Agenda packet — Rancho Cucamonga City Council, December 6, 2023 (part 3 of 3)

REVISION:

As part of the City’s outreach on this item, the staff met with representatives of the Building Industry of America (BIA). BIA representatives have asked for clarifying information related to the proposed adjustments to the Transportation Development Impact Fee (DIF) schedule. In order to fully address these questions, staff is recommending that the public hearing for the Transportation DIF be continued to January 17, 2023 . BIA representatives have committed to providing a comprehensive list of questions on this item to staff no later than January 2, 2023.

RECOMMENDATION:

Staff recommends the City Council take the following actions:

1. Conduct a public hearing on the proposed new and amended Citywide service and user fees;

2. Continue the public hearing on the Transportation Development Impact Fees to January 17, 2023 at 7:00 p.m.; and

3. Adopt a resolution to establish new fees, repeal outdated fees, and amend certain existing fees for Citywide service and user fees.

ATTACHMENTS:

None.

DATE: December 6, 2023
TO: John R. Gillison, City Manager
FROM: Elisa Cox, Assistant City Manager
Zack Neighbors, Director of Building and Safety
Jennifer Nakamura, Deputy Director of Planning
Justine Garcia, Deputy Director of Engineering
Chandra Thomas, Management Analyst III
Jason Shields, Management Analyst II
Aracely Estrada, Management Analyst I

BY: Jason Welday, City Engineer
SUBJECT: Public Hearing to Consider Establishing, Repealing, and Amending Certain Service and User Fee Adjustments for Various Departments (Building and Safety Services , Planning and Economic Development, and Community Services), Consider Amending the Transportation Development Impact Fees for Engineering Services, and Consider Two Reso lutions Approving Such New Service and User Fees. (RESOLUTION NO. 2023-121) and (RESOLUTION NO. 2023-122) (CITY)

MEMORANDUM
Engineering Department
Corrected Staff Report Memo: 12/6/2023 Item G2 Advertised Public Hearing DATE: December 6, 2023
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Matt Marquez, Director of Planning and Economic Development Flavio Nunez, Management Analyst II
SUBJECT: Public Hearing for Consideration of a Resolution Adopting and Approving the Issuance of Bonds by the California Statewide Communities Development Authority in the Amount not to Exceed $12 Million to Improve and Rehab the Physical Condition of Pepperwood Apartments Located at 9055 Foothill Blvd., Rancho Cucamonga. (RESOLUTION NO. 2023-117) (CITY)
RECOMMENDATION:

Staff recommends the City Council (1) conduct a TEFRA public hearing under the requirements of Section 147 (f) of the Internal Revenue Code of 1986, and (2) by resolution approve the issuance of bonds by the California Statewide Communities Development Authority in the amount not to exceed $12 million to improve and rehab the physical condition of Pepperwood Apartments located at 9055 Foothill Blvd., Rancho Cucamonga
BACKGROUND:

Pepperwood Apartments is a 230-unit multifamily property in Rancho Cucamonga that offers housing units to households earning 35%, 45% and 60% of the Area Median Income (AMI).

Originally constructed in 1971, LINC-Pepperwood Housing Investors LP acquired and rehabilitated the property in 2006. In 2022, LINC purchased the Enterprise Neighborhood Partners Fund's interest in the property and now wholly own the site. The current physical condition of Pepperwood is stable; however, the 230-unit property requires some rehab since it was last improved 17-years ago. The issuance of bonds will allow for the necessary improvements and rehabilitation of the site to occur.

ANALYSIS:

The issuance of tax exempt, private activity bonds must be approved by the jurisdiction in which the project is located following a public hearing in accordance with Internal Revenue Code requirements. A TEFRA public hearing provides a reasonable opportunity for interested individuals to express their views, orally or in writing, on the proposed issuance of bonds and the location and nature of the proposed project to be financed. Without the approval or the TEFRA public hearing, the California Debt Limit Allocation Committee will not allocate tax exempt bonds to the Project which are an essential component of the Project financing.

The new tax-exempt bond will be in an amount not to exceed $12,000,000, with an anticipated interest rate of 4.66%. The new bond will have a 10-Year term, 35-Year amortization, and a Yield Maintenance Period of 9.5 years.

Page 2 ends

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FISCAL IMPACT:

Approval of this action does not have a fiscal impact on the General Fund. The bonds and the obligation to pay principal and interest and any redemption premium will not constitute indebtedness or an obligation of the City. The City will not have any obligation to repay the bonds or to acquire, construct, improve, equip or operate the Project.

Financing documents with respect to the issuance of the bonds will contain clear disclaimers that the bonds are not obligations of the City but are to be paid for solely from funds provided by the Borrower. All financial obligations for the bonds and all fees and costs associated with the bonds will be the sole responsibility of the Borrower.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

While this action may not address a specific City Council goal, this action is consistent with the City’s Core Values. The City is guided through a number of core values and this action will help provide a high quality of life and enhance a safe and healthy community for all.

