1 CITY OF VISALIA
HOME INVESTMENT PARTNERSHIPS AMERICAN RESCUE PLAN PROGRAM (HOME-ARP)
LOAN AGREEMENT
(The Majestic Project)
This HOME-ARP Loan Agreement (the “Agreement”) is made as of the ___ day of ________ 2022, by and between the City of Visalia (“City”), and RH Community Builders L.P., a California Limited Partnership (“Owner”).
RECITALS
A. Owner has acquired certain real property in the City of Visalia located at 4545 W. Noble Avenue, in the City of Visalia, and more particularly described in Exhibit A (the “Property”), on which it will develop an 42-unit multifamily housing project which it will operate as affordable rental housing for HOME-ARP “Qualifying Populations” which include homeless; at-risk of homelessness; fleeing/attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking; and greatest risk of housing stability as determined by the Department of Housing and Urban Development (HUD) persons whose income is 30 percent or less of the area median income as determined by HUD and is experiencing severe cost burden, or persons whose income is 50 percent of the area median income as determined by HUD and meets one of the conditions of “At risk of homelessness” as defined in 24 CFR 91.5(iii), except for one (1) manager’s unit (the “Project”).
B. Owner has requested a loan from the City (the “Loan”) to assist in the construction, rehabilitation and/or permanent financing of the Project.
C. The Loan will be provided by the City in accordance with federal statutes and regulations governing the HOME-ARP Program as set forth in 42 U.S.C. 12741 et seq., 24 CFR Part 92 (the “HOME-ARP Regulations”), all as amended and in effect from time to time.
D. As a condition of the Loan, Owner will execute a regulatory agreement (the “Regulatory Agreement”) to be recorded against the Project which will regulate eleven (11) floating residential units, as allowed pursuant to Section 92.252(j) of the HOME-ARP Regulations, within the 42-unit Project to ensure that the units are occupied by and affordable to HOME-ARP Qualifying Populations who include homeless; at-risk of homelessness; fleeing/attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking; and greatest risk of housing stability as determined by HUD persons whose income is 30 percent or less of the area median income as determined by HUD and is experiencing severe cost burden, or persons whose income is 50 percent of the area median income as determined by HUD and meets one of the conditions of “At risk of homelessness” as defined in 24 CFR
91.5(iii) for the term of the Loan. All of the units, except for the manager’s unit, will be restricted by Successor Agency Housing State Regulations pursuant to a 55-year regulatory agreement to ensure that the units are occupied by and affordable to Low and Very-Low Income Households.
E. Pursuant to this Agreement, the City shall loan One Million Eight Hundred Thousand Dollars and no/100 ($1,800,000.00) (the “Funds”) to Owner, which will be disbursed in accordance with
2 this Agreement. This loan that is being made for development costs as allowed under 24 CFR 92.206 of the HOME-ARP Regulations.
F. Pursuant to 24 CFR 92.214 (b)(1)(i) of the HOME-ARP Regulations, HUD permits the City to charge fees to cover the cost of ongoing monitoring and physical inspection of HOME-ARP projects during their period of affordability. Owner agrees to pay the actual annual cost of City monitoring activities for this project, not to exceed Five Thousand Dollars and no/100 ($5,000.00) on an annual basis to the City of Visalia consistent with the requirements of the 24 CFR 92.214 (b)(1)(i) of the HOME-ARP Regulations.
NOW THEREFORE, IN CONSIDERATION of the mutual agreements, obligations, and representations, and in further consideration for the making of the Loan, Owner and City hereby agree as follows:
AGREEMENT
ARTICLE 1
LOAN TERMS
1.1 Loan Agreement. The City agrees to loan, and Owner agrees to borrow an amount not to exceed One Million Eight Hundred Thousand Dollars and no/100 ($1,800,000.00), subject to the conditions and terms of this Agreement. The loan shall be evidenced by a note bearing interest of zero percent (0%) per annum with a term of twenty (20) years (the “Note”) executed by Owner and secured by a deed of trust (the “Deed of Trust”) which will be recorded against the Project prior to, or simultaneously with, any disbursements hereunder. The amortized loan payments will be forgiven annually, on the anniversary of the effective date of this Agreement, contingent upon the property continuing to be used as affordable rental housing for HOME-ARP Qualifying Populations.
