Agenda packet — Orange City Council, January 23, 2024 (part 4 of 4)

Recording Requested by and
When Recorded Mail to:

THE CITY OF ORANGE
300 E. Chapman Avenue
Orange, CA 92866
Attention:

APN: 390-322-15 OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383
Notice of Affordability Restrictions
NOTICE IS HEREBY GIVEN that pursuant to Health & Safety Code Section 33334.3(f), the City of Orange is recording this Notice of Affordability Restrictions (hereinafter the “ Notice”) with regard to the property located at 1800 E. La Veta Avenue, Orange, California, and more particularly described in Exhibit “A” attached hereto (the “Property”).

The Property is subject to an Agreement Containing Covenants (the “Covenants”) recorded concurrently herewith, which restricts the use of the Property under the Owner’s long-term leasehold interest in the Property pursuant to the Ground Lease as follows:
(1) Ten (10) Units will be rented exclusively to an Extremely Low Income Senior Citizen Household at an Affordable Rent as provided in California Health and Safety Code Section 50106; (2) Twenty-four (24) Units will be rented exclusively to Lower Income Senior Citizen Households at an Affordable Rent as provided in California Health and Safety Code Section 50079.5; (3) Seventeen (17) Units will be rented exclusively to households meeting the thirty percent (30%) income limit under the Extended Use Agreement recorded against the Property in 447
1800 E. La Veta Avenue
Notice of Affordability Restrictions

Page 2 ends

connection with the Tax Credits, consisting of 11 one bedroom Units and 6 two bedroom Units;
(4) Thirty two (32) Units will be rented exclusively to households meeting the fifty percent (50%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of 22 one bedroom Units and 10 two bedroom Units;
(5) Thirty two (32) Units will be rented exclusively to households meeting the sixty percent (60%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of 22 one bedroom Units and 10 two bedroom Units; and
(6) Eighty three (83) Units will be rented exclusively to households meeting the seventy percent (70%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of 56 one bedroom Units and 27 two bedroom Units.

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Covenants.

The maximum incomes of eligible tenants under (1) and (2) above will be determined on the basis of the income limits for Extremely Low Income and Lower Income households in the Los Angeles-Long Beach-Anaheim SMSA, published approximately annually by the California Department of Housing and Community Development (“ HCD”). If HCD discontinues publishing such income limits, the term “Extremely Low Income” will mean a household income that does not exceed 30% of the area median income, adjusted for family size, and the term “Lower Income” will mean a household income that does not exceed 70% of the area median income, adjusted for family size. For the term of the Tax Credits, in no case will household income exceed applicable Tax Credit income limits as provided for in the Extended Use Agreement.
448
1800 E. La Veta Avenue
Notice of Affordability Restrictions

Page 3 ends

Rents charged to a tenant will not exceed rents that are affordable to Extremely Low Income and Lower Income households, as applicable, (as “Affordable Rent ” is defined below). The maximum rents, including a reasonable utility allowance for utilities and services (excluding telephone, cable, internet and utility services not paid for directly or reimbursed by tenants) to be paid by Extremely Low Income and Lower Income Senior Citizen Households will be the lower of the maximum rent applicable to Low Income Housing Tax Credits pursuant to the Tax Reform Act of 1986, as amended, and governed by Section 42 of Internal Revenue Code requirements for so long as such requirements are applicable or the maximum rent for the applicable income level as set forth below:
(a) In the case of the ten (10) Units for an Extremely Low Income Senior Citizen Household, the maximum rent will be a rent that does not exceed 30 percent (30%) of thirty percent (30%) of the area median income adjusted for household size appropriate to the unit, as determined by the California Department of Housing and Community Development;
(b) In the case of the twenty-four (24) Units for a Lower Income Senior Citizen Household, the maximum rent will be a rent that does not exceed 30 percent (30%) of seventy percent (70%) of the area median income adjusted for household size appropriate to the unit, as determined by the California Department of Housing and Community Development.

The affordability restrictions imposed on the Owner’s said long-term leasehold interest in the Property by the Covenants are scheduled to expire on the date that is fifty-five (55) years after the date of Conversion (i.e., around ____________, 20__).

This Notice is recorded for the purpose of providing notice only and it in no way modifies the provisions of the Covenants. In the event of any conflict between this Notice and the Covenants, the provisions of the Covenants shall control.
449
1800 E. La Veta Avenue
Notice of Affordability Restrictions

Page 4 ends

[Remainder of Page Intentionally Left Blank; Signatures on Following Page] 450
1800 E. La Veta Avenue
Notice of Affordability Restrictions
S-1
CITY OF ORANGE, a municipal corporation
of the State of California
By: ___________________
Daniel R. Slater, Mayor
ATTEST:
_______________________
Pamela Coleman, City Clerk
APPROVED AS TO FORM:

By:_______________________________
Michael J. Vigliotta,
City Attorney
[SIGNATURES CONTINUE ON NEXT PAGE]
451
1800 E. La Veta Avenue
Notice of Affordability Restrictions
Consent to Recordation

CONSENT TO RECORDATION
The undersigned, owner of the aforesaid long-term leasehold interest in the real property legally described in Exhibit “A” attached hereto, hereby consents to the recordation of the foregoing Notice of Affordability against said interest in real property.

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.

STATE OF CALIFORNIA )
)

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.

STATE OF CALIFORNIA )
)

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. 455
1800 E. La Veta Avenue
Notice of Affordability Restrictions
Exhibit A – Legal Description
Exhibit “A”

LEGAL DESCRIPTION
APN: 390-322-15
456
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 1 ends

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

THE CITY OF ORANGE
300 E. Chapman Avenue
Orange, CA 92866
Attention:

SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN: 390-322-15 OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383

AGREEMENT CONTAINING COVENANTS
(Including Rental Restrictions)
(1800 E. La Veta Avenue)
THIS AGREEMENT CONTAINING COVENANTS (“Agreement”) is entered into as of ______________________, 2023 by and between the CITY OF ORANGE, a municipal corporation (“City”) and ORANGE 702, L.P., a California limited partnership (“Owner”).

WHEREAS, Owner has a leasehold interest in that certain real property (“ Property”) located in the City of Orange, County of Orange and State of California and more particularly described in Exhibit “A” which is attached hereto and incorporated herein by this reference; and WHEREAS, for the purpose of providing housing that will be affordable to Extremely Low Income and Lower Income Senior Citizen Households, Owner and the City have entered into an Affordable Housing Agreement, dated as of _______________________, 2023, as amended from time to time (“Affordable Housing Agreement”), which is incorporated herein by this reference (any capitalized term that is not otherwise defined in this Agreement has the meaning ascribed to such term in the Affordable Housing Agreement); and
WHEREAS, pursuant to the Affordable Housing Agreement, the City is providing financial assistance to Owner to assist in the acquisition and development of the Property, using LMIHAF Funds; and
WHEREAS, the Owner has obtained an allocation of Low Income Housing Tax Credits pursuant to the Tax Reform Act of 1986, as amended, and governed by Section 42 of Internal Revenue Code (“Tax Credits”); and
WHEREAS, the use of the Tax Credits to finance the development of the Property imposes income and affordability requirements such that seventeen (17) of the units will be restricted at 30% tax credit limits (applicable to 11 one-bedroom units and 6 two-bedroom units), thirty-two 457
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 2 ends

(32) of the units will be restricted at 50% tax credit limits (applicable to 22 one-bedroom units and 10 two-bedroom units), thirty-two (32) of the units will be restricted at 60% tax credit limits (applicable to 22 one-bedroom units and 10 two-bedroom units), and eighty-three (83) of the units will be restricted at 70% tax credit limits (applicable to 56 one-bedroom units and 27 two-bedroom units) (the “Applicable Tax Credit Limits”); provided however, that nothing herein will be deemed to authorize charging rents in excess of the Affordable Rent for the specified units set forth in Section Error! Reference source not found. below; and
WHEREAS, the Affordable Housing Agreement contains certain provisions relating to the use of the Property and imposes additional income and affordability requirements.

NOW, THEREFORE, CITY AND DEVELOPER COVENANT AND AGREE AS FOLLOWS:

1. Construction Covenant.

Owner hereby covenants and agrees on behalf of itself and its successors and assigns to Owner’s leasehold interest in the Property or any portion thereof or any improvements thereon or any interest therein that Owner and such successors and assigns will develop and construct on the Property a residential apartment Project, which will contain one hundred sixty-six (166) residential units (111 one-bedrooms and 55 two-bedroom) and associated amenities, in accordance with the Affordable Housing Agreement, this Agreement, and Plans approved by the City of Orange.

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Affordable Housing Agreement.

2. Maximum Incomes.
a. Owner covenants and agrees for itself and its successors, its assigns and every successor in interest to the Property or any part thereof, that Owner and its successors and assignees will use the Property exclusively to provide affordable housing for Extremely Low and Lower Income Senior Citizen Households, subject to all of the terms and conditions of this Agreement, except for two two-bedroom units designated as the management units for the on-site managers. The remaining 164 units will be subject to the following:
(i) A minimum of Ten (10) Units will be rented exclusively to Extremely Low Income Senior Citizen Households at an Affordable Rent as provided in California Health and Safety Code Section 50106; and
(ii) A minimum of an additional Twenty-Four (24) Units will be rented exclusively to Lower Income Senior Citizen Households at an Affordable Rent as provided in California Health and Safety Code Section 50079.5; and (iii) In no event will any Unit will be rented to households above the Applicable Tax Credit Limits under the Extended Use Agreement recorded against the Property in connection with the Tax Credits. The Extended Use Agreement shall be consistent with 458
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 3 ends

the provisions of this Agreement unless otherwise first approved in writing by the City Manager.
b. The maximum incomes of eligible tenants under paragraphs 2.a (i) and (ii) above will be determined on the basis of the income limits for Extremely Low Income and Lower Income households in the Los Angeles-Long Beach-Anaheim SMSA, published approximately annually by the California Department of Housing and Community Development (“HCD”). If HCD discontinues publishing such income limits, the term “Extremely Low Income” will mean a household income that does not exceed 30% of the area median income, adjusted for family size, and the term “Lower Income” will mean a household income that does not exceed 70% of the area median income, adjusted for family size. For the term of the Tax Credits, in no case will household income exceed the Applicable Tax Credit Limits as provided for in the Extended Use Agreement. c. Owner will obtain and maintain on file an income computation and certification form from such prospective tenant dated immediately prior to the date of initial occupancy. Owner will verify that the income information provided by an applicant is accurate by following all applicable City policies and procedures and by taking one or more of the following steps as a part of the verification process: (i) obtain two (2) pay stubs from the most recent pay periods; (ii) obtain a written verification of income and employment from applicant’s current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant’s income as is reasonably satisfactory; or (v) obtain such other information as may be reasonably required. Each tenant lease will contain a provision to the effect that Owner has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of a Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. d. Owner will update income records annually and provide copies of updated tenant eligibility records and monthly rental records to the City for review. Upon review of such records, the City may at its option perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Costs for such an audit performed by the City will be paid by the City unless said audit reveals material noncompliance with the terms of this Agreement in which case the costs of the audit shall be paid by Owner. Owner will retain the records described in this Section for a period of not less than five (5) years after the date each record was created.