ATTACHMENTS:

Attachment 1 – Resolution 2023-117
Attachment 2 – Subordination Agreement
RESOLUTION NO. 2023-117

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO

CUCAMONGA, CALIFORNIA, APPROVING THE ISSUANCE BY THE

CALIFORNIA STATEWIDE COMMUNITIES DE VELOPMENT
AUTHORITY OF QUALIFIED 501(C)(3) BONDS FOR A

QUALIFIED RESIDENTIAL RENTAL P ROJECT FOR PEPPERWOOD

APARTMENTS
WH
EREAS, the California Statewide Communities Development Authority (the “Authority”) is authorized pursuant to the provisions of California Government Code Section 6500 et seq. and the terms of an Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988 (the “Agreement”), among certain local agencies throughout the State of California, including the City of Rancho Cucamonga (the “City”), to issue revenue bonds in accordance with Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code for the purpose of financing multifamily rental housing projects; and
WHE
REAS, LINC-Pepperwood Housing Investors LP (the “Borrower”) which is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the “Code”) has requested that the California Statewide Communities Development Authority (the “Authority”) adopt a plan of financing providing for the issuance of qualified 501(c)(3) bonds as defined in Section 145 of the Code in one or more series issued from time to time, including bonds issued to refund such qualified 501(c)(3) bonds in one or more series from time to time, and at no time to exceed $ 12,000,000 in outstanding aggregate principal amount (the “Bonds”). A portion of the proceeds of the Bonds will be used by the Borrower to finance or refinance the acquisition and rehabilitation of a multifamily rental housing project located at 9055 Foothill Boulevard, Rancho Cucamonga, California (the “Rancho Cucamonga Site”); and WH
EREAS, pursuant to Section 147(f) of the Code, prior to their issuance, the Bonds are required to be approved by the “applicable elected representative” of the governmental units on whose behalf such bonds are expected to be issued and by a governmental unit having jurisdiction over the entire area in which any facility financed by such bonds is to be located, after a public hearing held following reasonable public notice; and
WHE
REAS, the members of this City Council (this “City Council ”) are the applicable elected representatives of the City; and
WHE
REAS, there has been published, at least 7 days prior to the date hereof, in a newspaper of general circulation within the City, a notice that a public hearing regarding the Bonds would be held on a date specified in such notice; and
WH
EREAS, such public hearing was conducted on such date, at which time an opportunity was provided to interested parties to present arguments both for and against the issuance of the Bonds; and
WH
EREAS, the Authority is also requesting that the City Council approve the issuance of any refunding bonds hereafter issued by the Authority for the purpose of refinancing the Attachment 1

2 Bonds which financed the Rancho Cuc amonga Site (the “Refunding Bonds”), but only in such cases where federal tax laws would not require additional consideration or approval by the City Council; and

WHEREAS, it is intended that this resolution shall constitute the approval of the issuance of the Bonds required by Section 147(f) of the Code and Section 9 of the Agreement;

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA AS FOLLOWS:

Section 1. The above recitals are true and correct.

Section 2. The City Council hereby approves the issuance of the Bonds and the Refunding Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitute approval of the Bonds for the purposes of (a) Section 147(f) of the Code and (b) Section 9 of the Agreement.

Section 3. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents that they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the financing approved hereby.

Section 4. This resolution shall take effect immediately upon its passage.

ADOPTED by the City Council of the City of Rancho Cucamonga at a regular meeting of said Council held on the 6
th day of December, 2023, by the following vote:

AYES:

NOES:

ABSENT:

Mayor
ATTEST:

City Clerk
Subordination Agreement (Affordable) Form 6456 Page 1
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RECORDING REQUESTED BY:

CBRE Multifamily Capital, Inc. (Lender)
c/o CBRE Loan Services, Inc.
929 Gessner Road, Suite 1700
Houston, Texas 77024
W
HEN RECORDED RETURN TO:

Nicholas Pirulli, Esq.

Kearbey Pirulli & Evatt LLC
7910 Woodmont Avenue
Suite 750
Bethesda, MD 20814
---------------------------- [Space Above This Line For Recording Data] ----------------------------

SUBORDINATION AGREEMENT
(Affordable)
This SUBORDINATION AGREEMENT (this “ Agreement”) dated as of __________ ____, 2023, is executed by and among (i) CBRE MULTIFAMILY CAPITAL, INC., a Delaware corporation (“Senior Lender”), (ii) HOUSING SUCCESSOR AGENCY TO THE FORMER RANCHO CUCAMONGA REDEVELOPMENT AGENCY, a public body corporate and politic (“Subordinate Lender”), and (iii) LINC-PEPPERWOOD HOUSING INVESTORS, LP, a California limited partnership (“Borrower”).

RECITALS:

A. Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, executed by and between Borrower and Senior Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Senior Loan Agreement”), Senior Lender has agreed to make a loan to Borrower in the original principal amount of $_________ (the “Senior Loan ”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Senior Lender in the amount of the Senior Loan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Senior Note”).

B. In addition to the Senior Loan Agreement, the Senior Loan and the Senior Note are also secured by a certain Multifamily Mortgage, Deed of Trust or Deed to Secure Debt dated as of the date hereof (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Senior Security Instrument ”), encumbering the property described in t he Senior Security Instrument as the “Mortgaged Property” , as further described in Exhibit A attached hereto.

Attachment 2

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C. Borrower has requested Senior Lender to permit that certain subordinate loan in the amount of $20,350,000 (the “Subordinate Loan”) from Subordinate Lender to Borrower and to allow the Subordinate Loan to be secured by a mortgage lien against the Mortgaged Property.

D. Senior Lender has agreed to permit the continued existence of the Subordinate Loan and to allow the subordinate mortgage lien to continue against the Mortgaged Property subject to all of the conditions contained in this Agreement.

AGREEMENTS:

NOW, THEREFORE, in order to induce Senior Lender to permit the continued existence Subordinate Loan to Borrower and to allow the subordinate mortgage lien to continue against the Mortgaged Property, and in consideration thereof, Senior Lender, Subordinate Lender and Borrower agree as follows:

1. Recitals.

The recitals set forth above are incorporated herein by reference.

