completed in June 2022 and consists of 80 -affordable units and one on -site manager unit. The “Phase II Project” is the proposed addition of 32 units, all covenanted as affordable housing for a 55 -year Affordability Period, and includes additional parking, appurtenances, and reciprocal access and joint use of the Phase I and Phase II common facilities and amenities pursuant to a Joint Use Agreement.
DISCUSSION
Attached with this agenda report is the proposed Disposition, D evelopment and Affordable Housing Agreement (“DDAHA”) among Courtyards at Cottonwood II, L.P., a California limited partnership (“Developer”), the City, and the Authority, for consideration and action by the City Council and Housing Authority Board. Under the DDAHA, the Authority will sell to Developer the Phase II Site and Developer will plan, construct, develop, own, manage and maintain the new 32 unit multi -family affordable housing project with appurtenant improvements, community facilities for tenancy and occupancy by Eligible Households (“Phase II Project”). The Phase II Site is a vacant 1.61 -acre parcel directly adjacent to Phase I at the northeast corner of Cottonwood Avenue and Indian Street (APN 482 -161-026). As noted, the Phase I Project and Ph ase II Project will be subject to an Agreement for Joint Use of Common Area Amenity Facilities and Grant Of Reciprocal Nonexclusive Easements for joint use of the common facilities and amenities onsite at the two -phase development. The Authority owns fee title to the Phase II Site, which real property was at dissolution, and is presently, a “housing asset” that vested in the housing successor upon dissolution of the former redevelopment agency as of February 1, 2012.
The salient provisions and objectives of the DDAHA include: (1) the terms, conditions, and performance obligations of the parties to carry out the planning, design, construction, and operation of the 32 -unit Phase II Project in compliance with the Entitlement and DDAHA; (2) sale of the Phase II Site by the Authority to Developer; (3) enter into the Authority Loan that evidences the purchase price for the land; (4) City will provide certain impact fee waivers; (5) set forth the Authority’s rights under Intercreditor and Subordination Agreement instruments related to the Developer’s Construction and Permanent financing; (6) establish senior conditions, covenants and restrictions as set forth in the City Covenants Agreement and Authority Regulatory Agreement; and (7) establish Developer’s rights a nd obligations with regard to construction, completion and operation of the Phase II Project on the Phase II Site.
The Phase II Housing Units will be occupied by Eligible Households that qualify as Extremely Low Income, Very Low Income, or Low Income, and based on income level will be leased to the tenant at the Affordable Rent applicable to the Housing Unit. The “Unit Mix” among the 32 Housing Units includes 2-bedroom, 3-bedroom, and 4 bedroom apartments as follows:
• Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income; • One (1) 2-bedroom Housing Unit for 40% AMI Very Low Income; • One (1) 2-bedroom Housing Unit for 40% AMI Very Low Income; • Two (2) 2-bedroom Housing Units for 45% AMI Very Low Income; • Four (4) 2-bedroom Housing Unit for 50% AMI Very Low Income; A.8
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• Six (6) 2-bedroom Housing Units for 60% AMI Lower Income; • Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income; • One (1) 3-bedroom Housing Unit for 40% AMI Very Low Income; • One (1) 3-bedroom Housing Unit for 45% AMI Very Low Income; • One (1) 3-bedroom Housing Unit for 50% AMI Very Low;
• One (1) 3-bedroom Housing Unit for 50% AMI Very Low Income; • Six (6) 3-bedroom Housing Units for 60% AMI Lower Income; • One (1) 4-bedroom Housing Unit for 30% Extremely Low Income; • One (1) 4-bedroom Housing Unit for 40% Very Low Income; • One (1) 4-bedroom Housing Unit for 45% Very Low Income; and • One (1) 4-bedroom Housing Unit for 50% Very Low Income.
Pursuant to the DDAHA, the Phase II Project will be subject to the terms of the Authority Regulatory Agreement and City Covenants Agreement that set forth the affordable housing covenants and detail the terms of use, ownership, transfer, operation, maintenance and management of the development. Both agreements will be recorded against the Phase II Site as, and shall remain, senior and nonsubordinate to monetary liens and other encumbrances for the 55 -year Affordability Period. The City Covenants Agreement implements the Entitlement, the City’s density bonus ordinance, and the State Density Bonus Law, Government Code Section 65915, et seq.
In June 2022 in connection with the Developer’s application to the California Tax Credit Allocation Committee (“TCAC”) for the reservation of Tax Credits for the Phase II Project, the City Council and Authority Board approved a Preliminary Award Letter after a duly noticed public hearing by which the sale and conveyance of the Phase II Site was approved. The DDAHA implements that disposition in compliance with applicable laws.
Further, in 2021 and 2022, the Planning Commission and then the City Council considered and approved a series of discretionary decisions that comprise the land use “Entitlement” for the Phase II Project, including a General Plan Amendment and making certain findings pursuant to CEQA.
Under the DDAHA, if approved, the Phase II Site will be sold and conveyed to Developer for the appraised value of $380,000, with the purchase price paid through carry-back financing by an Authority Loan to be repaid through Residual Receipts, which loan is evidenced by the Authority Loan Note and secured by the Authority Loan Deed of Trust that will be subordinate to the Developer’s construction and permanent financing. The Authority Loan Note will accrue 1% simple interest per annum with a term of not less than 55 years, and annual Residual Receipts payments are due by Developer to the Authority.
Developer applied for and received a reservation of 9% Tax Credits and has received funding commitments from the County of Riverside, including $ 4,000,000 to be sourced from Permanent Local Housing Allocation (“PLHA”) program funds and eight Section 8 project based housing choice vouchers (“PBVs”). The Developer has selected Citibank for construction and permanent financing and CREA as the Investo r Limited Partner with equity installment payments to Developer totaling approximately $9,238,988 pursuant to a limited partnership agreement.
Pursuant to the Joint Use Agreement, the Phase II residents will have full access to all joint use amenities, in cluding: (i) 4,840 square -foot community building with A.8
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management, leasing services, tenant services and maintenance offices, (ii) maintenance garage, (iii) computer lab, (iv) laundry room, (v) restrooms, (vi) mail kiosk, (vii) community full kitchen, (viii) community pool, (ix) tot lot, (x) basketball court, and (xi) senior fitness course; in addition, the onsite manager’s unit is located in the Phase I Project on the second floor of the community building; additionally, the Phase II Project will include d rought tolerant landscaping, with passive courtyard areas that include seating, tables and chairs and BBQs for tenants. The Phase II Project will add 52 parking spaces, including 27 assigned covered parking spaces, 5 unassigned covered parking spaces, 15 unassigned accessible spaces, and 5 electric vehicle charging stations spaces.
The proposed DDAHA and this staff report have been available for public review prior to this joint public meeting. All actions required by all applicable law with respect to t he proposed DDAHA have been taken in an appropriate and timely manner, and staff recommends the City Council and Authority Board adopt their respective resolutions.
ALTERNATIVES
1. Adopt the City Council and Housing Authority Resolutions, respectively, that approve the Disposition, Development and Affordable Housing Agreement; authorize the City Manager and Executive Director of the Housing Authority to execute project related documents; authorize the City Manager and Executive Director to consider and approve future amendments as approved by the City Attorney that do not substantively increase or amend Moreno Valley’s obligations or materially change uses; approve necessary revenue and expenditure appropriations. Staff recommends this alternative as it will allow the City and Housing Authority to dedicate this vacant parcel to this affordable housing development.
2. Do not adopt the approve the City Council and Housing Authority Resolutions, respectively. Staff does not recommend this alternative as i t will not allow the City to dedicate this vacant parcel to this affordable housing development and further the goals and objectives of the City’s Housing Element and the Authority’s objective, as the housing successor, to cause development of covenanted affordable housing pursuant to the Housing Authorities Law and applicable provisions of the Dissolution Law.
FISCAL IMPACT
Under the DDAHA, if approved, the Moreno Valley Housing Authority will sell the Phase II Site, a 1.61 acre vacant parcel, to Develop er for development and operation of the Phase II Project. The purchase price of $380,000 will be evidenced by the carry -back financing of the Authority Loan that will be repaid through Residual Receipts payments over the term of the 55-year Affordability Period.
Under the DDAHA, if approved, the City would reduce or waive development impact fees as eligible under the Municipal Code, Density Bonus Program for Affordable Housing, Section 9.03.050, et seq. that provides for waivers, incentives and concessions, which were approved for this Phase II Development under the Entitlement; A.8
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the estimated fee waivers are approximately $421,431.
NOTIFICATION
The public has been notified through the publication of the agenda for the joint meeting of the City Council and Authority Board.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Dena Heald Brian Mohan
Deputy Finance Director Assistant City Manager
Chief Financial Officer/City Treasurer
CITY COUNCIL AND HOUSING AUTHORITY GOALS
The DDAHA implements the Housing Element of the City’s General Plan, and carries out the Authority’s obligation as the housing successor to cause development of affordable housing pursuant to the Housing Authorities Law and the Dissolution Law, in particular Health and Safety Code Section 34176.1.
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
ATTACHMENTS
To view large attachments, please click your “bookmarks” on the left hand side of this document for the necessary attachment.
1. Courtyards at Cottonwood Phase II Site Plan
2. City Resolution 2023- xx for Courtyards at Cottonwood Phase II
3. Housing Authority Resolution HA 2023- xx for Courtyards at Cottonwood Phase II
4. DRAFT Disposition, Development and Affordable Housing Agreement
APPROVALS
CITY COUNCIL GOALS
None
A.8
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CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
ATTACHMENTS
To view large attachments, please click your “bookmarks” on the left hand side of this document for the necessary attachment.
1. Courtyards at Cottonwood Phase II Site Plan
2. Reso - Housing Authority - Phase II 4874-8266-7600_2
3. Reso - City Council - Phase II 4873-2918-2288_2
4. Draft Disposition Development and Affordable Housing Agreement
APPROVALS
Budget Officer Approval ✓ Approved . 2/27/23 8:35 AM City Attorney Approval ✓ Approved .
City Manager Approval ✓ Approved . 2/27/23 9:02 AM A.8
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APN 482-161-026
Roebuck Atkins & Associates
495 E. Rincon Street, Suite 204
Corona, CA. 92879 (951) 268-1650
Arizona . California . Texas
APN 482-161-028
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APN 482-161-026
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(reverse of F)
BUILDING H
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BUILDING B
(existing)
APN 482-161-028
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BUILDING C
(existing)
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BUILDING A
(existing)
BUILDING E
(existing)
PEN21-0112
BUILDING D
(existing)
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A Proposed Affordable Housing Community
The Courtyards at Cottonwood
Phase II
24502 - 24502 Cottonwood Ave.
Moreno Valley, CA. 92553
PEN21-0112
[Grab your reader’s attention with a great quote from the document or use this space to emphasize a key point. To place this text box anywhere on the page, just drag it.]
A.8.a
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Attachment: Courtyards at Cottonwood Phase II Site Plan (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. HA 2023-____
Date Adopted: March 7, 2023
RESOLUTION NO. HA 2023-____
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
MORENO VALLEY HOUSING AUTHORITY, CALIFORNIA
APPROVING THE DISPOSITION, DEVELOPMENT AND
AFFORDABLE HOUSING AGREEMENT THAT INCLUDES SALE
OF VACANT LAND (APN -161-026) TO COURTYARDS AT
COTTONWOOD II, L.P. FOR DEVELOPMENT AND OPERATION
OF PHASE II OF THE COURTYARDS AT COTTONWOOD ,
A 32-UNIT AFFORDABLE HOUSING PROJECT; AUTHORIZING
THE HOUSING AUTHORITY CHAIR TO EXECUTE AND
SECRETARY TO ATTEST THE DDAHA; AUTHORIZING THE
EXECUTIVE DIRECTOR TO CARRY OUT THE DDAH A AND
IMPLEMENTING DOCUMENTS; AND MAKING CERTAIN OTHER
FINDINGS IN CONNECTION THEREWITH
WHEREAS, the Moreno Valley Housing Authority (“Authority”) is a housing authority duly established and operating as a local housing authority pursuant to the California Housing Authority Law, Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code (“HAL”); and
WHEREAS, the Authority also serves as the housing successor to the now dissolved Community Redevelopment Agency of the City of Moreno Valley (“Former Agency”) and administers that certain low and moderate housing asset fund (“LMIHAF”) under Division 24, Part 1.85 of the California Health and Safety Code (“HSC”), in particular Sections 34176 and 34176.1 (“Dissolution Law”); and
WHEREAS, the City of Moreno Valley (“City”) is a California municipal corporation; and
WHEREAS, the Authority is empowered under the HAL and Dissolution Law to enter into agreements and to carry out affordable housing projects and programs benefiting Extremely Low, Very Low, and Low Income persons, families, and households; and
WHEREAS, the Authority is authorized under the HAL and Dissolution Law to provide financial assistance for the development of multifamily residential affordable housing within the City; and
WHEREAS, the City is obligated by State law and the Housing Element of the General Plan to plan for the community’s supply of low to moderate income housing; and A.8.b
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Attachment: Reso - Housing Authority - Phase II 4874-8266-7600_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. HA 2023-____
Date Adopted: March 7, 2023
WHEREAS, in furtherance of the objectives of the Dissolution Law, the HAL and the Housing Element of th e General Plan, the City and the Authority desire to improve and increase the community’s supply of multi -family affordable housing available at an affordable rent and affordable housing cost; and
WHEREAS, Authority determines there is a continuing need in the community for multi-family apartment units to be available for the longest feasible period to persons and families of Extremely Low Income, Very Low Income , and Low Income at an Affordable Rent, as those terms are defined in the Disposition, Development and Affordable Housing Agreement described below and in applicable state law; and WHEREAS, the Authority, as housing successor under the Dissolution Law, is obligated to utilize funds in the LMIHAF to cause “development” (defined in HSC 34176.1) of affordable housing for Extremely Low, Very Low , and Low Income households available at an Affordable Rent; and
WHEREAS, Courtyards at Cottonwood, L.P. has completed and operates an 81 - unit multi-family affordable rental housing project (“ Phase I Project ”) on certain real property located at the northeast corner of Cottonwood Avenue and Indian Street, in the City of Moreno Valley, County of Riverside, State of California; and WHEREAS, pursuant to that certain proposed Disposition, Development and Affordable Housing Agreement (“DDAHA”) among Courtyards at Cottonwood II, L.P. , a California limited partnership (“Developer”), the City, and the Authority, as presented at this meeting, Authority will sell to Developer the Phase II Site and thereon Developer shall plan, construct, develop, own, manage and maintain a new 32 unit multi-family affordable housing project with appurtenant improvements, community facilities (shared with the Phase I Project), and resident and guest parking, for tenancy and occupa ncy by Eligible Households (“Phase II Project”), which will be developed and operated on that certain vacant 1.61-acre parcel directly adjacent to the Phase I Project at the northeast corner of Cottonwood Avenue and Indian Street (APN 482-161-026) (“Phase II Site”); and WHEREAS, the Phase I Project and Phase II Project will be subject to a certain Agreement for Joint Use of Common Area Amenity Facilities and Grant Of Reciprocal Nonexclusive Easements (“REA”) for joint use of the common facilities and amenit ies onsite at the two-phase development; and
WHEREAS, capitalized terms used in this Resolution are as defined in the DDAHA unless otherwise defined herein; and
WHEREAS, the Authority owns fee title to the Phase II Site, which real property was at dissolution, and is presently, a “housing asset” that vested in the housing successor at dissolution of the Former Agency; and
A.8.b
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Attachment: Reso - Housing Authority - Phase II 4874-8266-7600_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. HA 2023-____
Date Adopted: March 7, 2023
WHEREAS the Phase II Housing Units will be occupied by Eligible Households based on income level and leased at an Affordable Rent applicable to the Housing Unit covenanted with the following unit mix:
• Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income; • One (1) 2-bedroom Housing Unit for 40% AMI Very Low Income; • One (1) 2-bedroom Housing Unit for 40% AMI Very Low Income; • Two (2) 2-bedroom Housing Units for 45% AMI Very Low Income; • Four (4) 2-bedroom Housing Unit for 50% AMI Very Low Income; • Six (6) 2-bedroom Housing Units for 60% AMI Lower Income; • Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income; • One (1) 3-bedroom Housing Unit for 40% AMI Very Low Income; • One (1) 3-bedroom Housing Unit for 45% AMI Very Low Income; • One (1) 3-bedroom Housing Unit for 50% AMI Very Low;
• One (1) 3-bedroom Housing Unit for 50% AMI Very Low Income; • Six (6) 3-bedroom Housing Units for 60% AMI Lower Income; • One (1) 4-bedroom Housing Unit for 30% Extremely Low Income; • One (1) 4-bedroom Housing Unit for 40% Very Low Income; • One (1) 4-bedroom Housing Unit for 45% Very Low Income; and • One (1) 4-bedroom Housing Unit for 50% Very Low Income.
WHEREAS, pursuant to the DDAHA, the Phase II Project will be subject to the terms of the Authority Regulatory Agreement and City Covenants Agreement that set forth the affordable housing covenants, and detail the terms of use, ownership, transfer, operation, maintenance and management of the development, which agreements will be recorded against the Phase II Site as, and shall remain, senior and nonsubordinat e to monetary liens and other encumbrances for the 55-year Affordability Period; and WHEREAS, pursuant to the DDAHA the Phase II Site will be sold and conveyed to Developer for the appraised value of $380,000, with the purchase price paid through carry-back financing through an Authority Loan to be repaid through Residual Receipts, which loan is evidenced by the Authority Loan Note and secured by the Authority Loan Deed of Trust that will be subordinate to the Developer’s construction and permanent financing; the Authority Loan Note will accrue 1% simple interest per annum with a term of not less than 55 years; annual Residual Receipts payments are due by Developer to the Authority; and
WHEREAS, under the proposed DDAHA, the City would reduce or waive development impact fees as eligible under the Municipal Code, Density Bonus Program A.8.b
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Attachment: Reso - Housing Authority - Phase II 4874-8266-7600_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. HA 2023-____
Date Adopted: March 7, 2023
for Affordable Housing, Section 9.03.050, et seq. that provides for waivers, incentives and concessions, which were approved for this Phase II Development under the Entitlement; the estimated fee waivers are approximately $421,431; and WHEREAS, pursuant to the REA, the Phase II residents will have full access to all joint use amenities, including: (i) 4,840 square -foot community building with management, leasing services, tenant services and maintenance offices, (ii) maintenance garage, (iii) computer lab, (iv) laundry room, (v) restrooms, (vi) mail kiosk, (vii) community full kitchen, (viii) community pool, (ix) tot lot, (x) basketball court, and (xi) senior fitness course ; in addition, the onsite manager’s unit is located in the Phase I Project on the second floor of the community building; additionally, the Phase II Project will include drought tolera nt landscaping , with passive courtyard areas that include seating, tables and chairs and BBQs for tenants WHEREAS, in connection with that certain Preliminary Award Letter approved by the City Council and the Authority Board after a duly noticed public hearing in June 2022, the disposition of the Phase II Site was approved and the DDAHA will implement that disposition; and
WHEREAS, as described in the DDAHA, the City’s Planning Commission and thereafter the City Council considered and approved the series of discretionary decisions that comprise the land use “Entitlement” for the Phase II Project, including making certain findings pursuant to CEQA; and
WHEREAS, the Phase II Project is within the envelope of development approved by the actions that comprise the Entitlement , including the CEQA findings made by the City Planning Commission and City Council thereunder, and while based on such prior action no further action or pos ting under CEQA are necessary to approve the DDAHA and for Developer to undertake the Phase II Project; and WHEREAS, the DDAHA will implement the Housing Element of the City’s General Plan, and carry out the Authority’s obligation as the housing successor to cause development of affordable housing pursuant to HAL and the Dissolution Law, in particular Health and Safety Code Section 34176.1; and
WHEREAS, on March 7, 2023 at an open public meeting, the Authority encouraged and received public input and commen t, whether for, against or neutral, to the DDAHA and Phase II Project and the Authority has reviewed and desires to approve, enter into and implement the DDAHA with Developer; and
WHEREAS, the proposed DDAHA and a staff report have been available for public review prior to the joint public meeting; and
WHEREAS, all actions required by all applicable law with respect to the proposed DDAHA have been taken in an appropriate and timely manner; and A.8.b
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Attachment: Reso - Housing Authority - Phase II 4874-8266-7600_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. HA 2023-____
Date Adopted: March 7, 2023
WHEREAS, the Authority has duly considered all of the terms and conditions of the proposed DDAHA and believes that the development of the Phase II Site with the Phase II Project is in the best interests of the Moreno Valley community and in accord with the public purposes and provisions of applicable state and local laws and requirements.
NOW, THEREFORE, BE IT RESOLVED, FOUND, DETERMINED AND
ORDERED BY THE MORENO VALLEY HOUSING AUTHORITY AS FOLLOWS:
Section 1. The Authority finds and determines the foregoing recitals are t rue and correct and are a substantive part of this Resolution.
Section 2. The Authority approves the Disposition, Development and Affordable Housing Agreement among the Authority, the City, and Developer with such changes mutually agreed upon by the Authority Executive Director (or his authorized representative), the City Manager on behalf of the City, the City Attorney and special counsel, and Developer as are minor and in substantial conformance with the form of the DDAHA that has been submitted with this action item. Further:
(a) The Chair and the Authority Secretary are hereby authorized to execute and attest, respectively, the DDAHA, and the Authority Executive Director and Secretary are authorized to execute and attest the applicable Attachments and related implementing instruments, on behalf of the Authority; and (b) Copies of the final form of the DDAHA, when duly executed and attested, shall be placed on file in the office of the Secretary (City Clerk) and a complete copy shall be attached as a part of this Resolution; and (c) Further, the Authority Executive Director (or his authorized representative) is authorized to implement the DDAHA and take all further actions and execute all documents referenc ed therein , and/or necessary and appropriate to carry out the Phase II Project pursuant to the DDAHA; and (d) The Authority Executive Director (or his authorized representative) is hereby authorized to the extent necessary during the implementation of the DDAHA and implementation agreement(s) , if any, to make technical or minor changes and interpretations thereto after execution, as necessary to properly implement and carry out the DDAHA, provided any and all such changes shall not in any manner materially affect the rights and obligations of the Authority thereunder.
Section 3. In addition to the authorization of Section 2 above, inclusive of 2.(a) to (d) above, the Executive Director (and his authorized representative) is hereby authorized, on behalf of the Authority, to sign all other documents necessary or appropriate to carry out and implement the DDAHA, including causing the issuance of warrants in A.8.b
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Attachment: Reso - Housing Authority - Phase II 4874-8266-7600_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. HA 2023-____
Date Adopted: March 7, 2023
implementation thereto, and to administer the Authority’s obligations, responsibilities and duties to be performed under the DDAHA.
Section 4. The City’s previous actions and findings, as lead agency, under CEQA made in connection with the Entitlement apply to the DDAHA and Phase II Project and no other action or findings under CEQA are required by the Authority.
Section 5. The Authority Secretary shall certify to the adoption of this Resolution.
APPROVED AND ADOPTED this 7th day of March, 2023.
