HomeMy WebLinkAbout80A - HOUSING AND SUBORDINATION LOANSREQUEST FOR COUNCIL/
HOUSING AUTHORITY
ACTION
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SEPTEMBER 17, 2019
TITLE:
APPROVE AMENDED AND RESTATED
AFFORDABLE HOUSING LOANS AND
SUBORDINATION AGREEMENTS FOR
THE REHABILITATION OF
CORNERSTONE APARTMENTS
(STRATEGIC PLAN NO. 4,5)
CITY A.4NAGER
RECOMMENDED ACTION
CITY COUNCIL
u
CLERK OF COUNCIL USE ONLY:
APPROVED
❑ As Recommended
❑ As Amended
❑ Ordinance on 1� Reading
❑ Ordinance on 2nd Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
Authorize the City Manager to execute an Amended and Restated Loan Agreement with
Cornerstone Housing Partners LP (c/o Jamboree Housing Corporation) for $5,128,152 in
HOME Investment Partnerships Program (HOME) funds by consolidating and replacing ten
existing HOME Program loans in order to rehabilitate 126 units of existing affordable housing
at 805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California, subject
to non -substantive changes approved by the City Manager and City Attorney.
2. Authorize the City Manager to execute a Subordination Agreement with MUFG Union Bank,
N.A., for the City's Amended and Restated HOME Loan Agreement with Cornerstone Housing
Partners LP (c/o Jamboree Housing Corporation), subject to non -substantive changes
approved by the City Manager and City Attorney.
HOUSING AUTHORITY
Authorize the Executive Director of the Housing Authority to execute an Amended and
Restated Loan Agreement with Cornerstone Housing Partners LP (c/o Jamboree Housing
Corporation) for $2,054,327 in Housing Successor Agency funds by consolidating and
replacing thirty-three existing Housing Successor Agency loans in order to rehabilitate 126
units of existing affordable housing at 805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie
Street, Santa Ana, California, subject to non -substantive changes approved by the Executive
Director and Authority General Counsel.
2. Authorize the Executive Director of the Housing Authority to execute a Subordination
Agreement with MUFG Union Bank, N.A., for the Housing Authority's Amended and Restated
80A-1
Approve Affordable Housing Loans for the Rehabilitation of Cornerstone Apartments
September 17, 2019
Page 2
Housing Successor Agency Loan Agreement with Cornerstone Housing Partners LP (c/o
Jamboree Housing Corporation), subject to non -substantive changes approved by the
Executive Director and Authority General Counsel.
On November 20, 2018, the City Council and Housing Authority authorized the City Manager and
Executive Director of the Housing Authority to execute a commitment letter to resubordinate the
current affordable housing loans for the Cornerstone Apartments at 805, 810, 815, 816, 825, 828,
835, and 904 S. Minnie Street, Santa Ana, California, to tax-exempt multifamily housing bonds
(tax exempt bonds) in an amount not to exceed $8,700,000 in order to substantially rehabilitate
Cornerstone Apartments. The City Council and Housing Authority also authorized the City
Manager and Executive Director of the Housing Authority to execute the necessary documents to
level all rents onsite at the 50% Tax Credit Allocation Committee (TCAC) rents instead of the
existing Health and Safety Code rents. Following this approval, staff executed and provided a
commitment letter to Cornerstone Housing Partners LP c/o Jamboree Housing Corporation
(Exhibit 1).
Using the commitment letter as the City and Housing Authority's enforceable commitment,
Jamboree Housing Corporation (Jamboree) submitted an application on January 18, 2019 for
non-competitive 4% tax credits (tax-exempt bonds) to rehabilitate the Cornerstone Apartments.
Specifically, the Cornerstone Apartments at 805, 810, 815, 816, 825, 828, 835, and 904 S.
Minnie Street, in Santa Ana, California is collectively a 126-unit affordable housing project that
requires substantial repair and rehabilitation (Project). The Project was originally built in 1961.
For a single-family homeowner, when their home gets older and in need of repair, typically the
homeowner will refinance their mortgage to take out a loan to pay for the rehabilitation work on
their home. On the other hand, for a multi -family affordable housing project owner, when their
project gets older and in need of repair typically the owner will do something called "resyndicate"
by applying for additional 4% tax credits and obtaining tax-exempt bond proceeds to complete
the rehabilitation work on their rental units. The term "resyndication" is used to describe an
existing Low -Income Housing Tax Credit project that receives a new allocation of tax credits. This
can only happen after the property completes the initial 15-year compliance period for their
original tax credits. This resyndication involving the City and Housing Authority's existing
affordable housing loans is much more complicated than simply refinancing a single-family home.
The resyndication required approval by the City and Housing Authority to resubordinate existing
affordable housing loans to a new senior loan in order for the senior lender to provide their loan.
The City's existing affordable housing loans consists of ten (10) different HOME Investment
Partnerships Program (HOME) Loan Agreements and the Housing Authority's existing affordable
housing loans consists of thirty-three (33) different Housing Successor Agency Loan
Agreements. For the resyndication and rehabilitation of the project, Jamboree did not receive
any additional funds from the City or Housing Authority. Instead, Jamboree is actually paying off
$2,204,000 of the principle balance of the Housing Authority's loans. The original loan terms were
all relatively the same: 30 or 55 year term with 3% simple interest repaid through residual
80A-2
Approve Affordable Housing Loans for the Rehabilitation of Cornerstone Apartments
September 17, 2019
Page 3
receipts to the City or Housing Authority depending on the source of affordable housing funds
(HOME or Housing Successor Agency).
Following the City and Housing Authority's approval to resubordinate our existing affordable
housing loans, Jamboree received an allocation of 4% tax credits on March 20, 2019 and staff
began working with Jamboree to: 1) consolidate the forty-three (43) existing affordable housing
loans by the source of funds that had been provided by the City and Housing Authority to the
Project; 2) identify which loans would be paid off at closing by Jamboree; 3) Amend and Restate
the existing ten (10) HOME Loans; 4) Amend and Restate the existing thirty-three (33) Housing
Successor Agency Loans; and 5) finalize two Subordination Agreements with MUFG Union Bank,
N.A. (Union Bank) for the Amended and Restated HOME Loan and the Amended and Restated
Housing Successor Agency Loan.
Before discussing the Amended and Restated HOME and Housing Successor Agency Loans, it
is necessary to discuss an opportunity that arose for the City and Housing Authority to receive
additional funds during this process.
Senior Loan Debt Increase from $8,700,000 to $11,100,000
The City and Housing Authority's original commitment on November 20, 2018 was to
resubordinate the current affordable housing loans for Cornerstone Apartments to tax-exempt
multifamily housing bonds in an amount not to exceed $8,700,000 in order to substantially
rehabilitate the Project. As part of the original transaction, Jamboree then agreed to pay down
$500,000 of the existing City and Housing Authority loans at the time of bond closing.
On July 30, 2019, the City received a written request from Jamboree asking to increase the
amount of debt the City would subordinate to from $8,700,000 to $11,100,000. The request
explained that due to lower interest rates, a longer amortization period, and increased 2019 rents
published by TCAC, the Project was able to support a larger permanent loan amount than initially
anticipated. Generally, Jamboree was able to negotiate better deal terms with their senior lender
than what they originally anticipated in their initial proposal to the City in October 2018.
Specifically, Jamboree's original interest rate on the tax-exempt multifamily bonds was 5.75%.
Since then, interest rates have decreased substantially, and their senior lender decreased their
interest rate to around 4%, depending on the final closing interest rate. In addition, their senior
lender was able to offer a loan product with a 40-year amortization instead of their initial 35-year
amortization assumption. And lastly, in terms of revenue and cash flow, the 2019 TCAC rents
increased significantly from the 2018 TCAC rents in their initial underwriting assumptions.
As part of these updated terms, Jamboree has agreed to pay down $2,204,000 of the existing
Housing Authority loans at the time of bond closing. This is $1,704,000 more than originally
agreed upon by the City and Housing Authority. The remaining additional proceeds will then be
used to pay down the Project's deferred developer fee. The request for a permanent loan in the
amount of $11,100,000 assumes that the project ultimately closes at a 4% interest rate at the end
of September 2019. Should the closing interest rate increase due to macroeconomic private
• I .
Approve Affordable Housing Loans for the Rehabilitation of Cornerstone Apartments
September 17, 2019
Page 4
market activities upon which the City has no control, the amount of their loan repayment would
have to be reduced accordingly.
After receiving Jamboree's request, staff requested Keyser Marston Associates (KMA) to perform
an analysis of Jamboree's revised proposal (Exhibit 2). Their analysis concluded that
subordinating to the increased senior loan amount of $11,100,000 resulted in a greater benefit for
the City and Housing Authority as well as continued to prioritize the rehabilitation needs of the
Project. In this scenario, the City would benefit from both a larger loan pay down at closing as
well as a higher repayment out of the Project's cash flow as a result of the lower deferred
developer paid fee paid out ahead of the City's Loan. Following their analysis, KMA recommends
that the City and Housing Authority agree to the revised deal terms.
Amended and Restated Affordable Housing Loans
As previously mentioned, staff consolidated the forty-three (43) existing affordable housing loans
by the source of funds that had been provided by the City and Housing Authority to the Project
(Exhibit 7). The ten (10) HOME Loans were consolidated into one set of Amended and Restated
HOME Loan Documents and the thirty-three (33) Housing Successor Agency Loans were
consolidated into one set of Amended and Restated Housing Successor Agency Loan
Documents. Both sets of Loan Documents for each source of funds includes an Amended and
Restated:
• Loan Agreement
• Affordability Restrictions on Transfer or Property
• Deed of Trust
• Promissory Note
As a result, there are now two Loan Agreements for the Project: one Amended and Restated
HOME Loan Agreement for $5,128,152 in HOME Program funds and one Amended and
Restated Housing Successor Agency Loan Agreement for $2,054,327 in Housing Successor
Agency funds. No new funds are being provided to the Project. The Amended and Restated
HOME Loan Agreement is attached as Exhibit 3 and the Amended and Restated Housing
Successor Agency Loan Agreement is attached as Exhibit 4. Both Loan Agreements have the
following basic terms:
• $7,182,479 combined principal amount:
o $5,128,152 in HOME Program funds (not new funds)
o $2,054,327 in Housing Successor Agency funds (not new funds)
• 5% simple interest per annum;
Repayment from 50% of Residual Receipts (pro-rata with payments due in connection with
other financing provided by the City/Housing Authority) (after payment of operating
expenses, debt service, any deferred developer fee, and partnership fees to be described
in the Agreement) with the remaining 50% to be disbursed to the Developer;
Approve Affordable Housing Loans for the Rehabilitation of Cornerstone Apartments
September 17, 2019
Page 5
• Remaining principal and accrued interest due upon the 55th anniversary of the issuance of
Certificate of Occupancy and/or final building permits or earlier upon sale, refinancing or
default. On that date, the City/Housing Authority agrees to review the performance of the
property and consider in good faith any reasonable request by Jamboree to modify the
terms or extend the term of the City/Housing Authority Promissory Notes. Additionally, the
City/Authority will receive 50% of the net proceeds received from any sale or refinancing of
the Project, after payment of outstanding debt and payment in full of any deferred
developer fee and establishment of any reserves and transaction costs;
• Cost savings from the Project, if any, will be applied first to pay down the Loans, subject to
compliance with the TCAC regulations.
Regarding the two Subordination Agreements with Union Bank, the City's / Housing Authority's
total loan for the Project is less than the $11.1 million loan from Union Bank. In order for Union
Bank to provide their senior loan, they are requiring the City and Housing Authority to execute
one Subordination Agreement each for the City and Housing Authority's two Loan Agreements
that allow Union Bank to complete their underwriting and commit their private market financing.
As such, the two Subordination Agreements will allow Union Bank to commit their private market
financing for the rehabilitation of the Project. The Subordination Agreement for the City's
Amended and Restated HOME Loan Agreement is attached as Exhibit 5 and the Subordination
Agreement for the Housing Authority's Amended and Restated Housing Successor Agency Loan
Agreement is attached as Exhibit 6.
If the two Loan Agreements are not approved by City Council and the Housing Authority, then
Jamboree will have to return their allocation of 4% tax exempt bonds and the Project will not
move forward.
5% Simple Interest Instead of 3% Simple Interest
Jamboree requested that the City's interest rate be increased from 3% simple interest to 5%
simple interest.
The issue is that because the new Limited Partnership in the resyndication is assuming an
existing loan (not a new loan like a typical new construction project), for tax purposes it can be
looked at as if the new Limited Partnership is assuming the loan at much more favorable loan
terms than they could have obtained otherwise. If this is the case, it can be treated as income to
the Partnership. The Partnership never wants to have income in these types of transactions
because the Limited Partner would have to pay taxes on this income and as such this would
impact/reduce the amount of tax credit equity that they would put in the deal.
The test of whether or not the terms of the assumed loan are "favorable" and would trigger a
need to pay income on the loan is done by looking at the proposed rate for the assumed loan and
comparing it to the Applicable Federal Rate (AFR), which is the minimum market rate that the
Internal Revenue Service allows for a private loan. A comparison is then conducted between how
Approve Affordable Housing Loans for the Rehabilitation of Cornerstone Apartments
September 17, 2019
Page 6
much interest would be paid under each scenario to ensure that the interest rate on the assumed
loan is approximately equal to the interest amount one would pay over the term at the AFR rate.
The tax credit investor has calculated that the interest rate needed on the assumed City and
Housing Authority Loans would have to be at least 5% simple interest to be equal to the AFR and
not trigger a situation where the investor would have to pay taxes on "income" as a result of the
favorable financing and thereby reduce their financing/tax credit equity commitment to the
project.
Staff requested KMA to analyze this relatively unique request. KMA confirmed that the higher
interest rate is in the City's favor even though almost all affordable housing projects have soft
public loans at an interest rate in the range of 3% simple interest or less.
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal # 4 Fiscal Sustainability, Objective #
1 (maintain a stable, efficient and transparent financial environment) and Goal # 5 - Community
Health, Livability, Engagement & Sustainability, Objective # 3 (Facilitate diverse housing
opportunities and support efforts to preserve and improve the livability of Santa Ana
neighborhoods).
FISCAL IMPACT
The Residual Receipt payment schedule under the existing Loan Agreements call for the City
Loans to be repaid at the end of a 40-year term. Under the two new Loan Agreements, the City
and Housing Authority will receive approximately $2,204,000 from the resyndication at bond
closing. The $2,204,000 payment will be applied to the various sources according to the table
below: `
Tax Increment
TI/CHFA
HOME
TOTAL
(Fund 607)
(Fund 607)
(Fund 130)
Outstanding Loan Balances
as of September 24, 2019
$3,218,628.20
$946,667.19
$5,221,184.19
$9,386,479.58
Projected Allocation of
$2,204,000 Payment
$2,100,968.00
$ 0.00
$ 93,032.00
$2,204,000.00
New Loan Balances
$1,107,660.20
$946,667.19
$5,128,152.19
$7,182,479.58
Due to the nature of residual payments, future revenues cannot be estimated. However, In FY
2017-18, residual repayments received by the City/Housing Authority for the existing loans were
as follows:
. 1 m .,
Approve Affordable Housing Loans for the Rehabilitation of Cornerstone Apartments
September 17, 2019
Page 7
Program
Account
Amount
HOME
13018002-56901
$134,014.11
Tax Increment
60718002-56901
$ 84,172.36
Tax Increment/CHFA
60718002-56901
$ 24,612.54
Total
$242,799.01
The above annual receipts provides the scope of the revenues to be deferred and resubordinated
by the City and Housing Authority as a result of the recommended actions. During the 2018-19
fiscal year, Jamboree Housing did not make their annual residual repayment because of the
resyndication and their forthcoming loan payoff of $2,204,000. The City is not forgiving any of the
current debt or accrued interest, merely extending the term an additional 55 years. Jamboree is
also not receiving any new funds in support of the Project.
Steven A. Mendoza
Executive Director
Community Development Agency
APPROVED AS TTO` FUNDS AND ACCOUNTS:
Kathryn Dowfis, CPA Find r 3o el,�-
Executive Director E.4 1,01 iv
Finance and Management Services Agency
Exhibits: 1. Commitment Letter to Cornerstone Housing Partners LP c/o Jamboree Housing
Corporation
2. Analysis by Keyser Marston Associates
3. Amended and Restated HOME Loan Agreement
4. Amended and Restated Housing Successor Agency Loan Agreement
5. Subordination Agreement for the City's Amended and Restated HOME Loan
Agreement
6. Subordination Agreement for the Housing Authority's Amended and Restated
Housing Successor Agency Loan Agreement
7. List of City and Housing Authority Loans as of September 24, 2019
80A-7
INSURANCE NOT REQUIRED
WORK MAY PROCEED
MAYOR CLERK OF COUNCIL
Miguel A. Pulido r) ITC. DEC
MAYOR PRO'PEM ' L.l�1 ZO�p
Michele Martinez ® U
COUNCII.MEMBERS
P. David Benavides (�,
Vicente Sarmlento V � 0DA Iv0'
Jose Solon,o �t
Sal Tinalero
Juan Villages
November 20, 2018
CITY OF SANTA ANA
20 Civic Center Plaza • P.O. Box 1988
Santa Ana, California 92702
www.santa-ana.oro
Cornerstone Housing Partners LP
c/o Jamboree Housing Corporation
Attn: Laura Archuleta
17701 Cowan Avenue, Suite 200
Irvine, CA 92614
A-2018-280
EXHIBIT 1
CITY MANAGER
Raid Godinez 11
CITY ATTORNEY
Sonia R. Carvalho
CLERK OF THE COUNCIL
Maria D. Huizar
Re: 126 Unit Affordable Housing Apartment Project Known as Cornerstone Apartments
Located at 805 - 904 South Minnie Street, Santa Ana, California
Dear Ms. Archuleta,
On November 20, 2018, the City of Santa Ana and the Housing Authority of the City of
Santa Ana (collectively, the "City") authorized the City Manager and Executive Director
of the Housing Authority to execute a commitment letter to: 1) resubordinate the current
affordable housing loans for the Cornerstone Apartments at 805 - 904 South Minnie
Street, Santa Ana, California ("Property") to tax-exempt multifamily bonds (Bonds) in an
amount not to exceed $8,700,000 for the rehabilitation of the Property, and 2) execute
the necessary documents to level all rents onsite at the 50% Tax Credit Allocation
Committee ("TCAC") rents instead of the existing State of California Health and Safety
Code rents.
The City previously has made forty-two loans to Wakeham-Grant Apartments L.P.
("Existing Owner") in the aggregate principal and interest amount of $9,132,442 secured
by deeds of trust encumbering all or portions of the Property (individually, a "City Loan"
and, collectively, the "City Loans"). A description of each City Loan is set forth on
Exhibit "A" attached hereto. Cornerstone Housing Partners LP (the "New Owner")
desires to purchase the Property from Existing Owner, in order to obtain a new
construction and permanent tax-exempt loan (the "Senior Loan") to acquire and
substantially rehabilitate the Property, to obtain a seller carryback loan from Existing
Owner to pay a portion of the purchase price for the Property ("Carryback Loan"), to
obtain a new allocation of low income housing tax credits pursuant to Section 42 of the
Internal Revenue Code ("Tax Credits") and to assume the City Loans.
SANTA ANA CITY COUNCIL
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80A-9
EXHIBIT 1
The City now commits itself, subject to the terms of this letter, to permit the New Owner
to assume the City Loans and to subordinate the lien of the deeds of trust securing the
City Loans and the regulatory agreements encumbering the Property related to the City
Loans to the lien of the deed of trust securing the Senior Loan (the "Assumption"), but
not the Carryback Loan on the following terms and conditions:
Borrower:
Collateral:
Assumed Loan
Amount:
Non -Recourse:
Assumption
Documents:
Commitment
Expiration Date:
Additional Terms:
Cornerstone Housing Partners LP
Deed of Trust encumbering the Property subordinate to the
Senior Loan, but senior to the Carryback Loan.
Outstanding principal balance and accrued and unpaid interest
on the City Loans, less any net proceeds from the sale of the
Property to New Owner (but excluding the Carryback Loan).
The City Loans shall remain non -recourse to New Owner and
the partners of New Owner.
The form of the assumption
Agreements for the Senior Loa
and Housing Authority after the
Credits.
November 20, 2020
n
agreement and Subordination
shall be approved by the City
New Owner obtains their Tax
The City and Authority agree to subordinate the City Loans to a
maximum of $8.7 million in Bonds.
The City Loans will continue to be repaid from 50% of the
residual receipts generated by the Project.
Residual receipts will be defined as cash flow remaining after
payment of approved cash operating expenses, Bond. debt
service, repayment of the deferred Developer Fee, and payment
of approved Limited and General Partner asset management
fees.
100% of the Project's cash flow after payment of operating
expenses and Bond debt service will be allocated to repaying
the deferred Developer Fee.
The payment of Limited Partner asset management fees will
terminate at the end of 15 years.
FOOMMU1
iacua:ISI
The rents may be increased at the Property up to 50% of Area
Median Income. Prior to the levying of any rent increase,
Jamboree will provide a minimum 60-day notice instead of the
statutory 30-day notice.
This Commitment contains the entire understanding between New Owner and the City
with respect to the Assumption, supersedes all prior oral or written communications, and
may,not be modified or waived except in writing, and signed by the party to be bound
thereby. This Commitment and all Assumption documents shall be governed by
California law. This Commitment is personal to New Owner and is not assignable or
transferable by New Owner. The fulfillment of this Commitment is subject to the
approval of various Subordination Agreements and Amendments to the Loan
Agreements by City Council and the Housing Authority.
If you have any questions or require any additional information regarding this
Commitment, please contact Judson Brown, Housing Division Manager, by telephone at
(714) 667-2241 or by e-mail at ibrown(a.santa-ana.orc.
Sincerely,
Raul Godi ez II
City Manager
City of Santa Ana
Maria D. Huizar
Clerk of the Council
Maria Huizar
Recording Secretary
Steven A. Mendoza
Executive Director
Housing Authority of the City of Santa Ana
80A-11
80A-12
EXHIBIT 2
ADVISORS IN:
Real Estate
Affordable Housing To:
Economic Development
BERKELEY
A. Jerry Keyser
From:
Timothy C. Kelly
Debbie M. Kern
David Doezema
Kevin Feeney
Date:
Los ANOELES
Kathleen H. Head
James A. Rabe
Subject:
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz
0
KEYSER MARSTON ASSOCIATES.
ADVISORS IN PUBLIC/PRIVATE REAL ESTATE DEVELOPMENT
MEMORANDUM
Judson Brown, Housing Division Manager
City of Santa Ana
Kathleen Head
August 26, 2019
Cornerstone Apartments: Updated Resyndication Proposal
At your request, Keyser Marston Associates, Inc. (KMA) evaluated the August 14, 2019
SAa
Paul C.. Marra proposal submitted by Jamboree Housing Corporation (JHC) for the Low Income Housing
Tax Credit (Tax Credit) resyndication of the 127-unit Cornerstone Apartments (Project).
The purpose of the KMA analysis is to evaluate the JHC request to modify the
subordination terms associated with the loans that were provided to the Project by the
City of Santa Ana (City) and the Housing Authority of the City of Santa Ana (Authority).
BACKGROUND STATEMENT
In 2001 and 2003, the City and Authority provided 42 loans to a partnership that used
the loans to fund a portion of the acquisition and rehabilitation costs associated with
the Project (City Loan). As of November 2018, the City Loans were subordinated to in
$3.95 million in existing Bond debt.
In November 2018 the City and Authority approved the JHC resyndication proposal. As
part of the resyndication, the City and Authority agreed to the following:
1. JHC is required to prepay $500,000 of the City Loan's principal balance; and
2. The remaining principal and interest balance of the City Loan is subordinated to
$8.7 million in newly issued Bonds.
500 SOUTH GRAND AVENUE, SUITE 1480�- LOS ANGELES, CALIFORNIA 90071: PHONE 213.622.8095
W W W.KEYSERMARSTON.COM
80A-13
1908006.SNA:KHH
19190.017.003
EXHIBIT 2
Judson Brown, City of Santa Ana August 26, 2019
Cornerstone Apartments: Updated Resyndication Proposal Page 2
On August 14, 2019, JHC submitted a proposal to the City and Authority to modify the
agreed upon terms in the following ways:
1. JHC would prepay $2,204,000 of the principal balance on the City Loan; and
2. The remaining principal and interest balance of the City Loan would be
subordinated to $11.1 million in newly issued Bonds.
The August 14, 2019 JHC proposal is based on the following financial assumptions:
1. The Bond amount increased by $2.4 million based on the following changes to
the underwriting terms:
a. The mortgage interest rate decreased from 5.75% in November 2018 to
4.0% in August 2019.
b. The amortization period was increased from 35 years to 40 years.
2. The Developer Fee to be paid to JHC remains unchanged at $2,158,000.
However, the Developer Fee amount to be deferred and then repaid out of
Project cash flow was reduced from $1,050,432 to $296,204.
ANALYSIS
The KMA analysis evaluates the following:
1. The changes in the Project's development cost estimate;
2. The increase in Bond proceeds;
3. The viability of reverting to the affordable rent calculation methodology imposed
by California Health and Safety Code (H&SC) Section 50053;
4. The allocation of the additional Bond proceeds; and
5. The repayment of the City Loan in nominal and net present value terms.
A summary of the KMA analysis follows this memorandum. The detailed cash flow
projections are presented in Appendices A and B.
1908006.SNA:KHH
19190.017.003
EXHIBIT 2
Judson Brown, City of Santa Ana August 26, 2019
Cornerstone Apartments: Updated Resyndication Proposal Page 3
Development Cost Estimate
The November 2018 and August 2019 development cost estimates are summarized in
the following table:'
November
August 14,
Difference
2018
2019
Property Acquisition
$17,560,001
$17,500,001
($60,000)
Hard Construction Costs
8,274,250
8,449,522
175,272
Soft Costs
2,104,688
2,605,980
501,292
Developer Fee
2,158,000
2,158,000
0
Financing Costs
1,461,965
1,594,215
132,250
Total Development Cost
$31,558,904
$32,011,718
$748,814
As can be seen in the preceding table, the 1HC development cost estimate has increased
by approximately $749,000. The largest cost increase is $368,000, and it is related to
the JHC decision to temporarily relocate tenants while their units are being rehabilitated
rather than attempting to undertake the work while the tenants remain in residence.
The net Tax Credit equity being received by the Project increased by approximately
$667,000 between November 2018 and August 14, 2019. The additional proceeds are
being used to fund a portion of the increased development costs.
Bond Proceeds
Based on the interest rate reduction, the five year increase in the amortization period,
and the use of 2019 Orange County household income information, the Bond proceeds
to be received by the Project have increased by $2.4 million. These additional Bond
funds are proposed to be used for the following purposes:
1. A $1,704,000 additional prepayment of the City Loan's principal balance will be
made. This brings the total prepayment amount to $2,204,000.
'The proposed $1,704,000 million in additional City Loan principal prepayment is not included in the
comparative cost estimate. The proposed additional prepayment is analyzed separately.
1908006.SNA:KHH
19190.017.003
EXHIBIT 2
Judson Brown, City of Santa Ana August 26, 2019
Cornerstone Apartments: Updated Resyndication Proposal Page 4
2. The deferred Developer Fee amount will be reduced by $806,543.
Affordable Rent Standards
In November 2018 the City and Authority agreed to modify the affordability covenants
to allow for the use of Tax Credit rents. During the intervening period, the Bond interest
rate has been reduced, the amortization period has been extended by five years, and
the 2019 Orange County incomes have gone into effect. The combination of these
factors increases the supportable Bond funding to $11.1 million.
The estimated impact created by reverting to the H&SC Section 50053 rents along with
the current underwriting standards is presented in the following table:
Income
Gross Rent $1,451,200
Miscellaneous Income 18,100
Vacancy & Collection Allowance @ 5% (73,500)
Effective Gross Income (EGI) $1,395,900
Operating Expenses ($898,500)
Stabilized Net Operating Income $497,400
Debt Service Coverage Ratio 1.15
Income Available for Debt Service $432,500
Supportable Mortgage @ 4% Interest $8,623,000
Using the current underwriting standards and the H&SC Section 50053 rents generates a
supportable Bond issue of approximately $8.7 million. This is approximately $2.48
million less than the Bond supported using Tax Credit rents. In other words, the use of
H&SC Section 50053 rents wipes out the increase in the supportable Bond issue that
was generated by the current underwriting standards.
If the City and Authority choose to revert to the H&SC Section 50053 rents, the
prepayment of the City Loan will need to remain at the previously agreed upon amount
of $500,000. In addition, the deferred portion of the Developer Fee will need to
1908006.SNA:KHH
19190.017.003
EXHIBIT 2
Judson Brown, City of Santa Ana August 26, 2019
Cornerstone Apartments: Updated Resyndication Proposal Page 5
increase back to approximately $1.1 million. Given that 100% of the deferred Developer
Fee must be recouped prior to the commencement of any residual receipts payments,
the increase in the deferred amount would postpone the repayment of the City Loan.
Allocation of Additional Bond Proceeds
Under the current proposal JHC will obtain $2.4 million in additional Bond funds. As
proposed these funds will be allocated to reduce the amount of the Developer Fee that
must be deferred, and to increase the amount that will be prepaid on the City Loan.
The issue from the City and Authority perspective is how these additional funds should
be allocated between the City Loan repayment and the upfront Developer Fee payment.
The KMA analysis of the allocation proposed by JHC is presented in the following table:
November
August 14,
% Share of
2018
2019
Increase
Developer Fee
Total Developer Fee
$2,158,000
$2,158,000
(Less) Deferred Developer Fee
(1,050,432)
(243,889)
32%
Upfront Developer Fee
$1,107,568
$1,914,111
City Loan Prepayment
$500,000
$2,204,000
68%
As indicated in the preceding table, the approximately 68% of the increased Bond funds
are being allocated to prepayment of the City Loans, while 32% of the increased Bond
funds are being used to reduce the amount of Developer Fee that will be deferred. It is
important to note that as the deferred amount of the Developer Fee decreases, the
proceeds available to repay the City Loan increases.
City Loan Repayment
The outstanding principal and interest balance of the City Loan is comprised of the
following components:
1908008.SNA:KHH
80A-1 19190.017.003
Judson Brown, City of Santa Ana
Cornerstone Apartments: Updated Resyndication Proposal
EXHIBIT 2
August 26, 2019
Page 6
Outstanding Principal Balance $6,885,972
Accrued but Unpaid Interest:
Loan inception through June 27, 2018 2,246,469
June 28, 2018 through August 31, 2019 Z 243,367
Total Outstanding City Loan Balance $9,375,808
The cash flow projections for the November 2018 structure are presented in Appendix A
and the flow projections for the currently proposed structure are presented in Appendix
B. The results can be summarized as follows:
2018
2019
Difference
Nominal Dollar Repayment
Upfront Payment
$500,000
$2,204,000
$1,704,000
Sum of Repayment (55 Years)
1,792,000
7,632,000
5,840,000
Total Nominal Dollar Repayment
$2,292,000
$9,836,000
$7,544,000
Net Present Value of Repayment
$542,000
$2,683,000
$2,141,000
Outstanding Loan Balance (Yr 55)
$18,202,000
$10,902,000
($7,300,000)
CONCLUSIONS/RECOMMENDATIONS
Based on the results of the preceding analysis it is KMA's conclusion that the proposed
restructuring terms serve the best interest of the City, the Authority and JHC. It is
therefore our recommendation that the City and the Authority should approve the
transaction modifications currently being proposed by JHC.
KMA also offers the following transaction structuring recommendations:
1. The City Loan should be subordinated to a maximum of $11.1 million in Bonds.
1 This amount is provided for context purposes only. The actual amount will need to be calculated on the
day the Bond transaction closes.
1908006.SNA:KHH
19190.017.003
FOODINFOO
Judson Brown, City of Santa Ana
Cornerstone Apartments: Updated Resyndication Proposal
2.
3
4.
The following should occur concurrent with the Bond closing:
EXHIBIT 2
August 26, 2019
Page 7
a. The $2,204,000 City Loan prepayment should be due and payable; and
b. The outstanding principal and interest balance of the City Loan should be
established.
The outstanding principal balance of the City Loan should continue to carry 3%
simple interest.
The City Loans should continue to be repaid from 50% of the residual receipts
generated by the Project.
a. Residual receipts should be defined as cash flow remaining after payment
of approved cash operating expenses:
i. Bond debt service;
ii. Repayment of the $243,889 in deferred Developer Fee; and
Ill. Payment of approved Limited and General Partner asset
management fees which are set at $7,500 and $20,000 per year,
respectively.
b. To comply with IRS timing regulations, 100% of the Project's cash flow
after payment of operating expenses and Bond debt service will need to
be allocated to repaying the deferred Developer Fee.
C. The repayment of the seller carryback loan should not be treated as a
Project cost. Instead, the repayment should be derived solely from JHC's
50% share of the Project's residual receipts.
1908006.SNA:KHH
19190.017.003
80A-19
EXHIBIT 2
APPENDIX A
55-YEAR CASH FLOW PROJECTION
NOVEMBER 2018 ANALYSIS
1908006.SNA:KHH
19290.017.003
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80A-27
EXHIBIT 2
APPENDIX B
55-YEAR CASH FLOW PROJECTION
AUGUST 14, 2019 PROPOSAL ANALYSIS
1908006.SNA:KHH
19190.017.003
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80A-35
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
AMENDED AND RESTATED
HOME LOAN AGREEMENT
by and between the
CITY OF SANTA ANA
M.1
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
Dated: September 17, 2019
80A-37
EXHIBIT 3
AMENDED AND RESTATED LOAN AGREEMENT
HOMEPROGRAM
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement")
dated, for identification purposes only, as of September 17, 2019, is made and entered into
by and between the City of Santa Ana, a charter city and municipal corporation (referred
to herein as "City") and CORNERSTONE HOUSING PARTNERS LP, a California
limited partnership, with reference to the following:
RECITALS:
A. City has received an allocation of funds from the United States Department of
Housing and Urban Development ("HUD") under the HOME Investment Partnerships
Program (the "HOME Program") (42 U.S.C. § 12701, et seq.,) to be used in accordance
with applicable statutory requirements and regulations (the "HOME Regulations") (24
CFR Part 92);
B. Among the purposes of the HOME Program are (1) to expand the supply
of decent, safe, sanitary, and affordable housing, with primary attention to rental housing,
for very low-income and low-income Americans; and (2) to provide participating
jurisdictions, on a coordinated basis, with the various forms of federal housing assistance,
including capital investment, mortgage insurance, rental assistance, and other federal
assistance, needed (a) to promote the development of partnerships among the federal
government, states and units of general local government, private industry, and nonprofit
organizations able to utilize all available resources to provide more of such housing, and
(b) to expand the capacity of nonprofit Community Housing Development Organizations
to develop and manage decent, safe, sanitary and affordable housing;
C. Developer is the owner of that certain real property located at 805, 810, 815,
816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California and commonly referred
to as the Cornerstone Apartments, and legally described in Exhibit A attached hereto and
incorporated herein by reference ("Property").
D. The City of Santa Ana ("City") and Wakeham-Grant Apartments, L.P. (the
"Original Developer") previously entered into the HOME Loan Agreements recorded in
Official Records of Orange County and the Owner Participation Agreements (collectively,
"HOME Loan Agreements") described in Exhibit G.
E. The purpose of said HOME Loan Agreements was to assist with the
rehabilitation of a 126-unit residential housing development on the Property ("Project").
F. In connection with the Original Developer's sale of the Property to
Developer (the "Developer Sale"), Original Developer and Developer desire to enter into
that certain Assignment and Assumption Agreement (HOME Loan) by and between the
Original Developer and the Developer to effectuate the assignment of the HOME Loan
Agreements to Developer (the "Assignment"), and the City has consented to such
Developer Sale and Assignment.
2
EXHIBIT 3
G. In connection with the Assignment, the parties desire to amend and restate
said HOME Loan Agreements in order to: restate the terms of the HOME Loan
Agreements; extend the Term of the HOME Loan Agreements, and to set all affordable
rents at the Project based on Tax Credit Allocation Committee ("TCAC") rents, instead of
the existing State of California Health and Safety Code rents, upon the termination of the
HOME Compliance Period.
H. On November 20, 2018, the City Council authorized the City Manager to
execute a commitment letter to resubordinate the HOME Loan Agreements for the
Cornerstone Apartments to tax-exempt multifamily bonds in an amount not to exceed
$8,700,000. The City Council also authorized the City Manager to level all rents onsite at
the 50% TCAC rents instead of the existing Health and Safety Code rents. No new HOME
Program funds are being provided to the Project.
I. On September 17, 2019, the City Council authorized the resubordination of
the HOME Loan Agreements for the Cornerstone Apartments to a $17,250,000
construction loan, which will be reduced to $11,100,000 in connection with the conversion
of the construction loan to a permanent loan.
J. The Developer has received a new allocation of 4% low-income housing
tax credits in order to resyndicate and recapitalize the Project and rehabilitate the 126
affordable rental units, as is typical after the 15 year TCAC compliance period.
K. This Agreement and all of its attachments shall be enforceable by
City in accordance with the terms thereof. Each of this Agreement, the Affordability
Restrictions on Transfer of Property, the City/HOME Loan Note and the City/HOME
Deed of Trust provide a means of enforcement by the City if Developer is in breach of its
obligations hereunder and thereunder, including liens on the Property, use and deed
restrictions and covenants running with the land [24 CFR 92.504 (c) (13)].
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, City and Developer agree as follows:
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Project Documents, unless otherwise
expressly defined, are defined where first used in this Agreement and/or as set forth in
this Article 1.
"Affordable Housing" means housing operated in accordance with the
requirements of 24 CFR 92.252 and the rents governed by HUD.
"Affordability Restrictions on Transfer of Property" means that
certain document affecting real property benefiting the City, attached hereto as Exhibit F.
"Affordable Rent" means the monthly rents that are set forth in more detail
in Section 7 of this Agreement.
EXHIBIT 3
"Building Permit" means the building permit(s) issued by City and
required for the construction, if any.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 31.
"Certificate of Completion" has the meaning set forth in Article 17.
"CHDO" means Community Housing Development Organization
"City" means the City of Santa Ana, California, a charter city and
municipal corporation.
"City/HOME Loan" means the loan to be made to Developer by City
from HOME funds pursuant to Article 5 of this Agreement.
"City/HOME Loan Deed of Trust" means the deed of trust encumbering
the Property, in the form attached hereto as Exhibit D, to be executed by Developer
pursuant to Section 5.13.2 in order to secure the City/HOME Loan Note.
"City/HOME Loan Note" means that certain promissory note in the
original principal amount of FIVE MILLION, ONE HUNDRED, TWENTY-EIGHT
THOUSAND, ONE HUNDRED AND FIFTY-TWO DOLLARS ($5,128,152), in the
form attached hereto as Exhibit E, and to be executed by Developer in favor of City to
evidence the obligation of Developer to repay the City/HOME Loan.
"Close of Escrow" shall mean the date upon which the City/HOME Loan
Deed of Trust is recorded in the Official Records of the County.
"Closing Statement" means the final statement of Developer's
Escrow account for the purchase and sale of the Property pursuant to the Purchase Contract.
"County" means the County of Orange, California.
"Developer" means CORNERSTONE HOUSING PARTNERS LP, a
California limited partnership, its successors and assigns.
"Developer's Representative" shall mean the President of
the Managing General Partner of Developer or his/her designee.
"Escrow Holder" means First American Title Insurance Company,
18500 Von Karman Avenue, Suite 600, Irvine, CA 92612.
"Event of Default" has the meaning set forth in Section 20.1.
EXHIBIT 3
"Executive Director" means the Executive Director of the Community
Development Agency, or his/her designee.
"Extremely Low Income" an adjusted income which does not exceed
thirty percent (30%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD..
"General Partner(s)" means the General Partners of Developer,
Cornerstone Housing Partners LP, and their respective successors and assigns.
"Governmental Authority" means any governmental or quasi
governmental agency, board, bureau, commission, department, court, administrative
tribunal or other instrumentality or authority, and any public utility.
"Hazardous Materials" means flammable materials, explosives,
radioactive materials, hazardous wastes, toxic substances and similar substances and
materials, including all substances and materials defined as hazardous or toxic wastes,
substances or materials under any applicable law, including without limitation the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et sue., and the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. §§ 9601, et seq., as amended.
"HOME Compliance Period" is the 15 year period applicable only to the
original HOME loans provided to the Project. In cases where the initial HOME
Compliance period was established for thirty (30) years, the City will follow the 15 year
HOME Compliance period for HOME rehabilitation projects [24CFR 92.252 (e)]. The last
HOME Compliance period from the HOME Loan Agreements will end on December 23,
2019.
"HOME Program" has the meaning set forth in Recital "A" above.
"HOME Regulations" has the meaning set forth in Recital "A" above.
"HUD" means the United States Department of Housing and Urban
Development and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter
comprising any portion of the Property, including, without limitation, landscaping, trees
and plant materials; and offsite improvements (including, without limitation, streets,
curbs, storm drains, and adjacent street lighting).
"Indebtedness" of a person means (a) all indebtedness for borrowed
money, (b) notes payable and drafts accepted representing extensions of credit, whether
or not representing obligations for borrowed money, (c) any obligation for the purchase
of property or services in excess of $10,000 in the aggregate that is (i) deferred for more
than six (6) months, or (ii) evidenced by a note or similar instrument, and ( d) all recourse
EXHIBIT 3
and all non -recourse indebtedness secured by any Lien on any property or asset of such
person (whether or not assumed by such person).
"Indemnitees" has the meaning set forth in Section 14.5.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
judgments, injunctions, decrees or awards of the United States or any state, county,
municipality or other Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any lien or security
interest).
"Limited Partner" means the Limited Partners of Developer pursuant to
the Partnership Agreement, and their successors and assigns.
"Loan Documents" means, collectively, this Agreement, the City/HOME
Loan Note, the City/HOME Deed of Trust, the Affordability Restrictions on
Transfer of Property, and any other agreement, document, or instrument that the
City requires in connection with the execution of this Agreement or from time to
time to effectuate the purposes of this Agreement.
"Low Income" means an adjusted income which does not exceed eighty
percent (80%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD.
"Median Income for the Area" means the median income for the Orange
County, California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Loan Documents as "Area Median Income" or "AMP'.
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership dated September 1, 2019, as said Partnership Agreement may be
amended from time to time.
"Permitted Encumbrances for the Affordable Housing Restrictions"
means, collectively, the Senior Loan Deed of Trust and all other title exceptions and
limitations with respect to the Property hereafter approved by the Executive Director in
writing.
"Permitted Encumbrances for the City Loan Deed of Trust"
means, collectively, the Senior Loan Deed of Trust and all other title exceptions and
limitations with respect to the Property hereafter approved by the Executive Director in
writing.
"Project" means the acquisition and new construction -of the Property by
Developer pursuant to this Agreement.
EXHIBIT 3
"Project Budget" means the line -item budget for the Project
attached hereto as Exhibit C, as modified from time to time in accordance with this
Agreement.
"Project Costs" means all costs of any nature incurred in connection with
the Project in accordance with generally accepted accounting principles.
"Property" means, collectively,the Properties that are located at 805 S.
Minnie St, 810 S. Minnie, 815 S. Minnie St, 816 S. Minnie St., 825 S. Minnie St.,
828 S. Minnie St., 835 S. Minnie St., and 904 S. Minnie St, within the City of Santa
Ana, and is more fully described in the "Legal Description" of the Property attached
hereto as Exhibit A and incorporated herein by reference.
"Senior Lender" means MUFG Union Bank, N.A. or any other holder of
the Senior Loan Note(s) or any refinancing of the Senior Loan Note(s).
"Senior Loan" shall mean the senior loan being made by Senior Lender
concurrent to the City Loan for payment of a portion of the acquisition and new
construction costs, and shall include any subsequent loan that refinances the initial Senior
Loan.
"Senior Loan Deed of Trust" means the deed of trust securing the
Senior Loan by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement
governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and
any other agreement, document or instrument that the Senior Lender requires in
connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the
Senior Loan from Senior Lender.
"Term" the terms and conditions contained herein shall remain in effect
for fifty-five (55) years. The Affordability Restrictions on Transfer of Property shall also
remain in effect for fifty-five (55) years.
"Very Low Income" means an adjusted income which does not exceed
fifty percent (50%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD.
1.2 Singular and Plural Terms. Any defined term used in the plural in this
Agreement or any other City Loan Document shall refer to all members of the relevant
class and any defined term used in the singular shall refer to any number of the members
of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement or any
Loan Document shall include such document both as originally executed and as it may
from time to time be modified. References herein to Articles, Sections and Exhibits shall
EXHIBIT 3
be construed as references to this Agreement unless a different document is named.
References to subparagraphs shall be construed as references to the same Section in
which the reference appears. The term "document" is used in its broadest sense and
encompasses agreements, certificates, opinions, consents, instruments and other written
material of every kind. The terms "including" and "include" mean "including (include)
without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement,
as now existing and as the same may from time to time be modified, are incorporated
herein by this reference.
AMENDMENT AND RESTATEMENT
This Agreement amends, restates and supersedes in their entirety the HOME Loan
Agreements.
SCOPE OF WORK/ PROJECT BUDGET
Developer shall comply with this Section until the Certificate of Completion is
issued.
A "Scope of Work" for the Property is attached hereto as Exhibit B. Any change
to the Scope of Work requested by the Developer, which would result in a change
to the Project Budget in excess of ten percent (10%) of any individual line item or in
excess of five percent (5%) of the aggregate budget, shall be subject to the prior written
approval of the Executive Director.
A line -item budget for the Project, including a summary statement of sources and
uses of funds, is incorporated into Exhibit C (the "Project Budget"). Any material change
to the Project Budget in excess of ten percent (10%) of any individual line item or in
excess of five percent (5%) of the aggregate budget shall be subject to the prior written
approval of the Executive Director which if not granted or denied within five (5)
Business Days, shall be deemed approved; provided, however, that in all events,
Developer shall at all times obtain and maintain all required permits and approvals from
the City's Planning and Building Agency. Notwithstanding the foregoing, the City's
approval of a change order shall not be required unless the approval of the Senior Lender
is required with respect to such change order.
4. [RESERVED]
5. LOANS
A. CITY LOAN:
1. Amount and Purpose. Subject to the terms and conditions of this Agreement,
City agrees to make a loan of HOME funds to Developer in the principal amount of up to
FIVE MILLION, ONE HUNDRED, TWENTY-EIGHT THOUSAND, ONE HUNDRED
AND FIFTY-TWO DOLLARS ($5,128,152) (the "City/HOME Loan") for the
EXHIBIT 3
rehabilitation of the Property. No new HOME funds are being provided to the project.
The Loan consolidates nine existing HOME loans for the purpose of enabling the
Developer to resyndicate and rehabilitate the Property.
2. City/HOME Note and Deed of Trust. The City/HOME Loan shall be
evidenced by the City/HOME Loan Note in the form attached hereto as Exhibit E. The
City Loan shall be secured by the City/HOME Loan Deed of Trust in the form attached
hereto as Exhibit D. The City/HOME Deed of Trust shall be a deed of trust encumbering
the Property, subordinate to the Senior Loan(s) made to Developer and the Senior Loan
Documents.
3. City/HOME Loan Terms. The terms and conditions of the City/HOME
Loan are as set forth in the City/HOME Loan Note which is a residual receipts note.
6. CONDITIONS TO RETAIN EXISTING LOANS
Developer shall comply with this Section until the Certificate of Completion is issued.
6.1 Conditions Precedent. City's obligation to provide the Loan Amount is subject to
the satisfaction, or waiver by the Executive Director, of the following conditions
precedent:
(a) Loan Documents. Developer shall have delivered to the
Escrow Holder, signed by the authorized officer or officers of Developer, with such
signature(s) acknowledged where necessary, each of the following documents:
(i) This Agreement;
(ii) The City/HOME Loan Note;
(iii) The City/HOME Deed of Trust; and
(iv) The Affordability Restrictions on Transfer of Property.
(b) Title Insurance. City shall have received an LP-10 ALTA Lender's
loan policy of title insurance (2006 edition), or evidence of a commitment therefore
satisfactory to City, issued by First American Title Insurance Company and in form and
substance satisfactory to City, together with all endorsements and binders required,
naming City as the insured, in a policy amount of not less than the City/HOME Loan
Amount, showing Developer as the fee owner of the Property and insuring the
City/HOME Deed of Trust to be a valid lien on the Property. This Agreement, the
City/HOME Loan Note, and City/HOME Deed of Trust shall be subordinate to the Senior
Loan Note and Senior Loan Deed of Trust.
(c) Affordability Restrictions on Transfer of Property. Developer
shall have delivered to the Escrow Holder, in the form attached hereto as Exhibit F, the
Affordability Restrictions on Transfer of Title pursuant to which, among other things,
Developer agrees that the Property shall be used only for decent, safe, sanitary and
EXHIBIT 3
affordable rental housing pursuant to the affordability requirements of Code of Federal
Regulations ("CFR") section 92.252 or 92.254 and California Health and Safety Code
("H&S") sections 50052.5, as applicable.
(d) Documents Recorded. This Agreement, the City/HOME Loan Deed
of Trust and the Affordability Restrictions on Transfer of Property shall have been
recorded in the Official Records of the County. This Agreement, and the City/HOME
Loan Deed of Trust shall be subordinate to the Senior Loan Note and the Senior Loan
Deed of Trust.
(e) Request for Notice. For the benefit of City, Escrow Holder shall
have recorded a request for notice of default of the Senior Loan (the "Request for Notice
of Default").
(f) Insurance. City shall have received evidence satisfactory to the City
Attorney that all of the policies of insurance required by Section 19 of this Agreement are
in full force and effect.
(g) Representations and Warranties. The representations and
warranties of Developer contained in this Agreement and the other Loan Documents shall
be correct in all material respects as of the Close of Escrow as though made on and as of
that date, and if requested by the Executive Director, City shall have received a certificate
to that effect signed by Developer's Representative.
(h) No Default. No Event of Default by Developer shall have occurred,
and no event shall have occurred which, with the giving of notice or the passage of time
or both, would constitute an Event of Default by Developer under this Agreement, and if
requested by the Executive Director, City shall have received a certificate to that effect
signed by Developer's Representative.
