HomeMy WebLinkAbout80B - JOINT PH - RESO AND AMEND DDA WITH VISTA DEL RIOREQUEST FOR COUNCIL/
AGENCY ACTION
MEETING DATE:
MARCH 21, 2011
TITLE:
JOINT PUBLIC HEARING - RESOLUTION AND
THIRD AMENDMENT TO THE DISPOSITION AND
DEVELOPMENT AGREEMENT WITH VISTA DEL RIO
HOUSING PARTNERS, L.P.
CITY MANAGER EXECUTIVE ECTOR
RECOMMENDED ACTION
CITY COUNCIL
CLERK OF COUNCIL USE ONLY:
APPROVED
? As Recommended
? As Amended
? Ordinance on 1st Reading
? Ordinance on 2nd Reading
? Implementing Resolution
? Set Public Hearing For
CONTINUED TO
FILE NUMBER
Adopt a resolution making certain findings with respect to the consideration to be received by the
Community Redevelopment Agency pursuant to a Disposition and Development Agreement
between the Community Redevelopment Agency and Vista Del Rio Housing Partners, L.P., for the
sale of certain real property in the City of Santa Ana and approving the sale of said real property
upon the terms and conditions contained in that Agreement.
COMMUNITY REDEVELOPMENT AGENCY
Authorize the Executive Director of the Community Redevelopment Agency and Agency
Secretary to execute the attached Loan Agreement with Vista Del Rio Housing Partners, L.P.
in the amount of $469,000, subject to non-substantive changes approved by the Executive
Director and Agency General Counsel.
2. Authorize the Executive Director of the Community Redevelopment Agency and Agency
Secretary to execute the attached Third Amendment to the Disposition and Development
Agreement with Vista Del Rio Housing Partners, L.P., subject to non-substantive changes
approved by the Executive Director and Agency General Counsel.
COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION ACTION
At its regular meeting on March 15, 2011, by a vote of 6:0, the Community Redevelopment and
Housing Commission recommended that City Council adopt a resolution and that the Agency
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Joint Public Hearing -
DDA and Resolution-Vista Del Rio
March 21, 2011
Page 2
authorize execution of a Loan Agreement and the Third Amendment to the Disposition and
Development Agreement with Vista Del Rio Housing Partners, L.P.
DISCUSSION
On July 20, 2009, the Community Redevelopment Agency (Agency) authorized execution of a
Disposition and Development Agreement (DDA) with Vista Del Rio Housing Partners, L.P.
(Developer) for development of a 41 unit, handicapped accessible affordable housing project on a
3.2 acre vacant site owned by the Agency (project). The DDA also included a $100,000 grant to
the Developer to pay for entryway construction and a $500,000 HOME Program loan. On March
15, 2010, the DDA was amended so as to increase the HOME Program loan amount to $1.5
million. A second amendment was approved on December 20, 2010, to extend the date to obtain
all necessary financing. Since the DDA was approved, the Developer was not successful in
obtaining low income housing tax credits and is requesting approval of a $469,000 Agency loan so
as to improve its prospects for success with another application. This loan will require a third
amendment to the DDA. The attached Exhibit 1 is a Sources and Uses budget showing the
project's estimated development costs and funding sources.
The project was entitled by the City Council at the same joint meeting where the DDA was
approved. In order to obtain public input during the process leading to entitlement, public meetings
were held in the four surrounding neighborhoods: Concord, Riverglen, Casa de Santiago, and
Riverview. Additionally, a public hearing was conducted by the Planning Commission on March 9,
2009. The developer continues to work to ensure that neighborhood concerns are addressed.
FISCAL IMPACT
Funds for the Community Redevelopment Agency loan are available in the Low and Moderate
Income Housing accounts (no. 50718830-66220).
APPROVED AS TO FUNDS AND ACCOUNTS:
helly L ry-Bayle Francisco Gutierrez r
Housing anager Executive Director 0
Community Development Agency Finance & Management Services Agency
NTE/SLB/TG/mlr
Exhibits: 1. Sources and Uses Budget
2. Resolution
3. Agreement
4. DDA
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Sources and Uses Budget
Funding Sources (Permanent Financine)
Source Amount
Federal Tax Credit Equity $7,183,105
Section 8 Loan $416,254
Deferred Developer Fee $83,793
City of Santa Ana RDA Loan $469,000
City of Santa Ana HOME Program Loan $1,500,000
NSHP "Solar" Rebate $54,000
Solar Credits 1603 $69,339
Goodwill Industries Loan $125,000
City of Santa Ana RDA Grant $100,000
City of Santa Ana RDA Land $2,900,000
Total Permanent Financing $12,900,491
Funding Uses
Use Amount
Land Acquisition $2,920,000
New Construction $5,822,284
Architectural and Engineering Fees $994,000
Construction Loan Interest and Fees $616,892
Permanent Financing Origination and Closing Costs $29,163
Legal and Audit Fees $100,000
Operating Reserves $135,494
Appraisal and Market Study $18,000
California Tax Credit Allocation Committee Fees $49,295
Permit Processing Fees $714,420
Marketing $22,550
Furnishings and Appliances $45,100
Soft Cost Contingency $175,362
Developer Profit and Overhead $1,257,930
Total Project Uses $12,900,490
Exhibit 1
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RESOLUTION NO. 2011-
A RESOLUTION OF THE CITY COUNCIL OF
SANTA ANA MAKING CERTAIN FINDINGS WITH
RESPECT TO THE CONSIDERATION TO BE
RECEIVED BY THE COMMUNITY
REDEVELOPMENT AGENCY OF THE CITY OF
SANTA ANA PURSUANT TO A DISPOSITION AND
DEVELOPMENT AGREEMENT BETWEEN THE
AGENCY AND VISTA DEL RIO HOUSING
PARTNERS, L.P., FOR THE SALE OF CERTAIN
REAL PROPERTY AND APPROVING THE SALE
OF SAID REAL PROPERTY UPON THE TERMS
AND CONDITIONS CONTAINED IN THAT
AGREEMENT
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA, AS
FOLLOWS:
Section 1: The City Council of the City of Santa Ana hereby finds, determines and
declares as follows:
A. The Community Redevelopment Agency of the City of Santa Ana
(hereinafter referred to as the "Agency") is engaged in activities necessary
to execute and implement the Redevelopment Plan for the Merged
Redevelopment Projects, including strengthening of public-private
partnerships to provide more affordable housing, and particularly to
provide decent, safe, sanitary, and affordable housing to the lower income
citizens of the City of Santa Ana.
B. In order to implement the Redevelopment Plan, the Agency
proposes to sell said real property located at 1600 W. Memory Lane (the
Property) pursuant to the terms and provisions of a Disposition and
Development Agreement (hereinafter referred to as the "Agreement")
between the Agency and Vista del Rio Housing Partners, L.P., a limited
partnership ("Developer"), which is on file in the office of the Executive
Director of the Agency.
C. Developer plans to develop a 41 unit, handicapped accessible
affordable rental housing project on the 3.2 acre vacant site owned by the
Agency. The term of affordability for such units will be fifty-five (55) years.
Exhibit 2
1
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D. The consideration for the Properties is not less than the fair market
value of the land at the use and with the long term affordability covenants
and conditions and development costs authorized by the sale.
E. The Agreement contains all of the provisions, terms, conditions and
obligations required by the state and local laws, as well as long-term
affordability covenants benefiting the Agency and the community.
F. Developer possesses the qualifications and financial resources
necessary to acquire and insure development of the Properties as the 41
units shall be rented to qualified low income persons in accordance with the
purpose and objectives of the Redevelopment and Implementation Plan.
G. Pursuant to the provisions of the California Redevelopment Law, the
Agency and the City Council have held a duly noticed joint public hearing on
the proposed sale of the Properties in compliance with Health and Safety
Code section 33433.
Section 2. The City Council has considered all terms and conditions of the
proposed sale to Developer and hereby finds and determines that the sale and
development of the Property pursuant to the Agreement is in the best interest of the City
of Santa Ana and the health, safety and welfare of its residents, and is in accord with the
public purpose and provisions of the applicable state and local laws.
Section 3. The City Council hereby finds and determines that the consideration
for the sale of the Properties pursuant to the Disposition and Development Agreement is
not less than the fair market value of the Property determined in accordance with the
covenants and conditions governing the sale.
Section 4. The sale of the Property by the Agency to Developer upon the terms
and conditions contained in the Agreement is hereby approved.
Section 5. The Clerk of the Council shall attest to and certify the vote adopting
this Resolution.
2
?961117-Me,
ADOPTED this day of , 2011.
Miguel A. Pulido
Mayor
APPROVED AS TO FORM:
City Attorney
By:
Lisa E. Storck
Assistant City Attorney
AYES:
NOES:
Councilmembers:
Councilmembers:
ABSTAIN: Councilmembers:
NOT PRESENT: Councilmembers:
CERTIFICATION OF ATTESTATION AND ORIGINALITY
I, MARIA D. HUIZAR, Clerk of Council, do hereby attest to and certify the attached
Resolution No. to be the original resolution adopted by the City Council
of the City of Santa Ana on 2011.
