Recording Requested by
and When Recorded Return to:
CITY OF ORANGE
300 E. Chapman Ave.
Orange, CA 92866
Attention: City Manager
and Community Development Director
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN: 041-080-44 OFFICIAL BUSINESS
Document entitled to free
(Govt. Code §27383)
AGREEMENT CONTAINING HOME PROGRAM REQUIREMENTS
(24 CFR § 92.504)
THE CITY OF ORANGE, a municipal corporation of the State of California (“City”) and MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Developer”), in furtherance of the regulations issued by the United States Department of Housing and Urban Development set forth in 24 CFR Part 92 (the “HOME Regulations”), hereby agree as follows as of ____________, 2022.
WHEREAS, the City is responsible for administering the use of certain funds made available to the City of Orange by the United States Department of Housing and Urban Development (“ HUD”) under the HOME Investment Partnerships Program (the “ HOME Program”); and
WHEREAS, Developer will use the proceeds from the City loan for payment of a portion of the acquisition and development costs of certain real property (the “ Property”) located in the City of Orange and more particularly described in Exhibit “A” which is attached hereto and incorporated herein by this reference; and
WHEREAS, the City and Developer have entered into an Affordable Housing Agreement dated as of ______, 2022, as amended from time to time (the “AHA”), providing for, among other things, the financing of the acquisition, development and operation of forty-nine (49) affordable rental housing units for Extremely Low Income, Very Low Income, and Low Income Senior Citizen Households, and one (1) manager’s unit, through the adaptive reuse by Developer of a Attachment 8
360
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
portion of the existing Motherhouse (former convent) building located in an airspace lease parcel and improvements and fixtures on the Property to be acquired by the Developer; and WHEREAS, pursuant to the AHA, the City is providing a loan of HOME Funds to Developer (the “ HOME Loan”), for payment of a portion of the acquisition and development costs of the Project; and
WHEREAS, the parties mutually desire to comply with all applicable HOME Regulations.
NOW, THEREFORE, the City and Developer hereby agree as follows:
1. Term of this Agreement.
In accordance with the formula set forth in 24 CFR 92.252(e) and as required by 24 CFR
92.504 (c)(3)(ix), this Agreement will remain in effect for not less than (55) years for newly constructed HOME-assisted Units following the date the City of Orange issues a certificate of occupancy for the Project (the “HOME Affordability Period”).
2. Affordable Housing Agreement.
This Agreement Containing Home Program Requirements is entered into pursuant to the AHA, as it may be amended from time to time, including all the attachments appended thereto. A true and correct copy of the AHA is on file in the office of the City Clerk of the City. Any capitalized term not otherwise defined herein will have the meaning ascribed to such term in the AHA.
3. Use of HOME Funds. 24 CFR 92.504(c)(3)(i).
The HOME Funds will be used exclusively for the payment of costs incurred in connection with the acquisition and development of the Property and the construction thereon of the Project (sometimes referred to herein as the “Project Activities”) in accordance with the AHA. a. Schedule. Subject to Force Majeure Delays, the development of the Property will be accomplished within the time provided in the Schedule of Performance, which is attached to the AHA as Attachment No. 4.
b. Tasks and Budget. The tasks to be performed with the use of the HOME Funds, and the Project Budget, which specifies the line items for which HOME Funds will be used, are set forth in the Project Budget attached to the AHA as Attachment No. 5. 361
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
4. Affordability. 24 CFR 92.252; 92.504(c)(3)(ii).
a. The Project will be used exclusively as affordable rental housing as required by the various regulatory agreements relating to the Project. Eleven (11) units will be designated as floating HOME units (“HOME-assisted Units”) and restricted as follows:
Three (3) studio units designated as Low HOME-assisted Units for Very Low- Income Senior Citizen Households (income not to exceed fifty (50%) of median family income as determined by the United States Department of Housing and Urban Development). Eight (8) one- bedroom units designated as High HOME-assisted Units for Low Income Senior Citizen Households (income not to exceed eighty 80% of median family income as determined by the United States Department of Housing and Urban Development). b. For each of the three (3) Very Low Income households in the Low HOME-assisted Units, the maximum rent, including a reasonable utility allowance for utilities and services (excluding telephone) to be paid must meet either i. or ii. of the following rent requirements:
i. The rent does not exceed the lesser of (a) 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families, as provided by HUD; (b) the fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR 888.111; or
ii. The rent does not exceed 30 percent of the family’s adjusted income. If the unit receives Federal or State project-based rental subsidy and the family pays as contribution toward rent not more than 30 percent of the family’s adjusted income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy program.
c. For each of the eight (8) Low Income households in the High HOME-assisted Units, the rent may not exceed the lesser of:
i. the fair market rent for existing housing for comparable units in the area, as established by HUD under 24 CFR 888.111; and
ii. a rent that does not exceed 30 percent of the adjusted income (as that term is defined in 24 CFR 92.203) of a family whose annual income (as that term is defined in 24 CFR
92.203) equals 65 percent of the median income for the area, as determined by HUD, with adjustments for the number of bedrooms in the unit.
d. The HOME rent limits published by HUD will include average occupancy per unit and adjusted income assumptions.
362
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
e. The parties agree that if the Project were placed in service on the date of this Agreement, the maximum gross rents that would be paid by, and the HOME-assisted Units that would be occupied by, Extremely Low Income households, Very Low Income households and Low Income households pursuant to Section 4 would be as set forth in the table of rents appended as Exhibit B. The HOME rents provided in Exhibit B will be adjusted to not exceed the maximum rent limits provided by HUD at the date of initial occupancy and will be adjusted periodically thereafter in accordance with 24 CFR part 92.252(f) and (g). f. Rents for the HOME-assisted Units will remain affordable to Very Low Income Households and Low Income Households pursuant to this Agreement for the term set forth in Section 1 of this Agreement.
g. Prior to initial lease-up of the Project, Developer must submit to City for its approval the street address and unit number of the proposed HOME-assisted Units. Developer may not thereafter change the identity of the HOME-assisted Units without prior written approval by the City. Each substituted unit must be comparable to the originally designated HOME-assisted Unit in terms of size, features, and number of bedrooms. h. Failure to comply with the affordability requirements of this Agreement is an event of default under the terms of the HOME Loan. Pursuant to the HOME Note evidencing the HOME Loan, subject to the right to cure, the HOME Loan will be due and payable immediately if the rents for HOME-assisted Units do not meet the affordability requirements of this Agreement.
5. Project Requirements. 24 CFR 92 Subpart F (92.250 - 92.258).
Developer will comply with all applicable requirements set forth in Subpart F of the HOME Regulations, as provided elsewhere in this Agreement and also including the following:
a. Maximum Per-Unit Subsidy. 24 CFR 92.250. The amount of the HOME loan may not exceed the per unit dollar limits established by HUD pursuant to section 221(d)(3)(ii) of the National Housing Act, as implemented in regulations issued by HUD, 24 CFR 221.514(b)(1) and (c).
b. Property Standards. 24 CFR 92.251; 24 CFR 92.504 (c)(3)(iv). i. The development and maintenance of the Property will comply with the City’s building code and all other applicable local codes, rehabilitation standards, ordinances and zoning ordinances in effect at the time of project completion, and the Property will be decent, safe and sanitary will conform to the following codes that have been adopted by the City of Orange:
Uniform Building Code (UBC) as adopted by the State of California (California Building Code [Title 24 Part 2], National Electrical Code (NEC), Uniform Plumbing Code (UPC), Uniform Mechanical Code (UMC) and California Energy Code (CEC). 363
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
ii. The Property will comply with the accessibility requirements at 24 CFR Part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and, if applicable, the design and construction requirements at 24 CFR 100.205 for covered multifamily dwellings, as defined at 24 CFR 100.201, which implements the Fair Housing Act (42 U.S.C. 3601-3619).
iii. The Project will comply with the lead-based paint standards in Section
92.355. Housing assisted with HOME Program funds constitutes HUD-associated housing for the purpose of Lead-Based Paint Poisoning Prevention Act (42 U.S.C. Section 4821, et seq.) and is, therefore, subject to 24 Code of Federal Regulations Part 35. Accordingly, and pursuant to Section
92.355 of the Regulations, Developer hereby agrees to and will be responsible for testing and abatement activities specified in the Lead-Based Paint Poisoning Prevention Act and the regulations set forth at 24 Code of Federal Regulations Part 25 with respect to the construction of the Property.
c. Tenant Protections. 24 CFR 92.253. The Developer will comply with the tenant protection provisions of 24 CFR 92.253.
d. Termination of Tenancy. 24 CFR 253(c). Developer, its successors or assigns, may not terminate the tenancy or refuse to renew the lease of a tenant, except (i) for serious or repeated violation of the terms and conditions of the lease; (ii) for violation of applicable federal, state, or local law; or (iii) for other good cause. Pursuant to 24 C.F.R. 92.253(c), any termination or refusal to renew must be preceded by not less than 30 days by the Developer’s service upon the tenant of a written notice specifying the grounds for the action. e. Converting Rental Units to Homeownership Units for Existing Tenants. 24 CFR
92.255. Conversion of rental units to homeownership units will not be permitted. f. Faith Based Activities. 24 CFR 92.257. Developer will comply with the restrictions on the use of HOME Funds for faith-based activities as set forth in Section 92.257.
Developer hereby certifies that HOME Funds will not be used for the acquisition, construction or rehabilitation of structures to the extent that those structures are used for inherently religious activities. Developer will use the HOME Funds for the construction of structures only to the extent the structures are used for conducting eligible activities under 24 CFR Part 92. g. Affirmative Marketing Requirements. 24 CFR 92.351; 92.504(c)(3)(v). Prior to the initial lease-up of the Project, Developer will consult with and obtain the approval of the City in developing an affirmative marketing plan for renting the units. The affirmative marketing plan must comply with the requirements of 24 CFR 92.351.
6. Records and Reports. 24 CFR 92.504(c)(3)(vi); 92.508; 92.61.
To assist the City in meeting its recordkeeping and reporting requirements, Developer will 364
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
prepare, maintain, and submit to the City, as appropriate, the following records and reports:
a. Records which demonstrate that the Property meets the property standards described in Section 5.b;
b. Records which demonstrate, in accordance with 24 CFR 92.203, that each family occupying a HOME-assisted Unit is income eligible;
c. Records which demonstrate that the Property meets the affordability and income targeting requirements of 24 CFR 92.252 for the Term of this Agreement. Records will be kept for each family in a HOME-assisted Unit;
d. Records which demonstrate that each lease for a HOME-assisted Unit complies with the tenant protections specified in 24 CFR 92.253; e. Equal opportunity and fair housing records, including, as applicable:
i. data on the extent to which each racial and ethnic group and single-headed household (by gender of household head) have applied for, participated in, or benefitted from, any program or activity funded in whole or in part with HOME funds; ii. documentation of actions undertaken to meet the requirements of 24 CFR Part 135 which implements section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701u);
iii. documentation of actions taken to affirmatively further fair housing with respect to the Project;
f. Affirmative Marketing and MBE/WBE records, including, as applicable:
i. records documenting compliance with the affirmative marketing procedures and requirements of 24 CFR 92.351;
ii. documentation and data on the steps taken by Developer to implement the City’s outreach programs to minority-owned and female-owned businesses including data indicating the racial/ethnic or gender character of each business entity receiving a contract or subcontract of $25,000 or more paid, or to be paid, with HOME funds, the amount of the contract or subcontract, and documentation of the Developer’s affirmative steps to assure that minority business and women’s business enterprises have an equal opportunity to obtain or compete for contracts and subcontracts as sources of supplies, equipment, construction and services; iii. records which demonstrate compliance with the requirements of 24 CFR
92.353 relating to displacement, relocation and real property acquisition, including project 365
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
occupancy lists identifying the name and address of all persons occupying or moving into the Property on and after the date on which Developer obtained site control; iv. records demonstrating compliance with the labor requirements of 24 CFR
92.354, including contract provisions and payroll records; g. Records which support any exceptions to the conflict of interest prohibition of 24 CFR 92.356.
h. Debarment and suspension certifications required by 24 CFR Parts 24 and 91. i. Records, data and documentation as required for the City’s performance of its reporting obligations under the Federal Funding Accountability and Transparency Act of 2006 (FFATA), to the fullest extent applicable to the Project, which may include but is not necessarily limited to reporting of executive compensation received by executives of Developer and/or executives of Developer’s partners or members and/or executives of partners or members of any of Developer’s partners or members.
7. Retention and Inspection of Records. 24 CFR 92.504(c) & (d). a. Developer will retain all books and records relevant to the Project for a minimum of five years after the project completion date, except that records of individual tenant income verifications, project rents and project inspections will be retained for the most recent five year period until five years after the affordability period terminates. If any litigation, claim, negotiation, audit, monitoring, inspection, or other action has been started before the expiration of the required record retention period, records must be retained until the completion of the action and resolution of all issues which arise from it, or until the end of the required period, whichever is later. b. The City, HUD and the Comptroller General of the United States, and any of their representatives, will have the right of access to any pertinent books, documents, papers or other records of the Developer, in order to make audits, examinations, excerpts and transcripts.
8. Enforcement of the Agreement. 24 CFR 92.504(c)(3)(vii).
The AHA and all of its attachments, will be enforceable by the City in accordance with the terms thereof. Each of the AHA, this Agreement, the HOME Note and the City Deed of Trust provide a means of enforcement if the Developer is in breach of its obligations hereunder and thereunder, including liens on the Property, deed restrictions and covenants running with the land.
Developer hereby agrees that specific enforcement of its obligations contained herein is the only means by which the City may fully obtain the benefits of this Agreement, and Developer therefore agrees to the imposition of the remedy of specific performance against it in the case of uncured default by Developer hereunder. Provided however, the rights and remedies of the Agency are cumulative, and the exercise by the Agency of one or more of such rights or remedies shall not 366
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by Owner. Failure to comply with the requirements of this Agreement is an event of default under the terms of the HOME Note and the City Deed of Trust.
Notwithstanding anything to the contrary stated herein, a breach of this Agreement by Developer or its successors and assigns will in no way defeat, invalidate or impair the obligation or priority of any mortgage or deed of trust encumbering the leasehold interest in the Property.
9. Requests for Disbursement of Funds. 24 CFR 92.504(c)(3)(viii).
Developer will not request disbursement of HOME funds until the funds are needed to pay eligible costs. The amount of each disbursement request will be limited to the amount needed. The City will have the right to disapprove any request if the City determines the request is for an ineligible item or is otherwise not in compliance with or inconsistent with the AHA and this Agreement.
10. Duration of Agreement. 24 CFR 92.504(c)(3)(ix).
The Agreement will remain in effect for the period of affordability required pursuant to
92.252, and thereafter as set forth in Section 1 of this Agreement.
11. Other Program Requirements. 24 CFR 92, Subpart H (92.350 - 92.358).
Developer will comply with all applicable federal requirements set forth in Subpart H of the HOME regulations, including the following:
a. Other Federal Requirements and Nondiscrimination. 24 CFR 92.350. Developer acknowledges that 24 CFR 92.350 provides that the Federal requirements set forth in 24 CFR Part 5, subpart A, are applicable to participants in the HOME program, and that these Federal requirements include the following:
i. Nondiscrimination and Equal Opportunity.
ii. Civil Rights, Fair Housing, and Age and Disability Discrimination Acts Assurances: During the performance of the AHA, Developer will assure that no otherwise qualified person will be excluded from participation or employment, denied program benefits, or be subjected to discrimination based on race, color, national origin, sex, actual or perceived sexual orientation, gender identity, marital status, age, handicap, religion, religious preference or source of income (including but not limited to Section 8 Rental Assistance, Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) or earnings from seasonal employment), under any program or activity funded by this Agreement, as required by state law, the Fair Housing Act (42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et seq., Executive Order 11063 as amended by 367
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
Executive Order 12259 (3 CFR, 1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107, title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d- 2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1, the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CFR part 146, section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8, Title VI of the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age Discrimination Act of 1975, and all implementing regulations. iii. Training, Employment, and Contracting Opportunities Assurance of Compliance: The Project Activities to be performed under the Agreement are on a project assisted under a program providing direct federal financial assistance from HUD which is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u (“Section 3”), and the regulations issued by HUD to implement Section 3 (24 CFR Part 135) (the “Section 3 Regulations”). Pursuant to 24 CFR 135.3, the requirements of the Section 3 Regulations apply to the recipient of such financial assistance only where the amount of federal assistance exceeds $200,000, and apply to a contractor or subcontractor of such recipient only where the amount of assistance exceeds $200,000 and the amount of the contract or subcontract exceeds $100,000. Developer will provide, to the greatest extent feasible, training, employment and contracting opportunities generated by the financial assistance to low- and very-low income persons and business concerns owned by low- or very-low income persons, or which employ low- or very-low income persons.
iv. MBE/WBE Affirmative Action Outreach Program: Developer hereby agrees to comply with the City’s minority and women business outreach program in accordance with Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women’s Business Enterprise).
v. Disclosure Requirements. The disclosure requirements and prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 CFR Part 87; and the requirements for funding competitions established by the Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3531 et seq.).
vi. Debarred, Suspended or Ineligible Contractors. The prohibitions at 24 CFR Part 24 on the use of debarred, suspended or ineligible contractors. vii. Drug-free Workplace. The Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq.) and HUD’s implementing regulations at 24 CFR Part 24. 368
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
b. Affirmative Marketing. 24 CFR 92.351. Developer will comply with the City’s Affirmative Marketing requirements.
c. Displacement, Relocation and Acquisition. 24 CFR 92.353. Developer will carry out relocation activities in conformance with any required relocation plan approved by the City and will certify that it has complied with the federal relocation, displacement and acquisition rules governing the HOME Program, which are contained in the Uniform Relocation Act, 49 CFR Part 24, and applicable program regulations. 24 CFR Section 92.353 requires that tenants who are displaced from housing units demolished or converted as a result of HOME-funded activities be provided with relocation assistance.
d. Labor. 24 CFR 92.354. Does not apply to this Project. e. Lead-based Paint. 24 CFR 92.355. The Property will comply with the lead-based paint standards in 92.355, as provided in Section 5.b, above. f. Conflict of Interest. 24 CFR 92.356.
i. Interest of Employees, Officers and Officials. No employee, agent, consultant, officer or elected official or appointed official of the City, or employee, agent, consultant or officer of Developer, and no other public official of the City who exercises any functions or responsibilities with respect to the activities assisted with HOME funds or who are in a position to participate in a decision making process or gain inside information with regard to these activities, during their tenure and for one year thereafter, may obtain a financial interest or benefit from a HOME assisted activity or have an interest in any contract or subcontract, or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties. Developer will incorporate, or cause to be incorporated, in all such contractors or subcontracts a provision prohibiting such interest pursuant to the purposes of this Section. Fulfillment of “sweat equity” obligations as defined in Section 8201 of the HOME regulations will not be considered a violation of this prohibition. ii. Prohibition Against Occupying HOME-Assisted Units. No officer, employee, agent, official or consultant of Developer may occupy a HOME-assisted Unit. iii. Consultant Activities. 24 CFR 92.358. No person providing consultant services in an employer-employee type relationship will receive more than a reasonable rate of compensation for personal services paid for with HOME funds. In no event, however, will such compensation exceed the limits in effect under the provisions of any applicable statute (e.g., annual HUD appropriations acts which have set the limit at the equivalent of the daily rate paid for Level IV of the Executive Schedule). Such services will be evidenced by written agreements between the parties which detail the responsibilities, standards and compensation. Consultant services provided under an independent contractor relationship are not subject to the compensation limitation of Level IV of the Executive Schedule.
369
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
12. Lobbying Prohibition. 24 CFR 91.225.
Developer hereby certifies to the City, under penalty of perjury, under the terms of applicable federal law, that at all applicable times before, during and after the term of this Agreement:
a. No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; and
b. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, Developer will complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions; and
c. Developer will require that the above stated language in paragraphs a. and b. be included in the award documents for all subawards at all tiers, including subcontracts, subgrants, loans, contracts, and cooperative agreements concerning the subject matter of this Agreement; and d. Further, Developer and all subawards at all tiers, including subcontracts, subgrants, loans, contracts, and cooperative agreements concerning the subject matter of this Agreement, at all times, will certify compliance with the provisions of 31 U.S.C. §1352 and any and all terms and conditions of the Byrd Anti-Lobbying Amendment, as amended from time to time. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK;
SIGNATURES ON FOLLOWING PAGES]
370
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
13. Execution in Counterparts.
This Agreement may be executed by each party on a separate signature page, and when the executed signature pages are combined, will constitute one single instrument.
IN WITNESS WHEREOF, the City and the Developer have executed this Agreement.
THE CITY OF ORANGE
By: ____________________________
Mark Murphy
Mayor
APPROVED AS TO FORM AND LEGALITY:
GARY SHEATZ, CITY ATTORNEY
General Counsel to the City
By:________________________________
Gary A. Sheatz
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Special Counsel to the City
By: ___________________________
Murray O. Kane
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
371
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
“DEVELOPER”
MERCY HOUSING CALIFORNIA 107, L.P.,
a California limited partnership
by: Mercy Housing California 107, LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation,
its sole member/manager
By: ___________________________
Erika Villablanca
Vice President
372
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
Exhibit A
LEGAL DESCRIPTION OF PROPERTY
All that certain real property situated in the County of Orange, State of California, described as follows:
Parcel 1 of that certain Lot Line Adjustment LL 2001-4, in the City of Orange, County of Orange, State of California, recorded June 5, 2001, as Instrument No. 20010366968 of Official Records.
Except therefrom that portion of said land conveyed to the City of Orange, as set forth and described in that certain document recorded September 27, 200 as Instrument No. 20000511721 of Official Records.
Assessor’s Parcel Number: 041-080-44
373
Villa St. Joseph – 480 South Batavia Street
Attachment No. [8] – HOME Regulatory Agreement
Exhibit B – Affordability Requirements
Exhibit B
Affordability Requirements
(24 CFR 92.252; 92.504(c)(3)(iii))
Developer will submit its rent schedule and utility allowances thirty (30) days prior to initial rental of the HOME-assisted Units and on an annual basis thereafter. The City will review and approve or disapprove the proposed rent schedule and utility allowances for compliance with the maximum rent limitations contained in 24 CFR 92.252.
The City will provide updated HUD income and rent limits to Developer as they become available.
As of the date of this Agreement, the applicable income and rent limits are as follows:
2022 HOME Program Income Limits
Household Size Very Low-Income Low Income
1 $47,450 $75,900
2 $54,200 $86,750
3 $61,000 $97,600
4 $67,750 $108,400
Orange County
2022 HOME Program Rent Limits
Efficiency/Studios
Very Low Income $1,186
Low Income $1,523
Developer will be responsible for ensuring that the current operative HOME income and rent limits in effect at the time of the tenant’s rental application for HOME-assisted Units will be used to determine initial tenant eligibility and conformance with HOME affordability requirements and that each tenant recertification is conducted using current HOME income and rent limits to assure compliance with HOME Regulations.
Income determination and rental rate adjustments will occur upon annual lease renewal. Any increase in rents for HOME-assisted Units is subject to the provisions of existing leases, including the provision that rents may not be adjusted until leases are renewed. Developer must provide tenants with not less than thirty (30) days prior written notice before implementing any increase in rents.
374
480 South Batavia Street
LMIHAF Note
PROMISSORY NOTE
TO THE CITY OF ORANGE
(LMIHAF)
3% Interest Orange, California
$576,000 _____________________, 202_
FOR VALUE RECEIVED, MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Borrower”), hereby promises to pay to the CITY OF ORANGE, a municipal corporation of the State of California (“City”), or order, a principal amount of FIVE HUNDRED SEVENTY-SIX THOUSAND DOLLARS ($576,000), being the principal amount of the City’s loan of LMIHAF construction to permanent funds (the “ LMIHAF Loan”). This Note is given pursuant to that certain Affordable Housing Agreement dated as of ________________, 2022, between Borrower and the City (the “ Affordable Housing Agreement ”) and evidences the LMIHAF Loan to Borrower, which provides part of the financing for the acquisition and development of that certain real property located at 480 South Batavia Street in the City of Orange, legally described in the Deed of Trust securing this Note (the “ Property”). The obligation of Borrower to City hereunder is subject to the terms of the Affordable Housing Agreement, this Note and the following instruments, each dated on or about the date hereof, and, where applicable, executed and delivered by Borrower for the purpose of securing this Note: an Agreement Containing Covenants (Including Rental Restrictions) (“Agreement Containing Covenants”); a Subordinated Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) (“City Deed of Trust ”); an Assignment of Rents and Leases (“ Assignment of Rents ”); an Assignment of Agreements (“Assignment of Agreements”); and a UCC-1 Financing Statement.
Said documents are public records on file in the offices of City, and the provisions of said documents are incorporated herein by this reference. The Borrower will pay interest at the rate, in the amount and at the time hereinafter provided.
1. Capitalized terms not otherwise defined herein will have the meaning ascribed to such terms in the Affordable Housing Agreement. In addition, the following terms have the following meanings:
“Acquisition and Development Costs” means the total cost of acquiring the Property and developing, rehabilitating and constructing the Improvements thereon, in accordance with the Affordable Housing Agreement.