6.3 Termination for Failure of Condition. If (a) any of the conditions set forth
herein are not timely satisfied or waived by the Executive Director following the
expiration of any applicable notice and cure period, and (b) City is not in default under
this Agreement, City may terminate this Agreement without any further liability on its
part by giving written notice of termination to Developer. Upon the giving of such notice,
all principal, interest and other amounts owing under the City/HOME Loan Note shall be
immediately due and payable, regardless of any other specified due date.
6.4 IReserved.]
6.5 [Reserved.]
6.6 IReserved.]
6.7 [Reserved.]
6.8 Other Terms and Conditions of Loan
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EXHIBIT 3
A. The City/HOME Loan Note shall become immediately due and payable,
in the event of any of the following:
(1) violation of any of the use covenants and restrictions contained in
this Agreement after the expiration of any applicable notice and cure
periods;
(2) an Event of Default by Developer which is not timely cured after
expiration of any applicable notice and cure periods pursuant to the
terms of this Agreement.
6.9 Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges,
(b) all recording fees and charges on any document recorded pursuant to this Agreement,
and (c) the premium for the title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
7.1 Use Covenants and Restrictions
A. Developer agrees and covenants, which covenants shall run with the land and bind
Developer, its successors, its assigns and every successor in interest to the Property that
Developer will make all rental units on the Property available to very low-income households
(50% Area Median Income) at rents affordable to such households for fifty-five (55) years
from the issuance of the Certificate of Completion.
B. The Project shall consist of one -hundred, twenty-six (126) units, including one (1)
on -site manager's unit.
C. Rental increases shall be in conformance with federal and state law. The City
shall require that the units remain affordable, with rents calculated based on assumed
household size at the same income levels
D. Developer must have a written lease between tenant and owner for a period of at
least one year, unless a shorter period is mutually agreed upon. Leases must be consistent
with the HOME Program regulations at 24 CFR section 92.209(g).
7.2 Affordability Levels/Unit Mix:
All affordable rents in the Project shall be governed by the rents published annually by
the California Tax Credit Allocation Committee for households at 50% Area Median
Income upon the termination of the initial HOME Compliance Period, as applicable.
Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Housing
Authority of the City of Santa Ana publishes the Utility Allowance Schedule.
7.3 Rent Increases: On an annual basis, the City shall provide Developer with the
maximum allowable schedule of rents for the Property in accordance with changes in
allowable rent and income tables published by the California Tax Credit Allocation
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07.`11 m,
Committee (TCAC). In no event can Developer charge any tenant more than such amount.
The City will make all best efforts to provide Developer with the maximum allowable
schedule of rents within no more than 30 calendar days after the date TCAC publishes the
allowable rent and income tables.
7.4 Prohibited Fees. The Developer and subsequent owner is prohibited from charging
fees that are not customary, consistent with HOME Regulations 24 CFR section
92.504(c)(3)(xi). The Developer and subsequent owner can charge reasonable application
fees to prospective tenants; other fees only to the extent that they are reasonable and
customary for the project area; and fees for services provided to tenants, provided that these
services are not mandatory.
7.5 Maintenance of the Property. Solely at Developer's expense, Developer agrees to
maintain the Property in a clean and orderly condition and in good condition and repair and
keep the Property free from any accumulation of debris and waste materials (reasonable
wear and tear excepted). If at any time Developer fails to maintain, or cause to be
maintained, the Property as required by this section, and said condition is not corrected after
the expiration of a reasonable period of time not to exceed thirty (30) days from the date of
written notice from the City, unless such condition cannot reasonably be cured within thirty
(30) days, in which case Developer shall have such additional time as reasonably necessary
to complete such cure, the City may perform the necessary maintenance and Developer shall
pay all reasonable costs incurred for such maintenance. The City shall inspect the Property
annually after the date of issuance of the Certificate of Completion as described in Article 17
of this Agreement. During the affordability period, the Property must meet all applicable
State and local codes. The Property must be free of all health and safety defects during the
affordability period.
7.6 Obligation to Refrain from Discrimination. Developer covenants and agrees for
itself, its successors, its assigns and every successor in interest to the Property or any part
thereof, that there shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, religion, sex, mental or physical disability, marital
status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure
or enjoyment of the Property nor shall Developer itself or any person claiming under or
through him establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall
run with the land and shall remain in effect for the term of this Agreement.
7.7 CHDO Provisions. Developer shall maintain CHDO (Community Housing
Development Organization) status for the term of this Agreement and the HOME
Regulatory Agreement in accordance with 24 CFR 92. Developer agrees to provide
information as may be requested by the City to document its continued compliance,
including but not limited to an annual board roster and certification of continued
compliance.
Developer will create and follow a tenant participation plan, as required in 24 CFR 92.303.
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.O A ' 46
EXHIBIT 3
The provisions of this Section 7.7 shall not apply in the event of a foreclosure of the
Property or transfer in lieu of foreclosure. In the event of a foreclosure, or acceptance of a
deed in lieu of foreclosure, Senior Lender will use commercially reasonable efforts to accept
bids for the Property from a qualified CHDO; provided, however, that in no event shall
Senior Lender be obligated to select a qualified CHDO to be the purchaser of the Property
unless, among other criteria used in Senior Lender's reasonable discretion, such qualified
CHDO has offered the highest purchase price among the bidders.
8. RESERVED.
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to City to enter into this Agreement, Developer
represents and warrants as follows:
9.1 Formation, Oualification and Compliance. JHC-Comerstone II, LLC, the
managing general partner of Developer (a) is a limited liability company, validly existing
and in good standing under the laws of the State of California, (b) has all requisite
authority to conduct its business and own and lease its properties, and (c) is qualified and
in good standing in every jurisdiction in which the nature of its business makes
qualification necessary or where failure to qualify could have a material adverse effect on
its financial condition or the performance of its obligations under the Loan Documents.
Developer is in compliance with all laws applicable to its business and has obtained all
approvals, licenses, exemptions and other authorizations from, and has accomplished all
filings, registrations and qualifications with, any Governmental Authority that are
necessary for the transaction of its business.
9.2 Execution and Performance of Loan Documents.
9.2.1 Developer has all requisite authority to execute and
perform its obligations under the Loan Documents.
9.2.2 The execution and delivery of Developer of, and the
performance by Developer of its obligations under, each Loan Document has been
authorized by all necessary action and does not and will not:
(a) require any consent or approval not heretofore
obtained of any person having any interest in Developer;
(b) violate any provision of, or require any consent or
approval not heretofore obtained under, any articles of incorporation, by-laws or other
governing document applicable to Developer;
(c) result in or require the creation of any lien, claim,
charge or other right of others of any kind (other than under the City Loan Documents)
on or with respect to any property now or hereafter owned or leased by Developer;
(d) violate any provision of any law presently in effect;
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80A-49
EXHIBIT 3
air
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other
agreement or document to which Developer is a party or by which Developer or any of its
property is bound.
9.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of City under the Loan Documents or that would have any material
adverse effect on the financial condition of Developer or the conduct of its business,
under any law, contract, lease or other agreement or document described in sub-
paragraph (d) or (e) of the previous subsection.
9.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which
has not been previously obtained in connection with:
(a) the execution of Developer of, and the
performance by Developer of its obligations under, the Loan Documents; and
(b) the creation of the liens described in the Loan
Documents.
9.3 Financial and Other Information. To the best of Developer's knowledge,
all financial information furnished to City with respect to Developer in connection with
the Loan (a) is complete and correct in all material respects as of the date of preparation
thereof, (b) accurately presents the financial condition of Developer, and (c) has been
prepared in accordance with generally accepted accounting principles consistently
applied or in accordance with such other principles or methods as are reasonably
acceptable to City. To the best of Developer's knowledge, all other documents and
information furnished to City with respect to Developer, in connection with the Loans,
are correct and complete in all material respects insofar as completeness is necessary to
give the City accurate knowledge of the subject matter. To the best of Developer's
knowledge Developer has no material liability or contingent liability not disclosed to City
in writing and there is no material lien, claim, charge or other right of others of any kinds
(including liens or retained security titles of conditional vendors) on any property of
Developer not disclosed in such financial statements or otherwise disclosed to City in
writing.
9.4 No Material Adverse Change. There has been no material adverse change in
the condition, financial or otherwise, of Developer since the dates of the latest financial
statements furnished to City. Since those dates, Developer has not entered into any
material transaction not disclosed in such financial statements or otherwise disclosed to
City in writing.
9.5 Tax Liability. Developer has filed all required federal, state and local tax returns
and has paid all taxes (including interest and penalties, but subject to lawful extensions
disclosed to City in writing) other than taxes being promptly and actively contested in
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1M1
EXHIBIT 3
good faith and by appropriate proceedings. Developer is maintaining adequate reserves
for tax liabilities (including contested liabilities) in accordance with generally accepted
accounting principles or in accordance with such other principles or methods as are
reasonably acceptable to City.
9.6 Governmental Requirements. To the best of Developer's knowledge, Developer
is in compliance with all laws relating to the Property and all Governmental Authority
approvals, including zoning, land use, planning requirements, and requirements arising
from or relating to the adoption or amendment of, any applicable general plan,
subdivision and parcel map requirement; environmental requirements, including the
requirements of the California Environmental Quality Act and the National
Environmental Policy Act and the preparation and approval of all required environmental
impact statements and reports; use, occupancy and building permit requirements; and
public utilities requirements.
9.7 Rights of Others. Developer is in compliance with all covenants, conditions,
restrictions, easements, rights of way and other rights of third parties relating to the
Property.
9.8 Litigation. There are no material actions or proceedings pending or, to the best of
the Developer's knowledge, threatened against or affecting Developer or any property of
Developer before any Governmental Authority, except as disclosed to City in writing
prior to the execution of this Agreement.
9.9 Bankruptcy. To the best of Developer's knowledge, no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or threatened against Developer, nor are
any of such proceedings contemplated by Developer.
9.10 Information Accurate. To the best of Developer's knowledge, all information,
regardless of its form, conveyed by Developer to City, by whatever means, is accurate,
correct and sufficiently complete to give City true and accurate knowledge of its subject
matter, and does not contain any material misrepresentation or omission.
9.11 Conflicts of Interest. No member, official or employee of the City shall have any
personal interest, direct or indirect, in this Agreement, nor shall any such member, official or
employee participate in any decision relating to this Agreement which affects his/her
personal interests or the interests of any corporation, partnership or association in which
he/she has a direct or indirect financial interest. The Developer warrants that it neither has
paid nor given, nor will pay or give, any third party any money or other consideration for
obtaining this Agreement.
9.12 Nonliability of City Officials and Emplovees. No member, official or employee of
the City shall be personally liable to the Developer in the event of any default or breach by
the City or for any amount which may become due to Developer or on any obligations under
the terms of this Agreement.
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EXHIBIT 3
9.13 No Assignment. Developer expressly acknowledges and agrees that the City has
only agreed to assist the Developer as a means by which to induce the
acquisition/rehabilitation/development of the Property. Accordingly, Developer further
expressly acknowledges and agrees that this Agreement is a personal right of Developer that
is neither negotiable, transferable, nor assignable except as set forth herein. Developer may
assign some or all of its rights under this Agreement only with the prior written consent of
the Executive Director (such consent not to be unreasonably withheld), except that no prior
consent is necessary for an assignment by a limited partner of Developer to an affiliate, or as
otherwise provided in the Deed of Trust.
9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under
federal and state laws.
9.15 Third Parties. This Agreement is made for the sole benefit of Developer and the
City and their successors and assigns, and no other person or persons shall have any rights
or remedies under or by reason of this Agreement or any right to the exercise of any right or
power of the City hereunder or arising from any default by Developer, nor shall the City
owe any duty whatsoever to any claimant for labor performed or materials furnished in
connection with the construction of the Property.
9.16 Control of Property. The parties acknowledge that the City has not at any time
participated in any manner in the management or operation of the Property, and will not so
participate at any time hereafter.
10. CONDITIONS FOR CONSTRUCTION
Developer shall comply with this Section until the Certificate of Completion is issued.
10.1 Permits and Approvals. Developer shall diligently obtain all
permits, including all building permits, licenses, approvals, exemptions and other
authorizations of Governmental Agencies required in connection with the rehabilitation
of the Property.
10.2 Commencement and Completion of Construction.
The construction shall be considered complete for purposes of this Agreement
only when (a) all work described has been completed and fully paid for (subject to
required retainage), and (b) all work requiring inspection or certification by
Governmental Authority has been completed and all requisite certificates, approvals and
other necessary authorizations (including required final certificates of occupancy) have
been obtained.
10.3. RESERVED.
10.4 Entry and Inspection. At all times prior to completion of the
construction, upon reasonable notice, City and their agents shall have (a) the right of free
access to the Property and all sites away from the Property where materials for the
construction are stored, (b) the right to inspect all labor performed and materials
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EXHIBIT 3
furnished for the construction, and (c) the right to inspect and copy all documents
pertaining to the construction.
10.5 Compliance with Section 3 Clause. Section 3 of the Housing and
Urban Development Act of 1968, 12 U.S.C. 1701u, as amended by Section 915 of the
Housing and Community Development Act of 1992 requires that economic opportunities
generated by HUD financial assistance for housing and community development
programs be targeted toward low- and very low- income persons. Whenever HUD
assistance generates opportunities for employment or contracting, state and local
grantees, as well as other recipients of HUD housing assistance funds must, to the
greatest extent feasible, provide these opportunities to low- and very low- income persons
and to businesses owned by or employing low- and very low- income persons. Section 3
applies to projects for which HUD's share of project costs exceeds $200,000 and
contracts and subcontracts awarded on projects for which HUD's share or project costs
exceeds $200,000 and the contract or subcontract exceeds $100,000.
For purposes of this Section 3 Clause and compliance thereto, whenever
the word "contractor" is used it shall mean and include, as applicable, the Developer, and
its contractor and subcontractor(s), if any. The particular text to be utilized in any and all
contracts of any contractor doing work covered by Section 3 shall be in substantially the
form of the following, as reasonably determined by the City, or as directed by HUD or its
representative, and shall be executed by the applicable contractor under penalty of
perjury:
"(a) The work to be performed under this contract is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 U.S.C. 170lu ("Section 3"). The purpose of Section 3 is to ensure
that employment and other economic opportunities generated by HUD assistance
or HUD -assisted projects covered by Section 3, shall, to the greatest extent
feasible, be directed to low- and very low-income persons [inclusive of Very Low
Income Persons, Very Low Income Households, and Very Low Income Tenants
served by the Project], particularly persons who are recipients of HUD assistance
for housing.
(b) The parties to this contract agree to comply with HUD's
regulations in 24 CFR part 135, which implement Section 3. As evidenced by
their execution of this contract, the parties to this contract certify that they are
under no contractual or other impediment that would prevent them from
complying with the part 135 regulations.
(c) The contractor agrees to send to each labor organization or
representative of workers with which the contractor has a collective bargaining
agreement or other understanding, if any, a notice advising the labor organization
or workers' representative of the contractor's commitments under this Section 3
clause, and will post copies of notices in conspicuous places at the work site
where both employees and applicants for training and employment positions can
see the notice. The notice shall describe the Section 3 preference, shall set forth
minimum number of job titles subject to hire, availability of apprenticeship and
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EXHIBIT 3
training positions, the qualifications for each; and the name and location of
person(s) taking applications for each of the position; and the anticipated date the
work shall begin.
(d) The contractor agrees to include this Section 3 clause in every
subcontract subject to compliance with regulations in 24 CFR part 135, and
agrees to take appropriate action, as provided in an applicable provision of the
subcontract or in this Section 3 clause, upon a finding that the subcontractor is in
violation of the regulations in 24 CFR part 135. The contractor will not
subcontract with any subcontractor where the contractor has notice or knowledge
that the subcontractor has been found in violation of the regulations in 24 CFR
part 135.
(e) The contractor will certify that any vacant employment positions,
including training positions, that are filled (a) after the contractor is selected but
before the contract is executed, and (b) with persons other than those to whom the
regulations of 24 CFR part 135 require employment opportunities to be directed,
were not filled to circumvent the contractor's obligations under 24 CFR part 135.
(0 Noncompliance with HUD's regulations in 24 CFR part 135 may
result in sanctions, termination of this contract for default, and debarment or
suspension from future HUD assisted contracts."
After the foregoing Section 3 Clause, there shall be a signature block for
the contractor, as applicable, the following text shall be included immediately above the
signature block: "The contractor/provider by his/her signature affixed hereto declares
under penalty of perjury that contractor has read the requirements of the Section 3 Clause
and accepts all its requirements contained therein for all of his/her operations related to
this contract."
To the extent applicable, the Developer shall comply and/or cause
compliance with Section 3 Clause requirements for the Project. For example, when and
if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, rather than
volunteer labor or materials, Section 3 is applicable and all disclosure and reporting
requirements apply.
10.6 Construction Information. From time to time during the course of the
construction, within ten (10) Business Days following City's written demand therefore,
Developer shall furnish requested reports of project costs, progress schedules and
contractors' costs breakdowns for the construction, itemized as to trade description and
item, showing the name of the contractor(s) and/or subcontractor(s), and including such
indirect costs as real estate taxes, legal and accounting fees, insurance, architects' and
engineers' fees, loan fees, interest during construction and contractors' overhead.
10.7 Protection Against Liens. Developer shall diligently file a valid
Notice of Completion upon completion of the construction, diligently file a notice of
cessation in the event of a cessation of labor on the construction for a period of thirty (30)
days or more, and take all actions reasonably required to prevent the assertion of claims
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EXHIBIT 3
of lien against the Property. In the event that any claim of lien is asserted against the
property or any stop notice or claim is asserted against the City by any person furnishing
labor or materials to the Property, Developer shall immediately give written notice of the
same to City and shall, promptly and in any event within ten (10) Business Days after
written demand therefor, (a) pay and discharge the same, (b) effect the release thereof by
delivering to City a surety bond complying with the requirement of applicable laws for
such release, or (c) take such other action as City may reasonably require to release City
from any obligation or liability with respect to such stop notice or claim.
10.8 General Contractors who are Related Parties to the Developer. If the
Project is developed with general contractors who are Related Parties to the Developer,
the Developer must be audited to the subcontractor level by an outside auditing firm
approved by the City. The Developer shall pay for the audit to the subcontractor level by
an outside auditing firm.
11. FEDERAL (HOME PROGRAM) COVENANTS
11.1 CHDO. Jamboree Housing Corporation, the sole member and manager of
the managing general partner of Developer, represents and warrants that it qualifies and is
in good standing as a Community Housing Development Organization under the HOME
Program. Developer hereby covenants and agrees to maintain such status throughout the
term of this Agreement, and to provide the Agency and City with written documentation
necessary to demonstrate maintenance of said status on an annual basis.
11.2 Oualification as Affordable Housing. As more particularly provided in
the Affordability Restrictions on Transfer of Property, Developer shall use, manage and
operate the Property in accordance with the requirements of 24 CFR 92.252 so as to
qualify the housing on the Property as Affordable Housing with affordable rents.
11.3 Tenant and Participant Protection. Developer shall comply with the
requirements of 24 CFR 92.253.
11.4 Local Preference. Subject to compliance with the HOME Regulations and
applicable California and federal fair housing laws, local preference for Santa Ana
residents and workers in tenant selection shall be a requirement of the Project. Subject to
applicable laws and regulations governing nondiscrimination and preferences in housing
occupancy required by HUD or the State of California, as well as the City of Santa Ana
Affordable Housing Funds Policies and Procedures, the Developer shall give preference in
leasing units in the following order of priority:
1. First priority shall be given to persons who have been permanently displaced or
face permanent displacement from housing in Santa Ana as a result of any of the
following:
a. A redevelopment project undertaken pursuant to California's Community
Redevelopment Law (Health & Safety Code Sections 33000, et seq.) --
applicable only to projects funded by the Low and Moderate Income
Housing Asset Fund.
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EXHIBIT 3
b. Ellis Act, owner -occupancy, or removal permit eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP Contract by property
owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at least the last 6
months.
11.5 Handicapped Accessibility. Developer shall comply with (a) Section
504 of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C
governing accessibility of projects assisted under the HOME Program; and (b) the
Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36
in order to provide handicapped accessibility to the extent readily achievable.
11.6 Use of Debarred. Suspended, or Ineligible Participants. Developer shall
comply with the provisions of 24 CFR 24 relating to the employment, engagement of
services, awarding of contracts, or funding of any contractor or subcontractor during any
period of debarment, suspension, or placement in ineligibility status.
11.7 Maintenance of Drug -Free Workplace. Developer shall certify that
Developer will provide a drug -free workplace in accordance with 24 CFR 84.13.
11.8 Lead -Based Paint. Developer shall comply with the requirements of the
Lead -Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing
regulations at 24 CFR 35, as applicable.
11.9 Affirmative Marketing. Developer shall implement and perform such
affirmative marketing procedures and requirements for the Property (24 CFR 92.351) in
compliance with the City's adopted Program.
11.10 Equal Opportunity and Fair Housing. Developer shall carry out the
construction and perform its obligations under this Agreement in compliance with all of
the state and federal laws and regulations regarding equal opportunity and fair housing
described in 24 CFR 92.350.
11.11 Property Standards. Developer shall cause the Property to meet the
housing quality standards set forth in 24 CFR 882.109, as well as all applicable local,
state and federal codes and ordinances, including zoning ordinances. Developer shall also
cause the Property to meet the current edition of the Model Energy Code published by the
Council of American Building Officials.
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EXHIBIT 3
11.12 Displacement and Relocation. Developer acknowledges and agrees
that, pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this
part, City must ensure that it has taken all reasonable steps to minimize the displacement
of persons as a result of the Project. Furthermore, to the extent feasible, residential
tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent,
safe, sanitary and affordable dwelling unit on the Property upon completion of the
construction. Developer agrees to cooperate fully and completely with City in meeting
the requirements of 24 CFR 92.253 and shall take all actions and measures reasonably
required by the Executive Director in connection therewith. All applicable state
guidelines must also be followed.
(a) Developer acknowledges and agrees to hire a Relocation
Consultant to provide relocation services, pursuant to the Uniform
Relocation Act and Real Property Acquisition Policies Act of 1970
("URA") and 24 CFR 92.253.
(b) The City, Developer, and Relocation Consultant will meet
periodically during the relocation to provide updates and review
tenant files, including at Project approval and prior to final benefit
calculations. The Developer and Relocation Consultant shall carry
out activity in compliance with URA and the City's Acquisition
and Relocation Policy and Procedures Manual ("Manual').
(c) The Developer and Relocation Consultant shall maintain accurate
records and files pertaining to the temporary and permanent
relocation of tenants, in accordance with URA and the City's
Manual.
(d) The Developer and Relocation Consultant shall provide all
relocation and tenant files to the City once relocation is complete
at the Project.
11.13 Other Program Requirements. Developer shall carry out each activity
in compliance with all federal laws and regulations described in subpart H of 24 CFR 92,
except that Developer does not assume City's responsibilities for environmental review in
24 CFR 92.352 or the intergovernmental review process in 24 CFR 92.359.
11.14 Request for Disbursements of Funds. Notwithstanding anything
contained in this Agreement to the contrary, Developer may not request disbursements of
funds under this Agreement until the funds are needed for payment of eligible costs (such
funds shall be used solely towards the acquisition and construction of the Property). The
amount of each request shall be limited to the amount needed.
11.15 Eligible Costs. Developer shall use HOME Funds to pay costs defined as
"eligible costs" pursuant to 24 CFR 92.206.
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11.16 Records and Reports. Developer shall maintain and from time to time
submit to City such records, reports and information as the Executive Director may
reasonably require in order to permit City to meet the record keeping and reporting
requirements required of it pursuant to 24 CFR 92.508.
11.17 Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards. Developer shall comply with the requirements and
standards of 2 CFR 200.
11.18 Conflict of Interest. Developer shall comply with and be bound by the
conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations
pertaining to conflict of interest.
11.19 Monitoring. Developer shall allow the City to conduct periodic
inspections of the HOME assisted units on the Property as required by the Program after
the date of construction completion, with reasonable advance written notice. Developer
shall cure any defects or deficiencies found by the City while conducting such
inspections within two weeks of written notice thereof, or such longer period as is
reasonable within the sole discretion of the City.
11.20 Recertification of Tenant Income.
(A) Developer shall take all necessary steps to review the income of all tenants
prior to renting to them, as well as reviewing current tenants on an annual basis,
in accordance with HOME regulations and guidelines. Every fifth (51) year,
Developer shall require new original income documents to be submitted by
tenants. Tenants in HOME assisted units whose incomes no longer comply with
federal income guidelines shall have their rents adjusted in accordance with
federal HOME guidelines (24 CFR 92.252-92.253).
(B) HOME assisted units continue to qualify as affordable housing despite a
temporary non-compliance caused by increases in the incomes of existing tenants
if actions satisfactory to HUD are being taken to ensure that all vacancies are
filled in accordance with this section until the non-compliance is corrected.
11.21 Other HOME Program Requirements. Developer shall comply with all
other applicable federal regulations and requirements of the HOME Program.
11.22 Controlling Covenants. If there is a discrepancy between State and
Federal law with regard to any of the aforementioned covenants, the more stringent shall
apply.
11.23 Faith Based Activities. To the extent applicable to the Project, in
accordance with 24 CFR 92.257, Developer will comply with the restrictions on the use
of HOME funds for faith based activities as set forth in Section 92.257.
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EXHIBIT 3
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION
AND REPAIR OF PROPERTY
12.1 Maintenance. Developer shall maintain the Property (and all abutting
grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise
required to maintain) in good condition and repair; shall operate the Property in a
businesslike manner; shall prudently preserve and protect its own as well as the City's
interests in connection with the Property; shall not commit or permit any waste or
deterioration of the Property (except for normal wear and tear); shall not abandon any
portion of the Property or leave the Property unguarded or unprotected; and shall not
otherwise act, or fail to act, in such a way as to unreasonably increase the risk of any
damage to the Property or of any other impairment of City's interests under the Loan
Documents. Without limiting the generality of the foregoing, and except as otherwise
agreed by City in writing from time to time, Developer shall promptly and faithfully
perform and observe each of the following provisions:
12.1.1 Alterations and Repair. Developer shall not remove, demolish or
materially alter any Improvement without City's prior consent, except to make non-
structural repairs which preserve or increase the Property's value, and shall promptly
restore, in a good and professional manner, any Improvement (or other aspect or portion
of the Property) that is damaged or destroyed from any cause.
12.2 Compliance. Developer shall comply with all laws and requirements of
Governmental Authority (including, without limitation, all requirements relating to the
obtaining of Governmental Authority approvals), all Governmental Authority approvals
and all rights of third parties, relating to Developer, the Property or Developer's business
thereon.
12.3 Taxes and Impositions. Developer shall pay, prior to delinquency,
all of the following (collectively, the "Impositions"): (a) all general and special real
property taxes and assessments imposed on the Property; (b) all other taxes and
assessments and charges of every kind that are assessed upon the Property (or upon the
owner and/or operator of the Property) and that create or may create a lien upon the
Property (or upon any personal property or fixtures used in connection with the Property),
including, without limitation, non -governmental levies and assessments pursuant to
applicable covenants, conditions or restrictions; and (c) all license fees, taxes and
assessments imposed on City (other than City's income or franchise taxes) which are
measured by or based upon (in whole or in part) the amount of the obligations secured by
the Property. If permitted by law, Developer may pay any Imposition in installments
(together with any accrued interest).
12.1.3.1 Right to Contest. Developer shall not be required to pay any
Imposition so long as (a) its validity is being actively contested in good faith and by
appropriate proceedings, (b) Developer has demonstrated to City's reasonable satisfaction
that leaving such Imposition unpaid pending the outcome of such proceedings could not
result in conveyance of the Property in satisfaction of such Imposition or otherwise
impair City's interests under the Loan Documents, and (c) Developer has furnished City
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EXHIBIT 3
with a bond or other security satisfactory in an amount not less than 100% of the
applicable claim (including interest and penalties).
12.1.3.2 Evidence of Payment. Upon demand by City from
time to time, Developer shall deliver to City, within thirty (30) days following the due
date of any Imposition, evidence of payment reasonably satisfactory to City.
12.1.3.3 Books and Records. Developer shall maintain complete books of
account and other records reflecting its operations (in connection with any other
businesses as well as with respect to the Property), in accordance with generally accepted
accounting principles applied on a consistent basis or in accordance with such other
principles or methods as are reasonably acceptable to City, in accordance with 24 CFR
92.508.
12.4 Project Operating Account. Subject to the requirements of the Senior
Lender, Developer must promptly deposit all project income directly into a segregated
depository account established exclusively for the Project ("Project Operating Account").
Withdrawals from this account may be made only in accordance with the provisions of
this Agreement and the approved Project Budget, as it may be revised from time to time
with City approval. Prior to the repayment of the City/HOME Loan in full, Developer
may make withdrawals from this account solely for the payment of project expenses
(including, without limitation, funding reserves and the making of debt service
payments), project fees and permitted distributions to the partners of the Developer.
Withdrawals from this account for other purposes may be made only with the prior
written approval of the City.
12.5 Replacement Reserve Account. Developer must establish or cause to be
established a segregated interest -bearing replacement reserve depository account
("Replacement Reserve Account") no later than the date of the Senior Loan converts
from a construction loan to a permanent loan. Developer must make monthly deposits
from project income into the Replacement Reserve in the amount of one -twelfth (1/12)
$500 per unit per year (the $500 is an annual fee paid on a monthly basis). Developer
may withdraw funds from the Replacement Reserve Account solely to fund capital
improvements for the Project, such as replacing or repairing structural elements,
furniture, fixtures or equipment of the Project that are reasonably required to preserve the
Project. Developer may not withdraw funds from the Replacement Reserve Account for
any other purpose without the prior written approval of the City.
13. NONDISCRINIINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and
agrees that:
A. In Use of Property. There shall be no discrimination
against or segregation of any person, or group of persons, on account of race, color,
creed, religion, sex, mental or physical disability, marital status, national origin, or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Property, nor shall Developer or any person claiming under or through it, establish or
24
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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 vendors of the Property.
B. In Affordable Housing Restrictions. The
foregoing covenant shall (a) be included in the Affordability Restrictions on Transfer of
Property, (b) run with the land, and (c) remain effective for the term of the contract (for
55 years).
C. In Employment. In construction of the
Property, Developer shall not discriminate against any employee or applicant because of
race, color, creed, religion, sex, marital status, mental or physical disability, national
origin, or ancestry. Developer shall take affirmative action to ensure that applicants are
employed, and that employees are treated during employment, without regard to their
race, color, creed, religion, sex, marital status, national origin, or ancestry.
D. In all Contracts. Developer shall cause the foregoing
covenants to be inserted in all contracts for any work covered by this Agreement so that
such provisions will be binding upon each contractor and subcontractor for the benefit of
City, provided that the foregoing covenant shall not apply to contracts or subcontracts for
standard commercial supplies or raw materials.
14. ENVIRONMENTAL MATTERS
14.1 Representation and Warranty. Except as disclosed in writing to the
City including the environmental site assessments prepared on behalf of Developer and
delivered to the City, Developer has no knowledge (a) of the presence on, under or about
the Property, now or in the past, of any Hazardous Materials in violation of applicable
law, or of the transportation to or from the Property of any Hazardous Materials, (b) that
asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the Property,
or (c) that there are any underground storage tanks located in, on or under the Property.
14.2 Compliance with Environmental Laws. Developer shall (a) comply with
all environmental laws and environmental permits applicable to the Construction of the
Property, (b) immediately pay or cause to be paid all costs and expenses incurred by
reason of such compliance, (c) keep the Property free and clear of any environmental
claims or liens imposed pursuant to any environmental law, and (d) obtain and renew all
environmental permits required for ownership or use of the Property.
14.3 Presence of Hazardous Materials. Developer shall not, and shall not
permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous
Materials on the Property, or transport or permit the transportation of Hazardous
Materials to or from the Property except for de minimis quantities used at the Property in
compliance with all applicable environmental laws and required in connection with the
routine construction, operation and maintenance of the Property.
14.4 Notice of Environmental Matters. Developer shall immediately advise
City in writing of any of the following: (a) any pending or threatened environmental
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claim against Developer or the Property, (b) any condition or occurrence that (i) results in
noncompliance with any applicable environmental law, (ii) could reasonably be
anticipated to cause the Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of the Property under any environmental law, or (iii)
could reasonably be anticipated to form the basis of an environmental claim against the
Property or Developer.
14.5 Environmental Indemnification by the Developer. Developer agrees to
defend, indemnify and hold harmless the City and their respective officers, directors,
employees and agents (collectively the "lndemnitees ") from and against any and all
obligations (including removal and remediation), losses, claims (including third party
claims), suits, judgments, liabilities, penalties, damages (including consequential and
punitive damages), costs and expenses (including consultants, and attorneys' fees) of
whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or
asserted against the hidemnitees directly or indirectly based on, or arising or resulting
from the actual or alleged presence of Hazardous Materials on the Property other than
arising from the gross negligence, willful misconduct and/or illegal actions of any
Indemnitee.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the City/HOME Loan Noteor Deed of
Trust remain outstanding, the following provisions shall apply, except to the extent that
Executive Director otherwise consents in writing:
15.1 Existence. Developer's Managing General Partner shall maintain its
existence in good standing under the laws of the State of California, and
Developer shall provide documentation of such status annually to the City.
15.2 Protection of Lien. Developer shall maintain the lien of the City
Deed of Trust as a valid second priority deed of trust on the Property and take all
actions, and execute and deliver to City all documents, reasonably required by
City from time to time in connection therewith.
15.3 Notice of Certain Matters. Developer shall give notice to City, within ten
(10) days of Developer's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the
Property and involving an amount in excess of $5,000; and any litigation or claim that
might subject Developer or any general partner to liability in excess of $5,000, whether
covered by insurance or not;
(b) any material dispute between Developer and a
Governmental Authority relating to the Property, the
adverse determination of which might materially affect the
Property;
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EXHIBIT 3
(c) any change in Developer's principal place of business;
(d) any aspect of the Improvements that is not in
substantial conformity with the plans or code;
(e) any Event of Default or event which, with the giving of
notice or the passage of time or both, would constitute an Event of Default;
(f) any material default by Developer or any other party under
any Senior Loan document, or the receipt by Developer of any notice of default under
any Senior Loan document;
(g) the creation or imposition of any mechanics' or
materialmans' lien or other lien against the Property which might materially affect the
Property; and/or
(h) any material adverse change in the financial condition of
Developer.
15.4 Further Assurances. Developer shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to City all documents, and take all actions,
reasonably required by City from time to time to confirm the rights created or now or
hereafter intended to be created under the Loan Documents; to protect and further the
validity, priority and enforceability of the City Deed of Trust; to subject to the Deed of
Trust any property intended by the terms of any Loan Document(s) to be covered by the
City Deed of Trust or otherwise to carry out the purposes of the Loan Documents and the
transactions contemplated thereunder. Notwithstanding anything to the contrary set forth
herein, the Developer shall have no obligation to execute any document, or take any
action, which would (i) change a material term of any Loan Document, (ii) change or
impair any material right of Developer and/or (iii) increase the liability of Developer or
any partner thereof.
15.5 Annual Financial Statements. Developer shall deliver to City, within
one hundred twenty (120) days after the end of each Calendar Year following issuance of
a Certificate of Completion, (a) a certified public accountant reviewed balance sheet for
Developer as of the end of such Calendar Year and a certified public accountant reviewed
statement of profit and loss for Developer and for Developer's operations in connection
with the Property for such Calendar Year, together with all supporting schedules, (b) a
certificate of such certified public accountant that such documents were reviewed by such
certified public accountant in accordance with generally accepted accounting principles
and otherwise comply with generally accepted accounting principles review
requirements, and (c) a certificate of Developer's Managing General Partner that such
documents: (i) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis or in accordance with such other principles or
methods as are reasonably acceptable to City, (ii) fairly present Developer's financial
condition, (iii) show all material liabilities, direct and contingent, and (iv) fairly present
the results of Developer's operations. Developer shall also provide the City with any
other annual audit reports issued by other monitoring agencies upon written request.
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EXHIBIT 3
15.6 Audits and Access to Records. Developer agrees that City, the U.S.
Department of Housing and Urban Development, the Comptroller General of the United
States or any of their authorized representatives shall have the right of access, upon
reasonable notice, to any books, documents, papers, or other records of Developer which
are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts
or transcripts. Developer will maintain all books and records pertaining to this Agreement
for a period of not less than five (5) years after all matters pertaining to this Agreement
(i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or
state laws, regulations or policies, and when a period of affordability or recapture applies
to Developer's activities, for a period of not less than five (5) years after the affordability
period ends.
16. OTHER NEGATIVE COVENANTS
While any obligation of Developer under the City Note or City Deed of Trust
remain outstanding, the following provisions shall apply, except to the extent that
Executive Director otherwise consents in writing:
16.1 Default on Senior Loan. Developer shall not default on any of the
Senior Loan documents, provided however, that Developer shall have such period as is
provided in the Senior Loan Documents during which to effectuate a cure.
16.2 Sale or Lease of Property. Unless and until Developer has received a
Certificate of Completion for the construction from City, Developer shall not sell, lease,
sublease or otherwise transfer all or any part of the Property or any interest therein
without the prior written consent of the Executive Director, which consent may be
withheld in the Executive Director's reasonable discretion. In connection with the
foregoing consent requirements, Developer acknowledges that City relied upon
Developer's particular expertise in entering into this Agreement and continues to rely on
such expertise to ensure the satisfactory completion of the construction.
Notwithstanding anything to the contrary contained herein, a "transfer" shall not
include (i) a transfer of any general partner's interest in Developer when made in
connection with the exercise by the Developer's limited partner (the "Limited Partner")
of its rights upon a default by a general partner under the Developer's Partnership
Agreement or upon a general partner's withdrawal in violation of the Partnership
Agreement, so long as the removal and substitution of the defaulting general partner is
made within thirty (30) days of such default or, if such removal and substitution cannot
reasonably be completed within thirty (30) days, so long as the Limited Partner
commences to take action to remove and substitute the general partner with a reasonable
period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of
the Property to the managing general partner of Developer pursuant to the right of first
refusal or to the general partners of Developer pursuant to the purchase option, as
provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's
interest in accordance with the Partnership Agreement; and (iv) any sale, transfer or other
disposition of an interest in a limited partner of the Developer.
EXHIBIT 3
17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of
Developer, or at its own election, the City of Santa Ana shall issue a Certificate of
Completion. Such Certificate of Completion shall be, and shall so state, conclusive
determination of satisfactory completion of the construction.
If City declines to furnish a Certificate of Completion after written request from
Developer, the Executive Director shall, within thirty (30) days after receipt of the
request, provide Developer with a written statement of the reasons therefore. The
statement shall contain a description of the action Developer must take to obtain a
Certificate of Completion. If the reason therefore is that the Developer has not completed
a minor portion of the Construction, City may, in its sole and absolute discretion, issue
the Certificate of Completion upon the posting with City of a bond or other form of
security acceptable to the Executive Director in the amount of the fair value of the
uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of
the Loan Documents or any obligation of Developer to any other party whatsoever,
including any holder of a mortgage or deed of trust. A Certificate of Completion is not
"notice of completion" referred to in Section 3093 of the California Civil Code.
18. INDEMNIFICATION
18.1 Nonliability, of City. Developer acknowledges and agrees that:
(a) The relationship between Developer and City is and
shall remain solely that of borrower and lender, City neither undertakes nor assumes any
responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform
Developer of any matter in connection with the construction, including matters relating
to: (i) the performance of the construction work, (ii) architects, contractors,
subcontractors and materialmen, or the workmanship of or materials used by any of them,
or (iii) the progress of the construction; and Developer shall rely entirely on its own
judgment with respect to such matters and acknowledges that any review, inspection,
supervision, approval or information supplied to Developer by City in connection with
such matters is solely for the protection of City and that neither Developer nor any third
party is entitled to rely on it;
(b) Notwithstanding any other provision of any Loan Document: (i)
the City is not a partner, joint venture, alter -ego, manager, controlling person or other
business associate or participant of any kind of Developer and City does not intend to
ever assume any such status; (ii) City's activities in connection with the Loan(s) shall not
be "outside the scope of the activities of a lender of money" within the meaning of
California Civil Code Section 3434, as modified or recodifred from time to time, and City
does not intend to ever assume any responsibility to any person for the quality or safety
of the Property; and (iii) City shall not be deemed responsible for or a participant in any
acts, omissions or decisions of Developer;
MIM •
(c) City shall not be directly or indirectly liable or responsible for any
loss or injury of any kind to any person or property resulting from any construction on, or
occupancy or use of, the Property, whether arising from: (i) any defect in any building,
grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of
Developer or any of Developer's agents, employees, independent contractors, licensees
or invitees; or (iii) any accident on the Property or any fire or other casualty or hazard
thereon; and
(d) By accepting or approving anything required to be performed or
given to City under the Loan Documents, including any certificate, financial statement,
survey, appraisal or insurance policy, City shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or
approval shall constitute a warranty or representation by City to anyone.
18.2 Indemnity. Developer shall defend (by counsel reasonably satisfactory
to City), indemnify and save and hold harmless the Indemnitees from and against all
claims, damages, demands, actions, losses, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) arising from or relating to
(i) a breach of this Agreement by Developer; (ii) the making of the Loan(s); (iii) a claim,
demand or cause of action that any person has or asserts against Developer; (iv) any act
or omission of Developer, any contractor, subcontractor or material supplier, engineer,
architect or other person with respect to the Property; or (vi) the ownership, occupancy or
use of the Property. Notwithstanding the foregoing, Developer shall not be obligated to
indemnify City with respect to the consequences of any act of illegal conduct, gross
negligence or willful misconduct of City. Developer's obligations under this Section shall
survive the cancellation of the City/HOME Loan Note, release and reconveyance of the
City Deed of Trust, issuance of the Certificate of Completion, and termination of this
Agreement.
18.2.1 Nothwithstanding the foregoing, neither Developer, nor any of its partners,
shall be personally liable for any indemnification obligation hereunder
which would result as the repayment of principal and/or interest under the
Loan.
18.3 Reimbursement of City. Developer shall reimburse City immediately
upon written demand for all costs reasonably incurred by City (including the reasonable
fees and expenses of attorneys, accountants, appraisers and other consultants, whether the
same are independent contractors or employees of City) in connection with the
enforcement of the Loan Documents and all related matters including all claims,
demands, causes of action, liabilities, losses, commissions and other costs against which
City is indemnified under the Loan Documents. Such reimbursement obligations shall
bear interest from the date occurring twenty (20) days after City gives written demand to
Developer and shall be secured by the City Deed of Trust. Such reimbursement
obligations shall survive the cancellation of the City/HOME Loan Note, release and
reconveyance of the City Deed of Trust, issuance of a Certificate of Completion, and
termination of this Agreement
19. INSURANCE, CASUALTY AND CONDEMNATION
30
FOODINT111,
EXHIBIT 3
19.1 Policies Required. While any obligation of Developer under the Loan
Documents remains outstanding, Developer shall maintain at Developer's sole expense,
with insurers either (i) admitted in California or (ii) are not admitted to California but
have an A.M. Best Rating of "A" or above and reasonably approved by the City, the
following policies of insurance in form and substance reasonably satisfactory to the City
Attorney:
(a) worker's compensation insurance and any other insurance
required by law in connection with the construction;
(b) prior to commencement and following completion of the
construction, fire and hazard "all risk" insurance covering 100% of the replacement cost
of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the area
where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(c) upon commencement of the construction and at all
times prior to completion of the construction, builder's risk -all risk insurance covering
100% of the replacement cost of all Improvements (including offsite materials) during the
course of construction in the event of fire, lightning, windstorm, vandalism, earthquake,
malicious mischief and all other risks normally covered by "all risk" coverage policies in
the area where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(d) public liability insurance in the amount of $1,000,000 for "single
occurrence';
(e) property damage insurance in amounts reasonably
required by City from time to time, and in no event less than $1,000,000; and
(1) any other insurance reasonably required by City.
All such insurance shall provide that it may not be canceled or materially modified
without thirty (30) days (ten (10) days for nonpayment of premium) prior written notice
to City. The policies required under subparagraphs (b) and (c) shall include a "lender's
loss payable endorsement" in form and substance satisfactory to City, showing the City
as encumbrance. The City shall be named as an additional insured(s) in the policies
required under subparagraphs (d) and (e) with primary coverage. Certificates of insurance
for the above policies (and/or original policies, if required by City) shall be delivered
within ten (10) days after demand therefore, and prior to start of any construction work.
All policies insuring against damage to the Improvements shall contain an agreed value
clause sufficient to eliminate any risk of co-insurance. No less than ten (10) days prior to
the expiration of each policy, Developer shall deliver to City evidence of renewal or
replacement of such policy reasonably satisfactory to City Attorney.
19.2 RESERVED.
31
80A-67
EXHIBIT 3
19.3 Claims and Proceedings. Developer shall give City
immediate notice of any material casualty to any portion of the Property, whether or not
covered by insurance, and of the initiation or threatened initiation of any proceeding for
the condemnation or other taking for public or quasi -public use of any portion of the
Property (collectively, "Condemnation"), and shall provide City with copies of all
documents which pertain to any such casualty or Condemnation. Developer shall take all
action reasonably required by City in connection therewith to protect the interests of
Developer and/or City, and City shall be entitled (without regard to the adequacy of its
security) to participate in any action, claim, adjustment or proceeding and to be
represented therein by counsel of its choice. Developer shall not settle, adjust, or
compromise any claim, action, adjustment or proceeding without prior written approval,
which approval shall not be unreasonably withheld or delayed.
19.4 Delivery of Proceeds to City. In the event that,
notwithstanding the "lender's loss payable endorsement" requirement set forth above, if
the proceeds from any casualty insurance is in excess of $500,000, Developer shall,
subject to any superior rights of the Senior Lender, deliver such proceeds to the City
immediately upon receipt.
19.5 Application of Casualty Insurance Proceeds. Subject to the
rights of the Senior Lender, any proceeds collected (the "Proceeds") under any casualty
insurance policy described in this Agreement shall be disbursed to Developer as provided
below, but only upon fulfillment of each of the following conditions (the "Restoration
Conditions") within ninety (90) days (unless extended by mutual agreement of Developer
and City) following the occurrence of the damage for which the Proceeds are collected:
(a) Developer shall demonstrate to City's reasonable
satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to
subparagraph (b)) will be adequate to repair the Improvements and to restore the fair
market value of the Property, within two years (or such longer time period reasonably
determined by City), to at least the value it had immediately prior to sustaining the
damage. Such demonstration shall include delivery to City of (i) plans and specifications
reasonably satisfactory to City, and (ii) a construction contract in form and content, and
with a contractor, reasonably satisfactory to City.
(b) To the extent that the Proceeds are insufficient to
accomplish the restoration required above, Developer shall deliver to City (the "Shortfall
Funds") in the amount of such shortfall, which funds shall be assigned to City as security
for Developer's obligation hereunder and held and disbursed in the same manner as the
Proceeds.
(c) Developer shall execute such documents as City reasonably
requires to evidence and secure Developer's obligation to use all amounts disbursed for
the diligent restoration of the Property.
(d) No Event of Default shall remain uncured.
EXHIBIT 3
19.6 Failure to Satisfy Conditions. In the event that Developer
fails to fulfill the Restoration Conditions within ninety (90) days (unless extended
pursuant to Section 19.5) following the date on which the damage occurs, the Proceeds
shall be applied by City against any obligations to City that are secured by a lien on the
Property, and the selection of which such obligations to apply the Proceeds against shall
be made by City in their sole and absolute discretion, subject to the rights of the Senior
Lender.
19.7 Reserved.
19.8 Condemnation; Treatment of Compensation. Subject to any
superior rights of Senior Lender, Developer hereby assigns to the
City, as security for all obligations to City secured by a lien on the
Property, all amounts payable to Developer in connection with any
Condemnation, and any proceeds of any related settlement
(collectively, "Compensation"). Subject to any superior rights of
Senior Lender, Developer shall deliver such remaining Compensation
to City immediately upon receipt. If the taking results in a loss of the
Property to an extent that, in the reasonable opinion of City, renders
or is likely to render the Property not economically viable or if, in
City's reasonable judgment Developer's security is otherwise
impaired, City may apply the Compensation received due to judgment
or settlement in connection with any condemnation or other taking to
reduce the unpaid obligations secured in such order as City may
determine, and without any adjustment in the amount or due dates of
payments due under the Note. If so applied, any award in excess of
the unpaid balance of the Note and other sums due to City shall be
paid to Developer or Developer's assignee. City shall have no
obligation to take any action in connection with any actual or
threatened condemnation or other proceeding.
19.8.1 Notwithstanding the foregoing, as long as the value of
City's liens are not impaired, any condemnation proceeds may be used by the Borrower
for repair and/or restoration of the Project.
19.9Waiver of Subrogation. Developer hereby waives all rights to
recover against the City (or any officer, employee, agent or representative of the City) for
any loss incurred by Developer from any cause insured against or required by any Loan
Document, to be insured against; provided, however, that this waiver of subrogation shall
not be effective with respect to any insurance policy if the coverage thereunder would be
materially reduced or impaired as a result. Developer shall use its best efforts to obtain
only policies which permit the foregoing waiver of subrogation.