Date:
Clerk of Council
City of Santa Ana
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?i11 7 i?
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Community Redevelopment Agency
20 Civic Center Plaza (M-37)
P.O. Box 1988
Santa Ana, California 92702
Attention: Executive Director
LOAN AGREEMENT
by and among the
CITY OF SANTA ANA,
COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA
And
VISTA DEL RIO HOUSING PARTNERS, L.P.,
Dated: March_, 2011
EXHIBIT 3
DOCSOC/ 1475221 v5/200272-0004
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TABLE OF CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION ..............................................................................2
1.1 Defined Terms ...............................................................................................................2
1.2 Singular and Plural Terms ...........................................................................................10
1.3 References and Other Terms .....
10
1.4 ..................................................................................
Exhibits Incorporated
..................................................................................................10
2. [RESERVED] ..................................................
10
........................................................................
3. SCOPE OF WORK/ PROJECT BUDGET .............................................................................10
4. [RESERVED] ..................................................
10
........................................................................
5. LOA NS: ................
1
...................................................................................................................
0
5.1 City/HOME Loan ........................................................................................................10
5.2 Agency Loan ...............................................................................................................11
5.3 Other Terms and Conditions of the Loans ..................................................................11
6. CON DITIONS TO DISBURSEMENT OF LOAN PROCEEDS ...........................................12
6.1 Conditions Precedent ....................................................
12
6.2 ..............................................
Disbursement Procedures for Loans
6
3 ...........................................................................13
First Disbursement
.
6.4 ......................................................................................................14
Termination for Failure of Condition
6.5 ..........................................................................14
Any Disbursement
6
6 .......................................................................................................14
Final Disbursement
.
6.7 .....................................................................................................14
Waiver of Conditions
6.8 ..................................................................................................15
Disbursement Requests
6
9 ...............................................................................................15
Manner of Disbursement
.
6
10 .............................................................................................15
Cost Overruns
.
6.11 ..............................................................................................................16
Cost Savings
6.12 ................................................................................................................16
Retainage .
6.13 ....................................................................................................................16
Waiver of Disbursement Conditions
6
14 ...........................................................................17
Modification of Disburseme
t C
diti
d P
. n
on
ons an
rocedures ........................................17
6.15 Closing Costs and Fees ............................
17
...................................................................
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY17
7.1 Use Covenants and Restrictions ............................................
17
7.2 ......................................
Affordable Gross Starting Rents (Less Reasonable Utility Allowance) .....................18
7.3 Rental Vouchers ......................................................................
19
7.4 ....................................
Rent Increases
.............................................................................................................20
8. [RESERVED.] ............
.............................................................................................................20
9. GENERAL PROVISIONS AND WARRANTIES .............
20
....................................................
9.1 Formation, Qualification and Compliance ....................................
20
9.2 ..............................
Execution and Performance of Loan Documents
.......................................................20
9.3 Financial and Other Information .................................................................................21
9.4 No Material Adverse Change
......................................................................................21
i
DOC SOC/ 1475221 v5/200272-0004
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9.5 Tax Liability .........................................................
9.6 Governmental Requirements ................................
9.7 Rights of Others ...................................................
9.8 Litigation ..............................................................
9.9 Bankruptcy ...........................................................
9.10 Information Accurate
10.
11
12.
9.11 Conflicts of Interest ..............................................
9.12 Nonliability of City Officials and Employees......
9.13 No Assignment .....................................................
9.14 Applicable Law ....................................................
9.15 Third Parties .........................................................
9.16 Control of Property ..............................................
CONDITIONS FOR CONSTRUCTION .........................
................................................. 21
................................................. 21
................................................. 22
................................................. 22
................................................. 22
................................................. 22
................................................. 22
................................................. 22
................................................. 22
................................................. 22
................................................. 22
................................................. 23
..................................................... 23
10.1 Permits and Approvals ...........................................................
23
10.2 ....................................
Commencement and Completion of Construction ..................................................... .
.23
10.3 Change Orders ............................................................................................................ .23
10.4 Entry and Inspection .................................................................................................. .23
10.5 Compliance with Section 3 Clause ............................................................................ .23
10.6 Construction Information ........................................................................................... .25
10.7 Protection Against Liens ..................................... 25
....................................................... .
FEDE RAL (HOME PROGRAM) AND STATE REDEVELOPMENT COVENANTS .......25
11.1 [Intentionally Omitted] ................................................................................................25
11.2 Qualification as Affordable Housing .......................................................................... 25
11.3 Tenant and Participant Protection ........................................... 25
11
4 ....................................
[Intentionall
O
itt
d
. y
m
e
] ................................................................................................ 26
11.5 Handicapped Accessibility ...................................................... 26
11.6 ....................................
Use of Debarred, Suspended, or Ineligible Participants .............................................. 26
11.7 Maintenance of Drug-Free Workplace ...................................... 26
11
8 ..................................
Lead-Based Paint
.
11.9 ........................................................................................................
Affirmative Marketing 26
11.10 ................................................................................................
Equal Opportunity and Fair Housing 26
26
11.11 ..........................................................................
Property Standards
11.12 ......................................................................................................
[Intentionally Omitted] 26
11.13 ................................................................................................
Other Program Requirements 26
11.14 ......................................................................................
Request for Disbursements of Funds 26
11.15 ..........................................................................
Eligible Costs 26
11.16 ..............................................................................................................
Records and Reports 26
11
17 ...................................................................................................
Reserved 27
.
11.18 ......................................................................................................................
Conflict of Interest 27
11.19 ......................................................................................................
Monitoring 27
11
20 ..................................................................................................................
Recertification of Tena
t I 27
. n
ncome ................................................................................ 27
11.21 Other HOME Program Requirements ............................................ 27
11.22 .............................
Controlling Covenants
................................................................................................ 27
MAIN TENANCE, MANAGEMENT, OPERATION, PRESERVATION AND REPAIR OF
PROPERTY ........................
..................................................................................................... 27
12.1 Maintenance .........................
27
ii
DOCSOC/ 1475221 v5/200272-0004
8OB-11
12.2 Compliance with Laws ................................................................................................28
12.3 Taxes and Impositions .................................................................................................28
12.4 [Intentionally omitted] ......................................................... 29
12
5 ......................................
Project O
ti
B
d
t .
. pera
ng
u
ge
........................................................................................... .29
12.6 Replacement Reserve Account .................................................................................. .29
13. NON DISCRIMINATION COVENANTS ............................................................................. .29
13.1 Obligation to Refrain from Discrimination ................................................................ .29
13.2 Nondiscrimination in Employment ............................................................................ .30
13.3 Statutory Nondiscrimination Covenants .................................................................... .30
13.4 In Affordable Housing Restrictions ........................................................................... . 31
14. ENVIRONMENTAL MATTERS .......................................................................................... .31
14.1 Representation and Warranty ..................................................................................... .31
14.2 Compliance with Environmental Laws ...................................................................... .31
14.3 Presence of Hazardous Materials ............................................................................... .31
14.4 Notice of Environmental Matters ............................................................................... .32
14.5 Environmental Indemnification by the Vista Del Rio ................................................ .32
15. OTHER AFFIRMATIVE COVENANTS .............................................................................. .32
15.1 Existence .................................................................................................................... . 32
15.2 Protection of Lien ....................................................................................................... .32
15.3 Notice of Certain Matters ........................................................................................... .32
15.4 Further Assurances ......................................................................................................33
15.5 Annual Audited Financial Statements ......................................................................... 33
15.6 Audits and Access to Records ...............................................
. 33
15.7 .
....................................
Termite Inspection Re
ort
p
........................................................................................... 34
16. OTHER NEGATIVE COVENANTS ................................... 34
...................................................
16.1 Default on Senior Loan .................................................. 34
16.2 .............................................
Transfers of Interest in Property or Agreement .......................................................... 34
17. [RESERVED] ..........................................
. 36
........
.......................................................................
18. INDEMNIFICATION .......................................... 36
...................................................................
18.1 Nonliability of Agency and City ............................................ 36
18.2 .....................................
Indemnity
18.3 ....................................................................................................................
Reimbursement of City and A
enc 37
g
y ........................................................................... 37
19. INSURANCE, CASUALTY AND CONDEMNATION ........................................................ 37
19.1 Policies Required ........................................................................................................ 37
19.2 City Attorney and/or City Risk Manager May Modify ............................................... 38
19.3 Claims and Proceedings ........................................................ 38
19
4 ......................................
Deliver
of Proceeds t
Cit
/A
. y
o
y
gency ......................................................................... 38
19.5 Application of Casualty Insurance Proceeds ............................................................... 39
19.6 Method of Disbursement and Undisbursed Funds ...................................................... 39
19.7 Failure to Satisfy Conditions ................................................. 39
19
8 ......................................
Restoration
.
19
9 ..................................................................................................................