2. Definitions.

In addition to the terms defined in the Recitals to this Agreement, for purposes of this Agreement the following terms have the respective meanings set forth below:
“Affiliate” means, when used with respect to a Person, any corporation, partnership, joint venture, limited liability company, limited liability partnership, trust or individual C ontrolled by, under common Control with, or which Controls such Person, and in all cases any other Person that holds fifty percent (50%) or more of the ownership interests in such Person. “Borrower” means the Person named as such in the first paragraph on page 1 of this Agreement, any successor or assign of Borrower, including without limitation, a receiver, trustee or debtor-in- possession and any other Person (other than Senior Lender) who acquires title to the Mortgaged Property after the date of this Agreement.
“Business Day” means any day other than (a) a Saturday, (b) a Sunday, (c) a day on which Senior Lender is not open for business, or (d) a day on which the Federal Reserve Bank of New York is not open for business.
“Condemnation Action ” means any action or proceeding, however characterized or named, relating to any condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect.
“Control” (including with correlative meanings, the terms “ Controlling,” “Controlled by” and “under common C ontrol with”), as applied to any entity , means the possession, directly or indirectly, of the power to direct or cause the direction of the management or operations of such entity, whether through the ownership of voting securities, ownership interests or by contract or otherwise.

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“Default Notice” means: (a) a copy of any written notice from Senior Lender to Borrower and Subordinate Lender stating that a Senior Loan Default has occurred under the Senior Loan Documents; or (b) a copy of the written notice from Subordinate Lender to Borrower and S enior Lender stating that a Subordinate Loan Default has occurred under the Subordinate Loan Documents. Each Default Notice shall specify the default upon which such Default Notice is based.
“Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private). “Regulatory Agreement” means, individually and collectively, t he (i) Amended and Resta ted Regulatory Agreement dated as of August 29, 2006 by Borrower and Subordinate Lender, and recorded in the Official Records on September 1, 2006 as Document # 2006- 0604147 and (ii) Amended and Restated Operation and Maintenance Agreement dated as of Augu st 29, 2006 by Borrower and Subordinate Lender, and recorded in the Official Records on September 1, 2006 as Document # 2006-0604148.
“Senior Lender” means the Person named as such in the first paragraph on P age 1 of this Agreement, its successors and assigns and any other Person who becomes the legal holder of the Senior Loan after the date of this Agreement.
“Senior Loan Default” means the occurrence of an “Event of Default” as that term is defined in the Senior Loan Documents.
“Senior Loan Documents ” means the Senior Security Instrument, the Senior Note, the Senior Loan Agreement, and all other “Loan Documents” as that term is defined in the Senior Loan Agreement.
“Subordinate Lender” means the Person named as such in the first paragraph on page 1 of this Agreement, any successor or assign of Subordinate Lender, including without limitation, a receiver, trustee or debtor-in-possession and any other Person who becomes the legal holder of the Subordinate Note after the date of this Agreement.
“Subordinate Loan Agreement” means the Loan Agreement dated as of April 26, 2006 by and between Borrower and Subordinate Lender , as amended by that Amendment No. 1 to Loan Agreement by and between Borrower and Subordinate Lender made and entered into as of May 16, 2007.
“Subordinate Loan Default” means a default by Borrower in performing or observing any of the terms, covenants or conditions in the Subordinate Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the Subordinate Loan Documents for curing the default.
“Subordinate Loan Documents ” means the Subordinate Note, the Subordinate Mortgage, the Subordinate Loan Agreement , the Regulatory Agreement and all other documents evidencing, securing or otherwise executed and delivered in connection with the Subordinate Loan.

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“Subordinate Mortgage” means, collectively, the Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) dated as of April 26, 2006 by Borrower for the benefit of Subordinate Lender, recorded in the Official Records of the County of San Bernadino (“ Official Records”) on May 1, 2006 as Document # 2006- 0297267, as modified by that Amendment to Deed of Trust, Security Agreement and Fixture Filing With Assignment of Rents dated June 4, 2007, and recorded in the Official records on June 8, 2007 as Document # 2007- 0346256, as security for the Subordinate Loan.
“Subordinate Note” means the Residual Receipts Promissory Note dated April 19, 2006 issued by Borrower to Subordinate Lender, or order, to evidence the Subordinate Loan, and as amended by that Amendment to Residual Receipts Promissory Note dated June 4, 2007. “Surplus Cash” means, with respect to any period, any revenues of the Borrower remaining after paying, or setting aside funds for paying, all of the following:
(i) All sums due or currently required to be paid under the Senior Loan. (ii) All sums due or currently required to be paid under the Senior Loan Documents, including but not limited to any Imposition Deposits.
(iii) All deposits to any replacement reserve, repair reserve or other reserve or escrow required by the Senior Loan Documents that are due or currently payable. (iv) All reasonable operating expenses of the Mortgaged Property, including but not limited to real estate taxes, insurance premiums, utilities, building maintenance, painting and repairs, management fees, payroll, administrative expenses, legal expenses and audit expenses (excluding any developer fees payable with respect to the Mortgaged Property).

3. Permission to Place Mortgage Lien Against Mortgaged Property.

Senior Lender agrees, notwithstanding the prohibition against inferior liens on the Mortgaged Property contained in the Senior Loan Documents and subject to the provisions of this Agreement, to permit Subordinate Lender to retain the lien of the Subordinate Mortgage and other recorded Subordinate Loan Documents against the Mortgaged Property to secure Borrower’s obligation to repay the Subordinate Note and all other obligations, indebtedness and liabilities of Borrower to Subordinate Lender under and in connection with the Subordinate Loan.

4. Borrower’s and Subordinate Lender’s Representations and Warranties.

Borrower and Subordinate Lender each makes the following representations and warranties to Senior Lender:
(a) Subordinate Loan Documents.

The Subordinate Loa n is evidenced by the Subordinate Note and is secured by the Subordinate Mortgage, the Subordinate Loan Agreement and the Subordinate Loan Documents.

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(b) Subordinate Note.