“Affiliate” means any Person directly or indirectly controlling, controlled by or under common control with another Person. The term “control” as used in the immediately preceding sentence, means the power to direct the management or the power to control election of the board of directors. It will be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies Attachment 9
375
480 South Batavia Street
LMIHAF Note
of the controlled entity. For purposes of this definition, each general partner will be considered an “Affiliate” of Borrower.
“Annual Financial Statement” means the annual audited financial statement of Revenue and Operating Expenses and balance sheet for the Improvements, prepared at the Borrower’s expense, by an independent certified public accountant reasonably acceptable to the City, which will form the basis for determining the Residual Receipts. “City Deed of Trust ” means the Subordinated Deed of Trust, Security Agreement and Fixture Filing (with Assignment of Rents) executed by Borrower in favor of City and dated on or about the date hereof, which secures this Note and the LMIHAF Loan evidenced hereby. “City’s Share of Residual Receipts” will have the meaning set forth in Section 8, below. “Construction Financing Event” means the point in time when all conditions precedent to the release of the Construction Loan funds and the City Loan funds have been satisfied, in accordance with the Affordable Housing Agreement.
“Construction Loan ” means the Construction Period loan to be made to Borrower by Umpqua Bank (together with its successors and assigns, “ Construction Lender”) at the time of the Construction Financing Event, secured by the Construction Loan Deed of Trust. “Construction Loan Deed of Trust ” means the deed of trust securing the Construction Loan that is first in priority.
“Construction Period ” means the period of time commencing upon the Construction Financing Event and ending upon the repayment of the Construction Loan and the funding of the Permanent Financing.
“Conversion” means the point in time when the Permanent Financing has been funded, the Limited Partner Capital Contribution has been funded (subject to adjustment as provided in the Partnership Agreement and less that portion, not to exceed 10%, of the Limited Partner Capital Contribution that will be funded upon receipt of Form(s) 8609), and the Construction Loan has been repaid in full.
“Deferred Developer Fee” means that portion of the Developer Fee which was not paid prior to the date of Conversion and which will be paid from the Revenue remaining after payment of Operating Expenses, prior to any payment of Residual Receipts to the City. The term “Deferred Developer Fee” will include any loan or capital contribution made by a partner of Borrower to pay such deferred fee.
“Developer Equity” means funds provided by the Borrower for payment of Acquisition and Development Costs and will not include the Senior Loan, the LMIHAF Loan, the In Lieu Fees Loan, the HOME Loan or any other borrowed funds, and will include the Deferred Developer Fee, the Investor Limited Partner’s capital contribution, as well as any other funds of the Borrower. 376
480 South Batavia Street
LMIHAF Note
“Developer Fee” means the fee in the amount set forth in the Project Budget. “Environmental Indemnity” means the indemnity in the form attached to the Affordable Housing Agreement as Attachment No. 15, which is incorporated herein by this reference. “General Partner ” means Mercy Housing California 107 LLC, a California limited liability company, and its authorized successors and assigns. “HOME Loan” means the loan from the City to Borrower pursuant to the Affordable Housing Agreement as amended from time to time, in the amount of $651,244, which is evidenced by the HOME Loan Note and secured by the lien of the City Deed of Trust that is second in priority to the lien of the Senior Loan Deed of Trust.
“HOME Note” means the Promissory Note dated as of the date hereof, evidencing the HOME Loan.
“Improvements” means the 50-unit residential development and ancillary facilities to be constructed and rehabilitated on the Property, all as described in the Affordable Housing Agreement.
“In Lieu Fees Loan ” means the loan made by the City to Borrower in the maximum amount of $372,756 which is evidenced by the In Lieu Fees Note and secured by the City Deed of Trust.
“In Lieu Fees Note ” means the Promissory Note dated as of the date hereof, evidencing the In Lieu Fees Loan.
“Investor Limited Partner” means Wincopin Circle LLLP and its authorized successors and assigns.
“LMIHAF Loan” means the loan made by the City to Borrower in the maximum amount of $576,000, which is evidenced by this Note and secured by the City Deed of Trust. “LMIHAF Loan Documents ” means this Note, the City Deed of Trust, the Agreement Containing Covenants, the Assignment of Rents, the Assignment of Agreements, the Environmental Indemnity, and the UCC-1 Financing Statement, each dated on or about the date hereof.
“LMIHAF Note” means this Note dated as of the date hereof, evidencing the LMIHAF Loan.
“Low Income Housing Tax Credits” means tax credits authorized by the Tax Reform Act of 1986 and governed by Section 42 of the Internal Revenue Code. 377
480 South Batavia Street
LMIHAF Note
“Net Proceeds” means the proceeds of a sale, transfer or refinancing, less the customary and reasonable costs of the transaction.
“Operating Expenses” means actual, reasonable and customary costs, fees and expenses directly attributable to the operation, maintenance and management of the Property that are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles, expressly including, without limitation, payment of the following:
a. Principal and interest and all periodic fees and costs due and payable on the Senior Loan;
b. Property and other taxes and assessments imposed on the Project; c. A general partner partnership management fee to the General Partner of Borrower not to exceed $25,000 per year, to be increased at an annual rate of three percent (3%), which will accrue to the extent not paid;
d. General administrative expenses including but not limited to advertising and marketing, security services and systems and similar customary administrative expenses;
e. Maintenance and repair including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial, supplies, and similar customary services; f. Cash deposited into a replacement reserve fund in the amount of $500 per unit per year;
g. Cash deposited into an operating reserve fund in such reasonable amounts as are required by Project lenders, the California Tax Credit Allocation Committee, and the Investor Limited Partner from time to time, and approved by the City; h. Utility services not paid for directly or reimbursed by tenants, including but not limited to water, sewer, trash collection, gas and electricity; i. License or certificate of occupancy fees required for operation of the Project; j. Premiums for property damage and liability insurance; k. Cable television, satellite and similar services;
l. Recreational amenities, supplies and services;
m. Reasonable property management fee payable to a property manager acceptable to the City in an annual amount equal to $41,160 pursuant to a management contract approved by the City;
n. A reasonable resident services coordinator fee payable to a coordinator acceptable to the City;
378
480 South Batavia Street
LMIHAF Note
o. Purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves);
p. Fees and expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party; and
q. An Asset Management Fee to Borrower’s Limited Partner in an amount not to exceed $5,000 per year, to be increased at an annual rate of three percent (3.0%); r. Repayment of operating expense loans or development deficit loans to Borrower’s partners; and
s. A Project monitoring fee to the City in an amount equal to $6,000 per year.
Operating Expenses will not include the following: depreciation, amortization, depletion or other non-cash expenses, any amount expended from a reserve. Operating Expenses will be subject to the reasonable approval of the City.
“Permanent Financing ” means the loans and other sources of permanent financing identified in the Method of Financing (Attachment No. 3) attached to the Affordable Housing Agreement, including without limitation the Seller Carryback Loan, the CALHFA SNHP Loan, the HCD NPLH Loan and the OCHCD Loans to be made to Borrower, secured by the Permanent Financing Deeds of Trust.
“Permanent Financing Deeds of Trust ” means the deeds of trust and other security instruments securing the Permanent Financing.
“Permanent Period” means the period of time commencing upon the repayment of the Construction Loan and the funding of the Permanent Financing and payment of the Limited Partner Capital Contribution.
“Permitted Transfer ” means any of the following, provided (except for subsection f. below) Borrower, a General Partner of Borrower, or an Affiliate of such General Partner, retains day-to-day control over management and operations of the Property and the Improvements and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti- Terrorism Laws:
a. An assignment of the Affordable Housing Agreement and Borrower’s interests in the Property to an Affiliate or a conveyance back from the Affiliate to Borrower; b. A conveyance of a security interest in the Property or any portion thereof or interest therein, in connection with a Senior Loan;
c. The inclusion of equity participation in the Project by addition of limited partners to Borrower’s partnership or similar mechanism, and transfers of limited partnership interests in Borrower’s partnership;
379
480 South Batavia Street
LMIHAF Note
d. The lease for occupancy of all or any part of the Improvements on the Property in accordance with the Affordable Housing Agreement;
e. The granting of easements or permits to facilitate the development of the Property in accordance with the Affordable Housing Agreement;
f. The withdrawal, removal and/or replacement of a general partner of Borrower’s partnership pursuant to the terms of Borrower’s partnership agreement, or a conveyance of Borrower’s interest in the Property and the Improvements and/or a transfer of limited partnership interests to a general partner or an affiliate of Enterprise pursuant to the option provided to that partner in Borrower’s partnership agreement, will not constitute a default under this Agreement or any of the LMIHAF Loan Documents, nor will such actions accelerate the maturity of the LMIHAF Loan, provided that any required substitute general partner is reasonably acceptable to the City, as evidenced by the City’s written consent, and is selected with reasonable promptness; and
g. A transfer approved in writing by City’s Executive Director or designee, at his or her sole discretion.
A transfer described in clauses a., b., or c. will be subject to the reasonable approval of the City Executive Director or designee; provided that, the City approves the transfer of limited partner interests in Borrower’s partnership, so long as such transfer is not a result of a resyndication of the Low Income Housing Tax Credits and does not otherwise result in increased equity participation in Borrower, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
“Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, domestic or foreign. “Property” means the real property described as the “Property” in and legally described as set forth in Exhibit “A” of the City Deed of Trust.
“Residual Receipts” means the Revenue minus the Operating Expenses, calculated on a 12-month basis, minus the theretofore unpaid portion of the Deferred Developers Fee. All calculations of Residual Receipts will be subject to verification and reasonable approval by the City.
“Revenue” means the gross rental income from the Improvements, and any other income to the Borrower derived from the ownership, operation and management of the Property, including but not limited to the following: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to 380
480 South Batavia Street
LMIHAF Note
repair or rebuild the Project; and condemnation awards for a taking of part or all of the Project for a temporary period. “Revenue” will also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Project, except that the value of services provided by on-site manager(s) will not be treated as “Revenue” if no more than one dwelling unit is leased to or otherwise used by on-site manager(s). “Revenue” will not include tenants’ security deposits, proceeds from the Senior Loan, the City Loan, Developer Equity, including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts.
“Senior Loan” means the Construction Period loan made by Construction Lender (in its capacity as Servicer of the Construction Period loan) to Borrower in the approximate amount of $22,630,399 and during the Permanent Period, the HCD NPLH Loan and OCHCD Loans Deeds of Trust, which will be secured by deeds of trust or other instrument to which the City agrees, in its sole discretion, to subordinate this Note and the City Deed of Trust. “Term” of this Note means a term that expires on the fifty-fifth (55th) anniversary of the date of Conversion.
“Transfer” will have the meaning set forth in Section 11.e of this Note.
2. This Note evidences the obligation of the Borrower to the City for the repayment of the LMIHAF Loan. None of the funds provided pursuant to the LMIHAF Loan were funded directly or indirectly with any obligation the interest on which is exempt from tax under Section 103 of the Internal Revenue Code of 1986, as amended, or pursuant to any United States government federal source.
3. This Note is payable at the principal office of City, 300 E. Chapman Avenue, Orange, California 92866, or at such other place as the holder hereof may inform the Borrower in writing, in lawful money of the United States.
4. This Note is secured by the City Deed of Trust.
5. This Note will bear three percent (3%) simple interest.
6. Except in the event of a default described in Section 7 hereof, no payments will be due and payable under this Note except to the extent of (a) the City’s share of Residual Receipts as described in Section 8, below, and (b) any refinancing, Cost Savings or Additional Proceeds, subject to the limitations set forth below.
7. The entire unpaid principal balance of this Note and any accrued but unpaid interest will be due and payable upon the expiration of the Term hereof, or immediately upon the occurrence of either of the following:
381
480 South Batavia Street
LMIHAF Note
a. if the Property or any portion thereof or interest therein is sold, transferred, assigned or refinanced, without the prior written approval of the City, except as otherwise permitted in this Note; or
b. if there is a default by the Borrower under the terms of this Note, the City Deed of Trust, the Affordable Housing Agreement, the Agreement Containing Covenants, or any deed of trust or other instrument securing the Senior Loan or other obligations secured by a deed of trust on the Property, which is not cured within the respective time period provided herein and therein.
8. Prior to the expiration of the Term hereof, Borrower will be obligated to repay the LMIHAF Loan exclusively from the City’s share of Residual Receipts, as follows:
a. Annually, not later than the thirtieth (30th) day of April, beginning with the year following the year in which Conversion occurs, Borrower will submit to City an audited Annual Financial Statement for the preceding calendar year, prepared by a certified public accountant reasonably acceptable to the City, determining the amount of Residual Receipts, if any, generated in that year, together with payment of the City’s Share of such Residual Receipts. The first such Annual Financial Statement will be for the partial year beginning on the date of Conversion and ending on December 31 of that year. The City will review and approve such Annual Financial Statement, or request reasonable revisions, within 30 days after receipt. If as the result of the City’s review of the statement, there is an increase in the amount of any payment due and payable to City (as the result, for example, of a determination that the actual amount of Residual Receipts to which the City is entitled exceeds the amount of City’s share of Residual Receipts shown in the Annual Financial Statement submitted by Borrower), Borrower will promptly pay to the City the difference, with interest, from the date on which such payment was due, at the rate of one percent (1%) over the Prime Rate announced by Bank of America, but in any event within ten (10) days of notice of such increase. b. The City’s Share of Residual Receipts to be applied to this Note, the In Lieu Fees Note, and the HOME Note will be 5.99%. The City’s Share of Residual Receipts will be applied to the HOME Note, the LMIHAF Note, and the In Lieu Fees Note as follows: 40.7% (i.e., $651,244/$1,600,000) will be applied to the HOME Note, 36.0% (i.e., $576,000/$1,600,000) will be applied to this Note, and 23.3% (i.e., $372,756/$1,600,000) will be applied to the In Lieu Fees Note.
9. All payments applied to this Note will be applied first to penalties and late fees, then to interest, then to reduce the principal amount owed.
10. If there are Cost Savings with respect to the Project, subject to the requirements of the other Project lenders, the following will occur: (1) to the extent of fifty percent (50%) of the Cost Savings, any undisbursed capital contributions made by Borrower’s Investor Limited Partner will be released to the City as a payment of accrued interest on and then reduction of the principal amount of the City Loan; and (2) each Lender’s unfunded commitment will terminate. For purposes hereof, “Cost Savings”, shall mean the difference between the total sources of funds and 382
480 South Batavia Street
LMIHAF Note
the total cost of development as shown in the Borrower’s cost certification contained in Borrower’s application to the California Tax Credit Allocation Committee for a Form 8609 for the Project (“Tax Credit Report”); provided, however, the Cost Savings will be adjusted to take into account (i) the loss of any equity investment due to an adjustment in the allowable tax credits; provided that the tax credit factor applied to the required equity contribution will be as set forth in Borrower’s limited partnership agreement; and (ii) any reduction in the Senior Loans required by the Senior Loan Documents. The amount payable to City under this paragraph will be paid within sixty (60) days following submittal of the Tax Credit Report to the California Tax Credit Allocation Committee.
11. Prohibitions on Transfer.
a. Prior to the repayment in full of the LMIHAF Loan and expiration of the Term of the Agreement Containing Covenants, the Borrower must not, except for Permitted Transfers or as permitted by the Affordable Housing Agreement, assign or attempt to assign the Affordable Housing Agreement or this Note or any right therein or herein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property (referred to hereinafter as a “ Transfer”), without prior written approval of the City, except as expressly permitted by the Affordable Housing Agreement or this Note. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions.
City shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to this Section 11, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. b. Proposed transferees (other than an Affiliate of Borrower) must have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City, to fulfill Borrower’s obligations undertaken in the Affordable Housing Agreement, the Agreement Containing Covenants, and this Note. A proposed transferee (including an Affiliate of Borrower), by instrument in writing satisfactory to the City and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the City must expressly assume all of Borrower’s obligations under the Affordable Housing Agreement, the Agreement Containing Covenants, and this Note and agree to be subject to all conditions and restrictions applicable to Borrower. There must be submitted to the City for review all instruments and other legal documents proposed to affect any such transfer; and if approved by the City its approval will be indicated to Borrower in writing. If consent should be given, such transfer will be subject to this Section 11.
c. In the absence of specific written agreement by the City, no unauthorized Transfer, or approval thereof by the City, will be deemed to relieve the Borrower or any other party from any obligations under the Affordable Housing Agreement, the Agreement Containing Covenants, or this Note.
d. In the event of a Transfer prior to the time the LMIHAF Loan is paid in full without the prior written consent of the City, the remaining principal balance of the LMIHAF Loan and all accrued but unpaid interest will be immediately due and payable. 383
480 South Batavia Street
LMIHAF Note
e. As used herein, “Transfer” means
i. the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project. ii. “Transfer” also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of an interest in Borrower, or a conversion of Borrower to an entity form other than that of Borrower at the time of execution of the Affordable Housing Agreement, except that, a cumulative change in ownership interest of a general partner of Borrower of forty-nine percent (49%) or less will not be deemed a “Transfer” for purposes of this Note.
12. The City will not unreasonably withhold, condition, or delay its approval of any matter for which its approval is required hereunder. The City’s disapproval will be in writing and contain the City’s reasons for disapproval.
13. The LMIHAF Loan is funded from the City’s LMIHAF. Accordingly, Borrower agrees for itself, its successors and assigns that the use of the property will be subject to the restrictions on rent and occupancy set forth in the Agreement Containing Covenants.
14. Subject to the provisions and limitations of this Section 14, the obligation to repay the LMIHAF Loan is a nonrecourse obligation of the Borrower. Borrower and each general partner or limited partner of Borrower will not have any personal liability for repayment of the loan, except as provided in this Section 14. The sole recourse of City will be the exercise of its rights against the Property and other security for the LMIHAF Loan. Provided, however, that the foregoing will not (a) constitute a waiver of an obligation evidenced by this Note or the City Deed of Trust; (b) limit the right of the City to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under this Note and the City Deed of Trust or any action or proceeding hereunder so long as no judgment in the nature of a deficiency judgment will be asked for or taken against Borrower; (c) release or impair this Note or the City Deed of Trust; (d) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any other remedy against the mortgaged Property or other instrument securing the Note or as prescribed by law or in equity in case of default; (e) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of credit securing this Note; (f) relieve Borrower of its obligations under an indemnity delivered by Borrower to City; or (g) affect in any way the validity of a guarantee or indemnity from any person of all or any of the obligations evidenced and secured by this Note and the City Deed of Trust. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Borrower and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Borrower, 384
480 South Batavia Street
LMIHAF Note
its principals, shareholders, partners or its successors and assigns received rentals, other revenues, or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service, real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Borrower in connection with the operation of the mortgaged Property, which are then due and payable. Notwithstanding the first sentence of this paragraph, City may recover directly from Borrower or from any other party (other than Borrower’s Investor Limited Partner):
a. damages, costs and expenses incurred by the City as a result of fraud or criminal act or acts of Borrower or a partner, shareholder, officer, director or employee of Borrower, or of a member or general or limited partner of Borrower, or of a general or limited partner of such member or general or limited partner;
b. damages, costs and expenses incurred by City as a result of misappropriation of funds provided for the payment of Acquisition and Development Costs, as described in the Affordable Housing Agreement, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; c. all amounts owing by Borrower pursuant to the indemnification regarding Hazardous Substances under the Environmental Indemnity, and d. all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that City will pay Borrower’s reasonable court costs and attorneys’ fees if Borrower is the prevailing party in such enforcement or collection action).
15. Borrower waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of an extension or extensions of the time of payment or of a due date under this Note, in whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney’s fees, which may be incurred by the holder hereof, in the enforcement of this Note, the City Deed of Trust or any term or provision of either thereof.
16. Upon the failure of Borrower to perform or observe a term or provision of this Note, or upon the occurrence of an event of default under the terms of the City Deed of Trust, the Affordable Housing Agreement, the Agreement Containing Covenants, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, and after expiration of the applicable cure period, the holder may exercise its rights or remedies hereunder or thereunder.
385
480 South Batavia Street
LMIHAF Note
17. Defaults and Remedies.
a. Subject to the extensions of time set forth in Section 18, and subject to the further provisions of this Section 17, failure or delay by Borrower to perform a material term or provision of this Note, the City Deed of Trust, the Affordable Housing Agreement, the Agreement Containing Covenants, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, constitutes a default under this Note. b. The City will give written notice of default to Borrower, specifying the default complained of by the City. Delay in giving such notice will not constitute a waiver of any default nor will it change the time of default.
c. Failures or delays by the City in asserting its rights and remedies as to a default will not operate as a waiver of default or of such rights or remedies. Delays by the City in asserting its rights and remedies will not deprive the City of its right to institute and maintain actions or proceedings which it may deem necessary to protect, assert, or enforce such rights or remedies.
d. If a monetary event of default occurs under the terms of this Note or the City Deed of Trust, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder the City will give Borrower, each general partner, and the Investor Limited Partner, concurrent written notice of such default. Borrower will have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by the City under this Note and the City Deed of Trust. In no event will the City be precluded from exercising remedies if its security becomes or is about to become materially impaired by a failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received. e. If a non-monetary event of default occurs under the terms of the Affordable Housing Agreement, this Note, the City Deed of Trust, the Agreement Containing Covenants, or a document implementing the Affordable Housing Agreement or a deed of trust securing a Senior Loan or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder, the City will give Borrower, each General Partner, and the Investor Limited Partner, concurrent notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Borrower will have such period to effect a cure prior to exercise of remedies by the City under the Affordable Housing Agreement, the Agreement Containing Covenants, this Note and/or the City Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Borrower will have such additional time as is reasonably necessary to cure the default prior to the City’s exercise of remedies. If Borrower fails to take corrective action or to cure the default within the time set forth above in this Subsection
17.e, the City will give Borrower, the Senior Lender, the Investor Limited Partner written notice thereof, whereupon the Investor Limited Partner, subject to the terms of Borrower’s partnership agreement, may take such corrective action, including removing and replacing a general partner. 386
480 South Batavia Street
LMIHAF Note
The Investor Limited Partner will have 45 days, or such longer period as is approved by the City Executive Director or designee, to remove and replace such general partner of Borrower. The City agrees to accept cures tendered by a Senior Lender or the Investor Limited Partner within the time period provided herein. Additionally, in the event the Senior Lender, or Investor Limited Partner is precluded from curing a non-monetary default due to a bankruptcy, injunction, or similar proceeding by or against Borrower or a general partner, the City agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which such party is so precluded from acting, not to exceed 90 days or such additional time as is reasonably approved by the City Executive Director or designee, provided such Senior Lender or Investor Limited Partner is otherwise in compliance with the foregoing provisions. In no event will City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within one hundred eighty (180) days after the notice of default is received or deemed received or such additional time as is reasonably approved by the City Executive Director or designee.
f. A notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; a notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt by Borrower; and a notice of default that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof. Notices will be sent to the following addresses:
To City:
THE CITY OF ORANGE
300 E. Chapman Avenue
Orange, California 92866
Attention: City Manager
To Borrower:
Mercy Housing California 107, L.P.
1500 S. Grand Avenue, Suite 100
Los Angeles, California 90015
Attn: Erika Villablanca
18. Notwithstanding specific provisions of this Note, Borrower will not be deemed to be in default for failure to perform a non-monetary obligation hereunder where delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub-contractor or supplier, acts of the City or any other public or governmental authority or entity, or any causes beyond the 387
480 South Batavia Street
LMIHAF Note
control or without the fault of the Borrower. An extension of time for any such cause (a “ Force Majeure Delay”) will be for the period of the enforced delay and will commence to run from the time of the commencement of the cause, if notice by Borrower is sent to the City within fifteen (15) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Delay unless and until Borrower delivers to the City written notice describing the event, its cause, when and how Borrower obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom.
Borrower will deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event. Times of performance under this Note may also be extended in writing by the City and Borrower, such revision approval may be denied by either party in its sole discretion.
19. If the rights created by this Note are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations must be completely performed and paid.
20. The City Deed of Trust securing this Note and all other LMIHAF Loan Documents, except the Agreement Containing Covenants, have been made subordinate and junior to the claims, liens or charges of the Construction Loan Deed of Trust and all other instruments securing the Construction Loan by that certain Subordination Agreement by and among City, Borrower and Construction Lender which is being recorded concurrently with the execution and delivery of this Note and the recordation of the City Deed of Trust and will also be subordinate and junior to the claims, liens or charges of the Permanent Financing Deeds of Trust securing Senior Loans and all other instruments securing the Permanent Financing involving Senior Loans.
21. The City agrees that the lien of the City Deed of Trust will be subordinate to the extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the “Extended Use Agreement”) recorded against the Project; provided that such Extended Use Agreement, by its terms, must terminate upon foreclosure under the City Deed of Trust or upon a transfer of the Project by instrument in lieu of foreclosure or comparable conversion of the Loan, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code. The following rule contained in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, will also apply: for a period of three (3) years from the date of foreclosure, with respect to any unit that had been regulated by the Extended Use Agreement, (i) none of the tenants occupying those units at the time of foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code. Borrower acknowledges and agrees that a default, event of default, or breach (however such terms may be defined) under the Extended Use Agreement will be an event of default under this Note and the City Deed of Trust and that all costs, damages or other amounts, including reasonable attorneys’ fees incurred by the City as a result of an event of default by Borrower, and all amounts paid by City to cure a default under the Extended Use Agreement will be an obligation of Borrower and become a part of the debt evidenced by this Note and secured by the City Deed of Trust.
