts shall be allocated to repayment of th e City Bond Loan Note until the City Bond Loan Note has been fully repaid, at which time one hundred percent (100%) of City’s total share of Residual Receipts shall be allocated to repayment of the note evidencing the City HOME Loan.
5. Security. Borrower’s obligations under this Note and the Agreement shall, at all times during which any amount remains outstanding hereunder, be secured by the City Land Loan Deed of Trust, which City Land Loan Deed of Trust shall only be subordinated to the approve d deed(s) of trust for the Construction Loan and Take -Out Loan, and such encumbrances approved by City in writing, pursuant to a written subordination agreement in a form approved by the City Attorney. Upon execution of the same, the terms of the City Land Loan Deed of Trust are incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein.
6. Maturity. This Note shall be due and payable on the fifty -fifth (55 th) anniversary of the date the Construction Loan converts to a Take-Out Loan.
7. Application of Payments. All payments shall be applied (i) first, to costs and fees owing under this Note, (ii) second, to the payment of unpaid accrued interest owing under this Note for each calendar year in which no payment was made by Borrower
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pursuant to Section 4 above, (iii) third, to the payment of accrued interest for the preceding calendar year, and (iv) fourth, to payment of principal.
8. Waivers.
(a) Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time at City’s sole discretion and that City may accept security in consideration for any such extension or release any security for this Note at its sole discretion all without in any way affecting the liability of Borrower. (b) No extension of time for payment of this Note made by agreement by City with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever.
(d) Borrower waives presentment, demand, notice of protest and nonpayment, notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the rights or interests in or to properties securing this Note, and the benefit of any exemption under any homestead exemption laws, if applicable. (e) No previous waiver and no failure or delay by City in acting with respect to the terms of t his Note or the City Land Loan Deed of Trust shall constitute a waiver of any breach, default, or failure or condition under this Note, the City Land Loan Deed of Trust or the obligations secured thereby. A waiver of any term of this Note, the City Land Loan Deed of Trust or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
9. Attorneys’ Fees and Costs . Borrower agrees that if any amounts due under this Note are not paid whe n due, Borrower will pay all costs and expenses of collection and reasonable attorneys’ fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed.
10. Joint and Several Obligation. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs, successors and assigns.
11. Amendments and Modifications. This Note may not be changed orally, but only by an amendment app roved by City and evidenced in a writing signed by Borrower and by City.
12. City May Assign. City may, at its option, assign its right to receive payment under this Note without necessity of obtaining the consent of the Borrower.
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13. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer any portion of this Note without the prior express written consent of City, which consent shall not unreasonably be withheld, except pursuant to a transfer that is authorized under Section 14 of the Agreement.
14. Acceleration and Other Remedies . Upon the occurrence of a Default, City may, at City’s option, declare the outstanding principal amount of this Note, together with the then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured by the City Land Loan Deed of Trust, to be due and payable immediately, and upon such declaration, such principal and interest and other sums shall immediately become and be due and payable without demand or notice, all as further set forth in the City Land Loan Deed of Trust. All costs of collection, including, but not limited to, reasonable attorneys’ fees and all expenses incurred in connection with protection of, or realization on, the security for this Note, may be added to the principal hereunder, and shall accrue interest as provided herein. City shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as City may consider appropriate, without waiving a ny rights with respect to any of the security.
Any delay or omission on the part of City in exercising any right hereunder, under the Agreement or under the City Land Loan Deed of Trust shall not operate as a waiver of such right, or of any other right. No single or partial exercise of any right or remedy hereunder or under the Agreement or any other document or agreement shall preclude other or further exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such payment shall not be a waiver of City’s right to either require prompt payment when due of all other sums payable hereunder or to declare a Default for failure to make prompt or complete payment.
15. Alternate Rate. Upon the occurrence of any Default, or upon the maturity hereof (by acceleration or otherwise), the entire unpaid principal sum, at the option of City, shall bear interest, from the date of occurrence of such Default or maturity and after judgment and until collection, at the “Alternate Rate”, such rate being the highest interest rate then permitted by law. Interest calculated at the Alternate Rate, when and if applicable, shall be due and payable immediately without not ice or demand. Borrower agrees that in the event of any Default, City will incur additional expense in servicing the loan evidenced by this Note and will suffer damage and loss resulting from such Default.
Borrower agrees that in such event City shall be entitled to damages for the detriment caused thereby, which damages are extremely difficult and impractical to ascertain.
Therefore, Borrower agrees that the Alternate Rate (as applied to the unpaid principal balance, accrued interest, fees, costs and ex penses incurred) is a reasonable estimate of such damages to City, and Borrower agrees to pay such sum on demand.
16. Consents. Borrower hereby consents to: (a) any extension (whether one or more) of the time of payment under this Note, (b) the release or surrender or exchange or substitution of all or any part of the security, whether real or personal, or direct or indirect, for the payment hereof, (c) the granting of any other indulgences to Borrower, and (d) the taking or releasing of other or additional parties primarily or contingently liable hereunder. Any such extension, release, surrender, exchange or substitution may be
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made without notice to Borrower or to any endorser, guarantor or surety hereof, and without affecting the liability of said parties hereunder.
17. Interest Rate Limitation. City and Borrower stipulate and agree that none of the terms and provisions contained herein or in any of the loan instruments shall ever 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 holder 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 such holder, be credited to the payment of the sums due hereunder or returned to Borrower.
18. Successors and Assigns. Whenever “City” is referred to in this Note, such reference shall be deemed to include City and its successors and as signs, including, without limitation, any successor to its rights, powers, and responsibilities, and any subsequent assignee or holder of this Note. All covenants, provisions and agreements by or on behalf of Borrower, and on behalf of any makers, endorse rs, guarantors and sureties hereof which are contained herein shall inure to the benefit of City and City’s successors and assigns.
19. Miscellaneous. Time is of the essence hereof. This Note shall be governed by and construed under the laws of the State of California except to the extent Federal laws preempt the laws of the State of California. Borrower irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United Stat es District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue.
20. Non-Recourse Obligation . Borrower and its partners shall not be personally liable for the payment of this Note or for the payment of any deficiency established after judicial foreclosure or trustee’s sale; provided, however, that the foregoing shall not in any way affect any rights City may have (as a secured party or otherwise) hereunder or under the Agreement or the City Land Loan Deed of Trust to recover directly from Borrower any amounts, or any funds, damages or costs (including without limitation reasonable attorneys’ fees and costs) incurred by City as a result of fraud, intentional misrepresentation or bad faith waste, and any costs and expenses incurred by City in connection therewith (including without limitation reasonable attorneys’ fees and costs).
21. Accounting.
(a) Accounting Terms and Determinations . Unless otherwise specified herein, (i) all accounting terms used herein shall be interpreted, (ii) all accounting determinations hereunder shall be made, and (c) all books, record s and
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financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP, consistently applied, except for changes approved by City. (b) Financial Reporting and Accounting Covenants. Borrower shall permit the representatives of City at any time or from time to time, upon twenty-four (24) hours’ notice and during normal business hours, to inspect, audit, and copy all of Borrower’s books, records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to City the following:
(i) Annual Financial Statement. Borrower shall submit to City, on or before May 1 of each year commencing in the first year after the issuance of the first certificate of occupancy for the Project, an Annual Financial Statement, with respect to the Project that has been revie wed by an independent certified public accountant, together with an expressed written opinion of the certified public accountant that such Annual Financial Statement presents the financial position, results of operations, and cash flows of the Project fairly and in accordance with GAAP. (ii) Tax Returns. As soon as available, but in no event later than thirty (30) days after the time of filing with the Internal Revenue Service, the federal tax returns (and supporting schedules, if any) of Borrower. (iii) Audit Reports . Not later than ten (10) days after receipt thereof by Borrower, copies of all reports submitted to Borrower by independent public accountants in connection with each annual, interim or special audit of the financial statements of Borrower, m ade by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit. If any such audit report results in Borrower restating Residual Receipts upward for any fiscal year, then Borrower sha ll accompany delivery of such audit report to City with the additional payment to City resulting from said restatement pursuant to Section 4 of this Note. If any such audit report results in Borrower restating Residual Receipts downward for any fiscal year, Borrower may carry forward the overpayment made to City pursuant to such Section 4 as a credit against payments thereunder in subsequent fiscal years. (c) Late Payment. If any annual payment required pursuant to Section 4 above is not received by City within ten (10) calendar days after payment is due, Borrower shall pay to City a late charge of five percent (5%) of such payment, such late charge to be immediately due and payable without demand by City. (d) Dispute Regarding Annual Financial Statement . If City disputes any Annual Financial Statement, City shall notify Borrower of such dispute within sixty (60) days after receipt of an Annual Financial Statement and the parties shall cause their representatives to meet and confer concerning the dispute a nd to use all reasonable efforts to reach a mutually acceptable resolution of the matter in question within thirty (30) days after City’s notice of such dispute. If the parties are unable to reach a mutually acceptable resolution within such thirty (30) day period, then, within twenty (20) days after the expiration of such period, Borrower and City shall appoint a national firm of certified public accountants to review the dispute and to make a determination as to the matter in
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question within thirty (30) days after such appointment. If the parties cannot, within ten (10) days, agree upon the firm to be appointed, then, upon the application of either party, such firm shall be appointed by the Presiding Judge of the Superior Court for the County of Orange , California. Such firm’s determination shall be final and binding upon the parties. Such firm shall have full access to the books, records and accounts of Borrower and the Property.
(e) Underpayment. If any audit by City reports an underpayment by Borrower on this Note, Borrower shall pay the amount of such underpayment, together with the late charge set forth in Section 21(c) of this Note, to City within ten (10) days after written notice thereof to Borrower or, in the event of a dispute, after timely no tice to Borrower of the resolution of such dispute by the independent firm of certified public accountants, as the case may be, and if such underpayment amounts to more than five percent (5%) of the disputed payment for the period audited, then, notwithsta nding anything to the contrary in this section, Borrower shall pay to City, within ten (10) days after written demand, City’s reasonable costs and expenses in conducting such audit and exercising its rights under this Section 21 of this Note. [End of document – Signature page follows]
Date: , 20__
BORROWER:
___________________________, L.P.,
a California limited partnership
By:
Its:
882/036753-0123
18651856.3 a07/24/23 ATTACHMENT NO. 8A
ATTACHMENT NO. 8A
CITY BOND LOAN DEED OF TRUST
[See following document]
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RECORDING REQUESTED BY:
AND WHEN RECORDED RETURN TO:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attn: City Clerk
APN: ________________ [Free Recording Requested] [Government Code Sections 6103 and 27383]
D E E D OF T R U S T
W I T H A S S I G N M E N T OF R E N T S
NOTE: RIDER ATTACHED TO THIS DEED OF TRUST CONTAINING TERMS INCLUDING SECURITY AGREEMENT AND FIXTURE FILING.
This DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED HERETO ( “Deed of Trust ”), is made __________, _____, between ____________________, a California Limited Partnership, herein called TRUSTOR, whose address is __________________________, CA _____________, FIDELITY NATIONAL TITLE COMPANY, a California corporation, herein called TRU STEE, and CITY OF FULLERTON, a California municipal corporation, herein called BENEFICIARY.
WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, Trustor ’s estate, dated on or about the date hereof, in that property in the City of Fullerton, County of Orange, State of California, described in Exhibit “A” (the “Property”), together with the rents, issues and profits thereof, subject, however, to the right, p ower and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of ______________________________________ DOLLARS ($ ____________), with interest t hereon according to the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof; (2) the performance of each agreement of Trustor incorporated by reference or contained herein; and (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or its successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.
To protect the securi ty of this Deed of Trust, and with respect to the Property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely:
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COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-
31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los
Angeles
T-
3878
874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San
Bernardino
6213 768 Sutter 655 585
Contra
Costa
4684 1 Mariposa 90 453 San
Francisco
A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis
Obispo
1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Diego 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa
Barbara
2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 San Diego 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described.
Said agreements, terms and provisions contained in said subdivisions A and B (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, pro vided the charge therefor does not exceed the maximum allowed by law.
The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth.
SEE RIDERS ATTACHED TO THIS DEED OF TRUST
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be const ructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the spe cific enumerations herein not excluding the general.
2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney ’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
4) To pay: at least ten (10) days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears
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to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his or her reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the d ate of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the max imum allowed by law at the time when said statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance.
2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written reque st of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.
4) That upon written request of Beneficiary stating that all sums secured hereby have been paid , and upon surrender of this Deed and said note 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 hereu nder. The recitals in 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”. 5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in pay ment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default (beyond any applicable cure period, and during the continu ance of such default), Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter
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upon and take possession of said property or any part thereof, in its own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney’s fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may de clare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record.
Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or impli ed. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
7) 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 said 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
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hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee.
8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, th eir heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary means the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the cont ext so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.
9) That Trustee accepts this Trust when this Deed, 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.
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DO NOT RECORD -REQUEST FOR FULL RECONVEYANCE
TO _________________________________, TRUSTEE:
The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, an all other evidences of indebtedness se cured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same.
Dated _______________________________________
_____________________________________
_____________________
_____________________________________
_____________________
Please mail Deed of Trust,
Note and Reconveyance to
______________________________________________________________________ __________
Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made.
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EXHIBIT “A”
LEGAL DESCRIPTION OF PROPERTY
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RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS
This RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ( “Rider”) is executed this ___ day of __________ by _________________________, L.P., a California limited partnership, herein “Trustor,” in favor of the CITY OF FULLERTON, a California municipal corporation , herein “Beneficiary,” the same parties to that certain form Deed of Trust With Assignment of Rents, of even date hereto, to which this Rider is attached. This Rider is made a part of and is incorporated into said Deed of Trust. This Rider shall supersede any conflicting term or provision of the form Deed of Trust to which it is attached.
Reference is made to (i) that certain City Promissory Note (Bond Loan) executed by Trustor on or about the date set forth above, the repayment of which by Trustor is secured by this Deed of Trust ( “City Note”), (ii) that certa in Affordable Housing and Property Disposition Agreement between Meta Development, LLC, a California limited liability company, and Beneficiary dated for identification purposes only as of __________ as assigned to and assumed by the Trustor (collectively, the “Agreement”), and (iii) that certain Affordable Housing Regulatory Agreement, by and between Trustor and Beneficiary, for the benefit of Beneficiary, and recorded in the Office of the Orange County Recorder (“City Regulatory Agreement”).
The parties hereto agree:
1. Property. The estate subject to this Deed of Trust is Trustor’s fee estate in the real property legally described in the foregoing Deed of Trust to which this Rider is attached (the “Property”).
2. Obligations Secured . Trustor makes this grant and assignment for the purpose of securing the following obligations (“Secured Obligations”):
a. Payment to Beneficiary of all indebtedness at any time owing under the terms of the City Note;
b. Payment and performance of all obligations of Trustor under this Deed of Trust;
c. Payment and performance of all obligations of Trustor under the Agreement and the City Regulatory Agreement.
d. Payment and performance of all future advances and other obligations of Trustor or any other person, firm, or entity with the approval of Trustor, may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when the obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and
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e. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced.