3. Maximum Rents.
a. Rents charged to a tenant will not exceed rents that are affordable to Extremely Low Income and Lower Income households, as applicable, (as “Affordable Rent” is defined below). The maximum rents, including a reasonable utility allowance for utilities and services (excluding telephone, internet, cable and utility services not paid for directly or reimbursed by tenants) to be paid by Extremely Low Income and Lower Income Senior Citizen Households will be the lower of the maximum rent applicable to Lower Income Housing Tax 459
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 4 ends

Credits pursuant to the Tax Reform Act of 1986, as amended, and governed by Section 42 of Internal Revenue Code requirements for so long as such requirements are applicable or the maximum rent for the applicable income level as set forth below:
(i) In the case of an Extremely Low Income Senior Citizen Household, the maximum rent will be a rent that does not exceed 30 percent (30%) of thirty percent (30%) of the area median income adjusted for household size appropriate to the unit, as determined by the California Department of Housing and Community Development; (ii) In the case of a Lower Income Senior Citizen Household, the maximum rent will be a rent that does not exceed 30 percent (30%) of seventy percent (70%) of the area median income adjusted for household size appropriate to the unit, as determined by the California Department of Housing and Community Development.
b. The rent, income and affordability requirements of this Agreement will continue in effect for the period commencing at recordation of this Agreement and continuing until the date that is fifty-five (55) years after Conversion (the “Restricted Period”). c. Failure to comply with the rent, income and affordability requirements of this Agreement following notice from the City and an opportunity to cure such failure is an event of default under the terms of the LMIHAF Loan. Pursuant to the LMIHAF Note, subject to the right to cure, the LMIHAF Loan will be due and payable immediately if the housing does not meet the rent, income and affordability requirements of this Agreement. d. Upon request, the City Manager will notify Owner of the maximum rents that may be charged under Paragraphs Error! Reference source not found. and Error! Reference source not found. above (not to exceed “Affordable Rent”) and the maximum income of persons who are eligible to occupy the Property, based on the then-current area median income.

In no event will rents exceed the maximum rent permitted by the tax credit regulations and the Extended Use Agreement, or, with regard to the allocation of units set forth in Sections 2.a.i and ii hereof, the rules applicable to the use of LMIHAF, whichever is the lowest. e. Owner, its successors and assigns will not charge rents in excess of the amounts determined as set forth in Section 3. In the event that either Owner or the City determines that Owner has charged a tenant rent in excess of the amount set forth herein, Owner will immediately reimburse the tenant the amount of overpayment, with interest, from the date of rental payment, at the highest non-usurious rate of interest permitted by law, within ten (10) days of such determination. Owner may revise rents not more than once annually.

4. Project Monitoring Fee.

Annually, on or before the first day of each fiscal year, Owner will pay to the City a Project monitoring fee in an amount equal to a total of $500 per year, which fee shall accrue interest if not paid when and as due under this Agreement, from the date the fee is due until paid in full, at the highest non-usurious rate of interest then permitted by law. Such initial amount of $500 shall be increased annually commencing on the first June 1 following the first full calendar year of 460
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 5 ends

operation of the Project and each June 1 thereafter for the term of this Agreement by an amount equal to the annual change in the Consumer Price Index since the last June 1. Notwithstanding any other provision of this Agreement, this provision shall be subject to a fifteen (15) day notice and cure period.

5. Tenant Selection.

Owner will adopt, based upon a draft prepared by the City, written tenant selection policies and criteria, for approval by the City, that meet the following requirements:
a. Are consistent with the purpose of providing housing for Extremely Low Income and Lower Income Senior Citizen Households.
b. Are reasonably related to program eligibility and the applicants’ ability to perform the obligations of the lease.
c. Provide for:
i. The selection of otherwise eligible tenants from a written waiting list in the chronological order of their application, insofar as is practicable, taking into account applicants’ need for accessible features; and
ii. The prompt written notification to any rejected applicant of the grounds for any rejection;
d. Tenant selection will be administered in accordance with the tenant selection plan approved by the City.
e. Carry out the Affirmative Marketing procedures of the City of Orange.

Owner and City will cooperate to effectuate this provision during the Owner’s initial lease-up of the Property and as vacancies occur.

6. Increases in Tenant Incomes.

This Section will govern in the event of increases in tenant incomes: (a) A tenant who initially qualified as an Extremely Low Income Household, but who, due to an increase in income, no longer qualifies as an Extremely Low Income Household but does qualify as a Lower Income Household, will pay as rent an amount that is Affordable Rent to a Lower Income Household, as defined in Section 2 above; and (b) a tenant who initially qualified as a Lower Income Household, but who, due to an increase in income, no longer qualifies as a Lower Income Household, will pay as rent the lesser of the amount payable by the tenant under tax credit regulations, State or local law or 30 percent of the household’s adjusted income. Nothing in this Section 6 shall require that Owner increase a Tenant’s rent.

7. Tenant Protections.
461
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 6 ends

Each tenant lease must provide for housing for not less than one year, unless by mutual agreement between the tenant and the Owner. The lease may not contain any of the following provisions (in which references to “owner” will mean the Owner, its successors or assigns):
a. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; b. Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. The owner may dispose of this personal property in accordance with state law; c. Agreement by the tenant not to hold the owner or the owner’s agents legally responsible for any action or failure to act, whether intentional or negligent; d. Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant;
e. Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; f. Agreement by the tenant to waive the right to a trial by jury; g. Agreement by the tenant to waive the tenant’s right to appeal, or to otherwise challenge in court, a court decision in connection with the tenant housing agreement; and
h. Agreement by the tenant to pay attorney’s fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses.

8. Maintenance Obligations.

Owner will maintain the improvements on the Property in compliance with all applicable housing quality standards and local code requirements, and will keep the Property free from any unreasonable accumulation of debris or waste materials. Owner prepared and submitted to the City Manager of the City for approval a program (the “ Maintenance Program ”) for the maintenance of the Property and the Improvements. For the Restricted Period, Owner, and its successors and assigns, will maintain the Property and the Improvements in accordance with the approved Maintenance Program, as the same may be amended from time to time with the written approval of the City Manager of the City. If Owner fails to maintain the Property and the Improvements in accordance with the approved Maintenance Program, and such failure is not cured within thirty (30) days after notice to Owner, the City will have the right, but not the obligation, to enter the Property and the Improvements, correct any violation, and hold Owner 462
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 7 ends

responsible for the cost thereof, and such cost, until paid, will constitute a lien on the Property.

9. Nondiscrimination.

Owner covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there will be no discrimination against or segregation of any person, or group of persons, on account of race, color, national origin, religion or sex in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor will Owner itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. All deeds, leases or contracts will contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
a. In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed.

The foregoing covenants shall run with the land.”
b. In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
c. In contracts: There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor shall the transferee itself or any person claiming under or through him or her, establish or permit 463
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 8 ends

any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the land.”

10. Management Obligations.

Prior to the recordation of this Agreement, Owner prepared and submitted to the City Manager for approval a “ Management Plan ” pursuant to the Affordable Housing Agreement, describing Owner’s proposed plans for managing and operating the Property, a copy of which is on file at the offices of the City. For the Term of this Agreement, Owner will manage and operate the Property in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by the Owner and the City Executive Director. Throughout the Term of this Agreement, the Project must include at least one on-site Property Manager.

11. Removal and Replacement of Property Manager.

Owner’s agreement with the Property Manager must provide that it is subject to termination by Owner without penalty, upon thirty (30) days prior written notice. Owner hereby covenants and agrees that, if the City determines in its reasonable judgment that the Project is not being operated and managed in accordance with the approved Management Plan, the City may deliver notice to the Owner of its determination that the Project’s management practices do not conform to the Management Plan (the “City Notice”), including a reasonably detailed explanation of such non- conformance. The City and Owner will meet and confer in good faith to identify actions to be taken by Owner to bring its management practices into conformance with the Management Plan, which could include replacing the Property Manager. Owner will have thirty (30) days after receipt of the City Notice (or such longer time as may be granted by the City) to either change its management practices to conform to the Management Plan or replace the Property Manager with a manager approved by the City. Owner must promptly notify the City upon learning that there is a change in the management or control of the Property Manager, and, if the change is unsatisfactory to the City, it may require Owner to replace the Property Manager in accordance with the terms of this paragraph. Notwithstanding the foregoing, if the City determines that the Property Manager has violated local, state, or federal campaign finance laws, it will have the right to require Owner to immediately remove and replace the Property Manager with a manager approved by the City. 464
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 9 ends

12. Financial Reports.

Owner will submit the following financial reports for the Project:
a. On or before the first day of each fiscal year, an estimated annual budget for management of the Property (the “Annual Project Budget”). The Annual Project Budget will include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, taxes and special assessment levies, prorated amount required for insurance and all other expenses incident to the operation of the Project; and will show the expected revenues to pay such expenses, including annual debt service requirements and reserve fund deposits and balances. The Annual Project Budget, including any amendments proposed by the Owner for discretionary changes, will be subject to the approval of the City Manager, which approval will not be unreasonably withheld or delayed.
b. Sixty (60) days following the last day of each quarter of the fiscal year, beginning on the date of first occupancy, a quarterly report for the management of the Property (the “Quarterly Report”) during such quarter. The Quarterly Report will include a profit and loss statement, budget to date figures, and occupancy report. The City Manager in the City Manager’s sole discretion may waive the requirement of the Quarterly Report for one or more quarterly reporting periods. However, such waiver will not operate to waive any future right of the City to require a subsequent Quarterly Report. If at any time the City determines that the Property is not being managed or maintained in accordance with the approved Management Plan, Owner will change its management personnel or the practices complained of, upon receipt of written notice from the City.
c. Owner will pay to City a late fee in the amount of $1,500 for each Annual Project Budget and/or Quarterly Report which is not submitted to the City within the times and in the form and substance required by this Agreement, which late fee shall accrue interest if not paid when and as due under this Agreement, from the date the fee is due until paid in full, at the highest non-usurious rate of interest then permitted by law. Notwithstanding any other provision of this Agreement, this provision shall be subject to a fifteen (15) day notice and cure period.

13. Term of This Agreement.

The covenants established in this Agreement and any amendments hereto approved by the City and the Owner will, without regard to technical classification and designation, be binding for the benefit and in favor of the City, its successors and assigns. The requirements of this Agreement shall be in effect for the entirety of the Restricted Period, notwithstanding the payment in full of the LMIHAF Loan. This Agreement is secured by the City Deed of Trust recorded concurrently herewith and Owner will not be entitled to a reconveyance of the Deed of Trust prior to the expiration of the full Restricted Period of this Agreement. This Agreement will unconditionally be and remain at all times prior and superior to the lien created by the Senior Deed of Trust and any junior loan deed of trust and any other of the Senior and junior Loan Documents and all of the terms and conditions contained in the Senior and junior Loan Documents and to the lien of any new mortgage debt which is for the purpose of refinancing all or any part of the Senior Loan. 465
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 10 ends

14. Enforcement of This Agreement.

The City is deemed the beneficiary of the terms and provisions of this Agreement and the covenants herein, both for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit this Agreement and the covenants running with the land have been provided. The City will have the right, if the covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it is entitled.