388
480 South Batavia Street
LMIHAF Note
22. With regard to an approval, consent, or other determination by the City required under this Note or the other LMIHAF Loan Documents, the City will act reasonably and in good faith.
23. Borrower will have the right to prepay the obligation evidenced by this Note, or any part thereof, without penalty. However, prepayment of the obligation evidenced by this Note prior to the expiration of the term of the Agreement Containing Covenants will not entitle Borrower to a reconveyance of the City Deed of Trust.
24. This Note may be executed by each signatory on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ON FOLLOWING PAGE]
389
480 South Batavia Street
LMIHAF Note
S-1
IN WITNESS WHEREOF Borrower has executed this Note as of the day and year first set forth above.
BORROWER
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: ____________________________
Erika Villablanca,
Vice President
390
480 South Batavia Street
In Lieu Fees Note
PROMISSORY NOTE
TO THE CITY OF ORANGE
(IN LIEU FEES FUNDS)
3% Interest Orange, California
$372,756 _____________________, 202_
FOR VALUE RECEIVED, MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Borrower”), hereby promises to pay to the CITY OF ORANGE, a municipal corporation of the State of California (“City”), or order, a principal amount of THREE HUNDRED SEVENTY-TWO THOUSAND SEVEN HUNDRED FIFTY-SIX DOLLARS ($372,756), being the principal amount of the City’s loan of In Lieu Fees construction to permanent funds (the “ In Lieu Fees Loan ”). This Note is given pursuant to that certain Affordable Housing Agreement dated as of ________________, 2022, between Borrower and the City (the “Affordable Housing Agreement”) and evidences the In Lieu Fees Loan to Borrower, which provides part of the financing for the acquisition and development of that certain real property located at 480 South Batavia Street in the City of Orange, legally described in the Deed of Trust securing this Note (the “Property”). The obligation of Borrower to City hereunder is subject to the terms of the Affordable Housing Agreement, this Note and the following instruments, each dated on or about the date hereof, and, where applicable, executed and delivered by Borrower for the purpose of securing this Note: an Agreement Containing Covenants (Including Rental Restrictions) (“Agreement Containing Covenants”); a Subordinated Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) (“City Deed of Trust”); an Assignment of Rents and Leases (“Assignment of Rents”); an Assignment of Agreements (“Assignment of Agreements”); and a UCC-1 Financing Statement. Said documents are public records on file in the offices of City, and the provisions of said documents are incorporated herein by this reference. The Borrower will pay interest at the rate, in the amount and at the time hereinafter provided.
1. Capitalized terms not otherwise defined herein will have the meaning ascribed to such terms in the Affordable Housing Agreement. In addition, the following terms have the following meanings:
“Acquisition and Development Costs” means the total cost of acquiring the Property and developing, rehabilitating and constructing the Improvements thereon, in accordance with the Affordable Housing Agreement.
“Affiliate” means any Person directly or indirectly controlling, controlled by or under common control with another Person. The term “control” as used in the immediately preceding sentence, means the power to direct the management or the power to control election of the board of directors. It will be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies Attachment 10
391
480 South Batavia Street
In Lieu Fees Note
of the controlled entity. For purposes of this definition, each general partner will be considered an “Affiliate” of Borrower.
“Annual Financial Statement” means the annual audited financial statement of Revenue and Operating Expenses and balance sheet for the Improvements, prepared at the Borrower’s expense, by an independent certified public accountant reasonably acceptable to the City, which will form the basis for determining the Residual Receipts. “City Deed of Trust ” means the Subordinated Deed of Trust, Security Agreement and Fixture Filing (with Assignment of Rents) executed by Borrower in favor of City and dated on or about the date hereof, which secures this Note and the In Lieu Fees Loan evidenced hereby. “City’s Share of Residual Receipts” will have the meaning set forth in Section 8, below. “Construction Financing Event” means the point in time when all conditions precedent to the release of the Construction Loan funds and the City Loan funds have been satisfied, in accordance with the Affordable Housing Agreement.
“Construction Loan ” means the Construction Period loan to be made to Borrower by Umpqua Bank (together with its successors and assigns, “ Construction Lender”) at the time of the Construction Financing Event, secured by the Construction Loan Deed of Trust. “Construction Loan Deed of Trust ” means the deed of trust securing the Construction Loan that is first in priority.
“Construction Period ” means the period of time commencing upon the Construction Financing Event and ending upon the repayment of the Construction Loan and the funding of the Permanent Financing.
“Conversion” means the point in time when the Permanent Financing has been funded, the Limited Partner Capital Contribution has been funded (subject to adjustment as provided in the Partnership Agreement and less that portion, not to exceed 10%, of the Limited Partner Capital Contribution that will be funded upon receipt of Form(s) 8609), and the Construction Loan has been repaid in full.
“Deferred Developer Fee” means that portion of the Developer Fee which was not paid prior to the date of Conversion and which will be paid from the Revenue remaining after payment of Operating Expenses, prior to any payment of Residual Receipts to the City. The term “Deferred Developer Fee” will include any loan or capital contribution made by a partner of Borrower to pay such deferred fee.
“Developer Equity” means funds provided by the Borrower for payment of Acquisition and Development Costs and will not include the Senior Loan, the LMIHAF Loan, the In Lieu Fees Loan, the HOME Loan or any other borrowed funds, and will include the Deferred Developer Fee, the Investor Limited Partner’s capital contribution, as well as any other funds of the Borrower. 392
480 South Batavia Street
In Lieu Fees Note
“Developer Fee” means the fee in the amount set forth in the Project Budget. “Environmental Indemnity” means the indemnity in the form attached to the Affordable Housing Agreement as Attachment No. 15, which is incorporated herein by this reference. “General Partner ” means Mercy Housing California 107 LLC, a California limited liability company, and its authorized successors and assigns. “HOME Loan” means the loan from the City to Borrower pursuant to the Affordable Housing Agreement as amended from time to time, in the amount of $651,244, which is evidenced by the HOME Loan Note and secured by the lien of the City Deed of Trust that is second in priority to the lien of the Senior Loan Deed of Trust.
“HOME Note” means the Promissory Note dated as of the date hereof, evidencing the HOME Loan.
“Improvements” means the 50-unit residential development and ancillary facilities to be constructed and rehabilitated on the Property, all as described in the Affordable Housing Agreement.
“In Lieu Fees Loan Documents” means this Note, the City Deed of Trust, the Agreement Containing Covenants, the Assignment of Rents, the Assignment of Agreements, the Environmental Indemnity, and the UCC-1 Financing Statement, each dated on or about the date hereof.
“In Lieu Fees Loan ” means the loan made by the City to Borrower in the maximum amount of $372,756, which is evidenced by the In Lieu Fees Note and secured by the City Deed of Trust.
“In Lieu Fees Note ” means the Promissory Note dated as of the date hereof, evidencing the In Lieu Fees Loan.
“Investor Limited Partner” means Wincopin Circle LLLP and its authorized successors and assigns.
“LMIHAF Loan” means the loan made by the City to Borrower in the maximum amount of $576,000, which is evidenced by the LMIHAF Note and secured by the City Deed of Trust. “LMIHAF Note” means the Promissory Note dated as of the date hereof, evidencing the LMIHAF Loan.
“Low Income Housing Tax Credits” means tax credits authorized by the Tax Reform Act of 1986 and governed by Section 42 of the Internal Revenue Code. 393
480 South Batavia Street
In Lieu Fees Note
“Net Proceeds” means the proceeds of a sale, transfer or refinancing, less the customary and reasonable costs of the transaction.
“Operating Expenses” means actual, reasonable and customary costs, fees and expenses directly attributable to the operation, maintenance and management of the Property that are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles, expressly including, without limitation, payment of the following:
a. Principal and interest and all periodic fees and costs due and payable on the Senior Loan;
b. Property and other taxes and assessments imposed on the Project; c. A general partner partnership management fee to the General Partner of Borrower not to exceed $25,000 per year, to be increased at an annual rate of three percent (3%), which will accrue to the extent not paid;
d. General administrative expenses including but not limited to advertising and marketing, security services and systems and similar customary administrative expenses;
e. Maintenance and repair including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial, supplies, and similar customary services; f. Cash deposited into a replacement reserve fund in the amount of $500 per unit per year;
g. Cash deposited into an operating reserve fund in such reasonable amounts as are required by Project lenders, the California Tax Credit Allocation Committee, and the Investor Limited Partner from time to time, and approved by the City; h. Utility services not paid for directly or reimbursed by tenants, including but not limited to water, sewer, trash collection, gas and electricity; i. License or certificate of occupancy fees required for operation of the Project; j. Premiums for property damage and liability insurance; k. Cable television, satellite and similar services;
l. Recreational amenities, supplies and services;
m. Reasonable property management fee payable to a property manager acceptable to the City in an annual amount equal to $41,160 pursuant to a management contract approved by the City;
n. A reasonable resident services coordinator fee payable to a coordinator acceptable to the City;
394
480 South Batavia Street
In Lieu Fees Note
o. Purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves);
p. Fees and expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party; and
q. An Asset Management Fee to Borrower’s Limited Partner in an amount not to exceed $5,000 per year, to be increased at an annual rate of three percent (3.0%); r. Repayment of operating expense loans or development deficit loans to Borrower’s partners; and
s. A Project monitoring fee to the City in an amount equal to $6,000 per year.
Operating Expenses will not include the following: depreciation, amortization, depletion or other non-cash expenses, any amount expended from a reserve. Operating Expenses will be subject to the reasonable approval of the City.
“Permanent Financing ” means the means the loans and other sources of permanent financing identified in the Method of Financing (Attachment No. 3) attached to the Affordable Housing Agreement, including without limitation the Seller Carryback Loan, the CALHFA SNHP Loan, the HCD NPLH Loan and the OCHCD Loan to be made to Borrower, secured by the Permanent Financing Deeds of Trust.
“Permanent Financing Deeds of Trust ” means the deeds of trust and other security instruments securing the Permanent Financing.
“Permanent Period” means the period of time commencing upon the repayment of the Construction Loan and the funding of the Permanent Financing and payment of the Limited Partner Capital Contribution.
“Permitted Transfer ” means any of the following, provided (except for subsection f. below) Borrower, a General Partner of Borrower, or an Affiliate of such General Partner, retains day-to-day control over management and operations of the Property and the Improvements and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti- Terrorism Laws:
a. An assignment of the Affordable Housing Agreement and Borrower’s interests in the Property to an Affiliate or a conveyance back from the Affiliate to Borrower; b. A conveyance of a security interest in the Property or any portion thereof or interest therein, in connection with a Senior Loan;
c. The inclusion of equity participation in the Project by addition of limited partners to Borrower’s partnership or similar mechanism, and transfers of limited partnership interests in Borrower’s partnership;
395
480 South Batavia Street
In Lieu Fees Note
d. The lease for occupancy of all or any part of the Improvements on the Property in accordance with the Affordable Housing Agreement;
e. The granting of easements or permits to facilitate the development of the Property in accordance with the Affordable Housing Agreement;
f. The withdrawal, removal and/or replacement of a general partner of Borrower’s partnership pursuant to the terms of Borrower’s partnership agreement, or a conveyance of Borrower’s interest in the Property and the Improvements and/or a transfer of limited partnership interests to a general partner or an affiliate of Enterprise pursuant to the option provided to that partner in Borrower’s partnership agreement, will not constitute a default under this Agreement or any of the In Lieu Fees Loan Documents, nor will such actions accelerate the maturity of the In Lieu Fees Loan, provided that any required substitute general partner is reasonably acceptable to the City, as evidenced by the City’s written consent, and is selected with reasonable promptness; and
g. A transfer approved in writing by City’s Executive Director or designee, at his or her sole discretion.
A transfer described in clauses a., b., or c. will be subject to the reasonable approval of the City Executive Director or designee; provided that, the City approves the transfer of limited partner interests in Borrower’s partnership, so long as such transfer is not a result of a resyndication of the Low Income Housing Tax Credits and does not otherwise result in increased equity participation in Borrower, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
“Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, domestic or foreign. “Property” means the real property described as the “Property” in and legally described as set forth in Exhibit “A” of the City Deed of Trust.
“Residual Receipts” means the Revenue minus the Operating Expenses, calculated on a 12-month basis, minus the theretofore unpaid portion of the Deferred Developers Fee. All calculations of Residual Receipts will be subject to verification and reasonable approval by the City.
“Revenue” means the gross rental income from the Improvements, and any other income to the Borrower derived from the ownership, operation and management of the Property, including but not limited to the following: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to 396
480 South Batavia Street
In Lieu Fees Note
repair or rebuild the Project; and condemnation awards for a taking of part or all of the Project for a temporary period. “Revenue” will also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Project, except that the value of services provided by on-site manager(s) will not be treated as “Revenue” if no more than one dwelling unit is leased to or otherwise used by on-site manager(s). “Revenue” will not include tenants’ security deposits, proceeds from the Senior Loan, the City Loan, Developer Equity, including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts.
“Senior Loan” means the Construction Period loan made by Construction Lender (in its capacity as Servicer of the Construction Period loan) to Borrower in the approximate amount of $22,630,399 and during the Permanent Period, the HCD NPLH Loan and OCHCD Loans Deeds of Trust, which will be secured by deeds of trust that is senior and superior to the City Deed of Trust (but not the Construction Loan Deed of Trust), or any other loan (other than the Construction Loan) secured by a deed of trust or other instrument to which the City agrees, in its sole discretion, to subordinate this Note and the City Deed of Trust.
“Term” of this Note means a term that expires on the fifty-fifth (55th) anniversary of the date of Conversion.
“Transfer” will have the meaning set forth in Section 11.e of this Note.
2. This Note evidences the obligation of the Borrower to the City for the repayment of the In Lieu Fees Loan. None of the funds provided pursuant to the In Lieu Fees Loan were funded directly or indirectly with any obligation the interest on which is exempt from tax under Section 103 of the Internal Revenue Code of 1986, as amended, or pursuant to any United States government federal source.
3. This Note is payable at the principal office of City, 300 E. Chapman Avenue, Orange, California 92866, or at such other place as the holder hereof may inform the Borrower in writing, in lawful money of the United States.
4. This Note is secured by the City Deed of Trust.
5. This Note will bear three percent (3%) simple interest.
6. Except in the event of a default described in Section 7 hereof, no payments will be due and payable under this Note except to the extent of (a) the City’s share of Residual Receipts as described in Section 8, below, and (b) any refinancing, Cost Savings or Additional Proceeds, subject to the limitations set forth below.
7. The entire unpaid principal balance of this Note and any accrued but unpaid interest will be due and payable upon the expiration of the Term hereof, or immediately upon the occurrence of either of the following:
397
480 South Batavia Street
In Lieu Fees Note
a. if the Property or any portion thereof or interest therein is sold, transferred, assigned or refinanced, without the prior written approval of the City, except as otherwise permitted in this Note; or
b. if there is a default by the Borrower under the terms of this Note, the City Deed of Trust, the Affordable Housing Agreement, the Agreement Containing Covenants, or any deed of trust or other instrument securing the Senior Loan or other obligations secured by a deed of trust on the Property, which is not cured within the respective time period provided herein and therein.
8. Prior to the expiration of the Term hereof, Borrower will be obligated to repay the In Lieu Fees Loan exclusively from the City’s share of Residual Receipts, as follows:
a. Annually, not later than the thirtieth (30th) day of April, beginning with the year following the year in which Conversion occurs, Borrower will submit to City an audited Annual Financial Statement for the preceding calendar year, prepared by a certified public accountant reasonably acceptable to the City, determining the amount of Residual Receipts, if any, generated in that year, together with payment of the City’s Share of such Residual Receipts. The first such Annual Financial Statement will be for the partial year beginning on the date of Conversion and ending on December 31 of that year. The City will review and approve such Annual Financial Statement, or request reasonable revisions, within 30 days after receipt. If as the result of the City’s review of the statement, there is an increase in the amount of any payment due and payable to City (as the result, for example, of a determination that the actual amount of Residual Receipts to which the City is entitled exceeds the amount of City’s share of Residual Receipts shown in the Annual Financial Statement submitted by Borrower), Borrower will promptly pay to the City the difference, with interest, from the date on which such payment was due, at the rate of one percent (1%) over the Prime Rate announced by Bank of America, but in any event within ten (10) days of notice of such increase. b. The City’s Share of Residual Receipts to be applied to this Note, the LMIHF Note, and the HOME Note will be 5.99%. The City’s Share of Residual Receipts will be applied to the HOME Note, the LMIHAF Note, and the In Lieu Fees Note as follows: 40.7% (i.e., $651,244/$1,600,000) will be applied to the HOME Note, 36.0% (i.e., $576,000/$1,600,000) will be applied to the LMIHAF Note, and 23.3% (i.e., $372,756/$1,600,000) will be applied to this Note.
9. All payments applied to this Note will be applied first to penalties and late fees, then to interest, then to reduce the principal amount owed.
10. If there are Cost Savings with respect to the Project, subject to the requirements of the other Project lenders, the following will occur: (1) to the extent of fifty percent (50%) of the Cost Savings, any undisbursed capital contributions made by Borrower’s Investor Limited Partner will be released to the City as a payment of accrued interest on and then reduction of the principal amount of the City Loan; and (2) each Lender’s unfunded commitment will terminate. For purposes hereof, “Cost Savings”, shall mean the difference between the total sources of funds and 398
480 South Batavia Street
In Lieu Fees Note
the total cost of development as shown in the Borrower’s cost certification contained in Borrower’s application to the California Tax Credit Allocation Committee for a Form 8609 for the Project (“Tax Credit Report”); provided, however, the Cost Savings will be adjusted to take into account (i) the loss of any equity investment due to an adjustment in the allowable tax credits; provided that the tax credit factor applied to the required equity contribution will be as set forth in Borrower’s limited partnership agreement; and (ii) any reduction in the Senior Loans required by the Senior Loan Documents. The amount payable to City under this paragraph will be paid within sixty (60) days following submittal of the Tax Credit Report to the California Tax Credit Allocation Committee.
11. Prohibitions on Transfer.
a. Prior to the repayment in full of the In Lieu Fees Loan and expiration of the Term of the Agreement Containing Covenants, the Borrower must not, except for Permitted Transfers or as permitted by the Affordable Housing Agreement, assign or attempt to assign the Affordable Housing Agreement or this Note or any right therein or herein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property (referred to hereinafter as a “ Transfer”), without prior written approval of the City, except as expressly permitted by the Affordable Housing Agreement or this Note. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions.
City shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to this Section 11, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. b. Proposed transferees (other than an Affiliate of Borrower) must have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City, to fulfill Borrower’s obligations undertaken in the Affordable Housing Agreement, the Agreement Containing Covenants, and this Note. A proposed transferee (including an Affiliate of Borrower), by instrument in writing satisfactory to the City and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the City must expressly assume all of Borrower’s obligations under the Affordable Housing Agreement, the Agreement Containing Covenants, and this Note and agree to be subject to all conditions and restrictions applicable to Borrower. There must be submitted to the City for review all instruments and other legal documents proposed to affect any such transfer; and if approved by the City its approval will be indicated to Borrower in writing. If consent should be given, such transfer will be subject to this Section 11.
c. In the absence of specific written agreement by the City, no unauthorized Transfer, or approval thereof by the City, will be deemed to relieve the Borrower or any other party from any obligations under the Affordable Housing Agreement, the Agreement Containing Covenants, or this Note.
d. In the event of a Transfer prior to the time the In Lieu Fees Loan is paid in full without the prior written consent of the City, the remaining principal balance of the In Lieu Fees Loan and all accrued but unpaid interest will be immediately due and payable. 399
480 South Batavia Street
In Lieu Fees Note
e. As used herein, “Transfer” means
i. the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project. ii. “Transfer” also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of an interest in Borrower, or a conversion of Borrower to an entity form other than that of Borrower at the time of execution of the Affordable Housing Agreement, except that, a cumulative change in ownership interest of a general partner of Borrower of forty-nine percent (49%) or less will not be deemed a “Transfer” for purposes of this Note.
12. The City will not unreasonably withhold, condition, or delay its approval of any matter for which its approval is required hereunder. The City’s disapproval will be in writing and contain the City’s reasons for disapproval.
13. The In Lieu Fees Loan is funded from the City’s In Lieu Fees funds. Accordingly, Borrower agrees for itself, its successors and assigns that the use of the property will be subject to the restrictions on rent and occupancy set forth in the Agreement Containing Covenants.
14. Subject to the provisions and limitations of this Section 14, the obligation to repay the In Lieu Fees Loan is a nonrecourse obligation of the Borrower. Borrower and each general partner or limited partner of Borrower will not have any personal liability for repayment of the loan, except as provided in this Section 14. The sole recourse of City will be the exercise of its rights against the Property and other security for the In Lieu Fees Loan. Provided, however, that the foregoing will not (a) constitute a waiver of an obligation evidenced by this Note or the City Deed of Trust; (b) limit the right of the City to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under this Note and the City Deed of Trust or any action or proceeding hereunder so long as no judgment in the nature of a deficiency judgment will be asked for or taken against Borrower; (c) release or impair this Note or the City Deed of Trust; (d) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any other remedy against the mortgaged Property or other instrument securing the Note or as prescribed by law or in equity in case of default; (e) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of credit securing this Note; (f) relieve Borrower of its obligations under an indemnity delivered by Borrower to City; or (g) affect in any way the validity of a guarantee or indemnity from any person of all or any of the obligations evidenced and secured by this Note and the City Deed of Trust. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Borrower and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Borrower, 400
480 South Batavia Street
In Lieu Fees Note
its principals, shareholders, partners or its successors and assigns received rentals, other revenues, or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service, real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Borrower in connection with the operation of the mortgaged Property, which are then due and payable. Notwithstanding the first sentence of this paragraph, City may recover directly from Borrower or from any other party (other than Borrower’s Investor Limited Partner):
a. damages, costs and expenses incurred by the City as a result of fraud or criminal act or acts of Borrower or a partner, shareholder, officer, director or employee of Borrower, or of a member or general or limited partner of Borrower, or of a general or limited partner of such member or general or limited partner;
b. damages, costs and expenses incurred by City as a result of misappropriation of funds provided for the payment of Acquisition and Development Costs, as described in the Affordable Housing Agreement, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; c. all amounts owing by Borrower pursuant to the indemnification regarding Hazardous Substances under the Environmental Indemnity, and d. all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that City will pay Borrower’s reasonable court costs and attorneys’ fees if Borrower is the prevailing party in such enforcement or collection action).
15. Borrower waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of an extension or extensions of the time of payment or of a due date under this Note, in whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney’s fees, which may be incurred by the holder hereof, in the enforcement of this Note, the City Deed of Trust or any term or provision of either thereof.
16. Upon the failure of Borrower to perform or observe a term or provision of this Note, or upon the occurrence of an event of default under the terms of the City Deed of Trust, the Affordable Housing Agreement, the Agreement Containing Covenants, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, and after expiration of the applicable cure period, the holder may exercise its rights or remedies hereunder or thereunder.
401
480 South Batavia Street
In Lieu Fees Note
17. Defaults and Remedies.
a. Subject to the extensions of time set forth in Section 18, and subject to the further provisions of this Section 17, failure or delay by Borrower to perform a material term or provision of this Note, the City Deed of Trust, the Affordable Housing Agreement, the Agreement Containing Covenants, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, constitutes a default under this Note. b. The City will give written notice of default to Borrower, specifying the default complained of by the City. Delay in giving such notice will not constitute a waiver of any default nor will it change the time of default.
c. Failures or delays by the City in asserting its rights and remedies as to a default will not operate as a waiver of default or of such rights or remedies. Delays by the City in asserting its rights and remedies will not deprive the City of its right to institute and maintain actions or proceedings which it may deem necessary to protect, assert, or enforce such rights or remedies.
d. If a monetary event of default occurs under the terms of this Note or the City Deed of Trust, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder the City will give Borrower, each general partner, and the Investor Limited Partner, concurrent written notice of such default. Borrower will have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by the City under this Note and the City Deed of Trust. In no event will the City be precluded from exercising remedies if its security becomes or is about to become materially impaired by a failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received. e. If a non-monetary event of default occurs under the terms of the Affordable Housing Agreement, this Note, the City Deed of Trust, the Agreement Containing Covenants, or a document implementing the Affordable Housing Agreement or a deed of trust securing a Senior Loan or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder, the City will give Borrower, each General Partner, and the Investor Limited Partner, concurrent notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Borrower will have such period to effect a cure prior to exercise of remedies by the City under the Affordable Housing Agreement, the Agreement Containing Covenants, this Note and/or the City Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Borrower will have such additional time as is reasonably necessary to cure the default prior to the City’s exercise of remedies. If Borrower fails to take corrective action or to cure the default within the time set forth above in this Subsection
17.e, the City will give Borrower, the Senior Lender, the Investor Limited Partner written notice thereof, whereupon the Investor Limited Partner, subject to the terms of Borrower’s partnership agreement, may take such corrective action, including removing and replacing a general partner. 402
480 South Batavia Street
In Lieu Fees Note
The Investor Limited Partner will have 45 days, or such longer period as is approved by the City Executive Director or designee, to remove and replace such general partner of Borrower. The City agrees to accept cures tendered by a Senior Lender or the Investor Limited Partner within the time period provided herein. Additionally, in the event the Senior Lender, or Investor Limited Partner is precluded from curing a non-monetary default due to a bankruptcy, injunction, or similar proceeding by or against Borrower or a general partner, the City agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which such party is so precluded from acting, not to exceed 90 days or such additional time as is reasonably approved by the City Executive Director or designee, provided such Senior Lender or Investor Limited Partner is otherwise in compliance with the foregoing provisions. In no event will City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within one hundred eighty (180) days after the notice of default is received or deemed received or such additional time as is reasonably approved by the City Executive Director or designee.
f. A notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; a notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt by Borrower; and a notice of default that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof. Notices will be sent to the following addresses:
To City:
THE CITY OF ORANGE
300 E. Chapman Avenue
Orange, California 92866
Attention: City Manager
To Borrower:
Mercy Housing California 107, L.P.