___________________________________
Chair
Moreno Valley Housing Authority
ATTEST:
____________________________
Secretary
APPROVED AS TO FORM:
____________________________
General Counsel
A.8.b
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Attachment: Reso - Housing Authority - Phase II 4874-8266-7600_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. HA 2023-____
Date Adopted: March 7, 2023
RESOLUTION JURAT
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF MORENO VALLEY )
I, Jane Halstead, Secretary of the Moreno Valley Housing Authority hereby certifies that Resolution No. HA 2023-___ was duly and regularly adopted by the Authority Board at a regular meeting thereof held on the 7th day of March, 2023 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
(Authority Board Members, Chair and Vice Chair)
___________________________________
SECRETARY
(SEAL)
A.8.b
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Attachment: Reso - Housing Authority - Phase II 4874-8266-7600_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. 2023-____
Date Adopted: March 7, 2023
4873-2918-2288v2/200382-0006
RESOLUTION NO. 2023-____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MORENO VALLEY , CALIFORNIA APPROVING THE
DISPOSITION, DEVELOPMENT AND AFFORDABLE
HOUSING AGREEMENT FOR DEVELOPMENT AND
OPERATION OF PHASE II OF THE COURTYARDS AT
COTTONWOOD, A 32-UNIT AFFORDABLE HOUSING
DEVELOPMENT UNDER THE MORENO VALLEY
MUNICIPAL CODE ; AUTHORIZING THE MAYOR TO
EXECUTE AND CITY CLERK TO ATTEST THE DDAHA;
AUTHORIZING THE CITY MANAGER TO CARRY OUT THE
DDAHA AND IMPLEMENTING DOCUMENTS; AND
MAKING CERTAIN OTHER FINDINGS IN CONNECTION
THEREWITH
WHEREAS, the City of Moreno Valley (“City”) is a California municipal corporation; and
WHEREAS, the Moreno Valley Housing Authority (“Authority”) is a housing authority duly established and operatin g as a local housing authority pursuant to the California Housing Authority Law, Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code (“HAL”); and
WHEREAS, the Authority also serves as the housing successor to the now dissolved Community Redevelopment Agency of the City of Moreno Valley (“Former Agency”) and administers that certain low and moderate housing asset fund (“LMIHAF”) under Division 24, Part 1.85 of the California Health and Safety Code (“HSC”), in particular Sections 34176 and 34176.1 (“Dissolution Law”); and
WHEREAS, the City and Authority are empowered under the HAL , Dissolution Law, and Government Code to enter into agreements and to carry out affordable housing projects and programs benefiting Extremely Low, Very Low , and Low Income persons, families, and households; and
WHEREAS, the City and Authority are authorized under the HAL, Dissolution Law and Government Code to provide financial assistance for the development of multifamily residential affordable housing within the City; and
WHEREAS, the City is obligated by State law and the Housing Element of the General Plan to plan for the community’s supply of low to moderate income housing; and A.8.c
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Attachment: Reso - City Council - Phase II 4873-2918-2288_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. 2023-____
Date Adopted: March 7, 2023
4873-2918-2288v2/200382-0006
WHEREAS, in furtherance of the objectives of the Housing Element of the General Plan, the City and Authority desire to improve and increase the community’s supply of multi-family affordable housing available at an affordable rent; and WHEREAS, the City Council determines there is a continuing need in the community for multi-family apartment units to be available for the longest feasible period to persons and families of Extremely Low Income, Very Low Income, and Low Income at an Affordable Rent, as those terms are defined in the Disposition, Development and Affordable Housing Agreement described below and in applicable state law; and WHEREAS, Courtyards at Cottonwood , L.P. has completed and operates an 81-unit multi-family affordable rental housing project (“ Phase I Project ”) on certain real property located at the northeast corner of Cottonwood Avenue and Indian Street, in the City of Moreno Valley, County of Riverside, State of California; and WHEREAS, pursuant to that certain proposed Disposition, Development and Affordable Housing Agreement (“DDAHA”) among Courtyards at Cottonwood II, L.P., a California limited partnership (“Developer”), the City, and the Authority, as presented at this meeting, Authority will sell to Developer the Phase II Site and thereon Developer shall plan, construct, develop, own, manage and maintain a new 32-unit multi-family affordable housing project with appurtenant improvements, community facilities (shared with the Phase I Project), and resident and guest parking, for tenancy and occupancy by E ligible Households (“Phase II Project”), which will be developed and operated on that certain vacant 1.61-acre parcel directly adjacent to the Phase I Project at the northeast corner of Cottonwood Avenue and Indian Street (APN 482-161-026) (“Phase II Site”); and WHEREAS, the Phase I Project and Phase II Project will be subject to a certain Agreement for Joint Use of Common Area Amenity Facilities and Grant Of Reciprocal Nonexclusive Easements (“REA”) for joint use of the common facilities and amenities onsite at the two-phase development; and
WHEREAS, capitalized terms used in this Resolution are as defined in the DDAHA unless otherwise defined herein; and
WHEREAS, the Authority owns fee title to the Phase II Site, which real property was at dissolution, and is presently, a “housing asset” that vested in the housing successor at dissolution of the Former Agency; and
WHEREAS the Phase II Housing Units will be occupied by Eligible Households based on income level and leased at an Affordable Rent applicable to the Housing Unit covenanted with the following unit mix:
A.8.c
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Attachment: Reso - City Council - Phase II 4873-2918-2288_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. 2023-____
Date Adopted: March 7, 2023
4873-2918-2288v2/200382-0006
• Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income; • One (1) 2-bedroom Housing Unit for 40% AMI Very Low Income; • One (1) 2-bedroom Housing Unit for 40% AMI Very Low Income; • Two (2) 2-bedroom Housing Units for 45% AMI Very Low Income; • Four (4) 2-bedroom Housing Unit for 50% AMI Very Low Income; • Six (6) 2-bedroom Housing Units for 60% AMI Lower Income; • Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income; • One (1) 3-bedroom Housing Unit for 40% AMI Very Low Income; • One (1) 3-bedroom Housing Unit for 45% AMI Very Low Income; • One (1) 3-bedroom Housing Unit for 50% AMI Very Low;
• One (1) 3-bedroom Housing Unit for 50% AMI Very Low Income; • Six (6) 3-bedroom Housing Units for 60% AMI Lower Income; • One (1) 4-bedroom Housing Unit for 30% Extremely Low Income; • One (1) 4-bedroom Housing Unit for 40% Very Low Income; • One (1) 4-bedroom Housing Unit for 45% Very Low Income; and • One (1) 4-bedroom Housing Unit for 50% Very Low Income.
WHEREAS, pursuant to the DDAHA, the Phase II Project will be subject to the terms of the Authority Regulatory Agreement and City Covenants Agreement that set forth the affordable housing covenants and detail the terms of use, ownership, transfer, operation, maintenance and management of the development, which agreements will be recorded against the Phase II Site as, and shall remain, senior and nonsubordinate to monetary liens and other encumbrances for the 55-year Affordability Period; and WHEREAS, the City Covenants Agreement implements the Entitlement, the City’s density bonus ordinance, and the State Density Bonus Law, Government Code Section 65915, et seq.; and
WHEREAS, pursuant to the DDAHA the Phase II Site will be sold and conveyed to Developer for the appraised value of $380,000, with the purchase price paid through carry-back financing through an Authority Loan to be repaid through Residual Receipts, which loan is evidenced by the Authority Loan Note and secured by the Authority Loan Deed of Trust that will be subordinate to the Developer’s construction and permanent financing; the Authority Loan Note will accrue 1% simple interest per annum with a term of not less than 55 years; annual Residual Receipts payments are due by Developer to the Authority; and
WHEREAS, under the proposed DDAHA, the City would reduce or waive development impact fees as eligible under the Municipal Code, Density Bonus Program A.8.c
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Attachment: Reso - City Council - Phase II 4873-2918-2288_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. 2023-____
Date Adopted: March 7, 2023
4873-2918-2288v2/200382-0006
for Affordable Housing, Section 9.03.050, et seq. that provides for waivers, incentives and concessions, which were approved for this Phase II Development under the Entitlement; the estimated fee waivers are approximately $421,431; and WHEREAS, pursuant to the REA, the Phase II residents will have full access to all joint use amenities, including: (i) 4,840 square -foot community building with management, leasing services, tenant services and maintenance offices, (ii) maintenance garage, (iii) computer lab, (iv) laundry room, (v) restrooms, (vi) mail kiosk, (vii) community full kitchen, (viii) community pool, (ix) tot lot, (x) basketball court, and (xi) senior fitness course ; in a ddition, the onsite manager’s unit is located in the Phase I Project on the second floor of the community building; additionally, the Phase II Project will include drought tolerant landscaping , with passive courtyard areas that include seating, tables and chairs and BBQs for tenants WHEREAS, in connection with that certain Preliminary Award Letter approved by the City Council and Authority Board after a duly noticed public hearing in June 2022, the sale and conveyance of the Phase II Site was approved and the DDAHA will implement that disposition; and
WHEREAS, as described in the DDAHA, the City’s Planning Commission and thereafter the City Council considered and approved a series of discretionary decisions that comprise the land use “Entitlement” for the Phase II Project, including making certain findings pursuant to CEQA; and
WHEREAS, the Phase II Project is within the envelope of development approved by the actions that comprise the Entitlement , including the CEQA findings made by the City Planning Commission and City Council thereunder, and while based on such prior action no further action or posting under CEQA are necessary to approve the DDAHA and for Developer to undertake the Phase II Project; and WHEREAS, the DDAHA will implement the Housing Element of the City’s General Plan, and carry out the Authority’s obligation as the housing successor to cause development of affordable housing pursuant to HAL and the Dissolution Law, in particular Health and Safety Code Section 34176.1; and
WHEREAS, on March 7, 2023 at an open public meeting, the Authority encouraged and received public input and comment, whether for, against or neutral, to the DDAHA and Phase II Project and the Authority has reviewed and desires to approve, enter into and implement the DDAHA with Developer; and
WHEREAS, the proposed DDAHA and a staff report have been available for public review prior to the joint public meeting; and
WHEREAS, all actions required by all applicable law with respect to the proposed DDAHA have been taken in an appropriate and timely manner; and A.8.c
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Attachment: Reso - City Council - Phase II 4873-2918-2288_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
Resolution No. 2023-____
Date Adopted: March 7, 2023
4873-2918-2288v2/200382-0006
WHEREAS, the City Council has duly considered all of the terms and conditions of the proposed DDAHA and believes that the development of the Phase II Site with the Phase II Project is in the best interests of the Moreno Valley community and in accord with the public purposes and provisions of applicable state and local laws and requirements.
NOW, THEREFORE, BE IT RESOLVED, FOUND, DETERMINED AND
ORDERED BY THE CITY COUNCIL OF THE CITY OF MORENO VALL EY AS FOLLOWS:
Section 1. The City Council finds and determines the foregoing recitals are true and correct and are a substantive part of this Resolution.
Section 2. The City Council approves the Disposition, Development and Affordable Housing Agreement among the City, the Authority, and Developer with such changes mutually agreed upon by the City Manager or his authorized representative), the Authority Executive Director on behalf of the Authority, the City Attorney and special counsel, and Developer as are minor and in substantial conformance with the form of the DDAHA that has been submitted with this action item. Further:
(a) The Mayor and City Clerk are hereby authorized to execute and attest , respectively, the DDAHA, and the City Manager and City Clerk are authorized to execute and attest the applicable Attachments and related implementing instruments, on behalf of the City; and
(b) Copies of the final form of the DDAHA, when duly executed and attested, shall be placed on file in the office of the City Clerk and a complete copy shall be attached as a part of this Resolution; and
(c) Further, the City Manager (or his authorized representative) is authorized to implement the DDAHA and take all further actions and execu te all documents referenced therein , and/or necessary and appropriate to carry out the Phase II Project pursuant to the DDAHA; and
(d) The City Manager (or his authorized representative) is hereby authorized to the extent necessary during the implementation of the DDAHA and implementation agreement(s), if any, to make technical or minor changes and interpretations thereto after execution, as necessary to properly implement and carry out the DDAHA, provided any and all such changes shall not in any manner materi ally affect the rights and obligations of the City thereunder.
Section 3. In addition to the authorization of Section 2 above, inclusive of 2.(a) to (d) above, the City Manager (and his authorized representative) is hereby authorized, on behalf of the City, to sign all other documents necessary or appropriate to carry out and implement the DDAHA, including causing the issuance of warrants in implementation A.8.c
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Resolution No. 2023-____
Date Adopted: March 7, 2023
4873-2918-2288v2/200382-0006
thereto, and to administer the City’s obligations, responsibilities and duties to be performed under the DDAHA.
Section 4. The City’s previous actions and findings, as lead agency, under CEQA made in connection with the Entitlement apply to the DDAHA and Phase II Project and no other action or findings under CEQA are required by the City Council.
Section 5. The City Clerk shall certify to the adoption of this Resolution.
APPROVED AND ADOPTED this 7th day of March 2023.
_________________________________
Mayor of the City of Moreno Valley
ATTEST:
____________________________
City Clerk
APPROVED AS TO FORM:
____________________________
City Attorney
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Resolution No. 2023-____
Date Adopted: March 7, 2023
4873-2918-2288v2/200382-0006
RESOLUTION JURAT
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF MORENO VALLEY )
I, Jane Halstead, City Clerk of the City of Moreno Valley, California, do hereby certify that Resolution No. 2023-___ was duly and regularly adopted by the City Council of the City of Moreno Valley at a regular meeting thereof held on the 7th day of March, 2023 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
(Council Members, Mayor Pro Tem and Mayor)
___________________________________
CITY CLERK
(SEAL)
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Attachment: Reso - City Council - Phase II 4873-2918-2288_2 (6092 : COURTYARDS AT COTTONWOOD PHASE II)
4869-7726-2141v6/200382-0006
DISPOSITION, DEVELOPMENT AND AFFORDABLE
HOUSING AGREEMENT
by and among the
MORENO VALLEY HOUSING AUTHORITY
and the
CITY OF MORENO VALLEY
and
COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
(Phase II: 9% Tax Credits 32 Housing Units)
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TABLE OF CONTENTS
Page
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1. DEFINITIONS AND INTERPRETATION .............................................................................. 6
1.1 Defined Terms .............................................................................................................. 6
1.2 Singular and Plural Terms .......................................................................................... 27
1.3 References and Other Terms ....................................................................................... 27
1.4 Exhibits Incorporated .................................................................................................. 27
1.5 Representations and Warranties .................................................................................. 27
1.5.1 Authority Representations .............................................................................. 27
1.5.2 Developer Representations ............................................................................. 28
1.5.3 City Representations ....................................................................................... 29
1.6 Environmental Condition of the Phase II Site ............................................................ 30
1.6.1 Review by Developer ..................................................................................... 30
1.6.2 Indemnification............................................................................................... 30
1.6.3 Duty to Prevent Hazardous Material Contamination ..................................... 31
1.6.4 Release of Indemnitees by Developer ............................................................ 31
1.6.5 Environmental Inquiries ................................................................................. 31
2. DISPOSITION OF THE PHASE II SITE; ESCROW; TITLE ............................................... 32
2.1 Conveyance of Phase II Site ....................................................................................... 32
2.1.1 Conveyance Price; CBRE Appraisal of Phase II Site..................................... 33
2.1.2 Acreage ........................................................................................................... 33
2.2 Phase II Escrow ........................................................................................................... 33
2.2.1 Costs of Phase II Escrow ................................................................................ 33
2.2.2 Escrow Instructions ........................................................................................ 33
2.2.3 Authority of Escrow Holder ........................................................................... 33
2.2.4 Closing ............................................................................................................ 34
2.2.5 Termination of Escrow ................................................................................... 34
2.2.6 Closing Procedure for the Escrow .................................................................. 34
2.3 Review of Title ........................................................................................................... 35
2.4 Disposition Title Insurance Policies ........................................................................... 36
2.4.1 Owner’s Policy of Title Insurance .................................................................. 36
2.4.2 Authority Lender Policy of Title Insurance .................................................... 36
3. AUTHORITY LOAN; CONDITIONS TO DEVELOPER POSSESSION OF THE PHASE II SITE ....................................................................................................................... 37
3.1 Authority Loan ............................................................................................................ 37
3.1.1 Terms of the Authority Loan .......................................................................... 37
3.2 Conditions Precedent to Disposition of the Phase II Site ........................................... 38
3.2.1 Recording of Certain Documents ................................................................... 38
3.2.2 Title Policies ................................................................................................... 38
3.2.3 Financing Package .......................................................................................... 38
3.2.4 Construction Contract ..................................................................................... 38
3.2.5 Payment, Performance and Completion Bonds .............................................. 39
3.2.6 Permit Readiness ............................................................................................ 39
3.2.7 TCAC Approval ............................................................................................. 39
3.2.8 Insurance ........................................................................................................ 39
3.2.9 County PLHA Loan Approval ........................................................................ 39
3.2.10 Entitlement and Other Governmental Approvals ........................................... 39
3.2.11 Readiness ........................................................................................................ 40
3.2.12 Compliance with Enactments ......................................................................... 40 A.8.d
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4. SCOPE OF DEVELOPMENT; INSURANCE AND INDEMNITY, FINANCING .............. 40
4.1 Scope of Development ................................................................................................ 40
4.2 Entitlement; Design Review ....................................................................................... 40
4.2.1 Developer Submissions .................................................................................. 40
4.2.2 City Review and Approval ............................................................................. 41
4.2.3 Revisions ........................................................................................................ 41
4.2.4 Defects in Plans .............................................................................................. 41
4.2.5 Land Use Approvals ....................................................................................... 41
4.3 Time of Performance; Progress Reports ..................................................................... 41
4.4 Cost of Development .................................................................................................. 42
4.4.1 The Moreno Valley Municipal Code, Density Bonus Program for Affordable Housing, Section 9.03.050, et seq. provides for waivers, incentives and concessions, which were approved for this Phase II Development under the Entitlement .......................................... 42
4.5 Insurance Requirements .............................................................................................. 42
4.5.2 Waiver of Subrogation ................................................................................... 43
4.6 Obligation to Repair and Restore Damage Due to Casualty ....................................... 43
4.7 Indemnity .................................................................................................................... 44
4.8 Rights of Access ......................................................................................................... 45
4.9 Compliance with Laws ............................................................................................... 46
4.9.1 Prevailing Wage Laws .................................................................................... 46
4.9.2 Section 3 Compliance ..................................................................................... 47
4.10 Nondiscrimination in Employment ............................................................................. 48
4.11 Taxes and Assessments ............................................................................................... 48
4.12 Liens and Stop Notices ............................................................................................... 48
4.13 Certificate of Completion/Release of Construction Covenants .................................. 48
4.14 Further Assurances ...................................................................................................... 49
4.15 Financing of the Phase II Development ...................................................................... 49
4.15.1 Approval of Financing .................................................................................... 49
4.15.2 Required Financing Submittals; Submittal of Construction Contract .......................................................................................................... 50
4.15.3 No Encumbrances Except Approved Mortgages and Deeds of Trust for Development and Operation of the Phase II Project ....................... 52
4.15.4 Holder Not Obligated to Construct Improvements......................................... 52
4.15.5 Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure .................................................................................................. 52
4.15.6 Failure of Holder to Complete Improvements ................................................ 53
4.15.7 Right of Authority and/or City to Cure Mortgage or Deed of Trust Default ................................................................................................... 54
4.15.8 Priority Among Covenants ............................................................................. 54
4.16 Intentionally Omitted .................................................................................................. 54
4.17 Cost Savings Obligation; Excess Tax Credits Obligation .......................................... 54
4.17.1 Audit to Determine Cost Savings and Shared Cost Savings .......................... 54
4.17.2 Payment of Shared Cost Savings .................................................................... 55
4.17.3 Timing of Payment of Shared Cost Savings ................................................... 55
5. COVENANTS AND RESTRICTIONS .................................................................................. 55
5.1 Use Covenants ............................................................................................................ 55 A.8.d
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5.2 Affordable Housing Requirements ............................................................................. 55
5.2.1 Affordable Housing for all Housing Units ..................................................... 55
5.2.2 Duration of Affordability Requirements ........................................................ 55
5.2.3 Selection of Tenants; Special Limitations as to Eligible Households ..................................................................................................... 55
5.2.4 Income of Tenants .......................................................................................... 56
5.2.5 Determination of Affordable Rent for the Housing Units .............................. 56
5.3 Verifications ................................................................................................................ 56
5.3.1 Income Verification ........................................................................................ 56
5.3.2 Annual Reports ............................................................................................... 56
5.3.3 Verification of Income of New and Continuing Tenants ............................... 58
5.3.4 Retention of Tenant Documentation .............................................................. 58
5.3.5 Annual Authority Monitoring Charge ............................................................ 58
5.4 Maintenance of Phase II Site ...................................................................................... 58
5.4.1 Maintenance Standards ................................................................................... 59
5.4.2 Notice re Non-Compliance ............................................................................. 60
5.4.3 Program Maintenance ..................................................................................... 60
5.4.4 Occupancy Limits ........................................................................................... 60
5.5 Management of the Phase II Project ........................................................................... 61
5.5.1 Property Manager ........................................................................................... 61
5.5.2 Property Management Plan ............................................................................ 61
5.5.3 Gross Mismanagement ................................................................................... 61
5.5.4 Code Enforcement .......................................................................................... 63
5.6 Nondiscrimination Covenants ..................................................................................... 63
5.7 Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction ........................................................................................ 65
6. DEVELOPER’S GENERAL REPRESENTATIONS AND WARRANTIES ........................ 66
6.1 Formation, Qualification and Compliance .................................................................. 66
6.2 Execution and Performance of Project Documents .................................................... 66
6.3 Covenant Not to Transfer Except in Conformity ........................................................ 66
7. DEFAULTS, REMEDIES, AND TERMINATION ............................................................... 67
7.1 Default Remedies ........................................................................................................ 67
7.2 Institution of Legal Actions ........................................................................................ 67
7.3 Termination by Developer .......................................................................................... 67
7.4 Termination by Authority and/or City ........................................................................ 68
7.5 Acceptance of Service of Process ............................................................................... 68
7.6 Rights and Remedies Are Cumulative ........................................................................ 68
7.7 Inaction Not a Waiver of Default ................................................................................ 69
7.8 Applicable Law ........................................................................................................... 69
7.9 Covenant Provisions; Certain Amendments ............................................................... 69
7.10 Enforced Delay; Extension of Times of Performance ................................................ 69
7.10.1 COVID-19 Acknowledgement ....................................................................... 70
7.11 Authority and/or City Approvals and Actions ............................................................ 71
7.12 Transfers of Interest in Agreement or of Phase II Site ............................................... 71
7.12.1 Prohibition ...................................................................................................... 71
7.12.2 Permitted Transfers ........................................................................................ 71
7.12.3 Authority and City Consideration of Requested Transfer .............................. 72 A.8.d
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7.12.4 Successors and Assigns .................................................................................. 73
7.12.5 Assignment by Authority ............................................................................... 73
7.13 Non-Liability of Officials and Employees of Authority and/or City .......................... 73
7.14 Relationship Among Authority, City and Developer .................................................. 73
7.15 Real Estate Brokers ..................................................................................................... 73
7.16 Non-recourse Liability of Developer .......................................................................... 73
8. MISCELLANEOUS ................................................................................................................ 73
8.1 Obligations Unconditional and Independent............................................................... 73
8.2 Notices ........................................................................................................................ 74
8.3 Survival of Representations and Warranties ............................................................... 75
8.4 No Third Parties Benefited; AB 987 ........................................................................... 75
8.5 Binding Effect; Assignment of Obligations ................................................................ 75
8.6 Counterparts ................................................................................................................ 75
8.7 Prior Agreements; Amendments; Consents ................................................................ 76
8.8 Governing Law ........................................................................................................... 76
8.9 Severability of Provisions ........................................................................................... 76
8.10 Headings ..................................................................................................................... 76
8.11 Conflicts ...................................................................................................................... 76
8.12 Time of the Essence .................................................................................................... 76
8.13 Conflict of Interest ...................................................................................................... 76
8.14 Warranty Against Payment of Consideration ............................................................. 77
8.15 Developer’s Payment and Reimbursement of Authority’s Post-Date of Agreement Third Party Costs ...................................................................................... 77
8.15.1 Payment of Third Party Costs; Survival of Obligation................................... 77
8.15.2 Exception to Payment of Post-Effective Date Third Party Costs ............................................................................................................... 77
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ATTACHMENTS
ATTACHMENT NO. 1 MAP OF THE PHASE II SITE
ATTACHMENT NO. 2 LEGAL DESCRIPTION OF THE PHASE II SITE ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE
ATTACHMENT NO. 4 FORM OF CERTIFICATE OF CONTINUING PROGRAM
COMPLIANCE
ATTACHMENT NO. 5 NOTICE OF AFFORDABILITY RESTRICTIONS
ATTACHMENT NO. 6 AUTHORITY GRANT DEED
ATTACHMENT NO. 7 REQUEST FOR NOTICE OF DEFAULT
ATTACHMENT NO. 8 PHASE II SCOPE OF DEVELOPMENT
ATTACHMENT NO. 9 CERTIFICATE OF COMPLETION/RELEASE OF
CONSTRUCTION COVENANTS
ATTACHMENT NO. 10 CITY COVENANTS
ATTACHMENT NO. 11 AUTHORITY REGULATORY AGREEMENT
ATTACHMENT NO. 12 INCOME VERIFICATION
ATTACHMENT NO. 13 AUTHORITY LOAN NOTE
ATTACHMENT NO. 14 AUTHORITY LOAN DEED OF TRUST
ATTACHMENT NO. 15 BASE PRO FORMA; FINANCING ASSUMPTIONS ATTACHMENT NO. 16 OPERATING BUDGET; ANNUAL BUDGET
ATTACHMENT NO. 17 MEMORANDUM OF AGREEMENT
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DISPOSITION, DEVELOPMENT AND AFFORDABLE HOUSING AGREEMENT (Phase II: 9% Tax Credits 32 Housing Units)
This DISPOSITION, DEVELOPMENT AND AFFORDABLE HOUSING
AGREEMENT ( Phase II: 9% Tax Credits 32 Housing Units) (“Agreement”), dated, for identification purposes only, as of March 7, 2023 (“Date of Agreement”), is entered into by and among the MORENO VALLEY HOUSING AUT HORITY, a public body, corporate and politic (“Authority”), the CITY OF MORENO VALLEY , a municipal corporation (“City”) and COURTYARDS AT COTTONWOOD II, L.P., a California limited partnership (“Developer”).
R E C I T A L S
A. City, as part of its functions as a municipal corporation under the Constitution and laws of the State of California and in connection with its municipal code is authorized to promote the provision of affordable housing for all income segments of the community. City is authorized to enter into agreements in connection therewith.
B. Authority is a California housing authority formed by the City Council of the City of Moreno Valley (“City Council”) acting under the California Housing Authorities Law, Part 2 of Division 24, Section 34200, et se q., of the Health and Safety Code (“HAL”); further, Authority serves as the “housing successor” to the former Community Redevelopment Agency of the City of Moreno Valley, a dissolved redevelopment agency (“Former Agency”) pursuant to Part 1.85 of Division 24 of the Health and Safety Code, in particular Sections 34176 and 34176.1 (“Dissolution Law” or “Housing Successor Law”) and the Dissolution Law references and incorporates certain affordable housing laws set forth in Health and Safety Code Section 33000, et seq. that survived the dissolution of all California redevelopment agencies and remain effective as to housing successors, including the Authority (“CRL”). Statutory references in this Agreement are to the California Health and Safety Code (“HSC”) unless otherwise stated.
C. Developer is a California limited partnership and joint venture entity for which its administrative general partner is RBD Cottonwood, LLC, or its Affiliate, and for which its managing general partner is KDI Courtyards LLC, a Californ ia limited liability company. Developer and its Affiliate entities are experienced in the planning, construction, development, operation, management and maintenance of affordable multi-family housing throughout California.
D. Under the HAL, Dissolution Law, and applicable provisions of the CRL, the Authority is authorized and empowered to enter into agreements for the production, improvement, or preservation of affordable housing to households of limited income, with such housing to be available at Affordable Rent (as defined herein).
E. City previously activated the Former Agency that operated under the California Redevelopment Law, Part 1 of Division 24, Section 33000, et seq. of the Health and Safety Code (“CRL”).
F. The Redevelopment Plan for the Moreno Valley Redevelopment Project (“Redevelopment Project”) was adopted by Ordinance No. 154 by the City Council of the City of Moreno Valley (as amended, the “Redevelopment Plan”). The redevelopment project area for the Redevelopment Plan as so amended consti tuted the former “Project Area” administered by the A.8.d
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Former Agency prior to dissolution of all California redevelopment agencies on and as of February 1, 2012.
G. Prior to dissolution, in the course of conducting its affordable housing activities in implementation of the Redevelopment Plan and the CRL, the Redevelopment Agency acquired certain land, including without limitation that property described herein as the “Two Parcel Area”.
The Two Parcel Area is the location of the two -phased affordable housing dev elopment commonly referred to as “Courtyards at Cottonwood”.
H. City previously caused the preparation and recording in the Official Records of a lot line adjustment and parcel map that subdivided the Two Parcel Site into the “Phase I Site” of approximately 6 .79 acres and the Phase II Site of approximately 1.61 acres (“Phase II Site” or “Site”).
