PERMANENT LOCAL HOUSING ALLOCATION LOAN AGREEMENT
by and between
THE CITY OF SAN BERNARDINO
and
E Street Veterans Apartments, LP,
A California Limited Partnership
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS AND EXHIBITS 1
Section 1.1 Definitions.........................................................................................................1 Section 1.2 Exhibits. ............................................................................................................6 ARTICLE 2 LOAN PROVISIONS 6
Section 2.1 Loan. .................................................................................................................6 Section 2.2 Interest...............................................................................................................6 Section 2.3 Use of Loan Funds............................................................................................6 Section 2.4 Security. ............................................................................................................7 Section 2.5 Conditions Precedent to Disbursement of the Loan. ........................................7 Section 2.6 Disbursement. . ................................................................................................7 Section 2.7 Due in Full. ....................................................Error! Bookmark not defined.
Section 2.8 Right to Prepay. . .............................................................................................8 Section 2.9 Subordination. 8 Section 2.10 Non-Recourse. ................................................................................................8 ARTICLE 3 CONSTRUCTION OF THE IMPROVEMENTS 9
Section 3.1 Performance of Work Pursuant to Laws; Prevailing Wages. ...........................9 Section 3.2 Bonds. ...............................................................................................................9 Section 3.3 Equal Opportunity...........................................................................................10 Section 3.4 Construction Responsibilities. ........................................................................10 Section 3.5 Mechanics Liens, Stop Notices, and Notices of Completion..........................10 Section 3.6 Inspections. .....................................................................................................10 ARTICLE 4 ONGOING OBLIGATIONS 11
Section 4.1 Information. ....................................................................................................11 Section 4.2 Records. ..........................................................................................................11 Section 4.3 Audits..............................................................................................................11 Section 4.4 Hazardous Materials. ......................................................................................11 Section 4.5 Maintenance and Damage...............................................................................13 Section 4.6 Fees and Taxes................................................................................................14 Section 4.7 Notice of Litigation.........................................................................................14 Section 4.8 Operation of Development as Affordable Housing. .......................................14 Section 4.9 Non-Discrimination. .......................................................................................14 Section 4.10 Pet-Friendly Housing Act of 2017................................................................14 Section 4.11 Insurance Requirements................................................................................15 Section 4.12 Transfer.........................................................................................................17 ARTICLE 5 DEFAULT AND REMEDIES 17
Section 5.1 Events of Default. ...........................................................................................17 Section 5.2 Remedies.........................................................................................................19
TABLE OF CONTENTS
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Section 5.3 Right of Contest. .............................................................................................19 Section 5.4 Remedies Cumulative. ....................................................................................19 Section 5.5 Notice and Cure Rights of Investor. ...............................................................20 ARTICLE 6 GENERAL PROVISIONS 20
Section 6.1 Relationship of Parties. ...................................................................................20 Section 6.2 No Claims. ......................................................................................................20 Section 6.3 Amendments. ..................................................................................................21 Section 6.4 Entire Understanding of the Parties. ...............................................................21 Section 6.5 Indemnification...............................................................................................21 Section 6.6 Non-Liability of City Officials, Employees and Agents. ...............................21 Section 6.7 No Third Party Beneficiaries. .........................................................................21 Section 6.8 Action by the City...........................................................................................21 Section 6.9 Waivers. ..........................................................................................................21 Section 6.10 Notices, Demands and Communications. .....................................................22 Section 6.11 Applicable Law and Venue...........................................................................23 Section 6.12 Parties Bound................................................................................................23 Section 6.13 Attorneys' Fees..............................................................................................23 Section 6.14 Severability. ..................................................................................................23 Section 6.15 Force Majeure. ..............................................................................................23 Section 6.16 Conflict of Interest. .......................................................................................23 Section 6.17 Title of Parts and Sections. ...........................................................................24 Section 6.18 Operating Memoranda. .................................................................................24 Section 6.19 Multiple Originals; Counterpart....................................................................24 Exhibit A: Legal Description of the Property
Exhibit B: Development Budget
Exhibit C: Form of Promissory Note
Exhibit D: Form of Deed of Trust
Exhibit E: Form of Regulatory Agreement
TABLE OF CONTENTS
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1 PLHA Loan Agreement
PERMANENT LOCAL HOUSING ALLOCATION LOAN AGREEMENT
(U.S. VETS Housing Corporation – E Street Project)
This Permanent Local Housing Allocation Loan Agreement (the “Agreement”) is entered into as of November [ ], 2025 (the “Effective Date”), by and between the CITY OF SAN BERNARDINO, a California charter city and municipal corporation (the “City”), and E Street Veterans Apartments, LP, a California limited partnership (“Borrower”), with reference to the following facts, purposes and intentions.
RECITALS
A. These Recitals refer to and utilize certain capitalized terms that are defined in Article 1 of this Agreement. The Parties intend to refer to those definitions in connection with their use in these Recitals.
B. As of the Effective Date, Borrower owns the Property, which is generally located at 1351 N. E Street, San Bernardino, California 92405 (APN __________). The Property is more particularly described in the attached Exhibit A.
C. The Property currently consists of vacant land, and the Borrower intends to construct the Development using the Approved Financing.
D. The City desires to provide the Loan in the total amount of One Million Nine Hundred Eighty Five Thousand Four Hundred One Dollars and Zero Cents ($1,985,401.00). The Loan is comprised of Permanent Local Housing Allocation (“PLHA” or “PLHA Program”) funds.
E. The Loan is being made to finance development and other costs associated with the Development in order to help achieve financial feasibility for the Development and to increase the supply of affordable rental housing in the City.
F. The use of PLHA funds for the Loan in accordance with this Agreement is consistent with the PLHA Program in that the funds will expand affordable housing opportunities, and the supply of affordable housing, within the City.
NOW, THEREFORE, in consideration of the recitals hereof and the mutual promises and covenants set forth in this Agreement, the Parties agree as follows:
ARTICLE 1
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.The following capitalized terms have the meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided:
(a) “Agreement” means this PLHA Loan Agreement.
2 PLHA Loan Agreement
(b) “Annual Operating Expenses” means for each calendar year, the following costs reasonably and actually incurred for operation and maintenance of the Project: (i) Property taxes and assessments imposed on the Project; (ii) debt service currently due on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Project) on the VHHP Funding; (iii) on-site service provider fees for tenant social services, provided the City have approved, in writing, the plan and budget for such services before such services begin; (iv) property management fees and reimbursements, on–site property management office expenses, and salaries of property management and maintenance personnel, not to exceed amounts that are standard in the industry and which are pursuant to a management contract approved by the City; (vi) fees for accounting, audit, legal and other services incurred by Borrower in the asset management of the Project (including, for the avoidance of doubt, an asset management fee payable to the Borrower’s general partner/managing member), not to exceed amounts that are standard in the industry; (ix) premiums for insurance required for the Property or the improvements thereon to satisfy the requirements of any lender of Approved Financing; (x) utility services not paid for directly by tenants, including water, sewer, and trash collection; (xi) maintenance and repair expenses and services; (xii) any annual license or certificate of occupancy fees required for operation of the Project; (xiii) security services; (xiv) advertising and marketing; (xv) cash deposited into any replacement reserve account or operating reserve account approved by the City, which approval shall not be unreasonably withheld, conditioned or delayed (it being acknowledged and agreed that the City approves the deposit of any property tax refunds received by Borrower into the Project’s replacement reserve account); (xvii) extraordinary operating costs specifically approved in writing by the City; (xix) payments of deductibles in connection with casualty insurance claims not normally paid from reserves, the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves, and other ordinary and reasonable operating expenses approved in writing by the City and not listed above; (xx) and other ordinary and reasonable operating expenses approved in writing by the City and not listed above. Annual Operating Expenses do not include the following: depreciation, amortization, depletion or other non-cash expenses, initial deposits to capitalize a reserve account, any amount expended from a reserve account, and any capital cost associated with the Project. For purposes of determining Annual Operating Expenses, the following shall apply:
(1) The "property management fees" shall be limited to $60 per unit per month, increases at 3.0% per year.
(2) A minimum annual Replacement Reserve deposit is to be $500 per unit.
(3) The cost for tenant social services shall be a minimum of $3,212 per unit, increasing at 3% per year.
(4) A Limited Partner Asset Management Fee shall not exceed $5,000.00 per year, with allowable annual increases of 3% per year. (5) A Managing General Partner Asset Management Fee shall not exceed $10,000 per year, with allowable annual increases of 3% per year. 3 PLHA Loan Agreement
(c) “Approved Financing” means all of the following loans, or other financing, obtained by Borrower and approved by the City for the purpose of financing the Development, in addition to the PLHA Loan:
(1) A construction loan from Banc of California in the approximate amount of $10,172,391 (the “Construction Loan”);
(2) A loan from the State of California Housing and Community Development Department in the approximate amount of $4,426,369.00, consisting of funds from the Veterans Housing and Homelessness Prevention Program (the “VHHP Funding”); (3) A sponsor loan from U.S. VETS Housing Corporation in the approximate amount $5,500,000.00;
(4) A separate loan from the City of San Bernardino in the amount of $2,014,599.00, which will be made pursuant to a LMIHAF Loan Agreement (the "LMIHAF Loan"), and disbursed at the conversion to permanent financing; (5) A revocable grant from the County of San Bernardino in the amount of $5,000,000.00; and
(6) A grant from Home Depot in the amount of $500,000.00. (d) “AMI” means the median income for the Ontario/Riverside/San Bernardino Metropolitan Statistical Area, adjusted for household size, as defined, and periodically adjusted by HUD.
(e) “Borrower” means E Street Veterans Apartments, LP, a California limited partnership, and its permitted successors and assigns.
(f) “City” means the City of San Bernardino, a municipal corporation. (g) “City Council” means the Mayor and City Council of the City. (h) “City Manager” means the City Manager of the City, or their designee. (i) “City Share of Residual Receipts” means, for the PLHA Loan, an amount equal to [11.8%] of Residual Receipts. The City Share of Residual Receipts represents the percentage of the PLHA Loan as compared to the total sum of: the PLHA Loan, the VHHP Funding, and the LMIHAF Loan.
(j) “Construction Lender” means Banc of California.
(k) “Default” has the meaning set forth in Section 5.1 below. (l) “Default Rate” has the meaning set forth in Section 2.2(b) below. (m) “Development” means the Property and the Improvements. 4 PLHA Loan Agreement
(n) “Development Budget” means the proforma development budget, including sources and uses of funds, as approved by the City, and attached hereto and incorporated herein as Exhibit B.
