Agenda Packet — Redding City Council, March 15, 2022 (part 3 of 5)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 2

projects are funded to assist the unmet rental housing need, including the needs of individuals displaced from rental homes and individuals who became homeless as the result of the disasters.

H. As required, the City of Redding and HCD have entered into a Master Standard Agreement, numbered 21-DRMHP-21008 and dated May 13, 2021 which provides the overarching terms and conditions for implementing the Program and the terms of the Assistance common to all projects to be completed by the Subrecipient (the “Master Standard Agreement”).

I. As allowed under the DR-MHP, City provided a Conditional Commitment letter to Developer dated January 26, 2021 that provided a Conditional Commitment of DR-MHP funds for the development of the Project (the “City Loan”).

J. City and Developer now desire to enter into this Agreement to set forth the mutual obligations of the City and Developer in connection with the planning, designing, financing, construction, and completion of the Project.

AGREEMENT

1. DEFINITIONS. The following definitions shall apply for the purposes of this Agreement:

1.1 “Affordable Rent” shall have the meaning set forth in the City Declaration of Affordability Restrictions.

1.2 “Affordable Units” shall mean the rental housing units in the Project that are restricted by the City’s Declaration of Affordability Restrictions and pursuant to the LIHTC Program.

1.3 “Area Median Income or AMI” shall mean the current area median income adjusted for family size appropriate to the size of the rental unit applicable to Shasta County, as determined by the United States Department of Housing and Urban Development.

1.4 “Certificate of Completion” shall mean the document attached as Exhibit 9.

1.5 “Change Order” shall mean a modification of the Plans that is either a Substantial Change, a change which will result in a material net increase in cost (for purposes of this Section 1.5 a material net increase in cost shall mean $50,000 for any individual change or any change that exceeds $150,000 in the aggregate with all other changes) or extend the period of construction beyond the Completion Date, or other change necessitated by circumstances, such as the unforeseen unavailability of particular materials or products required in the Project’s plans and specifications.

1.6 “City” shall mean the City of Redding. The City is a municipal corporation and general law city. City as it is used in this Agreement includes the City Council of the City of Redding and any assignees of or successors to its right, powers, and responsibilities. The principal office of the City is located at 777 Cypress Avenue, Redding, California 96001. The phone number for voice communication with the City (Nicole Smith, Housing Manager) is 530.225.4336 and for email transmittal to the City is [email protected] .

1.7 “City Affordability Period” shall mean a period commencing upon the date of recordation of a Certificate of Completion by the City for the Project and continuing for fifty (55) Packet Pg. 532
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
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years.

1.8 “City Declaration of Affordability Restrictions” shall mean the Department of Housing and Community Development Community Development Block Grant – Disaster Relief Multifamily Housing Program Regulatory Agreement (contract No. 21-DRMHP 21008) between the Developer and the City that will restrict 6 units in the Project as required by HCD in connection with the CDBG DR-MHP.

1.9 “City Assistance” shall meant the City Loan.

1.10 “City Loan” shall mean the financial assistance provided by the City pursuant to Section 3.1.1.

1.11 “City Loan Promissory Note” shall mean the promissory note to be executed by Developer, or other party authorized by this Agreement which evidences the City Loan, a representative form of which is attached as Exhibit 2.

1.12 “City Manager” shall mean the City Manager of the City of Redding.

1.13 “Code of Federal Regulations” or “CFR” is the codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the Federal Government.

1.14 “Completion Date” shall mean the date stated in the Schedule of Performance for the completion of construction of the Project.

1.15 “Conflicting Language” shall mean any difference or conflict within the Agreement.

Conflicting language involving Exhibits 4a and 4b shall be resolved in favor of the aforementioned exhibits.

1.16 “Construction” (whether or not capitalized), unless the context clearly indicates otherwise, shall mean construction of the Project on the Property in accordance with the final Project Specifications and this Agreement.

1.17 “Construction Loan” is a loan to the Developer to be used for the construction of improvements on real estate, usually short-term in nature, with the funds advanced in stages as construction occurs and with repayment made from the permanent (long-term) mortgage loan placed on the property when construction is completed. The Developer’s construction loan with regard to this development will be provided by Citibank, N.A.

1.18 “Contractor” is the contractor or contractors with whom Developer contracts for the construction, and “subcontractors” are those contractors with whom Contractor contracts or with whom another subcontractor contracts for a portion of th e construction. Contractor (and all subcontractors who must, by law, hold a contractor’s license) shall have a current and valid contractor’s license, issued by the California Contractors’ State License Board, for the work they are performing.

1.19 “Days” shall mean calendar days unless expressly stated otherwise. If the date or time period for any action under this Agreement falls or ends on a Saturday, Sunday or federal, state or legal holiday, then such date or time period shall automatically be extended until 5 p.m. Pacific Time of the next Day which is not a Saturday, Sunday or federal, state or legal holiday.

1.20 “Deed of Trust” shall mean the deed of trust recorded against the Property to secure Packet Pg. 533
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
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the City Loan, a representative form of which is attached hereto as Exhibit 3.

1.21 “Developer” is a California Limited Parnter Company. The principal office of the Developer is located at 1011 Parkview Avenue, Suite A, Redding, CA 96001. The phone number for voice communication with the Developer is 530.24 4.0596 and for email transmittal to the Developer is [email protected]. Developer as it is used in this Agreement shall include any permitted nominee, assignee, or successor in interest as herein provided.

1.22 “Development Agreement” or “Agreement” is this agreement which includes this document and the referenced exhibits and attachments to this Agreement, which are all incorporated in this Agreement as if set forth in full in the body of the Agreement. A default of any of the referenced exhibits or attachments shall be deemed a default of this Agreement.

1.23 “Effective Date” shall mean the date this Agreement is signed by the City or its designee authorized to sign on behalf of the City.

1.24 “Final Plans” are the complete set of architectural and civil engineering plans and specifications for the Project which include the City’s Development Services and Land Development Divisions’ conditions of approval and have been approved by the City’s Building Division, Engineering Division and the Housing Division’s Project Manager prior to construction.

1.25 “HUD” shall mean the U.S. Department of Housing and Urban Development.

1.26 “Land Loan” shall mean the financial assistance provided by the City as defined in Recital D.

1.27 “Land Loan Deed of Trust” shall mean the deed of trust recorded against the Property to secure the Land Loan as defined in Recital D.

1.28 “Land Loan Promissory Note” shall mean the promissory note executed by Developer evidencing the Land Loan as defined in Recital D.

1.29 “Lender” shall mean all holders, including the holder of any construction or any permanent loan with a lien in first position or encumbrance as security for financing on all or any part of the Property and references to the Property shall mean that portion of the Property so encumbered.

1.30 “Low-Income Household” or “Lower-Income Household” shall mean a household earning no more than eighty percent (80%) of Shasta County median income adjusted for household size as determined by HUD from time to time as defined in California Health and Safety Code Section 50079.5.

1.31 “Low Income Housing Tax Credit (LIHTC) Program” or “Tax Credit Program” shall mean the federal and state Low Income Housing Tax Credit Programs administered by the California Tax Credit Allocation Committee.

1.32 “Notice of Completion” is the document attached as Exhibit 8.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 5

1.33 “Other Financing” shall mean the non-City financing sufficient to cover the remaining costs to complete the Project pursuant to Section 3.5.

1.34 “Permanent Loan” or “take-out loan” shall mean the loan provided to the Developer at the end of construction period to repay the short-term (non-permanent) construction loan. The prospective permanent loan provider for Developer is City Community Capital.

1.35 “Plans” are the Preliminary Plans and/or the Final Plans, or both, as the context requires.

1.36 “Preliminary Plans” are all the necessary plans, documents, and supplemental information to comprise a complete application for the entitlements necessary to develop the Project, as required by the City’s Development Services Department.

1.37 “Preliminary Project Budget” shall mean the document attached as Exhibit 6.

1.38 “Project” shall mean the development of the improvements to be constructed on the Property in accordance with the Project Final Plans and this Agreement. The development of the improvements include but are n ot limited to th e construction of a 4 0-unit affordable rental housing development consisting of 34 o ne-bedrooms, 5 two-bedrooms and n o three-bedroom un its, plus one manager's unit and common areas with infrastru cture to support the housin g development. The rental housing units will be restricted for tenants with inco mes not exceeding 80 percent of the AMI, except for two u nits that must be 30 percent of the AMI o r below, unless other more restrictive covenants call for a lower AMI. Additional Project detail is fu rther described and provided in this Agreement, th e Scope of Development and the Project Final Plans.

1.39 “Project Budget” is the identification of costs for all Project development activities as required in Section 6.1 of this Agreement. A Preliminary Project Budget is attached as Exhibit 6.

1.40 “Project Manager” shall mean the City’s de signee of a City staff person to review the Project Final Plans, oversee construction progress, verify development progress, approve and process construction draw requests and ensure construction compliance pursuant to this Agreement.

1.41 “Property” or “Project Site” shall mean the real property located in the City of Redding, Shasta County, California, identified as APN 114-070-006-000, more specifically described in Exhibit 1A and depicted in Exhibit 1A.

1.42 “Regulatory Agreement” for the DR-MHP is attached as Exhibit 4A.

1.43 “Rider to the Development Agreement” for DR-MHP is attached as Exhibit 4B.

1.44 “Schedule of Performance” is attached as Exhibit 7.

1.45 “Scope of Development” is attached as Exhibit 5.

1.46 “Security Documents” shall mean the following documents related to the City Loan:
the City Loan Deed of Trust, the City Loan Promissory Note and the City Declaration of Affordability Restrictions.

1.47 “Subcontractor” shall mean those contractors or material suppliers with whom the Developer contracts with or with whom another subcontractor contracts for a portion of the construction. Subcontractors must have a current and valid contractor’s license, issued by the Packet Pg. 535
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) Develop
ment Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 6 California Contractors’ State License Board, for the work they are performing.

1.48 “Substantial Change” is a change as described in subsection 5.4.2 of this Agreement.

2. THE
AGREEMENT.

2.1 Pu rpose of the Agreement. The p urpose of this Agreement is to further the goals of the City to increase, improve, and preserve affordable housing by assisting the Developer with th e development of the Property and the completion of the Project in accordance with the Final Plans and this Agreement.

The City represents that the development of the Property and completion of the Project, under this Agreement, and the fulfillment generally of this Agreement, are in the vital and best in terests of the City of Redding and the health, safety, morals and welfare o f its residents; for the purpose of community improvement and welfare; and to improve, preserve, and increase the supply of affordable housing. Except for the risks and speculation inherent with respect to real estate development projects, Developer represents and agrees that its developmen t o f the Project under the Agreement is not intended for speculation in land holding.

It is contemplated by th e parties that all activities undertaken b y Developer will be in accordance with this Agreement. All attachments a nd exhibits are hereby incorp orated in to this Agreement by reference.

2.2 Scope of Work . It is contemplated by the parties that the Developer will construct an affordable rental housing development consisting of 40-unit affordable rental housing development consisting of 3 4 one-bedrooms, 5 two-b edrooms and no three-bedroom units with one manger’s unit along with common areas and infrastructure to su pport the housing developmen t. The specific scope of work to be carried out by the Developer under this Agreement is more particularly describ ed in this Agreement, the Scope of Development and the Project Final Plans.

2.3 Term. This Agreement shall commence as of the Effective Date and proceed as required by the Agreement and the Sch edule of Performance, and, except fo r any deed restrictions, covenants running with the land, deed of trust or promissory note, or other agreements o r provisions which by their terms survive the term of the Agreement, shall terminate upon the completion of all of the following:
a) Completion of the constru ction of the Project in accordance with the Agreement and Project Specifications;
b) Fulfillment by the parties of their obligations under this Agreement.

3. PROJECT FINANCING.

3.1 City Assistance. The City Assistance shall consist of the following:

3.1.1 City Loan. In order to effectuate the completion of the Project on the Property by the Developer, the City shall provide a loan in an amount not to exceed One Million and no/100 ($1,000,000) pursuant to the terms and conditions de scribed in subsection 3.2.1 and this Agreement (the “City Loan”) for the construction of affordable housing and any necessary infrastructure improvements for development of the Project. The City Loan shall be funded with DR-MHP funds or any other funds deemed necessary to fulfill the City’s obligation under this Agreement.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

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3.2 City Loan Terms. The City Loan shall each be loaned pursuant to the terms and conditions described in this Agreement.

3.2.1 Terms and Conditions. The City Loan shall be evidenced by the City Loan Promissory Note in favor of City for the full amount of the City Loan. All payments of principal and interest on the City Loan will be residual receipts in nature as described in the City Loan Promissory Note. The term of the City Loan and interest accrual shall commence upon the date of the City Loan Promissory Note and mature Fifty-five (55) years therefrom. The City Loan shall bear simple interest at One (1%) per annum.

The City Loan Promissory Note shall be s ecured by the City Loan Deed of Trust which shall be recorded on the Property. The City Loan Deed of Trust shall be a lien on the Property which shall be junior only to City Declaration of Affordability Restrictions, deeds of trust securing the private financing, and any security documents required by the state and/or federal Low-Income Tax Credit Program or the DR-MHP. The City Land Loan Deed of Trust shall be subordinate to the City Loan Deed of Trust.

Subject to Section 11.3.3 of this Agreement, the City Loan Promissory Note shall not be assumable by the successors and assigns of Developer, or other party authorized by this Agreement without the prior written consent of the City, whereby such consent shall not reasonably be withheld.

3.3 Prepayment of City Loan. Developer, or other party authorized by this Agreement, including any successors and assigns, may pay in full, or any part of, the City Loan, prior to the due date without penalty.

3.4 City Additional Financing Terms. Subject to the notice and cure rights set forth in Section 13.1, the full amount of the City Loan, including principal and all accrued interest, shall become immediately due and payable upon the occurrence of any of the following:

a) Developer’s failure to proceed with and complete the Project in accordance with the Schedule of Performance; or

b) Developer abandons or substantially suspends construction of the Project for a period of three (3) months after written notice of such abandonment or suspension from the City;

c) Developer fails to utilize the Property for the Project within the timeframe set forth in the Schedule of Performance or as authorized in writing; or

d) Developer fails to comply with the affordability covenants set forth in this Agreement and the exhibits to the Agreement.

e) Other material breach of this Agreement following expiration of applicable notice and cure periods.

3.5 Other Financing. Developer shall obtain private financing, LIHTC Program financing and other financing which, when combined with the City Assistance shall be sufficient for the completion of the Project and its operation in conformity with this Agreement.

It is further anticipated that Developer shall complete the processing requirements for any other financing on behalf of the Project and according to the time line stated in the Schedule of Performance.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

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Developer shall provide to the City evidence of such private and other financing firm commitments no later than 3/30/2021, unless otherwise approved by the City Manager or their designee.

3.5.1 Approval of Other Financing Commitments. Developer shall provide to City for review and approval evidence of a firm and binding commitment for any private financing necessary for the Project pursuant to the time specified in the Schedule of Performance. Such commitments shall be subject only to reasonable conditions of the Lender necessary to assure the value and security of its loan. Such commitments shall not be subject to conditions which require amendment of this Agreement or other agreements between Developer and City without City approval. Said commitments shall be, in the aggregate, in a total amount sufficient to complete development of the Project as provided in the Project Budget and to fulfill all other obligations of this Agreement.

3.5.2 City Approval of Private Financing Security Documents. All non-City financing security documents shall be in a form a nd substance so as to be considered within the convention set by generally accepted commercial lending practices and shall be acceptable to the City and their legal counsel, which acceptance shall not be unreasonably withheld, conditioned or delayed.

Any non-City financing security documents for the Project shall comply with this Agreement.

3.6 Limitation on Encumbrances. Prior to the completion of the Project, Developer shall not engage in any financing or any other transaction creating any encumbrance or lien on the Property, whether by express agreement or operation of law, except to obtain funds to be used only for actual costs of the Project including construction short-term financing and subsequent permanent financing along with other expenditures necessary and appropri ate to develop the Property in accordance with this Agreement. Developer shall notify the City in advance of any proposed financing to be secured by the Property. In any event, Developer shall promptly notify City of any encumbrance or lien that has been created on or attached to the Property. If Developer is not in default of this Agreement, and if City approves all of the private financing documents, including the terms of any subordination agreement, which approval shall not be unreasonably withheld, City will subordinate its Deed of Trust to the lien of a construction deed of trust and permanent deed of trust, for such financing.

3.7 Provisional Refinancing. Developer may, without City consent which consent shall not be unreasonably withheld, conditioned or delayed, refinance any indebtedness secured by an encumbrance which is superior to the City’s Deed of Trust, provided that the refinanced encumbrance shall have the following characteristics:

3.7.1 Amount. The refinanced encumbrance shall not secure indebtedness in a dollar amount greater than the balance owed on the indebtedness plus reasonable costs related to the refinancing to which the City’s interest was originally subordinated.

3.7.2 Debt Service. The debt service of the refinanced indebtedness shall be an amount which does not exceed the amount of the debt service of the indebtedness to which the City’s interest was originally subordinated.

3.7.3 No Monies to Developer. Developer shall receive no fees or monies as a result of the refinancing of the indebtedness of the Project unless otherwise approved by the City which approval shall not be unreasonably withheld, conditioned or delayed.

Development Agreement Between
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lender securing funds for construction of the Project; 2) the lien of a permanent loan so long as the permanent loan is for an amount not greater than the amount due and owing by the Developer pursuant to the construction loan plus customary fees and costs payable for the benefit of the permanent lender in connection with the permanent loan and upon satisfaction and release and reconveyance of the deed of trust securing repayment of the construction loan; and 3) such regulatory agreement as may be required by the LIHTC Program. In the event a subordination agreement meets these requirements, the City Manager shall be authorized to execute the subordination agreement on behalf of the City without additional authorization by the City Council.

3.8 Assurances to Lenders. City and Developer shall in good faith consider making such reasonable modifications to this Agreement and executing such further instruments and agreements as a Lender secured by an interest in the Property may reasonably request to acknowledge and protect such Lender’s rights, provided such modifications, instruments and agreements do not materially or adversely affect any party’s rights or obligations under this Agreement and provided such modifications, instruments, and agreements serve a material economic purpose. In conjunction with any financing City agrees to execute, and deliver to Developer, when requested by Developer, an Estoppel Certificate regarding the status of this Agreement. This certificate will be in substantially the same form as it appears in Exhibit 11 and delivered to the Developer within 10 business days after receipt of the written request for the certificate.

3.9 No Reimbursement. Except as expressly provided in this Agreement, no person shall have the right of reimbursement from the City for any funds expended by them for the Project. This provision does not preclude any person from receiving reimbursement from persons other than the City.

4. DISBURSEMENT OF CITY ASSISTANCE, ESCROW; RECORDATION OF SECURITY DOCUMENTS.

4.1 Disbursement of Proceeds from City Loan. Upon execution and recordation of the City Loan Deed of Trust, a portion of the proceeds of the City Loan shall be disbursed to Developer by the City for payment of authorized title and escrow costs associated with the recording of the City Loan Deed of Trust. Alternatively, the Developer may choose to pay all title and escrow charges utilizing non-City resources. Following the disbursement of these funds, any balance remaining of the City Loan may be utilized by Developer for authorized infrastructure and/or construction costs associated with the Project that are incurred by Developer which will be disbursed through the City’s Finance Division pursuant to Section 6.2.

4.2 Compliance Monitoring Fees. Developer will be charged a reasonable fee for compliance monitoring. The Monitoring fee will be paid by the closing of the LIHTC financing escrow period by the Developer or prior to any payment under this DA. The fee is based upon the average cost of the City of Redding performing the required monitoring of CDBG-DR-assisted approved projects through the period of affordability. The basis for the fee is documented and the fee must be included in the costs of the project. The current compliance monitoring fee is a one-time $20,000 fee per project and will cover the required monitoring for the minimum 20-year affordability term.

5. PREPARATION OF PROJECT PLANS AND RELATED DOCUMENTS.

5.1 Project Manager. Subject to the terms of this Agreement, the City shall designate a Project Manager who shall, in addition to other responsibilities under this Agreement, have the right Packet Pg. 539
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

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of architectural and site planning review of all plans and drawings, including, but not limited to complete structural and engineering plans, and landscape plans associated with the Project as well as any changes therein.

5.2 Preparation of Project Final Plans. In accordance with the time line set forth in the Schedule of Performance, the Developer shall prepare the Final Plans. The Final Plans shall include all construction plans, drawings, specifications and other documents required to obtain the required building permits for the construction of the Project. The Final Plans shall conform in all material aspects with the Scope of Development, unless otherwise approved by the Project Manager.

The Project Manager and the Developer shall hold regular progress meetings as necessary to coordinate the preparation, submission and review of the Final Plans. The Project Manager and the Developer shall communicate and consult informally to ensure that the formal submittal of all or any part of the Final Plans to the City can receive prompt consideration.

5.3 Review of Project Final Plans. Devel oper shall provide the Project Manager with a complete set of Final Plans for the Project prior to or concurrently with the initial submittal of the Plans to the City’s Building Division. The Final Plans shall be accepted by the Project Manager, if a) the Plans conform in all material respects to the Scope of Development and this Agreement, and b) no Substantial Changes, as hereinafter defined, have been made.

5.4 Review of Substantial Changes to Project Final Plans.

5.4.1 City Review. Notwithstanding the foregoing, any Substantial Change in the Final Plans is subject to City review. If the Developer desires to make a Substantial Change in the Final Plans, the Developer shall submit such proposed change, in writing, to the Project Manager for review.

5.4.2 Substantial Change. A Substantial Change in the Final Plans shall mean any of the following changes, with respect to the Project:
(a) “Change Order” as previously defined in Section 1.5.

(b) Changes in size or design resulting in an increase or decrease of greater than ten percent (10%) of square footage of a unit or an increase or decrease in the number of bedrooms. (c) Changes in use or the mix of Units or Changes in the number of Units. (d) Changes in use of exterior finishing or landscape materials substantially affecting architectural appearance or functional use and operation of the Project.

(e) Material changes in size or placement of public service facilities; or material changes in general pedestrian or vehicu lar circulation in, around or through the Public areas of the Project.
(f) Any changes required by or requiring approval of the City of Redding, the County of Shasta, or any state or federal board, body, or commission.

(g) Any change which would preclude or materially reduce the ability to use the Project as set forth in the Final Plans and this Agreement.

5.5 Purpose of Review. Project Manager’s review of Final Plans and any Substantial Changes is not an assurance of the adequacy or correctness of the Plans. Project Manager has reserved review rights to: a) assure that the Final Plans conform to the Scope of Development and the Packet Pg. 540
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) Develop
ment Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 11 requirements of this Agreement; and b) assure that City funds which may be obligated under this Agreement are used as intended by the City.

5.5.1 Misrepresentation. If Project Mana ger’s approval of the Final Plans or the changes to the Final Plans delivered to the City is based upon a willful and material misrepresentation of Developer made in conjunction with the Final Plans or changes to the Final Plans, nothing in this Section shall be construed to preclude or limit the rights or claims of the City with regard to such misrepresentations, including any rights the City may have to rescind such approval.

6. DEVELOPMENT OF THE PROJECT.

6.1 Project Budget. At the times called for in the Schedule of Performance, the Developer shall provide a complete final Project Budget in a form and with specificity reasonably satisfactory to the Project Manager, including all “hard” and “soft” costs for the Project and reflecting, as possible, executed contracts. The final Project Budget will include a final construction bid from the Project’s Contractor. All Project costs that are not part of the Contractor’s construction bid shall be listed separately as line items in the final Project Budget. Such final Project Budget shall be substantially in conformance with the Preliminary Project Budget. Reductions in total Project cost that occur as a result of competitive bid solicitation by the Contr actor, are encouraged and shall be considered substantially in conformance with the Preliminary Project Budget.

6.2 Disbursement of Remaining Proceeds of City Loan. The parties agree that upon recording of the City Loan Deed of Trust as described in Section 4.1, the remaining proceeds of the City Loan not previously expended will be controlled by the City’s Finance Department or upon City Manager approval, a construction account controlled by the lenders. Each and any disbursement of funds from such account shall require a written authorization signed by the Project Manager authorizing the release of the requested disbursement. The Project Manager shall provide such written approval within ten (10) business days of receipt of the request from Developer.

6.2.1 Disbursement during Construction. Prior to any disbursement for construction, the Project Manager, Developer and Contractor shall develop a mutually agreeable disbursement format. This format shall include certifications from the Project Manager, Developer and Contractor that all materials and construction included in the request for disbursement are consistent with approved final Project Specificati ons and supplemental specifications and that all materials have been delivered to either the Property or installed and inspected as required. All disbursements shall be based on a percentage of completion and all disbursements shall reflect ten percent (10%) retention not including the costs of st ored materials. (Retention shall be released following the recording of the Notice of Completion and completion of the 30-Day mechanics lien period.)
The proceeds of the City Loan shall be disbursed in accordance with the mutually agreed upon draw schedule described above. Dis bursement shall be based upon satisfaction of the construction component upon which the draw request is based as determined in good faith by the Project Manager. Disbursements shall not exceed aggregate amounts set forth in the accepted and approved construction contract(s) for the Project. Developer and City acknowledge that it shall be the sole responsibility of the Developer to obtain th e required written authorization for any request for disbursement.

6.3 Developer Fee. It is expressly agreed and acknowledged that the parties mutually are entering into this Agreement (including without limitation all attachments and exhibits hereto) for the purpose of the development and operation of affo rdable housing. To that end, the Developer is authorized to charge to the Project budget a developer fee not to exceed the maximum amount allowable under the LIHTC Program. Developer agrees that, if necessary to facilitate the construction Packet Pg. 541
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) of the Project, all or a portion of the developer fee shall be considered a “Deferred Developer Fee” and shall be pro vided by the Develo per as part of th e Project’s development budget and be available as needed, during construction of the Project. It is hereby agreed that any cost savings realized during construction shall first be applied to pay back to Developer the amount of the Deferred Developer Fee.

Any balance owed to the Developer, remaining afte r all construction costs savings are realized, may be repaid to the Developer from allowable residual op erating cash. The non-deferred portion of the developer fee amoun t may be utilized by the Developer in any man ner permitted by law. Th e Developer fee will be funded solely by the LIHTC program.

6.4 Procurement. The Developer shall coordinate the solicitation of bids with the General Contractor based upon the Final Plans. Developer and General Contractor shall obtain a minimum of three bid s per subcontractor and , to the greates t extent possible, utilize lo cal suppliers and subcontractors from within Shasta County. The General Contractor will comply with the applicable procurement requirements in 24 CFR Part 85. The Project Manager will coordinate with the Developer and provide the required documents to complete the bid procuremen t process. The Project Man ager will complete a cost analysis and ensure that the bids are cost reasonable and conform to the proposed budget. The Project Manager’s cost analysis includes initial subcontract bids, contract modifications and change orders.

The final construction bid from the Contractor must have all no n-construction categories, including, but not limited to, general conditions; profit and overhead; and permits, clearly identified as separate line items.

6.5 Construction. Developer shall construct th e Project accord ing to the requirements established in this Agreement, including but not limited to the Scope of Development, Schedule o f Performance and the Final Plans. In the event that th e cost of construction of the Project, or any part of the Project exceeds the costs projected by Developer, Dev eloper sh all, nevertheless, bear the responsibility to complete, at Developer’s cost and without right o f contributio n from City, the construction of the Project in accordance with this Agreement. The parties agree that such obligations of Developer shall be covenan ts running with the land and that they sh all, in any event, and without regard to technical classification or designation, be to the fullest extent permitted by law and equity, binding for the benefit o f the City and enforceable by th e City against the Developer, its successors and assigns. These covenants shall terminate upon the City issuing a Certificate of Completion for the Project.

6.6 Substantial Changes. Developer covenants and agrees that Developer shall not make or permit to be made any constru ction of the Project which incorporates a Substantial Change in the Project Final Plans, as described in subsection 5.4.2, without City review of such changes as provided in that section.

6.7 Chan ges during Con struction. Developer sh all, prior to their occurren ce, notify the Project Manager of all Substantial Changes (as that term is defined in subsection 5.4.2) in the construction as well as changes which result in a material net increase in cost or may extend the period of construction beyond the Completion Date. To th e extent feasible, the Developer agrees to submit all proposed Change Orders to the Project Manager for review and approval prior to implementation.

6.8 Payment and Performance Bonds. As p art of the construction contract for the Project, Developer shall require the general Contractor to obtain payment and performance bonds in favor of the City for one hundred percent (100%) of the face amount of the construction contract price unless other secu rity is approved in advan ce by HCD. All bonds shall be issued by a corporate surety authorized by th e State of California. All payment and Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 12 Packet Pg. 542 Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) Develop
ment Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 13 performance bonds are to be submitted to the Project Manager to complete the City Attorney approval process. City Attorney approval is a condition precedent to the Developer starting construction.

In the event that the City Loan Deed of Trust is recorded prior to the closing of private financing for the development of the Project and Developer intends to utilize City Loan proceeds to construct the infrastructure improvements that are onsite and a part of the Project, this Section 6.8 shall be deemed satisfied if Developer, or the general contractor obtain payment and performance bonds in favor of the City for one hundred (100%) of the face amount of the construction contract price for such infrastructure improvements.

Notwithstanding anything to the contrary contained herein, Developer shall not commence construction on any component of the Project until payment and performance bonds meeting the requirements of this Section 6.8 have been obtained for such component.

6.9 No Construction over Utility Easements. Developer shall not construct any of the Project on, over, or within the boundary lines of any easement for public utilities on the Property, unless such construction is provided for in such easement or has been approved by the beneficiary of the easement.

6.10 Conditions Precedent to Construction. The Developer shall not begin construction until the following conditions precedent have been satisfied or waived by the City:

6.10.1 The City Loan Deed of Trust has recorded pursuant to the terms of this Agreement;

6.10.2 The Developer has submitted payment and performance bonds as required by Section 6.8 of this Agreement to the City and the City Attorney has approved the bonds.

6.10.3 The Developer has obtained all consents, approvals, entitlements, and permits required for construction, including any and all environmental approvals and/or clearances required by any Project Lender;

6.10.4 The City has reviewed the construction bid documents, construction contract and final selection of the Contractor for the Project.

6.10.5 The Developer has obtained the proper building permits from the City;

6.10.6 The Developer has requested a notice to proceed from the City, and the City has notified the Developer in writing that it may proceed with construction; and

6.10.7 The Developer has issued a notice to proceed under the executed construction contract, if any.

6.10.8 The Developer has cured all existing breaches of this Agreement to the satisfaction of the City.

6.10.9 The Developer has paid the monitoring fee pursuant to 4.2 of this agreement.

6.11 Commencement and Completion of Construction. Developer shall promptly begin and thereafter diligently pursue to complete the construction of the Project and the development of the Property in accordance with the provisions of this Agreement and at the times specified in the Schedule of Performance; and complete construction not later than the date set forth in the Schedule of Packet Pg. 543
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 14

Performance, unless otherwise approved by the City. Time is of the essence.

6.12 Reports. During the period of construction, the Developer shall submit to the City a written report of the progress of the work when reas onably requested by the City, but not more often than once each month. The report shall be in such form and detail as may reasonably be required by the City and shall include a reasonable number of construction photographs taken since the last report if previously requested by the City.

6.13 Local, State and Federal Laws. The Developer shall carry out the construction of the Project in conformity with all applicable laws, including all applicable federal and state labor standards.

6.14 Anti-Discrimination during Construction. The Developer for itself and its successors and assigns, agrees that the following provisions sha ll apply to, and be contained in all contracts and subcontracts for the construction of the Project. (For purposes of this Section 6.14 Developer shall also mean Contractor or Subcontractor.)

6.14.1 Employment. The Developer shall not discriminate against any employee or applicant for employment because of race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national origin. The Developer shall ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national origin. Such action shall include, but not limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layout or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Developer agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the City setting forth the provisions of this nondiscrimination clause.

6.14.2 Advertising. The Developer will, in all solicitations or advertisements for employees placed by or on behalf of the Developer, state that all qualified applicants will receive consideration for employment without regard to r ace, color, creed, religion, sex, marital status, or national origin.

6.15 City Access to the Property. Developer shall permit City representatives’ access, without charge, to the entire Property at any time and for any purpose which City reasonably considers necessary to carry out its obligations and protect its interests under this Agreement. Purposes for City entry may include, without limitation, inspection of all work being performed in connection with the construction of the Project. Any City personnel entering on the Property shall register immediately at Developer’s construction office, shall be escorted by Developer’s designee and shall wear proper clothing and safety equipment. City assumes all liability and responsibility for failure of its representatives to comply with such requirements and for any injury to person or damage to property arising out of or related to the presence of City personnel on the Property. At Developer’s request, City shall provide evidence that such representatives are adequately insured.

6.16 Notification of Contractors, Architects and Engineers. Developer shall notify its Project Contractors, architects and engineers in writing of the requirements of this Agreement.

Developer shall include, where applicable, the provisions of this Agreement in contracts and subcontracts for the Project, and Developer shall enforce such provisions.

6.17 Supervision of the Work. Developer shall be solely responsible for monitoring all construction, ensuring that the construction is performed in a workmanlike manner, and enforcing the terms of this Agreement and the construction contracts. City inspections of construction are made solely for assuring Developer’s performance under this Agreement and protecting City’s security Packet Pg. 544
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 15

interest in the Property.

6.18 Certificate of Completion. After the Certificate of Occupancy has been issued by the City’s Building Division and the Project Manager has determined that the Developer has completed the Project in accordance with Developer’s obligations under this Agreement, the Project Manager will coordinate with the Developer to execute and record a Notice of Completion. Following the Notice of Completion 30-Day lien period, the City will furnish the Developer with a Certificate of Completion certifying such completion. Such certification shall be a conclusive determination of satisfaction and termination of the agreements in the Agreement with respect to the obligations of the Developer to construct the Project and of the dates for the commencement and completion of construction, subject to any qualifications or limitations stated in such certification. Such certification and such determination shall not constitute evidence of compliance with or satisfaction of any governmental requirements other than City or any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance all or any part of the Project.

6.18.1 Refusal to Issue. If the City shall refuse or fail to provide a Certificate of Completion, the City shall, within five (5) Days after written request by the Developer, provide the Developer with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Project in accordance with the provisions of the Agreement, or is otherwise in default, and what measure or acts it will be necessary, in the opinion of the City, for the Developer to take or perform in order to obtain such certification. If the City wrongfully refuses to issue a Certificate of Completion, or upon passage of the five (5) business day period, Developer may seek a writ or order compelling City to issue the Certificate.

7. USE OF PROJECT PROPERTY

7.1 Uses. The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property, th at during construction and through the Affordability Period the Developer, its successors and assigns, shall devote, use, operate, and maintain the Property in accordance with the Declaration of Affordability Restrictions and this Agreement. All uses conducted on the Property, including, without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall conform to all applicable provisions of the City of Redding Municipal Code, and any restrictions of record or any of the recorded documents against the Property.

7.2 Affordable Housing.

7.2.1 Number and Type of Units; Income Eligibility. The Developer agrees to develop an affordable rental housing development that will include 40 apartment style units, income- restricted for tenants with incomes not exceeding 80 percent of the AMI except for two units that must be 30 percent of the AMI or below, unless other more restrictive covenants call for a lower AMI. .

The apartment units will consist of 34 one-bedrooms, 5 two-bedrooms and no three-bedroom units and one manager’s unit pursuant to this Agreement and th e Final Plans. All work shall be completed as specified in this Agreement, the Declaration of Affo rdability Restrictions and the Final Plans. All of the Affordable Units shall be subject to the most restrictive rent limitations as required by the LIHTC Program, the City’s Declaration of Affordability Restrictions and/or any other rent limitations as provided by any other funding source.

7.2.2 Affordability Restrictions. The City Declaration of Affordability Restrictions shall evidence the affordability restrictions require d by this Agreement, the CDBG-DR program and the conditions of the City Land Loan.

Packet Pg. 545
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 16

The covenants contained in the Declaration of Affordability Restrictions shall remain in effect throughout the Affordability Period, and issuance of a Notice of Completion by the City shall not affect the Developer’s obligations under those documents.

7.3 Management and Maintenance. The Developer shall manage and maintain, or cause to be managed and maintained, the Project. The Developer shall maintain the Property in good condition throughout the Affordability Period. The Developer shall keep parking areas, lighting fixtures, trash enclosures, and all areas which can be seen from adjacent streets, free from any accumulation of debris or waste materials by regularly scheduled maintenance. The Developer shall maintain the planted areas and all landscaping, in accordance with the landscape plan, for the term of the Affordability Period. Maintenance shall include, but not be limited to watering, weeding, mowing, cultivating, pruning, staking and tying, trash pick-up and removal, and repairing any damage caused by pedestrian or vehicle encroachment into the planting and/or turf areas.

If at any time the Developer fails to maintain such areas in the manner required pursuant to this Agreement, and said condition is not corrected within the time set forth in Section 13.1 upon written notice by the City pursuant to Section 14.9 of this Agreement, the City may, but shall not be obligated to, perform the necessary maintenance and the Developer shall pay such costs as are reasonably incurred for such maintenance, together with interest at the maximum lawful rate until full payment is made to the City. The monies expended by the City shall become a lien against the Property and the Developer hereby consents to the recordation of such lien without prior notice by City to Developer.

Said lien shall be junior and subordinate to deeds of trust for financing or refinancing of the Project as allowed pursuant to this Agreement.

Notwithstanding the above, the City reserves for itself the right to exercise any and all remedies available to it under this Agreement and the Deeds of Trust securing the City’s rights under this Agreement.

8. COVENANTS REGARDING USE AND OPERATION OF THE PROJECT AND PROPERTY.

The Developer covenants and agrees for itself, its successors, its assigns and every successor- in-interest to all or any part of the Property that the Developer, such successors and such assignees shall act as follows:

8.1 Nondiscrimination. Developer, its successors and assigns, shall not discriminate on the basis of race, color, religion, creed, age, disability , sex, sexual orientation, marital status, ancestry or national origin in the sale, lease or rental or in the use or occupancy of the Property and the Project.

8.2 Fair Housing. The Fair Housing Act (42 U.S.C. 3600, et seq.) prohibits discrimination in the sale, rental, and financing of housing becau se of race, color, religion, sex, handicap, familial status, or national origin. Section 804(c), as amended, makes it unlawful to make, print, publish, or cause to be made, printed or published, any notice, statement, or advertisement, with respect to the sale or rental of a dwelling, that indicates any prefer ence, limitation, or discrimination because of race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination.

All advertising of the Units shall contain an equal housing opportunity logotype, statement, or slogan as a means of educating the home-seeking public that the property is available to all persons regardless of race, color, religion, sex, national origin, familial status, or disability. A Fair Housing poster (Exhibit 10) must be prominently displayed at rental offices and project sites from the Packet Pg. 546
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 17

beginning of construction through occupancy, or in front of the existing multifamily building. The Fair Housing poster shall be 11 inches by 14 inches (24 CFR 110.25). A failure to display a Fair Housing poster as required shall be deemed prima facie evidence of a discriminatory housing practice (24 CFR Part 110.30).

8.3 24 CFR Section 8.4. Developer shall comply fully with 24 CFR Section 8.4 that provides that no qualified individual with a disability shall, only by reason of his or her disability, be excluded from the participation in, be denied the benefits of, or be subject to discrimination under any program or activity receiving Federal financial assistance.

8.4 Payment of Taxes, Assessments, Encumbrances and Liens. The Developer shall pay prior to delinquency all real estate taxes and asse ssments assessed and levied on the Property, at all times. The Developer shall not allow to be placed on the Property any mortgage, trust deed, encumbrance or lien other than such deeds of trust as the Developer may grant to secure construction or other financing related to the development of the Property unless expressly authorized by this Agreement or the City. The Developer shall promptly remove or satisfy any levy or attachment made on all or any part of the Property. Nothing contained in this Agreement shall prohibit the Developer from reasonably contesting the validity or amounts of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Developer in respect to such contest.

8.5 Effect and Duration of Covenants. It is intended and agreed that the agreements and covenants provided in the Declaration of Affordab ility Restrictions shall be covenants running with the land and equitable servitudes thereon for the duration of the Affordability Period and that they shall, in any event, and without regard to techni cal classifications or designation, be binding, to the fullest extent permitted by law and equity, for the benefit and in favor of, and enforceable by, the City, the City’s successors and assigns, any other governmental entity acting within its authority and any successor in interest to all or any part of the Property against the Developer, its successors and assigns and every successor in interest to all or any part of the Property, and any party in possession or occupancy of the Property and any subcontracting party or parties or other transferees under this Agreement.

8.6 Effect of Violation. The City is deemed the beneficiary of the terms and provisions of this Agreement, the Declaration of Affordability Restrictions, and the covenants running with the land, both for its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose benefit this Agreement and the covenants running with the land have been provided. The Agreement, the Declaration of Affordability Restrictions, and the covenants shall run in favor of the City without regard to whether the City has had or does have any interest in the Property.

9. INDEMNIFICATION AND WAIVER.

9.1 Developer hereby agrees to protect, defend, indemnify and hold harmless, City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands, penalties, fines, defense costs, and consequential damage or liability of any kind or nature, however caused, arising directly or indirectly out of the obligations or operations herein undertaken by Developer, but only to the extent such damage or liability is caused in whole or in part by any act or omission of the Devel oper, any contractors or subcontractors of Developer or anyone for whose acts Developer may be liable, including, but not limited to, concurrent active or passive negligence, except where caused by the active negligence, sole negligence or willful misconduct of the City or resulting or arising from allegations that the City failed to administer the program in accordance with applicable law. Developer will conduct all defense at its sole cost and expense and City shall have right to approve or disapprove legal counsel defending the Packet Pg. 547
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 18

City. City shall be reimbursed for all costs and attorney's fees incurred in enforcing this obligation.

This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable, but it is the intent of the parties that nothing in this provision is intended to otherwise reduce any insurance coverage on any policy of insurance held by the Developer or its subcontractors to which the City would otherwise be entitled to in the ab sence of this provision; accordingly the indemnity obligations hereunder shall not apply to the extent this indemnity would reduce or eliminate existing insurance coverage that would inure directly or indirectly to the benefit of the City. The policy limits do not act as a limitation upon the amount of indemnif ication to be provided by Developer. This Section 9 shall survive the termination of this Agreement, irrespective of the reason for its termination, until a date that is ten (10) years following the date the City furnishes the Developer a Certificate of Completion; provided however that nothing in this provision is intended to extend the statute of limitations by which any party other than the City can bring their claim.