Owner 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 Owner therefore agrees to the imposition of the remedy of specific performance against it in the case of uncured default by Owner hereunder.

15. Waiver.

A waiver by the City of the performance of any covenant or condition herein will not invalidate this Agreement nor will it be considered a waiver of any other covenants or conditions, nor will the delay or forbearance by the City in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right.

16. Covenants Run With the Land.

The covenants and agreements contained herein will run with the land and not be personal obligations of Owner. Upon the sale, conveyance or other transfer of the Property approved by the City or otherwise permitted under the Affordable Housing Agreement, the LMIHAF Note and the City Deed of Trust (a “ Transfer”) and the assumption of the obligations hereunder by a transferee, the Owner’s liability for performance will be terminated as to any obligation to be performed hereunder after the date of such Transfer.

17. Amendments.

This Agreement may be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the Official Records of the County of Orange, State of California.

18. Notice.

Any notice required to be given hereunder shall be given in the manner set forth in the Affordable Housing Agreement.

19. 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. 466
1800 E. La Veta Avenue
Agreement Containing Covenants

Page 11 ends

[Remainder of Page Intentionally Left Blank]
[Signatures Appear on Next Pages]
467
1800 E. La Veta Avenue
Agreement Containing Covenants
Page S-1
IN WITNESS WHEREOF, the City and Owner have executed this Agreement as of the date first written above.
“CITY”
CITY OF ORANGE, a municipal corporation
of the State of California
By: ___________________
Daniel R. Slater, Mayor
ATTEST:
_______________________
Pamela Coleman, City Clerk
APPROVED AS TO FORM:

By:_______________________________
Michael J. Vigliotta, City Attorney
[Signatures Continue on Next Page]
468
1800 E. La Veta Avenue
Agreement Containing Covenants
Page S-2
“OWNER”
ORANGE 702, L.P., a California limited partnership
By: USA Orange 702, Inc., a California corporation,
Administrative General Partner
By: ______________________________
Name: _______________________
Title: ________________________
By: Riverside Charitable Corporation, a California
nonprofit public benefit corporation
Managing General Partner
By: _______________________________
Name: _______________________
Title: ________________________
469
1800 E. La Veta Avenue
Agreement Containing Covenants
Exhibit A – Legal Description
Exhibit “A”

LEGAL DESCRIPTION
APN: 390-322-15
470
1800 E. La Veta Avenue
LMIHAF Note

Page 1 ends

PROMISSORY NOTE

TO THE CITY OF ORANGE
(LMIHAF)
3% Interest (Simple) Orange, California
$2,200,000 _____________________, 202_
FOR VALUE RECEIVED, ORANGE 702, 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 TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000), 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 ________________, 2023, 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 owned by Borrower and located at 1800 E. La Veta Avenue 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. Definitions.

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.
“Administrative General Partner ” means USA Orange 702, Inc., a California corporation, and its successors and assigns permitted under the terms of the Affordable Housing Agreement and this Note.
“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 471
1800 E. La Veta Avenue
LMIHAF Note

Page 2 ends

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 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 LMIHAF Loan funds have been satisfied, in accordance with the Affordable Housing Agreement.
“Construction Loan” means the Construction Period loan(s) to be made to Borrower by an institutional or governmental lender reasonably acceptable to City (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 on Borrower’s leasehold interest in the Property. “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 related conditions, and the Construction Loan has been repaid in full or converted to a Permanent Loan. “County Loan ” means the loan made by the County of Orange to Borrower in the maximum amount of $921,150.
472
1800 E. La Veta Avenue
LMIHAF Note

Page 3 ends

“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 Secondary Loan, the LMIHAF Loan, the RCC Loan, the County Loan, the Trust Fund Loan, the Improvement Allowance, 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 or the General Partners. “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. “Ground Lease” means the ground lease between Ground Lessor and Borrower approved by the City Manager pursuant to the Affordable Housing Agreement. “Ground Lessor” means the owner of the fee interest in the Property. “Improvement Allowance ” means the amount paid by Ground Lessor to Borrower pursuant to the Ground Lease to fund Acquisition and Development costs of the Improvements. “Improvements” means the 166-unit residential development and ancillary facilities to be constructed on the Property by the Borrower, all as described in the Affordable Housing Agreement.
“Investor Limited Partner ” means one or more Person(s) reasonably acceptable to Borrower and City who will be a limited partner in the Limited Partnership pursuant to the Limited Partnership Agreement and who will be allocated the Low Income Housing Tax Credits and own an approximately 99.99% interest in the Borrower, and any successor and assign thereof as permitted by the Limited Partnership Agreement.
“LMIHAF Loan” means the loan made by the City to Borrower in the maximum amount of $2,200,000, 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.
473
1800 E. La Veta Avenue
LMIHAF Note

Page 4 ends

“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. “Managing General Partner ” means Riverside Charitable Corporation, a California nonprofit public benefit corporation, and its successors and assigns permitted under the terms of the Affordable Housing Agreement and this Note.
“Net Proceeds” means the proceeds of a sale, transfer or refinancing, less the customary and reasonable costs of the transaction, including, without limitation, payment of the $914,000 Capital Transaction Fee payable to the Managing General Partner upon a sale or refinancing of the Project.
“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. Principal and interest and all periodic fees and costs due and payable on any said junior loan;
c. Amounts payable to Ground Lessor pursuant to the Ground Lease; d. Property and other taxes and assessments imposed on the Project; e. One or more general partner partnership management fees to the General Partner of Borrower not to cumulatively exceed $25,000 per year, to be increased at an annual rate of three percent (3%), which will accrue to the extent not paid; f. General administrative expenses including but not limited to advertising and marketing, security services and systems and similar customary administrative expenses;
g. 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; h. Cash deposited into a replacement reserve fund in the amount of $250 per unit per year or such greater amount as may be required by the Ground Lease, Senior Lender or Investor Limited Partner;
i. Cash deposited into an operating reserve fund as set forth in the Limited Partnership Agreement, or in such other reasonable amounts as are required by Project lenders, 474
1800 E. La Veta Avenue
LMIHAF Note

Page 5 ends

the California Tax Credit Allocation Committee, and/or the Investor Limited Partner from time to time, and approved by the City;
j. Utility services not paid for directly or reimbursed by tenants, including but not limited to water, sewer, trash collection, gas and electricity; k. License or certificate of occupancy fees required for operation of the Project; l. Premiums for property damage and liability insurance; m. Cable television, satellite, internet and similar services; n. Recreational amenities, supplies and services;
o. Reasonable property management fee payable to a property manager acceptable to the City in an annual amount equal to five percent (5%) of gross Project Revenues pursuant to a management contract approved by the City; p. A reasonable resident services coordinator fee payable to a coordinator acceptable to the City;
q. Purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves);
r. Fees and expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party; and
s. 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%); t. Repayment of operating expense loans or development deficit loans to Borrower’s partners; and
u. A Project monitoring fee to the City in an amount equal to $500 per year. Such initial amount of $500 shall be increased annually commencing on the first June 1 following the first full calendar year of operation of the Project and each June 1 thereafter for the term of this Agreement by an amount equal to the annual change in the Consumer Price Index since the last June 1.

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 Permanent Period Senior Loan identified in the Method of Financing (Attachment No. 3) attached to the Affordable Housing Agreement, secured by the Permanent Financing Deed of Trust.
“Permanent Financing Deed of Trust ” means the leasehold deed(s) of trust and other security instruments securing the Permanent Financing.
475
1800 E. La Veta Avenue
LMIHAF Note

Page 6 ends

“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 at least 90% 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;
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 the limited partner 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 Manager or designee, at his or her reasonable discretion.

A transfer described in clauses a., b., or c. will be subject to the reasonable approval of the City Manager or designee; provided that, the City approves the transfer of limited partner interests in Borrower’s partnership, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
476
1800 E. La Veta Avenue
LMIHAF Note

Page 7 ends

“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” legally described as set forth in Exhibit “A” of the City Deed of Trust.
“RCC Lender ” means Riverside Charitable Corporation, a California nonprofit public benefit corporation and/or an affiliate thereof.
“RCC Loan” means the loan made by the RCC Lender to Borrower in the anticipated original principal amount of $4,000,000.
“Residual Receipts” means the Revenue minus the Operating Expenses, calculated on a 12-month basis, minus the theretofore unpaid portion of the Deferred Developer 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 repay Senior Loan(s) or 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, any Secondary Loan, , the LMIHAF Loan, Developer Equity, the Improvement Allowance, the RCC Loan, the County Loan, the Trust Fund Loan including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts, other than in connection with Net Proceeds arising from a refinancing of the Senior Loan and/or the Secondary Loan. “Secondary Lender” means the lender of the Secondary Loan. “Secondary Loan ” means the loan made by the Secondary Lender to Borrower in the anticipated original principal amount of $______.
“Secondary Loan Deed of Trust ” means the second priority leasehold deed of trust securing the Secondary Loan.
477
1800 E. La Veta Avenue
LMIHAF Note

Page 8 ends

“Senior Loan ” means the Construction Period loan made by Construction Lender to Borrower in the approximate amount of $___________ and during the Permanent Period, the Permanent Financing, which will be secured by deeds of trust or other instrument to which the City agrees 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. “Trust Fund Loan” means the loan made by the Orange County Housing Trust Fund to Borrower in the maximum amount of $503,502, which is evidenced by this Note and secured by the City Deed of Trust.

2. This Note evidences the obligation of the Borrower to the City for the repayment of the LMIHAF Loan. The City shall disburse ninety percent (90%) of the proceeds of the LMIHAF Loan concurrently with the initial funding of the Construction Loan and the remaining ten percent (10%) of the LMIHAF Loan concurrently with the release of the Construction Lender’s retention disbursement.

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 or Cost Savings, subject to the limitations set forth in Section Error! Reference source not found., 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:
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 478
1800 E. La Veta Avenue
LMIHAF Note

Page 9 ends

of trust on the Property, which is not cured within the respective notice and cure 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 (30 th) day of May, 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 shall be 50% of Residual Receipts, subject to apportionment to the extent required by the following: For so long as any of the RCC Loan, the County Loan and/or the Trust Fund Loan is outstanding, the City’s Share of Residual Receipt shall be proportionately reduced such that the City shall receive a portion of the Residual Receipts equal to the ratio of the then outstanding amount of the LMIHAF Note and the then outstanding amount of the RCC Loan, the County Loan and the Trust Fund Loan (as applicable).

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 Ground Lessor and the California Tax Credit Allocation Committee, the following will occur: (1) the Cost Savings shall first be applied to the payment of the Deferred Developer Fee; (2) then, to the extent of fifty percent (50%) of any remaining Cost Savings, said remaining Cost Savings will be used to pay accrued interest on and then reduction of the principal amount of the LMIHAF Loan. 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 application to the California Tax Credit Allocation Committee for a Form 8609 for the Project (“Tax Credit Report”), or as reflected in a Revised Project Budget or Annual Project Budget submitted by Borrower and approved by the City; 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 pursuant to Borrower’s limited partnership agreement; and (ii) any reduction in the Senior Loans required by the Senior Loan 479
1800 E. La Veta Avenue
LMIHAF Note

Page 10 ends

Documents. The amount payable to City under this paragraph will be paid within sixty (60) days following Conversion.