1500 S. Grand Avenue, Suite 100
Los Angeles, California 90015
Attn: Erika Villablanca
18. Notwithstanding specific provisions of this Note, Borrower will not be deemed to be in default for failure to perform a non-monetary obligation hereunder where delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub-contractor or supplier, acts of the City or any other public or governmental authority or entity, or any causes beyond the 403
480 South Batavia Street
In Lieu Fees Note
control or without the fault of the Borrower. An extension of time for any such cause (a “ Force Majeure Delay”) will be for the period of the enforced delay and will commence to run from the time of the commencement of the cause, if notice by Borrower is sent to the City within fifteen (15) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Delay unless and until Borrower delivers to the City written notice describing the event, its cause, when and how Borrower obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom.
Borrower will deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event. Times of performance under this Note may also be extended in writing by the City and Borrower, such revision approval may be denied by either party in its sole discretion.
19. If the rights created by this Note are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations must be completely performed and paid.
20. The City Deed of Trust securing this Note and all other In Lieu Fees Loan Documents, except the Agreement Containing Covenants, have been made subordinate and junior to the claims, liens or charges of the Construction Loan Deed of Trust and all other instruments securing the Construction Loan by that certain Subordination Agreement by and among City, Borrower and Construction Lender which is being recorded concurrently with the execution and delivery of this Note and the recordation of the City Deed of Trust and will also be subordinate and junior to the claims, liens or charges of the Permanent Financing Deeds of Trust securing Senior Loans and all other instruments securing the Permanent Financing involving Senior Loans.
21. The City agrees that the lien of the City Deed of Trust will be subordinate to the extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the “Extended Use Agreement”) recorded against the Project; provided that such Extended Use Agreement, by its terms, must terminate upon foreclosure under the City Deed of Trust or upon a transfer of the Project by instrument in lieu of foreclosure or comparable conversion of the Loan, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code. The following rule contained in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, will also apply: for a period of three (3) years from the date of foreclosure, with respect to any unit that had been regulated by the Extended Use Agreement, (i) none of the tenants occupying those units at the time of foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code. Borrower acknowledges and agrees that a default, event of default, or breach (however such terms may be defined) under the Extended Use Agreement will be an event of default under this Note and the City Deed of Trust and that all costs, damages or other amounts, including reasonable attorneys’ fees incurred by the City as a result of an event of default by Borrower, and all amounts paid by City to cure a default under the Extended Use Agreement will be an obligation of Borrower and become a part of the debt evidenced by this Note and secured by the City Deed of Trust.
404
480 South Batavia Street
In Lieu Fees Note
22. With regard to an approval, consent, or other determination by the City required under this Note or the other In Lieu Fees Loan Documents, the City will act reasonably and in good faith.
23. Borrower will have the right to prepay the obligation evidenced by this Note, or any part thereof, without penalty. However, prepayment of the obligation evidenced by this Note prior to the expiration of the term of the Agreement Containing Covenants will not entitle Borrower to a reconveyance of the City Deed of Trust.
24. This Note may be executed by each signatory on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ON FOLLOWING PAGE]
405
480 South Batavia Street
In Lieu Fees Note
S-1
IN WITNESS WHEREOF Borrower has executed this Note as of the day and year first set forth above.
BORROWER
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: ____________________________
Erika Villablanca,
Vice President
406
480 South Batavia Street
HOME Note
PROMISSORY NOTE
TO THE CITY OF ORANGE
(HOME PROGRAM FUNDS)
3% Interest Orange, California
$651,244 _____________________, 202_
FOR VALUE RECEIVED, MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Borrower”), hereby promises to pay to the CITY OF ORANGE, a municipal corporation of the State of California (“ City”), or order, a principal amount of SIX HUNDRED FIFTY-ONE THOUSAND TWO HUNDRED FORTY-FOUR DOLLARS ($651,244), being the principal amount of the City’s loan of HOME Program construction to permanent funds (the “HOME Loan”). This Note is given pursuant to that certain Affordable Housing Agreement dated as of ________________, 2022, between Borrower and the City (the “ Affordable Housing Agreement”) and evidences the HOME Loan to Borrower, which provides part of the financing for the acquisition and development of that certain real property located at 480 South Batavia Street in the City of Orange, legally described in the Deed of Trust securing this Note (the “Property”). The obligation of Borrower to City hereunder is subject to the terms of the Affordable Housing Agreement, this Note and the following instruments, each dated on or about the date hereof, and, where applicable, executed and delivered by Borrower for the purpose of securing this Note: an Agreement Containing HOME Program Requirements (“ HOME Regulatory Agreement”); a Subordinated Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) (“ City Deed of Trust ”); an Assignment of Rents and Leases (“Assignment of Rents”); an Assignment of Agreements (“Assignment of Agreements”); and a UCC-1 Financing Statement. Said documents are public records on file in the offices of City, and the provisions of said documents are incorporated herein by this reference. The Borrower will pay interest at the rate, in the amount and at the time hereinafter provided.
1. Capitalized terms not otherwise defined herein will have the meaning ascribed to such terms in the Affordable Housing Agreement. In addition, the following terms have the following meanings:
“Acquisition and Development Costs” means the total cost of acquiring the Property and developing, rehabilitating and constructing the Improvements thereon, in accordance with the Affordable Housing Agreement.
“Affiliate” means any Person directly or indirectly controlling, controlled by or under common control with another Person. The term “control” as used in the immediately preceding sentence, means the power to direct the management or the power to control election of the board of directors. It will be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies Attachment 11
407
480 South Batavia Street
HOME Note
of the controlled entity. For purposes of this definition, each general partner will be considered an “Affiliate” of Borrower.
“Annual Financial Statement” means the annual audited financial statement of Revenue and Operating Expenses and balance sheet for the Improvements, prepared at the Borrower’s expense, by an independent certified public accountant reasonably acceptable to the City, which will form the basis for determining the Residual Receipts. “City Deed of Trust ” means the Subordinated Deed of Trust, Security Agreement and Fixture Filing (with Assignment of Rents) executed by Borrower in favor of City and dated on or about the date hereof, which secures this Note and the HOME Loan evidenced hereby. “City’s Share of Residual Receipts” will have the meaning set forth in Section 8, below. “Construction Financing Event” means the point in time when all conditions precedent to the release of the Construction Loan funds and the City Loan funds have been satisfied, in accordance with the Affordable Housing Agreement.
“Construction Loan ” means the Construction Period loan to be made to Borrower by Umpqua Bank (together with its successors and assigns, “ Construction Lender”) at the time of the Construction Financing Event, secured by the Construction Loan Deed of Trust. “Construction Loan Deed of Trust ” means the deed of trust securing the Construction Loan that is first in priority.
“Construction Period ” means the period of time commencing upon the Construction Financing Event and ending upon the repayment of the Construction Loan and the funding of the Permanent Financing.
“Conversion” means the point in time when the Permanent Financing has been funded, the Limited Partner Capital Contribution has been funded (subject to adjustment as provided in the Partnership Agreement and less that portion, not to exceed 10%, of the Limited Partner Capital Contribution that will be funded upon receipt of Form(s) 8609), and the Construction Loan has been repaid in full.
“Deferred Developer Fee” means that portion of the Developer Fee which was not paid prior to the date of Conversion and which will be paid from the Revenue remaining after payment of Operating Expenses, prior to any payment of Residual Receipts to the City. The term “Deferred Developer Fee” will include any loan or capital contribution made by a partner of Borrower to pay such deferred fee.
“Developer Equity” means funds provided by the Borrower for payment of Acquisition and Development Costs and will not include the Senior Loan, the LMIHAF Loan, the In Lieu Fees Loan, the HOME Loan or any other borrowed funds, and will include the Deferred Developer Fee, the Investor Limited Partner’s capital contribution, as well as any other funds of the Borrower. 408
480 South Batavia Street
HOME Note
“Developer Fee” means the fee in the amount set forth in the Project Budget. “Environmental Indemnity” means the indemnity in the form attached to the Affordable Housing Agreement as Attachment No. 15, which is incorporated herein by this reference. “General Partner ” means Mercy Housing California 107 LLC, a California limited liability company, and its authorized successors and assigns. “HOME Loan” means the loan from the City to Borrower pursuant to the Affordable Housing Agreement as amended from time to time, in the amount of $651,244, which is evidenced by this Note and secured by the lien of the City Deed of Trust that is second in priority to the lien of the Senior Loan Deed of Trust.
“HOME Loan Documents ” means this Note, the City Deed of Trust, the HOME Regulatory Agreement, the Assignment of Rents, the Assignment of Agreements, the Environmental Indemnity and the UCC-1 Financing Statement, each dated on or about the date hereof.
“HOME Note” means this Note dated as of the date hereof, evidencing the HOME Loan. “Improvements” means the 50-unit residential development and ancillary facilities to be constructed and rehabilitated on the Property, all as described in the Affordable Housing Agreement.
“In Lieu Fees Loan ” means the loan made by the City to Borrower in the maximum amount of $372,756, which is evidenced by the In Lieu Fees Note and secured by the City Deed of Trust.
“In Lieu Fees Note ” means the Promissory Note dated as of the date hereof, evidencing the In Lieu Fees Loan.
“Investor Limited Partner” means Wincopin Circle LLLP and its authorized successors and assigns.
“LMIHAF Loan” means the loan made by the City to Borrower in the maximum amount of $576,000, which is evidenced by the LMIHAF Note and secured by the City Deed of Trust. “LMIHAF Note” means the Promissory Note dated as of the date hereof, evidencing the LMIHAF Loan.
“Low Income Housing Tax Credits” means tax credits authorized by the Tax Reform Act of 1986 and governed by Section 42 of the Internal Revenue Code. 409
480 South Batavia Street
HOME Note
“Net Proceeds” means the proceeds of a sale, transfer or refinancing, less the customary and reasonable costs of the transaction.
“Operating Expenses” means actual, reasonable and customary costs, fees and expenses directly attributable to the operation, maintenance and management of the Property that are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles, expressly including, without limitation, payment of the following:
a. Principal and interest and all periodic fees and costs due and payable on the Senior Loan;
b. Property and other taxes and assessments imposed on the Project; c. A general partner partnership management fee to the General Partner of Borrower not to exceed $25,000 per year, to be increased at an annual rate of three percent (3%), which will accrue to the extent not paid;
d. General administrative expenses including but not limited to advertising and marketing, security services and systems and similar customary administrative expenses;
e. Maintenance and repair including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial, supplies, and similar customary services; f. Cash deposited into a replacement reserve fund in the amount of $500 per unit per year;
g. Cash deposited into an operating reserve fund in such reasonable amounts as are required by Project lenders, the California Tax Credit Allocation Committee, and the Investor Limited Partner from time to time, and approved by the City; h. Utility services not paid for directly or reimbursed by tenants, including but not limited to water, sewer, trash collection, gas and electricity; i. License or certificate of occupancy fees required for operation of the Project; j. Premiums for property damage and liability insurance; k. Cable television, satellite and similar services;
l. Recreational amenities, supplies and services;
m. Reasonable property management fee payable to a property manager acceptable to the City in an annual amount equal to $41,160 pursuant to a management contract approved by the City;
n. A reasonable resident services coordinator fee payable to a coordinator acceptable to the City;
410
480 South Batavia Street
HOME Note
o. Purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves);
p. Fees and expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party; and
q. An Asset Management Fee to Borrower’s Limited Partner in an amount not to exceed $5,000 per year, to be increased at an annual rate of three percent (3.0%); r. Repayment of operating expense loans or development deficit loans to Borrower’s partners; and
s. A Project monitoring fee to the City in an amount equal to $6,000 per year.
Operating Expenses will not include the following: depreciation, amortization, depletion or other non-cash expenses, any amount expended from a reserve. Operating Expenses will be subject to the reasonable approval of the City.
“Permanent Financing ” means the means the loans and other sources of permanent financing identified in the Method of Financing (Attachment No. 3) attached to the Affordable Housing Agreement, including without limitation the Seller Carryback Loan, the CALHFA SNHP Loan, the HCD NPLH Loan and the OCHCD Loans to be made to Borrower, secured by the Permanent Financing Deeds of Trust.
“Permanent Financing Deeds of Trust ” means the deeds of trust and other security instruments securing the Permanent Financing.
“Permanent Period” means the period of time commencing upon the repayment of the Construction Loan and the funding of the Permanent Financing and payment of the Limited Partner Capital Contribution.
“Permitted Transfer ” means any of the following, provided (except for subsection f. below) Borrower, a General Partner of Borrower, or an Affiliate of such General Partner, retains day-to-day control over management and operations of the Property and the Improvements and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti- Terrorism Laws:
a. An assignment of the Affordable Housing Agreement and Borrower’s interests in the Property to an Affiliate or a conveyance back from the Affiliate to Borrower; b. A conveyance of a security interest in the Property or any portion thereof or interest therein, in connection with a Senior Loan;
c. The inclusion of equity participation in the Project by addition of limited partners to Borrower’s partnership or similar mechanism, and transfers of limited partnership interests in Borrower’s partnership;
411
480 South Batavia Street
HOME Note
d. The lease for occupancy of all or any part of the Improvements on the Property in accordance with the Affordable Housing Agreement;
e. The granting of easements or permits to facilitate the development of the Property in accordance with the Affordable Housing Agreement;
f. The withdrawal, removal and/or replacement of a general partner of Borrower’s partnership pursuant to the terms of Borrower’s partnership agreement, or a conveyance of Borrower’s interest in the Property and the Improvements and/or a transfer of limited partnership interests to a general partner or an affiliate of Enterprise pursuant to the option provided to that partner in Borrower’s partnership agreement, will not constitute a default under this Agreement or any of the HOME Loan Documents, nor will such actions accelerate the maturity of the HOME Loan, provided that any required substitute general partner is reasonably acceptable to the City, as evidenced by the City’s written consent, and is selected with reasonable promptness; and
g. A transfer approved in writing by City’s Executive Director or designee, at his or her sole discretion.
A transfer described in clauses a., b., or c. will be subject to the reasonable approval of the City Executive Director or designee; provided that, the City approves the transfer of limited partner interests in Borrower’s partnership, so long as such transfer is not a result of a resyndication of the Low Income Housing Tax Credits and does not otherwise result in increased equity participation in Borrower, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
“Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, domestic or foreign. “Property” means the real property described as the “Property” in and legally described as set forth in Exhibit “A” of the City Deed of Trust.
“Residual Receipts” means the Revenue minus the Operating Expenses, calculated on a 12-month basis, minus the theretofore unpaid portion of the Deferred Developers Fee. All calculations of Residual Receipts will be subject to verification and reasonable approval by the City.
“Revenue” means the gross rental income from the Improvements, and any other income to the Borrower derived from the ownership, operation and management of the Property, including but not limited to the following: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to 412
480 South Batavia Street
HOME Note
repair or rebuild the Project; and condemnation awards for a taking of part or all of the Project for a temporary period. “Revenue” will also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Project, except that the value of services provided by on-site manager(s) will not be treated as “Revenue” if no more than one dwelling unit is leased to or otherwise used by on-site manager(s). “Revenue” will not include tenants’ security deposits, proceeds from the Senior Loan, the City Loan, Developer Equity, including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts.
“Senior Loan” means the Construction Period loan made by Construction Lender (in its capacity as Servicer of the Construction Period loan) to Borrower in the approximate amount of $22,630,399 and during the Permanent Period, the HCD NPLH Loan and OCHCD Loans Deeds of Trust, which will be secured by deeds of trust or other instrument to which the City agrees, in its sole discretion, to subordinate this Note and the City Deed of Trust. “Term” of this Note means a term that expires on the fifty-fifth (55th) anniversary of the date of Conversion.
“Transfer” will have the meaning set forth in Section 11.e of this Note.
2. This Note evidences the obligation of the Borrower to the City for the repayment of the HOME Loan. None of the funds provided pursuant to the HOME Loan were funded directly or indirectly with any obligation the interest on which is exempt from tax under Section 103 of the Internal Revenue Code of 1986, as amended, or pursuant to any United States government federal source.
3. This Note is payable at the principal office of City, 300 E. Chapman Avenue, Orange, California 92866, or at such other place as the holder hereof may inform the Borrower in writing, in lawful money of the United States.
4. This Note is secured by the City Deed of Trust.
5. This Note will bear three percent (3%) simple interest.
6. Except in the event of a default described in Section 7 hereof, no payments will be due and payable under this Note except to the extent of (a) the City’s share of Residual Receipts as described in Section 8, below, and (b) any refinancing, Cost Savings or Additional Proceeds, subject to the limitations set forth below.
7. The entire unpaid principal balance of this Note and any accrued but unpaid interest will be due and payable upon the expiration of the Term hereof, or immediately upon the occurrence of either of the following:
413
480 South Batavia Street
HOME Note
a. if the Property or any portion thereof or interest therein is sold, transferred, assigned or refinanced, without the prior written approval of the City, except as otherwise permitted in this Note; or
b. if there is a default by the Borrower under the terms of this Note, the City Deed of Trust, the Affordable Housing Agreement, the HOME Regulatory Agreement, or any deed of trust or other instrument securing the Senior Loan or other obligations secured by a deed of trust on the Property, which is not cured within the respective time period provided herein and therein.
8. Prior to the expiration of the Term hereof, Borrower will be obligated to repay the HOME Loan exclusively from the City’s share of Residual Receipts, as follows:
a. Annually, not later than the thirtieth (30th) day of April, beginning with the year following the year in which Conversion occurs, Borrower will submit to City an audited Annual Financial Statement for the preceding calendar year, prepared by a certified public accountant reasonably acceptable to the City, determining the amount of Residual Receipts, if any, generated in that year, together with payment of the City’s Share of such Residual Receipts. The first such Annual Financial Statement will be for the partial year beginning on the date of Conversion and ending on December 31 of that year. The City will review and approve such Annual Financial Statement, or request reasonable revisions, within 30 days after receipt. If as the result of the City’s review of the statement, there is an increase in the amount of any payment due and payable to City (as the result, for example, of a determination that the actual amount of Residual Receipts to which the City is entitled exceeds the amount of City’s share of Residual Receipts shown in the Annual Financial Statement submitted by Borrower), Borrower will promptly pay to the City the difference, with interest, from the date on which such payment was due, at the rate of one percent (1%) over the Prime Rate announced by Bank of America, but in any event within ten (10) days of notice of such increase. b. The City’s Share of Residual Receipts to be applied to this Note, the In Lieu Fees Note, and the LMIHAF Note will be 5.99%. The City’s Share of Residual Receipts will be applied to the HOME Note, the LMIHAF Note, and the In Lieu Fees Note as follows: 40.7% (i.e., $651,244/$1,600,000) will be applied to this Note, 36.0% (i.e., $576,000/$1,600,000) will be applied to the LMIHAF Note, and 23.3% (i.e., $372,756/$1,600,000) will be applied to the In Lieu Fees Note.
9. All payments applied to this Note will be applied first to penalties and late fees, then to interest, then to reduce the principal amount owed.
10. If there are Cost Savings with respect to the Project, subject to the requirements of the other Project lenders, the following will occur: (1) to the extent of fifty percent (50%) of the Cost Savings, any undisbursed capital contributions made by Borrower’s Investor Limited Partner will be released to the City as a payment of accrued interest on and then reduction of the principal amount of the City Loan; and (2) each Lender’s unfunded commitment will terminate. For purposes hereof, “Cost Savings”, shall mean the difference between the total sources of funds and the total cost of development as shown in the Borrower’s cost certification contained in Borrower’s 414
480 South Batavia Street
HOME Note
application to the California Tax Credit Allocation Committee for a Form 8609 for the Project (“Tax Credit Report”); provided, however, the Cost Savings will be adjusted to take into account (i) the loss of any equity investment due to an adjustment in the allowable tax credits; provided that the tax credit factor applied to the required equity contribution will be as set forth in Borrower’s limited partnership agreement; and (ii) any reduction in the Senior Loans required by the Senior Loan Documents. The amount payable to City under this paragraph will be paid within sixty (60) days following submittal of the Tax Credit Report to the California Tax Credit Allocation Committee.
11. Prohibitions on Transfer.
a. Prior to the repayment in full of the HOME Loan and expiration of the Term of the HOME Regulatory Agreement, the Borrower must not, except for Permitted Transfers or as permitted by the Affordable Housing Agreement, assign or attempt to assign the Affordable Housing Agreement or this Note or any right therein or herein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property (referred to hereinafter as a “Transfer”), without prior written approval of the City, except as expressly permitted by the Affordable Housing Agreement or this Note. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions. City shall not unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be subject to this Section 11, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein.
b. Proposed transferees (other than an Affiliate of Borrower) must have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City, to fulfill Borrower’s obligations undertaken in the Affordable Housing Agreement, the HOME Regulatory Agreement, and this Note. A proposed transferee (including an Affiliate of Borrower), by instrument in writing satisfactory to the City and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the City must expressly assume all of Borrower’s obligations under the Affordable Housing Agreement, the HOME Regulatory Agreement, and this Note and agree to be subject to all conditions and restrictions applicable to Borrower. There must be submitted to the City for review all instruments and other legal documents proposed to affect any such transfer; and if approved by the City its approval will be indicated to Borrower in writing. If consent should be given, such transfer will be subject to this Section 11.
c. In the absence of specific written agreement by the City, no unauthorized Transfer, or approval thereof by the City, will be deemed to relieve the Borrower or any other party from any obligations under the Affordable Housing Agreement, the HOME Regulatory Agreement, or this Note.
d. In the event of a Transfer prior to the time the HOME Loan is paid in full without the prior written consent of the City, the remaining principal balance of the HOME Loan and all accrued but unpaid interest will be immediately due and payable. 415
480 South Batavia Street
HOME Note
e. As used herein, “Transfer” means
i. the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project. ii. “Transfer” also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of an interest in Borrower, or a conversion of Borrower to an entity form other than that of Borrower at the time of execution of the Affordable Housing Agreement, except that, a cumulative change in ownership interest of a general partner of Borrower of forty-nine percent (49%) or less will not be deemed a “Transfer” for purposes of this Note.
12. The City will not unreasonably withhold, condition, or delay its approval of any matter for which its approval is required hereunder. The City’s disapproval will be in writing and contain the City’s reasons for disapproval.
13. The HOME Loan is funded from the City’s HOME Program Funds. Accordingly, Borrower agrees for itself, its successors and assigns that the use of the property will be subject to the restrictions on rent and occupancy set forth in the HOME Regulatory Agreement.
14. Subject to the provisions and limitations of this Section 14, the obligation to repay the HOME Loan is a nonrecourse obligation of the Borrower. Borrower and each general partner or limited partner of Borrower will not have any personal liability for repayment of the loan, except as provided in this Section 14. The sole recourse of City will be the exercise of its rights against the Property and other security for the HOME Loan. Provided, however, that the foregoing will not (a) constitute a waiver of an obligation evidenced by this Note or the City Deed of Trust; (b) limit the right of the City to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under this Note and the City Deed of Trust or any action or proceeding hereunder so long as no judgment in the nature of a deficiency judgment will be asked for or taken against Borrower; (c) release or impair this Note or the City Deed of Trust; (d) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any other remedy against the mortgaged Property or other instrument securing the Note or as prescribed by law or in equity in case of default; (e) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of credit securing this Note; (f) relieve Borrower of its obligations under an indemnity delivered by Borrower to City; or (g) affect in any way the validity of a guarantee or indemnity from any person of all or any of the obligations evidenced and secured by this Note and the City Deed of Trust. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Borrower and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Borrower, 416
480 South Batavia Street
HOME Note
its principals, shareholders, partners or its successors and assigns received rentals, other revenues, or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service, real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Borrower in connection with the operation of the mortgaged Property, which are then due and payable. Notwithstanding the first sentence of this paragraph, City may recover directly from Borrower or from any other party (other than Borrower’s Investor Limited Partner):
a. damages, costs and expenses incurred by the City as a result of fraud or criminal act or acts of Borrower or a partner, shareholder, officer, director or employee of Borrower, or of a member or general or limited partner of Borrower, or of a general or limited partner of such member or general or limited partner;
b. damages, costs and expenses incurred by City as a result of misappropriation of funds provided for the payment of Acquisition and Development Costs, as described in the Affordable Housing Agreement, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds; c. all amounts owing by Borrower pursuant to the indemnification regarding Hazardous Substances under the Environmental Indemnity, and d. all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that City will pay Borrower’s reasonable court costs and attorneys’ fees if Borrower is the prevailing party in such enforcement or collection action).