9.2 In addition to the indemnity provided in Section 9.1, Developer hereby agrees to indemnify, defend, protect and hold the City harmless from and against any and all liability, damages, penalties, claims, suits, actions, proceedings, loss, cost or expense (including, but not limited to, attorney’s fees and court costs) arising out of the failure of Developer to comply with the Prevailing Wage Law (Labor Code section 1720 et seq.) including, but not limited to the payment of prevailing wages, if required by law in connection with the activities authorized by this Agreement. Developer further agrees to waive all claims and causes of action it may have against City pursuant to Labor Code section 1781.

10. INSURANCE REQUIREMENTS AND PUBLIC SAFETY PROTECTIONS.

Developer shall promptly take steps to protect the public from the risk of injury whether from the condition of the Property or Developer’s activities in connection with the Property. The Developer shall obtain and maintain, or require the contractor and subcontractors for the Project to purchase and maintain the following insurance for claims which may result from the operations under the Agreement of the Developer, any contractor, subcontractor or anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable.

10.1 Developer Insurance Requirements. Developer shall procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to Property which may arise from or in connection with Developer’s activities hereunder. The cost of such insurance shall be borne by Developer. Developer shall maintain the following noted insurance:

Coverage Required Not Required
Commercial General Liability X (if Contractor does not carry) Comprehensive Vehicle Liability X
Workers Compensation and Employee Liability X
Hazard/Builders Risk/All Risks X

10.1.1 Hazard Insurance. Prior to the recording of the City Loan Deed of Trust, Developer shall provide proof of insurance covering the improvements now existing or hereafter erected on the Property for full replacement value against loss by fire, hazards included within the term “extended coverage,” and such other hazards as the City may require and in such amounts for the full remaining term of the City Loan. The City shall be named as a mortgagee and as an additional insured loss payee on all policy documents.

10.2 Contractor Insurance Requirements. During the course of construction, Developer shall ensure that the Contractor and Subcontractors maintain the following noted insurance:

Packet Pg. 548
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 19

Coverage Required Not Required
Commercial General Liability X
Comprehensive Vehicle Liability X
Workers Compensation and Employee Liability X
Builder’s Risk/Course of Construction X Hazard/All Risks X

10.3 Minimum Scope and Limits of Insurance. Coverage shall be at least as broad as:

(a) Insurance Services Office form number CG-0001, Commercial General Liability Insurance, in an amount not less than $1,000,000 per occurrence $2,000,000 general aggregate for bodily injury, personal injury and property damage;

(b) Insurance Services Office form number CA-0001, Comprehensive Automobile Liability Insurance, which provides for total limits of not less than $1,000,000 combined single limits per accident applicable to all owned/non-owned and hired vehicles;

(c) Statutory Workers Compensation required by the Labor Code of the State of California and Employers' Liability Insurance in an amount not less than $1,000,000 per occurrence.

Both the Workers Compensation and Employers' Liability policy shall contain the insurer's waiver of subrogation in favor of the City, its elected officials, officers, agents, employees and volunteers;

(d) Deductibles and Self-Insured Retentions: Any deductibles or self-insured retentions, and any modifications thereof, must be declared to and approved by the Risk Manager of the City of Redding.

10.4 Other Insurance Provisions. The general liability policy is to contain, or be endorsed to contain, the following provisions:
(a) The City, its officers, officials, employees, agents, and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on behalf of Developer; products and completed operations of the Developer; premises owned, occupied, or used by the Developer. The coverage shall contain no special limitations of the scope of protection afforded to the City, its officers, officials, employees, agents, or volunteers. (b) Developer’s insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, agents, and volunt eers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agen ts, or volunteers shall be in excess of Developer’s insurance and shall not contribute with it.
(c) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) Days prior written notice has been given to the entity. (d) All insurance policies and renewals thereof shall be in form acceptable to the City.

Developer shall promptly furnish to City copies of all renewal notices and all receipts of paid premiums. In the event of loss, Developer shall give prompt notice to the insurance carrier and City.

City may make proof of loss if not made promptly by Developer.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 20

10.5 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M.

Best's rating of no less than A: VII.

10.6 Verification of Coverage. Developer sha ll furnish the Risk Manager of the City of Redding with certificates of insurance and original endorsements effecting coverage required by this Agreement. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by the Risk Manager of the City of Redding as a condition precedent to the obligation of the City to disburse funds under this Agreement.

10.7 Failure to Maintain. If Developer fails to obtain or maintain, or cause to be obtained and maintained, any insurance required by this Agr eement, the City shall have the right to purchase the insurance and Developer shall reimburse the full costs to City of obtaining such insurance.

11. PROHIBITIONS AGAINST ASSI GNMENT AND TRANSFER.

11.1 Prohibition against Transfer of Rights or Obligations. City has entered into this Agreement in reliance upon the identity and qualifications of the Developer. Developer may not assign or otherwise transfer Developer’s rights or obligations under this Agreement without the prior written consent of City.

11.2 Prohibition against Transfer of Interest. Developer represent that it is informed, and Developer shall inform any successors in interest, of the provisions of this Section 11. Subject to restriction of federal and state securities regulation and prior to issuance of a Certificate of Completion, Developer shall not permit transfers of ownership which would result in a change in management authority or fiscal ability with respect to Developer or , with respect to any of the parties in control of the Developer, by any method or means, incl uding, but not limited to sale, transfer, increased capitalization, merger with another corporation, corporate or other amendments, or otherwise. With respect to this provision, the Developer represents that it has the authority to agree to and bind Developer to this provision.

11.3 Transfer or Assignment.

11.3.1 Transfer or Assignment of Interests, Rights, or Obligations in the Agreement.

Except as required to obtain the financing approved by City, Developer shall not, prior to the issuance of the Certificate of Completion, make any total or partial sale, assignment or transfer of any interest in the Agreement without the prior written approval of the City.

11.3.2 Transfer or Assignment of Interests in the Property. Except as required to obtain the financing approved by the City, Developer shall not, prior to the issuance of the Certificate of Completion, make any total or partial sale, assignment or transfer of any interest in the Property without the prior written approval of the City.

11.3.3 One-Time Assignment to Controlled Entity. Notwithstanding the foregoing, the City Manager or designee, is hereby authorized to approve, in writing, a one-time assignment by Developer of all of its rights and obligations under the Agreement, and all of its interest in the Property, to a limited partnership of which Developer, or its wholly controlled affiliate, is a general partner, and which shall acquire the Property from the Developer. Such transfer shall be subject to Developer’s compliance with the requirements of this Agreement.

11.3.4 Conditions of Approval. With exception of the assignment described in Section 11.3.3 hereof, City shall be entitled to requi re the following as conditions to any approval of Packet Pg. 550
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 21

any assignment or transfer of any interest in the Property, the Agreement, or the Developer:
(a) Qualifications and Financial Responsibility. Any proposed transferee shall have the qualifications and financial responsibility, as determined by City, necessary and adequate to fulfill Developer’s obligations under the Agreement (or, in the event of transfer of a part of the Property, such obligations to the extent that they relate to such part). (b) Assumption of Obligations. Any proposed transferee shall, for itself and its successors and assigns, expressly assume all of Developer’s obligations under this Agreement and shall agree to be subject to all the conditions and restrictions to which Developer is subject (or, in the event the transfer is of or relates to part of the Property, such obligations, conditions and restrictions to the extent that they relate to such part). Sa id assumption of obligations shall be in writing in recordable form approved by City and shall expressly be for the benefit of City. The fact that any such transferee shall not have assumed such obligations or so agreed, shall not relieve such transferee from such obligations, conditions, or restrictions, or depriv e the City of any rights or remedies or controls with respect to all or any part of the Property or this Agreement that the City would have had, had there been no such transfer or change.
(c) Review of Documents. Developer shall submit to the City for review all legal documents involved in effecting such transfer. Such documents shall be subject to City’s prior written approval.
(d) Limits on Consideration. Prior to issuance of the Certificate of Completion, the consideration payable for the transfer by such transferee of any interest in the Property or the Agreement shall not exceed the actual costs incurred for the Project, if any, actually made. It is the intent of this provision to preclude assignment of the Agreement or transfer of the Property for profit prior to the completion of the Project.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 22

(2) Notice and Cure Rights. The City hereby agrees that any cure of any default made or tendered by a Limited Partner shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer. Copies of all notices which are sent to Developer under the terms of the Loan Documents shall also be sent to each Limited Partner at an address to be provided to City in writing by said Limited Partner. (3) Extended Use Agreement. The City acknowledges that Developer and the California Tax Credit Allocation Committee (CTCAC) intend to enter into an extended use agreement, which constitutes the ex tended low-income housing commitment described in Section 42(h)(6)(B) of the Internal Revenue Code (IRC), as amended. As of the date hereof, IRC Section 42(h) (6) (E) (ii) does not permit the eviction or termination of tenancy (other than for good cause) of an existing tenant of any low-income unit or any increase in the gross rent with respect to such unit not otherwise permitted under Section 42 for a period of three (3) years after the date the building is acquired by foreclosure or instrument in lieu of foreclosure. In the event the extended use agreement required by CTCAC is recorded against th e Property, the City agrees to comply with the provisions set forth in IRC Section 42(h) (6) (E) (ii). (4) Assignment of Limited Partner Interests. The interests of Developer's limited partner shall be transferable to any entity that is directly or indirectly owned or managed by Raymond James Affordable Housing Investments, Inc., without the consent of the City.

11.4 Developer Obligations Not Relieved. In the absence of specific written agreement by the City to the contrary, no such transfer or approval of transfer by the City shall relieve the Developer or any other party bound in any way by the Agreement, from any of its obligations under the Agreement.

12. FINANCING DEFAULTS.

12.1 Lender’s Option to Cure Defaults. After any default of Developer’s obligations under the Agreement, each Lender (or successor to Lender) shall have the right, at its option, to cure or remedy such default (or to the extent that it relates to the part of the Property covered by its lien), within the time for cure allowed to Developer as stated in Section 13.1, and to add the cost of such cure to the debt and the lien secured by the Property. If the breach or default relates to construction of the Project, however, Lender shall not undertake or continue the construction of the Project (beyond the extent necessary to conserve or protect Project or construction already made) unless Lender assumes in writing Developer’s obligations to complete the Project on the Property in the manner provided in the Agreement. Any Lender (or successor to Lender) who properly completes the Project as provided in the Agreement shall be entitled, upon written request made to the City, to receive a Certificate of Completion from the City in a manne r provided in the Agreement. Such certification shall mean that any remedies or rights with respect to vesting of title to the Property that the City may have because of Developer’s failure to cure any default with respect to the construction of the Project on other parts of the Property, or because of any other default of the Agreement by the Developer shall not apply to the part of the Property to which such certification relates.

12.2 City’s Option to Pay Debt or Purchase Property. If, after Developer’s default under the Agreement and after sixty (60) Days prior written notice from the City, the Lender fails to exercise its option to construct the Project or undertakes, but does not diligently prosecute to completion, construction of the Project, City shall have the option, exercisable only by written notice to Lender within ten (10) Days after expiration of the sixty (60) Day period, to do one of the following:

12.2.1 Pay Debt. City shall be entitled, at its option, to pay to the Lender the amount of the secured debt and acquire or terminate Lender’s secured position.

12.2.2 Deed in Lieu. If title to the Propert y has vested in Lender by way of a deed in Packet Pg. 552
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 23

lieu of foreclosure, City shall be entitled, at its opt ion within sixty (60) Days from notice to City of Lender’s acceptance of such a deed, to a conveyance to it of the Property upon payment to Lender of an amount equal to the sum of the following:
(a) The secured debt at the time of the deed in lieu of foreclosure (less application of rentals and other income received during foreclosure proceedings).

(b) All expenses with respect to the deed in lieu of foreclosure.

12.2.3 Foreclosure. City shall have the right to bid at any foreclosure sale held by or for any Lender on the Property.

12.2.4 Eminent Domain. Nothing in this Agreement shall limit any exercise of City’s power of eminent domain over the Property.

12.3 City’s Option to Cure Loan Default. In the event of a default prior to the completion of the Project by the Developer, or any successor in interest to Developer by reason of any of its obligations under any mortgage or other instrument creating an encumbrance or lien upon the Property, the City may at its option cure such default or breach following the expiration of any applicable cure period (or sooner upon notice to Developer), in which case the City shall be entitled, in addition to any of its other rights or remedies, to reimbursement from the Developer of all costs and expenses incurred by the City in curing such default and to a lien upon the Property for such reimbursement, provided that any such lien shall be subject always to the lien of any existing liens on the Property authorized by this Agreement including, but not limited to, any construction financing.

12.4 Lender and Property. For the purposes of the Agreement, the term “Lender” shall include all holders of any lien or encumbrance as security for a loan made to the Developer on all or any part of the Property and references to the Property shall mean that portion of the Property so encumbered.

13. DEFAULTS AND REMEDIES.

The provisions of this Section 13 are in addition to any provisions in the City Loan Deed of Trust regarding default and remedies. Subject to any extension of time permitted by this Agreement, a failure or delay by a party to perform any term or provision of this Agreement constitutes a default of this Agreement.

13.1 Cure. Except as otherwise provided in this Agreement, if either party shall default in, or breach, this Agreement, such party shall cure such default or breach within thirty (30) Days after receipt of such written notice from the other party of such default or breach or, if such default or breach cannot be cured within such thirty (30) day period the defaulting party shall commence cure of such default or breach within thirty (30) days of r ecent notice from the other party and diligently pursue cure until its completion. If the defaulting party does not cure or demonstrate to the reasonable satisfaction of the other party that it has acted and continues to act promptly and diligently to cure the default within such time, the aggrieved party may declare an “Event of Default” and institute proceedings to cure and remedy such default or breach, including, but not limited to, proceedings to compel specific performance by the party in default. While neither party is relieved of any obligation under this Agreement to give notice, mere failure to notify the other party shall not be deemed a waiver of the defaulting party’s default. Notwithstanding anything to the contrary contained herein, City shall Packet Pg. 553
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 24

provide a copy of any notice delivered pursuant to this Section 13.1 to Developer’s limited partner and shall accept cure from such limited partner on the same terms as though such cure was tendered by the Developer.

13.2 Termination Prior to Completion of Construction.

13.2.1 Termination by City. If, prior to completion of construction of the Project by Developer and without City approval, Developer assigns any interest in the Agreement or the Property (other than as permitted in this Agreement), permits a change in the ownership or control in Developer in violation of this Agreement, or fails to perform any obligation under the Agreement, then City may elect to declare an Event of Default and terminate, subject to the applicable notice and cure periods provided in Section 13.1. In such event, the City reserves all remedies for any damages incurred.

13.2.2 Termination by Developer. If, prior to completion of construction of the Project by Developer, City fails to perform any obligation under the Agreement, then Developer may elect to declare an Event of Default and terminate, subject to the cure period provided in Section 13.1.

In such event, Developer reserves all remedies for specific performance and/or any damages incurred.

In no event shall the failure by the City to approve the Project or any Project Plans for the Project be deemed a default by the City.

13.3 Other Rights and Remedies of City. City shall have the right to institute such actions or proceedings as it may deem desirable to carry out the purposes of this Section 13, including the right to record in the public land records a written declar ation of the termination of all the rights of the Developer in the Property provided by this Agreement.

13.4 No Waiving by Delay. Any delay by a party in asserting any rights under this Section 13 shall not operate as a waiver of such rights or to deprive such party of, or limit, such rights in any way. Any waiver in fact made by a party with respect to any specific default shall not be considered as a waiver of the rights of such party with respect to any other defaults or with respect to the particular default except to the extent specifically waived in writing.

13.5 Delay for Causes beyond Control of Part y. For the purposes of any of the provisions of the Agreement, neither City nor Developer shall be considered in breach of, or default in, its obligations with respect to the Property or the Project, or the beginning, prosecution and completion of construction of the Project, if delay in the performance of such obligations is due to causes beyond the delayed party’s control and without its fault or negligence including, but not limited to, acts of God, acts of a public enemy, acts of any federal, state or local governmental body or City, delays in availability, procurements or delivery of adequate materials, equipment, supplies or personnel which are outside the control of Developer, acts of the other parties, fires, floods, epidemics, discovery of protected species or historical artifacts upon th e Property, discovery of pre-existing hazardous materials, quarantine restrictions, strikes, freight embargoes, a general moratorium on financing for projects of the same type, and unusually severe weather (as for example, floods, tornadoes, or hurricanes) or delays of subcontractors due to such causes. In the event of the occurrence of any such enforced delay, the time or times for performance of such obligations of the City and Developer shall be extended for the period of the enforced delay, provided that the party seeking the benefit of the provisions of this Section shall, within thirty ( 30) Days after the party has or should have knowledge of any such enforced delay, have first notified the other party, in writing, of the delay and its cause, and requested an extension for the period of the enforced delay. In no event, however, shall any period of enforced delay exceed ninety (90) Days if the party claiming enforced delay has not demonstrated, to the reasonable satisfaction of the other party, that it has acted and continues to act promptly and diligently, to the extent reasonably possible, to terminate such enforced delay.

Packet Pg. 554
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 25

13.6 Rights and Remedies Cumulative. The rights and remedies of the parties to the Agreement shall be cumulative, and the exercise by either party of any one or more of such remedies shall not preclude the exercise by it, at the same or different times, of any other such remedies for the same default or breach or of any of its remedies for any other default or breach by the other party.

Further, the remedies set forth in the City’s Deed of Trust shall not be construed as being limited by the terms and conditions set forth in this Agreement and shall be available to the City without restriction. No waiver made by either such party with respect to the performance of any obligation of the other parties or any condition to its own obligation under the Agreement shall be considered a waiver of any rights beyond those expressly waived in writing.

14. GENERAL PROVISIONS.

14.1 Time for Actions. City and Developer shall each do the actions required of them, on or before the times specified in this Agreement. Unless otherwise provided, City shall give required approvals or disapprovals within fourteen (14) Days after submission, except matters which must be decided by the Redding City Council, which shall be decided within forty-five (45) Days.

14.2 Counterparts. This Agreement may be executed in two (2) counterpart originals, each of which shall constitute one and the same instrument.

14.3 Priority of Contents of Agreement. In the event of a conflict between the terms of this Agreement and the Exhibits, this Agreement shall be given precedence.

14.4 Inspection of Books and Records. City has the right, at all reasonable times and upon reasonable notice, to inspect the books and records of the Developer pertaining to the Project as necessary to assure compliance with the provisions of this Agreement. Developer shall keep such books and records as City may reasonably require to assure Developer’s performance of its obligations under this Agreement.

14.5 Fees, Commissions, Gifts or Interests. Neith er party shall be liable for any real estate commissions, brokerage fees or finder’s fees wh ich may arise through the other party from this Agreement. City and Developer each represent that neither has engaged any broker, agent or finder, and that neither claims such a commission or fee, in connection with this Agreement. Developer shall pay no fee or commission, make no gifts and provide no interest in the City Loans to any employee or official of the City.

14.6 Entire Agreement. This Agreement, including all of the exhibits and attachments, integrates all of the terms and conditions related or incidental to its subject matter, and supersedes all negotiations or previous agreements between the parties with respect to its subject matter.

14.7 Waivers and Amendments. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the City or the Developer, and all amendments hereto must be in writing and signed by the appropriate authorities of the City and the Developer. Such amendments will not invalidate this DA. Amendmen ts stipulated within this Agreement that are considered minor, that do not result in a substantial or functional change to the original intent of the Agreement, or that do not qualify as substantial amendments as written in 5.4.2 shall be deemed “minor amendments” and may be agreed to in writing between Developer and the City Manager or designee without requiring approval of the City Council.

14.8 Non-liability of City Officials and Employ ees. No member, official or employee of the City shall be personally liable to the Developer or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer or its Packet Pg. 555
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 26

successors, or on any obligations under the terms of this Agreement.

14.9 Notices and Demands. Any notice, demand or other communication under the Agreement by either party to the other shall be deemed to have been full and properly given when made in writing, enclosed in a sealed envelope, and deposited in the United States Post Office, certified mail, postage prepaid, to the addresses for City and Developer stated in Sections 1.6 and 1.21, respectively, or delivered by email to the email a ddress listed for the City and Developer in Sections

1.6 and 1.21, respectively.

14.10 Jurisdiction, Venue and Attorneys’ Fees.

14.10.1 Jurisdiction and Venue. Any legal action(s) concerning the Agreement or the performance of any party thereunder shall be brought only in the court of appropriate jurisdiction in the County of Shasta. The Developer and the City agree that jurisdiction and venue shall only be in said courts.

14.10.2 Attorneys’ Fees. In the event any legal action, including arbitration, is brought by either party to this Agreement to enforce this Agreement or for breach of this Agreement or for a declaration of the rights and duties under this Agreement, the prevailing party shall recover costs and reasonable attorney’s fees in addition to any other relief to which that party may be entitled.

14.10.3 No Party Deemed Drafter. In the event of a dispute between the parties hereto over the meaning of this Agreement, no party shall be deemed to have been the drafter hereof, and the principle of law that contracts are construed against the drafter does not apply.

15. Special CDBG Administrative Requirements

15.1 Financial Management

15.1.1 Accounting Standards. Develope r agrees to comply with 24 CFR 84.21-28 and agrees to adhere to the accounting principles and procedures required therein, utilize adequate internal controls, and maintain necessary source documentation for all costs incurred.

15.1.2 Cost Principles. Developer sha ll expend City funds and administer its Project in conformance with OMB Circulars A-122, “Cost Principles for Non-Profits Organizations,” or A-21, “Cost Principles for E ducational Institutions,” as applicable. These principles shall be applied for all costs incurred whether charged on a direct or indirect basis.

15.2 Documentation and Record Keeping

15.2.1 Records to be Maintained. Develope r shall maintain all records required by the regulations specified in 24 CFR 570.506 that are pertinent to th e activities to be funds under this DA. Such records shall include, but not be limited to:

Records providing a full de scription of each activity undertaken; a. Records demonstrating that each ac tivity undertaken meets one of the National objectives of the CDBG program;
b. Records required to determine the eligibility of activities; c. Records required to document the acquisition, improvement, or use or disposition of real property acquired or improved with CDBG assistance; Packet Pg. 556
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

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d. Records documenting compliance with the fair housing and equal opportunity components of the CDBG program;
e. Financial records as required by 24 CFR 570.502, and 24 CFR 84.21-28; and f. Other records necessary to document compliance with Subpart K of 24 CFR Part 570.

15.2.2 Retention. Developer shall reta in all financial records, supporting documents, statistical records, and all other records pertinent to this DA for a period of five years beyond the affordability period. The retention peri od begins on the date of the submission of City’s annual performance and evaluation report to HUD in which the activities assisted under this DA are reported on for the final time. Notwithsta nding the above, if there is litigation, claims, audits, negotiations or other acti ons that involve any of the reco rds cited and that have started before the expiration of the five-year period, then such records must be retained until completion of the actions and resolution of all issues, or the expi ration of the five-year period, whichever occurs later.

15.3 Client Data. If required, Developer shall maintain client data demonstrating client eligibility for services provided. Such data sh all include, but not be limited to, client name, address, income level or other basis for determining eligibility, and description of service provided.

Such information shall be made available to C ity monitors or their designees for review upon request. Developer shall also take appropriate measures to maintain confidentiality of client information.

15.4 Disclosure. Recognizing that Devel oper may from time to time render services to recipients, which are highly personal and confid ential in nature, City shall only disclose such information as required by law.

15.5 Close-Outs. Developer’s obligation to City pursuant to th is DA shall not end until all close-out requirements are completed. Activities during this close-out period shall include, but are not limited to: making final payments, disposing of program assets (including the return of all unused materials, equipment, unspe nt cash advances, program income balances, and accounts receivable to City), and determining the custodianship of records. Notwithstanding the foregoing, the terms of this DA shall remain in effect during any period that Developer has control over CDBG funds, including program income or re mains liable for payment to City under the Deed of Trust.

15.6 Audits and Inspections. All Developer re cords with respect to any matters covered by this DA shall be made available to City, state, and/or federal authoriti es or any authorized representatives, at any time during normal business hours, as often as deemed necessary, to audit, examine, and make excerpts or transcripts of a ll relevant data. Any deficiencies noted in audit/monitoring reports must be fully cleared by Developer within 30 days after receipt of notice of deficiency or deficiencies by Developer. Failure of Devel oper to comply with the above audit/monitoring requirements will constitute a violation of this DA and may result in the withholding of future payments. Developer agrees to comply and provide requested information from third-party auditors conducting financial audits of City of Redding.

15.7 Reporting and Funding Availability City shall pay to Developer funds available under this DA based upon information submitted by the Developer and consistent with any approved budget and City policy concerning payments . With the exception of certain advances, payments will be made for eligible expenses actually incurred by Developer, and not to exceed Packet Pg. 557
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 28

actual cash requirements. In addition, City reserves the right to liquidate funds available to Developer under this DA for costs incurred by City on behalf of Developer insofar as those costs incurred on behalf of Developer relate to the obligations of Developer under this DA.

15.8 Procurement and Subcontracts

15.8.1 OMB Standards. Unless speci fied otherwise with this DA, Developer shall procure all materials, property, or servi ces in accordance with the requirements of 24 CFR

84.40-48.

15.9 Subcontracts

15.9.1 Monitoring. Developer shall mon itor all subcontracted services on a regular basis to assure compliance with this DA. The City shall be notified immediately if the subcontractee is found to be out of compliance with any aspect of the agreement.

15.9.2 Content. Developer shall require any contractor or subcontractor to comply with certain requirements included but not limited to procurement standards, Equal Employment Opportunity clauses, Fair Housi ng Laws, Labor Standards and MBE/WBE. These requirements will be more fully detailed in any subsequent bidding documents.

15.9.3 Selection Process. Developer shall undertake to ensure that all subcontracts let in the performance of this DA shall be awarded on a fair and open competition basis in accordance with applicable procurement requirements contained in this DA. Executed copies of all subcontracts shall be forwarded to City along with docum entation concerning the selection process.

15.10 Use and Reversion of Assets. The us e and disposition of real property and equipment under this DA shall be in compliance with the requirement of 24 CFR Part 84 and 24 CFR 570.502, 570.503, and 570.504, as applicable, whic h include but are not limited to the following:

15.10.1 Developer shall tr ansfer to City any CD BG funds on hand and any accounts receivable attributable to the use of funds under this DA at the time of expiration, cancellation, or termination.

15.10.2 Developer shall ensure that any real property that was acquired or improved in whole or part with CDBG funds in excess of $25,000 is either: Used to meet one of the CDBG national objectives pursuant to 24 CFR §507.208 until five years after expiration of this DA, or such longer period of time as determined to be appropriate by C ity; or if not used in accordance with this DA Developer shall pay to C ity an amount equal to the current fair market value of the property less any portion of the value attributable to expenditures of non-CDBG funds for acquisition of, or improvement to, the property. Such payment shall constitute program income to City. In all cases in which equipment acquired, in whole or in part, with funds under this DA is sold, proceeds shall be program income prorated to reflect the extent that funds received under this DA were used to acquire the equipment). Equipment acquired with funds under this DA that is not needed by the Developer for act ivities under this DA shall be 1) transferred to City for the CDBG program; or 2) retained after compensating City (an amount equal to the current fair market value of the equipment less the percentage of non-CDBG funds used to acquire the equipment).

Packet Pg. 558
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 29

15.11 FAIR HOUSING AND EQUAL OPPORTUNITY COMPLIANCE

15.11.1 Compliance. Developer shall comply with all state an d local civil rights ordinances, laws and regulations and with Title VI of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 104( b) and Section 109 of Title I of the Housing and Community Development Ac t (HCDA) of 1974 as amended, Section 504 of the Rehabilitation Act (RA) of 1973, the Amer icans with Disabilities Act of 1990, the Age Discrimination Act of 1975, Executive Order 11063, and Executive Order 11246 (as amended by Executive Orders 11375, 11478, 12107 and 12086).

It is the intent of the City that services funded under this DA are provided in a manner that encourages participation by all pe rsons regardless of age, race, co lor, religion, sex, disability, familial status, national origin, veteran status, or English language proficiency.

15.11.2 Non-Discrimination (HCDA Section 109). Developer shall comply with the non- discrimination in employment and contracting opportunities laws, regul ations, and executive orders referenced in 24 CFR 570.607, as revised by Executive Order 13279. The applicable non- discrimination provisions in Section 109 of the Housing and Community Development Act (HCDA) of 1974 are still applicable. Pursuant to Section 109, the Developer must provide services in a manner which will not cause discrimination on the basis of race, color, religion, sex, disability, familial status, or national origin. Segregated facilities, services, or benefits and different treatment are prohibited.

15.11.3 Non-Discrimination Noticing. Pursuant to Section 504 of the Rehabilitation Act (RA) of 1973 (29 U.S.C. 794), the Developer shall include a non-discrimination notice in informational, advertising, and marketing materials. This clause applies if the Developer has 15 or more employees.

15.12 Accessibility (RA Section 504). Deve loper shall comply with all federal regulations issued pursuant to compliance with Section 504 of the Rehabilitation Act (RA) of 1973 (29 U.S.C. 794), which prohibits discrimination against individuals with disabilities or handicaps in any federally assisted program. City shall furnish Developer with any guidelines necessary for compliance with that portion of the regulations in force during the term of this DA.

15.12.1 Program Accessibility. Pursuant to Section 504, the Developer shall be receptive to requests and needs of disabled pers on(s) within the community when determining which auxiliary aids or services are necessary pa rticularly for service recipients that may be hearing impaired, mobility impaired, developmen tally disabled, or vision impaired; and those persons requiring in-home care or institutional care.

15.12.2 Facilities Accessibility. Pursuant to Section 504, Developer shall ensure that the location in which the services are provided is readil y accessible and usable by persons with disabilities or persons with physical handica ps. Providing separate or different programs is illegal unless necessary to achieve equal opportunity.

15.13 Affirmative Action and Employment Provi sions. The Developer shall ensure that employment opportunities may not be denied on the basis of race, color, national origin, sex, age, religion, familial status, or disability. Developer agrees that it shall be committed to carry out pursuant to City’s specifications an Affirmative Action Plan in keeping with the principles as provided in President’s Execu tive Order 11246 of September 24, 1996. City shall provide Packet Pg. 559
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 30

Affirmative Action guidelines to Developer to a ssist in the formulation of such program.

Developer shall submit a plan for an Affirmative Action Program for approval prior to the award of funds.

15.13.1 Prohibited Activity. Developer is prohibited from using funds furnished herein or personnel employed in the administra tion of the program for: political activities, inherently religious activities, lobbying, political patronage, and nepotism activities.

15.13.2 Labor Standards. Developer shall comply with the requirements of the Secretary of Labor in accordance with the Davis-Bacon Act as amended, the provisions of Contract Work Hours and Safety Standards Act (40 U.S.C. 327 et seq.) and all other applicable Federal, state and local laws and regulations pertaining to labor standards insofar as those acts apply to the performance of this DA. Developer shall comp ly with the Copeland An ti-Kick Back Act (18 U.S.C. §874 et seq.) and the implementing regulations of the U.S. Department of Labor at 29 CFR Part 5. Developer shall maintain documentation that demonstrates compliance with hour and wage requirements of this part. Such documentation sh all be made available to City for review upon request.

Developer shall, except with respect to the rehabilitation or construction of residential property contai ning less than eight units, ensure that all contractors engaged under contracts in excess of $2,000.00 for c onstruction, renovation or repair work financed in whole or in part with assistance provided under this DA, comply with federal requirements adopted by City pertaining to such contracts and with the appl icable requirements of the regulations of the Department of Labor, under 29 CFR Parts 1, 3, 5 and 7 governing the payment of wages and ratio of apprentices and trainees to journey workers; provided that, if wage ra tes higher than those required under the regulations are imposed by state or local law, nothing hereunder is intended to relieve Developer of its obligation, if any, to require payment of the higher wage. Developer shall cause or require to be inserted in full, in al l contracts subject to su ch regulations, provisions meeting the requirements of this paragraph.

15.13.3 Notification. Developer shall send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice, to be provided by City ’s contracting officer, advising the labor union or worker’s representative of Developer’s commitments here under, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

15.13.4 Equal Opportunity and Affirm ative Action Statement (EEO/AA).

Developer shall, in all solicitati ons or advertisements for empl oyees placed by or on behalf of Developer, state that it is an Equal Opportunity or Affirmative Action employer.

15.14 Contracts and Subcontracts. With rega rd to subcontract agreements as approved by the City, the Developer shall ensure compliance with all state and local civil rights ordinances, laws and regulations and with Title VI of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 104(b) and Section 109 of Title I of the Housing and Community Development Act (HCDA) of 1974 as amended, Section 504 of the Rehabilitation Act (RA) of 1973, the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, Executive Order 11063, and Executive Orde r 11246 (as amended by Executive Orders 11375, 11478, 12107 and 12086).

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 31

15.14.1 Women- and Minority-Owned Busine sses (W/MBE). Developer shall use its best efforts to afford small businesses, mi nority business enterprise s, and women’s business enterprises the maximum practicable opportunity to participate in the performance of this DA. As used in this DA, the terms “small business” means a business that meets the criteria set forth in section 3(a) of the Small Business Act, as amended (15 U.S.C. 632), and “minority and women’s business enterprise” means a business at least 51 percent owned and controlled by minority group members or women. For the purpose of this definition, “minority group members” are Afro- Americans, Spanish-speaking, Spanish surnamed or Spanish-heritage Americans, Asian- Americans, and American Indians. Developer may rely on written representations by businesses regarding their status as minority and female business enterprise s in lieu of an independent investigation.

15.14.2 Access to Records. Developer shal l furnish and cause each of its own sub recipients or subcontractors to furnish all info rmation and reports requ ired hereunder and shall permit access to its books, records and accounts by C ity, HUD or its agent, or other authorized federal officials for purposes of investigation to ascertain compliance with the rules, regulations and provisions stated herein.

15.14.3 Subcontract Provisions. Developer shall include the provisions related to Non-Discrimination, Accessibility, Affirmative Action and Employment Provisions, and Minority and Women-Owned Businesses, Access to Records, and “Section 3” Clause contained within this DA in every subcontract or purchase order, specifica lly or by reference, so that such provisions will be binding upon each of its sub recipients or subcontractors.

15.15 Section 3 Clause. Section 3 of the Housing and Urban Development Act of 1968, as amended requires the provision of opportunities for training and employment that arise through HUD-financed projects to lower-in come residents of the project ar ea. It is also required that contracts be awarded to busine sses that provide economic opportuni ties for low- and very low- income persons residing in the area.

15.15.1 Compliance. Compliance with the provisions of Section 3 of the HUD Act of 1968, as amended, and as implemented by the regulations set forth in 24 CFR 135, and all applicable rules and orders issued hereunder prior to the execution of this DA, shall be a condition of the federal financial assistance provided under this DA and binding upon City, Developer and any of Developer’s sub recipients and subcontractors. Failure to fulfill these requirements shall subject City, Developer and any of Developer’s sub recipients and subcontractors, their successors and assigns, to those sanctions specified by the DA through which federal assistance is provided.

Developer certifies and agrees th at no contractual or other disabi lity exists that would prevent compliance with these requirements.

Developer shall comply with thes e “Section 3" requirements and include the following Language in all subcontracts executed under this DA:

“The work to be performed under th is DA is a project assisted under a program providing direct federal financial assistance from HUD and is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701).

Section 3 requires that to the greatest extent feasible, opportunities for training and employment be given to low- and very low-income residents of the project area, and that contracts for work in connection with the project be awarded to business concerns that provide economic opportunities Packet Pg. 561
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Kennett Court Senior Apartments, LP Page | 32

for low- and very low-income persons residing in the metropolitan area in which the project is located.”
Developer certifies and agrees that no contractual or other legal incapacity exists that would prevent compliance with these requirements.

15.15.2 Subcontracts. Developer shall include this Section 3 clause in every subcontract and shall take appropriate action pursuant to the subcontract upon a finding that the subcontractor is in violation of applicable regulations. Developer shall not subcontract with any entity where it has notice or knowledge that the latter has been found in violation of regulations under 24 CFR Part 135 and shall not let any subcontract unless the entity has first provided it with a preliminary statement of ability to comply with the requirements of the applicable regulations.

15.16 General Compliance. Developer agrees to comply with the requirements of Title 24 of the Code of Federal Regulations, Part 570 (the U.S. Housing and Urban Development regulations concerning Community Development Block Grants) including subpart K of those regulations, except that (1) De veloper does not assume th e recipient’s environmental responsibilities described in 24 CFR 570.604 and (2) Developer does not assume the recipient’s responsibility for initiating the review process under the provisions of 24 CFR Part 52. Developer also agrees to comply with all other applicable Federal, state and loca l laws, regulations, and policies governing the funds provide d under this DA. Developer furt her agrees to utilize funds available under this DA to supplement rather than supplant funds otherwise available.

15.17 Independent Contractor. Nothing contained in this DA is intended to, or shall be construed in any manner, as creating or estab lishing the relationship of employer/employee between the parties. Developer shall at all times remain an “independent contractor” with respect to the services to be performed under this DA . City shall be exempt from payment of all Unemployment Compensation, FICA , retirement, life and/or me dical insurance and Worker’s Compensation Insurance, as Developer is an independent contractor.

15.18 Recognition. Developer shall insure rec ognition of the role of City in providing services through this DA. All activities, facilities, and items utilized pursuant to this DA shall be prominently labeled as to funding source. In a ddition, the Developer will include a reference to the support provided herein in all publications made possible with funds made available under this DA.

15.19 RESERVED

15.20 Assignability. Except for Permitted Tran sfers, pursuant to Sections 11.3.4(f) and (g) hereof, Developer shall not assign or transfer any interest in this DA without the prior written consent of City thereto; provide d, however, that claims for mone y due or to become due to Developer from City under this DA may be assigne d to a bank, trust company, or other financial institution without such approval. Notice of any such assignment or transfer shall be furnished promptly to City.

15.21 Hatch Act. Developer agrees that no funds provided, nor personnel employed under this DA, shall be in any way or to any ex tent engaged in the conduc t of political activities in violation of Chapter 15 of Title V of the U.S.C.

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Development Agreement Between
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15.22 Conflict of Interest. Developer shall abide by the provisions of 24 CFR 84.42 and 570.611, which include (but are not limited to) the following:

Developer shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by federal funds.

No employee, officer or agent of Developer shall participate in the selection, or in the award, or administration of, a contract supported by federal funds if a conflict of interest, real or apparent, would be involved.

No covered persons who exercise or have exercised any functions or responsibilities with respect to CDBG-assisted activities, or who are in a position to particip ate in a decision-making process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, subcontract, or agreement with respect to the CDBG-assisted activity, or with respect to the proceeds from the CDBG-assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one year thereafter. For purposes of this paragraph, a “covered person” includes any person who is an employee, agent, consultant, officer, or elected or appointed official of City, Developer, or any designated public agency.

15.23 Lobbying. Developer shall execute th e Anti-Lobbying Certification (Exhibit 13), attached and incorporated herein.

15.24 Copyright. If this DA results in any c opyrightable material or inventions, City and/or grantor agency reserves the right to royalty-free, nonexclu sive and irrevocab le license to reproduce, publish or otherwise use and to authorize others to us e, the work or materials for governmental use.

15.25 Religious Activities. Developer agrees that funds provided under this DA will not be utilized for inherently reli gious activities prohibited by 24 CFR 570.200(j), such as worship, religious instruction, or proselytization.

15.26 Travel. Developer shall obtain written a pproval from City for any travel outside the County of Shasta with funds provided under this DA, if applicable.

15.27 Suspension or Termination. In accord ance with 24 CFR 85.43, City may suspend or terminate this DA if Developer materially fails to comply with any terms of this DA after the expiration of applicable notice and cure periods hereunder, which include (but are not limited to), the following:

Failure to comply with any of the rules, regu lations or provisions referred to herein, or such statutes, regulations, executive orders, and HUD guidelines, policies or directives as may become applicable at any time after expiration of applicable notice and cure periods;

Failure, for any reason, of Developer to fulfill in a timely and proper manner its obligations under this DA after the expiration of applicable notice and cure periods;

Ineffective or improper use of funds provided under this DA; or

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Development Agreement Between
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Submission by Developer to City of reports required under this DA that are incorrect or incomplete in any material respect.

This DA may also be terminated for convenience pursuant to 24 CFR 85.44.

In the event that City fails to receive CDBG funds, due to the actions or inactions of the Developer, or the allocation of such funds is reduced by HUD, City may reduce the amount of the City loan to equal the amount funded by HCD or, in the event that the amount of CDBG funds are reduced to an amount that makes the Project in feasible, terminate this DA by giving notice to Developer by registered mail.

Upon termination, Developer shall transfer to City the balance of any CDBG funds on hand at the time of termination and any accounts receivable attributable to the use of CDBG funds.

15.28 Severability. If any provision of this DA is held invalid, the remainder of this DA shall not be affected thereby and all other parts of this DA shall nevertheless be in full force and effect.

15.29 Section Headings and Subheadings. The section headings and subheadings contained in this DA are included for convenience only and shall not limit or otherwise affect the terms of this DA.

15.30 Waiver. City’s failure to act with respect to a breach by Developer does not waive its right to act with respect to subsequent or sim ilar breaches. The failure of City to exercise or enforce any right or provision shall not constitute a waiver of such right or provision.