(o) “Effective Date” means the first date set forth above. (p) “Force Majeure” means the occurrence of one or more of those events described in Section 6.15, permitting an extension of time for performance of obligations under this Agreement.
(q) “Gross Revenue” means for each calendar year, all revenue, income, receipts, and other consideration actually received from the operation and leasing of the Development. Gross Revenue includes, but is not limited to: (i) all rents, fees and charges paid by tenants; (ii) Section 8 payments or other rental subsidy payments received for the dwelling units; (iii) deposits forfeited by tenants; (iv) all cancellation fees; (v) price index adjustments and any other rental adjustments to leases or rental agreements; (vi) net proceeds from vending and laundry room machines; (vii) the proceeds of business interruption or similar insurance not paid to senior lenders; (viii) the proceeds of casualty insurance not used to rebuild the Development and not paid to senior lenders; and (ix) condemnation awards for a taking of part or all of the Development for a temporary period. Gross Revenue does not include tenants' security deposits, loan proceeds, capital contributions or similar advances. (r) “Hazardous Materials” has the meaning set forth in Section 4.4 below. (s) “Hazardous Materials Claim” has the meaning set forth in Section 4.4 below.
(t) “Hazardous Materials Law” has the meaning set forth in Section 4.4 below. (u) “HCD” means the State of California Department of Housing and Community Development.
(v) “HUD” means the United States Department of Housing and Urban Development.
(w) “Improvements” means the thirty (30) unit affordable rental housing complex, targeting special needs for homeless veterans with incomes between 30 and 50 percent of AMI to be developed pursuant to this Agreement, all ancillary improvements on the Property, and any other improvements constructed by, or on behalf of, Borrower on the Property during the Term.
(x) “Investor” means any investor selected by the Borrower to be admitted to the Borrower in order to provide the Tax Credit Equity Funds to the Development. (y) “Operating Memorandum” has the meaning given in Section 6.18 below. 5 PLHA Loan Agreement
(z) “Parties” means the City and Borrower.
(aa) “Partnership Agreement” means the Agreement of Limited Partnership of the Borrower, as may be amended from time to time, that governs the operation and organization of the Borrower.
(bb) “PLHA-Assisted Units” means the units of the Development funded by the PLHA Funds. City and Borrower agree that fourteen (14), including nine (9) one-bedroom units and five (5) two-bedroom units),of the total thirty (30) units of the Development shall be PLHA- Assisted Units.
(cc) “PLHA Deed of Trust” or “Deed of Trust” means the deed of trust, in favor of the City, that will encumber the Property to secure repayment of the Loan. (dd) “PLHA Funds” means the funds received by the City from HCD pursuant to the PLHA Program.
(ee) “PLHA Guidelines” means the final guidelines promulgated by HCD for the PLHA Program dated October 2019.
(ff) “PLHA Loan” or “Loan” means the City loan to Borrower in the total principal amount of One Million Nine Hundred Eighty Five Thousand Four Hundred One Dollars ($1,985,401) provided pursuant to this Agreement. The Loan is comprised of PLHA Funds. (gg) “PLHA Loan Documents” means this Agreement, the PLHA Note, the PLHA Regulatory Agreement, the PLHA Deed of Trust, and any other document or agreement evidencing the PLHA Loan. The forms of the PLHA Note, PLHA Deed of Trust, and PLHA Regulatory Agreement are attached hereto as Exhibits C, D, and E, respectively. (hh) “PLHA Note” or “Note” means the promissory note that will evidence Borrower's obligation to repay the Loan.
(ii) “PLHA Program” means the Permanent Local Housing Allocation program established pursuant to California Health & Safety Code Section 50470 and the PLHA Guidelines. (jj) “PLHA Regulatory Agreement” or “Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants between the City and Borrower to be recorded against the Property in conjunction with the Loan pursuant to the PLHA Guidelines. (kk) “Property” means that certain real property located in the City of San Bernardino, California, as more particularly described in Exhibit A. (ll) “Residual Receipts” means for each calendar year, the amount by which Gross Revenue exceeds Annual Operating Expenses.
(mm) “Term” means the term of this Agreement, and the Loan, which commences as of the Effective Date and, unless terminated earlier pursuant to the provisions of 6 PLHA Loan Agreement
this Agreement, ends on the later of: (i) fifty-seven (57) years after the date of the recordation of the PLHA Deed of Trust against the Property; or (ii) fifty-five (55) years after the date the first building located on the Property is constructed and obtains a certificate of occupancy, or equivalent document, from the City.
(nn) “Title Company” means __________, [Title Company Address], or such other nationally recognized title company reasonably acceptable to the Parties. (oo) “Transfer” has the meaning set forth in Section 4.11 below.
Section 1.2 Exhibits. The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference:
Exhibit A: Legal Description of the Property
Exhibit B: Approved Development Budget
Exhibit C: Form of Promissory Note
Exhibit D: Form of Deed of Trust
Exhibit E: Form of Regulatory Agreement
ARTICLE 2
LOAN PROVISIONS
Section 2.1 Loan.Subject to satisfaction of the conditions set forth in Sections 2.3 and
2.5 below, the City shall lend to Borrower the PLHA Loan. The Borrower's obligation to repay the PLHA Loan is evidenced by the PLHA Note.
Section 2.2 Interest. Loan. Subject to the provisions of subsection (b) below, simple interest will accrue on the outstanding principal balance of the PLHA Loan at a per annum rate of interest equal to three percent (3%), commencing on the date the Borrower executes the PLHA Note.
(b) Default Rate. In the event of a Default, interest on the Loan will begin to accrue, as of the date of Default and continue until such time as the Loan is repaid in full or the Default is cured, at the default rate of the lesser of ten percent (10%), compounded annually, or the highest rate permitted by law (the “Default Rate”).
Section 2.3 Use of Loan Funds. The Borrower shall use the Loan funds consistent with the Approved Development Budget, which shall fulfill and be consistent with the Loan Documents. The Borrower shall not use the Loan funds for any other purposes without the prior written consent of the City. The Borrower will provide City with documentation that demonstrates that the PLHA Loan was used only for the purposes described in this section. The Loan shall be used in accordance with the PLHA Guidelines and the PLHA Program requirements. 7 PLHA Loan Agreement
Section 2.4 Security. Borrower shall secure its obligation to repay the PLHA Loan, as evidenced by the City Note, by executing the PLHA Deed of Trust, and recording it as a lien against the Property.
Section 2.5 Conditions Precedent to Disbursement of the Loan. Conditions Precedent to Disbursement. The maximum amount of funds to be disbursed pursuant to this Section 2.5(a) shall not exceed the amount of the PLHA Loan. The City shall not be obligated to make any disbursements of Loan proceeds unless the following conditions precedent are satisfied:
(1) There exists no Default nor any act, failure, omission or condition that would constitute an event of Default under this Agreement, or any other Loan Documents; (2) Borrower has delivered to the City a budget for the use of the Loan, if not documented on the Approved Development Budget attached as Exhibit B; (3) Borrower has furnished the City with evidence of the insurance coverage meeting the requirements of Section 4.10 below. (4) The Title Company is unconditionally and irrevocably committed to issuing an ALTA Lender's Policy of title insurance insuring the priority of the PLHA Deed of Trust in the amount of the PLHA Loan, subject only to such exceptions and exclusions as may be reasonably acceptable to the City, and containing such endorsements as the City may reasonably require;
(5) The Borrower has acquired the Property;
(6) The Borrower has executed the PLHA Note;
(7) The PLHA Deed of Trust and the PLHA Regulatory Agreement have been recorded against the Property or will be simultaneously recorded against the Property; and
(8) Borrower has closed all Approved Financing described in Section 1.1(b).
Section 2.6 Disbursement.
(a) Upon the satisfaction of the conditions precedent set forth above and upon receipt of the PLHA Funds from HCD, the City shall disburse ninety percent (90%) of the PLHA Loan to the Borrower.
(b) Upon completion of construction of the Project, provided that Borrower has complied with all terms and conditions of this Agreement, the City shall disburse the remaining ten percent (10%) of the PLHA Loan to the Borrower.
Section 2.7 Terms of Repayment.
8 PLHA Loan Agreement
(a) Annual Residual Receipts Payment. Borrower shall make annual Residual Receipts Payments as follows: Commencing on the date that is one year after the first certificate of occupancy is issued for the Project, and on the anniversary of such date of each year thereafter during the Term, Borrower shall make a loan payment in an amount equal to the City Share of Residual Receipts for the prior calendar year (each such payment, an “Annual City Loan Payment”). The City shall apply all Annual City Loan Payments to the PLHA Loan as follows: (1) first, to accrued interest, and (2) second, to principal on the Loan. (b) Due in Full. All outstanding principal and accrued interest on the Loan shall be due in full on the earlier to occur of: (i) the date of any Default (following any applicable cure periods); or (ii) the expiration of the Term.
Section 2.8 Right to Prepay. Borrower may prepay the Loan at any time without premium or penalty. However, this Agreement and the PLHA Regulatory Agreement shall remain in effect for the entire Term regardless of any prepayment.
Section 2.9 Subordination.
(a). The City will agree to subordinate the PLHA Deed of Trust and the PLHA Regulatory Agreement to the deed of trust securing the loan of any Construction Lender, if any, and any documents securing or evidencing the VHHP Funding, subject to the satisfaction of the following conditions:
(1) All of the proceeds of the proposed loan, less any transaction costs, are used to provide acquisition, construction, and/or permanent financing for the Development; (2) The subordination agreement(s) is in a form acceptable to the City and is structured to minimize the risk that the PLHA Deed of Trust and/or PLHA Regulatory Agreement, and other City documents, will be extinguished as a result of a foreclosure by the holder of the loan. To satisfy this requirement, the subordination agreement must provide the City with adequate rights to cure any defaults by Borrower, including: (i) providing the City or its successor with copies of any notices of default at the same time and in the same manner as provided to Borrower; and (ii) providing the City with a cure period of sixty (60) days to cure any default.
Additionally, the subordination agreement will acknowledge the priority of the affordability restrictions set forth in the PLHA Regulatory Agreement. (b). Upon a decision by the City to subordinate the Deed of Trust and Regulatory Agreement, and the determination by the City Manager that the conditions in this Section have been satisfied, the City Manager, or their designee, will be authorized to execute the approved subordination agreement without the necessity of any further action or approval, and such agreement.