20. DEFAULTS AND REMEDIES
20.1 Events of Default. The occurrence of any of the following, whatever the
reason therefore, shall constitute an Event of Default by Developer:
33
80A-69
EXHIBIT 3
(a) Developer fails to make any payment of principal or
interest under the City/HOME Loan Note when due, and such failure is not cured within
fifteen (15) Business Days after Developer's receipt of written notice that such payment
was not received when due;
(b) Developer fails to perform any other obligation for the
payment of money under any Loan Document, and such failure is not cured within fifteen
(15) Business Days after Developer's receipt of written notice that such obligation was
not performed when due;
(c) Developer fails to perform any obligation (other than the
obligations described in subparagraphs (a) and (b) above) under any Loan Document, and
such failure is not cured within thirty (30) days after Developer's receipt of written notice
that such obligation was not performed; provided that, if cure cannot reasonably be
effected within such thirty (30)-day period, such failure shall not be an Event of Default
so long as Developer (in any event, within ten (10) days after receipt of such notice)
commences to cure, and thereafter diligently (in any event within ninety (90) days after
receipt of such notice) prosecutes such cure to completion;
(d) Any representation or warranty in any Loan Document proves to
have been incorrect in any material respect when made;
(e) Reserved;
(f) Work on the construction ceases for ninety (90) consecutive days
for any reason (other than governmental orders, decrees or regulations,
acts of God or any other deity, strikes or other causes beyond Developer's
reasonable control), provided that the same do not, in the aggregate and in
the City's reasonable judgment, threaten to delay the completion of the
construction beyond the required completion date set forth in this
Agreement;
(g) Developer is enjoined or otherwise prohibited by any
Governmental Authority from constructing and/or occupying the improvements and such
injunction or prohibition continues unstayed for ninety (90) days or more for any reason;
(h) Developer is dissolved, liquidated or terminated, or all or
substantially all of the assets of Developer are sold or otherwise transferred without the
Executive Director's prior written consent; or
(i) Developer is the subject of an order for relief by a bankruptcy
court, or is unable or admits its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; or Developer applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or any part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without the
application or consent of Developer and the appointment continues undischarged or
unstayed for ninety (90) days; or Developer institutes or consents to any bankruptcy,
34
FOODIM11
IM
insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship,
conservatorship, liquidation, rehabilitation or similar proceeding relating to it or any part
of its property; or any similar proceeding is instituted without the consent of Developer
and continues undismissed or unstayed for ninety (90) days; or any judgment, writ,
warrant of attachment or execution, or similar process is issued or levied against any
property of Developer and is not released, vacated or fully bonded within ninety (90)
days after its issue or levy.
(j) Any of the Senior Loan documents is amended, supplemented or
otherwise modified without City's prior written consent, which
consent shall not be unreasonably withheld, to the extent the City's
consent is required pursuant to any subordination agreement
between the City and the Senior Lender.
20.2 Remedies Upon Default. Upon the occurrence and during the
continuance of any Event of Default, City may, at its option and in its absolute discretion,
do any or all of the following:
(a) By written notice to Developer, declare the principal of all
amounts owing under the Loan Documents, together with all accrued interest and other
amounts owing in connection therewith, to be immediately due and payable, regardless of
any other specified due date; provided that any Event of Default described in Section
20.1 shall automatically, without notice or other action on City's part, cause all such
amounts to be immediately due and payable;
(b) In its own right or by a court -appointed receiver, take
possession of the Property, enter into contracts for and otherwise proceed with the
completion of the construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including, without limitation, the right to seek specific performance and
the right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as City elects in its sole and absolute discretion;
and,
(d) Suspend or terminate the award of HOME funds if Developer fails
to comply with any term of that award.
20.3 Cumulative Remedies: No Waiver. City's rights and remedies under the
Loan Documents are cumulative and in addition to all rights and remedies provided by
law. The exercise by City of any right or remedy shall not constitute a cure or waiver of
any default, nor invalidate any notice of default or any act done pursuant to any such
notice, nor prejudice the City in the exercise of any other right or remedy. No waiver of
any default shall be implied from any omission by City to take action on account of such
default if such default persists or is repeated. No waiver of any default shall affect any
default other than the default expressly waived, and any such waiver shall be operative
only for the time and to the extent stated. No waiver of any provision of any Loan
Document shall be construed as a waiver of any subsequent breach of the same provision.
35
80A-71
EXHIBIT 3
City's consent to or approval of any act by Developer requiring further consent or
approval shall not be deemed to waive or render unnecessary City's consent to or
approval of any subsequent act. The City's acceptance of the late performance of any
obligation shall not constitute a waiver by City of the right to require prompt performance
of all further obligations; City's acceptance of any performance following the sending or
filing of any notice of default shall not constitute a waiver of either party's right to
proceed with the exercise of its remedies for any unfulfilled obligations; and City's
acceptance of any partial performance shall not constitute a waiver by City of any rights.
20.4 Nonrecourse Liability. Neither Developer, nor any partner of Developer,
shall have any personal liability under this Agreement, or the attached Note and Deed of
Trust, and any judgment, decree or order for the payment of money obtained in any action to
enforce the obligation of Developer to repay the loan evidenced by such documents shall be
enforceable against Developer only to the extent of Developer's interest in the Property.
21. MISCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of City to Developer, or any other
claim by developer against City, in connection with the Loan or otherwise, Developer
hereby waives any right it might otherwise have (a) to offset any such obligation, liability
or claim against Developer's obligations under the Loan Documents, or (b) to claim that
the existence of any such outstanding obligation, liability or claim excuses the
nonperformance by Developer of any of its obligations under the Loan Documents.
21.2 Notices. All notices, demands, approvals and other communications
provided for in the Loan Documents shall be in writing and be delivered to the
appropriate party by personal service or U.S. mail at its address as follows:
If to Developer: CORNERSTONE HOUSING PARTNERS LP
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, CA 92614
Attn: President
With a copy to
Limited Partner: Alliant ALP 2019
c/o Alliant Asset Management Company, LLC
21600 Oxnard Street, Suite 1200
Woodland Hills, CA 91367
Attn: General Counsel
If to City: City of Santa Ana
Executive Director (CDA)
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
36
80A-72
EXHIBIT 3
With a copy to: City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to all other parties.
All notices personally served shall be effective when actually received. All notices
mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid.
The foregoing notwithstanding, the non -receipt of any notice as the result of a change of
address of which the sending party was not notified or as the result of a refusal to accept
delivery shall be deemed receipt of such notice.
21.3 Survival of Renresentations and Warranties. All representations and
warranties in the Loan Documents shall survive the making of the Loan described herein
and have been or will be relied on by City notwithstanding any investigation made by
either party.
21.4 No Third Parties Benefited. This Agreement is made for the purpose of
setting forth rights and obligations of Developer and the City, and no other person shall
have any rights hereunder or by reason hereof.
21.5 Binding Effect, This Agreement shall bind, and shall inure to the benefit
of, Developer and City and their respective successors and assigns.
21.6 Prior Agreements; Amendments; Consents. This Agreement (together
with the other Loan Documents) contains the entire agreement between the City and
Developer with respect to the Loan and the Property, and all prior negotiations,
understandings and agreements are superseded by this Agreement and such other Loan
Documents. No modification of any Loan Document (including waivers of rights and
conditions) shall be effective unless in writing and signed by the party against whom
enforcement of such modification is sought, and then only in the specific instance and for
the specific purpose given.
21.7 Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California and
Federal law, whichever is more stringent. Developer irrevocably and unconditionally
submits to the jurisdiction of the Superior Court of the State of California for the County
of Orange or the United States District Court of the Central District of California, as City
may deem appropriate, in connection with any legal action or proceeding arising out of or
relating to this Agreement or the Loan Documents. Assuming proper service of process,
Developer also waives any objection regarding personal or in rem jurisdiction or venue.
21.8 Severability of Provisions. No provision of any Loan Document that is
held to be unenforceable or invalid shall affect the remaining provisions, and to this end
all provisions of the Loan Documents are hereby declared to be severable.
37
80A-73
EXHIBIT 3
21.9 Headings. Article and section headings are included in the Loan
Documents for convenience of reference only and shall not be used in construing the
Loan Documents.
21.10 Conflicts. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, this Agreement, unless otherwise
expressly provided, shall prevail; provided however that, with respect to any matter
addressed in both such documents, the fact that one document provides for greater, lesser
or different rights or obligations than the other shall not be deemed a conflict unless the
applicable provisions are inconsistent and could not be simultaneously enforced or
performed.
21.11 Time of the Essence. Time is of the essence under this Agreement and in
the performance of every term, covenant, and obligation contained herein.
21.12 Conflict of Interest. No member, official or employee of the City shall
have any direct or indirect interest in this Agreement, nor participate in any decision
relating to this Agreement which is prohibited by law.
21.13 Warranty Against Payment of Consideration. Developer warrants that
it has not paid or given, and will not pay or give, any third person any money or other
consideration for obtaining this Agreement.
21.14 Nonliability of City Officials and Employees. No member, official or
employee of City shall be personally liable to Developer, or any successor in interest, in
the event of any default or breach by City or for any amount which may become due to
Developer or successor, or on any obligation under the terms of this Agreement.
21.15 Plans and Data. As additional collateral for the Loan, Developer hereby
grants to the City a security interest in all plans and data concerning the Property,
subject to the rights of any Senior Lender. Such right of City shall be subject to
any right of the preparer of the plans to their use.
21.16 Authority to Enter Agreement. Each undersigned represents and warrants
that its signature hereinbelow has the power, authority and right to bind their respective
parties to each of the terms of this Agreement, and shall indemnify the City fully, including
reasonable costs and attorney's fees, for any injuries or damages to City in the event that
such authority or power is not, in fact, held by the signatory or is withdrawn.
21. 17 City's Acknowledgement and Consent to Sale and Assignment. The City
hereby consents to the above -described Developer Sale and the assignment and assumption
of Original Developer's rights and obligations under the Assignment to Developer, as set
forth in the Assignment.
EXHIBIT 3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date set forth at the beginning of this Agreement.
ATTEST:
THE CITY OF SANTA ANA
Daisy Gomez Kristine Ridge
Clerk of the Council City Manager
APPROVED AS TO FORM
Sonia R. Carvalho
RECOMMENDED FOR APPROVAL:
Steven A. Mendoza
Executive Director
Community Development Agency
(Signatures continue on following page)
39
80A-75
EXHIBIT 3
DEVELOPER:
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: HIC-Cornerstone 11, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By:
Name:
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.
40
EXHIBIT 3
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.
Signature_ (SEAL)
41
80A-77
1000WIM
EXHIBITS
A. Legal Description
B. Scope of Work
C. Project Budget
D. City/HOME Loan Deed of Trust
E. City/HOME Loan Note
F. Affordability Restrictions on Transfer of Property
G. HOME Loan Agreements
42
FOODIAWOO
EXHIBIT 3
Exhibit A.*
Legal Description
EXHIBIT 3
Legal Description
The Land referred to herein below is situated in the City of Santa Ana, County of Orange, State of California, and is
described as follows:
PARCEL ONE:
LOTS 7 THROUGH 13 INCLUSIVE OF TRACT 3547 IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 138, PAGES 32 AND 33 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID ORANGE COUNTY.
PARCEL TWO:
PARCEL 1 OF "LOT MERGER NO. 2019-08" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282886 OF
OFFICIAL RECORDS.
PARCEL THREE:
PARCEL 1 OF "LOT MERGER NO. 2019-10" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282887 OF
OFFICIAL RECORDS.
For conveyancing purposes only: APN 404-033-01 (Affects portion of Parcel Two)
APN: 404-033-02 (Affects portion of Parcel Two)
APN: 404-032-01 (Affects portion of Parcel Three)
APN: 404-032-02 (Affects portion of Parcel Three)
APN: 404-031-03 (Affects Lots 8 and 9 of Parcel One)
APN: 404-031-01 (Affects Lots 12 and 13 of Parcel One)
APN: 404-031-04 (Affects Lot 7 of Parcel One)
APN: 404-031-02 (Affects Lots 10 and 11 of Parcel One)
Fi M i
EXHIBIT 3
Exhibit Be.
Scope of Work
...
EXHIBIT 3
Scope of Work —Cornerstone Apartments
Cornerstone Apartments is a multifamily affordable housing development that consists of 126
one- and two -bedroom units. The project is located at 805-904 S. Minnie Street, Santa Ana,
California. There are eight separate two story buildings that were originally constructed in 1961.
The last substantial renovation was in 2003. The buildings are two-story walkups with wood
framing and a stucco exterior. There are currently 179 parking spaces on -site, with at least 46 of
them being tuck -under spaces.
The project is slated to receive approximately 6.3 million dollars' worth of rehabilitation work.
This rehabilitation work is expected to increase the useful life of the property as well as improve
the living conditions of current residents.
There are several major items included in this work. Eight of 126 current units will be converted
into full ADA compliant accessible units. This work will involve demolition of existing walls,
abatement, installation of insulation, and electrical panel upgrades. The scope of work is meant
to increase unit size space and reconfigure the layout so that it is ADA compliant. There will also
be ADA sitework in terms of parking and path of travel. The current scope of work will repave
designated areas for ADA accessibility and create ADA markers, signs, and bumpers.
One of the major issues identified at the property was the lack of parking for residents. To
address this, the project will be installing a car lift system to increase the parking capacity
onsite. This car lift system will be located on existing parking spaces at the 810/816 and 828/904
apartments. The car lift system is being manufactured by Klaus Multiparking and will be a
standalone two-story structure with a puzzle system. The car lift system will add 30 additional
stalls to the project.
There will also be the installation of photovoltaic panels on top of a carport structure adjacent
to the car lifts, and on top of the adjacent roof. These PV panels will help residents save on their
energy costs. There will also be the installation of a solar thermal hot water system. Exterior
work will also include the recoating of all elevated deck areas, new silicone roofs, general
exterior repairs, and a seismic retrofit of the tuck under parking. The seismic retrofit will install
shear panels that are meant to better reinforce the soft story created by the tuck under parking.
The existing windows will be replaced with new vinyl dual glazed retrofit windows. The exterior
of the buildings will also be repainted.
Interior work will include the installation of new Energy Star appliances, bathroom fixtures,
maple shaker cabinets and countertops, new blinds, wall heaters, LEED light fixtures, and other
general repairs. New acoustic dampening flooring will be installed on the second story units.
FOODIX46Y
EXHIBIT 3
Exhibit Co.
Project Budget
...
EXHIBIT 3
Cornerstone
Sources & Uses City of Santa Ana
Pre-Dev Preforms
08/28/19
175.121
OR
ELIGIBLE
ELIGIBLE
NOT
TOTAL
USES OF FUNDS•
• •N
REHAB COST
HISTORIC
Land at$1,475,410 Per Acre or$33.87 Per SF
2,700,000
0
0
0
0
2,700.000
2114R9
Basting Structure
14.800,000
14,800,000
0
0
0
0
117,460
Other Acquisition Costs
1
1
0
0
0
0
0
6,332,483
Hard Cost Residential 7,295,020 57,897
6,332,483
0
0
6,332,483
0
50,268
Site Improvements
0
0
0
0
0
0
0
General Conditions, Profit & Overhead 14.00%
886.547
0
886,647
0
886,647
0
7,036
GC Bond/Insurance/Letter of Credit 1.20%
75,990
0
75,990
0
76,990
0
603
Hard Cost Contingency 10.00%
729,502
0
729,502
0
729,502
0
6,790
Construction Interest (4%)al Perm. Rate +Obp 4.00%
586,496
0
311,418
0
311,418
275,078
4,665
Bridge Interest at 10.00%
23,845
0
0
0
0
23,845
189
Construction Loan Fees
86,250
0
86,260
0
86,260
0
686
Permanent Loan Fees
119,350
0
0
0
119,350
947
0
Bridge Loan Fees
119
0
0
119
1
119
0
4%Related Costs/Cast of Issuance
288,275
0
275,000
0
276,000
2,288
13,276
Accounting & Audit
20,000
0
20,000
0
20,000
169
-cF
Appraisal / Market Study
20.000
0
20,000
0
20,000
0
169
Architecture(Arohitect, Landscape Architect)
570,000
0
670,000
0
570,000
0
4,524
Civil Engineering
245,000
0
246,000
0
246,000
0
1,944
Construction Manager
125,000
0
125,000
0
126,000
0
992
Consultants (CM, Goo, LEED, Utilities, exc.)
260,000
0
260,000
0
260,000
0
2,063
Environmental (EIR, Phase I, Asbestos, exc.)
50,000
0
60,000
0
60,000
0
397
Financial Advisor/ Syndication Consultant
0
0
0
0
0
0
0
Furnishings
75,000
0
75,000
0
76,000
0
695
Additional (City Repayment)
0
0
0
0
0
0
0
Lease -up & Marketing Expenses
100,000
0
0
0
0
100,000
794
Legal
200,000
0
180,000
0
180,000
20,000
1,687
MHSA Construction Period Fees
0
0
0
0
0
0
0
363,880
Operating& Debt Service Reserve (3-mo's/deb,3
363,880
0
0
0
0
2,888
Other (Admin, Repro. & Reimb.)
15.000
0
16,000
0
16,000
119
_
0
Other (6enI lgapections)
25,000
0
26,000
0
25,000
0
198
Other -Katerra CM fees
150,000
0
160,000
0
150,000
0
1,190
Insurance
112,329
127,709
0
0
112,329
127,709'
0
0
112,329
127,709
0
0
892
1,014
Permit Fees
Property Taxes
38,400
0
38,400
0
38,400
0
305
Relocation
518,000
0
518,000
0
618,000
0
4,111
Allowance- PV I Solar Thermal installation
75.000
0
76,000
0
76,000
0
696
Soft Cost Contingency 9.79%
329,542
0
329,642
0
329,642
0
2,615
54,000
Tax Credit Fees (App., Mon., & Res.)
56,000
0
2,000
0
2,000
444
Tide & Recording
45,000
0
__
12,260
0
32,250
357
12760
Developer Overhead
0
0
0
0
0
0
0
1,834,300
Developer Fee
2,158,000
323,700
0
2.158.000
0
17,127
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• • •
EXHIBIT 3
Exhibit D9.
City/HOME Loan
Deed of Trust
EXHIBIT 3
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
AMENDED AND RESTATED CITY HOME DEED OF TRUST
AND ASSIGNMENT OF RENTS
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
THIS AMENDED AND RESTATED CITY HOME DEED OF TRUST AND
ASSIGNMENT OF RENTS (this "City Deed of Trust") made this 17 day of September, 2019
by CORNERSTONE HOUSING PARTNERS LP, a California limited partnership (the
"Trustor"), AmeriNat, a Minnesota corporation (the "Trustee"), and the City of Santa Ana,
a charter city and municipal corporation (the "Beneficiary").
Wakeham-Grant Apartments, L.P. (the "Original Trustor") and the Beneficiary
previously entered into the Released Deeds of Trust (as defined below).
In connection with the Original Trustor's sale of the Property (as defined below) to
Trustor (the "Sale"), Original Trustor and Trustor desire to enter into that certain Assignment
and Assumption Agreement (HOME Loan), dated as of the date hereof, by and between the
Original Trustor and Trustor to effectuate the assignment of the HOME Loan Agreements (as
defined in the Agreement) to Trustor (the "Assignment"), and the Beneficiary has consented
to such Sale and Assignment.
In connection with the Assignment, the Beneficiary and Trustor desire to amend and
restate the Released Deeds of Trust, as set forth in this City Deed of Trust.
Trustor, in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the
property located in the City of Santa Ana, County of Orange, State of California, described in
the attached Exhibit A and more commonly known as 805, 810, 815, 816, 825, 828, 835,
and 904 S. Minnie Street, Santa Ana, California (the "Property");
TOGETHER with all the improvements now or hereafter erected on the Property, and
all easements, rights, appurtenances and all fixtures now or hereafter attached to the Property,
F46111MOT
EXHIBIT 3
all of which, including replacements and additions thereto, shall be deemed to be and remain
a part of the Property covered by this City Deed of Trust;
TOGETHER with the right, power and authority during the continuance of these
Trusts, to collect the rents, issues, and profits of the Property, reserving unto the Trustor the
right, prior to any default by Trustor in payment of the indebtedness secured by this City Deed
of Trust or in the performance of any agreement under this City Deed of Trust, to collect and
retain these rents, issues and profits as they become due and payable; and,
TOGETHER with all articles of personal property or fixtures now or hereafter
attached to or used in and about the building or buildings now erected, or hereafter to be
erected, on the Property which are necessary to the complete and comfortable use and
occupancy of such building or buildings for the purposes for which they were or are to be
erected, including all other goods and chattels and personal property as are ever used or
famished in operating a building, or the activities conducted therein, similar to the one herein
described and referred to, and all renewals or replacements thereof or articles in substitution
therefor, whether or not the same are, or shall be attached to said building or buildings in any
manner; and all of the foregoing, together with the Property, is herein referred to as the
"Security";
To have and to hold the Security together with acquittances to the Trustee, its
successors and assigns forever;
TO SECURE to the Beneficiary (a) the repayment of the sums evidenced by an
amended and restated promissory note to the Beneficiary executed by Trustor of even date
herewith in the principal amount of FIVE MILLION, ONE HUNDRED, TWENTY-EIGHT
THOUSAND, ONE HUNDRED AND FIFTY-TWO DOLLARS ($5,128,152) (the "City
Loan Note"); (b) the performance of the covenants and agreements of Borrower contained in
the Agreement (as hereinafter defined); and (c) the payment of all other sums, with interest
thereon, advanced in accordance herewith to protect the security of this City Deed of Trust;
and the performance of the covenants and agreements of Trustor contained herein.
TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS:
1. The Loan Agreement. This City Deed of Trust is executed and delivered,
along with the City Loan Note and the Amended and Restated Loan Agreement, to benefit
the Property. A copy of said Amended and Restated Loan Agreement is on file as a public
record with the Beneficiary and is incorporated herein by reference (the "Agreement').
Trustor acknowledges that but for the execution of this City Deed of Trust, the Beneficiary
would not enter into the Agreement or City Loan Note secured by this City Deed of Trust.
2. Trustees Estate. Trustor is lawfully seized of the estate hereby conveyed and
has the right to grant and convey the Security; that except as disclosed on the Title Policy
insuring this City Deed of Trust, the Security is not encumbered except for obligations secured
by deeds of trust, or any other security agreement, to secure financing or refinancing for the
purchase and rehabilitation of the Property.
EXHIBIT 3
3. Repayment of the Loan. Trustor will promptly repay, when due, the principal
and interest, as required by the City Loan Note secured by this City Deed of Trust.
4. Subordination. This obligation secured by this City Deed of Trust shall be
subordinated to the Senior Loan.
5. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform
all of Trustor's obligations under any mortgage, deed of trust or other security agreement with
a lien which has priority over this Instrument, including Trustor's covenants to make
payments when due (subject to an applicable notice and cure provisions). Trustor will pay all
taxes, assessments and other charges, fines and impositions attributable to the Security which
may attain a priority over this City Deed of Trust, by Trustor making any payment, when due,
directly to the payee thereof Trustor will promptly fiurrish to the Beneficiary all notices of
amounts due under this paragraph, and in the event Trustor makes payment directly, Trustor
will promptly discharge any lien which has priority over this City Deed of Trust; provided
that Trustor will not be required to discharge the lien of this CityDeed of Trust securing any
senior lender or any other lien described in this paragraph so long as Trustor will agree in
writing to the payment of the obligation secured by such lien in a manner acceptable to the
Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in,
legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the
Security or any part thereof.
6. Hazard Insurance. Trustor will keep the Security insured by such insurance
policies in such amounts and for such periods as called for in the Agreement. All insurance
policies and renewals thereof will include a standard mortgagee clause with standard lender's
endorsement in favor of the holder of any senior lender and the Beneficiary as their interests
may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right
to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor
shall promptly famish to the Beneficiary, or its designated agent, the original insurance
policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In
the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary
or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if
not made promptly by Trustor. The Beneficiary shall receive 30 days (10 days for
nonpayment of premium) advance notice of cancellation of any insurance policies required
under this Section.
Unless the Beneficiary and Trustor otherwise agree in writing, insurance proceeds,
subject to the rights of any senior lender, will be applied to restoration or repair of the Security
damaged, provided such restoration or repair is economically feasible and the security of this
City Deed of Trust is not thereby impaired. If such restoration or repair is not economically
feasible or if the security of this City Deed of Trust would be impaired, again, subject to the
rights of any senior lender, the insurance proceeds will be used to repay the loan secured by
this City Deed of Trust, with the excess, if any, paid to Trustor. If the Security is abandoned
by Trustor, or if Trustor fails to respond to the Beneficiary, or its designated agent within 30
days from the date notice is mailed by either of them to Trustor that the insurance carrier offers
OO M
EXHIBIT 3
to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized
to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or
repair of the Security or to repay the loan.
If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in
and to any insurance policy and in and to the proceeds thereof resulting from damage to the
Security prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums
secured by this City Deed of Trust immediately prior to such sale or acquisition subject to the
rights of any senior lender.
7. Preservation and Maintenance of Security. Trustor will keep the Security in
good repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the Beneficiarv's Security. If Trustor fails to perform the
covenants and agreements contained in this City Deed of Trust or if any action or proceeding
is commenced which materially affects the Beneficiary's interest in the Security, including,
but not limited to, default under the City Deed of Trust securing any senior lender, eminent
domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt
or decedent, then the Beneficiary, at the Beneficiary's option, upon notice to Trustor, may
make such appearances, disburse such sums and take such action as it determines necessary
to protect the Beneficiary's interest, including, but not limited to, disbursement of reasonable
attorneys' fees and entry upon the Security to make repairs.
Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest
thereon, will become an indebtedness of Trustor secured by this City Deed of Trust. Unless
Trustor and the Beneficiary agree to other terms of payment, such amount will be payable
upon notice from the Beneficiary to Trustor requesting payment thereof, and will bear interest
from the date of disbursement at the rate payable from time to time on outstanding principal
under the City Loan Note unless payment of interest at such rate would be contrary to
applicable law, in which event such amounts will bear interest at the highest rate permissible
under applicable law. Nothing contained in this paragraph will require the Beneficiary to
insure any expense or take any action hereunder.
9. Inspection. The Beneficiary may make, or cause to be made, reasonable
entries upon and inspections of the Security during normal business hours; provided that the
Beneficiary will give Truster reasonable prior written notice of inspection.
10. Forbearance by the Beneficiary Not a Waiver. Any forbearance by the
Beneficiary in exercising any right or remedy will not be a waiver of the exercise of any such
right or remedy. The procurement of insurance or the payment of taxes or other liens or
charges by the Beneficiary will not be a waiver of the Beneficiary's right to accelerate the
maturity of the indebtedness secured by this City Deed of Trust.
11. Remedies Cumulative. All remedies provided in this City Deed of Trust are
distinct and cumulative to any other right or remedy under this City Deed of Trust or any other
4
0:cu1M
document, or afforded by law or equity, and may be exercised concurrently, independently or
successively.
12. Successors and Assigns Bound. The covenants and agreements herein
contained shall bind, and the rights hereunder shall inure to, the respective successors and
assigns of the Beneficiary and Trustor subject to the provisions of this City Deed of Trust.
13. Joint and Several Liability. All covenants and agreements of Trustor shall be
joint and several.
14. Notice. Except for any notice required under applicable law to be given in
another manner, (a) any notice to Trustor provided for in this City Deed of Trust will be given
by certified mail, return receipt requested, addressed to Trustor at 17701 Cowan Avenue,
Suite 200, Irvine, CA 92614, Attn: President, with a copy to Union Bank, (b) any notice
to the Beneficiary will be given by certified mail, return receipt requested, to the Beneficiary
at 20 Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention: Executive
Director (CDA), or at such other address as the Beneficiary may designate by notice to Trustor
as provided above, and (c) to Trustee at 8121 E. Florence Avenue, Downey, California
90240. Notice shall be effective as of the date received as shown on the return receipt.
15. Governing Law. This City Deed of Trust shall be governed by the laws of the
State of California.
16. Severability. In the event that any provision or clause of this City Deed of
Trust or the City Loan Note conflicts with applicable law, such conflict will not affect other
provisions of this City Deed of Trust or the City Loan Note which can be given effect without
the conflicting provision, and to this end the provisions of the City Deed of Trust and the City
Loan Note are declared to be severable.
17. Cautions. The captions and headings in this City Deed of Trust are for
convenience only and are not to be used to interpret or define the provisions hereof.
18. Default in Foreclosure; Remedies. Upon Trustor's breach of any covenant or
agreement of Trustor in this City Deed of Trust or the City Loan Note secured by this City
Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured
by this City Deed of Trust, the Beneficiary may declare all sums secured by this City Deed of
Trust immediately due and payable by delivering to Trustor notice thereof specifying: (1)
The breach; (2) the action required to cure such breach; (3) a date not less than 30 days from
the date the notice is received by Trustor as shown on the return receipt, by which such breach
is to be cured provided, however, that if such default is not reasonable susceptible to being
cured within 30 days, Trustor shall have a reasonable period to cure the defect so long as
Trustor is diligently prosecuting the cure to completion; and (4) that failure to cure such breach
on or before the date specified in the notice may result in acceleration of the sums secured by
this City Deed of Trust and sale of the Security. The notice will also inform Trustor of
Tmstor's right to reinstate after acceleration and the right to bring a court action to assert the
non-existence of default or any other defense of Trustor to acceleration and sale.
EXHIBIT 3
The City Note contains additional cure periods granted to Trustor's limited partner
and no event of default shall have occurred until and unless the Trustor's limited partner
fails to cure such breach during such cure period.
If the breach is not cured on or before the date specified in the notice or such longer
period as provided above or in the City Loan Note or the Agreement, the Beneficiary, at the
Beneficiary's option, may: (a) declare all of the sums secured by this City Deed of Trust to
be immediately due and payable without fiuther demand and may invoke the power of sale
and any other remedies permitted by California law; or (b) either in person or by agent, with
or without bringing any action or proceeding, or by a receiver appointed by a court, and
without regard to the adequacy of its security, enter upon the Security and take possession
thereof (or any part thereof) and of any of the Security, in its own name or in the name of the
Trustee, and do any acts which it deems necessary or desirable to preserve the value or
marketability of the Property, or part thereof or interest therein, increase the income therefrom
or protect the security thereof. The entering upon and taking possession of the Security shall
not cure or waive any breach hereunder or invalidate any act done in response to such breach
and, notwithstanding the continuance in possession of the Security, the Beneficiary shall be
entitled to exercise every right provided for in this City Deed of Trust, or by law upon
occurrence of any uncured breach, including the right to exercise the power of sale; (i)
commence an action to foreclose this City Deed of Trust as a mortgage, appoint a receiver, or
specifically enforce any of the covenants hereof, (ii) deliver to the Trustee a written
declaration of default and demand for sale, pursuant to the provisions for notice of sale found
at California Civil Code Sections 2924, et seq., as amended from time to time; or (iii) exercise
all other rights and remedies provided herein, in the instruments by which Trustor acquires
title to any Security, or in any other document or agreement now or hereafter evidencing,
creating or securing all or any portion of the obligations secured hereby, or provided by law.
Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any
cure of any default made or tendered by Trustor's limited partner shall be deemed to be a cure
by Trustor and shall be accepted or rejected on the same basis as if made or tendered by
Trustor.
The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred
in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable
attorneys' fees.
19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration
of the sums secured by this City Deed of Trust, Trustor will have the right to have any
proceedings begun by the Beneficiary to enforce this City Deed of Trust discontinued at any
time prior to 5 days before sale of the Security pursuant to the power of sale contained in this
City Deed of Trust or at any time prior to entry of a judgment enforcing this City Deed of
Trust if. (a) Trustor pays the Beneficiary all sums which would be then due under this City
Deed of Trust and no acceleration under the City Loan Note has occurred; (b) Trustor cures
all breaches of any other covenants or agreements of Trustor contained in this City Deed of
Trust and the Affordability Restrictions on Transfer of Property; (c) Trustor pays all
6
1 .,
EXHIBIT 3
reasonable expenses incurred by the Beneficiary and the Trustee in enforcing the covenants
and agreements of Trustor contained in this City Deed of Trust and the Affordability
Restrictions, and in enforcing the Beneficiary's and the Trustee's remedies, including, but not
limited to, reasonable attorneys' fees; and (d) Trustor takes such action as the Beneficiary may
reasonably require to assure that the lien of this City Deed of Trust, the Beneficiary's interest
in the Security and Trustor's obligation to pay the sums secured by this City Deed of Trust
shall continue unimpaired. Upon such payment and cure by Trustor, this City Deed of Trust
and the obligations secured hereby will remain in full force and effect as if no acceleration
had occurred.
20. Acceptance by Trustee. Trustee accepts this Trust when this City Deed of
Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee
is not obligated to notify any party to this City Deed of Trust of pending sale under any other
deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a
party unless brought by Trustee.
21. Reconveyance. Upon payment or forgiveness of all sums secured by this City
Deed of Trust, the Beneficiary will request the Trustee to reconvey the Security and will
surrender this City Deed of Trust and the City Loan Note to the Trustee. The Trustee will
reconvey the Security without warranty and without charge to the person or persons legally
entitled thereto. Such person or persons will pay all costs of recordation, if any.
22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from
time to time remove the Trustee and appoint a successor trustee to any Trustee appointed
hereunder. The successor trustee will succeed to all the title, power and duties conferred upon
the Trustee herein and by applicable law.
23. Request for Notice. Trustor requests that copies of the notice of default and
notice of sale be sent to Trustee at the address set forth in Section 14 above.
24. Nonrecourse Liabilitv. Neither Trustor nor any partner of Trustor shall
have any personal liability under the Agreement, City Loan Note, and this City Deed of Trust
and any judgment, decree or order for payment of money obtained in any action to enforce
the obligation of Trustor to repay the loan evidenced by such documents shall be enforceable
against Trustor only to the extent of Trustor's interest in the Property.
25. Extended Use Agreement. Beneficiary acknowledges that Trustor and the
California Tax Credit Allocation Committee have or intend to enter into an extended use
agreement. Beneficiary acknowledges and agrees that, in the event of a foreclosure of its
interest under this City Deed of Trust or delivery by Trustor of a deed in lieu thereof
(collectively, a "Foreclosure"), the following rule contained in Section 42(h)(6)(E)(ii) of
the Code 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 extended use agreement, (i) none of the eligible tenants
occupying those units at the time of Foreclosure may be evicted or their tenancy terminated
EXHIBIT 3
(other than for good cause, including but not limited to, the tenants' ineligibility pursuant
to Section 42 of the Code), (ii) nor may any rent be increased except as otherwise permitted
under Section 42 of the Code.
26. Amendment and Restatement. This City Deed of Trust amends, restates and
supersedes in their entirety those certain City HOME Deeds of Trust and Assignment of
Rents described in the attached Exhibit B (collectively, "Released Deeds of Trust").
LFOOMMOT46
EXHIBIT 3
IN WITNESS WHEREOF, Trustor has executed this City Deed of Trust as of the date first
written above.
DEVELOPER
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By:
Name:
Title:
EXHIBIT 3
A Notary Public or other officer completing this certificate verifies only the identity of
the individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
STATE OF 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.
W=SS my hand and official seal.
Signature_ (SEAL)
80A-100
EXHIBIT 3
A. Legal Description
B. Released Deeds of Trust
80A-101
EXHIBIT 3
EXHIBIT A
Legal Description
12
80A-102
EXHIBIT 3
Legal Description
The Land referred to herein below is situated in the City of Santa Ana, County of Orange, State of California, and is
described as follows:
PARCEL ONE:
LOTS 7 THROUGH 13 INCLUSIVE OF TRACT 3547 IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 138, PAGES 32 AND 33 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID ORANGE COUNTY.
PARCEL TWO:
PARCEL 1 OF "LOT MERGER NO. 2019-08" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282886 OF
OFFICIAL RECORDS.
PARCEL THREE:
PARCEL 1 OF "LOT MERGER NO. 2019-10" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282887 OF
OFFICIAL RECORDS.
For conveyancing purposes only: APN 404-033-01 (Affects portion of Parcel Two)
APN: 404-033-02 (Affects portion of Parcel Two)
APN: 404-032-01 (Affects portion of Parcel Three)
APN: 404-032-02 (Affects portion of Parcel Three)
APN: 404-031-03 (Affects Lots 8 and 9 of Parcel One)
APN: 404-031-01 (Affects Lots 12 and 13 of Parcel One)
APN: 404-031-04 (Affects Lot 7 of Parcel One)
APN: 404-031-02 (Affects Lots 10 and 11 of Parcel One)
80A-103
EXHIBIT B
Released Deeds of Trust
80A-104
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80A-106
EXHIBIT 3
Exhibit Ee.
City/HOME Loan
Note
80A-107
EXHIBIT 3
AMENDED AND RESTATED CITY HOME LOAN NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO THE CITY OF SANTA ANA, CALIFORNIA
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
$5,128,152
1. Principal Amount of Loan
September 17, 2019
Santa Ana, California
For value received, CORNERSTONE HOUSING PARTNERS LP, a California limited
partnership (`Borrower") promises to pay to the order of THE CITY OF SANTA ANA ("City"),
at 20 Civic Center Plaza, 6a' Floor, Santa Ana, California 92701, or at such other place as the
City may from time to time designate in writing, or to the assignee of the City, the principal sum
of FIVE MILLION, ONE HUNDRED, TWENTY-EIGHT THOUSAND, ONE HUNDRED
AND FIFTY-TWO DOLLARS ($5,128,152) or so much thereof as shall be disbursed
hereunder, with five percent simple interest (5%) commencing on September 17, 2019.
City and Wakeham-Grant Apartments, L.P., a California limited partnership ("Original
Borrower") previously entered into the HOME Loan Agreements (as defined in the Loan
Agreement) , pertaining to the acquisition and rehabilitation of certain real property described in
the Loan Agreement as the "Property," located at 805, 810, 815, 816, 825, 828, 835, and 904 S.
Minnie Street, Santa Ana, California, commonly referred to as the Cornerstone Apartments, and
the operation of the Property as affordable housing for very -low income households, and the
Original Borrower previously entered into the City HOME Loan Notes, in favor of the City
(collectively, the "Original Notes") described in Exhibit A. The Original Notes referenced in
the "Interest Secured" column in Exhibit A are hereby amended and restated in their entirety by
this Note.
In connection with the Original Borrower's Sale of the Property to Borrower, Original
Borrower and Borrower desire to enter into that certain Assignment and Assumption Agreement
(HOME Loan), dated as of the date hereof, by and between the Original Borrower and Borrower
to effectuate the assignment of the HOME Loan Agreements to Borrower (the "Assignment"),
and the City has consented to such Sale and Assignment.
This Amended and Restated City HOME Loan Note (this "Note") is made pursuant to,
entitled to the benefits of and referred to as the City/HOME Loan Note in the Amended and
Restated Loan Agreement ("Loan Agreement"); that certain "Amended and Restated
Affordability Restrictions on Transfer of Property" between Borrower and City, dated on or
about the date hereof (the "City Affordability Restrictions on Transfer of Property"); and that
certain subordinated Amended and Restated City HOME Deed of Trust and Assignment of Rents
between Borrower and City, dated on or about the date hereof (the "City Deed of Trust"). This
F1 1:
EXHIBIT 3
Note, the Loan Agreement, the Affordability Restrictions on Transfer of Title, and the Deed of
Trust are sometimes collectively referred to herein, collectively, as the "Loan Documents." The
Loan Documents and the rights and responsibilities inure to the benefit of the City. Any
capitalized term which is not otherwise defined herein shall have the meaning ascribed to such
term in the Loan Agreement.
2. Definitions.
For the purpose of calculating the payments to be made by Borrower to City pursuant to
this Note, the following terms shall have the following respective meanings:
"Acquisition Costs" shall mean the costs and expenses of Borrower to acquire the
Property, as set forth in the Project Budget attached to the Loan Agreement.
"City Loan" shall mean the loan evidenced by this Note.
"City's Percentage" with reference to the Residual Receipts, shall mean 50% or the
prorated percentage of the total amount of funds contributed after CORNERSTONE HOUSING
PARTNERS LP, retains fifty percent of the Residual Receipts, whichever is less, of the City's
share of the total Residual Receipts from the Property as further described in Section 5 hereof. If
other lenders to the Property are also repaid from Residual Receipts, City's Percentage shall be
reduced proportionally to the ratio that the original principal amount of the Loan bears to the
original principal amount of all loans being repaid from Residual Receipts multiplied by 50%.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"Closing Costs" shall mean:
(i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a
result of the Sale, which shall not in any event exceed the customary amount charged -for similar
transactions in the immediate market place, costs of title insurance premiums, documentary
stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably
incurred with respect to the Property, in each case actually paid by Borrower as a condition of
the Sale.
GO In the case of a Refinancing, the reasonable and necessary costs of
consummating such Refinancing, including, without limitation, loan fees, loan repayment
charges, costs of title insurance premiums, escrow fees, recording fees, attorneys' fees and costs
of Lender required repairs or reserves.
"Gross Revenues" shall mean all revenues and receipts of every kind actually received
by Borrower from operating the Property, and all parts thereof, including, but not limited to,
income from both cash and credit transactions, rental from leased and/or subleased spaces and
80A-109
EXHIBIT 3
parking fees and charges (but not including security deposits and other tenant deposits, except to
the extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues
does not include any insurance proceeds other than any rental interruption insurance proceeds.
Any credit consideration shall be included in Gross Revenues at the time cash proceeds
(principal, interest and/or other) are received. Borrower shall establish and maintain accounts for
the Gross Revenues (the "'Project Accounts") that are segregated from revenues and income
received by Borrower from all other projects. Gross Revenues shall also include all interest
earned on the Project Accounts to the extent interest is released from the Project Accounts.
Gross Revenues do not include the proceeds of any loans or capital contributions made to
Borrower, Refinancing Proceeds or Sale Proceeds.
"Operating Expenses" shall mean the sum of the following:
(i) payments of principal and interest and all other charges relating to the Senior
Loan(s), exclusively including required payments under the MUFG Union Bank, N.A. loan(any
additional loans to the project must be approved by the City);
GO a property management fee no greater than 8% of gross rents;
(iii) Owner Partnership Management and Asset Management Fees not to exceed 5%
of gross rents;
(iv) Deposits into required reserves required by any lender or Borrower's
Partnership Agreement;
(v) all other actual, reasonable cash operating costs and expenses, calculated on an
annual basis, that are directly attributable to managing and operating the Property and the
Borrower, including, without limiting the generality of the foregoing, the following: costs and
expenses for real and personal property taxes, special assessments or similar charges; water, fuel,
electricity and other utilities; heating, ventilation and air conditioning expenses; labor; supplies;
tools; equipment; insurance; advertising and marketing; accounting and legal fees; brokerage
commissions and other leasing expenses; reasonable reserves for all anticipated expenses as
approved by the City; and other such items constituting operation, maintenance and repair costs
actually paid by the Borrower, subject to the following conditions:
(a) Depreciation and amortization expenses shall not be considered
Operating Expenses, except as otherwise provided herein.
(b) Reserved.
(c) Any expenses, compensation or fees paid to any affiliate of Borrower
shall only be included as Operating Expenses to the extent they are not in excess of the
reasonable expenses, compensation or fees which would be payable to unrelated third parties in
arms -length transactions for similar services in the Santa Ana, California area.
3
80A-110
EXHIBIT 3
(vi) Any other expenses necessary to meet senior lender requirements and requirements
of Borrower's limited partner, or its assignee, as set forth in Borrower's Agreement of Limited
Partnership (the "Partnership Agreement"), including, without limitation, repayment of any loans
to the Borrower by a partner or tax credit recapture or deficiency payments.
(vii) Deferred Developer Fees.
(viii) A social services administrative fee.
"Project" shall mean the acquisition and rehabilitation of the Property by Borrower
pursuant to the Loan Agreement.
"Property" shall mean the real property located at 805, 810, 815, 816, 825, 828, 835, and
904 S. Minnie Street, Santa Ana, California, and commonly referred to as the Cornerstone
Apartments, described in the City Deed of Trust.
"Refinancing" shall mean changing the then existing financing on the Property by,
without limitation, modifying final maturity date of the existing Senior Loan, increasing the
stated maximum principal amount of the existing Senior Loan, paying off the existing Senior
Loan in full and obtaining new Senior Loan.
"Refinancing Proceeds" shall be disbursed as set forth in Section 7 hereof.
"Residual Receipts" shall mean the Gross Revenues from the Property, for each year,
less deductions for Operating Expenses from the Property, applicable to each such year to the
extent not already deducted as an Operating Expense.
"Sale" shall mean any transfer, assignment, conveyance or lease (other than to a tenant
for occupancy or a transaction set forth in Section 15(c) hereof) of the Property or any portion
thereof, or any interest therein by the Borrower, and includes any transfer, assignment or sale of
any partnership interest in the Borrower by an individual or entity which is a general partner in
the Borrower, or any interest by any individual or entity which holds an interest in any such
general partner in the Borrower, which brings the cumulative total of all such direct and indirect
transfers, assignments and sales during the term of this Note to more than forty-nine percent
(49%) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a
direct or indirect partnership interest thereafter. Sale includes a sale in condemnation or under
threat thereof. Sale does not include dedications and grants of easements to public and private
utility companies of the kind customary in real estate development, nor transfers of Limited
Partnership interests or transfers of General Partner interests caused by the removal of the
General Partner pursuant to the terms of the Partnership Agreement.
"Sale Proceeds" shall be disbursed as set forth in Section 8 hereof.
2
80A-111
EXHIBIT 3
"Senior Loan" shall mean the senior loan being made by MUFG Union Bank, N.A.,
concurrent to the City Loan for payment of a portion of the Acquisition and Rehabilitation Costs,
and shall include any subsequent loan that refinances the initial Senior Loan.
"Term" the term for repayment of this Note shall mean fifty-five (55) years from the
date of recording.
3. Loan Repavment.
Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts),
7 (Refinancing Proceeds), 8 (Sale Proceeds) and 10 (Accelerated Loan Repayment).
4. Operating Capital Improvement Loan.
If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and
the General Partner makes a loan to the Partnership, the reserves must be fully funded to their
original level prior to repayment of said loan. Such loan shall be repaid with net cash flow prior
to the residual receipt split. The outstanding loan balance will be reflected in the annual report.
5. Annual Loan Repayment.
a. After any deferred Developer Fee has been paid, as set forth hereinabove, the
Borrower shall thereafter make a loan payment to the City annually, in the amount of the lesser
of the outstanding balance due under this Note or the City's Percentage of the Residual Receipts,
as provided in this Section 5.
b. Within one hundred twenty (120) days after the year in which the rehabilitation of
the Project is completed, and on or before the 120th day of each Calendar Year thereafter, the
Borrower shall submit to the City a detailed statement of Gross Revenues and Operating
Expenses attributable to the Property for the applicable Calendar Year, along with a computation
of the amount of the Residual Receipts applicable to such Calendar Year with which to make a
City Loan payment then due.
c. Except as otherwise provided in Section 4, the Borrower shall pay to the City fifty
percent (50%) of the Residual Receipts as payment of principal and interest under its loan. The
remaining amount of the Residual Receipts shall remain with the Borrower to be used by
Borrower as determined by the General Partners of Borrower, including, without limitation, for
distribution to the partners of the Borrower.
d. The Residual Receipts payment shall be made not later than one hundred fifty (150)
days after the close of the Calendar Year. Such payment shall be applied first to any accrued but
unpaid interest, if any, then to reduce the principal balance of the loans.
6. Reserved.
5
80A-112
EXHIBIT 3
7. Loan Renavment from Refinancing Proceeds.
The Borrower shall make a loan payment to the City from every Refinancing that occurs
during the term of this Note not to exceed the outstanding balance of principal and interest on
this Note, to the extent of the City's Percentage of the Refinancing Proceeds (if any), as follows:
the cash proceeds from such Refinancing shall be applied first to pay Closing Costs; next, the
amount necessary to pay in full all amounts owing on the Senior Loan; next to pay any amounts
due to the Limited Partner pursuant to the Partnership Agreement; next, the Borrower shall pay
to the City fifty percent (50%) of the then remaining unapplied Refinancing Proceeds not to
exceed the outstanding balance on this Note. The remaining Refinancing proceeds shall remain
with Borrower to be used by Borrower as determined by the General Partners of Borrower,
including, without limitation, for distribution to the partners of the Borrower. Such payment shall
be due within 30 days of the date of such Refinancing, and shall be applied first to any accrued
but unpaid interest, then to reduce the principal balance of the Loans. The City shall not be
required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the
City Loan in full.
8. Loan Repayment from Sale Proceeds.
The Borrower shall make a loan payment, not to exceed the outstanding balance of
principal and interest on this Note, to the City from any Sale that occurs during the term of the
City Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows: gross sale
proceeds are applied first to pay Closing Costs, next to pay in full all amounts owing on the
Senior Loan; next the Borrower shall pay to the City fifty percent (50%) of the then remaining
unapplied Sale Proceeds, not to exceed the outstanding amount of principal and interest due on
this Note. This fifty percent (50%) represents the total payment due under the City Note. The
remaining Sale Proceeds shall remain with Borrower. Such payment shall be due on the date of
such Sale, and shall be applied first to any accrued but unpaid interest, then to reduce the
principal balance of the Loans. The City shall not be required to reconvey the lien of the Deed of
Trust if Sale Proceeds are insufficient to repay the City Loan in full.
9. Buy Out Option.
Prior to the initial disbursement under this Note, the Borrower shall grant to the City a Right of
First Refusal (subject to any purchase option and/or right for first refusal granted to one or more
of the general partners of the Borrower) (the "City Right of First Refusal") to acquire the
Property if Borrower desires to transfer the Property to an entity which is not affiliated with one
or more of Borrower's general partners. The City Right of First Refusal shall be in form and
substance acceptable to the City and the Limited Partner and shall comply with all applicable
Tax Credit requirements.
3
80A-113
EXHIBIT 3
10. Accelerated Loan Payment.
The full principal amount outstanding plus accrued but unpaid interest thereon, shall be
due and payable on the earlier to occur of the following:
a. Sale or Refinancing of the Property as provided further in Section 15 hereof;
unless: (i) in the case of a Sale in which the City's Percentage of the Sale Proceeds are
insufficient to repay in full the City Loan, the City approves such sale -and the purchaser assumes
the balance of the City Loan in accordance with the terms of this Note; or (ii) in the case of a
Refinancing in which the City's Percentage of the Refinancing Proceeds are insufficient to repay
in full the City Loan, the City approves such Refinancing and the Borrower remains obligated
pursuant to the terms of this Note.
or
b. if an Event of Default occurs pursuant to Section 16 hereof.
c. The date that is fifty five (55) years after the date of execution of this Note.
11. Prepayment
Borrower may prepay the outstanding principal balance under this Note, in whole or in
part, together with any accrued but unpaid interest, if any, and other sums owed to the City under
this Note, if any, at any time without penalty.
12. Lawful Money.
Principal and interest are payable in lawful money of the United States of America.