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Development Agreement Between
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LIST OF EXHIBITS

EXHIBIT 1A: Property Legal Description
EXHIBIT 1B: Parcel Map
EXHIBIT 2: Promissory Note Secured By Deed of Trust
EXHIBIT 3: Deed of Trust
EXHIBIT 4A: Draft Regulatory Agreement
EXHIBIT 4B: Draft Rider to Development Agreement
EXHIBIT 5: Scope of Development
EXHIBIT 6: Preliminary Project Budget
EXHIBIT 7: Schedule of Performance
EXHIBIT 8: Form of Notice of Completion
EXHIBIT 9: Form of Certificate of Completion
EXHIBIT 10: Fair Housing Poster
EXHIBIT 11: Estoppel Certificate
EXHIBIT 12: Reserved
EXHIBIT 13: Anti-Lobbying Certificate

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 1A

LEGAL DESCRIPTION

The land described herein is situated in the State of California, County of Shasta, City of Redding, described as follows:

APN: 114-070-006-000

RESULTANT PARCEL 2

The land described herein is situated in the Southwest One-Quarter of Section 14, Township 32 North, Range 5 West, M.D.M. in the City of Redding, County of Shasta, State of California described as follows:

Being a portion of all that real property as described in that Grant Deed to AOK Properties, LLC, a California Limited Liability Company recorded Decemb er 9, 2019 in Instrument Number 2019-0037939, Shasta County records and being a portion of Parcel 2 as described in that Corr ective Grant Deed to The City of Redding as Successor Housing Agency of th e Redding Redevelopment Agency to recorded September 25, 2019 in Instrument Number 2019-0028214, Shasta County records, lying Northerly and Easterly of the following described line:

Commencing at the most Northeasterly corner of Pa rcel 1 as shown on that Record of Survey for ADK Properties LLC filed July 21, 2020 in Book 59 of Land Surveys at Page 148, Shasta County records thence on and along Northerly line of said Parcel 1 North 75° 24' 00" West 156.54 feet;

Thence North 81° 17' 02West 13.56 feet to the True Point of Beginning;

Thence from said Point of Beginning and leaving said Southerly line North 0° 52' 23" West 223.12 feet;

Thence South 89° 07' 37" West 142.19 feet;

Thence North 0° 52' 23" West 184.00 feet more or less to a point on the Northerly line of the lands of ADK Properties LLC, a California Limited Liability Company as described in said Instrument Number 2019- 0037939, Shasta County records, and the point of termination of said line

Containing 2 .28 acres more or less.

Book 59 of Land Surveys, Page 148, Shasta County records was used as the basis of bearings for this description.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 1B
Parcel Map APN: 114-070-006-000

Kennett Court
Senior Apartments
Kennett Court
Apartments II
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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 2

PROMISSORY NOTE SECURED BY DEED TRUST

DO NOT DESTROY THIS NOTE: When paid, this note, with Deed of Trust securing same, must be surrendered to Trustee for cancellation before reconveyance will be made.

Amount: $1,000,000 March 3, 2022
Redding, California

FOR VALUE RECEIVED, Kennett Court Senior Apartments, LP , a California limited partnership, ("Borrower"), promises to pay to the order of the City of Redding ("Holder"), the principal sum of One Million and no/100 ($1,000,000), pursuant to Section 4 below.

1. Borrower’s Obligation. This promissory note (“Note”) evidences Borrower’s obligation to pay Holder the principal amount of One Million and no/100 ($1,000,000) for the funds loaned to Borrower by Holder to assist with the development of certain real property (“Project”) pursuant to a Development Agreement between Borrower and Holder dated March ____, 2022 (“Agreement”).

2. Interest. The principal balance of this Note shall bear simple interest from the date of the promissory note until repaid in full at One (1%) per annum; provided, however, if an event of default occurs, interest on the principal balance shall begin to accrue, as of the date of the event of default and continuing until the earlier of the Loan funds being paid in full or cure of such event of default, at the default rate of the lesser of: ten percent (10%), compounded annually; or the highest rate permitted by law.

3. Term and Repayment Requirements. The term of this Note (“Term”) shall commence with the date of this Note and shall expire Fifty-five (55) years from the date of recordation of a Notice of Completion by the City, so long as there is no event of default as described in Section 4 below.

Payment of the note shall be required as follows:

The term of the note will not exceed 55 years. All principal and interest payments shall be paid to the City of Redding. No payments will be due for the first fifteen (15) years of the term. Beginning the sixteenth (16th) year following the completion of construction, no later than one hundred twenty (120) days after the end of each fiscal year during the term of the proposed City loan, Developer, Borrower or other party authorized by the Development Funding Agreement (DFA), including any successors and assigns, shall provide City with a written y ear-end cash flow analysis and audited financial statement for the project prepared by a certified public accountant. Fifty percent (50%) of any residual receipts realized from the operation of the Project as shown by the annual audit, shall be split proportionately between the City and the lenders of any other project-related loans approved by the City for which residual receipts payments are due. Any such residual receipts received by the City shall be credited as a payment on the City loan and shall be applied first to reducing the accrued interest, if any, on the loan, and subsequently, to reducing the principal. The remaining 50% of residual receipts will be available for distribution to the Borrower.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Payments are required as stated above, until the expi ration of the Term at which time all outstanding principal and accrued interest shall be due and payable.

a. All payments are payable in lawful money of the United States. b. All payments on this note shall be paid to the City of Redding at 777 Cypress Avenue, Redding, California, or to such other place as holder of this note may from time to time designate.
c. All payments on this Note shall be without expense to Holder, and Borrower agrees to pay all costs and expenses, including reconveyance fees and reasonable attorney’s fees of Holder, incurred in connection with the payment of this Note and the release of any security hereof. d. Notwithstanding any other provision of this Note, or any instrument securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment of all sums by Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that Holder may legally charge under the laws of the State of California, then the amount by which payments exceed the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no event shall Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate. e. The whole of this Note shall be nonrecourse to Borrower.

4. Default.

a. Any of the following shall constitute an event of default under this Note and are subject to the applicable notice and cure rights.

1) Any failure to pay, in full, any payment required under this Note when due. 2) Any failure in the performance by Borrower of any term, condition, provision, or covenant set forth in this Note.
3) The occurrence of any event of default under the Agreement, the Deed of Trust, or the Declaration of Affordability Restrictions, (as defined in the Agreement).

b. Upon the occurrence of such an event of default and the expiration of the applicable cure period, the entire unpaid principal balance, together with all interest thereon, and together with all sums then payable under this Note and the Deed of Trust shall at the option of Holder become immediately due and payable upon written notice by Holder to Borrower without further demand.

c. The failure to exercise the remedy set forth in subsection 4b above or any other remedy provided by law upon the occurrence of one or more of the foregoing events of default shall not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other default. The acceptance by Holder hereof of any payment which is less that the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Holder, except as and to the extent otherwise provided by law.

5. No Assumption. This Note shall not be assumable by the succes sors and assigns of Borrower without the prior written consent of Holder.

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6. Security . This Note is secured by a Deed of Trust and Security Agreement (“Deed of Trust”), of even date herewith, wherein Borrower is the Trustor and Holder is the Beneficiary, covering the Property.

7. Waivers.
a. Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of
dishonor and notice of nonpayment of this Note. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower.
b. No exten
sion of time for payment of this Note or any installment hereof made by agreement by Holder with any person now or hereafter liable for payment of this note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
c. The oblig
ations of Borrower under this Note shall be absolute and Borrower waives any and all ri
ghts to offset, deduct, or withhold any payments or charges due under this Note for any reason whatsoever.

8. Miscellan
eous Provisions.
a. Bo
rrower promises to pay all costs and expenses, including reasonable attorney’s fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement.
b. This Note m
ay not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. c. This Not
e shall be governed by and construed in accordance with the laws of the State of California.

Kennett Court Senior Apartments, LP
a California Limited Partnership
By: Community Revitalization and Development Corp.
a California nonprofit public benefit corporation. Its:

Managing General Partner
By:

David Rutledge
Its: President
By: Kennett Court Senior Apartments LLC
a California a California Limited Liability Company
Its: Administrative General Partner
By _: _______________________
Daniel Knott
Its: Manager
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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 3

RECORDING REQUESTED BY:

City of Redding

CITY BUSINESS - NO FEE
Section 6103 of the Government Code
of the State of California

AND WHEN RECORDED MAIL TO:

City of Redding – Housing Division
P.O. Box 496071
777 Cypress Avenue
Redding, CA 96049-6071

CITY OF REDDING DEED OF TRUST WITH ASSIGNMENTS OF RENTS

THIS DEED OF TRUST is made this March 3, 2022, by Kennett Court Senior Apartments, LP, a California limited liability partnership, as to equitable title, herein called “Trustor,” and/or “Borrower” whose address is 1011 Parkview Avenue, Suite A, Redding, CA 96001; Placer Title Company, herein called “Trustee,” whose address is 2145 Larkspur Lane ; and the CITY OF REDDING, a municipal corporation and general law city, whose address is P.O. Box 496071, 777 Cypress Avenue, Redding, California 96049-6071, herein called “Beneficiary” and/or the “Lender”.

WITNESSETH: That Trustor Irrevocably, Grants, Tran sfers and Assigns, to Trustee, in Trust, with Power of Sale, that property in the City of Redding (“City”), County of Shasta, State of California, described as:

EXHIBIT 1 - Legal Description
ASSESSOR’S PARCEL NUMBER: 114-070-006-000

TOGETHER WITH: (a) all buildings, improvements and fixtures, now or in the future thereon, it being understood and agreed that all classes of property attached or unattached used in connection herewith shall be deemed fixtures, (b) rents, issues and profits thereof, and (c) all sums of money payable on the purchase price of said property secured by a lien thereon or payable under any agreement for the sale thereof, SUBJECT, HOWEVER, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues, and profits, and all sums of money payable on the purchase price of said property secured by a lien thereon or payable under any agreement.

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BORROWER HEREBY expressly acknowledges and agrees that the subject loan, this Deed of Trust, and the property which serves as security for the Note and Deed of Trust, involves a multifamily residential transaction, one that the Borrower is expressly entering into for the provision of affordable housing and not for profit, and not in any way related to Borrower’s home or residence. As such, Borrower further acknowledges and agrees that Lender likewise is making this loan on the aforesaid basis, and thus intends to enforce any and all of its rights accordingly. FOR THE PURPOSE OF SECURING:

1. Payment of the sum of One Million and no/100 ($1,000,000) with interest thereon according to the terms of a certain Promissory Note of even da te herewith, designated as the “Promissory Note” made by Trustor, payable to the order of the Beneficiary and extensions or renewals thereof.

2. Payment of such additional sums with interest thereon as: (a) may be hereafter borrowed from the Beneficiary by the then record owner or owners of said property when evidenced by another Promissory Note or Notes reciting that they are secured hereby, or (b) as may be added to the indebtedness secured hereby in accordance with the provisions of this Deed of Trust.

3. Performance of each and every obligation, c ovenant, promise, or agreement of Trustor contained herein.

4. Payment, with interest thereon, of any other present or future indebtedness or obligation of the Trustor (or of any successor in interest of the Trustor to said property) to the Beneficiary reciting that they are secured hereby, whether created directly or acquired by assignment, whether absolute or contingent, whether due or not, whether otherwise secured or not, or whether existing at the time of the execution of the Deed of Trust, or arising thereafter.

5. Performance of each agreement of Trustor contained in any Development Agreement and/or Disposition and Development Agreement (including without limitation the Exhibits thereto) entered into between Trustor and Beneficiary for the development, construction of improvements, adoption of rent restrictions or other affordability covenants, or operation of certain activities on the above-described property.

TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:

1. To keep said property in good condition and repa ir; to allow Beneficiary or its representatives to enter and inspect the premises at all reasonable times and access thereto shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the premises without Beneficiary's written consent; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or de stroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry-rot; to pay when due all claims for labor performed and materials furnished in connection with such propert y and not to permit any mechanic's lien against such property; to comply with all laws affecting such prope rty or requiring any alterations or improvements to be made thereon; not to initiate or acquiesce in any zoning reclassification without Beneficiary's written consent; not to commit or permit waste thereon; not to commit, suffer, or permit any act upon such property in violation of the law; and to paint, cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of said property may be reasonably necessary; to promptly pay all amounts due others upon agreements of lease or conditional sale of all fixtures, furnishings, and equipment located thereon.

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If the loan secured hereby or any part thereof is being obtained or should any additional loan be made hereafter for the purpose of financing rehabilitation im provements or construction of affordable housing on said property, Trustor further agrees, anything in this Deed of Trust to the contrary notwithstanding: (a) to complete the same in accordance with City approved plans and specifications satisfactory to Beneficiary; (b) to allow Beneficiary to inspect such property at all times during construction; (c) to replace any work or materials unsatisfactory to Beneficiary within fifteen (15) calendar days after written notice from Beneficiary of such fact, which notice may be given to Trustor by registered or certified mail, sent to its last known address, or by personal service of the same; (d) that work shall not cease on the construction of such improvements for any reason whatsoever for a period of fifteen (15) calendar days, whether consecutive or not, without the written permission of the Beneficiary; (e) to pay when due all claims for labor and materials furnished in connection with the said construction and/or rehabilitation and not to permit any claims of lien for said work or material to be filed of record against the said prope rty; and (f) not to permit any stop notice claims to be presented to Beneficiary. If the said property is part of a larger tract upon which improvements will be constructed, Trustor shall make separate contracts and subcontracts for said construction, which shall pertain to the said property only and shall keep separate, full, and complete records of all work and materials furnished to the said property. Trustee, upon presentation to it of an affidavit signed by the Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein and to act thereon hereunder.

2. To provide and maintain in force at all times with respect to said property, fire and other types of insurance as may be required by Beneficiary. All of such insurance shall have a loss payable endorsement in favor of Beneficiary, shall contain an endorsement that such insurance shall not be canceled or modified without thirty (30) days advance written notice to Beneficiary, shall be for a term and in form, content, amount, and with such companies as may be satisfactory to Beneficiary, and the policies therefor shall be delivered to and remain in possession of Beneficiary as further security for the faithful performance of Trustor hereunder.

At least thirty (30) days prior to the expiration of any insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefor and, in the event any such insurance policy and evidence of the payment of the premium therefor are not so delivered by Trustor to Beneficiary, Trustor, by executing this Deed of Trust, specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may obtain such insurance through or from any insurance agency or co mpany acceptable to it, pay the premium thereof, and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest.

Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy theretofor e delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies , or for any insolvency of any insurer or insurance underwriter. In case of insurance loss, Beneficiary is hereby authorized either (a) upon prior notice to Trustor, to settle and adjust any claim under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss. In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restor e or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds, after deducting therefrom any expenses incurred in the collection thereof, shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises. In all other cases, such insurance proceeds, at the option of the Trustor, shall either be used for the cost of rebuilding or restoring the Packet Pg. 574
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building or improvements on said premises or applied in reduction of the indebtedness secured hereby whether due or not. If Trustor elects to apply such proceeds to a reduction of the indebtedness secured hereby such application shall be in such order as Beneficiary may determine. Such buildings and improvements shall be so restored or rebuilt as to be of at least equal value and substantially the same character as prior to the damage or destruction, and shall be in a condition satisfactory to Beneficiary. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Any and all unexpired insurance shall inure to the benefit of, and pass to the purchaser of, the property conveyed at any Trustee sale held hereunder.

3. To pay: (a) all general and special City and County taxes affecting such property; (b) when due, all special assessments for public improvements, without permitting any improvement bond to issue for any special assessment; (c) when due, all encumbrances, charges and liens, with interest, on said property, or any part thereof, which are or appears to be prior or superior hereto; (d) if the security of this Deed of Trust is a leasehold estate, to make any payment or do any act required of the Lessee or its successor in interest under the terms of the instrument or instruments creating said leasehold; (e) all costs, fees and expenses of this trust; (f) for any statement regarding the obligation secured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made; (g) such other charges for services rendered by Beneficiary and furnished at Trus tor's request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable.

If, by the laws of the United States of America, or of any state having jurisdiction over the Trustor, any tax is due or becomes due in respect to the issuance of the Note hereby secured, the Trustor covenants and agrees to pay such tax in the manner required by such law. Should Trustor fail to make any such payment, Beneficiary may elect to make such payment and any amount so paid may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest.

4. That, should Trustor fail to make any payment or do any act as provided in this Deed of Trust, then Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee; (c) pay, purchase, contest, or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior or superior hereto; and (d) in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. Trustor agrees to repay any amount so expended on demand of Beneficiary, and any amount so, expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest. This provision is not intended to curtail the right of Trustor to contest any such payment in good faith.

5. To perform each agreement of Trustor contained in any Development Agreement (including without limitation the Exhibits thereto) entered into between Trustor and Beneficiary for the development, construction of improvements, adoption of rent restric tions or other affordability covenants, or operation of certain activities on the above-described property.

6. To appear in and defend any action or proceeding purporting to affect the security hereof or the property which is covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends, to pay all costs and expenses, including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may Packet Pg. 575
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appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in such property is directly questioned by such action, including any action for the condemnation or partition of said premises, and in any su it brought by Beneficiary to foreclose this Deed of Trust.

7. To pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from th e date of expenditure at the rate that the principal obligation secured hereby bears at the time such paymen t is made, and the repayment of such sums shall be secured hereby.

8. That, should the Trustor or any successor in inte rest to Trustor in such property drill or extract, or enter into a lease for drilling or extraction of oil, gas, or other hydrocarbon substances or any mineral of any kind or character, or sell, convey, further encumber, or alienate said property, or any part thereof, or any interest therein, or be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily except as allowed by the Agreement, Beneficiary shall have the right, at its option, to declare any indebtedness or obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing.

9. That any award, settlement, or damages for injury or damages to such property, or in connection with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to said property, or any part thereof, is hereby assigned and shall be paid to Beneficiary, who may apply or release such m onies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or other insurance.

10. That, by accepting payment of any sum secured hereby after its due date, or by making any payment, or performing any act on behalf of Trustor, that Trustor was obligated hereunder, but failed, to make, or perform, or by adding any payment so made by Beneficiary to the indebtedness secured hereby, Beneficiary does not waive its right either to require prompt payment when due of all sums so secured or to declare a default for failure so to pay.

11. That at any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary an d presentation of this Deed of Trust and any Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of said property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with respect to the remainder of said property, Trustee may: (a) reconvey any part of said property; (b) consent to the making of any map or plat thereof; (c) join in granting any easement thereon; (d) join in any agreement subordinating the lien or charge hereof.

12. That the lien hereof shall remain in full force and effect during any postponement or extension of time of payment of the indebtedness secured hereby, or any part thereof.

13. That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and said Note or Notes to Trustee for cancellation and retention, and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters of fact shall be conclusive evidence of the truthfulness thereof.

The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." Such request and reconveyance shall operate as a re-assignment of the rents, issues, royalties and profits hereinafter Packet Pg. 576
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assigned to Beneficiary. Five (5) years after issuance of such full reconveyance, Trustee may destroy said Note and this Deed of Trust (unless directed in such request to retain them). 14. That as additional security, Trustor irrevocably assigns to Beneficiary the rents, issu es, and profits of the property affected by this Deed of Trust for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Beneficiary any duty to produce rents from the property affected by this Deed of Trust, or cause Beneficiary to be (a) "mortgagee in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the property affected by this Deed of Trust, or for any negligence in the management, upkeep, repair, or control of such property. This is an absolute assignment, not an assignment for security only, and Beneficiary's right to rents, issues, and profits is not contingent upon, and may be exercised without possession of, the property affected by this Deed of Trust.

Beneficiary confers upon Trustor a license (“License”) to collect and retain the rents, issues, and profits of the property affected by this Deed of Trust as they become due and payable, until the occurrence of a default hereunder. Upon such default, the License shall be automatically revoked and Beneficiary may collect and retain the rents, issues, and profits without notice and without taking possession of the property affected by this Deed of Trust. This right to collect rents, issues and profits shall not grant to Beneficiary or Trustee the right to possession, except as otherwise provided herein; and neither said right, nor termination of the License, shall impose upon City or Trustee the duty to produce rents, issues, or profits or maintain all or any part of the property affected by this Deed of Trust. If Trustor shall default as aforesaid, Trustor's right to collect any such money shall cease and Beneficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents, issues, royalties, and profits and shall be authorized, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secure d hereby, either personally or by attorney or agent without bringing any action or proceeding, or by receiver to be appointed by the Court, enter into possession and hold, occupy, possess and enjoy the said property, make, cancel, enforce, and modify leases, obtain and eject tenants, and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents, issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of said property, and of collection including reasonable attorneys' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties, and profits of said property being hereby assigned to Beneficiary for said purposes. The acceptance of such rents, issues, royalties, and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California. Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties, or profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. The receipt and application by said Beneficiary of all such rents, issues, royalties, and profits pursuant hereto, after execution and delivery of declaration of default and demand for sale as hereinafter provided, or during the pendency of Trustee' s sale proceedings hereunder, shall not cure such breach or default nor affect said sale proceedings, or any sale made pursuant thereto, but such rents, issues, royalties, and profits, less all costs of operation, maintenance, collection, and reasonable attorneys' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary may determine. Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be, an affirmation by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor a subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option.

15. That if the security of this Deed of Trust is a leasehold estate, the Trustor agrees that: (a) the term “Lease” as used herein shall mean the lease creating the “leasehold estate”; (b) Trustor shall not amend, Packet Pg. 577
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change, or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Benefi ciary regarding any notice, request, or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, th e leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants, agreements, terms, conditions, and provisions under any lease affec ting the premises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents provided for therein or the interest of the lessor or the Beneficiary therein or thereunder. Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust. In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "said property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary.

16. Subject to any applicable notice and cure rights, any default by Trustor in payment of any indebtedness secured hereby or performance of any covenant or condition set forth in a Development Agreement between Trustor and Beneficiary shall cons titute a default under this Deed of Trust, and upon default by Trustor under the terms of any encumbrance, charge, or lien which is or appears to be prior or superior hereto, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale of written notice of default and of election to cause to be sold said property, whic h notice Trustee shall cause to be filed for record. Beneficiary shall also deposit with Trustee this Deed of Trust and any No tes and all documents evidencing expenditures secured hereby. After the lapse of such time as then may be required by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in such notice of sale, whether as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied.

The recital in such Deed of any matters of fact shall be conclusive evidence of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as he reinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale.) After deducting all costs, fees and expenses of Trustee, and of this Trust, including cost of evidence of title in connection with this sale, Trustee shall apply the proceeds of sale to payment, first, of all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable under the Note or Notes secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto.

17. To waive, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense to any demand secured hereby.

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18. That Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by Beneficiary and recorded in the office of the record er of the county or counties where such property is situated, shall be conclusive proof of property substitu tion of such successor Trustee or Trustees, who shall, without conveyances from the Trustee predecessor, succeed to all its title, estate, rights, powers, and duties, including but not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust. Such instrument must contain the name of the original Trustor, Trustee, and Beneficiary hereunder, and the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the co sts, fees, and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument. The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law.

19. That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, transferees, successors, and assigns. The term Beneficiary” shall mean the owner and holder, including pledgee, of the Note secured hereby, whether or not named as Beneficiary herein. 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.

20. Trustor agrees to file with Beneficiary annually during October of each calendar year a written operational report which concerns the fiscal year ending on the immediately preceding June 30th and conforms to the standards set forth by the Participating Jurisdiction and 24 CFR Part 92 (with respect to the real property first described in this Deed of Trust) necessary or convenient for Beneficiary to make the annual reports.

21. That in the event of a demand for, and the preparation and delivery of a written statement regarding the obligations secured by this Deed of Trust pursuant to Sections 2943 and 2954 of the Civil Code of California (or successor statutes), Beneficiary shall be entitled to make a reasonable charge, not exceeding the maximum amount which is permitted by law at the time the statement is furnished. Beneficiary may also charge Trustor a reasonable fee for any other services rendered to Trustor or rendered in Trustor's behalf in connection with said property of this Deed of Trust, including changing Beneficiary's records pertaining to this Deed of Trust and the loan secured hereby in connection with the transfer of said property, or releasing an existing policy of fire insurance or other casualty insurance held by Beneficiary and replacing the same with another such policy.

22. That Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.

23. That should this Deed of Trust or any Note secured hereby provide any fee for prepayment of any indebtedness secured hereby, Trustor agrees to pay said fee, if any, if said indebtedness shall be paid prior to the due date thereof stated in said Note or this Deed of Trust even if and notwithstanding that Trustor shall have defaulted in payment thereof, or in performance of any agreement hereunder, and Beneficiary, by reason thereof, shall have declared all sums secured hereby immediately due and payable.

24. That Trustor has made certain representations and disclosures in order to induce Beneficiary to make the loan evidenced by the Promissory Note or Notes which this Deed of Trust secures, and in the event that Trustor has made any material misrepresentation or failed to disclose any material fact, Beneficiary at its Packet Pg. 579
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option and without notice, shall have the right to decl are the indebtedness secured hereby, irrespective of the maturity date specified in such Note or Notes, immediately due and payable, and on failure to so pay Beneficiary may make a written declaration of default and demand for sale as in paragraph No. 15 herein set forth. Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder.

Any notice which any party hereto may desire or be required to give to the other party shall be in writing. The mailing thereof must be certified mail addressed to the Trustor at his address herein above set forth or to the Beneficiary at his office or at such other place as such parties hereto may designate in writing.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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THE UNDERSIGNED TRUSTOR REQUESTS that a copy of any notice of default and of any notice of sale hereunder be mailed to him at his address hereinbefore set forth.

Dated: March 3, 2022
Signature of Trustor(s):

Kennett Court Senior Apartments, LP
a California Limited Partnership

By: Community Revitalization and Development Corporation, a California non-profit public benefit corporation
Its: Managing General Partner

B y :

David Rutledge
Its: President

By: Kennett Court Senior Apartments LLC,
a California Limited Liability Company
Its: Administrative General Partner

By: ________________________
Daniel Knott
Its: Manager

This document must be notarized.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Exhibit 1 – Legal Description
Deed of Trust

114-070-006-000

RESULTANT PARCEL 2

Being a portion of all that real property as described in that Grant Deed to AOK Properties, LLC, a California Limited Liability Company recorded December 9, 2019 in Instrument Number 2019-0037939, Shasta County records and being a portion of Parcel 2 as described in that Corrective Grant Deed to The City of Redding as Successor Housing Agency of the Redding Redevelopment Agency to recorded September 25, 2019 in Instrument Number 2019-0028214, Shasta County records, lying Northerly and Easterly of the following described line:

Thence North 81° 17' 02West 13.56 feet to the True Point of Beginning;

Thence from said Point of Beginning and leaving said Southerly line North 0° 52' 23" West 223.12 feet;

Thence South 89° 07' 37" West 142.19 feet;

Containing 2 .28 acres more or less.

Book 59 of Land Surveys, Page 148, Shasta County records was used as the basis of bearings for this description.

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Exhibit 4A
DRAFT - For informational purposes only, HCD to provide final document

FREE RECORDING IN

ACCORDANCE WITH

CALIFORNIA GOVERNMENT
CODE SECTION 27383

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL
TO:

[Subrecipient Address]

DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT

COMMUNITY DEVELOPMENT BLOCK GRANT - DISASTER RECOVERY

MULTIFAMILY HOUSING PROGRAM

REGULATORY AGREEMENT

CONTRACT NUMBER - 21-DRMHP-21008

This Regulatory Agreement (the “Agreement”) dated March 3, 2022, for reference purposes only, is made and entered into by and between Kennett Court Senior Apartments LP, a a California Limited Parntership Company (the “Developer”), and City of Redding a California municipal corporation, (the “Subrecipient”), pursuant to the requirements of the Community Development Block Grant - Disaster Recovery Multifamily Housing Program administered by the Department of Housing and Community Development, a public agency of the State of California (the “Department”).

RECITALS:

The Development is located on the real property described in Exhibit A hereto (the “Property”).

The Subrecipient, with Department’s approval, has agreed to provide the Assistance under the Community Development Block Grant - Disaster Recovery Multifamily Housing Program (the Packet Pg. 583
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“Program”) and the DR-MHP Policies and Procedures Manual (the “DR-MHP Policies and Procedures”). The obligations imposed on the Developer by the Program and the Program policies and procedures are collectively referred to herein as the “Program Requirements.”

B. Community Development Block Grant Disaster Recovery (CDBG-DR) funding was appropriated under Public Law 115-123, and awarded by the U.S. Department of Housing and Urban Development (HUD) to the Department via Federal Register Notice 83 FR 40314. The Department serves as the lead agency and responsible entity for administering CDBG-DR funds. CDBG-DR supports the State of California’s unmet recovery needs related to the Federal Emergency Management Agency (FEMA) Major Disaster Declarations DR-4344 in October 2017 and DR-4353 in December 2017. HCD performed an unmet needs assessment that covered the areas affected by DR 4344 and DR 4353, and included data from FEMA, Small Business Administration (SBA), California’s Department of Forestry and Fire Protection (CAL FIRE), and California Department of Insurance (CDI). Recognizing the requirement included in Federal Register Notice 83 FR 5844, published February 9, 2018, and 83 FR 40314, published August 14, 2018, to address housing needs first and based on the results of the needs assessment, the Department developed the Disaster Rec overy Multifamily Housing Program (DR-MHP).

DR-MHP projects are funded to assist with meeting the unmet rental housing need, including the needs of individuals displaced from rental homes and individuals who became homeless as the result of the disasters.

C. As required by the Program, Subrecipient and the Department have entered into a Master Standard Agreement, numbered 21-DRMHP-21008 and dated May 13, 2021, which provides the overarching terms and conditions for implementing the Program and the terms of the Assistance common to all projects to be complete d by the Subrecipient (the “Master Standard Agreement”).

D. As required by the Program and the Master Standard Agreement, Department has issued to Subrecipient a Notice to Proceed for the Development, dated TBD 2022, which provides the specific terms and conditions for the Development (the “Notice to Proceed”).

E. As required by the Program, Developer and the Subrecipient have entered into that certain Development Agreement dated TBD 2022 , governing the terms and conditions of the Development and governing the terms of the Assistance for the Development (the "Development Agreement"). As required by the Program, Subrecipient has made a part of the Development Agreement the DR-MHP Development Agreement Rider (the “Development Agreement Rider”) to include terms required by the Department for the Development.

F. The Master Standard Agreement, the Notice to Proceed, the Development Agreement, the Development Agreement Rider, this Agreement, Ground Lease Rider (as applicable) and such other documents which govern and secure the Development as are reasonably required by the Subrecipient and Department are collectively referred to herein as the “Program Legal Documents.”

G. As further consideration for the Assistance and in furtherance of the purposes of the Program, Developer has agreed to enter into this Agreem ent and consent to its recordation against the Development. The purpose of this Agreement is to regulate and restrict the occupancy, rents, operation, ownership and management of the Development in compliance with the Program Packet Pg. 584
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Requirements and put such regulations and restrictions on title for the term of this Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1. Recitals. The foregoing recitals are a part of this Agreement and are incorporated herein by reference as if fully stated herein.

2. Property. Developer is the owner in fee of the Property and all improvements now and hereafter located thereon.

3. Definitions. Unless the context requires otherwise, or the terms are defined herein, the terms used in this Agreement shall be governed by the definitions set forth in the Program policies and procedures. The following terms shall have the respective meanings assigned to them in this paragraph unless the context in which they are used clearly requires otherwise:

a. Affordable Rents: means rents that are at or below the “High” HOME Program rents published by HUD for different metropolitan areas.

b. Affordable Units: means a “dwelling" that is rented at an Affordable Rent to a household that earns less than 80 percent of Area Median Income adjusted for household size as calculated by HUD for different metropolitan areas within the State and published annually by the Department or HUD.

c. Area Median Income (AMI): means the median family income for specific geographic areas, adjusted for household size, as calculated by HUD, and published annually by HCD for the CDBG program.

d. Commercial Space: any nonresidential space located in or on the property of the Development that is, or is proposed to be, rented or leased by the owner of the Project, the income from which shall be included in Operating Income, as applicable, which ensures the fiscal integrity of the Development.

e. Developer Fee: All Funds paid at any time as compensation for developing the Development, to include all development consultant fees, processing agent fees, developer overhead and profit, construction management oversight fees if provided by the developer, personal guarantee fees, syndicator consulting fees, and reserves in excess of those customarily required by multi-family housing lenders.

f. Distributions: the amount of cash or other benefits received from the operation of Development and available to be distributed to the or any party having a beneficial interest in the or the , after payment of all due and outstanding obligations incurred in connection with the Development.

g. Disability: any disability, including mental or physical disability, that limits a major life activity, including a disability that falls within the definitions in Government Code (G.C.) Sections 11135, 12926, and 12926.1 or with in the definition of disability used in the federal Americans with Disabilities Act of 1990, codified at 42 U.S.C. 12102.

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h. Elderly Person: A person at least 62 years of age (24 CFR Part 5.100).

i. Extremely Low Income (ELI): ELI individuals or families whose income is at or below 30% of the area median income (AMI) or the federal poverty level, whichever is higher for the area of the Development.

j. Fiscal Year: the Fiscal Year for the Development shall mean the annual period commencing on January 1st and concluding on December 31st each year.

k. Household: One or more persons occupying a housing unit.

l. Initial Operating Year: the initial period of operation of the Development, beginning at the time of the initial occupancy of the completed project and ending on the last day of the Fiscal Year for the Development.

m. Low- to Moderate-Income (LMI): Low to moderate income people are those having incomes not more than the “moderate-income” level (80% Area Median Family Income) set by the federal government for the HUD-assisted Housing Programs. This income standard changes from year to year and varies by household size, county and the metropolitan statistical area.

n. Operating Expenses: the amount approved by the Subrecipient that is necessary to pay for the recurring expenses of the Development, such as utilities, maintenance, management, taxes, licenses, and Supportive Services costs, but not including debt service or required reserve account deposits.

o. Operating Income: all income generated in connection with operation of the Development including rental income for DR-MHP Assisted Units and non-DR-MHP Assisted Units, rental income for Commercial Space or commercial use, laundry and equipment rental fees, rental subsidy payments, and interest on any accounts, other than approved reserve accounts, related to the Development. "Operating Income" does not include security and equipment deposits, payments to the Developer for Supportive Services not included in the operating budget, cash contributed by the Developer, or tax benefits received by the Developer.

p. Ordinary Maintenance and Repair: means regular or usual care, upkeep or replacement of any part, or putting back together that which is deteriorated or broken, of an existing property, building or structure to affect the maintenance of a decent, safe, sanitary condition.

q. Reconstruction: Demolishing and re-building a housing unit on the same lot in substantially the same manner. Reconstruction is rehabilitation for purposes of DR- MHP.

r. Rehabilitation: Repair or restoration of housing units in the disaster-impacted areas to applicable construction codes and standards.

s. Rent: means all mandatory charges, other than deposits, paid by the tenant for the use Packet Pg. 586
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and occupancy of a DR-MHP Assisted Unit, plus a utility allowance established in accordance with HOME Regulations at 24 CFR 92.252(a).

t. Restricted Unit: DR-MHP Assisted Units and any units that are subject to Rent and occupancy restrictions that are comparable to those applicable to DR-MHP Assisted Units. Restricted Units include units subject to a TCAC regulatory agreement, and all units subject to similar long-term, low-income or occupancy restrictions imposed by other public agencies.

u. Special Needs or Special Needs Populations : means agricultural workers, individuals living with physical or sensory disabil ities and transitioning from hospitals, nursing homes, development centers, or other care facilities; individuals living with developmental disabilities, serious mental illness or substance abuse disorders; individuals who are survivors of domestic violence, sexual assault, and human trafficking; individuals who are experien cing Homelessness; individuals with HIV; homeless youth as defined in Government Code (GC) Section 12957(e)(2); families in the child welfare system for whom the absence of housing is a barrier to family reunification, as certified by a county; frequent users of public health or mental health services, as identified by a public health or mental health agency; Frail Elderly Persons; or other specific groups with unique housing needs as determined by the Department. “Special Needs Populations” do not include seniors unless they otherwise qualify as a Special Needs Population.

v. Substantial Rehabilitation: Rehabilitation as defined in 24 CFR 5.100.

w. Supportive Housing: means housing with no limit on length of stay, that is occupied by the target population and that is linked to onsite or offsite services that assist the Supportive Housing resident in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community.

x. Supportive Services: social, health, educational, income support and employment services and benefits, coordination of community building and educational activities, individualized needs assessment, and individualized assistance with obtaining services and benefits.

y. TCAC: means the California Tax Credit Allocation Committee.

z. Uniform Relocation Assistance and Real Pr operty Acquisition Act (URA) (42 U.S.C.

Chapter 61): A federal law that establishes minimum standards for federally funded programs and Projects that require the acquisition of real property (real estate) or the displacement of persons from their homes, businesses, or farms.

4. Compliance with Program Requirements. The Developer agrees that at all times its actions regarding the Development and the use of funds provided under the Master Standard Agreement and the Notice to Proceed shall be in conformity with all Program Requirements, including the requirements of this Agreement and the Program Legal Documents. The Packet Pg. 587
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Developer acknowledges that it is familiar with the Program Requirements, the requirements imposed on the Developer in the Program Legal Documents, and has access to professional advice to the extent necessary to enable the Developer to fully comply with the Program Requirements and the applicable provisions of the Program Legal Documents.

5. Term of Agreement. This Agreement shall commence on the date set forth above and remain in full force and effect and shall apply to the Development through and including the twentieth (20th) anniversary of the date of Department acceptance of the Project Completion Report pursuant to paragraph 35 hereof regardless of any prepayment of the Assistance or sale, assignment, transfer or conveyance of the Development, unless terminated earlier by the Department or Subrecipient or extended by the mutual consent of the Parties.

6. DR-MHP Assisted Units, Restricted Units, Sp ecial Needs Populations Units and Supportive Housing Units.

a. For the full term of this Agreement, Developer shall provide within the Development, the number, type and size of DR-MHP Assisted Units set forth in Exhibit B, Part I, attached hereto and incorporated herein.

b. Restricted Units shall not differ substantially in size or amenity level from non- Restricted Units within the Development with the same number of bedrooms, and Restricted Units shall not be segregated from non-Restricted Units.

c. Within the limits of subparagraph b . above, and subject to the requirements of subparagraph a. above, Developer may change the designation of a particular Unit from DR-MHP Assisted Unit to non-DR-MHP Assisted Unit, and vice versa, over time, only to address situations when a tenant in a DR-MHP Assisted Unit is no longer qualified to reside in that unit or if the unit is no longer habitable. Any other proposed changes to the unit designation must be approved in writing in advance by the Subrecipient.

7. Affirmative Marketing and Tenant Selection Procedures. Affirmative Marketing involves special outreach and advertising efforts designed to communicate the availability of DR-MHP assisted housing to those groups or individuals who might otherwise be unlikely to apply.

Affirmative marketing efforts must be commenced by the Developer at least 90 days prior to initial or renewed occupancy for new construction and Substantial Rehabilitation Projects, respectively. The Department has determined that in addition to the required demographic analysis, individuals and families that were impacted by the disasters and Section 8 Housing Choice Voucher holders are least likely to apply. Examples of renters impacted by the disasters include renters that have lost rental units or have been displaced due to the impacts of DR-4344 and DR-4353. The Affirmative Marketing Plan shall be updated and submitted to Subrecipient every five (5) years during the term of this Agreement.

Developer shall rent DR-MHP Assisted Units in the Development to eligible Households in accordance with the management plan prepared by the Developer and approved by and on file with the Subrecipient and Department (the “Management Plan”) pursuant to paragraph 13 of this Agreement. The Management Plan shall:

Packet Pg. 588
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

a. detail actions to be taken by Developer to affirmatively market all Housing Units in a manner that ensures equal access to all persons in any category protected by federal, state or local laws governing discrimination, and without regard to any arbitrary factor;

b. specify reasonable criteria for determination of tenant eligibility, including Household size;

c. require that eligible tenants be selected based on order of application, lottery, or other reasonable method approved by the Subrecipient;

d. require eligible applicants to be notified of eligibility and, based on turnover history, when a DR-MHP Assisted Unit may be available;

e. require ineligible applicants to be notified of the reason for their ineligibility;

f. specify procedures through which applicants deemed to be ineligible may appeal this determination;

g. require maintenance of a waiting list of eligible applicants;

h. specify procedures for obtaining information regarding prospective tenants' incomes as necessary to certify that such income does not exceed the income limit limitations;

i. be made available to prospective tenants upon request; and

8. Non-Discrimination. Developer shall not discriminate against any tenant or prospective tenant on the basis of any class or status prohibited by Government Code section 12920 and United States Code 42 U.S.C section 3601 – 3019, including: race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, genetic information, or any other arbitrary factor in violation of any state, federal or local la w governing discrimination in rental housing. The restriction of housing to Elderly and Special Needs Populations is permitted where the housing is intended to benefit those targeted groups in compliance with applicable law, and only with prior approval of the selection criteria by the Subrecipient.

9. Rental Agreement and Occupancy Procedures.

a. Each eligible Household selected to occupy a DR-MHP Assisted Unit in the Development shall enter into a written rental or occupancy agreement with the Developer, the form of which shall be subject to approval by the Subrecipient and be consistent with the Program Requirements. Such rental agreement shall provide for, inter alia, good cause eviction, reference the appeal and grievance procedures set forth in the Management Plan, and require the tenant annually recertify household income and size.

Packet Pg. 589
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

b. The Developer may establish reasonable rules of conduct and occupancy. Such rules shall be consistent with state law and the Program Requirements and shall not distinguish or discriminate between Rest ricted Units and non-Restricted Units. The rules shall be in writing and shall be given to each tenant upon occupancy. Any change to such rules shall become effective no less than thirty (30) days after giving written notice thereof to each Household in the Development.

10. DR-MHP Assisted Unit Rents and Maximum Income.

a. For the Initial Operating Year, Developer shall charge Rents for the DR-MHP Assisted Units in the Development in accordance with Exhibit B hereto.

b. After the Initial Operating Year, Rents for DR-MHP Assisted Units may be adjusted no more often than every twelve (12) months. Developer shall provide tenants of DR- MHP Assisted Units not less than 30 days prior written notice, or a longer period as required by state or local law, before implementing any increase in rents. In no event shall the rents exceed the High HOME Rents as designated for the area and published by HUD. If the Project is assisted with tax credits, the amount and method of rent adjustment for DR-MHP Assist ed Units shall be in accordance with the Tax Credit Allocation Committee (TCAC) policy or a longer period as required by state or local law,

c. Notwithstanding the previous subparagraph, Rents for DR-MHP Assisted Units subsidized under Section 8 of the Housing Act of 1937 or any comparable federal or state rental assistance program may be adjusted as required by the respective rental assistance program, for as long as the DR-MHP Assisted Units continue to receive the rental assistance.

d. The maximum income of a Household occupying a DR-MHP Assisted Unit shall not exceed 80% of the Area Median Income.