The Subordinate Note shall be deemed to contain the following provision:

The indebtedness evidenced by this Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a Multifamily Note (and any schedules) dated as of even date herewith in the original principal amount of $____________, executed by LINC -PEPPERWOOD HOUSING INVESTORS, LP, a California limited partnership and payable to the order of CBRE MULTIFAMILY CAPITAL, INC., a Delaware corporation (“Senior Lender”), to the extent and in the manner provided in that certain Subordination Agreement dated as of even date herewith between the payee of this Note, and Senior Lender and LINC -PEPPERWOOD HOUSING INVESTORS, LP, a California limited partnership (the “ Subordination Agreement ”). The Mortgage, Deed of Trust or Deed to Secure Debt (and any exhibits) securing this Note is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Multifamily Mortgage, Deed of Trust or Deed to Secure Deb t (and any exhibits) securing the Multifamily Note and the terms, covenants and conditions of the Multifamily Loan and Security Agreement evidencing the terms of the Multifamily Note, as more fully set forth in the Subordination Agreement. The rights and remedies of the payee and each subsequent holder of this Note under the Mortgage, Deed of Trust or Deed to Secure Debt (and any exhibits) securing this Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of this Note shall be deemed, by virtue of such holder’s acquisition of the Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by Subordinate Lender under the Subordination Agreement.
(c) Relationship of Borrower to Subordinate Lender and Senior Lender.

Subordinate Lender is not an Affiliate of Borrower and is not in possession of any facts which would lead it to believe that Senior Lender is an Affiliate of Borrower. (d) Term.

The term of the Subordinate Note does not end before the stated term of the Senior Note. (e) Subordinate Loan Documents.

The executed Subordinate Loan Documents are substantially in the same forms as those submitted to, and approved by, Senior Lender prior to the date of this Agreement. (f) Interpretation of Defined Terms in the Subordinate Loan Documents.

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For purposes of this Agreement, Subordinate Lender acknowledges that the term Senior Loan as defined herein, shall mean, and shall qualify as a “Senior Loan” as such term is used in the Subordinate Loan Documents.

5. Deliveries.

Subordinate Lender shall submit the following items to Senior Lender the later of (a) ten (10) Business Days after the effective date of the Senior Loan Documents:
(1) Intentionally Omitted.
(2) Certification.

A certification from Borrower and Subordinate Lender to Senior Lender that the Subordinate Loan Documents do not contain any changes from the Subordinate Loan Documents submitted to, and approved by, Senior Lender prior to the date of this Agreement.
(3) Subordinate Loan Documents.

A complete set of the fully executed Subordinate Loan Documents, certified by Borrower to be true, correct and complete.

Borrower shall submit to Subordinate Lender, an executed copy of each of the Senior Loan Documents, certified by Borrower to be true, correct and complete.

6. Terms of Subordination.
(a) Agreement to Subordinate.

Senior Lender an d Subordinate Lender agree that (1) the indebtedness evidenced by t he Subordinate Loan Documents is and shall be subordinated in right of payment, to the extent and in the manner provided in this Agreement , to the prior payment in full of the I ndebtedness evidenced by the Senior Loan Documents, and (2) the liens, terms, covenants and conditions of the Subordinate Mortgage and the other Subordinate Loan Documents are and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Senior Security Instrument and the other Senior Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the Senior Security Instrument and the other Senior Loan Documents (including but not limited to, all sums advanced for the purposes of (A) protecting or further securing the lien of the Senior Security Instrument, curing defaults by Borrower under the Senior Loan Documents or for any other purpose expressly permitted by the Senior Loan Documents, or (B) constructing, renovating, repairing, furnishing, fixturing or equipping the Mortgaged Property). In addition to the limitations set forth above, the Subordinate Lender hereby agrees that the Subordinate Loan will be payable solely from 75% of Surplus Cash while the Senior Loan remains outstanding.

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(b) Subordination of Subrogation Rights.

Subordinate Lender agrees that if, by reason of its payment of real estate taxes or other monetary obligations of Borrower, or by reason of its exercise of any other right or remedy under the Subordinate Loan Documents, it acquires by right of subrogation or otherwise a lien on the Mortgaged Property which (but for this subsection) would be senior to the lien of the Senior Security Instrument, then, in that event, such lien shall be subject and subordinate to the lien of the Senior Security Instrument.
(c) Payments Before Senior Loan Default.

Until Subordinate Lender receives a Default Notice (or otherwise acquires actual knowledge) of a Senior Loan Default, Subordinate Lender shall be entitled to retain for its own account all payments made under or pursuant to the Subordinate Loan Documents , provided that no such payment exceeds 75% of then available Surplus Cash. (d) Payments After Senior Loan Default.

Borrower agrees that, after it receives a Default Notice (or otherwise acquires knowledge) of a Senior Loan Default, it will not make any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorneys ’ fees, or any other sums secured by the Subordinate Loan Documents) without Senior Lender’s prior written consent. Subordinate Lender agrees that, after it receives a Default Notice f rom Senior Lender with written instructions directing Subordinate Lender not to accept payments from Borrower on account of the Subordinate Loan, it will not accept any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorneys ’ fees, or any other sums secured by the Subordinate Loan Documents) without Senior Lender’s prior written consent. If Subordinate Lender receives written notic e from Senior Lender that the Senior Loan Default which gave rise to Subordinate Lender’s obligation not to accept payments has been cured, waived, or otherwise suspended by Senior Lender, the restrictions on payment to Subordinate Lender in this Section 6 shall terminate, and Senior Lender shall have no right to any subsequent payments made to Subordinate Lender by Borrower prior to Subordinate Lender’s receipt of a new Default Notice from Senior Lender in accordance with the provisions of this Section 6(d).
(e) Remitting Subordinate Loan Payments to Senior Lender.