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 or a General Partner reasonably approved by the City) 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. e. As used herein, “Transfer” means (other than in connection with a Permitted Transfer):
(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 480
1800 E. La Veta Avenue
LMIHAF Note

Page 11 ends

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. Transfer shall not include routine changes in officers and/or board members.

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, 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 481
1800 E. La Veta Avenue
LMIHAF Note

Page 12 ends

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.

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 482
1800 E. La Veta Avenue
LMIHAF Note

Page 13 ends

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, but not to exceed ninety (90) days from the notice of default. 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. The Investor Limited Partner will have 45 days, or such longer period as is approved by the City Manager 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 483
1800 E. La Veta Avenue
LMIHAF Note

Page 14 ends

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 Manager 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 Manager 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:
484
1800 E. La Veta Avenue
LMIHAF Note

Page 15 ends

c/o USA Properties Fund, Inc.
3200 Douglas Blvd., Suite 200
Roseville, CA 95661
Attn: President
And
c/o Riverside Charitable Corporation
14131 Yorba Street, Suite 204
Tustin, CA 9270
Attn: Executive Director
And
Bank of America, N.A.

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
And:

Banc of America CDC Special Holding Company, Inc.

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management

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 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 thirty (30) days after it obtains actual knowledge 485
1800 E. La Veta Avenue
LMIHAF Note

Page 16 ends

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 and the Density Bonus Agreement, (i) 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 (ii) have been made subordinate and junior to the claims, liens or charges of the Secondary Loan Deed of Trust and all other instruments securing the Secondary Loan by that certain Subordination Agreement by and among City, Borrower and Secondary 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 Deed 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.

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.
486
1800 E. La Veta Avenue
LMIHAF Note

Page 17 ends

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 terminate or modify Borrower’s obligations pursuant to the Agreement Containing Covenants or the Density Bonus Agreement.

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]
487
1800 E. La Veta Avenue
LMIHAF Note
S-1
IN WITNESS WHEREOF Borrower has executed this Note as of the day and year first set forth above.

BORROWER
ORANGE 702, L.P., a California limited partnership
By: USA Orange 702, Inc., a California corporation,
Administrative General Partner
By: ______________________________
Name: _______________________
Title: ________________________
By: Riverside Charitable Corporation, a California
nonprofit public benefit corporation
Managing General Partner
By: _______________________________
Name: _______________________
Title: ________________________
488
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 1 ends

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: 390-322-15
Document entitled to free
recording per Government
Code Section 27383

SUBORDINATED DEED OF TRUST,

SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS)
(Orion Senior Apartments – 1800 E. La Veta Avenue)
This Subordinated Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) is made as of __________________, 2022 by ORANGE 702, L.P., a California limited partnership (“Trustor”) (whose address is 3200 Douglas Blvd., Suite 200, Roseville, CA 95661), to First American Title Insurance 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) Trustor’s leasehold interest under the Ground Lease 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) All of Trustor’s right, title and interest 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”); 489
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 2 ends

(c) All tenements, hereditaments, appurtenances, privileges, franchises and other rights and interests of Trustor 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 490
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 3 ends

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:
(a) Due, prompt and complete observance, performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following:
(i) A promissory note in the original principal amount of $_________, executed by Trustor of even date herewith (the “LMIHAF Note”); (ii) The Affordable Housing Agreement dated as of ______________, 2023 (the “Affordable Housing Agreement”), between Trustor and Beneficiary; (iii) The Agreement Containing Covenants (Including Rental Restrictions) between Trustor and Beneficiary, recorded concurrently herewith (“ Agreement Containing Covenants”); and
(iv) The Ground Lease dated of even date herewith, entered into by and between the owner of fee title to the Property and Trustor, as referenced in that certain Memorandum of Lese entered into by and between the owner of fee title to the Property and Trustor dated of even date herewith and recorded concurrently herewith (the Ground Lease, together with any amendments, modifications, addendums, riders, the said Memorandum of Lease and supplements thereto signed by the parties thereto, the “Ground Lease”). (b) Payment of indebtedness of the Trustor to the Beneficiary in the principal sum of $1,200,000 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 491
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 4 ends

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 LMIHAF Note, the Ground Lease, 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 LMIHAF Note 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 and the Agreement Containing Covenants;

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 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 492
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 5 ends

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 unabated 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;

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; 493
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 6 ends

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;

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:
494
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 7 ends

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;

19. a. Prior to the repayment in full of the LMIHAF Loan and the expiration of the term of the Agreement Containing Covenants, 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 Note 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 495
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 8 ends

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 LMIHAF 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 LMIHAF Loan Document.
d. In the event of a Transfer without the prior written consent of the Beneficiary, prior to the time the LMIHAF Loan is 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. 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.
(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 496
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 9 ends

with a Senior Loan; provided that, a refinancing that increases the principal balance of the Senior Loan, increases the monthly principal and interest payments required under the Senior Loan, shortens the maturity 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, not to be unreasonably withheld; (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, and the Agreement Containing Covenants;
(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 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 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.

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 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 497
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 10 ends

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;

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; 498
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 11 ends

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:

Orange 702, L.P.
c/o USA Properties Fund, Inc.
3200 Douglas Blvd., Suite 200
Roseville, CA 95661
Attn: President
And
c/o Riverside Charitable Corporation
14131 Yorba Street, Suite 204
Tustin, CA 9270
Attn: Executive Director
With a copy to Limited Partner:

Bank of America, N.A.

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
And:

Banc of America CDC Special Holding Company, Inc.

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
With a copy to Ground Lessor:
499
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 12 ends

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 and construction of the Improvements, including 164 dwelling units of affordable housing (plus two manager’s units) for Extremely Low Income and Lower 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 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 LMIHAF Loan. The sole recourse of Beneficiary will be the exercise of its rights against the Property and any related security for the LMIHAF 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;
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).
500
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 13 ends

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.
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. 501
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 14 ends

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.
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 502
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 15 ends

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, but not the Agreement Containing Covenants, to the deed of trust securing the Construction Loan, the Permanent Loan, and 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 Trustor’s said leasehold interest in 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, 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 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;
503
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust

Page 16 ends

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 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]
504
Orion Senior Apartments – 1800 E. La Veta Avenue
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.

STATE OF CALIFORNIA )
)

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.

STATE OF CALIFORNIA )
)

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. 507
Orion Senior Apartments – 1800 E. La Veta Avenue
City Deed of Trust
Exhibit A – Legal Description
Exhibit A

LEGAL DESCRIPTION
APN: 390-322-15
508
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 1 ends

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: 390-322-15 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 _______________________, 2023 by ORANGE 702, 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 holds a leasehold interest under the Ground Lease in that certain the real property described in Exhibit “A” attached hereto, and is 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 a loan to Borrower to assist Borrower in financing a portion of the Acquisition and Development Costs, in the original principal amounts of $__________ (“LMIHAF Loan”), pursuant to the terms of an Affordable Housing Agreement by and between Borrower and City dated as of ______________________, 2023 (“ Loan Agreement”). The LMIHAF Loan is evidenced by a promissory note of even date herewith (“Note”) and is 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”).

C. In order to induce City to make the LMIHAF Loan to Borrower, Borrower has agreed to execute this Assignment.
509
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 2 ends

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 the 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 LMIHAF Loan, subject to the rights of the Construction Lender, the Secondary 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, the 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.

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, the Note, 510
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 3 ends

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, the 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 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. 511
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 4 ends

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.
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 512
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 5 ends

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 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. 513
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 6 ends

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 to the extent allowed by applicable law.
(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. 514
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 7 ends

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 the 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 the 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 the 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 the 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 the 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:
515
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 8 ends

If to Borrower:

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
And:

Banc of America CDC Special Holding Company, Inc.

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
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 516
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents

Page 9 ends

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] 517
IN WITNESS WHEREOF, the undersigned Borrower has executed this Assignment as of the date first above written.

STATE OF CALIFORNIA )
)

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.

STATE OF CALIFORNIA )
)

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. 520
Orion Senior Apartments – 1800 E. La Veta Avenue
Assignment of Rents
Exhibit A – Legal Description
EXHIBIT “A”

TO ASSIGNMENT OF RENTS AND LEASES

LEGAL DESCRIPTION
APN: 390-322-15
521
1800 E. La Veta Avenue
Assignment of Agreements

Page 1 ends

ASSIGNMENT OF AGREEMENTS
FOR VALUE RECEIVED, the undersigned, ORANGE 702, 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 _______________________ (“ Construction Lender ”) and _______________ (the “Secondary Loan 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 _____________________, 2023, 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 and continuance 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.
522
1800 E. La Veta Avenue
Assignment of Agreements

Page 2 ends

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 other than to the Construction Lender, the Secondary Loan Lender or the Ground Lessor.

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 materially 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, a loan from the Secondary Loan Lender and in connection with the Ground Lease with the Ground Lessor), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications without 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]
523
1800 E. La Veta Avenue
Assignment of Agreements
S-1
BORROWER:

ORANGE 702, L.P., a California limited partnership
By: USA Orange 702, Inc., a California corporation,
Administrative General Partner
By: ______________________________
Name: _______________________
Title: ________________________
By: Riverside Charitable Corporation, a California
nonprofit public benefit corporation
Managing General Partner
By: _______________________________
Name: _______________________
Title: ________________________
524
1800 E. La Veta Avenue
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]
525
1800 E. La Veta Avenue
Assignment of Agreements
Architect’s Consent
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
526
1800 E. La Veta Avenue
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 ORANGE 702, L.P. as Borrower, and the CITY OF ORANGE, as City.
[List Claims]
527
1800 E. La Veta Avenue
Assignment of Agreements
Exhibit A
Legal Description

EXHIBIT A

PROPERTY DESCRIPTION
APN: 390-322-15
528
1800 E. La Veta Avenue
Environmental Indemnity

Page 1 ends

ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (“ Indemnity”), dated as of _________________, 2023, made by ORANGE 702, 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 holds a leasehold interest under Ground Lease in that certain 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 ______________, 2023 (“Affordable Housing Agreement”), pursuant to which the City agreed to make a loan to Borrower in the original principal amounts of __________________________ DOLLARS ($__________) (“LMIHAF Loan”), to provide part of the financing for the acquisition, development, construction, and operation of a 166-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 LMIHAF 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 “hazardous materials” as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and publications promulgated pursuant to said laws. “Hazardous Materials” 529
1800 E. La Veta Avenue
Environmental Indemnity

Page 2 ends

shall not include substances used at the Property in compliance with all applicable environmental laws and regulations in connection with the routine construction, operation, maintenance and occupancy of the Project. 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. (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 in accordance with applicable provisions of the Ground Lease, and 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 written 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 530
1800 E. La Veta Avenue
Environmental Indemnity

Page 3 ends

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. 531
1800 E. La Veta Avenue
Environmental Indemnity

Page 4 ends

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;
532
1800 E. La Veta Avenue
Environmental Indemnity

Page 5 ends

(c) Any extension of the maturity of the LMIHAF 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 LMIHAF 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 LMIHAF 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 LMIHAF 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 LMIHAF 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 LMIHAF 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 LMIHAF Loan or the release or other extinguishment of any security for the LMIHAF 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 533
1800 E. La Veta Avenue
Environmental Indemnity

Page 6 ends

of the Obligations, notwithstanding the fact that no event, circumstance, or condition of the nature described in paragraph (a) above ever occurred.