11. Rents for non-DR-MHP Assisted Units and Commercial Space.

Developer shall establish and implement a rent structure and operations budget for non-DR- MHP Assisted Units and Commercial Space, if applicable, in order for the Department to ensure continued financial viability throughout the affordability period.

a. For the Initial Operating Year, rent for non-DR-MHP Assisted Units and Commercial Space shall be in accordance with Exhibit B attached hereto. After the Initial Operating Year, rents for non-DR-MHP Assisted Units and Commercial Space may be adjusted in accordance with the provisions outlined by other funding sources and requirements of state and local laws.

b. Developer shall estimate all income and expenses attributable to the non-DR-MHP Assisted Units and, if applicable, Commercial Space, in the annual operating budget described in paragraph 16 herein, and shall report all income and expenses attributable to non-DR-MHP Assisted Units and Commercial Space in the annual report described in paragraph 18 herein.

Packet Pg. 590
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

12. Certification of Tenant Income and Household Size.

a. The income and Household size of all Households occupying DR-MHP Assisted Units shall be certified by the Developer prior to occupancy and recertified annually thereafter in the manner specified in the Development's approved Management Plan and in accordance with applicable rules, regulations, and procedures governing the Program.

b. If, at the time of tenant recertification, the income of a Household occupying a DR- MHP Assisted Unit exceeds the income level applicable to new tenants for respective DR-MHP Assisted Units, the Developer shall:

(1) increase the tenant’s rent to the lesser of 30 percent of adjusted income, fair market rent, or the rent limitations of other funding programs governing the unit; and
(2) to the extent another non-DR-MHP Assisted Unit becomes available within the Development, designate the next available comparable non-DR-MHP Assisted Unit as a DR-MHP Assisted Unit at the income level originally applicable to the Household until the unit mix required by this Agreement is achieved. A Housing Unit shall be deemed “comparable” if it has the same number of bedrooms, the same or similar features, and is similar in size to the original DR-MHP Assisted Unit.

13. Management and Maintenance.

a. Developer is responsible for all maintenance, repair, and management functions, including without limitation, the following: selection of tenants; recertification of family income and size; evictions; collecti on of Rents; ordinary and extraordinary maintenance and repairs; and replacement of capital items. Developer shall maintain all Housing Units, common areas and Commercial Space in a safe and sanitary manner in accordance with local health, building, and housing codes and the Management Plan described above.

b. Developer is responsible for operating the Development in accordance with the Management Plan. All amendments to this plan require prior written approval of the Subrecipient.

c. Developer may, with the prior written approval of the Subrecipient, contract with a management agent for the performance of the services or duties required in subparagraphs a. and b. of this paragraph 13. However, such an arrangement does not relieve the Developer of responsibility for proper performance of these duties. Such contract shall be subject to prior written approval by the Subrecipient and shall contain a provision allowing the Developer to terminate the contract without penalty upon no more than thirty (30) days' notice. Upon a determination by the Subrecipient, and notice to the Developer thereof, that the contractor performing the functions required in subparagraphs a. and b. has failed to operate the Development in accordance with this Packet Pg. 591
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Agreement and the approved Management Plan, the Developer shall exercise such right of termination forthwith and make immediate arrangements, which shall be subject to Subrecipient approval, for continuing performance of the functions required in subparagraphs a. and b.

d. Upon a determination by the Subrecipient, and notice to the Developer thereof, that the Developer has failed to operate the Development in accordance with this Agreement, the Subrecipient may require the Developer to contract with a qualified management agent to operate the Development, or to make such other arrangements as the Subrecipient deems necessary to ensure performance of the functions required in subparagraphs a. and b.

e. Developer shall operate, maintain and repair both Restricted and non-Restricted Units equally without regard to their designation as Restricted Units or non-Restricted Units.

14. Insurance.

Subrecipient, its Developers and Contractors shall comply with all requirements outlined in the (A) General Provisions section and (B) Project Insurance Requirements outlined herein. These requirements are in addition to, and not in lieu of, any other insurance coverages required elsewhere in the Development Agreement and elsewhere in the Master Standard Agreement. The Department reserves the right to waive or adjust required insurance coverages from time to time in its sole discretion.

a. General Provisions Applying to All Policies

1) Coverage Term – Subrecipient’s coverage needs to be in force for the complete term of the Agreement, unless otherwise noted herein. The Developer’s coverage needs to be in force for the complete affordability period of each Approved Project. The Developer’s coverage needs to be in force until a certificate of occupancy is issued for each Approved Project. No work may be performed by Subrecipient, Developer, or a contractor until and unless all insurances required by this Agreement are in full force and effect. If insurance expires during the term of the Agreement/affordability period/certificate of occupancy issuance, as applicable, a new certificate must be received by the Department at least thirty (30) days prior to the expiration of said insurance. Any new insurance must comply with the original terms of this Agreement.

2) Policy Cancellation or Termination & Notice of Non-Renewal – Subrecipient is responsible to notify the Department within fifteen (15) business days prior to any actual or proposed cancellation, non-renewal or material change that affects required insurance coverage. No policy may be cancelled upon less than thirty (30) days’ prior written notice from the insurer to the insured and the Department. New certificates of insurance are subject to the approval of the Department and the Subrecipient agrees no services will be commenced or performed prior to obtaining such approval. In the event Subrecipient and Developer fails to keep in effect at all times the specified insurance coverage, the Department may, in addition to any other remedies it may have, terminate Packet Pg. 592
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

this Agreement and/or Approved Project upon the occurrence of such event, subject to the provisions of this Agreement.

3) Premiums, Assessments and Deductibles – Subrecipient, Developer and contractors for each Approved Project are responsible for the payment of all premiums, policy assessments, deductibles or self-insured retentions associated with their respective insurance programs.

4) Primary Clause – Any required insurance contained in this Agreement shall be primary, and not excess or contributory, to any other insurance carried by the Department.

Acceptance of self-insurance is within the sole discretion of the Department, and the Department reserves the right to require insurance from third-party commercial insurers.

6) Endorsements – Any required endorsements requested by the Department must be physically attached to all requested certificates of insurance and not substituted by referring to such coverage on the certificate of insurance.

7) Inadequate Insurance – Inadequate or lack of insurance does not negate the Subrecipient’s, Developer’s, or contractor’s obligations under this Agreement or the terms specific to the relevant Approved Project, nor does the availability or limits of any insurance policies required herein in any way limit the liability of Subrecipient, or any Developer or contractor, to the Department hereunder, nor does it in any way limit the liability of such parties to the Department in regards to any indemnification obligations of such parties herein.

8) Available Coverages/Limits – All coverage and limits available to the Subrecipient, Developer, or contractor shall also be available and applicable to the Department.

9) Satisfying an SIR - All insurance required by this Agreement and any required by the terms specific to the relevant Approved Project must allow the Department to pay and/or act as the Subrecipient’s, Developer’s, or contractor’s agent in satisfying any self-insured retention (SIR). The choice to pay and/or act as the Subrecipient’s, Developer’s, or contractor’s agent in satisfying any SIR is at the Department’s discretion.

10) Use of Subcontractors - In the case of De veloper or contractor’s utilization of subcontractors to complete the contracted scope of work for the relevant Approved Project, Developer or contractor shall include all subcontractors as insureds under Developer’s or contractor’s insurance or supply evidence to the Subrecipient of subcontractor’s insurance equal to policies, coverages, and limits required of Developer and contractor.

Packet Pg. 593
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

b. Project Insurance Requirements

Developer, and/or contractor shall display evidence, as applicable for the relevant Approved Project, of the following on a certificate of insurance evidencing the below coverages. No work shall be commenced on any Approved Project prior to such coverages being in effect and the required certificate(s) have been provided to the Department.

1) Commercial General Liability – Subrecipien t and Developer or contractor on an Approved Project shall maintain commercial general liability insurance on an occurrence form with limits not less than $1,000,000 per occurrence for bodily injury and property damage liability combined with a $2,000,000 annual policy aggregate for the duration of this Agreement. The policy shall include coverage for liabilities arising out of premises, operations, independent contractors, products, completed operations, personal & advertising injury, and liability assumed under an insured contract. This insurance shall apply separately to each insured against whom claim is made or suit is brought subject to the Developer’s or contractor’s limit of liability.

The policy must name The State of California, its officers, agents, and employees as additional insureds, but only with respect to work performed under this Agreement.

2) Automobile Liability – Developer or Contractor shall maintain, as applicable, business automobile liability insurance for limits not less than $1,000,000 combined single limit. Such insurance shall cover liability arising out of a motor vehicle including owned, hired and non-owned motor vehicles. Should the scope of the relevant Approved Project involve transportation of hazardous materials, evidence of an MCS- 90 endorsement is required.

The policy must name The State of California, its officers, agents, and employees as additional insured, but only with respect to work performed under this Agreement.

3) Workers’ Compensation and Employer’s Liability – Subrecipient and Developer or Contractor shall maintain statutory work er’s compensation and employer’s liability coverage for all its employees who will be engaged in the performance of this Agreement and the relevant Approved Project. In addition, employer’s liability limits of $1,000,000 are required. By signing this Agreement, Subrecipient acknowledges compliance with these regulations. A Waiver of Subrogation or Right to Recover endorsement in favor of the State of California must be attached to certificate.

4) Flood Insurance – The Subrecipient shall ensure that Developer complies with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001).

Subrecipient shall ensure flood insurance coverage is provided by the Developer for the Approved Project if required by the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001). The Subrecipient shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, that flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including rehabilitation).

Packet Pg. 594
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

5) Builders Risk insurance – Developer or Developer’s contractor on an Approved Project shall maintain builders risk coverage prior to or upon commencement of construction of the Approved Project, including any deliv ery and storage of materials to be incorporated into the Approved Project, through the completion of construction and until property insurance can be secured. This coverage must cover all risk of physical damage or risk of loss for an amount equal to the full amount of the cost of construction. This coverage must include coverage for flood if the Property is located in a Special Flood Hazard Area as determined by the Federal Emergency Management Agency. Additionally, Developer or Devel oper’s general contractor must obtain a builder’s risk installation floater for coverage of the contractor’s labor, materials, and equipment to be used for completion of work performed under the construction contract. The minimum amount of coverage to be carried must be equal to the full amount of the cost of construction.

6) Property Insurance – Developer on an Approved Project shall maintain including all risk coverage or standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements to the ex tent of full replacement value of the Approved Project for the duration of th e term of the Affordability Period. Coverage amount may be adjusted for fluctuation in replacement values. This coverage is required upon completion of construction of the Approved Project, or upon closing of the financing for the Approved Project if it is a rehabilitation project.

15. Condemnation.

a. The Developer shall at all times keep the Development insured against loss by fire and such other hazards, casualties, liabilities a nd contingencies, and in such amounts and for such periods as required by the Subrecipient. All insurance policies and renewals thereof shall be issued by a carrier and in form acceptable to the Subrecipient.

b. In the event of any fire or other casualty to the Development or eminent domain proceedings resulting in condemnation of the Development or any part thereof, Developer shall be obligated to rebuild the Development, and to use all available insurance or condemnation proceeds therefore, provided that, as determined by the Subrecipient in its sole discretion, (i) such proceeds are sufficient to keep the Assistance in balance and rebuild the Development in a manner that provides adequate security to the Subrecipient for repayment of the Assistance or if such proceeds are insufficient, then Developer shall have funded any deficiency (ii) the Subrecipient shall have the right to approve plans and specifications for any major rebuilding and the right to approve disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or similar arrangement, and (iii) no material breach or default then exists under the Program Legal Documents. If the casualty or condemnation affects only part of the Development and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the Assistance in a manner that provides adequate security to the S ubrecipient for repayment of the remaining balance of the Assistance.
c. In the event that the Developer fails to commence or to complete the rebuilding, repair, Packet Pg. 595
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

replacement or restoration of the Project timely, the Department and Subrecipient shall have the right, in addition to any other remedies granted in the Program Legal Documents or at law or in equity, to repair, restore, rebuild or replace the Project so as to prevent the occurrence of a default hereunder.

16. Annual Operating Budget.

a. For the Initial Operating Year, Developer shall operate the Development and expend Operating Income in accordance with the initial operating budget approved by and on file with the Subrecipient. Such budget sha ll show all anticipated Operating Income, debt service, Operating Expenses and amount payable to reserves for the Initial Operating Year.

b. No later than sixty (60) days prior to the beginning of each subsequent Fiscal Year of the Development, the Developer shall submit to the Subrecipient a proposed annual operating budget on a form provided by the Subrecipient. The proposed annual operating budget shall set forth the Developer's estimate of Operating Income, Operating Expenses and debt service for the upcoming year, amounts payable to reserves, and proposed Rent adjustments.

c. If the Development contains either non-Restricted Units or Commercial Space, or both, each annual operating budget shall show amounts, sources and uses of income allocated between DR-MHP Assisted Units, Restri cted Units, non-Restricted Units, and Commercial Space. The allocation method used for each budget line item shall be subject to Subrecipient approval, and shall apportion income and expenses in a manner that accurately reflects the particular physical, operational and economic characteristics of the Development.

17. Periodic Reports. Developer shall submit to the Subrecipient such periodic reports as deemed necessary by the Subrecipient to monitor the Developer's compliance with this Agreement. The reports may include, but are not limited to:

a. an income and expense statement for the reporting period;

b. a summary of the occupancy of the Development, indicating the number and type of Units reserved for eligible Households, the number of vacant Units, and the number of evictions completed or in process;

c. a report on maintenance or other issues anticipated to impact the current budget needs of the Development;

d. information on the status of waiting lists for the DR-MHP Assisted Units, including the number of households on lists for different Unit sizes and by income group, as well as evidence of compliance with Project’s Affirmative Marketing Plan; and

e. other information as required by the Subrecipient to accurately monitor Developer's performance hereunder.

Packet Pg. 596
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

If, after the Initial Operating Year, the Subrecipient determines that such periodic reports continue to be necessary, the Subrecipient shall so notify the Developer as part of the annual budget approval process. Upon such notification, Developer shall submit the requested reports.

18. Annual Report and Audit.

a. Developer shall file an annual report with the Subrecipient no later than ninety (90) days after the end of each Fiscal Year for the Development. The report shall be in such form and contain such information as required by the Subrecipient.

b. As part of the annual report, the Developer shall submit an audit of the Development prepared by an independent certified public accountant in accordance with Subrecipient audit requirements, and as specified in the Department’s Audit Handbook, titled “Audited Financial Statements for Multifamily Rental Housing”, published April 2018, as periodically updated, located on the Department’s website here:
https://www.hcd.ca.gov/grants-funding/already-have-funding/all-rental- projects.shtml.

19. Required Reserves. Developer shall establish, fund and maintain reserve accounts for the term of this Agreement as listed below. All such accounts shall be in the name of the Developer, earn interest, and, unless otherwise approved in writing by the Subrecipient, be insured by an agency of the federal government or other comparable federal insurance program. All interest earned on a reserve account shall become a part of the account. Withdrawals from the reserve accounts shall require prior written approval of the Subrecipient. Should the Subrecipient fail to take action on a request for a withdrawal from a reserve account within thirty (30) days of documented receipt of the request, that request will be deemed approved.

a. Replacement Reserve Account. Commencing no later than 6 months following completion of the Project, Developer shall establish a segregated replacement reserve account. Developer shall make annual deposits from Operating Income to the replacement reserve account in the amount set forth in Exhibit C , unless the Subrecipient determines, in its sole discretion, that more frequent deposits are required.

Developer shall also deposit any Development funds designated for replacement reserves into this account, including those identified in Exhibit C. The amount of the minimum annual deposit may be adjusted, as determined by the Subrecipient, in its sole discretion, based on the results of reserve studies, performed by an independent third party at the Developer’s expense as requested by the Subrecipient or as based on other reliable indicators of the need for reserve funds over time.

b. Operating Reserve Account. Developer shall establish an operating reserve account or sub-account within the Development’s general operating account no later than the date that the Project’s permanent loan closes. Developer shall fund the operating reserve account with an initial deposit in an amount as specified in Exhibit C, and through monthly deposits from Operating Income in amounts as specified in Exhibit C Developer shall fully replace any withdrawals from the operating reserve account using available cash flow prior to use of any cash flow to pay deferred Developer Fee, Packet Pg. 597
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

partnership management or similar fees, or Distributions.

c. Other Reserve Accounts. Developer certifies that Exhibit C hereto contains a complete listing of all reserve accounts established or to be established for the Development. All withdrawals from these accounts shall require prior written Subrecipient approval, except as specifically noted in Exhibit C.

20. Accounting System. In a manner subject to Subrecipient approval, Developer shall maintain an accrual or modified accrual basis general ledger accounting system that is posted monthly and that accurately and fully shows all assets, liabilities, income and expenses of the Development.

21. Records Retention. All records and books relating to the initial development phase of the Development (application through project completion) shall be retained for a minimum period of five (5) years after the Department notifies the Subrecipient that the grant agreement between HUD and the State of California has been closed. Subsequent to close out of the grant agreement between HUD and the State of California, all records and books relating to the operational phase of the Development shall be retained for the most recent five (5) year period, until five years after the affordability period terminates. All records must be maintained in such a manner as to ensure that the records are reasonably protected from destruction or tampering. All records shall be subject to inspection and audit by the Subrecipient, the Department, HUD, or its representative.

22. Use of Income from Operations.

a. The Developer, or Developer's management agent, shall promptly deposit all Operating Income in a segregated account established in the Developer's name exclusively for the Development and insured by an agency of the federal government or other comparable federal insurance program.

b. Withdrawals from the account shall be made only in accordance with the provisions of this Agreement, and the approved annual operating budget, and shall be disbursed, applied, or reserved and set aside for payment when due, in the following priority, to the extent available:

(1) salaries, wages, and any other compensation due and payable to the employees or agents of the Developer employed on site in connection with the maintenance, administration or operation of the Development, along with all withholding taxes, insurance premiums, Social Security payments and other payroll taxes or payments required in connection with such employees;

(2) all charges incurred in the operation of the Development in connection with utilities, real estate taxes and assessments, and liability, fire and other hazard insurance premiums;

(3) regularly scheduled non-contingent payments of interest, principal, impounds, Packet Pg. 598
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

fees and charges, if any, required on loans, including the Assistance when such Assistance is provided as a loan, which are secured by liens on the Property, which have been approved by the Subrecipient, payments on which are to be made prior to the determination of Net Cash Flow, as specified in Exhibit C, hereto;

(4) all other incurred Operating Expenses, including the fee of the managing agent and any extraordinary expenses, in accordance with the approved annual operating budget of the Development or as otherwise approved in advance by the Subrecipient;

(5) deposits to required reserve accounts;

(6) deferred Developer Fee;

(7) asset management, partnership management and similar fees, to the extent such fees are specified under the terms of financing from a public entity and approved by the Subrecipient, or if there is no public entity financing, asset management, partnership management and similar fees, in accordance with the Uniform Multifamily Regulations Section 8314(a).

(8) Distributions, in accordance with paragraph 23 of this Agreement.

The withdrawals permitted under subparagraph 22 (b) (6), (7) and (8) shall also be subject to the restrictions of paragraph 19 (b) above.

The Developer may depart from the foregoing priorities of payment only upon the express written approval of the Subrecipient. Net Cash Flow shall be distributed in accordance with paragraph 24 hereto.

23. Distributions.

a. Developer shall be limited to annual Distributions equal to the annual Operating Income remaining after payment of the items allowed in clauses (1) through (7) of subparagraph b of paragraph 22 above. If the Development generates insufficient cash flow to permit payment of Distributions in a particular year, Distributions in future years shall not be increased to cover the lack of Distributions in prior years.

b. Developer may deposit all or a portion of the amount permitted for Distributions into a Development account for distribution in subsequent years. Such future Distributions shall not reduce the otherwise permitted Distributions in those subsequent years.

c. Distributions shall be permitted for a par ticular Fiscal Year, including Distributions from an accumulated Distributions account , only after the Developer submits a complete annual report and operating budget and the Subrecipient determines that the report and budget demonstrate compliance with all Program Requirements.

Packet Pg. 599
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

d. Circumstances under which no Distributi ons, deferred Developer Fee, asset management fees, partnership management fees, and/or similar fees shall be made or paid include:

(1) when written notice of default has been issued by any entity, (including the Subrecipient) with an equitable or beneficial interest in the Development or which has a contractual relationship with the Developer regarding the Development;

(2) when the Developer is in default under the terms of this Agreement, the Development Agreement, the Development Agreement Rider, or the Policies and Procedures as they may be amended from time to time;

(3) when the Subrecipient determines that the Developer or Developer’s management agent has failed to comply with the Subrecipient’s written notice of any reasonable requirement for proper maintenance or operation of the Development;

(4) if all currently required debt service, including mandatory payments on the Assistance, and Operating Expenses have not been paid; or

(5) if the replacement reserve account, operating reserve account or any other required reserve account is not fully funded pursuant to this Agreement.

24. Use of Net Cash Flow.

Net Cash Flow shall be applied to payment of interest, principal, impound fees and charges, if any, on loans which are secured by liens on the Property, including the Assistance (if made as a loan), which have been approved by the Subrecipient and which are to be paid from Net Cash Flow in the amounts, proportion and in accordance with the terms specified in Exhibit C hereto.

25. Department or Subrecipient Review and Inspections.

a. At any time during the term of this Agreement, the Department, the Subrecipient, or their designee may enter and inspect the physical premises and inspect all accounting records pertaining to the construction, development or operation of the entire Development. Upon request by the Department or Subrecipient, the Developer shall notify occupants of upcoming inspections of their Units in accordance with state law.

b. In addition to the annual audit required in paragraph 18 above, and at the Department's or Subrecipient’s request, the Developer shall provide, at Developer’s expense, a special audit of the Development certified by an independent certified public accountant. The Department or Subrecipient may also perform or cause to be performed audits of any and all phases of the Developer's activities related to the Packet Pg. 600
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development.

c. The Department or Subrecipient may request any other information that it deems necessary to monitor compliance with the Program Requirements and the requirements set forth in this Agreement and the Program Legal Documents. The Developer shall promptly provide such information.

26. Restrictions on Sale, Encumbrance, and Other Acts.

Prior to making any of the below changes or entering into any of the below agreements, Developer shall give written notice to Subrecipient and the Department no less than 60 days of its intention to take such action.

a. Except with the Subrecipient’s prior written approval, and Department’s prior written approval at the Department’s sole discretion, Developer shall not:

(1) make any direct or indirect sale, encumbrance, hypothecation, assignment, refinancing, pledge, conveyance, or transfer in any other form of the Property or Development or of any of Developer’s interest in either of them;

(2) substantially add to, remodel, remove, reconstruct, or demolish any part of the Development;

(3) permit the use of the Development for any purpose other than that permitted by this Agreement;

(4) incur any liability or obligation in connection with the Property or Development, other than for current Operating Expenses, nor incur any liability, charge, assessment, or obligation whatsoever that is secured in whole or in part by any interest in or lien or encumbrance on the Property provided that the Subrecipient may permit refinancing or additional financing secured by the Property to the extent necessary to maintain or improve the Development's fiscal integrity, or to maintain Affordable Rents;

(5) enter into any contract relating to rehabilitating or managing the Development;

(6) enter into any lease for more than a single rental Unit, a ground lease of the Property or any interest therein, except for the rental of Commercial Space in the Development; or

(7) if the Developer or its successor in in terest is a limited partnership, discharge or replace any general partner or amend, modify or add to its partnership agreement, or amend, modify or add to the organizational documents of the general partner; except that it may transfer limited partner interests without such approval. The withdrawal, remova l, and/or replacement of a general partner of the partnership pursuant to the terms of the partnership agreement shall not constitute a default under any of the Program Legal Documents, and Packet Pg. 601
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

any such actions shall not accelerate the maturity of the Assistance, provided that any required substitute general partner is reasonably acceptable to the Subrecipient and the Department, and is selected with reasonable promptness.

b. Any and all proposed sale, transfer, conveyance of the Property or Development, or proposed refinancing of any loans for the Development, must be approved in writing by both the Subrecipient and the Department, in the Department’s sole discretion. In evaluating such requests, the Department will consider, among other factors, the following:

(1) The transferor Developer (or Developer, as applicable) is in compliance with this Agreement, or the sale, transfer, conveyance or refinance will result in the cure of any existing violations of this Agreement.

(2) The transferee Developer agrees to assume all obligations of the transferor Developer pursuant to this Agreement, the other Program Legal Documents and the Program Requirements.

(3) The transferee Developer demonstrates to the Subrecipient's satisfaction that it has the ability and capacity to own and operate the Development in full compliance with this Agreement and the Program Requirements for the duration of this Agreement.

(4) Any terms of the sale, transfer, conveyance or refinance shall not jeopardize the Subrecipient's security or the transferee Developer’s (or Developer’s, as applicable) ability to comply with all Program Requirements.

(5) The Subrecipient and Department will not approve any cash payment to the selling party, or to any party related to or affiliated with the selling party. The Developer may not cash out its equity. Deferred developer fee, and seller carry back loans, cannot be cashed out from the proceeds of a sale, transfer, conveyance or refinance.

c. The Subrecipient and Department may grant its approval for a sale, transfer, conveyance or refinance of the Property or Development subject to such terms and conditions as may be necessary to preserve or establish the fiscal integrity of the Development or to ensure compliance with the Program Requirements. Such conditions may include, but are not limited to, the deposit of sales proceeds, or a portion thereof, to maintain required reserves or to offset negative cash flow.

d. If Developer or its successor in interest is a limited partnership, the execution and delivery of the purchase option and right of first refusal agreement described in the partnership agreement, if any, shall not constitute a default under the Program Legal Documents or accelerate the maturity of the Assistance thereunder, provided that such purchase option is and remains subordinate to the documents securing the Assistance.

Any requisite consent of the Subrecipient and Department to (a) the exercise of said Packet Pg. 602
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

purchase option and right of first refusal agreement by the Developer identified therein, and to (b) the assumption without penalty of Assistance obligations by the Developer and the release of Developer from such obligations shall not be unreasonably withheld, but may be conditioned upon the execution of an operating guaranty from the Developer in form provided by the Subrecipient. Subject to any such consent requirement, the exercise of rights under the partnership agreement shall not constitute a default under the Program Legal Documents or accelerate maturity of the Assistance.

e. If the Developer or its successor in interest is a limited liability company, the execution and delivery of the purchase option and right of first refusal agreement described in the operating agreement, if any, shall not constitute a default under the Program Legal Documents or accelerate the maturity of the Assistance thereunder, provided that such purchase option is and remains subordinate to the documents securing the Assistance.

Any requisite consent of the Subrecipient and Department to (a) the exercise of said purchase option and right of first refusal agreement by the Developer identified therein, and to (b) the assumption without penalty of Assistance obligations by the Developer and the release of Developer from such obligations shall not be unreasonably withheld, but may be conditioned upon the execution of an operating guaranty from the Developer in form provided by the Subrecipient. Subject to any such consent requirement, the exercise of rights under such the operating agreement shall not constitute a default under the Program Legal Documents or accelerate maturity of the Assistance.

f. If Developer or its successor in interest is a limited partnership or limited liability company and the purchase option and right of first refusal agreement described in the partnership or operating agreement, if any, is not exercised and the Development is sold subject to low-income housing use restrictions contained in this Agreement, the requisite consent of the Subrecipient and Department to said sale, and to the assumption without penalty of Assistance obligations by the purchaser and the release of Developer from such obligations, shall not be unreasonably withheld, but may be conditioned upon, among other requirements, the execution of an operating guaranty from the Developer in form provided by the Subrecipient.

g. The Developer agrees that if it is organized as a partnership or limited liability company, Developer shall not dissolve the partnership or limited liability company prior to the expiration of the term of this Agreement, without the prior written approval of the Subrecipient and the Department.

27. Breach of Agreement by Developer.

a. In the event of the Developer's breach, violation or default in the performance of any covenant, agreement or obligation of the Developer set forth in this Agreement including, but not limited to, Developer's covenant to perform its obligations under the Program Legal Documents, the Subrecipient shall give the Developer written notice in the manner specified in paragraph 42 of this Agreement, specifying the nature of the violation, breach or default and the action needed to cure. If the default, breach or violation is not cured to the satisfaction of the Subrecipient within the time period Packet Pg. 603
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

specified in the notice, which shall not be less than the applicable time to cure as stated in paragraph 28 of this Agreement, the Subrecipient may declare a default hereunder and may take any one or more of the following actions:

(1) Collect all Rents and income in connection with the operation of the Development and use the same and the reserve funds for the operation and maintenance of the Development.

(2) Take possession of the Development and bring any action necessary to enforce any rights of the Developer growing out of the operation of the Development, and operate the Development in accordance with the terms of this Agreement until such time as the Subrecipient, in its sole discretion, shall determine that the Developer is again in a position to operate the Development in accordance with the terms of this Agreement.

(3) Apply to any court, state or federal, for specific performance of this Agreement or for the appointment of a receiver to take over and operate the Development in accordance with the terms of this Agreement, or for such other relief as may be appropriate. It is agreed by the Developer that the injury to the Subrecipient arising from a default under any of the terms of this Agreement would be irreparable and that the amount of compensation, which would provide adequate relief to the Subrecipient, in light of the purposes and requirements of the Program, would be impossible to ascertain.

(4) Accelerate all amounts including outstanding principal and interest, due under the terms of the Program Legal Documents (if any) and demand immediate repayment thereof. Upon a failure to repay such accelerated amount in full, the Note provides that the Subrecipient may proceed with a foreclosure or sale under the power of sale in accordance with the provisions of the Deed of Trust and state law regarding foreclosures.

(5) Seek such other appropriate remedies as may be available under the law.

b. In the event that the breach or violation involves charging tenants Rent or other charges in excess of those permitted under this Agreement, the Subrecipient may demand that Developer immediately return all such exce ss Rents or other charges to the affected households. If legal action is necessary to enforce the provisions of this Agreement, the Subrecipient may seek the return of such overcharges to the affected households.

c. The remedies of the Subrecipient hereunder and under the other Program Legal Documents are cumulative, and the exercise of one or more of such remedies shall not be deemed an election of remedies and shall not preclude the exercise by the Subrecipient of any one or more of its other remedies.

d. The tenants of the DR-MHP Assisted Units shall be considered third party beneficiaries of this Agreement, all shall have such rights and remedies to enforce the Program Requirements of this Agreement as may be available to third party beneficiaries under Packet Pg. 604
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

the law.

28. Time To Cure.

a. If a monetary event of default occurs under the terms of any of the Program Legal Documents, prior to exercising any remedies thereunder the Subrecipient shall give Developer written notice of such default. De veloper shall have a period of seven (7) days after such notice is given within which to cure the default prior to exercise of remedies by the Subrecipient under the Program Legal Documents, or such longer period of time as may be specified in the Program Legal Documents.

b. If a non-monetary event of default occurs under the terms of any of the Program Legal Documents, prior to exercising any remedies thereunder, the Subrecipient shall give Developer written notice of such default. If the default is reasonably capable of being cured within thirty (30) days, as determined by the Subrecipient in its sole discretion, Developer shall have such period to effect a cure prior to exercise of remedies by the Subrecipient under the Program Legal Documents, or such longer period of time as may be specified in the Program Legal Documents. If the default is such that it is not reasonably capable of being cured within thirty (30) days, as determined by the Subrecipient in its sole discretion, or such longer period if so specified, and if Developer (a) initiates corrective action within said period, and (b) diligently, continually, and in good faith works to effect a cure as soon as possible, then Developer shall have such additional time as is determined by the Subrecipient, in its sole discretion, to be reasonably necessary to cure the default prior to exercise of any remedies by the Subrecipient. If Developer or its successor in interest is a limited partnership, if Developer fails to take corrective action or to cure the default within such a specified time, the Subrecipient shall give Developer written notice thereof, whereupon the limited partner may remove and replace the general partner with a substitute general partner who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. In no event shall the Subrecipient be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety (90) days after the first notice of default is given, or such longer period of time as may be specified in the Program Legal Documents.

c. In the event of either a monetary or non-monetary default under the Program Legal Documents by the Developer, Subrecipient shall provide notice of such default to the Department simultaneously with the giving of notice to the Developer.

29. Property Tax Exemption. To the extent the property tax exemption provisions of section 214 of the Revenue and Taxation Code are applicable to the Developer and the Development, Developer shall take all actions necessary to qualify the Development for the maximum exemption from property taxes available pursuant to said section 214 of the Revenue and Taxation Code within 18 months of the recordation date of this Agreement. Such actions may include, but are not limited to the following:

a. Modify, add to or delete from the articles of incorporation, bylaws or other Packet Pg. 605
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

organizational documents of Developer or of the managing general partner of Developer;

b. Apply for nonprofit, tax-exempt status to the appropriate state or federal agency;

c. Provide the certifications and assurances required by section 214 of the Revenue and Taxation Code; and

d. Comply with the procedures and requirements imposed by local government agencies as a condition of receiving the property tax exemption.

e. Developer’s failure to qualify the Development for the maximum exemption from property taxes as described in this Section 29 shall constitute a default under the terms of this Agreement, and may also constitute a default under the Program Legal Documents.

30. Controlling Agreement.

a. Developer specifically agrees and acknowledges that, notwithstanding any internal accounting procedures or provision pertaining to the use of receipts, payments, reserves and distributions contained in its partners hip or other organizational documents or agreements, the terms of this Agreement, the Notice to Proceed and the Program Requirements shall control as to the use of the funds provided under the Development Agreement and all Operating Income from the Development.

b. In the event of any inconsistencies or conf licts between the terms of this Agreement and the terms of the other Program Legal Documents, the terms of this Agreement shall control.

31. Assignment of Subrecipient Rights. The Subrecipient retains the right at its sole discretion to assign all or part of its rights under this Agreement for the purpose of ensuring compliance and enforcement of Developer's duties and obligations hereunder to a Subrecipient-owned or controlled entity such as its Housing Authority. In addition, the Subrecipient may designate or hire an agent to act on its behalf in monitoring compliance and enforcing the provisions hereof.

In the event Subrecipient assigns all or part of its rights for the purpose of ensuring compliance and enforcement, or designates or hires an agent to act on its behalf with respect to monitoring and enforcement as described in this paragraph, Subrecipient shall remain obligated under, and ultimately responsible for fulfilling, the terms of this Agreement.

32. Amendment. This Agreement shall not be altered or amended except in writing, executed by all of the parties hereto, with prior written approval by the Department.

33. Partial Invalidity. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

Packet Pg. 606
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

34. Binding on Successors. This Agreement shall bind, and the benefits hereof shall inure to, the respective parties hereto, their legal represen tatives, executors, administrators, transfers, successors in interest and assigns, provided, however, that the Developer may not assign this Agreement or any of its obligations hereunder, voluntarily or by operation of law, without the prior written approval of the Subrecipient. The term “Developer” as used herein shall include and apply to any person or entity succeeding to the legal, equitable, proprietary or possessory interest of Developer in the Development.

35. Recording of Agreement. This Agreement, and all amendments hereto, shall be executed by each of the parties and their respective signatures acknowledged. This Agreement, shall be recorded against the Property in the official records of the county(ies) in which the Development is situated before construction begins, but not more than 180 days subsequent to the issuance of a Notice to Proceed by the Department and shall have priority over other liens, encumbrances and other matters of record except as may be approved by the Department.

Exceptions to the position of this Agreement must be approved in writing and in advance by the Department.

36. Indemnification of Department; Waiver.

a. Developer agrees to indemnify and defend the Department and its agents, employees and officers against, and hold the Department and its agents, employees and officers harmless from, any and all costs, losses, damages, liabilities, claims, demands, actions, judgments, court costs and legal or other expenses (including attorneys’ fees) of every name, kind and description, which the Department may incur as a direct or indirect consequence of any of the following: (1) the making of the Assistance to the Developer; (2) Developer’s failure to perform any obligations as and when required by this Agreement or any of the other Program Lega l Documents; (3) any failure at any time of any of Developer's representations or warranties to be materially true and correct; (4) any act or omission by Developer, any contractor, subcontractor, material supplier, engineer, architect or other person or entity with respect to the Property or the construction, management, maintenance or operation of the Development; or (5) the presence of any recognized environmental conditions at the Development or on the Property. Developer shall pay immediately upon the Department's demand any amounts owing under this indemnity together with interest from the date the indebtedness arises until paid at the rate of ten percent (10%) per annum. Developer’s duty to indemnify and hold harmless includes the duties to defend as set forth in section 2778 of the Civil Code. Developer shall indemnify and hold harmless the Department and its agents, officers and employees as set forth herein regardless of the existence or degree of fault or negligence whether active or passive, primary or secondary on the part of the Department, , the Subrecipient, or their respective agents, officers, employees, contractors or subcontractor; pr ovided, however, that Developer's duty to indemnify and hold harmless hereunder shall not extend to liability arising from the gross negligence or willful misconduct of the Department. Developer's duty to indemnify and defend the Department shall survive the term of this Agreement. In the event the United States Department of Housing and Urban Development (“HUD”) acquires title to the Development, this indemnification provision will not apply to Packet Pg. 607
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

HUD.

b. The Developer waives and releases any and all rights to any types of express or implied indemnity against the Department or its agents, officers or employees.

c. The Developer expressly waives the protections of section 1542 of the Civil Code in relation to subparagraphs a. and b. above. Said section 1542 provides as follows: “A general release does not extend to claims that the creditor does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party”.

37. Indemnification of Subrecipient; Waiver.

a. Developer agrees to indemnify the Subrecipient and its agents, employees and officers against, and holds the Subrecipient and its agents, employees and officers harmless from, any losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses (including attorney’s fees) of every name, kind and description, which the Subrecipient may incur as a direct or indirect consequence of: (1) the making of the Assistance to the Developer; (2) Developer’s failure to perform any obligations as and when required by this Agreement or any of the other Program Legal Documents; (3) any failure at any time of any of Developer’s representations or warranties to be materially true and correct; (4) any act or omission by Developer, any contractor, subcontractor, material supplier, engineer, architect or other person or entity with respect to the Property or the construction, management, maintenance or operation of the Development; or (5) the presence of any recognized environmental conditions at the Development or on the Property. Developer shall pay immediately upon the Subrecipient's demand any amounts owing under this indemnity together with interest from the date the indebtedness arises until paid at the rate of ten percent (10%) per annum. Developer’s duty to indemnify and hold harmless includes the duties to defend as set forth in section 2778 of the Civil Code. Developer shall indemnify and hold harmless the Subrecipient and its agents, o fficers and employees as set forth herein regardless of the existence or degree of fault or negligence whether active or passive, primary or secondary on the part of the Subrecipient, or their respective agents, officers, employees, contractors or subcontractor; pr ovided, however, that Developer's duty to indemnify and hold harmless hereunder shall not extend to liability arising from the gross negligence or willful misconduct of the Subrecipient. Developer's duty to indemnify the Subrecipient shall survive the term of this Agreement. In the event HUD acquires title to the Development, this indemnification provision will not apply to HUD.

b. The Developer waives and releases any and all rights to any types of express or implied indemnity against the Subrecipient or its agents, officers or employees.

c. The Developer expressly waives the protections of section 1542 of the Civil Code in relation to subparagraphs a. and b. above. Said section 1542 provides as follows: A

GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
Packet Pg. 608
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR

AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM

OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

38. No Waiver. No waiver by the Department or Subrecipient of any breach or violation of or default under this Agreement shall be deemed to be a waiver of any other or subsequent breach or violation hereof or default hereunder. All waivers must be in a writing signed by the party making the waiver in order for such waiver to be effective.

39. Third-Party Beneficiaries. The Developer and Subrecipient expressly agree and acknowledge that the Department is an intended third-party beneficiary to the provisions of this Agreement.

Among other things, the performance of this Agreement benefits the Department by creating, rehabilitating, or otherwise making available, affordable housing units within the State of California, and allows the Department to ensure compliance with applicable program requirements governing the Development. The Department is the sole third-party beneficiary and no other parties are intended or should be deemed as such.

40. Captions. The captions used in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, or describe the scope or the intent of this Agreement.

41. Governing Law. This Agreement shall be cons trued in accordance with and governed by the laws of the State of California and the United St ates of America. All code references herein refer to the California state statutes, unless specifically indicated otherwise.

42. Notice. Except for any notice required under applicable law to be given in another manner, any notices, demands or communications between the parties hereto shall be sufficiently given if, and shall not be deemed given unless, dispatched by certified mail, postage prepaid, return receipt requested or delivered by express delivery service with delivery receipt, to the address of the respective party as set forth below, or to such other address as the respective party may have designated by written notice given to the other party in the manner provided herein. Such written notices, demands and communications shall be effective on the date shown on the delivery receipt as the date delivered, the date on which delivery was refused, or the date on which delivery was attempted.

43. Attorneys’ Fees. The prevailing party in any action to enforce this Agreement, including residents of DR-MHP Assisted Units, shall be entitled to reasonable attorneys’ fees and costs as determined by the trier of fact in that forum.

44. Subrecipient’s Approval, Etc. Whenever this Agreement or any of the other Program Legal Documents requires the approval, consent, or other determination by the Subrecipient, the Subrecipient shall act reasonably and in good faith.

45. Compliance with IRC Section 42(h)(6)(E)(ii). In the event a regulatory agreement required by TCAC is recorded against the Property as a condition of the award of federal tax credits, the Department and Subrecipient agree to comply with the provisions set forth in Internal Revenue Packet Pg. 609
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Code (“IRC”) Section 42(h)(6)(E)(ii). As of the date of this Agreement, IRC Section 42(h)(6)(E)(ii) does not permit the eviction or termination of tenancy (other than for good cause) of an existing tenant of any low-income unit or any increase in the gross rent with respect to such unit not otherwise permitted under Sectio n 42 for a period of three (3) years after the date the building is acquired by foreclosure or instrument in lieu of foreclosure.