Condemnation
Treat
t
f C
i 39
. ;
men
o
ompensat
on .............................................................. 40
19.10 Waiver of Subrogation 4
................................................................................................ 0
DOC SOC/ 1475221 v5/200272-0004
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20. DEFAULTS AND REMEDIES ..............................................................................................40
20.1 Events of Default .........................................................................................................40
20.2 Remedies Upon Default ............................................................................................ ..42
20.3 Cumulative Remedies: No Waiver ............................................................................ ..42
21. MISCELLANEOUS ................................................................................................................43
21.1 Obligations Unconditional and Independent ...............................................................43
21.2 Notices ...................................................................................................................... ..43
21.3 Survival of Representations and Warranties ............................................................. ..44
21.4 [Intentionally Omitted] .............................................................................................. ..44
21.5 Binding Effect; Assignment of Obligations .............................................................. ..44
21.6 Prior Agreements; Amendments; Consents .............................................................. ..44
21.7 Governing Law .......................................................................................................... ..44
21.8 Severability of Provisions ......................................................................................... ..44
21.9 Headings .................................................................................................................... ..44
21.10 Conflicts .................................................................................................................... ..44
21.11 Time of the Essence .................................................................................................. ..45
21.12 Conflict of Interest .................................................................................................... ..45
21.13 Warranty Against Payment of Consideration ........................................................... ..45
21.14 Nonliability of City and Agency Officials and Employees ....................................... ..45
21.15 Plans and Data ........................................................................................................... ..45
21.16 Authority to Enter Agreement ................................................................................... ..45
21.17 Subsequent Approvals ............................................................................................... ..45
21.18 City, Agency and Authority Approvals and Actions ................................................ ..45
EXHIBIT LIST
Exhibit A - Legal Description of Property
Exhibit B - Affordability Restrictions on Transfer of Property
Exhibit C - City/HOME Loan Deed of Trust
Exhibit D - City/HOME Loan Note
Exhibit E - Agency Loan Deed of Trust
Exhibit F - Agency Loan Note
Exhibit G - Scope of Work/Budget
Exhibit H - Marketing Plan
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DOC SOC/ 1475221 v5/200272-0004
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LOAN AGREEMENT
This LOAN AGREEMENT (the "Agreement") dated, for identification purposes only, as of
March , 2011, is made and entered into by and among the COMMUNITY
REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA, a public body, corporate and
politic (the "Agency"), the CITY OF SANTA ANA, a charter city and municipal corporation
(referred to herein separately as the "City"), and VISTA DEL RIO HOUSING PARTNERS, L.P.,
a California limited partnership ("Vista Del Rio"), 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 Program to be used in accordance with
applicable HOME Regulations (as those terms are defined below);
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. The Agency is authorized by the Community Redevelopment Law of the State of
California (Health and Safety Code sections 33000 et seq.) ("CRL") to expend funds to increase the
supply of very low and low-income housing available at affordable housing costs;
D. In part to further this goal, the Agency has created the Merged Project Area, within
the City (the "Project Area"), and adopted a Redevelopment Plan for the redevelopment of the
Project Area. In accordance with Section 33334.2, et seq., of the CRL, Agency sets aside a portion of
the tax increment revenues it receives from the Merged Project Area in a separate low and moderate
housing fund, which Agency uses for the construction, preservation, and rehabilitation of affordable
housing for low income households;
E. Vista Del Rio has entered into an agreement (the "Disposition and Development
Agreement" as amended by the "First Amendment to Disposition and Development Agreement",
"Second Amendment to Disposition and Development Agreement, and "Third Amendment to
Disposition and Development Agreement"; collectively, the "DDA") with the Agency to acquire and
develop approximately 3.2 acres of real property, within the Project Area, located generally at 1600
Memory Lane in the City of Santa Ana, California, and legally described in Exhibit A attached
hereto (the "Property"). The loans referenced herein shall assist Vista Del Rio with the cost of
construction of said Property that is improved with a multifamily residential housing development.
F. In furtherance of the HOME Program, the CRL, and the Redevelopment Plan, Vista
Del Rio has applied to City and Agency for loans with which to:
DOCSOC/ 1475221 v5/200272-0004
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I. provide deeper affordability for a longer term, as well as acquire and develop
the Property, and;
2. thereafter to maintain, operate and professionally manage the Property as
decent, safe, sanitary and affordable rental housing.
G. City desires to make a loan to Vista Del Rio pursuant to the terms and conditions set
forth herein in order to make possible the construction of the Property, thereby eliminating blight
while expanding the supply of decent, safe, sanitary and affordable housing.
H. Agency desires to make a loan to Vista Del Rio pursuant to the terms and conditions
set forth herein in order to make possible the construction of the Property, thereby eliminating blight
while expanding the supply of decent, safe, sanitary and affordable housing.
1. If there is any discrepancy between Federal and State guidelines with regard to any of
the terms and conditions contained herein, the more stringent shall apply.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, City and Vista Del Rio agree as follows:
1. 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. In the event of a
conflict between the definitions set forth in the DDA, as amended, and the definitions set forth in this
Agreement, the definitions set forth in this Agreement shall control.
"Affordable Housing" means housing operated in accordance with the requirements
of 24 CFR 92.252 and the rents governed by California Health and Safety Code Section 50052.5.
"Affordable Rent" means the monthly rents that are set forth in more detail in
Section 7 of this Agreement.
"Affordability Restrictions on Transfer of Property" means that certain
Affordability Restrictions on Transfer of Property, which contains the covenants and restrictions
pertaining to the operation, maintenance, and management of the Project as Affordable Housing for a
term of not fewer than 55 years, which covenants and restrictions shall run with the land, to be
executed by the Agency, the City, and Vista Del Rio and recorded against the Property in the Official
Records of the County. The Affordability Restrictions on Transfer of Property and the legally
required notice thereof are attached hereto as Exhibit B and incorporated herein.
"Agency" means the Community Redevelopment Agency of the City of Santa Ana, a
public body, corporate and politic, exercising governmental functions and powers, and organized and
existing under the CRL. The principal office of the Agency is located at 20 Civic Center Plaza, Santa
Ana, California, 92702. Agency shall also refer to the City where the context dictates, to the effect
that City shall have all rights granted to the Agency hereunder.
"Agency Loan" means a loan in the original principal amount of up to FOUR
HUNDRED SIXTY-NINE THOUSAND DOLLARS ($469,000.00) to be made to Vista Del Rio by
2
DOCSOC/ 1475221 v5/200272-0004
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the Agency solely from tax increment moneys set aside in Agency's low and moderate income
housing fund.
"Agency Loan Deed of Trust" means the deed of trust to be recorded against the
Property in the Official Records of the County, in substantially the form attached hereto as Exhibit E,
which shall be executed by Vista Del Rio pursuant to Section 5.2.2 in order to secure the Agency
Loan Note.
"Agency Loan Note" means that certain promissory note in the original principal
amount of up to FOUR HUNDRED SIXTY-NINE THOUSAND DOLLARS ($469,000.00) in
substantially the form attached hereto as Exhibit F, which shall be executed by Vista Del Rio in favor
of Agency to evidence the obligation of Vista Del Rio to repay the Agency Loan.
"Area Median Income" and "AMI" means the median income for the Orange
County, California PMSA as most recently determined by HUD.
politic.
"Authority" means the Santa Ana Housing Authority, a public body, corporate and
"Building Permit" means the grading and building permit(s) issued by City and
required for the Construction.
"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 30.
"City" means the City of Santa Ana, California, a charter city and municipal
corporation. "City" shall also refer to the Agency where the context dictates, to the effect that
Agency shall have all the rights granted to the City hereunder other than the right to receive
repayment of the City/HOME Loan.
"City/HOME Loan" means a loan in the original principal amount of up to ONE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) to be made to Vista Del Rio
by City from HOME Program funds pursuant to Article 5 of this Agreement.
"City/HOME Loan Deed of Trust" means the deed of trust to be recorded against
the Property in the Official Records of the County, in substantially the form attached hereto as
Exhibit C, which shall be executed by Vista Del Rio pursuant to Section 5.1.2 in order to secure the
City/HOME Loan Note.
"City/HOME Loan Note" means that certain promissory note in the original
principal amount of up to ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($1,500,000.00) in substantially the form attached hereto as Exhibit D, which shall be executed by
Vista Del Rio in favor of City to evidence the obligation of Vista Del Rio to repay the City/HOME
Loan.
"Close of Escrow" shall mean the date upon which the Deeds of Trust are recorded
in the Official Records of the County.
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"Closing Statement" means the final statement of Vista Del Rio's Escrow account
for the purchase of the Property pursuant to the DDA.
"Construction" means the demolition and construction activities required to
construct the 41 residential unit, multi-family project specified in City Site Plan Review No. 2009-
02.
"Construction Contract" means each and every contract between Vista Del Rio, the
General Contractor, and/or any subcontractor for the construction of the Improvements, or any part
thereof, including construction of any on-site or off-site improvements included in the Scope of
Development, the land use entitlement approved by the City. The Construction Contract between
Vista Del Rio and the General Contractor shall be for a fixed fee to complete all work to be
performed or caused to be performed by the General Contractor under such Construction Contract.