13. Application of Payments; Late Charges.
a. Any payments received by the City pursuant to the terms hereof shall be
applied first to sums, other than principal and interest, due the City pursuant to this Note, next to
the payment of all interest accrued to the date of such payment, and the balance, if any, to the
payment of principal.
b. If any payment is not received by the City within ten (10) days following the
due date thereof, then in addition to the remedies conferred upon the City pursuant to this Note
and the other Loan Documents, (i) a late charge of four percent (4%) of the amount due and
unpaid will be added to the delinquent amount to compensate the City for the expense of
handling the delinquency and (ii) the amount due and unpaid, excluding the late charge, shall
bear interest at ten percent (10%) per annum, computed from the date on which the amount was
due and payable until paid. Without prejudice to the rights of the City hereunder or under any of
the other Loan Documents, Borrower shall indemnify the City against, and shall pay the City on
7
80A-114
EXHIBIT 3
demand, any expense or loss which it may sustain or incur as a result of the failure by Borrower
to pay when due any installment of interest and/or principal, fees, or other amounts payable to
the City under this Note or any other Loan Document, to the extent that any such expense or loss
is not recovered pursuant to such foregoing provisions. A certificate of the City setting forth the
basis for the determination of the amounts necessary to indemnify the City in respect of such
expenses or direct loss, submitted to Borrower by the City, shall be conclusive and binding for
all purposes except as immediately corrected by Borrower notice to City.
14. Securi
This Note is secured by the City Deed of Trust.
15. Acceleration by Reason of Transfer or Financing.
a. In order to induce City to make the loan evidenced hereby, Borrower agrees that
in the event of any transfer of the Property without the prior written consent of City
(other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of
foreclosure, by the holder of the Senior Loan Deed of Trust), City shall have the
absolute right at its option, upon at least 30 days' prior written notice to Borrower, to
declare all sums secured hereby immediately due and payable. Such consent will not
be unreasonably withheld. Consent to one such transaction shall not be deemed to be
a waiver of the right to require consent to future or successive transactions. City may
grant or deny such consent in its reasonable discretion and, if consent should be
given, any such transfer shall be subject to this Section 12, and any such transferee
shall assume all obligations hereunder and agree to be bound by all provisions
contained herein. Such assumption shall release Borrower from all liability
thereunder from and after the date of such assumption.
b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or
conveyance of the Property, or any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, the execution of any installment land sale contract
or similar instrument affecting all or a portion of the Property, or the lease of all or substantially
all of the Property. "Transfer' shall not include the leasing of individual residential units on the
Property, so long as Borrower complies with the provisions of the Loan Agreement and the
Affordable Housing Restrictions relating to such leasing activity, nor shall it include a
conveyance of the Property to a limited partnership in which the general partner of Borrower or
an affiliate is a general partner, or to a corporation that is wholly owned by the Borrower and that
is formed for the sole purpose of owning and operating the Property, or the sale back to the
Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the
balance of the Senior Loan, without the prior written consent of City (which consent City may
grant or deny in its sole discretion), then the entire outstanding balance of the City Loan together
with all accrued and unpaid interest, shall be repaid to the City at the time of each Refinancing or
partial Refinancing.
9
80A-115
EXHIBIT 3
c. For the avoidance of doubt, a "transfer" shall not include (i) a transfer of any
general partner's interest in Borrower when made in connection with the exercise by the
Borrower's limited partner (the "Limited Partner") of its rights upon a default by a general
partner under the Borrower's Partnership Agreement or upon a general partner's withdrawal in
violation of the Partnership Agreement, so long as the removal and substitution of the defaulting
general partner is made within thirty (30) days of such default or, if such removal and
substitution cannot reasonably be completed within thirty (30) days, so long as the Limited
Partner commences to take action to remove and substitute the general partner with a reasonable
period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the
Property to the managing general partner of Borrower pursuant to the right of first refusal or to
the general partners of Borrower pursuant to the purchase option, as provided for in the Purchase
Option and Right of First Refusal Agreement between Borrower and its general partner; (iii) any
transfer of the Limited Partner's interest in accordance with the Partnership Agreement; and (iv)
any sale, transfer or other disposition of an interest in a limited partner of the Borrower.
16. Event of Default.
Subject to the provisions of Sections 23 and 25 hereof, the occurrence of any of the
following shall be deemed to be an event of default ("Event of Default") hereunder: (a) failure by
Borrower to make any payments provided for herein, and if such default is not made good within
fifteen (15) days of written notice to Borrower of such default; or (b) failure by Borrower to
perform any covenant or agreement in the Deed of Trust, the Loan Agreement, or the
Affordability Restrictions on Transfer of Property within thirty (30) days after written demand
therefor by City (or, in the event that more than thirty (30) days is reasonably required to cure
such default, should Borrower fail to promptly commence such cure, and diligently and
continuously prosecute same to completion). Notwithstanding the foregoing, if Borrower fails to
cure such breach during the time set forth herein for such cure, City shall provide written notice
of such failure to Limited Partner and no Event of Default shall be deemed to occur unless
Limited Partner fails to cure such breach within 30 days following delivery of such notice;
provided, however, if in order to cure such breach Limited Partner determines that it must
remove the General Partner pursuant to the terms of the Partnership Agreement, then no Event of
Default shall occur until 30 days following the effective date of such removal.
17. Remedies.
Upon the occurrence and during the continuance of an Event of Default, after any
applicable notice has been provided and the expiration of any applicable cure period therefore,
City may declare all sums evidenced hereby immediately due and payable by delivery to the
Trustee named in the City Deed of Trust securing this Note, and to Borrower, written declaration
of default and demand for sale, and written notice of default and of election to cause the Property
to be sold, which notice Trustee shall cause to be duly filed for record and City may foreclose on
the City Deed of Trust. City shall also deposit with Trustee the Deed of Trust, this Note and all
documents evidencing expenditures secured thereby and evidenced hereby. No delay or
80A-116
EXHIBIT 3
omission on the part of the City in exercising any right under this Note or under any of the other
Loan Documents shall operate as a waiver of such right.
18. Attorneys' Fees.
If this City Loan Note is not paid when due or if any Event of Default occurs, Borrower
promises to pay all costs of enforcement and collection, including but not limited to, reasonable
attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions
hereof.
19. Severability.
Every provision of this Note is intended to be severable. In the event any term or
provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and
provisions hereof, which terms and provisions shall remain binding and enforceable.
20. Number and Gender.
In this Note the singular shall include the plural and the masculine shall include the
feminine and neuter gender, and vice versa, if the context so requires.
21. Non -recourse.
The City Loan is a nonrecourse obligation of the Borrower. Neither Borrower nor any
other party, including Borrower's partners, shall have any personal liability for repayment of the
City Loan or for any other amounts under any of the documentation evidencing, securing or
describing the City Loan. The sole recourse of City under this Note and the Deed of Trust for
repayment of the City Loan and for such other amounts arising therefrom shall be the exercise of
its rights against the Property and related security thereunder.
22. Subordination.
It is hereby expressly agreed and acknowledged by Borrower and City that the City Deed
of Trust is a subordinate deed of trust, and that this Note is subject and subordinate to the Senior
Loan Deed of Trust held by MUFG Union Bank, N.A..
23. Reserved.
24. Reserved.
25. Force Mal cure.
10
80A-117
EXHIBIT 3
Notwithstanding specific provisions of this Note, performance hereunder shall not be
deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs;
riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy;
epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental
restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor,
materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to
act of the City or any other public or governmental City or entity (except that any act or failure to
act of City shall not excuse performance by City); or any other causes beyond the reasonable
control or without the fault of the parry claiming an extension of time to perform. An extension
of time for any such cause shall be for the period of the enforced delay and shall commence to
run from the time the party claiming such extension gives notice to the other party, provided
notice by the party claiming such extension is given within thirty (30) days after the
commencement of the cause. Times of performance under this Note may also be extended in
writing by the City and the Borrower.
26. Assignments.
The City, and the assignee of the City, shall have the right to assign this Note and the
City Deed of Trust securing this Note, without any further act of Borrower. The assignee shall
give notice to Borrower as soon as practicable after such assignment.
26. Amendment and Restatement.
This Note amends, restates and supersedes in their entirety the Original Notes. On or
before the date hereof, the City shall surrender and deliver to Original Borrower the Original
Notes.
11
80A-118
EXHIBIT 3
This Note is hereby agreed to and executed on the date first set forth above.
"BORROWER"
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By: _
Name:
Title:
12
80A-119
EXHIBIT 3
EXHIBIT
A. City HOME Loan Notes (the "Original Notes")
13
80A-120
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80A-122
EXHIBIT 3
Exhibit Fo.
Affordability
Restrictions on
Transfer of Property
80A-123
EXHIBIT 3
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
AMENDED AND RESTATED AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
THESE AFFORDABLE HOUSING RESTRICTIONS ON TRANSFER OF
PROPERTY (the "Restrictions") are entered into as of September 17, 2019, by and among
and CORNERSTONE HOUSING PARTNERS LP, a California limited partnership
(referred to herein as the "Developer"), and the City of Santa Ana, a charter city and
municipal corporation (the "City").
RECITALS:
A. Developer is the owner of that certain real property located at 805, 810, 815,
816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California and commonly referred
to as the Cornerstone Apartments, and legally described in Exhibit A attached hereto and
incorporated herein by reference ("Property").
B. For the purpose of providing one -hundred, twenty-six (126) units of housing,
one hundred twenty-five (125) of which will be affordable to very -low income households
("Assisted Units"), Wakeham-Grant Apartments, L.P. (the "Original Developer") and the
City previously entered into the HOME Loan Agreements (as defined in the Loan
Agreement) and the Affordability Restrictions on Transfer of Property (collectively, the
"Original Restrictions") described in Exhibit B.
C. In connection with the Original Developer's sale of the Property to
Developer (the "Sale"), Original Developer and Developer desire to enter into that certain
Assignment and Assumption Agreement (HOME Loan), dated as of the date hereof, by and
between the Original Developer and the Developer to effectuate the assignment of the
HOME Loan Agreements to Developer (the "Assignment"), and the City has consented to
such Sale and Assignment.
D. The City and Developer have entered into that certain Amended and Restated
Loan Agreement, dated on or about the date hereof (the "Loan Agreement") to which these
80A-124
EXHIBIT 3
Restrictions are attached as Exhibit G, which, along with all of its attachments, is
incorporated herein by this reference (any capitalized term that is not otherwise defined in
these Restrictions shall have the meaning ascribed to such term in the Loan Agreement).
E. In connection with the Assignment, the City and Developer desire to amend
and restate the Original Restrictions.
F. The Loan Agreement provides, among other things, for the use of the
Property for affordable housing with all Assisted Units being restricted to Very -Low Income
households, at Affordable Rent(s).
G. The Loan Agreement contains certain provisions relating to the use of the
Property.
NOW, THEREFORE, CITY AND DEVELOPER COVENANT AND AGREE AS
FOLLOWS:
1. The Restrictions amend, restate and supersede in their entirety the Original
Restrictions. Developer covenants and agrees (for itself, its successors, its assigns, and
every successor in interest to the Property or any part thereof) that Developer, such
successors, and such assigns shall use the Property exclusively to provide affordable
housing of Very -Low Income households, as provided in these Restrictions and in the
Loan Agreement.
2. Developer, for itself and its successors and assigns, hereby covenants and
agrees that all of the apartments in the Property (less one manager's unit) (the "Units")
shall be rented exclusively, at Affordable Rent, to Very -Low Income households to the
extent provided for herein. Area median income levels and Affordable Rents are subject
to adjustment from time to time as provided in Section 3 below.
3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
3.1 Use Covenants and Restrictions
A. Developer agrees and covenants, which covenants shall run with the land and bind
Developer, its successors, its assigns and every successor in interest to the Property that
Developer will make all rental units on the Property available to very low-income households
at rents affordable to such households for fifty-five (55) years from the issuance of the
Certificate of Completion. The City permits the Developer to limit the eligibility and/or give
preference to a particular segment of the population in accordance with 24 CFR 92.253(d).
B. The Project shall consist of one -hundred, twenty-six (126) units, including one (1)
on -site manager's unit(s). The HOME assisted units shall be floating.
C. Rental increases shall be in conformance with federal and state law
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80A-125
EXHIBIT 3
D. Developer must have a written lease between tenant and owner for a period of at least
one year, unless a shorter period is mutually agreed upon. Leases must be consistent with the
HOME Program regulations at 24 CFR section 92.209(g).
3.2 Affordability Levels/Unit Mix:
All affordable rents in the Project shall be governed by the rents published annually by the
California Tax Credit Allocation Committee for households at 50% Area Median Income
upon the termination of the initial HOME Compliance Period, as applicable (as defined in
the Loan Agreement).
Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Housing
Authority of the City of Santa Ana publishes the Utility Allowance Schedule.
3.3 Rent Increases: On an annual basis, the City shall provide Developer with the
maximum allowable schedule of rents for the Property in accordance with changes in
allowable rent and income tables published by the California Tax Credit Allocation
Committee (TCAC). In no event can Developer charge any tenant more than such amount.
The City will make all best efforts to provide Developer with the maximum allowable
schedule of rents within no more than 30 calendar days after the date TCAC publishes the
allowable rent and income tables.
3.4 CHDO Provisions. Developer shall maintain CHDO (Community Housing
Development Organization) status for the term of this Agreement and the HOME Regulatory
Agreement in accordance with 24 CFR 92. Developer agrees to provide information as may
be requested by the City to document its continued compliance, including but not limited to
an annual board roster and certification of continued compliance.
The provisions of this Section 3.4 shall not apply in the event of a foreclosure of the Property
or transfer in lieu of foreclosure. In the event of a foreclosure, or acceptance of a deed in lieu
of foreclosure, Senior Lender will use commercially reasonable efforts to accept bids for the
Property from a qualified CHDO; provided, however, that in no event shall Senior Lender be
obligated to select a qualified CHDO to be the purchaser of the Property unless, among other
criteria used in Senior Lender's reasonable discretion, such qualified CHDO has offered the
highest purchase price among the bidders.
4. Developer, its successors and assigns shall not charge rents for the Units in excess
of the amounts set forth herein, as adjusted on the basis of the revised schedules of area
median incomes issued from time -to -time by HUD. The City shall notify Developer in
writing of the adjusted allowable maximum incomes and rents.
5. Developer shall adopt and include as part of its Management Plan (described in
Section 11 below), written tenant selection policies and criteria for the Units, that meet the
following requirements:
(a) Are consistent with the purpose of providing housing for Very -Low
Income households;
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80A-126
EXHIBIT 3
(b) Are reasonably related to program eligibility and the applicants'
ability to perform the obligations of the lease;
(c) Give reasonable consideration to the housing needs of households
that would have a preference under 42 CFR §906.211 (Federal selection preferences for
admission to Public Housing);
(d) Provide for:
(i) The selection of tenants from a written waiting list in the
chronological order of their application, insofar as is practicable; and
(ii) The prompt written notification to any rejected applicant of
the grounds for any rejection;
(e) Subject to compliance with the HOME Regulations and applicable
California and federal fair housing laws, local preference for Santa Ana residents and
workers in tenant selection shall be a requirement of the Project. Subject to applicable
laws and regulations governing nondiscrimination and preferences in housing occupancy
required by HUD or the State of California, as well as the City of Santa Ana Affordable
Housing Funds Policies and Procedures, the Developer shall give preference in leasing
units in the following order of priority:
1. First priority shall be given to persons who have been
permanently displaced or face permanent displacement from
housing in Santa Ana as a result of any of the following:
a. A redevelopment project undertaken pursuant to
California's Community Redevelopment Law (Health &
Safety Code Sections 33000, et seq.) -- applicable only
to projects funded by the Low and Moderate Income
Housing Asset Fund.
b. Ellis Act, owner -occupancy, or removal permit eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP
Contract by property owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at
least the last 6 months.
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EXHIBIT 3
(f) Carry out the Affirmative Marketing procedures of the City of Santa
Ana, which are designed to provide information and otherwise attract eligible persons
from all racial, ethnic and gender groups in the housing market area to the units.
Developer shall cooperate with the City to effectuate this provision prior to the initial
renting, or upon occurrence of a vacancy, and the re -renting of any Restricted Units (24
CFR 92.351).
6. Developer, its successors and assigns, shall not refuse to lease a unit to a
holder of a rental voucher under 24 CFR part 887 (Housing Choice Voucher Program) or
to a holder of a comparable document evidencing participation in a HOME tenant -based
assistance program because of the status of the prospective tenant as a holder of such
certificate of family participation, rental voucher, or comparable HOME tenant -based
assistance document. Total rents charged to the tenant for the tenant's share of rent shall
not exceed the allowable rents as described above.
7. Any lease of any of the units must be for not less than one year, unless by
mutual agreement between the tenant and the Developer. Should the tenant and Developer
agree to a term of less than one year, said agreement shall be expressed in some type of
written form, signed by the tenant, and maintained in the tenant's rental file held by the
Developer. The lease may not contain any of the following provisions (in which
references to "owner" shall mean the Developer, its successors or assigns):
(a) Agreement by the tenant to be sued, to admit guilt, or to a judgment
in favor of the owner in a lawsuit brought in connection with the lease;
(b) Agreement by the tenant that the owner may take, hold, or sell
personal property of household members without notice to the tenant and a court decision
on the rights of the parties. This prohibition, however, does not apply to an agreement by
the tenant concerning disposition of personal property remaining in the housing Unit after
the tenant has moved out of the Unit. The owner may dispose of this personal property in
accordance with state law;
(c) Agreement by the tenant not to hold the owner or the owner's agent
legally responsible for any action or failure to act, whether intentional or negligent;
(d) Agreement of the tenant that the owner may institute a lawsuit
without notice to the tenant;
(e) Agreement by the tenant that the owner may evict the tenant or
household members without instituting a civil court proceeding in which the tenant has the
opportunity to present a defense, or before a court decision on the rights of the parties;
(f) Agreement by the tenant to waive any right to a trial by jury;
(g) Agreement by the tenant to waive the tenant's right to appeal, or to
otherwise challenge in court, a court decision in connection with the lease; and
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80A-128
EXHIBIT 3
(h) Agreement by the tenant to pay attorney's fees or other legal costs
even if the tenant wins in a court proceeding by the owner against the tenant. The tenant,
however, may be obligated to pay costs if the tenant loses.
8. Developer, its successors or assigns, must adhere to state law requirements
with regard to termination of tenancy.
9. Developer shall maintain the improvements on the Property in compliance
with all applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local
code requirements (California Health and Safety Code section 33418), and shall keep the
Property free from any unreasonable accumulation of debris or waste materials.
Developer shall also maintain in a healthy condition any landscaping planted on the
Property.
10. Developer covenants and agrees for itself, its successors, its assigns and
every successor in interest to the Property or any part thereof, there shall be no
discrimination against or segregation of any person, or group of persons, on account of
race, color, creed, religion, sex, mental or physical disability, marital status, national origin
or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property
nor shall the Developer itself or any person claiming under or through it establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Property, as required by the Title VI of the Civil Rights Act of 1964, the
Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age
Discrimination Act of 1975, and all implementing regulations.
11. Not later than five (5) business days prior to the execution of the
documents, Developer shall submit to the Executive Director a Management Plan in a
form that is acceptable to the Executive Director, including, but not limited to, the
components listed below. Approval of the Management Plan must be obtained from the
Executive Director not later than the time for the Closing. Developer shall manage the
Assisted Units in accordance with the approved Management Plan, including such
amendments as may be approved in writing from time to time by the Executive Director,
for the term of the income and rent restrictions contained in these Restrictions. The
components of the Management Plan shall include:
(a) Management Agent. Developer shall submit the name and
qualifications of the proposed Management Agent. The Executive Director shall approve
or disapprove the proposed Management Agent in writing based on the experience and
qualifications of the Management Agent.
(b) Management Agreement. Developer shall submit a copy of the
proposed management agreement specifying the amount of the management fee, and the
relationship and division of responsibilities between Developer and Management Agent.
(c) Annual Budget and Projected Cash Flows. Prior to the Closing,
and annually thereafter not later than ninety (90) days after the close of each calendar year
thereafter until the Loan is repaid in full, Developer shall submit a projected operating
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80A-129
EXHIBIT 3
budget and cash flow to the Executive Director. The budget and cash flow shall be in a
form that is acceptable to the Executive Director.
(d) Tenant Selection Policies. Developer shall include in the
Management Plan the tenant selection policies in accordance with Section 5, above.
12. If at any time the City determines that the units are not being managed or
maintained in accordance with the approved Management Plan, the City shall send the
Developer a detailed description of the management deficiencies (a "Deficiency Notice").
If the deficiencies set forth in the Deficiency Notice are not cured within thirty (30) days
(or such longer period as may be reasonably required to cure the deficiency), with the
exception of HOME regulations that require a shorter period, the Executive Director may
require Developer to change management practices or to terminate the management
contract and designate and retain a different management agent. The management
agreement shall provide that it is subject to termination by Developer without penalty,
upon thirty (30) days prior written notice, at the direction of the Executive Director upon
failure to cure a Deficiency Notice within the time period specified above. Within ten (10)
days following a direction of the Executive Director to replace the management agent in
accordance with the terms hereof, the Developer shall select another management agent or
make other arrangements satisfactory to the Executive Director or designee for continuing
management of the units.
13. The covenants established in these Restrictions and any amendments hereto
approved by the City and Developer shall, without regard to technical classification and
designation, be binding for the benefit and in favor of the City and their respective
successors and assigns. These Restrictions shall remain in effect for fifty-five (55) years.
In its discretion, the City may defer repayment of the HOME Loan or the City may agree
to such reasonable modifications to the requirements of these Restrictions, as they may
determine are necessary for the continued maintenance and operation of the Assisted
Units. The covenants against discrimination shall remain in effect for the period of these
Restrictions.
14. Developer shall not request disbursement of HOME funds until the funds
are needed to pay eligible costs. The City shall have the right to disapprove any request if
the City determines the request is for an ineligible item or is otherwise not in compliance
with or inconsistent with the Loan Agreement and these Restrictions [24 CFR 92.504
(c)(10A.
15. Developer shall prepare, maintain and submit to the City, as appropriate,
the following records and reports in compliance with 24 CFR 92.504 (c) (12):
a. Annual Reports. Developer shall file with the City an Annual Report
(herein referred to as the "Annual Report") within one hundred twenty (120) days
following the end of each calendar year, commencing with the end of the calendar year (or
portion thereof) in which the Real Estate Closing occurs. The Annual Report shall contain
a certification by Developer as to such information as the City Executive Director may
then require, including, but not limited to, the following:
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80A-130
(1) The fiscal condition of the Project, including the Annual Budget and
Project Cash Flow report required by Section 10 (c) of the Affordable Housing
Restrictions which shall include a financial statement for the previous calendar year that
includes a balance sheet and a profit and loss statement indicating any surplus or deficit in
operating accounts; a detailed itemized listing of income and expenses; and the amounts of
any fiscal reserves. Such Annual Budget and financial statement shall be prepared in
accordance with generally accepted accounting practices. The City Executive Director
may require that the financial statement be audited at Developer's expense by an
independent certified public accountant acceptable to the Executive Director.
(2) Any substantial physical defects in the Project, including a
description of any major repair or maintenance work undertaken or needed in the previous
and current years. Such statement shall describe what steps Developer has taken in order
to maintain the Project in a safe and sanitary condition in accordance with applicable
housing and building codes and the property standards set forth in 24 CFR 92.251.
(3) The occupancy of the units indicating the income of each current
resident and the current rents charged each resident and whether those rents include
utilities, including records that demonstrate that the Project meets the requirements of 24
CFR 92.253 for tenant and participant protection under the HOME Program.
(4) General management performance, including tenant relations and
other relevant information.
(5) Records that demonstrate that the units meet the affordability
requirements of 24 CFR 92.252, 50052.5 and 50053(b)(1) of the California Health and
Safety Code, for the required period of affordability according to section 33334.3 of the
California Health and Safety Code.
(6) Evidence of a currently paid hazard insurance policy in accordance
with the requirements of Section 6 of the City/HOME Deed of Trust, with a loss payable
endorsement naming the City as a loss payee(s) together with other approved lenders (as
their interests may appear), with a "Replacement Cost Endorsement" in amount sufficient
to prevent Developer or City from becoming. a co-insurer under the terms of the policy, but
in any event in an amount not less than 100% of the then full replacement cost, to be
determined at least once annually and subject to reasonable approval by the Executive
Director.
(7) Evidence of a currently paid liability insurance policy, naming the
City as additional insured and in a form approved by the City Attorney with coverage as
described in the Loan Agreement.
(8) Termite reports pertaining to the Property every fifth (5a`) year.
(9) Such other information as may be reasonably required by the
Executive Director or his/her designee.
b. Records and Audits. During the HOME Compliance Period, Developer
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80A-131
EXHIBIT 3
shall maintain the following general program records, and make them available for
inspection by the City, the State or HUD:
(1) records which demonstrate that the project meets the property
standard specified in 24 CFR 92.251;
(2) records, for each HOME Assisted Unit, which demonstrates that the
project meets the requirements of 24 CFR 92.252.
(3) records which demonstrate compliance with the tenant and
participant protections, as specified in 24 Section 29.253;
(4) records which demonstrate compliance with the Equal Opportunity
and Fair Housing requirements outlined in these Restrictions, including:
(A) data on the extent to which each racial and ethnic group and
single head of household (by gender of head of household) have applied for, participated
in, or benefited from, any program or activity funded in whole or in part with HOME
funds;
(13) documentation of actions undertaken to meet the equal
opportunity requirements of 24 CFR 92.350, which implements Section 3 of the Housing
Development Act of 1968, as amended (12 U.S.C. 1701u);
(C) documentation and data on the steps taken to implement
Developer's outreach programs to minority -owned and women -owned businesses to meet
the minority outreach requirements of 24 CFR 92.350;
(5) documentation of the steps taken to carry out an affirmative
marketing program in accordance with 24 CFR 92.351, if applicable;
(6) if applicable, records which demonstrate compliance with the
requirements relating to relocation of displaced persons, as described in 24 CFR 92.353.
At a minimum, these shall include project occupancy lists identifying the name and
address of all persons occupying the project property up until the date of the Real Estate
Closing (i.e., the date on which Developer obtained site control);
(7) records concerning lead -based paint in accordance with 24 CFR
92.355;
(8) if applicable, records which support any requests for waivers of the
conflict of interest prohibition as stated in 24 CFR 92.356;
(9) records of certifications of contractor qualifications as they relate to
the debarment and suspension requirement as stated in 24 CFR 92.357 and 24 CFR Part
24; and
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80A-132
IWN:I 1 0.11
(10) any other reports issued by other monitoring agencies.
C. All records pertaining to each calendar year of HOME funds
must be retained for the most recent five year period, except that for rental housing
projects, records may be retained for five years after the project completion date; except
that records of individual tenant income verifications, project rents and project inspections
must be retained for the most recent five year period, until five years after the affordability
period terminates (24 CFR 92.508). Developer shall cooperate with the City to retain all
books and records relevant to the Loan Agreement for a minimum of five years after the
expiration of the Loan Agreement and any and all amendments hereto, or for five years
after the conclusion or resolution of any and all audits or litigation relevant to the Loan
Agreement, whichever is later. The City, the State, the Office of the Auditor General of
HUD, and/or their representatives shall have unrestricted reasonable access to all
locations, books, and records for the purpose of monitoring, auditing, or otherwise
examining said locations, books, and records with or without prior notice.
d. If so directed by the City, the State or HUD upon termination of the Loan
Agreement, Developer shall cause all records, accounts, documentation and all other
materials relevant to the work to be delivered to the City, the State or HUD, as depository.
e. All records, accounts, documentation and other materials relevant to the
Project shall be accessible at any time to the authorized representatives of the City, the
State or HUD, on reasonable prior notice, for the purpose of examination or audit.
f. Pursuant to 24 CFR Part 44, the City shall perform an annual audit at the
close of each calendar year in which these Restrictions are in effect. Developer shall
reasonably cooperate with City in performing such audit.
16. If an event of default occurs under the terms of these Restrictions, prior to
exercising any remedies hereunder, City shall give Developer written notice of such
default. If the default is reasonably capable of being cured within thirty (30) days,
Developer shall have such period to effect a cure prior to exercise of remedies by the City
under these Restrictions. If the default is such that it is not reasonably capable of being
cured within thirty (30) days, and Developer (i) initiates corrective action within said
period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as
possible, then Developer shall have such additional time as is reasonably necessary to cure
the default prior to exercise of any remedies by City.
The City is a beneficiary of the terms and provisions of these Restrictions
and the covenants herein, both for and in their own right and for the purposes of protecting
the interests of the community and other parties, public or private, for whose benefit these
Restrictions and the covenants running with the land have been provided. Upon the
occurrence of an event of default and the expiration of the notice and cure period specified
above, the City shall have the right to exercise all rights and remedies, and to maintain any
actions or suits at law or in equity or other proper proceedings to enforce the curing of
such breaches to which they or any other beneficiaries of these Restrictions and covenants
are entitled.
10 of 14
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EXHIBIT 3
17. The covenants and agreements contained herein shall run with the land and
not be personal obligations of Developer. Upon the sale, conveyance or other transfer of
the Property (a "Transfer") and the assumption of the obligations hereunder by a
transferee, Developer's liability for performance shall be terminated as to any obligation to
be performed hereunder after the date of such Transfer.
18. The Loan Agreement and all of its attachments shall be enforceable by
City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability
Restrictions on Transfer of Property, the City/HOME Loan Note and the City/HOME
Deed of Trust provide a means of enforcement by the City if Developer is in breach of its
obligations hereunder and thereunder, including liens on the Property, use and deed
restrictions and covenants running with the land [24 CFR 92.504 (c) (13)].
11 of 14
80A-134
EXHIBIT 3
IN WITNESS WHEREOF, the parties hereto have caused these Amended and Restated
Affordability Restrictions on Transfer of Property to be executed on the date set forth
hereinabove.
ATTEST:
Daisy Gomez
Clerk of the Council
APPROVED AS TO FORM
Sonia R. Carvalho
City Attorney
By: Ryan O. Hodge
Assistant City Attorney
THE CITY OF SANTA ANA
Kristine Ridge
City Manager
RECOMMENDED FOR APPROVAL:
Steven A. Mendoza
Executive Director
Community Development Agency
{Signatures continue on followingpage)
12 of 14
80A-135
DEVELOPER:
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By: _
Name:
Title:
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On , before me,
a notary public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WIl NESS my hand and official seal.
Signature
(SEAL)
13 of 14
80A-136
EXHIBIT 3
EXHIBITS
A. Legal Description
B. Affordability Restrictions on Transfer of Property (the "Original Restrictions")
14 of 14
80A-137
EXHIBIT 3
Legal Description
The Land referred to herein below is situated in the City of Santa Ana, County of Orange, State of California, and is
described as follows:
PARCEL ONE:
LOTS 7 THROUGH 13 INCLUSIVE OF TRACT 3547 IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 138, PAGES 32 AND 33 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID ORANGE COUNTY.
PARCEL TWO:
PARCEL 1 OF "LOT MERGER NO. 2019-08" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282886 OF
OFFICIAL RECORDS.
PARCEL THREE:
PARCEL 1 OF "LOT MERGER NO. 2019-10" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282887 OF
OFFICIAL RECORDS.
For conveyancing purposes only: APN 404-033-01 (Affects portion of Parcel Two)
APN: 404-033-02 (Affects portion of Parcel Two)
APN: 404-032-01 (Affects portion of Parcel Three)
APN: 404-032-02 (Affects portion of Parcel Three)
APN: 404-031-03 (Affects Lots 8 and 9 of Parcel One)
APN: 404-031-01 (Affects Lots 12 and 13 of Parcel One)
APN: 404-031-04 (Affects Lot 7 of Parcel One)
APN: 404-031-02 (Affects Lots 10 and 11 of Parcel One)
80A-138
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80A-139
EXHIBIT 3
Exhibit Go.
HOME Loan
Agreements
80A-140
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80A-141
80A-142
EXHIBIT 4
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
AMENDED AND RESTATED
HOUSING SUCCESSOR AGENCY LOAN AGREEMENT
by and between the
HOUSING AUTHORITY OF THE CITY OF SANTA ANA
SERVING AS THE HOUSING SUCCESSOR AGENCY TO THE
FORMER COMMUNITY REDEVELOPMENT AGENCY
M
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
Dated: September 17, 2019
80A-143
EXHIBIT 4
AMENDED AND RESTATED HOUSING SUCCESSOR
AGENCY LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement")
dated, for identification purposes only, as of September 17, 2019, is made and entered into
by and between the Housing Authority of the City of Santa Ana serving as the Housing
Successor Agency to the former Community Redevelopment Agency, a public body,
corporate and politic ("Housing Successor Agency" or "Agency") and CORNERSTONE
HOUSING PARTNERS LP, a Califomia limited partnership, with reference to the
following:
RECITALS:
A. Developer is the owner of that certain real property located at 805, 810, 815,
816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California and commonly referred
to as the Cornerstone Apartments, and legally described in Exhibit A attached hereto and
incorporated herein by reference ("Property").
B. The Community Redevelopment Agency of the City of Santa Ana ("CRA")
and Wakeham-Grant Apartments, L.P. (the "Original Developer") previously entered into
the Tax Increment Loan Agreements recorded in Official Records of Orange County and
the Owner Participation Agreements (collectively, "Housing Successor Agency Loan
Agreements") described in Exhibit G.
C. The purpose of said Housing Successor Agency Loan Agreements was to
assist with the rehabilitation of a 126-unit residential housing development on the Property
("Project').
D. The CRA was established as a redevelopment agency that was previously
organized and existing under the California Community Redevelopment Law, Health and
Safety Code sections 33000, et seq., and previously authorized to transact business and
exercise powers of a redevelopment agency pursuant to action of the City Council of the
City of Santa Ana ("Agency").
E. Assembly Bill xl 26 added Parts 1.8 and 1.85 to Division 24 of the Health
and Safety Code ("Dissolution Act'), which laws caused the dissolution and wind down of
all redevelopment agencies as of and on February 1, 2012.
F. The CPA is now a dissolved redevelopment agency pursuant to the
Dissolution Act.
G. By a resolution considered and approved by the City Council at an open
public meeting, the Agency chose to become and serve as the successor agency to the
dissolved CRA under the Dissolution Act, as of February 1, 2012.
H. By another resolution considered and approved by the City Council at an
open public meeting on January 9, 2012, pursuant to section 34176 of the Dissolution Act,
the Housing Authority of the City of Santa Ana (CA093) ("Housing Authority") accepted
2
80A-144
EXHIBIT 4
and assumed the housing assets and functions of the CRA. Therefore, as of February 1,
2012, the Housing Authority became and serves as the Housing Successor Agency of the
former CRA pursuant to the Dissolution Act.
I. The housing assets that transferred from the CRA to the Housing Authority
include real property, contracts, leases, books and records, the loan portfolio, buildings,
equipment, encumbered funds, and the Low and Moderate Income Housing Asset Fund,
collectively referred to as Housing Assets pursuant to section 34176 of the Dissolution Act.
J. Accordingly, the Housing Authority, acting as the Housing Successor
Agency, now has all "rights, powers, assets, liabilities, duties and obligations" relating to
the Housing Assets, obligations, and functions of the former CRA pursuant to section
34181 of the Dissolution Act.
K. In connection with the Original Developer's sale of the Property to
Developer (the "Developer Sale"), Original Developer and Developer desire to enter into
that certain Assignment and Assumption Agreement (Housing Successor Agency Loan) by
and between the Original Developer and the Developer to effectuate the assignment of the
Housing Successor Agency Loan Agreements to Developer (the "Assignment"), and the
Agency has consented to such Developer Sale and Assignment.
L. In connection with the Assignment, the parties desire to amend and restate
said Housing Successor Agency Loan Agreements in order to: restate the terms of the
Housing Successor Agency Loan Agreements; extend the Term of the Housing Successor
Agency Loan Agreements, and to set all affordable rents at the Project based on Tax Credit
Allocation Committee ("TCAC") rents, instead of the existing State of California Health
and Safety Code rents.
M. On November 20, 2018, the Housing Authority authorized the Executive
Director of the Housing Authority to execute a commitment letter to resubordinate the
Housing Successor Agency Loan Agreements for the Cornerstone Apartments to tax-
exempt multifamily bonds in an amount not to exceed $8,700,000. The Housing Authority
also authorized the Executive Director to level all rents onsite at the 50% TCAC rents
instead of the existing Health and Safety Code rents. No new Housing Successor Agency
funds are being provided to the Project.
N. On September 17, 2019, the Housing Authority authorized the
reubordination of the Housing Successor Agency Loan Agreements for the Cornerstone
Apartments to a $17,250,000 construction loan, which will be reduced to $11,100,000 in
connection with the conversion of the construction loan to a permanent loan.
O. The Developer has received a new allocation of 4% low-income housing
tax credits in order to resyndicate and recapitalize the Project and rehabilitate the 126
affordable rental units, as is typical after the 15 year TCAC compliance period.
P. This Agreement and all of its attachments shall be enforceable by
Agency in accordance with the terms thereof. Each of this Agreement, the Affordability
Restrictions on Transfer of Property, the Housing Successor Agency Loan Note and the
3
80A-145
F: VA 111P-31�!
Housing Successor Agency Deed of Trust provide a means of enforcement by the
Agency if Developer is in breach of its obligations hereunder and thereunder, including
liens on the Property, use and deed restrictions and covenants running with the land [24
CFR 92.504 (c) (13)].
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Agency and Developer agree as follows:
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Project Documents, unless otherwise
expressly defined, are defined where first used in this Agreement and/or as set forth in
this Article 1.
"Agency" means the Housing Authority of the City of Santa Ana serving
as the Housing Successor Agency to the former Community Redevelopment Agency, a
public body, corporate and politic.
"Affordable Housing" means housing operated in accordance with the
requirements of 24 CFR 92.252 and the rents governed by HUD.
"Affordability Restrictions on Transfer of Property" means that
certain document affecting real property benefiting the Agency, attached hereto as Exhibit
F.
"Affordable Rent" means the monthly rents that are set forth in more detail
in Section 7 of this Agreement.
'Building Permit' means the building permit(s) issued by the City of
Santa Ana and required for the construction, if any.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Santa Ana City Hall is open to the public for the conduct of Agency affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 31.
"Certificate of Completion" has the meaning set forth in Article 17.
"City" means the City of Santa Ana, California, a charter city and
municipal corporation.
"Housing Successor Agency Loan" means the loan to be made to
Developer by Agency from Housing Successor Agency funds pursuant to Article 5
of this Agreement.
80A-146
EXHIBIT 4
"Housing Successor Agency Loan Deed of Trust" means the deed of
trust encumbering the Property, in the form attached hereto as Exhibit D, to be
executed by Developer pursuant to Section 5.13.2 in order to secure the Housing
Successor Agency Loan Note.
"Housing Successor Agency Loan Note" means that certain promissory
note in the original principal amount of TWO MILLION, FIFTY-FOUR
THOUSAND, THREE HUNDRED AND TWENTY-SEVEN DOLLARS
($2,054,327), in the form attached hereto as Exhibit E, and to be executed by
Developer in favor of Agency to evidence the obligation of Developer to repay the
Housing Successor Agency Loan
"Close of Escrow" shall mean the date upon which the Housing Successor
Agency Loan Deed of Trust is recorded in the Official Records of the County.
"Closing Statement" means the final statement of Developer's
Escrow account for the purchase and sale of the Property pursuant to the Purchase Contract.
"County" means the County of Orange, California.
"Developer" means CORNERSTONE HOUSING PARTNERS LP, a
California limited partnership, its successors and assigns.
"Developer's Representative" shall mean the President of
the Managing General Partner of Developer or his/her designee.
"Escrow Holder" means First American Title Insurance Company,
18500 Von Karman Avenue, Suite 600, Irvine, CA 92612.
"Event of Default" has the meaning set forth in Section 20.1.
"Executive Director" means the Executive Director of the Community
Development Agency, or his/her designee.
"Extremely Low Income" an adjusted income which does not exceed
thirty percent (30%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD.
"General Partner(s)" means the General Partners of Developer,
Cornerstone Housing Partners LP, and their respective successors and assigns.
"Governmental Authority" means any governmental or quasi
governmental agency, board, bureau, commission, department, court, administrative
tribunal or other instrumentality or authority, and any public utility.
"Hazardous Materials" means flammable materials, explosives,
radioactive materials, hazardous wastes, toxic substances and similar substances and
materials, including all substances and materials defined as hazardous or toxic wastes,
80A-147
EXHIBIT 4
substances or materials under any applicable law, including without limitation the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et sue., and the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. §§ 9601, et seq., as amended.
"HUD" means the United States Department of Housing and Urban
Development and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter
comprising any portion of the Property, including, without limitation, landscaping, trees
and plant materials; and offsite improvements (including, without limitation, streets,
curbs, storm drains, and adjacent street lighting).
"Indebtedness" of a person means (a) all indebtedness for borrowed
money, (b) notes payable and drafts accepted representing extensions of credit, whether
or not representing obligations for borrowed money, (c) any obligation for the purchase
of property or services in excess of $10,000 in the aggregate that is (i) deferred for more
than six (6) months, or (ii) evidenced by a note or similar instrument, and ( d) all recourse
and all non -recourse indebtedness secured by any Lien on any property or asset of such
person (whether or not assumed by such person).
"Indemnitees" has the meaning set forth in Section 14.5.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
judgments, injunctions, decrees or awards of the United States or any state, county,
municipality or other Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any lien or security
interest).
"Limited Partner" means the Limited Partners of Developer pursuant to
the Partnership Agreement, and their successors and assigns.
"Loan Documents" means, collectively, this Agreement, the Housing
Successor Agency Loan Note, the Housing Successor Agency Loan Deed of
Trust, the Affordability Restrictions on Transfer of Property, and any other
agreement, document, or instrument that the Agency requires in connection with
the execution of this Agreement or from time to time to effectuate the purposes of
this Agreement.
"Low Income" means an adjusted income which does not exceed eighty
percent (80%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD.
.4 I � ' 46
EXHIBIT 4
"Median Income for the Area" means the median income for the Orange
County, California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Loan Documents as "Area Median Income" or "AMI".
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership dated September 1, 2019, as said Partnership Agreement may be
amended from time to time.
"Permitted Encumbrances for the Affordable Housing Restrictions"
means, collectively, the Senior Loan Deed of Trust and all other title exceptions and
limitations with respect to the Property hereafter approved by the Executive Director in
writing.
"Permitted Encumbrances for the Agency Loan Deed of Trust"
means, collectively, the Senior Loan Deed of Trust and all other title exceptions and
limitations with respect to the Property hereafter approved by the Executive Director in
writing.
"Project" means the acquisition and new construction of the Property by
Developer pursuant to this Agreement.
"Project Budget" means the line -item budget for the Project
attached hereto as Exhibit C, as modified from time to time in accordance with this
Agreement.
"Project Costs" means all costs of any nature incurred in connection with
the Project in accordance with generally accepted accounting principles.
"Property" means, collectively,the Properties that are located at 805 S.
Minnie St, 815 S. Minnie St, 816 S. Minnie St., 825 S. Minnie St., 828 S. Minnie
St., 835 S. Minnie St., and 904 S. Minnie St, within the City of Santa Ana, and is
more fully described in the "Legal Description" of the Property attached hereto as
Exhibit A and incorporated herein by reference.
"Senior Lender" means MUFG Union Bank, N.A. or any other holder of
the Senior Loan Note(s) or any refinancing of the Senior Loan Note(s).
"Senior Loan" shall mean the senior loan being made by Senior Lender
concurrent to the Housing Successor Agency Loan for payment of a portion of the
acquisition and new construction costs, and shall include any subsequent loan that
refinances the initial Senior Loan.
"Senior Loan Deed of Trust" means the deed of trust securing the
Senior Loan by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement
80A-149
EXHIBIT 4
governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and
any other agreement, document or instrument that the Senior Lender requires in
connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the
Senior Loan from Senior Lender.
"Term" the terms and conditions contained herein shall remain in effect
for fifty-five (55) years. The Affordability Restrictions on Transfer of Property shall also
remain in effect for fifty-five (55) years.
"Very Low Income" means an adjusted income which does not exceed
fifty percent (50%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD.
1.2 Singular and Plural Terms. Any defined term used in the plural in this
Agreement or any other Loan Document shall refer to all members of the relevant class
and any defined term used in the singular shall refer to any number of the members of the
relevant class.
1.3 References and Other Terms. Any reference to this Agreement or any
Loan Document shall include such document both as originally executed and as it may
from time to time be modified. References herein to Articles, Sections and Exhibits shall
be construed as references to this Agreement unless a different document is named.
References to subparagraphs shall be construed as references to the same Section in
which the reference appears. The term "document' is used in its broadest sense and
encompasses agreements, certificates, opinions, consents, instruments and other written
material of every kind. The terms "including" and "include" mean "including (include)
without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement,
as now existing and as the same may from time to time be modified, are incorporated
herein by this reference.
2. AMENDMENT AND RESTATEMENT
This Agreement amends, restates and supersedes in their entirety the Housing
Successor Agency Loan Agreements.
3. SCOPE OF WORK/ PROJECT BUDGET
Developer shall comply with this Section until the Certificate of Completion is
issued.
A "Scope of Work" for the Property is attached hereto as Exhibit B. Any change
to the Scope of Work requested by the Developer, which would result in a change
to the Project Budget in excess of ten percent (10%) of any individual line item or in
80A-150
EXHIBIT 4
excess of five percent (5%) of the aggregate budget, shall be subject to the prior written
approval of the Executive Director.
A line -item budget for the Project, including a summary statement of sources and
uses of funds, is incorporated into Exhibit C (the "Project Budget"). Any material change
to the Project Budget in excess of ten percent (10%) of any individual line item or in
excess of five percent (5%) of the aggregate budget shall be subject to the prior written
approval of the Executive Director which if not granted or denied within five (5)
Business Days, shall be deemed approved; provided, however, that in all events,
Developer shall at all times obtain and maintain all required permits and approvals from
the City's Planning and Building Agency. Notwithstanding the foregoing, the Agency's
approval of a change order shall not be required unless the approval of the Senior Lender
is required with respect to such change order.
4. [RESERVED]
5. LOANS
A. AGENCY LOAN:
1. Amount and Purpose. Subject to the terms and conditions of this Agreement,
Agency agrees to make a loan of Housing Successor Agency funds to Developer in the
principal amount of up to TWO MILLION, FIFTY-FOUR THOUSAND, THREE
HUNDRED AND TWENTY-SEVEN DOLLARS ($2,054,327) (the "Housing
Successor Agency Loan") for the rehabilitation of the Property. No new Housing
Successor Agency funds are being provided to the project. The Loan consolidates ten
existing Housing Successor Agency loans for the purpose of enabling the Developer to
resyndicate and rehabilitate the Property.
2. Housing Successor Agency Note and Deed of Trust. The Housing
Successor Agency Loan shall be evidenced by the Housing Successor Agency Loan Note
in the form attached hereto as Exhibit E. The Housing Successor Agency Loan shall be
secured by the Housing Successor Agency Loan Deed of Trust in the form attached
hereto as Exhibit D. The Housing Successor Agency Loan Deed of Trust shall be a deed
of trust encumbering the Property, subordinate to the Senior Loan(s) made to Developer
and the Senior Loan Documents.
3. Housing Successor Agency Loan Terms. The terms and conditions of
the Housing Successor Agency Loan are as set forth in the Housing Successor Agency
Loan Note which is a residual receipts note.
6. CONDITIONS TO RETAIN EXISTING LOANS
Developer shall comply with this Section until the Certificate of Completion is issued.
6.1 Conditions Precedent. Agency's obligation to provide the Loan Amount is
subject to the satisfaction, or waiver by the Executive Director, of the following
conditions precedent:
80A-151
EXHIBIT 4
(a) Loan Documents. Developer shall have delivered to the
Escrow Holder, signed by the authorized officer or officers of Developer, with such
signature(s) acknowledged where necessary, each of the following documents:
(i) This Agreement;
(ii) The Housing Successor Agency Loan Note;
(iii) The Housing Successor Agency Loan Deed of Trust; and
(iv) The Affordability Restrictions on Transfer of Property.
(b) Title Insurance. Agency shall have received an LP-10 ALTA
Lender's loan policy of title insurance (2006 edition), or evidence of a
commitment therefore satisfactory to Agency, issued by First American Title
Insurance Company and in form and substance satisfactory to Agency, together
with all endorsements and binders required, naming Agency as the insured, in a
policy amount of not less than the Housing Successor Agency Loan Amount,
showing Developer as the fee owner of the Property and insuring the Housing
Successor Agency Loan Deed of Trust to be a valid lien on the Property. This
Agreement, the Housing Successor Agency Loan Note, and Housing Successor
Agency Loan Deed of Trust shall be subordinate to the Senior Loan Note and
Senior Loan Deed of Trust.
(c) Affordability Restrictions on Transfer of Property. Developer
shall have delivered to the Escrow Holder, in the form attached hereto as Exhibit F, the
Affordability Restrictions on Transfer of Title pursuant to which, among other things,
Developer agrees that the Property shall be used only for decent, safe, sanitary and
affordable rental housing pursuant to the affordability requirements of Code of Federal
Regulations ("CFR') section 92.252 or 92.254 and California Health and Safety Code
("H&S") sections 50052.5, as applicable.
(d) Documents Recorded. This Agreement, the Housing Successor
Agency Loan Deed of Trust and the Affordability Restrictions on Transfer of Property
shall have been recorded in the Official Records of the County. This Agreement, and the
Housing Successor Agency Loan Deed of Trust shall be subordinate to the Senior Loan
Note and the Senior Loan Deed of Trust.
(e) Request for Notice. For the benefit of Agency, Escrow Holder shall
have recorded a request for notice of default of the Senior Loan (the "Request for Notice
of Default").
(f) Insurance. Agency shall have received evidence satisfactory to the
Agency Attorney that all of the policies of insurance required by Section 19 of
this Agreement are in full force and effect.
(g) Representations and Warranties. The representations and
10
80A-152
EXHIBIT 4
warranties of Developer contained in this Agreement and the other Loan Documents shall
be correct in all material respects as of the Close of Escrow as though made on and as of
that date, and if requested by the Executive Director, Agency shall have received a
certificate to that effect signed by Developer's Representative.
(h) No Default. No Event of Default by Developer shall have occurred,
and no event shall have occurred which, with the giving of notice or the passage of time
or both, would constitute an Event of Default by Developer under this Agreement, and if
requested by the Executive Director, Agency shall have received a certificate to that
effect signed by Developer's Representative.
6.3 Termination for Failure of Condition. If (a) any of the conditions set forth
herein are not timely satisfied or waived by the Executive Director following the
expiration of any applicable notice and cure period, and (b) Agency is not in default
under this Agreement, Agency may terminate this Agreement without any further liability
on its part by giving written notice of termination to Developer. Upon the giving of such
notice, all principal, interest and other amounts owing under the Housing Successor
Agency Loan Note shall be immediately due and payable, regardless of any other
specified due date.