3. Obligations. The term “obligations” is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges, late charges and fees at any time accruing or assessed on any of the Secured Obligations.
4. Incorporation. All terms of the City Note, Agreement, and City Regulatory Agreement, and the Secured Obligations are incorporated herein by this reference. All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of all of the foregoing documents.
5. Mortgagee-in-Possession. Neither the assignment of rents set forth in the Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed to make Beneficiary a “mortgagee-in-possession” or otherwise liable in any manner with resp ect to the Property, unless Beneficiary, in person or by agent, assumes actual possession thereof. Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or by agreement with Trustor, or the entering into possessio n of the Property by such receiver, be deemed to make Beneficiary a “mortgagee-in-possession” or otherwise liable in any manner with respect to the Property.
6. No Cure. In the event Beneficiary collects and receives any rents under the Deed of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of the default, except if and to the extent the same are sufficient to cure all monetary defaults and no other defaults then exist.
7. Possession Upon Default . Upon the oc currence of and during the continuation of a default, Beneficiary, after having given notice and the applicable cure periods having expired with the default having not been cured (hereinafter, a “default”), may, at its option, without any action on its par t being required and without in any way waiving such default, take possession of the Property in accordance with applicable law and have, hold, manage, lease and operate the same, on such terms and for such period of time as Beneficiary may deem proper, and may collect and receive all rents and profits, with full power to make, from time to time, all commercially reasonable alterations, renovations, repairs or replacements thereto as may seem proper to Beneficiary, and to apply such rents and profits to the payment of (a) the cost of all such alterations, renovations, repairs and replacements, and all costs and expenses incident to taking and retaining possession of the Property, and the management and operation thereof, and keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any other liens which may be prior in lien or payment of the City Note, and premiums for insurance, with interest on all such items; and (c) the indebtedness secured hereby, together with all costs and attorney’s fees, in such order or priority as to any of such items as Beneficiary in its sole discretion may determine, any statute, law, custom or use to the contrary notwithstanding. Any amounts received by Beneficiary or its agents in the performance of a ny acts prohibited by the terms of this assignment, including, but not limited to, any amounts received in connection with any cancellation, modification or
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amendment of any lease prohibited by the terms of this assignment and any rents and profits received by Trustor after the occurrence of a default shall be held by Trustor as trustee for Beneficiary and all such amounts shall be accounted for to Beneficiary and shall not be commingled with other funds of the Trustor. Any person receiving any portion of such trust funds shall receive the same in trust for Beneficiary as if such person had actual or constructive notice that such funds were impressed with a trust in accordance therewith.
8. Receiver. In addition to any and all other remedies of Beneficiary set forth under this Deed of Trust or permitted at law or in equity, if a default shall have occurred and not have been cured within any applicable cure period, Beneficiary, to the extent permitted by law and without regard to the value, adequacy or occupancy of the security for the Note and other sums secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Property and to collect all rents and profits and apply the sa me as the court may direct, and such receiver may be appointed by any court of competent jurisdiction by ex parte application and without notice, notice of hearing being hereby expressly waived. The expenses, including receiver ’s fees, attorneys ’ fees, co sts and agent ’s compensation, incurred pursuant to the power herein contained shall be secured by this Deed of Trust.
9. Notice to Beneficiary . Notices to Beneficiary shall be sent to Beneficiary addressed to:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attn: City Manager
Reference: 1600 W. Commonwealth Affordable Housing Project
10. Limited Partner Cure Rights. Notwithstanding anything to the contrary set forth herein, Beneficiary shall not exercise any right hereunder without providing the limited partner of Trustor with not less than thirty (30) days prior written notice and right to cure any default giving rise to the exercise of said remedy. Beneficiary agrees that any cure tendered by the limited partner of Trustor shall be accepted or rejected on the same terms and conditions as if tendered directly by Trustor.
11. Subordination Acknowledgement. Beneficiary hereby acknowledges that the loan secured by this Deed of Trust is also subordinate to the extended use agreement required to be executed by Borrower pursuant to Section 42(h)(6)(B) of the Internal Revenue Code, for purposes o f the low -income housing tax credits to be allocated to Trustor. In addition, Beneficiary hereby acknowledges that the loan secured by this Deed of Trust is further subordinate to Section 42(h)(6)(e)(ii) of the Internal Revenue Code, which prohibits the eviction or termination of a tenancy, other than for good cause, of an existing tenant of any low-income housing tax credit unit or any increase in the gross rent with respect to such unit, not otherwise permitted under Section 42, for a period of three (3) years after the date the Property is acquired by Beneficiary through foreclosure or instrument in lieu of foreclosure.
[signatures on next page]
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IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Trustor’s acknowledgment herein below, to be effective for all purposes as of the day and year first set forth above.
TRUSTOR:
______________________, L.P.,
a California Limited Partnership
By:
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A Notary Public or other officer completing this certificate verifies on ly the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument an d acknowledged to me that he/she/they executed the same in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________________ (Seal)
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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18651856.3 a07/24/23 ATTACHMENT NO. 8B
ATTACHMENT NO. 8B
CITY LAND LOAN DEED OF TRUST
[See following document]
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RECORDING REQUESTED BY:
AND WHEN RECORDED RETURN TO:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attn: City Clerk
APN: ________________ [Free Recording Requested] [Government Code Sections 6103 and 27383]
D E E D OF T R U S T
W I T H A S S I G N M E N T OF R E N T S
NOTE: RIDER ATTACHED TO THIS DEED OF TRUST CONTAINING TERMS INCLUDING SECURITY AGREEMENT AND FIXTURE FILING.
This DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED HERETO (“Deed of Trust”), is made __________, _____, between ____________________, a California Limited Partnership, herein called TRUSTOR, whose address is __________________________, CA _____________, FIDELITY NATIONAL TITLE COMPANY , a California corporation, herein called TRUSTEE, and CITY OF FULLERTON, a California municipal corporation, herein called BENEFICIARY.
WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, Trustor’s estate, dated on or about the date hereof, in that property in the City of Fullerton, County of Orange, State of California, described in Exhibit “A” (the “Property”), together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given t o and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of ______________________________________ DOLLARS ($ ____________), with interest thereon according to the terms of a pro missory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof; (2) the performance of each agreement of Trustor incorporated by reference or contained herein; and (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or its successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with res pect to the Property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely:
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COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-
31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los
Angeles
T-
3878
874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San
Bernardino
6213 768 Sutter 655 585
Contra
Costa
4684 1 Mariposa 90 453 San
Francisco
A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis
Obispo
1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Diego 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa
Barbara
2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 San Diego 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described.
Said agreements, terms and provisions contained in said subdivisions A and B (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law.
The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth.
SEE RIDERS ATTACHED TO THIS DEED OF TRUST
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein no t excluding the general.
2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebte dness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
4) To pay: at least ten (10) days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears
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to be prior or superior hereto ; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his or her reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of expenditure at the amou nt allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the tim e when said statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance.
2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presenta tion of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.
4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this D eed and said note 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 in such re conveyance 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”. 5) That as additional security, Trustor hereby gives to and co nfers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secur ed hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default (beyond any applicable cure period, and during the continuance of such default), Benefic iary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter
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upon and take possession of said property or any part thereof, in its own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney’s fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record.
Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auctio n to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date he reof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, subst itute 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 said 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 origina l Trustor, Trustee and Beneficiary
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hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee.
8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary means the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.
9) That Trustee accepts this Trust when this Deed, 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.
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DO NOT RECORD -REQUEST FOR FULL RECONVEYANCE
TO _________________________________, TRUSTEE:
The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, an all other evidences of indebtedness secured by said Deed o f Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same.
Dated _______________________________________
_____________________________________
_____________________
_____________________________________
_____________________
Please mail Deed of Trust,
Note and Reconveyance to
______________________________________________________________________ __________
Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made.
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EXHIBIT “A”
LEGAL DESCRIPTION OF PROPERTY
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RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS
This RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS (“ Rider”) is executed this ___ day of __________ by _________________________, L.P., a California limited partnership, herein “Trustor,” in favor of the CITY OF FULLERTON, a California municipal corporation, he rein “Beneficiary,” the same parties to that certain form Deed of Trust With Assignment of Rents, of even date hereto, to which this Rider is attached. This Rider is made a part of and is incorporated into said Dee d of Trust. This Rider shall supersede any conflicting term or provision of the form Deed of Trust to which it is attached.
Reference is made to (i) that certain City Promissory Note (City Land Loan) executed by Trustor on or about the date set forth abov e, the repayment of which by Trustor is secured by this Deed of Trust (“City Note”), (ii) that certain Affordable Housing and Property Disposition Agreement between Meta Development, LLC, a California limited liability company, and Beneficiary dated for identification purposes only as of __________ as assigned to and assumed by the Trustor (collectively, the “Agreement”), and (iii) that certain Affordable Housing Regulatory Agreement, by and between Trustor and Beneficiary, for the benefit of Beneficiary, and recorded in the Office of the Orange County Recorder (“City Regulatory Agreement”).
The parties hereto agree:
1. Property. The estate subject to this Deed of Trust is Trustor’s fee estate in the real property legally described in the foregoing Deed o f Trust to which this Rider is attached (the “Property”).
2. Obligations Secured . Trustor makes this grant and assignment for the purpose of securing the following obligations (“Secured Obligations”):
a. Payment to Beneficiary of all indebtedness at any t ime owing under the terms of the City Note;
b. Payment and performance of all obligations of Trustor under this Deed of Trust;
c. Payment and performance of all obligations of Trustor under the Agreement and the City Regulatory Agreement.
d. Payment and p erformance of all future advances and other obligations of Trustor or any other person, firm, or entity with the approval of Trustor, may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when the obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and
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e. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced.
3. Obligations. The term “obligations” is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges, late charges and fees at any time accruing or assessed on any of the Secured Obligations.
4. Incorporation. All terms of the City Note, Agreement, and City Regulatory Agreement, and the Secured Obligations are incorporated herein by this reference. All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of all of the foregoing documents.
5. Mortgagee-in-Possession. Neither the assignment of rents set forth in the Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed to make Beneficiary a “mortgagee -in-possession” or otherwise liable in any manner with respect to the Property, unless Beneficiary, in person or by agent, assumes actual possession thereof. Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or by agreement wit h Trustor, or the entering into possession of the Property by such receiver, be deemed to make Beneficiary a “mortgagee-in-possession” or otherwise liable in any manner with respect to the Property.
6. No Cure. In the event Beneficiary collects and receives any rents under the Deed of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of the default, except if and to the extent the same are sufficient to cure all monetary defaults and no other defaults then exist.
7. Possession Upon Default . Upon the occurrence of and during the continuation of a default, Beneficiary, after having given notice and the applicable cure periods having expired with the default having not been cured (hereinafter, a “ default”), may, at its option, without any action on its part being required and without in any way waiving such default, take possession of the Property in accordance with applicable law and have, hold, manage, lease and operate the same, on such terms and for such period of time as Beneficiary may deem proper, and may collect and receive all rents and profits, with full power to make, from time to time, all commercially reasonable alterations, renovations, repairs or replacements thereto as may seem proper to Beneficiary, a nd to apply such rents and profits to the payment of (a) the cost of all such alterations, renovations, repairs and replacements, and all costs and expenses incident to taking and retaining possession of the Property, and the management and operation there of, and keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any other liens which may be prior in lien or payment of the City Note, and premiums for insurance, with interest on all such items; and (c) the indebtedness secure d hereby, together with all costs and attorney’s fees, in such order or priority as to any of such items as Beneficiary in its sole discretion may determine, any statute, law, custom or use to the contrary notwithstanding. Any amounts received by Benefici ary or its agents in the performance of any acts prohibited by the terms of this assignment, including, but not limited to, any amounts received in connection with any cancellation, modification or
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amendment of any lease prohibited by the terms of this ass ignment and any rents and profits received by Trustor after the occurrence of a default shall be held by Trustor as trustee for Beneficiary and all such amounts shall be accounted for to Beneficiary and shall not be commingled with other funds of the Trustor. Any person receiving any portion of such trust funds shall receive the same in trust for Beneficiary as if such person had actual or constructive notice that such funds were impressed with a trust in accordance therewith.
8. Receiver. In addition to any and all other remedies of Beneficiary set forth under this Deed of Trust or permitted at law or in equity, if a default shall have occurred and not have been cured within any applicable cure period, Beneficiary, to the extent permitted by law and without regard to the value, adequacy or occupancy of the security for the Note and other sums secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Property and to collect all rents and profits and apply the same as the court may direct, and such receiver may be appointed by any court of competent jurisdiction by ex parte application and without notice, notice of hearing being hereby expressly waived. The expenses, including receiver’s fees, attorneys’ fees, costs and agent’s compensation, incurred pursuant to the power herein contained shall be secured by this Deed of Trust.
9. Notice to Beneficiary . Notices to Beneficiary shall be sent to Beneficiary addressed to:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attn: City Manager
Reference: 1600 W. Commonwealth Affordable Housing Project
10. Limited Partner Cure Rights. Notwithstanding anything to the contrary set forth herein, Beneficiary shall not exercise any right hereunder without providing the limited partner of Trustor with not less than thirty (30) days prior written notice and right to cure any default giving rise to the exercise of said remedy. Beneficiary agrees that any cure tendered by the limited partner of Trustor shall be accepted or rejected on the same terms and conditions as if tendered directly by Trustor.
11. Subordination Acknowledgement. Benef iciary hereby acknowledges that the loan secured by this Deed of Trust is also subordinate to the extended use agreement required to be executed by Borrower pursuant to Section 42(h)(6)(B) of the Internal Revenue Code, for purposes of the low -income housing tax credits to be allocated to Trustor. In addition, Beneficiary hereby acknowledges that the loan secured by this Deed of Trust is further subordinate to Section 42(h)(6)(e)(ii) of the Internal Revenue Code, which prohibits the eviction or termination of a tenancy, other than for good cause, of an existing tenant of any low-income housing tax credit unit or any increase in the gross rent with respect to such unit, not otherwise permitted under Section 42, for a period of three (3) years after the date t he Property is acquired by Beneficiary through foreclosure or instrument in lieu of foreclosure.
[signatures on next page]
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IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Trustor’s acknowledgment herein below, to be effective for all purposes as of the day and year first set forth above.
TRUSTOR:
______________________, L.P.,
a California Limited Partnership
By:
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________________ (Seal)
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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18651856.3 a07/24/23 ATTACHMENT NO. 9
ATTACHMENT NO. 9
PROJECT BUDGET
[see following pages]
882/036753-0123
18651856.3 a07/24/23 ATTACHMENT NO. 10
ATTACHMENT NO. 10
CITY REGULATORY AGREEMENT
[See following document]
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REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attention: City Clerk
This document is exempt from a recording fee pursuant to Government Code Sections 6103 and 27383.