I. Courtyards at Cottonwood, L.P. (“Phase I Developer”) owns the Phase I Site and thereon has completed construction and development of, and now owns and operates an 81 -unit multifamily affordable rental housing project (“Phase I Project”).
J. Pursuant to this Agreement, the Phase II Project, including construction of the Phase II Development thereon, shall occur on the Phase II Site, which is depicted on Attachment No. 1, Map of Phase II Site.
K. Pursuant to this Agreement and related instruments and agreements referenced herein, Developer desires to, and hereby agrees to, construct, complete and operate on the Phase II Site a new 32 -unit multifamily affordable rental housing pr oject that will be the second phase of the Courtyards at Cottonwood affordable housing development, with joint access and use between the two developments pursuant to that certain Joint Use Agreement, all as more fully defined and described herein (“Phase II Project”).
L. In 2021 and 2022, the City of Moreno Valley Planning Commission (“Planning Commission”) and the City Council of the City of Moreno Valley (“City Council”) held a series public hearings regarding and approved the following resolutions and ordi nances, with conditions of approval, that comprise the land use entitlement for development and operation of the Phase II Project on the Phase II Site, including:
(i) Planning Commission Resolution No. 2021-48 dated December 9, 2021 recommending to the City Co uncil approval of a Mitigation Monitoring and Reporting Program and certification of Negative Declaration for the Phase II Project on the Phase II Site; (ii) Planning Commission Resolution No. 2021-49 dated December 9, 2021 recommending to the City Council approval of General Plan Amendment (PEN 21-0113) amending the General Plan Land Use Map to change the land use designation from Public (P) to Residential 15 (R15) for the Phase II Site including the necessary and corresponding amendments to the City’s Zoning Atlas;
(iii) Planning Commission Resolution No. 2021-50 dated December 9, 2021 recommending to the City Council approval of change of zone (PEN 21 -0114) to amend the City Zoning Atlas from Public (P) District to Residential 15 District (R15); A.8.d
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(iv) Planning Commission Resolution No. 2021-51 dated December 9, 2021 recommending to the City Council approval of Plot Plan (PEN 21-0112) the 32-UNIT Phase II Project on the Phase II Site;
(v) City Council Resolution No. 2022 -12 dated January 18, 2022 adopting a Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program for the Courtyards At Cottonwood Phase II Project on the Phase II Site; (vi) City Council Resolution No. 2022 -13 dated January 18, 2022 approving approved General Plan Amendment (PEN21 -0113) amending t he General Plan Land Use Map and changing the land use designation for the Phase II Site from Public (P) to Residential 15 (R15) and the necessary and corresponding amendments to the City's Zoning Atlas;
(vii) City Council Resolution Number 2022 -14 dated January 18, 2022 approving Plot Plan (PEN 21-0112) for a 32 -unit affordable housing project located on the Phase II Site; and
(viii) City Council Ordinance No. 986 dated February 1, 2022 approving the change of zone (PEN 21-0114) amending the City Zoning Atlas from Publ ic (P) District to Residential 15 (R15) District, for the Phase II Site (Parcel B);
Together (i) through (viii) above is referred to as the “Entitlement” and reference is made to the specific resolutions and ordinances and related discretionary and ministe rial approvals by the City that comprise such Entitlement; this Agreement does not intend to restate all details of same but such actions are hereby incorporated by reference and referred to as the Entitlement; therefore, development of affordable housing is authorized to occur on the Phase II Site, subject to each particular development meeting applicable City Code requirements.
M. By this Agreement, Authority agrees to sell to Developer the Phase II Site and thereon Developer hereby agrees to plan, construct , develop, own, manage and maintain a new 32-unit multi -family affordable housing Project with appurtenant improvements, community facilities (shared with the Phase I Project), and resident and guest parking, for tenancy and occupancy by Eligible Households.
N. Pursuant to the Entitlement, the onsite parking in Phase II includes 53 parking spaces, with (i) 27 assigned covered parking spaces, (ii) five (5) assigned uncovered parking spaces, (iii) 15 unassigned accessible spaces, and (iv) five (5) EVCS spaces.
O. Each and all Housing Units in the Phase II Project shall be occupied by Eligible Households and leased at an Affordable Rent based on the Riverside County Area Median Income (“AMI”) applicable to the Housing Unit all in accordance with the followin g unit mix, with parenthetical designations of which units are “non -PBV”) and which units are assigned PBVs by the County during the term of that certain Housing Assistance Payment Contract entered into between the County and Developer (“County HAP”):
• Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income Households (PBV designated PBV units);
• One (1) 2 -bedroom Housing Unit for 40% AMI Very Low Income Households (PBV designated unit);
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• One (1) 2 -bedroom Housing Unit for 40% AMI Very Low Income Households (non-PBV);
• Two (2) 2 -bedroom Housing Units for 45% AMI Very Low Income Households (non-PBV);
• Four (4) 2 -bedroom Housing Unit for 50% AMI Very Low Income Households (non-PBV);
• Six (6) 2 -bedroom Housing Units for 60% AMI Lower Income Househ olds (non-PBV);
• Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income Households (PBV designated units);
• One (1) 3 -bedroom Housing Unit for 40% AMI Very Low Income Households (PBV designated unit);
• One (1) 3 -bedroom Housing Unit for 45% AMI Very Low Income Households (PBV designated unit);
• One (1) 3 -bedroom Housing Unit for 50% AMI Very Low Income Households (PBV designated unit);
• One (1) 3 -bedroom Housing Unit for 50% AMI Very Low Income Households (non-PBV)
• Six (6) 3 -bedroom Housing Units for 60 % AMI Lower Income Households (non-PBV);
• One (1) 4 -bedroom Housing Unit for 30% Extremely Low Income Households (non-PBV);
• One (1) 4-bedroom Housing Unit for 40% Very Low Income Households (non-PBV); • One (1) 4-bedroom Housing Unit for 45% Very Low Income Households (non-PBV); and
• One (1) 4-bedroom Housing Unit for 50% Very Low Income Households (non-PBV).
P. All Housing Units shall be leased at an “Affordable Rent” and in conformance with the “Prescribed Income Levels” throughout the “Affordability Period” (as defined below) as those terms are defined hereinafter.
Q. The Phase II Project is intended to implement Authority’s goals and objectives under the HAL, Dissolution Law and CRL, under the City’s 2021 -2028 Housing Element of the General Plan, and in furtherance of the Authority and City’s goals and objectives to provide in the community decent, safe and sanitary affordable housing and to increase, improve and preserve housing available at affordable housing cost for income-Eligible Households.
R. Developer prepared and submitted an application to and has received a reservation of 9% Low Income Tax Credits as generally provided for under 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 HSC Section 50199, et seq . (“Tax Credits”). Developer provided evidence to A.8.d
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Authority that Developer has obtained a preliminary reservation of 9% Tax Credits as set forth in that certain “Reservation Letter” dated September 28, 2022 issued by and from TCAC to Developer.
S. By this Agreement, Authority will sell the Phase II Site to Developer and issue to Developer the “Authority Loan” in an original principal amount of Three Hundred and Eighty Thousand Dollars ($380,000), which is equal to the appraised fair market value of the Phase II Site and which loan is structured as a “Residual Receipts” loan to be repaid from the “Authority’s Share of Residual Receipts” as set forth and subject to the terms and conditions herein.
T. Developer acknowledges t hat the Phase II Site upon which the Phase II Project will be developed and operated is a “housing asset” of the Authority’s Low to Moderate Income Housing Asset Fund (“LMIHAF”), which was reviewed and approved by the State of California, Department of Finance (“DOF”) as such, and therefor is subject to applicable provisions of the Dissolution Law and CRL in implementation of this Agreement.
U. The PBVs issued to Developer by the County are intended to subsidize eight (8) of the Housing Units for occupancy by income-eligible persons and families. The County requires that the eight (8) PBVs will be allocated among the Housing Units as follows: (i) two (2) 2 -bedroom units for 30% AMI Extremely Low Income Households, (ii) one (1) 2 -bedroom unit for 40% AMI Very Low Income Households, (iii) two (2) 3 -bedroom units for 30% AMI Extremely Low Income Households, (iv) one (1) 3 -bedroom unit for 40% AMI Very Low Income Household, (v) one (1) 3-bedroom unit for 45% AMI Very Low Income Household, and (vi) one (1) 3 -bedroom unit for 50% AMI Very Low Income Household.
V. Further, in connection with the reservation and implementation of the Tax Credits, Developer applied for and has received funding commitments for completion and operation of the Phase II Project from (i) County of Riverside (as described above), (ii) Primary Construction Lender for the construction loan in an estimated original principal amount of $9,424,642, (iii) Primary Permanent Lender for the permanent loan in an estimated original principal amount of $2,827,475, (iv) CREA, LLC (“CREA”) as the Investor Limited Partner for the equity investment in the Tax Credits in an estimated amount of $9,238,988, and (v) other funding programs, which, subject to the normal and customary processes of such lenders and inves tor, Developer will have adequate funding, together with the Authority Loan (and concurrent closing for the County PLHA Loan and County PBVs), will be and remain sufficient to defray the costs to undertake, complete and operate the Phase II Project.
W. The PBVs issued to Developer by the County are intended to subsidize eight (8) Housing Units. The County requires that the eight (8) PBVs will be allocated among the Housing Units as described in Recital O. above.
X. Further, in connection with the reservati on and implementation of the Tax Credits, Developer applied for and has received funding commitments for completion and operation of the Phase II Project from (i) County of Riverside (as described above), (ii) Primary Construction Lender for the constructi on loan in an estimated original principal amount of $9,354,904, (iii) Primary Permanent Lender for the permanent loan in an estimated original principal amount of $2,725,708, (iv) CREA, LLC (“CREA”) as the Investor Limited Partner for the equity investmen t in the Tax Credits in an estimated amount of $9,238,895, and (v) other funding programs, which, subject to the normal and customary processes of such lenders and investor, Developer will have adequate funding, together with the Authority Loan (and concur rent closing for the County PLHA Loan and County A.8.d
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PBVs), will be and remain sufficient to defray the costs to undertake, complete and operate the Phase II Project.
Y. Developer acknowledges and agrees that it will comply with the requirements pertaining to suc h funding sources; provided that Developer shall remain obligated to comply with all provisions hereof, with the result that the most restrictive provisions shall apply in each case.
Z. This Agreement is in the vital and best interest of the City and the heal th, safety and welfare of its residents and furthers the public policies of Authority.
NOW, THEREFORE , for and in consideration of the mutual promises, covenants, and conditions herein contained, the parties hereto agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms . As used in this Agreement (and in all other Project Documents, unless otherwise defined), the following capitalized terms shall have the following meanings:
“Affiliate” means any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Developer, which shall include each of the constituent partners or members of Developer’s limited partnership. (but not the Investor Limited Partner.) The term “control,” as u sed in the immediately preceding sentence, means, with respect to a person that is a corporation, the right to exercise, directly or indirectly, at least 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. “Affiliated Person ” means, when used in reference to a specific person, any person that directly or indirectly controls or is controlled by or under common control with the specified person, any person that is an officer or director of, a trustee of, or a general partner, managing member or operator in, the sp ecified person or of which the specified person is an officer, director, trustee, general partner or managing member, or any person that directly or indirectly is the beneficial owner of ten percent (10%) or more of any class of the outstanding voting securities of the specified person. “Affordability Period” means a period of not less than fifty -five (55) years commencing as of the Authority Conveyance of the Phase II Site to Developer. “Affordable Rent” shall mean the maximum amount of out -of-pocket housi ng cost to be charged monthly by Developer and paid by each of the Eligible Households that qualify as an Extremely Low, 40% AMI Very Low, 45% AMI Very Low, 50% AMI Very Low, or Low Income Households at the applicable Prescribed Income Levels for the Housi ng Units at the Phase II Development as determined and calculated pursuant to the affordable rent and the rent limitations according to TCAC, the Tax Credit Rules, and Tax Credit Regulatory Agreement applicable to Phase II in accordance herewith. For purp oses of Affordable Rent, the monthly housing payment shall mean the total of monthly payments by each tenant household of a Housing Unit for use and occupancy of a Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service, as set forth in more detail herein Section 4.2 hereof.
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Further, the term includes the total of monthly payments by the tenants of a Housing Unit for (a) use and occupancy for the Unit and facilities associated therewith, (b) any separately charged fees or service charges assessed by Developer which are required of all tenants of the Housing Units, other than security deposits, (c) a reasonable allowance for utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity and gas, as determined by regulation of Housing Authority of the County of Riverside pursuant to 24 C.F.R. Section 5.600 et seq. or by the California Utility Allowance Calculator as permitted by TCAC, and (d) possessory interest, taxes or other fees or charges assessed for the use of the Housing Units and facilities associated therewith by a public or private entity other than Developer; provided that the rent charged as to any Housing Unit shall not exceed Affordable Rent.
Under this Agreement and for purposes of Affordable Rent in the operation of the Phase II Project the following Affordable Rents are acceptable for the applicable income category:
• To comply with HSC Section 34176.1 and LMIHAF requirements, the household income for 30% AMI Extremely Low Income Households (5 Housing Units) shall not exceed the most restrictive income standard of HSC Section 50106 or Tax Credit Rules. The Affordable Rent for 30% AMI Extremely Low Income Households shall not exceed the most restrictive standard of the calculations under HSC Sections 50052.5 and 50053 or Tax Credit Rules;
• To comply with HSC Section 34176.1 and LMIHAF requirements, the household income for 40% AMI Very Low (4 Housing Units), 45% AMI Very Low (4 Housing Units) , and 50% AMI Very Low Income Households (7 Housing Units) (for a total of 15 Very Low Income Housing Units) shall not exceed the most restrictive standard of HSC 50105 or Tax Credit Rules as adjusted for the applicable AMI of 40%, 45% or 50%; and • To comply with HSC Section 34176.1 and LMIHAF requirements, the household income for Low Income Households (12 Housing Units) shall not exceed the most restrictive income standard of HSC Section 50079.5 or Tax Credit Rules. The Affordable Rent shall not exceed the most restrictive standard of the calculations under HSC Sections 50052.5 and 50053 or Tax Credit rules.
While it is anticipated that the rent standards under the Tax Credit Rules will be less restrictive, i.e., allow for a higher monthly rent, than those otherwise allowable under HSC 50052.5 and 50053; nonetheless, it is the responsibility of Developer to comply with the definition of Affordable Rent and all affordable housing standards herein. “Annual Authority Monitoring Charge ” means the sum of One T housand Six Hundred Dollars ($1600.00), i.e., Fifty Dollars ($50.00) per Housing Unit, payable on or before June 15 of each Year following completion of the Phase II Improvements. “Annual County Monitoring Charge ” means a monitoring charge imposed by the C ounty from time to time, payable to the County on or before June 15 of each Year following completion of the Phase II Development.
“Applicable Federal Rate ” means the interest rate set by the United States Treasury from time to time pursuant to Section 1288(b) of the Internal Revenue Code. The Applicable Federal Rate is published by the Internal Revenue Service in monthly revenue rulings.
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“Applicable Interest Rate ” means the following rates: (a) as to amounts paid when due with respect to which the Applicable Interest Rate is made applicable by this Agreement, one percent (1%) per annum, simple interest and (b) as to amounts not paid when due, the lesser of (i) seven percent (7%) per annum, simple interest, and (ii) the maximum rate permitted by applicable law. “Applicable Percentage” means fifty percent (50%) of Residual Receipts; provided that in the event the County makes the County PLHA Loan ($4,000,000.00), the Applicable Percentage (payable to Authority) will be ten percent (10%) of Residual Receipts. “Area” and “AMI” mean the Riverside Primary Metropolitan Statistical Area, as periodically defined by HUD.
“Audit” is defined in Section 4.17.1.
“Audited Financial Statement ” means an audited financial statement, including without limitation a profit and loss statement, generated by Cohn Reznick, or another third party certified public accountant acceptable to Authority in its reasonable discretion, showing, for the previous Year, in an easily readable format, Gross Revenues, Operating Expenses, Debt Service, Capital Replacement Reserve, Operating Reserve, General Partner Fee, Limited Partner Fee and Residual Receipts.
“Authority”, as defined in the first paragraph hereof, means the Moreno Valle y Housing Authority, a public body, corporate and politic, acting as a housing authority exercising governmental functions and powers and organized under the HAL, and any assignee of or successor to its rights, powers and responsibilities.
“Authority Grant Deed” means a grant deed substantially in the form of Attachment No. 6 to this Agreement by which the Authority will convey the Phase II Site to Developer subject to the terms and conditions of this Agreement.
“Phase II Escrow” is described in Section 2.2.
“Authority Loan Amount ” means an amount equal to the appraised value of the Phase II Site, which as of the Date of Agreement is Three Hundred Eighty Thousand Dollars ($380,000.00). “Authority Loan Deed of Trust ” means that certain deed of trust securing the Authority Loan Note substantially in the form of Attachment No. 14. “Authority Loan Note” means that certain promissory note evidencing the Authority Loan and such note is secured by the Authority Loan Deed of Trust, and set forth substantiall y in the form of Attachment No. 13.
“Authority Loan Policy” is defined in Section 2.4.
“Authority Regulatory Agreement ” or “ Regulatory Agreement ” means that certain regulatory agreement with conditions, covenants and restrictions affecting the Phase II Sit e and Phase II Development and is set forth in Attachment No. 11 to this Agreement. From the date of recording in the Official Records and throughout the Affordability Period, the Authority Regulatory Agreement is and shall remain a senior encumbrance aga inst the Phase II Site, nonsubordinate to all monetary liens.
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“Authority Share of Residual Receipts ” means (i) a base amount of Residual Receipts equal to ten percent (10%) to Authority while the County PLHA Loan remains outstanding and fifty percent (50)% after repayment of the County PLHA Loan, and (ii) to the extent applicable, the Additional Amount of Residual Receipts.
“Base Pro Forma ” or “ Financing Assumptions ” means Attachment No. 15 hereto. The Financing Assumptions are utilized solely for the purp oses of certain parameters under this Agreement and do not otherwise constitute a part of this Agreement. The Financing Assumptions may be amended and modified by the mutual agreement of the Developer and Authority, and if so modified, then the amended ve rsion of such Financing Assumptions shall be appended (and deemed appended) to this Agreement. The failure of any financing assumptions shall not excuse performance by Developer under this Agreement.
“Basic Concept Drawings” is defined in Section 4.2.1 hereof. “Building Permit” means the building permit(s) issued by City and required for the Phase II Development.
“Capital Replacement Reserve ” means a reserve fund to be established by Developer and maintained throughout the Affordability Period as a capital replacement reserve; amounts shall initially be in the minimum amount of Three Hundred Dollars ($300.00) per Housing Unit per Year and may be increased annually following the issuance of a Certificate of Completion/Release of Construction Covenants for th e Phase II Development by three percent (3.0%) per Year, or such other amount as the Executive Director and the Developer shall mutually approve. Interest earned on moneys held in the Capital Replacement Reserve shall be retained in the Capital Replaceme nt Reserve unless otherwise directed by the Permanent Lender. To the extent Developer is required to maintain a Capital Replacement Reserve by any Approved Construction and/or Permanent Lender or the Limited Partner, Developer shall receive a credit hereu nder for such amounts maintained by it in compliance such Approved Construction and/or Permanent Lender or Limited Partner capital replacement reserve requirement. It is contemplated that the Capital Replacement Reserve will be held by the Permanent Lender.
“Certificate of Completion/Release of Construction Covenants ” means that certain instrument evidencing the Developer’s obligation to cause and complete construction of the Phase II Development, the form of which is set forth in Attachment No. 9 to this Agreement. “Certificate of Continuing Program Compliance ” means the Certificate to be filed by Developer or its property manager on behalf of Developer with Authority, which Certificate shall be substantially in the form attached hereto as Attachment No. 4. “City”, as defined in the first paragraph hereof, means the City of Moreno Valley, a California municipal corporation.
“City Code” means the Municipal Code of the City of Moreno Valley as may be amended from time to time, including without limitation the Uniform Codes. “Conditions Precedent” are set forth in Section 3.2.
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“Construction Security ” shall mean and include payment and performance bonds from responsible sureties admitted in the State of California in the amount of 100% of the construction costs for the Phase II Development (as detailed in Developer's GC Contract) and, with respect to the performance bond, naming each and both the Authority and City as dual co -obligees, along with reasonably satisfactory evidence demonstrating said Contractor’s fi nancial strength (such as the two most recent financial statements of Contractor) and reputation for quality and timely work and performance necessary to complete construction of the Phase II Development in accordance with Developer's Construction Contract . The payment and performance bonds, once obtained and delivered, the payment bond shall remain in full force and effect until thirty -five (35) days after the date of recordation of the Notice of Completion/Release of Construction Covenants and the performance bond will be released one year after said date. “City Covenants” means that certain part of the Entitlement issued by the City to Developer pursuant to and in implementation of the City Code and State Density Bonus Law, Government Code Section 65915, et seq. , which the City requires be entered into and caused to be recorded in the Official Records, County of Riverside a “density bonus housing agreement” prior to issuance of any Grading or Building permits for multifamily rental housing project. Pursu ant to the DBL and Entitlement, the terms of the City Covenants shall run with the Phase II Site for the life of the Affordability Period and shall be an remain an encumbrance senior and nonsubordinate to each and all monetary liens for the term thereof. The form of the City Covenants is Attachment No. 10 to this Agreement.
“City Impact Fees ” means those facility fees, road improvement fees, and other fees identified by City as development impact fees, including street improvements and/or street improvement fees, required by City and retained by City in connection with the development of the Phase II Development. The City Impact Fees are estimated at Four Hundred Twenty -One Thousand Four Hundred Thirty-One Dollars ($431,131); provided that the amount desig nated for fees as of the time of payment to City shall control.
“City Waived Fees” means those certain fees that are authorized to be waived by the City in connection with the construction of the Phase II Project, which as of the Date of Agreement such estimated waived fees total approximately $421,431.
“City Manager” means the City Manager of the City, or his or her designee. “Closing” is defined in Section 2.2.4 herein and including both the closing of the Phase II Conveyance and the closing of Developer’s Primary Construction Loan. “Contractor” means a construction contractor, duly licensed in the State of California and bonded and i nsured as required herein, performing the Construction work for the Phase II Development or any other Improvements that comprise the Phase II Development. “Conversion” means the closing of the Primary Permanent Loan and repayment of any construction period only financing.
“Conveyance” means the conveyance of the Phase II Site by the Authority Deed in conformity with this Agreement.
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“Conveyance Price” means the appraised value of the Phase II Site based on an independent appraisal not older than six (6) months from the date of the Closing of Escrow for disposition of the Phase II Site by the Authority to Developer.
“Cost Savings” is defined in Section 4.17 hereof.
“County” means the County of Riverside, California.
"County PLHA Loan" means a loan in the original principal amount of Four Million Dollars ($4,000,000.00) to be provided by the County to the Developer for the Phase II Development. “CPI” means United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for Urban Wage Earn ers and Clerical Workers, Subgroup “All Items,” for the Los Angeles-Riverside-Riverside County area, 1982 -84 = 100, or successor or equivalent index in case such index is no longer published.
“Date of Agreement” means March 7, 2023.
“Debt Service ” means re quired debt service payments for the Primary Construction Loan and/or the Primary Permanent Loan including the funding obligations in respect of all reserves or escrows required thereunder and scheduled payments as approved as part of the Final Financing Package.
“Default” is defined in Section 7.1 hereof.
“Deferred Developer Fee ” means approximately One Hundred Fifty One Thousand Sixty - Six Dollars ($151,066) of the Developer Fee. The Deferred Developer Fee is to be paid from cash flow from the Phase II De velopment. The amount of the Deferred Developer Fee may be modified provided that the prior written approval of the Executive Director is obtained. “Design Development Drawings” means drawings more detailed than conceptual drawings or plans.
“Determination Date” means the sixtieth (60th) day after the Date of Agreement. “Developer” means Courtyards at Cottonwood II, L.P., a California limited partnership. “Developer Fee” means the lesser of: (i) One Million Nine Hundred Fifty -Three Thousand One Hundred S ixty-Seven Dollars ($1,953,167.00), or (ii) that amount of a fee to Developer as a developer fee included within basis in connection with the preliminary reservation of Tax Credits; the Developer Fee as received by Developer shall be limited to such amount or such other amount as may be approved by TCAC at the placed in service date.
“Developer Title Policy” is defined in Section 2.8.
“Developer’s Share of Residual Receipts” means fifty percent (50%) of Residual Receipts. “Development” or “Phase II Development” means the new 32 -unit apartment complex and associated improvements as required by this Agreement to be: (i) constructed by Developer upon the Phase II Site, with related offsite improvements, if any, as more particularly described in the A.8.d
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Entitlement, the Scope of Development, and final Development Plans, and (ii) operated as an affordable housing complex in conformity with the Authority Grant Deed, City Covenants, Authority Regulatory Agreement, Authority Deed of Trust, Notice of Affordability Restri ction and the Joint Use Agreement that provides joint and reciprocal access to, maintenance and management, and use of the amenities onsite in the Phase I Project and onsite in the Phase II Project. “Development Plans ” means conceptual drawings, Design Development Drawings, Final Plans, and any other plans or drawings which describe or pertain to the construction of the Phase II Development.
“District” has the meaning set forth therefor in Recital G. “Eligible Household ” means a household having a n income which conforms to the Prescribed Income Levels as more particularly set forth in this Agreement. “Entitlement” means and includes the series of Planning Commission and City Council resolutions and ordinances described Recital L., which together in clude each application and discretionary action of the City, through its administrators, and, as applicable by the City Council, Planning Commission, or other boards or commissions for construction, development and operation of the Phase II Project, and th is Agreement, including the findings in compliance with the California Environmental Quality Act (“CEQA”), Conditional Use Permits and any and all conditions of approval related thereto, as set forth in the conditions of approval for the Phase II Project. “Environmental Laws ” means all laws, ordinances and regulations relating to Hazardous Materials, including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauth orization Act of 1986, “CERCLA”), 42 U.S.C.