1.2 Term of Agreement. The term of this Agreement shall commence upon the date of the recordation of the Regulatory Agreement of the same date herewith and remain in full force and effect and shall apply to the Project through and including the date which is twenty (20) years following the date of recordation of the Regulatory Agreement, unless terminated earlier pursuant to the terms of this Agreement.
1.3 Compliance with Program Requirements. Owner agrees that at all times its acts regarding the Project and the use of funds provided herein it shall be in conformity with all provisions of the HOME-ARP Program including the statutes, rules and regulations and such policies and procedures of HUD pertaining to the HOME-ARP Program. Owner acknowledges that it is familiar with such applicable provisions and has been professionally advised to the extent necessary for the purpose of enabling Owner to fully comply with such provisions.
1.4 Use of Funds.
3 (a) Owner shall use the HOME-ARP funds for the development costs of the Project in a manner consistent with Section 92.206 of the HOME-ARP Regulations. Costs for development shall only be for work approved by the City at the time of project set-up under the HOME-ARP Regulations or later approved in writing by the City if a modification of the scope of work is necessary. Any expenditure that is not authorized by this Agreement or is found to be ineligible under the HOME-ARP Regulations shall be disallowed, and funds relating to such expenditure must be returned to the City within thirty (30) days of discovery by the City or Owner.
(b) The City shall review and approve written cost estimates, construction contracts, documents and Project plans (i.e., work write-ups and cost estimates);
(c) The City shall conduct initial, progress and final inspections related to construction to ensure that work is done in accordance with the applicable codes, construction contract and construction documents.
(d) Owner agrees that it will not use the HOME-ARP Funds pursuant to this Agreement, either directly or indirectly, as a contribution in order to obtain any other federal funds under any other federal program without prior written approval of the City.
1.5 Scope of Project. The Project shall consist of eleven (11) floating residential units, as allowed pursuant to Section 92.252(j) of the HOME-ARP Regulations, within the 42-unit development, with said forty-two (42) units being occupied by HOME-ARP “Qualifying Populations” which include homeless; at-risk of homelessness; fleeing/attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking; and greatest risk of housing stability as determined by HUD persons whose income is 30 percent or less of the area median income as determined by HUD and is experiencing severe cost burden, or persons whose income is 50 percent of the area median income as determined by HUD and meets one of the conditions of “At risk of homelessness” as defined in 24 CFR
91.5(iii) for the term of the Loan as provided by this Agreement. Owner agrees to complete the development of the Project (“Project Completion”) in accordance with the Scope of Work approved by the City, and described more particularly in Exhibit B, which is attached hereto and incorporated herein by this reference.
(a) The Scope of Work shall be completed in accordance with the time frame established by Section 92.205(e)(2) of the HOME-ARP Regulations, which requires completion of the Project within four (4) years from the commitment of funds, with the possibility of an additional one (1) year extension. Owner agrees to begin construction within 12 months of this Agreement executed date.
(b) Owner intends to be the long-term owner of the Project and the property in fee simple absolute for rental to Qualifying Populations in accordance with Sections 92.252 and 92.300 of the HOME-ARP Regulations. Owner therefore must demonstrate that it will be in sole charge of all aspects of the development process, including obtaining zoning, securing non-HOME-ARP financing, selecting architects, engineers, and general contractors, overseeing the progress of the work, and determining the reasonableness of costs.
4 1.6 Regulatory Agreement. Owner shall execute a Regulatory Agreement which shall regulate eleven (11) floating HOME-ARP assisted units of the Project to ensure that the units are occupied by HOME-ARP Qualifying Populations for twenty (20) years.
1.7 Disbursement of Funds. During the term of this Agreement, the City shall disburse HOME-ARP Funds to reimburse Owner for development costs of the Project (“Disbursements”) as provided in Section 1.4(a). Owner shall submit to the City an invoice with sufficient back-up documentation of the expenditures which verifies that the cost has been incurred by Owner. City shall make Disbursements of HOME-ARP Funds to Owner only to the extent that: (a) HOME-ARP Funds are available from the HOME-ARP Program; and, (b) the uses of the HOME-ARP Funds are eligible in accordance with the HOME-ARP Program Regulations. If for any reason the HOME-ARP Funds are not available from the HOME-ARP Program, or any of Owner's uses of HOME-ARP Funds are deemed ineligible uses under the HOME-ARP Program Regulations, then the City shall not have an obligation to make Disbursements of HOME-ARP Funds requested by Owner. The aggregate of the Disbursements of the HOME-ARP Funds provided to Owner under this Agreement shall not exceed the amount of the Loan.