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.
534
1800 E. La Veta Avenue
Environmental Indemnity

Page 7 ends

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:

Page 8 ends

Bank of America, N.A.

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
And:

Banc of America CDC Special Holding Company, Inc.

MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
With a copy to Ground Lessor at:

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 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 536
1800 E. La Veta Avenue
Environmental Indemnity

Page 9 ends

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 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. 537
1800 E. La Veta Avenue
Environmental Indemnity

Page 10 ends

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] 538
1800 E. La Veta Avenue
Environmental Indemnity
S-1
IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date first set forth above.

LEGAL DESCRIPTION
APN:
540
Agenda Item
City Council
Item #: 7.3. 1/23/2024 File #: 24-0045
TO: Honorable Mayor and Members of the City Council
FROM: Tom Kisela, City Manager

1. SUBJECT
Consideration of City Council resolutions memorializing the Orange City Council’s position on forthcoming ballot measures in March and November 2024.

2. SUMMARY
Resolution Nos. 11523, 11524, and 11525 memorializes the Orange City Council’s position on respective ballot measures scheduled to appear on the March 2024 Presidential Primary Election (Proposition 1) and November 2024 General Election (Assembly Constitutional Amendments 1 and 13).

3. RECOMMENDED ACTION

1. Receive and file a presentation on Proposition 1, Assembly Constitutional Amendment 1, and Assembly Constitutional Amendment 13 by Townsend Public Affairs.

2. Consider the adoption of Resolution No. 11523. A Resolution of the City Council of the City of Orange, California, opposing Assembly Constitutional Amendment 1, which will appear on the November 5, 2024, Statewide General Election Ballot.

3. Consider the adoption of Resolution No. 11524. A Resolution of the City Council of the City of Orange, California, opposing Assembly Constitutional Amendment 13 which will appear on the November 5, 2024, Statewide General Election Ballot.

4. Consider the adoption of Resolution No. 11525. A Resolution of the City Council of the City of Orange, California, opposing Proposition 1, Behavioral Health Services Program and Bond Measure, which has been placed on the March 5, 2024, Statewide Presidential Primary Election Ballot.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 3: Enhance and Promote Quality of Life in the Community e. Develop and strengthen collaborative partnerships to enhance and promote quality of life programs, projects, and services.

6. DISCUSSION AND BACKGROUND
At the January 9, 2024, City Council meeting, it was requested that a position resolution on Proposition 1 be considered. Subsequent to the January 9, 2024, meeting, it was also requested that two position resolutions on Assembly Constitutional Amendments 1 and 13 be considered as well.

City of Orange Printed on 1/18/2024Page 1 of 3
powered by Legistar™
541
Item #: 7.3. 1/23/2024 File #: 24-0045
two position resolutions on Assembly Constitutional Amendments 1 and 13 be considered as well.

Provided below are descriptions of each measure.

Assembly Constitutional Amendment 1 - November 5, 2024, General Election:

Currently, the California Constitution requires two-thirds voter approval (66.67%) for local governments to issue general obligation bonds or to levy special taxes. In citing the need for affordable housing and public infrastructure improvements, Assembly Constitutional Amendment 1 would authorize local governments to issue general obligation bonds or levy special taxes at 55% approval. Tax revenues or bond proceeds must be used to fund the acquisition or lease of real property, construction, reconstruction, or rehabilitation of public infrastructure as well as the development of affordable housing or permanent supportive housing for persons at risk of chronic homelessness.

Other provisions include:
· The Legislature may, by majority vote, enact laws for downpayment assistance programs. · Authorizes the Legislature, by two-thirds vote, to enact additional accountability measures for local agencies utilizing these funding sources.

Assembly Constitutional Amendment 13 - November 5, 2024, General Election:

In response to the Taxpayer Protection and Government Accountability Act (also currently on the November 5, 2024, ballot), Assembly Constitutional Amendment 13 (ACA 13) would require state or local initiative measures seeking to increase voter thresholds for certain measures to pass by the same margin. For example, if an initiative is seeking to increase future voter thresholds from simple majority to two-thirds approval, the measure seeking this increase would need to pass by two-thirds approval.

Lastly, ACA 13 protects the ability of local governments to place advisory questions on a ballot to ask voters their opinions on issues.

Proposition 1 - Behavioral Health Services Program and Bond Measure:

The 2024 California Presidential Primary Election will occur on Tuesday, March 5, 2024. Included on the March 2024 ballot is Proposition 1 - Behavioral Health Services Program and Bond Measure (Proposition 1).

Proposition 1 includes two aspects. First, it alters the 2004 Mental Health Services Act. Second, it proposes a $6.38 billion bond to develop more mental health and drug/alcohol treatment facilities while also funding more housing for individuals struggling with mental health as well as drug and alcohol abuse. Both components are reviewed in turn.
2004 Mental Health Services Act
The Mental Health Services Act (MHSA) was passed by voters in 2004 under Proposition 63. MHSA placed a tax on incomes over $1 million and requires tax revenue be used for mental health services.

Of the total tax revenue generated from MHSA (which the Legislative Analyst Office reports to be between $2 billion to $3.5 billion per year), 95% is directed to counties while the remaining 5% is allocated to the state to support mental health services. Although counties are limited in the types of services they can fund with MHSA money, they are afforded deference in how those services are City of Orange Printed on 1/18/2024Page 2 of 3
powered by Legistar™
542
Item #: 7.3. 1/23/2024 File #: 24-0045
services they can fund with MHSA money, they are afforded deference in how those services are provided.

Proposition 1 changes two components of the 2004 MHSA. First, the state will receive a larger portion of the MHSA tax revenues. As mentioned above, counties currently receive 95% of MHSA tax revenues. Proposition 1 would lower this to 90% which equates to a loss of $140 million annually, according to state Legislative Analyst Office (LAO).

Second, Proposition 1 will require counties to spend more MHSA money on housing and personalized support services (e.g. employment assistance). Although counties are currently authorized to fund these types of services, Proposition 1 would mandate a specific amount, potentially leaving less resources to fund other mental health services. $6.38 Billion Bond
The proposed bond measure would create more facilities for mental health and drug or alcohol treatment as well as more housing. If approved, the bond proceeds would be dispersed as follows:
· Facilities for Mental Health Care and Drug or Alcohol Treatment - $4.4 billion would go to a state program to build more facilities for mental health care and drug or alcohol treatment. Of the $4.4 billion, $1.5 billion would be set aside for local governments (i.e., cities, counties, and tribal entities).
· Housing - $2 billion to a state program that extends funding to local agencies so they may construct new housing or rehabilitate hotels or other buildings into housing. It should be noted that housing projects funded by this bond would be considered “use by right,” potentially preempting local zoning laws for properties with multifamily residential, office, retail, or parking uses.

If approved, the LAO estimates it will cost $310 million annually for 30 years to repay the bond. The LAO also estimates the bond would build 6,800 places for people to receive mental health care as well as drug or alcohol treatment. Lastly, the LAO estimates this bond would “reduce statewide homelessness by only a small amount.”

7. ATTACHMENTS
· Resolution No. 11523
· Resolution No. 11524
· Resolution No. 11525
City of Orange Printed on 1/18/2024Page 3 of 3
powered by Legistar™
543
Agenda Item
City Council
Item #: 7.3. 1/23/2024 File #: 24-0045
TO: Honorable Mayor and Members of the City Council
FROM: Tom Kisela, City Manager

1. SUBJECT
Consideration of City Council resolutions memorializing the Orange City Council’s position on forthcoming ballot measures in March and November 2024.

3. RECOMMENDED ACTION

1. Receive and file a presentation on Proposition 1, Assembly Constitutional Amendment 1, and Assembly Constitutional Amendment 13 by Townsend Public Affairs.

4. FISCAL IMPACT
None.

City of Orange Printed on 1/18/2024Page 1 of 3
powered by Legistar™
544
Item #: 7.3. 1/23/2024 File #: 24-0045
two position resolutions on Assembly Constitutional Amendments 1 and 13 be considered as well.

Provided below are descriptions of each measure.

Assembly Constitutional Amendment 1 - November 5, 2024, General Election:

Assembly Constitutional Amendment 13 - November 5, 2024, General Election:

Lastly, ACA 13 protects the ability of local governments to place advisory questions on a ballot to ask voters their opinions on issues.

Proposition 1 - Behavioral Health Services Program and Bond Measure:

Of the total tax revenue generated from MHSA (which the Legislative Analyst Office reports to be between $2 billion to $3.5 billion per year), 95% is directed to counties while the remaining 5% is allocated to the state to support mental health services. Although counties are limited in the types of services they can fund with MHSA money, they are afforded deference in how those services are City of Orange Printed on 1/18/2024Page 2 of 3
powered by Legistar™
545
Item #: 7.3. 1/23/2024 File #: 24-0045
services they can fund with MHSA money, they are afforded deference in how those services are provided.

7. ATTACHMENTS
· Resolution No. 11523
· Resolution No. 11524
· Resolution No. 11525
City of Orange Printed on 1/18/2024Page 3 of 3
powered by Legistar™
546
RESOLUTION NO. 11523

A RESOLUTION OF THE CITY COUNCIL OF

THE CITY OF ORANGE, CALIFORNIA,

OPPOSING ASSEMBLY CONSTITUTIONAL
AMENDMENT 1 WHICH WILL APPEAR ON
THE NOVEMBER 5, 2024, STATEWIDE

GENERAL ELECTION BALLOT

WHEREAS, in 1978, California voters amended the California Constitution by passing the Proposition 13, an initiative prohibiting the ad valorem tax rate on real property from exceeding one percent (1%) of the full cash value of the property, subject to certain exceptions; and

WHEREAS, Proposition 13 greatly protects taxpayers and their families by additionally prohibiting any city, county, or special district from imposing a special tax unless imposed by a two thirds (2/3) supermajority vote of the voters in that jurisdiction, subject to certain exceptions; and

WHEREAS, proposed Assembly Constitutional Amendment 1 (“ACA 1”) would amend the California Constitution to create additional exceptions to Proposition 13 by lowering the two- thirds (66%) supermajority voter threshold to only fifty -five percent (55%) for local jurisdictions to levy an ad valorem tax on real property to pay for bonds issued by the local jurisdiction to fund public infrastructure, affordable housing, down payment assistance, and permanent supportive housing for persons at risk of chronic homelessness, or the acquisition or lease of real property for such purposes; and

WHEREAS, attempts to remove Proposition 13 provisions can result in higher taxes and correspondingly increases the tax liability of Californians, potentially undermining the goal to conserve economic opportunity in California; and

WHEREAS, the City of Orange opposes ACA 1 due to the exceptions it would create to the taxpayer protections enshrined in the California Constitution by Proposition 13.