6.4 [Reserved.]
6.5 [Reserved.]
6.6 [Reserved.]
6.7 [Reserved.]
6.8 Other Terms and Conditions of Loan.
A. The Housing Successor Agency Loan Note shall become immediately
due and payable, in the event of any of the following:
(1) violation of any of the use covenants and restrictions contained in
this Agreement after the expiration of any applicable notice and cure
periods;
(2) an Event of Default by Developer which is not timely cured after
expiration of any applicable notice and cure periods pursuant to the
terms of this Agreement.
6.9 Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges,
(b) all recording fees and charges on any document recorded pursuant to this Agreement,
and (c) the premium for the title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
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7.1 Use Covenants and Restrictions.
A. Developer agrees and covenants, which covenants shall run with the land and bind
Developer, its successors, its assigns and every successor in interest to the Property that
Developer will make all rental units on the Property available to very low-income households
(50% Area Median Income) at rents affordable to such households for fifty-five (55) years
from the issuance of the Certificate of Completion.
B. The Project shall consist of one -hundred, twenty-six (126) units, including one (1)
on -site manager's unit.
C. Rental increases shall be in conformance with federal and state law. The Agency
shall require that the units remain affordable, with rents calculated based on assumed
household size at the same income levels
D. Developer must have a written lease between tenant and owner for a period of at
least one year, unless a shorter period is mutually agreed upon.
7.2 Affordability Levels/Unit Mix:
All affordable rents in the Project shall be governed by the rents published annually by
the California Tax Credit Allocation Committee for households at 50% Area Median
Income. Utility allowances must be deducted from the Maximum Gross Monthly Rent. The
Housing Authority of the City of Santa Ana publishes the Utility Allowance Schedule.
7.3 Rent Increases: On an annual basis, the Agency shall provide Developer with the
maximum allowable schedule of rents for the Property in accordance with changes in
allowable rent and income tables published by the California Tax Credit Allocation
Committee (TCAC). In no event can Developer charge any tenant more than such amount.
The Agency will make all best efforts to provide Developer with the maximum allowable
schedule of rents within no more than 30 calendar days after the date TCAC publishes the
allowable rent and income tables.
7.4 Prohibited Fees. The Developer and subsequent owner is prohibited from charging
fees that are not customary. The Developer and subsequent owner can charge reasonable
application fees to prospective tenants; other fees only to the extent that they are reasonable
and customary for the project area; and fees for services provided to tenants, provided that
these services are not mandatory.
7.5 Maintenance of the Property. Solely at Developer's expense, Developer agrees to
maintain the Property in a clean and orderly condition and in good condition and repair and
keep the Property free from any accumulation of debris and waste materials (reasonable
wear and tear excepted). If at any time Developer fails to maintain, or cause to be
maintained, the Property as required by this section, and said condition is not corrected after
the expiration of a reasonable period of time not to exceed thirty (30) days from the date of
written notice from the Agency, unless such condition cannot reasonably be cured within
thirty (30) days, in which case Developer shall have such additional time as reasonably
necessary to complete such cure, the Agency may perform the necessary maintenance and
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Developer shall pay all reasonable costs incurred for such maintenance. The Agency shall
inspect the Property annually after the date of issuance of the Certificate of Completion as
described in Article 17 of this Agreement. During the affordability period, the Property must
meet all applicable State and local codes. The Property must be free of all health and safety
defects during the affordability period.
7.6 Obligation to Refrain from Discrimination. Developer covenants and agrees for
itself, its successors, its assigns and every successor in interest to the Property or any part
thereof, that there shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, religion, sex, mental or physical disability, marital
status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure
or enjoyment of the Property nor shall Developer itself or any person claiming under or
through him establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall
run with the land and shall remain in effect for the term of this Agreement.
8. RESERVED.
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to Agency to enter into this Agreement, Developer
represents and warrants as follows:
9.1 Formation. Qualification and Compliance. JHC-Cornerstone 11, LLC, the
managing general partner of Developer (a) is a limited liability company, validly existing
and in good standing under the laws of the State of California, (b) has all requisite
authority to conduct its business and own and lease its properties, and (c) is qualified and
in good standing in every jurisdiction in which the nature of its business makes
qualification necessary or where failure to qualify could have a material adverse effect on
its financial condition or the performance of its obligations under the Loan Documents.
Developer is in compliance with all laws applicable to its business and has obtained all
approvals, licenses, exemptions and other authorizations from, and has accomplished all
filings, registrations and qualifications with, any Governmental Authority that are
necessary for the transaction of its business.
9.2 Execution and Performance of Loan Documents.
9.2.1 Developer has all requisite authority to execute and
perform its obligations under the Loan Documents.
9.2.2 The execution and delivery of Developer of, and the
performance by Developer of its obligations under, each Loan Document has been
authorized by all necessary action and does not and will not:
(a) require any consent or approval not heretofore
obtained of any person having any interest in Developer;
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(b) violate any provision of, or require any consent or
approval not heretofore obtained under, any articles of incorporation, by-laws or other
governing document applicable to Developer;
(c) result in or require the creation of any lien, claim,
charge or other right of others of any kind (other than under the Housing Successor
Agency Loan Documents) on or with respect to any property now or hereafter owned or
leased by Developer;
(d) violate any provision of any law presently in effect;
or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other
agreement or document to which Developer is a party or by which Developer or any of its
property is bound.
9.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of Agency under the Loan Documents or that would have any material
adverse effect on the financial condition of Developer or the conduct of its business,
under any law, contract, lease or other agreement or document described in sub-
paragraph (d) or (e) of the previous subsection.
9.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which
has not been previously obtained in connection with:
(a) the execution of Developer of, and the
performance by Developer of its obligations under, the Loan Documents; and
(b) the creation of the liens described in the Loan
Documents.
9.3 Financial and Other Information. To the best of Developer's knowledge,
all financial information furnished to Agency with respect to Developer in connection
with the Loan (a) is complete and correct in all material respects as of the date of
preparation thereof, (b) accurately presents the financial condition of Developer, and (c)
has been prepared in accordance with generally accepted accounting principles
consistently applied or in accordance with such other principles or methods as are
reasonably acceptable to Agency. To the best of Developer's knowledge, all other
documents and information furnished to Agency with respect to Developer, in connection
with the Loans, are correct and complete in all material respects insofar as completeness
is necessary to give the Agency accurate knowledge of the subject matter. To the best of
Developer's knowledge Developer has no material liability or contingent liability not
disclosed to Agency in writing and there is no material lien, claim, charge or other right
of others of any kinds (including liens or retained security titles of conditional vendors)
on any property of Developer not disclosed in such financial statements or otherwise
disclosed to Agency in writing.
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9.4 No Material Adverse Change. There has been no material adverse change in
the condition, financial or otherwise, of Developer since the dates of the latest financial
statements furnished to Agency. Since those dates, Developer has not entered into any
material transaction not disclosed in such financial statements or otherwise disclosed to
Agency in writing.
9.5 Tax Liability. Developer has filed all required federal, state and local tax returns
and has paid all taxes (including interest and penalties, but subject to lawful extensions
disclosed to Agency in writing) other than taxes being promptly and actively contested in
good faith and by appropriate proceedings. Developer is maintaining adequate reserves
for tax liabilities (including contested liabilities) in accordance with generally accepted
accounting principles or in accordance with such other principles or methods as are
reasonably acceptable to Agency.
9.6 Governmental Requirements. To the best of Developer's knowledge, Developer
is in compliance with all laws relating to the Property and all Governmental Authority
approvals, including zoning, land use, planning requirements, and requirements arising
from or relating to the adoption or amendment of, any applicable general plan,
subdivision and parcel map requirement; environmental requirements, including the
requirements of the California Environmental Quality Act and the National
Environmental Policy Act and the preparation and approval of all required environmental
impact statements and reports; use, occupancy and building permit requirements; and
public utilities requirements.
9.7 Ri2hts of Others. Developer is in compliance with all covenants, conditions,
restrictions, easements, rights of way and other rights of third parties relating to the
Property.
9.8 Litigation. There are no material actions or proceedings pending or, to the best of
the Developer's knowledge, threatened against or affecting Developer or any property of
Developer before any Governmental Authority, except as disclosed to Agency in writing
prior to the execution of this Agreement.
9.9 Bankruptcy. To the best of Developer's knowledge, no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or threatened against Developer, nor are
any of such proceedings contemplated by Developer.
9.10 Information Accurate. To the best of Developer's knowledge, all information,
regardless of its form, conveyed by Developer to Agency, by whatever means, is
accurate, correct and sufficiently complete to give Agency true and accurate knowledge
of its subject matter, and does not contain any material misrepresentation or omission.
9.11 Conflicts of Interest. No member, official or employee of the Agency shall have
any personal interest, direct or indirect, in this Agreement, nor shall any such member,
official or employee participate in any decision relating to this Agreement which affects
his/her personal interests or the interests of any corporation, partnership or association in
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which he/she has a direct or indirect financial interest. The Developer warrants that it neither
has paid nor given, nor will pay or give, any third party any money or other consideration
for obtaining this Agreement.
9.12 Nonliability of Agency Officials and Employees. No member, official or employee
of the Agency shall be personally liable to the Developer in the event of any default or
breach by the Agency or for any amount which may become due to Developer or on any
obligations under the terms of this Agreement.
9.13 No Assignment. Developer expressly acknowledges and agrees that the Agency has
only agreed to assist the Developer as a means by which to induce the
acquisition/rehabilitation/development of the Property. Accordingly, Developer further
expressly acknowledges and agrees that this Agreement is a personal right of Developer that
is neither negotiable, transferable, nor assignable except as set forth herein. Developer may
assign some or all of its rights under this Agreement only with the prior written consent of
the Executive Director (such consent not to be unreasonably withheld), except that no prior
consent is necessary for an assignment by a limited partner of Developer to an affiliate, or as
otherwise provided in the Deed of Trust.
9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under
federal and state laws.
9.15 Third Parties. This Agreement is made for the sole benefit of Developer and the
Agency and their successors and assigns, and no other person or persons shall have any
rights or remedies under or by reason of this Agreement or any right to the exercise of any
right or power of the Agency hereunder or arising from any default by Developer, nor shall
the Agency owe any duty whatsoever to any claimant for labor performed or materials
famished in connection with the construction of the Property.
9.16 Control of Property. The parties acknowledge that the Agency has not at any time
participated in any manner in the management or operation of the Property, and will not so
participate at any time hereafter.
10. CONDITIONS FOR CONSTRUCTION
Developer shall comply with this Section until the Certificate of Completion is issued.
10.1 Permits and Approvals. Developer shall diligently obtain all
permits, including all building permits, licenses, approvals, exemptions and other
authorizations of Governmental Agencies required in connection with the rehabilitation
of the Property.
10.2 Commencement and Completion of Construction.
The construction shall be considered complete for purposes of this Agreement
only when (a) all work described has been completed and fully paid for (subject to
required retainage), and (b) all work requiring inspection or certification by
Governmental Authority has been completed and all requisite certificates, approvals and
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other necessary authorizations (including required final certificates of occupancy) have
been obtained.
10.3. RESERVED.
10.4 Entry and Inspection. At all times prior to completion of the
construction, upon reasonable notice, Agency and their agents shall have (a) the right of
free access to the Property and all sites away from the Property where materials for the
construction are stored, (b) the right to inspect all labor performed and materials
furnished for the construction, and (c) the right to inspect and copy all documents
pertaining to the construction.
10.5 Compliance with Section 3 Clause. Section 3 of the Housing and
Urban Development Act of 1968, 12 U.S.C. 1701u, as amended by Section 915 of the
Housing and Community Development Act of 1992 requires that economic opportunities
generated by HUD financial assistance for housing and community development
programs be targeted toward low- and very low- income persons. Whenever HUD
assistance generates opportunities for employment or contracting, state and local
grantees, as well as other recipients of HUD housing assistance funds must, to the
greatest extent feasible, provide these opportunities to low- and very low- income persons
and to businesses owned by or employing low- and very low- income persons. Section 3
applies to projects for which HUD's share of project costs exceeds $200,000 and
contracts and subcontracts awarded on projects for which HUD's share or project costs
exceeds $200,000 and the contract or subcontract exceeds $100,000.
For purposes of this Section 3 Clause and compliance thereto, whenever
the word "contractor" is used it shall mean and include, as applicable, the Developer, and
its contractor and subcontractor(s), if any. The particular text to be utilized in any and all
contracts of any contractor doing work covered by Section 3 shall be in substantially the
form of the following, as reasonably determined by the Agency, or as directed by HUD
or its representative, and shall be executed by the applicable contractor under penalty of
perjury:
"(a) The work to be performed under this contract is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 U.S.C. 1701 u ("Section 3"). The purpose of Section 3 is to ensure
that employment and other economic opportunities generated by HUD assistance
or HUD -assisted projects covered by Section 3, shall, to the greatest extent
feasible, be directed to low- and very low-income persons [inclusive of Very Low
Income Persons, Very Low Income Households, and Very Low Income Tenants
served by the Project], particularly persons who are recipients of HUD assistance
for housing.
(b) The parties to this contract agree to comply with HUD's
regulations in 24 CFR part 135, which implement Section 3. As evidenced by
their execution of this contract, the parties to this contract certify that they are
under no contractual or other impediment that would prevent them from
complying with the part 135 regulations.
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(c) The contractor agrees to send to each labor organization or
representative of workers with which the contractor has a collective bargaining
agreement or other understanding, if any, a notice advising the labor organization
or workers' representative of the contractor's commitments under this Section 3
clause, and will post copies of notices in conspicuous places at the work site
where both employees and applicants for training and employment positions can
see the notice. The notice shall describe the Section 3 preference, shall set forth
minimum number of job titles subject to hire, availability of apprenticeship and
training positions, the qualifications for each; and the name and location of
person(s) taking applications for each of the position; and the anticipated date the
work shall begin.
(d) The contractor agrees to include this Section 3 clause in every
subcontract subject to compliance with regulations in 24 CFR part 135, and
agrees to take appropriate action, as provided in an applicable provision of the
subcontract or in this Section 3 clause, upon a finding that the subcontractor is in
violation of the regulations in 24 CFR part 135. The contractor will not
subcontract with any subcontractor where the contractor has notice or knowledge
that the subcontractor has been found in violation of the regulations in 24 CFR
part 135.
(e) The contractor will certify that any vacant employment positions,
including training positions, that are filled (a) after the contractor is selected but
before the contract is executed, and (b) with persons other than those to whom the
regulations of 24 CFR part 135 require employment opportunities to be directed,
were not filled to circumvent the contractor's obligations under 24 CFR part 135.
(f) Noncompliance with HUD's regulations in 24 CFR part 135 may
result in sanctions, termination of this contract for default, and debarment or
suspension from future HUD assisted contracts."
After the foregoing Section 3 Clause, there shall be a signature block for
the contractor, as applicable, the following text shall be included immediately above the
signature block: "The contractor/provider by his/her signature affixed hereto declares
under penalty of perjury that contractor has read the requirements of the Section 3 Clause
and accepts all its requirements contained therein for all of his/her operations related to
this contract."
To the extent applicable, the Developer shall comply and/or cause
compliance with Section 3 Clause requirements for the Project. For example, when and
if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, rather than
volunteer labor or materials, Section 3 is applicable and all disclosure and reporting
requirements apply.
10.6 Construction Information. From time to time during the course of the
construction, within ten (10) Business Days following Agency's written demand
therefore, Developer shall furnish requested reports of project costs, progress schedules
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and contractors' costs breakdowns for the construction, itemized as to trade description
and item, showing the name of the contractor(s) and/or subcontractor(s), and including
such indirect costs as real estate taxes, legal and accounting fees, insurance, architects'
and engineers' fees, loan fees, interest during construction and contractors' overhead.
10.7 Protection Against Liens. Developer shall diligently file a valid
Notice of Completion upon completion of the construction, diligently file a notice of
cessation in the event of a cessation of labor on the construction for a period of thirty (30)
days or more, and take all actions reasonably required to prevent the assertion of claims
of lien against the Property. In the event that any claim of lien is asserted against the
property or any stop notice or claim is asserted against the Agency by any person
furnishing labor or materials to the Property, Developer shall immediately give written
notice of the same to Agency and shall, promptly and in any event within ten (10)
Business Days after written demand therefor, (a) pay and discharge the same, (b) effect
the release thereof by delivering to Agency a surety bond complying with the
requirement of applicable laws for such release, or (c) take such other action as Agency
may reasonably require to release Agency from any obligation or liability with respect to
such stop notice or claim.
10.8 General Contractors who are Related Parties to the Developer. If the
Project is developed with general contractors who are Related Parties to the Developer,
the Developer must be audited to the subcontractor level by an outside auditing firm
approved by the Agency. The Developer shall pay for the audit to the subcontractor level
by an outside auditing firm.
11. OTHER COVENANTS
11.1 Local Preference. Subject to compliance with applicable California and
federal fair housing laws, local preference for Santa Ana residents and workers in tenant
selection shall be a requirement of the Project. Subject to applicable laws and regulations
governing nondiscrimination and preferences in housing occupancy required by HUD or
the State of California, as well as the City of Santa Ana Affordable Housing Funds Policies
and Procedures, the Developer shall give preference in leasing units in the following order
of priority:
1. First priority shall be given to persons who have been permanently displaced or
face permanent displacement from housing in Santa Ana as a result of any of the
following:
a. A redevelopment project undertaken pursuant to California's Community
Redevelopment Law (Health & Safety Code Sections 33000, et seq.) --
applicable only to projects funded by the Low and Moderate Income
Housing Asset Fund.
b. Ellis Act, owner -occupancy, or removal permit eviction;
c. Earthquake, fire, flood, or other natural disaster;
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d. Cancellation of a Housing Choice Voucher HAP Contract by property
owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at least the last 6
months.
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION
AND REPAIR OF PROPERTY
12.1 Maintenance. Developer shall maintain the Property (and all abutting
grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise
required to maintain) in good condition and repair; shall operate the Property in a
businesslike manner; shall prudently preserve and protect its own as well as the Agency's
interests in connection with the Property; shall not commit or permit any waste or
deterioration of the Property (except for normal wear and tear); shall not abandon any
portion of the Property or leave the Property unguarded or unprotected; and shall not
otherwise act, or fail to act, in such a way as to unreasonably increase the risk of any
damage to the Property or of any other impairment of Agency's interests under the Loan
Documents. Without limiting the generality of the foregoing, and except as otherwise
agreed by Agency in writing from time to time, Developer shall promptly and faithfully
perform and observe each of the following provisions:
12.1.1 Alterations and Repair. Developer shall not remove, demolish or
materially alter any Improvement without Agency's prior consent, except to make non-
structural repairs which preserve or increase the Property's value, and shall promptly
restore, in a good and professional manner, any Improvement (or other aspect or portion
of the Property) that is damaged or destroyed from any cause.
12.2 Compliance. Developer shall comply with all laws and requirements of
Governmental Authority (including, without limitation, all requirements relating to the
obtaining of Governmental Authority approvals), all Governmental Authority approvals
and all rights of third parties, relating to Developer, the Property or Developer's business
thereon.
12.3 Taxes and Impositions. Developer shall pay, prior to delinquency,
all of the following (collectively, the "Impositions"): (a) all general and special real
property taxes and assessments imposed on the Property; (b) all other taxes and
assessments and charges of every kind that are assessed upon the Property (or upon the
owner and/or operator of the Property) and that create or may create a lien upon the
Property (or upon any personal property or fixtures used in connection with the Property),
including, without limitation, non -governmental levies and assessments pursuant to
applicable covenants, conditions or restrictions; and (c) all license fees, taxes and
assessments imposed on Agency (other than Agency's income or franchise taxes) which
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are measured by or based upon (in whole or in part) the amount of the obligations secured
by the Property. If permitted by law, Developer may pay any Imposition in installments
(together with any accrued interest).
12.1.3.1 Right to Contest. Developer shall not be required to pay any
Imposition so long as (a) its validity is being actively contested in good faith and by
appropriate proceedings, (b) Developer has demonstrated to Agency's reasonable
satisfaction that leaving such Imposition unpaid pending the outcome of such
proceedings could not result in conveyance of the Property in satisfaction of such
Imposition or otherwise impair Agency's interests under the Loan Documents, and (c)
Developer has furnished Agency with a bond or other security satisfactory in an amount
not less than 100% of the applicable claim (including interest and penalties).
12.1.3.2 Evidence of Payment. Upon demand by Agency from
time to time, Developer shall deliver to Agency, within thirty (30) days following the due
date of any Imposition, evidence of payment reasonably satisfactory to Agency.
12.1.3.3 Books and Records. Developer shall maintain complete books of
account and other records reflecting its operations (in connection with any other
businesses as well as with respect to the Property), in accordance with generally accepted
accounting principles applied on a consistent basis or in accordance with such other
principles or methods as are reasonably acceptable to Agency, in accordance with 24
CFR 92.508.
12.4 Project Operating Account. Subject to the requirements of the Senior
Lender, Developer must promptly deposit all project income directly into a segregated
depository account established exclusively for the Project ("Project Operating Account").
Withdrawals from this account may be made only in accordance with the provisions of
this Agreement and the approved Project Budget, as it may be revised from time to time
with Agency approval. Prior to the repayment of the Housing Successor Agency Loan in
full, Developer may make withdrawals from this account solely for the payment of
project expenses (including, without limitation, funding reserves and the making of debt
service payments), project fees and permitted distributions to the partners of the
Developer. Withdrawals from this account for other purposes may be made only with the
prior written approval of the Agency.
12.5 Replacement Reserve Account. Developer must establish or cause to be
established a segregated interest -bearing replacement reserve depository account
("Replacement Reserve Account") no later than the date of the Senior Loan converts
from a construction loan to a permanent loan. Developer must make monthly deposits
from project income into the Replacement Reserve in the amount of one -twelfth (1/12)
$500 per unit per year (the $500 is an annual fee paid on a monthly basis). Developer
may withdraw funds from the Replacement Reserve Account solely to fund capital
improvements for the Project, such as replacing or repairing structural elements,
furniture, fixtures or equipment of the Project that are reasonably required to preserve the
Project. Developer may not withdraw funds from the Replacement Reserve Account for
any other purpose without the prior written approval of the Agency.
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13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and
agrees that:
A. In Use of Property. There shall be no discrimination
against or segregation of any person, or group of persons, on account of race, color,
creed, religion, sex, mental or physical disability, marital status, national origin, or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Property, nor shall Developer or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with reference to
the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendors of the Property.
B. In Affordable Housing Restrictions. The
foregoing covenant shall (a) be included in the Affordability Restrictions on Transfer of
Property, (b) run with the land, and (c) remain effective for the term of the contract (for
55 years).
C. In Employment. In construction of the
Property, Developer shall not discriminate against any employee or applicant because of
race, color, creed, religion, sex, marital status, mental or physical disability, national
origin, or ancestry. Developer shall take affirmative action to ensure that applicants are
employed, and that employees are treated during employment, without regard to their
race, color, creed, religion, sex, marital status, national origin, or ancestry.
D. In all Contracts. Developer shall cause the foregoing
covenants to be inserted in all contracts for any work covered by this Agreement so that
such provisions will be binding upon each contractor and subcontractor for the benefit of
Agency, provided that the foregoing covenant shall not apply to contracts or subcontracts
for standard commercial supplies or raw materials.
14. ENVIRONMENTAL MATTERS
14.1 Representation and Warranty. Except as disclosed in writing to the
Agency including the environmental site assessments prepared on behalf of Developer
and delivered to the Agency, Developer has no knowledge (a) of the presence on, under
or about the Property, now or in the past, of any Hazardous Materials in violation of
applicable law, or of the transportation to or from the Property of any Hazardous
Materials, (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or
stored on the Property, or (c) that there are any underground storage tanks located in, on
or under the Property.
14.2 Compliance with Environmental Laws. Developer shall (a) comply with
all environmental laws and environmental permits applicable to the Construction of the
Property, (b) immediately pay or cause to be paid all costs and expenses incurred by
reason of such compliance, (c) keep the Property free and clear of any environmental
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claims or liens imposed pursuant to any environmental law, and (d) obtain and renew all
environmental permits required for ownership or use of the Property.
14.3 Presence of Hazardous Materials. Developer shall not, and shall not
permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous
Materials on the Property, or transport or permit the transportation of Hazardous
Materials to or from the Property except for de minimis quantities used at the Property in
compliance with all applicable environmental laws and required in connection with the
routine construction, operation and maintenance of the Property.
14.4 Notice of Environmental Matters. Developer shall immediately advise
Agency in writing of any of the following: (a) any pending or threatened environmental
claim against Developer or the Property, (b) any condition or occurrence that (i) results in
noncompliance with any applicable environmental law, (ii) could reasonably be
anticipated to cause the Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of the Property under any environmental law, or (iii)
could reasonably be anticipated to form the basis of an environmental claim against the
Property or Developer.
14.5 Environmental Indemnification by the Developer. Developer agrees to
defend, indemnify and hold harmless the Agency and their respective officers, directors,
employees and agents (collectively the "Indemnitees") from and against any and all
obligations (including removal and remediation), losses, claims (including third party
claims), suits, judgments, liabilities, penalties, damages (including consequential and
punitive damages), costs and expenses (including consultants, and attorneys' fees) of
whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or
asserted against the Indemnitees directly or indirectly based on, or arising or resulting
from the actual or alleged presence of Hazardous Materials on the Property other than
arising from the gross negligence, willful misconduct and/or illegal actions of any
Indemnitee.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the Housing Successor Agency Loan
Note or Housing Successor Agency Loan Deed of Trust remain outstanding, the
following provisions shall apply, except to the extent that Executive Director otherwise
consents in writing:
15.1 Existence. Developer's Managing General Partner shall maintain its
existence in good standing under the laws of the State of California, and
Developer shall provide documentation of such status annually to the Agency.
15.2 Protection of Lien. Developer shall maintain the lien of the Agency
Deed of Trust as a valid second priority deed of trust on the Property and take all
actions, and execute and deliver to Agency all documents, reasonably required by
Agency from time to time in connection therewith.
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15.3 Notice of Certain Matters. Developer shall give notice to Agency, within
ten (10) days of Developer's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the
Property and involving an amount in excess of $5,000; and any litigation or claim that
might subject Developer or any general partner to liability in excess of $5,000, whether
covered by insurance or not;
(b) any material dispute between Developer and a
Governmental Authority relating to the Property, the
adverse determination of which might materially affect the
Property;
(c) any change in Developer's principal place of business;
(d) any aspect of the Improvements that is not in
substantial conformity with the plans or code;
(e) any Event of Default or event which, with the giving of
notice or the passage of time or both, would constitute an Event of Default;
(f) any material default by Developer or any other party under
any Senior Loan document, or the receipt by Developer of any notice of default under
any Senior Loan document;
(g) the creation or imposition of any mechanics' or
materialmans' lien or other lien against the Property which might materially affect the
Property; and/or
(h) any material adverse change in the financial condition of
Developer.
15.4 Further Assurances. Developer shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to Agency all documents, and take all
actions, reasonably required by Agency from time to time to confirm the rights created or
now or hereafter intended to be created under the Loan Documents; to protect and further
the validity, priority and enforceability of the Agency Deed of Trust; to subject to the
Deed of Trust any property intended by the terms of any Loan Document(s) to be covered
by the Agency Deed of Trust or otherwise to carry out the purposes of the Loan
Documents and the transactions contemplated thereunder. Notwithstanding anything to
the contrary set forth herein, the Developer shall have no obligation to execute any
document, or take any action, which would (i) change a material term of any Loan
Document, (ii) change or impair any material right of Developer and/or (iii) increase the
liability of Developer or any partner thereof.
15.5 Annual Financial Statements. Developer shall deliver to Agency, within
one hundred twenty (120) days after the end of each Calendar Year following issuance of
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a Certificate of Completion, (a) a certified public accountant reviewed balance sheet for
Developer as of the end of such Calendar Year and a certified public accountant reviewed
statement of profit and loss for Developer and for Developer's operations in connection
with the Property for such Calendar Year, together with all supporting schedules, (b) a
certificate of such certified public accountant that such documents were reviewed by such
certified public accountant in accordance with generally accepted accounting principles
and otherwise comply with generally accepted accounting principles review
requirements, and (c) a certificate of Developer's Managing General Partner that such
documents: (i) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis or in accordance with such other principles or
methods as are reasonably acceptable to Agency, (ii) fairly present Developer's financial
condition, (iii) show all material liabilities, direct and contingent, and (iv) fairly present
the results of Developer's operations. Developer shall also provide the Agency with any
other annual audit reports issued by other monitoring agencies upon written request.
15.6 Audits and Access to Records. Developer agrees that Agency, the U.S.
Department of Housing and Urban Development, the Comptroller General of the United
States or any of their authorized representatives shall have the right of access, upon
reasonable notice, to any books, documents, papers, or other records of Developer which
are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts
or transcripts. Developer will maintain all books and records pertaining to this Agreement
for a period of not less than five (5) years after all matters pertaining to this Agreement
(i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or
state laws, regulations or policies, and when a period of affordability or recapture applies
to Developer's activities, for a period of not less than five (5) years after the affordability
period ends.
16. OTHER NEGATIVE COVENANTS
While any obligation of Developer under the Housing Successor Agency Loan
Note or Housing Successor Agency Loan Deed of Trust remain outstanding, the
following provisions shall apply, except to the extent that Executive Director otherwise
consents in writing:
16.1 Default on Senior Loan. Developer shall not default on any of the
Senior Loan documents, provided however, that Developer shall have such period as is
provided in the Senior Loan Documents during which to effectuate a cure.
16.2 Sale or Lease of Property. Unless and until Developer has received a
Certificate of Completion for the construction from Agency, Developer shall not sell,
lease, sublease or otherwise transfer all or any part of the Property or any interest therein
without the prior written consent of the Executive Director, which consent may be
withheld in the Executive Director's reasonable discretion. In connection with the
foregoing consent requirements, Developer acknowledges that Agency relied upon
Developer's particular expertise in entering into this Agreement and continues to rely on
such expertise to ensure the satisfactory completion of the construction.
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Notwithstanding anything to the contrary contained herein, a "transfer" shall not
include (i) a transfer of any general partner's interest in Developer when made in
connection with the exercise by the Developer's limited partner (the "Limited Partner")
of its rights upon a default by a general partner under the Developer's Partnership
Agreement or upon a general partner's withdrawal in violation of the Partnership
Agreement, so long as the removal and substitution of the defaulting general partner is
made within thirty (30) days of such default or, if such removal and substitution cannot
reasonably be completed within thirty (30) days, so long as the Limited Partner
commences to take action to remove and substitute the general partner with a reasonable
period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of
the Property to the managing general partner of Developer pursuant to the right of first
refusal or to the general partners of Developer pursuant to the purchase option, as
provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's
interest in accordance with the Partnership Agreement; and (iv) any sale, transfer or other
disposition of an interest in a limited partner of the Developer.
17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of
Developer, or at its own election, the City of Santa Ana shall issue a Certificate of
Completion. Such Certificate of Completion shall be, and shall so state, conclusive
determination of satisfactory completion of the construction.
If City declines to furnish a Certificate of Completion after written request from
Developer, the Executive Director shall, within thirty (30) days after receipt of the
request, provide Developer with a written statement of the reasons therefore. The
statement shall contain a description of the action Developer must take to obtain a
Certificate of Completion. If the reason therefore is that the Developer has not completed
a minor portion of the Construction, City may, in its sole and absolute discretion, issue
the Certificate of Completion upon the posting with City of a bond or other form of
security acceptable to the Executive Director in the amount of the fair value of the
uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of
the Loan Documents or any obligation of Developer to any other party whatsoever,
including any holder of a mortgage or deed of trust. A Certificate of Completion is not
"notice of completion" referred to in Section 3093 of the California Civil Code.
18. INDEMNIFICATION
18.1 Nonliability. of Agency. Developer acknowledges and agrees that:
(a) The relationship between Developer and Agency is and
shall remain solely that of borrower and lender, Agency neither undertakes nor assumes
any responsibility to review, inspect, supervise, approve (other than for aesthetics) or
inform Developer of any matter in connection with the construction, including matters
relating to: (i) the performance of the construction work, (ii) architects, contractors,
subcontractors and materialmen, or the workmanship of or materials used by any of them,
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or (iii) the progress of the construction; and Developer shall rely entirely on its own
judgment with respect to such matters and acknowledges that any review, inspection,
supervision, approval or information supplied to Developer by Agency in connection
with such matters is solely for the protection of Agency and that neither Developer nor
any third party is entitled to rely on it;
(b) Notwithstanding any other provision of any Loan Document: (i)
the Agency is not a partner, joint venture, alter -ego, manager, controlling person or other
business associate or participant of any kind of Developer and Agency does not intend to
ever assume any such status; (ii) Agency's activities in connection with the Loan(s) shall
not be "outside the scope of the activities of a lender of money" within the meaning of
California Civil Code Section 3434, as modified or recodified from time to time, and
Agency does not intend to ever assume any responsibility to any person for the quality or
safety of the Property; and (iii) Agency shall not be deemed responsible for or a
participant in any acts, omissions or decisions of Developer;
(c) Agency shall not be directly or indirectly liable or responsible for
any loss or injury of any kind to any person or property resulting from any construction
on, or occupancy or use of, the Property, whether arising from: (i) any defect in any
building, grading, landscaping or other onsite or offsite improvement; (ii) any act or
omission of Developer or any of Developer's agents, employees, independent
contractors, licensees or invitees; or (iii) any accident on the Property or any fire or other
casualty or hazard thereon; and
(d) By accepting or approving anything required to be performed or
given to Agency under the Loan Documents, including any certificate, financial
statement, survey, appraisal or insurance policy, Agency shall not be deemed to have
warranted or represented the sufficiency or legal effect of the same, and no such
acceptance or approval shall constitute a warranty or representation by Agency to
anyone.
18.2 Indemnity. Developer shall defend (by counsel reasonably satisfactory
to Agency), indemnify and save and hold harmless the hidemnitees from and against all
claims, damages, demands, actions, losses, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) arising from or relating to
(i) a breach of this Agreement by Developer; (ii) the making of the Loan(s); (iii) a claim,
demand or cause of action that any person has or asserts against Developer; (iv) any act
or omission of Developer, any contractor, subcontractor or material supplier, engineer,
architect or other person with respect to the Property; or (vi) the ownership, occupancy or
use of the Property. Notwithstanding the foregoing, Developer shall not be obligated to
indemnify Agency with respect to the consequences of any act of illegal conduct, gross
negligence or willful misconduct of Agency. Developer's obligations under this Section
shall survive the cancellation of the Housing Successor Agency Loan Note, release and
reconveyance of the Housing Successor Agency Loan Deed of Trust, issuance of the
Certificate of Completion, and termination of this Agreement.
18.2.1 Nothwithstanding the foregoing, neither Developer, nor any of its partners,
shall be personally liable for any indemnification obligation hereunder
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which would result as the repayment of principal and/or interest under the
Loan.
18.3 Reimbursement of Agency. Developer shall reimburse Agency
immediately upon written demand for all costs reasonably incurred by Agency (including
the reasonable fees and expenses of attorneys, accountants, appraisers and other
consultants, whether the same are independent contractors or employees of Agency) in
connection with the enforcement of the Loan Documents and all related matters including
all claims, demands, causes of action, liabilities, losses, commissions and other costs
against which Agency is indemnified under the Loan Documents. Such reimbursement
obligations shall bear interest from the date occurring twenty (20) days after Agency
gives written demand to Developer and shall be secured by the Housing Successor
Agency Loan Deed of Trust. Such reimbursement obligations shall survive the
cancellation of the Housing Successor Agency Loan Note, release and reconveyance of
the Housing Successor Agency Loan Deed of Trust, issuance of a Certificate of
Completion, and termination of this Agreement
19. INSURANCE, CASUALTY AND CONDEMNATION
19.1 Policies Required. While any obligation of Developer under the Loan
Documents remains outstanding, Developer shall maintain at Developer's sole expense,
with insurers either (i) admitted in California or (ii) are not admitted to California but
have an A.M. Best Rating of "A" or above and reasonably approved by the Agency, the
following policies of insurance in form and substance reasonably satisfactory to the
Agency Attorney:
(a) worker's compensation insurance and any other insurance
required by law in connection with the construction;
(b) prior to commencement and following completion of the
construction, fire and hazard "all risk" insurance covering 100% of the replacement cost
of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the area
where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(c) upon commencement of the construction and at all
times prior to completion of the construction, builder's risk -all risk insurance covering
100% of the replacement cost of all Improvements (including offsite materials) during the
course of construction in the event of fire, lightning, windstorm, vandalism, earthquake,
malicious mischief and all other risks normally covered by "all risk" coverage policies in
the area where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(d) public liability insurance in the amount of $1,000,000 for "single
occurrence";
(e) property damage insurance in amounts reasonably
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required by Agency from time to time, and in no event less than $1,000,000; and
(0 any other insurance reasonably required by Agency.
All such insurance shall provide that it may not be canceled or materially modified
without thirty (30) days (ten (10) days for nonpayment of premium) prior written notice
to Agency. The policies required under subparagraphs (b) and (c) shall include a "lender's
loss payable endorsement" in form and substance satisfactory to Agency, showing the
Agency as encumbrance. The Agency shall be named as an additional insured(s) in the
policies required under subparagraphs (d) and (e) with primary coverage. Certificates of
insurance for the above policies (and/or original policies, if required by Agency) shall be
delivered within ten (10) days after demand therefore, and prior to start of any
construction work. All policies insuring against damage to the Improvements shall
contain an agreed value clause sufficient to eliminate any risk of co-insurance. No less
than ten (10) days prior to the expiration of each policy, Developer shall deliver to
Agency evidence of renewal or replacement of such policy reasonably satisfactory to
Agency Attorney.
19.2 RESERVED.
19.3 Claims and Proceedings. Developer shall give Agency
immediate notice of any material casualty to any portion of the Property, whether or not
covered by insurance, and of the initiation or threatened initiation of any proceeding for
the condemnation or other taking for public or quasi -public use of any portion of the
Property (collectively, "Condemnation"), and shall provide Agency with copies of all
documents which pertain to any such casualty or Condemnation. Developer shall take all
action reasonably required by Agency in connection therewith to protect the interests of
Developer and/or Agency, and Agency shall be entitled (without regard to the adequacy
of its security) to participate in any action, claim, adjustment or proceeding and to be
represented therein by counsel of its choice. Developer shall not settle, adjust, or
compromise any claim, action, adjustment or proceeding without prior written approval,
which approval shall not be unreasonably withheld or delayed.
19.4 Delivery of Proceeds to Agency. In the event that,
notwithstanding the "lender's loss payable endorsement" requirement set forth above, if
the proceeds from any casualty insurance is in excess of $500,000, Developer shall,
subject to any superior rights of the Senior Lender, deliver such proceeds to the Agency
immediately upon receipt.
19.5 Application of Casualty Insurance Proceeds. Subject to the
rights of the Senior Lender, any proceeds collected (the "Proceeds") under any casualty
insurance policy described in this Agreement shall be disbursed to Developer as provided
below, but only upon fulfillment of each of the following conditions (the "Restoration
Conditions") within ninety (90) days (unless extended by mutual agreement of Developer
and Agency) following the occurrence of the damage for which the Proceeds are
collected:
(a) Developer shall demonstrate to Agency's reasonable
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satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to
subparagraph (b)) will be adequate to repair the Improvements and to restore the fair
market value of the Property, within two years (or such longer time period reasonably
determined by Agency), to at least the value it had immediately prior to sustaining the
damage. Such demonstration shall include delivery to Agency of (i) plans and
specifications reasonably satisfactory to Agency, and (ii) a construction contract in form
and content, and with a contractor, reasonably satisfactory to Agency.
(b) To the extent that the Proceeds are insufficient to
accomplish the restoration required above, Developer shall deliver to Agency (the
"Shortfall Funds") in the amount of such shortfall, which funds shall be assigned to
Agency as security for Developer's obligation hereunder and held and disbursed in the
same manner as the Proceeds.
(c) Developer shall execute such documents as Agency
reasonably
requires to evidence and secure Developer's obligation to use all amounts disbursed for
the diligent restoration of the Property.
(d) No Event of Default shall remain uncured.
19.6 Failure to Satisfv Conditions. In the event that Developer
fails to fulfill the Restoration Conditions within ninety (90) days (unless extended
pursuant to Section 19.5) following the date on which the damage occurs, the Proceeds
shall be applied by Agency against any obligations to Agency that are secured by a lien
on the Property, and the selection of which such obligations to apply the Proceeds against
shall be made by Agency in their sole and absolute discretion, subject to the rights of the
Senior Lender.
19.7 Reserved.
19.8 Condemnation, Treatment of Compensation. Subject to any
superior rights of Senior Lender, Developer hereby assigns to the
Agency, as security for all obligations to Agency secured by a lien on
the Property, all amounts payable to Developer in connection with any
Condemnation, and any proceeds of any related settlement
(collectively, "Compensation"). Subject to any superior rights of
Senior Lender, Developer shall deliver such remaining Compensation
to Agency immediately upon receipt. If the taking results in a loss of
the Property to an extent that, in the reasonable opinion of Agency,
renders or is likely to render the Property not economically viable or
if, in Agency's reasonable judgment Developer's security is otherwise
impaired, Agency may apply the Compensation received due to
judgment or settlement in connection with any condemnation or other
taking to reduce the unpaid obligations secured in such order as
Agency may determine, and without any adjustment in the amount or
due dates of payments due under the Note. If so applied, any award in
excess of the unpaid balance of the Note and other sums due to
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Agency shall be paid to Developer or Developer's assignee. Agency
shall have no obligation to take any action in connection with any
actual or threatened condemnation or other proceeding.
19.8.1 Notwithstanding the foregoing, as long as the value of
Agency's liens are not impaired, any condemnation proceeds may be used by the
Borrower for repair and/or restoration of the Project.
19.9Waiver of Subrogation. Developer hereby waives all rights to
recover against the Agency (or any officer, employee, agent or representative of the
Agency) for any loss incurred by Developer from any cause insured against or required
by any Loan Document, to be insured against; provided, however, that this waiver of
subrogation shall not be effective with respect to any insurance policy if the coverage
thereunder would be materially reduced or impaired as a result. Developer shall use its
best efforts to obtain only policies which permit the foregoing waiver of subrogation.
20. DEFAULTS AND REMEDIES
20.1 Events of Default. The occurrence of any of the following, whatever the
reason therefore, shall constitute an Event of Default by Developer:
(a) Developer fails to make any payment of principal or
interest under the Housing Successor Agency Loan Note when due, and such failure is
not cured within fifteen (15) Business Days after Developer's receipt of written notice
that such payment was not received when due;
(b) Developer fails to perform any other obligation for the
payment of money under any Loan Document, and such failure is not cured within fifteen
(15) Business Days after Developer's receipt of written notice that such obligation was
not performed when due;
(c) Developer fails to perform any obligation (other than the
obligations described in subparagraphs (a) and (b) above) under any Loan Document, and
such failure is not cured within thirty (30) days after Developer's receipt of written notice
that such obligation was not performed; provided that, if cure cannot reasonably be
effected within such thirty (30)-day period, such failure shall not be an Event of Default
so long as Developer (in any event, within ten (10) days after receipt of such notice)
commences to cure, and thereafter diligently (in any event within ninety (90) days after
receipt of such notice) prosecutes such cure to completion;
(d) Any representation or warranty in any Loan Document proves to
have been incorrect in any material respect when made;
(e) Reserved;
(f) Work on the construction ceases for ninety (90) consecutive days
for any reason (other than governmental orders, decrees or regulations,
acts of God or any other deity, strikes or other causes beyond Developer's
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OAVOMIN. WE!
reasonable control), provided that the same do not, in the aggregate and in
the Agency's reasonable judgment, threaten to delay the completion of the
construction beyond the required completion date set forth in this
Agreement;
(g) Developer is enjoined or otherwise prohibited by any
Governmental Authority from constructing and/or occupying the improvements and such
injunction or prohibition continues unstayed for ninety (90) days or more for any reason;
(h) Developer is dissolved, liquidated or terminated, or all or
substantially all of the assets of Developer are sold or otherwise transferred without the
Executive Director's prior written consent; or
(i) Developer is the subject of an order for relief by a bankruptcy
court, or is unable or admits its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; or Developer applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or any part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without the
application or consent of Developer and the appointment continues undischarged or
unstayed for ninety (90) days; or Developer institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship,
conservatorship, liquidation, rehabilitation or similar proceeding relating to it or any part
of its property; or any similar proceeding is instituted without the consent of Developer
and continues undismissed or unstayed for ninety (90) days; or any judgment, writ,
warrant of attachment or execution, or similar process is issued or levied against any
property of Developer and is not released, vacated or fully bonded within ninety (90)
days after its issue or levy.
(j) Any of the Senior Loan documents is amended, supplemented or
otherwise modified without Agency's prior written consent, which
consent shall not be unreasonably withheld, to the extent the
Agency's consent is required pursuant to any subordination
agreement between the Agency and the Senior Lender.
20.2 Remedies Upon Default. Upon the occurrence and during the
continuance of any Event of Default, Agency may, at its option and in its absolute
discretion, do any or all of the following:
(a) By written notice to Developer, declare the principal of all
amounts owing under the Loan Documents, together with all accrued interest and other
amounts owing in connection therewith, to be immediately due and payable, regardless of
any other specified due date; provided that any Event of Default described in Section
20.1 shall automatically, without notice or other action on Agency's part, cause all such
amounts to be immediately due and payable;
(b) In its own right or by a court -appointed receiver, take
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possession of the Property, enter into contracts for and otherwise proceed with the
completion of the construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including, without limitation, the right to seek specific performance and
the right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as Agency elects in its sole and absolute discretion;
and,
20.3 Cumulative Remedies: No Waiver. Agency's rights and remedies under
the Loan Documents are cumulative and in addition to all rights and remedies provided
by law. The exercise by Agency of any right or remedy shall not constitute a cure or
waiver of any default, nor invalidate any notice of default or any act done pursuant to any
such notice, nor prejudice the Agency in the exercise of any other right or remedy. No
waiver of any default shall be implied from any omission by Agency to take action on
account of such default if such default persists or is repeated. No waiver of any default
shall affect any default other than the default expressly waived, and any such waiver shall
be operative only for the time and to the extent stated. No waiver of any provision of any
Loan Document shall be construed as a waiver of any subsequent breach of the same
provision. Agency's consent to or approval of any act by Developer requiring further
consent or approval shall not be deemed to waive or render unnecessary Agency's
consent to or approval of any subsequent act. The Agency's acceptance of the late
performance of any obligation shall not constitute a waiver by Agency of the right to
require prompt performance of all further obligations; Agency's acceptance of any
performance following the sending or filing of any notice of default shall not constitute a
waiver of either party's right to proceed with the exercise of its remedies for any
unfulfilled obligations; and Agency's acceptance of any partial performance shall not
constitute a waiver by Agency of any rights.
20.4 Nonrecourse Liability. Neither Developer, nor any partner of Developer,
shall have any personal liability under this Agreement, or the attached Note and Deed of
Trust, and any judgment, decree or order for the payment of money obtained in any action to
enforce the obligation of Developer to repay the loan evidenced by such documents shall be
enforceable against Developer only to the extent of Developer's interest in the Property.
21. NUSCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of Agency to Developer, or any other
claim by developer against Agency, in connection with the Loan or otherwise, Developer
hereby waives any right it might otherwise have (a) to offset any such obligation, liability
or claim against Developer's obligations under the Loan Documents, or (b) to claim that
the existence of any such outstanding obligation, liability or claim excuses the
nonperformance by Developer of any of its obligations under the Loan Documents.
21.2 Notices. All notices, demands, approvals and other communications
provided for in the Loan Documents shall be in writing and be delivered to the
appropriate party by personal service or U.S. mail at its address as follows:
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If to Developer: CORNERSTONE HOUSING PARTNERS LP
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, CA 92614
Attn: President
With a copy to
Limited Partner: Alliant ALP 2019
c/o Alliant Asset Management Company, LLC
21600 Oxnard Street, Suite 1200
Woodland Hills, CA 91367
Attn: General Counsel
If to Agency: Housing Authority of the City of Santa Ana
Executive Director (CDA)
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
With a copy to: Agency Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to all other parties.
All notices personally served shall be effective when actually received. All notices
mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid.
The foregoing notwithstanding, the non -receipt of any notice as the result of a change of
address of which the sending party was not notified or as the result of a refusal to accept
delivery shall be deemed receipt of such notice.
21.3 Survival of Representations and Warranties. All representations and
warranties in the Loan Documents shall survive the making of the Loan described herein
and have been or will be relied on by Agency notwithstanding any investigation made by
either party.
21.4 No Third Parties Benefited. This Agreement is made for the purpose of
setting forth rights and obligations of Developer and the Agency, and no other person
shall have any rights hereunder or by reason hereof.
21.5 Binding Effect. This Agreement shall bind, and shall inure to the benefit
of, Developer and Agency and their respective successors and assigns.
21.6 Prior Agreements, Amendments, Consents. This Agreement (together
with the other Loan Documents) contains the entire agreement between the Agency and
Developer with respect to the Loan and the Property, and all prior negotiations,
understandings and agreements are superseded by this Agreement and such other Loan
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Documents. No modification of any Loan Document (including waivers of rights and
conditions) shall be effective unless in writing and signed by the party against whom
enforcement of such modification is sought, and then only in the specific instance and for
the specific purpose given.
21.7 Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California and
Federal law, whichever is more stringent. Developer irrevocably and unconditionally
submits to the jurisdiction of the Superior Court of the State of California for the County
of Orange or the United States District Court of the Central District of California, as
Agency may deem appropriate, in connection with any legal action or proceeding arising
out of or relating to this Agreement or the Loan Documents. Assuming proper service of
process, Developer also waives any objection regarding personal or in rem jurisdiction or
venue.
21.8 Severability of Provisions. No provision of any Loan Document that is
held to be unenforceable or invalid shall affect the remaining provisions, and to this end
all provisions of the Loan Documents are hereby declared to be severable.
21.9 Headings. Article and section headings are included in the Loan
Documents for convenience of reference only and shall not be used in construing the
Loan Documents.