46. Special Conditions. The Developer agrees to comply with and be bound by the special conditions, if any, set forth in Exhibit C hereto.

47. Exhibits. The following exhibits are attached hereto, incorporated herein and made a part of this Agreement:

Exhibit A: Legal Description of the Property;

Exhibit B: Unit Designation and Rent Schedule and requirements for Supportive Housing Units or Special Needs Population Units; and

Exhibit C: Special Conditions.

[Signatures of the Developer and the Subrecipient follow on page 24 of this Regulatory Agreement. The remainder of this page is intentionally left blank.]
Packet Pg. 610
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

IN WITNESS WHEREOF, the parties hereby execute and enter into this Agreement as of the date first set forth above and agree to be bound hereby:

IN WITNESS WHEREOF, the City and the Developer have executed this Agreement on the respective dates set forth below:

City of Redding , a municipal corporation

Date: ___________________
By: Kristen Schreder, Mayor

Kennett Court Senior Apartments, LP ,
a California Limited Partnership

By: Community Revitalization and Development Corporation a California non-profit public benefit corporation
Its: Managing General Partner

B y :

David Rutledge
Its: President

By: Kennett Court Senior Apartments LLC
a California Limited Liability Company
Its: Administrative General Partner

By: ________________________
Daniel Knott
Its: Manager

ATTEST:

________________________
By: Pamela Mize, City Clerk

APPROVED AS TO FORM:

_____________________________________
By: Barry E. DeWalt, City Attorney
Packet Pg. 611
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT A TO REGULATORY AGREEMENT

LEGAL DESCRIPTION OF THE PROPERTY

114-070-006-000
RESULTANT PARCEL 2

Being a portion of all that real property as described in that Grant Deed to AOK Properties, LLC, a California Limited Liability Company recorded December 9, 2019 in Instrument Number 2019-0037939, Shasta County records and being a portion of Parcel 2 as described in that Corrective Grant Deed to The City of Redding as Successor Housing Agency of the Redding Redevelopment Agency to recorded September 25, 2019 in Instrument Number 2019-0028214, Shasta County records, lying Northerly and Easterly of the following described line:

Thence North 81° 17' 02West 13.56 feet to the True Point of Beginning;

Thence from said Point of Beginning and leaving said Southerly line North 0° 52' 23" West 223.12 feet;

Thence South 89° 07' 37" West 142.19 feet;

Thence North 0° 52' 23" West 184.00 feet more or less to a point on the Northerly line of the lands of ADK Properties LLC, a California Limited Liability Compan y as described in said Instrument Number 2019- 0037939, Shasta County records, and the point of termination of said line

Containing 2 .28 acres more or less.

Book 59 of Land Surveys, Page 148, Shasta County records was used as the basis of bearings for this description.

Packet Pg. 612
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT B TO REGULATORY AGREEMENT

I. UNIT DESIGNATIONS AND RENT SCHEDULE

Developer shall comply with Rent provisions of all regulatory agreements regulating the Property.

The Initial Operating Year ends at the end of the initial Fiscal Year, which is:

December 31, 2023.

During the Initial Operating Year:

A. Developer shall charge Rents for DR-MHP Assisted Units that do not exceed Rents set forth in the schedule below; and
B. Developer shall charge Rents for Units other than DR-MHP Assisted Units in amounts not less than the amounts shown herein.

After the Initial Operating Year, Rents may be increased in accordance with paragraphs 10 and 11 of this Agreement.

Unit Mix:

No. of
Bedrooms
DR-MHP
Assisted
Units
Restricted
(including
DR-MHP
Assisted
Units)
non-
Restricted
Units

Total
Units

Rent

Utility
Allowance
Net Rent
(gross –
util.
allw.)

Annual Net
Rent

Income Limit
AMI

AMI
% AMI
% AMI
% AMI

Market
Rate

Mngr.

Totals

The above Unit Mix chart is based on the following:
2021 High HOME Program Rents and CDBG Income Limits for Shasta County, California.

Packet Pg. 613
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

II. DR-MHP PRIORITY PROVISIONS AND/OR SUPPORTIVE HOUSING UNITS REQUIREMENTS [CHECK MARK the ACTUAL PRIORITY
CRITERIA USED TO QUALIFY THE PROJECT FOR DR-MHP – ]

A. For the full term of this Agreement, Developer shall restrict occupancy of Units within the Development as Supportive Housing Units to be occupied by eligible Households experiencing Chronic Homelessness, as defined in 24 CFR 578.3. For these units, Developer shall select tenants in strict accordance with the criteria and procedures identif ied in the supportive services plan for the Development approved by the Subrecipient, as may be amended from time to time. For the full term of this Agreement, Developer shall make a good-faith effort to provide all the supportive services identified in the supportive services plan for the Development approved by the Subrecipient. At a minimum, Developer shall provide without cost to tenant the following services, or arrange for their provision:
. No later than ninety (90) days af ter the end of each Fiscal Year for the Development, Developer shall submit for Subrecipient review and approval a report on the Supportive Housing Units households in the Development. This report shall be on a form provided by the Subrecipient, and shall include a listing of the number and type of Supportive Housing Units residents, a description of the supportive services provided to them, and such other matters as the Subrecipient may require.

B. XX For the full term of this Agreement, Developer shall restrict occupancy of 40 Units within the Development for Elderly Persons, defined in the DR-MHP Policies and Procedures as persons 62 years of age or older, or in the State Multifamily Housing Program Guidelines as residents who are 62 years of age or older under applicable provisions of Cal. Civ. Code, Section 51.3 and the federal Fair Housing Act, or the Project is for residents who are 55 years of age or older, per 24 CFR 100.300-308 subpart E.

C. For the full term of this Agreement, Developer shall restrict occupancy of _____ Units within the Development for persons with at least one Disability.

D. For the full term of this Agreement, Developer shall restrict occupancy of _____ Units within the Development for Low-Income Immigrants. “Low- income” persons means individuals, families, and households whose incomes are no more than 50% of the area median income involved, as set by HUD.

From the demography point of view, the low-income working families are those earning less than twice the federal poverty line; and recent immigrants are those who came to the United States within the past 10 years.

III. SPECIAL NEEDS POPULATIONS DEVELOPMENT REQUIREMENTS [CHECK MARK BASED ON THE ACTUAL PRIORITY CRITERIA USED
TO QUALIFY THE PROJECT FOR DR-MHP]
A. For the full term of this Agreement, Developer shall restrict occupancy of___ units within the Development to the following Special Needs Population or Populations:

B. For these units, Developer shall select tenants in strict accordance with the Packet Pg. 614
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

criteria and procedures identified in the supportive services plan for the Development approved by the Subrecipient, as may be amended from time to time. For the full term of this Agreement, Developer shall make a good-faith effort to provide all the supportive services identified in the supportive services plan for the Development approved by the Subrecipient. At a minimum, Developer shall provide without cost to tenant the following services, or arrange for their provision: INSERT TYPE OF SERVICES.

C. No later than ninety (90) days after the end of each Fiscal Year for the Development, Developer shall submit for Subrecipient review and approve a report on the Special Needs Population households in the Development. This report shall be on a form provided by the Subrecipient, and shall include a listing of the number and type of Sp ecial Needs Population residents, a description of the supportive services provided to them, and such other matters as the Subrecipient may require.

EXHIBIT C TO REGULATORY AGREEMENT
Special Conditions

In the event of any inconsistencies or conflicts between these Special Conditions and the terms of this Agreement or any of the other Program Legal Documents, the terms of these Special Conditions shall control.

Required Reserves (paragraph 19).

Replacement Reserves (paragraph 19.a). 1 2

Annual Deposit Amount 33: $_________________
[ ] based on .006 times $
[ ] based on a physical needs assessment
[ ] based on _____ established by ____ funding source
Initial Capitalization Amount:
$_____________
Withdrawals Require Prior Subrecipient Approval: YES
Operating Reserve (paragraph 19.b).

Deposit Amount: $ per month
Initial Capitalization Amount: $
Date of Deposit: [close of escrow or ?]
Withdrawals Require Prior
Subrecipient Approval?
YES

2 The annual deposit of $ will be held and controlled by CalHFA. The initial capitalized portion of

3 The first annual deposit amount shall be prorated from the close of escrow to the end of the Fiscal Year (defined in section 3).

Packet Pg. 615
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Other Reserves ( paragraph 19.c). If applicable, approved transition reserve account established to prevent tenant displacement resulting from the termination of rent subsidies.

Name:

Deposit Amount: $ per
Initial Capitalization Amount:

Withdrawals Require Prior
Subrecipient Approval?

Name:

Deposit Amount: $ per
Initial Capitalization Amount:

Withdrawals Require Prior
Subrecipient Approval?

Payments to be made Prior to Determination of Net Cash Flow (paragraph 22b.(3)).

Lender:

Initial Principal Amount: $
Payment Amount 4 $ per year for ___ years (___% of principal) Term to Maturity: __ years
Lien Position:

Interest Rate and Type: __%

Deferred Developer Fee ( paragraph 22.b.). The Subrecipient approved Deferred Developer Fee from paragraph 22.b.(6) is $ .

Use of Net Cash Flow (paragraph 24). Net Cash Flow shall be applied towards payment of the following loans, in the percentages noted:

Lender:

Initial Principal Amount: $
Percentage of Net Cash Flow: %
Term to Maturity: __ years
Lien Position:

Interest Rate: %

Limited Partner Cure Rights. Notwithstanding anything to the contrary herein, the Subrecipient hereby agrees that any cure of any default offered by the limited partners of the Developer

4 Payment Amount to include details on future adjustments, caps, and balloons Packet Pg. 616
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

shall be accepted or rejected on the same basis as if cure was offered by the Developer. Copies of all notices of default sent hereunder shall be sent to the limited partners of the Developer at the following address:

Raymond James Affordable Housing Investments, Inc.

The Subrecipient’s failure to provide a duplicate copy will not be a breach by the Subrecipient, nor will it impair the Subrecipient’s or Department’s foreclosure or other remedies in any way.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Exhibit 4B

RIDER TO DEVELOPMENT AGREEMENT
DRAFT - For informational purposes only, HCD to provide final document

State of California
Department of Housing and Community Development
Community Development Block Grant - Disaster Recovery
DR4344 and DR4353 Disaster Recovery Multifamily Housing Program

Kennett Senior Court Apartments / Kennett Court Senior Apartments, LP

Pursuant to that certain Master Standard Agreement (“MSA”) number 21-DRMHP-21008, entered into on the 13th day of May 2021 , by and between the California Department of Housing and Community Development (“Department”) and City of Redding (“Subrecipient”), this RIDER TO DEVELOPMENT AGREEMENT (“RIDER”) is incorporat ed into and made a part of that certain Development Agreement, defined as the legal instrument that conveys the Project Funds to the development, entered into on the TBD 2022 by and between City of Redding (“Subrecipient”) and Kennett Court Senior Apartments, LP , (“Developer”) (the “Development Agreement”) to include terms required by the Department for the individual multifamily affordable housing development project proposed by Subrecipient located at [114-070-006-000, consisting of 40 affordable housing units, including [6 (5 units are at 30% or below of AMI)] CDBG-DR restricted units, (the “Approved Project”).

This Approved Project is subject to the terms of the MSA, this Rider, and the funding amount and conditions determined by the Department set forth in the Notice to Proceed (“NTP”) for the Approved Project. The Subrecipient and Developer agree to abide by the following terms required by Department applicable to the Approved Project.

1. Performance Milestones

A. [Milestones from NTP]

B. [Milestones from NTP]

C. DR-MHP Regulatory Agreement shall be recorded against the Approved Project property before construction begins, but not more than 180 days subsequent to the issuance of an NTP by the Department.

D. No later than April 30, 2023, Subrecipient shall provide the Department with written certification on its letterhead evidencing that physical construction work is underway for the Approved Project.

E. No later than January 31, 2025, Subrecipient shall provide the Department with a copy of the recorded Notice of Completion for all Approved Projects.

2. Priority of Use of Funds
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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Subrecipient and Developer must utilize funds available under the NTP (“Project Funds”) to supplement rather than supplant funds otherwise available. To the extent available, Subrecipient and Developer must disburse funds available to the Approved Project from, among other sources, third-party loans or grants, program income, rebates, refunds, contract settlements, audit recoveries, insurance and condemnation proceeds and interest earned on such funds before disbursing Project Funds.

3. Method of Payment

Payments will be made directly to Subrecipient as reimbursements based on the documented and satisfactory completion of agreed upon milestones detailed in the NTP. The Department shall not authorize payments or reimbursements unless it has determined the activities indicated in the Financial Report have been performed in compliance with the terms of the MSA and any other agreements executed by the parties in connection herewith.

A. Reimbursements for costs incurred

1) The Subrecipient may use Project Funds for reimbursement by the Department of Eligible Expenses as defined in the MSA, applied to Approved Projects.

2) Financial Reports for Project Funds shall be submitted to the Department by Subrecipient on a pro rata basis based on the percentage of construction completed.

3) Subrecipient shall withhold as retainage 10% of all DR-MHP funded Developer payments. No retainage payments shall be released to the Developer or reimbursed to the Subrecipient until receipt and approval by the Department of all required Approved Project closeout documents identified in Section 6 of the MSA.

4) To receive reimbursement for Approved Project activities, the Subrecipient must timely submit all required Department forms via Grants Network.

Financial Reports must include the level of documentation specified by the Department in the Department’s most recent version of the Grant Administration Manual located on the Department’s website, in order to be reviewed and processed.

5) Developer shall provide Subrecipient with documentation as requested to evidence expenditure of eligible costs on the Approved Project.

4. Duplication of Benefits

A Duplication of Benefits (DOB) occurs when a program beneficiary receives assistance from multiple sources for a cumulative amount that exceeds the total need for a particular recovery purpose. The amount of the duplication is the amount of assistance provided in excess of the need. It is the Department’s responsibility to ensure that the DR-MHP provides assistance only to the extent that the disaster recovery need has not been fully met by funds that have already been paid, or will be paid, from another source.

The Subrecipient must report all funds obtained for the activity by the Project owner from any source from the date of the disaster until the Project is completed.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Additionally, the Department, in coordination with the Subrecipient, will perform a check for DOB prior to issuing a Notice to Proceed to ensure that duplicative assistance is not provided for multifamily housing. The Department also reserves the right to require that the Subrecipient perform additional DOB checks throughout the course of the Approved Project’s period/performance, up to and through the closeout of each Approved Project, to ensure there is no duplicative assistance throughout the course of the Approved Project. Any person who knowingly makes a false claim or statement to HUD may be subject to civil or criminal penalties under 18 U.S.C. 287, 1001 and 31 U.S.C. 3729.

The Subrecipient agrees to repay to the Department any assistance later received for the same purpose as the CDBG–DR funds and that exceeds th e total need for the particular recovery purpose.

5. Developer Responsibilities

A. Developer for the Approved Project shall be responsible for all project management functions of the Approved Project, in cluding project design and development, construction and/or rehabilitation, maintenance, selection of tenants, annual recertification of Household income and size, and management of the Approved Project and units in accordance with local requirements, the most recent version of the DR-MHP Policies and Procedures Manual, the requirements of the MSA and DR-MHP Regulatory Agreement for the duration of the affordability period.

B. Developer shall be responsible for all repair and maintenance functions of the Approved Project, including ordinary maintenance and repair, and replacement of capital items. “Ordinary maintenance and repair” means regular or usual care, upkeep or replacement of any part, or putting back together that which is deteriorated or broken, of an existing property, building or structure so that the Approved Project is in decent, safe, and sanitary condition at all times. Developer shall ensure maintenance of residential units, commercial space and common areas in accordance with all federal, state, and local health, building, and housing codes, and the Management Plan described below.

C. If Developer hires a separate entity to manage the property after construction is complete, Developer for the Approved Project shall ensure that the Approved Project is managed by an entity approved by the Subrecipient that is actively in the business of managing affordable housing. Any property management contract entered into for this purpose shall be subject to Subrecipient approval and must contain a provision allowing Developer to terminate the contract upon 30-days’ notice. Developer shall terminate said contract as directed by Subrecipient upon a determination that management does not comply with DR-MHP requirements and/or the provisions of any recorded regulatory agreement for the Approved Project.

D. Developer for the Approved Project shall develop a management plan for the Approved Project (“Management Plan”) subject to Subrecipient approval prior to the start of construction. Any change to the Management Plan shall be subject to the approval of Subrecipient. The Management Plan shall be consistent with program requirements and must include provisions addressing the following:

 The role and responsibility of Developer and the delegation of its authority;  Personnel policy and staffing arrangements including key personnel and lines of Packet Pg. 620
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

authority;
 Plans and procedures for publicizing and achieving early and continued occupancy by eligible low- to moderate-income tenants;
 Procedures for determining tenant eligibility and selecting tenants and for certifying and annually recertifying Household income and size;  Plans for carrying out, and budgeting for, an effective maintenance and repair program including ordinary maintenance and repair, and a capital needs assessment prepared every 5 years, excep t that for newly constructed projects, this requirement shall apply beginning with year 10;
 Rent collection policies and procedures;
 Policies and Procedures for managing funds that meet generally accepted accounting principles;
 A program for maintaining adequate accounting records and handling necessary forms and vouchers;
 Plan for safeguarding all tenant personally identifiable information (PII) such as social security numbers, names and birthdates, against possible identity theft as applicable.
 Plans for enhancing tenant-management relations;
 The property management contract if any;
 Provisions for periodic update of the Management Plan;  Appeal and grievance procedures;
 Policies and procedures for collections for tenant-caused damages, processing evictions and terminations; and
 A supportive services plan for Approved Projects serving Special Needs Populations, including Supportive Housing and/or providing supportive services to the general tenant population.

E. Annually, during the term of the MSA, Subrecipient shall perform monitoring of Developer and Approved Project to ensure compliance with federal and state requirements, timely project completion and the terms of the DR-MHP Regulatory Agreement. Developer shall be required to resolve any monitoring findings to the Subrecipient's satisfaction by the deadlines set by the Subrecipient.

Developer shall retain all books, records, accounts, documentation, and all other materials relevant to this RIDER and the initial development phase of this Approved Project for a minimum period of five (5) years after the Department notifies the Subrecipient that the grant agreement between HUD and the State of California has been closed. Subsequent to close out of the grant agreement between HUD and the State of California, all records and books relevant to this RIDER and the operational phase of this Approved Project shall be retained for the most recent five (5) year period, until five years after the affordability period terminates. All records must be maintained in such a manner as to ensure that the records are reasonably protected from destruction or tampering. All records shall be subject to inspection and audit by the Subrecipient, the Department, HUD, federal Office of the Inspector General or their respective representatives.

Subrecipient may charge Developer a reasonable annual fee for compliance monitoring during the term of affordability period. The fee must be based upon the average actual cost of performing the monitoring of CDBG-DR-assisted Approved Projects. The basis for determining the amount of the fee must be documented and the fee must be included in the costs of the project as part of the project underwriting.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Should Developer fail to perform its duties as described above, including a failure constituting a material default pursuant to the Development Agreement, such that the Approved Project’s ability to meet its stated goals under the Program is materially impaired or wholly prevented, or that materially impacts the delivery of an eligible and compliant project on a timely basis pursuant to the NTP, such failure shall constitute a default under this RIDER.

Subrecipient shall be responsible for curing such default, by way of corrective action or hiring a new Developer. The Developer shall not be removed or substituted with a new developer entity without the prior written consent of both the Department and Subrecipient, and the Development Agreement shall contain a provision to this effect.

No Developer may be listed on any state or federal debarment list and must be in good standing with the Department and the State of California. Any proposed cure of such default must be provided to the Department in writing for approval prior to implementation. If such default is not cure d timely, Subrecipient will be responsible for repayment to the Department of the funding for the Approved Project.

6. Suspension and Debarment

By executing this RIDER, Developer verifies and affirms that it has not been suspended or debarred from participating in or receiving federal government contracts, subcontracts, loans, grants or other assistance programs. Developer further agrees to verify that its partners, contractors, and subcontractors have not been suspended or debarred from participating or receiving federal government contracts, subcon tracts, loans, grants, or other assistance programs. Subrecipient and the Department each reserve the right to request documented confirmation that Developer and its partners, contractors and subcontractors have not been suspended or debarred from receiving federal government contracts, subcontracts, loans, grants or other assistance programs, and are in good standing with the Department and the State of California.

7. Compliance with State and Federal Laws and Regulations

Subrecipient and Developer shall comply with all local, state, and federal laws, statutes, and regulations, as well as the CDBG-DR Grant Administration Manual for 2017 and 2018 Disasters and the DR-MHP Policies and Procedures Manual, as the same may be amended from time to time.

8. Authority to Impose Additional Special Conditions

In accordance with 2 CFR 200.207, Department reserves the right and authority to impose additional special conditions within any NTP or NTP revision issued under the MSA under any of the following circumstances:

A. When, in the Department’s sole discretion, Department finds that Subrecipient or Developer has a history of failure to comply with the general or specific terms and conditions applicable to the CDBG-DR funds allocated under the MSA, this RIDER, or to other awards of Federally-funded grant or loan assistance passed through the Department.

B. When Subrecipient or Developer fails to meet expected performance goals under this RIDER.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

C. When Subrecipient or Developer poses an increased risk for noncompliance based on factors including, but not limited to, financial stability, quality of management systems, history of performance under Federal awards, history of timeliness under Federal awards, history of conformance with terms and conditions of previous federal awards, and reports and findings from audits.

D. When, in the Department’s sole discretion, such conditions are necessary to ensure timely and compliant performance under the Federal award.

Such specific special conditions, may include, withholding of reimbursement of project costs until receipt of evidence of acceptable performance within a given period of performance, requiring additional detailed financial reports, requiring additional project monitoring, requiring the Subrecipient or Developer to obt ain technical or management assistance, establishing additional prior approvals, or any other condition the Department deems reasonable and necessary to safeguard Federal funds.

Such additional specific special conditions, shall be included in the NTP or NTP revision for the Approved Project and shall include the nature of the additional requirements, the reason why the additional requirements are being imposed, the nature of the action needed to remove the additional requirement (if applicable), the time allowed for completion of the actions (if applicable), and the method for requesting reconsideration of the additional requirements imposed.

9. The Training, Employment, and Contracting Opportunities for Business and Lower-Income Persons Assurance of Compliance (Section 3):

Developers shall comply with Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) (“Section 3”) and implemen ting regulation at 24 CFR Part 135. The responsibilities outlined in 24 CFR Subpart B, § 135.32 include:

A. Implementing procedures designed to notif y Section 3 residents about training and employment opportunities generated by Section 3 covered assistance and Section 3 business concerns about contracting opportunities generated by Section 3 covered assistance.

B. Notifying potential contractors for Section 3 covered projects of the requirements of this Part and incorporating the Section 3 clause set forth in Section 135.38 in all solicitations and contracts in excess of $100,000.

C. Facilitating the training and employment of Section 3 residents and the award of contracts to Section 3 business concerns by undertaking activities such as described in the appendix to this part, as appropriate, to reach the goals set forth in Section 135.30.

Recipients, at their own discretion, may establish reasonable numerical goals for the training and employment of Section 3 residents and contract award to Section 3 business concerns that exceed those specified in Section 135.30.

D. Assisting and actively cooperating with the Assistant Secretary in obtaining the compliance of contractors and subcontractors with the requirements of this part, and refraining from entering into any contract with any contractor where the recipient has notice or knowledge that the contractor has been found in violation of the regulations in 24 CFR Part 135.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

E. Documenting actions taken to comply with the requirements of this part, the results of those actions taken and impediments, if any.

10. Assurance of Compliance with the “Violen ce Against Women Reauthorization Act of 2013” (VAWA) (S.47 - 113th Congress (2013-2014)) (as amended or reauthorized) Title VI - Safe Homes for Victims of Domestic Violence, Dating Violence, Sexual Assault, and Stalking – Sec. 601-603. See also 81 CFR 80724:

VAWA provides housing protections for survivors of domestic and dating violence, sexual assault, and stalking when it comes to finding and keeping a home, they can feel safe in.

VAWA applies for all victims of domestic violence, dating violence, sexual assault, and stalking, regardless of sex, gender identity, or sexual orientation, and which must be applied consistently with all nondiscrimination and fair housing requirements. VAWA now expands housing protections to HUD programs beyond HUD’s public housing program and HUD’s tenant-based and project-based Section 8 programs. VAWA now provides enhanced protections and options for victims of domestic violence, dating violence, sexual assault, and stalking.

During the performance of this Approved Project, Developer shall assure that all requirements of VAWA are complied with (including but not limited to):

A. Domestic Violence survivors are not denied assistance as an applicant, or evicted or have assistance terminated as a tenant, because the applicant or tenant is or has been a victim of domestic violence, dating violence, sexual assault, and stalking.

B. It will implement an ‘emergency transfer plan’, which allows for domestic violence survivors to move to another safe and available unit if they fear for their life and safety.

C. It will provide “Protections against denials, terminations, and evictions that directly result from being a victim of domestic violence, dating violence, sexual assault, or stalking, if the applicant or tenant otherwise qualifies for admission, assistance, participation, or occupancy.”

D. It will implement a ‘Low-barrier certification process’ where a domestic violence survivor need only to self-certify in order to document the domestic violence, dating violence, sexual assault, or stalking, ensuring third party documentation does not cause a barrier in a survivor expressing their ri ghts and receiving the protections needed to keep themselves safe.

11. Procurement of Recovered Materials

In accordance with Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, the Developer shall cause contractor to procure items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR Part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition. The Developer shall cause contractors to procure items designated in the EPA guidelines that contain the highest percentage of recovered materials practicable unless the contractor determines that such items: (1) are not reasonably available in a reasonable period of time; (2) fail to meet reasonable performance standards, which shall be determined on the basis of the guidelines of the National Institute of Standards and Technology, if applicable to the item; or (3) are only available at an unreasonable price.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

This clause shall apply to items purchased under this RIDER where: (1) the contractor purchases in excess of $10,000 of the item under this contract; or (2) during the preceding Federal fiscal year, the contractor: (i) purchased any amount of the items for use under a contract that was funded with Federal appropriations and was with a Federal agency or a State agency or agency of a political subdivision of a State; and (ii) purchased a total of in excess of $10,000 of the item both under and outside that contract.

12. Construction Standards

The Subrecipient and Developer shall ensure that all Approved Projects comply with the following requirements:

A. California Building Codes (CBC) (Cal. Code Regs., Title 24)

All residential construction projects shall comply with the housing construction codes of the State of California, including all units developed under DR-MHP.

B. The Architectural Barriers Act of 1968 (42 U.S.C. §§ 4151-4157)

The Architectural Barriers Act (ABA) stands as the first measure by Congress to ensure access to the built environment for people with disabilities. The law requires that buildings or facilities that were designed, built, or altered with federal dollars or leased by federal agencies after August 12, 1968 be accessible.

C. California Green Buildings Standards Code (CALGreen) (Title 24, Part 11 of the California Code of Regulations)

All new construction of residential buildings or reconstruction of substantially damaged buildings must incorporate California Green Buildings Standards Code (CALGreen).

D. Sustainability Requirements

All rehabilitation, reconstruction, and new construction must be designed to incorporate principles of sustainability, including water and energy efficiency, resilience, and mitigating the impact of future disasters. Wherever feasible, the Subrecipient, Subrecipient’s Developers and contractors must follow best practices, such as those provided by the U.S. Department of Energy, Home Energy Professionals:

Professional Certifications and Standard work specifications.

E. National Floodplain Elevation Standards

Subrecipient, Developer, and contractors must comply with the national floodplain elevation standards for new construction, repair of substantially damaged structures, or substantial improvements to residential structures in flood hazard areas. All structures designed for residential use within a 100-year (or one percent annual chance) floodplain will be elevated with the lowest floor at least two feet above the base flood elevation level and comply with the requirements of 83 FR 5850 and 83 FR 5861.

F. Wildland-Urban Interface building codes (WUI codes)

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

All Approved Projects under this program that are located in a CAL FIRE high fire zone must comply with applicable WUI codes, found in Title 24, Chapter 7a of the California Building Code, which offer specific material, design and construction standards to maximize ignition- resistance.

13. Federal Labor Standards Provisions

The Subrecipient and the Developer shall at all times comply, and cause all Approved Project contractors to comply, with applicable federal labor standards, including without limitation, the following:

A. Davis-Bacon Act (40 U.S.C. §§ 3141-3148) requires that workers receive no less than the prevailing wages being paid for similar work in their locality. Prevailing wages are computed by the Federal Department of Labor and are issued in the form of federal wage decisions for each classification of work. The law applies to most construction, alteration, or repair contracts over $2,000.

B. "Anti-Kickback Act of 1986" (41 U.S.C. §§ 51-58): The act prohibits attempted as well as completed "kickbacks," which include any money, fees, commission, credit, gift, gratuity, thing of value, or compensation of any kind. The act also provides that the inclusion of kickback amounts in contract prices is prohibited conduct in itself. This act requires that the purpose of the kickback was for improperly obtaining or rewarding favorable treatment. It is intended to embrace the full range of government contracting.

C. Contract Work Hours and Safety Sta ndards Act - CWHSSA (40 U.S.C. § 3702) requires that workers receive "overtime" compensation at a rate of one and one-half (1-1/2) times their regular hourly wage after they have worked forty (40) hours in one week.

D. Title 29, Code of Federal Regulations CFR, Subtitle A, Parts 1, 3 and 5, are the regulations and procedures issued by the Secretary of Labor for the administration and enforcement of the Davis-Bacon Act, as amended.

Developer shall provide and Subrecipient shall maintain documentation that demonstrates compliance with hour and wage requirements of this part. Such documentation shall be made available to the Department for review upon request. Subrecipient shall be responsible for monitoring Developer, contractors, and subcontractors for compliance, as applicable.

14. State Prevailing Wages

A. Developer shall comply and Subrecipient shall ensure that the requirements of California Labor Code (LC), Chapter 1, commencing with Section 1720, Part 7 [LC Section 1720-1743] pertaining to the payment of prevailing wages and administered by the California Department of Industrial Relations are met.

B. For the purposes of this requirement "construction work" includes, but is not limited to rehabilitation, alteration, demolition, installation, or repair done under contract and paid for, in whole or in part, through this Agreement. All construction work shall be done through the use of a written contract with a properly licensed building contractor incorporating these requirements (the "Construction Contract"). Where the Construction Contract will be between the Subrecipient and a licensed building contractor, the Subrecipient shall serve as the "awarding body" as that term is defined in the LC. Where the Subrecipient will provide funds to a third party that will enter Packet Pg. 626
Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

into the Construction Contract with a licensed building contractor, the third party shall serve as the "awarding body." Prior to any disbursement of funds, including but not limited to release of any final retention payment, the Department may require a certification from the awarding body that prevailing wages have been or will be paid.

C. The applicable wage rate determination on construction work will be the more restrictive of the rate prescribed in LC Section 1770-1784 or the Davis-Bacon Wage Determination.

15. Agreements with Developers and Contractors

A. The Subrecipient shall not enter into any agreement, written or oral, with any contractor, Developer or other party without the prior determination that the contractor, Developer or other party is eligible to receive federal funds and is not listed on the Federal Consolidated List of Debarred, Suspended, and Ineligible contractors.

1) The terms “other party” is defined as public or private non-profit agencies or organizations and certain (limited) private for-profit entities who receive Grant Funds from a Subrecipient to undertake Approved Projects.

B. An agreement between the Subrecipient and any contractor, Developer or other party shall require:

1) Compliance with all State and federal requirements described in this RIDER including without limitation those that pertain to labor standards, nondiscrimination, Americans with Disabilities Act, Equal Employment Opportunity and Drug-Free Workplace, and prevailing wages. In addition to these requirements, all contractors and subcontractors shall comply with the applicable provisions of the California Labor Code.

2) Maintenance of at least the minimum State-required Workers' Compensation Insurance for those employees who will perform the Approved Project activities.

3) Maintenance, as required by law, of unemployment insurance, disability insurance and liability insurance, which is reasonable to compensate any person, firm, or corporation, who may be injured or damaged by the contractor, or any subcontractor in performing the Approved Project activities.

4) Compliance with the applicable Equal Opportunity Requirements described in Section 16 of this Rider.

C. Developer, contractors, and subcontractors shall:

1) Perform the Approved Project activities in accordance with federal, state and local housing and building codes, as are applicable.

2) Provide security to assure completion of the Approved Project(s) by furnishing the Subrecipient with proof of sufficient insurance and performance and payment bonds, or other security approved in advance in writing by the Department, as determined by the particulars of each individual project will be required.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

D. Developer, contractors and subcontractors: Drug-Free Workplace Act of 1988

1) Publish and give a policy statement to all covered employees informing them that the unlawful manufacture, distribution, dispensation, possession or use of a controlled substance is prohibited in the covered workplace and specifying the actions that will be taken against employees who violate the policy.

2) Establish a drug-free awareness program to make employees aware of a) the dangers of drug abuse in the workplace; b) the policy of maintaining a drug-free workplace; c) any available drug counseling, rehabilitation, and employee assistance programs; and d) the penalties that may be imposed upon employees for drug abuse violations.

3) Notify employees that as a condition of employment on a federal contract or grant, the employee must a) abide by the terms of the policy statement; and b) notify the employer, within (5) five calendar days, if he or she is convicted of a criminal drug violation in the workplace.

4) Notify the contracting or granting agency within 10 (ten) days after receiving notice that a covered employee has been convicted of a criminal drug violation in the workplace.

5) Impose a penalty on or require satisfactory participation in a drug abuse assistance or rehabilitation program by an y employee who is convicted of a reportable workplace drug conviction.

6) Make an ongoing, good faith effort to maintain a drug-free workplace by meeting the requirements of the act.

16. Special Conditions Pertaining to Hazards, Safety Standards and Accident Prevention

A. Use of Explosives: When the use of explosives is necessary for the prosecution of the work, Developer shall ensure the contractor observes all local, state and federal laws in purchasing and handling explosives. Developer shall ensure contractors take all necessary precautions to protect completed work, neighboring property, water lines, or other underground structures. Where there is danger to structures or property from blasting, the charges shall be reduced, and the material shall be covered with suitable timber, steel or rope mats.

The Developer shall notify or cause contract ors to notify all owners of public utility property of intention to use explosives at least 8 hours before blasting is done close to such property. Any supervision or direction of use of explosives by the engineer does not in any way reduce the responsibility of the Developer or contractors or their Surety for damages that may be caused by such use.

B. Danger Signals and Safety Devices: Devel oper shall cause contractors to make all necessary precautions to guard against damages to property and injury to persons.

Contractors shall put up and maintain in good condition, sufficient red or warning lights at night, suitable barricades and other devices necessary to protect the public. In case contractors fail or neglect to take such precautions, the Developer may have such lights and barricades installed and charge the cost of this work to the contractor. Such action by the Developer does not relieve the contractor of any liability incurred under these specifications or contract.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

C. Protection of Lives and Health: The Developer shall exercise proper precautions and cause contractors to exercise proper precautions at all times for the protection of persons and property and shall be responsible for all damages to persons or property, either on or off the worksite, which occur as a result of prosecution of the work. The safety provisions of applicable laws and building and construction codes, in addition to specific safety and health regulations described by Chapter XIII, Bureau of Labor Standards, Department of Labor, Part 1518, Safety and Health Regulations for Construction, as outlined in the Federal Register, Volume 36, No. 75, Saturday, April 17, 1971, Title 29 - LABOR, shall be observed and the Developer and its contractors and their subcontractors shall take or cause to be taken, such additional safety and health measures as the Developer may determine to be reasonably necessary.

17. Equal Opportunity Requirements and Responsibilities

The obligations undertaken by Subrecipient and Developer include, but are not limited to, the obligation to comply with all federal laws and regulations described in Subpart K of 24 CFR Part 570 and specifically with each of the following, among other things, as the same may be amended from time to time:

A. Title VI of the Civil Rights Act of 1964: This act provides that no person shall be excluded from participation, denied program benefits, or subject to discrimination based on race, color, and/or national origin under any program or activity receiving federal financial assistance.

B. Title VII of the Civil Rights Act of 1968 (The Fair Housing Act): This act prohibits discrimination in housing on the basis of race, color, religion, sex and/or national origin. This law also requires actions which affirmatively promote fair housing.

C. Restoration Act of 1987: This act restores the broad scope of coverage and clarifies the application of the Civil Rights Act of 1964. It also specifies that an institution which receives federal financial assistance is prohibited from discriminating on the basis of race, color, national origin, religion, sex, disability or age in a program or activity which does not directly benefit from such assistance.

D. Section 109 of Title 1 of the Housing and Community Development Act of 1974 [42 U.S.C. 5309]: This section of Title 1 provides that no person shall be excluded from participation (including employment), denied program benefits, or subject to discrimination on the basis of race, color, national origin, or sex under any program or activity funded in whole or in part under Title 1 of the Act.

E. The Fair Housing Amendment Act of 1988: This act amended the original Fair Housing Act to provide for the protection of families with children and people with disabilities, strengthen punishment for act s of housing discrimination, expand the Justice Department jurisdiction to bring suit on behalf of victims in federal district courts, and create an exemption to the provisions barring discrimination on the basis of familial status for those housing devel opments that qualify as housing for persons age 55 or older.

F. The Age Discrimination Act of 1975: This act provides that no person shall be excluded from participation, denied program benefits, or subject to discrimination on the basis of age under any program or activ ity receiving federal funding assistance.

Effective January 1987, the age cap of 70 was deleted from the laws. Federal law preempts any State law currently in effect on the same topic.

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G. Section 504 of the Rehabilitation Act of 1973: It is unlawful to discriminate based on disability in federally assisted programs. This Section provides that no otherwise qualified individual shall, solely by reason of his or her disability, be excluded from participation (including employment), denied program benefits, or subjected to discrimination under any program or activity receiving federal funding assistance.

Section 504 also contains design a nd construction accessibility provisions for multi-family dwellings developed or substantially rehabilitated for first occupancy on or after March 13, 1991.

H. The Americans with Disabilities Act of 1990 (ADA): This act modifies and expands the Rehabilitation Act of 1973 to prohibit discrimination against "a qualified individual with a disability" in employment and public accommodations. The ADA requires that an individual with a physical or mental impairment who is otherwise qualified to perform the essential functions of a job, with or without reasonable accommodation, be afforded equal employment opportunity in all phases of employment.

I. Executive Order 11063: This executive order provides that no person shall be discriminated against on the basis of race, color, religion, sex, or national origin in housing and related facilities provided with federal assistance and lending practices with respect to residential property when such practices are connected with loans insured or guaranteed by the federal government.

J. Executive Order 12259: This executive order provides that the administration of all federal programs and activities relating to housing and urban development be carried out in a manner to further housing opportunities throughout the United States.

K. The Equal Employment Opportunity Act: This act empowers the Equal Employment Opportunity Commission (EEOC) to bring civil action in federal court against private sector employers after the EEOC has investigated the charge, found "probable cause" of discrimination, and failed to obtain a conciliation agreement acceptable to the EEOC. It also brings federal, state, and local governments under the Civil Rights Act of 1964.

L. The Uniform Guidelines on Employee Selection Procedures adopted by the Equal Employment Opportunity Commission in 1978: This manual applies to employee selection procedures in the areas of hiring, retention, promotion, transfer, demotion, dismissal and referral. It is designed to assist employers, labor organizations, employment agencies, licensing and certif ication boards in complying with the requirements of federal laws prohibiting discriminatory employment.

M. The Vietnam Era Veterans' Readjustment Act of 1974 (revised Jobs for Veterans Act of 2002): This act was passed to ensure equal employment opportunity for qualified disabled veterans and veterans of the Vietnam War. Affirmative action is required in the hiring and promotion of veterans.

N. Executive Order 11246: This executive order applie s to all federally assisted construction contracts and subcontracts. It provides that no person shall be discriminated against on the basis of race.

18. Affirmatively Furthering Fair Housing

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The Subrecipient and Developer shall affirma tively further fair housing, in accordance with the Civil Rights Act of 1964 (42 U.S.C 2000a, et seq.), and the Fair Housing Act (42 U.S.C. 3601, et seq.), according to 42 U.S.C. 5306, et se q. and in compliance with California Gov.

Code sections 65583, et seq. and 8899.5, et seq.), as each may be amended from time to time.

Subrecipient shall also comply with the Fair Housing Amendment Act of 1988 (Public Law 100-430), as may be amended from time to time.

19. Reporting Requirements

A. Developer shall provide information and data for required reports as requested by Subrecipient. Subrecipient must timely submit the reports prescribed below. The Department reserves the right to request additional detail and support for any report made. Reports must be made according to the dates identified, in the formats provided by the Department, and via the Department’s Grants Network unless otherwise specified at the discretion of the Department. The Subrecipient’s performance under the MSA will be assessed based in part on whether it has submitted the reports on a timely basis.

i. Monthly Activity Report: Developer shall provide Subrecipient with information sufficient for Subrecipient to submit a Monthly Activity Report to Department that addresses the following, at a minimum: (1) a description of the current status of the Approved Project, including number of units leased, and Households assisted; (2) a description of activities to be undertaken in the next reporting period; (3) a description of problems or delays encountered with the Approved Project and course of action taken to address them; (4) a description of actions taken to achieve MSA expenditure deadlines; and (5) a summary of the MSA fiscal status, including allocation amount, funds drawn, and remaining balance. Unless otherwise waived in writing by the Department, Monthly Activity Reports must begin on the 10
th calendar day of the second
month following execution of the MSA and must continue through the receipt and approval by the Department of the Project Completion Report, detailed below.

ii. Monthly Program Income Report: Program Income, if identified as a funding source for any Approved Project, must be included in the project budget and must be substantially expended prior to drawing Grant Funds. During the term of this RIDER, if Program Income is generated, the Subrecipient must submit a Monthly Program Income Report certifying the amount of Program Income generated, retained and expended. Program Income remaining at the end of each quarter and at the expiration of the MSA in excess of $35,000.00 must be remitted to the Department.

iii. Semi-Annual Labor Standards Report: During the term of construction for each Approved Project, each April 1st and October 1st, the Subrecipient must submit the Labor Standards Cover Memo, the HUD Form 4710 and the Davis Bacon Labor Standards Report 5.7 (if applicable). These forms are located on the Department’s website and are also available upon request.

iv. Project Completion Report: At the completion of construction and once an Approved Project is placed in service, the Subrecipient must submit a Project Completion Report that includes the total number of units built and leased, affordable units built and leased, DR-MHP units built and leased, an accomplishment narrative, and the tenants’ names, demographics and income Packet Pg. 631
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for each DR-MHP unit.

v. Annual Beneficiary Report: Once an Approved Project is placed in service and through the Affordability Period described in Exhibit D, Section 4 of the MSA, the Subrecipient must submit an Annual Beneficiary Report providing the tenants names, demographics, and income for each DR-MHP unit. Information shall be derived from documentation submitted by Developer to Subrecipient for review and approval.