1.8 Subordination. The City agrees to subordinate the Deed of Trust and the Regulatory Agreement to any loan from institutional construction and permanent lenders (“Bank”) provided Bank shall agree to include in its subordination agreement conditions substantially similar to the following conditions or as otherwise approved by the City in its reasonable discretion: (i) City shall receive any notices of default issued by such lender to Owner; (ii) City shall have the right to cure any default by Owner after a notice of default. City shall have the right to review and approve the terms and conditions of the Bank’s financing and subordination agreement, which approval shall not be unreasonably withheld. City shall have the right to record a request that City receive notice of any default by Owner under Owner's financing or other financing obtained by Owner with respect to the Project. To implement any such subordination, City agrees to cooperate with Owner and execute such subordination agreements that may be reasonably required, in form and content approved by City Attorney.
ARTICLE 2
GENERAL REQUIREMENTS
2.1 Initial Occupancy. Pursuant to Section 92.252 of the HOME-ARP regulations, the eleven (11) HOME-ARP-assisted units in the Project must be occupied by HOME-ARP Qualifying Populations that are eligible tenants, as provided for herein, within six (6) months following the date of Project Completion. If any of the eleven (11) HOME-ARP-assisted units in the Project are not occupied by households that are eligible tenants within six (6) months of Project Completion, Owner shall submit to City marketing information and a marketing plan. The City will require Owner to repay the HOME- ARP funds invested in any housing unit that has not been initially rented to eligible tenants within eighteen (18) months after the date of Project Completion.
5 2.2 Income Determinations for Tenants. Owner or Owner’s agent shall make income determinations to assess a prospective tenant’s eligibility to occupy a HOME-ARP funded unit in accordance with Section 92.203 of the HOME-ARP regulations.
2.3 Rental Agreement.
(a) Leases of HOME-ARP-assisted units must comply with Section 92.253 of the HOME-ARP Regulations, as summarized below:
(1) There must be a written lease between the tenant and Owner or Owner’s agent for rental housing assisted with HOME-ARP funds that is for a period of not less than one year, unless by mutual agreement between tenant and owner a shorter period is specified.
(2) Any termination of tenancy or refusal to renew a lease must be preceded by thirty (30) days written notice specifying the grounds for the action by the owner. Owner shall not terminate the tenancy or refuse to renew the lease of a tenant except for serious or repeated violation of the terms and conditions of the lease; for violation of applicable Federal, State, or local law; for completion of the transitional housing tenancy period or failure to follow any required transitional housing supportive services plan; or for other good cause. Any termination or refusal to renew a lease by Owner’s service upon the tenant of a written notice shall be in compliance with State law and tax credit regulations and specify the grounds for the action.
(3) Leases may not contain the following prohibitive clauses:
• Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of Owner or Owner’s agent in a lawsuit brought in connection with the lease; and • Agreement by the tenant that Owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. Owner may dispose of this personal property in accordance with State law; and
• Agreement by the tenant not to hold Owner or Owner’s agents legally responsible for any action or failure to act, whether intentional or negligent; and • Agreement of the tenant that Owner or Owner’s agent may institute a lawsuit without notice to the tenant; and
• Agreement by the tenant that Owner or Owner’s agent may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; and
• Agreement by the tenant to waive any right to a trial by jury; • Agreement by the tenant to waive tenant’s right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and
6 • Agreement by the tenant to pay attorneys’ fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses; and • Agreement by the tenant (other than a tenant in transitional housing) to accept supportive services that are offered.
2.4 Property Standards and Management of HOME-ARP-Assisted Units. Owner must maintain the Project in compliance with all applicable housing quality standards consistent with Section
92.251(f) of the HOME-ARP Regulations, as identified in City’s Multi-family Rental Development Guide, and local code requirements for the duration of this and the Regulatory Agreement.
2.5 Occupancy Procedures. Owner or Owner’s agent must comply with the affirmative marketing requirements established by the Section 92.351 of the HOME-ARP Regulations and the City pursuant to its Multi-family Rental Development Guide, and shall adopt written tenant selection policies and criteria for the HOME-ARP assisted units that:
(a) Limit HOME-ARP units to HOME-ARP qualifying populations which include homeless; at-risk of homelessness; fleeing/attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking; and greatest risk of housing stability as determined by the HUD persons whose income is 30 percent or less of the area median income as determined by HUD and is experiencing severe cost burden, or persons whose income is 50 percent of the area median income as determined by HUD and meets one of the conditions of “At risk of homelessness” as defined in 24 CFR
91.5(iii);
(b) Are reasonably related to program eligibility and the applicants' ability to perform the obligations of the lease; and
(c) Do not exclude an applicant with a certificate or voucher under the Section 8 Tenant-Based Assistance: Housing Choice Voucher Program (24 CFR part 982) or an applicant participating in a HOME-ARP tenant-based rental assistance program because of the status of the prospective tenant as a holder of such certificate, voucher, or comparable HOME-ARP tenant-based assistance document.