If, after Subordinate Lender receives a Default Notice from Senior Lender in accordance with Section 6(d), Subordinate Lender receives any payments under the Subordinate Loan Documents, Subordinate Lender agrees that such payment or other distribution will be received and held in trust for Senior Lender and unless Senior Lender otherwise notifies Subordinate Lender in writing, will be promptly remitted, in kind to Senior Lender, properly endorsed to Senior Lender, to be applied to the principal of, interest on and other amounts due under the Senior Loan Documents in accordance with the provisions of the Senior Loan Documents. By executing this Agreement, Borrower specifically authorizes Subordinate Lender to endorse and remit any such payments to Senior Lender, and specifically waives any and all rights to have such payments

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returned to Borrower or credited against the Subordinate Loan. Borrower and Senior Lender acknowledge and agree that payments received by Subordinate Lender, and remitted to Senior Lender under this Section 6, shall not be applied or otherwise credited against the Subordinate Loan, nor shall the tender of such payment to Senior Lender waive any Subordinate Loan Default which may arise from the inability of Subordinate Lender to retain such payment or apply such payment to the Subordinate Loan.
(f) Notice of Payment from Other Persons.

Subordinate Lender agrees to notify (telephonically or via email, followed by written notice) Senior Lender of Subordinate Lender’s receipt from any Person other than Borrower of a payment with respect to Borrower’s obligations under the Subordinate Loan Documents, promptly after Subordinate Lender obtains knowledge of such payment. (g) Agreement Not to Commence Bankruptcy Proceeding.

Subordinate Lender agrees that during the term of this Agreement it will not commence, or join with any other creditor in commencing any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings against or with respect to Borrower, without Senior Lender’s prior written consent.

7. Default Under Subordinate Loan Documents.
(a) Notice of Subordinate Loan Default and Cure Rights.

Subordinate Lender shall deliver to Senior Lender a Default Notice within five (5) Business Days in each case where Subordinate Lender has given a Default Notice to Borrower. Failure of Subordinate Lender to send a Default Notice to Senior Lender shall not prevent the exercise of Subordinate Lender’s rights and remedies under the Subordinate Loan Documents, subje ct to the provisions of this Agreement. Senior Lender shall have the right, but not the obligation, to cure any Subordinate Loan Default within sixty (60) days following the date of such notice; provided, however that Subordinate Lender shall be entitled, during such sixty (60) day period, to continue to pursue its rights and remedies under the Subordinate Loan Documents. All amounts paid by Senior Lender in accordance with the Senior Loan Documents to cure a Subordinate Loan Default shall be deemed to have been advanced by Senior Lender pursuant to, and shall be secured by, the Senior Loan Agreement and the Senior Security Instrument. (b) Subordinate Lender’s Exercise of Remedies After Notice to Senior Lender.

If a Subordinate Loan Default occurs and is conti nuing, Subordinate Lender agrees that, without Senior Lender’s prior written consent, it will not commence foreclosure proceedings with respect to the Mortgaged Property under the Subordinate Loan Documents or exercise any other rights or remedies it may have under the Subordinate Loan Documents, including, but not limited to accelerating the Subordinate Loan (and enforcing any “due on sale” provision included in the Subordinate Loan Documents) , collecting rents, appointing (or seeking the appointment of) a receiver or exercising any other rights or remedies thereunder unless and until it has given Senior Lender at least sixty (60) days prior written notice; during such sixty (60) day period, however,

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Subordinate Lender shall be entitled to exercise and enforce all other rights and remedies available to Subordinate Lender under the Subordinate Loan Documents and/or under applicable laws, including without limitation, rights to enforce covenants and agreements of Borrower relating to income, rent, or affordability restrictions contained in any land use restriction agreement. (c) Cross Default.

Borrower and Subordinate Lender agree that a Subordinate Loan Default shall constitute a Senior Loan Default under the Senior Loan Documents and Senior Lender shall have the right to exercise all rights or remedies under the Senior Loan Documents in the same manner as in the case of any other Senior Loan Default. If Subordinate Lender notifies Senior Lender in writing that any Subordinate Loan Default of which Senior Lender h as received a Default Notice has been cured or waived, as determined by Subordinate Lender in its sole discretion, then provided that Senior Lender has not conducted a sale of the Mortgaged Property pursuant to its rights under the Senior Loan Documents, any Senior Loan Default under the Senior Loan Documents arising solely from such Subordinate Loan Default shall be deemed cured, and the Senior Loan shall be reinstated, provided, however, that Senior Lender shall not be required to return or otherwise credit for the benefit of Borrower any default rate interest or other default related charges or payments received by Senior Lender during such Senior Loan Default.

8. Default Under Senior Loan Documents.
(a) Notice of Senior Loan Default and Cure Rights.

Senior Lender shall deliver to Subordinate Lender a Default Notice within five (5) Business Days in each case where Senior Lender has given a Default Notice to Borrower. Failure of Senior Lender to send a Default Notice to Subordinate Lender shall not prevent the exercise of Senior Lender’s rights and remedies under the Senior Loan Documents, subject to the provisions of this Section 8(a), nor shall such failure constitute a default by Senior Lender under this Agreement .