Section 2.10 Non-Recourse.Except as provided below, Borrower or the partners of the Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the PLHA Loan or the performance of the covenants of Borrower under the PLHA Deed of Trust. The sole recourse of the City with respect to the principal of, or interest on, the PLHA Note and defaults by Borrower in the performance of its covenants under the Deed of Trust shall be to the Development; provided, however, that nothing contained in the foregoing limitation 9 PLHA Loan Agreement
of liability shall: (a) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City thereunder; or (b) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto. The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note and the performance of Borrower's obligations under the Deed of Trust, except as hereafter set forth; nothing contained herein is intended to relieve Borrower of its obligation to indemnify the City under Sections 4.4, and 6.5 of this Agreement; or liability for: (i) fraud or willful misrepresentation; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by Borrower other than in accordance with the Deed of Trust; and (iv) the misappropriation of any proceeds under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development.
ARTICLE 3
CONSTRUCTION OF THE IMPROVEMENTS
Section 3.1 Performance of Work Pursuant to Laws; Prevailing Wages. Compliance with Laws. Borrower shall cause all work performed in connection with the Development to be performed in compliance with: (i) all applicable laws, ordinances, rules and regulations of federal, state, City or municipal governments or agencies now in force or that may be enacted hereafter; and (ii) all directions, rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit, license, or other authorization that may be required by the City/City or any governmental agency having jurisdiction, and Borrower shall be responsible to the City for the procurement and maintenance thereof, as may be required of Borrower and all entities engaged in work on the Development. (b) State Prevailing Wages. This Agreement has been prepared with the intention that the Loan meets the exceptions set forth in California Labor Code Section 1720(c) to the general requirement that state prevailing wages be paid in connection with construction work that is paid for in whole or in part out of public funds. Notwithstanding the foregoing, Borrower shall be solely responsible for determining whether any work related to this agreement is subject to payment of prevailing wages, and if so, for complying with all prevailing wage laws.
Section 3.2 Bonds.Prior to the commencement of construction, Borrower shall deliver to the City copies of labor and material bonds and performance bonds for the construction of the Development in an amount equal to one hundred percent (100%) of the scheduled cost of the Development, or such other security for the completion of construction of the Development acceptable to the Investor. Such performance bond (or other security provided) shall name the City as a co-obligee.
10 PLHA Loan Agreement
Section 3.3 Equal Opportunity.During the construction of the Improvements there shall be no discrimination on the basis of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin, ancestry, or disability in the hiring, firing, promoting, or demoting of any person engaged in the construction work.
Section 3.4 Construction Responsibilities. Borrower is responsible for the coordination and scheduling of the work to be performed so that commencement and completion of the construction of the Improvements will take place in accordance with this Agreement. (b) Borrower is solely responsible for all aspects of Borrower's conduct in connection with the Development, including (but not limited to) the quality and suitability of the plans and specifications, the supervision of construction work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the City with reference to the Development is solely for the purpose of determining whether Borrower is properly discharging its obligations to the City, and should not be relied upon by Borrower or by any third parties as a warranty or representation by the City as to the quality of the design or construction of the Development and does not relieve Borrower, or its consultants, from any applicable requirement to obtain City/City approval and/or inspections.
Section 3.5 Mechanics Liens, Stop Notices, and Notices of Completion. If any claim of lien is filed against the Development or a stop notice affecting the Loan is served on the City or any other lender or other third party in connection with the Development, then Borrower shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the City a surety bond from a surety acceptable to the City in sufficient form and amount, or provide the City with other assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged. (b) If Borrower fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section, then in addition to any other right or remedy, the City may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at Borrower's expense. Alternately, the City may require Borrower to immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof.
The City may use such deposit to satisfy any claim or lien that is adversely determined against Borrower.
(c) Borrower shall file a valid notice of cessation or notice of completion upon cessation of construction of the Development for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims of lien against the Property and/or Development. Borrower authorizes the City, but without any obligation, to record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Property and/or Development.
Section 3.6 Inspections.Borrower shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Development by the City and by public authorities during reasonable business hours for the purposes of determining compliance with this Agreement. Such inspections do not relieve Borrower, or its contractors, from any 11 PLHA Loan Agreement
applicable requirement to obtain City inspections in connection with the construction of the Improvements.
ARTICLE 4
ONGOING OBLIGATIONS
Section 4.1 Information.Borrower shall provide any information reasonably requested by the City in connection with the Development.
Section 4.2 Records. Borrower shall keep and maintain at the Development, or elsewhere with the City's written consent, full, complete and appropriate books, record and accounts relating to the Development, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail Borrower's compliance with the terms and provisions of this Agreement. Books, records and accounts relating to Borrower's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of this Agreement. All such books, records, and accounts shall be open to and available for inspection and copying by the City, its auditors or other authorized representatives at reasonable intervals during normal business hours. Borrower shall permit any duly authorized representative of the City to inspect and copy such records. Such records shall include all invoices, receipts, and other documents related to expenditures from the Loan and must be kept accurate and current. Borrower shall maintain complete, accurate, and current records pertaining to the Development for a period of not less than ten (10) years after termination of this Agreement for all expenditures, and as reasonably requested by City in order to comply with mandated records retention laws. If the Borrower is unable to maintain these records, Borrower may transfer them to the City. If any litigation, claim, negotiation, audit exception, monitoring, inspection or other action relating to the use of the Loan is pending at the end of the record retention period stated herein, then Borrower shall retain such records until such action and all related issues are resolved.
Section 4.3 Audits.Borrower shall make available for examination at reasonable intervals and during normal business hours to the City and HCD all books, accounts, reports, files, and other papers or property with respect to all matters covered by this Agreement, and shall permit City to audit, examine, and make excerpts or transcripts from such records. City or HCD may make audits of any conditions relating to this Agreement.
Section 4.4 Hazardous Materials. Borrower shall keep and maintain the Development in compliance with, and shall not cause or permit the Development to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Development including, but not limited to, soil and ground water conditions. Borrower shall not use, generate, manufacture, store or dispose of on, under, or about the Development or transport to or from the Development any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” or “toxic substances” under any applicable federal or state laws or regulations (collectively referred to hereinafter as “Hazardous Materials”) except such of the 12 PLHA Loan Agreement
foregoing as may be used in construction of the Development or customarily kept and used in and about residential property of this type.
(b) Borrower shall within one business day advise the City in writing if at any time it receives written notice of: (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Borrower or the Development pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, (“Hazardous Materials Law”); (ii) all claims made or threatened by any third party against Borrower or the Development relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as “Hazardous Materials Claims”); and (iii) Borrower's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Development that could cause the Development or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of the Development under any Hazardous Materials Law.
(c) The City shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by Borrower.
Borrower shall indemnify and hold harmless the City and its commissioners, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Development including without limitation: (a) all reasonably foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Development and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by the City in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. This obligation to indemnify shall survive termination of this Agreement.
(d) Without the City's prior written consent, which shall not be unreasonably withheld, Borrower shall not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Development, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in the City's reasonable judgment, impair the value of the City's security hereunder; provided, however, that the City's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Development either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain the City's consent before taking such action, provided that in such event Borrower shall notify the City as soon as practicable of any action so taken. The City agrees not to withhold its consent, where such consent is required hereunder, if either: (i) a particular remedial action is ordered by a court of competent jurisdiction; (ii) Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Borrower establishes to the reasonable satisfaction of the City that there is no reasonable alternative to such remedial action which would result in less impairment of the City's security hereunder; or (iv) the action has been agreed to by the City.
13 PLHA Loan Agreement
(e) Borrower hereby acknowledges and agrees that: (i) this Section is intended as the City's written request for information (and Borrower's response) concerning the environmental condition of the Development as required by California Code of Civil Procedure Section 726.5; and (ii) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Development is intended by the Parties to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736. (f) In the event that any portion of the Development is determined to be “environmentally impaired” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an “affected parcel” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the City's or the trustee's rights and remedies under the Deed of Trust, the City may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to: (1) waive its lien on such environmentally impaired or affected portion of the Development; and (2) exercise, (a) the rights and remedies of an unsecured creditor, including reduction of its claim against Borrower to judgment, and (b) any other rights and remedies permitted by law. For purposes of determining the City right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), Borrower shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of Hazardous Materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Development and Borrower knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by the City in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Development is environmentally impaired, plus interest thereon at the rate specified in the Note until paid, shall be added to the indebtedness secured by the Deed of Trust and shall be due and payable to the City upon its demand made at any time following the conclusion of such action.
Section 4.5 Maintenance and Damage. During the course of both the construction of the Improvements and operation of the Development, Borrower shall maintain the Development in good repair and in a neat, clean and orderly condition. If there arises a condition in contravention of this requirement, and if Borrower has not cured such condition within thirty (30) days after receiving a notice from the City of such a condition, then in addition to any other rights available to the City, the City shall have the right to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Development. (b) If economically feasible in the City's reasonable judgment after consultation with Borrower, if any improvement now or in the future on the Development is damaged or destroyed, then Borrower shall, at its cost and expense, diligently undertake to repair or restore such improvement consistent with the plans and specifications approved by the City with such changes as have been approved by the City. Such work or repair shall be commenced no later than the later of one hundred twenty (120) days, or such longer period approved by the City in writing, after the damage or loss occurs or thirty (30) days following receipt of the insurance proceeds, and 14 PLHA Loan Agreement
shall be complete within one (1) year thereafter. Any insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for such purpose, then Borrower shall make up the deficiency.
Section 4.6 Fees and Taxes.Borrower shall be solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public City or utility company with respect to the Development to the extent owned by Borrower, and shall pay such charges prior to delinquency. However, Borrower shall not be required to pay and discharge any such charge so long as: (a) the legality thereof is being contested diligently and in good faith and by appropriate proceedings; and (b) if requested by the City, Borrower deposits with the City any funds or other forms of assurance that the City in good faith from time to time determines appropriate to protect the City from the consequences of the contest being unsuccessful.
Section 4.7 Notice of Litigation.Borrower shall promptly notify the City in writing of any actions or proceedings pending or threatened against or affecting Borrower and/or the Development, and of any claims or disputes that involve a material risk of litigation.