(d) Provide for:
(1) The selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and
(2) The prompt written notification to any rejected applicant of the grounds for any rejection.
(e) Do not allow Owner or its officers, employees, agents, elected or appointed officials, consultants of Owner, or immediate family member or immediate family member of an officer, employee, agent, elected or appointed official, or consultant of the Owner, to occupy the HOME-ARP
7 funded units during the required period of affordability. This provision does not apply to an employee or agent of the Owner who occupies a housing unit as the Project manager or maintenance worker.
Upon written request of Owner, the City may grant an exception this provision on a case-by-case basis when it determines that the exception will serve to further the purposes of the HOME-ARP program and the effective and efficient administration of Owner's Project. In determining whether to grant a requested exception, the City shall consider the following factors:
(1) Whether the person receiving the benefit is a member of a group or class of low-income persons intended to be the beneficiaries of the assisted housing, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class; and
(2) Whether the person has withdrawn from his or her functions or responsibilities, or the decision-making process with respect to the specific assisted housing in question;
(3) Whether the tenant protection requirements of Section 92.253 of the HOME- ARP Regulations are being observed;
(4) Whether the affirmative marketing requirements of Section 92.351 of the HOME-ARP Regulations are being observed and followed; and
(5) Any other factor relevant to the participating jurisdiction's determination, including the timing of the requested exception.
2.6 Soft Costs to Beneficiaries. Owner or Owner’s agent shall not charge those servicing, origination, or other fees for the purpose of covering costs related to carrying out the Project to the tenant as required by and as identified in Section 92.206(d)(6) and Section 92.214(b) of the HOME-ARP Regulations. Owner or Owner’s agent may charge nominal application fees so long as it is appropriate to the type of application and does not create an undue impediment to a prospective tenant's participation in the City’s HOME-ARP Program. Owner or Owner’s agent shall not charge fees that are not customarily charged in rental housing (e.g., laundry room access fees), except that Owner or Owner’s agent may charge parking fees to tenants only if such fees are customary for rental housing projects in the neighborhood fees for services such as bus transportation or meals, as long as the services are voluntary, and fees are charged for services provided.
2.7 Security Deposits. Any security deposits collected by Owner or Owner's agent shall be kept separate and apart from all other funds of the Project in a trust account with a depository insured by the Federal Deposit Insurance Corporation, or other comparable federal deposit insurance program, and shall be held and disbursed in accordance with California law. The balance of such amount shall at all times equal or exceed the aggregate of all outstanding obligations under said account, plus accrued interest thereon.
2.8 Hazard and Liability Insurance. Owner shall at all times cause the Project to be insured against loss by fire, flood, and such other hazards, casualties, liabilities and contingencies, and in such amounts and for such periods as are reasonably acceptable to the City. All insurance policies and
8 renewals thereof shall be issued by a carrier and in a form acceptable to the City. Property insurance policies shall name the City as an additional insured, as approved by the City.
2.9 Hold Harmless. Owner and its successors in interest agree to indemnify, defend, and hold harmless the City and its agents, employees, volunteers and officers from any and all claims, losses, liabilities or causes of action (including reasonable attorney's fees) arising from or in connection with Owner's development, management, maintenance or operation of the Project; provided, however, Owner's obligations to indemnify and hold harmless shall not apply in the event and to the extent of the City's willful misconduct.
2.10 Annual Report. Owner shall file with the City an annual report no later than 120 days following the end of each calendar year. The report shall contain a certification by Owner as to such information as the City may then require including, but not limited to, the following:
(a) The substantial physical defects in the Project, including a description of any major repair or maintenance work undertaken or needed in the previous and current fiscal years. Such statement shall describe what steps Owner has taken in order to maintain the Project in a safe and sanitary condition in accordance with applicable housing and building codes.