Subordinate Lender shall have the right, but not the obligation, to cure any such Senior Loan Default within sixty (60) days following the date of such Default Notice or the date on which Subordinate Lender otherwise acquires actual knowledge of Senior Loan Default ; provided, however, that Senior Lender shall be entitled during such sixty (60) day period to continue to pursue its remedies under the Senior Loan Documents. Subordinate Lender may have up to ninety (90) days from the date of the Default Notice to cure a non-monetary default if during such ninety (90) day period Subordinate Lender keeps current all payments required by the Senior Loan Documents. In the event that such a non- monetary default creates an unacceptable level of risk relative to the Mortgaged Property, or Senior Lender’s secured position relative to the Mortgaged Property, as determined by Senior Lender in its sole discretion, then Senior Lender may exercise during such ninety (90) day period all available rights and remedies to protect and preserve the Mortgaged Property and the rents, revenues and other proceeds from the Mortgaged Property. All amounts paid by Subordinate Lender t o Senior Lender to cure a Senior Loan Default shall be deemed to have been advanced by Subordinate Lender pursuant to, and shall be secured by the Subordinate Loan Agreement and the Subordinate Mortgage.

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(b) Cross Default.

Subordinate Lender agrees that, notwi thstanding any contrary provision contained in the Subordinate Loan Documents, a Senior Loan Default shall not constitute a default under the Subordinate Loan Documents ( if no other default has occurred under the Subordinate Loan Documents) until either (1) Senior Lender has accelerated the maturity of the Senior Loan, or (2) Senior Lender has taken affirmative action to exercise its rights under the Senior Loan Documents to collect rent, to appoint (or seek the appointment of) a receiver or to foreclose on (or to exercise a power of sale contained in) the Senior Loan Documents. At any time after a Senior Loan Default is determined to constitute a default u nder the Subordinate Loan Documents, Subordinate Lender shall be permitted to pursue its remedies for default under the Subordinate Loan Documents, subject to the restrictions and limitations of this Agreement. If at any time Borrower cures any Senior Loan Default to the satisfaction of Senior Lender, as evidenced by written notice from Senior Lender to Subordinate Lender, any default under the Subordinate Loan Documents arising from such Senior Loan Default shall be deemed cured and the Subordinate Loan shall be retroactively reinstated as if such Senior Loan Default had never occurred.

9. Conflict.

Borrower, Senior Lender and Subordinate Lender each agree s that, in the event of any conflict or inconsistency between the terms of the Senior Loan Documents, the Subordinate Loan Documents and the terms of this Agreement, the terms of this Agreement shall govern and control solely as to the following: (a) the relative priority of the security interests of Senior Lender and Subordinate Lender in the Mortgaged Property; (b) the timing of the exercise of remedies by Senior Lender and Subordinate Lender under the Senior Loan Documents and the Subordinate Loan Documents, respectively; and (c) solely as between Senior Lender and Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations which Senior Lender and Subordinate Lender have agreed to as expressly provided in this Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not, and shall not be deemed to: extend Borrower’s time to cure any Senior Loan Default or Subordinate Loan Default, as the case may be; give Borrower the right to notice of any Senior Loan Default or Subordinate Loan Default, as the case may be other than that, if any, provided, respectively under the Senior Loan Documents or the Subordinate Loan Documents; or create any other right or benefit for Borrower as against Senior Lender or Subordinate Lender.

10. Rights and Obligations of Subordinate Lender Unde r the Subordinate Loan Documents and of Senior Lender under the Senior Loan Documents.

Subject to each of the other terms of this Agreement, all of the following provisions shall supersede any provisions of the Subordinate Loan Documents covering the same subject matter:
(a) Protection of Security Interest.

Subordinate Lender shall not, without the prior written consent of Senior Lender in each instance, take any action which has the effect of increasing the indebtedness outstanding under, or secured by, the Subordinate Loan Documents, except that Subordinate Lender shall have the right to advance funds to cure Senior Loan Defaults pursuant to Section 8(a) and advance funds pursuant

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to the Subordinate Loan Documents for the purpose of paying real estate taxes and insurance premiums, making necessary repairs to the Mortgaged Property and curing other defaults by Borrower under the Subordinate Loan Documents.
(b) Condemnation or Casualty.

Following the occurrence of (1) a Condemnation Action, or (2) a fire or other casualty resulting in damage to all or a portion of the Mortgaged Property (collectively, a “ Casualty”), at any time or times when the Senior Security Instrument remains a lien on the Mortgaged Property the following provisions shall apply:
(A) Subordinate Lender hereby agrees that its rights (under the Subordinate Loan Documents or otherwise) to participate in any proceeding or action relating to a Condemnation Action or a Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a Condemnation Action or a Casualty shall be and remain subject and subordinate in all respects to Senior Lender’s rights under the Senior Loan Documents with respect thereto, and Subordinate Lender shall be bound by any settlement or adjustment of a claim resulting from a Condemnation Action or a Casualty made by Senior Lender; provided, however, this subsection or anything contained in this Agreement shall not limit the rights of Subordinate Lender to file any pleadings, documents, claims or notices with the appropriate court with jurisdiction over the proposed Condemnation Action or Casualty; and
(B) all proceeds received or to be received on account of a Condemnation Action or a Casualty, or both, shall be applied (either to payment of the costs and expenses of repair and restoration or to payment of the Senior Loan) in the manner determined by Senior Lender in its sole discretion; provided, however, that if Senior Lender elects to apply such proceeds t o payment of the principal of, interest on and other amounts payable under the Senior Loan, any proceeds remaining after the satisfaction in full of the principal of, interest on and other amounts payable under the Senior Loan shall be paid to, and may be applied by, Subordinate Lender in accordance with the applicable provisions of the Subordinate Loan Documents, provided however, Senior Lender agrees to consult with Subordinate Lender in determining the application of Casualty proceeds, provided further, however, that in the event of any disagreement between Senior Lender and Subordinate Lender over the application of Casualty proceeds, the decision of Senior Lender, in its sole discretion, shall prevail. (c) Insurance.