Section 9601, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; all comparable state and local laws, la ws of other jurisdictions or orders and regulations; and all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, City, or any other political subdivision in which the Phase II Site is located, and of a ny other political subdivision, agency or instrumentality exercising jurisdiction over Authority, Developer, or the Phase II Site. “Escrow Holder ” means First American Title Insurance Company, Riverside office, or another mutually acceptable escrow holder.
“Event of Default” or “Default” has the meaning set forth in Section 7.1. “Executive Director ” and “ City Manager ” mean the Authority’s Executive Director and City Manager the City, or his or her designee(s). Whenever the consent, approval or other action of the “Executive Director” or “City Manager” is required herein such consent may be provided by the Executive Director or City Manager’s authorized designee(s), or he or she may choose to submit to A.8.d
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the Authority Board and City Council for consideration a nd action to approve or disapprove such request.
“Extremely Low Income Households ” means households earning not greater than thirty percent (30%) of the Median Income for the Area as provided under the most restrictive income standard of HSC Section 50106 or Tax Credit Rules.
“Extremely Low Income Unit ” means a Housing Unit required by this Agreement to be occupied at Affordable Rent by an Extremely Low Income Household. “Fair Housing Laws ” means the Fair Housing Act of 1968 as amended from time to time (42 U.S. Code Sections 3601 -3619 and 3631), the Unruh Civil Rights Act (California Civil Code Section 51), California Government Code Section 12920, the prohibition against discrimination on the basis of marital status per Smith v. Fair Employment & Housing Commission, 12 Cal. 4th 1143 (1996), and the prohibition on discrimination based upon personal characteristic or trait, such as physical attributes or a tenant’s receipt of public assistance (per Harris v. Capital Growth Investors XIV, 52 Cal. 3d 1142 (1991).
“Federal Program Limitations ” means compliance with all applicable federal regulations, if any, relating to fair housing and non-discrimination applicable to the Phase II Project and rules and regulations made applicable to the Phase II Project due to the provision of Section 8 Assistance by the County. Developer covenants, acknowledges, and agrees it is subject to the HAL and all Federal Program Limitations, whichever are most restrictive and to the extent applicable to the Phase II Project), in conn ection with its performance under this Agreement, and agrees it shall endeavor to cause the use and operation of the Phase II Site to conform to the Federal Program Limitations. “Final Development Budget ” means a detailed enumeration of all projected costs of construction of the Phase II Development, including all costs and off -site improvements required to be constructed under this Agreement.
“Final Financing Package” is defined in Section 4.15.1 hereof. “Final Plans” has the meaning established therefor in Section 4.2.2. “General Partner Fee ” means a fee if charged by the general partner; provided that the General Partner Fee together with the Limited Partner Fee shall not for any Year exceed the amount permitted under this Agreement for the Partnership Related Fees (as such fees are aggregated). “Governmental Requirements” shall mean all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the State of California, the County, the City, or any other political subdivision in which the Phase II Site is located, and of any other political subdivision, agency, or instrumentality exercising jurisdiction over Developer or the Phase II Site, as may be amended from time to time.
“Gross Revenues ” means the sum of: the total rental income and all other revenues or income received by the Developer or its successors or assigns in connection with the Phase II Development, including without limitation Housing Rent, lau ndry charges (as received by Developer) or consideration received from an entity that contracts to provide laundry services, payments in connection with Section 8 certificates, if any, cable income or consideration received A.8.d
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from an entity that contracts to provide cable services, each of (i) amounts paid to Developer or any Affiliated Person on account of Operating Expenses for further disbursement by Developer or such affiliate to a third party or parties, including, without limitation, grants received to fund social services or other housing supportive services at the Phase II Development; (ii) late charges and interest paid on rentals; (iii) rents and receipts from licenses, concessions, vending machines, coin laundry, and similar sources; (iv) other fees , charges, or payments not denominated as rental but payable to Developer in connection with the rental of office, retail, storage, or other space in the Phase II Development; (v) consideration received in whole or in part for the cancellation, modification, extension or renewal of leases; and (vi) interest and other investment earnings on security deposits, reserve accounts and other Development accounts to the extent disbursed, but does not include: (x) the proceeds of the sale of Tax Credits to finance the Phase II Development; (y) Refinancing Net Proceeds (provided the refinancing is permitted by and is accomplished in accordance with the Authority Deed and this Agreement); and (z) insurance proceeds applied to reconstruct or repair the Phase II Development.
“HAL” means the California Housing Authorities Law, Part 2 of Division 24, Section 34200, et seq., of the Health and Safety Code.
“Hazardous Material ” or “ Hazardous Materials ” means and include any substance, material, or waste which is or becomes re gulated by any local governmental authority, including the County, the Regional Water Quality Control Board, 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,” “restricted hazardous waste,” or “extremely hazardous waste” under Sections 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,” “hazard ous 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 Cali fornia Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (v) petroleum; (vi) asbestos and/or asbestos containing materials; (vii) lead based paint or any lead based or lead products; (viii) polychlorinated biph enyls, (ix) designated as a “hazardous substance” 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) Methyl tertiary Butyl Ether; (xii) 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 . (42 U.S.C. Section 9601); (xiii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either require special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment; and/or (xiv) lead based paint pursuant to and defined in the Lead Based Paint Poisoning Prevention Act, Title X of the 1992 Housing and Community Development Act, 42 U.S.C. § 4800, et seq ., specifically §§ 4821 –4846, and the implementing regulations thereto. Notwithstanding the foregoing, “Hazardous Materials” shall not include such products in quantities below attainment levels identified in one or more of the enactments iden tified above as Governmental Requirements, including those products and amounts as are customarily used in the construction, maintenance, rehabilitation, management, operation and residence of residential developments or associated buildings and grounds, o r typically used in residential activities in a A.8.d
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manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Phase II Development, including without limitation alcohol, aspirin, tobacco and saccharine.
“Hazardous Materials Contamination ” means the contamination (whether presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or other elements on, in, or under the Phase II Site by Hazardou s Materials, or 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 (whether before or after the Date of Agreement) emanating from the Phase II Site.
“HCD” means the Housing and Community Development Department of the State of California.
“High Quality” means and refers to the condition of the Phase II Project and the standard of maintenance and upkeep of the improvements (interior and exterio r), hardscape, and landscaping commensurate with High Quality affordable housing developments in Riverside County, such as apartment complexes owned and operated by an Affiliate of Developer, or by Jamboree Housing Corporation, or other highly regarded own ers and developers of High Quality affordable housing rental complexes in Riverside County. When determining comparable affordable apartment complexes, the age of the improvements shall be considered. Further, comparable High Quality affordable apartment complexes shall be those that are subject to enhanced maintenance and property management standards comparable to those set forth herein of this Agreement, and which are managed by experienced, professional property management companies. “Housing Units”, “Housing Unit” means the thirty-two (32) apartment units that are part of the Phase II Development on the Phase II Site, which shall be constructed, owned, leased, managed, maintained, and operated by Developer for occupancy by Eligible Households at the P rescribed Income Levels and at an Affordable Rent for the Affordability Period. Each and all of the Housing Units are affordable housing units and part of the affordable housing project referred to herein as the Phase II Project.
“Income Verification” means the form of income verification that Developer shall cause to be completed by each and all prospective tenants, and all continuing tenants to qualify as an Eligible Household; the form of an Income Verification is set forth in Attachment No. 12, which form may be modified from time-to-time by City and Authority.
“Indemnitees” is defined in Section 1.6.2 and shall include: Moreno Valley Housing Authority, City of Moreno Valley, Successor Agency to the Community Redevelopment Agency of the City of Moreno Valley (“Successor Agency”), and all of their elected and appointed officials, officers, employees, attorneys, agents, volunteers and representatives. “Intercreditor and Subordination Agreement ” means one or more estoppel, intercreditor and/or subordination agreement(s) or instrument(s) as may be requested by a Primary Lender relating to the Primary Construction Loan (and/or Primary Permanent Loan), and, as applicable, Investor Limited Partner, and/or other subordinate lenders for approval by the Executive Director and Authority legal counsel, subject to the terms thereof shall in no event require or otherwise include subordination or modification of the City Covenants or Authority Regulatory Agreement (or County Regulatory Agreement). Within five (5) busin ess days of Developer’s receipt thereof, Developer A.8.d
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shall provide to Authority and City complete, legible copy(ies) of the loan commitment(s) issued by the proposed Primary Lender for the Primary Construction Loan (and, as applicable, Primary Lender for the Primary Permanent Loan) and, as applicable, Investor Limited Partner and/or County, along with Word versions of the requested form(s) of estoppel, intercreditor and/or subordination instrument(s) requested by the Primary Lender, and, as applicable, others , which Intercreditor and Subordination Agreement, and each form thereof, shall be subject to the review and approval of the Authority, City and legal counsel in their sole, reasonable discretion. “Investor Limited Partner ” means each tax credit limited pa rtner of Developer for the Phase II Project. As of the Date of Agreement, Developer has selected CREA, LLC (“CREA”) as the Investor Limited Partner for the Phase II Project; the terms of such equity investment are set forth in a letter from CREA to Develo per dated November 18, 2022. The Base Pro Forma and commitment evidence this Investor Limited Partner’s equity investment in the Phase II Project is $9,238,988.00.
“Kingdom” means Kingdom Development Inc., a California nonprofit public benefit corporation.
“Legal Description of the Phase II Site” means Attachment No. 2 to this Agreement. “Low and Moderate Income Housing Asset Fund ” or “LMIHAF” means moneys which prior to dissolution of redevelopment were required under the CRL to be deposited into a fund created by the Former Agency under Health and Safety Code Section 33334.2 and 33334.3, which funds are now housing assets of the LMIHAF pursuant to the Dissolution Law. Due to dissolution of the Former Agency, on and as of February 1, 2012, to the present and following into the future, the Authority serves as the “housing successor” to the Former Agency and thereby the LMIHAF is the Authority’s fund established, administered, and subject to the requirements of the Dissolution Law, in particular HSC Sections 34176 and 34176.1, as existing and hereafter amended. “Low Income Households” or “Lower Income Households” means households earning not greater than sixty percent (60%) of Median Income as provided under the most restrictive income standard of HSC Section 50079.5 or Tax Credit Rules.
“Low Income Unit ” and “ Low Income Units ” mean a Housing Unit required by this Agreement to be occupied at Affordable Rent by a Low Income Household (and Very Low and/or Extremely Low Income Households also qualify for and may occupy such unit.) There are twelve (12) Low Income Units in the Phase II Project.
“Map of the Phase II Site” means Attachment No. 1 to this Agreement. “Materially Adverse Conditions ” are surface or subsurface conditions of the Phase II Site which: (i) are not apparent from a visual inspection of the surface of the Phase II Site; and (ii) (a) include the presence of Hazardous Materials a t the Phase II Site in excess of currently applicable levels permitted under federal or state law, or (b) include the presence of conditions not typically found in properties within City and which a mutually acceptable independent third party geotechnical and/or environmental assessment and remediation firm retained by Developer estimates will increase development costs by over Three Hundred Thousand Dollars ($300,000.00).
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“Maturity Date” is defined and Section 3.1. and is set forth and established in the A uthority Loan Note.
“Memorandum of Agreement ” means a memorandum of agreement in the form of Attachment No. 17 to this Agreement.
“Median Income” or “AMI” means area median income for Riverside County, California, as set forth by the most restrictive standard of the Tax Credit Rules or HSC Sections 50079.5 and 50105 and the implementing regulations of State HCD in the Cal Code Regulations. “Milestones” means each of the following: (i) making of the Required Submittals; and (ii) implementing Required Submittal Modifications.
“Notice” means a notice in the form prescribed by Section 8.2 hereof. “Notice of Affordability Restrictions” means an instrument substantially in the form of Attachment No. 5, which instrument is caused to be recorded pursuant to the Dis solution Law and other applicable provisions of the CRL.
“Official Records” means, unless the context otherwise requires, the official land records of the Riverside County, California.
“Operating Budget” and “Annual Budget” shall mean the annual operating budget for Phase II that sets forth the projected Operating Expenses for the upcoming year that are subject to and shall be submitted for review and approval by Executive Director, in his/her reasonable discretion, each yea r during the Affordability Period. The Phase II Operating Budget shall be in substantially the form attached hereto as Attachment No. 16 and incorporated herein, or such other form as may be required by Authority from time to time. “Operating Expenses” means actual, reasonable and customary costs, fees and expenses directly incurred and for which payment has been made and which are attributable to the operation, maintenance, and management of the Phase II Development, and consisting of only the following ( and such additional items, if any, as to which the prior written approval of the Executive Director is first obtained. Such approval shall be granted, granted subject to conditions, or refused at the sole and absolute discretion of the Executive Director) : painting, cleaning, repairs and alterations; landscaping; utilities; rubbish removal; sewer charges; costs incurred to third parties in connection with generating laundry charges (but in no event to exceed the laundry charges); real and personal propert y taxes and assessments; insurance premiums; security; advertising, promotion and publicity; office, janitorial, cleaning and building supplies; actual and customary salary payable to an on -site manager which directly and exclusively benefits residents of the Phase II Development; the actual and customary salary paid for one assistant manager, one on -site maintenance manager and such other on -site management personnel, if any, which directly and exclusively benefit residents of the Phase II Development, subject to the prior written approval of the Executive Director who must act reasonably with regard to such written approval; a management fee (“Management Fee”) (excluding any on -site management personnel) of not to exceed six percent (6%) of Gross Revenues; purchase, repairs, servicing and installation of appliances, equipment, fixtures and furnishings; reasonable and customary fees and expenses of accountants, attorneys, consultants and other professionals as A.8.d
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incurred commencing after the completion of the Phase II Development (as evidenced by the issuance by City of a certificate of occupancy for the corresponding building developed as part of the Phase II Development) in connection with the operation of the Phase II Development by Developer; repayment of l oans, if any, made by one or more of the Limited Partners in accordance with the Partnership Agreement; the Limited Partner Fee; the General Partner Fee; tax credit adjuster payments after review and reasonable verification by Authority of documents provided by Developer; any unpaid portion of the Developer Fee; on -site service provider fees for tenant social services up to Ten Thousand Dollars ($10,000) in any Year, as such amount is adjusted for inflation based upon the lesser of (i) CPI for the prior Yea r, or (ii) three percent (3%) as applied per Year measured from the Phase II Conveyance); the Annual Authority Monitoring Charge; the Annual County Monitoring Charge; payments of deductibles in connection with casualty insurance claims not normally paid fr om reserves; the amount of uninsured losses actually replaced, repaired or restored and not paid from reserves; tenant improvements that are not included in the costs of the Phase II Development, and payments made by the Developer to satisfy indemnity obli gations and other payments by the Developer pursuant to this Agreement and the Authority Deed other than to the Developer, partners or other related persons; provided, however, that payments to parties related to Developer for Operating Expenses must not e xceed market rates. The Operating Expenses shall not include non -cash expenses, including without limitation, depreciation. The Operating Expenses shall be reported in the Audited Financial Statement and shall be broken out in line item detail. “Operating Reserve” means a reserve account in the approximate amount of One Hundred Eight Thousand Six Hundred Thirty -One Dollars ($108,631.00) to be funded using equity and to be applied to defray Operating Expenses. The Operating Reserve shall be funded by an i nstallment of Tax Credit Equity, which is a target amount equal to three (3) months of (i) Debt Service on the permanent Primary Loan and (ii) Operating Expenses pursuant to an approved Annual Budget (“Target Amount”); provided, a larger Operating Reserve may be maintained if required by the Primary Lender or Investor Limited Partner. The Operating Reserve shall thereafter be replenished from Annual Project Revenue to maintain the Operating Reserve balance of the Target Amount. “Partnership Agreement” or “LPA” means the agreement(s) which set(s) forth the terms of Developer’s (or its approved Affiliate(s)) limited partnership, as such agreement(s) may be amended from time to time, so long as consistent with the requirements of this Agreement. The Partnersh ip Agreement shall include provisions that incorporate or otherwise conform to the cash flow priorities included in the definition of “Residual Receipts” set forth in this Agreement. Developer shall provide copies of any amendments or modifications to the Partnership Agreement to the Authority within fifteen (15) days following execution thereof.
“Partnership Related Fees” or “Limited Partner Fees” shall mean the following fees of Developer (or partners thereof pursuant to the Partnership Agreement) which are actually paid in the following order of priority:
(a) a limited partner asset management fee payable to the Investor Limited Partner of Developer in the amount of Five Thousand Dollars ($5,000) (increasing by three percent (3%) annually ); and
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(b) a ge neral partner(s) (administrative and/or managing partner(s)) partnership management fee payable to the general partner(s) of Developer in the amount of Twenty Thousand Dollars ($20,000) (increased annually by three percent (3%).) In no event shall the fees for Phase II described in (a) and (b) above together cumulatively exceed Twenty Five Thousand Dollars ($25,000), increased annually as described in clauses (a) and (b) above. In the event insufficient Annual Project Revenues exist to provide for payment of all or part of the specific Partnership Related Fees listed above, no interest shall accrue on the unpaid portions of such Partnership Related Fees, but the unpaid balance will be added to the Partnership Related Fees due in the next following years.
Upon exit of the Investor Limited Partner, the Partnership Fees shall be reduced by the amount of the Limited Partner Fee.
“Permitted Senior Lien ” means collectively, the deeds of trust securing the Primary Construction Loan and the Primary Permanent Loan.
“Permitted Transfer” means any of the following:
a. A conveyance of a security interest in Developer’s estate in the Phase II Site in connection with any Permitted Senior Lien, and any subsequent transfer of title by foreclosure, foreclosure deed, or othe r conveyance instrument in lieu of foreclosure in connection therewith;
b. A conveyance of the Phase II Site by Developer to an Affiliate, provided however, nothing in this subpart b. shall be construed to allow or otherwise consent to the Resyndication of the Phase II Project in any manner whatsoever. In the event of any form of Resyndication of the Phase II Project is proposed by Developer (or any third party), then Developer shall provide prompt written notice to Authority and in no event shall any form of Resyndication be construed as permitted, deemed permitted, preapproved, deemed preapproved, or otherwise authorized by this Agreement, except with the prior written consent of the Authority in its sole and absolute discretion; c. The inclusion of equit y participation by Developer by addition of limited partners to Developer’s limited partnership, or similar mechanisms; d. The lease for occupancy of the Housing Units;
e. The granting of easements or permits to facilitate development of the Phase II Site in accordance with this Agreement and the Entitlement; f. The withdrawal, removal, transfer, and/or replacement of: (i) Investor Limited Partner with an Affiliate of the Investor Limited Partner, or (ii) General Partner with its Affiliate or an Affiliate o f the Investor Limited Partner, all subject and pursuant to the terms of the Developer’s Partnership Agreement. Additionally, such withdrawal, removal, transfer, and/or replacement shall not constitute a default under any of the Project Documents evidencing and/or implementing the Authority Loan and this Agreement; provided however, in the event of the removal of the Developer’s General Partner for cause in accordance with the Partnership Agreement as described in this subpart (f), the nomination and selec tion of the new permanent replacement General Partner is not a Permitted Transfer and shall be and remain subject to the Authority’s prior review and consent as a “Transfer” pursuant to the requirements of this Agreement; and
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g. Any transfer approved in wr iting by the Authority’s Executive Director prior to such transfer with such approval at her or his sole discretion. “Phase II Project” is defined in the Recitals and comprises the new 32 -unit affordable housing development that will be a companion multi-family rental project to the Phase I Project. “Phase II Site ” means the 1.66 -acre parcel upon which the Phase II Project will be constructed and operated; and means the real property interest described with more particularity by the Legal Description of the Phase II Site; and the Phase II Site Map depicts the Phase II Site. “Prescribed Income Levels” means income levels for the Eligible Household tenants of the Housing Units that conform to definition of Housing Units with the prescribed unit mix as to unit size (number of bedrooms) and income levels based on the Riverside County AMI in accordance with the following unit mix (with parenthetical designations of which units are “non -PBV” and which units are assigned PBVs by the County during the term of the County HAP):
• Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income Households (PBV designated PBV units);
• One (1) 2 -bedroom Housing Unit for 40% AMI Very Low Income Households (PBV designated unit);
• One (1) 2 -bedroom Housing Unit for 40% AMI Very L ow Income Households (non-PBV);
• Two (2) 2 -bedroom Housing Units for 45% AMI Very Low Income Households (non-PBV);
• Four (4) 2 -bedroom Housing Unit for 50% AMI Very Low Income Households (non-PBV);
• Six (6) 2 -bedroom Housing Units for 60% AMI Lower Income Households (non-PBV);
• Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income Households (PBV designated units);
• One (1) 3 -bedroom Housing Unit for 40% AMI Very Low Income Households (PBV designated unit);
• One (1) 3 -bedroom Housing Unit for 45% AMI Very Low Income Households (PBV designated unit);
• One (1) 3 -bedroom Housing Unit for 50% AMI Very Low Income Households (PBV designated unit);
• One (1) 3 -bedroom Housing Unit for 50% AMI Very Low Income Households (non-PBV)
• Six (6) 3 -bedroom Housing Units for 60% AMI Lower Income Households (non-PBV);
• One (1) 4 -bedroom Housing Unit for 30% Extremely Low Income Households (non-PBV);
• One (1) 4-bedroom Housing Unit for 40% Very Low Income Households (non-PBV); • One (1) 4-bedroom Housing Unit for 45% Very Low Income Households (non-PBV); and
• One (1) 4-bedroom Housing Unit for 50% Very Low Income Households (non-PBV).
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“Primary Construction Loan” means, collectively, the mortgage loans and letters of credit obtained by Developer from an Approved Construction Lender. As of the Date of Agreement, Developer has selected, and received a commitment from, Citibank as its Primary Construction Lender to issue the Primary Construction Loan. The Base Pro Forma evidences that amount of the Primary Construction Loan is $9,424,642.
“Primary Lender” or “Lender” means each of the responsible financial lending institutions or entities approved by Authority and City under this Agreement, which provide the Primary Construction Loan or the Primary Permanent Loan, including construction loan(s) or permanent loan(s) for the construction, development, and/or operation of the Phase II Project. A Lender shall not include the financial entities or age ncies commonly referred to as CalHFA, FannieMae or FreddieMac; provided however, the foregoing prohibition shall not be construed to prohibit a transfer or assignment of the Primary Construction Loan or Primary Permanent Loan on the secondary market so lon g as such transfer does not require a rider, amendment or other modification to this Agreement, the City Covenants, Authority Regulatory Agreement, or Authority Loan Documents or other transaction document to which the City and/or Authority is/are party(ie s), signatory(ies) or intended beneficiary(ies). As of the Date of Agreement, Developer has selected Citibank as its Primary Lender to issue the Primary Construction Loan. The following institutional lenders may also be a Primary Lender subject to City a nd Authority review and approval of each and any loan commitment and implementing documents therefor: CIT Bank, Bank of America, California Community Reinvestment Corporation (“CCRC”), Union Bank, Wells Fargo Bank, U.S. Bank, Century Housing, or another m utually acceptable reputable and established bank, savings and loan association, or other similar financial institution or a state agency or instrumentality, but not California Housing Finance Agency (“CalHFA”), Federal National Mortgage Association (“Fannie Mae”) or Federal Home Loan Mortgage Corp. (“FreddieMac”). And, following the issuance of a Certificate of Completion/Release of Construction Covenants, a Primary Lender may include: (1) a “qualified institutional buyer” (“QIB”) as defined in Rule 144A promulgated under the Securities Act of 1933, as in effect on the date hereof, that is a financial institution or commercial bank having capital and surplus of $5,000,000,000 or more, (2) an affiliate of the Primary Permanent Lender, (3) a trust or custod ial arrangement established by the Primary Permanent Lender or one of its affiliates or any state or local government or any agency or entity which is a political subdivision of a federal, state or local government (a “Governmental Entity”), in each case ( i) the beneficial interests in which will be owned only by QIBs, or (ii) the beneficial interests in which will be rated in the “BBB” category or higher without regard to modifier (or the equivalent investment grade category) by at least one nationally recognized rating agency, or (4) a Governmental Entity. “Primary Permanent Loan” means, collectively, the mortgage loans obtained by Developer from an Approved Permanent Lender in an amount limited to satisfaction of the outstanding balance of the Primary Con struction Loan or in an amount in excess of such outstanding balance so long as such excess proceeds are used to pay (or prepay) Developer Fee, Cost Overrun Amounts, the Annual Authority Monitoring Charge and outstanding development costs. The Base Pro Fo rma evidences that the estimated amount of the Primary Permanent Loan is $2,827,475. “Principals” means James M. Jernigan, William Leach, KDI Courtyards LLC, a California limited liability company, Rancho Belago Developers, Inc., a California corporation , RBD Cottonwood, LLC, a California limited liability company, and Kingdom. “Project Documents ” means, collectively, this Agreement, City Covenants, Authority Regulatory Agreement, Authority Grant Deed, Authority Loan Note, Authority Deed of Trust, Notice A.8.d
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of Affordability Restrictions, Request for Notice, Memorandum of Agreement, all other Attachments to this Agreement, and any other agreement, document, or instrument that Authority requires in connection with the execution of this Agreement or from time to time to effectuate the purposes of this Agreement.
“Reciprocal Easement Agreement ” or “ Joint Use Agreement ” or “ REA” means that certain joint use and reciprocal easement agreement for joint use, access, and enjoyment of and between the amenities, access, and related exterior improvements of the Phase I Project and Phase II Project.
“Recordable Documents ” means the following: (i) Authority Grant Deed; (ii) City Covenants; (iii) Authority Regulatory Agreement; (iv) County Regulatory Agreement; (v) Primary Loan deed of trust; (vi) 1-UCC Financing Statement by Developer in favor of an Approved Construction and/or Permanent Lender (as construction lender) for filing as a fixture filing among Official Records; (vii) the Notice of Affordability Restrictions; (vii i) Request for Notice, and (ix) such other instruments, if any, as shall be approved by Executive Director as necessary or convenient to effectuate and implement the initial financing of the Phase II Development (and the permanent financing thereof).