Section 4.8 Operation of Development as Affordable Housing.After completion of construction Borrower shall continuously operate and maintain the Development as affordable housing rented to income-eligible tenants in conformity with: (i) this Agreement; (ii) the PLHA Regulatory Agreement; (iii) the PLHA Guidelines and the applicable requirements of the standard agreement entered into between HCD and the City pursuant to the PLHA Guidelines; and (iv) any regulatory agreements recorded against the Property, including any other regulatory agreement in favor of the City.
Section 4.9 Non-Discrimination.Borrower covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, creed, ancestry, national origin, religion, sex, sexual orientation, marital status, age, disability (except to the extent necessary to comply with any Approved Financing), medical condition, familial status, source of income or any other arbitrary basis in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Development, nor shall Borrower or any person claiming under or through Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Development. The Borrower shall comply with all requirements contained in the Americans with Disabilities Act (“ADA”), the Fair Housing Amendments Act, the California Fair Employment and Housing Act, the Unruh Act, Government Code section 1135, Section 504 of the Rehabilitation Act, and all applicable regulations promulgated pursuant to those statutes, including 24 CFR Part 100, 24 CFR Part 8, and 28 CFR Part 35, in all of the Borrower’s activities with relation to the Development funded in part by this Agreement.
Section 4.10 Pet-Friendly Housing Act of 2017. Borrower agrees and understands that the Development is subject to the Pet Friendly Housing Act of 2017 (“PFHA”) (Health and Safety Code section 50466). Borrower agrees to operate the Development in accordance with the requirement of the PFHA, including, but not limited to, the requirement that residents of the 15 PLHA Loan Agreement
Development shall be authorized to own or otherwise maintain one or more common household pets as set forth in Health and Safety Code section 50466, as may be amended from time to time.
Section 4.11 Insurance Requirements.Borrower shall ensure that the following insurance coverage is maintained throughout the Term:
(a) Workers’ Compensation coverage, in full compliance with California statutory requirements, for all employees of the Borrower and Employer's Liability in the minimum amount of $1,000,000. A Waiver of Subrogation endorsement in favor of the City is required.
(b) Comprehensive General Liability “occurrence” coverage in the minimum amount of $2,000,000 and $4,000,000 aggregate, including bodily injury, personal injury, broad form property damage, ongoing operations/premises liability, products completed operations, broad form blanket contractual liability and $100,000 fire legal liability. Borrower may satisfy this requirement by maintaining an umbrella insurance policy; provided, however, that the combination of primary and umbrella liability coverage must equal or exceed the minimum limits, both per occurrence and in the aggregate, stated in this subsection. (c) Commercial Automobile Liability coverage in the minimum amount of $1,000,000 CSL bodily injury & Property damage, including owned, non-owned and hired automobiles. Also include Uninsured / Underinsured Motorists coverage in the minimum amount of $100,000 when there are owned vehicles.
(d) Builder’s Risk and Property Insurance.
(1) Builder's Risk insurance during the course of construction (including, but not limited to, during the completion of all remodeling work), and upon completion of construction, property insurance, covering the Development, in form appropriate for the nature of such property, covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the replacement value, with deductible, if any, not to exceed $10,000.00, naming the City as a Loss Payee, as its interests may appear. Flood insurance shall be obtained if required by applicable federal regulations.
(2) Additionally, the City will accept property insurance in lieu of Builder’s Risk insurance during the first 60 days of the Borrower’s ownership of the Property, even if the Property is vacant. Such coverage shall meet all of the same requirements set forth in subsection (d)(1), above, that apply to property insurance maintained upon completion of construction.
(3) Notwithstanding the foregoing, Borrower shall provide evidence of a Builders’ Risk policy that satisfies all of the requirements set forth in subsection (d)(1), above, within 45 days of the effective date of this Agreement. (e) Errors & Omissions coverage in the minimum amount of $1,000,000 each occurrence and $2,000,000 aggregate for engineers, architects, and surveyors rendering services in connection with the Development.
16 PLHA Loan Agreement
(f) Fidelity insurance coverage in the minimum amount of $500,000, which meets the following requirements: the policy shall apply to the performance of any director, officer, or agent of the Borrower who signs or authorizes signatures on checks or drafts, or in any manner authorizes the disbursement of Project funds. Prior to the payment of program funds by City, the Borrower shall furnish City a certificate of insurance from an insurer admitted to do business in the State of California verifying that the Borrower carries such insurance coverage. Said insurance certificate shall certify that: 1) the City is named as a Loss Payee, as its interests may appear; and 2) that said coverage shall not be canceled or terminated without thirty (30) days’ prior written notice to the City. The Borrower hereby assigns to City any right it has to claim indemnification under such insurance policy.
(g) Borrower shall cause any general contractor, agent or subcontractor working on the Development under direct contract with Borrower or subcontract, to maintain insurance of the types and in at least the minimum amounts described in subsections (a), (b), and (c) above and shall require that such insurance shall meet all of the general requirements of subsections (i) and (j) below.
(h) The required insurance shall be provided under an occurrence form, and Borrower shall maintain such coverage continuously throughout the Term. Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit shall be three times the occurrence limits specified above. (i) Comprehensive General Liability and Comprehensive Automobile Liability insurance policies shall be endorsed to name as an additional insured the City, and its officers, agents, employees and members of the City Council.
(j) All policies and bonds shall contain: (i) an agreement that such policies are primary and non-contributing with any insurance that may be carried by the City; (ii) a provision that no act or omission of Borrower shall affect or limit the obligation of the insurance carrier to pay the amount of any loss sustained; (iii) a waiver by the insurer of all rights of subrogation against the City and its authorized parties in connection with any loss or damage thereby insured against; and (iv) a requirement to provide written notice to City at least thirty (30) days prior to any cancellation or termination of the policy or bond or of any other lapse in coverage. (k) All insurance companies providing coverage pursuant to this Section shall be insurance organizations authorized by the Insurance Commissioner of the State of California to transact the business of insurance in the State of California, and shall have an A. M. Best's rating of not less than “A:VII”.
(l) If, in connection with the use of the Loan, death, serious personal injury, or substantial property damage occurs, then Borrower shall immediately notify the City. Borrower shall promptly submit to the City a written report, in such form as may be required by the City, of all accidents which occur in connection with this Agreement. This report shall include the following information: (i) name and address of the injured or deceased person(s); (ii) name and address of Borrower's contractor or subcontractor, if any; (iii) name and address of Borrower's 17 PLHA Loan Agreement
liability insurance carrier; and (iv) a detailed description of the accident and whether any of the Borrower's equipment, tools or material were involved.
Section 4.12 Transfer. For purposes of this Agreement, “Transfer” means any sale, assignment, or transfer, whether voluntary or involuntary, of: (i) any rights and/or duties under this Agreement; and/or (ii) any interest in the Development, including (but not limited to) a fee simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a land contract by which possession of the Development is transferred and Borrower retains title. The term “Transfer” excludes the leasing of any single unit in the Development to an occupant in compliance with the City Regulatory Agreement.
(b) No Transfer shall be permitted without the prior written consent of the City, which the City may withhold in its sole discretion; provided, however, that: (i) the Investor may Transfer its limited partnership interest to affiliates of Investor, without the consent of the City, so long as the managing general partner of the Borrower provides notice of such Transfer within thirty (30) days after such Transfer is effective; (ii) the Investor shall have the right to Transfer its limited partner interest, to any person without the City's consent; (iii) the Investor and the Construction Lender shall have the right to remove and replace a general partner of the Borrower in accordance with the Partnership Agreement provided that the substitute general partner must first be accepted by the City, which will not unreasonably reject or delay its acceptance of such substitute general partner, so long as Borrower provides thirty (30) days’ notice to City, which shall list the reasons for removal and the qualifications on which the new general partner was chosen, and shall provide written assurance that the change of the general partner will not affect Borrower's ability to satisfy the requirements of the City Regulatory Agreement or any of the other Loan Documents; and (iv) Construction Lender may foreclose or accept a deed in lieu of foreclosure, and subsequently sell the Property, without the consent of the City. (c) The City approves the grant of the security interests in the Development for the Approved Financing.
(d) Following the expiration of the fifteen (15)-year compliance period as described in Section 42(i)(1) of the Internal Revenue Code of 1986, as amended, (or at such other time period determined by the Borrower and the Investor), the City approves any Transfer by the Borrower of the Investor's limited partner interest, or the Development, to the general partner of the Borrower.
ARTICLE 5
DEFAULT AND REMEDIES
Section 5.1 Events of Default.Each of the following shall constitute a “Default” by Borrower under this Agreement:
(a) Failure to Make Payment. Failure of Borrower to repay the principal and any interest on the Loan that is due and payable to the City pursuant to the Loan Documents following written notice by the City of such failure and ten (10) days opportunity to cure. 18 PLHA Loan Agreement
(b) Breach of Covenants. Failure of Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents, including, but not limited to the failure to comply with the PLHA Guidelines, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the City to Borrower; provided, however, that if a different period or notice requirement is specified under any other section of this Article 5, the specific provisions shall control. (c) Insolvency. A court having jurisdiction shall have made or entered any decree or order: (i) adjudging Borrower to be bankrupt or insolvent; (ii) approving as properly filed a petition seeking reorganization of Borrower or seeking any arrangement for Borrower under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction; (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower in bankruptcy or insolvency or for any of their properties; (iv) directing the winding up or liquidation of Borrower, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or (v) Borrower shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of Default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note.
(d) Assignment; Attachment. Borrower shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this subsection shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note.
(e) Suspension; Dissolution. Borrower shall have voluntarily suspended its business or the dissolution of Borrower.
(f) Liens on Property and the Development. There shall be filed any claim of lien (other than liens approved in writing by the City) against the Development, or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the PLHA Loan and the continued maintenance of said claim of lien or notice to withhold for a period of twenty (20) days without discharge or satisfaction thereof or provision therefore (including, without limitation, the posting of bonds) satisfactory to the City. (g) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Development.
(h) Unauthorized Transfer. Any Transfer other than as permitted by Section 4.11.
(i) Representation or Warranty Incorrect. Any representation or warranty of Borrower contained in this Agreement, or in any application, financial statement, certificate, or 19 PLHA Loan Agreement
report submitted to the City in connection with any of the Loan Documents, proves to have been incorrect in any material and adverse respect when made. Provided, however, after completion of the construction of the Development, Default may be declared under this subsection only if the failure of representation or warranty also has a material adverse effect on the operation of the Development.