AFFORDABLE HOUSING REGULATORY AGREEMENT
This AFFORDABLE HOUSING REGULATORY AGREEMENT (this “Regulatory Agreement”), dated for purposes of identification only as of ________________ (the “Date of Regulatory Agreement ”), is entered by and between the CITY OF FULLERTON, a California municipal corporation (the “City”), and ________________, L.P., a California limited partnership (the “Developer”). City and Developer are hereinafter referred to individually as a “Party” and collectively as the “Parties.”
RECITALS
The following recitals are a substantive part of this Regulatory Agreement; all capitalized terms set forth in the Recitals shall have the meanings ascribed to such terms in Section 1 hereof.
A. City is a California municipal corporation, organized and existing pursuant to and under the general laws of the State of California.
B. City owns fee title to that certain real property located at 16 00 W.
Commonwealth Avenue in the City of Fullerton, County of Orange, State of California more particularly described in Exhibit “A”, which is attached hereto and incorporated herein by this reference (the “Property”).
C. City and Meta Development, LLC, a California limited liability company, (“Meta”), entered into an Affordable Housing and Property Disposition Agreement dated as of __________ (“Agreement”). On or about the same date hereof, Meta assigned the Agreement to Developer.
D. The Agreement provides for City to sell the Property to Developer and for Developer to subsequently transfer and convey the Property to a limited partnership for the limited partnership to construct and operate thereon a sixty-five (65) unit affordable rental apartment project with all but one (1) of such units restricted, throughout the term hereof, for occupancy by income- qualified households (the “Project”). The Agreement further provides that the Parties execute and record this Regulatory Agreement against the Property, to ensure that the Property shall be operated continuously as a n affordable rental apartment complex in accordance with the terms hereof.
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NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. DEFINITIONS.
“Additional Regulatory Agreements ” means the Tax Credit Regulatory Agreement, and any other regulatory agreement Developer is required to execute as a condition to obtaining financing to develop and/or operate the Project. “Affiliate” means any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Developer which, if Developer is a partnership or limited liability company, shall include each of the constituent members or general partners, respectively thereof. The term “control” as used in the immediately preceding sentence, means, with respect to a person that is a corporation, the right to the exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled person.
“Affordability Period” shall mean the period commencing upon the execution of this Regulatory Agreement by City and Developer and continuing until the fifty-fifth (55th) anniversary of the date City issues a Certificate of Occupancy for the Project. “Affordable Rent” means the maximum Monthly Rent that may be charged to and paid by Very Low Income Households, Low Income Households, and Moderate Income Households, as applicable, for the Affordable Units, as annually determined pursuant to Health and Safety Code Section 50053(b), as of the date hereof, and the regulations promulgated pursuant to and incorporated therein.
“Affordable Units” means the following sixty-four (64) rental units in the Project:
(i) Twenty-nine (29) one (1) bedroom, one (1) bath units; (ii) Eighteen (18) two (2) bedroom, one (1) bath units; and (iii) Seventeen (17) three (3) bedroom, two (2) bath units. “Agreement” is defined in Recital C hereof.
“AMI” means the median family income (adjusted for household size) for the Orange County Area promulgated and published annually by HCD pursuant to Title 25, Section 6932 of the California Code of Regulations. If HCD ceases to annually publish median incomes, the Parties shall agree upon an adequate substituted manner for determining AMI.
“Annual Project Revenue” has the meaning ascribed thereto in each of the City Bond Loan Note and City Land Loan Note.
“Approved Financing” means the financing approved by City pursuant to the Agreement, as set forth in the Project Budget attached to the Agreement, obtained by
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Developer for Developer’s acquisition of the Property and the construction/development and ownership of the Project. In addition, “Approved Financing ” shall include any refinancing of the Approved Financing which has been approved by City. “Approved Pro Forma” means that certain pro forma created in connection with the Project Budget attached to the Agreement.
“City” means the City of Fullerton, a California municipal corporation. “City and City Personnel” means City and City’s officers, officials, directors, members, employees, agents, and representatives.
City Bond Loan” means the loan, sourced from Bond Proceeds, provided by City to Developer pursuant to the Agreement to assist Developer with the costs Developer incurs in acquiring the Property and developing the Project. “City Bond Loan Deed of Trust” means that certain deed of trust executed by Developer, as “Trustor,” in favor of City, as “Beneficiary,” securing Developer’s repayment under the City Bond Loan Note.
“City Bond Loan Note” means that certain City Promissory Note (City Bond Loan) executed by Developer on or about the same date hereof, that evidences Developer’s obligation to repay the City Bond Loan.
“City Land Loan” means the loan provided by City to Developer pursuant to the Agreement, in the form of seller carryback financing , to assist Developer to acquire the Property.
“City Land Loan Deed of Trust” means that certain deed of trust executed by Developer, as “Trustor,” in favor of City, as “Beneficiary,” securing Developer’s repayment under the City Land Loan Note
“City Land Loan Note” means that certain City Promissory Note (City Land Loan) executed by Developer on or about the same date hereof, that evidences Developer’s obligation to repay the City Land Loan.
“Capital Replacement Reserve ” means a capital replacement reserve for the Project, to be set aside in a separate interest-bearing trust account, consisting of annual deposits of Two Hundred Fifty Dollars ($250) per Unit (e.g., $16,250) of Annual Project Revenue, increasing annually by three percent (3%), but capped at Three Hundred Fifty Dollars ($350) per Unit (unless otherwise agreed to by Developer and City) or as required under the Partnership Agreement (or such greater amount required under any Additional Regulatory Agreement, or under the Partnership Agreement). “Certification of Continuing Program Compliance ” means an annual recertification form substantially in the form attached hereto and incorporated herein as Exhibit E.
“Certificate of Occupancy ” means the final certificate of occupancy issued by the City of Fullerton for the completion of construction of the Project.
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“Closing” means the time and day that the Grant Deed, City Bond Loan Deed of Trust, City Land Loan Deed of Trust, Project Financing, and this Regulatory Agreement are filed for record with the Orange County Recorder.
“Closing Date” means the date on which the Closing occurs. “Construction Financing ” means the means the construction loan for the Project, in the anticipated amount of approximately _____________ Dollars ($___________).
“County” means the County of Orange.
“CPI Adjustment” means the percentage increase in the cost of living index, as measured by the Consumer Price Index for All Urban Consumers, Los Angeles-Riverside- Orange County statistical area, all items (1982-84 = 100) published by the United States Department of Labor, Bureau of Labor Statistics (“CPI”) between the CPI figure in effect as of the date on which the Certificate of Occupancy is issued and the CPI figure in effect as of the date on which an adjustment is made. If such index is discontinued or revised, such other index with which such index is replaced (or if not replaced, another index which reasonably reflects and monitors consumer prices) shall be used in order to obtain substantially the same results as would have been obtained if the discontinued index had not been discontinued or revised. If the CPI is changed so that the base year is other than 1982 -84, the CPI shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. “Date of Regulatory Agreement” is defined in the initial paragraph hereof. “Default” means the failure of a Party to perform any action or covenant required by the Agreement or hereunder within the time periods provided in the Agreement or hereunder, respectively, following notice and opportunity to cure, as set forth in Section
12.1 of the Agreement and Section 16.01 hereof, respectively. “Developer” means _______________, L.P., a California limited partnership, and any permitted assignees of Developer.
“Eligible Tenant ” means a household that qualifies as a Very Low Income Household, as a Low Income Household, or as a Moderate Income Household. “Environmental Laws” means (i) Sections 25115, 25117, 25122.7 or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Respon se Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Article 9 or Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (vi) Section 311 of the Clean Water Act (33 U.S.C. §1317), (vii) Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq.
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(42 U.S.C. §6903) or (viii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq. “City Manager” means the person duly appointed to the position of City Manager, or his or her designee. The City Manager shall represent City in all matters pertaining to this Regulatory Agreement. Whenever a reference is made herein to an action or approval to be undertaken by City, the City Manager is authorized to act unless this Regulatory Agreement specifically provides otherwise or the c ontext should otherwise require.
“Governmental Requirements ” means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees, of the United States, the State of California, the County, City, and any other political subdivision, agency, instrumentality, or other entity exercising jurisdiction over City, Developer, the Project, or the Property. “Hazardous Materials ” means any substance, material, or waste which is or becomes regulated by any local governmental authority, the State of Calif ornia, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a “hazardous waste”, “acutely hazardous waste”, “extremely hazardous waste”, or “restricted hazardous waste” under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter
6.5 (Hazardous Waste Control Law), (ii) defined as a “hazardous substance ” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a “hazardous material”, “hazardous substance”, or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) polychlorinated biphenyls, (viii) listed under Article 9 or defined as “hazardous” or “extremely hazardous ” pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20, (ix) designated as “hazardous substances” pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. (42 U.S.C. Section 6903), (xi) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (xii) methyl -tertiary butyl ether, (xiii) perchlorate, or (xiv) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment. For purposes hereof, “Hazardous Materials” excludes materials and substances in quantities as are commonly used in constructing and operating apartment complexes, provid ed such materials and substances are used in accordance with all applicable laws. “Hazardous Materials Contamination ” means the contamination (whether presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or oth er elements on, in or of the Property by Hazardous Materials, or
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the contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result of Hazardous Materials at any time emanating from the Property.
“HCD” means the California Department of Housing and Community Development.
“HOME Regulatory Agreement” means the regulatory agreement entered into or to be entered into between City and Developer imposing affordability and operating requirements on the Project with respect to the City HOME Loan. “HUD” means the United States Department of Housing and Urban Development. “Institutional Lender” means any of the following institutions having assets or deposits in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California chartered bank; a bank created and operated under and pursuant to the laws of the United States of America; an “incorporated admitted insurer” (as that term is used in Section 1100.1 of the California Insurance Code); a “foreign (other state) bank” (as that term is defined in Section 1700(1) of the California Financial Code); a federal savings and loan association (Cal. Fin. Code Section 8600); a commercial finance lender (within the meaning of Sections 2600 et seq. of the California Financial Code); a “foreign (other nation) bank ” provided it is licensed to maintain an offi ce in California, is licensed or otherwise authorized by another state to maintain an agency or branch office in that state, or maintains a federal agency or federal branch in any state (Section 1716 of the California Financial Code); a bank holding compan y or a subsidiary of a bank holding company which is not a bank (Section 3707 of the California Financial Code); a trust company, savings and loan association, insurance company, investment banker; college or university; pension or retirement fund or system, either governmental or private, or any pension or retirement fund or system of which any of the foregoing shall be trustee, provided the same be organized under the laws of the United States or of any state thereof; and a Real Estate Investment Trust, a s defined in Section 856 of the Internal Revenue Code of 1986, as amended, provided such trust is listed on either the American Stock Exchange or the New Y ork Stock Exchange. Each of __________________________ and ________________________________ are hereby deemed to be an Institutional Lender.
“Legal Description” means that certain legal description of the Property which is attached hereto and incorporated herein as Exhibit “A”. “Low Income Household” has the meaning ascribed in Health and Safety Code Section 50079.5 for “lower income households”.
“Map” means a map depicting the Property which is attached hereto and incorporated herein as Exhibit “B”.
“Marketing Plan” means a marketing plan for the rental of the Affordable Units which provides, to the extent authorized by applicable federal, state and local laws and regulations, that a preference be given to tenants who are currently residents of the City of Fullerton and/or currently work in the City of Fullerton. The Marketing Plan shall include
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a tenant selection system in conformance with fair housing laws and the Tax Credit Rules which establishes a chronological waiting list system for selection of tenants. City shall have approved the Marketing Plan, in its reasonable discretion, as one of City’s conditions to the Closing.
“Moderate Income Household ” has the meaning ascribed in Health and Safety Code Section 50093.
“Monthly Rent” means the total of monthly payments for (a) use and occupancy of each Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by Developer which are required of all tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone or cable service, and (d) possessory interest, taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than Developer. In the event that all utility charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the rent. “Notice” means a notice in the form prescribed by Section 17.01 hereof. “Official Records ” means the Official Records of the County of Orange , California.
“Operating Budget” means an operating budget for the Project, which budget shall be subject to the annual written approval of City in accordance with Section 9.01 hereof.
“Operating Expenses” has the meaning ascribed thereto in each of the City Bond Loan Note and City Land Loan Note.
“Operating Reserve ” means an operating reserve for the Project (i) initially consisting of an amount equal to the sum of three (3) months of hard debt service and Operating Expenses for the Project, as projected at the Closing (or such greater amount required under any Additional Regulatory Agreement, under the Partnership Agreement, or by any lender of a Project-related loan that has been approved by City) set aside in a separate interest-bearing trust account, commencing upon the rental of the Affordable Units, and (ii) replenished from annual deposits of the Annual Project Revenue, to the extent available, such that the balance of the Operating Reserve consists of not less than three (3) months of projected Operating Expenses, ad justed annually by the CPI Adjustment (unless otherwise agreed to by Developer and City) or as required under the Partnership Agreement (or such greater amount required under any Additional Regulatory Agreement, or under the Partnership Agreement), provided in no event shall the balance in such account exceed a sum equal to one (1) year of debt service for the Project (or such greater amount required under any Additional Regulatory A greement, pursuant to any of the Approved Financing or under the Partnershi p Agreement). Developer ’s requirement to maintain the Operating Reserve shall terminate at such time as the Project has achieved a minimum annual debt service ratio of 1.15 for three (3) years following
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the date Developer has initially rented ninety -five percent (95%) of the Affordable Units to Eligible Tenants in accordance with the terms of this Regulatory Agreement. “Partnership Agreement” means the agreement which sets forth the terms of Developer’s limited partnership, as such agreement may be amended from time to time. “Permanent Financing” means a loan in an amount not to exceed the amount of the Construction Financing from an Institutional Lender to be secured by a deed of trust against the Property which replaces the Construction Financing u pon Developer ’s completion of the construction of the Project.
“Project” means a n affordable rental Project consisting of sixty-five (65) residential dwelling units and all required on -site improvements necessary to serve the Project.
“Property” means that certain real property (i) consisting of approximately two and four hundred ninety -six thousandths (2.96 ) “net” acres, (ii) located in the City of Fullerton, County of Orange , State of California , (iii) depicted on the Map, and (iv) described in the Legal Description.
“Regulatory Agreement” means this Regulatory Agreement. “Release of Construction Covenants ” means the document which evidences Developer’s satisfactory completion of construction of the Project, as set forth in Section
9.17 of the Agreement, substantially in the form which is attached thereto as Attachment No. 13 and incorporated therein by reference.
“Restricted Unit Matrix ” means that cer tain affordability matrix attached hereto and incorporated herein as Exhibit “F”.
“Scope of Development ” means that certain Scope of Development which is attached to the Agreement as Attachment No. 4 and incorporated therein by reference.
The Scope of Development describes the scope, amount and quality of the construction to be done by Developer pursuant to the terms and conditions of the Agreement and this Regulatory Agreement.
“Tax Credits” means Low Income Housing Tax Credits, in the anticipated amount of _______________ Dollars ($_____________), granted pursuant to Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq.