15. Borrower waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of an extension or extensions of the time of payment or of a due date under this Note, in whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney’s fees, which may be incurred by the holder hereof, in the enforcement of this Note, the City Deed of Trust or any term or provision of either thereof.
16. Upon the failure of Borrower to perform or observe a term or provision of this Note, or upon the occurrence of an event of default under the terms of the City Deed of Trust, the Affordable Housing Agreement, the HOME Regulatory Agreement, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, and after expiration of the applicable cure period, the holder may exercise its rights or remedies hereunder or thereunder.
417
480 South Batavia Street
HOME Note
17. Defaults and Remedies.
a. Subject to the extensions of time set forth in Section 18, and subject to the further provisions of this Section 17, failure or delay by Borrower to perform a material term or provision of this Note, the City Deed of Trust, the Affordable Housing Agreement, the HOME Regulatory Agreement, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, constitutes a default under this Note. b. The City will give written notice of default to Borrower, specifying the default complained of by the City. Delay in giving such notice will not constitute a waiver of any default nor will it change the time of default.
c. Failures or delays by the City in asserting its rights and remedies as to a default will not operate as a waiver of default or of such rights or remedies. Delays by the City in asserting its rights and remedies will not deprive the City of its right to institute and maintain actions or proceedings which it may deem necessary to protect, assert, or enforce such rights or remedies.
d. If a monetary event of default occurs under the terms of this Note or the City Deed of Trust, or a deed of trust securing a Senior Loan, or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder the City will give Borrower, each general partner, and the Investor Limited Partner, concurrent written notice of such default. Borrower will have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by the City under this Note and the City Deed of Trust. In no event will the City be precluded from exercising remedies if its security becomes or is about to become materially impaired by a failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received. e. If a non-monetary event of default occurs under the terms of the Affordable Housing Agreement, this Note, the City Deed of Trust, the HOME Regulatory Agreement, or a document implementing the Affordable Housing Agreement or a deed of trust securing a Senior Loan or other obligations secured by a deed of trust on the Property, prior to exercising its remedies hereunder or thereunder, the City will give Borrower, each General Partner, and the Investor Limited Partner, concurrent notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Borrower will have such period to effect a cure prior to exercise of remedies by the City under the Affordable Housing Agreement, the HOME Regulatory Agreement, this Note and/or the City Deed of Trust.
If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Borrower will have such additional time as is reasonably necessary to cure the default prior to the City’s exercise of remedies. If Borrower fails to take corrective action or to cure the default within the time set forth above in this Subsection
17.e, the City will give Borrower, the Senior Lender, the Investor Limited Partner written notice thereof, whereupon the Investor Limited Partner, subject to the terms of Borrower’s partnership agreement, may take such corrective action, including removing and replacing a general partner. 418
480 South Batavia Street
HOME Note
The Investor Limited Partner will have 45 days, or such longer period as is approved by the City Executive Director or designee, to remove and replace such general partner of Borrower. The City agrees to accept cures tendered by a Senior Lender or the Investor Limited Partner within the time period provided herein. Additionally, in the event the Senior Lender, or Investor Limited Partner is precluded from curing a non-monetary default due to a bankruptcy, injunction, or similar proceeding by or against Borrower or a general partner, the City agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which such party is so precluded from acting, not to exceed 90 days or such additional time as is reasonably approved by the City Executive Director or designee, provided such Senior Lender or Investor Limited Partner is otherwise in compliance with the foregoing provisions. In no event will City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within one hundred eighty (180) days after the notice of default is received or deemed received or such additional time as is reasonably approved by the City Executive Director or designee.
f. A notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; a notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt by Borrower; and a notice of default that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof. Notices will be sent to the following addresses:
To City:
THE CITY OF ORANGE
300 E. Chapman Avenue
Orange, California 92866
Attention: City Manager
To Borrower:
Mercy Housing California 107, L.P.
1500 S. Grand Avenue, Suite 100
Los Angeles, California 90015
Attn: Erika Villablanca
18. Notwithstanding specific provisions of this Note, Borrower will not be deemed to be in default for failure to perform a non-monetary obligation hereunder where delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub-contractor or supplier, acts of the City or any other public or governmental authority or entity, or any causes beyond the 419
480 South Batavia Street
HOME Note
control or without the fault of the Borrower. An extension of time for any such cause (a “ Force Majeure Delay”) will be for the period of the enforced delay and will commence to run from the time of the commencement of the cause, if notice by Borrower is sent to the City within fifteen (15) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Delay unless and until Borrower delivers to the City written notice describing the event, its cause, when and how Borrower obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom.
Borrower will deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event. Times of performance under this Note may also be extended in writing by the City and Borrower, such revision approval may be denied by either party in its sole discretion.
19. If the rights created by this Note are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations must be completely performed and paid.
20. The City Deed of Trust securing this Note and all other HOME Loan Documents, except the HOME Regulatory Agreement, have been made subordinate and junior to the claims, liens or charges of the Construction Loan Deed of Trust and all other instruments securing the Construction Loan by that certain Subordination Agreement by and among City, Borrower and Construction Lender which is being recorded concurrently with the execution and delivery of this Note and the recordation of the City Deed of Trust and will also be subordinate and junior to the claims, liens or charges of the Permanent Financing Deeds of Trust securing Senior Loans and all other instruments securing the Permanent Financing involving Senior Loans.
21. The City agrees that the lien of the City Deed of Trust will be subordinate to the extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the “Extended Use Agreement”) recorded against the Project; provided that such Extended Use Agreement, by its terms, must terminate upon foreclosure under the City Deed of Trust or upon a transfer of the Project by instrument in lieu of foreclosure or comparable conversion of the Loan, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code. The following rule contained in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, will also apply: for a period of three (3) years from the date of foreclosure, with respect to any unit that had been regulated by the Extended Use Agreement, (i) none of the tenants occupying those units at the time of foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code. Borrower acknowledges and agrees that a default, event of default, or breach (however such terms may be defined) under the Extended Use Agreement will be an event of default under this Note and the City Deed of Trust and that all costs, damages or other amounts, including reasonable attorneys’ fees incurred by the City as a result of an event of default by Borrower, and all amounts paid by City to cure a default under the Extended Use Agreement will be an obligation of Borrower and become a part of the debt evidenced by this Note and secured by the City Deed of Trust.
420
480 South Batavia Street
HOME Note
22. With regard to an approval, consent, or other determination by the City required under this Note or the other HOME Loan Documents, the City will act reasonably and in good faith.
23. Borrower will have the right to prepay the obligation evidenced by this Note, or any part thereof, without penalty. However, prepayment of the obligation evidenced by this Note prior to the expiration of the term of the HOME Regulatory Agreement will not entitle Borrower to a reconveyance of the City Deed of Trust.
24. This Note may be executed by each signatory on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ON FOLLOWING PAGE]
421
480 South Batavia Street
HOME Note
S-1
IN WITNESS WHEREOF Borrower has executed this Note as of the day and year first set forth above.
BORROWER
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: ____________________________
Erika Villablanca,
Vice President
422
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
Recording Requested by and
When Recorded Mail to:
THE CITY OF ORANGE
300 E. Chapman Avenue
Orange, CA 92866
Attention:
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN:
Document entitled to free
recording per Government
Code Section 27383
SUBORDINATED DEED OF TRUST,
SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS)
(Villa St. Joseph – 480 South Batavia Street)
This Subordinated Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) is made as of __________________, 2022 by MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Trustor”) (whose address is 1500 S. Grand Avenue, Suite 100, Los Angeles, California 90015), to COMMONWEALTH LAND TITLE COMPANY, a California corporation (“ Trustee”), for the benefit of THE CITY OF ORANGE, a municipal corporation of the State of California (“Beneficiary”), whose address is 300 E. Chapman Avenue, Orange, California 92866.
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION the following property (the “Trust Estate”):
(a) An airspace leasehold interest in that certain real property in the City of Orange, County of Orange, State of California more particularly described in Exhibit “A” attached hereto and by this reference made a part hereof (the “Subject Property”); (b) Fee simple title to the real property comprised of all buildings, structures, fixtures and other improvements now or in the future located or to be constructed on the Subject Property (the “Improvements”);
Attachment 12
423
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
(c) All tenements, hereditaments, appurtenances, privileges, franchises and other rights and interests now or in the future benefitting or otherwise relating to the Subject Property or the Improvements, including easements, rights-of-way and development rights (the “Appurtenances”). (The Appurtenances, together with the Subject Property and the Improvements, are hereafter referred to as the “Real Property”); (d) Subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management, operation leasing or occupancy of the Trust Estate, including those past due and unpaid (the “Rents”); (e) All present and future right, title and interest of Trustor in and to all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code (the “UCC”), and whether existing now or in the future) now or in the future located at, upon or about, or affixed or attached to or installed in, the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances, building materials and supplies, generators, boilers, furnaces, water tanks, heating ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property, but not including personal property that is donated to Trustor (the “Goods,” and together with the Real Property, the “Property”); and (f) All present and future right, title and interest of Trustor in and to all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the future) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits, approvals and other governmental authorizations, (ii) improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects, engineers, sales agents, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale 424
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all other types on intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (the “Intangibles”).
Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estates described above in which a security interest may be created under the UCC (collectively, the “ Personal Property ”). This Deed of Trust constitutes a security agreement under the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary.
Trustee and Beneficiary will have, in addition to all rights and remedies provided herein, all the rights and remedies of a “secured party” under the UCC and other applicable California law.
Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Section 9313 and 9402(6) of the UCC.
FOR THE PURPOSE OF SECURING , in such order of priority as Beneficiary may elect, the following:
(1) due, prompt and complete observance, performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following:
(a) a promissory note in the original principal amount of $576,000, executed by Trustor of even date herewith (the “LMIHAF Note”);
(b) a promissory note in the original principal amount of $372,756, executed by Trustor of even date herewith (the “In Lieu Fees Note”); (c) a promissory note in the original principal amount of $651,244, executed by Trustor of even date herewith (the “ HOME Note”) (the LMIHAF Note, the In Lieu Fees Note, and the HOME Note may collectively be referred to herein as the “Notes”);
(d) the Affordable Housing Agreement dated as of ______________, 2022 (the “Affordable Housing Agreement”), between Trustor and Beneficiary; (e) the Agreement Containing Covenants (Including Rental Restrictions) between Trustor and Beneficiary, recorded concurrently herewith (“ Agreement Containing Covenants”); and
(f) the Agreement Containing HOME Program Requirements between Trustor and Beneficiary, recorded concurrently herewith (“ HOME Regulatory Agreement”); and
425
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
(2) payment of indebtedness of the Trustor to the Beneficiary in the principal sum of $576,000 or so much thereof as will be advanced, evidenced by the LMIHAF Note secured hereby, with interest, according to the terms of the LMIHAF Note secured hereby; and (3) payment of indebtedness of the Trustor to the Beneficiary in the principal sum of $372,756 or so much thereof as will be advanced, evidenced by the In Lieu Fees Note secured hereby, with interest, according to the terms of the In Lieu Fees Note secured hereby; and
(4) payment of indebtedness of the Trustor to the Beneficiary in the principal sum of $651,244 or so much thereof as will be advanced, evidenced by the HOME Note secured hereby, with interest, according to the terms of the HOME Note secured hereby.
The Affordable Housing Agreement, including all Attachments thereto, and the documents and instruments executed by Trustor in connection with the Project, including the Agreement Containing Covenants, the HOME Regulatory Agreement, the LMIHAF Note, the In Lieu Fees Note, the HOME Note, the Assignment of Rents and Leases, and the Assignment of Agreements, all as described in the Affordable Housing Agreement (collectively referred to as the “ Secured Obligations”) and all of their terms are incorporated herein by reference and this conveyance will secure any and all extensions, amendments, modifications or renewals thereof however evidenced, and additional advances evidenced by any note reciting that it is secured hereby. Each capitalized term that is not otherwise defined in this Deed of Trust has the meaning ascribed to it in the Affordable Housing Agreement.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:
1. That Trustor will pay the Notes secured hereby at the time and in the manner provided therein, and perform the obligations of the Developer as set forth in the Secured Obligations at the time and in the manner respectively provided therein;
2. That Trustor will not permit or suffer the use of any of the property for any purpose other than the uses permitted by the Affordable Housing Agreement, the Agreement Containing Covenants, and the HOME Regulatory Agreement;
3. That the Secured Obligations are incorporated in and made a part of this Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable.
4. That all rents, profits and income from the property covered by this Deed of Trust are hereby assigned to the Beneficiary for the purpose of discharging the debt hereby secured.
Permission is hereby given to Trustor so long as no default exists hereunder after the giving of 426
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the Affordable Housing Agreement.
5. That upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period, Beneficiary will be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the property described herein and operate same and collect the rents, profits and income therefrom;
6. That Trustor will keep the improvements to be constructed on the Property in accordance with the Affordable Housing Agreement insured against loss by fire and such other hazards, casualties, and contingencies as may reasonably be required in writing from time to time by the Beneficiary, and all such insurance will be evidenced by standard fire and extended coverage insurance policy or policies. In no event will the amounts of coverage be less than 100 percent of the insurable value of the Property. Such policies will be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies will be deposited with the Beneficiary;
7. To pay, at least 10 days before delinquency, any taxes and assessments affecting said Property; to pay, when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor will not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 7.
8. To keep said property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon (subject to Trustor’s right to contest the validity or applicability of laws or regulations); not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law and/or covenants, conditions and/or restrictions affecting said property; not to permit or suffer any material alteration of or addition to the buildings or improvements hereafter constructed in or upon said property without the consent of the Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 427
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
10. Should Trustor fail, after the giving of notice and the expiration of any applicable cure period, to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest, or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay his reasonable fees. Notwithstanding the foregoing, in the event of default under this Deed of Trust, the Beneficiary may also require Trustor to maintain and submit additional records. Beneficiary will specify in writing the particular records that must be maintained and the information or reports that must be submitted;
11. Beneficiary will have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary will be added to the principal sum secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at the rate specified in the Notes secured hereby;
13. That the funds to be advanced hereunder are to be used in accordance with the Secured Obligations and upon the failure of Trustor, after the giving of notice and the expiration of any applicable cure period, to keep and perform all the covenants, conditions, and agreements of said agreements, the principal sum and all arrears of interest, and other charges provided for in the Notes secured hereby will at the option of the Beneficiary of this Deed of Trust become due and payable, anything contained herein to the contrary notwithstanding;
14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as permitted by the Secured Obligations or otherwise approved by Beneficiary, and further that it will keep and maintain the property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor will not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor will, at Beneficiary’s written request, within thirty (30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the Recorder of Orange County, a surety bond in an amount one-and-one-half (1½) times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary;
428
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
15. That any and all improvements made or about to be made upon the premises covered by this Deed of Trust, and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated, now or hereafter, by lawful City, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office;
16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of the Beneficiary a reasonable charge for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2 Title 14, Division 3, of the California Civil Code.
IT IS MUTUALLY AGREED THAT:
17. Should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, subject to the rights of the beneficiary of the Construction Loan Deed of Trust, the Permanent Loan Deed of Trust and any other obligation having a lien on the Property that is senior to the lien of this Deed of Trust (“ Senior Lender ”), Beneficiary will be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, and will be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage.
Subject to the rights of the Senior Lenders, all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting said property, are hereby assigned to Beneficiary. After deducting therefrom all its expenses, including reasonable attorney’s fees, the balance of the proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, will be applied to the amount due under the Notes secured hereby. No amount applied to the reduction of the principal will relieve the Trustor from making regular payments as required by the Notes secured hereby;
18. Upon default by Trustor in making any payments provided for in the Notes secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the Secured Obligations, and if such default is not cured within the respective time provided therefor in Section 34 of this Deed of Trust, below, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the Property to be sold, which notice Trustee will cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary will also deposit with Trustee this Deed of Trust, the Notes and all documents evidencing expenditures secured hereby;
429
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
19. a. Prior to the repayment in full of the LMIHAF Loan, the In Lieu Fees Loan, and the HOME Loan and expiration of the terms of the Agreement Containing Covenants and the HOME Regulatory Agreement, the Trustor will not assign or attempt to assign the Affordable Housing Agreement or any right therein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the Project thereon, or any portion thereof or interest therein (referred to hereinafter as a “ Transfer”), without prior written approval of the Beneficiary, except for the Permitted Transfers described in Section 19.e.(3) below, or as otherwise permitted in the Notes secured hereby. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions. Beneficiary will not unreasonably withhold or delay its consent. If consent should be given, any such transfer will be subject to this Section 19, and any such transferee will assume all obligations hereunder and agree to be bound by all provisions contained herein, subject to the provisions of paragraph e.(3) of this Section 19, below.
b. Any such proposed transferee will have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Beneficiary, to fulfill the obligations undertaken by Trustor in the Affordable Housing Agreement and the City Loan Documents. Any such proposed transferee, by instrument in writing satisfactory to the Beneficiary and in form recordable among the land records of Orange County, for itself and its successors and assigns, and for the benefit of the Beneficiary will expressly assume all of the obligations of the Trustor under the Affordable Housing Agreement and the City Loan Documents, and agree to be subject to all conditions and restrictions applicable to the Trustor in this Deed of Trust, subject to the provisions of paragraph e.(3) of this Section 19. There will be submitted to the Beneficiary for review all instruments and other legal documents proposed to effect any such transfer; and if approved by the Beneficiary its approval will be indicated to the Trustor in writing. c. In the absence of specific written agreement by the Beneficiary, no unauthorized Transfer, or approval thereof by the Beneficiary, will be deemed to relieve the Trustor or any other party from any obligations under the Affordable Housing Agreement or any other City Loan Document.
d. In the event of a Transfer without the prior written consent of the Beneficiary, prior to the time the LMIHAF Loan, the In Lieu Fees Loan, and the HOME Loan are paid in full, the net proceeds (after repayment in full of any Senior Loan and the reconveyance of the Senior Loan Deed of Trust or Permanent Loan Deed of Trust), will be paid to the Beneficiary to the extent necessary to pay in full the accrued interest, if any, current interest and remaining principal balance of the LMIHAF Loan, the In Lieu Fees Loan, and the HOME Loan. e. (1) As used herein, “Transfer” includes the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project, except as provided in subparagraph e.(3) of this Section 19, below.
430
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
(2) “Transfer” will also include the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Trustor, or any conversion of Trustor to an entity form other than that of Trustor at the time of execution of the Affordable Housing Agreement, except that a cumulative change in ownership interest of any general partner of forty- nine percent (49%) or less will not be deemed a “transfer” for purposes of this Deed of Trust. (3) “Notwithstanding paragraphs (1) and (2), above, “Transfer” will not include any of the following Permitted Transfers, provided (except for subsection (f) below) Trustor, a general partner of Trustor, or an Affiliate of such general partner, retains day-to-day control over management of the Property and Improvements:
(a) An assignment of the Affordable Housing Agreement and sale of all of Trustor’s interest in the Property to an Affiliate, or a sale back to Trustor, which will be subject to the reasonable approval of Beneficiary’s City Manager or designee; (b) A conveyance of a security interest in the Property in connection with a Senior Loan; provided that, a refinancing that increases the principal balance of the Senior Loan, increases the principal and interest payments required under the Senior Loan, changes the maturity of the Senior Loan, increases the interest rate of the Senior Loan, or otherwise changes the Senior Loan terms in a manner that creates an adverse effect upon the City will not be considered a Permitted Transfer and must be approved by Beneficiary’s City Manager or designee; (c) The inclusion of equity participation by Trustor by addition of limited partners to Trustor’s partnership, or similar mechanisms, and any transfers of limited partnership interests in Trustor’s partnership;
(d) The leasing for occupancy of all or any part of the Improvements on the Property, in accordance with the Affordable Housing Agreement, the Agreement Containing Covenants, and the HOME Regulatory Agreement; (e) The granting of easements or permits to facilitate the development of the Property in accordance with the Affordable Housing Agreement; (f) In addition, the withdrawal, removal and/or replacement of a general partner of Trustor’s partnership pursuant to the terms of the Trustor’s partnership agreement or a conveyance of Trustor’s interest in the Property and the Improvements or a transfer of limited partnership interests to a general partner pursuant to the option provided to that partner in Trustor’s partnership agreement will not constitute a default under this Deed of Trust or any of the City Loan Documents, nor will such actions accelerate the maturity of the LMIHAF Loan, In Lieu Fees Loan, or the HOME Loan, provided that any required substitute general partner, is reasonably acceptable to the Beneficiary and is selected with reasonable promptness; and, (g) Any transfer approved in writing by Beneficiary’s City Manager or designee, at his or her sole discretion.
431
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
Transfers described in clauses (a), (b), or (c) will be subject to the reasonable approval of the Beneficiary’s City Manager or designee; provided that, the Beneficiary approves the transfer of limited partner interests in Trustor’s partnership, so long as such transfer is not a result of a resyndication of the Low Income Housing Tax Credits and does not otherwise result in increased equity participation in Trustor, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
f. The Beneficiary will not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder.
Any disapproval will be in writing and contain the Beneficiary’s reasons for disapproval.
20. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, will sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee will deliver to the purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the Deed of any matters or facts will be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee will apply the proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee’s fees or attorney’s fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee’s Deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest at the rate specified in the Notes; (4) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto;
21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter will be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution will be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, will be conclusive proof of proper appointment of the successor trustee;
22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law; 432
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, and upon surrender of this Deed of Trust and the Notes to Trustee for cancellation and retention and upon payment of its fees, Trustee will reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or fact will be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto”;
24. The trust created hereby is irrevocable by Trustor;
25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term “Beneficiary” will include not only the original Beneficiary hereunder but also any future owner and holder including pledgees, of the Notes secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several;
26. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee will be a party unless brought by Trustee;
27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the following address:
Mercy Housing California 107, L.P.
1500 S. Grand Avenue, Suite 100
Los Angeles, California 90015
Attn: Erika Villablanca
With a copy to Limited Partner:
Wincopin Circle LLLP
c/o Enterprise Community Asset Management, Inc.
70 Corporate Center
11000 Broken Land Parkway, Suite 700
Columbia, Maryland 21044
Telephone: (410) 964-0552
Facsimile: (410) 772-2630
Attn: Asset Management
433
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
Kenneth S. Gross, Esq.
Gallagher Evelius & Jones LLP
218 North Charles Street, Suite 400
Baltimore, Maryland 21201
28. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the premises and their use as may be requested by Beneficiary.
29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the purpose of financing the acquisition, development, rehabilitation, and construction of the Improvements, including 49 dwelling units of affordable housing (plus one manager’s unit) for Extremely Low, Very Low Income, and Low Income Senior Citizen Households, and such dwelling units will be occupied exclusively by such persons as set forth in the Secured Obligations.
30. Trustor agrees that, except as otherwise provided in the Notes secured hereby, upon sale or refinancing of the Property, the entire principal balance of the debt secured by this Deed of Trust, plus any accrued but unpaid interest thereon, will at the option of Beneficiary be immediately due and payable.
31. The obligation to repay the LMIHAF Loan, the In Lieu Fees Loan, and the HOME Loan is a nonrecourse obligation of the Trustor and its partners. Neither Trustor nor any of its general or limited partners, nor any other party, will have any personal liability for repayment of the loan. The sole recourse of Beneficiary will be the exercise of its rights against the Property and any related security for the LMIHAF Loan, the In Lieu Fees Loan, and the HOME Loan.
Notwithstanding the foregoing, Beneficiary may recover directly from Trustor or from any other party (other than Trustor’s Investor Limited Partner):
a. any damages, costs and expenses incurred by Beneficiary as a result of fraud or any criminal act or acts of Trustor or any partner, shareholder, officer, director or employee of Trustor, or of any member or general or limited partner of Trustor, or of any general or limited partner of such member or general or limited partner;
b. any damages, costs and expenses incurred by Beneficiary as a result of any misappropriation of funds provided for the construction of the Improvements, rents and revenues from the operation of the Improvements or proceeds of insurance policies or condemnation proceeds;
434
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
c. any and all amounts owing by Trustor pursuant to the indemnification regarding Hazardous Substances pursuant to the Environmental Indemnity, and d. all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Beneficiary will pay Trustor’s reasonable court costs and attorneys’ fees if Trustor is the prevailing party in any such enforcement or collection action).
32. Notwithstanding specific provisions of this Deed of Trust, non-monetary performance hereunder will not be deemed to be in default where delays or defaults are proximately caused by any of the following Force Majeure events, provided such event actually delays and interferes with the timely performance of the matter, and, despite the exercise of diligence and good business practices, such event is beyond the reasonable control of Trustor:
War; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; acts of terrorism, epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any Governmental Authority (except acts or failure to act of the Beneficiary will not excuse performance by the Beneficiary); the imposition of any applicable moratorium by a Governmental Authority; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Event unless and until Trustor delivers to Beneficiary written notice describing the event, its cause, when and how Trustor obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Trustor will deliver such written notice within fifteen (15) days after it obtains actual knowledge of the event.