Subordinate Lender agrees that all original policies of insurance required pursuant to the Senior Security Instrument shall be held by Senior Lender. The preceding sentence shall not preclude Subordinate Lender from requiring that it be named as a loss pa yee, as its interest may appear, under all policies of property damage insurance maintained by Borrower with respect to the Mortgaged Property, provided such action does not affect the priority of payment of the proceeds of property damage insurance under the Senior Security Instrument, or that it be named

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as an additional insured under all policies of liability insurance maintained by Borrower with respect to the Mortgaged Property.
(d) No Modification of Subordinate Loan Documents.

Borrower and Subordinate Lender each agree that, until the principal of, interest on and all other amounts payable under the Senior Loan Documents have been paid in full, it will not, without the prior written consent of Senior Lender in each instance, increase the amount of the Subordinate Loan, increase the required payments due under the Subordinate Loan, decrease the term of the Subordinate Loan, increase the interest rate on the Subordinate Loan, or otherwise amend the Subordinate Loan terms in a manner that creates an adverse effect upon Senior Lender under the Senior Loan Documents. Any amendment of the Subordinate Loan Documents or assignment of Subordinate Lender’s interest in the Subordinate Loan without Senior Lender’s consent shall be void ab initio and of no effect whatsoever.

11. Modification or Refinancing of Senior Loan.

Subordinate Lender consents to any agreement or arrangement in which Senior Lender waives, postpones, extends, reduces or modifies any provisions of the Senior Loan Documents, including any provision requiring the payment of money. Subordinate Lender further agrees that its agreement to subordinate hereunder shall extend to any new mortgage debt which is for the purpose of refinancing all or any part of the Senior Loan (including reasonable and necessary costs associated with the closing and/or the refinancing); and that all the terms and covenants of this Agreement shall inure to the benefit of any holder of any such refinanced debt; and that all references to the Senior Loan, the Senior Note, the Senior Loan Agreement, the Senior Security Instrument, the Senior Loan Documents and Senior Lender shall mean, respectively, the refinance loan, the refinance note loan agreement, the mortgage securing the refinance note, all documents evidencing securing or otherwise pertaining to the refinance note and the holder of the refinance note.

12. Default by Subordinate Lender or Senior Lender.

If Subordinate Lender or Senior Lender defaults in performing or observing any of the terms, covenants or conditions to be performed or observed by it under this Agreement, the other, non-defaulting lender shall have the right to all available legal and equitable relief.

13. Reinstatement.

To the extent that Borrower makes a payment to Senior Lender or Senior Lender receives any payment or proceeds of the collateral securing the Senior Loan for Borrower’s benefit, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable doctrine, then to the extent of such payment or proceeds received and not retained by Senior Lender, this Agreement shall be reinstated and continue in full force and effect until full and final payment shall have been made to Senior Lender. Subordinate Lender agrees to hold in trust for Senior Lender and promptly remit

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to Senior Lender any payments received by Subordinate Lender after such invalidated, rescinded or returned payment was originally made.

14. Notices.
(a) Process of Serving Notice.

All notices under this Agreement shall be:
(1) in writing and shall be:
(A) delivered, in person;
(B) mailed, postage prepaid, either by registered or certified delivery, return receipt requested;
(C) sent by overnight courier; or
(D) sent by electronic mail with originals to follow by overnight courier; (2) addressed to the intended recipient at the address(es) below the signature block, as applicable; and
(3) deemed given on the earlier to occur of:
(A) the date when the notice is received by the addressee; or (B) if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or any express courier service. (b) Change of Address.

Any party to Agreement may change the address to which notices intended for it are to be directed by means of notice given to the other parties identified in this Agreement. (c) Receipt of Notices.

Senior Lender, Subordinate Lender or Borrower shall not refuse or reject delivery of any notice given in accordance with this Agreement. Each party is required to acknowledge, in writing, the receipt of any notice upon request by the other party.

15. General.
(a) Assignment/Successors.

This Agreement shall be binding upon Borrower, Senior Lender and Subordinate Lender and shall inure to the benefit of the respective legal successors, transferees and assigns of

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Borrower, Senior Lender and Subordinate Lender. Borrower shall not assign any of its rights and obligations under this Agreement without the prior written consent of Senior Lender. (b) No Partnership or Joint Venture.

Senior Lender’s permission for the placement of the Subordinate Loan does not constitute Senior Lender as a joint venturer or partner of Subordinate Lender. Neither party hereto shall hold itself out as a partner, agent or Affiliate of the other party hereto. (c) Senior Lender’s and Subordinate Lender’s Consent.

Wherever Senior Lender’s consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by Senior Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. Wherever Subordinate Lender’s consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by Subordinate Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement.
(d) Further Assurances.

Subordinate Lender, Senior Lender and Bor rower each agrees, at Borrower’s expense, to execute and deliver all additional instruments and/or documents reasonably required by any other party to this Agreement in order to evidence that the Subordinate Mortgage is subordinate to the lien, covenants and conditions of the Senior Loan Documents, or to further evidence the intent of this Agreement.
(e) Amendment.

This Agreement shall not be amended except by written instrument signed by all parties hereto.
(f) Governing Law.

This Agreement shall be governed by the laws of the jurisdiction in which the Mortgaged Property is located without giving effect to any choice of law provisions thereof that would result in the application of the laws of another jurisdiction. Senior Lender, Subordinate Lender and Borrower agree that any controversy arising under or in relation to this Security Instrument shall be litigated exclusively in the jurisdiction in which the Mortgaged Property is located. The state and federal courts and authorities with jurisdiction in such locale shall have exclusive jurisdiction over all controversies that arise under or in relation to this Agreement. The parties hereto irrevocably consent to service, jurisdiction, and venue of such courts for any such litigation and waive any other venue to which any might be entitled by virtue of domicile, habitual residence or otherwise.