Each Construction Contract shall be reviewed and reasonably approved (or disapproved) by
Executive Directors, with each contract to include: (i) a full recitation of Section 3 and the Section 3
Clause with an express acknowledgement and agreement by the General Contractor and each
subcontractor, as applicable, to fully comply with the Section 3 Clause, (ii) an express
acknowledgement and agreement by the General Contractor and each subcontractor, as applicable,
that as a condition precedent to the final payment under its contract, the General Contractor or
subcontractor, as applicable, shall provide written evidence, in form reasonably satisfactory to the
Executive Directors and/or HUD, that it and all its subcontractor(s) have complied with the Section 3
Clause in completing the development of the Project, and (iii) reference to all other applicable federal
regulations and laws based on the final federal funding sources, if any, to which such General
Contractor or subcontractor, as applicable, must comply in undertaking the construction and
development of the Project; provided it is understood by the parties that it is and shall remain
primarily the Vista Del Rio's obligation to obtain and submit all required Section 3 Clause
documentation. The Construction Contract shall include any and all provisions required by the CRL,
the Section 8 requirements and the HOME Regulations, as applicable.
"Construction Lender" means the maker of the Construction Loan.
"Construction Loan" means that certain construction loan from the Construction
Lender to Vista Del Rio.
"County" means the County of Orange, California.
"Deeds of Trust" means the Agency Loan Deed of Trust and the City/HOME Loan
Deed of Trust.
"DDA" means that Disposition and Development Agreement entered into by
Agency, Authority and Vista Del Rio and dated as of July 20, 2009, as amended by the First
Amendment to Disposition and Development Agreement dated as of March 15, 2010, that Second
Amendment to Disposition and Development Agreement dated as of December 20, 2010, and that
Third Amendment to Disposition and Development Agreement dated as of
"Environmental Laws" means any federal, state or local law, statute, ordinance or
regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous
Materials including, but not limited to: (i) sections 25115, 25117, 25122.7,or 25140 of the California
Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law),
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(ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-
Presley-Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and
Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.C.
section 1317), (vi) Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. section
6901, et seq. (42 U.S.C. section 6903, (vii) Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. section 9601 et seq., or (viii) any state or
federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit,
approval, authorization, license, variance or permission required by any governmental authority
having jurisdiction.
"Escrow" means Escrow No
"Escrow Holder" means First American Title Company in Santa Ana, California.
"Event of Default" has the meaning set forth in Section 20.1.
"Executive Directors" means, collectively, the City Manager of the City and/or the
Executive Director of the Agency, and/or the Executive Director of the Authority, and/or the
authorized designee(s) of either of them.
"Extremely Low Income" means 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 annually published by HUD.
"General Contractor" means the general contractor to be hired by Vista Del Rio to
engage and supervise the subcontractors in the performance and completion of the construction of the
Improvements and all other on-site and off-site improvements required to be constructed in
connection with the Project, all in accordance with the Scope of Development, and the land use
entitlement to be approved by City. The General Contractor shall be reasonably acceptable to and
approved by the Executive Directors, in their reasonable discretion. The parties acknowledge that
the General Contractor will not be performing actual construction work for any portion of the
Project, but instead shall hire subcontractors, subject to all applicable federal, state and local laws,
rules and regulations, including without limitation the HOME Regulations, Section 8 Requirements,
Section 3, the CRL, and all other applicable Governmental Requirements.
"General Partner(s)" means the General Partners of Vista Del Rio.
"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.
"Governmental Requirements" means all applicable laws, ordinances, statutes,
codes, rules, regulations, orders, and decrees of the United States, the State of California, the County,
the City, or any other political subdivision with jurisdiction over property within the City including
the Authority, and of any other political subdivision, agency, or instrumentality exercising
jurisdiction over the Agency, Vista Del Rio or Property, including all applicable federal, state, and
local occupation, safety and health laws, rules, regulations and standards, applicable state and labor
DOC SOC/ 1475221 v5/200272-0004
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standards, applicable prevailing wage requirements, the City zoning and development standards, City
permits and approvals, building, plumbing, mechanical and electrical codes, as they apply to work
undertaken pursuant to this Agreement, and all other provisions of the City and its Municipal Code
(as they apply to work undertaken pursuant to this Agreement), and the Unruh Civil Rights Act, Civil
Code § 51 et seq.
"Grant Deed" means a grant deed for the conveyance of the Property to Vista Del
Rio in a form reasonably acceptable to Vista Del Rio and the Executive Directors.
"HAP Contract" shall mean, collectively, the initial "Agreement to Enter into
Housing Assistance Payments Contract" (such contract may be referred to as the "AHAP") and the
initial Housing Assistance Payments Contract to be entered into by and between Authority and Vista
Del Rio expressly subject to all Section 8 Requirements and other applicable federal laws and
regulations and pursuant to which Authority will agree to provide Project Based Section 8 assistance
to a specified number of Units at the Project in accordance with the DDA, as amended. Pursuant and
subject to HR3221, enacted July 30, 2008, the HAP Contract is expected to be for a term of
effectiveness of fifteen (15) years, expressly subject to all Section 8 Requirements. Renewals, if any,
of the HAP Contract by HUD (and Authority) beyond the first 15 years thereof are and shall remain
subject to the sole and absolute discretion of the Executive Directors and the Section 8 Requirements,
and all provisions of this Agreement, including Section 7.3, et seq. Notwithstanding anything to the
contrary set forth herein or in any other Project Document, the Partnership Agreement, the Senior
Loan Documents, or any other document or instrument entered into by Vista Del Rio, Authority
and/or any third party(ies) relating to the Project or the Property, nothing set forth in any such
instruments shall modify, amend, or alter be construed or deemed to modify, amend or alter any
provision or term of the HAP Contact.
"Hazardous Materials" means any substance, material, or waste which is or
becomes, regulated by any local governmental authority, the State of California, or the United States
government, including, but not limited to, any material or substance which is (i) defined as a
"hazardous waste," "extremely hazardous waste," or "restricted hazardous waste under Section
25115, 25117, or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety
Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous
material," "hazardous substance," or " hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans
and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health
and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v)
petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) designated as "hazardous
substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (ix) defined as
a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq.,(42 U.S.C. section 6903) or (x) defined as "hazardous substances"
pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. section 9601 et seq.
"HOME Compliance Period" means fifteen (15) years from the later to occur of (1)
issuance of the Release of Construction Covenants, (2) the date on which City reports the
Construction of the Project is complete to HUD, or (3) payment in full of all of principal and all
accrued interest on the HOME Loan.
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"HOME Program" shall mean the Title II of the Cranston-Gonzalez National
Affordable Housing Act, as amended, specifically the HOME Investment Partnership Act, 42 U.S.C.
§12701, et seq. and the implementing HOME Regulations at 24 CFR §92.1, et seq., as such law now
exists and as it may hereafter be amended, to the extent applicable to the Project.
"HOME Regulations" shall mean the implementing regulations of the HOME
Program set forth at 24 CFR §92.1, et seq. as such regulations now exist and as they may hereafter be
amended, to the extent applicable to the Project. Vista Del Rio covenants hereunder to comply with
the CRL, the Section 8 requirements, and all applicable HOME Regulations in the performance of
this Agreement and the other Project Documents, whichever are more restrictive. In implementation
of these requirements, this Agreement, the Project, and all eligible contributions and expenditures
hereunder shall conform to the following:
a. The housing developed hereunder does and shall qualify as affordable
housing under 24 CFR §92.252 because each Unit shall be rented at an Affordable Rent to
households whose annual income is in compliance with the HOME Regulations; and
b. This Agreement serves as the written agreement that imposes and enumerates
(by meeting or exceeding) all of the affordability requirements from 24 CFR §92.252; the property
standards requirements of 24 CFR §92.251; and income determinations made in accordance with 24
CFR §92.203.
"HOME Units" shall mean eleven (11) of the Units which shall be designated as
HOME Units and shall be subject to all applicable HOME Regulations. All HOME Units shall be
"Low HOME" units pursuant to the HOME Regulations. The HOME Units shall be "fixed" HOME
Units, such that the specific Units designated as HOME Units shall not change. Vista Del Rio shall
designate eleven (11) of the Units as HOME Units, subject to approval by the Executive Directors
and in accordance with this paragraph, the HOME Program, and the HOME Regulations.
"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).
"Indemnitees" means City, Agency, and Authority and their past and present elected
officials, officers, employees, attorneys, contractors, elective and appointive boards and
commissions, representatives, agents, and volunteers..
"Limited Partner" means the Limited Partners of Vista Del Rio, and their
successors and assigns.
"Loan Documents" means, collectively, this Agreement, the Notes, the Deeds of
Trust, the Affordability Restrictions on Transfer of Property, and any other agreement, document, or
instrument that the City or Agency requires in connection with the execution of this Agreement or
from time to time to effectuate the purposes of this Agreement.