“Tax Credit Regulatory Agreement” means the regulatory agreement which may be required to be recorded against the Property with respect to the issuance of Tax Credits for the Project.
“Tax Credit Rules ” means Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5
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and California Health and Safety Code Section 50199, et seq. , and the rules and regulations implementing the foregoing, as the same may be amended from time to time. “TCAC” means the California Tax Credit Allocation Committee. “Very Low Income Household” has the meaning ascribed in Health and Safety Code Section 50105.
SECTION 2. COVENANTS REGARDING CONSTRUCTION OF THE
IMPROVEMENTS.
Developer shall carry out the design, construction, and operation of the Project in compliance with applicable Governmental Requirements and all of the terms and conditions set forth in the Agreement.
SECTION 3. COVENANTS REGARDING USE.
3.01 Covenants To Use In Accordance With Agreement. Developer covenants and agrees for itself, its successors, assigns , and every successor in interest to Developer’s interest in the Property or any part thereof, that Developer shall devote the Property to the uses specified in this Regulatory Agreement. The foregoing covenants shall run with the land.
3.02 Covenant Regarding Specific Uses. Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to Developer ’s interest in the Property or any part thereof, that Developer shall use the Property to operate the Project.
3.03 Covenants Regarding Term And Priority Of Agreement . This Regulatory Agreement shall remain until the expiration of the Affordability Period, notwithstanding the payment in full of the City Loans. Developer ’s performance under this Regulatory Agreement is secured by each of the City Bond Loan Deed of Trust and City Land Loan Deed of Trust, and Developer shall not be entitled to a reconveyance of either of the City Bond Loan Deed of Trust or City Land Loan Deed of Trust prior to the expiration of the Affordability Period; provided that, upon Developer ’s repayment of the City Bond Loan, Developer shall be entitled to a partial reconveyance of the City Bond Loan Deed of Trust solely to release therefrom Developer’s obligations to repay the City Bond Loan, and upon Developer’s repayment of the City Land Loan, Developer shall be entitled to a partial reconveyance of the City Land Loan Deed of Trust solely to release therefrom Developer’s obligations to repay the City Land Loan. This Regulatory Agreement shall unconditionally be and remain at all times prior and superior to the liens created by the Construction Financing, the Permanent Financing, any other Project financing, the Tax Credit Regulatory Agreement, any other Additional Regulatory Agreement, and any other documents related to any of the foregoing and all of the terms and conditions contained therein, and to the lien of any new mortgage debt which is for the purpose of refinancing all or any part of the Construction Financing or Permanent Financing.
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SECTION 4. COVENANTS REGARDING AFFORDABLE UNITS.
Developer shall provide for the Affordable Units in accordance with this Section.
4.01 Residential Use. Without City’s prior written consent, which consent may be given or withheld in City’s sole and absolute discretion, none of the Affordable Units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park, nor shall the Affordable Units be used as a place of business except as may otherwise be allowed by applicable law.
4.02 Provision of Affordable Units . Developer shall make available, restrict occupancy to, and rent the Afforda ble Units to Eligible Tenants at Affordable Rents , in compliance with the Restricted Unit Matrix, throughout the Affordability Period.
4.03 Selection of Tenants . Developer shall be responsible for the selection of tenants for the Affordable Units in compliance with all lawful and reasonable criteria, as set forth in the Marketing Plan. Developer shall not refuse to lease to (i) a holder of a certificate of family participation under 24 CFR part 882 (Rental Certificate Program) or a rental voucher under 24 CFR part 887 (Rental Voucher Program) or to the holder of a comparable document evidencing participation in a Section 8 program or other tenant - based assistance program, who is otherwise qualified to be a tenant in accordance with the approved tenant selection criteria, or (ii) an applicant who would be qualified to be a tenant in accordance with the approved tenant selection criteria but for a poor credit rating resulting from a foreclosure of a mortgage on a single family home previously owned by the applicant.
4.04 Occupancy By Eligible Tenant. An Affordable Unit occupied by an Eligible Tenant who qualified as an Eligible Tenant at the commencement of the occupancy shall be treated as occupied by an Eligible Tenant until a recertification of such Eligible Tenant’s income in accordance with Section 4.08 below demonstrates that such tenant no longer qualifies as an Eligible Tenant at the applicable income level. An Affordable Unit previously occupied by an Eligible Tenant and then vacated shall be considered occupied by an Eligible Tenant until the Affordable Unit is reoccupied, provided Developer uses its best efforts to re -lease the vacant Affordable Unit to an Eligible Tenant. Any vacated Affordable Unit shall be held vacant until re -leased to an Eligible Tenant .
Developer shall take any or all of the following actions, as necessary, to locate Eligible Tenants for the Project: (i) notification to the City of the available Affordable Unit; (ii) advertisement of the available Affordable Unit in a newspaper of gen eral circulation in Orange County, and (iii) outreach and marketing activities typically used by Meta or limited partnerships in which Meta is the managing general partner to fill unoccupied or vacated units, including available units, if any, for which a specified target population will receive a preference.
4.05 Occupancy Restrictions . The maximum number of occupants that may reside in an Affordable Unit shall be as follows: thr ee (3) persons in a one (1) bedroom Affordable Unit; five (5) persons in a t wo (2) bedroom Affordable Unit , and seven (7) persons in a three (3) bedroom unit. Developer shall comply with all applicable minimum
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occupancy restrictions promulgated by HUD, TCAC, and/or any other applicable funding source.
4.06 Income Computation and Certification . Immediately prior to an Eligible Tenant’s occupancy of an Affordable Unit, Developer shall obtain an Income Computation and Certification Form in the form attached hereto and incorporated herein as Exhibit ”C”, or on a similar form required by any Additional Regulatory Agreement if such form requires inclusion of the same information as required in Exhibit “C”, from each such Eligible Tenant, dated no more than ninety (90) days prior to the date of initial occupancy in the Project by such Eligible Tenant. In addition, Developer shall provide such further information as may be reasonably required in the future by City for purposes of verifying a tenant’s status as an Eligible Tenant. Developer shall use good faith efforts to verify that the income provided by an applicant is accurate by taking the following steps as a part of the verification process:(i) obtain three (3) pay stubs for the most recent pay periods; (ii) obtain a written verification of income and employment from the applicant ’s current employer; (iii) obtain an income verification form from the Social Security Administration, California Department of Social Services, and/or Calif ornia Employment Development Department if the applicant receives assistance from any of said agencies; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other evidence and/or verification of such applicant’s total income received during the calendar year from any source, taxable or nontaxable, or such other information as is satisfactory to City. Developer shall maintain in its records each Income Computation and Certification Form obtained pursuant to this section for a minimum of five (5) years.
4.07 Rental Priority ; Lease -Up. Subject to all applicable Governmental Requirements, applicable fair housing laws , and any funding obtained by Developer to operate and/or develop the Project that has been approved by City, during the term of this Regulatory Agreement, Developer shall use its reasonable commercial efforts to lease the Affordable Units to credit -worthy Eligible Tenants in the following order of priority: (a) Eligible Tenants who have been or will be displaced by an activity of City, or (b) Eligible Tenants who live and/or work in the City of Fullerton. (a) The initial lease-up of the Affordable Units shall be done pursuant to a lottery. The Marketing Plan shall include procedures for conducting the lottery.
A representative of City may, but shall not be obligated to, attend the lottery.
Notwithstanding anything in this Regulatory Agreement to the contrary, none of Developer or M eta, and their respective officials, directors, and employees, and the immediate family members of their respective officials, directors, and employees shall be eligible to participate in the lottery for the initial lease-up of the Affordable Units. As used herein, the term “immediate family member” shall mean and include a parent or step -parent, grandparent or step -grandparent, sibling or step-sibling and child or step-child.
(b) Following the initial lease-up of the Affordable Units, Developer shall maintain a waiting list of persons interested in renting an Affordable Unit. Subject to Section 4.07 above at such time as an Affordable Unit becomes available for rental, Developer shall rent such Affordable Unit to the first person on the waiting list that qualifies as an Eligible Tenant to rent the Affordable Unit. Developer shall
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use commercially reasonable efforts to lease Affordable Units that become available as quickly as possible.
4.08 Recertification. Within sixty (60) days prior to the first anniversary date of the occupancy of an Affordable Unit by an Eligible Tenant, and on each anniversary date thereafter, Developer shall recertify the income of such Eligible Tenant by obtaining a completed Income Recertification Form, in the form attached hereto and incorporate d herein as Exhibit ”D”, based upon the current income of each known occupant of the Affordable Unit; provided, however, that if any Additional Regulatory Agreement requires Developer to obtain a recertification form which requires inclusion of the same information as required in Exhibit “D”, then Developer shall not be deemed to be in default hereunder if during the term of such Additional Regulatory Agreement Developer obtains from each Eligible Tenant the recertification form required pursuant to said Ad ditional Regulatory Agreement.
If, after renting a Very Low Income Unit, the household income increases above the income level permitted for the Very Low Income Unit, but meets the income level permitted for a Low Income Unit, the household shall continue to be permitted to reside in such unit provided that Developer shall increase the rent for that Very Low Income Unit to the rent level designated for a Low Income Unit, and shall restrict and designate as a Very Low Income Unit the next available Affordable Unit with the same number of bedrooms that is not already designated hereunder as a Very Low Income Unit.
If, after renting a Low Income Unit, the household income increases above the income level permitted for the Low Income Unit, but meets the income level permitted for a Moderate Income Unit, the household shall continue to be permitted to reside in such unit provided that Developer shall increase the rent for that Moderate Income Unit to the rent level designated for a Moderate Income Unit, and shall restrict and designate as a Low Income Unit the next available Affordable Unit with the same number of bedrooms that is not already designated hereunder as a Low Income Unit.
If, after renting an Affordable Unit, the household income increases above the income level permitted for a Moderate Income Unit, that household may not be permitted to remain in the unit unless requiring such househ old to move will violate the Tax Credit Rules. In such event, Developer shall notify City in writing of such occurrence, and shall inform City of (1) its plans for removing the household from the Affordable Unit, or (2) the specific rule in the Tax Credit Rules that prohibits such action providing written evidence of the same. In the event of clause (2) above, Developer shall increase the rent to thirty percent (30%) of the household’s gross income, provided in no event shall the rent exceed the market rent for such unit.
4.09 Certification of Continuing Program Compliance . During the term of this Regulatory Agreement, on or before each July 1st following the date City issues a Release of Construction Covenants for the Project, Developer shall annually advise City of the occupancy of the Project during the preceding calendar year by delivering a Certification of Continuing Program Compliance in the form attached hereto and incorporated herein as Exhibit ”E”, stating (i) the Affordable Units of the Project which have been rented to and are occupied by Eligible Tenants and (ii) that to the knowledge of Developer either (a) no unremedied default has occurred under this Regulatory Agreement, or (b) a default
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has occurred, in which event said certification shall describe the nature of the default and set forth the measures being taken by Developer to remedy such default.
4.10 Leases; Rental Agreements for Affordable Units. Developer shall submit a standard lease form, which shall comply with the requirements of this Regulatory Agreement, to City for its approval. City shall reasonably approve such lease form upon finding that such lease form is consistent wit h this Regulatory Agreement. Developer shall enter into a written lease, in the form approved by City, with each tenant/tenant household of the Affordable Units. Developer shall not make any material changes to such form of lease without obtaining City’s prior written consent. Any proposed increase in the monthly rent to be charged to an Eligible Household is hereby deemed material and shall require City’s written consent prior to imposition of the same.
4.11 Reliance on Tenant Representations . Each tenant lease shall contain a provision to the effect that Developer has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of the Affordable Unit, and that any material misstatement in s uch certification (whether or not intentional) will be cause for immediate termination of such lease.
4.12 Monitoring and Record Keeping . Representatives of City shall be entitled to enter the Property during normal business hours, upon not less than twenty -four (24) hours’ notice, to monitor compliance with this Regulatory Agreement, to inspect the records of the Property, and to conduct an independent audit or inspection of such records. Developer agrees to cooperate with City in making the Property and all Affordable Units thereon available for such inspection or audit. Developer agrees to maintain records in a businesslike manner, and to maintain copies of original tenant certifications for fifteen (15) years (or such longer period as required under the Tax Credit Rules) and all other records pertaining to the Project for five (5) years.
4.13 Annual Monitoring Payment . On or before April 1 of each year after Developer’s completion of the Project, Developer shall pay to City an annual payment in the amount of Fi fty Dollars ($50) per unit (for an initial annual payment of $2,750) , increased every three (3) years by the CPI Adjustment, to reimburse City for the costs City incurs in monitoring Developer’s compliance with the terms of this Regulatory Agreement; provided, however, that if Developer completes the Project between January 1 and March 31, Developer’s first such reimbursement payment shall not be due and payable until the subsequent April 1. For example, if Developer completes the Project on March 10, 2025, the first reimbursement payment will be due on April 1, 2026. During the initial fifteen (15) years of operation this payment will be made from a capitalized account created and controlled by Developer. Beginning in the sixteenth (16th) year of operation this payment will be paid as an Operating Expense pursuant to each of the City Bond Loan Note and City Land Loan Note.
4.14 Remedy For Violation of Rental Requirements.
(a) It shall constitute a default for Developer to charge or accept for any Affordable Unit rent amounts in excess of the amount provided for in Section 4.02 of this Regulatory Agreement. In the event that Developer charges or receives such higher rental amounts, Developer shall be required to reimburse the tenant that occupied said
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Affordable Unit at the time the excess rent was received for the entire amount of such excess rent received, provided that such tenant can be found following reasonable inquiry, and to pay to such tenant interest on said excess amount, at the rate of six percent (6%) per annum, for the period commencing on the date the first excess rent was received from said tenant and ending on the date reimbursement is made to the tenant. For purposes of this Section 4.1 4, “reasonable inquiry” shall include Developer ’s review of information provided by the tenant as part of the tenant ’s application, and forwarding information provided by the tenant, and Developer ’s reasonable attempts to contact the tenant and any other persons listed in either of such documents. If, after such reasonable inquiry, Developer is unable to locate the tenant, Developer shall pay all of such amounts otherwise to be paid to the tenant to City.
(b) Except as otherwise provided in this Regulatory Agreement, it shall constitute a default for Developer to knowingly (or without investigation as required herein) initially rent any Affordable Unit to a tenant who is not an Eligible Tenant. In the event Developer violates this Section, in addition to any other equitable remedy City shall have for such default, Developer, for each separate violation, shall be required to pay to City an amount equal to (i) the greater of (A) the total rent Developer received from such ineligible tenant, or (B) the total rent Developer was entitled to receive for renting that Affordable Unit, plus (ii) any relocation expenses incurred by City as a result of Developer having rented to such ineligible person. The terms of this Section shall not apply if Developer rents to an ineligible person as a res ult of such person ’s fraud or misrepresentation.