20. Monitoring Requirements

During the term of the MSA, the Department shall perform program and/or fiscal monitoring of the Subrecipient and Approved Projects to ensure compliance with federal and state requirements and timely project completion. The Subrecipient shall be required to resolve any monitoring findings to the Department's satisfaction by the deadlines set by the Department.

In the event Subrecipient disagrees with a finding and/or any accompanying corrective actions or sanction(s) that are associated with such finding, Subrecipient shall follow the Department’s appeals process and rights contained as an exhibit within the Department’s CDBG-DR Monitoring Plan located on the Department’s CDBG-DR website at https://www.hcd.ca.gov/community-development/disaster-recovery-programs/cdbg-dr/cdbg- dr-2017/index.shtml.

Subrecipient shall ensure their Developers and Approved Projects are in compliance with CDBG-DR requirements and shall perform regular, ongoing monitoring of the Developer and Approved Project for the term of this RIDER and the affordability period defined in the DR- MHP Regulatory Agreement. Subrecipient sha ll ensure their Developers resolve any monitoring findings to the Subrecipient's satisfaction by the deadlines set by the Subrecipient.

Subrecipients may charge Developers a reasonable annual fee for compliance monitoring during the term of affordability period. The fee must be based upon the average actual cost of performing the monitoring of CDBG-DR-assisted Approved Projects. The basis for determining the amount of the fee must be documented and the fee must be included in the costs of the project as part of the project. If a monitoring fee is charged, Subrecipient shall remit 10% of the monitoring fee collected from each Approved Project to the Department not less than annually and within 90 days of receipt of the fees.

21. Inspections of Project Activities

The Department reserves the right to inspect any Approved Project activities performed hereunder to verify that the Approved Project activities are being and/or have been performed in accordance with the applicable federal, state and/or local requirements and this RIDER.

A. The Subrecipient shall inspect any Approved Project activity performed by Developers, contractors and subcontractors hereunder to ensure that the Approved Project activities are being and have been performed in accordance with the applicable federal, State and/or local requirements and the MSA.

B. The Subrecipient shall require that all Approved Project activities found by such inspections that do not conform to the applicable requirements be promptly corrected, and shall withhold payment to its Developer, contractor or subcontractor, respectively, until it is so corrected.

C. Access by the Subrecipient, the federal grantor agency, the State, the Comptroller General of the United States, or any of their duly authorized representatives to any Packet Pg. 632
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books, documents, papers, and records of the Subrecipient, Developer, contractors or subcontractors which are directly pertinent to that specific contract for the purpose of monitoring, making audit, examination, excerpts, and transcriptions pursuant to 2 CFR 200.336 shall be permitted. Developer shall include in its agreements with contractors, or subcontractors, as applicable, provisions requiring such parties to provide access to its records for the purposes specified above.

22. Signs

If the Subrecipient or Developer places signs stating that the Approved Project is funded with private or public dollars and the Department is also providing financing, it shall indicate in a typeface and size commensurate with the De partment's funding portion of the Approved Project that the Department is a source of financing through the CDBG-DR Program.

23. Insurance

Subrecipient, its Developers and Contractors shall comply with all requirements outlined in the (A) General Provisions section and (B) Project Insurance Requirements outlined in this Section

21. These requirements are in addition to, and not in lieu of, any other insurance coverages required elsewhere in the Development Agreement and elsewhere in the MSA. No payments will be made under the terms of any Approved Pr oject until the Subrecipient confirms to the Department that Developer and all contractors on the specified Approved Project fully comply with all requirements. The Department reserves the right to waive or adjust required insurance coverages from time to time in its sole discretion.

A. General Provisions Applying to All Policies

1) Coverage Term – Subrecipient’s coverage needs to be in force for the complete term of the Agreement. The Developer’s coverage needs to be in force for the complete affordability period of each Approved Project. The Developer’s coverage needs to be in force until a certificate of occupancy is issued for each Approved Project. No work may be performed by Subrecipient, Developer, or a contractor until and unless all insurances required by this Agreement are in full force and effect. If insurance expires during the term of the Agreement/affordability period/certifi cate of occupancy issuance, as applicable, a new certificate must be received by the Department at least thirty (30) days prior to the expiration of said insurance. Any new insurance must comply with the original terms of this Agreement.

2) Policy Cancellation or Termination & Notice of Non-Renewal – Subrecipient is responsible to notify the Department within fifteen (15) business days prior to any actual or proposed cancellation, non-renewal or material change that affects required insurance coverage. No policy may be cancelled upon less than thirty (30) days’ prior written no tice from the insurer to the insured and the Department. New certificates of insurance are subject to the approval of the Department and the Subrecipient agrees no services will be commenced or performed prior to obtaining such approval. In the event Subrecipient and Developer fails to keep in effect at a ll times the specified insurance coverage, the Department may, in addition to any other remedies it may have, terminate this Agreement and/or Approved Project upon the occurrence of such event, subject to the provisions of this Agreement.

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4) Primary Clause – Any required insurance contained in this Agreement shall be primary, and not excess or contributory, to any other insurance carried by the Department.

5) Insurance Carrier Required Rating – All insurance companies must carry an AM Best rating of at least “A–” with a financial category rating of no lower than VII. If the Subrecipient, Developer and/or contractor is self-insured for a portion or all of its insurance, review of financial information including a letter of credit may be required. Acceptance of self-insurance is within the sole discretion of the Department, and the Department reserves the right to require insurance from third-party commercial insurers.

8) Available Coverages/Limits – All coverage and limits available to the Subrecipient, Developer, or contractor shall also be available and applicable to the Department.

10) Use of Subcontractors - In the case of De veloper or contractor’s utilization of subcontractors to complete the contracted scope of work for the relevant Approved Project, Developer or contractor shall include all subcontractors as insureds under Developer’s or contractor’s insurance or supply evidence of subcontractor’s insurance to the Department equal to policies, coverages, and limits required of Developer and contractor.

B. Project Insurance Requirements

Subrecipient, Developer, and/or contractor shall display evidence, as applicable for the relevant Approved Project, of the following on a certificate of insurance evidencing the below coverages. No work shall be commenced on any Approved Project prior to Packet Pg. 634
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such coverages being in effect and the required certificate(s) have been provided to the Department.

1) Commercial General Liability – Developer or contractor on an Approved Project shall maintain commercial general liability insurance on an occurrence form with limits not less than $1,000,000 per occurrence for bodily injury and property damage liability combined with a $2,000,000 annual policy aggregate. The policy shall include coverage for liabilities arising out of premises, operations, independent contractors, products, completed operations, personal & advertising injury, and liability assumed under an insured contract. This insurance shall apply separately to each insured against whom claim is made or suit is brought subject to the Developer’s or contractor’s limit of liability.

The policy must name The State of California, its officers, agents, and employees as additional insureds.

The policy must name The State of California, its officers, agents, and employees as additional insured.

3) Workers’ Compensation and Employer’s Liability – Developer or Contractor shall maintain statutory worker’s compensation and employer’s liability coverage for all its employees who will be engaged in the performance of this Agreement and the relevant Approved Project. In addition, employer’s liability limits of $1,000,000 are required. By signing this Agreement, Subrecipient acknowledges compliance with these regulations. A Waiver of Subrogation or Right to Recover endorsement in favor of the State of California must be attached to certificate.

4) Flood Insurance – The Subrecipient shall ensure that Developer complies with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001). Subrecipient shall ensure flood insurance coverage is provided by the Developer for the Approved Project if required by the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001). The Subrecipient shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as havi ng special flood hazards, that flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including rehabilitation).

This coverage must cover all risk of physical damage or risk of loss for an Packet Pg. 635
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amount equal to the full amount of the construction contract. This coverage must include coverage for flood if the Property is located in a Special Flood Hazard Area as determined by the Federal Emergency Management Agency.

Additionally, Developer or Developer’s general contractor must obtain a builder’s risk installation floater for coverage of the contractor’s labor, materials, and equipment to be used for completion of work performed under the construction contract. The minimum amount of coverage to be carried must be equal to the full amount of the construction contract.

6) Property Insurance – Developer on an Approved Project shall maintain including all risk coverage or standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements to the extent of full replacement value of the Approved Project for the duration of the term of the Affordability Period. Coverage amount may be adjusted for fluctuation in replacement values. This coverage is required upon completion of construction of the Approved Project, or upon closing of the financing for the Approved Project if it is a rehabilitation project.

24. Anti-Lobbying Certification

The Subrecipient shall require that the language of this certification be included in all contracts or subcontracts entered into in connection with the Approved Project(s) and shall certify and disclose accordingly. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into.

Submission of this certification is a prerequisite for making or entering into this transaction imposed by 31 U.S.C. § 1352. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and no more than $100,000 for such failure.

A. No federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any federal contract, the cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan, or cooperative agreement.

B. If any funds other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions.

25. Conflict of Interest

Pursuant to 24 CFR § 570.489(h), no member, officer, or employee of the Developer, or its designees or agents, no member of the governing body of the locality in which the Approved Project is situated, and no other public official of such locality or localities who exercise or have exercised any functions or responsibilitie s with respect to CDBG-DR activities assisted under this part, or who are in a position to participate in a decision-making process or gain inside information with regard to such activities, including members and delegates to the Congress of the United States, may obtain a financial interest or benefit from a CDBG- DR-assisted activity, or have a financial interest in any contract, subcontract or agreement with Packet Pg. 636
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respect to a CDBG-DR-assisted activity or its pr oceeds, either for themselves or those with whom they have business or immediate family ties, during their tenure, or for one (1) year thereafter.

26. Energy Policy and Conservation Act

This Agreement is subject to mandatory standa rds and policies relating to energy efficiency which are contained in the State Energy Conservation Plan issued in compliance with the federal Energy Policy and Conservation Act (Pub. L. 94-163, 89 Stat. 871).

27. State Contract Manual Requirements (Section 3.11, Federally Funded Contracts (Rev. 3/03):

A. All contracts, except for State construction projects that are funded in whole or in part by the Federal government, must contain a 30-day cancellation clause and the following provisions:

1) It is mutually understood between the parties that this contract may have been written for the mutual benefit of both parties before ascertaining the availability of congressional appropriation of funds to avoid program and fiscal delays that would occur if the contract were executed after that determination was made.

2) This contract is valid and enforceable only if sufficient funds are made available to the State by the United States Government for the purpose of this Program.

In addition, this contract is subject to any additional restrictions, limitations, or conditions enacted by the Congress or to any statute enacted by the Congress that may affect the provisions, terms, or funding of this contract in any manner.

3) The parties mutually agree that if the Congress does not appropriate sufficient funds for the program, this contract shall be amended to reflect any reduction in funds.

4) The Department has the option to invalidate the contract under the 30-day cancellation clause or to amend the contract to reflect any reduction in funds.

A. Exemptions from provisions A.1 through A.4 above may be granted by the Department of Finance provided that the director of the State agency can certify in writing that Federal funds are available for the term of the contract.

B. Gov. Code § 8546.4(e) provides that State agencies receiving Federal funds shall be primarily responsible for arranging for Federally required financial and compliance audits, and shall immediately notify the Director of Finance, the State Auditor, and the State Controller when they are required to obtain Federally required financial and compliance audits.

28. Indemnification

Subrecipient and Developer, at their sole cost and expense, shall jointly and severally indemnify, defend, and hold harmless the Department, its employees, representatives, attorneys, agents, and their respective successors, heirs, and assigns (collectively, the “Department Indemnified Parties”) from and against any and all claims, demands, actions, costs, losses, damages, and liabilities, whether direct or indirect (collectively, “Damages”), and Packet Pg. 637
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regardless of their nature or source, which in any way relate to or arise from the actions or inactions of Subrecipient, Developer, or its contractors, subcontractors, agents, or representatives (collectively, the “Developer Parties”) in connection with this RIDER and any agreement or instruments executed in connection herewith. The obligations of the Developer Parties under this Section 26 shall apply to all actions or omissions of Developer Parties as described above which cause or are alleged to have caused Damages in connection with the Project. Further, the obligations of the Developer Parties under this Section 26 shall survive the expiration or earlier termination of the Development Agreement or this RIDER.

29. Conflicting Provisions

Should any of the provisions of this RIDER be found to be in conflict with any other provision of the Development Agreement to which this RIDER is attached, the terms of this RIDER shall prevail.

30. Third Party Beneficiaries

The Developer and Subrecipient expressly agree and acknowledge that the Department is an intended third-party beneficiary to the provisions of the Development Agreement and this RIDER. Among other things, the performance of the Development Agreement and this RIDER benefit the Department by creating, rehabilitating, or otherwise making available, affordable housing units within the State of California. The Department is the sole third-party beneficiary under Section 28 and no other parties are intended or should be deemed as such.

THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

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IN WITNESS WHEREOF, the City and the Developer have executed this Agreement on the respective dates set forth below:

City of Redding , a municipal corporation

Date: ___________________
By: Kristen Schreder, Mayor

Kennett Court Senior Apartments, LP ,
a California Limited Partnership

By: Community Revitalization and Development Corp.
a California non-profit public benefit corporation
Its: Managing General Partner

B y :

David Rutledge
Its: President

By: Kennett Court Senior Apartments LLC
a California Limited Liability Company
Its: Administrative General Partner

By: ________________________
Daniel Knott
Its: Manager

ATTEST:

________________________
By: Pamela Mize, City Clerk

APPROVED AS TO FORM:

_____________________________________
By: Barry E. DeWalt, City Attorney

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EXHIBIT 5

SCOPE OF DEVELOPMENT

I. GENERAL

The location of the Project is the Property or Project Site further described and specifically delineated on the Legal Description associated with this Development Agreement (“Agreement”).

The Developer agrees that all work completed on the Property and/or Project Site will be in accordance with the provisions of this Agreement and the plans, drawings, Exhibits and related documents approved by the City and Developer pursuant hereto.

II. DEVELOPMENT

The Developer shall develop, construct, operate, manage and maintain a 40-unit affordable rental housing development consisting of 34 one-bedroom, 5 two-bedroom and no three-bedroom units and common areas and infrastructure to support the housing development. The rental housing units (less the manager’s unit) will be income restricted for tenants at initial occupancy.

The development will be pursuant to the Agreement, this Exhibit, and all conditions set forth in any City Permit issued for the Project.

With specific regard to the DR-MHP funding, the Developer shall commence and complete the Improvements by the respective timeframes found in the Schedule of Performance. Please note that CDBG DR-MHP funding may be utilized to construct the housing units and eligible site improvement costs, including on-site improvements (sidewalks, utility connections, sewer and water lines, etc) where none are present. Fu nding other than CDBG DR-MHP may pay for any required offsite infrastructure:

1. Street frontage improvements shall be installed in accordance with City Construction Standards, as follows:
a. Vertical curb, gutter, and 5-foot-wide sidewalk and a bus turnout for Redding Area Bus Authority service positioned to properly connect and align with existing improvements installed along the full frontage of Lake Boulevard.
b. Necessary transitions and tie-in paving, as well as asphalt overlay work on the existing street sections as necessary to provide a uniform cross slope from centerline to the new gutter. c. Street storm-drainage facilities.
d. Standard City of Redding driveway at approved locations. e. New pavement striping and street signage as needed.
f. Streetlights as needed.

2. Sewer, Water, and Drainage Utilities. Sewer lines, waterlines, electric-service facilities, and other utilities; drainage facilities; necessary electric- and public-service easements; and street dedications are to be provided in accordance with the Redding Municipal Code and as specified by the Engineering Division. The developer shall extend sewer and water lines and electric substructures and conduits as necessary to serve the property and provide logical extensions of service through the property boundaries to adj acent properties. New utilities within the project, including, but not limited to, electric, cable television, and phone, shall be installed underground.

Applicant shall note that the California Green Building Code Section 5.304.2 requires a separate water meter and water service for irrigation of landscape areas when a commercial project includes more than 1,000 square feet or irrigated landscape. All utility and landscape plans shall depict the Packet Pg. 640
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proposed location of the water meter and identify the total area of landscape proposed with the project.

3. Electric Utility. The developer shall be responsible for all costs associated with the relocation or modification of existing utility facilities or st ructures necessitated by the construction of the project or of improvements required as a condition of approval of this project, including reimbursement of any costs to City of Redding Electric Utility for work performed to support the project

4. Fire Protection. On-site and street-side fire hy drants are to be installed in accordance with the California Fire Code in locations approved by the City Fire Marshal. Fire hydrants shall have a fire flow meeting Appendix B of the California Fire Code. In no case shall the water mains be less than 6 inches in diameter. If a hydrant is located on private property, adequate access shall be provided to and around the hydrant as determined by the Fire Marshal

5. Streetlights. The developer shall install streetlights on all public-street frontages as required by the Engineering Division in accordance with the City Construction Standards. Streetlights shall be provided in accordance with applicable Redding Electric Utility Construction Standards 553.0, et seq.

III. DEVELOPMENT STANDARDS

The Improvements shall conform to all applicable state laws and regulations and to applicable provisions of the Municipal Code of the City of Redding (the “Municipal Code”); all applicable City of Redding development and zoning code requirements; and any and all permits issues for the Project. Housing Project Coordinator must also provide written approval the Final Plans prior to commencing of construction.

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Exhibit 6

Kennett Court Senior
Apartments, LP

CONSTRUCTION
BUDGET

PROJECT INFORMATION
Project Name Kennett Senior Court Apartments
Contractor Modern Building, Inc.

Est. Construction Financing
Construction Financing -
Citibank, N.A. $ 11,450,000

Raymond James Equity $ 1,810,244
City of Redding CDBG DR
MHP $1,000,000
Reserved
Deferred Project Reserves $94,071
Deferred Developer Fee $ 1,482,216
Total Allotted Funds $16,461,531

*Please note that a $20,000 long-term monitoring fee will be charged prior to close of escrow or funding of this loan.

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Exhibit 7

Action

Qualification

1. Developer executes Agreement

Prior to City Execution of Agreement

1. City executes Agreement

After Developer execution of Agreement.

2. Developer closes Escrow and all required
documents are delivered to Escrow Agent
No later than 180 after receiving Tax Credit Award
letter

3. Developer submits certificates of Insurance (10.6)
in the appropriate name
Prior to Recording of City Deed of Trust

4. Developer submits evidence of Other Financing
(3.5)
Prior to Recording of City Deed of Trust

5. City Reviews Other Financing Commitments Prior to Recording of City Deed of Trust.

6. Developer shall execute and record City Loan
Deed of Trust
No later than 30 days following the Effective Date.

7. Recording of City Deed of Trust

When all conditions have been satisfied

8. Developer submits Final Project Budget and Final
Sources and Uses to the City

When all conditions have been satisfied

9. City reviews the Final Plans and Final Project
Budget

5 days following Final Project Budget submittal.

10. Developer submits Payment and Performance
Bonds for City Attorney review and approval

Prior to Commencement of Construction

11. Developer obtains Building Permits

Prior to Commencement of Construction.

12. Developer requests Notice to Proceed for
construction of improvements from City

No later than ten (10) days following approval of
Building Permits.

13. City notifies Developer to proceed with
construction of the improvements
No later than fourteen (14) days following City
receipt of Notice to Proceed

14. Developer issues Notice to Proceed to General
Contractor
No later than fourteen (14) days following City
notice to proceed

15. Developer commences improvements No later than fourteen (14) days following Developer notification to General Contractor to proceed

16. Developer completes improvements and obtains
Certificate of Occupancy

No later than twenty-four (24) months following
issuance of Notice to Proceed to General Contractor
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RECORDING REQUESTED BY

CITY OF REDDING
WHEN RECORDED, MAIL TO:

CITY OF REDDING
P.O. Box 496071
Redding, CA 96049-6071
Loan No.: THIS SPACE FOR RECORDER'S USE ONLY

NOTICE OF COMPLETION
Notice pursuant to Civil Code Section 3093 must be filed within 10 days after completion.

NOTICE IS HEREBY GIVEN THAT:

1. The undersigned is the owner or authorized agent of the owner of the interest or estate stated below in the property hereinafter described.

2. The full name of the owner is: Kennett Court Senior Apartments, LP

3. The full address of the owner is: 1011 Parkview Avenue, Suite A, Redding, CA 96001

4. The nature of the interest or estate of the undersigned is: In Fee

5. The full names and full addresses of all persons, if any, who hold title with the undersigned as joint tenants or as tenants in common are: None

6. Work or improvement on the property hereinafter described was construction and was completed on_______________________________.

7. Said work or improvement was undertaken on said property pursuant to a contract dated _____, 2022_ with General Contractor______________________________.

8. The street address of the property on which said work or improvement was completed is 1185 Lake Blvd., Redding, CA 96003, County of Shasta, State of California, APN: 114-070-006-000 I, the undersigned, state that I am the declarant of the foregoing Notice of Completion; that I have read said Notice of Completion and, to the best of my knowledge, I declare under penalty of perjury that the foregoing is true and correct.

Dated:_______________________
_____________________________________
Daniel Knott, Managing Member
Kennett Court Senior Apartments LLC
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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 9

CERTIFICATE OF COMPLETION

THIS CERTIFICATE OF COMPLETION (the "Certificate") is made by the CITY OF REDDING a municipal corporation and general law city (the "CITY"), in favor of Kennett Court Senior Apartments, LP a California limited partnership (the "OWNER"), as of the date set forth below.

RECITALS

A. The CITY and the OWNER have entered into that certain Development Agreement (DA) dated March ____2022, concerning the development of certain real property situated in Redding, California, including a Portion of Assessor Parcel Number(s) 114-070-006-000 as more fully described in Exhibit A attached hereto and made a part hereof (the Property).

B. The DA sets forth the obligations of Kennett Court Senior Apartments, LP, referred to as Developer, under the DA.

C. The CITY has conclusively determined that the Developer has satisfactorily completed the obligations of the DEVELOPER relative to development of the Property required by the DA and now desires to furnish DEVELOPER or its successors with a Certificate of Completion. This Certificate is in such form as to permit conclusi ve determination of satisfactory completion of all of the obligations of the DEVELOPER required by the DA regarding development of the property.

NOW, THEREFORE, the CITY hereby certifies as follows:

1. The obligations of the DEVELOPER regarding development of the Site as stated in the DA have been fully and satisfactorily completed in conformance with the DA except as to those breaches of contract or defects in construction that could not have reasonably been discovered by CITY at the time of issuance of the Certificate of Completion.

2. Nothing contained in this instrument shall modify in any way any other provisions of the DA.

IN WITNESS WHEREOF, the CITY has executed this Certificate this day of , 202__.

CITY OF REDDING, a municipal
corporation

____________________________________
BARRY TIPPIN, City Manager

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT A to CERTIFICATE OF COMPLETION

LEGAL DESCRIPTION
The land described herein is situated in the State of California, County of Shasta, City of Redding, described as follows:

Portion APN: 114-070-006-000

RESULTANT PARCEL 2

Being a portion of all that real property as described in that Grant Deed to AOK Properties, LLC, a California Limited Liability Company recorded December 9, 2019 in Instrument Number 2019- 0037939, Shasta County records and being a portion of Parcel 2 as described in that Corrective Grant Deed to The City of Redding as Successor Housing Agency of the Redding Redevelopment Agency to recorded September 25, 2019 in Instrument Number 2019-0028214, Shasta County records, lying Northerly and Easterly of the following described line:

Commencing at the most Northeasterly corner of Parcel 1 as shown on that Record of Survey for ADK Properties LLC filed July 21, 2020 in Book 59 of Land Surveys at Page 148, Shasta County records thence on and along Northerly line of said Parcel 1 North 75° 24' 00" West 156.54 feet;

Thence North 81° 17' 02West 13.56 feet to the True Point of Beginning;

Thence from said Point of Beginning and leaving said Southerly line North 0° 52' 23" West 223.12 feet;

Thence South 89° 07' 37" West 142.19 feet;

Thence North 0° 52' 23" West 184.00 feet more or less to a point on the Northerly line of the lands of ADK Properties LLC, a California Limited Liability Company as described in said Instrument Number 2019-0037939, Shasta County records, and the point of termination of said line

Containing 2 .28 acres more or less.

Book 59 of Land Surveys, Page 148, Shasta County records was used as the basis of bearings for this description.

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Exhibit 11 – Estoppel Certificate

This Estoppel Certificate (“Certificat e”) dated as of ___________, 2022 (“Date Hereof”) is executed by the City of Re dding (“City”) in favor of Kennett Court Senior Apartments, LP, a Californi a limited partnership (“De veloper”) loan with Citibank, N.A.(“Lender”).

NOW THEREFORE, the Agency certifies to Lender:

1. As of the date of this Certificate, to th e best of the City’s knowledge, Developer has performed all obligations required of City under the Declaration; no offsets, claims or breach of the Declaration exist as of the Date Hereof and no events have occurred that are known to the Declarant which would constitute an uncured breach of the Declaration.

2. From the Date of this Certificate, the C ity agrees to notify Lender in the event of discovery of facts that would make this Certificate inaccurate.

DATED:__________________________________

CITY OF REDDING, a municipal
corporation

____________________________________
BARRY TIPPIN, City Manager

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Exhibit 12 – RESERVED

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 13

ANTI-LOBBYING CERTIFICATION

The undersigned certifies, to the best of his or her knowledge and belief, that:

1. No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.

2. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions.

3. The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly.

This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.

DATE:______________________ SIGNATURE:_________________________________

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Attachment: Kennett Court Senior Apartments DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

=============================================

DEVELOPMENT AGREEMENT

Community Development Block Grant (CDBG)
Disaster Recovery – Multifamily Housing Program (DR-MHP) Alturas Crossing I
1320 and 1368 Old Alturas Rd, Redding, CA 96003
(Accessor Parcel Number: 071-270-012-000 and 071-270-021-000 )

=============================================

By and Between the

City of Redding

and

Alturas Crossing I, LP

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Development Agreement Between
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DEVELOPMENT AGREEMENT

This DEVELOPMENT AGREEMENT (“Agreemen t”) is made and entered into by and between the CITY OF REDDING, a municipal corporation and general law city (“City”) and Alturas Crossing I, LP, a California limited partnership (“Developer”).

RECITALS

A. City is a California municipal corporation and general law city.

B. Developer is a California a limited partnership organized under the laws of the State of California.

C. Alturas Crossing I, LP is the legal owner of record of the Property particularly described in Exhibit 1A (“Legal Description” ), Assessor’s Parcel Number 071-270-012-000 and 071-270-021-000 (the “Property”) and depicted visually in Exhibit 1B. The Property is currently vacant, undeveloped land.

D. Alturas Crossing I, LLC is the administrative general partner of Developer.

Developer intends to develop, construct and manage a 39-unit rental housing development consisting of No one-bedrooms, 19 two-bedrooms (including one manager’s unit), and 20 three-bedroom units with related amenities thereon (hereinafter, collectively, referred to as the “Project”).

E. The Project has obtained an award of 9% low income housing tax credits (“Tax Credits”) from the California Tax Credit Allocatio n Committee (“CTCAC”) to partly finance the development of the Project.

F. The United States Department of Housing and Urban Development (“HUD”) allocates funds to the Community Development Block Grant (CDBG) Program. The State of California (State) was appropriated Community Development Block Grant-Disaster Recovery (CDBG-DR) funding under Public Law 115-123, by HUD via Federal Register Notice 83 FR 40314.

The State’s Housing and Community Development (H CD) Department serves as the lead agency and responsible entity for administering CDBG-DR funds for the State’s unmet recovery needs related to the Federal Emergency Management Ag ency (FEMA) Major Disaster Declarations 4344 and DR 4353. Recognizing the requirement included in Federal Register Notice 83 FR 5844, published February 9, 2018, and 83 FR 40314, published August 14, 2018, to address housing needs first, HCD developed the Disaster Recovery Multifamily Housing Program (DR-MHP). DR-MHP projects are funded to assist the unmet rental housing need, including the needs of individuals displaced from rental homes and individuals who became homeless as the result of the disasters.

G. As required, the City of Redding and HCD have entered into a Master Standard Agreement, numbered 21-DRMHP-21008 and dated May 13, 2021 which provides the overarching terms and conditions for implementing the Program and the terms of the Assistance common to all projects to be completed by the Subrecipient (the “Master Standard Agreement”).

H. City and Developer now desire to enter into this Agreement to set forth the mutual obligations of the City and Developer in connection with the planning, designing, financing, construction, and completion of the Project.

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Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
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AGREEMENT

1. DEFINITIONS. The following definitions shall apply for the purposes of this Agreement:

1.1 “Affordable Rent” shall have the meaning as set forth by the City Declaration of Affordability Restrictions.

1.2 “Affordable Units” shall mean the rental housing units in the Project that are restricted by the City’s Declaration of Affordability Restrictions and pursuant to the LIHTC Program.

1.4 “Certificate of Completion” shall mean the document attached as Exhibit 9.

1.7 “City Affordability Period” shall mean a period commencing upon the date of recordation of a Certificate of Completion by the City for the Project and continuing for fifty (55) years.

1.8 “City Declaration of Affordability Restrictions” shall mean that certain Department of Housing and Community Development Community Development Block Grant – Disaster Relief Multifamily Housing Program Regulatory Agreement (Contract No. 21-DRMHP-21008 ) between the Developer and the City that will restrict 9 (4 units at 30% or below of AMI) units in the Project as required by HCD in connection with the CDBG-DR-MHP program.

1.9 “City Assistance” shall meant the City Loan.

1.10 “City Loan” shall mean the financial assistance provided by the City pursuant to Section 3.1.1.

1.12 “City Manager” shall mean the City Manager of the City of Redding.

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Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

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City of Redding and Alturas Crossing I, LP Page | 3

1.14 “Completion Date” shall mean the date stated in the Schedule of Performance for the completion of construction of the Project.

1.15 “Conflicting Language” shall mean any difference or conflict within the Agreement.

Conflicting language involving Exhibits 4a and 4b shall be resolved in favor of the aforementioned exhibits.

1.20 “Deed of Trust” shall mean the deed of trust recorded against the Property to secure the City Loan, a representative form of which is attached hereto as Exhibit 3.

1.21 “Developer” is Alturas Crossing I, LP, a California a limited partnership. The principal office of the Developer is located at 1011 Parkview Avenue, Suite A, Redding, CA 96001. The phone number for voice communication with the Developer is 530.244.0596 and for email transmittal to the Developer is [email protected]. Developer as it is used in this Agreement shall include any permitted nominee, assignee, or successor in interest as herein provided.

1.23 “Effective Date” shall mean the date this Agreement is signed by the City or its designee authorized to sign on behalf of the City.

1.24 “Final Plans” are the complete set of architectural and civil engineering plans and specifications for the Project which include the City’s Development Services and Land Development Divisions’ conditions of approval and have been approved by the City’s Building Division, Packet Pg. 654
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Engineering Division and the Housing Division’s Project Manager prior to construction.

1.25 “HUD” shall mean the U.S. Department of Housing and Urban Development.

1.26 RESERVED

1.27 RESERVED

1.28 RESERVED

1.30 “Low-Income Household” or “Lower-Income Household” shall have the meanings set forth in the City of Declaration of Affordability Restrictions.

1.32 “Notice of Completion” is the document attached as Exhibit 8.

1.33 “Other Financing” shall mean the non-City financing sufficient to cover the remaining costs to complete the Project pursuant to Section 3.5.

1.34 “Permanent Loan” or “take-out loan” shall mean the loan provided to the Developer at the end of construction period to repay the short-term (non-permanent) construction loan. The permanent loan provider for Developer is Citibank, N.A..

1.35 “Plans” are the Preliminary Plans and/or the Final Plans, or both, as the context requires.

1.37 “Preliminary Project Budget” shall mean the document attached as Exhibit 6.

1.38 “Project” shall mean the development of the improvements to be constructed on the Property in accordance with the Project Final Plans and this Agreement. The development of the improvements include but are not limited to the co nstruction of a 39-unit affordable rental housing development consisting of No one-bedrooms, 19 two-bedrooms (including manager’s unit) and 20 three-bedroom units and common areas with infrastructure to support the housing development. The rental housing units (except the manager’s unit) will be restricted as follows: 14 for tenants not exceeding 60 percent of AMI, 12 units for tenants with incomes not exceeding 50 percent of the AMI, 8 units for tenants with incomes not exceeding 40 percent of the AMI, 4 units for tenants with incomes not exceeding 30 percent of the AMI and ______ units for tenants with incomes not exceeding 25 percent of the AMI. Additional Project detail is further described and provided in this Agreement, the Scope of Development and the Project Final Plans.

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1.39 “Project Budget” is the identification of costs for all Project development activities as required in Section 6.1 of this Agreement. A Preliminary Project Budget is attached as Exhibit 6.

1.41 “Property” or “Project Site” shall mean the real property located in the City of Redding, Shasta County, California, identified as APN 071-270-012-000 and 071-270-021-000, more specifically described in Exhibit 1A and depicted in Exhibit 1A.

1.42 “Regulatory Agreement” for the DR-MHP is attached as Exhibit 4A.

1.43 “Rider to the Development Agreement” for DR-MHP is attached as Exhibit 4B.

1.44 “Schedule of Performance” is attached as Exhibit 7.

1.45 “Scope of Development” is attached as Exhibit 5.

1.48 “Substantial Change” is a change as described in subsection 5.4.2 of this Agreement.

2. THE AGREEMENT.

2.1 Purpose of the Agreement. The purpose of this Agreement is to further the goals of the City to increase, improve, and preserve afford able housing by assisting the Developer with the development of the Property and the completion of the Project in accordance with the Final Plans and this Agreement.

The City represents that the development of the Property and completion of the Project, under this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the City of Redding and the health, safety, morals and welfare of its residents; for the purpose of community improvement and welfare; and to improve, preserve, and increase the supply of affordable housing. Except for the risks and speculation inherent with respect to real estate development projects, Developer represents and agrees that its development of the Project under the Agreement is not intended for speculation in land holding.

It is contemplated by the parties that all activities undertaken by Developer will be in accordance with this Agreement. All attachments a nd exhibits are hereby incorporated into this Agreement by reference.

2.2 Scope of Work. It is contemplated by th e parties that the Developer will construct an affordable rental housing development consisting of 39-unit affordable rental housing development consisting of No one-bedrooms, 19 two-bedrooms and 20 three-bedroom units, including one Packet Pg. 656
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
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manager’s unit along with common areas and infrastructure to support the housing development. The specific scope of work to be carried out by the Developer under this Agreement is more particularly described in this Agreement, the Scope of Development and the Project Final Plans.

2.3 Term. This Agreement shall commence as of the Effective Date and proceed as required by the Agreement and the Schedule of Performance, and, except for any deed restrictions, covenants running with the land, deed of trust or promissory note, or other agreements or provisions which by their terms survive the term of the Agreement, shall terminate upon the completion of all of the following:
a) Completion of the construction of the Project in accordance with the Agreement and Project Specifications;
b) Fulfillment by the parties of their obligations under this Agreement.

3. PROJECT FINANCING.

3.1 City Assistance. The City Assistance shall consist of the following:

3.1.1 City Loan. In order to effectuate the completion of the Project on the Property by the Developer, the City shall provide a loan in an amount not to exceed Two Million and no/100 ($2,000,000) pursuant to the terms and conditions described in subsection 3.2., 15.27 and this Agreement (the “City Loan”) for the construction of affordable housing and any necessary infrastructure improvements for development of the Project. The City Loan shall be funded with CDBG DR-MHP funds or any other funds deemed necessary to fulfill the City’s obligation under this Agreement.

3.2 City Loan Terms. The City Loan shall each be loaned pursuant to the terms and conditions described in this Agreement.

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City of Redding and Alturas Crossing I, LP Page | 7

a) Developer’s failure to proceed with and complete the Project in accordance with the Schedule of Performance; or

b) Developer abandons or substantially suspends construction of the Project for a period of three (3) months after written notice of such abandonment or suspension from the City;

c) Developer fails to utilize the Property for the Project within the timeframe set forth in the Schedule of Performance or as authorized in writing; or

d) Developer fails to comply with the affordability covenants set forth in this Agreement and the exhibits to the Agreement.

e) Other material breach of this Agreement following expiration of applicable notice and cure periods.

Developer shall provide to the City evidence of such private and other financing firm commitments no later than , unless otherwise approved by the City Manager or their designee.

Any non-City financing security documents for the Project shall comply with this Agreement.

3.6 Limitation on Encumbrances. Prior to the completion of the Project, Developer shall not engage in any financing or any other transaction creating any encumbrance or lien on the Property, whether by express agreement or operation of law, except to obtain funds to be used only for actual costs of the Project including construction short-term financing and subsequent permanent financing along with other expenditures necessary and appropri ate to develop the Property in accordance with this Agreement. Developer shall notify the City in advance of any proposed financing to be secured by the Property. In any event, Developer shall promptly notify City of any encumbrance or lien that Packet Pg. 658
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

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has been created on or attached to the Property. If Developer is not in default of this Agreement, and if City approves all of the private financing documents, including the terms of any subordination agreement, which approval shall not be unreasonably withheld, City will subordinate its Deed of Trust to the lien of a construction deed of trust and permanent deed of trust, for such financing.

3.7.4 Subordination Agreement. Subject to City approval, which approval shall not be unreasonably withheld, upon request, City shall execute any document reasonably required to evidence the subordination of the City Loan Deed of Trust to a permitted indebtedness including construction short-term financing to permanent loan or refinancing. City shall allow the Declaration of Affordability Restrictions to be recorded on the Property junior only to 1) the lien of the construction lender securing funds for construction of the Project; 2) the lien of a permanent loan so long as the permanent loan is for an amount not greater than the amount due and owing by the Developer pursuant to the construction loan plus customary fees and costs payable for the benefit of the permanent lender in connection with the permanent loan and upon satisfaction and release and reconveyance of the deed of trust securing repayment of the construction loan; and 3) such regulatory agreement as may be required by the LIHTC Program. In the event a subordination agreement meets these requirements, the City Manager shall be authorized to execute the subordination agreement on behalf of the City without additional authorization by the City Council.

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Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) Develop
ment Agreement Between
City of Redding and Alturas Crossing I, LP Page | 9

4. DISBURSEMENT OF CITY ASSISTANCE, ESCROW; RECORDATION OF SECURITY DOCUMENTS.

4.2 Compliance Mo nitoring Fees. Developer will be charged a reasonable fee for compliance monitoring. The Monitoring fee will be paid by the closing of the LIHTC financing escrow by the Developer or prior to any payment of DR-MHP funds. The fee is based upon the average cost of the City o f Red ding perfo rming th e required monitoring of CDBG-DR-assisted approved projects through the period of affordability. The basis for the fee is documented and the fee must b e included in the co sts of the project as part of the project. The current compliance monitoring fee is a one-time $20,000 fee per project and will cover the required monitoring for the minimum 20-year affordability term.

5. PREPARATION OF PROJECT PLANS AND RELATED DOCUMENTS.

5.1 Project Manager. Subject to the terms of this Agreement, the City shall designate a Project Manager who shall, in addition to other responsibilities under this Agreement, have the right of architectural and site planning review of all plans and drawings, including, but not limited to complete structural and engineering plans, and landscape plans associated with the Project as well as any changes therein.

5.3 Review of Project Final Plans. Developer shall provide the Project Manager with a complete set of Final Plans for the Project prior to or concurrently with the initial submittal of the Plans to the City’s Building Division. The Final Plans shall be accepted by the Project Manager, if a) the Plans conform in all material respects to the Scope of Development and this Agreement, and b) no Substantial Changes, as hereinafter defined, have been made.

5.4 Review of Substantial Changes to Project Final Plans.

5.4.1 City Review. Notwithstanding the foregoing, any Substantial Change in the Final Plans is subject to City review. If the Developer desires to make a Substantial Change in the Packet Pg. 660
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Development Agreement Between
City of Redding and Alturas Crossing I, LP Page | 10

Final Plans, the Developer shall submit such proposed change, in writing, to the Project Manager for review.

5.4.2 Substantial Change. A Substantial Change in the Final Plans shall mean any of the following changes, with respect to the Project:
(a) “Change Order” as previously defined in Section 1.5.

(g) Any change which would preclude or materially reduce the ability to use the Project as set forth in the Final Plans and this Agreement.

6. DEVELOPMENT OF THE PROJECT.

6.2 Disbursement of Remaining Proceeds of City Loan. The parties agree that upon recording of the City Loan Deed of Trust as described in Section 4.1, the remaining proceeds of the City Loan not previously expended will be controlled by the City’s Finance Department or upon City Manager approval, a construction account controlled by the lenders. Each and any disbursement of funds from such account shall require a written authorization signed by the Project Manager Packet Pg. 661
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authorizing the release of the requested disbursement. The Project Manager shall provide such written approval within ten (10) business days of receipt of the request from Developer.

6.3 Developer Fee. It is expressly agreed and acknowledged that the parties mutually are entering into this Agreement (including without limitation all attachments and exhibits hereto) for the purpose of the development and operation of affo rdable housing. To that end, the Developer is authorized to charge to the Project budget a developer fee not to exceed the maximum amount allowable under the LIHTC Program. Developer agrees that, if necessary to facilitate the construction of the Project, all or a portion of the developer fee shall be considered a “Deferred Developer Fee” and shall be provided by the Developer as part of th e Project’s development budget and be available as needed, during construction of the Project. It is hereby agreed that any cost savings realized during construction shall first be applied to pay back to Developer the amount of the Deferred Developer Fee.