21.10 Conflicts. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, this Agreement, unless otherwise
expressly provided, shall prevail; provided however that, with respect to any matter
addressed in both such documents, the fact that one document provides for greater, lesser
or different rights or obligations than the other shall not be deemed a conflict unless the
applicable provisions are inconsistent and could not be simultaneously enforced or
performed.
21.11 Time of the Essence. Time is of the essence under this Agreement and in
the performance of every term, covenant, and obligation contained herein.
21.12 Conflict of Interest. No member, official or employee of the Agency
shall have any direct or indirect interest in this Agreement, nor participate in any decision
relating to this Agreement which is prohibited by law.
21.13 Warranty Against Payment of Consideration. Developer warrants that
it has not paid or given, and will not pay or give, any third person any money or other
consideration for obtaining this Agreement.
21.14 Nonliability of Agency Officials and Employees. No member, official
or employee of Agency shall be personally liable to Developer, or any successor in
interest, in the event of any default or breach by Agency or for any amount which may
become due to Developer or successor, or on any obligation under the terms of this
Agreement.
35
80A-177
EXHIBIT 4
21.15 Plans and Data. As additional collateral for the Loan, Developer hereby
grants to the Agency a security interest in all plans and data concerning the
Property, subject to the rights of any Senior Lender. Such right of Agency shall
be subject to any right of the preparer of the plans to their use.
21.16 Authority to Enter Agreement. Each undersigned represents and warrants
that its signature hereinbelow has the power, authority and right to bind their respective
parties to each of the terms of this Agreement, and shall indemnify the Agency fully,
including reasonable costs and attorney's fees, for any injuries or damages to Agency in the
event that such authority or power is not, in fact, held by the signatory or is withdrawn.
21. 17 Agency's Acknowledgement and Consent to Sale and Assignment. The
Agency hereby consents to the above -described Developer Sale and the assignment and
assumption of Original Developer's rights and obligations under the Assignment to
Developer, as set forth in the Assignment.
36
80A-178
EXHIBIT 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date set forth at the beginning of this Agreement.
ATTEST:
Daisy Gomez
Recording Secretary
APPROVED AS TO FORM
Sonia R. Carvalho
THE HOUSING AUTHORITY
OF THE CITY OF SANTA ANA
Steven A. Mendoza
Executive Director
(Signatures conlinue on following page)
37
80A-179
EXHIBIT 4
DEVELOPER:
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: HIC-Cornerstone 11, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Rousing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By: _
Name:
Title:
a/L.
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,
ELO
,: 1 ffloe
EXHIBIT 4
STATE OF CALIFORNIA
COUNTY OF
On before me,
1
a notary public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _ (SEAL)
39
80A-181
EXHIBIT 4
EXHIBITS
A. Legal Description
B. Scope of Work
C. Project Budget
D. Housing Successor Agency Loan Deed of Trust
E. Housing Successor Agency Loan Note
F. Affordability Restrictions on Transfer of Property
G. Housing Successor Agency Loan Agreements
40
80A-182
EXHIBIT 4
Exhibit Ae.
Legal Description
80A-183
W3:11.111W1!
Legal Description
The Land referred to herein below is situated in the City of Santa Ana, County of Orange, State of California, and is
described as follows:
PARCEL ONE:
LOTS 7 THROUGH 13 INCLUSIVE OF TRACT 3547 IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 138, PAGES 32 AND 33 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID ORANGE COUNTY.
PARCEL TWO:
PARCEL 1 OF "LOT MERGER NO. 2019-08" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282886 OF
OFFICIAL RECORDS.
PARCEL THREE:
PARCEL 1 OF "LOT MERGER NO. 2019-10" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282887 OF
OFFICIAL RECORDS.
For conveyancing purposes only: APN 404-033-01 (Affects portion of Parcel Two)
APN: 404-033-02 (Affects portion of Parcel Two)
APN: 404-032-01 (Affects portion of Parcel Three)
APN: 404-032-02 (Affects portion of Parcel Three)
APN: 404-031-03 (Affects Lots 8 and 9 of Parcel One)
APN: 404-031-01 (Affects Lots 12 and 13 of Parcel One)
APN: 404-031-04 (Affects Lot 7 of Parcel One)
APN: 404-031-02 (Affects Lots 10 and 11 of Parcel One)
EXHIBIT 4
Exhibit Be.
Scope of Work
80A-185
EXHIBIT 4
Scope of Work —Cornerstone Apartments
Cornerstone Apartments is a multifamily affordable housing development that consists of 126
one- and two -bedroom units. The project is located at 80S-904 S. Minnie Street, Santa Ana,
California. There are eight separate two story buildings that were originally constructed in 1961.
The last substantial renovation was in 2003. The buildings are two-story walkups with wood
framing and a stucco exterior. There are currently 179 parking spaces on -site, with at least 46 of
them being tuck -under spaces.
The project is slated to receive approximately 6.3 million dollars' worth of rehabilitation work.
This rehabilitation work is expected to increase the useful life of the property as well as improve
the living conditions of current residents.
There are several major items included in this work. Eight of 126 current units will be converted
into full ADA compliant accessible units. This work will involve demolition of existing walls,
abatement, installation of insulation, and electrical panel upgrades. The scope of work is meant
to increase unit size space and reconfigure the layout so that it is ADA compliant. There will alsc
be ADA sitework in terms of parking and path of travel. The current scope of work will repave
designated areas for ADA accessibility and create ADA markers, signs, and bumpers.
One of the major issues identified at the property was the lack of parking for residents. To
address this, the project will be installing a car lift system to increase the parking capacity
onsite. This car lift system will be located on existing parking spaces at the 810/816 and 828/904
apartments. The car lift system is being manufactured by Klaus Multiparking and will be a
standalone two-story structure with a puzzle system. The car lift system will add 30 additional
stalls to the project.
There will also be the installation of photovoltaic panels on top of a carport structure adjacent
to the car lifts, and on top of the adjacent roof. These PV panels will help residents save on their
energy costs. There will also be the installation of a solar thermal hot water system. Exterior
work will also include the recoating of all elevated deck areas, new silicone roofs, general
exterior repairs, and a seismic retrofit of the tuck under parking. The seismic retrofit will install
shear panels that are meant to better reinforce the soft story created by the tuck under parking.
The existing windows will be replaced with new vinyl dual glazed retrofit windows. The exterior
of the buildings will also be repainted.
Interior work will include the installation of new Energy Star appliances, bathroom fixtures,
maple shaker cabinets and countertops, new blinds, wall heaters, LEED light fixtures, and other
general repairs. New acoustic dampening flooring will be installed on the second story units.
FOOTITMOOT19
-Mcu:3M,
Exhibit Co.
Project Budget
80A-187
EXHIBIT 4
Cornerstone
Sources & Uses City of Santa Ana
Pre-Dev Profonna
08/28/19
175,121
NEW OR
ELIGIBLE
ELIGIBLE
NOT
TOTAL
USES OF FUNDS•
• •N
REHAB COST
HISTORIC
Land at$1,475,410 Per Acre or$33.87 Per SF
2,700.000
0
0
0
0
2.700,000
21,429
Existing Structure
14,800.000
14,800,000
0
0
0
0
117,460
Other Acquisition Costs
1
1
0
0
0
0
0
6,332,483
Hard Cost Residential 7,295,020 57,897
6,332,483
0
0
6,332,483
0
60,258
Site Improvements
0
0
0
0
0
0
0
General Conditions, Profit & Overhead 14.00%
886,547
0
886,547
0
886,647
0
7,036
GC Bond/Insurance/Letter of Credit 1.20%
75,990
0
75,990
0
76,9g0
0
603
Hard Cost Contingency 10.00%
729,502
0
729,502
0
729,602
0
5,790
275.078
Construction Interest (4%) at Perm. Rate +0bp 4.00%
586,496
0
311,418
0
311,418
4,655
Bridge Interest at 10.00%
23,845
0
0
0
0
23,845
189
Construction Loan Fees
86,250
0
86,260
0
86,260
0
685
Permanent Loan Fees
119,350
0
0
0
119,390
947
0
Bridge Loan Fees
119
0
119
0
119
0
1
13,275
4%Related Costs/ Cost of Issuance
288,275
0
275,000
0
276,000
2,288
Accounting & Audit
20,000
0
26,000
0
20,000
159
0
Appraisal / Market Study
20,000
0
20,000
0
20,000
0
159
Architecture (Architect, Landscape Architect)
570,000
0
570,000
0
670,000
0
4,624
Civil Engineering
245,000
0
246,000
0
246,000
0
1,944
Construction Manager
125,000
0
126,000
0
126,000
0
992
Consultants (CM, Goo, LEED, Utilities, exc.)
260.000
0
260,000
0
260,000
0
2,063
Environmental (EIR, Phase I, Asbestos, exc.)
50,000
0
60,000
0
60,000
0
397
Financial Advisor! Syndication Consultant
0
0
0
0
0
0
0
Furnishings
75.000
0
75,000
0
75,000
0
695
Additional (City Repayment)
0
0
0
0
0
0
0
Lease -up & Marketing Expenses
100,000
0
0
0
0
100,000
794
Legal
200,000
0
180,000
0
180,000
20,000
1,687
MHSA Construction Period Fees
0
0
0
0
0
0
0
363,880
Operating& Debt Service Reserve (3-mo's/debj 3
363,860
0
0
0
0
2,888
Other (Admin, Repro. & Reimb.)
15,000
25,000
0
0
16,000
26,000
0
0
16,000
26,000
0
0
119
198
Other(Be kInspections) -
Other-Katerra CM fees
150.000
0
150,000
0
160,000
0
1,190
Insurance
112.329
127.709
0
0
112,329
127,709
0
0
112,329
127,709
0
0
892
1,014
Permit Fees
Property Taxes
38,400
0
38,400
0
38,400
0
305
Relocation
518,000
0
618,000
0
618,000
0
4,111
Allowance -PV/ Solar Thermal installation
75,000
0
76,000
0
76,000
0
695
Soft Cost Contingency 9.79%
329,542
0
329,542
0
329,642
0
2,616
2,000
54.000
Tax Credit Fees (App., Mon., & Res.)
56,000
0
0
2,000
444
Title & Recording
45.000
0
_
32,250
0
32,260
12,7 00
357
Developer Overhead
0
0
0
0
0
0
Develo er Fee
2,168,000
323,700
_ __0
1,834,300
0
2.168,000
0
17,127
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80A-191
80A-193
Face
Exhibit Do.
Housing Successor
Agency Loan Deed of
Trust
80A-194
EXHIBIT 4
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
AMENDED AND RESTATED HOUSING SUCCESSOR AGENCY DEED OF
TRUST AND ASSIGNMENT OF RENTS
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
THIS AMENDED AND RESTATED HOUSING SUCCESSOR AGENCY DEED
OF TRUST AND ASSIGNMENT OF RENTS (this "Agency Deed of Trust") made this 17
day of September, 2019 by CORNERSTONE HOUSING PARTNERS LP, a California
limited partnership (the "Trustor"), AmeriNat, a Minnesota corporation (the "Trustee"),
and the Housing Authority of the City of Santa Ana, a public body, corporate and politic
(the "Beneficiary").
Wakeham-Grant Apartments, L.P. (the "Original Trustor") and the Beneficiary
previously entered into the Released Deeds of Trust (as defined below).
In connection with the Original Trustor's sale of the Property (as defined below) to
Trustor (the "Sale"), Original Trustor and Trustor desire to enter into that certain Assignment
and Assumption Agreement (Housing Successor Agency Loan), dated as of the date hereof,
by and between the Original Trustor and Trustor to effectuate the assignment of the Housing
Successor Agency Loan Agreements (as defined in the Agreement) to Trustor (the
"Assignment"), and the Beneficiary has consented to such Sale and Assignment.
In connection with the Assignment, the Beneficiary and Trustor desire to amend and
restate the Released Deeds of Trust, as set forth in this Agency Deed of Trust.
Trustor, in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the
property located in the City of Santa Ana, County of Orange, State of California, described in
the attached Exhibit A and more commonly known as 805, 810, 815, 816, 825, 828, 835,
and 904 S. Minnie Street, Santa Ana, California (the "Property");
TOGETHER with all the improvements now or hereafter erected on the Property, and
all easements, rights, appurtenances and all fixtures now or hereafter attached to the Property,
80A-195
EXHIBIT 4
all of which, including replacements and additions thereto, shall be deemed to be and remain
a part of the Property covered by this Agency Deed of Trust;
TOGETHER with the right, power and authority during the continuance of these
Trusts, to collect the rents, issues, and profits of the Property, reserving unto the Trustor the
right, prior to any default by Trustor in payment of the indebtedness secured by this Agency
Deed of Trust or in the performance of any agreement under this Agency Deed of Trust, to
collect and retain these rents, issues and profits as they become due and payable; and,
TOGETHER with all articles of personal property or fixtures now or hereafter
attached to or used in and about the building or buildings now erected, or hereafter to be
erected, on the Property which are necessary to the complete and comfortable use and
occupancy of such building or buildings for the purposes for which they were or are to be
erected, including all other goods and chattels and personal property as are ever used or
famished in operating a building, or the activities conducted therein, similar to the one herein
described and referred to, and all renewals or replacements thereof or articles in substitution
therefor, whether or not the same are, or shall be attached to said building or buildings in any
manner; and all of the foregoing, together with the Property, is herein referred to as the
"Security";
To have and to hold the Security together with acquittances to the Trustee, its
successors and assigns forever;
TO SECURE to the Beneficiary (a) the repayment of the sums evidenced by an
amended and restated promissory note to the Beneficiary executed by Trustor of even date
herewith in the principal amount ofTWO MILLION, FIFTY-FOUR THOUSAND, THREE
HUNDRED AND TWENTY-SEVEN DOLLARS ($2,054,327) (the "Agency Loan
Note"); (b) the performance of the covenants and agreements of Borrower contained in the
Agreement (as hereinafter defined); and (c) the payment of all other sums, with interest
thereon, advanced in accordance herewith to protect the security of this Agency Deed of Trust;
and the performance of the covenants and agreements of Trustor contained herein.
TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS:
1. The Loan Agreement. This Agency Deed of Trust is executed and delivered,
along with the Agency Loan Note and the Amended and Restated Loan Agreement, to benefit
the Property. A copy of said Amended and Restated Loan Agreement is on file as a public
record with the Beneficiary and is incorporated herein by reference (the "Agreement").
Trustor acknowledges that but for the execution of this Agency Deed of Trust, the Beneficiary
would not enter into the Agreement or Agency Loan Note secured by this Agency Deed of
Trust.
2. Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and
has the right to grant and convey the Security; that except as disclosed on the Title Policy
insuring this Agency Deed of Trust, the Security is not encumbered except for obligations
80A-196
EXHIBIT 4
secured by deeds of trust, or any other security agreement, to secure financing or refinancing
for the purchase and rehabilitation of the Property.
3. Repayment of the Loan. Trustor will promptly repay, when due, the principal
and interest, as required by the Agency Loan Note secured by this Agency Deed of Trust.
4. Subordination. This obligation secured by this Agency Deed of Trust shall be
subordinated to the Senior Loan.
5. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform
all of Trustor's obligations under any mortgage, deed of trust or other security agreement with
a lien which has priority over this Instrument, including Trustor's covenants to make
payments when due (subject to an applicable notice and cure provisions). Trustor will pay all
taxes, assessments and other charges, fines and impositions attributable to the Security which
may attain a priority over this Agency Deed of Trust, by Trustor making any payment, when
due, directly to the payee thereof. Trustor will promptly furnish to the Beneficiary all notices
of amounts due under this paragraph, and in the event Trustor makes payment directly, Trustor
will promptly discharge any lien which has priority over this Agency Deed of Trust; provided
that Trustor will not be required to discharge the lien of this Agency Deed of Trust securing
any senior lender or any other lien described in this paragraph so long as Trustor will agree in
writing to the payment of the obligation secured by such lien in a manner acceptable to the
Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in,
legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the
Security or any part thereof.
6. Hazard Insurance. Trustor will keep the Security insured by such insurance
policies in such amounts and for such periods as called for in the Agreement. All insurance
policies and renewals thereof will include a standard mortgagee clause with standard lender's
endorsement in favor of the holder of any senior lender and the Beneficiary as their interests
may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right
to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor
shall promptly furnish to the Beneficiary, or its designated agent, the original insurance
policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In
the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary
or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if
not made promptly by Trustor. The Beneficiary shall receive 30 days (10 days for
nonpayment of premium) advance notice of cancellation of any insurance policies required
under this Section.
Unless the Beneficiary and Trustor otherwise agree in writing, insurance proceeds,
subject to the rights of any senior lender, will be applied to restoration or repair of the Security
damaged, provided such restoration or repair is economically feasible and the security of this
Agency Deed of Trust is not thereby impaired. If such restoration or repair is not
economically feasible or if the security of this Agency Deed of Trust would be impaired,
again, subject to the rights of any senior lender, the insurance proceeds will be used to repay
the loan secured by this Agency Deed of Trust, with the excess, if any, paid to Trustor. If the
80A-197
EXHIBIT 4
Security is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or its
designated agent within 30 days from the date notice is mailed by either of them to Trustor
that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its
designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's
option either to restoration or repair of the Security or to repay the loan.
If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in
and to any insurance policy and in and to the proceeds thereof resulting from damage to the
Security prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums
secured by this Agency Deed of Trust immediately prior to such sale or acquisition subject to
the rights of any senior lender.
7. Preservation and Maintenance of Security. Trustor will keep the Security in
good repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the Beneficiary's Security. If Trustor fails to perform the
covenants and agreements contained in this Agency Deed of Trust or if any action or
proceeding is commenced which materially affects the Beneficiary's interest in the Security,
including, but not limited to, default under the Agency Deed of Trust securing any senior
lender, eminent domain, insolvency, code enforcement, or arrangements or proceedings
involving a bankrupt or decedent, then the Beneficiary, at the Beneficiary's option, upon
notice to Trustor, may make such appearances, disburse such sums and take such action as it
determines necessary to protect the Beneficiary's interest, including, but not limited to,
disbursement of reasonable attorneys' fees and entry upon the Security to make repairs.
Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest
thereon, will become an indebtedness of Trustor secured by this Agency Deed of Trust.
Unless Trustor and the Beneficiary agree to other terms of payment, such amount will be
payable upon notice from the Beneficiary to Trustor requesting payment thereof, and will bear
interest from the date of disbursement at the rate payable from time to time on outstanding
principal under the Agency Loan Note unless payment of interest at such rate would be
contrary to applicable law, in which event such amounts will bear interest at the highest rate
permissible under applicable law. Nothing contained in this paragraph will require the
Beneficiary to insure any expense or take any action hereunder.
9. Inspection. The Beneficiary may make, or cause to be made, reasonable
entries upon and inspections of the Security during normal business hours; provided that the
Beneficiary will give Trustor reasonable prior written notice of inspection.
10. Forbearance by the Beneficiary Not a Waiver. Any forbearance by the
Beneficiary in exercising any right or remedy will not be a waiver of the exercise of any such
right or remedy. The procurement of insurance or the payment of taxes or other liens or
charges by the Beneficiary will not be a waiver of the Beneficiary's right to accelerate the
maturity of the indebtedness secured by this Agency Deed of Trust.
EXHIBIT 4
11. Remedies Cumulative. All remedies provided in this Agency Deed of Trust
are distinct and cumulative to any other right or remedy under this Agency Deed of Trust or
any other document, or afforded by law or equity, and may be exercised concurrently,
independently or successively.
12. Successors and Assiens Bound. The covenants and agreements herein
contained shall bind, and the rights hereunder shall inure to, the respective successors and
assigns of the Beneficiary and Trustor subject to the provisions of this Agency Deed of Trust.
13. Joint and Several Liability. All covenants and agreements of Trustor shall be
joint and several.
14. Notice. Except for any notice required under applicable law to be given in
another manner, (a) any notice to Trustor provided for in this Agency Deed of Trust will be
given by certified mail, return receipt requested, addressed to Trustor at 17701 Cowan
Avenue, Suite 200, Irvine, CA 92614, Attn: President, with a copy to Union Bank, (b) any
notice to the Beneficiary will be given by certified mail, return receipt requested, to the
Beneficiary at 20 Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention:
Executive Director (CDA), or at such other address as the Beneficiary may designate by notice
to Trustor as provided above, and (c) to Trustee at 8121 E. Florence Avenue, Downey,
California 90240. Notice shall be effective as of the date received as shown on the return
receipt.
15. Governing Law. This Agency Deed of Trust shall be governed by the laws of
the State of California.
16. Severability. In the event that any provision or clause of this Agency Deed of
Trust or the Agency Loan Note conflicts with applicable law, such conflict will not affect
other provisions of this Agency Deed of Trust or the Agency Loan Note which can be given
effect without the conflicting provision, and to this end the provisions of the Agency Deed of
Trust and the Agency Loan Note are declared to be severable.
17. Captions. The captions and headings in this Agency Deed of Trust are for
convenience only and are not to be used to interpret or define the provisions hereof.
18. Default in Foreclosure: Remedies. Upon Trustor's breach of any covenant or
agreement of Trustor in this Agency Deed of Trust or the Agency Loan Note secured by this
Agency Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums
secured by this Agency Deed of Trust, the Beneficiary may declare all sums secured by this
Agency Deed of Trust immediately due and payable by delivering to Trustor notice thereof
specifying: (1) The breach; (2) the action required to cure such breach; (3) a date not less than
30 days from the date the notice is received by Trustor as shown on the return receipt, by
which such breach is to be cured provided, however, that if such default is not reasonable
susceptible to being cured within 30 days, Trustor shall have a reasonable period to cure the
defect so long as Trustor is diligently prosecuting the cure to completion; and (4) that failure
to cure such breach on or before the date specified in the notice may result in acceleration of
80A-199
EXHIBIT 4
the sums secured by this Agency Deed of Trust and sale of the Security. The notice will also
inform Tmstor of Trustor's right to reinstate after acceleration and the right to bring a court
action to assert the non-existence of default or any other defense of Truster to acceleration
and sale.
The Agency LoanNote contains additional cure periods granted to Truster's limited
partner and no event of default shall have occurred until and unless the Trustor's limited
partner fails to cure such breach during such cure period.
If the breach is not cured on or before the date specified in the notice or such longer
period as provided above or in the Agency Loan Note or the Agreement, the Beneficiary, at
the Beneficiary's option, may: (a) declare all of the sums secured by this Agency Deed of
Trust to be immediately due and payable without further demand and may invoke the power
of sale and any other remedies permitted by California law; or (b) either in person or by agent,
with or without bringing any action or proceeding, or by a receiver appointed by a court, and
without regard to the adequacy of its security, enter upon the Security and take possession
thereof (or any part thereof) and of any of the Security, in its own name or in the name of the
Trustee, and do any acts which it deems necessary or desirable to preserve the value or
marketability of the Property, or part thereof or interest therein, increase the income therefrom
or protect the security thereof. The entering upon and taking possession of the Security shall
not cure or waive any breach hereunder or invalidate any act done in response to such breach
and, notwithstanding the continuance in possession of the Security, the Beneficiary shall be
entitled to exercise every right provided for in this Agency Deed of Trust, or by law upon
occurrence of any uncured breach, including the right to exercise the power of sale; (i)
commence an action to foreclose this Agency Deed of Trust as a mortgage, appoint a receiver,
or specifically enforce any of the covenants hereof, (ii) deliver to the Trustee a written
declaration of default and demand for sale, pursuant to the provisions for notice of sale found
at California Civil Code Sections 2924, et sue., as amended from time to time; or (iii) exercise
all other rights and remedies provided herein, in the instruments by which Truster acquires
title to any Security, or in any other document or agreement now or hereafter evidencing,
creating or securing all or any portion of the obligations secured hereby, or provided by law.
Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any
cure of any default made or tendered by Truster's limited partner shall be deemed to be a cure
by Truster and shall be accepted or rejected on the same basis as if made or tendered by
Trustor.
The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred
in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable
attorneys' fees. -
19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration
of the sums secured by this Agency Deed of Trust, Truster will have the right to have any
proceedings begun by the Beneficiary to enforce this Agency Deed of Trust discontinued at
any time prior to 5 days before sale of the Security pursuant to the power of sale contained in
this Agency Deed of Trust or at any time prior to entry of a judgment enforcing this Agency
6
80A-200
LW:117-IM
Deed of Trust if: (a) Trustor pays the Beneficiary all sums which would be then due under
this Agency Deed of Trust and no acceleration under the Agency Loan Note has occurred; (b)
Trustor cures all breaches of any other covenants or agreements of Trustor contained in this
Agency Deed of Trust and the Affordability Restrictions on Transfer of Property; (c) Trustor
pays all reasonable expenses incurred by the Beneficiary and the Trustee in enforcing the
covenants and agreements of Trustor contained in this Agency Deed of Trust and the
Affordability Restrictions, and in enforcing the Beneficiary's and the Trustee's remedies,
including, but not limited to, reasonable attorneys' fees; and (d) Trustor takes such action as
the Beneficiary may reasonably require to assure that the lien of this Agency Deed of Trust,
the Beneficiary's interest in the Security and Trustor's obligation to pay the sums secured by
Us Agency Deed of Trust shall continue unimpaired. Upon such payment and cure by
Trustor, this Agency Deed of Trust and the obligations secured hereby will remain in full
force and effect as if no acceleration had occurred.
20. Acceptance by Trustee. Trustee accepts this Trust when this Agency Deed
of Trust, duly executed and acknowledged, is made a public record as provided by law.
Trustee is not obligated to notify any party to this Agency Deed of Trust ofpending sale under
any other deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee
shall be a party unless brought by Trustee.
21. Reconvevance. Upon payment or forgiveness of all sums secured by this
Agency Deed of Trust, the Beneficiary will request the Trustee to reconvey the Security and
will surrender this Agency Deed of Trust and the Agency Loan Note to the Trustee. The
Trustee will reconvey the Security without warranty and without charge to the person or
persons legally entitled thereto. Such person or persons will pay all costs of recordation, if
any.
22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from
time to time remove the Trustee and appoint a successor trustee to any Trustee appointed
hereunder. The successor trustee will succeed to all the title, power and duties conferred upon
the Trustee herein and by applicable law.
23. Request for Notice. Trustor requests that copies of the notice of default and
notice of sale be sent to Trustee at the address set forth in Section 14 above.
24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor shall
have any personal liability under the Agreement, Agency Loan Note, and this Agency Deed
of Trust and any judgment, decree or order for payment of money obtained in any action to
enforce the obligation of Trustor to repay the loan evidenced by such documents shall be
enforceable against Trustor only to the extent of Trustor's interest in the Property.
25. Extended Use Agreement. Beneficiary acknowledges that Trustor and the
California Tax Credit Allocation Committee have or intend to enter into an extended use
agreement. Beneficiary acknowledges and agrees that, in the event of a foreclosure of its
interest under this Agency Deed of Trust or delivery by Trustor of a deed in lieu thereof
80A-201
WAMMINdrIl
(collectively, a "Foreclosure"), the following rule contained in Section 42(h)(6)(E)(ii) of
the Code 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 extended use agreement, (i) none of the eligible tenants
occupying those units at the time of Foreclosure may be evicted or their tenancy terminated
(other than for good cause, including but not limited to, the tenants' ineligibility pursuant
to Section 42 of the Code), (ii) nor may any rent be increased except as otherwise permitted
under Section 42 of the Code.
26. Amendment and Restatement. This Agency Deed of Trust amends, restates and
supersedes in their entirety those certain Agency Deeds of Trust and Assignment of Rents
described in the attached Exhibit B (collectively, "Released Deeds of Trust").
80A-202
EXHIBIT 4
IN WITNESS WHEREOF, Trustor has executed this Agency Deed of Trust as of the date
first written above.
DEVELOPER
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By: _
Name:
Title:
80A-203
EXHIBIT 4
A Notary Public or other officer completing this certificate verifies only the identity of
the individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
m
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.
Signature _ (SEAL)
80A-204
EXHIBIT 4
A. Legal Description
B. Released Deeds of Trust
EXHIBITS
80A-205
EXHIBIT 4
EXHIBIT A
Legal Description
12
80A-206
EXHIBIT 4
Legal Description
The Land referred to herein below is situated in the City of Santa Ana, County of Orange, State of California, and is
described as follows:
PARCEL ONE:
LOTS 7 THROUGH 13 INCLUSIVE OF TRACT 3547 IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 138, PAGES 32 AND 33 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID ORANGE COUNTY.
PARCEL TWO:
PARCEL 1 OF "LOT MERGER NO. 2019-08" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282886 OF
OFFICIAL RECORDS.
PARCEL THREE:
PARCEL 1 OF "LOT MERGER NO. 2019-10" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282887 OF
OFFICIAL RECORDS.
For conveyancing purposes only: APN 404-033-01 (Affects portion of Parcel Two)
APN: 404-033-02 (Affects portion of Parcel Two)
APN: 404-032-01 (Affects portion of Parcel Three)
APN: 404-032-02 (Affects portion of Parcel Three)
APN: 404-031-03 (Affects Lots 8 and 9 of Parcel One)
APN: 404-031-01 (Affects Lots 12 and 13 of Parcel One)
APN: 404-031-04 (Affects Lot 7 of Parcel One)
APN: 404-031-02 (Affects Lots 10 and 11 of Parcel One)
80A-207
EXHIBIT 4
EXHIBIT B
Released Deeds of Trust
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80A-218
EXHIBIT 4
Exhibit E9.
Housing Successor
Agency Loan Note
80A-219
EXHIBIT 4
AMENDED AND RESTATED HOUSING SUCCESSOR AGENCY LOAN NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO THE HOSUING AUTHORITY OF THE CITY OF SANTA ANA, CALIFORNIA
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
$2,054,327
1. Principal Amount of Loan
September 17, 2019
Santa Ana, California
For value received, CORNERSTONE HOUSING PARTNERS LP, a California limited
partnership ("Borrower") promises to pay to the order of THE HOUSING AUTHORITY OF
THE CITY OF SANTA ANA, AS THE HOUSING SUCCESSOR AGENCY TO THE
FORMER COMMUNITY REDEVELOPMENT AGENCY ("Agency"), at 20 Civic Center
Plaza, 6a' Floor, Santa Ana, California 92701, or at such other place as the Agency may from
time to time designate in writing, or to the assignee of the Agency, the principal sum of TWO
MILLION, FIFTY-FOUR THOUSAND, THREE HUNDRED AND TWENTY-SEVEN
DOLLARS ($2,054,327) or so much thereof as shall be disbursed hereunder, with five percent
simple interest (5%) commencing on September 17, 2019.
Agency and Wakeham-Grant Apartments, L.P., a California limited partnership
("Original Borrower") previously entered into the Housing Successor Agency Loan Agreements
(as defined in the Loan Agreement) , pertaining to the acquisition and rehabilitation of certain
real property described in the Loan Agreement as the 'Property," located at 805, 810, 815, 816,
825, 828, 835, and 904 S. Minnie Street, Santa Ana, California, commonly referred to as the
Cornerstone Apartments, and the operation of the Property as affordable housing for very -low
income households, and the Original Borrower previously entered into the Housing Successor
Agency Loan Notes, in favor of the Community Redevelopment Agency of the City of Santa
Ana ("CRA") (collectively, the "Original Notes") described in Exhibit A. The Original Notes
referenced in the "Interest Secured" column in Exhibit A are hereby amended and restated in
their entirety by this Note.
In connection with the Original Borrower's Sale of the Property to Borrower, Original
Borrower and Borrower desire to enter into that certain Assignment and Assumption Agreement
(Housing Successor Agency Loan), dated as of the date hereof, by and between the Original
Borrower and Borrower to effectuate the assignment of the Housing Successor Agency Loan
Agreements to Borrower (the "Assignment"), and the Agency has consented to such Sale and
Assignment.
This Amended and Restated Housing Successor Agency Loan Note (this "Note") is made
pursuant to, entitled to the benefits of and referred to as the Housing Successor Agency Loan
Note in the Amended and Restated Loan Agreement ("Loan Agreement"); that certain
80A-220
EXHIBIT 4
"Amended and Restated Affordability Restrictions on Transfer of Property" between Borrower
and Agency, dated on or about the date hereof (the "Agency Affordability Restrictions on
Transfer of Property"); and that certain subordinated Amended and Restated Housing Successor
Agency Deed of Trust and Assignment of Rents between Borrower and Agency, dated on or
about the date hereof (the "Agency Deed of Trust"). This Note, the Loan Agreement, the
Affordability Restrictions on Transfer of Title, and the Agency Deed of Trust are sometimes
collectively referred to herein, collectively, as the "Loan Documents." The Loan Documents and
the rights and responsibilities inure to the benefit of the Agency. Any capitalized term which is
not otherwise defined herein shall have the meaning ascribed to such term in the Loan
Agreement.
2. Definitions.
For the purpose of calculating the payments to be made by Borrower to Agency pursuant
to this Note, the following terms shall have the following respective meanings:
"Acquisition Costs" shall mean the costs and expenses of Borrower to acquire the
Property, as set forth in the Project Budget attached to the Loan Agreement.
"Agency Loan" shall mean the loan evidenced by this Note.
"Agency's Percentage" with reference to the Residual Receipts, shall mean 50% or the
prorated percentage of the total amount of funds contributed after CORNERSTONE HOUSING
PARTNERS LP, retains fifty percent of the Residual Receipts, whichever is less, of the Agency's
share of the total Residual Receipts from the Property as further described in Section 5 hereof. If
other lenders to the Property are also repaid from Residual Receipts, Agency's Percentage shall
be reduced proportionally to the ratio that the original principal amount of the Loan bears to the
original principal amount of all loans being repaid from Residual Receipts multiplied by 50%.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"Closing Costs" shall mean:
(i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a
result of the Sale, which shall not in any event exceed the customary amount charged -for similar
transactions in the immediate market place, costs of title insurance premiums, documentary
stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably
incurred with respect to the Property, in each case actually paid by Borrower as a condition of
the Sale.
(ii) In the case of a Refinancing, the reasonable and necessary costs of
80A-221
EXHIBIT 4
consummating such Refinancing, including, without limitation, loan fees, loan repayment
charges, costs of title insurance premiums, escrow fees, recording fees, attorneys' fees and costs
of Lender required repairs or reserves.
"Gross Revenues" shall mean all revenues and receipts of every kind actually received
by Borrower from operating the Property, and all parts thereof, including, but not limited to,
income from both cash and credit transactions, rental from leased and/or subleased spaces and
parking fees and charges (but not including security deposits and other tenant deposits, except to
the extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues
does not include any insurance proceeds other than any rental interruption insurance proceeds.
Any credit consideration shall be included in Gross Revenues at the time cash proceeds
(principal, interest and/or other) are received. Borrower shall establish and maintain accounts for
the Gross Revenues (the "'Project Accounts") that are segregated from revenues and income
received by Borrower from all other projects. Gross Revenues shall also include all interest
earned on the Project Accounts to the extent interest is released from the Project Accounts.
Gross Revenues do not include the proceeds of any loans or capital contributions made to
Borrower, Refinancing Proceeds or Sale Proceeds.
"Operating Expenses" shall mean the sum of the following:
(i) payments of principal and interest and all other charges relating to the Senior
Loan(s), exclusively including required payments under the MUFG Union Bank, N.A. loan(any
additional loans to the project must be approved by the Agency);
a property management fee no greater than 8% of gross rents;
(iii) Owner Partnership Management and Asset Management Fees not to exceed 5%
of gross rents;
(iv) Deposits into required reserves required by any lender or Borrower's
Partnership Agreement;
(v) all other actual, reasonable cash operating costs and expenses, calculated on an
annual basis, that are directly attributable to managing and operating the Property and the
Borrower, including, without limiting the generality of the foregoing, the following: costs and
expenses for real and personal property taxes, special assessments or similar charges; water, fuel,
electricity and other utilities; heating, ventilation and air conditioning expenses; labor; supplies;
tools; equipment; insurance; advertising and marketing; accounting and legal fees; brokerage
commissions and other leasing expenses; reasonable reserves for all anticipated expenses as
approved by the Agency; and other such items constituting operation, maintenance and repair
costs actually paid by the Borrower, subject to the following conditions:
(a) Depreciation and amortization expenses shall not be considered
Operating Expenses, except as otherwise provided herein.
3
80A-222
EXHIBIT 4
(b) Reserved.
(c) Any expenses, compensation or fees paid to any affiliate of Borrower
shall only be included as Operating Expenses to the extent they are not in excess of the
reasonable expenses, compensation or fees which would be payable to unrelated third parties in
arms -length transactions for similar services in the Santa Ana, California area.
(vi) Any other expenses necessary to meet senior lender requirements and requirements
of Borrower's limited partner, or its assignee, as set forth in Borrower's Agreement of Limited
Partnership (the "Partnership Agreement"), including, without limitation, repayment of any loans
to the Borrower by a partner or tax credit recapture or deficiency payments.
(vii) Deferred Developer Fees.
(viii) A social services administrative fee.
"Project" shall mean the acquisition and rehabilitation of the Property by Borrower
pursuant to the Loan Agreement.
"Property" shall mean the real property located at 805, 810, 815, 816, 825, 828, 835, and
904 S. Minnie Street, Santa Ana, California, and commonly referred to as the Cornerstone
Apartments, described in the Agency Deed of Trust.
"Refinancing" shall mean changing the then existing financing on the Property by,
without limitation, modifying final maturity date of the existing Senior Loan, increasing the
stated maximum principal amount of the existing Senior Loan, paying off the existing Senior
Loan in full and obtaining new Senior Loan.
"Refinancing Proceeds" shall be disbursed as set forth in Section 7 hereof.
"Residual Receipts" shall mean the Gross Revenues from the Property, for each year,
less deductions for Operating Expenses from the Property, applicable to each such year to the
extent not already deducted as an Operating Expense.
"Sale" shall mean any transfer, assignment, conveyance or lease (other than to a tenant
for occupancy or a transaction set forth in Section 15(c) hereof) of the Property or any portion
thereof, or any interest therein by the Borrower, and includes any transfer, assignment or sale of
any partnership interest in the Borrower by an individual or entity which is a general partner in
the Borrower, or any interest by any individual or entity which holds an interest in any such
general partner in the Borrower, which brings the cumulative total of all such direct and indirect
transfers, assignments and sales during the term of this Note to more than forty-nine percent
(49%) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a
direct or indirect partnership interest thereafter. Sale includes a sale in condemnation or under
80A-223
EXHIBIT 4
threat thereof. Sale does not include dedications and grants of easements to public and private
utility companies of the kind customary in real estate development, nor transfers of Limited
Partnership interests or transfers of General Partner interests caused by the removal of the
General Partner pursuant to the terns of the Partnership Agreement.
"Sale Proceeds" shall be disbursed as set forth in Section 8 hereof.
"Senior Loan" shall mean the senior loan being made by MUFG Union Bank, N.A.,
concurrent to the Agency Loan for payment of a portion of the Acquisition and Rehabilitation
Costs, and shall include any subsequent loan that refinances the initial Senior Loan.
"Term" the term for repayment of this Note shall mean fifty-five (55) years from the
date of recording.
3. Loan Repavment.
Borrower shall make payments to the Agency as provided in Sections 5 (Residual
Receipts), 7 (Refinancing Proceeds), 8 (Sale Proceeds) and 10 (Accelerated Loan Repayment).
4. Operating Capital Improvement Loan.
If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and
the General Partner makes a loan to the Partnership, the reserves must be fully funded to their
original level prior to repayment of said loan. Such loan shall be repaid with net cash flow prior
to the residual receipt split. The outstanding loan balance will be reflected in the annual report.
5. Annual Loan Repavment.
a. After any deferred Developer Fee has been paid, as set forth hereinabove, the
Borrower shall thereafter make a loan payment to the Agency annually, in the amount of the
lesser of the outstanding balance due under this Note or the Agency's Percentage of the Residual
Receipts, as provided in this Section 5.
b. Within one hundred twenty (120) days after the year in which the rehabilitation of
the Project is completed, and on or before the 120th day of each Calendar Year thereafter, the
Borrower shall submit to the Agency a detailed statement of Gross Revenues and Operating
Expenses attributable to the Property for the applicable Calendar Year, along with a computation
of the amount of the Residual Receipts applicable to such Calendar Year with which to make a
Agency Loan payment then due.
c. Except as otherwise provided in Section 4, the Borrower shall pay to the Agency
fifty percent (50%) of the Residual Receipts as payment of principal and interest under its loan.
The remaining amount of the Residual Receipts shall remain with the Borrower to be used by
W1
80A-224
EXHIBIT 4
Borrower as determined by the General Partners of Borrower, including, without limitation, for
distribution to the partners of the Borrower.
d. The Residual Receipts payment shall be made not later than one hundred fifty (150)
days after the close of the Calendar Year. Such payment shall be applied first to any accrued but
unpaid interest, if any, then to reduce the principal balance of the loans.
6. Reserved.
7. Loan Repayment from Refinancin¢ Proceeds.
The Borrower shall make a loan payment to the Agency from every Refinancing that
occurs during the tern of this Note not to exceed the outstanding balance of principal and
interest on this Note, to the extent of the Agency's Percentage of the Refinancing Proceeds (if
any), as follows: the cash proceeds from such Refinancing shall be applied first to pay Closing
Costs; next, the amount necessary to pay in full all amounts owing on the Senior Loan; ; next to
pay any amounts due to the Limited Partner pursuant to the Partnership Agreement; next to pay
any amounts due to the Limited Partner pursuant to the Partnership Agreement; next, the
Borrower shall pay to the Agency fifty percent (50%) of the then remaining unapplied
Refinancing Proceeds not to exceed the outstanding balance on this Note. The remaining
Refinancing proceeds shall remain with Borrower to be used by Borrower as determined by the
General Partners of Borrower, including, without limitation, for distribution to the partners of the
Borrower. Such payment shall be due within 30 days of the date of such Refinancing, and shall
be applied first to any accrued but unpaid interest, then to reduce the principal balance of the
Loans. The Agency shall not be required to reconvey the lien of the Agency Deed of Trust if
Sale Proceeds are insufficient to repay the Agency Loan in full.
8. Loan Repayment from Sale Proceeds.
The Borrower shall make a loan payment, not to exceed the outstanding balance of
principal and interest on this Note, to the Agency from any Sale that occurs during the term of
the Agency Loan, to the extent of the Agency's Percentage of the Sale Proceeds, as follows:
gross sale proceeds are applied first to pay Closing Costs, next to pay in full all amounts owing
on the Senior Loan; next the Borrower shall pay to the Agency fifty percent (50%) of the then
remaining unapplied Sale Proceeds, not to exceed the outstanding amount of principal and
interest due on this Note. This fifty percent (50%) represents the total payment due under this
Note. The remaining Sale Proceeds shall remain with Borrower. Such payment shall be due on
the date of such Sale, and shall be applied first to any accrued but unpaid interest, then to reduce
the principal balance of the Loans. The Agency shall not be required to reconvey the lien of the
Agency Deed of Trust if Sale Proceeds are insufficient to repay the Agency Loan in full.
9. Buy Out Option.
0
80A-225
EXHIBIT 4
Prior to the initial disbursement under this Note, the Borrower shall grant to the Agency a Right
of First Refusal (subject to any purchase option and/or right for first refusal granted to one or
more of the general partners of the Borrower) (the "Agency Right of First Refusal") to acquire
the Property if Borrower desires to transfer the Property to an entity which is not affiliated with
one or more of Borrower's general partners. The Agency Right of First Refusal shall be in form
and substance acceptable to the Agency and the Limited Partner and shall comply with all
applicable Tax Credit requirements.
10. Accelerated Loan Payment.
The full principal amount outstanding plus accrued but unpaid interest thereon, shall be
due and payable on the earlier to occur of the following:
a. Sale or Refinancing of the Property as provided further in Section 15 hereof;
unless: (i) in the case of a Sale in which the Agency's Percentage of the Sale Proceeds are
insufficient to repay in full the Agency Loan, the Agency approves such sale -and the purchaser
assumes the balance of the Agency Loan in accordance with the terms of this Note; or (ii) in the
case of a Refinancing in which the Agency's Percentage of the Refinancing Proceeds are
insufficient to repay in full the Agency Loan, the Agency approves such Refinancing and the
Borrower remains obligated pursuant to the terms of this Note.
b. if an Event of Default occurs pursuant to Section 16 hereof.
or
c. The date that is fifty five (55) years after the date of execution of this Note.
11. Prepayment
Borrower may prepay the outstanding principal balance under this Note, in whole or in
part, together with any accrued but unpaid interest, if any, and other sums owed to the Agency
under this Note, if any, at any time without penalty.
12. Lawful Money.
Principal and interest are payable in lawful money of the United States of America.
13. Application of Payments; Late Charges.
a. Any payments received by the Agency pursuant to the terms hereof shall be
applied first to sums, other than principal and interest, due the Agency pursuant to this Note, next
to the payment of all interest accrued to the date of such payment, and the balance, if any, to the
payment of principal.
80A-226
EXHIBIT 4
b. If any payment is not received by the Agency within ten (10) days following the
due date thereof, then in addition to the remedies conferred upon the Agency pursuant to this
Note and the other Loan Documents, (i) a late charge of four percent (4%) of the amount due and
unpaid will be added to the delinquent amount to compensate the Agency for the expense of
handling the delinquency and (ii) the amount due and unpaid, excluding the late charge, shall
bear interest at ten percent (10%) per annum, computed from the date on which the amount was
due and payable until paid. Without prejudice to the rights of the Agency hereunder or under any
of the other Loan Documents, Borrower shall indemnify the Agency against, and shall pay the
Agency on demand, any expense or loss which it may sustain or incur as a result of the failure by
Borrower to pay when due any installment of interest and/or principal, fees, or other amounts
payable to the Agency under this Note or any other Loan Document, to the extent that any such
expense or loss is not recovered pursuant to such foregoing provisions. A certificate of the
Agency setting forth the basis for the determination of the amounts necessary to indemnify the
Agency in respect of such expenses or direct loss, submitted to Borrower by the Agency, shall be
conclusive and binding for all purposes except as immediately corrected by Borrower notice to
Agency.
14. Securi
This Note is secured by the Agency Deed of Trust.
15. Acceleration by Reason of Transfer or Financing.
a. In order to induce Agency to make the loan evidenced hereby, Borrower agrees
that in the event of any transfer of the Property without the prior written consent of
Agency (other than a transfer resulting from a foreclosure, or conveyance by deed in
lieu of foreclosure, by the holder of the Senior Loan Deed of Trust), Agency shall
have the absolute right at its option, upon at least 30 days' prior written notice to
Borrower, to declare all sums secured hereby immediately due and payable. Such
consent will not be unreasonably withheld. Consent to one such transaction shall not
be deemed to be a waiver of the right to require consent to future or successive
transactions. Agency may grant or deny such consent in its reasonable discretion and,
if consent should be given, any such transfer shall be subject to this Section 12, and
any such transferee shall assume all obligations hereunder and agree to be bound by
all provisions contained herein. Such assumption shall release Borrower from all
liability thereunder from and after the date of such assumption.
b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or
conveyance of the Property, or any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, the execution of any installment land sale contract
or similar instrument affecting all or a portion of the Property, or the lease of all or substantially
all of the Property. "Transfer" shall not include the leasing of individual residential units on the
Property, so long as Borrower complies with the provisions of the Loan Agreement and the
Affordable Housing Restrictions relating to such leasing activity, nor shall it include a
E
80A-227
EXHIBIT 4
conveyance of the Property to a limited partnership in which the general partner of Borrower or
an affiliate is a general partner, or to a corporation that is wholly owned by the Borrower and that
is formed for the sole purpose of owning and operating the Property, or the sale back to the
Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the
balance of the Senior Loan, without the prior written consent of Agency (which consent Agency
may grant or deny in its sole discretion), then the entire outstanding balance of the Agency Loan
together with all accrued and unpaid interest, shall be repaid to the Agency at the time of each
Refinancing or partial Refinancing.
c. For the avoidance of doubt, a "transfer" shall not include (i) a transfer of any
general partner's interest in Borrower when made in connection with the exercise by the
Borrower's limited partner (the "Limited Partner") of its rights upon a default by a general
partner under the Borrower's Partnership Agreement or upon a general partner's withdrawal in
violation of the Partnership Agreement, so long as the removal and substitution of the defaulting
general partner is made within thirty (30) days of such default or, if such removal and
substitution cannot reasonably be completed within thirty (30) days, so long as the Limited
Partner commences to take action to remove and substitute the general partner with a reasonable
period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the
Property to the managing general partner of Borrower or affiliates thereof pursuant to the right of
first refusal or to the general partners of Borrower or affiliates thereof pursuant to the purchase
option, as provided for in the Purchase Option and Right of First Refusal Agreement between
Borrower and its general partner; (iii) any transfer of the Limited Partner's interest in accordance
with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a
limited partner of the Borrower.
16. Event of Default.
Subject to the provisions of Sections 23 and 25 hereof, the occurrence of any of the
following shall be deemed to be an event of default ('Event of Default") hereunder: (a) failure by
Borrower to make any payments provided for herein, and if such default is not made good within
fifteen (15) days of written notice to Borrower of such default; or (b) failure by Borrower to
perform any covenant or agreement in the Agency Deed of Trust, the Loan Agreement, or the
Affordability Restrictions on Transfer of Property within thirty (30) days after written demand
therefor by Agency (or, in the event that more than thirty (30) days is reasonably required to cure
such default, should Borrower fail to promptly commence such cure, and diligently and
continuously prosecute same to completion). Notwithstanding the foregoing, if Borrower fails to
cure such breach during the time set forth herein for such cure, Agency shall provide written
notice of such failure to Limited Partner and no Event of Default shall be deemed to occur unless
Limited Partner fails to cure such breach within 30 days following delivery of such notice;
provided, however, if in order to cure such breach Limited Partner determines that it must
remove the General Partner pursuant to the terms of the Partnership Agreement, then no Event of
Default shall occur until 30 days following the effective date of such removal.
80A-228
EXHIBIT 4
17. Remedies.
Upon the occurrence and during the continuance of an Event of Default, after any
applicable notice has been provided and the expiration of any applicable cure period therefore,
Agency may declare all sums evidenced hereby immediately due and payable by delivery to the
Trustee named in the Agency Deed of Trust securing this Note, and to Borrower, written
declaration of default and demand for sale, and written notice of default and of election to cause
the Property to be sold, which notice Trustee shall cause to be duly filed for record and Agency
may foreclose on the Agency Deed of Trust. Agency shall also deposit with Trustee the Agency
Deed of Trust, this Note and all documents evidencing expenditures secured thereby and
evidenced hereby. No delay or omission on the part of the Agency in exercising any right under
this Note or under any of the other Loan Documents shall operate as a waiver of such right.