Section 5.2 Remedies.The occurrence of any Default hereunder following the expiration of all applicable notice and cure periods will, either at the option of the City or automatically where so specified, relieve the City of any obligation to make or continue the Loan and shall give the City the right to proceed with any and all remedies set forth in this Agreement and the Loan Documents, including but not limited to the following:
(a) Acceleration of Note. The City shall have the right to cause all indebtedness of Borrower to the City under this Agreement and the Note, together with any accrued interest thereon, to become immediately due and payable. Borrower waives all right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Deed of Trust. Borrower shall be liable to pay the City on demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney's fees and expenses) paid or incurred by the City in connection with the collection of the Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Loan. (b) Specific Performance. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Borrower to perform its obligations and covenants under the Loan Documents or to enjoin acts or things which may be unlawful or in violation of the provisions of the Loan Documents.
(c) Right to Cure at Borrower's Expense. The City shall have the right (but not the obligation) to cure any monetary default by Borrower under a loan other than the Loan.
Borrower agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Borrower upon demand therefore, together with interest thereon at the Default Rate from the date of expenditure until the date of reimbursement.
Section 5.3 Right of Contest.Borrower shall have the right to contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute a Default hereunder.
Any such contest shall be prosecuted diligently and in a manner unprejudicial to the City or the rights of the City hereunder.
Section 5.4 Remedies Cumulative.No right, power, or remedy given to the City by the terms of this Agreement or the Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the City by the terms of any such instrument, or by any statute or otherwise against Borrower and any other person. Neither the failure nor any delay on the part of the City to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the City of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. 20 PLHA Loan Agreement
Section 5.5 Notice and Cure Rights of Investor.The City agrees, after Investor's admission as limited partner to the Borrower, to provide the Investor a duplicate copy of all notices of default that the City may give to or serve in writing upon Borrower pursuant to the terms of the Loan Documents, at the address that Borrower shall provide to City upon its admission of the Investor, provided, the City shall have no liability to the Investor for its failure to do so.
Notwithstanding anything in the foregoing sentence to the contrary, the City shall not commence with any of its rights or remedies for such Default until notice has been provided to the Investor, except that notwithstanding anything to the contrary, the City may commence an action for specific performance to enforce any affordability or other non-monetary covenant contained in the City Regulatory Agreement or this Agreement at any time. The Investor shall have the right, but not the obligation, to cure any Default of Borrower set forth in such notice, during any applicable cure period described in the Loan Documents, and the City will accept tender of such cure as if delivered by Borrower. Notwithstanding anything herein to the contrary, in the event no cure period is provided for a Default under the Loan Documents, the Investor shall have a period of thirty (30) days to cure any such Default following its receipt of notice in accordance with Section 6.10 hereof. If the Investor is unable to cure a Default because Borrower's general partner is in bankruptcy and/or because the cure requires removal of the general partner of Borrower and the Investor is proceeding diligently to remove the general partner of Borrower in order to effect a cure of the Default, the cure period shall be extended for such reasonable time as is necessary for the Investor to effect a cure of the Default. The address of the Investor may be provided or changed upon written notice delivered to the City in the manner specified in Section 6.10.
ARTICLE 6
GENERAL PROVISIONS
Section 6.1 Relationship of Parties.Nothing contained in this Agreement shall be interpreted or understood by either of the Parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the City and Borrower or Borrower's agents, employees or contractors, and Borrower shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement. Borrower has and retains the right to exercise full control of employment, direction, compensation, and discharge of all persons assisting in the performance of services under the Agreement. Borrower shall be solely responsible for all matters relating to payment of its employees, including compliance with Social Security, withholding and all other laws and regulations governing such matters, and shall include requirements in each contract that contractors shall be solely responsible for similar matters relating to their employees. Borrower agrees to be solely responsible for its own acts and those of its agents and employees.
Section 6.2 No Claims.Nothing contained in this Agreement shall create or justify any claim against the City, by any person Borrower may have employed or with whom Borrower may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the development of the Development, and 21 PLHA Loan Agreement
Borrower shall include similar requirements in any contracts entered into for the development of the Development.
Section 6.3 Amendments.Except as otherwise provided in connection with Operating Memoranda executed pursuant to Section 6.18 below, no alteration or variation of the terms of this Agreement shall be valid unless agreed to in writing by the Parties.
Section 6.4 Entire Understanding of the Parties.This Agreement constitutes the entire understanding and agreement of the Parties with respect to the PLHA Loan.
Section 6.5 Indemnification. Except as directly caused by the City's gross negligence or willful misconduct, Borrower agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the City) the City, the City Council, and its officers and employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of: (i) Borrower's performance or non-performance of its obligations under this Agreement; (ii) Borrower's ownership of the Development; (iii) the development, marketing, rental and operation of the Development; or (iv), any documents executed by Borrower in connection with the Development. The provisions of this Section shall survive termination of this Agreement.
Section 6.6 Non-Liability of City Officials, Employees and Agents.No member, official, employee or agent of the City shall be personally liable to Borrower, 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 Borrower or its successor or on any obligation under the terms of this Agreement.
Section 6.7 No Third Party Beneficiaries.There shall be no third party beneficiaries to this Agreement except for the rights granted the Investor in Section 5.5 above and except for the rights granted to City after assignment of Loan as specified in Section 6.12(b) below.
Section 6.8 Action by the City.Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent, request, extension of time, waiver of condition, termination, or other action by the City is required or permitted under this Agreement, such action may be given, made, or taken by the City Manager without further approval by the City Council, and any such action shall be in writing.
Any consents or approvals required under this Agreement shall not be unreasonably withheld or made, except where it is specifically provided that a sole discretion standard applies.
The City Manager is also hereby authorized to approve, on behalf of the City, requests by Borrower for reasonable extensions of time deadlines set forth in this Agreement. The City shall not unreasonably delay in reviewing and approving or disapproving any proposal by Borrower made in connection with this Agreement.
Section 6.9 Waivers.Any waiver by the City of any obligation or condition in this Agreement must be in writing. No waiver will be implied from any delay or failure by the City to take action on any breach or default of Borrower or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to Borrower to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations 22 PLHA Loan Agreement
under this Agreement. Consent by the City to any act or omission by Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the City's written consent to future waivers.
Section 6.10 Notices, Demands and Communications.Formal notices, demands, and communications between the City and Borrower shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered personally, to the principal office of the City and Borrower as follows:
City:
With a copy to:
City of San Bernardino
201 N. E Street
San Bernardino, California 92401
Attn: Housing Division Manager
Phone: (909) 384-5135
City of San Bernardino
201 N. E Street
San Bernardino, California 92401
Attn: City Attorney
Borrower:
With a copy to:
E Street Veterans Apartments, LP
800 W. 6th Street, Suite 1505
Los Angeles, CA 90017
Attn: Executive Director
Phone: _______________
[Borrower’s Counsel]
[Address]
Attn: __________
Phone: __________
Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected party may from time to time designate by mail as provided in this Section, or by an Operating Memorandum, as defined below. Receipt shall be deemed to have occurred on the date shown on a written receipt for delivery or refusal of delivery. Copies of notices sent to Borrower shall also be sent to any successor investor limited partner of Borrower who requests such notices in writing and provides its address to the City. 23 PLHA Loan Agreement
Section 6.11 Applicable Law and Venue.This Agreement shall be governed by California law. Any action brought claiming a breach of this Agreement or interpreting this Agreement shall be brought and venued in San Bernardino County, California.
Section 6.12 Parties Bound.Except as otherwise limited herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, legal representatives, successors and assigns. This Agreement is intended to run with the land and shall bind Borrower and its successors and assigns in the Property and the Development for the entire Term, and the benefit hereof shall inure to the benefit of the City and its successors and assigns.
Section 6.13 Attorneys' Fees.If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing party will have the right to recover its reasonable attorneys' fees and costs of suit from the other party.
Section 6.14 Severability.If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability.
Section 6.15 Force Majeure.In addition to specific provisions of this Agreement, performance by either Party shall not be deemed to be in default where delays or defaults are due to acts of God, war, insurrection, strikes, lock-outs or other labor disturbances, one or more acts of a public enemy, war, riot, sabotage, blockade, embargo, floods, earthquakes, fires, quarantine restrictions, freight embargoes, lack of transportation, court order, pandemic, epidemic, local public health emergency, delays or failures of performance by any governmental authority or utility company (other than the acts or failure to act of the City and so long as the party seeking the extension has adequately complied with the applicable processing requirements of such governmental City or utility company), delays resulting from changes in any applicable laws, rules, regulations, ordinances or codes, or a change in the interpretation thereof by any governing body with jurisdiction, or any other cause (other than lack of funds of Borrower or Borrower's inability to finance the construction of the Development) beyond the reasonable control or without the fault of the Party claiming an extension of time to perform or an inability of performance. An extension of time for any cause will be deemed granted if notice by the Party claiming such extension is sent to the other within ten (10) days from the commencement of the cause and the Party granting the extension agrees to the extension in writing. In no event shall the City be required to agree to cumulative delays in excess of one hundred eighty (180) days.
Section 6.16 Conflict of Interest. Except for approved eligible administrative or personnel costs, no person described in Subsection (b) below who exercises or has exercised any functions or responsibilities with respect to the activities funded pursuant to this Agreement or who is in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during, or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that the prohibition in this subsection (a) is followed.
24 PLHA Loan Agreement
(b) The conflict of interest provisions of subsection (a) above apply to any person who is an employee, agent, consultant, officer, or any immediate family member of such person, or any elected or appointed official of the City, or any person related within the third (3rd) degree of such person.
Section 6.17 Title of Parts and Sections.Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall not be definitive in interpreting any part of the Agreement's provisions.
Section 6.18 Operating Memoranda.The Parties acknowledge that the provisions of this Agreement require a close degree of cooperation, and that new information and future events may demonstrate that changes are appropriate with respect to the details of performance of the Parties under this Agreement. The Parties desire, therefore, to retain a certain degree of flexibility with respect to the details of performance of those items covered in general terms under this Agreement.
If and when, from time to time during the term of this Agreement, the Parties find that refinements or adjustments regarding details of performance are necessary or appropriate, they may effectuate such refinements or adjustments through a memorandum (individually, an “Operating Memorandum,” and collectively, “Operating Memoranda”) approved by the Parties which, after execution, shall be attached to this Agreement as addenda and become a part hereof. This Agreement describes some, but not all, of the circumstances in which the preparation and execution of Operating Memoranda may be appropriate.