33. If the rights and liens created by this Deed of Trust will be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the unsecured portion of such obligations will be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations, and all performance and payments made by Trustor will be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations.
34. a. Subject to the extensions of time set forth in Section 32, and subject to the further provisions of this Section 34, failure or delay by Trustor to perform any term or provision respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes a default under this Deed of Trust.
b. Beneficiary will give written notice of default to Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice will not constitute a waiver of any default nor will it change the time of default.
435
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
c. Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default will not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies will not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. d. If a monetary event of default occurs, prior to exercising any remedies hereunder, prior to exercising its remedies, Beneficiary will give Trustor, each general partner, and the Investor Limited Partner, concurrent written notice of such default. Trustor will have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by the Beneficiary under this Deed of Trust. In no event will the Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially impaired by a failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received.
e. If a non-monetary event of default occurs, prior to exercising any remedies hereunder, Beneficiary will give Trustor, each general partner, and the Investor Limited Partner, concurrent notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Trustor will have such period to effect a cure prior to exercise of remedies by the Beneficiary under this Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Trustor will have such additional time as is reasonably necessary to cure the default prior to the Beneficiary’s exercise of remedies. If Trustor fails to take corrective action or to cure the default within the time set forth above in this subsection (e), Beneficiary will give Trustor, the Senior Lender, and the Investor Limited Partner written notice thereof, whereupon the Investor Limited Partner, subject to the terms of Trustor’s partnership agreement, may take such corrective action, including removing and replacing a general partner. The Investor Limited Partner will have 45 days, or such longer period as is approved by the Beneficiary City Manager or designee, to remove and replace such general partner of Trustor. Beneficiary agrees to accept cures tendered by a Senior Lender or the Investor Limited Partner within the time period provided herein. Additionally, in the event the Senior Lender or Investor Limited Partner is precluded from curing a non-monetary default due to a bankruptcy, injunction, or similar proceeding by or against Trustor or a general partner, Beneficiary agrees to forbear from completing a foreclosure (judicial or nonjudicial) during the period during which such party is so precluded from acting, not to exceed 90 days or such additional time as is reasonably approved by the Beneficiary City Manager or designee, provided such Senior Lender or Investor Limited Partner is otherwise in compliance with the foregoing provisions. In no event will Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within one hundred eighty (180) days after the notice of default is received or deemed received or such additional time as is reasonably approved by the Beneficiary City Manager or designee. f. Reserved.
436
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
g. Any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt by Trustor; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof.
35. This Deed of Trust will be subordinate and junior to the Construction Loan Deed of Trust. Following the reconveyance of the lien of the Construction Loan Deed of Trust, this Deed of Trust will be subordinate and junior to the deed of trust in favor of the maker of any permanent or take-out loan (each of which loans is referred to herein as a “Permanent Loan”), as described in the Notes secured hereby. The City Manager of the Beneficiary or designee will execute such instruments as may be necessary to subordinate the lien of this Deed of Trust and the Secured Obligations, to the deed of trust securing the Construction Loan, the Permanent Loan, any regulatory agreement recorded in connection with the issuance of the Low Income Housing Tax Credits. In the event of a default or breach by Trustor of any security instrument securing a Senior Loan described in this Section 35, Beneficiary will have the right to cure the default prior to completion of any foreclosure. In such event, Beneficiary will be entitled to reimbursement by Trustor of all reasonable costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements will be a lien against the Subject Property and added to the obligation secured by this Deed of Trust until repaid, with interest at the highest rate permitted by law.
36. The Trustor has informed the Beneficiary that Trustor intends that the Project qualify for an allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code (“Tax Credits”). In order to receive an allocation of Tax Credits, the Trustor will be required to record in the real property records of the County of Orange an “extended low- income housing commitment” (as defined in Code Section 42(h)(6)(B)) (the “ Extended Use Agreement”). If the Trustor demonstrates to the reasonable satisfaction of the Beneficiary that the Tax Credit Allocation Committee or applicable federal law requires that the lien of this Deed of Trust be subordinate to the Extended Use Agreement, then the Beneficiary will execute a subordination agreement (“Extended Use Subordination Agreement ”) wherein the lien of this Deed of Trust is subordinated to the Extended Use Agreement. The Extended Use Subordination Agreement will:
a. provide that such Extended Use Agreement, by its terms, must terminate upon foreclosure under this Deed of Trust or upon a transfer of the Property by instrument in lieu of foreclosure or comparable conversion of the LMIHAF Loan, the In Lieu Fees Loan, and HOME Loan, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code; b. provide that the following rule contained in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, will also apply: for a period of three (3) years from the date of foreclosure, with respect to any unit that had been regulated by the Extended Use 437
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
Agreement, (i) none of the tenants occupying those units at the time of foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code;
c. provide that Trustor acknowledges and agrees that any default, event of default, or breach (however such terms may be defined) under the Extended Use Agreement will be an event of default under this Deed of Trust and that any costs, damages or other amounts, including reasonable attorneys’ fees incurred by Beneficiary as a result of an event of default by Trustor, and any amounts paid by Beneficiary to cure any default under the Extended Use Agreement will be an obligation of Trustor and become a part of the debt evidenced by the LMIHAF Loan, the In Lieu Fees Note, and/or the HOME Note, as applicable, and secured by this Deed of Trust; and
d. otherwise be in a form reasonably acceptable to Beneficiary.
37. This Deed of Trust will be subject to the terms and conditions set forth in that certain Subordination Agreement recorded concurrently herewith by and among the Trustor, Senior Lender, and the Beneficiary, as the same may be amended, restated, supplemented or modified from time to time.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
[SIGNATURES ON FOLLOWING PAGE]
438
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
S-1
IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set forth above.
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: ____________________________
Erika Villablanca,
Vice President
439
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 440
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 441
Villa St. Joseph – 480 South Batavia Street
City Deed of Trust
Exhibit A – Legal Description
Exhibit A
LEGAL DESCRIPTION
APN:
442
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
Recording Requested by and
When Recorded Mail to:
THE CITY OF ORANGE
300 E. Chapman Avenue
Orange, CA 92866
Attention:
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN: OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383
ASSIGNMENT OF RENTS AND LEASES
THIS ASSIGNMENT OF RENTS AND LEASES (the “Assignment”) is made as of _______________________, 2022 by MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Borrower”), in favor of the CITY OF ORANGE, a municipal corporation of the State of California, and its successors and assigns (the “City”).
RECITALS
A. Borrower is the owner of an interest in real property described in Exhibit “A” attached hereto, and the owner of all of the personalty, fixtures, and improvements now or hereafter located thereon or attached thereto now existing or to be constructed thereon. Said real property, personalty, fixtures, and the improvements are herein referred to collectively as the “Premises”.
B. City has agreed to make three loans to Borrower in the original principal amounts of FIVE HUNDRED SEVENTY-SIX THOUSAND DOLLARS ($576,000) (“LMIHAF Loan”),
THREE HUNDRED SEVENTY-TWO THOUSAND SEVEN HUNDRED AND FIFTY-SIX DOLLARS ($372,756) (“In Lieu Fees Loan”), and SIX HUNDRED FIFTY-ONE THOUSAND TWO HUNDRED FORTY-FOUR DOLLARS ($651,244) (“ HOME Loan ”), pursuant to the terms of an Affordable Housing Agreement by and between Borrower and City dated as of ______________________, 2022 (“ Loan Agreement”). The LMIHAF Loan, the In Lieu Fees Loan, and the HOME Loan are each evidenced by a promissory note of even date herewith (each, a “Note”) and are secured by a Subordinated Deed of Trust, Security Agreement and Fixture Filing, of even date herewith, executed by Borrower, as Trustor, for the benefit of City, as Beneficiary (“Deed of Trust”).
Attachment 13
443
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
C. In order to induce City to make the City Loans to Borrower, Borrower has agreed to execute this Assignment.
NOW, THEREFORE, with reference to the foregoing and in reliance thereon and for good and valuable consideration, the receipt of which is hereby acknowledged, Borrower agrees as follows:
AGREEMENT
1. All initially capitalized terms used herein, unless otherwise defined or required by context, have the meaning ascribed to them in the Loan Agreement.
2. Borrower hereby absolutely grants, sells, assigns, transfers, and sets over to City, by this Assignment, all of Borrower’s interests, whether now existing or hereafter acquired, in all leases and other occupancy agreements of any nature, now or hereafter covering all or any part of the Premises, together with all extensions, renewals, modifications, or replacements of said leases and occupancy agreements, and together with any and all guarantees of the obligations of the lessees and occupants (“Lessees”) thereunder, whether now existing or hereafter executed, and all extensions and renewals of said guarantees. (Said leases and occupancy agreements, together with any and all guarantees, modifications, extensions and renewals thereof, are hereinafter referred to collectively as the “Leases” and individually as a “Lease”.)
3. Borrower’s purpose in making this Assignment is to relinquish to City its right to collect and enjoy the rents, royalties, issues, profits, income, and other benefits at any time accruing by virtue of the Leases (hereinafter called “Rents and Profits”).
4. This Assignment is a present, absolute and unconditional assignment, subordinate to the rights of ________________________, and its successors and assigns (“ Senior Lender”) and, immediately upon execution, gives the City the right to collect the Rents and Profits and to apply them in payment of the principal and interest and all other sums payable on the Indebtedness and other Obligations under each Note and other loan documents, as well as all other sums payable under the Deed of Trust or any other instrument given as security for the Indebtedness, subject to the rights of the Construction Lender and Permanent Lender. However, the City hereby grants to Borrower a license to collect and use, subject to the provisions set forth below, the Rents and Profits as they respectively become due and to enforce the Leases, so long as there is no Default by Borrower in performance of the terms, covenants, or provisions of the Deed of Trust, any Note, or the Loan Agreement, this Assignment or any other loan document, after the expiration of any applicable notice and cure periods. Nothing contained herein, nor any collection of Rents and Profits by City or by a receiver, will be construed to make City a “mortgagee in possession” of the Premises so long as City has not entered into actual possession of the Premises. 444
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
5. Upon the occurrence of any Default or Event of Default, after the expiration of any applicable notice and cure periods, under the terms and conditions of this Assignment, each Note, the Deed of Trust, the Loan Agreement or any other loan document, this Assignment will constitute a direction and full authority to each Lessee under any Lease and each guarantor of any Lease to pay all Rents and Profits to City without proof of the Default relied upon. Borrower hereby irrevocably authorizes each Lessee and guarantor to rely upon and comply with any notice or demand by City for the payment to City of any Rents and Profits due or to become due.
6. Borrower represents and warrants as to each Lease now or hereafter covering all or any portion of the Premises, unless City has been otherwise advised in writing by Borrower:
a. That each Lease is in full force and effect;
b. That no material default exists on the part of the Lessee thereunder or Borrower;
c. That no rent in excess of one month’s rent has been collected in advance; d. That no Lease or any interest therein has been previously assigned or pledged;
e. That no Lessee under any Lease has any defense, setoff or counterclaim against Borrower; and
f. That all rent due to date under each Lease has been collected and no concession has been granted to any Lessee in the form of a waiver, release, reduction, discount, or other alteration of rent due or to become due except as previously disclosed to Borrower in writing.
7. Borrower agrees with respect to each Lease:
a. If any Lease provides for a security deposit paid by the Lessee to Borrower, this Assignment transfers to City all of Borrower’s right, title, and interest in and to each such security deposit; provided, however, that Borrower will have the right to retain said security deposit so long as Borrower is not in Default, after the expiration of any applicable notice and cure periods, under this Assignment, the Deed of Trust, each Note, the Loan Agreement or any other Loan Document; and provided further that City will have no obligation to the Lessee with respect to such security deposit unless and until City comes into actual possession and control of said security deposit.
b. If any Lease provides for the abatement of rent during repair of the leased premises by reason of fire or other casualty, Borrower will furnish rental insurance to City, the 445
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
policies to be with companies and in form, content, policy limits, and terms as are customary in the case of entities owning similar property or assets similarly situated. c. Each Lease will remain in full force and effect despite any merger of the interest of Borrower and any Lessee thereunder. Except as otherwise provided in the Loan Agreement, Borrower will not terminate any Lease (except pursuant to the terms of the Lease upon a Default by any Lessee thereunder), or materially modify or amend any Lease or any of the terms thereof, or grant any concessions in connection therewith or accept a surrender thereof, without the prior written consent of City, which consent will not be unreasonably withheld. d. Except as otherwise provided in the Loan Agreement, Borrower will not hereafter execute any Lease, the terms and conditions of which have not been previously approved in writing by City, which approval will not be unreasonably withheld or delayed. e. Borrower will not collect any Rents and Profits more than thirty (30) days in advance of the date on which they become due under the terms of any Lease, provided that Borrower may collect customary security deposits more than 30 days in advance. f. Borrower will not discount any future accruing Rents and Profits. g. Borrower will not consent to any assignment of any Lease, or any subletting thereunder, whether or not in accordance with its terms, on any terms less favorable than those that would reflect an arm’s length transaction in light of prevailing market conditions (subject to the rent restrictions applicable to the Premises), without the prior written consent of City, except as otherwise provided in the Loan Agreement.
h. Except as otherwise provided in the Loan Agreement, Borrower will not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law. i. Borrower will not request, consent to, agree to, or accept a subordination of any Lease to any mortgage, deed of trust or other encumbrance, or any other lease, now or hereafter affecting the Premises or any part thereof, or suffer or permit conversion of any Lease to a sublease, without City’s prior written consent.
j. Borrower will faithfully perform and discharge all obligations of the lessor under each Lease, and will give prompt written notice to City of any notice of Borrower’s default received from any Lessee or any other person and furnish City with a complete copy of said notice.
Borrower will appear in and defend, at no cost to City, any action or proceeding arising under or in any manner connected with any Lease. If requested by City, Borrower will enforce each Lease and all remedies available to Borrower against the Lessee in the case of default under the Lease by the Lessee.
446
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
k. Except as otherwise provided in the Loan Agreement, Borrower will give City written annual reports of all Leases entered into during the previous year, and will promptly upon request of City provide to City a true and correct copy of each executed Lease. All Leases entered into by Borrower will be deemed included in this Assignment as though originally listed herein. At City’s option, such reports may be recorded in the Official Records of Orange County, California, which report will refer to this Assignment. l. Except as otherwise provided in the Loan Agreement, at City’s option, Borrower will not hire, retain, or contract with any third party for property management services with respect to the Premises, without the prior written approval of City of such party and the terms of its contract for management services.
m. Nothing herein will be construed to impose any liability or obligation on City under or with respect to any Lease. Borrower will indemnify, defend, and hold City, its officers, directors, agents, employees, and representatives (the Indemnitees) harmless from and against any and all liabilities, losses, and damages that any Indemnitee may incur under any Lease or by reason of this Assignment, and of and from any and all claims and demands whatsoever that may be asserted against any Indemnitee by reason of any alleged obligations to be performed or discharged by City under any Lease or this Agreement, unless any of the foregoing arises from or results from the gross negligence or willful misconduct of any Indemnitee. Should any Indemnitee incur any liability, loss, or damage under any Lease or by reason of this Assignment and such liability, loss, or damage falls within the foregoing indemnification, Borrower will immediately upon demand reimburse such Indemnitee for the amount thereof together with all costs and expenses and reasonable attorneys’ fees (based on itemized invoices for time and charges) and court costs incurred by such Indemnitee. All of the foregoing sums will bear interest at the maximum rate permitted by law from demand by Indemnitee until paid. Any Rents and Profits collected by City may be applied by City, in its discretion, in satisfaction of any such liability, loss, damage, claim, demand, cost, expense, or fees.
8. Subject to the rights of Senior Lender, Borrower hereby grants to City the following rights:
a. Upon an Event of Default as defined in the Loan Agreement, City will be deemed to be the creditor of each Lessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership, or other debtor relief proceedings affecting such Lessee, without obligation on the part of City, however, to file timely claims in such proceedings or otherwise pursue creditor’s rights therein. b. City will have the right to assign Borrower’s right, title, and interest in the Leases to any subsequent holder of the Deed of Trust or any participating interest therein or to any 447
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
person acquiring title to all or any part of the Premises through foreclosure or otherwise. Any such City assignee will have all the rights and powers herein provided to City. c. City will have the right (but not the obligation), upon any Event of Default under the Deed of Trust or the Loan Agreement, to take any action as City may deem necessary or appropriate to protect its security, including but not limited to appearing in any action or proceeding and performing any obligations of the lessor under any Lease; and Borrower agrees to pay, on demand, all costs and expenses, including without limitation reasonable attorneys’ fees and court costs incurred by City in connection therewith, together with interest thereon at the rate of ten percent (10%) per annum.
d. Upon any Default under this Assignment, the Deed of Trust, any Note, the Loan Agreement, or any other loan document (subject to any notice and cure provisions), and without notice to or consent of Borrower, City will have the following rights (none of which will be construed to be obligations of City):
i. City will have the right under this Assignment to use and possess, without rental or charge, the Fixtures, Equipment, and Personal Property of the Borrower located in or on the Premises and used in the operation or occupancy thereof. City will have the right to apply any of the Rents and Profits to pay installments due for Personal Property rented or purchased on credit, insurance premiums on Personal Property, or other charges relating to Personal Property in or on the Premises. However, this Assignment will not make City responsible for the control, care, management, or repair of the Premises or any Personal Property or for the carrying out of any of the terms or provisions of any Lease. ii. City will have the right to apply the Rents and Profits and any sums recovered by City hereunder to the outstanding Indebtedness, as well as to charges for taxes, insurance, improvements, maintenance, and other items relating to the operation of the Premises. iii. City will have the right to take possession of the Premises, manage and operate the Premises and Borrower’s business thereon, and to take possession of and use all books of account and financial records of Borrower and its property managers or representatives relating to the Premises.
iv. City will have the right to execute new Leases of any part of the Premises, including Leases that extend beyond the term of the Deed of Trust. v. City will have the right to cancel or alter any existing Leases. vi. City will have the irrevocable authority, as Borrower’s attorney-in- fact, such City being coupled with an interest, to sign the name of Borrower and to bind Borrower on all papers and documents relating to the operation, leasing and maintenance of the Premises. 448
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
e. All of the foregoing rights and remedies of City are cumulative, and City will also have upon the occurrence of any such Default or Event of Default all other rights and remedies provided under each Note, the Loan Agreement, the Deed of Trust, or any other loan document or other agreement between Borrower and City, or otherwise available at law or in equity or by statute subject to the nonrecourse clause set forth in each Note.
9. Failure of City to avail itself of any terms, covenants, or conditions of this Assignment for any period of time or for any reason will not constitute a waiver thereof.
10. Notwithstanding any future modification of the terms of any Note, the Deed of Trust, the Loan Agreement, or any other loan document, this Assignment and the rights and benefits hereby assigned and granted will continue in favor of City in accordance with the terms of this Assignment.
11. This Assignment will be binding upon and inure to the benefit of the respective heirs, legal representatives, successors, and assigns of the parties hereto (including without limitation in the case of City, any third parties now or hereafter acquiring any interest in the Indebtedness or other obligations of Borrower under each Note or Deed of Trust or a part thereof, whether by virtue of assignment, participation, or otherwise). The words Borrower, City, and Lessee, wherever used herein, will include the persons and entities named herein or in any Lease and designated as such and their respective heirs, legal representatives, successors and assigns, provided that any action taken by the named person or entity or any successor, designated as such by an instrument recorded in the Official Records of Orange County, California, referring to this Assignment, will be sufficient for all purposes notwithstanding that City may have theretofore assigned or participated any interest in the obligation to a third party. All words and phrases will be taken to include the singular or plural number, and the masculine, feminine, or neuter gender, as may fit the case.
12. Any change, amendment, modification, abridgment, cancellation, or discharge of this Assignment or any term or provision hereof will be invalid without the written consent of City.
13. Upon payment to City of the full amount of the Indebtedness and other obligations secured hereby and by each Note and Deed of Trust, as evidenced by a recorded satisfaction or release of the Deed of Trust, this Assignment will be void and of no further effect.
14. All notices, demands, approvals, and other communications provided for in the Loan Documents will be in writing and be delivered by overnight air courier, personal delivery, or registered or certified U.S. mail, postage prepaid with return receipt requested to the appropriate party at its address as follows:
449
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
If to Borrower:
Mercy Housing California 107, L.P.
1500 S. Grand Avenue, Suite 100
Los Angeles, California 90015
Attn: ________________
If to City:
City of Orange
300 E. Chapman Avenue
Orange, California 92866
Attn: City Manager
Addresses for notice may be changed from time to time by written notice to all other parties. If any communication is given by mail in the manner hereinabove described, it will be effective upon the earlier of (a) three (3) days after deposit in a post office or other official depository under the care and custody of the United States Postal Service, or (b) actual receipt, as indicated by the return receipt; and if given by personal delivery, or by overnight air courier, when delivered to the appropriate address set forth above.
15. This Assignment may be recorded in the Official Records of Orange County, California, and Borrower will pay all fees, charges, costs, and expenses of such recording.
16. If any provision hereof is determined to be illegal or unenforceable for any reason, the remaining provisions hereof will not be affected thereby.
17. This Assignment will be governed by and construed in accordance with the laws of the State of California.
18. If City should bring any action to enforce its rights hereunder at law or at equity, Borrower will reimburse City for all reasonable attorneys’ fees and costs expended in connection therewith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES ON FOLLOWING PAGES]
450
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
S-1
IN WITNESS WHEREOF, the undersigned Borrower has executed this Assignment as of the date first above written.
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: ____________________________
Erika Villablanca,
Vice President
451
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 452
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 453
Villa St. Joseph – 480 South Batavia Street
Assignment of Rents
Exhibit A – Legal Description
EXHIBIT “A”
TO ASSIGNMENT OF RENTS AND LEASES
LEGAL DESCRIPTION
APN:
454
480 South Batavia Street
Assignment of Agreements
ASSIGNMENT OF AGREEMENTS
FOR VALUE RECEIVED, the undersigned, MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Borrower”), assigns to the CITY OF ORANGE, a municipal corporation of the State of California (“City”), all of its rights, title and interest in and to:
1. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, “Architectural Agreements”); and
2. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively “Plans and Specifications”)
heretofore or hereafter into or prepared by any architect, engineer or other person or entity (collectively “Architect”), for or on behalf of Borrower in connection with the construction of the Improvements. The Plans and Specifications, as of the date hereof, include the Plans and Specifications which Borrower has heretofore, or will hereafter deliver to City. The Architectural Agreements include, but are not limited to, the architectural contract between Borrower and ________________, located at _________________________________.
This ASSIGNMENT OF AGREEMENTS AND PLANS AND SPECIFICATION (“Assignment”) constitutes a present and absolute assignment to City as of the Effective Date, subordinate to the rights of Umpqua Bank (“ Construction Lender”); provided, however, City confers upon Borrower the right to enforce the terms of the Architectural Agreements and Borrower’s rights to the Plans and Specifications so long as no Default or event which would constitute a Default after notice or the passage of time, or both, has occurred and is continuing under the Affordable Housing Agreement dated as of __________________________, 2022, between City and Borrower (the “Affordable Housing Agreement”), as well as any amendments and implementation agreements. Capitalized terms not otherwise defined herein have the meaning set forth in the Affordable Housing Agreement. Upon the occurrence of a Default or event which would constitute a Default after notice or the passage of time, or both, under the Affordable Housing Agreement, City may, in its sole discretion, give notice to Architect of its intent to enforce the rights of Borrower under the Architect Agreements and of its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Borrower acknowledges that by accepting this Assignment, City does not assume any of Borrower’s obligations under the Architectural Agreements or with respect to the Plans and Specifications.
Attachment 14
455
480 South Batavia Street
Assignment of Agreements
Borrower represents and warrants to City, as of the Effective Date, that: (a) all Architectural Agreements entered into by Borrower are in full force and effect and are enforceable in accordance with their terms and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to City are complete and correct; and (c) Borrower has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications.
Borrower agrees: (a) to pay and perform all obligations of Borrower under the Architectural Agreements; (b) to enforce the payment and performance of all obligations of any other person or entity under the Architectural Agreements; (c) not to modify the existing Architectural Agreements nor to enter into any future Architectural Agreements without City’s prior written approval except as otherwise may be permitted in the Affordable Housing Agreement; and (d) not to further assign (other than assignment in connection with a loan from the Construction Lender), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications with City’s prior written consent.
This Assignment secures performance by Borrower of all obligations of Borrower under the Affordable Housing Agreement. This Assignment is supplemented by the provisions of the Affordable Housing Agreement and said provisions are incorporated herein by reference.
This Assignment will be governed by the laws of the State of California, without reference to the principles governing conflicts of laws, and Borrower consents to the jurisdiction of any Federal or State Court within the State of California having proper venue for the filing and maintenance of any action arising hereunder and agrees that the prevailing party in any such action will be entitled, in addition to any other recovery, to reasonable attorney’s fees and costs.
This Assignment will be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors-in-interest of Borrower and City; provided, however, this will not be construed and is not intended to waive any restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by Borrower contained in the Affordable Housing Agreement.