(g) Severable Provisions.

If any provision of this Agreement shall be invalid or unenforceable to any extent, then the other provisions of this Agreement, shall not be affected the reby and shall be enforced to the greatest extent permitted by law.
(h) Term.

The term of this Agreement shall commence on the date hereof and shall continue until the earliest to occur of the following events: (1) the payment in full of the principal of, interest on and other amounts payable under the Senior Loan Documents; (2) the payment in full of the principal of, interest on and other amounts payable under the Subordinate Loan Documents, other than by reason of payments which Subordinate Lender is obligated to remit to Senior Lender pursuant to Section 6 hereof; (3) the acquisition by Senior Lender of title to the Mortgaged Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the Senior Loan Documents; or (4) the acquisition by Subordinate Lender of title to the Mortgaged Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the Subordinate Loan Documents, but only if such acquisition of title does not violate any of the terms of this Agreement.
(i) Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one and the same instrument.
(j) Sale of Senior Loan.

Nothing in this Agreement shall limit Senior Lender’s (including any assignee or transferee of Senior Lender) right to sell or transfer the Senior Loan, or any interest in the Senior Loan. The Senior Loan or a partial interest in the Senior Loan (together with this Agreement and the other Loan Documents) may be sold one or more times without prior notice to Borrower.

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IN WITNESS WHEREOF , Borrower, Senior Lender and Subordinate Lender have signed and delivered this Agreement under seal (where applicable) or have caused this Agreement to be signed and delivered under seal (where applicable) by a duly authorized representative.

Where applicable law so provides, Borrower, Senior Lender and Subordinate Lender intend that this Agreement shall be deemed to be signed and delivered as a sealed instrument.

SENIOR LENDER:

CBRE MULTIFAMILY CAPITAL, INC.,
a Delaware corporation

By: ( SEAL)
Name:

Title:

Address: c/o CBRE Loan Services, Inc.
929 Gessner Road, Suite 1700
Houston, Texas 77024

With a copy to:

Fannie Mae
Attention: Multifamily Asset
Management
Drawer AM
1100 15th Street, NW
Washington, DC 20005

ACKNOWLEDGMENT BLOCK

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF ______________
:SS
COUNTY OF ______________

On ______________ before me, ____________________________ (insert name and title of the officer), personally appeared _________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature ____________________________ (Seal)
(Signature of Notary Public)

SUBORDINATE LENDER:

RANCHO CUCAMONGA REDEVELOPMENT
AGENCY, a public body corporate and politic
By: (SEAL)
Name:

Title:

Address:

ACKNOWLEDGMENT BLOCK

STATE OF ______________
:SS
COUNTY OF ______________

On ______________ before me, ____________________________ (insert name and title of the officer), personally appeared ______________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature ____________________________ (Seal)
(Signature of Notary Public)

BORROWER:

LINC-PEPPERWOOD HOUSING
INVESTORS, LP, a California limited partnership

By: LINC Housing Corporation
a California nonprofit public benefit
corporation, its general partner

By:

Name:

Title:

Address: 3590 Elm Avenue,
Long Beach, CA 90807

ACKNOWLEDGMENT BLOCK

STATE OF ______________
:SS
COUNTY OF ______________

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)
(Signature of Notary Public)

Exhibit A
Legal Description

DATE:December 6, 2023
TO:Mayor and Members of the City Council
FROM:John R. Gillison, City Manager
INITIATED BY: Elisa C. Cox, Assistant City Manager
Michael Parmer, Assistant to the City Manager
SUBJECT: Consideration of City Council's Appointment of Their Respective Member to Cucamonga Valley Water District's Conservation Regulations Coalition. (CITY)
RECOMMENDATION:

Staff recommends the City Council appoint their respective member as the City of Rancho Cucamonga’s representative on the Cucamonga Valley Water District’s Conservation Regulations Coalition.

BACKGROUND:

In 2018, the California State Legislature enacted Senate Bill 606 (Hertzberg) and Assembly Bill 1668 (Friedman) to establish a new foundation for long-term improvements in water conservation and drought planning to adapt to climate change and the longer and more intense droughts that are likely to result in California. Specifically, the legislation tasked the California Department of Water Resources (DWR) with providing regulation recommendations to the State Water Resources Control Board that would establish methodologies and guidelines to calculate the objectives; standards for efficient residential outdoor water use and efficient use of water on Commercial, Industrial, and Institutional (CII) landscapes with Dedicated Irrigation Meters (DIMs); CII performance measures; and annual reporting requirements.

ANALYSIS:

The proposed regulation creates a new framework for managing urban water use, by California’s largest water suppliers, by helping realize water savings proposed in the water supply strategy.

While not the primary goal of the proposed regulation, implementation of the framework is likely to result in suppliers making investments and programmatic changes that encourage individuals, businesses, and local governments to change how they use water. The proposed rulemaking schedule included a first public comment period from August 18 – October 17, 2023. The State Water Resources Control Board will consider the proposed rulemaking for adoption in the summer of 2024 and, if adopted, the rule will become effective on October 24, 2024.

In response to the proposed rulemaking, the Cucamonga Valley Water District is convening a Conservation Regulations Coalition to review and analyze the potential regional implications of the proposed statewide water use regulations, develop policy considerations, and coordinate advocacy efforts. To ensure the City and its interests are represented, it is recommended City Council appoint their respective member as the City of Rancho Cucamonga’s representative on the Cucamonga Valley Water District’s Conservation Regulations Coalition.

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4 2
FISCAL IMPACT:

None.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s Core Values of promoting and enhancing a safe and healthy community for all.

ATTACHMENTS:

None.

Rancho Cucamonga City CouncilDecember 6, 2023

Rancho Cucamonga City Council
December 6, 2023