18. Attorneys' Fees.
If this Agency Loan Note is not paid when due or if any Event of Default occurs,
Borrower promises to pay all costs of enforcement and collection, including but not limited to,
reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the
provisions hereof.
19. Severability.
Every provision of this Note is intended to be severable. In the event any term or
provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and
provisions hereof, which terms and provisions shall remain binding and enforceable.
20. Number and Gender.
In this Note the singular shall include the plural and the masculine shall include the
feminine and neuter gender, and vice versa, if the context so requires.
21. Non -recourse.
The Agency Loan is a nonrecourse obligation of the Borrower. Neither Borrower nor any
other party, including Borrower's partners, shall have any personal liability for repayment of the
Agency Loan or for any other amounts under any of the documentation evidencing, securing or
describing the Agency Loan. The sole recourse of Agency under this Note and the Agency Deed
of Trust for repayment of the Agency Loan and for such other amounts arising therefrom shall be
the exercise of its rights against the Property and related security thereunder.
10
80A-229
EXHIBIT 4
22. Subordination.
It is hereby expressly agreed and acknowledged by Borrower and Agency that the
Agency Deed of Trust is a subordinate deed of trust, and that this Note is subject and subordinate
to the Senior Loan Deed of Trust held by MUFG Union Bank, N.A..
23. Reserved.
24. Reserved.
25. Force Maieure.
Notwithstanding specific provisions of this Note, performance hereunder shall not be
deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs;
riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy;
epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental
restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor,
materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to
act of the Agency or any other public or governmental Agency or entity (except that any act or
failure to act of Agency shall not excuse performance by Agency); or any other causes beyond
the reasonable control or without the fault of the party claiming an extension of time to perform.
An extension of time for any such cause shall be for the period of the enforced delay and shall
commence to run from the time the party claiming such extension gives notice to the other party,
provided notice by the party claiming such extension is given within thirty (30) days after the
commencement of the cause. Times of performance under this Note may also be extended in
writing by the Agency and the Borrower.
26. Assignments.
The Agency, and the assignee of the Agency, shall have the right to assign this Note and
the Agency Deed of Trust securing this Note, without any further act of Borrower. The assignee
shall give notice to Borrower as soon as practicable after such assignment.
26. Amendment and Restatement.
This Note amends, restates and supersedes in their entirety the Original Notes. On or
before the date hereof, the Agency shall surrender and deliver to Original Borrower the Original
Notes.
11
80A-230
EXHIBIT 4
This Note is hereby agreed to and executed on the date first set forth above.
"BORROWER"
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By: _
Name:
Title:
12
80A-231
EXHIBIT 4
EXHIBIT
A. Housing Successor Agency Loan Notes (the "Original Notes")
13
80A-232
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80A-242
EXHIBIT 4
Exhibit Fo.
Affordability
Restrictions on
Transfer of Property
80A-243
EXHIBIT 4
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
AMENDED AND RESTATED AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
(805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California)
THESE AFFORDABLE HOUSING RESTRICTIONS ON TRANSFER OF
PROPERTY (these "Restrictions") are entered into as of September 17, 2019, by and
among and CORNERSTONE HOUSING PARTNERS LP, a California limited
partnership (referred to herein as the "Developer"), and the Housing Authority of the City
of Santa Ana, a public body, corporate and politic (the "Agency").
RECITALS:
A. Developer is the owner of that certain real property located at 805, 810, 815,
816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California and commonly referred
to as the Cornerstone Apartments, and legally described in Exhibit A attached hereto and
incorporated herein by reference ("Property").
B. For the purpose of providing one -hundred, twenty-six (126) units of housing,
one hundred twenty-five (125) of which will be affordable to very -low income households
("Assisted Units"), Wakeham-Grant Apartments, L.P. (the "Original Developer") and the
Agency previously entered into the Housing Successor Agency Loan Agreements (as
defined in the Loan Agreement) and the Affordability Restrictions on Transfer of Property
(collectively, the "Original Restrictions") described in Exhibit B.
C. In connection with the Original Developer's sale of the Property to
Developer (the "Sale"), Original Developer and Developer desire to enter into that certain
Assignment and Assumption Agreement (Agency Loan), dated as of the date hereof, by and
between the Original Developer and the Developer to effectuate the assignment of the
Agency Loan Agreements to Developer (the "Assignment"), and the Agency has consented
to such Sale and Assignment.
D. The Agency and Developer have entered into that certain Amended and
Restated Loan Agreement, dated on or about the date hereof (the "Loan Agreement") to
80A-244
EXHIBIT 4
which these Restrictions are attached as Exhibit G, which, along with all of its attachments,
is incorporated herein by this reference (any capitalized term that is not otherwise defined
in these Restrictions shall have the meaning ascribed to such term in the Loan Agreement).
E. In connection with the Assignment, the Agency and Developer desire to
amend and restate the Original Restrictions.
F. The Loan Agreement provides, among other things, for the use of the
Property for affordable housing with all Assisted Units being restricted to Very -Low Income
households, at Affordable Rent(s).
G. The Loan Agreement contains certain provisions relating to the use of the
Property.
NOW, THEREFORE, AGENCY AND DEVELOPER COVENANT AND
AGREE AS FOLLOWS:
1. The Restrictions amend, restate and supersede in their entirety the Original
Restrictions. Developer covenants and agrees (for itself, its successors, its assigns, and
every successor in interest to the Property or any part thereof) that Developer, such
successors, and such assigns shall use the Property exclusively to provide affordable
housing of Very -Low Income households, as provided in these Restrictions and in the
Loan Agreement.
2. Developer, for itself and its successors and assigns, hereby covenants and
agrees that all of the apartments in the Property (less one manager's unit) (the "Units")
shall be rented exclusively, at Affordable Rent, to Very -Low Income households to the
extent provided for herein. Area median income levels and Affordable Rents are subject
to adjustment from time to time as provided in Section 3 below.
3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
3.1 Use Covenants and Restrictions
A. Developer agrees and covenants, which covenants shall run with the land and bind
Developer, its successors, its assigns and every successor in interest to the Property that
Developer will make all rental units on the Property available to very low-income households
at rents affordable to such households for fifty-five (55) years from the issuance of the
Certificate of Completion. The Agency permits the Developer to limit the eligibility and/or
give preference to a particular segment of the population in accordance with 24 CFR 92.253(d)
B. The Project shall consist of one -hundred, twenty-six (126) units, including one (1)
on -site manager's unit(s).
C. Rental increases shall be in conformance with federal and state law.
2of11
80A-245
Wci
D. Developer must have a written lease between tenant and owner for a period of at least
one year, unless a shorter period is mutually agreed upon.
3.2 Affordability Levels[UDit Mix:
All affordable rents in the Project shall be governed by the rents published annually by the
California Tax Credit Allocation Committee for households at 50% Area Median Income
(as defined in the Loan Agreement).
Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Housing
Authority of the City of Santa Ana publishes the Utility Allowance Schedule.
3.3 Rent Increases: On an annual basis, the Agency shall provide Developer with the
maximum allowable schedule of rents for the Property in accordance with changes in
allowable rent and income tables published by the California Tax Credit Allocation
Committee (TCAC). In no event can Developer charge any tenant more than such amount.
The Agency will make all best efforts to provide Developer with the maximum allowable
schedule of rents within no more than 30 calendar days after the date TCAC publishes the
allowable rent and income tables.
4. Developer, its successors and assigns shall not charge rents for the Units in excess
of the amounts set forth herein, as adjusted on the basis of the revised schedules of area
median incomes issued from time -to -time by HUD. The Agency shall notify Developer in
writing of the adjusted allowable maximum incomes and rents.
5. Developer shall adopt and include as part of its Management Plan (described in
Section 11 below), written tenant selection policies and criteria for the Units, that meet the
following requirements:
(a) Are consistent with the purpose of providing housing for Very -Low
Income households;
(b) Are reasonably related to program eligibility and the applicants'
ability to perform the obligations of the lease;
(c) Provide for:
(i) The selection of tenants from a written waiting list in the
chronological order of their application, insofar as is practicable; and
(h) The prompt written notification to any rejected applicant of
the grounds for any rejection;
(d) Subject to compliance with applicable California and federal fair
housing laws, local preference for Santa Ana residents and workers in tenant selection
shall be a requirement of the Project. Subject to applicable laws and regulations governing
nondiscrimination and preferences in housing occupancy required by HUD or the State of
California, as well as the City of Santa Ana Affordable Housing Funds Policies and
3ofII
80A-246
EXHIBIT 4
Procedures, the Developer shall give preference in leasing units in the following order of
priority:
1. First priority shall be given to persons who have been
permanently displaced or face permanent displacement from
housing in Santa Ana as a result of any of the following:
a. A redevelopment project undertaken pursuant to
California's Community Redevelopment Law (Health &
Safety Code Sections 33000, et seq.) -- applicable only
to projects funded by the Low and Moderate Income
Housing Asset Fund.
b. Ellis Act, owner -occupancy, or removal permit eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP
Contract by property owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at
least the last 6 months.
(e) Carry out the Affirmative Marketing procedures of the City of Santa
Ana, which are designed to provide information and otherwise attract eligible persons
from all racial, ethnic and gender groups in the housing market area to the units.
Developer shall cooperate with the Agency to effectuate this provision prior to the initial
renting, or upon occurrence of a vacancy, and the re -renting of any Restricted Units 24
CFR 92.3511.
6. Developer, its successors and assigns, shall not refuse to lease a unit to a
holder of a rental voucher under 24 CFR part 887 (Housing Choice Voucher Program) or
to a holder of a comparable document evidencing participation in a HOME tenant -based
assistance program because of the status of the prospective tenant as a holder of such
certificate of family participation, rental voucher, or comparable HOME tenant -based
rental assistance document. Total rents charged to the tenant for the tenant's share of rent
shall not exceed the allowable rents as described above.
7. Any lease of any of the units must be for not less than one year, unless by
mutual agreement between the tenant and the Developer. Should the tenant and Developer
agree to a term of less than one year, said agreement shall be expressed in some type of
written form, signed by the tenant, and maintained in the tenant's rental file held by the
Developer. The lease may not contain any of the following provisions (in which
4of11
80A-247
EXHIBIT 4
references to "owner" shall mean the Developer, its successors or assigns):
(a) Agreement by the tenant to be sued, to admit guilt, or to a judgment
in favor of the owner in a lawsuit brought in connection with the lease;
(b) Agreement by the tenant that the owner may take, hold, or sell
personal property of household members without notice to the tenant and a court decision
on the rights of the parties. This prohibition, however, does not apply to an agreement by
the tenant concerning disposition of personal property remaining in the housing Unit after
the tenant has moved out of the Unit. The owner may dispose of this personal property in
accordance with state law;
(c) Agreement by the tenant not to hold the owner or the owner's agent
legally responsible for any action or failure to act, whether intentional or negligent;
(d) Agreement of the tenant that the owner may institute a lawsuit
without notice to the tenant;
(e) Agreement by the tenant that the owner may evict the tenant or
household members without instituting a civil court proceeding in which the tenant has the
opportunity to present a defense, or before a court decision on the rights of the parties;
(f) Agreement by the tenant to waive any right to a trial by jury;
(g) Agreement by the tenant to waive the tenant's right to appeal, or to
otherwise challenge in court, a court decision in connection with the lease; and
(h) Agreement by the tenant to pay attorney's fees or other legal costs
even if the tenant wins in a court proceeding by the owner against the tenant. The tenant,
however, may be obligated to pay costs if the tenant loses.
8. Developer, its successors or assigns, must adhere to state law requirements
with regard to termination of tenancy.
9. Developer shall maintain the improvements on the Property in compliance
with all applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local
code requirements (California Health and Safety Code section 33418), and shall keep the
Property free from any unreasonable accumulation of debris or waste materials.
Developer shall also maintain in a healthy condition any landscaping planted on the
Property.
10. Developer covenants and agrees for itself, its successors, its assigns and
every successor in interest to the Property or any part thereof, there shall be no
discrimination against or segregation of any person, or group of persons, on account of
race, color, creed, religion, sex, mental or physical disability, marital status, national origin
or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property
nor shall the Developer itself or any person claiming under or through it establish or
permit any such practice or practices of discrimination or segregation with reference to the
5of11
80A-248
EXHIBIT 4
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Property, as required by the Title VI of the Civil Rights Act of 1964, the
Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age
Discrimination Act of 1975, and all implementing regulations.
11. Not later than five (5) business days prior to the execution of the
documents, Developer shall submit to the Executive Director a Management Plan in a
form that is acceptable to the Executive Director, including, but not limited to, the
components listed below. Approval of the Management Plan must be obtained from the
Executive Director not later than the time for the Closing. Developer shall manage the
Assisted Units in accordance with the approved Management Plan, including such
amendments as may be approved in writing from time to time by the Executive Director,
for the term of the income and rent restrictions contained in these Restrictions. The
components of the Management Plan shall include:
(a) Management Agent. Developer shall submit the name and
qualifications of the proposed Management Agent. The Executive Director shall approve
or disapprove the proposed Management Agent in writing based on the experience and
qualifications of the Management Agent.
(b) Management Agreement. Developer shall submit a copy of the
proposed management agreement specifying the amount of the management fee, and the
relationship and division of responsibilities between Developer and Management Agent.
(c) Annual Budget and Projected Cash Flows. Prior to the Closing,
and annually thereafter not later than ninety (90) days after the close of each calendar year
thereafter until the Loan is repaid in full, Developer shall submit a projected operating
budget and cash flow to the Executive Director. The budget and cash flow shall be in a
form that is acceptable to the Executive Director.
(d) Tenant Selection Policies. Developer shall include in the
Management Plan the tenant selection policies in accordance with Section 5, above.
12. If at any time the Agency determines that the units are not being managed
or maintained in accordance with the approved Management Plan, the Agency shall send
the Developer a detailed description of the management deficiencies (a "Deficiency
Notice"). If the deficiencies set forth in the Deficiency Notice are not cured within thirty
(30) days (or such longer period as may be reasonably required to cure the deficiency), the
Executive Director may require Developer to change management practices or to
terminate the management contract and designate and retain a different management agent.
The management agreement shall provide that it is subject to termination by Developer
without penalty, upon thirty (30) days prior written notice, at the direction of the Executive
Director upon failure to cure a Deficiency Notice within the time period specified above.
Within ten (10) days following a direction of the Executive Director to replace the
management agent in accordance with the terms hereof, the Developer shall select another
management agent or make other arrangements satisfactory to the Executive Director or
designee for continuing management of the units.
6of11
80A-249
i AMMIM. .
13. The covenants established in these Restrictions and any amendments hereto
approved by the Agency and Developer shall, without regard to technical classification
and designation, be binding for the benefit and in favor of the Agency and their respective
successors and assigns. These Restrictions shall remain in effect for fifty-five (55) years.
hi its discretion, the Agency may defer repayment of the Agency Loan or the Agency may
agree to such reasonable modifications to the requirements of these Restrictions, as they
may determine are necessary for the continued maintenance and operation of the Assisted
Units. The covenants against discrimination shall remain in effect for the period of these
Restrictions.
14. Developer shall not request disbursement of Agency funds until the funds
are needed to pay eligible costs. The Agency shall have the right to disapprove any
request if the Agency determines the request is for an ineligible item or is otherwise not in
compliance with or inconsistent with the Loan Agreement and these Restrictions [24 CFR
92.504 (c)(10)].
15. [RESERVED]
16. If an event of default occurs under the terms of these Restrictions, prior to
exercising any remedies hereunder, Agency shall give Developer written notice of such
default. If the default is reasonably capable of being cured within thirty (30) days,
Developer shall have such period to effect a cure prior to exercise of remedies by the
Agency under these Restrictions. If the default is such that it is not reasonably capable of
being cured within thirty (30) days, and Developer (i) initiates corrective action within
said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon
as possible, then Developer shall have such additional time as is reasonably necessary to
cure the default prior to exercise of any remedies by Agency.
The Agency is a beneficiary of the terms and provisions of these
Restrictions and the covenants herein, both for and in their own right and for the purposes
of protecting the interests of the community and other parties, public or private, for whose
benefit these Restrictions and the covenants running with the land have been provided.
Upon the occurrence of an event of default and the expiration of the notice and cure period
specified above, the Agency shall have the right to exercise all rights and remedies, and to
maintain any actions or suits at law or in equity or other proper proceedings to enforce the
curing of such breaches to which they or any other beneficiaries of these Restrictions and
covenants are entitled.
17. The covenants and agreements contained herein shall run with the land and
not be personal obligations of Developer. Upon the sale, conveyance or other transfer of
the Property (a "Transfer") and the assumption of the obligations hereunder by a
transferee, Developer's liability for performance shall be terminated as to any obligation to
be performed hereunder after the date of such Transfer.
is. The Loan Agreement and all of its attachments shall be enforceable by
Agency in accordance with the terms thereof. Each of the Loan Agreement, these
Restrictions, the Housing Successor Agency Loan Note and the Housing Successor
Agency Loan Deed of Trust provide a means of enforcement by the Agency if Developer
7of11
80A-250
EXHIBIT 4
is in breach of its obligations hereunder and thereunder, including liens on the Property,
use and deed restrictions and covenants running with the land.
8of11
80A-251
EXHIBIT 4
IN WITNESS WHEREOF, the parties hereto have caused these Amended and Restated
Affordability Restrictions on Transfer of Property to be executed on the date set forth
hereinabove.
ATTEST:
Daisy Gomez
Recording Secretary
APPROVED AS TO FORM
Sonia R. Carvalho
General Counsel
By: Ryan O. Hodge
Assistant Agency Attorney
THE HOUSING. AUTHORITY OF
THE CITY OF SANTA ANA
Steven A. Mendoza
Executive Director
(Signatures continue on following page)
9of11
80A-252
EXHIBIT 4
DEVELOPER:
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California non-profit public benefit corporation,
its Managing Member
By: _
Name:
Title:
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On , before me,
a notary public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(SEAL)
10 of 11
80A-253
EXHIBITS
A. Legal Description
B. Affordability Restrictions on Transfer of Property (the "Original Restrictions")
11 of 11
80A-254
03:11:3li1
Legal Description
The Land referred to herein below is situated in the City of Santa Ana, County of Orange, State of California, and is
described as follows:
PARCEL ONE:
LOTS 7 THROUGH 13 INCLUSIVE OF TRACT 3547 IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 138, PAGES 32 AND 33 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID ORANGE COUNTY.
PARCEL TWO:
PARCEL 1 OF "LOT MERGER NO. 2019-08" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282886 OF
OFFICIAL RECORDS.
PARCEL THREE:
PARCEL 1 OF "LOT MERGER NO. 2019-10" RECORDED AUGUST 02, 2019 AS INSTRUMENT NO. 2019000282887 OF
OFFICIAL RECORDS.
For conveyancing purposes only: APN 404-033-01 (Affects portion of Parcel Two)
APN: 404-033-02 (Affects portion of Parcel Two)
APN: 404-032-01 (Affects portion of Parcel Three)
APN: 404-032-02 (Affects portion of Parcel Three)
APN: 404-031-03 (Affects Lots 8 and 9 of Parcel One)
APN: 404-031-01 (Affects Lots 12 and 13 of Parcel One)
APN: 404-031-04 (Affects Lot 7 of Parcel One)
APN: 404-031-02 (Affects Lots 10 and 11 of Parcel One)
80A-255
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80A-262
EXHIBIT 5
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Davis Wright Tremalne LLP
865 S. Figueroa Street
Suite 2400
Los Angeles, CA 90017
Attn: Nancy B. Clapp, Esq.
SUBORDINATION AGREEMENT
(CITY HOME LOAN)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR RIGHTS UNDER
CERTAIN AGREEMENTS RELATING TO CERTAIN REAL PROPERTY BECOMING
SUBJECT TO, AND OF LOWER PRIORITY THAN, THE LIEN OF A SECURITY
INTEREST.
THIS SUBORDINATION AGREEMENT (this "Agreement"), made as of the 111 day of September,
2019, by and between the CITY OF SANTA ANA ("Subordinating Party"), whose address is 20 Civic
Center Plaza, Santa Ana, California 92701, and MUFG UNION BANK, N.A. ("Bank"), in Its capacity as
agent for the CALIFORNIA MUNICIPAL FINANCE AUTHORITY ("Governmental Lender"), whose
address Is MUFG Union Bank, N.A., Loan Administration Department, 3151 E. Imperial Highway, 1st Floor,
Brea, California 92821, Attention: Manager, is made with reference to the following facts:
A. Unless expressly defined herein, all capitalized terms used herein shall have the meanings
ascribed to them in Appendix I or Exhibit B attached hereto and made a part hereof.
B. Borrower is the owner (or, concurrently with the recording of this Agreement, will be the
owner) of the Property, which Property Is more particularly described in Exhibit A attached hereto and made
a part hereof.
C. Borrower and Subordinating Party have heretofore entered Into or, concurrently herewith,
are entering into, those certain loan documents more particularly described in Exhibit B attached hereto
(collectively, "Subordinating Party's Loan Documents"), pursuant to the terms of which Subordinating
Party shall make to Borrower a Five Million One Hundred Twenty -One Thousand Seven Hundred Thirty -
One and 32r100v' Dollar ($5,121,731.32) loan ("Subordinating Party's Loan") which Subordinating Party's
Loan is secured by, among other things, that certain Amended and Restated City HOME Deed of Trust and
Assignment of Rents ("Subordinating Party's Deed of Trust") dated , 2019, executed
by Borrower for the benefit of Subordinating Party, and recorded substantially concurrently herewith in the
Official Records of Orange County, California (the "Official Records"), and encumbering the Property and
all Improvements to be constructed thereon and that certain Amended and Restated Affordability
Restrictions on Transfer of Property (the "Restrictions") dated , 2019, and recorded
substantially concurrently herewith in the Official Records, pursuant to the terms of which Borrower agreed,
among other things, for Itself and Its successors and assigns, to operate the Project as a low income
apartment project in accordance with the terms and conditions set forth therein. Subordinating Parry's
Deed of Trust and Sections 3.4 and 18 of the Restrictions are sometimes hereinafter collectively referred
to as "Subordinating Party's Security Documents".
D. Concurrently herewith, Borrower, Governmental Lender and Bank are entering into the
Borrower Loan Agreement, pursuant to the terms of which Governmental Lender shall make to Borrower
the Borrower Loan to cover a portion of the cost of constructing the Improvements and certain other costs
related thereto, which Borrower Loan is evidenced by the Borrower Note, made by Borrower to the order
4825.9439-0424v3 0096250-000020
80A-263
EXHIBIT 5
of Governmental Lender, and secured by, among other things, the Deed of Trust, executed by Borrower
for the benefit of Governmental Lender and Bank, and encumbering the Property and all Improvements to
be constructed thereon. The Borrower Loan Agreement, the Borrower Note, the Deed of Trust and all other
documents evidencing, securing or pertaining to the Borrower Loan are sometimes hereinafter collectively
referred to as the "Borrower Loan Documents". All right, title and Interest of Governmental Lender with
respect to the Borrower Loan and the Borrower Loan Documents have been assigned to Bank.
E. As a condition precedent to Governmental Lender's and Bank's making the Borrower Loan,
Governmental Lender and Bank requires that the Deed of Trust shall unconditionally be and remain at all
Umes a lien or charge upon the Project which is prior and superior to the liens or charges of Subordinating
Part's Security Documents (but not to the Restrictions, other than Sections 3.4 and 18 of the Restrictions).
NOW, THEREFORE, in consideration of Governmental Lender's and Bank's making the Borrower
Loan to Borrower, and In consideration of the mutual promises and agreements hereinafter contained and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Governmental Lender and Bank to make the Borrower Loan to Borrower, the parties to
this Agreement do hereby agree as follows:
1. SUBORDINATION OF SUBORDINATING PARTY'S SECURITY DOCUMENTS. The
Deed of Trust, and any and all renewals or extensions thereof and all amendments and modifications
hereafter made thereto, and any and all disbursements made by Governmental Lender to or for the account
or benefit of Borrower the repayment of which Is secured thereunder, shall unconditionally be and remain
at all times a lien or charge against the Project that is prior and superior to the liens or charges of
Subordinating Parry's Security Documents (but not to the Restrictions, other than Sections 3.4 and 18 of
the Restrictions), to the same extent and purpose as though Subordinating Party's Security Documents had
been executed and recorded subsequent to the recording of the Deed of Trust and the making of each
disbursement or advance made by Governmental Lender to Borrower the repayment of which Is secured
by the Deed of Trust, regardless of whether Borrower, at the time of any such disbursement or advance,
may have been in default under the Borrower Loan Agreement, the Deed of Trust, or any of the other the
Borrower Loan Documents and regardless of whether Governmental Lender was obligated to make any
such disbursement or advance. Notwithstanding the foregoing, Governmental Lender and Bank shall not
amend or modify the terms of the Borrower Loan and/or the Borrower Loan Documents without the prior
written consent of the Subordinating Party if such amendment or modification has the effect of: (1) increasing
or decreasing the amount of the Borrower Loan, except in the case of sums advanced by Governmental
Lender or Bank in exercising their rights and remedies under the Borrower Loan Documents or as otherwise
provided in Paragraph 2 of this Agreement; (ii) Increasing the annual interest rate(s), including the default
rate, above the rate(s) described in the Borrower Note; (Ili) modifying the maturity date to be sooner than
the stated maturity date of the Borrower Note; or (iv) having a materially adverse effect on Subordinating
Party. For the avoidance of doubt, the Restrictions, except Sections 3.4 and 18 of the Restrictions, shall at
all times be prior and superior to the Deed of Trust
2. ALL DISBURSEMENTS UNDER THE BORROWER LOAN SECURED BY THE DEED OF
TRUST. Notwithstanding anything to the contrary set forth in the Borrower Loan Agreement or any other
agreement among Governmental Lender, Bank and Borrower with respect to the disbursement of all or any
portions of the proceeds of the Borrower Loan, any and all disbursements made by Governmental Lender
to or for the account or benefit of Borrower or the Project in connection with the following, whether or not
Governmental Lender is obligated to make such disbursements pursuant to the Borrower Loan Documents:
(a) any costs or expenses Incurred in complying with any laws, rules, regulations, or statutes or any
directives of any governmental agencies or authorities having or exercising jurisdiction over the Project; (b)
any sums advanced to pay for the cost of completing the construction of the Project, Project cost overruns
and/or to lease -up and stabilize the Project made by Governmental Lender or Bank; and (c) any sums
advanced by Governmental Lender or Bank for the payment of real estate taxes or assessments or
insurance premiums, or any other sums advanced or obligations Incurred by Governmental Lender or Bank
in connection with the protection or preservation of any security given to Governmental Lender or Bank with
respect to the Borrower Loan, Including, without IlmitaUon, interest thereon shall be deemed to be, and In
all events shall be, secured by the Deed of Trust and, as so secured, and regardless of whether Borrower
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EXHIBIT 5
at the time of any such disbursements may have been In default under the Borrower Loan Documents and
regardless of whether Governmental Lender or Bankwere obligated to make any such disbursements, shall
be and remain a lien or charge against the Project that is unconditionally prior and superior to the lien and
effect of Subordinating Party's Security Documents.
3. APPLICATION OF PAYMENTS UNDER SUBORDINATING PARTY'S LOAN. Until such
time as all amounts outstanding under the Borrower Loan have been indefeasibly paid in.full, prior to the
occurrence of an Event of Default (as such term is defined In the Borrower Loan Documents), Subordinating
Party shall be entitled to receive and retain payments made pursuant to and in accordance with the
Subordinating Party's Loan Documents; provided, however, that no such payment is made more than ninety
(90) days in advance of Its scheduled due date. Upon the occurrence of an Event of Default under the
Borrower Loan Documents, after Subordinating Party receives notice of such Event of Default from Bank
with written Instructions directing Subordinating Party not to accept payments from Borrower on account of
the Subordinating Party's Loan (Including, but not limited to, principal, Interest, additional interest, late
payment charges, default Interest, attorneys' fees, or any other sums secured by Subordinating Party's
Deed of Trust), all amounts (including, without limitation, all insurance proceeds and condemnation awards)
received by Subordinating Party from, or for the account of, Borrower under Subordinating Party's Loan
shall be immediately remitted to Bank at the address set forth above to be applied by Governmental Lender
in reduction of amounts outstanding under the Borrower Loan, in such amounts and in such order as Bank
shall determine. In the event that any payment is made to Subordinating Party which Is not permitted under
this Agreement, such payment shall be held by Subordinating Party in trust for the benefit of Governmental
Lender and Bank and shall be paid immediately to Bank for application to the payment of all of indebtedness
and obligations remaining unpaid under the Borrower Loan. If Subordinating Party receives written notice
from Bank that the Event of Default which gave rise to the Subordinating Parry's obligation not to accept
payments has been cured, waived, or otherwise suspended by Bank, the restrictions on payment to
Subordinating Party in this Section 3 shall terminate, and Bank shall have no right to any subsequent
payments made to Subordinating Party by Borrower prior to Subordinating Parry's receipt of a new notice
from Bank of an Event of Default in accordance with this Section 3. Without limiting the complete
subordination of the Subordinating Party's Loan to the payment In full of the Borrower Loan, in any
bankruptcy, insolvency, receivership or similar proceeding, upon any payment or distribution to creditors,
Governmental Lender and Bank shall be paid in full first in cash before the Subordinating Party shall be
entitled.to receive any payment or other distribution on account of or in respect to the Subordinating Party's
Loan and, until the entire Borrower Loan is paid in full in cash, any payment or distribution to which the
Subordinating Party will be entitled but for this Agreement (whether In cash, property or other assets) shall
be paid to Bank.
4. . SUBORDINATION TO MODIFICATION OF BORROWER LOAN. If Governmental Lender
and Bank extend or otherwise modify the terms of the Borrower Loan (including any amendment or
modification which requires the Subordinating Parry's prior written consent pursuant to Paragraph 1 and for
which Subordinating Party has granted such consent), Subordinating Party, upon 20 days' prior notice to
Subordinating Party, shall execute a new subordination agreement, in the form of this Agreement,
confirming Subordinating Party's subordination of the effect of Subordinating Party's Security Documents
against the Project to the lien or charge of the Deed of Trust. In the event that consent from the
Subordinating Party is not required hereunder or such consent has been obtained, the execution of such
new subordination agreement, however, shall not be a condition to the effectiveness of the subordination
of Subordinating Party's Security Documents against the Project to the lien or charge of the Deed of Trust,
which subordination shall be automatic.
5. SUBORDINATING PARTY'S RIGHT TO CURE DEFAULTS. Upon the occurrence of an
Event of Default, Bank shall: (a) concurrently with notifying Borrower of the occurrence of such event of
default, notify Subordinating Party at its address set forth above of the occurrence of such event of default;
(b) permit Subordinating Party to cure or correct (provided that such event of default is curable) any such
event of default within thirty (30) calendar days after receipt of such notice ("Subordinating Party Cure
Period"); provided, however, that Governmental Lender and Bank have the continuing right to commence
to pursue their respective remedies under the Borrower Loan Documents on account of such default during
the Subordinating Party Cure Period, including but not limited to the right to accelerate the Borrower Loan,
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record a notice of default and to obtain a receiver; provided further, that If the cure Is completed during the
Subordinating Party Cure Period, Governmental Lender and Bank will rescind any notice of default after
reimbursement of all of its costs incurred In connection with the default, including, without limitation,
attorneys' fees and court costs; and (c) accept all payments and all acts done by Subordinating Party on
behalf of Borrower within the Subordinating Party's Cure Period as though the same had been timely done
and performed by Borrower, so that such acts and payments shall fully and totally cure and correct all such
defaults, breaches, failures or refusals for all purposes. Subordinating Party shall not be subrogated to the
rights of Governmental Lender or Bank under the Borrower Loan Documents by reason of Subordinating
Party having cured any default under the Borrower Loan Documents; however, Governmental Lender and
Bank acknowledge that, to the extent so provided in the Subordinating Party's Security Documents,
amounts advanced or expended by Subordinating Party to cure an event In default under the Borrower
Loan Documents may be added to and become a party of the Subordinating Parry's Loan. In the event
that an Event of Default occurs and Bank has recorded a notice of default, then for the period from the date
of recordation of the notice of default, until the date of recordation of a notice of sale, so long as the noticed
default continues, Subordinating Partyshall have the right, but notthe obligation, in lieu of curing any default
under the Borrower Loan Documents, to purchase the Funding Loan Note and the Funding Loan Agreement
and Bank's rights as agent thereunder subject to Subordinating Party satisfying any requirements under
the Funding Loan Agreement to purchase the Funding Loan Note. Such purchase will be accomplished by
Subordinating Party paying to Bank the outstanding principal amount of the Borrower Loan, plus all accrued
and unpaid interest thereon and any prepayment premium, together with reasonable expenses incurred by
Bank in connection therewith (including reasonable attorneys' fees and costs), in exchange for the
assignment of the Funding Loan Note without recourse or warranty, except that Bank will warrant that it
owns and has all requisite authority to transfer the Funding Loan Note at the time of the transfer.
Subordinating Party acknowledges and agrees that Subordinating Party's right to purchase the Funding
Loan Note shall unconditionally be and remain at all times subordinate to any right of any senior lender with
lien priority to purchase the Funding Loan Note. Borrower acknowledges and agrees, by executing the
joinder attached hereto, that after the Funding Loan Note has been assigned to Subordinating Party or its
nominee, Bank shall be relieved from all liability to Borrower under or in connection with the Borrower Loan
Documents.
6. BANK RIGHT TO CURE DEFAULT UNDER SUBORDINATING PARTY'S LOAN. Upon
the occurrence of a default under the Subordinating Party's Loan, Subordinating Party shall: (a)
concurrently with notifying Borrower of the occurrence of such event of default, notify Bank at its address
set forth above of the occurrence of such default or event of default; (b) permit Bank to cure or correct
(provided that such event of default is curable) any such event of default within thirty (30) calendar days
after receipt of such notice ("Bank Cure Period"); provided, however, that Subordinating Party has the
continuing right to commence to pursue its remedies under the Subordinating Parry's Loan Documents on
account of such default during the Bank Cure Period, Including but not limited to the right to accelerate the
Subordinating Party's Loan, record a notice of default and to obtain a receiver; provided further, that if the
cure is completed during the Bank Cure Period, Subordinating Party will rescind any notice of default after
reimbursement of all of its costs incurred in connection with the default, including, without limitation,
attomeys' fees and court costs; and (c) accept all payments and all acts done by Bank on behalf of Borrower
within the Bank Cure Period as though the same had been timely done and performed by Borrower, so that
such acts and payments shall fully and totally cure and correct all such defaults, breaches, failures or
refusals for all purposes.
7. SUBORDINATION TO PERMANENT FINANCING. Subordinating Party acknowledges
that it has been advised by Borrower that Borrower intends to repay a portion of the amount outstanding
under the Borrower Loan, In whole or in part, by obtaining permanent financing In the future by one or more
lenders, which permanent financing would be secured by, among other things, a deed of trust or deeds of
trust encumbering the Project which would be senior to the effect of Subordinating Party's Security
Documents (but not to the Restrictions, other than Sections 3.4 and 18 of the Restrictions. In order to
enable Borrower (or its successors or assigns, "Borrower's Successor") to obtain permanent financing to
repay the Borrower Loan, Subordinating Party hereby agrees that within twenty (20) days after written
request by Borrower or Borrower's Successor, Subordinating Party shall execute a subordination
agreement (In form and substance substantially similar to this Agreement) subordinating the effect of
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Subordinating Party's Security Documents to the lien and effect of one (1) or more deeds of trust
encumbering the Project in an amount not to exceed //![$8,800,000]1//.
8. RECEIPT AND APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION
AWARDS: RECEIPT AND APPLICATION OF PROCEEDS FROM BONDS.
(a) Receipt and Application of Insurance Proceeds and Condemnation Awards.
Notwithstanding anything stated to the contrary in any of Subordinating Partys Security Documents, so
long as the Deed of Trust continues to encumber all or portions of the Project, all Insurance proceeds that
may become available from time to time as a result of damage or destruction to all or portions of the
Improvements and all condemnation awards that may become available from time to time as a result of the
condemnation of all or portions of the Project shall be held by Bank, disbursed by Bank and applied by
Bank in accordance with the terms and conditions of the Deed of Trust and the other the Borrower Loan
Documents and Subordinating Party shall have no right to hold, disburse or apply any of such proceeds
and/or awards. Without limiting the generality of the foregoing, the Bank shall have all approval, consent
and oversight rights in connection with any Insurance claims or condemnation proceedings related to the
Property and any decision regarding the use of insurance proceeds after a casualty loss or condemnation
awards and Subordinating Party shall have no right to object to any such action or approval taken by Bank
and shall consent thereto and be bound thereby. Subordinating Party shall execute such documents as
Bank may require from time to time in order to assure compliance with the provisions of this Paragraph
8(a).
(b) Receipt and Application of Proceeds from Bonds. With respect to all labor and
material bonds and/or completion bonds that are Issued from time to time to assure payment and
completion of the Improvements and which name Governmental Lender, Bank and Subordinating Parry (or
any other party) as dual obligees, all proceeds that may become available from time to time under such
bonds shall be held by Bank and disbursed by Bank and Subordinating Party shall have no right to hold or
disburse any of such proceeds. Subordinating Parry shall execute such documents as Bank may require
from time to time In order to assure compliance with the provisions of this Paragraph 8(b).
9. NOTICES. Any notice, demand or request required or permitted to be delivered hereunder
shall be deemed to have been duly and properly given at the time of such delivery if personally delivered
(which shall include (1) delivery by means of professional overnight courier service which confirms receipt
in writing and (It) transmission by telecopier or telefacslmlle machine capable of confirming transmission
and receipt), or if mailed, forty-eight (48) hours after deposit In United States registered or certified mall,
postage prepaid, return receipt requested, addressed to Subordinating Party, Governmental Lender or
Bank, as the case may be, at their addresses set forth above,
10. ENTIRE AGREEMENT. This Agreement shall be the whole and only agreement with
respect to the subordination of the effect of Subordinating Party's Security Documents to the lien or charge
of the Deed of Trust and all disbursements and advances made thereunder, and shall supersede and cancel
any prior agreements as to such subordination, including without limitation any provisions contained in
Subordinating Party s Security Documents that provide for the subordination of the effect thereof to one or
more deeds of trust.
11.
JVALS AND ACKNOWLEDGEMENTS. Subordinating Party hereby
agrees and acknowledges as follows:
(a) For purposes of this Agreement, Subordinating Parry acknowledges that
Subordinating Parry has been provided the opportunity to review the Borrower Loan Documents before
executing this Agreement;
(b) Governmental Lender and Bank, In making disbursements pursuant to the
Borrower Loan Agreement, are under no obligation or duty to insure, nor has Governmental Lender or Bank
represented that it will insure, the proper application of such proceeds by the person(s) to whom
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EXHIBIT 5
Governmental Lender or Bank disburses such proceeds, and any application or use of such proceeds for
purposes other than as provided in any such agreement shall not defeat or render invalid, in whole or in
part, the subordination provided for in this Agreement;
(c) Governmental Lender and Bank have not made any warranty or representation of
any kind or nature whatsoever to Subordinating Party with respect to (i) the application of the proceeds of
the Borrower Loan being made by Governmental Lender to Borrower upon the security of the Deed of Trust,
(11) the value of the Property, the Improvements to be constructed thereon pursuant to the Borrower Loan
Agreement, or the marketability or value thereof upon completion of such construction, or (it!) the ability of
Borrower to honor Its covenants and agreements with Governmental Lender, Bank or Subordinating Party;
(d) Governmental Lender's and/or Bank's release of any security for the Borrower
Loan, including, without limitation, the reconveyance of any portion(s) of the Project from the lien of the
Deed of Trust shall not constitute a waiver or relinquishment of Subordinating Party's unconditional
subordination of the liens or charges of Subordinating Parry's Security Documents against the Project to
the lien or charge of the Deed of Trust;
(a) Governmental Lender would not make the Borrower Loan to Borrower absent the
execution of this Agreement by Subordinating Party;
(f) Governmental Lender and Bank have no duty to disclose to Subordinating Party
any facts Governmental Lender or Bank may now know or hereafter know about Borrower or the partners
or successors of Borrower, regardless of whether (1) Governmental Lender or Bank has reason to believe
that any such facts may Increase materially the risk beyond that which Subordinating Party Intends to
assume, (ii) Governmental Lender or Bank may have reason to believe that such facts are unknown to
Subordinating Party, or (III) Governmental Lender or Bank has a reasonable opportunity to communicate
such facts to Subordinating Party, it being understood and agreed that Subordinating Party is fully
responsible for being and keeping Informed of the financial condition of Borrower and/or any partners or
successors of Borrower and of all circumstances bearing on the risk of non-payment of any indebtedness
of Borrower to Governmental Lender described in this Agreement;
(g) Subordinating Party has made such independent legal and factual inquiries and
examinations as Subordinating Party deems necessary or desirable, and Subordinating Party has relied
solely on said independent inquiries and examinations In entering into this Agreement;
(h) The Subordinating Party's Loan Documents as described in Exhibit V attached
hereto are all of the documents evidencing, securing or pertaining to Subordinating Partys Loan, true,
correct and complete copies thereof have been delivered to Bank and the Subordinating Parry's Loan
Documents have not been amended or modified except as reflected thereon;
(1) As of the date set forth above, the Subordinating Party has no offset, defense,
deduction or claim against Borrower under any of the Subordinating Party's Loan Documents, Borrower is
not in default under any of the Subordinating Parry's Loan Documents and the Subordinating Party knows
of no event that has occurred or is continuing which, with the passage of time or the giving of notice, or
both would constitute a default under any of the Subordinating Party's Loan Documents;
0) Each and every covenant, condition and obligation contained in the Subordinating
Parry's Loan Documents required to be performed or satisfied as of the date hereof, and each and every
matter required to be approved the Subordinating Party as of the date hereof, has been satisfied and/or
approved and/or waived as applicable, Including, without limitation, all conditions precedent to Borrower's
right to commence construction of the Improvements, all of which conditions have been satisfied and/or
approved and/or waived, as applicable, as of the date set forth above;
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EXHIBIT 5
(k) Under Subordinating Party's Loan Documents, Borrower is not obligated to
commence construction of the Improvements until . 20_, and construction of the
Improvements need not be completed until 20_, subject to extension for force majeure;
(1) Notwithstanding anything stated to the contrary in the Subordinating Parry's Loan
Documents, (i) the limited partner in Borrower shall have the right at any time and from time to time, without
the approval or consent of the Subordinating Party, to assign, sell or otherwise transfer to any third party
Its limited partnership Interest in Borrower, provided that Borrower provides notice to the Subordinating
Party of such assignment, sale or transfer concurrently with such assignment, sale or transfer, and (11) the
general partner in Borrower shall have the right, without the approval or consent of the Subordinating Party,
to pledge or otherwise encumber Its partnership Interest in Borrower to Govemmental Lender and Bank
and the foreclosure of such pledge by Governmental Lender or Bank shall not cause an event of default
under the Subordinating Parry's Loan Documents;
(m) Notwithstanding anything slated to the contrary In the Subordinating Party's Loan
Documents, Subordinating Party's Interest in the plans and specifications and all data, drawings, contracts
and agreements relating thereto and all contracts and agreements relating to the construction of the
Improvements shall be subject and subordinate to Governmental Lender's and Bank's Interest in the same;
(n) Notwithstanding anything stated to the contrary In the Subordinating Party's Loan
Documents, Subordinating Party's rights in and to the leases and rents of the Property shall be subject and
subordinate to the rights of Governmental Lender and Bank to same; and
(o) Notwithstanding anything stated to the contrary in the Subordinating Parry's Loan
Documents, the occurrence of an Event of Default under the Borrower Loan Documents shall not in and of
itself constitute a default or an event of default under any of the Subordinating Party's Loan Documents
unless the occurrence of such event shall constitute a separate default under the Subordinating Parry's
Loan Documents.
(p) The subordination of the Subordinating Partys Loan shall continue in the event
that any payment with respect to any Borrower Loan Document (whether by or on behalf of Borrower, as
proceeds of security or enforcement of any right of set-off or otherwise) Is for any reason repaid or returned
to Borrower or its Insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, a
receiver or other similar party under any bankruptcy, insolvency or receivership or similar law under any
bankruptcy, Insolvency, receivership or similar proceeding. In such event, the Borrower Loan or any part
thereof originally Intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of
any repayment, return or other action, as If such payment on account of the Borrower Loan had not been
made.
(q) Subordinating Party shall not commence in or join with any other creditor In
commencing any bankruptcy, insolvency, receivership or similar proceeding involving Borrower and
Subordinating Party shall not initiate any action, motion or request in any such proceeding involving any
other person or entity, which seeks the consolidation of some or all of the assets of Borrower into such
proceeding. in the event of any such proceeding relating to Borrower or the Property or, in the event of any
such proceeding relating to any other person or entity into which (notwithstanding the covenant in the first
sentence of this clause) the assets or interests of Borrower are consolidated, then In either event, the
Borrower Loan shall first be paid in full before Subordinating Party shall be entitled to receive or retain any
payment or distribution with respect to the Subordinating Party s Loan. Subordinating Party agrees that (i)
the Bank shall receive all payments and distributions of every kind or character In respect of the
Subordinating Party's Loan to which the Subordinating Parry would otherwise be entitled, before the
subordination provisions of this Agreement (including, without limitation, any payments or distributions
during the pendency of any bankruptcy, insolvency, receivership or similar proceeding involving Borrower
or the. Property) until the Borrower Loan is repaid in full, and (11) the subordination of the Subordinating
Party's Loan and the Subordinating Party's Security Documents shall not be affected in any way by the
Bank electing, under Section 1111(b) of the Federal Bankruptcy Code, to have its claim treated as being a
fully secured claim. In addition, Subordinating Party hereby covenants and agrees that, in connection with
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EXHIBIT 5
such a proceeding involving Borrower, neither Subordinating Party nor any of its affiliates shall (I) make or
participate In a loan facility to or for the benefit of Borrower on a basis that is senior to or par! passu with
the liens and interests held by Governmental Lender and Bank pursuant to the Borrower Loan Documents
and (!I) not contest the continued accrual of Interest on the Borrower Loan, In accordance with and at the
rate specified in the Borrower Loan Documents, both for periods before and for periods after
commencement of such proceedings.
12. ATTORNEYS' FEES. If either Subordinating Party, Governmental Lender or Bank shall
bring an action against the other by reason of the breach of any covenant, provision, or condition of this
Agreement, or otherwise arising out of this Agreement, the unsuccessful party shall pay to the prevailing
party reasonable attorneys' fees, which fees shall be payable whether or not any action Is prosecuted to
judgment. The term "prevailing party" shall Include, without limitation, a party who brings an action against
the other by reason of the other's breach or default and obtains substantially the relief sought, whether by
compromise, settlement, orjudgment.
13. ESTOPPEL CERTIFICATES. Either party shall, within twenty (20) days following the other
party's written request therefor, execute and deliver to such requesting party an estoppel certificate in form
and substance reasonably satisfactory to the requesting party.
14. GOVERNING JURISDICTION. This Agreement shall be governed by the laws of the State
of California and shall be binding upon, and shall inure to the benefit of, the parties to this Agreement and
their respective successors and assigns.
15. SEVERABILITY. In case 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, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof and this Agreement shall be construed as if
such Invalid, illegal or unenforceable provision had never been contained herein unless the effect thereof
would materially alter the benefits or burdens hereof to the parties hereto.
16. THIRD PARTIES. Subordinating Party recognizes that Governmental Lender and Bank
may show copies of this Agreement to other Institutional lenders who are interested in the matters covered
In this Agreement and Subordinating Party agrees that such other institutional lenders may also materially
rely upon the representations, warranties and agreements made by the Subordinating Party In this
Agreement.
17. COUNTERPARTS. This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original but all of which together shall constitute but one and the same
Instrument.
18, WAIVER OF JURY TRIAL. To the extent permitted by law, In connection with any action
or proceeding, whether brought in state or federal court, the Subordinating Party and Bank hereby
expressly, intentionally and deliberately waive any right they may otherwise have to trial by jury of any Claim
(as defined below).
19. JUDICIAL REFERENCE. If the waiver of jury trial set forth herelnabove Is not enforceable
under the laws of the state in which the Property Is located, then the parties hereby agree that all Claims,
Including any and all questions of law or fact relating thereto, shall, at the written request of any party, be
determined by Reference (as hereinafter defined) as set forth hereinbelow:
(a) Selection Or Appointment Of Referee. The Bank and Subordinating Party shall
select a single neutral referee, who shall be a retired state or federal judge. In the event that the Bank and
Subordinating Party cannot agree upon a referee, the referee shall be appointed by the court.
(b) Conduct Of Reference. Except as otherwise provided In this Agreement, the
Reference shall be conducted pursuant to the laws of the state in which the Property is located. The referee
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EXHIBIT 5
shall determine all issues relating to the applicability, interpretation, legality and enforceability of the
Borrower Loan Documents or Funding Loan Documents. The referee shall report a statement of decision
to the court. The Bank and Subordinating Party shall equally bear the fees and expenses of the referee,
unless the referee otherwise provides In the statement of decision.
(c) Provisional Remedies, Self -Help And Foreclosure. No provision of this Agreement
shall limit the right of any party to (i) exercise self-help remedies Including, without limitation, setoff, (il)
foreclose against or sell any collateral, by power of sale or otherwise or (lii) obtain or oppose provisional or
ancillary remedies from a court of competent jurisdiction before, after or during the pendency of the
Reference. The exercise of, or opposition to, any such remedy does not waive the right of any party to a
Reference pursuant to this Agreement.
(d) No Decision By Jurv. The parties hereby acknowledge that If a referee Is selected
or appointed to determine the Claims, then the Claims will not be decided by a jury.
(e) Miscellaneous. In the event that multiple Claims are asserted, some of which are
not subject to this Section, the parties agree to stay the proceedings of the Claims not subject to this Section
until all other Claims are resolved in accordance with this Section. In the event that Claims are asserted
against multiple parties, some of whom are not subject to this Section, the Parties agree to sever the Claims
subject to this Section and resolve them In accordance with this Section.