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"Loans" means the City/HOME Loan and the Agency Loan.
"Notes" means the City/HOME Loan Note and the Agency Loan Note.
"Partnership Agreement" means the Agreement of Vista Del Rio Housing Partners,
L.P., dated August 1, 2008, which was amended by the First Amendment to Agreement of Limited
Partnership dated on or about June 8, 2009, as may be amended in the future with the approval of the
Executive Directors.
"Portable Voucher" shall mean Section 8 tenant-based vouchers, certificates of
family participation under 24 CFR part 882 (Rental Certificate Program), rental vouchers under 24
CFR part 887 (Rental Voucher Program), and comparable documents evidencing participation in a
program pursuant to the HOME Investment Partnership Act, 42 U.S.C. § 12701, et seq. and the
implementing regulations located at 24 CFR part 92, as such now exist and as may hereafter be
amended, or other tenant-based rental assistance programs.
"Project" means the acquisition, construction, operation, maintenance, and
management of the Property as Affordable Housing in accordance with the Scope of Work, this
Agreement and the other Project Documents.
"Project Based Section 8" shall mean housing choice vouchers held by the City
and/or Authority pursuant to annual and/or multi-year contribution contract(s) with HUD, which may
be used to assist specific housing units as authorized by and subject to Section 8(o)(13) of the U.S.
Housing Act of 1937, 42 U.S.C. Section 1437f(o)(13), and the implementing regulations set forth at
24 CFR Part 983, and HR3221, enacted July 30, 2008. Pursuant to Section 311.7 of the DDA,
Authority has agreed to provide no less than seven (7) but no more than ten (10) Project Based
Section 8 vouchers as assistance for an equal number of Units, subject to: (1) all Section 8
Requirements, (2) the fulfillment or waiver of the Agency's Conditions Precedent, including without
limitation Vista Del Rio securing financing in accordance with Section 311 of the DDA, and (3) the
provisions of Section 311.7 of the DDA. In all events, Authority's obligation to provide Project
Based Section 8 assistance to the Project is expressly conditioned upon the satisfactory completion of
environmental review and the Authority's receipt of a release of federal funds from HUD.
Accordingly:
Notwithstanding any provision of this Agreement, the parties hereto agree and
acknowledge that this Agreement does not constitute a commitment of federal funds, and that such
commitment of funds or may occur only upon satisfactory completion of environmental review and
receipt by Authority and/or City, as applicable, of a release of funds from the U.S. Department of
Housing and Urban Development under 24 CFR Part 58. The parties further agree that the provision
of any federal funds to the Project is conditioned on Authority's and/or City's, as applicable,
determination to proceed with, modify or cancel the Project Based Section 8 funding based on the
results of a subsequent environmental review.
The parties hereto are further prohibited from undertaking or committing any federal
funds to physical or choice-limiting actions, including property acquisition, demolition, movement,
rehabilitation, conversion, repair or construction prior to the environmental clearance; the parties
understand that the violation of this provision may result in the denial of any federal funds under this
Agreement.
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"Project Budget" means the line-item budget for the Project attached hereto as
Exhibit G, 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.
"Project Documents" means this Agreement, the Disposition and Development
Agreement, and the other Loan Documents, the Affordability Restrictions, the Agreement to enter
into Housing Assistance Payments Contract and Housing Assistance Payments Contract to be entered
into by the Authority and Vista Del Rio in connection with the Authority's provision of Project
Based Section 8 (defined in the DDA) assistance to Project, and all other documents, agreements and
instruments to be executed by Vista Del Rio in furtherance of the Project.
"Property" means the approximately 2.74 acres of real property, within the Project
Area, located generally at 1600 Memory Lane in the City of Santa Ana, California. The Property is
more fully described in the "Legal Description" of the Property attached hereto as Exhibit A and
incorporated herein by reference.
"Release of Construction Covenants" means the Release of Construction
Covenants described in Section 310 of the DDA, a form of which is attached to the DDA as
Attachment No. 6.
"Section 504" means section 504 of the federal Rehabilitation Act of 1973, codified
at 29 U.S.C. § 701 et seq., and its implementing regulations located at 24 CFR Part 8.
"Section 8 Requirements" means Section 8(o)(13) of the U.S. Housing Act of 1937,
42 U.S.C. Section 1437f(o)(13), and the implementing regulations set forth at 24 CFR Part 983.
Loan Note(s).
"Senior Lender" means
or any other holder of the Senior
"Senior Loan" shall mean the senior loan being made by the Senior Lender,
concurrent to the Loans for payment of a portion of the Construction costs incurred by Vista Del Rio
relating to the Project, as approved by the Executive Directors, 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, all of
which shall be subject to the approval of the Executive Directors.
"Senior Loan Note" means the promissory note evidencing the Senior Loan from
the Senior Lender.
"Term" the terms and conditions contained herein shall remain in effect for fifty-five
(55) years, from the date the Release of Construction Covenants is recorded against the Property in
the Official Records of the County.
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"Units" means the forty (40) for-rent, multi-family residential units (excepting the
single manager's unit) in the Project.
"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 annually published by HUD.
"Vista Del Rio" means Vista Del Rio Housing Partners, L.P., a California limited
partnership, and its successors and assigns.
"Vista Del Rio's Representative" shall mean the Chief Executive Officer of the
General Partner of Vista Del Rio or his/her designee.
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. [RESERVED]
3. SCOPE OF WORK/ PROJECT BUDGET
A Scope of Work and Project Budget for the Property are attached hereto as Exhibit G. Any
material change to the Scope of Work and/or Project Budget requested by Vista Del Rio shall be
subject to the prior written approval of the Executive Directors. The design and Construction of the
Project shall at all times comply with the DDA, the Scope of Development, the Scope of Work, the
Project Budget, Section 504, the CRL, the HOME Regulations, the Section 8 Requirements, and all
applicable Environmental Laws and Governmental Requirements.
4. [RESERVED]
5. LOANS:
5.1 City/HOME Loan
5.1.1 Amount and Purpose. Subject to the terms and conditions of this
Agreement, City agrees to make a loan of HOME Program funds to Vista Del Rio in the original
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principal amount of up to ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($1,500,000.00) (the "City/HOME Loan") for the Construction of the Project.
5.1.2 City/HOME Note and Deed of Trust. The City/HOME Loan shall be
evidenced by the City/HOME Loan Note in substantially the form attached hereto as Exhibit C. The
City/HOME Loan shall be secured by the City/HOME Loan Deed of Trust in substantially the form
attached hereto as Exhibit B. The City/HOME Loan Deed of Trust shall be a deed of trust
encumbering the Property, subordinate only to the Senior Loan(s) made to Vista Del Rio.
5.1.3 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. The
City/HOME Loan Note shall be subordinate only to the Senior Loan, and shall continue in full force
and effect for the entire HOME Compliance Period.
5.1.4 Use of City/HOME Loan Proceeds. Proceeds of the City/HOME Loan shall
be used only for costs incurred by Vista Del Rio to construct the Improvements as set forth in the
approved Project Budget.
5.2 Agency Loan
5.2.1 Amount and Purpose. Subject to the terms and conditions of this
Agreement, Agency agrees to make the Agency Loan to Vista Del Rio from tax increment money in
the original principal amount of up to FOUR HUNDRED SIXTY-NINE THOUSAND DOLLARS
($469,000.00) (the "Agency Loan") for the Construction of the Project. The Agency Loan does not
include the $100,000 reimbursement to be made by the Agency to Vista Del Rio pursuant to
Section 201 of the DDA for the extra costs incurred by Vista Del Rio for the construction of the
entry-way to the Project in excess of City Municipal Code requirements.
5.2.2 AA2ency Note and Deed of Trust. The Agency Loan shall be evidenced by
the Agency Loan Note in substantially the form attached hereto as Exhibit F. The Agency Loan shall
be secured by the Agency Loan Deed of Trust in substantially the form attached hereto as Exhibit E.
The Agency Loan Deed of Trust shall be a deed of trust encumbering the Property, subordinate to the
Senior Loan(s) and the City/HOME Loan made to Vista Del Rio.
5.2.3 Agency Loan Terms. The terms and conditions of the Agency Loan are as
set forth in the Agency Loan Note which is a residual receipts note. The Agency Loan Note shall be
subordinate only to the Senior Loan and the City/HOME Loan, and shall continue in full force and
effect until the Agency Loan is repaid in full.
5.2.4 Use of Agency Loan Proceeds. Proceeds of the Agency Loan shall be used
only for costs incurred by Vista Del Rio to construct the Improvements as set forth in the approved
Project Budget.