(c) It shall constitute a default for Developer to knowingly (or without investigation as required herein) rent an Affordable Unit in violation of the leasing preference requirements of Section 4.07 of this Regu latory Agreement. In the event Developer violates this Section, in addition to any other equitable remedy City shall have for such default, Developer, for each separate violation, shall be required to pay City an amount equal to two (2) months of rental charges.
THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN THIS SECTION
4.14 (THE “DAMAGE AMOUNTS”) CONSTITUTE A REASONABLE APPROXIMATION
OF THE ACTUAL DAMAGES THAT CITY WOULD SUFFER DUE TO THE DEFAULTS BY DEVELOPER SET FORTH IN THIS SECTION 4.1 4, CONSIDERING ALL OF THE
CIRCUMSTANCES EXISTING ON THE DATE OF REGULATORY AGREEMENT,
INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF HARM TO CITY AND ACCOMPLISHMENT OF CITY’S PURPOSE OF ASSISTING IN
THE PROVISION OF AFFORDABLE HOUSING TO ELIGIBL E TENANTS THAT
REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE AMOUNTS SET FORTH IN THIS SECTION 4.1 4 SHALL BE THE SOLE MONETARY DAMAGES REMEDY FOR THE DEFAULTS SET FORTH IN THIS SECTIO N 4.14, BUT NOTHING IN THIS SECTION 4.1 4 SHALL BE INTERPRETED TO LIMIT CITY’S REMEDY FOR
SUCH DEFAULT TO SUCH A DAMAGES REMEDY AND IN THAT REGARD CITY MAY
DECLARE A DEFAULT UNDER THE TERMS OF THE CITY BOND LOAN NOTE, THE
CITY LAND LOAN NOTE, THE AGREEMENT, OR OTHER AGREEMENTS ENTERED INTO BY AND BETWEEN CITY AND DEVELOPER. IN PLACING ITS INITIALS AT THE
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PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY CONFIRMS THE
ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH
PARTY HAS BEE N REPRESENTED BY COUNSEL WHO HAS EXPLAINED THE
CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED THIS REGULATORY AGREEMENT.
DEVELOPER’S INITIALS:
CITY’S INITIALS:
4.15 Relationship to HOME Regulatory Agreement and Additional Regulatory Agreements. Notwithstanding any other provisions set forth in this Regulatory Agreement and subject to the following sentence, to the extent that the provisions related to tenant selection, tenant income levels and unit rent levels set forth in the HOME Regulatory Agreement and/or any Additional Regulatory Agreement are less restrictive than those provisions set forth in this Section 4, then the provisions set forth in this Section 4 shall govern and cont rol. To the extent of any inconsistency between this Regulatory Agreement, the HOME Regulatory Agreement, and/or any Additional Regulatory Agreement regarding Affordable Rent for the Affordable Units, the more restrictive agreement or covenants shall prev ail unless compliance with such more restrictive provisions would violate the provisions of the less restrictive document.
Developer agrees to perform all of Developer ’s obligations under this Regulatory Agreement, under the HOME Regulatory Agreement, and under each of the Additional Regulatory Agreements. In the event City is prevented by a final, non -appealable order of a court of competent jurisdiction in a lawsuit involving the Project, or by an applicable and binding published appellate opinion, or by a final, non -appealable order of a regulatory body having jurisdictio n, from enforcing, for any reason, the affordability restrictions set forth in this Regulatory Agreement, then in such event City shall be a third- party beneficiary under the Additional Regulatory Agreements, and shall have full authority to enforce any breach or default by Developer thereunder in the same manner as though it were a breach or default hereunder. Without City’s prior written consent, which consent may be withheld in City’s sole and absolute discretion, Developer shall not consent to any amen dment of or modification to any of the Additional Regulatory Agreements which (i) shortens the term of the affordability restrictions on the Affordable Units or (ii) modifies the affordability mix in a manner inconsistent with the Restricted Unit Matrix.
4.16 Density Bonus Requirements. City and Developer acknowledge and agree that pursuant to the California Density Bonus Law , Developer agreed to restrict not less than seven (7) of the Affordable Units for rental to and occupancy by Very Low Income Households f or a period of not less than fifty -five (55) years , in exchange for several development concessions, including a waiver of City’s zoning requirement that parking spaces at the Project be covered, and reductions in the Project’s open space requirements (collectively, the “Concessions”). City and Developer further acknowledge and agree that this Regulatory Agreement is the instrument that ensures the continued affordability of the seven (7) Affordable Units Developer agreed to restrict for rental to and
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occupancy by Very Low Income Households for a period of not less than fifty -five (55) years in exchange for the Concessions.
SECTION 5. COVENANT TO PAY TAXES AND ASSESSMENTS.
Developer shall pay prior t o delinquency all ad valorem real estate taxes, special taxes, assessments and special assessments levied against the Property, subject to Developer’s right to contest any such tax in good faith and any property tax exemption.
SECTION 6. COVENANTS REGARDING MAINTENANCE.
Developer shall maintain the Property and all improvements thereon, including lighting and signage, in good condition, free of debris, waste and graffiti, and in compliance with all applicable laws and regulations, including, without limitation, HUD’s Housing Quality Standards. Developer shall maintain the improvements and landscaping on the Property in accordance with the “Maintenance Standards,” as hereinafter defined.
Such Maintenance Standards shall apply to all buildings, signage, lighting, lands caping, irrigation of landscaping, architectural elements identifying the Property and any and all other improvements on the Property. To accomplish the maintenance, Developer shall either staff or contract with and hire licensed and qualified personnel t o perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirements of this Regulatory Agreement.
Developer and its maintenance staff, contractors or subcontractors shall comply with the following standards (the “Maintenance Standards”):
(a) The Property shall be maintained in good condition and in accordance with the custom and practice generally applicable to comparable high quality, well-managed apar tment complexes in Orange County , including but not limited to painting and cleaning of all exterior surfaces and other exterior facades comprising all private improvements and public improvements to the curbline. (b) Landscape maintenance shall include, but n ot be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. (c) Clean-up maintenance shall include, but not be limited to:
maintenance of all sidewalks, paths, and other paved areas in clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris, or other matter which is unsafe or unsightly; removal of all trash, litter, and other debris from improvements and la ndscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves, and other debris are properly disposed of by maintenance workers.
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Upon City’s written notification to Developer of any maintenance deficiency, Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency, or such longer period as is reasonably necessary to complete the cure, provided Developer commences the correction, remedy, or cure within such thirty (30) day period and diligently pursues such correction, remedy, or cure to completion.
SECTION 7. COVENANTS REGARDING MANAGEMENT.
Developer shall provide for the management of the Project in accordance with this Section.
7.01 Property Manager. Developer shall manage or cause the Project, and all appurtenances thereto that are a part of the Project, to be managed in a prudent and business-like manner, consistent with property management standards for o ther comparable high quality, well -managed rental housing projects and commercial developments in Orange County, California. Developer may contract with a property management company or property manager to operate and maintain the Project in accordance with the terms of this Section (“Property Manager”); provided, however, the selection and hiring of the Pr operty Manager (and each successor or assignee) is and shall be subject to prior written approval of City. Developer shall conduct due diligence and background evaluation of any potential outside property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager. Any proposed property manager shall have prior experience with projects and properties comparable to the Project and the references and credit record of such man ager/company shall be investigated (or caused to be investigated) by Developer prior to submitting the name and qualifications of such proposed property manager to City for review and approval. A complete and true copy of the results of such background ev aluation shall be provided to City. Approval of a Property Manager by City shall not be unreasonably withheld or delayed and shall be in City’s reasonable discretion, and City shall use good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing management of the Project.
Furthermore, the identity and retention of any approved Property Manager shall not be changed without the prior written approval of City, which approval shall not be unreasonably delayed, and sha ll be in City’s reasonable discretion. The selection by Developer of any new Property Manager also shall be subject to the foregoing requirements.
7.02 Management Plan. Prior to and as one of City’s conditions to the Closing under the Agreement, Developer shall have prepared and submitted to the City Manager for review and approval an updated and supplemented management plan which includes a detailed plan and strategy for long -term marketing for the Affordable Units, operation, maintenance, repair, and security of the Project, method of selection of tenants, rules and regulations for tenants, and other rental policies for the Affordable Units (the “Management Plan ”). Subsequent to approval of the Management Plan by the City Manager, the ongoing management an d operation of the Project shall be in compliance with the approved Management Plan. Developer and Property Manager may from time to time submit to the City Manager proposed amendments to the Management Plan, which are also subject to the prior written approval of the City Manager.
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7.03 Social Services. Prior to and as one of City’s conditions to the Closing under the Agreement, Developer shall have prepared and submitted to the City Manager for review and approval a resident services plan (the “Resident Services Plan”). Developer shall provide a variety of social services at the Project , as set forth in the Resident Services Plan. No changes may be made to the Resident Services Plan without the prior written approval of the City Manager , which shall be given or withheld in his or her reasonable discretion. Developer’s social service program shall be targeted to the needs of the residents of the Project which shall include, but not be limit ed to th e following services: after school programs of an ongoing nature for school age children, adult education services, and the availability of a bona fide services coordinator or social worker to the tenants. Developer shall ensure that all personnel providing or coordinating all social services shall be adequately trained and counseled, including with respect to the appropriate means and methods of communicating and interacting with residents. If Developer intends to partner with a third party to p rovide the social services required pursuant to this Section 7.03, Developer shall obtain City’s prior written approval of Developer’s proposed social service provider, which approval shall not be unreasonably withheld, conditioned or delayed. Any substantive change in the scope, amount, or type of supportive services to be provided at the Property, whether or not such change requires a change to the Resident Services Plan, shall be subject to prior reasonable approval of City. City shall respond to any such proposed changes within thirty (30) days after submittal to City by Developer.
7.04 Gross Mismanagement. In the event of “Gross Mismanagement” (as that term is defined below) of the Affordable Units or any part of the Project, City shall have and retain the authority to direct and require any condition(s), acts, or inactions of Gross Mismanagement to cease and/or be corrected immediately, and further to direct and require the immediate removal of the Property Manager and replacement with a new qualified and approved Property Manager, if such condition(s) is/are not ceased and/or corrected after expiration of thirty (30) days from the date of Notice from City. If such condition(s) acts, or inactions of gross mismanagement do persist be yond such period, City shall have the sole and absolute right to immediately and without further notice to Developer (or to Property Manager or any other person/entity) replace the Property Manager with a new property manager of City’s selection at the sole cost and expense of Developer. If Developer takes steps to select a new property manager that selection is subject to the requirements set forth above for selection of a Property Manager.
For purposes of this Regulatory Agreement, the term “Gross Mismanagement” means management of any part of the Project in a manner which materially violates the terms and/or intention of this Regulatory Agreement to operate a high quality, well - managed residential complex, and shall include, but is not limited to, any one or more of the following:
(a) knowingly leasing Affordable Units to tenants who exceed the prescribed income levels and/or otherwise fail to qualify as an Eligible Tenant; (b) knowingly allowing th e tenants of Affordable Units to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding;
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(c) underfunding Capital Replacement or Operating Reserve accounts, unless funds are not available to deposit in such accounts; (d) failing to timely maintain the Project in accordance with the Management Plan and the manner prescribed herein;
(e) failing to submit timely and/or adequate annual reports to City as required herein;
(f) committing fraud or embezzlement with respect to Project fund s, including without limitation funds in the reserve accounts; (g) failing to reasonably cooperate with law enforcement in its attempts to maintain a safe, crime-free environment within the Project; (h) spending funds from the Capital Reserve account(s) for items that are not defined as capital costs under the standards imposed by generally accepted accounting principles (GAAP) (and/or, as applicable, general ly accepted auditing principles).
Notwithstanding the requirements of the Property Manager to correct any condition of Gross Mismanagement as described above, Developer is obligated and shall use its best efforts to correct any defects in property management or operations at the earliest feasible time and, if necessary, to replace the Property Manager as provide d above.
Developer shall include advisement and provisions of the foregoing requirements and requirements of this Regulatory Agreement within any contract between Developer and its Property Manager.
7.05 City Inspections. City and City employees and authorized agents shall have the right to conduct inspections of the Project and the individual Affordable Units, both exterior and interior, at reasonable times and upon reasonable notice (not less than 48 hours prior notice) to Developer and/or an individual tenant. If such notice is provided by City or its representative(s) to Developer, then Developer (or its Property Manager) shall immediately and directly advise tenants of such upcoming inspection and cause access to the area(s) and/or units to be made available and open for inspection. Developer shall include express advisement of such inspection rights within the lease/rental agreements for each Affordable Unit in order for each and every tenant and tenant household to be aware of this inspection right.
7.06 Drug Free Covenant. Developer shall use its best efforts to maintain a drug free environment on the Property. Developer covenants to City that Developer shall use its best efforts to ensure that all persons working or residing on the Property shall not unlawfully manufacture, distribute, dispense, possess or use controlled substances, as said term is defined in 21 United States Code Section 812 and California Health and Safety Code Section 11007 (or successor statutes) on the Property.
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SECTION 8. COVENANTS REGARDING NONDISCRIMINATION.
Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person, or group of persons on any basis listed in subdivision (a) or (d) of S ection 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, or any part thereof, nor shall Developer, or any person claiming under or through him or her, 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, or any part thereof. The foregoing covenants shall run with the land.
Developer agrees for itself and any successor in interest that Developer sha ll refrain from restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national origin of any person. All such deeds, le ases, or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds : “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases ar e defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subten ants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” (b) In leases : “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: ”That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasin g, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segrega tion with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
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(c) In contracts : “There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 129 55.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
The covenants established in this Regulatory Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of City, its successors and assigns, and any successor in interest to the Property, together with any property acquired by Developer pursuant to this Regulatory Agreement, or any part thereof. The covenants against discrimination shall remain in effect in perpetuity.