(f) Claim. "Claim" shall mean any claim, cause of action, action, dispute or
controversy between or among the parties, whether sounding in contract, tort or otherwise, which arises
out of or relates to: (1) any of the Borrower Loan Documents or the Funding Loan Documents; (ii) and
negotiations or communications relating to any of the Borrower Loan Documents or the Funding Loan
Documents, whether or not incorporated into the Borrower Loan Documents or the Funding Loan
Documents or any indebtedness evidenced thereby; or (lil) any alleged agreements, promises,
representations or transactions in connection therewith.
(g) Reference. "Reference" shall mean ajudicial reference conducted pursuant to this
Agreement and in accordance with the laws of the state in which the Property is located, as in effect at the
time the referee is selected or appointed.
[Signature Pages Follow]
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EXHIBIT 5
WHEREAS, this Subordination Agreement has been executed by the parties as of the date first
written above.
SUBORDINATING PARTY:
CITY OF SANTA ANA
Kristine Ridge
City Manager
ATTEST:
Daisy Gomez
Recording Secretary
APPROVED AS TO FORM:
SONIA R. CARVALHO, City Attorney
Rya . Hddbe
Assistant City Attorney
RECOMMENDED FOR APPROVAL:
Steven A. Mendoza
Executive Director
Community Development Agency
(Signature Page to Subordination Agreement (City HOME Loan)]
4825-9439-0424r.3 0096250-000020
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EXHIBIT 5
BANK:
MUFG UNION BANK, N.A.,
a national banking association
0
[Name]
[Title]
[Signature Page to Subordination Agreement (City HOME Loan)]
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EXHIBIT 5
JOINDER
Unless expressly defined herein, all capitalized terms used herein shall have the same meanings
ascribed to them in the Subordination Agreement (the "Subordination Agreement") to which this Joinder
is attached.
The undersigned hereby acknowledges receipt of a copy of the Subordination Agreement and, as
fee owner of the Property, hereby consents to, approves and agrees to be bound by all of the terms and
conditions set forth in the Subordination Agreement.
BORROWER:
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California nonprofit public benefit corporation,
its Managing e er
By: Add
[Name] cA
[title] C�tCF DEUd2Dl�/LGNr �FC�GC1
[Joinder to Subordination Agreement (City HOME Loan)]
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*W 11:311P
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
)as
County of orr"d
On 9174 , 2019 before me,
a Notary Public, personally appeared M it i Ke-I M&-rslc 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
(les), 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. LAMMI , A MEDELLIN
Notary Public - Calllornla Z
orange County
z commission # 2153187
My Comm. Ex Tres Jun 11. 2020 �
Signaturee�^'d" t�l
(Seal)
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EXHIBIT 5
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the Identity of the Individual
who signed the document to which this certificate
Is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
ss
County of
On , 2019 before me,
a Notary Public, personally appeared , who proved to me on
the basis of satisfactory evidence to be the person (s) whose name (s) is/are subscribed to the within
Instrument and acknowledged to me that he/she/they executed the same In his/her their authorized capacity
(!as), and that by his/her/their signature (s) on the instrument the person (s), or the entity upon behalf of
which the person (s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
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EXHIBIT 5
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
) ss
County of _ 1
On . 2019 before me,
a Notary Public, personally appeared who proved to me on
the basis of satisfactory evidence to be the person (s) whose name (s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity
(ies), and that by his/her/their signature (s) on the Instrument the person (s), or the entity upon behalf of
which the person (s) acted, executed the Instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
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EXHIBIT 5
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the Identity of the individual
who signed the document to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
as
County of
On . 2019 before me,
a Notary Public, personally appeared
who proved to me on
the basis of satisfactory evidence to be the person (s) whose name (s) islare subscribed to the within
Instrument and acknowledged to me that he/she/they executed the same in hislhertheir authorized capacity
([as), 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.
(Seal)
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EXHIBIT 5
EXHIBIT "A"
LEGAL DESCRIPTION
APN:
EXHIBIT ON
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EXHIBIT 5
EXHIBIT "B"
SUBORDINATING PARTY'S LOAN DOCUMENTS
1. Amended and Restated HOME Loan Agreement dated 2019, by and between
Subordinating Party and Borrower (the "Subordinating Party's Loan Agreement").
2. Amended and Restated City HOME Loan Note Secured by Subordinated Deed of Trust to the City
of Santa Ana, California dated , 2019, executed by Borrower to the order of
Subordinating Party in the face principal amount of $5,121,731.32.
3. Amended and Restated City HOME Deed of Trust and Assignment of Rents dated
, 2019, executed by Borrower for the benefit of Subordinating Party, recorded
in the Official Records substantially concurrently herewith.
4. Amended and Restated Affordability Restrictions on Transfer of Property dated _
2019, by and between Subordinating Party and Borrower, recorded in the Official Records
substantially concurrently herewith.
EXHIBIT "B"
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EXHIBIT 5
APPENDIX I
(Appendix I - Definitions)
As used in the agreement to which this Appendix I Is attached, and as used In this Appendix I, the
following terms shall have the indicated meanings:
"Allocation Committee" shall mean the California Tax Credit Allocation Committee and any
successor governmental agency appointed to carry out the obligations of the Allocation Committee.
"Bank" shall mean MUFG Union Bank, N.A., acting in its capacity as holder of the Funding Loan
Note and as assignee of and agent for the Governmental Lender, pursuant to the Funding Loan Agreement,
Its successors and assigns.
"Borrower° shall mean Cornerstone Housing Partners LP, a California limited partnership.
"Borrower Loan" shall mean the ///[$17,250,000]/// construction and permanent loan to be made
by Governmental Lender to Borrower, pursuant to the Borrower Loan Agreement.
"Borrower Loan Agreement" shall mean the Construction and Permanent Loan Agreement
(Multifamily Housing Back to Back Loan Program) dated September 1, 2019, executed by Borrower,
Governmental Lender and Bank.
"Borrower Loan Documents" shall mean the Borrower Loan Agreement, the Borrower Note, the
Deed of Trust and all other documents evidencing, securing or pertaining to the Borrower Loan.
"Borrower Note" shall mean the Promissory Note (Multifamily Housing Back to Back Loan
Program) in the amount of ///[$17,250,000]//l dated September 1, 2019, executed by Borrower in favor of
Governmental Lender.
"Code(s)" shall mean the Internal Revenue Code of 1986, as amended from time to time, or the
corresponding provisions of any successor federal income lax law and, If applicable, the California Revenue
and Taxation Code, as amended from time to time, or the corresponding provisions of any successor state
Income tax law. Any reference to a particular provision of the Code(s) shall include any amendment of
such provision or the corresponding provision of any successor federal Income tax law or state Income tax
law.
"Deed of Trust" shall mean that certain Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (Construction Trust Deed) (Multifamily Housing Back to Back Loan Program) of even date
of the Borrower Note, executed by Borrower for the benefit of Governmental Lender and Bank and
encumbering the Property.
"Funding Loan Agreement" shall mean the Funding Loan Agreement between the Governmental
Lender and the Bank In connection with the Issuance of the Funding Loan Note.
"Funding Loan Note" shall mean that certain Governmental Lender Housing Revenue Note
(Cornerstone Apartments) 2019 Series A, executed by Governmental Lender In favor of Bank In the
principal amount of///[$17,250,000]N/.
"General Partner(s)" shall mean JHC-Cornerstone 11, LLC, a California limited liability company.
"Governmental Lender" shall mean the California Municipal Finance Authority, a joint exercise of
powers agency, duly organized and existing under the laws of the State of California.
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EXHIBIT 5
"Improvements" shall mean a 126-unit low income apartment complex, together with related
appurtenances now or hereafter located on the Property.
"Partnership Agreement" shall mean that certain N[Agreement of Limited Partnershipy// of
Borrower dated September _, 2019, as the same has been or may be amended from time to time.
"Property" shall mean certain real property located In the City of Santa Ana, County of Orange,
State of California, as more particularly described in the Deed of Trust.
"Project° shall mean the Property and the Improvements.
"Tax Credit Investor" shall mean
"Tax Credits" shall mean low income housing tax credits allocated under Section 42 of the Internal
Revenue Code of 1986, as amended, pursuant to the terms of the Tax Credit Allocation Documents.
"Tax Credit Allocation Documents" shall mean the Tax Credit Application, the Preliminary
Reservation, the Final Reservation and such other documents as have or may be Issued by the Allocation
Committee from time to time with respect to the Tax Credits.
"Tax Credit Application" shall mean the 20_ Low -Income Housing Tax Credit Application
submitted to the Allocation Committee to apply for Tax Credits with respect to the Project.
Borrower's address for purposes of notices is as follows:.
Cornerstone Housing Partners LP
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, Californla 92614
Attention: Laura Archuleta
Tax Credit Investor's address for purposes of notices Is as follows:
Attention: _
Telephone No.:
Telecopier No.:
General Partner(s)' address for purposes of notices Is as follows:
JHC-Cornerstone II, LLC
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, California 92614
Attention: Laura Archuleta
Governmental Lender's address for purposes of notices Is as follows:
California Municipal Finance Authority
2111 Palomar Road, Suite 320
Carlsbad, California 92011
Attention: John P. Stoecker, Finance Advisor
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EXHIBIT 6
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Davis Wright Tremalne LLP
865 S. Figueroa Street
Suite 2400
Los Angeles, CA 90017
Attn: Nancy B. Clapp, Esq.
ABOVE
SUBORDINATION AGREEMENT
(HOUSING SUCCESSOR AGENCY LOAN)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR RIGHTS UNDER
CERTAIN AGREEMENTS RELATING TO CERTAIN REAL PROPERTY BECOMING
SUBJECT TO, AND OF LOWER PRIORITY THAN, THE LIEN OF A SECURITY
INTEREST.
THIS SUBORDINATION AGREEMENT (this "Agreement"), made as of the Is' day of September,
2019, by and between the HOUSING AUTHORITY OF THE CITY OF SANTA ANA SERVING AS THE
HOUSING SUCCESSOR AGENCY TO THE FORMER COMMUNITY REDEVELOPMENT AGENCY
("Subordinating Party"), whose address is 20 Civic Center Plaza, Santa Ana, California 92701, and MUFG
UNION BANK, N.A. ("Bank"), in its capacity as agent for the CALIFORNIA MUNICIPAL FINANCE
AUTHORITY ("Governmental Lender"), whose address is MUFG Union Bank, N.A., Loan Administration
Department, 3151 E. Imperial Highway, 1 6r Floor, Brea, California 92821, Attention: Manager, is made with
reference to the following facts:
A. Unless expressly defined herein, all capitalized terms used herein shall have the meanings
ascribed to them in Appendix I or Exhibit B attached hereto and made a part hereof.
B. Borrower is the owner (or, concurrently with the recording of this Agreement, will be the
owner) of the Property, which Property is more particularly described In Exhibit A attached hereto and made
a part hereof.
C. Borrower and Subordinating Party have heretofore entered into or, concurrently herewith,
are entering Into, those certain loan documents more particularly described in Exhibit B attached hereto
(collectively, 'Subordinating Parry's Loan Documents"), pursuant to the terms of which Subordinating
Party shall make to Borrower a and /100t" Dollar
($ 1 loan ("Subordinating Party's Loan") which Subordinating Party's Loan Is secured
by, among other things, that certain ///[Amended and Restated Deed of Trust and Assignment of Rents]I//
("Subordinating Party's Deed of Trust") dated 2019, executed by Borrower for the
benefit of Subordinating Party, and recorded substantially concurrently herewith in the Official Records of
Orange County, Californla (the "Official Records"), and encumbering the Property and all Improvements
to be constructed thereon and that certain ///[Amended and Restated Affordability Restrictions on Transfer
of Property]I// (the "Restrictions") dated , 2019, and recorded substantially
concurrently herewith In the Official Records, pursuant to the terms of which Borrower agreed, among other
things, for itself and Its successors and assigns, to operate the Project as a low income apartment project
in accordance with the terms and conditions set forth therein. Subordinating Party's Deed of Trust and
Sections and of the Restrictions are sometimes hereinafter collectively referred to as
"Subordinating Party's Security Documents".
D. Concurrently herewith, Borrower, Governmental Lender and Bank are entering into the
Borrower Loan Agreement, pursuant to the terms of which Governmental Lender shall make to Borrower
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EXHIBIT 6
the Borrower Loan to cover a portion of the cost of constructing the Improvements and certain other costs
related thereto, which Borrower Loan is evidenced by the Borrower Note, made by Borrower to the order
of Governmental Lender, and secured by, among other things, the Deed of Trust, executed by Borrower
for the benefit of Governmental Lender and Bank, and encumbering the Property and all Improvements to
be constructed thereon. The Borrower Loan Agreement, the Borrower Note, the Deed of Trust and all other
documents evidencing, securing or pertaining to the Borrower Loan are sometimes hereinafter collectively
referred to as the "Borrower Loan Documents". All right, title and Interest of Governmental Lender with
respect to the Borrower Loan and the Borrower Loan Documents have been assigned to Bank.
E. As a condition precedentto Governmental Lender's and Bank's making the Borrower Loan,
Governmental Lender and Bank requires that the Deed of Trust shall unconditionally be and remain at all
times a lien or charge upon the Project which Is prior and superior to the liens or charges of Subordinating
Party's Security Documents (but not to the Restrictions, other than Sections and of the
Restrictions).
NOW, THEREFORE, in consideration of Governmental Lender's and Bank's making the Borrower
Loan to Borrower, and In consideration of the mutual promises and agreements hereinafter contained and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
In order to induce Governmental Lender and Bank to make the Borrower Loan to Borrower, the parties to
this Agreement do hereby agree as follows:
1. SUBORDINATION OF SUBORDINATING PARTY'S SECURITY DOCUMENTS. The
Deed of Trust, and any and all renewals or extensions thereof and all amendments and modifications
hereafter made thereto, and any and all disbursements made by Governmental Lender to or for the account
or benefit of Borrower the repayment of which is secured thereunder, shall unconditionally be and remain
at all times a lien or charge against the Project that is prior and superior to the liens or charges of
Subordinating Party's Security Documents (but not to the Restrictions, other than Sections and
of the Restrictions), to the same extent and purpose as though Subordinating Party's Security
Documents had been executed and recorded subsequent to the recording of the Deed of Trust and the
making of each disbursement or advance made by Governmental Lender to Borrower the repayment of
which Is secured by the Deed of Trust, regardless of whether Borrower, at the time of any such
disbursement or advance, may have been In default under the Borrower Loan Agreement, the Deed of
Trust, or any of the other the Borrower Loan Documents and regardless of whether Governmental Lender
was obligated to make any such disbursement or advance. Notwithstanding the foregoing, Governmental
Lender and Bank shall not amend or modify the terms of the Borrower Loan and/or the Borrower Loan
Documents without the prior written consent of the Subordinating Party if such amendment or modification
has the effect of: (1) Increasing or decreasing the amount of the Borrower Loan, except In the case of sums
advanced by Governmental Lender or Bank In exercising their rights and remedies under the Borrower
Loan Documents or as otherwise provided In Paragraph 2 of this Agreement; (il) Increasing the annual
interest rate(s), including the default rate, above the rate(s) described in the Borrower Note; (iii) modifying
the maturity date to be sooner than the stated maturity date of the Borrower Note; or (iv) having a materially
adverse effect on Subordinating Party. For the avoidance of doubt, the Restrictions, except Sections
and of the Restrictions, shall at all times be prior and superior to the Deed of Trust
2. ALL DISBURSEMENTS UNDER THE BORROWER LOAN SECURED BY THE DEED OF
TRUST. Notwithstanding anything to the contrary set forth in the Borrower Loan Agreement or any other
agreement among Governmental Lender, Bank and Borrowerwith respect to the disbursement of all or any
portions of the proceeds of the Borrower Loan, any and all disbursements made by Governmental Lender
to or for the account or benefit of Borrower or the Project In connection with the following, whether or not
Governmental Lender is obligated to make such disbursements pursuant to the Borrower Loan Documents:
(a) any costs or expenses incurred in complying with any laws, rules, regulations, or statutes or any
directives of any governmental agencies or authorities having or exercising jurisdiction over the Project; (b)
any sums advanced to pay for the cost of completing the construction of the Project, Project cost overruns
and/or to lease -up and stabilize the Project made by Governmental Lender or Bank; and (c) any sums
advanced by Governmental Lender or Bank for the payment of real estate taxes or assessments or
Insurance premiums, or any other sums advanced or obligations incurred by Governmental Lender or Bank
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EXHIBIT 6
in connection with the protection or preservation of any security given to Governmental Lender or Bank with
respect to the Borrower Loan, including, without limitation, interest thereon shall be deemed to be, and In
all events shall be, secured by the Deed of Trust and, as so secured, and regardless of whether Borrower
at the time of any such disbursements may have been in default under the Borrower Loan Documents and
regardless of whether Governmental Lender or Bankwere obligated to make any such disbursements, shall
be and remain a lien or charge against the Project that is unconditionally prior and superior to the lien and
effect of Subordinating Party's Security Documents.
3. ' APPLICATION OF PAYMENTS UNDER SUBORDINATING PARTY'S LOAN. Until such
time as all amounts outstanding under the Borrower Loan have been indefeasibly paid in full, prior to the
occurrence of an Event of Default (as such term Is defined in the Borrower Loan Documents), Subordinating
Party shall be entitled to receive and retain payments made pursuant to and In accordance with the
Subordinating Parry's Loan Documents; provided, however, that no such payment Is made more than ninety
(90) days in advance of Its scheduled due date. Upon the occurrence of an Event of Default under the
Borrower Loan Documents, after Subordinating Party receives notice of such Event of Default from Bank
with written instructions directing Subordinating Party not to accept payments from Borrower on account of
the Subordinating Party's Loan (including, but not limited to, principal, Interest, additional interest, late
payment charges, default interest, attorneys' fees, or any other sums secured by Subordinating ParVs
Deed of Trust), all amounts (Including, without limitation, all insurance proceeds and condemnation awards)
received by Subordinating Party from, or for the account of, Borrower under Subordinating Party's Loan
shall be immediately remitted to Bank at the address set forth above to be applied by Governmental Lender
in reduction of amounts outstanding under the Borrower Loan, in such amounts and In such order as Bank
shall determine. In the event that any payment Is made to Subordinating Party which Is not permitted under
this Agreement, such payment shall be held by Subordinating Party in trust for the benefit of Governmental
Lender and Bank and shall be paid immediately to Bank for application to the payment of all of indebtedness
and obligations remaining unpaid under the Borrower Loan. If Subordinating Party receives written notice
from Bank that the Event of Default which gave rise to the Subordinating Parry's obligation not to accept
payments has been cured, waived, or otherwise suspended by Bank, the restrictions on payment to
Subordinating Party in this Section 3 shall terminate, and Bank shall have no right to any subsequent
payments made to Subordinating Party by Borrower prior to Subordinating Party's receipt of a new notice
from Bank of an Event of Default in accordance with this Section 3. Without limiting the complete
subordination of the Subordinating Party's Loan to the payment In full of the Borrower Loan, in any
bankruptcy, insolvency, receivership or similar proceeding, upon any payment or distribution to creditors,
Governmental Lender and Bank shall be paid in full first in cash before the Subordinating Party shall be
entitled to receive any payment or other distribution on account of or in respect to the Subordinating Party's
Loan and, until the entire Borrower Loan Is paid in full in cash, any payment or distribution to which the
Subordinating Party will be entitled but for this Agreement (whether in cash, property or other assets) shall
be paid to Bank.
4. SUBORDINATION TO MODIFICATION OF BORROWER LOAN. If Governmental Lender
and Bank extend or otherwise modify the terms of the Borrower Loan (including any amendment or
modification which requires the Subordinating Party's priorwrltten consent pursuant to Paragraph 1 and for
which Subordinating Party has granted such consent), Subordinating Party, upon 20 days' prior notice to
Subordinating Party, shall execute a new subordination agreement, in the form of this Agreement,
confirming Subordinating Party's subordination of the effect of Subordinating Party's Security Documents
against the Project to the lien or charge of the Deed of Trust. In the event that consent from the
Subordinating Parry is not required hereunder or such consent has been obtained, the execution of such
new subordination agreement, however, shall not be a condition to the effectiveness of the subordination
of Subordinating Party's Security Documents against the Project to the lien or charge of the Deed of Trust,
which subordination shall be automatic.
5. SUBORDINATING PARTY'S RIGHT TO CURE DEFAULTS. Upon the occurrence of an
Event of Default, Bank shall: (a) concurrently with notifying Borrower of the occurrence of such event of
default, notify Subordinating Party at its address set forth above of the occurrence of such event of default;
(b) permit Subordinating Party to cure or correct (provided that such event of default Is curable) any such
event of default within thirty (30) calendar days after receipt of such notice ("Subordinating Party Cure
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Period"); provided, however, that Governmental Lender and Bank have the continuing right to commence
to pursue their respective remedies under the Borrower Loan Documents on account of such default during
the Subordinating Party Cure Period, including but not limited to the right to accelerate the Borrower Loan,
record a notice of default and to obtain a receiver; provided further, that if the cure is completed during the
Subordinating Party Cure Period, Governmental Lender and Bank will rescind any notice of default after
reimbursement of all of its costs Incurred in connection with the default, including, without limitation,
attorneys' fees and court costs; and (c) accept all payments and all acts done by Subordinating Party on
behalf of Borrower within the Subordinating Party's Cure Period as though the same had been timely done
and performed by Borrower, so that such acts and payments shall fully and totally cure and correct all such
defaults, breaches, failures or refusals for all purposes. Subordinating Party shall not be subrogated to the
rights of Governmental Lender or Bank under the Borrower Loan Documents by reason of Subordinating
Party having cured any default under the Borrower Loan Documents; however, Governmental Lender and
Bank acknowledge that, to the extent so provided in the Subordinating Party's Security Documents,
amounts advanced or expended by Subordinating Party to cure an event in default under the Borrower
Loan Documents may be added to and become a party of the Subordinating Party's Loan. In the event
that an Event of Default occurs and Bank has recorded a notice of default, then for the period from the date
of recordation of the notice of default, until the date of recordation of a notice of sale, so long as the noticed
default continues, Subordinating Party shall have the right, but not the obligation, in lieu of curing any default
under the Borrower Loan Documents, to purchase the Funding Loan Note and the Funding Loan Agreement
and Bank's rights as agent thereunder subject to Subordinating Party satisfying any requirements under
the Funding Loan Agreement to purchase the Funding Loan Note. Such purchase will be accomplished by
Subordinating Party paying to Bank the outstanding principal amount of the Borrower Loan, plus all accrued
and unpaid interest thereon and any prepayment premium, together with reasonable expenses incurred by
Bank in connection therewith (including reasonable attorneys' fees and costs), In exchange for the
assignment of the Funding Loan Note without recourse or warranty, except that Bank will warrant that it
owns and has all requisite authority to transfer the Funding Loan Note at the time of the transfer.
Subordinating Party acknowledges and agrees that Subordinating Party's right to purchase the Funding
Loan Note shall unconditionally be and remain at all times subordinate to any right of any senior lender with
lien priority to purchase the Funding Loan Note. Borrower acknowledges and agrees, by executing the
joinder attached hereto, that after the Funding Loan Note has been assigned to Subordinating Party or its
nominee, Bank shall be relieved from all liability to Borrower under or in connection with the Borrower Loan
Documents.
6. BANK RIGHT TO CURE DEFAULT UNDER SUBORDINATING PARTY'S LOAN. Upon
the occurrence of a default under the Subordinating Party's Loan, Subordinating Party shall: (a)
concurrently with notifying Borrower of the occurrence of such event of default, notify Bank at its address
set forth above of the occurrence of such default or event of default; (b) permit Bank to cure or correct
(provided that such event of default Is curable) any such event of default within thirty (30) calendar days
after receipt of such notice ("Bank Cure Period"); provided, however, that Subordinating Party has the
continuing right to commence to pursue its remedies under the Subordinating Party's Loan Documents on
account of such default during the Bank Cure Period, Including but not limited to the right to accelerate the
Subordinating Party's Loan, record a notice of default and to obtain a receiver; provided further, that If the
cure is completed during the Bank Cure Period, Subordinating Party will rescind any notice of default after
reimbursement of all of Its costs incurred In connection with the default, including, without limitation,
attorneys' fees and court costs; and (c) accept all payments and all acts done by Bank on behalf of Borrower
within the Bank Cure Period as though the same had been timely done and performed by Borrower, so that
such acts and payments shall fully and totally cure and correct all such defaults, breaches, failures or
refusals for all purposes.
7. SUBORDINATION TO PERMANENT FINANCING. Subordinating Party acknowledges
that It has been advised by Borrower that Borrower intends to repay a portion of the amount outstanding
under the Borrower Loan, In whole or in part, by obtaining permanent financing in the future by one or more
lenders, which permanent financing would be secured by, among other things, a deed of trust or deeds of
trust encumbering the Project which would be senior to the effect of Subordinating Parry's Security
Documents (but not to the Restrictions, other than Sections and of the Restrictions. In
order to enable Borrower (or its successors or assigns, "Borrower's Successor") to obtain permanent
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EXHIBIT 6
financing to repay the Borrower Loan, Subordinating Party hereby agrees that within twenty (20) days after
written request by Borrower or Borrower's Successor, Subordinating Party shall execute a subordination
agreement (in form and substance substantially similar to this Agreement) subordinating the effect of
Subordinating Party's Security Documents to the lien and effect of one (1) or more deeds of trust
encumbering the Project in an amount not to exceed ///[$8,800,000]///.
8. RECEIPT AND APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION
AWARDS: RECEIPT AND APPLICATION OF PROCEEDS FROM BONDS.
(a) Receipt and Application of Insurance Proceeds and Condemnation Awards.
Notwithstanding anything stated to the contrary in any of Subordinating Party's Security Documents, so
long as the Deed of Trust continues to encumber all or portions of the Project, all Insurance proceeds that
may become available from time to time as a result of damage or destruction to all or portions of the
Improvements and all condemnation awards that may become available from time to time as a result of the
condemnation of all or portions of the Project shall be held by Bank, disbursed by Bank and applied by
Bank in accordance with the terms and conditions of the Deed of Trust and the other the Borrower Loan
Documents and Subordinating Party shall have no right to hold, disburse or apply any of such proceeds
and/or awards. Without limiting the generality of the foregoing, the Bank shall have all approval, consent
and oversight rights In connection with any Insurance claims or condemnation proceedings related to the
Property and any decision regarding the use of Insurance proceeds after a casualty loss or condemnation
awards and Subordinating Party shall have no right to object to any such action or approval taken by Bank
and shall consent thereto and be bound thereby. Subordinating Party shall execute such documents as
Bank may require from time to time In order to assure compliance with the provisions of this Paragraph
8(a).
(b) Receipt and Application of Proceeds from Bonds. With respect to all labor and
material bonds and/or completion bonds that are issued from time to time to assure payment and
completion of the Improvements and which name Governmental Lender, Bank and Subordinating Party (or
any other party) as dual obllgees, all proceeds that may become available from time to time under such
bonds shall be held by Bank and disbursed by Bank and Subordinating Party shall have no right to hold or
disburse any of such proceeds. Subordinating Party shall execute such documents as Bank may require
from time to time in order to assure compliance with the provisions of this Paragraph 8(b).
g. NOTICES. Any notice, demand or request required or permitted to be delivered hereunder
shall be deemed to have been duly and properly given at the time of such delivery If personally delivered
(which shall include (1) delivery by means of professional overnight courier service which confirms receipt
in writing and (ii) transmission by telecopler or telefacsimile machine capable of confirming transmission
and receipt), or If mailed, forty-elght (48) hours after deposit in United States registered or certified mall,
postage prepaid, return receipt requested, addressed to Subordinating Party, Governmental Lender or
Bank, as the case may be, at their addresses set forth above.
10. ENTIRE AGREEMENT. This Agreement shall be the whole and only agreement with
respect to the subordination of the effect of Subordinating Party's Security Documents to the lien or charge
of the Deed of Trust and all disbursements and advances made thereunder, and shall supersede and cancel
any prior agreements as to such subordination, including without limitation any provisions contained in
Subordinating Party's Security Documents that provide for the subordination of the effect thereof to one or
more deeds of trust.
11. SUBORDINATING PARTY'S REPRESENTATIONS, WARRANTIES, COVENANTS
CONSENTS, APPROVALS AND ACKNOWLEDGEMENTS. Subordinating Party hereby warrants,
represents, declares, agrees and acknowledges as follows:
(a) For purposes of this Agreement, Subordinating Party acknowledges that
Subordinating Party has been provided the opportunity to review the Borrower Loan Documents before
executing this Agreement;
-5-
4820-2714-2560v.4 0096250-000020
80A-287
OVA .: I W
(b) Governmental Lender and Bank, in making disbursements pursuant to the
Borrower Loan Agreement, are under no obligation or duty to insure, nor has Governmental Lender or Bank
represented that it will insure, the proper application of such proceeds by the person(s) to whom
Governmental Lender or Bank disburses such proceeds, and any application or use of such proceeds for
purposes other than as provided in any such agreement shall not defeat or render invalid, in whole or in
part, the subordination provided for in this Agreement;
(c) Governmental Lender and Bank have not made any warranty or representation of
any kind or nature whatsoever to Subordinating Party with respect to (I) the application of the proceeds of
the Borrower Loan being made by Governmental Lender to Borrower upon the security of the Deed of Trust,
(ii) the value of the Property, the Improvements to be constructed thereon pursuant to the Borrower Loan
Agreement, or the marketability or value thereof upon completion of such construction, or (III) the ability of
Borrower to honor its covenants and agreements with Governmental Lender, Bank or Subordinating Party;
(d) Governmental Lender's and/or Bank's release of any security for the Borrower
Loan, including, without limitation, the reconveyance of any portion(s) of the Project from the lien of the
Deed of Trust shall not constitute a waiver or relinquishment of Subordinating Party's unconditional
subordination of the liens or charges of Subordinating Party's Security Documents against the Project to
the lien or charge of the Deed of Trust;
(e) Governmental Lender would not make the Borrower Loan to Borrower absent the
execution of this Agreement by Subordinating Party;
(f) Governmental Lender and Bank have no duty to disclose to Subordinating Party
any facts Governmental Lender or Bank may now know or hereafter know about Borrower or the partners
or successors of Borrower, regardless of whether (i) Governmental Lender or Bank has reason to believe
that any such facts may Increase materially the risk beyond that which Subordinating Party intends to
assume, (11) Governmental Lender or Bank may have reason to believe that such facts are unknown to
Subordinating Parry, or (111) Governmental Lender or Bank has a reasonable opportunity to communicate
such facts to Subordinating Party, it being understood and agreed that Subordinating Party is fully
responsible for being and keeping informed of the financial condition of Borrower and/or any partners or
successors of Borrower and of all circumstances bearing on the risk of non-payment of any indebtedness
of Borrower to Governmental Lender described in this Agreement;
(g) Subordinating Party has made such independent legal and factual inquiries and
examinations as Subordinatng Party deems necessary or desirable, and Subordinating Party has relied
solely on said independent inquiries and examinations in entering into this Agreement;
(h) The Subordinating Party's Loan Documents as described in Exhibit V attached
hereto are all of the documents evidencing, securing or pertalning to Subordinating Party's Loan, true,
correct and complete copies thereof have been delivered to Bank and the Subordinating Party's Loan
Documents have not been amended or modified except as reflected thereon;
(1) As of the date set forth above, the Subordinating Party has no offset, defense,
deduction or claim against Borrower under any of the Subordinating Party's Loan Documents, Borrower Is
not In default under any of the Subordinating Party's Loan Documents and the Subordinating Party knows
of no event that has occurred or is continuing which, with the passage of time or the giving of notice, or
both would constitute a default under any of the Subordinating Party's Loan Documents;
G) Each and every covenant, condition and obligation contained in the Subordinating
Party's Loan Documents required to be performed or satisfied as of the date hereof, and each and every
matter required to be approved the Subordinating Party as of the date hereof, has been satisfied and/or
approved and/or waived as applicable, including, without limitation, all conditions precedent to Borrower's
right to commence construction of the Improvements, all of which conditions have been satisfied and/or
approved and/or waived, as applicable, as of the date set forth above;
-6-
4920-2714-2560v.4 0096250-000020
EXHIBIT 6
(k) Under Subordinating Party's Loan Documents, Borrower Is not obligated to
commence construction of the Improvements until , 20 , and construction of the
Improvements need not be completed until 20_, subject to extension for force majeure;
(1) Notwithstanding anything stated to the contrary in the Subordinating Party's Loan
Documents, (1) the limited partner in Borrower shall have the right at any time and from time to time, without
the approval or consent of the Subordinating Party, to assign, sell or otherwise transfer to any third party
Its limited partnership interest in Borrower, provided that Borrower provides notice to the Subordinating
Party of such assignment, sale or transfer concurrently with such assignment, sale or transfer, and (ii) the
general partner in Borrower shall have the right, without the approval or consent of the Subordinating Party,
to pledge or otherwise encumber its partnership interest In Borrower to Governmental Lender and Bank
and the foreclosure of such pledge by Governmental Lender or Bank shall not cause an event of default
under the Subordinating Party's Loan Documents;
(m) Notwithstanding anything stated to the contrary in the Subordinating Party s Loan
Documents, Subordinating Party's Interest in the plans and specifications and all data, drawings, contracts
and agreements relating thereto and all contracts and agreements relating to the construction of the
Improvements shall be subject and subordinate to Governmental Lender's and Bank's interest in the same;
(n) Notwithstanding anything stated to the contrary in the Subordinating Party s Loan
Documents, Subordinating Party's rights in and to the leases and rents of the Property shall be subject and
subordinate to the rights of Governmental Lender and Bank to same; and
(o) Notwithstanding anything stated to the contrary In the Subordinating Party's Loan
Documents, the occurrence of an Event of Default under the Borrower Loan Documents shall not in and of
itself constitute a default or an event of default under any of the Subordinating Parry's Loan Documents
unless the occurrence of such event shall constitute a separate default under the Subordinating Party's
Loan Documents.
(p) The subordination of the Subordinating Parry's Loan shall continue In the event
that any payment with respect to any Borrower Loan Document (whether by or on behalf of Borrower, as
proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned
to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, a
receiver or other similar party under any bankruptcy, insolvency or receivership or similar law under any
bankruptcy, insolvency, receivership or similar proceeding. In such event, the Borrower Loan or any part
thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of
any repayment, return or other action, as if such payment on account of the Borrower Loan had not been
made.
(q) Subordinating Party shall not commence In or join with any other creditor in
commencing any bankruptcy, insolvency, receivership or similar proceeding involving Borrower and
Subordinating Party shall not initiate any action, motion or request In any such proceeding Involving any
other person or entity, which seeks the consolidation of some or all of the assets of Borrower into such
proceeding. In the event of any such proceeding relating to Borrower or the Property or, in the event of any
such proceeding relating to any other person or entity into which (notwithstanding the covenant in the first
sentence of this clause) the assets or interests of Borrower are consolidated, then in either event, the
Borrower Loan shall first be paid in full before Subordinating Party shall be entitled to receive or retain any
payment or distribution with respect to the Subordinating Party's Loan. Subordinating Party agrees that (1)
the Bank shall receive all payments and distributions of every kind or character in respect of the
Subordinating Party's Loan to which the Subordinating Party would otherwise be entitled, before the
subordination provisions of this Agreement (Including, without limitation, any payments or distributions
during the pendency of any bankruptcy, Insolvency, receivership or similar proceeding Involving Borrower
or the Property) until the Borrower Loan Is repaid in full, and (11) the subordination of the Subordinating
Party's Loan and the Subordinating Parry's Security Documents shall not be affected in any way by the
Bank electing, under Section 1111(b) of the Federal Bankruptcy Code, to have its claim treated as being a
fully secured claim. In addition, Subordinating Party hereby covenants and agrees that, in connection with
-7-
4820.2714.2560v,4 0096250-000020
80A-289
such a proceeding Involving Borrower, neither Subordinating Party nor any of its affiliates shall (i) make or
participate in a loan facility to or for the benefit of Borrower on a basis that is senior to or pari passu with
the liens and interests held by Governmental Lender and Bank pursuant to the Borrower Loan Documents
and (it) not contest the continued accrual of interest on the Borrower Loan, in accordance with and at the
rate specified in the Borrower Loan Documents, both for periods before and for periods after
commencement of such proceedings.
12. ATTORNEYS' FEES. If either Subordinating Party, Governmental Lender or Bank shall
bring an action against the other by reason of the breach of any covenant, provision, or condition of this
Agreement, or otherwise arising out of this Agreement, the unsuccessful party shall pay to the prevailing
party reasonable attomeys' fees, which fees shall be payable whether or not any action Is prosecuted to
judgment. The term "prevailing party" shall include, without limitation, a party who brings an action against
the other by reason of the other's breach or default and obtains substantially the relief sought, whether by
compromise, settlement, or judgment.
13. ESTOPPEL CERTIFICATES. Either party shall, within twenty (20) days following the other
parry's written request therefor, execute and deliver to such requesting party an estoppel certificate in form
and substance reasonably satisfactory to the requesting party.
14. GOVERNING JURISDICTION. This Agreement shall be governed by the laws of the State
of California and shall be binding upon, and shall Inure to the benefit of, the parties to this Agreement and
their respective successors and assigns.
15. SEVERABILITY. In case 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, such invalidity, illegality or
unenforceablllty shall not affect any other provisions hereof and this Agreement shall be construed as if
such Invalid, illegal or unenforceable provision had never been contained herein unless the effect thereof
would materially alter the benefits or burdens hereof to the parties hereto.
16. THIRD PARTIES. Subordinating Party recognizes that Governmental Lender and Bank
may show copies of this Agreement to other institutional lenders who are interested in the matters covered
in this Agreement and Subordinating Party agrees that such other institutional lenders may also materially
rely upon the representations, warranties and agreements made by the Subordinating Party in this
Agreement.
17. COUNTERPARTS. This Agreement may be executed In two (2) or more counterparts,
each of which shall be deemed an original but all of which together shall constitute but one and the same
instrument.
18. WAIVER OF JURY TRIAL. To the extent permitted by law, In connection with any action
or proceeding, whether brought in state or federal court, the Subordinating Party and Bank hereby
expressly, intentionally and deliberately waive any right they may otherwise have to trial by jury of any Claim
(as defined below).
19. JUDICIAL REFERENCE. If the waiver of jury trial set forth herelnabove Is not enforceable
under the laws of the state In which the Property is located, then the parties hereby agree that all Claims,
including any and all questions of law or fact relating thereto, shall, at the written request of any party, be
determined by Reference (as hereinafter defined) as set forth hereinbeiow:
(a) Selection Or Appointment Of Referee. The Bank and Subordinating Party shall
select a single neutral referee, who shall be a retired state or federal judge. In the event that the Bank and
Subordinating Party cannot agree upon a referee, the referee shall be appointed by the court.
(b) Conduct Of Reference. Except as otherwise provided In this Agreement, the
Reference shall be conducted pursuant to the laws of the state in which the Property is located. The referee
-8-
4820-2714-2560v.4 0096250-000020
80A-290
EXHIBIT 6
shall determine all issues relating to the applicability, interpretation, legality and enforceability of the
Borrower Loan Documents or Funding Loan Documents. The referee shall report a statement of decision
to the court. The Bank and Subordinating Party shall equally bear the fees and expenses of the referee,
unless the referee otherwise provides In the statement of decision.
(c) Provisional Remedies, Self -Help And Foreclosure. No provision of this Agreement
shall limit the right of any party to (1) exercise self-help remedies Including, without [Imitation, set-off, (11)
foreclose against or sell any collateral, by power of sale or otherwise or (III) obtain or oppose provisional or
ancillary remedies from a court of competent jurisdiction before, after or during the pendency of the
Reference. The exercise of, or opposition to, any such remedy does not waive the right of any party to a
Reference pursuant to this Agreement.
(d) No Decision By Jurv. The parties hereby acknowledge that if a referee is selected
or appointed to determine the Claims, then the Claims will not be decided by a jury.
(e) Miscellaneous. In the event that multiple Claims are asserted, some of which are
not subject to this Section, the parties agree to stay the proceedings of the Claims not subject to this Section
until all other Claims are resolved in accordance with this Section. In the event that Claims are asserted
against multiple parties, some of whom are not subject to this Section, the Parties agree to sever the Claims
subject to this Section and resolve them In accordance with this Section.
(f) Claim. "Claim" shall mean any claim, cause of action, action, dispute or
controversy between or among the parties, whether sounding in contract, tort or otherwise, which arises
out of or relates to: (1) any of the Borrower Loan Documents or the Funding Loan Documents; (I[) and
negotiations or communications relating to any of the Borrower Loan Documents or the Funding Loan
Documents, whether or not incorporated into the Borrower Loan Documents or the Funding Loan
Documents or any indebtedness evidenced thereby; or (III) any alleged agreements, promises,
representations or transactions in connection therewith.
(g) Reference. 'Reference" shall mean ajudicial reference conducted pursuant to this
Agreement and in accordance with the laws of the state in which the Property is located, as in effect at the
time the referee is selected or appointed.
[Signature Pages Follow]
4820-2714.2560v.4 0096250-000020
80A-291
EXHIBIT 6
WHEREAS, this Subordination Agreement has been executed by the parties as of the dale first
written above.
ATTEST:
[Name]
[Title]
APPROVED AS TO FORM:
SONIA RCARVALLHO, City Attorney
gjit::�
[Na
[Title]
FOR APPROVAL:
[Name]
[Title]
SUBORDINATING PARTY:
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA SERVING AS THE HOUSING
SUCCESSOR AGENCY TO THE FORMER
COMMUNITY REDEVELOPMENT AGENCY
[Name]
[Title]
[Signature Page to Subordination Agreement (Housing Successor Agency Loan)]
4820-2714-2560v.4 0096250-000020
80A-292
EXHIBIT 6
BANK:
MUFG UNION BANK, N.A.,
a national banking association
By:
[Name]
[Title]
[Signature Page to Subordination Agreement (Housing Successor Agency Loan)]
4920-2714-2560v.4 0096250-000020
80A-293
EXHIBIT 6
JOINDER
Unless expressly defined herein, all capitalized terms used herein shall have the same meanings
ascribed to them in the Subordination Agreement (the "Subordination Agreement") to which this Joinder
is attached.
The undersigned hereby acknowledges receipt of a copy of the Subordination Agreement and, as
fee owner of the Property, hereby consents to, approves and agrees to be bound by all of the terms and
conditions set forth in the Subordination Agreement.
BORROWER:
CORNERSTONE HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Cornerstone II, LLC,
a California limited liability company,
its Managing General Partner
By: Jamboree Housing Corporation,
a California nonprofit 9�biic benefit corporation,
its Managirurt Merhber, n
By:
114jr,4 I MA5616
mitrr. ija(SORP7£1A OFFiLGM
[Joinder to Subordination Agreement (Housing Successor Agency Loan)]
4820-2714-2560v.4 D096250-000020
80A-294
EXHIBIT 6
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the Identity of the individual
who signed the document to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
) ss
County of y-A)n .,
On 47g 2019 before me, �Arjl sl&
a Notary Public, personally appeared. M i zIq a.& I JA PIE i t , who proved to me on
the basis of satisfactory evidence to be the person (a) 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
(!es), and that by his/her/thelr 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. LARISSA MEDELLIN
Notary Public • California
a -c Orange County z
z commission # 2153187
/ My Comm. Ex Ires Jun 11, 2020
Signature_ �%ayj7-�''/
(Seal)
4820-2714-2564v.4 0096250-000020
80A-295
EXHIBIT 6
ACKNOWLEDGMENT
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.
Slate of California )
) ss
County of )
On . 2019 before me,
a Notary Public, personally appeared . who proved to me on
the basis of satisfactory evidence to be the person (s) whose name (s) Is/are subscribed to the within
Instrument and acknowledged to me that he/she/they executed the same In his/her their authorized capacity
(ies), and that by his/her/their signature (s) on the Instrument the person (s), or the entity upon behalf of
which the person (s) acted, executed the Instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph Is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
4820-2714-2560v.4 0096250-000020
80A-296
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the Identity of the Individual
who signed the document to which this certificate
Is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
) ss
County of )
On , 2019 before me,
a Notary Public, personally appeared
who proved to me on
the basis of satisfactory evidence to be the person (s) whose name (s) is/are subscribed to the within
Instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity
(ies), and that by his/her/their signature (s) on the instrument the person (s), or the entity upon behalf of
which the person (s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
4820-2714-2560v.4 0096250-000020
80A-297
EXHIBIT 6
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
ss
County of
On 2019 before me,
a Notary Public, personally appeared . who proved to me on
the basis of satisfactory evidence to be the person (s) whose name (s) Is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity
(ies), and that by his/her/their signature (s) on the Instrument the person (s), or the entity upon behalf of
which the person (s) acted, executed the Instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
4820-2714-2566v.4 0096250-000020
80A-298
EXHIBIT 6
EXHIBIT"A"
LEGAL DESCRIPTION
n., Qkq
EXHIBIT"A"
4 B20-2714-2560v.4 0096250-000020
80A-299
EXHIBIT 6
EXHIBIT "B"
SUBORDINATING PARTY'S LOAN DOCUMENTS
N[TO BE UPDATED UPON RECEIPT AND REVIEW OF HOUSING AUTHORITY LOAN DOCUMENTSIN
1. Amended and Restated Housing Successor Agency Loan Agreement dated
2019, by and between Subordinating Party and Borrower (the "Subordinating Party's Loan
Agreement").
2. Amended and Restated Note Secured by Subordinated Deed of Trust to the City of Santa Ana,
California dated 2019, executed by Borrower to the order of Subordinating
Party In the face principal amount of $
3. Amended and Restated Deed of Trust and Assignment of Rents dated 2019,
executed by Borrower for the benefit of Subordinating Party, recorded in the Official Records
substantially concurrently herewith.
4. Amended and Restated Affordability Restrictions on Transfer of Property dated
2019, by and between Subordinating Party and Borrower, recorded in the Official Records
substantially concurrently herewith.
EXHIBIT "B"
4820.2714.2560v.40096250-000020
80A-300
EXHIBIT 6
APPENDIX I
(Appendix I - Definitions)
As used in the agreement to which this Appendix I is attached, and as used In this Appendix I, the
following terms shall have the Indicated meanings:
"Allocation Committee" shall mean the California Tax Credit Allocation Committee and any
successor governmental agency appointed to carry out the obligations of the Allocation Committee.
"Bank" shall mean MUFG Union Bank, N.A., acting in Its capacity as holder of the Funding Loan
Note and as assignee of and agent for the Governmental Lender, pursuant to the Funding Loan Agreement,
its successors and assigns.
"Borrower" shall mean Cornerstone Housing Partners LP, a California limited partnership.
"Borrower Loan" shall mean the ///[$17,250,000]/// construction and permanent loan to be made
by Governmental Lender to Borrower, pursuant to the Borrower Loan Agreement.
"Borrower Loan Agreement" shall mean the Construction and Permanent Loan Agreement
(Multifamily Housing Back to Back Loan Program) dated September 1, 2019, executed by Borrower,
Governmental Lender and Bank.
"Borrower Loan Documents" shall mean the Borrower Loan Agreement, the Borrower Note, the
Deed of Trust and all other documents evidencing, securing or pertaining to the Borrower Loan.
"Borrower Note" shall mean the Promissory Note (Multifamily Housing Back to Back Loan
Program) in the amount of /1/[$17,250,000]1// dated September 1, 2019, executed by Borrower in favor of
Governmental Lender.
"Code(s)" shall mean the Internal Revenue Code of 1986, as amended from time to time, or the
corresponding provisions of any successor federal income tax law and, if applicable, the California Revenue
and Taxation Code, as amended from time to time, or the corresponding provisions of any successor state
income tax law. Any reference to a particular provision of the Code(s) shall Include any amendment of
such provision or the corresponding provision of any successor federal income tax law or state income tax
law.
"Deed of Trust" shall mean that certain Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (Construction Trust Deed) (Multifamily Housing Back to Back Loan Program) of even date
of the Borrower Note, executed by Borrower for the benefit of Governmental Lender and Bank and
encumbering the Property.
"Funding Loan Agreement" shall mean the Funding Loan Agreement between the Governmental
Lender and the Bank in connection with the Issuance of the Funding Loan Note.
"Funding Loan Note" shall mean that certain Governmental Lender Housing Revenue Note
(Cornerstone Apartments) 2019 Series A, executed by Governmental Lender in favor of Bank in the
principal amount of ///[$17,250,000]///.
"General Partner(s)" shall mean JHC-Comerstone ll, LLC, a Califomla limited liability company.
"Governmental Lender" shall mean the California Municipal Finance Authority, a joint exercise of
powers agency, duly organized and existing under the laws of the State of California.
4820-2714.2560v.4 0096250-000020
80A-301
EXHIBIT 6
"Improvements" shall mean a 126-unit low income apartment complex, together with related
appurtenances now or hereafter located on the Property.
"Partnership Agreement" shall mean that certain ///[Agreement of Limited Partnership]/// of
Borrower dated September J 2019, as the same has been or may be amended from time to time.
"Property" shall mean certain real property located in the City of Santa Ana, County of Orange,
State of California, as more particularly described in the Deed of Trust.
"Project" shall mean the Property and the Improvements.
"Tax Credit Investor" shall mean
"Tax Credits" shall mean low Income housing tax credits allocated under Section 42 of the Internal
Revenue Code of 1986, as amended, pursuant to the terns of the Tax Credit Allocation Documents.
"Tax Credit Allocation Documents" shall mean the Tax Credit Application, the Preliminary
Reservation, the Final Reservation and such other documents as have or may be Issued by the Allocation
Committee from time to time with respect to the Tax Credits.
"Tax Credit Application" shall mean the 20 Low -Income Housing Tax Credit Application
submitted to the Allocation Committee to apply for Tax Credits with respect to the Project.
Borrower's address for purposes of notices Is as follows:
Cornerstone Housing Partners LP
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, California 92614
Attention: Laura Archuleta
Tax Credit Investor's address for purposes of notices is as follows:
Attention:
Telephone No.:
Telecopier No.:
General Partnegs)' address for purposes of notices is as follows:
JHC-Cornerstone Il, LLC
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, Califomia 92614
Attention: Laura Archuleta
Governmental Lender's address for purposes of notices is as follows:
California Municipal Finance Authority
2111 Palomar Road, Suite 320
Carlsbad, California 92011
Attention: John P. Stoecker, Finance Advisor
4820-2714-2580v.4 0096250-000020
[Comerstone]
80A-302
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