NOW, THEREFORE, the City Council of the City of Orange resolves as follows:

Section 1: The Orange City Council does hereby oppose ACA 1.

Section 2: The City of Orange supports residents and taxpayers as well as the safeguards afforded by Proposition 13.

Section 3: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution.

547
2 ADOPTED this ____ day of ____________________, 2024

Daniel R. Slater, Mayor, City of Orange

ATTEST:

Pamela Coleman, City Clerk, City of Orange

APPROVED AS TO FORM:

Mike Vigliotta, City Attorney

STATE OF CALIFORNIA )

COUNTY OF ORANGE )

CITY OF ORANGE )

I, PAMELA COLEMAN, City Clerk of the City of Orange, California, do hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of Orange at a regular meeting thereof held on the day of , 2024 by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

Pamela Coleman, City Clerk, City of Orange
548
RESOLUTION NO. 11524

A RESOLUTION OF THE CITY COUNCIL OF

THE CITY OF ORANGE, CALIFORNIA,

OPPOSING ASSEMBLY CONSTITUTIONAL
AMENDMENT 13 WHICH WILL APPEAR ON
THE NOVEMBER 5, 2024, STATEWIDE

GENERAL ELECTION BALLOT

WHEREAS, since the adoption of the California Constitution in 1849, there has never been different thresholds for the approval of constitutional amendments based on the content of the amendment; and

WHEREAS, Assembly Constitutional Amendment 13 (“ACA 13”) proposes a change in the California Constitution to impose a higher vote threshold for certain types of amendments to the California Constitution proposed by citizens via a ballot initiative; and

WHEREAS, ACA 13 raises the voter approval requirement for those citizen -proposed ballot initiatives making it more difficult for ordinary citizens to pass amendments to the California Constitution that would, among others, limit the ability of the State Legislature to increase taxes; and

WHEREAS, ACA 13 places stringent requirements for amendments to the California Constitution that have the effect of limiting the ability to raise taxes without imposing the same requirements on the State Legislature, preventing citizens from effectively utilizing the initiative process to limit tax increases; and

WHEREAS, in 1978, California voters adopted Proposition 13 to provide checks and balances on local governments ’ taxing authority and to ensure a greater representative voice for all Californians who would be taxed; and

WHEREAS, the City of Orange is, and has been, historically dedicated to limiting the cost and overreach of government on the taxpayers of Orange, as well as protecting Orange County residents and businesses from troublesome fiscal actions by other levels of government which may impair our ability to protect our quality of life and provide for our families.

NOW, THEREFORE, the City Council of the City of Orange resolves as follows:

Section 1: The Orange City Council does hereby oppose ACA 13.

Section 2: The City of Orange supports citizens in being able to utilize the initiative process to enact constitutional or policy changes.

Section 3: The City of Orange disagrees with efforts to undermine this ability by changing voting thresholds for specific amendments.
549
2 Section 4: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution.

ADOPTED this_______ day of _____________________, 2024

Daniel R. Slater, Mayor, City of Orange

ATTEST:

Pamela Coleman, City Clerk, City of Orange

APPROVED AS TO FORM:

____________________________________
Mike Vigliotta, City Attorney

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

Pamela Coleman, City Clerk, City of Orange

550
RESOLUTION NO. 11525

A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF ORANGE, CALIFORNIA, OPPOSING
PROPOSITION 1 , BEHAVIORAL HEALTH

SERVICES PROGRAM AND BOND MEASURE ,
WHICH HAS BEEN PLACED ON THE MARCH 5,
2024, STATEWIDE PRESIDENTIAL PRIMARY

ELECTION BALLOT

WHEREAS, Governor Gavin Newsom and a majority of the California State Legislature has placed Proposition 1 – Behavioral Health Services Program and Bond Measure (“Proposition 1”) on the March 2024 ballot, which will completely rewrite the intent and flexibility of the Mental Health Services Act (“MHSA”); and

WHEREAS, Proposition 1 seeks to divert funding away from programs typically serviced through the MHSA while also issuing $6.38 billion in bonds, causing the State to incur significant debt which the Legislative Analyst Office (“LAO”) estimates will cost $310 million in annual payments over the next 30 years; and

WHEREAS, while also incurring $6.38 billion in debt, plus interest, the proposed ballot measure also specifies that permanent supportive housing funded through Proposition 1 bond proceeds may be developed on a “by right” basi s undermining local zoning restrictions where multifamily residential, office, retail, or parking are principally permitted uses; and

WHEREAS, Proposition 1 will divert an estimated $140 million annually away from counties to the State while also dictating how remaining funds can be used locally, removing local control, and removing discretion away from local e lected officials most familiar with the issues facing their communities; and

WHEREAS, Proposition 1 is a detrimental proposal that beyond limiting local zoning authority or diverting funding back to the State, also incurs $6.38 billion in debt while the State of California faces what the LAO estimates to be a $68 billion deficit; and

WHEREAS, in making these significant sacrifices, the LAO estimates Proposition 1 would “reduce statewide homelessness by only a small amount.”

NOW, THEREFORE, the City Council of the City of Orange resolves as follows:

Section 1: The Orange City Council does hereby oppose Proposition 1, Behavioral Health Services Program and Bond Measure.

Section 2: The City of Orange supports local control and fiscal responsibility and believes that decisions regarding zoning are best reserved for local elected officials.

551
2 Section 3: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution.

ADOPTED this_______ day of _____________________, 2024

Daniel R. Slater, Mayor, City of Orange

ATTEST:

Pamela Coleman, City Clerk, City of Orange

APPROVED AS TO FORM:

____________________________________
Mike Vigliotta, City Attorney

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

Pamela Coleman, City Clerk, City of Orange

552
Agenda Item
City Council
Item #: 9.1. 1/23/2024 File #: 24-0031
TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Russell Bunim, Community Development Director

1. SUBJECT
Public Hearing to consider an amendment to the 2020-2024 Consolidated Plan to add a Tenant Based Rental Assistance Program and updates to the Citizen Participation Plan.

2. SUMMARY
Public Hearing to consider the approval to add a Tenant Based Rental Assistance Program as a goal in the 2020-2024 Consolidated Plan and approve updates to the Citizen Participation Plan that includes expanding the scope of the Community Development Block Grant Program Committee and adding changes to the Citizen Participation Plan as a substantial amendment.

3. RECOMMENDED ACTION

1. Conduct and close Public Hearing.

2. Approve the draft amendment to the 2020-2024 Consolidated Plan.

3. Approve the updates to the Citizen Participation Plan.

4. Authorize staff to incorporate comments received for the amendment to the 2020-2024 Consolidated Plan at the Public Hearing before submitting to the Department of Housing and Urban Development.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 3: Enhance and promote quality of life in the community e: Develop and strengthen collaborative partnerships to enhance and promote quality of life programs, projects, and services.

6. DISCUSSION AND BACKGROUND
Background
On March 11, 2021, the American Rescue Plan (ARP) was passed in response to the COVID-19 pandemic. Congress appropriated $5.0 billion in ARP funds to be administered through the HOME Investment Partnerships Program (HOME) and authorized the Department of Housing and Urban Development (HUD) to distribute the funds to participating jurisdictions (PJ) that qualified for an allocation of HOME funds in Fiscal Year (FY) 2021, of which Orange was a recipient.

On September 20, 2021, the City was notified that it was allocated $1,655,186 in HOME-ARP funds.

In order to access the funds, the City developed a HOME-ARP Allocation Plan (Plan) that described City of Orange Printed on 1/18/2024Page 1 of 3
powered by Legistar™
553
Item #: 9.1. 1/23/2024 File #: 24-0031
In order to access the funds, the City developed a HOME-ARP Allocation Plan (Plan) that described the consultation and public participation process that the City engaged in developing the Plan and outlines how the City will use HOME-ARP funds. The Plan was approved by HUD on May 8, 2023.

To meet the housing requirement of the HOME-ARP grant and address some of the housing assistance needed within the City, the Plan proposed to establish a Tenant Based Rental Assistance Program (TBRA) with its annual HOME entitlement fund. A TBRA Program is a rental subsidy to assist individual households afford housing costs such as rent or security deposits.

On May 9, 2023, the City Council approved $150,000 for a TBRA Program as part of its 2023-2024 Annual Action Plan using HOME entitlement funds. The Annual Action Plan is required by HUD and outlines the City’s intent for the use of funds in a given entitlement year.

On November 14, 2023, the City Council approved a TBRA program to provide security and utilities deposit rental assistance to be funded out of the HOME entitlement funds with the following preferences:

1. Current City of Orange resident with intention to continue to reside in the City of Orange;

2. Families with children under 12;

3. Veterans with honorable discharge; and

4. Elderly as defined by the Social Security Administration for full retirement qualification.

Additionally:

1. Security and utility deposits are to be paid to the landlord or property manager directly in the form of a grant to the tenant, with remaining funds at the end of residency are to be returned to the City as Program Income;

2. Participant referral from a supportive services organization serving residents of the City of Orange is required as part of the qualification criteria for applying for TBRA assistance;

3. Tenants are to be incentivized to receive full deposit back at the end of lease by:
a. Disqualifying tenants from future qualification if they lose more than 50% of their deposit assistance;
b. Granting 1/3 of the deposit returned to the tenant if 85% or more of original deposit is refunded to the City;

4. Tenants verify eligibility for security deposits through the Cal Aim program first.

Substantial Amendment Criteria
The City’sCitizen Participation Plan (CPP) details the citizen involvement in the amendment process for the Consolidated Plan (Con Plan) and describes how the City complies with federal regulations in providing opportunities for the public to participate in an advisory role in the planning, implementation, and assessment of programs and projects for CDBG funding.

The adopted CPP states that a substantial amendment to the Con Plan is required when there is:

1. A change in goals and policies of the Annual Action Plan or Consolidated Plan;

2. Allocation of CDBG and HOME funds, including program income, to a new activity not previously described in the Annual Action Plan or Consolidated Plan;

3. A substantial change in the purpose, scope, location, or beneficiaries of an existing activity; and/or

4. A reallocation of more than 20% of CDBG or HOME entitlement funds for the program year.

The determination for the substantial change criteria to the 2020-2024 Con Plan utilized by the City City of Orange Printed on 1/18/2024Page 2 of 3
powered by Legistar™
554
Item #: 9.1. 1/23/2024 File #: 24-0031
The determination for the substantial change criteria to the 2020-2024 Con Plan utilized by the City of Orange in this case, is determined by the following:

1. A change in the goals to add Tenant Based Rental Assistance (TBRA) to the Consolidated Plan

2. Allocation of HOME funds to a new activity for TBRA
Updates to Citizen Participation Plan
Staff is also recommending updates to the CPP that include some language and grammar updates with the following significant updates:

1. Increase the number of CDBG Committee members from five to seven;

2. Add review of changes to the CPP as a task of the CDBG Committee prior to submitting to City Council for approval;

3. Add review of substantial amendment requests by the CDBG Committee for recommendation prior to submitting to City Council for approval;

4. Define updates to the CPP procedures, requirements, or other material changes as a substantial amendment;

5. Clarify that the notice of the 30-day review period and Public Hearing meets the noticing requirement for a substantial amendment.