The attached Architect’s Consent, Schedule 1, and Exhibit A are incorporated by reference. [SIGNATURES ON FOLLOWING PAGES]
456
480 South Batavia Street
Assignment of Agreements
S-1
BORROWER:
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: ____________________________
Erika Villablanca,
Vice President
457
480 South Batavia Street
Assignment of Agreements
Architect’s Consent
ARCHITECT’S CONSENT
The undersigned architect (“Architect”) hereby consents to the foregoing Assignment to which this Architect’s Consent (“Consent”) is part, and acknowledges that there presently exists no unpaid claims due to the Architect except as set forth on Schedule 1 attached hereto, arising out of the preparation and delivery of the Plans and Specifications to Borrower and/or the performance of the Architect’s obligations under the Assignment.
Architect agrees that if, at any time, City will become the owner of said Property, or, pursuant to its rights under the Affordable Housing Agreement, elects to undertake or cause the completion of construction of the Improvements on any portion of the Property, in accordance with the Plans and Specifications, and gives Architect written notice of such election; THEN, so long as Architect has received, receives or continues to receive the compensation called for under the Agreements, City may, at its option, use and rely on the Plans and Specifications for the purposes for which they were prepared, and Architect will continue to perform its obligations under the Agreements for the benefit and account of City in the same manner as if performed for the benefit or account of Borrower in the absence of the Assignment.
Architect further agrees that, in the event of a breach by Borrower of the Agreements, or any agreement entered into with Architect in connection with the Plans and Specifications, so long as Borrower’s interest in the Agreements and Plans and Specifications is assigned to City, Architect will give written notice to City of such breach at the address shown below. City will have thirty (30) days from the receipt of such written notice of default to remedy or cure said default. Nothing herein will require City to cure said default or to undertake completion of construction of the Improvements.
[ARCHITECT’S SIGNATURE ON FOLLOWING PAGE]
458
480 South Batavia Street
Assignment of Agreements
Architect’s Consent
Architect warrants and represents that he or she has no knowledge of any prior assignment(s) of any interest in the Plans and Specifications and/or the Agreements. Except as otherwise defined herein, the terms used herein will have the meanings given them in the Assignment.
Executed as of___________, 2022.
[ARCHITECT NAME]
By: __________________________
Name:
Title:
[Architect address]
City’s Address:
CITY OF ORANGE
300 E. Chapman Avenue
Orange, CA 92866
Attn: City Manager
459
480 South Batavia Street
Assignment of Agreements
Schedule of Unpaid Claims
SCHEDULE OF UNPAID CLAIMS
Schedule 1 to Assignment of Architectural Agreements and Plans and Specifications dated as of____________, 2022 between MERCY HOUSING CALIFORNIA 107, L.P. as Borrower, and the CITY OF ORANGE, as City.
[List Claims]
460
480 South Batavia Street
Assignment of Agreements
Exhibit A
Legal Description
EXHIBIT A
PROPERTY DESCRIPTION
APN:
461
480 South Batavia Street
Environmental Indemnity
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (“ Indemnity”), dated as of _________________, 2022, made by MERCY HOUSING CALIFORNIA 107, L.P., a California limited partnership (“Borrower”), in favor of the CITY OF ORANGE, a municipal corporation of the State of California (“City”).
WITNESSETH
WHEREAS, Borrower is the owner of the real property in the City of Orange, as more particularly described on Exhibit A attached hereto and made a part hereof, and the real property improvements thereon (collectively referred to as the “Property”); WHEREAS, Borrower and the City, entered into that certain Affordable Housing Agreement, dated as of ______________, 2022 (“Affordable Housing Agreement”), pursuant to which the City agreed to make three loans to Borrower in the original principal amounts of FIVE HUNDRED SEVENTY-SIX THOUSAND DOLLARS ($576,000) (“LMIHAF Loan”), THREE
HUNDRED SEVENTY-TWO THOUSAND SEVEN HUNDRED AND FIFTY-SIX DOLLARS ($372,756) (“ In Lieu Fees Loan ”), and SIX HUNDRED FIFTY-ONE THOUSAND TWO HUNDRED FORTY-FOUR DOLLARS ($651,244) (“ HOME Loan”), collectively referred to herein as the “ City Loan ”, to provide part of the financing for the acquisition, development, rehabilitation, and operation of a 50-unit housing project thereon (the Affordable Housing Agreement and the documents and instruments referred to therein which are being executed by Borrower concurrently herewith are referred to collectively as the “Loan Documents”); WHEREAS, Borrower has agreed to execute and deliver to the City this Indemnity to induce the City to make the City Loan.
NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Borrower hereby agrees with the City as follows:
Section 1. DEFINITIONS
For the purpose of this Indemnity, “Hazardous Materials” or “Hazardous Substances” will include, but not be limited to, substances defined as “extremely hazardous substances,” “hazardous substances,” “hazardous materials,” “hazardous waste” or “toxic substances” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 11001-11050; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code, as “infectious waste” in Section 25117.5 of the California Health and Safety Code, or as “hazardous substances” in Section 25316 of the California Health and Safety Code or Attachment 15
462
480 South Batavia Street
Environmental Indemnity
“hazardous materials” as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity will have the meanings ascribed to them in the Affordable Housing Agreement with the same force and effect as if set forth in full below.
Section 2. COVENANTS AND INDEMNITY
The following covenants and indemnities are hereby given and made by Borrower:
2.1 Covenants.
(a) Borrower covenants that it will comply with any and all laws, regulations, and/or orders which may be promulgated, from time to time, with respect to the discharge and/or removal of Hazardous Materials, to pay immediately when due the costs of the removal of, or any other action required by law with respect to, any such Hazardous Materials, and to keep the Property free of any lien imposed pursuant to any such laws, regulations, or orders. (b) Borrower covenants that the Property will not, while Borrower is the owner thereof, be used for any activities involving, directly or indirectly, the use, generation, treatment, storage, release, or disposal of any Hazardous Materials, except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine construction, operation and maintenance of the Property. (c) Borrower further agrees that Borrower will not release or dispose of any Hazardous Materials at the Property without the express written approval of the City and that any such release or disposal will be effected in strict compliance with all applicable laws and all conditions, if any, established by the City.
(d) The City will have the right, at any time, to conduct an environmental audit of the Property at the City’s expense, unless Hazardous Materials are found, then at Borrower’s sole cost and expense, and Borrower will cooperate in the conduct of any such environmental audit but in no event will such audit be conducted unless the City believes that such audit is warranted.
Other than in an emergency, such audit will be conducted only after reasonable prior notice has been given to Borrower and only in the presence of a representative of Borrower. Borrower will give the City and its agents and employees access to the Property at all reasonable times to remove, or otherwise to mitigate against the effects of, Hazardous Materials. (e) Borrower will not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by federal or state regulations respecting such material, and, with respect to any such material currently present in the Property, Borrower will promptly either (i) remove or cause to be removed any material that such regulations deem hazardous and require to be removed, or (ii) otherwise comply with such federal and state 463
480 South Batavia Street
Environmental Indemnity
regulations, at Borrower’s sole cost and expense. If Borrower will fail to so do within the cure period permitted under applicable law, regulation, or order, the City may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with the applicable law, regulation, or order, and the costs thereof will be added to the Obligations (as hereinafter defined) of Borrower under this Section 2.
(f) Borrower will immediately advise the City in writing of any of the following:
(i) any pending or threatened environmental claim against Borrower or the Property, (ii) any condition or occurrence on the Property that (A) results in noncompliance by Borrower with any applicable environmental law, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental law, or (C) could reasonably be anticipated to form the basis of an environmental claim against the Property or Borrower.
2.2 Indemnity. Borrower will indemnify, protect, and hold the City harmless from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, reasonable attorneys’ and experts’ fees and disbursements) of any kind or of any nature whatsoever (collectively, the Obligations) which may at any time be imposed upon, incurred by or asserted or awarded against the City and arising from or out of:
(a) The presence of any Hazardous Materials on, in, under, or affecting all or any portion of the Property or any surrounding areas;
(b) The breach of any covenant made by Borrower in Section 2.1 hereof; or (c) The enforcement by the City of any of the provisions of this Section 2.2 or the assertion by Borrower of any defense to its obligations hereunder.
Subject to the qualifications set forth in Section 2.3, below, Borrower will be liable for payment and performance of the Obligations to the full extent (but only to the extent) of the property and assets (including the Property) which constitute security for such Obligations. If default occurs in the timely and proper payment and performance of any such Obligations (after notice and reasonable opportunity to cure), any judicial proceedings brought by the City against Borrower will be limited to the protection and preservation of the Property, the preservation, enforcement and foreclosure of the liens, mortgages, assignments, rights and security interests securing such Obligations and enforcement and collection of such Obligations for which Borrower remains directly liable as provided in this Section. If there is a foreclosure of any such liens, mortgages, assignments, rights and security interests by power of sale or otherwise, no personal judgment for any deficiency thereon will be sought or obtained by the City against Borrower, or its officers, directors, agents, attorneys, servants or employees. In no event shall Borrower be liable for any Obligations resulting exclusively from the gross negligence and/or willful misconduct of the City. 464
480 South Batavia Street
Environmental Indemnity
2.3 Exceptions to Non-Recourse Liability. Notwithstanding the foregoing provisions of Section 2.2 or any other agreements,
(a) the City may proceed against any other person or entity whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and (b) The City may recover personally from any person or entity other than Borrower’s Managing General Partner and Limited Partners:
(1) any damages, costs and expenses incurred by the City as a result of the negligence of such person or entity, involving, directly or indirectly, the use, generation, treatment, storage, release, or disposal of any Hazardous Materials by such person or entity or by others; provided, however, that neither Borrower nor any officer, partner, agent, attorney, servant or employee of Borrower will have any personal liability if the act or omission complained of was performed in good faith and was not reckless, wanton, intentional or grossly negligent; (2) any damages, costs and expenses incurred by City as a result of fraud or any criminal act or acts of Borrower or any partner, shareholder, officer, director or employee of Borrower, or of any general or limited partner of Borrower; and (3) all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that City will pay Borrower’s reasonable court costs and attorneys; fees if Borrower is the prevailing party in any such enforcement of collection action).
Section 3. BORROWER’S UNCONDITIONAL OBLIGATIONS
3.1 Unconditional Obligations. Borrower hereby agrees that the Obligations will be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Loan Documents or affecting any of the rights of the City with respect thereto. The obligations of Borrower hereunder will be absolute and unconditional irrespective of:
(a) The validity, regularity, or enforceability of the Loan Documents or any other instrument or document executed or delivered in connection therewith; (b) Any alteration, amendment, modification, release, termination, or cancellation of any of the Loan Documents, or any change in the time, manner, or place of payment of, or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Loan Documents;
465
480 South Batavia Street
Environmental Indemnity
(c) Any extension of the maturity of the City Loan or any waiver of, or consent to any departure from, any provision contained in any of the Loan Documents; (d) Any exculpatory provision in any of the Loan Documents limiting the City’s recourse to property encumbered by the Deed of Trust securing the City Loan, or to any other security, or limiting the City’s rights to a deficiency judgment against Borrower; (e) Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the City Loan, or any release, amendment, waiver of, or consent to any departure from any provision of, any other Borrower or guarantee given in respect of the City Loan;
(f) The insolvency or bankruptcy of Borrower, Borrower, or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the City Loan; or (g) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower, Borrower, or any other indemnitor or guarantor with respect to the City Loan or any or all of the Obligations.
3.2 Continuation. This Indemnity (a) is a continuing indemnity and will remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the payment in full of the City Loan or the release or other extinguishment of any security for the City Loan); and (b) will continue to be effective or will be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the City upon the insolvency, bankruptcy, or reorganization of Borrower, Borrower or otherwise, all as though such payment had not been made.
3.3 Termination. Notwithstanding the payment (and performance) in full of all of the Obligations and the payment (or performance) in full of all of Borrower’s obligations under the Loan Documents, this Indemnity will not terminate if any of the following will have occurred:
(a) The City has at any time or in any manner participated in the management or control of, taken possession of (whether personally, by agent or by appointment of a receiver), or taken title to the Property or any portion thereof, whether by foreclosure, deed in lieu of foreclosure, sale under power of sale or otherwise; or
(b) There has been a change, between the date hereof and the date on which all of the Obligations are paid and performed in full, in any Hazardous Materials laws, the effect of which may be to make a lender or mortgagee liable in respect of any of the Obligations, notwithstanding the fact that no event, circumstance, or condition of the nature described in paragraph (a) above ever occurred.
466
480 South Batavia Street
Environmental Indemnity
Section 4. WAIVER
Borrower hereby waives the following:
(a) Promptness and diligence;
(b) Notice of acceptance and notice of the incurrence of any obligation by Borrower;
(c) Notice of any action taken by the City, Borrower, or any other interested party under any Loan Document or under any other agreement or instrument relating thereto; (d) All other notices, demands, and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Borrower of its Obligations hereunder;
(e) The right to a trial by jury with respect to any dispute arising under, or relating to, this Indemnity;
(f) Any requirement that the City protect, secure, perfect, or insure any security interest or lien in or on any property subject thereto; (g) Any requirement that the City exhaust any right or take any action against Borrower or any other person or collateral; and
(h) Any defense that may arise by reason of:
(1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons;
(2) The failure of the City to file or enforce any claim against the estate (in probate, bankruptcy, or any other proceedings) of any person or persons; or (3) Any defense based upon an election of remedies by the City, including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of the City or any other right of the City to proceed against Borrower.
467
480 South Batavia Street
Environmental Indemnity
Section 5. NOTICES
Any notice, demand, statement, request, or consent made hereunder will be in writing and will be personally served or delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), or mailed by first-class registered mail, return receipt requested, to the following addresses (or to such other address as the parties hereto, will designate in writing):
In the case of the City:
The City of Orange
300 E. Chapman Avenue
Orange, CA 92866
Attn: City Manager
In the case of Borrower:
Mercy Housing California 107, L.P.
1500 S. Grand Avenue, Suite 100
Los Angeles, California 90015
Attn: Erika Villablanca
With a copy to Investor Limited Partner at:
Wincopin Circle LLLP
c/o Enterprise Community Asset Management, Inc.
70 Corporate Center
11000 Broken Land Parkway, Suite 700
Columbia, Maryland 21044
Telephone: (410) 964-0552
Facsimile: (410) 772-2630
Attn: Asset Management
Kenneth S. Gross, Esq.
Gallagher Evelius & Jones LLP
218 North Charles Street, Suite 400
Baltimore, Maryland 21201
Any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will 468
480 South Batavia Street
Environmental Indemnity
be deemed received on the documented date of receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof.
Section 6. MISCELLANEOUS
6.1 Borrower will make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to the City at its address specified in the first paragraph hereof.
6.2 No amendment of any provision of this Indemnity will be effective unless it is in writing and signed by Borrower and the City, and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, will be effective unless it is in writing and signed by the City, and then such waiver or consent will be effective only in the specific instance and for the specific purpose for which given.
6.3 No failure on the part of the City to exercise, and no delay in exercising, any right hereunder or under any other Loan Document will operate as a waiver thereof, nor will any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the City provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of the City under any Loan Document against any party thereto are not conditional or contingent on any attempt by the City to exercise any of its rights under any other Loan Document against such party or against any other person or collateral.
6.4 Any provision of this Indemnity that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction.
6.5 This Indemnity will (a) be binding upon Borrower, and Borrower’s successors and assigns; and (b) inure, together with all rights and remedies of the City hereunder, to the benefit of the City, its respective directors, officers, employees, and agents, any successors to the City’s interest in the Property, any other person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of the City’s rights and remedies under the Loan Documents, any successors to any such person, and all directors, officers, employees, and agents of all of the aforementioned parties. Without limiting the generality of clause (b) of the immediately preceding sentence, the City may, subject to, and in accordance with, the provisions of the Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under any other Loan Document, to any other person, and such other person will thereupon become vested with all of the rights and obligations in respect thereof that were granted to the City herein or otherwise. None 469
480 South Batavia Street
Environmental Indemnity
of the rights or obligations of Borrower hereunder may be assigned or otherwise transferred without the prior written consent of the City.
6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Orange County in any action or proceeding arising out of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non convenient or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in such California or federal court.
Borrower irrevocably consents to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity, above. Borrower agrees that a final judgment in any such action or proceeding will be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.
6.7 The title of this document and the captions used herein are inserted only as a matter of convenience and for reference and will in no way define, limit, or describe the scope or the intent of this Indemnity or any of the provisions hereof.
6.8 This Indemnity will be governed by, and construed and interpreted in accordance with, the laws of the State of California applicable to contracts made and to be performed therein, except to the extent that the laws of the United States preempt the laws of the State of California.
6.9 This Indemnity may be executed in any number of counterparts, each of which will constitute an original and all of which together will constitute one agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES ON FOLLOWING PAGE]
470
480 South Batavia Street
Environmental Indemnity
S-1
IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date first set forth above.
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: ____________________________
Erika Villablanca,
Vice President
Dated: _________________, 2022
471
480 South Batavia Street
Environmental Indemnity
Exhibit A – Legal Description
Exhibit A
to Environmental Indemnity
LEGAL DESCRIPTION
APN:
472
Prepared For:Mercy Housing CaliforniaPrepared By:California Housing Partnership CorporationVersion: 2.18 Revised: 9/2/2022Filename:
TABLE OF CONTENTS