“Refinancing Net Proceeds” means the proceeds of any Authority -approved refinancing of any of the Primary Construction Loan or the Primary Permanent Loan or other approved financing secured by the interest of Developer in the Phase II Site, net of: (i) the amo unt of the existing financing which is satisfied out of such proceeds; (ii) reasonable and customary costs and expenses incurred in connection with the refinancing; (iii) the costs of improvements to the Phase II Site which constitute the Phase II Developm ent, including hard and soft costs to the extent approved in writing by the Executive Director prior to the closing of the refinancing; (iv) the balance of authorized loans to the Phase II Development made by the limited partners of Developer for development or operating deficits, amounts expended to maintain compliance with the Tax Credit Rules, or contributions for capital expenditures in excess of available Project revenues, if any, including interest at the Applicable Federal Rate; (v) the balance, if a ny, of operating loans or development loans made by the partners of Developer to the Phase II Development, including interest at the Applicable Federal Rate; (vi) payment of unpaid Tax Credit adjustment amounts or reimbursement of Tax Credit adjustment amo unts paid by the administrative and/or managing general partners and/or the guarantors to the Phase II Development pursuant to the approved Partnership Agreement, if any; and (vii) the payment to the administrative general partner of Developer of a refinancing fee, which fee is and shall be subject to the approval of the Executive Director at the time of each refinancing and which shall not exceed five percent (5%) of the amount of the approved refinancing. “Related Entity” means Kingdom, a Principal, or an entity in which any interest is held by Developer or one or more of the Principals.
“Relocation” or “ Relocation Laws” means all applicable federal and state relocation laws and regulations, including without limitation, (i) the relocation obligations of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“URA”), 42 U.S.C. 4201 –4655, and the implementing regulations thereto set forth in 49 C.F.R. Part 24, (ii) the California Relocation Assistance Act, Government Code Section 7260, et seq. and the implementing regulations thereto set forth in Title 25, Section 6000, et seq . of the California Code of Regulations, and (iii) any other applicable federal, state or local enactment, regulation or practice providing for relocation a ssistance, benefits, or compensation for moving and for property interests (including without limitation A.8.d
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goodwill and furnishings, fixtures and equipment, and moving expenses), and (iv) any federal law or regulation prohibiting payment of relocation benefits or assistance to persons ineligible for relocation benefits or assistance.
“Reporting Amount ” means the sum of $1600 per Year in the event Developer fails to deliver to Authority, during any Year, a full and adequate report that conforms to HSC Section 33418, HAL and Dissolution Law, including HSC Section 34176.1. “Request for Notice” or “Request for Notice of Default” shall mean the request for notice of default pursuant to Civil Code Section 2924b to be recorded against the Phase II Site in connection with the Escrow for disposition of the Phase II Site substantially in the form attached hereto as Attachment No. 7 and fully incorporated by this reference. “Residual Receipts” for a particular Year means Gross Revenues for the corresponding Year less (i) Debt Service payments made during such Year on the Primary Construction Loan or the Primary Permanent Loan in amounts not in excess of the amounts due and payable during such Year (and not including prepayments); and (ii) the sum of (a) Operating Expenses and, to the extent funded, (b) payments of the Deferred Developer Fee; and (b) payments made to the Capital Replacement Reserve as made during the corresponding Year up to the amount indicated therefor in the Base Pro Forma and Financial Assumptions. All calculations of Residual Receipts shall be made annually, on or before May 15 for the preceding Year, on a cash (and not accrual) basis and the components thereof shall be subject to verification and approval, on an annual basis, based upon conformity with the terms of this Agreement and the Authority Deed, by Authority.
The allocation of Residual Receipts under this Agreement is reflective of the circumstance that one hundred percent (100%) of the moneys used to acquire the Phase II Site were sourced from the Former Agency’s housing fund, as succeeded by and accounted for as a housing asset in the LMIHAF. Each Year while the County PLHA Loan is outstanding, Developer shall allocate Residual Receipts as follows: (i) Developer shall disburse: (A) to the County forty percent (40%) percent of Residual Receipts while the Cou nty PLHA Loan is outstanding, (B) to the Authority ten percent (10%) of Residual Receipts as the Base Amount of Residual Receipts, and (C) the balance of fifty percent (50%) of Residual Receipts may be retained by Developer. In each Year post -repayment of the County PLHA Loan, Developer shall allocate Residual Receipts as follows: (1) the Base Amount of Residual Receipts shall increase to fifty percent (50%) to Authority, and (2) Developer may continue to retain fifty percent (50%) of Residual Receipts . In addition to the percentages of Residual Receipts to Authority set forth in the two preceding sentences, the equivalent percentage of Net Refinancing Proceeds shall be remitted to Authority (and, as applicable, to County), which amount shall be applied toward repayment, first and prorate to the Authority Loan Note and County PLHA Loan promissory note.
Further, for each Year that one or more of the following events occur(s), Authority shall receive one hundred percent (100%) of the moneys, if any, that re sult from “Additional Amount of Residual Receipts”: (i) a Transfer; (ii) the obtaining of grant moneys not reflected in or in excess of amounts indicated therefor in the Base Pro Forma and Financing Assumptions; and/or (iii) the funding of a loan in excess of amounts outstanding when then-existing loans (and, in the case of a loan upon conversion from construction to permanent, an amount in excess of the outstanding loan amount after applying an infusion of equity attributable to the Tax Credits; each of t he events described in the foregoing sentence (i), (ii), or (iii) shall constitute an “Overage Event” and the amount by which such Overage Event results in the receipt by Developer of amounts in excess of A.8.d
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those set forth in the Financing Assumptions, then Authority (and County, pro rata) shall be entitled to increase the amount of the Authority Loan Note to reflect such Overage Amounts and Developer shall cooperate in evidencing such increase.
“Residual Receipts Note Payments ” or “ Note Payments” means all p ayments required to be made pursuant to the Authority Loan Note under this Agreement. “Residual Receipts Report” shall mean the annual report that is part of the Annual Financial Report defined in Section 5.3 herein that is completed by Developer and submi tted to Authority for the Phase II Project; this report shall be calculated using cash basis accounting. It is understood the Residual Receipts Report is subject to all of the terms and conditions set forth in this Agreement. The summary of the items in the Residual Receipts Report is not intended to supersede or modify the more complete description in this Agreement; in the event of any inconsistency between the Residual Receipts Report and this Agreement, this Agreement shall govern. “Resyndication” shall mean the application for and obtaining by Developer or any successor or assign of Developer of a new allocation of federal and state low income housing tax credits for the Phase II Project; this term excluding the Reservation of Tax Credits for Phase II described and defined as a part of the financing of the Phase II Project under this Agreement. In no event shall a Resyndication of the Phase II Project occur, including without limitation amendment of the Prescribed Income Levels for the Housing Units, without the prior review, approval and consent of the Executive Director in his or her sole and complete discretion. “Schedule of Performance” means Attachment No. 3 to this Agreement. “Scope of Development” means Attachment No. 8 to this Agreement. “Section 3 Clause” and “Section 3” means and refer to Section 3 of the Housing and Urban Development Act of 1968, 12 U.S.C. 1701u, as amended. City and Authority have available Section 3 “checklist” and other forms related to Section 3 compliance, and Developer agrees to and shall use and apply applicable provisions thereof as to each and all Contractor(s), subcontractor(s), or other contractor(s), as applicable, with forms to be utilized in all contracts and subcontracts to which Section 3 applies and to the extent required by 24 CFR part 75. For purposes of this Section 3 Clause and compliance thereto, whenever the word “contractor” is used it means and include, as applicable, Developer, Contractor, other contractor(s), and subcontractor(s).
For ease of reference relating to Section 3 requirements, as of the Date of Agreement, access the following links:
https://www.hud.gov/section3 and https://www.ecfr.gov/current/title-24/subtitle-A/part-75.
Developer hereby acknowledges and agrees the responsibility for compliance with all Section 3 Clause federal requirements as to Developer, its Contractor, or other contractor(s), subcontractor(s), and other agents is the primary obligation of Developer. Developer shall provide or cause to be provided to its Contractor, and each of its other contractor(s), subcontractor(s) a nd agents a checklist for compliance with Section 3 federal requirements, to obtain from such Contractor, and other contractor(s), subcontractor(s), and agents all applicable items, documents, and other evidence of compliance with the items, actions, and o ther provisions within the checklist, and to submit all such completed Section 3 documentation and proof of compliance to the Executive Director.
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“Section 8 Laws” shall mean and include both the Housing Choice Voucher and the Project-Based (PBV) Voucher Pr ograms, 42 U.S.C. 1437f and 3535(d), and the implementing regulations therefor in the Code of Federal Regulations, Parts 982 and 983. “Section 8 Portable Vouchers” and “Portable Vouchers” shall mean each and all Section 8 tenant-based vouchers, certificates of family participation under the Section 8 Laws, in particular, 24 CFR part 882 (Rental Certificate Program), rental vouchers under 24 CFR part 887 (Rental Voucher Program) as such now exist and as may hereafter be amended, or other tenant -based rental assistance programs issued or otherwise administered by a public housing authority under the Section 8 Laws. “Subcontractor” and “ Subcontractors” means, individually and collectively, one or more subcontractors hired by Developer’s General Contractor for the Phase II Development to perform and complete, or to engage and supervise others to perform and complete, the construction of the Phase II Development and all other on -site and off -site improvements required to be constructed in connection with the Phase II Project, all of which shall be in accordance with the Scope of Development, the Entitlement, and the Final Plans. Each of the Subcontractors shall be selected after competitive bidding and City (and Authority) representatives shall have every reasonab le right and opportunity to observe and review all material stages of such competitive bidding process, including a right to review the invitation to bidders, each bid package, each responsive bid form, each submitted bid package and the right to be presen t when each bid is opened by Developer and/or the General Contractor. Developer shall submit to City information regarding the entity serving as the Subcontractor for any portion of the Phase II Development required to be constructed in connection therewith in accordance with the Scope of Development, the Entitlement, and the Final Plans, including all required licenses, certifications, insurance, etc., as requested by the City Manager. “Tax Credit Amount ” means that amount which, per the Base Pro Forma, r epresents the projected yield from the marketing of the Tax Credits under the Base Pro Forma and may not correspond to the amount of tax credits ultimately available. “Tax Credit Rent ” means that maximum rent permitted to be paid for a household corresponding to an income category set forth in this agreement (such as 50% of Median Income) under the Tax Credit Rules.
“Tax Credit Rules ” means Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 a nd 23610.5 and California Health and Safety Code Section 50199, et seq., and the rules and regulations implementing the foregoing, including without limitation the program regulations promulgated by TCAC. “Tax Credits” means 9% Housing Tax Credits 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. “TCAC” means the Tax Credit Allocation Committee of the State of California. “Third Party Costs” are defined and described in Section 8.15 herein. “Title Company” shall be First American Title Insurance Company or another title insurer mutually acceptable to Authority and Developer.
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“Transfer” means a sale, lease or other disposition of any interest in or use of the Phase II Site or the Phase II Project.
“Transfer Net Proceeds ” shall mean the proceeds of any transfer, in whole or in part, of Developer’s interest in the Phase II Site or any sale, assignm ent, sublease, or other transfer, in whole or in part of Developer’s interests in the Phase II Site, net reasonable and customary costs and expenses incurred in connection with such transfer.
“Uniform Codes” means each of the following as in effect from ti me to time as approved by City: the Uniform Building Code, Uniform Housing Code, National Electrical Code, Uniform Plumbing Code, Uniform Mechanical Code, and Uniform Code for Abatement of Dangerous Buildings.
“Very Low Income Households ” means those house holds earning not greater than fifty percent (50%) of Median Income, adjusted for actual household size, as provided under the most restrictive income standard of HSC Section 50105 or Tax Credit Rules. The term shall include:
(i) 30% Extremely Low Income Households; (ii) 40% AMI Very Low Income Households; (iii) 45% AMI Very Low Income Households, and (v) 50% AMI Very Low Income Households. “Very Low Income Unit ” means a Housing Unit occupied at Affordable Rent by a Very Low Income Household. (An Extrem ely Low Income Household also qualifies for and may occupy such unit.)
“30% AMI Extremely Low” shall mean those households earning not greater than thirty percent (30%) of Median Income, adjusted for household size, those households earning not greater than fifty percent (50%) of Median Income, adjusted for actual household size, as provided under the most restrictive income standard of HSC or Tax Credit Rules. “40% AMI Very Low Income Households” and/or “40% AMI Very Low” shall mean those households earning not greater than forty percent (40%) of Median Income, adjusted for household size, as provided under the most restrictive income standard of HSC or Tax Credit Rules.
Further, 40% AMI Households also include 30% AMI Households. “45% AMI Very Low Income Households” and/or “45% AMI Very Low” shall mean those households earning not greater than forty -five percent (45%) of Median Income, adjusted for household size, as provided under the most restrictive income standard of HSC or Tax Credit Rules.
Further, 45% AMI Households also include 30% AMI Households and 40% AMI Households. “50% AMI Very Low Income Households” and/or “50% AMI Very Low” shall mean those households earning not greater than fifty percent (50%) of Median Income, adjusted for household size, as provided under the most restrictive income standard of HSC or Tax Credit Rules.
Further, 50% AMI Very Low include 45% AMI Very Low, 40% AMI Very Low, and 30% AM I Extremely Low Eligible Households.
“60% AMI Low” shall mean those households earning not greater than sixty percent (60%) of Median Income, adjusted for household size, as provided under the most restrictive income standard of HSC or Tax Credit Rules. F urther, 60% AMI Low include 50% AMI Very Low, 45% AMI Very Low 40% AMI Very Low, and 30% AMI Extremely Low Eligible Households.
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“Year” means the period commencing as of the Phase II Conveyance and ending as of December 31 of that calendar year, then each s ucceeding calendar year thereafter during the Affordability Period terminating as of the last day of the Affordability Period.
1.2 Singular and Plural Terms. Any defined term used in the plural in this Agreement or any Project Document shall refer to all members of the relevant class and any defined term used in the singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms . Any reference to this Agreement or any Project Document shall include such document both as originally executed and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references to the same Section in which the reference appears. The term “document” is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments and other written material of every kind. The terms “including” and “include” mean “including (include) without limitation.”
1.4 Exhibits Incorporated . All attachments and exhibits to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference.
1.5 Representations and Warranties.
1.5.1 Authority Representations . Authority represents and warrants to Developer as follows:
(a) Authority. Authority is a public body, corporate and politic, acting hereunder as a housing authority existing pursuant to the Housing Authorities Law, which has been authorized to transact business pursuant to action of City. Authority has full right, power and lawful authority to convey the Phase II Site as provided herein and the execution, performance, and delivery of this Agreement by Authority has been fully authorized by all requisite actions on the part of Authority. The parties who have executed this Agreement on behalf of Authority are authorized to bind Authority by their signatures hereto.
(b) Litigation. To the best of Authority’s knowledge , there are no actions, suits, material claims, legal proceedings, or any other proceedings involving the Authority affecting the Phase II Site or any portion thereof, at law or in equity before any court or governmental agency, domestic or foreign.
(c) No Con flict. Authority and City’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Authority is a party or by which it is bound. (d) No Authority B ankruptcy. Authority is not the subject of a bankruptcy proceeding.
Until the Phase II Conveyance of the Phase II Site, Authority shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 1.5.1 not to be true as of the Phase II Conveyance, immediately give written notice of such A.8.d
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fact or condition to Developer. Such exception(s) to a representation shall not be deemed a breach by Authority hereunder, but shall constitute an exception which Dev eloper shall have a right to approve or disapprove if such exception would have an effect on the development and/or operation of the Phase II Site. If Developer elects to accept the Phase II Conveyance and possession of the Phase II Site following disclos ure of such information, Authority’s representations and warranties contained herein shall be deemed to have been made as of the Phase II Conveyance, subject to such exception(s). If, following the disclosure of such information, Developer elects to not a ccept the Phase II Conveyance of and possession of the Phase II Site, then this Agreement shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder. The representations and warranties set forth in this Section 1.5.1 shall survive the Phase II Conveyance.
1.5.2 Developer Representations. Developer represents and warrants to each of City and Authority as follows:
(a) Authority. Developer is a duly organized limited partnership organized within and in good st anding under the laws of the State of California. Developer has full right, power and lawful authority to lease and accept title to and possession of the Phase II Site and undertake all obligations as provided herein and the execution, performance and del ivery of this Agreement by Developer has been fully authorized by all requisite actions on the part of Developer.
The parties who have executed this Agreement on behalf of Developer are authorized to bind Developer by their signatures hereto.
(b) Litigation. To the best of Developer’s knowledge, there are no actions, suits, material claims, legal proceedings, or any other proceedings affecting Developer, at law or in equity before any court or governmental agency, domestic or foreign. (c) No Conflict. Developer’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound. (d) No Developer Bankruptcy . Developer is no t the subject of a bankruptcy proceeding.
(e) Developer Experience; Sophisticated Party . The Principals of Developer are sophisticated parties, with substantial experience in the acquisition, rehabilitation, development, financing, obtaining financing for, ma rketing, and operation of affordable housing projects, including rental projects, and with the negotiation, review, and preparation of agreements and other documents in connection with such activities. Developer is familiar with and has reviewed all laws and regulations pertaining to the development and operation of the Phase II Development, including without limitation the Tax Credit Rules, and has obtained advice from any advisers of its own choosing in connection with this Agreement.
(f) Developer Knowledge of Phase II Site, Suitability. Developer studied the condition of the Phase II Site prior to the acquisition of the Phase II Site by Developer is familiar with the condition of the Phase II Site. Developer has determined that the Phase II Site is suitable for the development proposed by Developer as further described in this Agreement. (g) Due Authorization and Execution; Studies Completed. Developer has duly authorized the execution of this Agreement, including without limitation the attachments hereto.
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Developer is ready, willing and able to execute the Authority Regulatory Agreement, City Covenants, Authority Note, Authority Deed of Trust, Request for Notice, Notice of Affordability Restrictions, and all documents necessary to effectuate the disposition of the Phase II Site by Authority to Developer and has conducted all studies necessary to proceed with the Phase II Development. Prior to the Phase II Conveyance, Developer shall execute and deposit with Authority (to be held pending satisfaction of the Conditions Precedent as set forth in Section 3.2 hereunder) the City Covenants, the Authority Regulatory Agreement, the Authority Note, the Authority Deed of Trust, and all documents necessary to effectuate the Phase II Conveyance as provided in this Agreement.
Until the Phase II Conveyance, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 1.5.2 not to be true as of the Phase II Conveyance, immediately give written notice of s uch fact or condition to each of City and Authority. Such exception(s) to a representation shall not be deemed a breach by Developer hereunder, but shall constitute an exception which each of City and Authority shall have a right to approve or disapprove if such exception would have an effect on the development and/or operation of the Phase II Site. If Authority elects to proceed with the Phase II Conveyance following disclosure of such information, Developer’s representations and warranties contained her ein shall be deemed to have been made as of the Phase II Conveyance, subject to such exception(s). If, following the disclosure of such information, Authority or City elects to not close Escrow, then this Agreement and the Escrow shall automatically termi nate, and neither party shall have any further rights, obligations or liabilities hereunder. The representations and warranties set forth in this Section 1.5.2 shall survive the Phase II Conveyance.
1.5.3 City Representations . City represents and warrants to D eveloper as follows:
(a) Authority. City has full right, power and lawful authority concerning the execution, performance, and delivery of this Agreement by City has been fully authorized by all requisite actions on the part of City. The parties who have executed this Agreement on behalf of City are authorized to bind City by their signatures hereto. (b) Litigation. To the best of City’s knowledge, there are no actions, suits, material claims, legal proceedings, or any other proceedings involving the City affect ing the Phase II Site or any portion thereof, at law or in equity before any court or governmental agency, domestic or foreign.
(c) No Conflict . City’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which City is a party or by which it is bound. (d) No City Bankruptcy . City is not the subject of a bankruptcy proceeding.
Until the Phase II Conveyance, Authority shall, upon learning of any fact or condition that would cause any of the warranties and representations in this Section 1.5.3 not to be true as of the Phase II Conveyance, immediately give written notice of such fact or condition to Developer.
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exception would have an effect on the development and/or operation of the Phase II Site. If Developer elects to accept the Phase II Conveyance and possession of the Phase II Site following disclosure of such information, Authority’s representations and warranties contained herein shall be deemed to have been made as of the Phase II Conveyance, subject to such exception(s). If, following the disclosure of such information, Developer elects to not accept the Phase II Conveyance of and possession of the Phase II Site, then this Agreement shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder. The representations and warranties set forth in this Section 1.5.3 shall survive the Phase II Conveyance.
1.6 Environmental Condition of the Phase II Site.
1.6.1 Review by Developer . Developer shall conduct and complete its evaluation of the Phase II Site and inform Authority and City in writing as to its conclusions on or prior to the Determination Date.
1.6.2 Indemnification. Developer shall save, protect, pay for, defend (with counsel acceptable to each of Authority and City), indemnify and hold harmless each and all of the Indemnitees from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monet ary sanctions), losses, costs or expenses (including, without limitation, consultants’ fees, investigation and laboratory fees, attorneys’ fees and remedial and response costs and third -party claims or costs) (the foregoing are hereinafter collectively ref erred to as “Liabilities”) that may now or in the future be incurred or suffered by Indemnitees by reason of, resulting from, in connection with or arising in any manner whatsoever as a direct or indirect result of: (i) the acquisition and/or ownership of the Phase II Site by Developer; (ii) the ownership and/or use of any land and/or improvements located within the corporate limits of the City that is owned by the Developer; (iii) the presence, use, release, escape, seepage, leakage, spillage, emission, g eneration, discharge, storage, or disposal of any Hazardous Materials in, on, under, or about, or the transportation of any such Hazardous Materials to or from, the Phase II Site occurring after the Closing or caused or contributed to by Developer; (iv) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, leakage, spillage, emission, escape, discharge, storage, disposal, or transportation of Hazardous Materials in, on, under, or about, or to or from, the Phase II Site (occurring after the earlier to owner of (a) the conduct of due diligence activities by Developer on the Phase II Site or (b) the Phase II Conveyance); (v) the establishment or modificatio n of land use entitlements or land use designations as to the Phase II Site; (vi) the disposition of the Phase II Site by Authority to Developer; (vii) claims, if any, for Relocation benefits or assistance arising from or related to the acquisition, dispos ition or use of the Phase II Site, or any other land and/or improvements located within the corporate limits of the City that is owned by the Developer; (viii) the physical and environmental condition of the Phase II Site caused or contributed to by Developer or occurring after the Closing; and (ix) any Liabilities caused or contributed to by acts or omissions of Developer relating to any Environmental Laws and other Governmental Requirements relating to Hazardous Materials and/or the environmental and/or p hysical condition of the Phase II Site. The foregoing indemnification shall continue in full force and effect regardless of whether such condition, liability, loss, damage, cost, penalty, fine, and/or expense shall accrue or be discovered before or after the termination of the Affordability Period. This indemnification supplements and in no way limits the indemnification set forth in Section 4.7. The foregoing indemnification shall not be deemed to include Liabilities to the extent caused by the sole act ive gross negligence or willful misconduct of an Indemnitee or Indemnitees.
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1.6.3 Duty to Prevent Hazardous Material Contamination . During the construction, development, operation and management of the Phase II Development, Developer shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment on or under the Phase II Site. Such precautions shall include, but not be limited to, compliance with all Environmental Laws and other Governmental Requirements. Developer s hall notify each of City and Authority, and provide to each of City and Authority a copy or copies of any notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements and reports filed or applications made pursuant to all Environmental Laws and other Governmental Requirements, and Developer shall report to each of City and Authority, as soon as possible after each incident, any unusual or potential ly important incidents in the event of a release of any Hazardous Materials into the environment.
1.6.4 Release of Indemnitees by Developer. Developer hereby waives, releases and discharges forever the Indemnitees from all present and future claims, demands, su its, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, including attorneys’ fees, court and litigation costs and fees of expert witnesses, present and future, arising out of or in any wa y connected with Developer’s possession or use of the Phase II Site, improvement of the Phase II Site, and the ownership and/or use of any other land or improvements located within the corporate limits of the City that are owned by the Developer, in accordance with this Agreement, the Scope of Development, and the Entitlement obtained by Developer for the Phase II Project, and for the operation of the Phase II Project on the Phase II Site, of any Hazardous Materials on the Phase II Site from the activities of Developer or arising from and after the Closing, or the existence of Hazardous Materials contamination in any state on, under, or about the Phase II Site, from the activities of Developer or arising from and after the Closing.
In connection with the for egoing, Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code that 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 Initials
As such relates to this Section 1.6.5, Developer hereby waives and relinquishes all rights and benefits that it may have under Section 1542 of the California Civil Code.
1.6.5 Environmental Inquiries . Developer shall notify each of City and Authority upon receipt, and provide to Autho rity a copy or copies, of the following environmental permits, disclosures, applications, entitlements or inquiries relating to one or more of the Phase II Site, and the Phase II Project: notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements and reports filed or applications made pursuant to any Environmental Laws and other applicable Governmental Requirements relating to Hazardous Material s and underground tanks, and Developer A.8.d
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shall report to each of City and Authority, as soon as possible after each incident, all material information relating to or arising from such incident, including, but not limited to, the following:
(a) All required repor ts of releases of Hazardous Materials, including notices of any release of Hazardous Materials as required by any Governmental Requirements; (b) All notices of suspension of any permits relating to Hazardous Materials;
(c) All notices of violation from federal, st ate or local environmental authorities relating to Hazardous Materials;
(d) All orders under the State Hazardous Waste Control Act and the State Hazardous Substance Account Act and corresponding federal statutes, concerning investigation, compliance schedules, clean up, or other remedial actions; (e) All orders under the Porter Cologne Act, including corrective action orders, cease and desist orders, and clean up and abatement orders; (f) Any notices of violation from OSHA or Cal OSHA concerning employees’ exposure to Hazardous Materials;
(g) All complaints and other pleadings filed against Developer relating to Developer’s storage, use, transportation, handling or disposal of Hazardous Materials on or about the Phase II Site; and
(h) Any and all other notices, citations, inqui ries, orders, filings or any other reports containing information which would have a materially adverse effect on the Phase II Site or Authority’s liabilities or obligations relating to Hazardous Materials.