Public Review of Con Plan Amendment and Notice of Public Hearing The City advertised the availability of the draft Con Plan Amendment (Amendment) and updates to the CPP on November 30, 2023 in the Orange City News. Copies of the Amendment and updated CPP were made available for public review and comment from November 30, 2023 to January 2, 2024 at the following locations:

1. Community Development Department

2. Orange Main Library

3. City Clerk’s Office

4. City website
No comments were received during the public review and comment period.

Staff recommends the approval of the Con Plan Amendment and updates to the CPP.

7. ATTACHMENTS
· Draft Amendment to the 2020-2024 Consolidated Plan
· Draft Citizen Participation Plan
City of Orange Printed on 1/18/2024Page 3 of 3
powered by Legistar™
555
Agenda Item
City Council
Item #: 9.1. 1/23/2024 File #: 24-0031
TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Russell Bunim, Community Development Director

1. SUBJECT
Public Hearing to consider an amendment to the 2020-2024 Consolidated Plan to add a Tenant Based Rental Assistance Program and updates to the Citizen Participation Plan.

3. RECOMMENDED ACTION

1. Conduct and close Public Hearing.

2. Approve the draft amendment to the 2020-2024 Consolidated Plan.

3. Approve the updates to the Citizen Participation Plan.

4. Authorize staff to incorporate comments received for the amendment to the 2020-2024 Consolidated Plan at the Public Hearing before submitting to the Department of Housing and Urban Development.

4. FISCAL IMPACT
None.

On September 20, 2021, the City was notified that it was allocated $1,655,186 in HOME-ARP funds.

In order to access the funds, the City developed a HOME-ARP Allocation Plan (Plan) that described City of Orange Printed on 1/18/2024Page 1 of 3
powered by Legistar™
556
Item #: 9.1. 1/23/2024 File #: 24-0031
In order to access the funds, the City developed a HOME-ARP Allocation Plan (Plan) that described the consultation and public participation process that the City engaged in developing the Plan and outlines how the City will use HOME-ARP funds. The Plan was approved by HUD on May 8, 2023.

1. Current City of Orange resident with intention to continue to reside in the City of Orange;

2. Families with children under 12;

3. Veterans with honorable discharge; and

4. Elderly as defined by the Social Security Administration for full retirement qualification.

Additionally:

2. Participant referral from a supportive services organization serving residents of the City of Orange is required as part of the qualification criteria for applying for TBRA assistance;

4. Tenants verify eligibility for security deposits through the Cal Aim program first.

The adopted CPP states that a substantial amendment to the Con Plan is required when there is:

1. A change in goals and policies of the Annual Action Plan or Consolidated Plan;

2. Allocation of CDBG and HOME funds, including program income, to a new activity not previously described in the Annual Action Plan or Consolidated Plan;

3. A substantial change in the purpose, scope, location, or beneficiaries of an existing activity; and/or

4. A reallocation of more than 20% of CDBG or HOME entitlement funds for the program year.

The determination for the substantial change criteria to the 2020-2024 Con Plan utilized by the City City of Orange Printed on 1/18/2024Page 2 of 3
powered by Legistar™
557
Item #: 9.1. 1/23/2024 File #: 24-0031
The determination for the substantial change criteria to the 2020-2024 Con Plan utilized by the City of Orange in this case, is determined by the following:

1. A change in the goals to add Tenant Based Rental Assistance (TBRA) to the Consolidated Plan

1. Increase the number of CDBG Committee members from five to seven;

2. Add review of changes to the CPP as a task of the CDBG Committee prior to submitting to City Council for approval;

3. Add review of substantial amendment requests by the CDBG Committee for recommendation prior to submitting to City Council for approval;

4. Define updates to the CPP procedures, requirements, or other material changes as a substantial amendment;

5. Clarify that the notice of the 30-day review period and Public Hearing meets the noticing requirement for a substantial amendment.

1. Community Development Department

2. Orange Main Library

3. City Clerk’s Office

4. City website
No comments were received during the public review and comment period.

Staff recommends the approval of the Con Plan Amendment and updates to the CPP.

7. ATTACHMENTS
· Draft Amendment to the 2020-2024 Consolidated Plan
· Draft Citizen Participation Plan
City of Orange Printed on 1/18/2024Page 3 of 3
powered by Legistar™
558

CITY OF ORANGE
SUBSTANTIAL AMENDMENT TO 2020-2024 CONSOLIDATED PLAN
Community Development Block Grant
(CDBG) and HOME Investment
Partnerships Program (HOME)

Jurisdiction(s): City of Orange, CA
Website: https://www.cityoforange.org/housing

Contact Person: Jessica Herrera
Senior Administrative Analyst
Community Development Department

NOTICE IS HEREBY GIVEN that the City Council of the City of Orange will hold a public hearing, Tuesday, January 23, at 6:00 p.m., or as soon thereafter as the matter may be heard, in the Council Chamber located at 300 E. Chapman Avenue, Orange, California, to review and approve the Substantial Amendment to the 2020-2024 Consolidated Plan.

The City of Orange, CA (City), is a federal entitlement community that receives annual allocations of Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) funds from the U.S. Department of Housing and Urban Development (HUD). Based on the funding, the City is required to prepare a 5-year Consolidated Plan that describes the jurisdictions community development prioritie s and multiyear goals based on an assessment of housing and community development needs, an analysis of housing and economic market conditions and available resources.

According to 24 CFR 91.505 and the City’s Citizen Participation Plan, the City of Orange has determined that the following actions will require a substantial amendment:

• The City is creating a new Tenant Based Rental Assistance Program to assist households experiencing or at risk of experiencing homelessness with a security deposit in accordance with State Law and a deposit assistance for establishing utilities.

The City ’s goal outcome is assisting 25 households with the new program which provides for approximately 25 security deposits to assist households experiencing or at risk of experiencing homelessness. In accordance with HUD guidance, the City is providing no less than thirty (30) days for public review and comments on any amendments to the City’s Consolidated Plan.

Proposed Substantial Amendment

This substantial amendment request will allow the City to add the Tenant Based Rental Assistance Program as a goal to the 2020-2024 Consolidated Plan. The City plans to launch this program by March 2024.

The City will address and incorporate any comments received during the 30 -day public comment period between November 30, 2023 and January 2, 2023. A copy of the Substantial Amendment to the 2020-2024 Consolidated Plan will be available on the City of Orange’s website at https://www.cityoforange.org/housing or at the following locations for a 30-day public review and comment period:

• Community Development Department – 300 East Chapman Avenue, Orange, CA 92866
559

• Main Public Library – 407 East Chapman Avenue, Orange, CA 92866 All interested persons may submit comments and may be heard on any relevant matter relating to the proposed actions by mail, email, voicemail or in -person, as set forth in the January 23, 2023, City Council agenda. For more information, please contact Jessica Herrera at (714) 744-7270 or [email protected].

If you require reasonable accommodations, please contact 714-744-7242 to discuss your needs. Translation services also available upon request.

560

Page 1 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

CITY OF ORANGE

CITIZEN PARTICIPATION PLAN

CDBG AND HOME PROGRAM FUNDS

I. PURPOSE

The United States Department of Housing and Urban Development (HUD) requires jurisdictions that receive funding under certain federal entitle ment programs to adopt and comply with a Citizen Participation Plan (CPP). The CPP sets forth the jurisdiction’s policies and procedures for citizen participation to ensure full compliance with federal regulations under Title 24 CFR Part 91. The City currently receives annual entitlement grants for the Community Development Block Grant (CDBG) Program and HOME Investment Partnerships Program through HUD. This CPP primarily addresses the citizen participation requirements for the CDBG and HOME Programs. If the City receives federal entitlement grants from other funding sources in the future, the guidelines set forth in this CPP will be followed unless separate citizen participation requirements are issued by HUD.

The CPP provides a strategy to ensure the participation of citizens and other interested parties in the development of the Five-Year Consolidated Plan (CP), the Annual Action Plan (AAP) and the Consolidated Annual Performance and Evaluation Report (CAPER) . The CP, which is prepared every five yea rs, iden tifies the City’s overall housing and community development needs and market conditions, establishes funding priorities, outlines a strategy to address these priorities, and provides the framework for the use of CDBG, HOME and other federal entitlement grant funds. The AAP is prepared annually and outlines eligible programs and projects that are to be funded with the annual allocation of federal grant funds received by the City to address the priorities of the CP. Last, the CAPER is prepared annua lly following th e end of the program year to report on annual accomplishments.

The City’s citizen participation process provides nonprofit agencies, City departments, the community, and other interested parties with the opportunity to work in partnership with the City to develop the CP, the AAP, any substantial amendments to the CP or the APP, and the CA PER. This process includes identifying needs and determining recommendations for the allocation of HUD funds and review and approval of performance evaluation reports.

In accordance with the regulations relating to citizen participation, the City will encourage all residents to participate in the development of the C P including Low- and Moderate -Income persons, and residents of predominantly Low- and Moder ate-Income neighborhoods. The City will also take appropriate actions to encourage the participation of minorities, non -English speaking persons, and persons with disabilities by extending accommodations for participation in the CPP process.

561

Page 2 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

II. CITIZEN PARTICIPATION STRATEGY

A. PROGRAM PLANNING PROCESS

The City of Orange recognizes that CDBG and HOME funds are to be used primarily to benefit Low- and Moderate -Income persons and neighborhoods . The following policy defines the City’s citizen participation strategy in accordance with federal regulations.

1. Citizen Involvement

In order to ensure that Orange residents and other interested persons/organizations have the opportunity to participate in the CP, AAP and CAPER process, public meetings and publi c hearings will be held to obtain community input, consider proposals, and provide technical guidance. The public meetings and hearings will address housing and community development needs including priority non-housing community development needs, develo pment of propose d activities, and r eview of program performance. The meetings and public hearings wil l be publicized through the following methods:

▪ Display ads will be published in a newspaper of general circulation within the jurisdiction of the City of Orange at least 10 days before the meeting and hearing dates.

▪ Notices of the meetings and public hearings will be posted at the public counters in the City Clerk's Office, Community Development Department, City of Orange Main Public Library, the public notice kiosk at Ci ty Hall, and the City of Orange Community Development Department website.

The following entities will participate in the process in the following manner.

Community Development Block Grant Program Committee:

The Community Development Blo ck Grant Program Committee (CDBG Committee) will be comprised of up to seven members from the community and will act as an advisory body to the City Council concerning planning, recommending, and implementing CDBG and HOME Program funding requests and allocations and changes to the CPP. This process will include the following tasks:

▪ Disseminating pertinent information during the CDBG application process, and other HUD application processes as applicable;

▪ Receiving presentations from nonprofit agencies and City Departments;

▪ Evaluating and rating applications for CDBG and HOME funding;

▪ Collecting citizen input concerning neighborhoods and community needs;

▪ Reviewing and providing feedback on draft funding recommendations for proposed projects for City Council's review and final approval; and

▪ Reviewing project/program progress and annual performance 562

Page 3 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

▪ Reviewing substantial amendment requests

Community Development Department:

The Community Development Department will be the lead agency in the coordination of the CPP, CP, AAP and CAPER develop ment and reporting process and w ill coordin ate all required activities and amendments. For the CP process, the Community Development Department will conduct a needs assessment survey every five years to identify community development needs. The survey will be sen t to various stakeholders including nonprofit agencie s, City Departments, State and local health agencies, and the Orange County Housing Authority and will notify them of the publ ic hearings before the CDBG Committee and City Council. The Communi ty Development Department will send written notice to various City Departments and nonprofit agencies each year notifying them of the Notice of Funding Availability process for CDBG program, and that applications are being accepted.