5.3 Other Terms and Conditions of the Loans.
5.3.1 The Agency Loan Note and City/HOME Loan Note shall become
immediately due and payable, in the event of any of the following:
(a) failure to complete the Project within the time set forth in the Schedule of
Performance subject to Force Majeure or other extensions as allowed in this Agreement;
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(b) violation of any of the use covenants and restrictions contained in this
Agreement, the Affordability Restrictions on Transfer of Property, or any other Project Document
after the expiration of any applicable notice and cure periods; or
(c) an Event of Default by Vista Del Rio under this Agreement or any other
Project Document which is not timely cured after expiration of any applicable notice and cure
periods pursuant to the terms of this Agreement or the applicable Project Document.
6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
6.1 Conditions Precedent. City's and Agency's respective obligations to disburse any
amount of the Loans and Authority's obligation to provide Project Based Section 8 assistance to the
Project is subject to the satisfaction, or waiver by the Executive Directors, of the following
conditions precedent:
(a) Loan Documents. Vista Del Rio shall have delivered to the Escrow Holder,
signed by the authorized officer or officers of Vista Del Rio, with such signature(s) acknowledged
where necessary, each of the following documents:
(i) the DDA;
(ii) the Grant Deed;
(iii)the City/HOME Loan Note;
(iv) the City/HOME Loan Deed of Trust;
(v) the Agency Loan Note;
(vi) the Agency Loan Deed of Trust; and
(vii) The Affordability Restrictions on Transfer of Property.
(b) Title Insurance. Agency and City shall each have received a 2006 ALTA
Lender's loan policy of title insurance, 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 and Agency as the insured, in a
policy amount of not less than the amount of the Loans, showing Vista Del Rio as the fee owner of
the Property and insuring the Deeds of Trust to be valid priority liens on the Property. The Notes and
Deeds of Trust shall be subordinate to the Senior Loan Note and Senior Loan Deed of Trust. The
Affordability Restrictions on Transfer of Property shall take priority over the Loan Documents
pursuant to City/Agency's request.
(c) Affordability Restrictions on Transfer of Property. Vista Del Rio shall have
delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the Affordability
Restrictions on Transfer of Property pursuant to which, among other things, Vista Del Rio 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 sections 50052.5 and 33334.3, as applicable, and all other
applicable provisions of the HOME Program, the CRL, and the Section 8 Requirements.
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(d) Documents Recorded. This Loan Agreement, the Grant Deed, the Deeds of
Trust and the Affordability Restrictions on Transfer of Property shall have been recorded in the
Official Records of the County.
(e) Request for Notice. For the benefit of City and Agency, 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
and/or Risk Manager 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 Vista
Del Rio contained in this Agreement and the other Loan Documents shall be correct as of the Close
of Escrow as though made on and as of that date, and if requested by the Executive Directors, City
and Agency shall have received a certificate to that effect signed by Vista Del Rio's Representative.
(h) No Default. No Event of Default by Vista Del Rio 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 Vista Del Rio under this Agreement, and if requested by the
Executive Director, City shall have received a certificate to that effect signed by Vista Del Rio's
Representative.
6.2 Disbursement Procedures for Loans.
The Loan proceeds shall be disbursed to finance the construction of the Project. To the
extent practicable, taking into consideration all HOME Regulations relating to the application of
City/HOME Loan proceeds to the construction of HOME Units, Agency Loan and City/HOME Loan
proceeds shall be disbursed on a pro-rata basis (based on the relative principal amounts of the Loans
and the proportionate principal amount of the Loans in comparison to the total, cumulative sources of
funding and financing for the Project). The Loan proceeds shall not be used for any purpose other
than for development related costs incurred by Vista Del Rio, including developer's fee and soft
costs related to development of the Project, all in accordance with the approved Project Budget, with
such costs all subject to the prior review by the Executive Directors. All disbursements shall be
made as reimbursements to Vista Del Rio for costs actually and reasonably incurred by Vista Del Rio
for the construction of the Improvements in accordance with the Project Budget, based on detailed
invoices and/or bills received from the General Contractor, materials suppliers, consultants and
subcontractors that have performed work on the Project. No portion of the Loans shall be disbursed
prior to the Close of Escrow. Subject to satisfaction of all Conditions Precedent set forth herein,
proceeds of the Loans may be disbursed to Vista Del Rio to reimburse Vista Del Rio for Construction
costs incurred prior to the Close of Escrow; provided that proceeds of the Loans shall only be used to
pay a proportionate share of pre-closing Construction costs, based on the initial principal amount of
the Loans compared to the total, cumulative sources of funding and financing for the Project (i.e. the
Loans shall only be disbursed to pay a pro-rata portion of Construction costs, as described above).
Vista Del Rio, Agency and City shall agree on a draw request schedule to ensure that the Agency and
City are provided with frequent updates regarding the status of the construction of the Improvements,
the status of expenditures in accordance with the Project Budget, and the status of invoices submitted
by and payments to the General Contractor, suppliers, consultants, and subcontractors performing
work at the Project.
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6.3 First Disbursement. City's and Agency's obligation to make the first disbursement
of the proceeds of the Loans is subject to satisfaction of the following conditions precedent:
(a) General Contractor. If the Executive Directors have not yet approved the
General Contractor, the Executive Directors shall have approved the identity and qualifications of the
General Contractor.
(b) Construction Contract. If the Executive Directors have not yet approved the
Construction Contract, the Executive Directors shall have approved the Construction Contract.
6.4 Termination for Failure of Condition. If (a) any of the conditions set forth herein
are not timely satisfied or waived by the Executive Directors, and (b) neither City nor Agency are in
default under this Agreement, City and Agency may terminate this Agreement without any further
liability on its part by giving written notice of termination to Vista Del Rio. Upon the giving of such
notice, all principal, interest and other amounts owing under the Notes shall be immediately due and
payable, regardless of any other specified due date.
6.5 Any Disbursement. City's and Agency's obligation to make any disbursement of
the proceeds of the Loans (including the first and final disbursements) is subject to the satisfaction of
the following conditions precedent:
(a) SatisfactoLy Progress. The Executive Directors shall be satisfied, based on
their own inspections or other reliable information, that the Construction is progressing satisfactorily
in conformance with all applicable laws and other requirements (including HOME regulations).
(b) Condition of Title. Either (i) the Executive Directors reasonably believe that
no event has occurred since the Close of Escrow that would give rise to a colorable claim against the
Property (e.g., a mechanic's lien) superior to the claim of City and Agency against the Property with
respect to the subject disbursement, or (ii) City and Agency must have received, at Vista Del Rio's
expense but payable out of the Construction Proceeds, from the title insurer who issued City's and
Agency's LP-10 Title Policies, all endorsements thereto then reasonably required by the Executive
Directors (including, without limitation, CLTA Form 122 - priority of advance endorsements).
(c) Representations and Warranties. The representations and warranties of Vista
Del Rio contained in this Agreement and the other Loan Documents shall be correct in all material
respects as of the date of the disbursement as though made on and as of that date.
(d) No Default. No Event of Default by Vista Del Rio shall remain uncured 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 Vista Del Rio.
6.6 Final Disbursement. City's and Agency's obligation to disburse that portion of the
proceeds of the Loans retained pursuant to Section 6.12 is subject to the satisfaction of the following
additional conditions precedent:
(a) Construction Complete. The construction of the Project shall be complete.
(b) Certificate of Completion and Release of Construction Covenants. Any
portion of the construction requiring inspection or certification by any Governmental Authority shall
have been inspected and certified as complete. Vista Del Rio shall request that the Building
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Department issue a Certificate of Completion pursuant to the City's normal procedures and
requirements, a copy of which shall be delivered to the Executive Directors, in order for final
disbursement to occur. In addition, the Agency shall have issued to Vista Del Rio the Release of
Construction Covenants pursuant to Section 310 of the DDA.
(c) Lien Free. At least one of the following shall have occurred:
(i) Thirty-five (35) days shall have passed since the recording of a valid
notice of completion for the construction, and no mechanic's or material man's lien shall be
outstanding; or
(ii) Ninety-five (95) days shall have passed since actual completion of the
construction, and no mechanic's or materialman's lien shall be outstanding, or Vista Del Rio
shall have bonded over any such lien to Executive Directors' reasonable satisfaction.
6.7 Waiver of Conditions. The conditions set forth pertaining to City's or Agency's
obligation to make disbursements of the proceeds of the Loans are for City's and Agency's benefit
only and the Executive Directors may waive all or any part of such rights by written notice to Vista
Del Rio.
6.8 Disbursement Requests. The proceeds of the Loans shall be disbursed on a line-
item by line-item basis in accordance with the Project Budget and subject to the conditions in this
section. In no event shall City or Agency have any obligation to disburse any amount for any item in
excess of the amount allocated to such item in the Project Budget. Disbursements shall be made only
upon Vista Del Rio's written request in the form of a Disbursement Request showing all costs which
Vista Del Rio intends to fund with such disbursement, itemized in such detail as City or Agency may
reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to City or
Agency, including in any event partial lien releases executed by each contractor and subcontractor
who has received any payment for work performed, and (b) all other documents and information
reasonably required by City and Agency. Disbursement Requests shall be submitted no less than ten
(10) Business Days prior to the date of the requested disbursement, and shall not be submitted more
often than monthly.