(b) The occupancy of the Project including with respect to the eleven (11) HOME- ARP-assisted units:
(1) the verified income of each current household; and
(2) the current rent charged each household and whether these rents include utilities; and
(c) A summary of the information received from the recertification of tenants' incomes: and
(d) Other information reasonably required by the City or HUD.
2.11 City Review and Inspections.
(a) Upon not less than 48 hours' notice to Owner, and subject to the rights of tenants under their existing leases, the City may at any time during the term of this Agreement, enter and inspect the physical premises and inspect all accounting records pertaining to the development or operation of the Project. Upon request by the City, Owner shall notify occupants of upcoming inspections of their units in accordance with State Law. At a minimum, City shall be entitled to conduct completion inspections, ongoing periodic inspections, and annual inspections of the HOME-ARP funded units in accordance with the requirements of Section 92.504(d) of the HOME-ARP Regulations.
9 (b) The City may request any other information that it deems necessary to monitor compliance with requirements set forth in this Agreement. Such information shall be promptly provided by Owner.
(c) As set forth in Recital F of this Agreement, pursuant to Section 92.214(b)(1)(i) of the HOME-ARP Regulations, HUD permits the City to charge fees to cover the cost of ongoing monitoring and physical inspection of HOME-ARP projects during their period of affordability. Owner agrees to pay the actual annual cost of City monitoring activities for this project, not to exceed Five Thousand Dollars ($5,000.00) on an annual basis, to the City of Visalia for ongoing monitoring and physical inspection of the Project.
2.12 Restrictions on Sale, Encumbrance, and Other Acts.
(a) Except for any senior financing, Owner shall not make any sale, encumbrance, hypothecation, assignment, pledge, conveyance, or transfer in any form of the Project or of any of its interest therein without prior written approval of the City and must meet and conform to all requirements of Section 92.300 of the HOME-ARP Regulations.
(b) Owner shall not permit the use of the Project for any purpose other than that permitted by this Agreement without the prior written approval of the City.
(c) The City may approve a sale, transfer, or conveyance provided that all of the following conditions are met:
(1) Owner is in compliance with this Agreement, or the sale, transfer or conveyance will result in the cure of any existing violations of this Agreement;
(2) the successor-in-interest to Owner agrees to assume all obligations of Owner pursuant to this Agreement and the HOME-ARP Program;
(3) the successor-in-interest demonstrates to the City's satisfaction that it can own and operate the Project in full compliance with all HOME-ARP Program requirements; and
(4) any terms of the sale, transfer or conveyance shall not threaten the City's security or the successor's ability to comply with all HOME-ARP Program requirements.
(d) The City may grant any approval for a sale, transfer, or conveyance subject only to such terms and conditions as may be necessary to ensure compliance with HOME-ARP Program requirements.
2.13 Assignment of City Rights. The City retains the right at its sole discretion to assign all or part of its rights under this Agreement for the purpose of ensuring compliance and enforcement of Owner's duties and obligations hereunder. In addition, the City may designate an agent to act on its behalf in monitoring compliance and enforcing the provisions hereof.
10 ARTICLE 3
DEFAULTS AND REMEDIES
3.1 Event of Default. Any material breach by Owner of any representation, warranty, or covenant hereunder, which is not cured within thirty (30) days after notice thereof given by the City or, where cure is not possible within thirty (30) days, whose cure is not commenced within thirty days and diligently prosecuted to completion, shall constitute an Event of Default. Notwithstanding anything to the contrary contained herein, the City hereby agrees that any cure of any default made or tendered by one or more of Owner’s partners shall be deemed to be a cure by Owner and shall be accepted or rejected on the same basis as if made or tendered by Owner.
3.2 City's Remedies. Upon the happening of an Event of Default which continues beyond expiration of applicable notice and cure periods, the City may pursue any remedy allowed at law or in equity, including but not limited to, accelerating payment under the Note, or applying to any State court for specific performance of this Agreement and the Regulatory Agreement.
ARTICLE 4
HOME-ARP PROGRAM REQUIREMENTS
4.1 HOME-ARP Laws & Regulations. Owner shall comply with all applicable laws and regulations governing the HOME-ARP Program and the use of the HOME-ARP Loan, as set forth in 24 CFR Part 92 et seq., all as amended and in effect from time to time, including (but not limited to) the requirements set forth in the HOME-ARP Regulatory Agreement. In the event of any conflict between this Agreement and applicable laws and regulations governing the HOME-ARP Program and the use of the Loan proceeds, the applicable HOME-ARP Program laws and regulations shall govern. Owner agrees to enter into any modification of this Agreement and/or the Regulatory Agreement reasonably required by the City to attain compliance with the requirements of the HOME-ARP Program. Owner acknowledges and agrees that it has received and reviewed a copy of the regulations regarding the HOME-ARP Program in effect as of the date of execution of this Agreement.