SECTION 9. OPERATING BUDGET OR ANNUAL BUDGET; ANNUAL AND
QUARTERLY REPORTS
9.01 Operating Budget. Developer shall submit to City on or before November 1st of each year during the Affordability Period an operating budget for the Project (“Operating Budget” or “Annual Budget”), which budget, including the format thereof, shall be subject to the written approval of the City Manager or designee, which approval shall not be unreasonably withheld or conditioned so long as such budget is not inconsistent with this Regulatory Agreement. The City Manager’s discretion in review and approval of each proposed annual Operating Budget or Annual Budget shall include, without limitation, authority to review individual categories, line items, and accounts, such as the following: property and other taxes and assessments imposed on the Project; premiums for property damage and liability insurance; utility services not paid for directly by the tenants, including (as applicable), but not limited to, water, sewer, trash collection, gas, and electri city; maintenance and repairs including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial supplies; resident services pursuant to the Resident Services Plan; additional supportive services necessary to help reside nts maintain personal or household stability and housing status; any license or certificates of occupancy fees required for operation of the Project; general administrative expenses , including, but not limited to , advertising, marketing, security services and systems, professional fees for legal, audit, accounting and tax returns, and other; property management fees and reimbursements including on -site manager expenses, not to exceed ___________ ($___) per year (in creased annually by three percent (3%)) and pursuant to a management contract approved by City (which such approval will not be unreasonably withheld); partnership management fee in an amount not to exceed Fifteen Thousand Dollars ($15,000) per year (increased annually by three percent (3%)); asset management fee in an amount not to exceed Five Thousand Dollars ($5,000) per year (increased annually by three percent (3%)) ; annual cash deposited into the Capital Replacement Reserve in the amount of Two Hundred Fifty Dollars ( $250) per unit per
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year (increased annually by three and one-half percent (3.5%)), provided any changes to the amount deposited into th e Capital R eplacement Reserve will require City approval; cash deposited into the Operating R eserve for the Project and such other reserves as may be required by Developer’s senior lender or tax credit investor; and debt service payments of loans in senior position to this loan. In the event Developer requires an amendment to an approved Annual Budget during an applicable year of the Affordability Period, then Developer shall submit a written request to the City Manager explaining the requested amendment and reasons therefor; the City Manager shall reasonably review and approve (or disapprove) each request for an amendment to an approved Annual Budget. The City Manager shall communicate to Developer his or her reasonable approval or disapproval of a proposed annual Operating Budget or Annual Budget within thirty (30) days after receipt thereof; as to each amendment, the Executive Developer shall communicate to Developer his or her reasonable approval or disapproval within fifteen (15) days after receipt of a complete submittal requesting an am endment to an approved Annual Budget. In the event the City Manager fails to approve a proposed annual Operating Budget or Annual Budget within thirty (30) days after receipt thereof, Developer may operate the Project in accordance with such proposed annu al Operating Budget or Annual Budget until the City Manager notifies Developer that such proposed annual Operating Budget or Annual Budget is not approved; provided, however, that in such case any expenditure made by Developer after expiration of the afore mentioned thirty (30) days period but prior to the City Manager’s notification that the proposed annual Operating Budget or Annual Budget is not approved shall be deemed an approved expenditure.
9.02 Annual Reports . Developer covenants and agrees to submit t o City an annual report (the “Annual Report ”), which shall include the information required by California Health & Safety Code Section 33418.The Annual Report shall include for each Affordable Unit the rental rate and the income and family size of the occu pants. The Developer shall submit the Annual Report on or before May 1st of the year following the year covered by the Annual Report. The Developer shall provide for the submission of household information and certification in its leases with tenants.
9.03 Quarterly Reports. Upon execution of this Regulatory Agreement and until permanent loan conversion, Developer shall also submit on a quarterly basis a quarterly report for the management of the Property (the “Quarterly Report ”). The Quarterly Report shall describe the Project -related tasks performed in the past three (3) months and the expected Project-related tasks to be performed in the upcoming three (3) months.
The report should include an updated Project schedule, including a schedule for completing milestones and/or tasks, and should indicate the status of the Project in relationship to this timeline. Developer shall document any changes from the time line submitted with the most recent funding application. From time to time, City may request from Developer an updated Project proforma which shall include a development budget with sources and uses, debt sizing, calculations and pricing for the Ta x Credits, 30-year operating proforma, base year income projection, and maintenance and operating expenses; Developer will have thirty (30) days to satisfy such request . The Quarterly Report shall be in a form that is reasonably acceptable to the City Manager. T he City Manager, in his/her sole discretion may waive the requirement of the Quarterly Report for one or more quarterly reporting periods. However, such waiver shall not operate to waive
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any subsequent requirement of the Quar terly Report . After receipt o f such certified financial statements for the Project, City may request additional financial analysis or obtain a third party review at City’s own expense, of financial statements for the Project to verify the accuracy of the payments by Developer on each of the City Bond Loan Note and City Land Loan Note, and/ or the required deposits into the Capital Replacement Reserve.
SECTION 10. COVENANTS REGARDING CAPITAL REPLACEMENT RESERVE.
Upon the closing of the Take -Out Loan or conversion of the Construction Loan , Developer shall establish the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used only for capital repairs, improvements, and replacements to the Project fixtures and equipment which are normally capitalized under generally accepted accounting principles. The non -availability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen Developer ’s obligation to undertake any and all necessary capital repairs, improvements, or replacements and to continue to maintain the Project in the manner prescribed herein. Not less than once per year, Developer, at its expense, shall submit to City an accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the Project shall include only those items with a long useful life, including, without limitation, the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line replacement; water line replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; and common area repainting.
SECTION 11. COVENANTS REGARDING OPERATING RESERVE.
Upon the closing of the Take -Out Loan or conversion of the Construction Loan , Developer shall establish the Operating Reserve. The Operating Reserve shall be used to cover shortfalls between Annual Project Revenue and actual operating e xpenses, but shall in no event be used to pay for capital items or capital costs properly payable from the Capital Replacement Reserve. Developer shall, not less than once per every twelve (12) months, submit to City evidence reasonably satisfactory to City of compliance herewith.
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SECTION 12. EFFECT OF VIOLATION OF THE TERMS AND PROVISIONS OF
THIS REGULATORY AGREEMENT AFTER COMPLETION OF
CONSTRUCTION.
City is deemed the beneficiary of the terms and provisions of this Regulatory Agreement and of the covenants running with the land, without regard to whether City has been, remains or is an owner of any land or interest therein in the Property or in the Project. City shall have the right, if this Regulatory Agreement or any of the covenants herein are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Regulatory Agreement and co venants may be entitled. The County is hereby deemed to be a third party beneficiary of this Regulatory Agreement and the covenants contained herein with the right, but no t the obligation, to enforce the terms hereof. Except as provided in the following sentence, the covenants contained in this Regulatory Agreement shall remain in effect until the expiration of the Affordability Period. The covenants regarding nondiscrimination as set forth in Section 8 shall remain in effect in perpetuity.
SECTION 13. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
13.01 Compliance With Laws. Developer shall comply with (i) all Governmental Requirements applicable to the Project and/or Property, (ii) any permit issued pursuant to the National Pollutant Discharge Elimination System (“ NPDES”) and applicable to the Project and/or Property; and (ii) all rules and regulations of any assessment district of the City with jurisdiction over the Property.
13.02 Indemnity. D eveloper shall save, protect, defend, indemnify and hold harmless City and City Personnel from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines, and monetary sanctions), losses, costs or expenses (including, without limitation, consultants’ fees, investigation and laboratory fees, reasonable attorneys ’ fees, and remedial and response costs) (the foregoing are hereinafter collectively referred to as “Liabilities”) which may now or in the future be incurred or suffered by any of City and City Personnel by reason of, resulting from, in connection with, or existing in any manner whatsoever as a direct or indirect result of (i) any placement on or under the Property of any Hazardous Materials or Hazardous Materials Contamination, (ii) the escape, seepage, l eakage, spillage, discharge, emission or release from the Property of any Hazardous Materials or Hazardous Materials Contamination that occurs after the Closing Date, (iii) Developer’s failure to comply with any applicable NPDES permit, or (iv) any Liabilities incurred under any Governmental Requirements relating to the acts described in the foregoing clauses (i), (ii) and (iii).
13.03 Duty to Prevent Hazardous Material Contamination . Developer shall take commercially reasonable action to prevent the release of any Hazardous Materials into the environment. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Developer shall install and utilize such equipment and implement and adhere to su ch procedures as are consistent with the standards generally applied by apartment complexes in Orange
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County, California as respects the disclosure, storage, use, removal, and disposal of Hazardous Materials.
13.04 Obligation of Developer to Remediate Premises . Notwithstanding the obligation of Developer to indemnify City and City Personnel pursuant to Section 13.02, and provided no Hazardous Materials exist on the Property as a result of City’s actions, Developer shall, at its sole cost and expense, promptly take (i) all actions required by any federal, state, regional, or local governmental agency or political subdivision or any Governmental Requirements and (ii) all actions necessary to make full economic use of the Property for the purposes contemplated by th is Regulatory Agreement and the Agreement, which requirements or necessity arise from the presence upon, about or beneath the Property, of any Hazardous Materials or Hazardous Materials Contamination.
Such actions shall include, but not be limited to, the investigation of the environmental condition of the Property, the preparation of any feasibility studies or reports and the performance of any cleanup, remedial, removal or restoration work.
13.05 Environmental Inquiries. Developer, when it has received any no tices of violation, notices to comply, citations, inquiries, clean -up or abatement orders, or cease and desist orders related to Hazardous Materials or Hazardous Materials Contamination, or when Developer is required to report to any governmental agency an y violation or potential violation of any Governmental Requirement pertaining to Hazardous Materials or Hazardous Materials Contamination, shall concurrently notify the City Manager, and provide to him/her a copy or copies, of the environmental permits, di sclosures, applications, entitlements, or inquiries relating to the Property, the notices of violation, notices to comply, citations, inquiries, clean -up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements, a nd reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks, and Developer shall report to the City Manager, as soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment, Developer shall, as soon as possible after it becomes aware of the release, furnish to the City Manager a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of the City Manager, Developer shall furnish to the City Manager a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Property including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential.
SECTION 14. INSURANCE REQUIREMENTS.
14.01 Commercial General Automobile Liability; Worker ’s Compensation .
Commencing on the Closing Date and continuing until the expiration of th e Affordability Period, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the City Manager, the following policies of insurance:
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(a) Commercial General Liability Insurance covering bodily injury, property damage, personal injury and advertising injury written on a per -occurrence and not a claims -made basis containing the following minimum limits:(i) general aggregate limit of Five Million Dollars ($5,000,000.00); (ii) products-completed operations aggregate limit of Three Million Dollars ($3,000,000.00); (iii) personal an d advertising injury limit of Three Million Dollars ($3 ,000,000.00); and (iv) each o ccurrence limit of Thre e Million Dollars ($ 3,000,000.00). Said policy shall include the following coverages:(i) blanket contractual liability (specifically covering the indemnification clause contained below); (ii) products and completed operations; (iii) independent contractors; (iv) Owner’s broad form property damage; (v) severability of interest; (vi) cross liability; and (vii) property damage liability arising out of the so-called “XCU” hazards (explosion, collapse and underground hazards). The policy shall be endorsed to have the general aggregate apply to this Project only.
(b) A policy of worker’s compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for City and Developer against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by Developer in the course of carrying out the work or services contemplated in this Regulatory Agreement, and Employers Liability Insurance in an amount not less than One Million Dollars ($1,000,000) combined single limit for all damages arising from each accident or occupational disease. (c) A policy of comprehensive automobile liability insurance written on a per-occurrence basis in an amount not less than Two Million Dollars ($2,000,000.00) combined single limit covering all owned, non -owned, leased and hired vehicles used in connection with the Work.
14.02 Builder’s Risk. Commencing on the Closing Date and continuing until City issues a Release of Construction Covenants for the Project, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the City Manager, Builder’s Risk (course of construction) insurance coverage in an amount equal to the full cost of the hard construction costs of the Project. Such insurance shall cover, at a minimum: all work, materials, and equipment to be incorporated into the Project; the Project during construction; the completed Project until such time as the City issues a final certificate of occupancy for the Project, and storage and transportation risks. Such insurance shall protect/insure the interests of Developer/owner and all of Developer ’s contractor(s), and subcontracto rs, as each of their interests may appear. If such insurance includes an exclusion for “design error,” such exclusion shall only be for the object or portion which failed. City shall be a loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement.
14.03 Property; Business Interruption; Boiler and Machinery Insurance .
Commencing on the date City issues a Release of Construction Covenants for the Project and continuing until the expiration of the Affordability Period, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the City Manager, the following insurance:
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(a) Insurance against fire, extended coverage, vandalism, and malicious mischief, and such other additional p erils, hazards, and risks as now are or may be included in the standard “all risk” form in general use in Orange County, California, with the standard form fire insurance coverage in an amount equal to full actual replacement cost thereof, as the same may change from time to time. The above insurance policy or policies shall include coverage for earthquakes to the extent generally and commercially available at commercially reasonable rates, if such insurance is generally obtained for affordable Projects in Orange County. City shall be a loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement. (b) Business interruption and extra expense insurance to protect City and Developer covering loss of revenues and/or extra expense incurred by reason of the total or partial suspension or delay of, or interruption in, the operation o f the Project caused by loss or damage to, or destruction of, any part of the insurable real property structures or equipment as a result of the perils insured against under the all risk physical damage insurance, covering a period of suspension, delay or interruption of at least twelve (12) months, in an amount not less than the amount required to cover such business interruption and/or extra expense loss during such period. (c) Boiler and machinery insurance in the aggregate amount of the full replacement value of the equipment typically covered by such insurance.
14.04 Contract Insurance Requirements . Developer shall cause any general contractor with whom it has contracted for the performance of work on the Property to secure, prior to commencing any activities he reunder and maintain insurance that satisfies all of the requirements of this Section 14.
14.05 Additional Requirements. The following additional requirements shall apply to all of the above policies of insurance:
(a) All of the above policies of insurance shall be primary insurance and, except the Worker’s Compensation, Employer Liability insurance, and automobile liability insurance, shall name City and City Personnel as additional insureds on an ISO Form CG 20:10 (current version) or substantially similar form and not an ISO Form CG 20:09. The insurer shall waive all rights of subrogation and contribution it may have against any of City and City Personnel and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days’ prior written notice to City. In the event any of said policies of insurance are cancelled, Developer shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the City Manager . Not later than the Effective, Developer shall provide the City Manager with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders shall be subject to the reasonable approval of the City Manager.
(b) The policies of insurance required by t his Regulatory Agreement shall be satisfactory only if issued by companies of recognized good standing authorized to do business in California, rated “A-” or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial
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category Class VII or better, unless such requirements are waived by the City Manager due to unique circumstances.
(c) The City Manager is hereby authorized to reduce or otherwise modify Developer’s insurance requirements set forth herein in the event he or she determines, in his or her sole and absolute discretion, that such reduction or modification is consistent with reasonable commercial practices.
(d) The Developer agrees that the provisions of this Section shall not be construed as limiting in any way City’s right to indemnification or the extent to which Developer may be held responsible for the payment of damages to any persons or property resulting from Developer’s activities or the activities of any person or persons for which Developer is otherwise responsible.
14.06 Indemnification. Developer shall defend (by counsel satisfactory to City), assume all responsibility for and hold City and City Personnel harmless from all claims or suits for, and damages to, property and injuries to persons, including accidental death (including expert witness fees, attorney ’s fees and costs), which may be caused by the activities or performance of Developer or any of Developer ’s employees, agents, representatives, contractors, or subcontractors under (i) this Regulatory Agreement, (ii) a claim, demand or cause of action that any person has or asserts against Developer; (iii) any act or omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Property; or (iv) the ownership, occupancy or use of the Property by Developer. The obligations and indemnifications in this Section 14.06 shall constitute covenants running with the land.
SECTION 15. ASSIGNMENT.