Citizen Participation Process:

The City of Orange will implemen t the following strategy to solicit meaningful community input during the preparation of the CP, AAP or CAPER. All public meetings and hearings will be conducted at City Ha ll located at 300 East Chapman Avenu e, or at key public facilities which are easily accessible to the general public including persons with disabilities. During public health emergencies, all public meetings and hearings wil l be conducted virtually or in-person and public comments will be received via emails, voice mails, e-comment features, or in-person.

Consolidated Plan Process:

At a minimum, this plan will ensure that all HUD requirements are met as follows:

▪ The City will hold at least two public hea rings during the CP process to obtain citizens’ views and to respond to proposals a nd questions. The first public hearing will be held during the development of the CP and will be held before the CDBG Committee; the second public hearing will be held before the City Council.

▪ Notices of the meeti ngs and public hearings will be posted at the public counters in the City Clerk's Office, Community Services Department, Community Development Department, City of Orange Main Public Library, the public notice kiosk at City Hall and the City of Community Development Department website.

▪ There will be a 30 -day review period for citizen s to review and comment on the CP prior to approving the CP by City Council and submitting the CP to HUD.

▪ Public comments will be given consideration. The plan will include a summary of comments received and, if applicable, reasons any comments/suggestions were not incorporated.

Annual Action Plan Process:

At a minimum, this plan will ensure that all HUD requirements are met as follows:

563

Page 4 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

▪ During the AAP process, at least one public meeting and two public hearings will be held. The first public hearing will be held by the CDBG Committee to receive application presentation s from City Departments and nonprofit agencies for CDBG and federal funding to obtain citizens’ views.

▪ The CDBG Committee will hold one public meeting during the developm ent of the plan to review, discuss and deliberate on the formulation of funding recommendations for the City Council.

▪ The City Council will hold on e public hearing to consider the funding recommendations and approve the AAP.

▪ The proposed AAP will be published. At a minimum, the City will publish a summary of the proposed plan in a newspaper of general circulation.

▪ Notices of the meetings and publi c hearings will be post ed at the public counters in the City Clerk's Office, Community Development Department, City of Orange Main Public Library, the public notice kiosk at City Hall , and the City of Orange Community Development Department website.

▪ There will be a 30 -day period for citizen review and comment prior to submitting t he AAP to the City Council for approval and submitting to HUD.

▪ Public comments will be given considerati on. The plan will incl ude a summary of comments received and, if applicable, reasons any comments/suggestions were not incorporated.

Consolidated Annual Performance and Evaluation Report (CAPER) Process:

At a minimum, this plan will ensure that all HUD requirements are met as follows:

▪ Notice of the availability of the CAPER for public review and comment will be published in a newspaper of general circulation within the jurisdiction of the City of Orange.

▪ Notices of the availability of the CAPER for public review and comment will be posted at the public counters in the City Clerk's Office, Community Development Department, City of Orange Main Public Librar y, the public notice kiosk at City Hall , and the City of Orange Community Development Department website.

▪ There will be a 15 -day period f or citizen review and comment prio r to submitting the CAPER to HUD.

Public comments will be given consideration. The plan will in clude a summary of comments received and, if applicable, reasons any comments/suggestions were not incorporated.

2. Public Health Emergency, Natural Disaster, or Other Emergency

During a public health emergency, natural disaster, or other emergency, th e City will follow an expedited planning process to address the acute needs of the Low- and Moderate-Income residents in a 564

Page 5 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

timely manner. The expedited process includes a five-day public review process and one City Council meeting (virtual or in -person) to review and approve the reprogramming of funds and substa ntial amendments to the CP or the AAP. Public comments will be received by email or voice mail during the five-day public review process and at the City Council hearing by using the e -comment feature to submit comments or through appearing at City Hall and providing in-person comments

B. ACCESS TO RECORDS

The City wil l ensure t imely and reasonable access to information and records related to the development of the CP, and the use of monies for pr ograms funded by CDBG and HOME funds for the past five yea rs. Infor mation to be made available will include budget and progra m performance information, meeting minutes, and comments received by the City during the development of the CP.

Certain records will remain confidential to protect the privacy rights of affected households.

Requests for information and records must be ma de to the City Clerk Department in writing by a Public Records Act request. Staff will respond to such requests within 10 days.

C. TECHNICAL ASSISTANCE

Upon request, staff will provide t echnical assistance to develop funding requests fo r CDBG-eligible activities. The following technical assistance will be provided:

▪ The annual project proposal submission and review cycle will include the distribution of information, instructions, forms and resources to interested citizens or representative groups so that they may have reasonable access to the funding consideration process.

▪ Self-explanatory project proposal forms and instruct ions will be provided to all persons who request them whet her by te lephone, letter, or email . The City's ap plication for funds is designed to be easily understood, whi le still covering all key items necessary to determine the merits of the request. Census and Block Group data and maps depicting the areas of the City will be furnished upon request.

▪ City staff will answer questions rece ived from citizens or representati ve groups asking for assistance with writing or submit ting eligible project proposals . Such assistance will not necessarily result in the provision of funds to said groups.

▪ Meetings will be conducted with groups or indiv iduals as requested, to assist in identifying specific needs and to provide guidance in preparing project proposal applications.

▪ Completed project proposal forms from citizens or local nonprofit agencies will be assembled and a list of these proposals will be made available for public review.

▪ A project eligibility analysis process will be conducted at an early stage to det ermine the eligibility of each project. In cases where onl y minor a djustments are needed to make proposals eligible or otherwise practical, City staff will allow the proponents to make necessary changes to the proposals within a reasonable time..

565

Page 6 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

D. COMMENTS AND COMPLAINTS

1. Comments

Citizens or adja cent loc alities, as well as agencies providing services to the community, wi ll be encouraged to state or submit their comments on the development of the CP or the AAP, suggest amendments to the CP or the AAP, or the CAPER . Written and verbal comments rec eived at public hearings or during the public review period will be consider ed, summarized, and included with the City’s response in the final CP, AAP and CAPER. Comments and responses will also be included in amendments to the C P, AAP and CAPER. Written comments can be emailed to the Community Development Department via [email protected] or addressed to: Administrative Analyst, City of Orange, Community Development Department, 300 East Chapman Avenue, Orange, CA 92866

A written response will be made to all written comments within 10 working days after receiving comments, acknowledging the letter and identifying a plan of action, if necessary. Ever y effort will be made to send a complete response within 10 working days to those who submit written proposals or comments.

Copies of the complete final CP, AAP, CAPER, and any amendments will be available to interested parties in the Community Development Department. The City will provide a summary of the CP , AAP or CAPER upon request.

2. Complaints

Complaints regarding the CP plann ing process, AAP planning process, CAPER or proposed amendments must be made within 30 days from the date the document is published for comment. A written response will be made to all written complaints within five working days, acknowledging the letter and identifying a plan of action, if necessary. Staff will provide complete written responses to citizen complaints within 10 working days from the date of their complaint when practicable.

The City will accept written complaints provided that they:

▪ Include the name, address, and telephone n umber of the complainant and the date of the complaint.

▪ Describe the objection and provide supporting facts and data.

E. BILINGUAL OPPORTUNITIES

Wherever a significant number of residents speak and read a primary l anguage other than English, translation services at all public hearings will be provided in such language if translation services are requested in advance.

F. AMENDMENTS TO THE ACTION PLA N, CITIZEN PARTICIPATIO N PLAN, OR

THE CONSOLIDATED PLAN

The City may transfer a portion of the allocations among approved, related activities (e.g., street rehabilitation projects) when necessary to offset budget sho rtfalls. CDBG -funded Public Facilities 566

Page 7 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

activities that require change orders to increase or reallocate the ir respective budgets will be subject to City Manager approval fo r changes involving $30,000 or less, or City Council approval for changes involving more than $30,000.

Pursuant to Title 2 4 CFR Part 92, t he City will perform a “substantial amendment” of its approved AAP, CPP, or CP whenever one of the following occurs:

▪ A change in goals and policies of the AAP or CP

▪ Allocation of CDBG and HOME funds, including program income , to a new activity not previously described in the AAP or CP

▪ Substantial change in the purpose, scope, location, or beneficiaries of an existing activity

▪ Reallocation of more than 20 percent of CDBG or HOME entitlement funds for the program year

▪ Updates to procedures, requirements, or other material changes to the Citizen Participation Plan

▪ Update to the CDBG eligibility map approved in the current Consolidated Plan

The process for a “substantial amendment” consists of the following during non-emergency scenarios.

1. Publishing a 30-day public notice of the date, time, and place of the pub lic hearing in a newspaper of g eneral circulation within the juris diction of the City of Orange as well as the City’s social media platforms. This notice also serv es as the notice for the 30 -day public review period.

2. Holding one public hearing before the City Council.

3. Noticing of the public hearing will be posted at the public counters in the City Clerk's Office , Community Development Department, City of Orange Main Public Library, the public notice kiosk at City Hall, and the City of Orange Community Development website.

In case of public health emergency, natural disasters, or other emergencies, the above proc ess follows an “expedited process” outlined under Section A.2.

G. APPEALS

Appeals concerning the Plan s or decisions, statements, or recommendations of the staff shou ld be made to the following parties in the order listed: Senior Administrative Analyst, Community Development Dep artment Director, City Manager, CDBG Program Committee, City Council , and finally, the Los Angeles Area HUD office.

H. ANTI-DISPLACEMENT/RELOCATION

In the event that any residential displacement and relocation must take place in o rder to carry out a program activity, the City of Orange ensures that it wil l collaborate with the applicant/developer to 567

Page 8 of 8 ends

City of Orange Draft Citizen Participation Plan
Updated September 2023

prepare and approve an Anti -displacement and Relocation Plan in connection with that project as required by federal regulations. In the event that any acquisition and relocation is required to carry out a prog ram activity, the City of Orange will also compl y with federal acquisition and relocation requirements pursuant to Uniform Relocation Assistance Policies Act of 1970 under Title 49 CFR Part

24. I. ASSURANCES

The Citizen Participation Plan outlines the n ecessary processes to engage the public when preparing or amending the CP, AAP or CAPER. Prior to City Council approval, citizens will be given a reasonable opportunity to comment on the CP, AAP or CAPER. The CP, AAP or CAPER will be made available to the public and reasonable efforts will be made to ma ke the se documents available in a format accessible to persons with disabilities, or in another language upon their request.

The City of Orange assures that the most diligent effort s will be made to comply w ith the process and procedures outlined in this Citizen Participation Plan.

568

Orange City CouncilJanuary 23, 2024

Orange City Council
January 23, 2024