Any balance owed to the Developer, remaining afte r all construction costs savings are realized, may be repaid to the Developer from allowable residual operating cash. The non-deferred portion of the developer fee amount may be utilized by the Developer in any manner permitted by law. The Developer fee will be funded solely by the LIHTC program.

6.4 Procurement. The Developer shall coordinate the solicitation of bids with the General Contractor based upon the Final Plans. Developer and General Contractor shall obtain a minimum of three bids per subcontractor and, to the greates t extent possible, utilize local suppliers and subcontractors from within Shasta County. The General Contractor will comply with the applicable procurement requirements in 24 CFR Part 85. The Project Manager will coordinate with the Developer and provide the required documents to complete the bid procurement process. The Project Manager will complete a cost analysis and ensure that the bids are cost reasonable and conform to the proposed budget. The Project Manager’s cost analysis includes initial subcontract bids, contract modifications and change orders.

The final construction bid from the Contractor must have all non-construction categories, including, but not limited to, general conditions; profit and overhead; and permits, clearly identified as separate line items.

6.5 Construction. Developer shall construct the Project according to the requirements established in this Agreement, including but not limited to the Scope of Development, Schedule of Packet Pg. 662
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) Develop
ment Agreement Between
City of Redding and Alturas Crossing I, LP Page | 12
Performance and the Final Plans. In th e event that the cost of construction of the Project, or any part of the Project ex ceeds the costs pro jected b y Developer, Developer shall, nevertheless, bear the responsibility to complete, at Developer’s cost and without right o f contributio n from City, the construction of the Project in accordance with this Agreement. The parties agree that such obligations of Developer shall be covenan ts running with the land and that they sh all, in any event, and without regard to technical classification or designation, be to the fullest extent permitted by law and equity, binding for the benefit o f the City and enforceable by th e City against the Developer, its successors and assigns. These covenants shall terminate upon the City issuing a Certificate of Completion for the Project.

In the event that the City Loan Deed of Trust is recorded prior to the closing of private financing for the development of the Project and Developer in tends to utilize City Loan proceeds to construct the infrastructure improvements that are a part of the Project, this Section 6.8 shall be deemed satisfied if Developer, or the general contractor obtain payment and performance bonds in favor of the City fo r one hundred (100%) of the face amount of the construction contract price for such infrastructure improvements.

Notwithstanding anything to the contrary contained herein, Dev eloper shall not commence con struction on any compo nent of the Project until payment and performance b onds meeting the requirements of this Section 6.8 have been obtained for such component.

6.9 No Construction over Utility Easements. Developer shall n ot construct any of the Project on, over, or within the boundary lines of an y easement for public utilities on th e Property, unless such construction is provided for in such easement or has been approved by the beneficiary of the easement.

6.10 Conditions Precedent to Construction. The Developer shall no t begin construction until the following conditions precedent have been satisfied or waived by the City:

6.10.1 The City Loan Deed of Trust has recorded pursuant to the terms of this Agreement;
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6.10.2 The Developer has submitted payment and performance bonds as required by Section 6.8 of this Agreement to the City and the City Attorney has approved the bonds.

6.10.4 The City has reviewed the construction bid documents, construction contract and final selection of the Contractor for the Project.

6.10.5 The Developer has obtained the proper building permits from the City;

6.10.6 The Developer has requested a notice to proceed from the City, and the City has notified the Developer in writing that it may proceed with construction; and

6.10.7 The Developer has issued a notice to proceed under the executed construction contract, if any.

6.10.8 The Developer has cured all existing breaches of this Agreement to the satisfaction of the City.

6.10.9 The Developer has paid the monitoring fee pursuant to 4.2 of this agreement.

6.11 Commencement and Completion of Construction. Developer shall promptly begin and thereafter diligently pursue to complete the construction of the Project and the development of the Property in accordance with the provisions of this Agreement and at the times specified in the Schedule of Performance; and complete construction not later than the date set forth in the Schedule of Performance, unless otherwise approved by the City. Time is of the essence.

6.13 Local, State and Federal Laws. The Developer shall carry out the construction of the Project in conformity with all applicable laws, including all applicable federal and state labor standards.

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the provisions of this nondiscrimination clause.

6.16 Notification of Contractors, Architects and Engineers. Developer shall notify its Project Contractors, architects and engineers in writing of the requirements of this Agreement.

Developer shall include, where applicable, the provisions of this Agreement in contracts and subcontracts for the Project, and Developer shall enforce such provisions.

7. USE OF PROJECT PROPERTY
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7.2 Affordable Housing.

7.2.1 Number and Type of Units; In come Eligibility. The Developer agrees to develop an affordable rental housing development that will include 39 apartment style units, consisting of No one-bedrooms, 19 two-bedrooms (including manager’s unit) and 20 three-bedroom units and common areas with infrastructure to sup port the housing development. The rental housing units (except the manager’s unit) will be restricted as follows: 14 units for tenants not exceeding 60 percent of AMI, 12 units for tenants with incomes not exceeding 50 percent of the AMI, 8 units for tenants with incomes no t exceed ing 4 0 percent o f the AMI, 4 units for tenants with incomes n ot exceeding 30 percent of the AMI an d no units for tenants with in comes at or below 25 percent of the AMI. Additional Pro ject detail is further described and provided in this Agreement, the Scope of Development and the Project Final Plans. All work shall be completed as specified in this Agreement, the Declaration of Affordability Restrictions and th e Final Plans. All of the Affordab le Units shall be subject to the most restrictive rent limitations as required by the LIHTC Program, the City’s Declaration of Affordability Restrictions and/or any oth er rent limitations as provided by any other fundin g source.

7.2.2 Afford ability Restrictions. The City Declaration of Affordability Restrictions shall evidence the affordability restrictions required by the CDBG-DR MHP.

7.3 Management and Maintenance. The Develop er shall manage and maintain, or cause to be managed an d maintained, the Pro ject. The Developer shall maintain the Property in good condition throughout the Affordability Period . The Dev eloper shall keep parking areas, lighting fixtures, trash en closures, and all areas wh ich can be seen fro m adjacent streets, free from any accumulation of debris or waste materials by regularly scheduled maintenance. The Developer shall maintain the planted areas and all landscaping, in accordance with the landscape plan, for the term of the Affordability Period. Maintenance shall include, but not be limited to watering, weeding, mowing, cultivating, pruning, staking and tying, trash pick-up and removal, and rep airing any damage caused by pedestrian or vehicle encroachment into the planting and/or turf areas.

If at any time the Developer fails to maintain such areas in the manner required pursuant to this Agreement, and said condition is not co rrected within the time set forth in Section 13.1 upon written notice by the City pursuant to Section 14.9 of this Agreement, the City may, but shall not be obligated to, perform the necessary maintenance and th e Developer shall pay such costs as are reasonably incurred for such maintenance, together with interest at the maximum lawful rate until full payment is made to the City. The monies expended by the City shall become a lien against the Property and the Developer hereby consents to the recordation of such lien without prior notice by City to Developer.

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Said lien shall be junior and subordinate to deeds of trust for financing or refinancing of the Project as allowed pursuant to this Agreement.

8. COVENANTS REGARDING USE AND OPERATION OF THE PROJECT AND PROPERTY.

All advertising of the Units shall contain an equal housing opportunity logotype, statement, or slogan as a means of educating the home-seeking public that the property is available to all persons regardless of race, color, religion, sex, national origin, familial status, or disability. A Fair Housing poster (Exhibit 10) must be prominently displayed at rental offices and project sites from the beginning of construction through occupancy, or in front of the existing multifamily building. The Fair Housing poster shall be 11 inches by 14 inches (24 CFR 110.25). A failure to display a Fair Housing poster as required shall be deemed prima facie evidence of a discriminatory housing practice (24 CFR Part 110.30).

8.5 Effect and Duration of Covenants. It is intended and agreed that the agreements and Packet Pg. 667
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covenants provided in the Declaration of Affordab ility Restrictions shall be covenants running with the land and equitable servitudes thereon for the duration of the Affordability Period and that they shall, in any event, and without regard to techni cal classifications or designation, be binding, to the fullest extent permitted by law and equity, for the benefit and in favor of, and enforceable by, the City, the City’s successors and assigns, any other governmental entity acting within its authority and any successor in interest to all or any part of the Property against the Developer, its successors and assigns and every successor in interest to all or any part of the Property, and any party in possession or occupancy of the Property and any subcontracting party or parties or other transferees under this Agreement.

9. INDEMNIFICATION AND WAIVER.

9.1 Developer hereby agrees to protect, defend, indemnify and hold harmless, City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands, penalties, fines, defense costs, and consequential damage or liability of any kind or nature, however caused, arising directly or indirectly out of the obligations or operations herein undertaken by Developer, but only to the extent such damage or liability is caused in whole or in part by any act or omission of the Devel oper, any contractors or subcontractors of Developer or anyone for whose acts Developer may be liable, including, but not limited to, concurrent active or passive negligence, except where caused by the active negligence, sole negligence or willful misconduct of the City or resulting or arising from allegations that the City failed to administer the program in accordance with applicable law. Developer will conduct all defense at its sole cost and expense and City shall have right to approve or disapprove legal counsel defending the City. City shall be reimbursed for all costs and attorney's fees incurred in enforcing this obligation.

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section 1781.

10. INSURANCE REQUIREMENTS AND PUBLIC SAFETY PROTECTIONS.

10.2 Contractor Insurance Requirements. During the course of construction, Developer shall ensure that the Contractor and Subcontractors maintain the following noted insurance:

10.3 Minimum Scope and Limits of Insurance. Coverage shall be at least as broad as:

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(c) Statutory Workers Compensation required by the Labor Code of the State of California and Employers' Liability Insurance in an amount not less than $1,000,000 per occurrence.

(d) Deductibles and Self-Insured Retentions: Any deductibles or self-insured retentions, and any modifications thereof, must be declared to and approved by the Risk Manager of the City of Redding.

Developer shall promptly furnish to City copies of all renewal notices and all receipts of paid premiums. In the event of loss, Developer shall give prompt notice to the insurance carrier and City.

City may make proof of loss if not made promptly by Developer.

10.5 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M.

Best's rating of no less than A: VII.

11. PROHIBITIONS AGAINST ASSI GNMENT AND TRANSFER.

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11.3 Transfer or Assignment.

11.3.1 Transfer or Assignment of Interests, Rights, or Obligations in the Agreement.

11.3.4 Conditions of Approval. With exception of the assignment described in Section 11.3.3 hereof, City shall be entitled to requi re the following as conditions to any approval of any assignment or transfer of any interest in the Property, the Agreement, or the Developer:
(a) Qualifications and Financial Responsibility. Any proposed transferee shall have the qualifications and financial responsibility, as determined by City, necessary and adequate to fulfill Developer’s obligations under the Agreement (or, in the event of transfer of a part of the Property, such obligations to the extent that they relate to such part). (b) Assumption of Obligations. Any proposed transferee shall, for itself and its successors and assigns, expressly assume all of Developer’s obligations under this Agreement and shall agree to be subject to all the conditions and restrictions to which Developer is subject (or, in the event the transfer is of or relates to part of the Property, such obligations, conditions and restrictions to the extent that they relate to such part). Sa id assumption of obligations shall be in writing in recordable form approved by City and shall expressly be for the benefit of City. The fact that any such transferee shall not have assumed such obligations or so agreed, shall not relieve such transferee from such obligations, conditions, or restrictions, or depriv e the City of any rights or remedies or controls with respect to all or any part of the Property or this Agreement that the City would have had, had there been no such transfer or change.
(c) Review of Documents. Developer shall submit to the City for review all legal documents involved in effecting such transfer. Such documents shall be subject to City’s prior written approval.

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(d) Limits on Consideration. Prior to issuance of the Certificate of Completion, the consideration payable for the transfer by such transferee of any interest in the Property or the Agreement shall not exceed the actual costs incurred for the Project, if any, actually made. It is the intent of this provision to preclude assignment of the Agreement or transfer of the Property for profit prior to the completion of the Project.

(e) Other Conditions. Developer and such transferee shall comply with such other conditions as City may find necessary and reasonable in order to achieve and safeguard the purposes of the Agreement.
(f) Permitted Transfers. Notwithst anding any other provision of this Agreement, City approval shall not be required for sale of limited partner interests related to the syndication of Low-Income Housing Tax Credits, or by the tax credit investor. (g) Tax Credit Equity Investor. The City agrees and acknowledges that the development of the Project will be financed in part with proceeds of an equity investment made by one or more limited partners of the Developer (collectively, the “Limited Partner”) in connection with the allocation of federal and/or state low income housing tax credits to the Developer. Notwithstanding anything to the contrary set forth in this Agreement, the following provisions shall apply at all times during which a Limited Partner is a partner of the Developer:
(1) Removal of General Partner. The withdrawal, removal and/or replacement of a general partner(s) for cause in accordance with Developer’s Amended and Restated Agreement of Limited Partnership shall not constitu te a default under any of the Loan Documents or accelerate the maturity of the Loan. If a Limited Partner exercises its right to remove a general partner of Developer, City shall not unreasonably w ithhold its consent to the substitute general partner. Notwithstanding the preceding sentence, the City’s consent will not be required if the substitute general partner is an affiliate of th e limited partner. Notwithstanding the foregoing, the substitute general partner shall assume all of the rights and obligations of the removed general partner under all of the Loan Documents.
(2) Notice and Cure Rights. The City hereby agrees that any cure of any default made or tendered by a Limited Partner shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer. Copies of all notices which are sent to Developer under the terms of the Loan Documents shall also be sent to each Limited Partner at an address to be provided to City in writing by said Limited Partner. (3) Extended Use Agreement. The City acknowledges that Developer and the California Tax Credit Allocation Committee (CTCAC) intend to enter into an extended use agreement, which constitutes the ex tended low-income housing commitment described in Section 42(h)(6)(B) of the Internal Revenue Code (IRC), as amended. As of the date hereof, IRC Section 42(h) (6) (E) (ii) does not permit the eviction or termination of tenancy (other than for good cause) of an existing tenant of any low-income unit or any increase in the gross rent with respect to such unit not otherwise permitted under Section 42 for a period of three (3) years after the date the building is acquired by foreclosure or instrument in lieu of foreclosure. In the event the extended use agreement required by CTCAC is recorded against th e Property, the City agrees to comply with the provisions set forth in IRC Section 42(h) (6) (E) (ii). (4) Assignment of Limited Partner Interests. The interests of Developer's limited partner shall be transferable to any entity that is directly or indirectly owned or managed by Raymond James Affordable Housing Investments, Inc., without the consent of the City.

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the Agreement.

12. FINANCING DEFAULTS.

12.2.1 Pay Debt. City shall be entitled, at its option, to pay to the Lender the amount of the secured debt and acquire or terminate Lender’s secured position.

12.2.2 Deed in Lieu. If title to the Propert y has vested in Lender by way of a deed in lieu of foreclosure, City shall be entitled, at its opt ion within sixty (60) Days from notice to City of Lender’s acceptance of such a deed, to a conveyance to it of the Property upon payment to Lender of an amount equal to the sum of the following:
(a) The secured debt at the time of the deed in lieu of foreclosure (less application of rentals and other income received during foreclosure proceedings).

(b) All expenses with respect to the deed in lieu of foreclosure.

12.2.3 Foreclosure. City shall have the right to bid at any foreclosure sale held by or for any Lender on the Property.

12.2.4 Eminent Domain. Nothing in this Agreement shall limit any exercise of City’s power of eminent domain over the Property.

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period (or sooner upon notice to Developer), in which case the City shall be entitled, in addition to any of its other rights or remedies, to reimbursement from the Developer of all costs and expenses incurred by the City in curing such default and to a lien upon the Property for such reimbursement, provided that any such lien shall be subject always to the lien of any existing liens on the Property authorized by this Agreement including, but not limited to, any construction financing.

13. DEFAULTS AND REMEDIES.

13.1 Cure. Except as otherwise provided in this Agreement, if either party shall default in, or breach, this Agreement, such party shall cure such default or breach within thirty (30) Days after receipt of such written notice from the other party of such default or breach or, if such default or breach cannot be cured within such thirty (30) day period the defaulting party shall commence cure of such default or breach within thirty (30) days of r ecent notice from the other party and diligently pursue cure until its completion. If the defaulting party does not cure or demonstrate to the reasonable satisfaction of the other party that it has acted and continues to act promptly and diligently to cure the default within such time, the aggrieved party may declare an “Event of Default” and institute proceedings to cure and remedy such default or breach, including, but not limited to, proceedings to compel specific performance by the party in default. While neither party is relieved of any obligation under this Agreement to give notice, mere failure to notify the other party shall not be deemed a waiver of the defaulting party’s default. Notwithstanding anything to the contrary contained herein, City shall provide a copy of any notice delivered pursuant to this Section 13.1 to Developer’s limited partner and shall accept cure from such limited partner on the same terms as though such cure was tendered by the Developer.

13.2 Termination Prior to Completion of Construction.

In such event, Developer reserves all remedies for specific performance and/or any damages incurred.

In no event shall the failure by the City to approve the Project or any Project Plans for the Project be deemed a default by the City.

13.3 Other Rights and Remedies of City. City shall have the right to institute such actions or proceedings as it may deem desirable to carry out the purposes of this Section 13, including the right Packet Pg. 674
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to record in the public land records a written declar ation of the termination of all the rights of the Developer in the Property provided by this Agreement.

14. GENERAL PROVISIONS.

14.2 Counterparts. This Agreement may be executed in two (2) counterpart originals, each of which shall constitute one and the same instrument.

14.3 Priority of Contents of Agreement. In the event of a conflict between the terms of this Agreement and the Exhibits, this Agreement shall be given precedence.

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14.8 Non-liability of City Officials and Employ ees. No member, official or employee of the City shall be personally liable to the Developer or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement.

1.6 and 1.21, respectively.

14.10 Jurisdiction, Venue and Attorneys’ Fees.

14.10.3 No Party Deemed Drafter. In the event of a dispute between the parties hereto over the meaning of this Agreement, no party shall be deemed to have been the drafter hereof, and the Packet Pg. 676
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principle of law that contracts are construed against the drafter does not apply.

15. Special CDBG Administrative Requirements

15.1 Financial Management

15.2 Documentation and Record Keeping

Records providing a full de scription of each activity undertaken; a. Records demonstrating that each ac tivity undertaken meets one of the National objectives of the CDBG program;
b. Records required to determine the eligibility of activities; c. Records required to document the acquisition, improvement, or use or disposition of real property acquired or improved with CDBG assistance; d. Records documenting compliance with the fair housing and equal opportunity components of the CDBG program;
e. Financial records as required by 24 CFR 570.502, and 24 CFR 84.21-28; and f. Other records necessary to document compliance with Subpart K of 24 CFR Part 570.

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15.7 Reporting and Funding Availability City shall pay to Developer funds available under this DA based upon information submitted by the Developer and consistent with any approved budget and City policy concerning payments . With the exception of certain advances, payments will be made for eligible expenses actually incurred by Developer, and not to exceed actual cash requirements. In addition, City reserves the right to liquidate funds available to Developer under this DA for costs incurred by City on behalf of Developer insofar as those costs incurred on behalf of Developer relate to the obligations of Developer under this DA.

15.8 Procurement and Subcontracts

15.8.1 OMB Standards. Unless speci fied otherwise with this DA, Developer shall procure all materials, property, or servi ces in accordance with the requirements of 24 CFR

84.40-48.

15.9 Subcontracts

15.9.3 Selection Process. Developer shall undertake to ensure that all subcontracts let in the performance of this DA shall be awarded on a fair and open competition Packet Pg. 678
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basis in accordance with applicable procurement requirements contained in this DA. Executed copies of all subcontracts shall be forwarded to City along with docum entation concerning the selection process.

15.10.1 Developer shall tr ansfer to City any CD BG funds on hand and any accounts receivable attributable to the use of funds under this DA at the time of expiration, cancellation, or termination.

15.11 FAIR HOUSING AND EQUAL OPPORTUNITY COMPLIANCE

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15.12.2 Facilities Accessibility. Pursuant to Section 504, Developer shall ensure that the location in which the services are provi ded is readily accessibl e and usable by persons with disabilities or persons with physical handica ps. Providing separate or different programs is illegal unless necessary to achieve equal opportunity.

15.13 Affirmative Action and Employment Provi sions. The Developer shall ensure that employment opportunities may not be denied on the basis of race, color, national origin, sex, age, religion, familial status, or disability. Developer agrees that it shall be committed to carry out pursuant to City’s specifications an Affirmative Action Plan in keeping with the principles as provided in President’s Execu tive Order 11246 of September 24, 1996. City shall provide Affirmative Action guidelines to Developer to a ssist in the formulation of such program.

Developer shall submit a plan for an Affirmative Action Program for approval prior to the award of funds.

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Department of Labor, under 29 CFR Parts 1, 3, 5 and 7 governing the payment of wages and ratio of apprentices and trainees to journey workers; provided that, if wage ra tes higher than those required under the regulations are imposed by state or local law, nothing hereunder is intended to relieve Developer of its obligation, if any, to require payment of the higher wage. Developer shall cause or require to be inserted in full, in al l contracts subject to su ch regulations, provisions meeting the requirements of this paragraph.

15.13.4 Equal Opportunity and Affirm ative Action Statement (EEO/AA).

Developer shall, in all solicitati ons or advertisements for empl oyees placed by or on behalf of Developer, state that it is an Equal Opportunity or Affirmative Action employer.

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Developer certifies and agrees th at no contractual or other disabi lity exists that would prevent compliance with these requirements.

Developer shall comply with thes e “Section 3" requirements and include the following Language in all subcontracts executed under this DA:

Section 3 requires that to the greatest extent feasible, opportunities for training and employment be given to low- and very low-income residents of the project area, and that contracts for work in connection with the project be awarded to business concerns that provide economic opportunities for low- and very low-income persons residing in the metropolitan area in which the project is located.”
Developer certifies and agrees that no contractual or other legal incapacity exists that would prevent compliance with these requirements.

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between the parties. Developer shall at all times remain an “independent contractor” with respect to the services to be performed under this DA . City shall be exempt from payment of all Unemployment Compensation, FICA , retirement, life and/or me dical insurance and Worker’s Compensation Insurance, as Developer is an independent contractor.

15.19 RESERVED

15.20 Assignability. Except for permitted transfers pursuant to Sections 11.3.4(f) and (g) hereof, Developer shall not assign or transfer any interest in th is DA without the prior written consent of City thereto; provide d, however, that claims for mone y due or to become due to Developer from City under this DA may be assigne d to a bank, trust company, or other financial institution without such approval. Notice of any such assignment or transfer shall be furnished promptly to City.

15.22 Conflict of Interest. Developer shall abide by the provisions of 24 CFR 84.42 and 570.611, which include (but are not limited to) the following:

15.23 Lobbying. Developer shall execute th e Anti-Lobbying Certification (Exhibit 13), attached and incorporated herein.

15.24 Copyright. If this DA results in any c opyrightable material or inventions, City and/or grantor agency reserves the right to royalty-free, nonexclu sive and irrevocab le license to Packet Pg. 683
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reproduce, publish or otherwise use and to authorize others to us e, the work or materials for governmental use.

15.26 Travel. Developer shall obtain written a pproval from City for any travel outside the County of Shasta with funds provided under this DA, if applicable.

15.27 Suspension or Termination. In accord ance with 24 CFR 85.43, City may suspend or terminate this DA if Developer materially fails to comply with any terms of this DA, after the expiration of applicable notice and cure periods hereunder, which include (but are not limited to), the following:

Failure, for any reason, of Developer to fulfill in a timely and proper manner its obligations under this DA after the expiration of applicable notice and cure periods;

Ineffective or improper use of funds provided under this DA; or

Submission by Developer to City of reports required under this DA that are incorrect or incomplete in any material respect.

This DA may also be terminated for conve nience pursuant to 24 CFR 85.44 except that the termination for convenience set forth in 24 CFR 85.44(b) may only be exercised upon the mutual agreement of City and Developer.

In the event that City fails to receive CD BG funds, due to the action or inaction of the Developer, or the allocation of such funds is reduced by HUD, City may reduc e the CDBG-DR MHP City loan to equal the amount funded by HC D or, in the event that the amount of CDBG- DR MHP funds are reduced to an amount that ma kes Project infeasible, terminate and void this DA by giving notice to Developer by registered mail.

Upon termination, Developer shall transfer to City the balance of any CDBG funds on hand at the time of termination and any accounts receivable attributable to the use of CDBG funds.

15.28 Severability. If any provision of this DA is held invalid, the remainder of this DA shall not be affected thereby and all other parts of this DA shall nevertheless be in full force and effect.

15.29 Section Headings and Subheadings. The section headings and subheadings contained in this DA are included for convenience only and shall not limit or otherwise affect the terms of this DA.

15.30 Waiver. City’s failure to act with respect to a breach by Developer does not waive its right to act with respect to subsequent or sim ilar breaches. The failure of City to exercise or Packet Pg. 684
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enforce any right or provision shall not constitute a waiver of such right or provision.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) IN WITNESS WHEREOF, the City and the Developer have executed this Agreement on the . respective dates set forth below:

Date: _______ _
ATTEST:

By: Pamela Mize, City Clerk
Development Agreement Between
City of Redding and Alturas Cross ing I , LP
City of Redding, a municipal corporation
By: Kristen Schreder, Mayor
APPROVED AS TO FORM:

Barry E. De Walt, City Attorney
By:

Alturas Crossing I, LP,
a California Limited Partnership
By: Community Revitalization and Development
Corporation
a California non-profit public benefit corporation
Its: Managing General Partner
By:��
David Rutledge
Its: President
By: Alturas Crossing I, LP
a California Limited Liability Company
Its: Administrative General Partner
By�/J�
Dani�nott
Its: Manager
I'"�� J 35
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LIST OF EXHIBITS

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EXHIBIT 1A

LEGAL DESCRIPTION

The land described herein is situated in the State of California, County of Shasta, City of Redding, described as follows:

PARCEL 1 (APN 071-270-012):

A PORTION OF THE SOUTH ONE -HALF OF THE NORTHEAST ONE-QUARTER OF SECTION 32, TOWNSHIP 32 NORTH, RANGE 4 WEST, M.D.M., AS FOLLOWS:

COMMENCING AT THE NORTHEAST CORNER OF SECTION 32, TOWNSHIP 32 NORTH, RANGE 4 WEST, M.D.M., AS SHOWN ON THAT MAP RECORDED BOOK 10 OF LAND SURVEYS AT PAGE 57 IN THE OFFICE OF THE SHASTA COUNTY RECORDER; THENCE, ALONG THE EAST LINE OF SAID SECTION 32, SOUTH 1 DEGREE 26 1 54" EAST, 1308.70 FEET TO THE NORTHEAST CORNER OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SECTION 32; THENCE, ALONG THE NORTH LINE OF SAID SOUTH ONE -HALF NORTH 88 DEGREES 43 1 40" WEST, 1343.02 FEET TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION; SAID POINT BEING MARKED BY AN IRON PIN; THENCE, LEAVING SAID NORTH LINE SOUTH O DEGREES 49 1 WEST, 575.36 FEET TO A POINT ON THE NORTHERLY LINE OF COUNTY ROAD #38D SHOWN ON 17 OF LAND SURVEYS AT PAGE 30, BEING MARKED BY AN IRON PIN; THENCE, ALONG SAID NORTHERLY LINE NORTH 89 DEGREES 11' WEST, 151.30 FEET TO A POINT MARKED BY AN IRON PIN; THENCE, LEAVING SAID NORTHERLY LINE NORTH O DEGREES 49 1 EAST, 576.56 FEET TO A POINT ON THE NORTH LINE OF THE SOUTH ONE -HALF OF THE NORTHEAST ONE -QUARTER OF SAID SECTION 32, SAID POINT BEING MARKED BY AN IRON PIN; THENCE, ALONG SAID NORTH LINE SOUTH 88 DEGREES 43 1 40" EAST 151.30 FEET TO THE POINT OF BEGINNING.

EXCEPTING THEREFROM THAT PORTION DEEDED TO THE CITY OF REDDING BY FINAL ORDER OF CONDEMNATION REGARDING IRENE M. DAVIS DATED OCTOBER 19, 1998 AND RECORDED IN THE OFFICIAL RECORDS OF SHASTA COUNTY ON NOVEMBER 5, 1998, IN BOOK 3775, AT PAGE 421, DESCRIBED AS FOLLOWS:

ALL THAT REAL PROPERTY SITUATED IN THE NORTHEAST ONE -QUARTER OF SECTION 32, TOWNSHIP 32 NORTH, RANGE 4 WEST, M.D.M., CITY OF REDDING, COUNTY OF SHASTA, STATE OF CALIFORNIA, BEING A PORTION OF THE LANDS CONVEYED TO THOMAS E. DAVIS, ET UX., BY DEED RECORDED JULY 18, 1957 IN BOOK 538 OF SHASTA COUNTY OFFICIAL RECORDS AT PAGE 428, SAID PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

COMMENCING AT A 6”x6” CONCRETE MONUMENT MARKED RE 5438 AT THE NORTHWEST CORNER OF THE SOUTH ONE- HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 32 AS SHOWN ON THAT CERTAIN MAP RECORDED JUNE 29, 1979 IN BOOK 18 OF PARCEL MAPS AT PAGE 115, SHASTA COUNTY RECORDS; THENCE ALONG THE NORTH LINE OF PARCELS 1 AND 2 AS SHOWN ON SAID MAP SOUTH 88 DEGREES 32'41" EAST 1186.50 FEET (SOUTH 88 DEGREES 43 1 04" EAST
1186.83 FEET PER SAID MAP) TO THE NORTHWEST CORNER OF SAID DAVIS LANDS; THENCE ALONG THE WESTERLY LINE OF SAID DAVIS LANDS, SOUTH 00 DEGREES 5737" WEST (SOUTH OO DEGREES 4900" WEST PER SAID 538 OR 428) 560.10 FEET TO THE POINT OF BEGINNING; THENCE FROM SAID POINT OF BEGINNING, ACROSS SAID DAVIS LANDS, SOUTH 86 DEGREES 47 1 37" EAST 151.18 FEET TO A POINT ON THE EASTERLY LINE OF SAID DAVIS LANDS; THENCE ALONG SAID EASTERLY LINE SOUTH OO DEGREES 57 1 37" WEST (SOUTH 00 DEGREES 49 1 00" WEST PER SAID 538 OR 428) 9.83 FEET TO A 5/8" IRON PIN MARKED RE 5438 ON THE NORTHERLY LINE OF COUNTY ROAD #38-D (OLD ALTURAS ROAD) AND THE SOUTHEAST CORNER OF SAID DAVIS LANDS; THENCE ALONG SAID NORTHERLY LINE OF OLD ALTURAS ROAD, NORTH 89 DEGREES 02 1 23" WEST 151.06 FEET (NORTH 89 DEGREES 11 1 00 1 ' WEST 151.30 FEET PER SAID 538 OR 428) TO A 5/8" REBAR

AT THE SOUTHWEST CORNER OF SAID DAVIS LANDS; THENCE ALONG THE WESTERLY LINE OF SAID DAVIS LANDS NORTH OO DEGREES 57 1 37" EAST (NORTH OO DEGREES 49 1 00" EAST PER SAID 538 OR 428) 15.76 FEET TO THE POINT OF BEGINNING.

PARCEL 2 (APN 071-270-021):

A PORTIO N OF THE NORTHEAST ONE -QUARTER OF SECTION 32, TOWNSHIP 32 NORTH, RANGE 4 WEST, M.D.M., BEING PARTICULARLY DESCRIBED AS FOLLOWS:

RECORDS, BEING BOUNDED ON THE NORTH AND SOUTH BY THE NORTH AND SOUTH LINES RESPECTIVELY OF SAID LANDS CONVEYED TO PROCTOR; AND BEING BOUNDED ON THE EAST BY THE WESTERLY LINE AND THE SOUTHERLY PROLONGATION OF SAID WESTERLY LINE, OF THE LANDS CONVEYED TO THOMAS E.DAVIS, ET BY DEED RECORDED IN THE OFFICE OF THE COUNTY RECORDER ON JULY 18, 1957 IN BOOK 538 OF OFFICIAL RECORDS, PAGE 428, SHASTA COUNTY RECORDS; AND BEING BOUNDED ON THE WEST BY THE EAST LINE AND THE SOUTHERLY PROLONGATION OF SAID EAST LINE OF PARCEL 1 AS SHOWN ON THAT CERTAIN PARCEL MAP LS #121-78 FOR FRANK L. LITTLE RECORDED IN THE OFFICE OF THE COUNTY RECORDER ON JUNE 29, 1979 IN BOOK 18 OF PARCEL MAPS AT PAGE 115, SHASTA COUNTY RECORDS.

EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE FINAL ORDER OF CONDEMNATION IN FAVOR OF THE CITY OF REDDING, RECORDED JUNE 16, 1992 IN BOOK 2874 OF OFFICIAL RECORDS, PAGE 21, SHASTA COUNTY RECORDS.

ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. LS -6-93, FOR EDWARD J. & QUADALUPE GORGE, FILED FOR RECORD MAY 6, 1994 IN BOOK 30 OF PARCEL MAPS, AT PAGE 79, SHASTA COUNTY RECORDS. Packet Pg. 688 Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 1B
Parcel Map APN: 071-270-012-000 and 071-270-021-000

Packet Pg. 689
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 2

PROMISSORY NOTE SECURED BY DEED TRUST

DO NOT DESTROY THIS NOTE: When paid, this note, with Deed of Trust securing same, must be surrendered to Trustee for cancellation before reconveyance will be made.

Amount: $2,000,000 March 3, 2022
Redding, California

FOR VALUE RECEIVED, Alturas Crossing I, LP , a California limited partnership, ("Borrower"), promises to pay to the order of the City of Redding ("Holder"), the principal sum of Two Million and no/100 ($2,000,000), pursuant to Section 4 below.

1. Borrower’s Obligation. This promissory note (“Note”) evidences Borrower’s obligation to pay Holder the principal amount of Two Million and no/100 ($2,000,000) for the funds loaned to Borrower by Holder to ass ist with the development of certain real property (“Project”) pursuant to a Development Agreement between Borrower and Holder dated March ____, 2022 (“Agreement”).

2. Interest. The principal balance of this Note shall bear simple interest from the dat e of the promissory note until repaid in full at One (1%) per annum; provided, however, if an event of default occurs, interest on the principal balance shall begin to accrue, as of the date of the event of default and continuing until the earlier of the Loan funds being paid in full or cure of such event of default, at the default rate of the lesser of: ten percent (10%), compounded annually; or the highest rate permitted by law.

3. Term and Repayment Requirements. The term of this Note (“Term”) shall commence with the date of this Note and shall expire Fifty-five (55) years from the date of recordation of a Notice of Completion by the City , s o long as there is no event of default as described in Section 4 below .

Payment of the note shall be required as follows:

The term of the note will not exceed 55 years. All principal and interest payments shall be paid to the City of Redding. No payments will be due for the first fifteen (15) years of the term. Beginning the sixteenth (16th) year following the completion of construction, no later than one hundred twenty (120) days after the end of each fiscal year during the term of the proposed City loan, Developer, Borrower or other party authorized by the Development Funding Agreement (DFA), including any successors and assigns, shall provide City with a written year-end cash flow analysis and audited financial statement for the project prepared by a certified public accountant. Fifty percent (50%) of any residual receipts realized from the operation of th e Project as shown by the annual audit, shall be split proportionately between the City and the lenders of any other project -related loans approved by the City for which residual receipts payments are due. Any such residual receipts received by the City shall be credited as a payment on the City loan and shall be applied first to reducing the accrued interest, if any, on the loan, and subsequently, to reducing the principal. The remaining 50% of residual receipts will be available for distribution to the Borrower.

Payments are required as stated above, u ntil the expiration of the Term at which time all outstanding principal and accrued interest shall be due and payable.

a. All payments are payable in lawful money of the United States.

Packet Pg. 690
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

b. All payme nts on this note shall be paid to the City of Redding at 777 Cypress Avenue, Redding, California, or to such other place as holder of this note may from time to time designate.
c. All payments on this Note shall be without expense to Holder, and Borrower agrees to pay all costs and expenses, including reconveyance fees and reasonable attorney’s fees of Holder, incurred in connection with the payment of this Note and the release of any security hereof. d. Notwithstanding any other provision of this Not e, or any instrument securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment of all sums by Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that Holder may legally charge under the laws of the State of California, then the amount by which payments exceed the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no event shall Borrower be obligate d under the terms of this Note to pay any interest which would exceed the lawful rate. e. The whole of this Note shall be nonrecourse to Borrower.

4. Default.

a. Any of the following shall constitute an event of default under this Note and are subject to the applicable notice and cure rights.

1) Any failure to pay, in full, any payment required under this Note when due.

2) Any failure in the performance by Borrower of any term, condition, provision, or covenant set forth in this Note.

3) The occu rrence of any event of default under the Agreement, the Deed of Trust, or the Declaration of Affordability Restrictions, (as defined in the Agreement).

c. The failure to exercise the remedy set forth in subsection 4b above or any other remedy provided by law upon the occurrence of one or more of the foregoing events of default shall not constitute a waiver of the right to ex ercise any remedy at any subsequent time in respect to the same or any other default. The acceptance by Holder hereof of any payment which is less that the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Holder, except as and to the extent otherwise provided by law.

5. No Assumption. This Note shall not be assumable by the successors and assigns of Borrower without the prior written consent of Holder.

Packet Pg. 691
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

7. Waivers.

a. Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of dishonor and notice of nonpayment of this Note. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower.
b. No extension of time for payment of this Note or any installment hereof made by agreement by Holder with any person now or hereafter liable for payment of this note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
c. The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct, or withhold any payments or charges due under this Note for any reason whatsoever.

8. Miscellaneous Provisions.

a. Borrower promises to pay all costs and expenses, including reasonable attorney’s fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement.
b. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. c. This Note shall be governed by and construed in accordance with the laws of the State of California.

Alturas Crossing I, LP
a California Limited Partnership

By: Community Revitalization and Development Corp.
a California nonprofit public benefit corporation.

Its: Managing General Partner

By:

David Rutledge
Its: President

By: Alturas Crossing I, LLC
a California a California Limited Liability Company
Its: Administrative General Partner

By: ________________________
Daniel Knott
Its: Manager
Packet Pg. 692
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

EXHIBIT 3

RECORDING REQUESTED BY:

City of Redding

CITY BUSINESS - NO FEE
Section 6103 of the Government Code
of the State of California

AND WHEN RECORDED MAIL TO:

City of Redding – Housing Division
P.O. Box 496071
777 Cypress Avenue
Redding, CA 96049-6071

CITY OF REDDING DEED OF TRUST WITH ASSIGNMENTS OF RENTS

THIS DEED OF TRUST is made this March 3, 2022, by Alturas Crossing I, LP, a California limited liability partnership, as to equitable title, herein called “Trustor,” and/or “Borrower” whose address is 1011 Parkview Avenue, Suite A, Redding, CA 96001; Placer Title Company, herein called “Trustee,” whose address is 2145 Larkspur Lane; and the CITY OF REDDING, a municipal corporation and general law city, whose address is P.O. Box 496071, 777 Cypress Avenue, Redding, California 96049-6071, herein called “Beneficiary” and/or the “Lender”.

WITNESSETH: That Trustor Irrevocably, Grants, Transfers and Assigns, to Trustee, in Trust, with Power of Sale, that property in the City of Redding (“City”), County of Shasta, State of California, described as:

EXHIBIT 1 - Legal Description
ASSESSOR’S PARCEL NUMBER: 071-270-012-000 and 071-270-021-000

Packet Pg. 693
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

1. Payment of the sum of Two Million and no/100 ($2,000,000) with interest thereon according to the terms of a certain Promissory Note of even date herewith, designated as the “Promissory Note” made by Trustor, payable to the order of the Beneficiary and extensions or renewals thereof.

2. Payment of such additional sums with interest thereon as: (a) may be hereafter borrowed from the Beneficiary by the then record owner or owners of said property when evidenced by another Promissor y Note or Notes reciting that they are secured hereby, or (b) as may be added to the indebtedness secured hereby in accordance with the provisions of this Deed of Trust.

3. Performance of each and every obligation, covenant, promise, or agreement of Trus tor contained herein.

TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:

1. To keep said property in good condition and repair; to allow Beneficiary or its representatives to enter and inspect the premises at all reasonable times and access thereto shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the premises without Beneficiary's written consent; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry-rot; to pay when due all claims for labor performed and materials furnished in connection with such property and not to permit any mechanic's lien against such property; to comply with all laws affecting such property or requiring any alterations or improvements to be made thereon; not to initiate or acquiesce in any zoning reclassification without Beneficiary's written consent; not to commit or permit waste thereon; not to commit, suffer, or permit any act upon such property in violation of the law; and to paint, cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of said property may be reasonably necessary; to promptly pay all amounts due others upon agreements of lease or conditional sale of all fixtures, furnishings, and equipment located thereon.

Packet Pg. 694
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

If the loan secured hereby or any part thereof is being obtained or should any additional loan be made hereafter for the purpose of financing rehabilitation improvements or construction of affordable housing on said property, Trustor further agrees, anything in this Deed of Trust to the contrary notwithstanding: (a) to complete the same in accordance with City approved plans and specifications satisfactory to Beneficiary; (b) to allow Beneficiary to inspect such property at all times during construction; (c) to replace any work or materials unsatisfactory to Beneficiary within fifteen (15) calendar days after written notice from Beneficiary of such fact, which notice may be given to Trustor by registered or certified mail, sent to its last known address, or by personal service of the same; (d) that work shall not cease on the construction of such improvements for any reason whatsoever for a period of fifteen (15) calendar days, whether consecutive or not, without the written permission of the Beneficiary; (e) to pay when due all claims for labor and materials furnished in connection with the said construction and/or rehabilitation and not to permit any claims of lien for said work or material to be filed of record against the said property; and (f) not to permit any stop notice claims to be presented to Beneficiary. If the said property is part of a la rger tract upon which improvements will be constructed, Trustor shall make separate contracts and subcontracts for said construction, which shall pertain to the said property only and shall keep separate, full, and complete records of all work and materials furnished to the said property. Trustee, upon presentation to it of an affidavit signed by the Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein and to act thereon hereunder.