15.01 Generally Prohibited . Exce pt as otherwise expressly provided to the contrary in this Regulatory Agreement, Developer shall not assign any of its rights or delegate any of its duties under this Regulatory Agreement, nor shall any changes occur with respect to the ownership and/or co ntrol of Developer, including, without limitation, stock transfers, sales of issuances, or transfers, sales or issuances of membership or ownership interests, or statutory conversions, without the prior written consent of the City Manager, which consent may be withheld in his or her sole and absolute discretion. Any such assignment or delegation without such consent shall, at City’s option, be void. This Section 15.01 shall not be applicable to the leasing of Affordable Units to Eligible Tenants in accordance with this Regulatory Agreement.
15.02 Release of Developer . Upon any such assignment made in compliance with Section 15.01 above which is evidenced by a written assignment and assumption agreement in a form approved by City’s counsel, Developer shall be released from any liability under this Regulatory Agreement arising from and after the date of such assignment.
SECTION 16. DEFAULTS AND REMEDIES.
16.01 Default. Subject to the extensions of time set forth in Section 17.02 of this Regulatory Agreement, failure by either Party to perform any action or covenant required
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by this Regulatory Agreement or under the Agreement within the time periods provided herein and therein following Notice and failure to cure as described hereafter, constitutes a “Default” under this Regulatory Agreement. A Party claiming a Default shall give written Notice of Default to the other Party specifying such Default. Except as otherwise expressly provided in this Regulatory Agreement or in the Agreement, the claimant shall not institute any proceeding against any other Party, and the other Party shall not be in Default if such party within thirty (30) days from receipt of such Notice, cures, corrects or remedies such failure or delay, or if such Default cannot reasonably be cured within thirty (30) days, such Party commences such cure within thirty (30) day s of receipt of such Notice and thereafter diligently prosecutes such cure to completion.
16.02 Remedies; Institution of Legal Actions. Developer’s sole remedy for City’s breach of this Regulatory Agreement shall be to institute an action at law or equity to seek specific performance of the terms of this Regulatory Agreement. Developer shall not be entitled to recover damages for any Default of City hereunder. City shall be entitled to seek any remedy available at law and in equity for Developer’s breach of this Regulatory Agreement. All legal actions must be instituted in the Superior Court of the County of Orange, State of California, or in the United States District Court for District of California in which Orange County is located.
16.03 Termination by City. In the event that Developer is in Default of this Regulatory Agreement or the Agreement, and (i) such Default is material and (ii) Developer fails to cure such Default within the time set forth in Section 16.01 hereof, then City may, at City’s option, terminate this Regulatory Agreement.
16.04 Acceptance of Service of Process . In the event that any legal action is commenced by Developer against City, service of process on City shall be made by personal service upon the City Manager or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on Developer shall be made in such manner as may be provided by law.
16.05 Rights and Remedies Are Cumulative . Except as otherwise expressly stated in this Regulatory Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party 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 by the other Party.
16.06 Inaction Not a Waiver of Default . Any failures or delays by either Party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.
16.07 Applicable Law. The internal laws of the State of California shall govern the interpretation and enforcement of this Regulatory Agreement, without regard to conflict of law principles.
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SECTION 17. GENERAL PROVISIONS.
17.01 Notices, Demands and Communications Between the Parties. Any notices, requests, demands, do cuments, approvals or disapprovals given or sent under this Regulatory Agreement from one Party to another (collectively, “Notices”) may be personally delivered, delivered by reputable courier that provides a receipt with the date and time of delivery, or deposited with the United States Postal Service for mailing, postage prepaid, to the address of the other Party as stated in this Section, and shall be deemed to have been given or sent at the time of personal delivery, delivery by courier, or, if mailed, on the second day following the date of deposit in the course of transmission with the United States Postal Service. Notices shall be sent as follows:
If to Developer:
________________, L.P.
c/o Meta Housing Corporation
11150 West Olympic Blvd, Suite 620
Los Angeles, CA 90064
Attention: Christopher Maffris,
Executive Vice President
with a copy to:
If to City: City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attention: City Manager
with a copy to
Rutan & Tucker, LLP
18575 Jamboree Road, 9th Floor
Irvine, CA 92612
Attn: Allison LeMoine-Bui
17.02 Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Regulatory Agreement, performance by either Party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Regulatory Agreement shall be extended, where delays or De faults 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 prio rity; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts or omissions of the other Party; acts or failures to act of any 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 causes beyond the control or without the fault of the Party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Regulatory 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 ten (10) days of the commencement of the cause. Times of performance under this Regulatory Agreement may also be extended in writing by the
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mutual agreement of City and Developer. Notwithstanding any provision of this Regulatory Agreement to the contrary, the lack of funding to complete the construction of the Project shall not constitute grounds of enforced delay pursuant to this Section.
17.03 Relationship Between City and Developer. It is hereby acknowledged by Developer that the relationshi p between City and Developer is not that of a partnership or joint venture and that City and Developer shall not be deemed or construed for any purpose to be the agent of the other. Accordi ngly, with the exception of any provisions expressly set forth to the contrary in the Agreement, herein, or in the exhibits hereto, City shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Project. Developer 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 Developer with respect to the development, operation, maintenance or management of the Property or the Project, except to the extent occasioned by the active negligence or willful misconduct of City or its designated agents or employees.
17.04 No Third Party Rights . The Parties intend that no rights nor remedies be granted to any third party as a beneficiary of this Regulatory Agre ement or of any covenant, duty, obligation or undertaking established herein.
17.05 City Approvals and Actions . This Regulatory Agreement shall be administered and executed on behalf of City by the City Manager. The City Manager shall have the authority to issue interpretations, waive terms and conditions, enter into implementing agreements and amendments of this Regulatory Agreement on behalf of City provided that such actions do not substantially change the uses or development permitted on the Property, materially add to the costs or obligations, increase the risk of liability, or impair the rights or remedies, of City provided herein, or materially decrease the revenues or other compensation to be received by City hereby. All other waivers or amendments shall require the formal consent of the City Council of City.
17.06 Counterparts. This Regulatory Agreement may be signed in multiple counterparts which, when signed by all Parties, shall constitute a binding agreement.
17.07 Integration. This Regulatory Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Regulatory Agreement. Each Party is entering this Regulatory Agreement based solely upon the representations set forth herein and upon each Party’s own independent investigation of any and all facts such party deems material. This Regulatory Agreement constitutes the entire understanding and agreement of the Parties, notwithstanding any previous negotiations or agreements betwe en the parties or their predecessors in interest with respect to all or any part of the subject matter hereof.
17.08 Real Estate Brokerage Commission . City and Developer each represent and warrant to the other that no broker or finder is entitled to any commiss ion or finder’s fee in connection with this transaction, and each agrees to defend and hold harmless the other from any claim to any such commission or fee resulting from any action on its part.
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17.09 Attorneys’ Fees. In any action between the Parties to interp ret, enforce, reform, modify, rescind, or otherwise in connection with, any of the terms or provisions of this Regulatory Agreement, the prevailing Party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to whi ch it might be entitled, reasonable costs, expenses including, without limitation, litigation costs, reasonable attorneys ’ fees, and expert witness fees.
17.10 Titles and Captions. Titles and captions are for convenience of reference only and do not define, des cribe, or limit the scope or the intent of this Regulatory Agreement or of any of its terms. Reference to section numbers are to sections in this Regulatory Agreement, unless expressly stated otherwise.
17.11 Interpretation. As used in this Regulatory 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 R egulatory Agreement shall be interpreted as though prepared jointly by both Parties.
17.12 No Waiver. All waivers of the provisions of this Regulatory Agreement must be in writing by the appropriate authorities of Developer and City. A waiver by either Party of a breach of any of the covenants, conditions or agreements under this Regulatory Agreement to be performed by the other Party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Regulatory Agreement.
17.13 Modifications. Any alteration, change or modification of or to this Regulatory Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each Party.
17.14 Severability. If any term, provision, condition or covenant of this Regulatory Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Regulatory 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.
17.15 Computation of Time. The time in which any act is to be done under this Regulatory Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term “holiday” means all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time.
17.16 Legal Advice . Each Party repr esents and warrants to the other the following: they have carefully read this Regulatory Agreement, and in signing this Regulatory Agreement, 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 this Regulatory Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Regulatory Agreement; and, they have
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freely signed this Regulatory Agreement 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 this Regulatory Agreement, and without duress or coercion, whether economic or otherwise.
17.17 Time of Essence. Time is expressly made of the essence with respect to the performance by City and Developer of each and every obligation and condition of this Regulatory Agreement.
17.18 Cooperation. Each Party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Regulatory Agreement including, but not limited to, releases or additional agreements.
17.19 Non-Liability of Officials and Employees of City. No member, official, officer, employee, or volunteer of City shall be personally liable to Developer, or any successor in interest, in the event of any Default or br each by City or for any amount which may become due to Developer or its successors, or on any obligations under the terms of this Regulatory Agreement. Developer hereby waives and releases any claim it may have against any of the City and City Personnel with respect to any Default or breach by City or for any amount which may become due to Developer or its successors, or on any obligations under the terms of this Regulatory Agreement. Developer 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
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.
__________________________
Developer’s Initials
[End – signatures on next page]
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IN WITNESS WHEREOF, the parties have executed this Regulatory Agreement as of the respective dates set forth below.
Date:
“City”
CITY OF FULLERTON, a California municipal
corporation
By: _____________________________
Eric Levitt, City Manager
ATTEST:
_____________________________
Lucinda Williams, MMC, City Clerk
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
_____________________________
Alison LeMoine-Bui, Special Counsel
Date:
“Developer”
____________ L.P., a California limited
partnership
By: _________________________________
882/036753-0123
18651856.3 a07/24/23
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the sa me in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
882/036753-0123
18651856.3 a07/24/23
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized c apacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
882/036753-0123
18651856.3 a07/24/23
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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18651856.3 a07/24/23
EXHIBIT “A”
LEGAL DESCRIPTION OF THE PROPERTY
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EXHIBIT B
MAP
[See following page]
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EXHIBIT C
INCOME COMPUTATION AND CERTIFICATION FORM
(See following document)
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CITY OF FULLERTON
303 303 W. Commonwealth Avenue
Fullerton, CA 92832
INCOME COMPUTATION AND CERTIFICATION FORM
(Affordable Housing Eligibility for Renter Occupied Unit
PART I. PROPERTY FINANCED WITH GOVERNMENT ASSISTANCE
Property Address: _______________________________________________________
PART II. TENANT HOUSEHOLD INFORMATION
Date of
Birth
Soc. Sec. # Relationshi
p
TOTAL NUMBER OF PERSONS IN HOUSEHOLD:______ (Please list information on other household members below)
Mailing Address: ________________________ Telephone Numbers: Work(____) ________________
_____________________________________ Home (____) ________________
PART III. GROSS HOUSEHOLD INCOME Complete the following, attach copies of required verification as specified below. Attach a note explaining any significant changes in household income between the previous year and the current year. INFORMATION IS REQUIRED FOR ALL MEMBERS OF THE HOUSEH OLD AGE 18 OR OLDER REGARDLESS OF WHETHER THEY CONTRIBUTE TO THE COSTS OF THE HOUSEHOLD. If you are not required to file a tax return, please indicate this in Part V by your signature.
ANN
INCOME
ANN
INCOME
INCOME SOURCES for owner others in
hshld
VERIFICATIONS (needed for
file)
A. Employment earnings Last tax return & last 3 pay
stubs, employer verification
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B. Self-employment earnings Last 2 tax returns & current financial stmt
C. Social Security (OASDI) Annual award letter
D. Supplemental Security
Income (SSI)
Annual award letter
E. Public assistance (AFDC,
general
Current benefit statement
assistance, unemployment,
etc.)
F. Pension (s) Annual award letter, year end
stmt, W-2
G. Interest income Last 2 statements for all
accounts
H. Investment income (stocks,
bonds,
Last 2 statements for all
accounts
real estate, etc.)
I. Room rental Rental agreement, copies of
checks, etc.
J. Other income (list
type/source)
K. TOTAL INCOME (sum of A
thru J)
/ 12 months = ____________
mo. income
PART IV. PROPERTY STATUS
Will this property be your primary residence?______
Will someone other than the individuals listed above be occupying this property?______
If yes - Name of occupants: _______________________________________________
Telephone Number: _______________ Mailing Address: ________________________ _____________________________________________________________________
My/our housing expenses are as follows:
1.Monthly tenant rent ____________________
2.Average monthly utilities _______________
PART V. TENANT CERTIFICATION
I/We understand that after the initial eligibility determinatio n, completion of monitoring forms is required on an annual basis. I/We certify that I/we have disclosed all information pertaining to
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my/our application and that the information presented in the foregoing Sections I through IV is true and accurate to the best of my (our) knowledge.
_______________________________ ________________________________ Tenant Date Tenant Date
For more information regarding this application, please contact management staff at (760) _______________.
---------------------------------------------------------------------------------------------------------------------
FOR OFFICE USE ONLY
____ Information verified
____ Income category
____ Maximum allowable annual income (_____% of median) ____ Applicant’s annual income__________ gross monthly__________ max housing costs
Comments: ____________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
__________________________________________
Management Staff Date
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EXHIBIT D
INCOME RECERTIFICATION FORM
(See following document)
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CITY OF FULLERTON
303 W. Commonwealth Avenue
Fullerton, CA 92832
INCOME RECERTIFICATION FORM
(Renter Occupied Unit)
PART I. GENERAL INFORMATION
1. Property Owner Name ________________________________________
2. Renter Name _______________________________________________
3. Property Address ____________________________________________ Fullerton, CA __________(Please include P.O. Box No. if applicable)
4. Has there been a change in ownership of this property during the preceding 12 month period?
Yes( ) No( )
(If yes, please explain) ________________________________________ PART II. UNIT INFORMATION
5. Number of Bedrooms ____________
6. Number of Occupants ____________
Names:
_______________________________ ____________________________ _______________________________ ____________________________ PART III. AFFIDAVIT OF RENTER
I, _______________________, and I, _______________________, as renters of units assisted pursuant to the City of Fullerton (“City”) Affordable Housing Program (the “Program”), do hereby represent and warrant that the following computation includes all income (I/we) anticipate receiving for the 12-month period commencing on January 1, 20___ (including the renter(s) and all family members of the renters):
(a) amount of wages, salaries, overtime pay, commissions, fees, tips and bonuses, and payments in lieu of earnings, such as unemployment and disability compensation, worker’s compensation and severance pay (before payroll deduction) __________ (b) net income from business or profession or rental of property (without deduction for repayment of debts or expansion of business)
(c) interest and dividends __________
(d) periodic receipts such as social security, annuities, pensions, retirement funds, insurance policies, disability or death benefits, alimony, child support, regular contributions or gifts
from persons not occupying unit __________
(e) public assistance allowance or grant plus excess of maximum allowable for shelter or utilities over the actual allowance for such purposes __________
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(f) regular and special pay and allowances of a member of armed services (whether or not living in the dwelling)
who is head of the family or spouse __________
Subtotal (a) through (f) __________
LESS: Portion of above items which are income of a family member who is less than 18 years old or a full-time student ( ________ ) TOTAL ELIGIBLE INCOME __________
NOTE: The following items are not considered income: casual or sporadic gifts; amounts specifically for or in reimbursement of medical expenses; lump sum payment such as inheritances, insurance payments, capital gains and settlement for personal or property losses; educational scholarships paid directly to the student or educational institution; government benefits to a veteran fo r education; special pay to a serviceman head of family away from home and under hostile fire; foster child care payments; value of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in excess of amount actually charged the eligible household; relocation payments under Title II of Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; payments received pursuant to participation in the following programs: VISTA, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience.