In the event of a release of any Hazardous Materi als into the environment, Developer shall, as soon as possible after obtaining knowledge of the release, furnish to each of City and Authority a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of City and/or Authority, but subject to any limitations imposed by law or by court order, Developer shall furnish to each of City and Authority a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Phase II Site in Developer’s possession and/or shall notify each of City and Authority of any environmental entitlements or inquiries relating to or affecting the Phase II Site within Developer’s actual or constructive knowledge if Developer is not in possession of same, 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. For all purposes of this Ag reement, information in the possession of the Kingdom or one or more Related Entity shall also be deemed to be in the possession of the Developer.
2. DISPOSITION OF THE PHASE II SITE; ESCROW; TITLE.
2.1 Conveyance of Phase II Site . In accordance with and subject to all the terms, covenants, and conditions of this Agreement, Authority agrees to sell the Phase II Site to Developer, and Developer agrees to purchase the Phase II Site from Authority for the Conveyance Price. T he conveyance of the Phase II Site is to b e accomplished as set forth in Sections 2.1 to 2.4 hereof and A.8.d
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the disposition and Closing are subject to the Conditions Precedent set forth herein. In consideration of Authority executing and delivering the Authority Grant Deed, Developer agrees to comply with and cause the use and operation of the Phase II Project on the Phase II Site to conform to the Authority Grant Deed, City Covenants, Authority Regulatory Agreement, and Notice of Affordability Restrictions throughout the Affordability Period.
2.1.1 Conveyance Price; CBRE Appraisal of Phase II Site . As of the Date of Agreement an independent appraisal report dated as of December 19. 2022 was prepared for the City and Authority by CBRE Group, Inc., File No. CB22US131334-1, which concluded the appraised fair market value of the Phase II Site is $380.000.
2.1.2 Acreage. All references in this Agreement to acreage are approximate; the price for the Phase II Site as payable by Developer will not change regardless of whether the actual acreage of the Phase II Site differs from the acreage figures set forth in this Agreement.
2.2 Phase II Escrow . The parties shall open an escrow (“Phase II Escrow”) with the Escrow Holder, by the time established therefor in the Schedule of Performance for the Phase II Conveyance, and the recordation and delivery of documents herein. Authority, City, and Developer agree to execute such escrow instructions as may be reasonably required to implement this Section 2.2. The obligation of Authority to deliver the Authority Grant Deed, Authority Regulatory Agreement, Notice of Affordability Restrictions and, the obligation of City to deliver the City Covenants, all to Escrow and to proceed with the Phase II Conveyance is contingent upon the satisfaction of the Conditions Precedent as set forth herein.
2.2.1 Costs of Phase II Escrow . Developer agrees to and shall pay for any and all escrow and title fees and costs, and documentary transfer taxes, if any, that arise from Escrow.
2.2.2 Escrow Instructions . This Agreement constitutes the joint escrow instructions of Developer, City and Authority, and the Escrow Holder to whom these instructions are delivered is hereby empowered to act under this Agreement. The parties hereto agree to do all acts reasonably necessary to close this Escrow. Insurance policies for fire or casualty are not to be transferred, and Authority and City (as applicable) will cancel its/their own policies concurrent with or promptly after the Phase II Conveyance. All funds received i n the Escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check from such account.
If in the reasonable opinion of any of Developer, City or Authority it is necessary or convenient in order to accomplish the Phase II Conveyance, such party may require that the parties sign supplemental escrow instructions; prov ided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The parties agree to execute such other and further documents as may be reasonably necessary, hel pful or appropriate to effectuate the provisions of this Agreement. The Phase II Conveyance shall take place when the Conditions Precedent have been satisfied. Escrow Holder is instructed to release Authority’s escrow closing and Developer’s escrow closi ng statements to the respective parties.
2.2.3 Authority of Escrow Holder. Escrow Holder is authorized to, and shall:
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(a) Pay and charge Developer for the premium of the Developer Title Policy and Authority Title Policy, including all endorsement, and any amount necessary to place title in the condition necessary to satisfy Section 2.3 of this Agreement. (b) Pay and charge Developer for any escrow fees, charges, and costs payable under this Agreement.
(c) Record the Recordable Documents in the order set forth in Section 2.2.6 and deliver such documents as instructed. (d) Do such other actions as necessary to fulfill its obligations under this Agreement.
(e) Deliver to Authority the original Authority Note duly executed by Developer and those instruments referenced in Section 2.2.6 upon recordation thereof. (f) Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-S form, and be responsible for withholding taxes, if a ny such forms are provided for or required by law.
2.2.4 Closing. The Phase II Conveyance and delivery of related documents shall close, and concurrently the closing of financing for Developer’s Primary Construction Loan shall close, (together, “Closing”), with in ten (10) days of the parties’ satisfaction of all of the Conditions Precedent, but in no event later than the last day established therefor in the Schedule of Performance.
The Schedule of Performance is subject to modification from time to time at the mutual concurrence of City, Authority and Developer, each acting at its sole discretion. The “Closing” means the time and day that all of the Authority Grant Deed, City Covenants, Authority Regulatory Agreement, Authority Deed of Trust, Request for Notice , and Notice of Affordability Restrictions, have been recorded by the Riverside County Recorder among the Official Records. The “Closing Date” means the day on which the Closing occurs.
2.2.5 Termination of Escrow . If the Escrow is not in condition to close by the time established therefor in the Schedule of Performance, then either party which has fully performed under this Agreement may, in writing, demand the return of money or property and terminate the Escrow. If either party makes a written demand for re turn of documents or properties, this Escrow shall not terminate until five (5) days after Escrow Holder shall have delivered copies of such demand to all other parties at the respective addresses shown in this Agreement. If any objections are raised with in said five (5) day period, Escrow Holder is authorized to hold all papers and documents until instructed by a court of competent jurisdiction or by mutual written instructions of the parties. Termination of the Escrow shall be without prejudice as to wh atever legal rights either party may have against the other arising from this Agreement. If no demands are made, the Escrow Holder shall proceed with the Closing as soon as possible.
2.2.6 Closing Procedure for the Escrow. Escrow Holder shall close the Escrow for the Phase II Conveyance as follows:
(a) Record the following documents in this order: (i) Authority Grant Deed; (ii) City Covenants; (iii) Authority Regulatory Agreement; (iv) County Regulatory Agreement; A.8.d
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(v) the Approved Construction and/or Permanent Len der’s deed(s) of trust; (vi) Authority Deed of Trust; (vii) a deed of trust for the benefit of the County of Riverside if the County makes the County PLHA Loan for the Phase II Project; (vii) Notice of Affordability Restrictions; (viii) Request for Notice, (ix) Memorandum of Agreement, and (x) such other instruments, if any, as shall be approved by Executive Director as necessary or convenient to effectuate and implement the construction financing of the Phase II Development (and thereafter the permanent fi nancing therefor), including any mutually approved subordination agreements affecting the subordination of the Authority Deed of Trust (and County PLHA Loan deed of trust), so long as and provided that the City Covenants, Authority Regulatory Agreement and County Regulatory Agreement shall not be subordinated, with instructions for the Recorder of Riverside County, California to deliver to the City the City Covenants and deliver to the Authority the original Authority Note, along with conformed sets of the Authority Deed of Trust, Authority Regulatory Agreement, and Notice of Affordability Restrictions, and to deliver a certified copy of each to Developer, and deliver the Authority Grant Deed to Developer. Escrow Holder shall also provide to Authority a copy of any other instrument recorded in conjunction with the Phase II Conveyance. The Authority Deed of Trust shall be senior to any deed of trust recorded for the benefit of the County PLHA Loan. The order of recordation shall be subject to revision upon approval of the Executive Director;
(b) Instruct the Title Company to deliver the Developer Title Policy to Developer, with a copy to Authority;
(c) Instruct the Title Company to deliver to Authority the Authority Loan Policy;
(d) File any informational reports requir ed by Internal Revenue Code Section 6045(e), as amended, and any other applicable requirements; (e) Deliver the FIRPTA Certificate, if any, to Developer; (f) Deliver documents as set forth in Section 2.5.3 hereof; and (g) Forward to both Developer and Authority a sep arate accounting of all funds received and disbursed for each party and copies of all executed and recorded or filed documents deposited into Escrow, with such recording and filing date and information endorsed thereon.
2.3 Review of Title. Authority and Deve loper shall cooperate to cause First American Title Company to deliver to the parties, at least thirty (30) days prior to the scheduled Closing, an updated, standard preliminary title report with hyperlinks to complete, legible copies of the underlying doc uments listed as “Exceptions” in Schedule B thereof (“Preliminary Report”) with respect to the Phase II Site to be conveyed by the Authority Grant.. Developer shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that Developer hereby approves the following Exceptions:
(a) The Redevelopment Plan of the Former Agency.
(b) The lien of non -delinquent property taxes and assessments, if any, which, if any, shall be prorated at close of Escrow.
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(c) The provisions of the following instru ments to be recorded in connection with the Closing: (i) Authority Grant Deed, (ii) City Covenants; (iii) Authority Regulatory Agreement; (iv) County Regulatory Agreement, (v) Authority Deed of Trust, (vi) County PLHA Loan deed of trust, and (vii) Notice of Affordability Restrictions. (d) Any matters of record as of the acquisition of the Phase II Site by the Developer.
(e) Any incidental easements or other matters affecting title which do not materially impact Developer’s use of the Phase II Site as described in the Scope of Development.
Developer shall have five (5) business days from the date of its receipt of the Preliminary Report to give written notice to Authority and Escrow Holder of Developer’s approval or disapproval of any of such Exceptions. Developer’s failure to give written disapproval of the Preliminary Report within such time limit shall be deemed approval of the Preliminary Report. If Developer notifies Authority of its disapproval of any Exceptions in the Preliminary Report, Authority shall have ten (10) days from the receipt of written notice of disapproval by Developer to determine whether or not it will undertake the removal of any disapproved Exceptions. If Authority elects to remove such Exceptions, it shall diligently proceed to effect the removal of such Exceptions. If Authority cannot or does not elect to remove any of the disapproved Exceptions within that period, Developer shall have ten (10) business days after the expiration of such ten (10) business day period to either give Authority written notice that Developer elects to proceed with the acquisition of the Phase II Site subject to the disapproved Exceptions or to give Authority written notice that Developer elects to terminate this Agreement. The Exceptions to title approved by D eveloper as provided herein shall hereinafter be referred to as the “Condition of Title.” Developer shall have the right to approve or disapprove any additional and previously unreported Exceptions reported by the Title Company after Developer has approve d the Condition of Title for the Phase II Site (which are not created by Developer).
2.4 Disposition Title Insurance Policies.
2.4.1 Owner’s Policy of Title Insurance . Concurrently with recordation of the Authority Grant Deed, there shall be issued to Developer a standard ALTA owner’s policy of title insurance (“Developer Title Policy”), based upon the amount of the Phase II Conveyance Price, together with such endorsements as are reasonably requested by Developer, issued by the Title Company insuring that the tit le to the Phase II Site (as transferred by the Authority Grant Deed) is vested in Developer in the condition required by Section 2.3 of this Agreement. The Title Company shall provide Authority with a copy of the Developer Title Policy. Developer shall pa y the premium for the Developer Title Policy, as well as costs or additional premium associated with procurement of an owner’s extended coverage ALTA policy (if requested by Developer) or any endorsements requested by Developer.
2.4.2 Authority Lender Policy of Title Insurance . Concurrently with recordation of the Authority Grant Deed, there shall be issued to Authority a lender’s policy of title insurance as to Authority’s beneficial interest under the Authority Deed of Trust (“Authority Loan Policy”). The Authority Loan Policy will be to cover the Conveyance Price, which equates with the original principal amount of the Authority Loan. Such policy will include those endorsements as are requested by Authority and shall insure that the beneficial inte rests held under such Authority Deed of Trust are insured in the condition required by Section 2.3 of this Agreement. Developer shall pay A.8.d
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the premiums for the Authority Loan Policy and endorsements. It is contemplated that the Authority will, without lim itation, request the following endorsements: ALTA 3.2 -06 (zoning -land under development), ALTA 8.2 -06 (commercial environmental lien), ALTA 9.8 -06 (CC&Rs – land under development), ALTA 17 -06 (access and entry), ALTA 17.2 -06 (utility access), ALTA 26 -06 (subdivision), ALTA 28.3-06 (encroachments, boundaries and easements), ALTA 40 -05 (tax credit), ALTA 41.3 -06 (water – land under development); ALTA 39 -06 (policy authentication); SE -166 (maximum actual loss endorsement); and deletion of the paragraph of the conditions relating to arbitration. The Authority Deed of Trust shall be senior to any deed of trust recorded for the benefit of the County.
3. AUTHORITY LOAN; CONDITIONS TO DEVELOPER POSSESSION OF THE
PHASE II SITE
3.1 Authority Loan . Authority hereby commits and agrees, subject to the terms and provisions of this Agreement, to make the Authority Loan to Developer, and Developer hereby agrees to borrow the Authority Loan from Authority, in an amount not to exceed Three Hundred Eighty Thousand Dollars ($380,000 ) all subject to the terms and conditions set forth in this Agreement, and subject further to the terms and conditions set forth within the Phase II Project Documents, including the Authority Loan Note, Authority Loan Deed of Trust, City Covenants, and Authority Regulatory Agreement. The Authority Loan shall be evidenced by the Authority Loan Note and secured by the Authority Loan Deed of Trust and the Security Agreement, which shall be recorded against the Site in the Official Records in a third lien posi tion junior and subordinate to Primary Construction Loan, and County Loan, and later to the Primary Permanent Loan and County Loan.
3.1.1 Terms of the Authority Loan . The Authority Loan shall be deemed to be a loan for the benefit of, and payable by, Developer and shall be repaid as set forth in the Authority Loan Note. The terms and conditions of the Authority Loan are more particularly described in Attachment No. 13, Authority Loan Note. The Authority Note shall evidence the Authority Loan Amount, and the Authority Deed of Trust shall secure repayment thereof. The term of the Authority Loan Note shall commence on the date of recording of the Authority Grant Deed (“Authority Note Date”) and continue until the earlier to occur of (i) full repayment t hereof, or (ii) the fifty -eighth (58th) anniversary thereof, which date shall constitute the “Maturity Date”. The Authority Deed of Trust securing the Authority Loan Note shall be recorded against the Phase II Site and shall be subordinate only to the mon etary liens securing the Primary Construction Loan and the Primary Permanent Loan. The Authority Note shall bear simple interest at the rate of one percent (1%) per annum from the Authority Note Date. Payments under the Authority Loan Note shall be due a nd payable from the Authority Share of Residual Receipts generated by the Phase II Project in annual installments to be made by Developer beginning on the first April 15 following the Conversion, and on or before April 15 in each following Year until the A uthority Loan Note has been paid in full. In addition, Developer shall pay to Authority a portion of Refinancing Net Proceeds determined by applying a percentage equal to the Authority Share immediately upon any permitted and/or approved refinancing of th e Phase II Project (or any part thereof) and a portion of the Transfer Net Proceeds determined by applying a percentage equal to the Authority Share immediately upon any transfer or conveyance, in whole or in part, of the Phase II Project, all toward repay ment of the Authority Loan Note. The remaining balance of the Authority Loan Note, if any, shall be due in full on the Maturity Date. Payments towards the Authority Loan shall be applied first to accrued interest, and then to principal. Notwithstanding anything herein or in the Authority Loan Note to the contrary, no A.8.d
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Refinancing Net Proceeds will be payable hereunder or under the Authority Note as a result of the Conversion.
3.2 Conditions Precedent to Disposition of the Phase II Site . “Authority shall not effect the Phase II Conveyance, and Developer shall not take possession of the Phase II Site, and the City’s Building Official shall not issue building permits for the Phase II Development, unless and until all of the following conditions precedent (togeth er, “Conditions Precedent”) have been fully satisfied, or caused to be satisfied, by Developer, as determined in good faith by the Executive Director. The Conditions Precedent, if one or more requires action by Developer, shall also be a covenant of Developer.
3.2.1 Recording of Certain Documents.
(a) The Authority Grant Deed, City Covenants, Authority Regulatory Agreement, Authority Deed of Trust, Notice of Affordability Restrictions, Request for Notice, and County Regulatory Agreement, each have been recorded in the Official Records, or are held by Escrow for recording in the Official Records concurrent with the Closing. (b) Any documents reasonably determined as necessary to be entered into and duly executed in connection with the Final Financing Package shall have been delivered to Escrow, and if such document(s) are required to be recorded, have been recorded in the Official Records or are held by Escrow for recording in the Official Records
3.2.2 Title Policies. The Title Company has prepared policy proformas including requested endorsements and is ready to issue to Developer its Developer Title Policy and to Authority its Authority Title Policy at Closing.
3.2.3 Financing Package.
(a) Developer shall have provided written proof acceptable to Authority that Developer has sufficie nt internal funds and/or has obtained one or more loans or financing, subject to customary conditions, for construction through completion of the Phase II Development. (i) In this regard, the entirety of financing package is equal to or greater than the level of funding for the Phase II Project as provided for in the Base Pro Forma, and Authority has approved such evidence of financing, in accordance with all of Section 4.15 hereof. (ii) Authority shall have approved a Final Development Budget and a Final Financing Package.
(iii) The Primary Construction Loan for the Phase II Development shall be ready to close, and shall close, and a portion of proceeds from the sale of Tax Credits, as provided for in this Agreement and under the Final Financing Package, shall be immedia tely available for use in constructing the Phase II Development.
3.2.4 Construction Contract. Developer shall have provided to Authority and City for review and approval evidence of a stipulated sum or guaranteed maximum price contract between Developer and the general contractor for the construction of the Phase II Development, certified by Developer to be a true and correct copy thereof, and Executive Director shall have approved such contractor or contractors, and the construction contract or contracts, pursu ant to A.8.d
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Section 4.15 hereof. The Construction Contract shall reference this Agreement, shall meet and include all indemnity, insurance, and applicable requirements regarding Prevailing Wages, Section 3 and Federal Program Limitations.
3.2.5 Payment, Performance and Completion Bonds. Developer or its general contractor shall have provided the Construction Security by obtaining payment performance and completion bonds for the Phase II Development, in an amount and from surety company(ies) reasonably acceptable to the Executive Director. All bonds shall be issued by good and solvent surety(ies) qualified to do business in California and shall have a rating of “A” or better in the most recent edition of Best’s Key Rating Guide.
3.2.6 Permit Readiness. Developer has taken all necessary steps for, and City has issued a “permit -readiness letter” evidencing that the final Development Plans (all plans and specifications) for the Phase II Development have been approved by the City, that the grading permit(s) for the Phase II Site are ready to be issued, all but for payment of applicable fees. (a) In clarification of this Section 3.2.6, Developer shall be ready to obtain from the City the required grading permit(s) for the Phase II Site. Developer acknowledges and agrees that the Ci ty requires as a condition precedent to issuance of building permits that post - closing Developer shall first complete grading of the Phase II Site, then, the City shall have confirmed there exists a “certified pad” ready for construction of the Phase II De velopment; and, therefore, Developer shall have taken all steps necessary for the City to issue to Developer a “permit readiness letter” to evidence City approval of the final Development Plans and readiness to commence grading, complete the certified pad, and continue with construction of the Phase II Development.
3.2.7 TCAC Approval. All TCAC approvals, conditions, and performance tasks set forth in and required under the reservation of the 9% Tax Credits issued by TCAC have been performed, obtained or otherwise satisfied, with the valuation of the Tax Credits to be an amount not less set forth in the Base Pro Forma. All TCAC conditions and approvals shall remain in full force and effect.
3.2.8 Insurance. Authority shall have received evidence, satisfactory to Executive Director and City risk manager that all of the insurance coverages, policies, certificates and endorsements required by Section 4.5, below, are in full force and effect.
3.2.9 County PLHA Loan Approval . County shall have committed to issue, and to close co ncurrently with the Escrow, the County PLHA Loan of not less than Four Million Dollars ($4,000,000) with such amount to be repayable only from a ratable portion of fifty percent (50%) of Residual Receipts. Under the Base Pro Forma certain proceeds of the County PLHA Loan will be disbursed for and expended for part of construction costs ($3,600,000) and the balance ($400,000) disbursed upon completion of construction of the Phase II Development.
3.2.10 Entitlement and Other Governmental Approvals . Developer shall have provided to the Executive Director evidence that Developer (or its representative) has satisfied and met all applicable conditions of approval set forth in the Entitlement, and satisfied all requirements imposed by other governmental entities with jurisdiction over the Phase II Development.
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3.2.11 Readiness. Developer shall have provided to the Executive Director satisfactory evidence that, subject to the Phase II Conveyance occurring, Developer is ready, willing, able, and committed immediately after the C losing to commence construction of the Phase II Development, complete construction through the final certificate(s) of occupancy and final inspection of issued building permits, and thereupon operate the Phase II Development in conformity with this Agreement.
3.2.12 Compliance with Enactments . There shall exist no instance of violation of Governmental Requirements, including Developer’s compliance with applicable laws, regulations, including without limitation interpretations by City, as to land use and zoning matters. (a) Representations and Warranties . The representations and warranties of Developer contained in this Agreement shall be correct as of the Phase II Conveyance as though made on and as of that date, and Executive Director shall have received a certifica te to that effect signed by an officer of Developer.
(b) No Default. No Default by Developer shall have occurred under this Agreement or any other agreement between Authority and Developer and/or its officers or employees, no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute a Default by Developer under this Agreement, and Executive Director shall have received a certificate to that effect signed by an officer of Developer.
All Conditions Precedent set forth in Section 3.2, and City and Authority’s obligations hereunder, are for the City and Authority’s benefit only and Executive Director may waive, or extend time for performance of, all or any part of such rights by written notice to Developer. If Exe cutive Director shall, within the applicable periods set forth herein, disapprove of any of the items which are subject to Authority’s approval, or if any of the conditions set forth in this Agreement are not met within the times called for, Authority may thereafter terminate this Agreement without any further liability on the part of Authority by giving written notice of termination to Developer.
4. SCOPE OF DEVELOPMENT; INSURANCE AND INDEMNITY, FINANCING
4.1 Scope of Development . Developer shall construct and complete the Phase II Development in accordance with the Scope of Development, and the approved Development Plans.
In the event of any inconsistency between the Scope of Development and the approved Development Plans that have been approved by Authority and/or City, the approved Development Plans shall control.
4.2 Entitlement; Design Review.
4.2.1 Developer Submissions . Prior to the Date of Agreement, in connection with its application for land use approvals by City, Developer ap plied for and received the Entitlement, including environmental clearance required by City for the Phase II Development on the Phase II Site. Developer has submitted “Basic Concept Drawings” for the Phase II Development.
The Phase II Development include site improvements and thirty -two (32) rental Housing Units, as well as various amenities onsite and as reciprocally shared with the adjacent Phase I project pursuant to the Joint Use Agreement. Before commencement of construction of the Phase II Developme nt or other works of improvement upon the Phase II Site, Developer shall submit to City any plans and drawings (collectively, the “Design Development Drawings”) which may be required by City with A.8.d
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respect to any permits and related approvals required to be obtained to construct and complete the Phase II Development, which City shall comment on and return to Developer within thirty (30) days from the date of receipt thereof . Developer, on or prior to the date set forth in the Schedule of Performance, shall s ubmit to City such plans for the Phase II Development as required by City in order for Developer to obtain building permits for the Phase II Development. Within thirty (30) days after City’s disapproval or conditional approval of such plans, Developer sha ll revise the portions of such plans identified by City as requiring revisions and resubmit the revised plans to City.
4.2.2 City Review and Approval . City shall have all rights to review and approve or disapprove all Design Development Drawings and other requi red submittals in accordance with the City Code, and nothing set forth in this Agreement shall be construed to constitute City’s approval of any or all of the Design Development Drawings or to limit or affect City’s review and right to approve, approve subject to conditions, or disapprove Design Development Drawings, plans, drawings, applications, or submittals. The “Final Plans” or “Development Plans” shall be those certain plans as approved by City for which building permits are issued.
4.2.3 Revisions. Any a nd all change orders or revisions required by City and its inspectors under the City Code including without limitation all applicable Uniform Codes and under other applicable laws and regulations shall be included by Developer in its Design Development Drawings and other required submittals and shall be completed during the construction of the Phase II Development.
4.2.4 Defects in Plans . Neither Authority nor City shall be responsible to Developer or to any third parties in any way for (a) any defects in the Ph ase II Development Plans, nor (b) any structural or other defects in any work done according to the approved Development Plans, nor (c) any delays caused by the review and approval processes, nor (d) any delays reasonably caused by the review and approval processes established by this Section 4.2.4. Developer shall hold harmless, indemnify and defend the Indemnitees from and against any claims or suits for damages to property or injuries to persons (including death) arising out of or in any way relating to defects, latent or patent, in the Phase II Development Plans, or the actual construction work and improvements comprising the Phase II Project, including, without limitation, the violation of any Governmental Requirements, or arising out of or in any way relating to any defects in any work done and/or improvements completed according to the approved Development Plans.
4.2.5 Land Use Approvals . Before commencement of construction of the Phase II Development or other works of improvement upon the Phase II Site, D eveloper shall, at its own expense, secure or cause to be secured any and all land use and other entitlements, subdivision, if any, permits, and approvals which may be required for the Phase II Development by City or any other governmental agency(ies) affe cted by or having jurisdiction over such construction or work including without limitation, as to entry onto the Phase II Site, if any, prior to the Phase II Conveyance, a license agreement between Developer and City allowing entry onto the Phase II Site which indemnifies City and Authority from any claims made in connection with the activities of Developer. Developer shall, without limitation, apply for and secure, and pay all costs, charges and fees associated therewith, all permits and fees required by City, County, and other governmental agencies with jurisdiction over the Phase II Development.
4.3 Time of Performance; Progress Reports . Developer shall submit all Design Development Drawings, commence and complete all construction of the Phase II Developmen t, and satisfy all other obligations and conditions of this Agreement within the times established therefor in A.8.d
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this Agreement. Construction of the Phase II Development shall be commenced on or before the time established therefor in the Schedule of Perfor mance. Once construction is commenced, it shall continuously and diligently be pursued to completion and shall not be abandoned for more than thirty (30) days except when due to causes beyond the control and without the fault of Developer to the extent pr ovided in Section 7.10. During the course of construction and prior to issuance of the Certificate of Completion/Release of Construction Covenants, Developer shall provide timely reports of the progress of construction when requested by the Executive Dire ctor. Developer shall complete construction of all of the Phase II Development on or before the time established therefor in the Schedule of Performance.