Operating Memoranda may be executed on the City's behalf by the City Manager or the City Manager's designee. Operating Memoranda shall not require prior notice or hearing, and shall not constitute an amendment to this Agreement. Any substantive or significant modifications to the terms and conditions of performance under this Agreement or the Note shall be processed as an amendment of this Agreement in accordance with Section 6.3 above.
Section 6.19 Multiple Originals; Counterpart.This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.
Remainder of Page Left Intentionally Blank
Signature Page to PLHA Loan Agreement
WHEREFORE, this Agreement has been entered into by the undersigned as of the Effective Date.
CITY:
CITY OF SAN BERNARDINO, a California charter city
and municipal corporation
_________________________________
Rochelle Clayton, Acting City Manager
APPROVED AS TO FORM:
_________________________________
Sonia R. Carvalho, City Attorney
Signatures continue on following page
Signature Page to PLHA Loan Agreement
Signature Page to PLHA Loan Agreement
Borrower's Signature Page to PLHA Loan Agreement
BORROWER:
E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public benefit corporation,
its managing member
By: _______________________________
Lori Allgood, COO
By: Kingdom Development, Inc.,
a California nonprofit public benefit corporation,
its member
By: _______________________________
William Leach, President
APPROVED AS TO FORM:
_________________________________
Signature Page to PLHA Loan Agreement
EXHIBIT A
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
[INSERT LEGAL DESCRIPTION]
EXHIBIT B
DEVELOPMENT BUDGET
[INSERT]
EXHIBIT C
FORM OF PLHA NOTE
[ATTACHED]
Exhibit C to PLHA Loan Agreement
Form of Promissory Note
PROMISSORY NOTE
(City PLHA Loan)
$1,985,401.00 San Bernardino, California
__________, 2025
FOR VALUE RECEIVED, the undersigned, E Street Veterans Apartments, LP, a California limited partnership (the “Borrower”), hereby promises to pay to the order of the City of San Bernardino, a California charter law city and municipal corporation (the “Holder”), whose address is [201 N. E Street, San Bernardino, California 92401], or the Holder's assignee, the principal amount equal to One Million Nine Hundred Eighty Five Thousand Four Hundred One Dollars ($1,985,401) plus interest thereon pursuant to Section 2 below.
1. Borrower’s Obligation. This Promissory Note (the “PLHA Note”) evidences the Borrower’s obligation to pay the Holder the principal amount of One Million Nine Hundred Eighty Five Thousand Four Hundred One Dollars ($1,985,401) (the “PLHA Loan”), pursuant to the PLHA Loan Agreement between Borrower and the Holder dated as of the date of this PLHA Note (the “PLHA Loan Agreement”). All capitalized terms not otherwise defined in this PLHA Note shall have the meanings set forth in the PLHA Loan Agreement.
2. Interest.
(a) Interest. Subject to the provisions of Section 2(b) below, the outstanding principal balance of the PLHA Loan shall bear simple interest at a rate of three percent (3%) per annum. Interest on the PLHA Loan shall accrue commencing on the date of this PLHA Note. (b) Default Interest. In the event of a Default, interest on the PLHA Loan shall begin to accrue, as of the date of Default and continuing until such time as the PLHA Loan funds are repaid in full or the Default is cured, at the Default Rate.
3. Terms of Repayment Requirements. Borrower shall repay the PLHA Loan as follows:
(a) Annual Residual Receipts Payment. Borrower shall make annual Residual Receipts Payments as follows: Borrower shall make annual Residual Receipts Payments as follows: Commencing on the date that is one year after the first certificate of occupancy is issued for the Project, and on the anniversary of such date of each year thereafter during the Term, Borrower shall make a loan payment in an amount equal to the City Share of Residual Receipts for the prior calendar year (each such payment, an “Annual City Loan Payment”). The City shall apply all Annual City Loan Payments to the PLHA Loan as follows: (1) first, to accrued interest, and (2) second, to principal on the Loan.
Exhibit C to PLHA Loan Agreement
Form of Promissory Note
(b) Due in Full. All outstanding principal and accrued interest on the PLHA Loan shall be due in full on the earlier to occur of: (i) the date of any Default, or (ii) the expiration of the Term.
(c) Right to Prepay. Borrower may prepay, in whole or in part, the PLHA Loan at any time without premium or penalty. However, the PLHA Loan Agreement and the PLHA Regulatory Agreement shall remain in effect for the entire Term regardless of any prepayment.
Payments made shall be credited first against accrued interest and then against outstanding principal.
4. No Assumption. This PLHA Note shall not be assumable by the successors and assigns of Borrower without the prior written consent of the Holder, other than as set forth in the PLHA Loan Agreement.
5. Security. This PLHA Note is secured by the PLHA Deed of Trust.
6. Terms of Payment.
(a) U.S. Currency. All payments due under this PLHA Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts.
(b) Location. All payments on this PLHA Note shall be paid to Holder at 201 N. E Street, San Bernardino, California 92401, or to such other place as the Holder of this PLHA Note may from time to time designate.
(c) No Expense to Holder. All payments on this PLHA Note shall be without expense to the Holder, and the Borrower agrees to pay all costs and expenses, including reasonable attorney’s fees and other professional service fees and costs of the Holder, incurred in connection with the payment of this PLHA Note and the release of any security hereof. (d) No Unlawful Interest. Notwithstanding any other provision of this PLHA Note, or any instrument securing the obligations of the Borrower under this PLHA Note, if, for any reason whatsoever, the payment of any sums by the Borrower pursuant to the terms of this PLHA Note would result in the payment of interest which would exceed the amount that the 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 PLHA Note, so that in no event shall the Borrower be obligated under the terms of this PLHA Note to pay any interest which would exceed the lawful rate. (e) Nonrecourse. This PLHA Note shall be nonrecourse to the Borrower, pursuant to, and except as provided in, Section 2.10 of the PLHA Loan Agreement.
7. Default.
(a) Events of Default. Any of the following shall constitute an event of default under this PLHA Note:
Exhibit C to PLHA Loan Agreement
Form of Promissory Note
(i) Any failure to pay, in full, any payment required under this PLHA Note within ten (10) days of written notice from the Holder to the Borrower that such payment is due;
(ii) Any failure in the performance by the Borrower of any term, condition, provision or covenant set forth in this PLHA Note subject to the notice and cure period set forth in the PLHA Loan Agreement;
(iii) The occurrence of any event of default under any of the PLHA Loan Documents or other instrument securing the obligations of the Borrower under this PLHA Note or under any other promissory note(s) hereafter issued by the Borrower to the Holder pursuant to the PLHA Loan Agreement or the PLHA Deed of Trust, subject to notice and cure periods, if any, set forth therein.
(b) Balance Due. Upon the occurrence of one or more of the foregoing events of default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this PLHA Note and the PLHA Deed of Trust shall at the option of the Holder become immediately due and payable upon written notice by the Holder to the Borrower without further demand.
(c) No Waiver. Holder’s failure to exercise the remedy set forth in Subsection 7(b) 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 than 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 the Holder, except as and to the extent otherwise provided by law.
8. Waivers.
(a) Borrower’s Waivers. The Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, and notice of dishonor of this PLHA Note. The Borrower expressly agrees that this PLHA Note or any payment hereunder may be extended from time to time, and that the Holder may accept further security or release any security for this PLHA Note, all without in any way affecting the liability of the Borrower. (b) Extension is no Release of Liability. Any extension of time for payment of this PLHA Note or any installment hereof made by agreement of the Holder with any person now or hereafter liable for payment of this PLHA Note shall not operate to release, discharge, modify, change or affect the original liability of the Borrower under this PLHA Note, either in whole or in part.
Exhibit C to PLHA Loan Agreement
Form of Promissory Note
(c) No Offset. The obligations of the Borrower under this PLHA Note shall be absolute and the Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this PLHA Note for any reason whatsoever.
9. Miscellaneous Provisions.
(a) Notices. All notices to the Holder or the Borrower shall be given in the manner and at the addresses set forth in the PLHA Loan Agreement, or to such addresses as the Holder and the Borrower may therein designate.
(b) Holder’s Costs. The Borrower promises to pay all costs and expenses, including reasonable attorney's fees and other professional service fees and costs, incurred by the Holder in the enforcement of the provisions of this PLHA Note, regardless of whether suit is filed to seek enforcement.
(c) Amendment in Writing. This PLHA 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.
(d) California Law. This PLHA Note shall be governed by and construed in accordance with the laws of the State of California.
(e) Severability. If any provision of this PLHA Note 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.
(f) Time. The times for the performance of any obligations hereunder shall be strictly construed, time being of the essence.
(g) Entire Agreement. This document, together with the PLHA Loan Documents, contains the entire agreement between the parties as to the PLHA Loan.
Remainder of page left intentionally blank
Exhibit C to PLHA Loan Agreement
Form of Promissory Note
BORROWER:
E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public benefit corporation,
its managing member
By: _______________________________
Lori Allgood, COO
By: Kingdom Development, Inc.,
a California nonprofit public benefit corporation,
its member
By: _______________________________
William Leach, President
APPROVED AS TO FORM:
_________________________________
EXHIBIT D
FORM OF PLHA DEED OF TRUST
[ATTACHED]
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
APN: _________
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of San Bernardino
201 North E Street
San Bernardino, CA 92401
Attn: Housing Division Manager
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§ 6103, 27383, and
27388.1
SPACE ABOVE THIS LINE FOR RECORDER’S USE
SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS
(U.S. VETS–PLHA Loan)
This Deed of Trust, is made as of _________, 2025, between E Street Veterans Apartments, LP, a California limited partnership, herein called Trustor, whose address is: [Trustor Address], [Title Company], a [California corporation], herein called Trustee, and the City of San Bernardino, a California charter city and municipal corporation, herein called Beneficiary, Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to TRUSTEE IN TRUST, WITH POWER OF SALE, that property generally located at 1351 N. E Street, in the City of San Bernardino, California, described as follows:
SEE EXHIBIT A, incorporated herein by this reference.
TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary by paragraph C.10 of the provisions incorporated herein by reference to collect and apply such rents, issues and profits.