4.2 Specific Requirements. The laws and regulations governing the HOME-ARP Program and the use of the HOME-ARP Loan include (but are not limited to) the following:
(a) Environment and Historic Preservation. Section 104(f) of the Housing and Community Residence Act of 1974 and 24 CFR Part 58, which prescribe procedures for compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4361), and the additional laws and authorities listed at 24 C.F.R. 58.5.
(b) Uniform Administrative Requirements. The requirements of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards.
(c) Architectural Barriers. The requirements of the Architectural Barriers Act of 1968 (42 U.S.C. 4l5l-4l57).
11 (d) Lead-Based Paint. The requirements of the Lead-Based Paint Poisoning Prevention Act, as amended (42 U.S.C. 4821 et seq.) and implementing regulations at 24 CFR Part 35.
(e) Relocation. The requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and similar state laws. If and to the extent that acquisition and rehabilitation of the Project results in the permanent or temporary displacement of residential tenants, homeowners, or businesses, then Owner shall comply with all applicable local, state, and federal statutes and regulations with respect to relocation planning, advisory assistance, and payment of monetary benefits. Owner shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws.
(f) Disabled Discrimination. The requirements of Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 706), and federal regulations issued pursuant thereto (24 CFR Part 8), which prohibit discrimination against the disabled in any federally assisted program.
(g) Training Opportunities. The requirements of Section 3 of the Housing and Urban Development Act of 1978, as amended, 12 U.S.C. 1701, requiring that to the greatest extent feasible opportunities for training and employment be given to lower income residents of the project area and agreements for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in, the areas of the project. Owner agrees to include the following language in all subcontracts executed under this Agreement:
“The work to be performed under this agreement is a project assisted under a program providing direct federal financial assistance from HUD and is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended 12 U.S.C. 1701. Section 3 requires that to the greatest extent feasible opportunities for training and employment be given to lower income residents of the project area and agreements for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in, the areas of the project.”
(h) Title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601-20 (Public Law 90-284) and implementing regulations at 24 CFR Part 107.
(i) Executive Order 11063 and regulations at 24 CFR Part 107.
(j) Title VI of the Civil Rights Act of 1964 (Public Law 88-352) and regulations at 24 CFR Part 107.
(k) The Age Discrimination Act of 1975, 42 U.S.C. 6101-07, and regulations at 24 CFR Part 146.
(l) Executive Order 12372 and implementing regulations at 24 CFR Part 52, regarding intergovernmental review of federal programs.
12 (m) Flood Disaster Act of 1973, 42 U.S.C. 4001, et seq.
(n) Drug Free Workplace Act of 1988, P.L. 100-690, Title V, Subtitle D.
(o) Any other Department of Housing and Urban Development regulations currently in effect or as may be amended or added in the future pertaining to the HOME-ARP Program.
(p) The Fair Housing Act (42 U.S.C. 3601-3620)(Pub. L. 90-284) as it ensures fair housing practices and prohibits housing discrimination based on race, color, religion, sex, national origin, disability, or familial status.
(q) Section 109 of the Housing and Community Development Act of l974, as amended; and the regulations issued pursuant thereto at 24 CFR Section 470.601 as it relates to prohibiting discriminatory actions in activities funded by Community Development Funds.
(r) Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086 and 12107 (Equal Employment Opportunity) and implementing regulations issued at 41 CFR Chapter 60 and Section 3 of the Housing and Urban Development Act of l968 (12 U.S.C. 1701u), as amended and implementing regulations at 24 CFR part 135 as they relate to equal employment opportunities.
(s) Executive Orders 11625 and 12432 (concerning minority business enterprise) and 12138 (concerning women's business enterprise) to encourage the use of women and minority owned businesses to the maximum extent possible.
(t) Use of debarred, suspended, or ineligible contractors or subrecipients is prohibited directly or indirectly as part of this award as set forth in 24 CFR part 5.