4.4 Cost of Development. The cost of planning, designing, developing, and constructing through completing the Phase II Development shall be borne solely by Developer. All fees imposed by any governmental entity in connection with the acquisition of the Phase II Site or the development of the Phase II Development shall be borne by Developer and shall be paid when due by Developer.
Developer shall be responsible for and bear the costs, if any, associated with the application of Relocation Laws to the Phase II Development to the extent described above within the definition of “Relocation.” Developer shall pay to City, or cause to be disbursed by the lender making the Primary Construction Loan to City, all of the City Impact Fees not later than concurrently with the closing of the Primary Construction Loan.
4.4.1 The Moreno Valley Municipal Code, Density Bonus Progra m for Affordable Housing , Section 9.03.050, et seq . provides for waivers, incentives and concessions, which were approved for this Phase II Development under the Entitlement. The waivers include a City fee waiver, and as listed in the Base Pro Forma, of up to $421,431.
4.5 Insurance Requirements . Commencing as of the Phase II Conveyance and continuing throughout the Affordability Period, and, in addition at all times during which Developer is conducting work on the Phase II Site or any portion thereof, Develo per shall maintain at Developer’s sole expense, with insurers reasonably approved by Authority, the following policies of insurance in form and substance reasonably satisfactory to Authority:
(a) workers’ compensation insurance (if Developer has any employees) and (in addition to such insurance as is described in subsections (b), (c), (d) and (e) of this Section 4.5), additional other insurance to the extent and with limits as required by law in connection with the Phase II Development or other work performed o n the Phase II Site (to be in effect only while work is being performed on the Phase II Site);
(b) prior to the commencement of construction of the Phase II Development and at all times prior to completion of the Phase II Development, builder’s risk -all risk insurance covering 100% of the replacement cost of all Improvements (including offsite and the materials) during the course of construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally covered by “all risk” coverage policies in the area where the Phase II Site is located (including loss by flood if the Phase II Site is in an area designated as subject to the danger of flood);
(c) following completion of the Phase II Development, fire and hazar d “all risk” insurance covering 100% of the replacement cost of the Phase II Development in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally A.8.d
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covered by “all risk” coverage policies in the area where the Phase II Site is located (including loss by flood if the Phase II Site is in an area designated as subject to the danger of flood); (d) public liability insurance in amounts reasonably required by the Executive Director from time to time, and in no e vent less than $2,000,000.00 for “single occurrence;”
(e) property damage insurance in amounts reasonably required by the Executive Director from time to time, and in no event less than $2,000,000.00; and (f) all other insurance reasonably required by the Executiv e Director from time to time.
All such insurance shall provide that it may not be canceled or materially modified without 30 days prior written notice to Authority. The policies required under subparagraphs (b) and (c) shall include a “lender’s loss payab le endorsement” (Form 438BFU) in form and substance satisfactory to Authority, showing each of City and Authority as an additional insured and loss payee.
Each of City and Authority shall be an additional insured in the policies required under subparagraphs (d) and (e). No such insurance shall include deductible amounts to which Authority has not previously consented in writing. Certificates of insurance for the above policies (and/or original policies, if required by Authority) shall be delivered to Authority from time to time within 10 days after demand therefor. All policies insuring against damage to the Phase II Development shall contain an agreed value clause sufficient to eliminate any risk of co -insurance. No less than thirty (30) days prior to t he expiration of each policy, Developer shall deliver to Authority evidence of renewal or replacement of such policy reasonably satisfactory to the Executive Director.
Coverage provided hereunder by Developer shall be primary insurance and not be contributing with any insurance maintained by Authority or City, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of City and Authority. None of the above -described policies shall require Developer to meet a deductible or self-insured retention amount of more than Ten Thousand Dollars ($10,000.00) unless approved in writing by the Executive Director. All policies shall be written by good and solvent insurers qualified to do business in California and shall have a policyholder’s rating of A- or better in the most recent edition of “Best’s Key Rating Guide -- Property and Casualty.” The required certificate shall be furnished by Developer at the time set forth herein.
4.5.2 Waiver of Subrogation . Developer hereby waives all rights to recover against Authority or City (or any officer, employee, agent or representative of Authority or City) for any loss incurred by Developer from any cause insured against or required by any Proje ct Document to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation.
4.6 Obligation to Repair and Restore Damage Due to Casualty . Subject to the rights of the Primary Construction Lender, if during the period of construction the Phase II Developm ent shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Developer, Developer shall promptly proceed to obtain insurance proceeds and take all steps necessary to begi n reconstruction and, immediately upon A.8.d
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receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Phase II Development to substantially the same condition as the Phase II Development are required to be constructed pursuant to this Agreement, whether or not the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Developer shall complete the same as soon as possible thereafter so that the Phase II Development can be oc cupied as an affordable housing project in accordance with this Agreement. In no event shall the repair, replacement, or restoration period exceed fourteen (14) months from the date Developer obtains insurance proceeds unless the Executive Director, in hi s or her sole and absolute discretion, approves a longer period of time. Authority shall cooperate with Developer, at no expense to Authority, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then-existing laws of any other governmental agencies with jurisdiction over the Phase II Site do not permit the repair, replacement, or restoration, Developer may elect not to repair, replace, or restore the onsite improvements by giving notice to Authority (in which event Developer will be entitled to all insurance proceeds after paying to Authority from such proceeds an amount equal to any assistance expended by Authority but Developer shall be required to remove all debris from the Phase II Site) or Devel oper may reconstruct such other improvements on the Phase II Site as are consistent with applicable land use regulations and approved by City, Authority, and the other governmental agency or agencies with jurisdiction, and Authority may pursue remedies of its choosing under this Agreement, including without limitation termination.
4.7 Indemnity. Developer shall defend (by counsel satisfactory to Authority), indemnify and save and hold harmless the Indemnitees from and against all claims, damages, demands, actions, losses, liabilities, costs and expenses (including, without limitation, reasonable attorneys’ fees and court costs) arising from or relating in any manner whatsoever to: (i) Developer’s obligations under this Agreement (including without limitation Section 4.9 hereof); (ii) compliance with applicable laws; (iii) a claim, demand or cause of action that any person has or asserts against Developer; (iv) any act or omission of Developer, any contractor, subcontractor or material supplier, eng ineer, architect or other person with respect to the Phase II Site; (v) claims, if any, for Relocation benefits or assistance arising from or related to the acquisition, disposition, operation, and/or use of the Phase II Site and/or Phase II Development or related in any manner to this Agreement; (vi) the establishment, modification or challenge to any aspect of the Entitlement, permits, or approvals, whether discretionary or ministerial, as to the Phase II Site and Phase II Development; (vii) the disposition of the Phase II Site by Authority to Developer; and/or (viii) Developer’s ownership, occupancy, and/or use of the Phase II Site. Notwithstanding the foregoing, Developer shall not be obligated to indemnify the Indemnitees with respect to the consequenc es of any act of gross negligence or willful misconduct of the Indemnitees. Developer’s obligations under this Section 4.7 shall survive the issuance of the Certificate of Completion/Release of Construction Covenants and termination of this Agreement; the requirements under this Section 4.7 are in addition to and do not limit the obligations of Developer under the Authority Loan Deed of Trust or the Authority Grant Deed.
Developer shall reimburse Authority immediately upon written demand for all costs reasonably incurred by Authority (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of Authority) in connection with the enforcement of the Phase II Project Documents and all related matters including the following: (a) Authority’s commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the parties to any Project Document, and (b) all claims, demands, causes of action, liabilities, losses, commissions and other costs against which Authority is indemnified under the Phase II Project Documents. Such A.8.d
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reimbursement obligations shall bear interest based upon the amounts and times of disburse ment by Authority, provided that Authority gives written demand to Developer at the Applicable Interest Rate. Such reimbursement obligations shall survive the issuance of the Certificate of Completion/Release of Construction Covenants and termination of t his Agreement and are in addition to and do not limit the obligations of Developer under the Authority Grant Deed.
Developer shall indemnify each of City and Authority from any real estate commissions or brokerage fees which may arise from this Agreement o r the Phase II Site, including without limitation the acquisition of the Phase II Site by Developer, or the leasing of dwelling units on the Phase II Site. Developer represents that it has engaged no broker, agent, or finder in connection with this transaction, and Developer agrees to hold each of City and Authority harmless from any claim by any broker, agent or finder in connection with this Agreement, the activities by Developer, or the Phase II Site.
In addition, and without limitation to the foregoing , Developer agrees to indemnify, defend and hold the Indemnitees harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys’ fees), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Phase II Site caused or contributed to by Developer or which occurs after the Closing, or (ii) the violation, or alleged violation, by Developer or anyone acting by or through Developer, of any statute, ordinance, order, rule, regulation, permit, judg ment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Phase II Site which is caused or contributed to by Developer or which occurs after the C losing. This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment.
At the request of Developer, Authority shall cooperate with and assist Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that Authority shall not be obligated to incur any expense in connection with such cooperation or assistance. Notwithstanding anything contained herein to the contrary, Developer shall not indemnify Authority for any claims arising from Authority’s gross and active negligence or Authority’s willful misconduct.
4.8 Rights of Access . Prior to the issuance of the Certificate of Completion/Release of Construction Covenants, for purposes of assuring compliance with this Agreement, representatives of Authority and Cit y shall have the right of access to the Phase II Site, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in c onstructing the Phase II Development so long as Authority representatives comply with all safety rules. Authority representatives shall, except in emergency situations, notify Developer seventy -two (72) hours prior to exercising its rights pursuant to thi s Section 4.8. In addition, representatives of City shall have access to the Phase II Site in connection with the enforcement of laws, including without limitation the City Code to the extent used in connection with the exercise of police powers of City w ithout regard to any limitations otherwise set forth in this Section 4.8.
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4.9 Compliance with Laws . Developer shall carry out the design, construction and operation of the Phase II Development in conformity with all applicable laws, including all applicable s tate labor standards and federal prevailing wage laws (including without limitation provisions for payment of prevailing wages in connection with all construction of the Phase II Development to the extent applicable), City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Code, Fair Housing Laws, 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., the Unruh Civil Rights Act, Civil Code Section 51, et seq ., the Federal Program Limitations, and the California Building Standards Code, Health and Safety Code Section 18900, et seq . Developer, including but not limited to its contractors and subcontractors, shall comply with Labor Code Section 1720, et seq ., and its implementing regulations, regarding the payment of prevailing wages (“State Prevailing Wage Law”) and, if applicable, federal prevailing wage law (Davis Bacon Act, 40 U.S.C. Section 3141, et seq., and the regulations promulgated thereunder set forth at 29 CFR Part 1, (“Federal Prevailing Wage Law”) that together with State Prevailing Wage Law, may be referred to as the “Prevailing Wage Laws”) with regard to the construction of the Phase II Development, but only if and to the extent such sections are applicable to the development of the Phase II Development. Developer shall be solely responsible for determining and effectuating compliance with any applicable Prevailing Wage Laws, and Authority or City make no final representation as to the applicability or non -applicability of the Prevailing Wage Laws to the Phase II Development, or any part thereof. Developer hereby releases from liability, and agrees to indemnify, defend, assume all responsibility for and hold each of Authority and City, and their respective officers, employees, agents and representatives, harmless from any and all claims, demands, actions, suits, proceedings, fines, penalties, damages, expenses resulting from, arisin g out of, or based upon Developer’s acts or omissions pertaining to the compliance with the Prevailing Wage Laws for the Phase II Development.
4.9.1 Prevailing Wage Laws. Developer shall carry out the development of the Phase II Site in conformity with all appl icable Prevailing Wage Laws. The parties acknowledge that federal and/or state funding sources and financing scenarios may trigger compliance with applicable Prevailing Wage Laws, implementing regulations thereto, or other federal, state, county, or local laws and regulations.
Developer shall be solely responsible, expressly or impliedly, for determining and effectuating compliance with all applicable federal, state and local public works requirements, prevailing wage laws, labor laws and standards, and Authority (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 Phase II Development, either onsite or offsite. Developer expressly, k nowingly and voluntarily acknowledges and agrees that City and Authority have not previously represented to Developer or to any representative, agent or Affiliate of Developer, or its General Contractor or any subcontractor(s) for the construction or devel opment of the Phase II Development, in writing or otherwise, in a call for bids or otherwise, that the work and construction undertaken pursuant to this Agreement is (or is not) a “public work,” as defined in Section 1720 of the Labor Code or under Davis-Bacon.
Developer knowingly and voluntarily agrees that Developer shall have the obligation to provide any and all disclosures or identifications with respect to the Phase II Development as required by Labor Code Section 1781 and/or by Davis Bacon, as the sa me may be amended from time to time, or any other similar law or regulation. Developer shall indemnify, protect, pay for, defend (with legal counsel acceptable to Authority and City) and hold harmless the Indemnitees, A.8.d
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from and against any and all loss, li ability, damage, claim, cost, expense and/or “increased costs” (including reasonable attorneys’ fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and/or op eration of the Phase II 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 with any applicable local, state and/or fed eral law or regulation, including, without limitation, any applicable federal and/or state labor laws or regulations (including, without limitation, if applicable, the requirement to pay state and/or federal prevailing wages); (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 Secti on 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 Phase II Development, including, without limitation, any and all public works (as defined by applicable law or regulation), Developer shall bear all risks of payment or non -payment of prevailing wages under applicable federal, state and local law or regula tion and/or the implementation of Labor Code Section 1781 and/or by Davis Bacon, as the same may be amended from time to time, and/or any other similar law or regulation. “Increased costs,” as used in this Section 4.9.1, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time.
The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the construction and development of the Phase II Development by Developer.
Without limitation as to Section 4.7 of this Agreement, Developer shall indemnify, protect, defend and hold harmless Authority and its officers, employees, contractors and agents, with counsel reasonably acceptable to Authority, from and against any a nd 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, and/or operation of the Phase II Development, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Developer of any applicable local, state and/or federal law, inc luding, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages and/or federal prevailing wages); (2) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Developer to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any ot her similar law. It is agreed by the parties that, in connection with the development of the Phase II Development, including, without limitation, any and all public works (as defined by applicable law), Developer shall bear all risks of payment or non -payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. “Increased costs,” as used in this Section 4.9, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time.
The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the construction and development of the Phase II Development by Developer.
4.9.2 Section 3 Compliance. Developer agrees to comply with and to cause the General Contractor, each Subcontractor, and any other contractors and/or subcontractors or agents of Developer to comply with the requirements of Section 3 of the Housing and U rban Development Act of 1968, as amended, 12 U.S.C. § 1701u, and the implementing regulations, in connection with the construction of the Phase II Development. Developer shall submit to Authority each Construction A.8.d
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Contract with appropriate provisions prov iding for the construction of the Phase II Development in conformance with the terms of this Agreement, including the Section 3 Clause. The General Contractor, each Subcontractor, and any other contractors or subcontractors or agents of Developer shall have provided to City the certification in appendix B of 24 CFR Part 24 that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation from the Phase II Project, a nd Authority shall be responsible for determining whether each contractor has been debarred.
4.10 Nondiscrimination in Employment. Developer certifies and agrees that all persons employed or applying for employment by it, its affiliates, subsidiaries, or holdi ng companies are and will be treated equally by it without regard to, or because of race, color, religion, ancestry, national origin, sex, sexual orientation, age (excepting as otherwise provided herein and under the Authority Grant Deed as to restriction of the Housing Units to Eligible Households), pregnancy, childbirth or related medical condition, medical condition (cancer related) or physical or mental disability.
4.11 Taxes and Assessments . Subject to Developer’s right to contest taxes and assessments as provided in Section 7.2(c) of the Authority Grant Deed, Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Phase II Site. Developer shall remove or have removed any levy or attachment made on any of the Phase II Site or any part thereof which is owned or leased by Developer, or assure the satisfaction thereof within a reasonable time, but in no event to exceed sixty (60) days. Developer shall additionally defend, indemnify, and hold harmless Authority and City from and against any taxes, assessments, mechanic’s liens, claims of materialmen and suppliers, or other claims by private parties in connection with (a) activities undertaken by Developer or (b) the Phase II Site.
4.12 Liens and Stop Notices. Developer shall not allow to be placed on the Phase II Site or any part thereof any lien or stop notice. If a claim of a lien or stop notice is given or recorded affecting the Phase II Development, Developer shall within thirty (30) days of such recording or service or within five (5) days of Authority’s demand whichever last occurs:
(a) pay and discharge the same; or
(b) effect the release thereof by recording and delivering to Authority a surety bond in sufficient form and amount, or otherwise; or (c) provide City and Authority wit h indemnification from and by the Title Company against such lien or other assurance which City and Authority deem, in their sole discretion, to be satisfactory for the payment of such lien or bonded stop notice and for the full and continuous protection of Authority from the effect of such lien or bonded stop notice.
4.13 Certificate of Completion/Release of Construction Covenants. Promptly after completion of the Phase II Development in conformity with this Agreement, if requested to do so in writing by Devel oper, Authority shall furnish Developer with a “Certificate of Completion/Release of Construction Covenants” substantially in the form of Attachment No. 9. Authority shall not unreasonably withhold such Certificate of Completion/Release of Construction Cov enants. The Certificate of Completion/Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the Phase II Development and the Certificate of Completion/Release of Construction Covenants shall so state. If Auth ority refuses or fails to furnish a Certificate of Completion/Release of Construction Covenants after written request from Developer, Authority A.8.d
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shall, within thirty (30) days of receipt of written request therefor, provide Developer with a written statement of the reasons Authority refused or failed to furnish the Certificate of Completion/Release of Construction Covenants. The statement shall also contain Authority’s opinion of the actions Developer must take to obtain the Certificate of Completion/Releas e of Construction Covenants.
The Certificate of Completion/Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code.
4.14 Further Assurances . Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to Authority and City all documents, and take all actions, reasonably required by Authority and/or City from time -to-time to confirm the rights created or now or hereafter intended to be created under the Phase II Project Documents or otherwise to carry out the purposes of the Phase II Project Documents.
4.15 Financing of the Phase II Development . Financing shall be provided consistent with the Final Financing Package.
4.15.1 Approval of Financing. As required herein and as a Condition Precedent, Developer shall submit to Authority evidence reasonably satisfactory to the Executive Director that Developer has obtained sufficient equity capital or has arranged for and obtained a binding commitment for construction financ ing necessary to undertake the development of the Phase II Site and the construction of the Phase II Development in accordance with this Agreement (“Proof of Financing Commitments”). This requirement shall be implemented as follows: on or before the time set forth in the Schedule of Performance for the recording of documents, but not later than forty -five (45) days prior to Closing, and prior to taking possession of the Phase II Site, Developer shall submit to the Executive Director the Primary Lender’s pr oposed financing package (documents in Word format), including Word versions of the proposed drafts and form of any Intercreditor and Subordination Agreement (“Proposed Financing Package”) that identifies all funding, including sources, amounts, timing and mechanics for disbursement, sufficient to finance the development of the Phase II Development in conformity with this Agreement and is consistent with the Base Pro Forma. It is contemplated that the Authority Loan and the City fees waiver described herei n and shown on the Base Pro Forma are the sole financial assistance provided by the Authority and City for the Phase II Project.
(a) Upon receipt of such submittal from Developer of the Proposed Financing Package, the Executive Director and counsel (and nomi nees of their choosing for this purpose) will review the Proposed Financing Package and will confer with Developer regarding the Proposed Financing Package. The Executive Director may make suggestions and propose modifications or substitutions to the Proposed Financing Package. The parties contemplate that more than one submittal may be necessary to achieve a submitted financing package that is approved by the Executive Director, and that a consultative process shall occur in connection with each such submittal. At such point as the Executive Director may determine, in his discretion, to approve a Proposed Financing Package, upon approval by the Executive Director, such financing package shall be referred to as the “Final Financing Package.” The Attachme nts hereto may be subject to change by the terms of the Final Financing Package as determined by the Authority, City and counsel. (b) Without limitation as to other and additional payments as may be required under the terms of the Authority Deed of Trust and/o r the Authority Note, each of the Proposed Financing Package and Final Financing Package shall provide for the payment by Developer to Authority of Residual Receipts at not less than the Applicable Percentage under the A.8.d
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Authority Deed of Trust and, to the e xtent provided therein, the Authority Note, up to a certain maximum amount as provided under the Authority Deed of Trust and for a Developer Fee not in excess of the limitation established with respect thereto under the definition of Developer Fee in this Agreement.
4.15.2 Required Financing Submittals; Submittal of Construction Contract .
Such evidence of financing for the Phase II Development and readiness to commence construction of the Phase II Development shall include all of the following:
(a) Final Development Budget. The final development budget for the Phase II Development, including the Proposed Financing Package, showing the projected costs of construction of the Phase II Development, including all onsite and offsite improvements to be constructed in connection therewith.
(b) Financing Commitments and Primary Loan Documents . A copy of the lender’s firm commitment obtained by Developer for the Primary Construction Loan for the Phase II Development and, when available, copies of all loan documents evidencing the Primary Construction Loan therefor, all in Word format. The Primary Construction Loan commitments for financing shall be in such form and content acceptable to Authority and its financial advisor(s) and its legal advisor(s) and as such reasonably evidence s a legally binding, firm and enforceable commitment, subject only to the Lender’s customary and normal conditions and terms and subject to the requirements of this Section 4.15. Developer shall provide written certification to Authority that the loan doc uments submitted are correct copies of the actual loan documents to be executed by Developer concurrently with the Closing. If the Lender requires an Intercreditor and Subordination Agreement between or among Primary Lender, Authority, City, and/or Develo per, Authority, City and counsel, which instrument(s) are subject to their reasonable review and approval and subject to one or more of the conditions set forth in Section 4.15.6 necessary for the Primary Construction Loan to be a title-insured first monetary lien on the Phase II Development. (c) Developer Financial Statement . A current certified financial statement of Developer (and all partners and members thereof, except the Investor Limited Partner) and/or other documentation satisfactory to Authority as evidence of other sources of capital sufficient to demonstrate that Developer has adequate funds to cover the difference, if any, between construction and completion costs, and the financing authorized by the Tax Credits, Primary Construction Loan, County P LHA Loan proceeds, and any additional subsidies, sources of funding, or financing obtained by Developer for the development through completion of the Phase II Development.
(d) Construction Contract. Copies of the construction contract(s).
Authority and City, which may act through the Executi ve Director in consultation with counsel, shall have the right to approve or disapprove such evidence of financing within fifteen (15) business days of submission by Developer to Authority of all complete items required by this Section 4.15 or as otherwise reasonably imposed by Developer’s financing and such approval or disapproval shall be provided not less than fifteen (15) business days prior to the date scheduled for the Closing (so long as Authority has had no fewer tha n thirty (30) days for review of a complete submittal). Failure by Authority to approve evidence of financing shall constitute disapproval. In this regard, Developer agrees it shall use best efforts to cause its Primary Lender for the Primary Construction Loan to timely provide complete drafts of documents in Word format for review by A.8.d
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Authority and its legal counsel to perform within such time frames. Approval shall not be unreasonably withheld or conditioned. If Authority or City disapproves any such e vidence of financing, Authority or City, as applicable, shall do so by written notice to Developer stating the reasons for such disapproval and Developer shall promptly obtain and submit to Authority and City new evidence of financing within reset but equa l time periods. If Developer’s submission of new evidence of financing is timely and complete and provides Authority with adequate time to review such evidence within the times established in this Section 4.15, Authority and City shall approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 4.15 for the approval or disapproval of the evidence of financing as submitted to Authority and City initially. The Closing for the Phase II Conveyance shall be extended as necessary to accommodate the time necessary to obtain the Authority, City, and their counsel’s approval hereunder.
The evidence of financing shall be deemed to be an ongoing representation by Developer that the sum total of all sou rces of financing are at least equal to the amount of the approved Phase II Development costs as set forth in the Final Development Budget for the Phase II Development and that such Final Development Budget conforms to the Base Pro Forma (as if reasonably approved for adjustment by the Authority and City) and conforms to the preliminary reservation of 9% Tax Credits, and any and all updates thereto submitted by Developer to and approved by TCAC. Once the complete evidence of financing is approved by Author ity and City, Developer shall promptly notify Authority in writing of any change in, additional conditions to, or additional sources of financing, including without limitation, the award of other or additional state or federal Tax Credits, and any updates or additional information material or relevant to such financing and/or the Tax Credits. The representations made by Developer with respect to the budgets and costs for the Phase II Development and the sources of funding and method of financing for the Ph ase II Development, inclusive of all submittals and information related to the Tax Credits, were and remain the basis used by Authority to negotiate the financial terms of this Agreement. (e) Tax Credit Equity . The following requirements must be satisfied in order for the Investor Limited Partner’s equity investment and financing for Tax Credit funding to implement the Phase II Development, which is subject to review and approval by the Authority and City pursuant to this Section 4.15:
(i) The parties acknowledge that Developer and/or Kingdom may be required by third party lenders to provide an operating deficit guaranty, tax credit recapture guaranty, and/or other guaranties that may be required with respect to the Investor Limited Partners’ investment in the Pha se II Project. So long as such the terms, conditions and requirement for such guaranty(ies) is/are reasonably consistent with industry standards at such time for comparable affordable housing transactions; and if so reasonably necessary for such lender fi nancing, the execution of such guaranty(ies) shall be an additional Condition Precedent for the purposes of each of Section 3.2.
(ii) Developer shall submit, if not already submitted to Authority and City as described above in this Section 4.15, the following d ocuments as evidence of financing prior to the time set forth in the Schedule of Performance for the recording of documents, but not later than the Closing: (A) copy(ies) of legally binding, firm and enforceable loan commitment(s) or approval(s) obtained by Developer from unrelated financial institutions for the mortgage loan or loans for financing to fund the construction of the Phase II Development, subject to such lenders’ reasonable, customary and normal conditions and terms, (B) a Limited Partnership Agreement or A.8.d
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funding agreement from the Investor Limited Partner in the Phase II Development that demonstrate that Developer has sufficient funds for such construction, and that such funds have been committed to such construction, and a current financial s tatement of Developer, (C) a copy of a Preliminary Reservation of Tax Credits from the California Tax Credit Allocation Committee for Tax Credits for the construction of the Phase II Development, (D) a binding agreement for the purchase of the Tax Credits, and/or (e) other documentation satisfactory to Authority as evidence of other sources of capital, all of which together are sufficient to demonstrate that Developer has adequate funds to construct and complete the Phase II Development.