For the Purpose of Securing:
(1) Performance of each agreement of Trustor incorporated by reference or contained herein. (2) Payment of the indebtedness evidenced by one promissory note of even date herewith, and any extension or renewal thereof, in the principal sum of up to One Million Nine Hundred Eighty Five Thousand Four Hundred One Dollars ($1,985,401) executed by Trustor in favor of Beneficiary or order. (3) Payment of such further sums as the then record owner of said property hereafter may borrow from Beneficiary, when evidenced by another note (or notes) reciting it is so secured.
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
To Protect the Security of This Deed of Trust, Trustor Agrees: By the execution and delivery of this Deed of Trust and the note secured hereby, including the provisions set forth in EXHIBIT B and EXHIBIT C of this Deed of Trust, which are incorporated by this reference; that Trustor will observe and perform said provisions; and that the references to property, obligations and parties in said provisions shall be construed to refer to the property, obligations, and parties set forth in this Deed of Trust.
The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to it at its address.
BORROWER:
E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public benefit corporation,
its managing member
By: _______________________________
Lori Allgood, COO
By: Kingdom Development, Inc.,
a California nonprofit public benefit corporation,
its member
By: _______________________________
William Leach, President
APPROVED AS TO FORM:
_________________________________
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
__________________________________
Name:
__________________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit A to Deed of Trust
Property Description
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF
SAN BERNARDINO, STATE OF CALIFORNIA, DESCRIBED AS
FOLLOWS:
[INSERT]
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit B to Deed of Trust
Deed of Trust Addendum
B.1. Section 42 Requirements. Notwithstanding anything to the contrary contained in the Deed of Trust to which this Exhibit is attached or in any documents secured by this Deed of Trust or contained in any subordination agreement, the Beneficiary acknowledges and agrees that in the event of a foreclosure or deed-in-lieu of foreclosure (collectively, “Foreclosure”) with respect to the security encumbered by this Deed of Trust, the following rule contained in 26 U.S.C. Section 42(h)(6)(E)(ii), as amended, shall apply:
For a period of three (3) years from the date of Foreclosure, with respect to any unit that had been regulated by the Regulatory Agreement with the California Tax Credit Allocation Committee, (i) none of the tenants occupying those units at the time of Foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Internal Revenue Code.
B.2. Casualty or Condemnation Proceeds. Notwithstanding anything to the contrary contained in the Deed of Trust to which this Exhibit is attached or in any documents secured by this Deed of Trust or contained in any subordination agreement, the Beneficiary acknowledges and agrees that, subject to the rights of all senior lenders, in the event of a casualty or condemnation of the Property, the Beneficiary shall permit the Trustor to use any proceeds from such event to rebuild or otherwise restore the improvements located on the Property.
B.3. Conflict. In the event of any conflict between this Exhibit and any other provision of the Deed of Trust, this Exhibit shall control. This Exhibit is hereby incorporated into, and made a part of, the Deed of Trust by this reference.
B.4. Standstill. Notwithstanding anything to the contrary in the promissory note (the “Note”) or this Deed of Trust, the Beneficiary must obtain the prior written consent of Borrower’s limited partner, which consent may be granted or denied in the sole and absolute discretion of Borrower’s limited partner, prior to the Trustor exercising any rights or remedies under the Note or this Deed of Trust.
B.5. Transfers. Notwithstanding anything to the contrary contained in this Deed of Trust or the Note, (a) any transfer permitted under the Trustor’s partnership agreement as of the date hereof (“Partnership Agreement”) shall be permitted (each, a “Permitted Transfer”), (b) no Permitted Transfer shall cause a default under this Deed of Trust or the Note, and (c) Beneficiary shall not receive any fee or other amounts from Trustor in connection with a Permitted Transfer.
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
B.6. Refinancing of Senior Loans. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor may refinance any loans secured by deeds of trust senior in lien priority to the Deed of Trust (the “Senior Indebtedness”) without the prior consent of the Beneficiary (the “Refinanced Indebtedness”), and the Beneficiary hereby agrees to subordinate the loan secured by this Deed of Trust (the “Loan”) and all documents securing or evidencing the Loan, including, but not limited to, this Deed of Trust and the Note, to the Refinanced Indebtedness and the lien of any deed of trust or mortgage securing the Refinanced Indebtedness, provided that (i) the principal balance of the Refinanced Indebtedness does not exceed the then outstanding principal balance of the Senior Indebtedness plus the costs of refinancing the Senior Indebtedness and (ii) the scheduled maturity date of the Senior Indebtedness is not modified.
B.7. Notices. Notwithstanding anything to the contrary contained in this Deed of Trust, notices to the Trustor shall be given in the manner and to the addresses as described in the Note.
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit C to Deed of Trust
Conventional Terms
To Protect the Security of This Deed of Trust, Trustor Agrees:
C.1 Subsequent to completion of construction/renovations of improvements, keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon: not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general.
C.2 To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default hereunder or invalidated any act done pursuant to such notice.
C.3 To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney’s fees in a reasonable sum, in any such actions or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
C.4 To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, the Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
to be prior to or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees.
C.5 To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded.
That any award of damages in connection with any condemnation for public use or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him/her/them in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance.
C.6 That any award of damages in connection with any condemnation for public use or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him/her them in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance.
C.7 That by accepting payment of any sum secured hereby after its due date, beneficiary does not waive his right either to require prompt payment when due all other sums so secured or to declare default for failure so to pay.
C.8 That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said Note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may; reconvey any part of said property, consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof
C.9 That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said Note 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 or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto.” Five years after issuance of such full reconveyance, Trustee may destroy this document (unless directed in such request to retain it).
C.10 That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to adequacy of any security for the indebtedness hereby secured enter upon and take possession of said property or any part thereof, in his/her/their own name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney’s fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
C.11 That upon default by trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said Note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at 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 recitals in such deed of any matters of facts shall be conclusive proof of the truthfulness thereof.
Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof, not the repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
C.12 Beneficiary, or any successor in ownership of any indebtedness secured hereby, 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 by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee.
C.13 That this Deed applies to inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the Note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.
C.14 That trustee accepts this Trust when this Deed, 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.
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
ACCEPTANCE OF CONVEYANCE
Address: 201 N. E Street
San Bernardino, CA 92401
APN: __________
This instrument certifies that the interest in real property conveyed by the Deed of Trust with Assignment of Rents dated _________, 2025, from Trustor, E STREET VETERANS APARTMENTS, LP, a California limited partnership, to THE CITY OF SAN BERNARDINO, as “Beneficiary” thereunder, which Beneficiary is a municipal corporation of the State of California, is hereby accepted by the undersigned officer on behalf of the City of San Bernardino pursuant to the authority conferred by resolution of the City Council adopted on ________, 20__, and the Beneficiary consents to the recordation thereof by its duly authorized officer.
Signature must be notarized
Dated: _______
By: ___________________________
City Manager
APPROVED AS TO FORM:
Best Best & Krieger LLP
By: ___________________________
Sonia R. Carvalho
City Attorney
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
ACKNOWLEDGMENT
STATE OF ____________
CITY OF ____________
On ___________________________ before me, _________________________________ personally appeared __________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledge to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of ____________ that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________ (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
Exhibit D to PLHA Loan Agreement
Form of Deed of Trust
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
EXHIBIT E
FORM OF PLHA REGULATORY AGREEMENT
[ATTACHED]
Recording Requested by
and when Recorded, return to:
City of San Bernardino
201 North E Street
San Bernardino, CA 92401
Attn: Housing Division Manager
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§ 6103, 27383
ARTICLE 1
(SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE)
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(PLHA LOAN)
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (this “Agreement”) is made and entered as of _________, 2025, by and among the City of San Bernardino, a California charter city and municipal corporation (“City”), and E Street Veterans Apartments, LP, a California limited partnership (“Owner” or, collectively with City, “Parties”) with reference to the following:
RECITALS
A. Owner is the owner of certain real property generally located at 1351 N. E Street, in the City of San Bernardino, California (the “Property”). The Property is more particularly described in Exhibit A.
B. Pursuant to a Permanent Local Housing Allocation Loan Agreement between City and Owner ("PLHA Loan Agreement"), the City agreed to provide a loan to the Owner consisting of funds received by the City from the State of California Department of Housing and Community Development (“HCD”) pursuant to the Permanent Local Housing Allocation program (the “PLHA Program”) established pursuant to California Health & Safety Code Section 50470, for the construction and operation of an affordable housing development for veterans, generally consisting of thirty (30) multifamily housing units, including, one (1) manager’s unit(s), and related improvements on the Property (the “Project”).
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
C. The purpose of this Agreement is to establish rental restrictions on fourteen (14) of the residential units within the Project for the period set forth in this Agreement, and to provide for the continuous availability of such restricted units as affordable housing to households at the income level specified below.
D. This Agreement shall run with the land and shall bind Owner and all of Owner’s successors in interest as owners of the Property.
NOW, THEREFORE, in consideration of the foregoing and the benefits secured by Owner and City, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. RECITALS. The foregoing recitals are a part of this Agreement.
2. DEFINITIONS. In addition to the terms defined elsewhere in the Agreement, the following terms shall have the following meetings:
A. “Affordable Unit(s)” or “Unit(s)” shall mean the fourteen (14) individual units, which shall be comprised of nine (9) one-bedroom units and five (5) two- bedroom units, that must be occupied by Very Low Income Households, pursuant to Section 4 below and are subject to the requirements of this Agreement.
B. “Very-Low Income Household” means an Adjusted Income that is less than or equal to the maximum income for very-low income households, adjusted for actual household size, as calculated pursuant to Health and Safety Code Section 50105 and published annually for San Bernardino County by HCD in Title 25, Section 6932, California Code of Regulations, or any successor provision.
C. “Median Income” shall mean the area median income adjusted for household size applicable to San Bernardino County as determined annually by HCD.
D. “Rent” shall mean the monthly total of payments by the tenants of a Unit for the following: use and occupancy of the Unit and associated facilities, including parking; the separately charged fees or service charges assessed by Owner which are required of all tenants, other than security deposits; the allowance for utility costs paid by the tenant estimated in accordance with regulations promulgated by the California Tax Credit Allocation Committee, including electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service; any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than Owner, and paid by the Tenant.
E. “Tenant” shall mean an occupant of any one of the Units.
Any capitalized term not specifically defined herein shall have the meaning set forth in the Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
PLHA Loan Agreement.