(u) No member, officer or employee of the organization, or its designees or agents, no member of the governing body of the locality in which the program is situated, and no other public official of such locality or localities who exercises any functions or responsibilities with respect to the program during his/her tenure or for one year thereafter, shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the loan, and Owner shall incorporate, or cause to be incorporated, in all such contracts or subcontracts a provision prohibiting such interest pursuant to the purposes of the certification.
(v) There shall be no religious worship, instruction, or proselytizing as part of, or in connection with the performance of this agreement.
(w) Davis Bacon. All contracts for new construction or rehabilitation projects with 12 or more HOME-ARP-assisted units shall comply with HUD requirements and the applicable requirements of the regulations of the Department of Labor under 29 CFR Parts 1, 3, and 5 governing the payment of wages and the ratio of apprentices and trainees to journeypersons.
13 4.3 Limitation in Use of Funds. Owner agrees that it will not use funds loaned pursuant to this Agreement, either directly or indirectly, as a contribution in order to obtain any Federal funds under any Federal programs without prior written approval of the City.
4.4 Certification Regarding Lobbying. The undersigned certifies, to the best of his or her knowledge and belief, that:
(a) No federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan, or cooperative agreement.
(b) If any funds other than federally appropriated funds have been paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL. “Disclosure form to Report Lobbying” in accordance with its instructions.
ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1 Conflict of Interest. No employee, agent, consultant, officer, elected or appointed official or member of the City has or may obtain a personal or financial interest in or benefit from Owner or the Project or in any contract or subcontract or agreement, or the proceeds thereof, relating to the Project either for themselves or for those with whom they have family or business ties, during their tenure or one year thereafter, as referenced under 24 CFR 92.356(f)(1), which provides as follows :
“Owners, Developers, Sponsors. (1) No owner, developer, or sponsor of a project assisted with HOME-ARP funds (or officer, employee, agent, elected or appointed official, or consultant of the owner, developer, or sponsor or immediate family member or immediate family member of an officer, employee, agent, elected or appointed official, or consultant of the owner, developer, or sponsor) whether private, for-profit or nonprofit (including a community housing development organization (CHDO) when acting as an owner, developer, or sponsor) may occupy a HOME- ARP-assisted affordable housing unit in a project during the required period of affordability specified in §92.252(e) or §92.254(a)(4). This provision does not apply to an individual who receives HOME-ARP funds to acquire or rehabilitate his or her principal residence or to an employee or agent of the owner or developer of a rental housing project who occupies a housing unit as the project manager or maintenance worker.”
5.2 Nondiscrimination. Owner shall not discriminate against any prospective tenant in the use, enjoyment, occupancy, conveyance, lease, sublease, or rental of any part of the Project on the basis of race, color, ancestry, national origin, religion, sex, sexual preference, age, marital status, family status, source of income, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), or any other arbitrary basis. Owner shall otherwise comply with all applicable local, state, and federal laws concerning discrimination in housing.
14 5.3 Amendment. This Agreement may be amended only by a writing signed by authorized representatives of the City and Owner; the City Manager of the City shall be authorized to act on behalf of the City.
5.4 Notice. Any notice required or authorized under this Agreement shall be effective if, and only if, in writing and if mailed or emailed, to the party in question at the address shown below:
CITY: City of Visalia
Finance Department - Housing
707 W. Acequia Avenue
Visalia, CA 93291
Email: [email protected]
Owner: RH Community Builders
Attention: Wayne Rutledge, CEO
352 W. Bedford Avenue, Suite 110
Fresno, CA 93711
Email: [email protected]
5.5 No Waiver. No failure to enforce or delay in enforcing or exercising any right or remedy available under this Agreement shall impair the exercise of such right or remedy or the exercise of a similar right or remedy on a subsequent occasion.
5.6 Severability. Should any provision of this Agreement be found invalid by a court or other body of competent jurisdiction, said invalidity or ineffectiveness shall not affect the validity of the remaining provisions which shall remain in force to the maximum extent possible.
5.7 Titles and Headings. The titles and headings in this Agreement are for convenience only and shall not be construed to affect the meaning or construction of any provision of this Agreement.
5.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
5.9 Attorneys' Fees. The prevailing party shall be entitled to receive the amount of its legal expenses, including reasonable attorneys' fees, expert legal fees and other legal costs and expenses, in the event of any legal action brought under or to enforce the provisions of this Agreement.
5.10 Signs. During the construction period, should Owner be required to place signage on the property identifying the sources of Project funding, Owner shall include verbiage stating the HOME- ARP program is providing financing for the Project.