(iii) The equity investme nt of the Investor Limited Partner shall not be less than the approximate prevailing price for 9% Tax Credits at such time, taking into consideration all relevant factors such as timing of required payments and amount of the Tax Credits.
4.15.3 No Encumbrances Except Approved Mortgages and Deeds of Trust for Development and Operation of the Phase II Project . In addition to the deed of trust and related instruments evidencing and securing the approved Primary Construction Loan, the Authority Loan Deed of Trust, and the deed of trust securing the County PLHA Loan, other or additional mortgages and deeds of trust recorded against the Phase II Site are permitted before the completion of the Phase II Development only with the Authority and City’s prior written approval, but only for the purpose of securing loans of funds to be used for additional financing to cause completion of construction of the Phase II Development. After and upon issuance of the Certificate of Completion/Release of Construction Covenants, the same procedure shall be undertaken by Developer to submit a proposed financing package for the Primary Permanent Loan to be issued by an approved Primary Lender. In no event shall the amount or amounts of indebtedness secured by mortgages or deeds of trust on the Phase II Site exceed the projected Developer’s cost, as evidenced by the Base Pro Forma, and an approved and updated project pro forma. Developer shall notify Authority and City prior to entering into or causing recordation of any m ortgage, deed of trust, if Developer proposes to enter into the same before completion of the construction of the Phase II Development.
4.15.4 Holder Not Obligated to Construct Improvements . The holder of any mortgage or deed of trust on the Phase II Site author ized by this Agreement shall not be obligated by the provisions of this Agreement to construct, complete, or operate the Phase II Development or any portion thereof, or to guarantee such construction, completion or operation; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Phase II Site to any uses or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement.
4.15.5 Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure. With respect to any mortgage or deed of trust granted by Developer as provided herein, whenever Authority or City ma y deliver any notice or demand to Developer with respect to any breach or default by Developer under this Agreement, Authority and/or City shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand; provided that the failure to notify any holder of record shall not vitiate or affect the effectiveness of notice to Developer. Each such holder shall and the Investor Limited Partner (insofar as the rights granted by Auth ority are concerned) have the right, at its option, within sixty (60) days after the receipt of the notice, or such longer time as expressly provided for a cure under this Agreement, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost A.8.d
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thereof to the mortgage debt and the lien of its mortgage or deed of trust, as may be applicable.
Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Phase II Development, or any portion thereof (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed De veloper’s obligations to Authority and City by written agreement reasonably satisfactory to Authority and City. The holder, in that event, must agree to complete, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates, but on a schedule which takes into account the time reasonably required for the holder to obtain title to and possession of the Phase II Site, analyze and negotiate amendments to plans, specifications, construction contracts and operating contracts or to negotiate new construction contracts and operating contracts. Any such holder properly completing such improvement shall be entitled, upon compliance with the requirements of Section 4.13 of this Agreement, to a Certificate of Completion/Release of Construction Covenants. It is understood that a holder or Investor Limited Partner shall be deemed to have satisfied the sixty (60) day time limit set forth above for commencing to cure or remedy a Developer default that requires title and/or p ossession of the Phase II Site (or portion thereof) if and to the extent any such holder or Investor Limited Partner has within such sixty (60) day period commenced proceedings to obtain title and/or possession and thereafter the holder or Investor Limited Partner diligently pursues such proceedings to completion and cures or remedies the default. The Authority and City will accept, for purposes of this Agreement, a cure made by the holder or Investor Limited Partner as if performed by Developer.
4.15.6 Failure of Holder to Complete Improvements . In any case where, sixty (60) days after the holder of any mortgage or deed of trust creating a lien or encumbrance upon the Phase II Site or any part thereof receives a notice from Authority of a default by Developer in completion of construction of any of the Phase II Development under this Agreement, and such holder is not vested with ownership of the Phase II Site and has not exercised the option to construct as set forth in Section 4.15, or if it has exercised the op tion but has defaulted hereunder and failed to timely cure such default, in addition to such other rights and remedies as Authority shall have, Authority may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. If the ownership of the Phase II Site or any part thereof has vested in the holder, Authority, if it so desires, shall be entitled to a conveyance from the holder to Authority upon payment to the holder of an amount equal to the sum of the following:
(a) The unpaid mortgage or deed of trust debt at the time title became vested in the holder (less all appropriate credits, including those resul ting from collection and application of rentals and other income received during foreclosure proceedings); (b) All expenses with respect to foreclosure including reasonable attorneys’ fees;
(c) The net expense, if any, incurred by the holder as a direct result of the subsequent management of the Phase II Site or part thereof; (d) The costs of any improvements made by such holder;
(e) An amount equivalent to the interest that would have accrued at the rate(s) specified in the holder’s loan documents on the aggregate of such amounts had all such A.8.d
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amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by Authority; and
(f) Any customary prepayment charges imposed by the lender pursuant to its loan documents and agreed to by Developer.
The foregoing rights shall supplement and not limit Authority’s rights as landlord under the Authority Deed of Trust or by operation of law.
4.15.7 Right of Authority and/or City to Cure Mortgage or Deed of Trust Default. In the event of a mo rtgage or deed of trust default or breach by Developer whether prior to or after the completion of the construction of any of the Phase II Development or any part thereof (continuing until the expiration of the term of the City Covenants and Authority Regu latory Agreement), Developer shall immediately deliver to Authority and City a copy of any mortgage holder’s notice of default. If the holder of any mortgage or deed of trust has not exercised its option to construct, Authority and City, each independentl y and/or jointly, shall have the right but no obligation to cure the default. In such event, each and both Authority and City shall be entitled to reimbursement from Developer of all proper costs and expenses incurred by Authority and/or City in curing such default.
(a) Developer agrees to provide documentation evidencing the relinquishment of any and all rights to the Phase II Development and under the Authority Deed of Trust in such event; provided that the failure to provide such documentation shall not be construed to mean that Developer retains any rights under the Agreement or the Authority Deed of Trust.
4.15.8 Priority Among Covenants . The priority among and order of recording shall be: City Covenants, Authority Regulatory Agreement, County Regulatory Agreement, each which shall be and remain senior and nonsubordinate to each and all monetary liens.
4.16 Intentionally Omitted.
4.17 Cost Savings Obligation; Excess Tax Credits Obligation . Developer hereby agrees to apply Cost Savings in connection with the Phase II Development in an amount to be determined based on the Audit to be conducted upon completion of construction for the Phase II Development (unless sooner applied to fund the Capital Replacement Reserve or the Operating Reserve). Disbursement of the Cost Savings is to be made at the time set forth therefor in Section 4.17.1, below.
4.17.1 Audit to Determine Cost Savings and Shared Cost Savings . The actual amount of “Cost Savings” (as defined below) to be disbursed upon an Audit, as hereafter defined and described. Developer shall apply the Cost Savings toward the Capital Replace ment Reserve and/or the Operating Reserve, and thereafter any remaining amount as Gross Revenues as defined herein, an amount equal to the Cost Savings remaining after satisfaction in full of the Developer Fee and the Cost Overrun Amounts (which resulting amount shall constitute the “Shared Cost Savings”). Within one hundred eighty (180) days following the completion of construction of the Phase II Development, as evidenced by issuance of the final certificate of occupancy by the City’s building official, Developer shall cause its certified public accountant(s) to perform a draft cost certification of the costs of the Phase II Development in accordance with the requirements of the Tax Credits, and generally accepted accounting procedures (GAAP) and generally accepted auditing standards (herein, A.8.d
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referred to as “Audit”). If the Audit determines that the total sources of permanent financing for the Phase II Development (including long-term permanent debt and equity) exceed the total development cost for the Phase II Development (including, without limitation, all hard and soft costs and all onsite and offsite improvements required in connection with the development of the Phase II Development, including the Developer Fee), such excess shall be considered the “C ost Savings” for the Phase II Development.
4.17.2 Payment of Shared Cost Savings . The Shared Cost Savings, once determined by the Audit pursuant to Section 4.17.1, if any, shall be due and shall be applied by Developer in the following order, toward (i) Capital Replacement Reserve, (ii) Operating Reserve (provided that the amount in the Operating Reserve shall not exceed the amount required by the Primary Lender), (iii) with any excess available evenly to be applied toward (A) remaining unpaid Deferred Developer Fee, if any, and (B) pay down of the Authority Loan.
4.17.3 Timing of Payment of Shared Cost Savings . Unless sooner disbursed pursuant to the foregoing portion of this Section 4.17, the Shared Cost Savings shall be applied by Developer upon conversion to perman ent loan and completion of construction, concurrent with the closing of the Primary Permanent Loan or, if earlier, at such time as Developer receives its final Tax Credit equity payment for the Phase II Development.
5. COVENANTS AND RESTRICTIONS.
5.1 Use Covenants. Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Phase II Site or any part thereof, that Developer shall devote the Phase II Site to the uses specified in and shall operate in conformity with this Agreement, the Authority Grant Deed, City Covenants, Authority Regulatory Agreement, Authority Deed of Trust and Notice of Affordability Restrictions, whichever is the more restrictive in each case unless expressly provided to contrary effect herein. All uses conducted on the Phase II Site, including, without limitation, all activities undertaken by Developer pursuant to this Agreement, shall conform to the Entitlement, the City Code, and other applicable laws and regulations.
5.2 Affordable Housing Requirements.
5.2.1 Affordable Housing for all Housing Units . During the Affordability Period, Developer agrees to make available, restrict occupancy to, and lease each and all of the thirty-two (32) Housing Units at the Prescribed Income Levels and at an Affordab le Rent to the tenant households occupying the Housing Units.
5.2.2 Duration of Affordability Requirements . The Housing Units shall be maintained as rental units available at the Prescribed Income Levels at an Affordable Rent for the Extremely Low Income Househ olds, Very Low Income Households, and Low Income Households throughout the fifty-five (55) year Affordability Period, as more particularly set forth in each of the City Covenants and the Authority Regulatory Agreement.
5.2.3 Selection of Tenants ; Special Limitat ions as to Eligible Households .
Developer shall be responsible for the selection of tenants for the Housing Units in compliance with the criteria set forth in Sections 5.2 and 5.3 of this Agreement.
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5.2.4 Income of Tenants . Each tenant household shall qualify as an Eligible Household, either as an Extremely Low Income Household, Very Low Income Household (40%, 45%, 50% AMI, as applicable), or, Low Income Household, in accordance with the Prescribed Income Levels for the Housing Units, and shall meet all other r equirements established for tenancy and occupancy of the corresponding Housing Unit. Developer shall obtain a certification from, and verify, each tenant household renting or leasing a Housing Unit that substantiates compliance with the Prescribed Rent Level applicable to his/her/their Housing Unit. Prior to the rental or lease of any Housing Unit on the Phase II Site to a tenant, and annually thereafter, Developer shall submit to Authority or its designee, at Developer’s expense, a completed income computation, certification and verification form, substantially in the form of Attachment No. 12.
5.2.5 Determination of Affordable Rent for the Housing Units . All Housing Units shall be rented at an “Affordable Rent” as defined in this Agreement. (a) Affordable Rent; R elationship to County PLHA Requirements and Other Requirements. Notwithstanding any other provisions of this Agreement, to the extent that the County Regulatory Agreement or limitations of the PLHA Program relating to monthly rent for the Housing Units (“ PLHA Units”) are more restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Agreement and the City Covenants, Authority Regulatory Agreement, and Notice of Affordabil ity Restrictions, compliance with the most restrictive provisions shall not be a default hereunder. (i) In the event Developer is required, as a condition of funding imposed by entities other than City or Authority, to cause more restrictive covenants relating to rent and/or income qualification for tenant households of the Housing Units, the attachments to this Agreement shall be modified to reflect such greater, more restrictive covenants. (b) While it is anticipated that the rent standards under the Tax Credit Rules will be less restrictive, i.e., allow for a higher monthly rent, than those otherwise allowable under HSC 50052.5 and 50053; nonetheless, it is the responsibility of Developer to comply with the definition of Affordable Rent and all affordable housing standards herein.
5.3 Verifications.
5.3.1 Income Verification. Developer shall verify the gross household income, including all sources of income and valuation of assets, of each and all proposed and existing tenant household (all adult members thereof) of the Housing Units developed and operated on the Phase II Site.
5.3.2 Annual Reports . Following the issuance o f the Certificate of Completion/Release of Construction Covenants, and on or before June 15 of each Year and throughout the Affordability Period, Developer, at its expense, shall submit to Authority or its designee the reports in the manner described by He alth and Safety Code Section 33418, as the same may be amended from time to time, with each such report to be in the form prescribed by Authority.
Each annual report shall cover the immediately preceding Year. (a) Developer shall maintain on file each tenant’ s executed lease and Income Verification and rental records for all Housing Units on the Phase II Site. Developer shall maintain complete and accurate records pertaining to the Housing Units and shall permit any duly A.8.d
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authorized representative of Authority and/or City to inspect the books and records of Developer pertaining to this Agreement and the Housing Units (and Phase II Project overall) upon reasonable advance notice of not less than twenty four (24) hours and during normal business hours. Following the issuance of the Certificate of Completion/Release of Construction Covenants, and on or before June 15 of each Year and throughout the Affordability Period, Developer shall prepare and submit to Authority and City an annual report that evidences (i) compliance with the applicable Prescribed Rent Level for each and all Housing Units, (ii) Affordable Rent charged, (iii) security deposit on account, (iv) additional charges, if any, (v) whether the tenant holds a Portable Voucher (or is a designated County PBV unit), (vi) the total number of occupants, with names, ages of all adults and minors, whether any household member is elderly (age 55 or older) disabled, or with other special needs, (vii) gross household income and itemized by the adult occupants of t he household, and (viii) any other pertinent information that may be used to determine compliance with the terms of this Agreement.
(b) Also while the Authority Loan remains outstanding and for not less than the Tax Credit Compliance Period, in the annual repo rt Developer shall include a statement of amounts payable by Developer under the Authority Loan Note, Authority Deed of Trust, and this Agreement, all supported by an Audited Financial Statement prepared by an independent accounting firm reasonable accepta ble to Authority that sets forth information in detail sufficient for adequate review by Authority for the purposes of confirming those amounts payable by Developer to Authority as well as showing the general financial performance of the Phase II Project ( “Annual Financial Report”).
(i) Each Annual Financial Report shall include a profit and loss statement showing Gross Revenues, Operating Expenses, Debt Service, Capital Replacement Reserve, Operating Reserve, and Rental Receipts, payments of fees and any oth er remuneration to Developer all certified by the Audited Financial Statement. In the event the amounts reported or paid deviate by five percent (5%) or more from that amount determined to be owing upon review of Developer’s submittal, Developer shall reimburse Authority for its cost to review (which may require engagement of auditors) and collect the amounts owing; such amounts shall, until paid, be added to the amounts payable to Authority during the first succeeding Year. Developer agrees to maintain records in businesslike manner, and to maintain such records for the Affordability Period. (ii) The income and rent restrictions provided for hereunder are intended and shall be maintained in a manner sufficient to satisfy the provisions of Health and Safety Code Section 33413(b) without regard to whether such statute is applicable as a matter of law. (iii) In addition, as part of its annual report, Developer shall also provide to Authority completed income computation, asset evaluation, and certification forms, for any such tenant or tenants, in substantially the form provided by Authority from time to time.
Developer shall obtain an annual certification from each household of each Unit demonstrating that such household is an Extremely Low Income Household, a Very Low Income Household or a Low Income Household, as applicable, and meets the Prescribed Income Level and complies with the Affordable Rent requirements established for each Housing Unit. Developer shall verify the income certification of each tenant household. In order to comply with this Section 5.3.2, Developer shall submit to Authority any and all tenant income and occupancy ce rtifications and supporting documentation required to be submitted to TCAC pursuant to the Tax Credit Rules and the Tax Credit Regulatory Agreement for the Phase II Development; provided, Authority may request (and Developer shall provide) additional docum entation to assist Authority’s evaluation of Developer’s A.8.d
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compliance with this Agreement, if determined to be necessary in the reasonable discretion of the Executive Director, specifically including (without limitation) any documentation or additional certifications that may be necessary to verify compliance with the requirements applicable to all funding sources, and each tenant’s status as to each Housing Unit as an Eligible Household. This requirement is in addition to and does not replace or supersede D eveloper’s obligation to annually submit the Certificate of Continuing Program Compliance to Authority during the Affordability Period. Further, Authority and City have the right, but not the obligation to monitor compliance with respect to each tenant ho usehold at the Phase II Project, and Authority and/or City’s election to monitor some, but not all, of the Housing Units shall not constitute a waiver of Authority or City’s right to monitor and enforce compliance with respect to all Housing Units in the future.
5.3.3 Verification of Income of New and Continuing Tenants . Gross household income calculations for each and all prospective and continuing tenants shall be determined in accordance with 25 Cal. Code Regs. Section 6914 or as required by the Tax Credit Ru les. Developer shall verify the income and information provided in the income certification of the proposed tenant as set forth below.
(a) Developer shall verify the income of each proposed tenant of the Phase II Project and by at least one of the following m ethods as appropriate to the tenant, whether prospective or continuing tenant:
(i) obtain two (2) paycheck stubs from each adult household member’s two (2) most recent pay periods;
(ii) obtain a true copy of an income tax return from each adult household member for the most recent tax year in which a return was filed; (iii) obtain an income verification certification from the employer of each adult household member;
(iv) obtain an income verification certification from the Social Security Administration and/or the California D epartment of Social Services if one or more household member(s) receive(s) assistance from such agencies; or (v) obtain an alternate form of income verification reasonably requested by Authority or City, if none of the above forms of verification is available to Developer; or
5.3.4 Retention of Tenant Documentation. Developer shall retain documentation regarding the eligibility of each tenant household for a period of not less than five (5) years.
5.3.5 Annual Authority Monitoring Charge. Developer shall pay to Authority the sum of One thousand Six Hundred Dollars ($1,600.00) per Year (i.e., Fifty Dollars ($50.00) per Housing Unit) payable on or before June 15 of each Year following completion of the Phase II Development. The amount paid to Authority under this Section 5.3.5 collectively constitute the Annual Authority Monitoring Charge.
5.4 Maintenance of Phase II Site . Developer agrees for itself and its successors in interest to the Phase II Site, to maintain the improvements on the Phase II Site in conformity with the A.8.d
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City Code and the conditions set forth in the Entitlement, City Covenants, Authority Regulatory Agreement, and Notice of Affordability Restrictions, and shall keep the Phase II Site free from any accumulation of debris or waste materials. During such perio d, Developer shall also maintain the landscaping planted on the Phase II Site in a healthy condition.
5.4.1 Maintenance Standards. Developer and its maintenance staff, contractors or subcontractors shall comply with the following standards as to the Phase II De velopment (collectively, “Maintenance Standards”):
(a) The Phase II Project shall be maintained in conformance and in compliance with the approved final as -built plans, and reasonable Maintenance Standards that comply with industry standards (industry standard s applicable at such time) for High Quality affordable housing projects in Riverside County, California. In this regard the standard of maintenance and upkeep of the Phase II Development (interior and exterior), hardscape, and landscaping shall be commensurate with other High Quality affordable housing projects in Riverside County at such relevant time during the compliance periods required under this Agreement; provided however, when determining comparable High Quality affordable housing projects, the age of the improvements shall be considered; provided that nothing in such comparison shall modify, expressly or impliedly, the maintenance and property management standards set forth in this Section 5.4.1 and otherwise in this Agreement.
(b) Landscape maintenanc e shall include, but not 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 visibili ty, 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 :
(i) maintenance of all sidewalks, paths and other paved areas in clean and weed -free condition; (ii) maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; (iii) removal of all trash, litter, bulky items, and other debris from improvements and landscaping prior to mowing; (iv) 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, debris, and other discarded items are properly disposed of by maintenance workers. (d) Repair maintenance includes work to fix, repair, or correct exterior conditions of the Housing Units, common areas, parking, and overall Phase II Project, including:
(i) painted su rfaces, materials, other surfaces, and all onsite amenities are maintained free from fading, peeling, chipping, cracked surfaces, holes or other damage; and (ii) all broken fixtures, lights, and other improvements are repaired or replaced.
(e) Repair maintenan ce also includes work to repair and fix broken or other non -functional appliances (only those provided by Developer as part of a Housing Unit), plumbing, electrical, HVAC and structural improvements of the interiors of the Housing Units at the Phase II Dev elopment consistent with property management standards required herein, subject to exclusions referenced in a tenant’s lease for damages such as that caused by tenant’s intentional action or inaction from misuse or neglect within the Housing Unit.
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5.4.2 Notice r e Non -Compliance. Authority and/or City agrees to notify Developer in writing (including by email) if the conditions of the Phase II Development or Phase II Site do not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Developer to cure the deficiencies. Upon notification of any maintenance deficiency, Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification relates to a problem that is urgent and relating to the public health and safety as reasonably determined in writing by the police department, fire department, department of public works, building department or other first responder public agency, then Developer shall have forty-eight (48) hours (or any such longer time as may be reasonable under the circumstances) to rectify the problem. In the event Developer does not maintain the Phase II Site and Phase II Development in the manner set forth herein and in accordance with the Ma intenance Standards, Authority and City shall have, in addition to any other rights and remedies hereunder, the right to maintain the Phase Site and Phase II Development, or to contract for the correction of such deficiencies, after written Notice to Devel oper, and Developer shall be responsible for the payment of all such costs incurred by Authority and/or City.
5.4.3 Program Maintenance . In addition to the routine maintenance and repair required pursuant to Section 5.4 above, Developer shall perform the follow ing minimum programmed maintenance of the Phase II Development on the Phase II Site:
(a) Interior painting and window covering replacement at least every seven (7) Years, unless such improvements would be substantially disruptive to a vulnerable resident occupant, in which case, Developer shall perform as work at the earliest feasible opportunity; (b) Exterior painting at least every ten (10) Years, unless the exterior is of a material which the manufacturer recommends to not be painted; (c) Repair and resurfacing of parking areas and walkways at least every ten (10) Years;
(d) Replacement of all deterior ated or worn landscaping at least every five (5) Years; and
(e) Replacement of all deteriorated or worn recreational equipment at least every ten (10) Years.
Notwithstanding the foregoing, if the Executive Director reasonably determines that the Phase II Devel opment suffers from excess unexpected wear and tear requiring any of the above items of maintenance to be performed sooner than as set forth above, Authority may require that such maintenance actions be performed within a reasonable time, even if sooner th an the time periods set forth above. Upon the request of Developer, the Executive Director, at his or her sole and absolute discretion, may grant a waiver or deferral of any program maintenance requirement. Developer shall keep such records of maintenanc e and repair as are necessary to prove performance of the program maintenance requirements.
5.4.4 Occupancy Limits . To the greatest extent allowed by law, the maximum occupancy of the Housing Units in the Phase II Development shall not exceed more than such number of persons as is equal to two persons per bedroom, plus one. Thus, for a one (1) bedroom A.8.d
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Unit, the maximum occupancy shall not exceed three (3) persons, and for a two (2) bedroom Unit, the maximum occupancy shall not exceed five (5) persons.
5.5 Management of the Phase II Project.
5.5.1 Property Manager. Developer shall manage or cause the Phase II Site and Phase II Development in a prudent and business -like manner, consistent with good property management standards for other High Quality affordable housing p rojects in Riverside County, California. Developer may contract with a property management company or property manager, to operate and maintain the Phase II Project in accordance with the terms of this Section 5.5 (“Property Manager” or alternatively, “Ph ase II Site Manager”); provided, however, the selection and hiring of the Phase II Site Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the Executive Director (or designee) in his disc retion. The initial Phase II Site Manager shall be AWI Management Corporation. The Phase II Site Manager shall manage the Phase II Project in accordance with the definition of Affordable Rent, at the Prescribed Income Levels, in compliance with the tenan t selection requirements,. Any fee paid to the Phase II Site Manager for social services provided to the tenants shall be exclusive of the fee paid to the Phase II Site Manager relating to the management of the Phase II Project. Developer shall conduct d ue diligence and background evaluation of any potential third party property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager. Any proposed property manager shal l have significant and relevant prior experience with affordable housing projects and properties comparable to the Phase II Project and the references and credit record of such property manager/company shall be investigated (or caused to be investigated) b y Developer prior to submitting the name and qualifications of such proposed property manager to the Executive Director for review and approval. A complete and true copy of the results of such background evaluation shall be provided to the Executive Direc tor.
Approval of a Property Manager by Executive Director shall not be unreasonably delayed but shall be in his/her sole reasonable discretion, and the Executive Director shall use good faith efforts to respond as promptly as practicable in order to facil itate effective and ongoing property management of the Phase II Project. The replacement of a Property Manager by Developer and/or the selection by Developer of any new or different Property Manager during the Affordability Period shall also be subject to the foregoing requirements.
5.5.2 Property Management Plan. Prior to and as a Condition Precedent to the Closing of the Phase II Conveyance, Developer shall prepare and submit to the Executive Director for review and approval, a management plan for the Phase I I Project that includes a detailed plan and strategy for long term marketing, operation, maintenance, repair and security of the Phase II Project, inclusive of social services for the residents of the Housing Units, and the method of selection of tenants, rules and regulations for tenants, and other rental policies for the Phase II Project (“Property Management Plan”). Executive Director shall review and shall act reasonably to approve or disapprove the Phase II Site Management Plan within a reasonable tim e. Subsequent to approval of the Phase II Site Management Plan by the Executive Director, the ongoing management and operation of the Phase II Project shall be in compliance with the approved Property Management Plan. During the Affordability Period, Dev eloper and its Property Manager may from time to time submit to the Executive Director proposed amendments to the Phase II Site Management Plan, the implementation of which shall also be subject to the prior written approval of the Executive Director.
5.5.3 Gross Mismanagement. During the Affordability Period, and in the event of “Gross Mismanagement” (as defined below) of the Phase II Project, and Authority and City A.8.d
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