Prior to each disbursement by City or Agency of proceeds of the Loans, Vista Del Rio shall
deliver to City and/or Agency and to the Construction Lender a draw request ("Draw Request"), and
all required supporting information as set forth in the Loan Documents or as otherwise reasonably
required by City, Agency, or the Construction Lender in order to provide information for evaluating
the requested disbursement pursuant to customary construction lending practices of institutional
lenders in Southern California.
City, Agency, and the Construction Lender shall notify the others and Vista Del Rio of
approval or disapproval of each Draw Request within five (5) business days after receipt of the Draw
Request, using the Bank's "Disbursement/Change Order Approval Notice". City, Agency, and the
Construction Lender shall have the right, but not the obligation, to discontinue processing Draw
Requests unless and until receipt of notification from the other of approval or disapproval of each
outstanding Draw Request.
6.9 Manner of Disbursement. City and Agency may make any disbursement by check
payable to Vista Del Rio; or on a voucher basis; or by check payable jointly to Vista Del Rio and any
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contractor, subcontractor or other claimant; or directly to any such claimant; or by any other means
reasonably selected by City, or Agency, as applicable.
6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost
reasonably estimated by City, Agency, or Vista Del Rio to be required to complete all matters
included in any line item by $10,000.00 in the Project Budget exceeds the amount allocated to that
line item in the Project Budget, (b) Construction costs for any matters not covered by a specific line
item have been or will be incurred in excess of $10,000.00, or (c) the undisbursed portion of the
proceeds of the Loans is or may be insufficient to pay all Construction costs that may be payable
under the Loan Documents or otherwise in connection with the Construction, Vista Del Rio shall,
within ten (10) days after it receives written notice thereof from City or Agency of any of the
foregoing matters, do one or more of the following:
(a) provide satisfactory evidence to City and/or Agency that Vista Del Rio has
previously paid such excess or otherwise provided for such insufficiency (collectively, the "Excess
Cost") with funds from a source other than the Loans;
(b) reallocate sufficient funds to pay the Excess Cost from funds allocated to
"Contingency" in the Project Budget; provided, however, that the Executive Directors' reasonable
consent to any such reallocation shall be required; or
(c) deposit an amount equal to the Excess Cost in a non-interest bearing account
(the "Overrun Account") with the Construction Lender from which withdrawals may be made only
with the consent of the Executive Directors but which will be exhausted prior to any further
disbursement for any line item, so that any resulting surplus in any line item of the Project Budget
will then be reallocated to the line item(s) in which the Excess Costs are expected to be incurred.
Neither Agency nor City shall have any obligation to make further disbursements until Vista
Del Rio has paid or otherwise provided for the overrun as required above. Amounts deposited by
Vista Del Rio in the Overrun Account for any Excess Costs shall be disbursed by the Construction
Lender prior to the disbursement of any remaining proceeds of the Loans.
6.11 Cost Savings. Upon completion of and disbursement for all matters covered by any
line items in the Project Budget, any remaining undisbursed amounts allocated to that line item shall
be reallocated to "Contingency" and thereafter be available for disbursement in accordance with the
terms of this Agreement.
6.12 Retainage. City and Agency will withhold a Retainage of 10% from each
Disbursement for each of the Construction cost line items of the Project Budget until all conditions to
the final disbursement of Construction costs have been satisfied. City shall not retain funds for
building materials purchased by Vista Del Rio for which Vista Del Rio supplies documentation to
City proving payment in full or for soft costs.
6.12.1 Holdback. The retainage otherwise available for disbursement shall be
subject to a holdback of one hundred twenty-five percent (125%) of the estimated cost (as
determined by the Executive Directors) for "punch-list" items. Such holdback will be released when
all punch-list items have been completed to the satisfaction of City and Agency.
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6.13 Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the
making by City of any disbursement with knowledge that any condition to such disbursement is not
fulfilled shall constitute a waiver of such condition only with respect to the particular disbursement
made, and such condition shall be condition to all further disbursements until fulfilled.
6.14 Modification of Disbursement Conditions and Procedures. The Executive
Directors shall have the authority to modify the disbursement conditions and procedures set forth
herein in order to conform them to the payment provisions of the approved Construction Contract.
6.15 Closing Costs and Fees. Vista Del Rio 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 City's and Agency's policies of title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
7.1 Use Covenants and Restrictions.
A. Vista Del Rio agrees and covenants, which covenants shall run with the land
and bind Vista Del Rio, its successors, its assign and every successor in interest to the Property that
Vista Del Rio will make all Units on the Property available solely to Extremely Low Income and
Very Low Income households at Affordable Rents. The HOME Regulations applicable to the eleven
(11) HOME Units shall be enforced during the entire HOME Compliance Period. Upon expiration
of the HOME Compliance Period, the City and Agency will enforce affordability of said units with
the same income and rent restrictions as the other units, pursuant to the requirements of Section
50052.5 of the Health and Safety Code and the CRL. Vista Del Rio further covenants and agrees that
the Property shall be developed, operated, managed and maintained in accordance with Specific
Development No. 83; Amendment Application 08-11, as approved by the City of Santa Ana Planning
and Building Agency and by the Santa Ana City Council pursuant to Ordinance No. NS-2790 of the
City of Santa Ana, adopted August 3, 2009.
B. The Project shall consist of forty income restricted units (and one unrestricted
manager's unit). There shall be eleven (11) HOME Units. The eleven HOME Units will be fixed
units and shall be distributed throughout the complex with comparable amenities to the other Units.
C. At initial lease up, all households selected to rent and occupy the HOME
Units shall be Very Low Income households and all households selected to rent and occupy the
remaining units shall be Extremely Low Income and Very Low Income households, in accordance
with the schedule set forth in Section 7.2 below. All rental increases shall be in conformance with
federal and state law and approved by the Executive Directors.
D. The rent charged for the on-site property manager's unit shall not be
restricted.
E. Affordable Rents charged to tenants shall be governed by California Health
and Safety Code Sections 50052.5, 50053(b)(1), and 50053(b)(2), and as provided in the HOME
Regulations 24 CFR section 92.2, whichever is less.
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7.2 Affordable Gross Starting Rents (Less Reasonable Utility Allowance). Initial
rents may be recalculated to allowable rental amounts at the time of initial lease-up following
completion of Construction in accordance with any changes in allowable rent and income tables as
published by HUD and the State of California, Department of Housing and Community
Development.
A. Agency and HOME Units
Agency, City, and Vista Del Rio agree that the breakdown of unit affordability for the Units
shall be as follows, under this Agreement:
The rents charged at the Project must comply with the lowest and most restrictive of the
following standards:
The calculation methodology defined in (i) Section 50053(b)(1) for
Extremely Low Income Households, or (ii) Section 50053(b)(2) for
Very Low Income Households;
2. The rents published for Low Income Housing Tax Credit (Tax Credit)
projects by the California Tax Credit Allocation Committee (TCAC);
and
With respect to the HOME Units, the Low HOME rents published by
HUD.
Agency, City, and Vista Del Rio agree that effective 2010 the initial maximum gross monthly
Affordable Rents and the breakdown of unit affordability for the Extremely Low Income Units shall
be as follows:
Studio Extremely Low Units
One Bedroom Extremely Low Units
Two Bedroom Extremely Low Units
# of Units # of Max. Gross
(Agency) HOME units Monthly Rents*
4 2 $488
8 2 $523
2 2 $627
Agency, City, and Vista Del Rio agree that the Year 2010 initial maximum gross monthly
Affordable Rents and the breakdown of unit affordability for the Very Low Income Units shall be as
follows:
Studio Very Low Units
One Bedroom Very Low Units
Two Bedroom Very Low Units
# of Units
(Agency)
# of HOME Max. Gross
units Monthly Rents*
2 $753
2 $861
1 $969
*Utilities Allowances must be deducted from the Maximum Gross Monthly Affordable Rent.
The applicable utilities allowances are determined periodically by the Authority.
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Maximum Gross Monthly Rents shall be recalculated following issuance of a Release of
Construction Covenants but prior to the time of initial lease-up in accordance with any changes in
allowable rent and income tables as published by HUD and the State of California, and shall be as
approved by the Executive Directors in writing in accordance with this Section. Such Maximum
Gross Monthly Rents charged to the first tenants of the 41 units (40 Units plus manager's unit) shall
constitute the Initial Rental Schedule.
7.3 Rental Vouchers.
(a) In the event Vista Del Rio rents a Unit to a household holding a Portable
Voucher, the rental agreement (or lease agreement, as applicable) between Vista Del Rio, as
landlord, and the tenant shall expressly provide that the monthly rent charged shall be the Affordable
Rent required hereunder for the Unit (not fair market rent) and that the rent collected directly from
such tenant holding a portable rental voucher shall be not more than 40% of the tenant's actual gross
income pursuant to the applicable voucher program regulations; i.e., the rent charged to such tenant
under the rental agreement shall be the Affordable Rent chargeable hereunder and not fair market
rent for the area, as would otherwise be permitted under the applicable Portable Voucher program.