3. TERM OF AGREEMENT, RUNS WITH THE LAND. The term of this Agreement (the “Term”) shall commence on the date first written above, and this Agreement shall remain in full force and effect until the later of: (i) fifty-seven (57) years after the date of the recordation of this Agreement in the official records of San Bernardino County; or (ii) fifty-five (55) years after the date the first building located on the Property is constructed and obtains a certificate of occupancy, or equivalent document, from the City, unless terminated earlier by City pursuant to the terms of this Agreement or extended by the mutual consent of the Parties. The covenants set forth herein shall be covenants running with the land (as they may be amended from time to time) and shall inure to the benefit of and be enforceable by City while City maintains any interest in the Property and shall be binding upon Owner and/or any other party having any right, title or interest in the Property (including any portion thereof). By accepting title, Owner, or any other person who acquires an ownership interest in the Property, agrees (a) that all covenants and restrictions created by this Agreement are necessary in order to preserve the stock of affordable housing for Low Income Households and are reasonable in light of their purposes, and (b) to abide by each and every covenant and restriction herein.
4. RENTAL AND OCCUPANCY REQUIREMENTS
A. Throughout the Term, the Affordable Units in the Project shall be restricted for occupancy to Very-Low Income Households (other than any time prior to the completion of construction of the Project). The Very-Low Income Household is subject to annual certification and Owner is authorized to immediately terminate, subject to applicable law, the tenancy of any Household one or more of whose members misrepresented any fact material to the Household’s qualification as a Very-Low Income Household.
B. Annual Rents for the Affordable Units occupied by a Very-Low Income Household shall not exceed thirty percent (30%) of fifty percent (50%) of the Median Income, adjusted for number of bedrooms, assumed household size and applicable utility allowances ("Affordable Rent"), in accordance with California Health and Safety Code Section 50053 and any implementing regulations published by the California Department of Housing and Community Development. Subject to requirements of the PLHA Program, to the extent authorized by California Health and Safety Code Section 50053, the Affordable Rent may be determined by deed restrictions or regulatory agreements that restrict the Affordable Units pursuant to terms of public financing or public financial assistance.
C. Owner shall require each Affordable Unit to be subject to a rental agreement in the form which may be subject to approval by City and shall not lease any such Unit for less than six months or for more than one year.
D. Owner shall comply with all applicable requirements of the PLHA Program governing the use and occupancy of the Affordable Units.
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
5. MARKETING. Owner shall prepare and implement a marketing plan, subject to prior approval by City, which approval shall not be unreasonably withheld or delayed, which specifies how Owner intends to market the Affordable Units to prospective Very-Low Income Households.
6. MAINTENANCE OF PROPERTY. Throughout the Term, at its sole cost and expense, Owner(s) shall keep the Property in good condition, order and repair and shall not commit waste or permit impairment, demolition or deterioration of the Property. City shall have the right to inspect the Property, provided the occupants of the Affordable Units are given written notice prior to any such inspection.
7. NO DISCRIMINATION. Owner covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Owner or any person claiming under or through Owner establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, subleases or vendees in the Property, except to the extent required by any public funding source utilized by the Owner for the construction and operation of the Project in accordance with applicable law. Owner shall comply with all requirements contained in the Americans with Disabilities Act (“ADA”), the Fair Housing Amendments Act, the California Fair Employment and Housing Act, the Unruh Act, Government Code section 1135, Section 504 of the Rehabilitation Act, and all applicable regulations promulgated pursuant to those statutes, including 24 CFR Part 100, 24 CFR Part 8, and 28 CFR Part 35, in all of the Borrower’s activities with relation to the Project.
8. PET-FRIENDLY HOUSING ACT OF 2017. Owner agrees and understands that the Project is subject to the Pet Friendly Housing Act of 2017 (“PFHA”) (Health and Safety Code section 50466). Owner agrees to operate the Project in accordance with the requirement of the PFHA, including, but not limited to, the requirement that residents of the Project shall be authorized to own or otherwise maintain one or more common household pets as set forth in Health and Safety Code section 50466, as may be amended from time to time.
9. NO IMPAIRMENT OF LIEN; SUBORDINATION. No violation or breach of the covenants, conditions, restrictions, provisions or limitation contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument permitted under this Agreement. Upon written request from Owner, to the extent necessary to obtain financing for the construction and operation of the Project, the City shall execute a subordination agreement in favor of lenders for other public financing sources, in a form reasonably acceptable to the Parties and any other third party requiring such subordination, providing for the subordination of this Agreement.
10. RESTRICTIONS ON TRANSFERS.
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
A. For purposes of this Agreement, “Transfer” means any sale, assignment, or transfer, whether voluntary or involuntary, of: (i) any rights and/or duties under this Agreement; and/or (ii) any interest in the Project, including (but not limited to) a fee simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a land contract by which possession of the Project is transferred and Borrower retains title. The term “Transfer” excludes the leasing of any single unit in the Project to an occupant in compliance with this Agreement.
B. No Transfer shall be permitted without the prior written consent of the City, which the City may withhold in its sole discretion; provided, however, that: (i) the Investor may Transfer its limited partnership interest to affiliates of Investor, without the consent of the City, so long as the managing general partner of the Owner provides notice of such Transfer within thirty (30) days after such Transfer is effective; (ii) the Investor shall have the right to Transfer its limited partner interest, to any person without the City's consent; (iii) the Investor and the Construction Lender shall have the right to remove and replace a general partner of the Owner in accordance with the Partnership Agreement provided that the substitute general partner must first be accepted by the City, which will not unreasonably reject or delay its acceptance of such substitute general partner, so long as Owner provides thirty (30) days’ notice to City, which shall list the reasons for removal and the qualifications on which the new general partner was chosen, and shall provide written assurance that the change of the general partner will not affect Owner's ability to satisfy the requirements of this Agreement or any of the other Loan Documents; and (iv) Construction Lender may foreclose or accept a deed in lieu of foreclosure, and subsequently sell the Property, without the consent of the City.
C. The City approves the grant of the security interests in the Project for the Approved Financing.
D. Following the expiration of the fifteen (15)-year compliance period as described in Section 42(i)(1) of the Internal Revenue Code of 1986, as amended, (or at such other time period determined by the Borrower and the Investor), the City approves any Transfer by the Owner of the Investor's limited partner interest, or the Project, to the general partner of the Owner.
11. DEFAULTS AND REMEDIES. Upon substantial violation by Owner of this Agreement, City shall give written notice to Owner, and each limited partner of Owner, specifying the nature of the violation. If Owner or any limited partner does not correct the violation to the satisfaction of City, in its sole discretion, within a reasonable period of time (which shall not be less than thirty (30) days and shall not exceed ninety (90) days) after its receipt of such notice, or within such further time as City, in its sole discretion, determines is necessary to correct the violation, City may immediately declare a default under this Agreement and exercise any other Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
remedies permitted at law or in equity. City agrees to accept cure from any limited partner of Owner.
12. SUCCESSOR AND ASSIGNS. This Agreement shall bind, and the benefit shall inure to, Owner and his or her heirs, legal representatives, executors, successors in interest and assigns, and City and its successors and assigns for the term of this Agreement as provided in Section 3.
13. SUPERIORITY OF AGREEMENT. Owner covenants that Owner has not, and will not, execute any other agreement with provisions contradictory to or in opposition of the provisions of this Agreement, and that, in any event, this Agreement is controlling as to the rights and obligations between Owner and City and their respective successors and assigns.
Notwithstanding the foregoing, in the event of a conflict between the provisions of this Agreement and the provisions of: (a) Section 42 of the Internal Revenue Code or regulations promulgated thereunder; (b) the regulatory agreement to be recorded as required by the California Tax Credit Allocation Committee and it regulations; or (c) any other regulatory agreement required to be recorded in connection with any other governmental funding utilized for the Project (collectively, the “Government Restrictions”); the Government Restrictions shall prevail.
14. INVALID PROVISIONS. If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
15. CONTROLLING LAW. The terms of this Agreement shall be interpreted under the laws of the State of California.
16. NOTICES. All notices required herein shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt and shall be deemed to be effective as of the date received or the date delivery was refused as indicated on the return receipt as follows:
To Owner: E Street Veterans Apartments, LP
800 W. 6th Street, Suite 1505
Los Angeles, CA 90017
Attn: Executive Director
With a copy to: [Owner’s Counsel]
[Address]
Attn: _________
To City: City of San Bernardino
201 North E Street
San Bernardino, CA 92401
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
Attn: Housing Division Manager
Phone: (909) 384-5135
With copy to: City of San Bernardino
201 North E Street
San Bernardino, CA 92401
Attn: City Attorney
The Parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Agreement.
17. EXHIBITS. Any exhibits referred to in this Agreement are incorporated in this Agreement by such reference.
18. INDEMNITY. Owner shall defend, indemnify, and hold harmless City, its officers, employees, agents, and assigns from any and all claims arising from or pertaining to the ownership, maintenance, or management of the Property and the Project.
19. COUNTERPARTS. This Agreement may be executed in counterpart signatures all of which shall constitute one and the same document.
[SIGNATURES ON FOLLOWING PAGE]
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
* * * * * * * * * * * IN WITNESS WHEREOF the foregoing Agreement is executed on the date and year first above-written.
By:
ATTEST:
_______________________________
Genoveva Rocha, City Clerk
Approved as to Legal Form:
CITY ATTORNEY
By: ___________________________
Sonia R. Carvalho
CITY:
CITY OF SAN BERNARDINO, a California
charter city and municipal corporation
__________________________
Eric Levitt, City Manager
Signatures continue on following page
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
BORROWER:
E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public benefit corporation,
its managing member
By: _______________________________
Lori Allgood, COO
By: Kingdom Development, Inc.,
a California nonprofit public benefit corporation,
its member
By: _______________________________
William Leach, President
APPROVED AS TO FORM:
_________________________________
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
ACKNOWLEDGMENT
STATE OF ____________
CITY OF ____________
On ___________________________ before me, _________________________________ personally appeared __________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledge to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of ____________ that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________ (Seal)
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
ACKNOWLEDGMENT
STATE OF ____________
CITY OF ____________
On ___________________________ before me, _________________________________ personally appeared __________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledge to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of ____________ that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________ (Seal)
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
ACKNOWLEDGMENT
STATE OF ____________
CITY OF ____________
On ___________________________ before me, _________________________________ personally appeared __________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledge to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of ____________ that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________ (Seal)
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
Exhibit E to PLHA Loan Agreement
Form of Regulatory Agreement
EXHIBIT A
Legal Description of Property
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
[INSERT]