Sources of Funds…………………………………………..………………………..……..…………………………………………..………………………..……..1 Cash Flow (Residential)…………………………………………..………………………..……..…………………………………………..………………………..……..11aUses of Funds…………………………………………..………………………..……..…………………………………………..………………………..……..2 Cash Flow (Commercial) …………………………………………..………………………..……..…………………………………………..………………………..……..11bDeveloper Fee Calculation…………………………………………..………………………..……..…………………………………………..………………………..……..3 Outstanding Debt & Reserves (Book)…………………………………………..………………………..……..…………………………………………..………………………..……..12aUnit Mix & Rental Income…………………………………………..………………………..……..…………………………………………..………………………..……..4 Outstanding Debt & Reserves (Tax)…………………………………………..………………………..……..…………………………………………..………………………..……..12bTax Credit Calculation…………………………………………..………………………..……..…………………………………………..………………………..……..5 Net Cash Flow Fee Accruals…………………………………………..………………………..……..…………………………………………..………………………..……..12cBase Year Income & Expense…………………………………………..………………………..……..…………………………………………..………………………..……..6 Schedule of Existing Debt…………………………………………..………………………..……..…………………………………………..………………………..……..12dMortgage Calculation & Bond Ratios…………………………………………..………………………..……..…………………………………………..………………………..……..7 Schedule of Deductions…………………………………………..………………………..……..…………………………………………..………………………..……..13Lease-up/Placed-in-Service Schedule…………………………………………..………………………..……..…………………………………………..………………………..……..8 Analysis of Taxable Income…………………………………………..………………………..……..…………………………………………..………………………..……..14Net Syndication Proceeds…………………………………………..………………………..……..…………………………………………..………………………..……..9 Capital Account & Exit Tax Liability…………………………………………..………………………..……..…………………………………………..………………………..……..15TCAC Calculations…………………………………………..………………………..……..…………………………………………..………………………..……..10aInvestment Summary…………………………………………..………………………..……..…………………………………………..………………………..……..16TCAC Transfer Event Calculation…………………………………………..………………………..……..…………………………………………..………………………..……..10bNet Quarterly Benefits…………………………………………..………………………..……..…………………………………………..………………………..……..17
SOURCES OF FUNDS - PERMANENT
AMOUNT
TOTAL INTEREST COST
OID INTEREST RATEAMORT (Yr) COMMENTSTotal Permanent Debt:- Seller Carryback Loan (SJCO)5,705,0003.140%3.140%55.0 Accrued Deferred Interest - Seller Carryback Loan (SJCO)433,092Cal HFA SNHP 3,696,8933.000%1.788%55.0 Per Unit: 73,938 Accrued Deferred Interest - Cal HFA SNHP157,352County of Orange HOME Loan1,020,6003.000%1.788%55.0 Per Unit: 20,412 HCD - NPLH Non-Competitive2,000,0003.000%1.903%55.0 Per Unit: 40,000 HCD - NPLH Competitive3,641,7223.000%1.903%55.0 Per Unit: 72,834 County of Orange MHSA Loan1,400,0003.000%1.788%55.0 Per Unit: 28,000 City of Orange HOME Loan651,2443.000%1.788%55.0 1,600,000 total City LoansPer Unit: 13,025 City of Orange LMIHA Loan576,0003.000%1.788%55.0 Per Unit: 11,520 City of Orange In-Lieu Fees Loan372,7563.000%1.788%55.0 Per Unit: 7,455 Deferred Developer Fee710,2080.000%0.000%Capital Contributions General Partner (Developer Fee)0 Synd Costs 168,500 GP Capital 0 Net Equity for TCAC16,270,135 Limited Partners (Enterprise)16,438,635 Fed LIHTC:$0.9675State LIHTC:$0.80 TOTAL SOURCES 36,803,502Surplus/(Shortfall) 0 Investor:PERMANENT LOAN INTEREST RATETRANCHE ATRANCHE B INVESTOR EQUITY STACKOTHER ASSUMPTIONSBase Rate 4.100%4.100%Cushion 1.000%1.000% LIHTC Equity (Federal+State)16,438,635 Current AFR:3.14%MIP 0.000%0.000% Historic Tax Credit0 AFR Month:9/1/22GNMA/Servicing 0.000%0.000% Investment Tax Credit (Solar PV)0 AFR Cushion:0.00%Issuer 0.050%0.050%4,000Issuer min/yrSubtotal LP Equity16,438,635 Total U/W AFR:3.14%Trustee 0.000%0.000%2,000per annumRating 0.000%0.000%0per annum CA Certificated Credit Sale0Remarketing 0.000%0.000%0per annumTotal Investor Equity16,438,635Rebate Analyst 0.000%0.000%0per annumTotal 5.150%5.150%
SOURCES OF FUNDS - CONSTRUCTION
AMOUNTINTEREST RATETERM (Mos.) COMMENTSUmpqua providing 30-month term, conversion anticipated in 28 months##Umpqua Tax-Exempt Construction Loan17,925,0005.480%28 2,400,000supplemental request15.5%of original allocUmpqua Taxable Construction Loan4,538,2645.980%28Seller Carryback Loan (SJCO)5,705,0003.140%28 Accrued Deferred Interest - Seller Carryback Loan (SJCO)433,092Cal HFA SNHP 3,696,8933.000%28 Accrued Deferred Interest - Cal HFA SNHP157,352Costs Deferred Until Conversion1,272,173 See page 2 - right columnDeferred Developer Fee710,208Capital Contributions LP Equity - Construction Period General Partner (Developer Fee)0 LP Equity used for const.2,365,52014.39% GP Capital 0 LP Equity for bond collateral0 0.00% Limited Partners (Enterprise)2,365,520#REF! Total Equity During Const.2,365,52014.39% TOTAL SOURCES 36,803,502 Syndication Costs168,500Surplus/(Shortfall) 0 Net Equity for TCAC2,197,020Sources Less Deferred To Conversion:35,531,329 Less Costs Deferred to Conv.34,437,982
CONSTRUCTION LOAN INTEREST RATECONSTRUCTION LOAN VALUATIONTAX-EXEMPT BOND DATA Index Type: 30d SOFRRestricted NOI 130,03250% Test (see Page 7):52.60%Current Index: 2.28%OAR 5.00%Issuer Inducement: TBDSpread: 1.20%FMV per NOI 2,600,639CDLAC Allocation:17,925,000 Base Interest Rate (not including cushion):3.48%Agg. Credit Value @ 0.9716,438,635Percent of CDLAC Allocation Used:100.00%Cushion - Total 2.00%Perm-Only Soft Debt9,662,322Const-only portion:17,925,000Interest Rate (All-In) 5.48%Total Value 28,701,596LTV: 85.00% CDLAC Per-Unit Limit27,104,500 Bank underwriting cushion1.00%Max. Const. Loan Amount24,396,357 CDLAC 55% Limit18,743,000 Index increase to close cushion1.00%Commitment Amount TBD CDLAC 52% Target17,721,000
SELLER POSITION
Proceeds of Sale: Uses of Cash to Seller:Sales Price 5,820,000Incl. Reserves & Personal PropertyCash to Seller 115,000includes legal fee of $15KSeller Carryback Note(5,705,000) Repayment of Debt0Cash to Seller 115,000 Net Cash to Seller115,000 Mercy Villa St Joseph 2.18 pre-closing.xlsm
Villa St. Joseph
473
Uses of Funds Version:2.18
100.00%COST ALLOCATIONS LIHTC ELIGIBLE BASISOTHER BASIS & COST ALLOCATIONS100.00%Assuming 266 Election?Yes Deferred toDepreciable CompletionLand/BasisITC TaxTotal Total Non-Non- Constr./ or forCredit BasisTOTALResidentialResidentialDepreciableResidentialNon-Resid.ExpensedAmortizedRehabAcquisitionPerm Conv.50% Test(Solar PV) ACQUISITION COSTS Total Purchase Price - Real Estate:5,820,000 Building - VSJ 5,820,0005,820,0000 5,820,000 0 5,820,000 05,820,000Legal - Acquisition 10,00010,0000 0 10,000 0 10,000 010,000Off-site Improvements 0 0 0 0 0 0 0 0 0 0 HARD COSTS Total Construction Contract:18,549,721
NEW CONSTRUCTIONDemolition 684,952684,9520 0 684,952 0 0 684,952 0684,952Hard Costs-Unit Construction14,109,10514,109,1050 14,109,105 0 0 14,109,105 014,109,105Personal Property in Construction Contract286,548286,5480 286,548 0 0 286,548 0286,548Site Improvements/Landscape413,177413,1770 413,177 0 413,177 0413,177GC - General Conditions827,480827,4800 827,480 0 827,480 0827,480GC - Overhead & Profit1,013,8241,013,8240 1,013,824 0 1,013,824 01,013,824GC - Insurance 331,315331,3150 331,315 0 331,315 0331,3150.05 Contingency - Escalation883,320883,3200 883,320 0 883,320 0883,3200.1 Contingency - Owner's Construction1,854,9721,854,9720 1,854,972 0 1,854,972 01,854,972 SOFT COSTSArchitecture - Design634,650634,6500 634,650 0 634,650 0634,6500Architecture - Supervision143,175143,1750 143,175 0 143,175 0143,1750Design/Engineering - Civil90,05590,0550 90,055 0 90,055 090,0550Phase I/II/Toxics Report16,00016,0000 16,000 0 16,000 016,000Special Inspections/CASp/ADA25,00025,0000 25,000 0 25,000 025,000Prevailing Wage Monitor45,00045,0000 45,000 0 45,000 045,0000Owner's Rep / Construction Supervision142,000142,0000 142,000 0 142,000 0142,0000Local Development Impact Fees1,125,6211,125,6210 1,125,621 0 1,125,621 01,125,621Impact Fee Waiver 0 0 0 0Local Permits/Fees 300,000300,0000 300,000 0 300,000 0300,000Utilty Connection Fees150,000150,0000 150,000 0 150,000 0150,0000Security During Const 0 0 0 0 0 0 0 0 0 0Real Estate Taxes During Const109,313109,3130 63,766 045,547 63,766 0 063,766Insurance During Const400,520400,5200 400,520 0 0 400,520 0 0400,5200Appraisal 5,0005,000 0 5,000 0 0 5,000 0 5,000Market/Rent Comp Study13,50013,5000 13,500 0 0 0OC Supportive Housing Monitoring Fee4,2504,250 0 0 0 4,250 0 0 0Soft Cost Contingency350,868350,8680 350,868 0 350,868 0350,868Predev. Loan Interest/Fees 61,50061,5000 61,500 0 0 61,500 061,500Construction Loan Interest1,776,3081,776,3080 957,733 0818,575 957,733 0 0957,7330 Construction Loan Interest - Tail226,157226,1570 0 0226,157 0 0 0 0 Accrued Interest - Seller Carryback Loan (SJCO)433,092433,0920 0 0433,092 0 0 0 0Accrued Interest - Cal HFA SNHP157,352157,3520 100,400 056,952 100,400 0100,400Title/Recording/Escrow - Construction80,00080,0000 80,000 0 80,000 0 080,000Title/Recording/Escrow - Permanent40,00040,0000 40,000 40,000Legal (Owner): Construction Closing80,00080,0000 80,000 0 80,000 0 080,000 Syndication - LP45,00045,000022,500 22,500 0Syndication Consulting93,50093,500093,500 0 0 2,500Audit/Cost Certification30,00030,0000 30,000 0TCAC Application/Res/Monitoring Fee89,47089,4700 89,470 20,500Marketing 200,000200,0000 200,000 0Furnishings Not in Contract324,000324,0000 324,000 0 324,000 0324,000Start-up /Lease-up Reserve15,00015,000015,000 0 0Capitalized Operating Reserve (4 mos.)204,000204,0000204,000 204,000Capitalized HCD Subsidy Transistion Reserve289,256289,2560289,256 289,256Developer Fee 2,500,0002,500,0000 2,500,0000 2,500,000 0 715,9172,500,000- COSTS OF ISSUANCE/FINANCING FEESBond Counsel 50,00050,000050,000 0 0 0 0 0 0Issuer Application Fee2,5002,500 0 1,600 0 900 0 0 0 1,600Issuer Fee - Upfront 31,10931,1090 19,910 011,199 0 0 019,910Issuer Fee - Annual During Const.17,92517,9250 11,472 06,453 0 0 011,472Construction Lender Origination Fee152,933152,9330 107,550 045,383 0 107,550 0107,550Construction Lender Expenses25,00025,0000 25,000 0 0 25,000 025,000Construction Lender Counsel75,00075,0000 75,000 0 0 75,000 075,000Trustee Fee During Construction4,0004,000 0 2,560 01,440 0 0 0 2,560CDLAC Fee 6,2746,274 0 4,015 02,259 0 0 0 4,015CDIAC Fee 4,4814,481 0 2,868 01,613 0 0 0 2,868Subtotal - Financing/Costs of Issuance369,222369,222050,000249,975069,2470207,5500 0249,9750 TOTAL DEVELOPMENT COSTS36,803,50236,803,5020674,25634,079,95601,679,570369,72028,146,0315,891,5001,272,17334,079,9560TDC Per Unit 736,070100.00%TDC Net of accrued interest:36,213,058TDC TCAC 36,635,00236,635,002 Villa St. Joseph
474
Developer Fee Calculation Version: 2.18
MAXIMUM DEVELOPER FEE CALCULATION
CONST. ACQ. TOTAL
Fee per Base TCAC Formula3,846,905883,7254,730,630
Percent of Total81.32% 18.68%100.00%
Max. Allowable Fee per TCAC (prorated)3,846,905883,7254,730,630 Less: Development Consulting0 0
Net Allowable3,846,905883,7254,730,630
Less: Owner Reduction 0 0 0
Net Allowable3,846,905883,7254,730,630
Maximum Base Developer Fee per TCAC 4,730,630
Maximum Developer Fee per HCD N/A
Maximum Developer Fee per Local N/A
Maximum Developer Fee per Owner 2,500,000
Maximum Developer Fee at Max Cash Fee
Most Restrictive Maximum Developer Fee: 2,500,000
Maximum Cash Fee per TCAC(Lesser of Calc. or Reservation Amount)2,500,000 Maximum Cash Fee per HCDNPLH guidelines 2,000,000
Maximum Cash Fee per Local N/A
Maximum Cash Fee per Owner N/A
Most Restrictive Maximum Cash Fee: 2,000,000
ACTUAL DEVELOPER FEE PAYMENT SCHEDULE
Amount% of Cash Fee% of Total Fee
Construction Close 715,917 40.00% 28.64% Completion 357,958 20.00% 14.32% Conversion 615,917 34.41% 24.64% Final LP Pay-in 1 100,000 5.59% 4.00% Total: Cash Fee 1,789,792
Plus: Deferred Developer Fee 710,208 28.41%
Plus: GP Capital 0 0.00%
Total Developer Fee 2,500,000
Villa St. Joseph
475
Unit Mix & Rental Income Version:2.18
UTILITY ALLOWANCES0BR1BR2BR3BR4BR5BRAVERAGE AFFORDABILITY FOR VSJ 64 74 103 82 - - LIHTC UNITS (% of Median)33.88% 0 - - - - - - 0 - - - - - - RENT LIMITS AS OF YEAR:2022
RESIDENTIAL INCOME
LIHTC - Tier 1VSJ TCAC20%AMI % of Units:36.73% Section 8SUBSIDIZED Unit TypeNumberUnit Floor Area
Actual Rent TCAC AMI %
Per Unit Monthly Gross Rent
Per Unit Regulatory Net Rent
Per Unit Actual Net Rent
Total Monthly Net Rent
Total Annual Net Rent
Number of Subsidized Units
Per Unit Net Subsidy Rents
Per Unit Subsidy Increment
Total Monthly Subsidy
Total Annual Subsidy
Total Annual Income
1BR 1850020.0% 508 434 4347,81293,744 181,8501,41625,488305,856399,600 TOTAL18 PSH- NPLH units 7,81293,744 18 25,488305,856399,600 LIHTC - Tier 2VSJ TCAC30%AMI % of Units:12.24% NOTSUBSIDIZED Unit TypeNumberUnit Floor Area
Actual Rent TCAC AMI %
Per Unit Monthly Gross Rent
Per Unit Regulatory Net Rent
Per Unit Actual Net Rent
Total Monthly Net Rent
Total Annual Net Rent
Number of Subsidized Units
Per Unit Net Subsidy Rents
Per Unit Subsidy Increment
Total Monthly Subsidy
Total Annual Subsidy
Total Annual Income
0BR 2 37530.0% 712 648 6481,29615,552 0 0 0 0 015,5521BR 4 50030.0% 762 688 6882,75233,024 0 0 0 0 033,024 TOTAL6 4,04848,576 0 0 048,576
LIHTC - Tier 3VSJ TCAC40%AMI % of Units:26.53% NOTSUBSIDIZED Unit TypeNumberUnit Floor Area
Actual Rent TCAC AMI %
Per Unit Monthly Gross Rent
Per Unit Regulatory Net Rent
Per Unit Actual Net Rent
Total Monthly Net Rent
Total Annual Net Rent
Number of Subsidized Units
Per Unit Net Subsidy Rents
Per Unit Subsidy Increment
Total Monthly Subsidy
Total Annual Subsidy
Total Annual Income
0BR 2 37540.0% 949 885 8851,77021,240 0 0 0 0 021,2401BR 1150040.0% 1,016942 94210,362124,344 0 0 0 0 0124,344 TOTAL13 12,132145,584 0 0 0145,584
LIHTC - Tier 4VSJ TCAC50%AMI % of Units:24.49% NOTSUBSIDIZED Unit TypeNumberUnit Floor Area
Actual Rent TCAC AMI %
Per Unit Monthly Gross Rent
Per Unit Regulatory Net Rent
Per Unit Actual Net Rent
Total Monthly Net Rent
Total Annual Net Rent
Number of Subsidized Units
Per Unit Net Subsidy Rents
Per Unit Subsidy Increment
Total Monthly Subsidy
Total Annual Subsidy
Total Annual Income
0BR 2 37550.0% 1,1861,1221,1222,24426,928 0 0 0 0 026,9281BR 1050050.0% 1,2701,1961,19611,960143,520 0 0 0 0 0143,520 TOTAL12 14,204170,448 0 0 0170,448
Staff Units - Site 1VSJ
Unit TypeNumberUnit Floor Area
Actual Rent TCAC AMI %
Per Unit Monthly Gross Rent
Per Unit Regulatory Net Rent
Per Unit Actual Net Rent
Total Monthly Net Rent
Total Annual Net Rent
2BR 1 8000.0% 0 0 0 0 0
TOTAL1 0 0
TOTAL RESIDENTIAL INCOME
Number
Total Monthly Net Rent
Total Annual Net Rent
Monthly Section 8 Income
Annual Section 8 IncomeMonthly NA IncomeAnnual NA Income Monthly Test C Income
Annual Test C Income
Monthly Test D Income
Annual Test D Income
Grand Total IncomeTotal Floor AreaLIHTC 49 38,196 458,352 25,488 305,856 0 0 0 0 0 0 764,208 23,750 Non-LIHTC 0 0 0 0 0 0 0 0 0 0 0 0 0 Staff Units 1 0 0 0 0 0 0 0 0 0 0 0 800 TOTAL 50 38,196 458,352 25,488 305,856 0 0 0 0 0 0 764,208 24,550
MISCELLANEOUS INCOME SUBSIDIZED UNIT MIX SUMMARY
Per Unit Per MonthMonthly TotalAnnual Total
Laundry / Vending 5.00 250 3,000 Units With Section 8
Units Without SubsidyOther 0.00 0 0 Unit Type Units With Units With Units With Total UnitsParking 0.00 0 0 0BR 0 0 0 0 6 61BR 18 0 0 0 25 43TOTAL 5.00 250 3,000 2BR 0 0 0 0 1 1TOTAL 18 0 0 0 32 50
SCATTERED SITE UNIT MIX SUMMARY
LIHTC Non-LIHTC STAFF UNITS
Unit TypeVSJ0 0 0 0 VSJ0 0 0 0 VSJ0 0 0 00BR6 0 0 0 0 0 0 0 0 0 0 0 0 0 01BR43 0 0 0 0 0 0 0 0 0 0 0 0 0 02BR0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 TOTAL49 0 0 0 0 0 0 0 0 0 1 0 0 0 0
TOTAL ALL TYPES
Unit Type VSJ 0 0 0 00BR 6 0 0 0 01BR 43 0 0 0 02BR 1 0 0 0 0 TOTAL50 0 0 0 0
Villa St. Joseph
476
Calculation of Tax Credits Version: 2.18
FEDERAL CALIFORNIA
CONST/ CONST/
ACQUISITIONREHAB TOTALACQUISITIONREHAB TOTAL
TOTAL ELIGIBLE COSTS 5,891,50028,146,03134,037,531 0 0 0 Less:
Voluntary Reduction for Tie-Breaker 0 0 0 0 0 0
ELIGIBLE BASIS 5,891,50028,146,03134,037,531 0 0 0
Threshold Basis Limit 49,868,829
TBL: Exclude GP Cap/DDF for 4%/State 0
REQUESTED UNADJUSTED ELIGIBLE BASIS (For Tiebreaker)5,891,50028,146,03134,037,531 0 0 0 HIGH COST ADJUSTMENT (Y or N)Y 100.0% 130.0% 100.0% 100.0% DDA 2021-2022
ADJUSTED ELIGIBLE BASIS 5,891,50036,589,84142,481,341 0 0 0 APPLICABLE FRACTION* 100.0% 100.0% 100.0% 100.0%
QUALIFIED CREDIT BASIS 5,891,50036,589,84142,481,341 0 0 0 CREDIT RATE (TCAC UNDERWRITING)State - Total 13.00% 13.00% Federal Annual/Yr 1-3 State4.00% 4.00% 4.00% 4.00%
Year 4 - State 1.00% 1.00%
MAX. POTENTIAL FEDERAL CREDIT (No Vol Basic Reduct/Actual Rate) Credit Rates 4.00% 4.00%
Potential Credit235,6601,463,5941,699,254
Credit Rate Locked? NO
MAX. CREDIT AMOUNT PER TCAC UNDERWRITING
Federal Annual/Yr 1State235,6601,463,5941,699,254 0 0 0 Yr 2 State 0 0 0
Yr 3 State 0 0 0
Yr 4 State 0 0 0
Total 0 0 0
Federal Annual/Total StateN/A N/A N/A N/A N/A N/A
MAXIMUM ALLOWABLE CREDITS (Lesser of above)
Federal Annual/Total State235,6601,463,5941,699,254 0
MAXIMUM ALLOWABLE - TEN YEAR TOTAL 16,992,536 0
Villa St. Joseph
477
Base Year Income & Expense Version: 2.18
INCOME
Scheduled Gross Income - Residential 458,352
Total Gross Subsidy Income - Section 8 305,856
Misc. Income 3,000
Vacancy Loss - Residential 6.84% (31,556)
Vacancy Loss - Section 8 6.84% (20,921)
EFFECTIVE GROSS INCOME 714,731
EXPENSES - RESIDENTIAL
Administrative
Advertising 2,016
Legal 2,000
Accounting/Audit 15,828
Security 0
Other: Misc. Admin 18,473
Total Administrative 38,317
Management Fee 41,160
Utilities
Gas 9,756
Electricity 14,400
Water/Sewer 18,000
Total Utilities 42,156
Payroll/Payroll Taxes
On-Site Manager/Office Admin 58,400
Maintenance Payroll 94,360
Payroll Taxes/Benefits 37,356
Total Payroll/Payroll Taxes 190,116
Insurance 68,304
Maintenance
Painting 6,192
Repairs 0
Trash Removal 17,112
Exterminating 6,582
Grounds 600
Supplies & Contracts 48,732
Total Maintenance 79,218
Other
Misc. Tax/License 1,500
Total Other 1,500
Resident Services
Tenant Services 91,692
Total Resident Services 91,692
Replacement Reserve 25,000
Real Estate Taxes 7,236
TOTAL EXPENSES - RESIDENTIAL 584,699
Per Unit Per Annum (incl. Reserves) 11,694
Per Unit Per Annum (w/o taxes/res/svc)) 9,215
TCAC Minimum (w/o taxes/res/svc) 4,700
NET AVAILABLE INCOME 130,032
Less: Mandatory Annual HCD Payment (Grossed Up for DSCR Factor) 1.15 (27,250) Less: Ground Lease - Minimum Payment (1)
Less: OCHCD Monitoring Fee (1,710)
ADJUSTED NET AVAILABLE INCOME: TOTAL 101,071
ADJUSTED NET AVAILABLE INCOME: NET OF OP SUBSIDY (183,864) Debt Service Coverage Ratio 1.15
AVAILABLE FOR DEBT SERVICE (NET OF OP SUBSIDY) (159,882) AVAILABLE FOR DEBT SERVICE (OP SUBSIDY OVERHANG) 247,770 NET AVAILABLE INCOME AFTER SENIOR DEBT SERVICE 101,071
Villa St. Joseph
478
Mortgage Calculation/Bond Ratios Version: 2.18
BOND / REHABILITATION RATIOS
Tax-Exempt Financing Ratio CDLAC Allocation Limit Effective Date Limits:6/9/20 Units Per-Unit LimitTotal Limit
Studio and SRO 6 522,000 3,132,000
One BR 43 544,000 23,392,000
Series A Bonds 0Two BR 1 580,500 580,500
Series B Bonds 0Three BR 0 638,500 0
Short Term Bonds (Construction Loan Portion)17,925,000Four BR or More 0 671,500 0 TOTAL TAX-EXEMPT FINANCING17,925,000
TOTAL27,104,500
TOTAL BASIS + LAND ALLOCATION34,079,956 Potential Bond Size17,925,000 Over/(Under)-9,179,500
Percent Tax-Exempt Financing 52.60%
Cushion to 50%: 885,022
Villa St. Joseph
479
Lease-Up / Placed-in-Service Schedule Version: 2.18
SCHEDULE
DatesMonths to MilestoneCumulative MonthsStart of ConstructionDecember 1, 20220 0Completion June 1, 202418 18100% OccupancyNovember 1, 20245 23Conversion April 1, 20255 28Form(s) 8609 October 1, 20256 34 LIHTC SCHEDULE LIHTC SCHEDULE -- 2/3 CREDITSOPERATIONS SCHEDULESINGLE BUILDING / MULTIPLE BUILDINGS - GROUP ASINGLE BLDG / MULTIPLE BLDGS - GROUP AYEAR1 1st Tax Credit Year:2024 1st Tax Credit Year (2/3 Units):2025 2024Total # Units:49 Completed Lease Up by MonthTotal QOTotal VacatedCumulativeCumulative MonthNo. UnitsPercent MonthNo. UnitsPercentMonthby Monthby MonthOccupancyOccupancy % Jan-250 0.0% Jan-24 0 0.0%Jan-24 0 0 0 0.00% Feb-250 0.0% Feb-24 0 0.0%Feb-24 0 0 0 0.00% Mar-250 0.0% Mar-24 0 0.0%Mar-24 0 0 0 0.00% Apr-250 0.0% Apr-24 0 0.0%Apr-24 0 0 0 0.00% May-250 0.0% May-24 0 0.0%May-24 0 0 0 0.00% Jun-250 0.0% Jun-24 1020.0%Jun-24 9 0 9 18.37% Jul-250 0.0% Jul-24 1020.0%Jul-24 10 0 19 38.78% Aug-250 0.0% Aug-24 1020.0%Aug-24 10 0 29 59.18% Sep-250 0.0% Sep-24 1020.0%Sep-24 10 0 39 79.59% Oct-250 0.0% Oct-24 1020.0%Oct-24 10 0 49100.00% Nov-250 0.0% Nov-24 0 0.0%Nov-24 0 0 49100.00% Dec-250 0.0% Dec-24 0 0.0%Dec-24 0 0 49100.00% Total0 0.0% Total 50100.0% 1st Year Occupancy: 202441.33% Total Avg % Qual. Occ.0.0% Total % Operating in First Year41.67% MULTIPLE BUILDINGS - GROUP B MULTIPLE BUILDINGS - GROUP BYEAR 2 (cumulative) 2025 1st Tax Credit Year:2025 1st Tax Credit Year (2/3 Units):2026Total # Units: 0Total QOTotal VacatedCumulativeCumulative MonthNo. UnitsPercent MonthNo. UnitsPercentMonthby Monthby MonthOccupancyOccupancy % Jan-260 0.0% Jan-25 50100.0%Jan-25 0 0 0 0.00% Feb-260 0.0% Feb-25 0 0.0%Feb-25 0 0 0 0.00% Mar-260 0.0% Mar-25 0 0.0%Mar-25 0 0 0 0.00% Apr-260 0.0% Apr-25 0 0.0%Apr-25 0 0 0 0.00% May-260 0.0% May-25 0 0.0%May-25 0 0 0 0.00% Jun-260 0.0% Jun-25 0 0.0%Jun-25 0 0 0 0.00% Jul-260 0.0% Jul-25 0 0.0%Jul-25 0 0 0 0.00% Aug-260 0.0% Aug-25 0 0.0%Aug-25 0 0 0 0.00% Sep-260 0.0% Sep-25 0 0.0%Sep-25 0 0 0 0.00% Oct-260 0.0% Oct-25 0 0.0%Oct-25 0 0 0 0.00% Nov-260 0.0% Nov-25 0 0.0%Nov-25 0 0 0 0.00% Dec-260 0.0% Dec-25 0 0.0%Dec-25 0 0 0 0.00% Total0 0.0% Total 50100.0% 1st Year Occupancy: 20250.00% Total Avg % Qual. Occ.0.0% Total % Operating in 2nd Year100.0% PIS SCHEDULE FOR ACQ BASIS DEPRECIATIONPIS SCHEDULE FOR REHAB/NC BASIS DEPRECIATIONPIS SCHEDULE FOR SITEWORK/PERS. PROP. DEPRECIATIONYEAR1 YEAR 1 YEAR 1Mid-Month Convention2024 Mid-Month Convention 2024 Mid-Year Convention 2024 Bldg. PIS by Month Bldg. PIS by Month Bldg. PIS by MonthMonthNo. UnitsDep. Percent MonthBuilding No.No. UnitsPercent MonthBuilding No.No. UnitsPercentJan-24 0 0.0% Jan-24 0 0 0.0% Jan-24 0 0 0.0%Feb-24 0 0.0% Feb-24 0 0 0.0% Feb-24 0 0 0.0%Mar-24 0 0.0% Mar-24 0 0 0.0% Mar-24 0 0 0.0%Apr-24 0 0.0% Apr-24 0 0 0.0% Apr-24 0 0 0.0%May-24 0 0.0% May-24 0 0 0.0% May-24 0 0 0.0%Jun-24 10 0.8% Jun-24 0 100.8% Jun-24 0 10 0.0%Jul-24 20 2.5% Jul-24 1 202.5% Jul-24 1 10 8.3%Aug-24 30 4.2% Aug-24 0 304.2% Aug-24 0 10 8.3%Sep-24 40 5.8% Sep-24 0 405.8% Sep-24 0 10 8.3%Oct-24 50 7.5% Oct-24 0 507.5% Oct-24 0 10 8.3%Nov-24 50 8.3% Nov-24 0 508.3% Nov-24 0 0 8.3%Dec-24 50 8.3% Dec-24 0 508.3% Dec-24 0 0 8.3%TOTAL 50 37.5% TOTAL 5037.5% TOTAL 5050.0% Total Avg % PIS Y1 37.5% Total Avg % PIS Y1 37.5% Total Avg % PIS Y1 50.0%YEAR 2 (cumulative) YEAR 2 (cumulative) YEAR 2 (non-cumulative) Jan-25 50 8.3% Jan-25 0 508.3% Jan-25 0 0 8.3%Feb-25 50 8.3% Feb-25 0 508.3% Feb-25 0 0 8.3%Mar-25 50 8.3% Mar-25 0 508.3% Mar-25 0 0 8.3%Apr-25 50 8.3% Apr-25 0 508.3% Apr-25 0 0 8.3%May-25 50 8.3% May-25 0 508.3% May-25 0 0 8.3%Jun-25 50 8.3% Jun-25 0 508.3% Jun-25 0 0 8.3%Jul-25 50 8.3% Jul-25 0 508.3% Jul-25 0 0 8.3%Aug-25 50 8.3% Aug-25 0 508.3% Aug-25 0 0 8.3%Sep-25 50 8.3% Sep-25 0 508.3% Sep-25 0 0 8.3%Oct-25 50 8.3% Oct-25 0 508.3% Oct-25 0 0 8.3%Nov-25 50 8.3% Nov-25 0 508.3% Nov-25 0 0 8.3%Dec-25 50 8.3% Dec-25 0 508.3% Dec-25 0 0 8.3%TOTAL 50 100.0% TOTAL 50100.0% TOTAL 0100.0% Total Avg % PIS Y2 100.0% Total Avg % PIS Y2 100.0% Total Avg % PIS Y2 100.0% Villa St. Joseph
480