At least thirty (30) days prior to the expiration of any insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefor and, in the event any such insurance policy and evidence of the payment of the premium therefor are not so delivered by Trustor to Beneficiary, Trustor, by executing this Deed of Trust, specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may obtain such insurance through or from any insurance agency or company acceptable to it, pay the premium thereof, and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest.

Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy theretofore delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies, or for any insolvency of any insurer or insurance underwriter. In case of insurance loss, Beneficiary is hereby authorized either (a) upon prior notice to Trustor, to settle and adjust any claim under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss. In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds, after deducting therefrom any expenses incurred in the collection thereof, shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises. In all other cases, such insurance proceeds, at the option of the Trustor, shall either be used for the cost of rebuilding or restoring the Packet Pg. 695
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

3. To pay: (a) all general and special City and County taxes affecting such property; (b) when due, all special assessments for public improvements, without permitting any improvement bond to i ssue for any special assessment; (c) when due, all encumbrances, charges and liens, with interest, on said property, or any part thereof, which are or appears to be prior or superior hereto; (d) if the security of this Deed of Trust is a leasehold estate, to make any payment or do any act required of the Lessee or its successor in interest under the terms of the instrument or instruments creating said leasehold; (e) all costs, fees and expenses of this trust; (f) for any statement regarding the obligation s ecured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made; (g) such other charges for services rendered by Beneficiary and furnished at Trustor's request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable.

4. That, should Trustor fail to make any payment or do any act as provided in this Deed of Trust, then Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purpos es; (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee; (c) pay, purchase, contest, or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior or superior hereto; and (d) in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. Trustor agrees to repay any amount so expended on demand of Beneficiary, and any amount so, expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest. This provision is not intended to curtail the right of Trustor to contest any such payment in good faith.

5. To perform each agreement of Trustor contained in any Development Agreement (including without limitation the Exhibits thereto) entered into between Trustor and Beneficiary for the development, construction of improvements, adoption of rent rest rictions or other affordability covenants, or operation of certain activities on the above-described property.

6. To appear in and defend any action or proceeding purporting to affect the security hereof or the property which is covered by this Deed of T rust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends, to pay all costs and expenses, including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may Packet Pg. 696
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in such property is directly questioned by such action, including any action for the condemnation or partition of said premises, and in any suit brought by Beneficiary to foreclose this Deed of Trust.

7. To pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from the date of expenditure at the rate that the principal obligation secured hereby bears at the time such payment is made, and the repayment of such sums shall be secured hereby.

8. That, should the Trustor or any successor in interest to Trustor in such property drill or extract, or enter into a lease for drilling or extraction of oil, gas, or other hydrocarbon substances or any mineral of any kind or character, or sell, convey, further encumber, or alienate said property, or any part thereof, or any interest therein, or be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily except as allowed by the Agreement, Beneficiary shall have the right, at its option, to declare any indebtedness or obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing.

9. That any award, settlement, or damages for injury or damages to such property, or in connection with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to said property, or any part thereof, is hereby assigned and shall be paid to Beneficiary, who may apply or release such monies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or other insurance.

11. That at any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary a nd presentation of this Deed of Trust and any Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of said property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with respect to the remainder of said property, Trustee may: (a) reconvey any part of said property; (b) consent to the making of any map or plat thereof; (c) join in granting any easement thereon; (d) join in any agreement subordinating the lien or charge hereof.

12. That the lien hereof shall remain in full force and effect during any postponement or extension of time of payment of the indebtedness secured hereby, or any part thereof.

The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." Such request and reconveyance shall operate as a re-assignment of the rents, issues, royalties and profits hereinafter Packet Pg. 697
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

assigned to Beneficiary. Five (5) years after issuance of such full reconveyance, Trustee may destroy said Note and this Deed of Trust (unless directed in such request to retain them). 14. That as additional security, Trustor irrevocably assigns to Beneficiary the rents, issues, and profits of the property aff ected by this Deed of Trust for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Beneficiary any duty to produce rents from the property affected by this Deed of Trust, or cause Beneficiary to be (a) "mo rtgagee in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the propert y affected by this Deed of Trust, or for any negligence in the management, upkeep, repair, or control of such property. This is an absolute assignment, not an assignment for security only, and Beneficiary's right to rents, issues, and profits is not contingent upon, and may be exercised without possession of, the property affected by this Deed of Trust.

Beneficiary confers upon Trustor a license (“License”) to collect and retain the rents, issues, and profits of the property affected by this Deed of Trust as they become due and payable, until the occurrence of a default hereunder. Upon such default, the License shall be automatically revoked and Beneficiary may collect and retain the rents, issues, and profits without notice and without taking possession of the property affected by this Deed of Trust. This right to collect rents, issues and profits shall not grant to Beneficiary or Trustee the right to possession, except as otherwise provided herein; and neither said right, nor termination of the License, shall impose upon City or Trustee the duty to produce rents, issues, or profits or maintain all or any part of the property affected by this Deed of Trust. If Trustor shall default as aforesaid, Trustor's right to collect any such money shall cease and Ben eficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents, issues, royalties, and profits and shall be authorized, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent without bringing any action or proceeding, or by receiver to be appointed by the Court, enter into possession and hold, occupy, possess and enjoy the said property, make, cancel, enforce, and modify leases, obtain and eject tenants, and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents, issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of said property, and of collection including reasonable attorneys' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties, and profits of said property being hereby assigned to Beneficiary for said purposes. The acceptance of such rents, issues, royalties, and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California. Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties, or profits shall not in any manner a ffect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. The receipt and application by said Beneficiary of all such rents, issues, royalties, and profits pursuant hereto, after execution and delivery of declaration of default and demand for sale as hereinafter provided, or during the pendency of Trustee's sale proceedings hereunder, shall not cure such breach or default nor affect said sale proceedings, or any sale made pursuant thereto, but such rents, issues, royalties, and profits, less all costs of operation, maintenance, collection, and reasonable attorneys' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary m ay determine. Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be, an affirmation by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor a subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option.

15. That if the security of this Deed of Trust is a leasehold estate, the Trustor agrees that: (a) the term “Lease” as used herein shall mean the lease creating the “leasehold estate”; (b) Trustor shall not amend, Packet Pg. 698
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

change, or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Beneficiary regarding any notice, request, or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, the leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants, agreements, terms, conditions, and provisions under any lease affecting the premises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents provided for therein or the interest of the lessor or the Beneficiary therein or thereunder. Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust. In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "said property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary.

16. Subject to any applicable notice and cure rights, any default by Trustor in payment of any indebtedness secured hereby or performance of an y covenant or condition set forth in a Development Agreement between Trustor and Beneficiary shall constitute a default under this Deed of Trust, and upon default by Trustor under the terms of any encumbrance, charge, or lien which is or appears to be prior or superior hereto, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale of written notice of default and of election to cause to be sold said property, w hich notice Trustee shall cause to be filed for record. Beneficiary shall also deposit with Trustee this Deed of Trust and any Notes and all documents evidencing expenditures secured hereby. After the lapse of such time as then may be required by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in such notice of sale, whether as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied.

The recital in such Deed of any matters of fact shall be conclusive evidence of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale.) After deducting all costs, fees and expenses of Trustee, and of this Trust, including cost of evidence of title in connection with this sale, Trustee shall apply the proceeds of sale to payment, first, of all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable under the Note or Notes secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto.

17. To waive, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense to any demand secured hereby.

Packet Pg. 699
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

18. That Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by Beneficiary and recorded in the office of the recorder of the county or counties where such property is situated, shall be conclusive proof of property substitution of such successor Trustee or Trustees, who shall, without conveyances from the Trustee predecessor, succeed to all its title, estate, rights, powers, and duties, including but not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust. Such instrument must contain the name of the original Trustor, Trustee, and Beneficiary hereunder, and the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees, and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument. The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law.

24. That Trustor has made certain representations and disclosures in order to induce Beneficiary to make the loan evidenced by the Promissory Note or Notes which this Deed of Trust secures, and in the event that Trustor has made any material misrepresentation or failed to disclose any material fact, Beneficiary at its Packet Pg. 700
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

option and without notice, shall have the right to declare the indebtedness secured hereby, irrespective of the maturity date specified in such Note or Notes, immediately due and payable, and on failure to so pay Beneficiary may make a written declaration of default and demand for sale as in paragraph No. 15 herein set forth. Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

Packet Pg. 701
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

THE UNDERSIGNED TRUSTOR REQUESTS that a copy of any notice of default and of any notice of sale hereunder be mailed to him at his address hereinbefore set forth.

Dated: March 3, 2022
Signature of Trustor(s):

Alturas Crossing I, LP
a California Limited Partnership

By: Community Revitalization and Development Corp.,
a California non-profit public benefit corporation
Its: Managing General Partner

By:

David Rutledge
Its: President

By: Alturas Crossing I, LLC,
a California Limited Liability Company
Its: Administrative General Partner

By: ________________________
Daniel Knott
Its: Manager

This document must be notarized.

Packet Pg. 702
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

Exhibit 1 – Legal Description
Deed of Trust

PARCEL 1 (APN 071-270-012):

A PORTION OF THE SOUTH ONE -HALF OF THE NORTHEAST ONE -QUARTER OF SECTION 32, TOWNSHIP 32 NORTH, RANGE 4 WEST, M.D.M., AS FOLLOWS:

COMMENCING AT THE NORTHEAST CORNER OF SECTION 32, TOWNSHIP 32 NORTH, RANGE 4 WEST, M.D.M., AS SHOWN ON THAT MAP RECORDED BOOK 10 OF LAND SURVEYS AT PAGE 57 IN THE OFFICE OF THE SHASTA COUNTY RECORDER; THENCE, ALONG THE EAST LINE OF SAID SECTION 32, SOUTH 1 DEGREE 26
1 54" EAST, 1308.70 FEET TO THE NOR THEAST CORNER OF THE SOUTH ONE -HALF OF THE NORTHEAST ONE-QUARTER OF SECTION 32; THENCE, ALONG THE NORTH LINE OF SAID SOUTH ONE -HALF NORTH 88 DEGREES 43 1 40" WEST, 1343.02 FEET TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION; SAID POINT BEING MARKED BY AN IRON PIN; THENCE, LEAVING SAID NORTH LINE SOUTH O DEGREES 49 1 WEST, 575.36 FEET TO A POINT ON THE NORTHERLY LINE OF COUNTY ROAD #38D SHOWN ON 17 OF LAND SURVEYS AT PAGE 30, BEING MARKED BY AN IRON PIN; THENCE, ALONG SAID NORTHERLY LINE NORTH 89 DEGREES 11' WEST, 151.30 FEET TO A POINT MARKED BY AN IRON PIN; THENCE, LEAVING SAID NORTHERLY LINE NORTH O DEGREES 49 1 EAST, 576.56 FEET TO A POINT ON THE NORTH LINE OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 32, SAID POINT BEING MARKED BY AN IRON PIN; THENCE, ALONG SAID NORTH LINE SOUTH 88 DEGREES 43 1 40" EAST 151.30 FEET TO THE POINT OF BEGINNING.

COMMENCING AT A 6”x6” CONCRETE MONUMENT MARKED RE 5438 AT THE NORTHWEST CORNER OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 32 AS SHOWN ON THAT CERTAIN MAP RECORDED JUNE 29, 1979 IN BOOK 18 OF PARCEL MAPS AT PAGE 115, SHASTA COUNTY RECORDS; THENCE ALONG THE NORTH LINE OF PARCELS 1 AND 2 AS SHOWN ON SAID MAP SOUTH 88 DEGREES 32'41" EAST 1186.50 FEET (SOUTH 88 DEGREES 43 1 04" EAST 1186.83 FEET PER SAID MAP) TO THE NORTHWEST CORNER OF SAID DAVIS LANDS; THENCE ALONG THE WESTERLY LINE OF SAID DAVIS LANDS, SOUTH 00 DEGREES 5737" WEST (SOUTH OO DEGREES 4900" WEST PER SAID 538 OR 428) 560.10 FEET TO THE POINT OF BEGINNING; THENCE FROM SAID POINT OF BEGINNING, ACROSS SAID DAVIS LANDS, SOUTH 86 DEGREES 47 1 37" EAST 151.18 FEET TO A POINT ON THE EASTERLY LINE OF SAID DAVIS LANDS; THENCE ALONG SAID EASTERLY LINE SOUTH OO DEGREES 57 1 37" WEST (SOUTH 00 DEGREES 49 1 00" WEST PER SAID 538 OR 428) 9.83 FEET TO A 5/8" IRON PIN MARKED RE 5438 ON THE NORTHERLY LINE OF COUNTY ROAD #38-D (OLD ALTURAS ROAD) AND THE SOUTHEAST CORNER OF SAID DAVIS LANDS; THENCE ALONG SAID NORTHERLY LINE OF OLD ALTURAS ROAD, NORTH 89 DEGREES 02 1 23" WEST 151.06 FEET (NORTH 89 DEGREES 11 1 00 1 ' WEST 151.30 FEET PER SAID 538 OR 428) TO A 5/8" REBAR

AT THE SOUTHWEST CORN ER OF SAID DAVIS LANDS; THENCE ALONG THE WESTERLY LINE OF SAID DAVIS LANDS NORTH OO DEGREES 57 1 37" EAST (NORTH OO DEGREES 49 1 00" EAST PER SAID 538 OR 428) 15.76 FEET TO THE POINT OF BEGINNING.

PARCEL 2 (APN 071-270-021):

A PORTION OF THE NORTHEAST ONE-QUARTER OF SECTION 32, TOWNSHIP 32 NORTH, RANGE 4 WEST, M.D.M., BEING PARTICULARLY DESCRIBED AS FOLLOWS:

ALL THAT PORTION OF THE LANDS CONVEYED TO LYLE S. PROCTOR, ET BY THAT CERTAIN DEED RECORDED IN THE OFFICE OF THE COUNTY RECORDER ON JUNE 3, 1953 IN BOOK 402 OF OFFICIAL RECORDS, PAGE 133, SHASTA COUNTY RECORDS, BEING BOUNDED ON THE NORTH AND SOUTH BY THE NORTH AND SOUTH LINES RESPECTIVELY OF SAID LANDS CONVEYED TO PROCTOR;

AND BEING BOUNDED ON THE EAST BY THE WESTERLY LINE AND THE SOUTHERLY PROLONGATION OF SAID WESTERLY LINE, OF THE LANDS CONVEYED TO THOMAS E.DAVIS, ET BY DEED RECORDED IN THE OFFICE OF THE COUNTY RECORDER ON JULY 18, 1957 IN BOOK 538 OF OFFICIAL RECORDS, PAGE 428, SHASTA COUNTY RECORDS; AND BEING BOUNDED ON THE WEST BY THE EAST LINE AND THE SOUTHERLY PROLONGATION OF SAID EAST LINE OF PARCEL 1 AS SHOWN ON THAT CERTAIN PARCEL MAP LS #121-78 FOR FRANK L. LITTLE RECORDED IN THE OFFICE OF THE COUNTY RECORDER ON JUNE 29, 1979 IN BOOK 18 OF PARCEL MAPS AT PAGE 115, SHASTA COUNTY RECORDS.

EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE FINAL ORDER OF CONDEMNATION IN FAVOR OF THE CITY OF REDDING, RECORDED JUNE 16, 1992 IN BOOK 2874 OF OFFICIAL RECORDS, PAGE 21, SHASTA COUNTY RECORDS.

Packet Pg. 703
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds) Exhibit 4A
DRAFT - For informational purposes only, HCD to provide final document

FREE RECORDING IN

ACCORDANCE W
ITH

CALIFORNIA GOVERNMENT
CODE SECTION 27383
R

ECORDING REQUESTED BY

AND WHEN RECORDED MAIL
TO:
[S
ubrecipient Address]

DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT

COMMUNITY DEVELOPMENT BLOCK GRANT - DISASTER RECOVERY

MULTIFAMILY HOUSING PROGRAM

REGULATORY AGREEMENT
CONTRACT NUMBER - 21-DRMHP-21008
This Regulatory Agreement (the “Agreement”) dated March 3, 2022, for reference purposes only, is made and entered into by and between Alturas Crossing I, LP, a limited partnership (the “Developer”), and City of Redding a California municipal corporation, (the “Subrecipient”), pursuant to the requirements of the Community Development Block Grant - Disaster Recovery Multifamily H ousing P rogram administered by t he Department of Housing and Community Development, a public agency of the State of California (the “Department”).

RECITALS:

A. Developer has applied to Subrecipient for Community Development Block Grant - Disaster Recovery Multifamily Hous ing Program financial assistance (the “Assistance”) for the development of a rental housing development located at 1320 and 1368 Old Alturas Rd, Redding, CA 96003 , California, consisting of a total of 39 Housing Units (including one manager’s unit) (the "Development"), of which 9 (4 units at 30% or b
elow of AMI) are DR-MHP Assisted Units are to be occupied by eligible Households as provided in this Agreement. The Development is located on the real property described in Exhibit A hereto (the “Property”). The Subrecipient, with Department’s approval, has agreed to provide the Assistance under the Community Development Block Grant - Disaster Recovery Multifamily Housing Program (the “Program”) and the DR -MHP Policies and Procedures Manual (the “DR-MHP Policies and Procedures”). The obligations imposed on the Developer Packet Pg. 704
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

by the Program and the Program policies and procedures are collectively referred to herein as the “Program Requirements.”

B. Community Development Block Grant Disaste r Recovery (CDBG -DR) funding was appropriated under Public Law 115-123, and awarded by the U.S. Department of Housing and Urban Development (HUD) to the Department via Federal Register Notice 83 FR 40314. The Department serves as the lead agency and respon sible entity for administering CDBG -DR funds. CDBG-DR supports the State of California’s unmet recovery needs related to the Federal Emergency Management Agency (FEMA) Major Disaster Declarations DR -4344 in October 2017 and DR-4353 in December 2017. HCD performed an unmet needs assessment that covered the areas affected by DR 4344 and DR 4353, and included data from FEMA, Small Business Administration (SBA), California’s Department of Forestry and Fire Protection (CAL FIRE), and California Department of Ins urance (CDI). Recognizing the requirement included in Federal Register Notice 83 FR 5844, published February 9, 2018, and 83 FR 40314, published August 14, 2018, to address housing needs first and based on the results of the needs assessment, the Department developed the Disaster Recovery Multifamily Housing Program (DR-MHP).

C. As required by the Program, Subrecipient and the Department have entered into a Master Standard Agreement, numbered 21-DRMHP-21008 and dated May 13, 2021, which provides the overarching terms and conditions for implementing the Program and the terms of the Assistance common to all projects to be completed by the Subrecipient (the “Master Standard Agreement”).

E. As required by the Program, Developer and the Subrecipient have entered into that certain Development Agreement dated March ____, 2022, governing the terms and conditions of the Development and governing the terms of the Assistance for the Development (the "Development Agreement"). As required by the Program, Subrecipient has made a part of the Development Agreement the DR -MHP Development Agreement Rider (the “Development Agreement Rider”) to include terms required by the Department for the Development.

G. As further consideration for the Assistance and in furtherance of the purposes of the Program, Developer has agreed to enter into this Agreement and consent to its recordation against the Development. The purpose of this Agreement is to regulate and restrict the occupancy, rents, operation, ownership and management of the Development in compliance with the Program Requirements and put such regulations and restrictions on title for the term of this Agreement.

Packet Pg. 705
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

NOW, THEREFORE, the parties hereto agree as follows:

1. Recitals. The foregoing recitals are a part of this Agreement and are incorporated herein by reference as if fully stated herein.

2. Property. Developer is the owner in fee of the Property and all improvements now and hereafter located thereon.

3. Definitions. Unless the context requires otherwise, or the terms are defined herein, the terms used in this Agreement shall be governed by the definitions set forth in the Program policies and procedures. The following terms shall have the respec tive meanings assigned to them in this paragraph unless the context in which they are used clearly requires otherwise:

a. Affordable Rents: means rents that are at or below the “High” HOME Program rents published by HUD for different metropolitan areas.

c. Area Median Income (AMI): means the median family income for specific geographic areas, adjusted for household size, as calculated by HUD, and published annually by HCD for the CDBG program.

d. Commercial Space: any nonres idential space located in or on the property of the Development that is, or is proposed to be, rented or leased by the owner of the Project, the income from which shall be included in Operating Income, as applicable, which ensures the fiscal integrity of the Development.

g. Disability: any disability, including mental or physical dis ability, that limits a major life activity, including a disability that falls within the definitions in Government Code (G.C.) Sections 11135, 12926, and 12926.1 or within the definition of disability used in the federal Americans with Disabilities Act of 1990, codified at 42 U.S.C. 12102.

h. Elderly Person: A person at least 62 years of age (24 CFR Part 5.100).

Packet Pg. 706
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

j. Fiscal Year: the Fiscal Year for the Development shall mean the annual period commencing on July 1st and concluding on June 30
th each year.

k. Household: One or more persons occupying a housing unit.

m. Low- to Moderate-Income (LMI): Low to moderate income people are those having incomes not more than the “moderate -income” level (80% Area Median Family Income) set by the federal government for the HUD-assisted Housing Programs. This income standard changes from year to year and varies by household size, county and the metropolitan statistical area.

n. Operating Expenses: the amount approved by the Subrecipient that is necessary to pay for the recurring expenses of the Development, such as utilities, maintenance, management, taxes, licenses, and Su pportive Services costs, but not including debt service or required reserve account deposits.

q. Reconstruction: Demolishing and re -building a housing unit on the same lot in substantially the same manner. Reconstruction is rehabilitation for purposes of DR- MHP.

r. Rehabilitation: Repair or restoration of housing units in the disaster-impacted areas to applicable construction codes and standards.

s. Rent: means all mandatory charges, other than deposits, paid by the tenant for the use and occupancy of a DR-MHP Assisted Unit, plus a utility allowance established in Packet Pg. 707
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

accordance with HOME Regulations at 24 CFR 92.252(a).

t. Restricted Unit: DR-MHP Assi sted Units and any units that are subject to Rent and occupancy restrictions that are comparable to those applicable to DR-MHP Assisted Units. Restricted Units include units subject to a TCAC regulatory agreement, and all units subject to similar long -term, low-income or occupancy restrictions imposed by other public agencies.

u. Special Needs or Special Needs Populations: means agricultural workers, individuals living with physical or sensory disabilities and transitioning from hospitals, nursing homes, deve lopment centers, or other care facilities; individuals living with developmental disabilities, serious mental illness or substance abuse disorders; individuals who are survivors of domestic violence, sexual assault, and human trafficking; individuals who a re experiencing Homelessness; individuals with HIV; homeless youth as defined in Government Code (GC) Section 12957(e)(2); families in the child welfare system for whom the absence of housing is a barrier to family reunification, as certified by a county; frequent users of public health or mental health services, as identified by a public health or mental health agency; Frail Elderly Persons; or other specific groups with unique housing needs as determined by the Department. “Special Needs Populations” do not include seniors unless they otherwise qualify as a Special Needs Population.

v. Substantial Rehabilitation: Rehabilitation as defined in 24 CFR 5.100.

y. TCAC: means the California Tax Credit Allocation Committee.

z. Uniform Relocation Assistance and Real Property Acquisi tion Act (URA) (42 U.S.C.

4. Compliance with Program Requirements . The Developer agrees that at all times its actions regarding the Development and the use of funds provided under the Master Standard Agreement and the Notice to Proceed shall be in conformity with all Program Requirements, including the requirements of this Agreement and the Program Legal Documents. The Developer acknowledges that it is familiar with the Program Requirements, the requirements Packet Pg. 708
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

imposed on the Developer in the Program Legal Documents, and has acces s to professional advice to the extent necessary to enable the Developer to fully comply with the Program Requirements and the applicable provisions of the Program Legal Documents.

5. Term of Agreement. This Agreement shall commence on the date set forth abo ve and remain in full force and effect and shall apply to the Development through and including the twentieth (20th) anniversary of the date of Department acceptance of the Project Completion Report pursuant to paragraph 35 hereof regardless of any prepayment of the Assistance or sale, assignment, transfer or conveyance of the Development, unless terminated earlier by the Department or Subrecipient or extended by the mutual consent of the Parties.

6. DR-MHP Assisted Units, Restricted Units, Special Needs Populations Units and Supportive Housing Units.

b. Restricted Units shall not differ substantially in size or amenity level from non - Restricted Units within the Development with the same number of bedrooms, and Restricted Units shall not be segregated from non-Restricted Units.

c. Within the limits of subparagraph b. above, and subject to the requirements of subparagraph a. above, Developer may change the designation of a particular Unit from DR-MHP Assisted Unit to non-DR-MHP Assisted Unit, and vice versa, over time, only to address situations when a tenant in a DR-MHP Assisted Unit is no longer qualified to reside in that unit or if the unit is no longer habitable. Any other proposed changes to the unit designation must be approved in writing in advance by the Subrecipient.

7. Affirmative Marketing and Tenant Selection Procedures . Affirmative Marketing involves special outreach and advertising efforts designed to communicate the availability of DR-MHP assisted housing to those groups or individuals who might otherwise be unlikel y to apply.

Affirmative marketing efforts must be commenced by the Developer at least 90 days prior to initial or renewed occupancy for new construction and Substantial Rehabilitation Projects, respectively. The Department has determined that in addition t o the required demographic analysis, individuals and families that were impacted by the disasters and Section 8 Housing Choice Voucher holders are least likely to apply. Examples of renters impacted by the disasters include renters that have lost rental units or have been displaced due to the impacts of DR-4344 and DR-4353. The Affirmative Marketing Plan shall be updated and submitted to Subrecipient every five (5) years during the term of this Agreement.

Packet Pg. 709
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

b. specify reasonable criteria for determination of tenant eligibility, including Household size;

c. require that eligible tenants be selected based on order of application, lottery, or other reasonable method approved by the Subrecipient;

d. require eligible applicants to be notified of eligibility and, based on turnover history, when a DR-MHP Assisted Unit may be available;

e. require ineligible applicants to be notified of the reason for their ineligibility;

f. specify procedures through which a pplicants deemed to be ineligible may appeal this determination;

g. require maintenance of a waiting list of eligible applicants;

h. specify procedures for obtaining information regarding prospective tenants' incomes as necessary to certify that such income does not exceed the income limit limitations;

i. be made available to prospective tenants upon request; and

8. Non-Discrimination. Developer shall not discriminate against any tenant or prospective tenant on the basis of any class or status prohibited by Government Code section 12920 and United States Code 42 U.S.C section 3601 – 3019, including: race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, genetic information, or any other arbitrary factor in violation of any state, federal or local law governing discrimination in rental housing. The restriction of housing to Elderly and Special Needs Populations is permitted where the housing is intended to benefit those targeted groups in compliance with applicable law, and only with prior approval of the selection criteria by the Subrecipient.

9. Rental Agreement and Occupancy Procedures.

a. Each eligible Household selected to occupy a DR -MHP Assisted Unit in the Development shall enter into a written rental or occupancy agreement with the Developer, the form of which shall be subject to approval by the Subrecipient and be consistent with the Program Requirements. Such rental agreement shal l provide for, inter alia, good cause eviction, reference the appeal and grievance procedures set forth in the Management Plan, and require the tenant annually recertify household income and size.

b. The Developer may establish reasonable rules of conduct an d occupancy. Such rules Packet Pg. 710
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

shall be consistent with state law and the Program Requirements and shall not distinguish or discriminate between Restricted Units and non-Restricted Units. The rules shall be in writing and shall be given to each tenant upon occupancy. Any change to such rules shall become effective no less than thirty (30) days after giving written notice thereof to each Household in the Development.

10. DR-MHP Assisted Unit Rents and Maximum Income.

a. For the Initial Operating Year, Developer shall charge Rents for the DR-MHP Assisted Units in the Development in accordance with Exhibit B hereto.

b. After the Initial Operating Year, Rents for DR-MHP Assisted Units may be adjusted no more often than every twelve (12) months. Developer shall provide tenants of DR- MHP Assisted Units not less than 30 days prior written notice, or a longer period as required by state or local law, before implementing any increase in rents. In no event shall the rents exceed the High HOME Rents as designated for the area and published by HUD. If the Project is assisted with tax credits, the amount and method of rent adjustment for DR-MHP Assisted Units shall be in accordance with the Tax Credit Allocation Committee ( TCAC) policy or a longer period as required by state or local law,

c. Notwithstanding the previous subparagraph, Rents for DR-MHP Assisted Units subsidized under Section 8 of the Housing Act of 1937 or any comparable federal or state rental assistance program may be adju sted as required by the respective rental assistance program, for as long as the DR-MHP Assisted Units continue to receive the rental assistance.

d. The maximum income of a Household occupying a DR-MHP Assisted Unit shall not exceed 80% of the Area Median Income.

11. Rents for non-DR-MHP Assisted Units and Commercial Space.

Developer shall establish and implement a rent structure and operations budget for non-DR - MHP Assisted Units and Commercial Space, if applicable, in order for the Department to ensure continued financial viability throughout the affordability period.

b. Developer shall estimate all income and expenses attributable to the non -DR-MHP Assisted Units and, if applicable, Commercial Space, in the annual op erating budget described in paragraph 16 herein, and shall report all income and expenses attributable to non-DR-MHP Assisted Units and Commercial Space in the annual report described in paragraph 18 herein.

Packet Pg. 711
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

12. Certification of Tenant Income and Household Size.

a. The income and Household size of all Households occupying DR-MHP Assisted Units shall be certified by the Developer prior to occupancy and recertified annually thereafter in the manner specified in the Development's approved Management Plan and in ac cordance with applicable rules, regulations, and procedures governing the Program.

(1) increase the tenant’s rent to the lesser of 30 percent of adjusted income, fair market rent, or the rent limitations of other funding programs governing the unit; and
(2) to the extent another non-DR-MHP Assisted Unit becomes available within the Development, designate the next available comparable non -DR-MHP Assisted Unit as a DR -MHP Assisted Unit at the income level originally applicable to the Household until the unit mix required by this Agreement is achieved. A Housing Unit shall be deemed “comparable” if it has the same number of bedrooms, the same or similar features, and is similar in size to the original DR-MHP Assisted Unit.

13. Management and Maintenance.

a. Developer is responsible for all maintenance, repair, and management functions, including without limitation, the following: selection of tenants; recertification of family income and size; evictions; collection of Rents; ordinary and extraordinary maintenance and repairs; and replacement of capital items. Devel oper shall maintain all Housing Units, common areas and Commercial Space in a safe and sanitary manner in accordance with local health, building, and housing codes and the Management Plan described above.

b. Developer is responsible for operating the Development in accordance with the Management Plan. All amendments to this plan require prior written approval of the Subrecipient.

c. Developer may, with the prior written approval of the Subrecipient, contract with a management agent for the performance of the services or duties required in subparagraphs a. and b. of this paragraph 13. However, such an arrangement does not relieve the Developer of responsibility for proper performance of these duties. Such contract shall be subject to prior written approval by the Subrecipient and shall contain a provision allowing the Developer to terminate the contract without penalty upon no more than thirty (30) days' notice. Upon a determination by the Subrecipient, and notice to the Developer thereof, that the contractor performing the functions required in subparagraphs a. and b. has failed to operate the Development in accordance with this Agreement and the approved Management Plan, the Developer shall exercise such right Packet Pg. 712
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

of termination forthwith and make immediate arrangements, which shall be subject to Subrecipient approval, for continuing performance of the functions required in subparagraphs a. and b.

e. Developer shall operate, maintain and repair both Restricted and non-Restricted Units equally without regard to their designation as Restricted Units or non-Restricted Units.

14. Insurance.

Subrecipient, its Developers and Contractors shall comply with all requirements outlined in the (A) General Provisions s ection and (B) Project Insurance Requirements outlined herein. These requirements are in addition to, and not in lieu of, any other insurance coverages required elsewhere in the Development Agreement and elsewhere in the Master Standard Agreement. The Department reserves the right to waive or adjust required insurance coverages from time to time in its sole discretion.

a. General Provisions Applying to All Policies

2) Policy Cancellation or Termination & Notice of Non-Renewal – Subrecipient is responsible to notify the Department within fifteen (15) business days prior to any actual or proposed cancellation, non-renewal or material change that affects required insurance coverage. No policy may be cancelled upon less than thirty (30) days’ prior written notice from the insurer to the insured and the Department. New certificates of insurance are subject to the approval of the Department and the Subrecipient agrees no services will be commenced or performed prior to obtaining such approval. In the event Subrecipient and Developer fails to keep in effect at all times the specified insurance coverage, the Department may, in addition to any other remedies it may have, terminate this Agreement and/or Approved Project upon the occurrence of such event, subject to the provisions of this Agreement.

Packet Pg. 713
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

3) Premiums, Assessments and Deductibles – Subrecipient, Developer and contractors for each Approved Project are responsible for the payment of all premium s, policy assessments, deductibles or self -insured retentions associated with their respective insurance programs.

4) Primary Clause – Any required insurance contained in this Agreement shall be primary, and not excess or contributory, to any other insurance carried by the Department.

Acceptance of self-insurance is within the sole discretion of the Department, and the Department reserves the right to require insurance from third-party commercial insurers.

8) Available Coverages/Limits – All coverage and limits available to the Subrecipient, Developer, or contractor shall also be available and applicable to the Department.

10) Use of Subcontractors - In the case of Developer or contractor’s utilization of subcontractors to complete the contracted scope of work for the relevant Approved Project, Developer or contractor shall include all subcontractors as insureds under Developer’s or contractor’s insurance or supply evidence to the Subrecipient of subcontractor’s insurance equal to policies, coverages, and limit s required of Developer and contractor.

b. Project Insurance Requirements
Packet Pg. 714
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

1) Commercial General Liability – Subrecipient and Developer or contractor on an Approved Project shall maintain commercial general liability insurance on an occurrence form with limits not less than $1,000,000 per occurrence for bodily injury and property damage liability combined with a $2,000,000 annual policy aggregate for the duration of this Agreement. The policy shall include coverage for liabilities arising out of premises, operations, independent contractors, products, completed operations, personal & advertising injury, and liability assumed under an insured contract. This insurance shall apply separately to each insured against whom claim is made or suit is brought subject to the Developer’s or contractor’s limit of liability.

The policy must name The State of California, its officers, agents, and employees as additional insureds, but only with respect to work performed under this Agreement.

The policy must name The State of California, its officers, agents, and employees as additional insured, but only with respect to work performed under this Agreement.

3) Workers’ Compensation and Employer’s Liability – Subrecipient and Developer or Contractor shall maintain statutory worker’s compensation and employer’s liability coverage for all its employees who will be engaged in the performance of this Agreement and the relevant Approved Project. In addition, employer’s liability limits of $1,000,000 are required. By signing this Agreement, Subrecipient acknowledges compliance with these regulations. A Waiver of Subrogation or Right to Recover endorsement in favor of the State of California must be attached to certificate.

4) Flood Insurance – The Subrecipient shall ensure that Developer complies with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001).

Subrecipient shall ensure flood insurance coverage is provided by the Developer for the Approved Project if required by the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001). The Subrecipient shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards , that flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including rehabilitation).

Packet Pg. 715
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

5) Builders Risk insurance – Developer or Developer’s contractor on an Approved Project shall maintain builders risk coverage prior to or upon commencement of construction of the Approved Project, including any delivery and storage of materials to be incorporated into the Approved Project, through the completion of construction and until property insurance can be secured. This coverage must cover all risk of physical damage or risk of loss for an amount equal to the full amount of the cost of construction. This coverage must include coverage for flood if the Property is located in a Special Flood Hazard Area as determined by the Federal Emergency Management Agency. Additionally, Developer or Developer’s general contractor must obtain a builder’s risk installation floater for coverage of the contractor’s labor, ma terials, and equipment to be used for completion of work performed under the construction contract. The minimum amount of coverage to be carried must be equal to the full amount of the cost of construction.

6) Property Insurance – Developer on an Approved Project shall maintain including all risk coverage or standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements to the extent of full replacement value of the Approved Project for the durati on of the term of the Affordability Period. Coverage amount may be adjusted for fluctuation in replacement values. This coverage is required upon completion of construction of the Approved Project, or upon closing of the financing for the Approved Project if it is a rehabilitation project.

15. Condemnation.

a. The Developer shall at all times keep the Development insured against loss by fire and such other hazards, casualties, liabilities and contingencies, and in such amounts and for such periods as required by the Subrecipient. All insurance policies and renewals thereof shall be issued by a carrier and in form acceptable to the Subrecipient.

b. In the event of any fire or other casualty to the Development or eminent domain proceedings resulting in condemnation of the Development or any part thereof, Developer shall be obligated to rebuild the Development, and to use all available insurance or condemnation proceeds therefore, provided that, as determined by the Subrecipient in its sole discretion, (i) such proceeds are sufficient to keep the Assistance in balance and rebuild the Development in a manner that provides adequate security to the Subrecipient for repayment of the Assistance or if such proceeds are insufficient, then Developer shall have funded any deficiency (ii) the Subrecipient shall have the right to approve plans and specifications for any major rebuilding and the right to approve disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or similar arrangement, and (iii) no material breach or default then exists under the Program Legal Documents. If the casualty or condemnation affects only part of the Development and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the Assistance in a manner that provides adequate security to the Subrecipient for repayment of the remaining balance of the Assistance.
c. In the event that the Developer fails to commence or to complete the rebuilding, repair, replacement or restoration of the Project timely, the Department and Subrecipient shall Packet Pg. 716
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

have the right, in addition to any other remedies granted in the Program Legal Documents or at law or in equity, to repair, restore, rebuild or replace the Project so as to prevent the occurrence of a default hereunder.

16. Annual Operating Budget.

a. For the Initial Operating Year, Developer shall operate the Development and expend Operating Income in accordance with the initial operating budget approved by and on file with the Subrecipient. Such budget shall show all anticipated Operating Income, debt service, Operating Expenses and amount payable to reserves for the Initial Operating Year.

c. If the Development contains either non-Restricted Units or Commercial Space, or both, each annual operating budget shall show amounts, sources and uses of income allocated between DR -MHP Assisted Units, Restricted Units, non-Restricted Units, and Commercial Space. The allocation method used for each budget line item shall be subject to Subrecipient approval, and shall apportion income and expenses in a manner that accurately reflects the particular physical, operational and economic characteristics of the Development.

a. an income and expense statement for the reporting period;

c. a report on maintenance or other issues anticipated to impact the current budget needs of the Development;

d. information on the status of waiting lists for the DR -MHP Assisted Uni ts, including the number of households on lists for different Unit sizes and by income group, as well as evidence of compliance with Project’s Affirmative Marketing Plan; and

e. other information as required by the Subrecipient to accurately monitor Develope r's performance hereunder.

Packet Pg. 717
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

18. Annual Report and Audit.

19. Required Reserves. Developer shall establish, fund and maintain reserve accounts for the term of this Agreem ent as listed below. All such accounts shall be in the name of the Developer, earn interest, and, unless otherwise approved in writing by the Subrecipient, be insured by an agency of the federal government or other comparable federal insurance program. All interest earned on a reserve account shall become a part of the account. Withdrawals from the reserve accounts shall require prior written approval of the Subrecipient. Should the Subrecipient fail to take action on a request for a withdrawal from a reserve account within thirty (30) days of documented receipt of the request, that request will be deemed approved.

a. Replacement Reserve Account. Commencing no later than 6 months following completion of the Project, Developer shall establish a segregated replacement reserve account. Developer shall make annual deposits from Operating Income to the replacement reserve account in the amount set forth in Exhibit C, unless the Subrecipient determines, in its sole discretion, that more frequent deposits are required.

Developer shall also deposit any Development funds designated for replacement reserves into this account, including those identified in Exhibit C . The amount of the minimum annual deposit may be adjusted, as determined by the Subrecipient, in its sole discretion, based on the results of reserve studies, performed by an independent third party at the Developer’s expense as requested by the Subrecipient or as based on other reliable indicators of the need for reserve funds over time.

b. Operating Reserve Account. Developer shall establish an operating reserve account or sub-account within the Development’s general operating account no later thanthe date that the Project’s permanent loan closes . Developer shall fund the operating reserve account with an initial deposit in an amount as specified in Exhibit C. Developer shall fully replace any withdrawals from the operating reserve account using available cash flow prior to use of any cash flow to pay deferred Developer Fee, partnership management or similar fees, or Distributions.

Packet Pg. 718
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

22. Use of Income from Operations.

(2) all charges incurred in the operation of the Development in connection with utilities, real estate taxes and assessments, and liability, fire and other hazard insurance premiums;

(3) regularly scheduled non-contingent payments of interest, principal, impounds, fees and charges, if any, required on loans, including the Assistance when such Assistance is provided as a loan, which are secured by liens on the Property, Packet Pg. 719
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

which have been approved by the Subre cipient, payments on which are to be made prior to the determination of Net Cash Flow, as specified in Exhibit C, hereto;

(5) deposits to required reserve accounts;

(6) deferred Developer Fee;

(8) Distributions, in accordance with paragraph 23 of this Agreement.

The withdrawals permitted under subparagraph 22 (b) (6), (7) and (8) shall also be subject to the restrictions of paragraph 19 (b) above.

23. Distributions.

a. Developer shall be limited to annual Distributions equal to annual Operating Income remaining after payment of the items allowed in clauses (1) through (7) of subparagraph b of paragraph 22 above. If the Development generates insufficient cash flow to permit payment of Distributions in a particular year, Distributions in future years shall not be increased to cover the lack of Distributions in prior years.

c. Distributions shall be permitted for a particular Fiscal Year, including Distributions from an accumulated Distributions account, only after the Developer submits a complete annual report and operating budget and the Subrecipient determines that the report and budget demonstrate compliance with all Program Requirements.

d. Circumstances under which no Distributions, deferred Developer Fee, asset Packet Pg. 720
Attachment: Alturas Crossing DA (available online) (9.2(b)--Development Funding Agreements for CDBG-DR MHP funds)

management fees, partnership management fees, and/or similar fees shall be made or paid include:

Redding City CouncilMarch 15, 2022

Redding City Council
March 15, 2022