15 IN WITNESS WHEREOF, City and Owner have executed this Agreement on the respective dates set forth below.
City:
City of Visalia
By: _________________________
Name: _______________________
Its: __________________________
Date:
Attest: _______________________
Chief Deputy City Clerk
Approved as to form:
___________________________
City Attorney
Owner:
RH Community Builders L.P., a California limited partnership
By: WRBH LLC, a California limited liability company, its General Partner
___________________________
By: Wayne Rutledge, its Manager
By: AHBH LLC, a California limited liability company, its Co-Limited Partner
________________________
By: Brad Hardie, its Manager
By: Wayne and Rena Rutledge Revocable Trust, its Co-Limited Partner
__________________________
By: Wayne Rutledge, its Trustee
16 EXHIBIT A
LEGAL DESCRIPTION FOR PROJECT PROPERTY
To be added.
17 EXHIBIT B
Scope of Work
General Description
RHCB’s proposed project includes development of 42 affordable rental housing units from the rehabilitation and conversion of the existing Majestic Motel property located at 4545 W. Noble Ave.
RHCB will acquire, develop, and operate the Majestic as an integrated supportive housing development for people experiencing homelessness. The proposed project will also provide revitalization to the Majestic Motel. Renovations will include conversion of all units to meet Housing Quality Standards.
Units will be completely renovated with a new configuration to accommodate kitchenettes. Renovations will also include new flooring, blinds, doors, cabinets, new furnishings, and fresh paint. Exterior renovations will include new paint, concrete, fencing, stair rails, signage, lightening, asphalt, landscaping, and a security system.
The proposed project includes an on-site manager, robust wrap around supportive services to assist in tenant’s long-term housing stability. On-site supportive services include providing early intervention services for issues that may jeopardize housing, such as late rental payment, hoarding, substance abuse, and other lease violations. Additional supportive services include assistance with mainstream benefits, SSI eligibility, annual housing recertification, life skills trainings, financial literacy, and connection to community resources, such as job training. The Majestic is currently being used as a RoomKey project to house those previously located at Sequoia Village while Sequoia Village is under renovation. The proposed project will serve households earning 0% - 30% of the area median income levels. This proposal would convert the Majestic Hotel’s transient lodging into 42 new housing units, adding to the supply of affordable housing withing the City.
Rents
HOME-ARP assisted units must meet High and Low HOME-ARP rent requirements. At least 20% of the HOME-ARP assisted units must be occupied by very low -income households and meet one of the following rent requirements:
1. The rent does not exceed 30% if the annua l income of a household whose income equals 50% of the AMI, as determined by HUD.
2. The rent does not exceed 30% of the household’s adjusted income. If the unit receives Federal or State project -based rental subsid y and the very low -income household pays as a contribution toward rent not more than 30% of the households adjusted income, then the maximum rent (i.e., tenant contribution plus project -based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy Program.
18 Loan Terms
The loan will be a zero percent (0 %), 20-year term loan in the amount of One Million Eight Hundred Thousand Dollars and no/100 ( $1,800,000.00). The amortized loan payments will be forgiven annually, on the anniversary of the effective date of th is agreement, contingent upon the property continuing to be used as agreed upon according to the terms of this agreement. Failure to abide by the terms of this agreement will result in the entire loan amount becoming due and payable. The HOME-ARP funds will be used during the development stage to pay for costs such as allowable development hard and soft costs under 24 CFR 92.206.
Deed Restrictions and Long-Term Use of Property
As a condition of the Loan, a Regulatory Agreement recorded against the Project for a 20-year affordability period, which will regulate eleven (11) floating residential units, as allowed pursuant to Section 92.252(j) of the HOME-ARP Regulations, within the 42-unit Project to ensure that the units are occupied by and affordable to HOME-ARP Qualifying Populations who include homeless; at-risk of homelessness; fleeing/attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking; and greatest risk of housing stability as determined by HUD persons whose income is 30 percent or less of the area median income as determined by HUD and is experiencing severe cost burden, or persons whose income is 50 percent of the area median income as determined by HUD and meets one of the conditions of “At risk of homelessness” as defined in 24 CFR 91.5(iii) for the term of the Loan. All the units, except for the manager’s unit, will also be restricted by Successor Agency Housing State Regulations pursuant to a 55-year regulatory agreement to ensure that the units are occupied by and affordable to Low and Very-Low Income Households.
Ownership Structure
The project will be owned by RH Community Builders.