2. This affidavit is made with the knowledge that it wi ll be relied upon by the Developer and City to determine maximum income for eligibility and (I/we) warrant that all information set forth in this Part III is true, correct and complete and based upon information (I/we) deem reliable and that the estimate c ontained in paragraph 1 is reasonable and based upon such investigation as the undersigned deemed necessary.
3. (I/We) will assist the Developer and City in obtaining any information or documents required to verify the statements made in this Part III an d have attached hereto a copy of our federal income tax return for the last year (20___).
4. (I/We) acknowledge that (I/we) have been advised that the making of any misrepresentation or misstatement in this affidavit will constitute a material breach of (my/our) agreement with the Developer to rent the unit and will additionally enable City to initiate and pursue all applicable legal and equitable remedies with respect to the unit and to me/us.
B. (My/Our) monthly housing expenses are limited to the following:
1. Base rent __________________________
2. Average Monthly Utilities __________________________
3. Other (explain) __________________________
(I/We) understand that completion of monitoring forms is required on an annual basis and agree to notify City in writing of any change in ownership or rental of the unit.(I/We) do hereby swear under penalty of perjury that the foregoing statements are true and correct.
Date___________________________ Renter(s)______________________________
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EXHIBIT E
FORM OF CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
(See following document)
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CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being duly authorized to execute this certificate on behalf of ______________________, owner of the _______________________ Project, hereby represents and warrants that:
1. He/she has read and is thoroughly familiar with the provisions of the Affordable Housing Regulatory Agreement between City and __________________________________________.
2. As of June 30, 20__, the following number of residential units in the Project (i) are currently occupied by tenants qualifying as ________________________ Income Households at Affordable Rents; (ii) are currently occupied by tenants qualifying as _________________ Income Households at Affordable Rents; (iii) are currently occupied by tenants qualifying as __________________ Income Households at Affordable Rents; or (iv) are currently vacant and being held available for occupancy by Eligible Tenants and have been so held continuously since the date Eligible Tenants vacated such unit, as indicated:
i. _____ Units occupied by Very Low Income Households
ii. _____ Units occupied by Low Income Households
iii. _____ Units occupied by Moderate Income Households iv. _____ Vacant Units
3. The unit number, unit size, rental amount charged and collected, number of occupants, and the income of the occupants for each Affordable Unit in the Project are set forth on the attached list. All Affordable U nits in the Project are rented at Affordable Rent.
Dated:____________________, 20__
DEVELOPER NAME
_______________________________,
a California limited partnership
By:
(Printed name and title)
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EXHIBIT F
RESTRICTED UNIT MATRIX
Size No. of
Units
Very Low
Income
Low Income
Moderate
Income
Mgr
Unit
One bedroom 29 9 16 4
Two
bedrooms
19 3 6 9 1
Three
bedrooms
17 2 1 14
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18651856.3 a07/24/23 ATTACHMENT NO. 11
ATTACHMENT NO. 11
NOTICE OF AFFORDABILITY RESTRICTIONS
(See following document)
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attn: City Clerk
Exempt From Recording Fee Pursuant to Government Code § 27383
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and title companies, and other persons, regarding affordable housing restrictions on the real property described in this Notice:
Affordable housing r estrictions have been recorded with respect to the property described below (referred to in this Notice as the “Property”) which require that the Property be developed as an affordable rental housing development and that all of the units be rented to and occupied by persons and households of limited income at affordable rents.
Title of Document Containing Affordable Housing Restrictions:
Affordable Housing Regulatory Agreement (“Agreement”).
Parties to Agreement: ____________, L.P. , a California limited partnership (“Developer”), and the City of Fullerton, a California municipal corporation (“City”).
The Agreement is recorded concurrently with this Notice , in the Official Records of Orange County.
Legal Description of Property: See Exhibit “A” attached hereto and incorporated herein by this reference.
Property Location: Located in the City of Fullerton , County of Orange, State of California.
Assessor’s Parcel Numbers of Property:
______________________.
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Summary of Agreement:
o The Agreement requires Developer to develop a sixty-five (65) unit affordable rental Project on the Property;
o The Agreement restricts the rental of (i) thirty (30) units to households who qualify as very low income pursuant to Health and Safety Code section 50105, (ii) seven (7) units to households who qualify as lower income households pursuant to Health and Safety Code section 50079.5, and (iii) twenty-seven (27) units to households who qualify as moderate income households
pursuant to Health and Safety Code section 50093.
o The Regulatory Agreement restricts the rents that may be charged to such households to the maximum amount of rent, including a reasonable utility allowance, that does not exceed the rent permitted to be charged to the applicable household, as the case may be, determined pursuant to Health and Safety Code Section 50053(b).
o The Agreement will remain in effect for 55 years from the date City issues a Certificate of Occupancy for the Property.
This Notice does not contain a full description of the details of all of the terms and conditions of the Agreement. You will need to obtain and read the Agreement to fully understand the restrictions and requirements which apply to the Property.
This Notice is being recorded and filed in co mpliance with Health and Safety Code Section 33334.3(f)(3) and (4), and shall be indexed against Developer, who will own fee title to the Property, and City. [signature on next page]
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Date: _______________, 201_
“City”
CITY OF FULLERTON, a California
municipal corporation
By:
_____________________________
Eric Levitt, City Manager
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18651856.3 a07/24/23
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT “A”
LEGAL DESCRIPTION OF PROPERTY
882/036753-0123
18651856.3 a07/24/23 ATTACHMENT NO. 12
ATTACHMENT NO. 12
(See following document)
882/036753-0123
18651856.3 a07/24/23 ATTACHMENT NO. 13
ATTACHMENT NO. 13
RELEASE OF CONSTRUCTION COVENANTS
(See following document)
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Fullerton
303 W. Commonwealth Avenue
Fullerton, CA 92832
Attn: City Clerk
(Space Above for Recorder’s Use)
Exempt from Recordation Fee per Gov. Code
§ 27383
RELEASE OF CONSTRUCTION COVENANTS
This RELEASE OF CONSTRUCTION COVENANTS (“ Release”) is made this ____ day of ________________, by the CITY OF FULLERTON, a California munic ipal corporation (“City”), in favor of ________________ ______________________, a California limited partnership (“Developer”).
R E C I T A L S
A. Developer owns fee title to that certain real property located in the City of Fullerton, County of Orange, State of California, more particularly described in the legal description attached hereto as Exhibit “A” (“Property”).
B. On or about ________________, City and Meta Development, LLC, a California limited liability company (“Meta”), entered into that certain Affordable Housing and Property Disposition Agreement (“ Agreement”) which provides for Meta to develop on the Property a sixty-five (65) unit rental affordable housing development, as more particularly described therein as the “P roject.” Meta assigned to Developer, and Developer assumed from Meta, all of Meta’s rights and obligations in and to the Agreement.
C. Pursuant to the Agreement, City is required to furnish Developer with this Release upon request by Developer after completion of construction of the Project.
D. The issuance by City of this Release shall be conclusive evidence that Developer has complied with the terms of the Agreement pertaining to the construction of the Project.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by this reference, the parties hereto agree as follows:
1. As provided in the Agreement, City does hereby certify that the construction of the Project has been satisfactorily performed and completed, and that such development and construction work complies with the Agreement.
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2. This Release does not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage or any insurer of a mortgage security money loaned to finance the work of construction of improvements and development of the Property, or any part of thereof.
3. This Release is not a notice of completion as referred to in Section 3093 of the California Civil Code.
4. This Release does not terminate any other agreement or document executed by Developer in conne ction with the Agreement, including, without limitation, that certain Affordable Housing Regulatory Agreement recorded on ________, as Instrument No. __________________, in the Official Records of the County of Orange (the “Official Records”), and that cer tain Deed of Trust recorded on ___________, as Instrument No. ________________, in the Official Records, all of which shall survive recordation of this Release.
IN WITNESS WHEREOF, City has executed this Release as of the date set forth above.
Date:
CITY OF FULLERTON, a California
municipal corporation
By: _____________________________
Eric Levitt, City Manager
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18651856.3 a07/24/23
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of ______________________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the sa me in his/her/their authorized capa city(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT “A”
LEGAL DESCRIPTION OF PROPERTY
TABLE OF CONTENTS
Page
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1. DEFINITIONS ................................................................................................................. 3
2. PARTIES ....................................................................................................................... 12
2.1 City ................................................................................................................ 12
2.2 Developer .................................................................................................... 12
3. OPENING OF ESCROW; INDEPENDENT CONTRACT
CONSIDERATION ....................................................................................................... 12
4. DUE DILIGENCE PERIOD; PERMISSION TO ENTER PROPERTY;
AS-IS; PHYSICAL AND ENVIRONMENTAL CONDITION ................................... 12
4.1 Due Diligence Period ................................................................................. 12
4.2 “AS-IS” ......................................................................................................... 13
4.3 Developer Indemnity and Release .......................................................... 14
4.4 Materiality .................................................................................................... 14
4.5 Review of Title of Property ........................................................................ 15
5. FINANCING PLAN FOR THE PROJECT ................................................................ 16
5.1 Financing Plan ............................................................................................ 16
5.2 City Loans .................................................................................................... 16
5.3 Application to TCAC................................................................................... 16
5.4 Project Budget ............................................................................................ 17
5.5 Developer Submittals ................................................................................ 17
5.6 Financing Commitments ........................................................................... 17
5.7 Disbursement of City Bond Loan ............................................................. 18
6. DISPOSITION OF PROPERTY ................................................................................. 18
6.1 Agreement to Sell Property to Developer ............................................... 18
6.2 Conditions for City’s Benefit ..................................................................... 18
6.3 Conditions for Developer’s Benefit .......................................................... 21
6.4 Developer Right to Terminate .................................................................. 23
6.5 City Right to Terminate .............................................................................. 23
6.6 Waiver of Conditions .................................................................................. 23
7. CLOSING; ESCROW EXPENSES ............................................................................ 23
7.1 Developer’s Escrow Deposits .................................................................. 23
7.2 City’s Escrow Deposits .............................................................................. 24
7.3 Closing ......................................................................................................... 24
7.4 Closing ......................................................................................................... 25
7.5 Escrow Cancellation Charges .................................................................. 25
7.6 Escrow Cancellation .................................................................................. 25
7.7 Land Use Entitlement Claims; CEQA Claims ........................................ 26
7.8 Escrow Closing Costs ................................................................................ 26 Page
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7.9 Instruction to Escrow Holder Regarding Waiver of Transfer Taxes and Recording Fees....................................................................... 26
7.10 Broker’s Commissions ............................................................................... 26
8. OTHER ESCROW INSTRUCTIONS ........................................................................ 27
8.1 Funds in Escrow ......................................................................................... 27
8.2 Amendments ............................................................................................... 27
8.3 Notices ......................................................................................................... 27
8.4 Liability ......................................................................................................... 27
9. DEVELOPMENT OF THE PROJECT ....................................................................... 27
9.1 Scope of Development .............................................................................. 27
9.2 Architectural Plans ..................................................................................... 27
9.3 Final Construction Drawings .................................................................... 28
9.4 Additional Governmental Permits and Approvals ................................. 28
9.5 Review and Approval of Plans, Drawings, and Related Documents .................................................................................................. 28
9.6 Cost of Development ................................................................................. 29
9.7 Indemnity ..................................................................................................... 29
9.8 Insurance Requirements ........................................................................... 29
9.9 Remedies for Defaults Re: Insurance ..................................................... 32
9.10 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance ............................................................................... 32
9.11 Rights of Access ......................................................................................... 32
9.12 Compliance with Laws; Compliance with Prevailing Wage Laws ...... 33
9.13 Anti-Discrimination ..................................................................................... 35
9.14 Taxes and Assessments ........................................................................... 35
9.15 Right of City to Satisfy Other Liens on the Property(s) ........................ 35
9.16 Non-liability of City ..................................................................................... 35
9.17 Release of Construction Covenants ........................................................ 36
9.18 Developer Fee ............................................................................................ 37
9.19 Cost Savings Obligation ............................................................................ 37
10. AFFORDABILITY COVENANTS ............................................................................... 38
11. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS ............ 38
11.1 Developer’s Formation, Qualification and Compliance ........................ 38
11.2 Litigation....................................................................................................... 38
11.3 City ................................................................................................................ 38
12. DEFAULTS AND REMEDIES .................................................................................... 38
12.1 Event of Default .......................................................................................... 38
12.2 No Waiver .................................................................................................... 39
12.3 Rights and Remedies are Cumulative .................................................... 39
12.4 Attorneys’ Fees ........................................................................................... 39
12.5 Reimbursement of City .............................................................................. 39 Page
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12.6 Investor Right to Cure ................................................................................ 40
13. NOTICES ....................................................................................................................... 40
14. ASSIGNMENT .............................................................................................................. 41
14.1 Generally Prohibited .................................................................................. 41
14.2 Release of Developer ................................................................................ 41
15. ADMINISTRATION ...................................................................................................... 41
16. MISCELLANEOUS....................................................................................................... 42
16.1 Counterparts ............................................................................................... 42
16.2 Prior Agreements; Amendments .............................................................. 42
16.3 Governing Law ............................................................................................ 42
16.4 Acceptance of Service of Process ........................................................... 42
16.5 Severability of Provisions .......................................................................... 42
16.6 Interpretation ............................................................................................... 42
16.7 Accounting Principles ................................................................................ 42
16.8 Attachments Incorporated ......................................................................... 43
16.9 Time of the Essence .................................................................................. 43
16.10 Warranty Against Payment of Consideration ......................................... 43
16.11 Non-liability of City Officials and Employees ......................................... 43
16.12 Force Majeure ............................................................................................. 43
16.13 Developer Covenant to Defend this Agreement .................................... 43
16.14 Nondiscrimination Covenants................................................................... 44
16.15 Consents and Approvals ........................................................................... 47
16.16 No Third Party Beneficiaries ..................................................................... 47
List of Attachments:
1A - Legal Description of City-Owned Mixed Property
1B - Depiction of City-Owned Mixed Property and Property 2A - Site Plan
2B - Proposed Subdivision Site Map
3 - Schedule of Performance
4 - Scope of Development
5 - Form of Grant Deed
6 - Form of Assignment of Plans and Contract
7A - Form of City Bond Loan Note
7B - Form of City Land Loan Note
8A - Form of City Bond Loan Deed of Trust
8B - Form of City Land Loan Deed of Trust
9 - Project Budget
10 - Form of City Regulatory Agreement
Page
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11 - Form of Notice of Affordability
12 - Form of City HOME Loan Agreement
13 - Form of Release of Construction Covenants