Thus, the subsidy payment to Vista Del Rio under any Portable Voucher shall not exceed the
difference between forty percent (40%) of the tenant's actual gross income and Affordable Rent
chargeable for the applicable Unit hereunder (and under the Affordability Restrictions).
(b) The parties acknowledge that Vista Del Rio and Authority intend to enter into
the HAP Contract and that the Senior Lender is anticipated to underwrite a Senior Loan based in part
on the Project Based Section 8 subsidy to the Project under the HAP Contract, including payments
thereunder equal to the difference between 30% of each tenant household's actual gross income and
the fair market rent for the area. In the event that, during the Term hereof, a new Housing Assistance
Payments Contract is proposed to be entered into (or is entered into) with respect to any Units at the
Project not already receiving Project Based Section 8 assistance under the HAP Contract (or those
Units, after expiration of the HAP Contract), Vista Del Rio shall cause the rental agreement (or lease
agreement, as applicable) for each Unit receiving Project Based Section 8 assistance pursuant to such
new Housing Assistance Payments Contract (but not the HAP Contract) to provide that the monthly
rent charged under such rental agreement (or lease agreement, as applicable) shall not exceed the
Affordable Rent required hereunder for the Unit (not fair market rent). Thus, the subsidy payment to
Vista Del Rio under any project-based rental voucher (other than with respect to the subsidy pursuant
to the HAP Contract) shall not exceed the difference between thirty percent (30%) of the tenant's
actual gross income and Affordable Rent chargeable for the applicable Unit hereunder (and under the
Regulatory Agreement).
(c) Vista Del Rio hereby acknowledges and agrees that, upon completion of
construction of the Project and leasing of the Units to Extremely Low Income and Very Low Income
households pursuant to this Agreement, the DDA and the Affordability Restrictions, Vista Del Rio
will have received governmental subsidies from Authority, City, Agency and TCAC (through the
Tax Credits allocated to the Project) in exchange for Vista Del Rio's agreement to limit the rents
charged to tenants of the Project to an Affordable Rent and Vista Del Rio further acknowledges and
agrees that, except for the HAP Contract payments with respect to between 7 and 10 Units (as
determined by Authority), which are part of the approved financing for the Project, acceptance of
additional governmental rental subsidies resulting in total, cumulative rent payments to Vista Del Rio
in excess of an Affordable Rent for any of the Units at the Project would constitute an unjustified
windfall to Vista Del Rio at the expense of Authority and the federal and state governments. Further,
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with respect to the HOME Units, the HOME Regulations prohibit application of any Project Based
Section 8 assistance, Portable Voucher, or other rental subsidy that, cumulatively with the rent to be
paid by the tenant household, exceeds an Affordable Rent calculated pursuant to the HOME
Regulations.
7.4 Rent Increases. On an annual basis, the Executive Directors shall provide Vista Del
Rio with the maximum allowable schedule of Affordable Rents for the Property in accordance with
changes in allowable rent and income tables published by HUD and the State of California, provided
however that the rent for the HOME units shall in no event be higher than the rent for the equivalent
Agency assisted Unit. In no event shall Vista Del Rio charge any tenant more than the Affordable
Rents prescribed for the Units pursuant to this Agreement and as directed by the Executive Directors.
[RESERVED.]
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to City and Agency to enter into this Agreement, Vista Del Rio
represents and warrants as follows:
9.1 Formation, Oualification and Compliance. Vista Del Rio (a) is a limited
partnership, 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. Vista Del Rio is in compliance with all
Governmental Requirements 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 Vista Del Rio has all requisite authority to execute and perform its obligations
under the Loan Documents.
9.2.2 The execution and delivery of Vista Del Rio of, and the performance by Vista
Del Rio 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 Vista Del Rio;
(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
Vista Del Rio;
(c) result in or require the creation of any lien, claim, charge or other right of
others of any kind (other than under the Loan Documents) on or with respect to any property now or
hereafter owned or leased by Vista Del Rio;
(d) violate any provision of any law presently in effect; or
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(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 Vista Del
Rio is a party or by which Vista Del Rio or any of its property is bound.
9.2.3 Vista Del Rio is not in default, in any respect that is materially adverse to the
interests of City or Agency under the Loan Documents or that would have any material adverse
effect on the financial condition of Vista Del Rio 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 Other than for building permits relating to the Project, 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 Vista Del Rio of, and the performance by Vista Del Rio 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 Vista Del Rio's knowledge, all
financial information furnished to City and Agency with respect to Vista Del Rio in connection with
the Loans (a) is complete and correct in all material respects as of the date of preparation thereof,
(b) accurately presents the financial condition of Vista Del Rio, and (c) to the extent applicable, 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 Vista Del Rio's knowledge, all other documents and information furnished to City and Agency
with respect to Vista Del Rio, in connection with the Loans, are correct and complete insofar as
completeness is necessary to give the City accurate knowledge of the subject matter. To the best of
Vista Del Rio's knowledge Vista Del Rio has no material liability or contingent liability not
disclosed to City and 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 Vista Del Rio not disclosed in such financial statements or otherwise disclosed to City and Agency
in writing.
9.4 No Material Adverse Chance. There has been no material adverse change in the
condition, financial or otherwise, of Vista Del Rio since the dates of the latest financial statements
furnished to City and Agency. Since those dates, Vista Del Rio has not entered into any material
transaction not disclosed in such financial statements or otherwise disclosed to City and Agency in
writing.
9.5 Tax Liability. Vista Del Rio 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 and Agency in writing) other than taxes being promptly and actively contested in good faith and
by appropriate proceedings. Vista Del Rio 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 and Agency.
9.6 Governmental Requirements. Vista Del Rio is in compliance with all laws relating
to the Property/Project and all Governmental Authority approvals, including zoning, land use,
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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; public utilities
requirements, and any other Governmental Requirements applicable to the Property or the Project.
9.7 Rights of Others. Vista Del Rio 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
Vista del Rio's knowledge, threatened against or affecting Vista Del Rio or any property of Vista Del
Rio 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 Vista Del Rio's knowledge, no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or threatened against Vista Del Rio, nor are any of such proceedings
contemplated by Vista Del Rio.
9.10 Information Accurate. To the best of Vista Del Rio's knowledge, all information,
regardless of its form, conveyed by Vista Del Rio to City and Agency, by whatever means, is
accurate, correct and sufficiently complete to give City and Agency true and accurate knowledge of
its subject matter, and does not contain any misrepresentation or omission.
9.11 Conflicts of Interest. No member, official or employee of the City or 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 which he/she has a direct or
indirect financial interest. The Vista Del Rio 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 Employees. No member, official or employee of
the City or Agency shall be personally liable to the Vista Del Rio in the event of any default or
breach by the City or Agency or for any amount which may become due to Vista Del Rio or on any
obligations under the terms of this Agreement.
9.13 No Assignment. Vista Del Rio expressly acknowledges and agrees that the City and
Agency have only agreed to assist Vista Del Rio as a means by which to induce the construction and
development of the Property/Project. Accordingly, Vista Del Rio further expressly acknowledges
and agrees that this Agreement is a personal right of Vista Del Rio that is neither negotiable,
transferable, nor assignable except as set forth in Section 16.2.
9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under
federal and state laws.
9.15 Third Parties. The Authority is an intended third party beneficiary of this
Agreement, with full rights (but no obligation) to enforce all terms, provisions and covenants
contained herein. This Agreement is made for the sole benefit of Vista Del Rio, the City, the
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Agency, the Authority, 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 or Agency hereunder or arising from any default by Vista Del Rio, nor shall the
City, Agency or Authority 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 neither the Agency nor City has
at anytime 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
10.1 Permits and Approvals. Vista Del Rio shall diligently obtain all Permits, including
all grading and building permits, licenses, approvals, exemptions and other authorizations of
Governmental Agencies required in connection with the construction and development of the
Property/Project.
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, 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 completion) have been obtained.
10.3 Change Orders. The Construction Contract shall not be modified except pursuant to
change orders. All change orders:
(a) shall be in writing, numbered in sequence, signed by Vista Del Rio and
submitted to City prior to the proposed effectiveness thereof and accompanied by any working
drawings and a written narrative of the proposed change.
(b) shall be subject to the Executive Directors' and the Construction Lender's
prior written approval.
10.4 Entry and Inspection. At all times prior to completion of the construction, upon
reasonable notice, City or Agency and their respective 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. 1701 u, 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
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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 Vista Del Rio, 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. 1701u
("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
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 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.
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(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, Vista Del Rio shall comply and/or cause compliance with Section 3
Clause requirements for the Project. For example, when and if Vista Del Rio 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,
but in no event more often than monthly, within ten (10) Business Days following Agency or City's
written demand therefore, Vista Del Rio 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. Vista Del Rio 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 or the City by any person furnishing labor or materials to the Property, Vista Del Rio shall
immediately give written notice of the same to City and 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 City and Agency a surety bond complying with the
requirement of applicable laws for such release, or (c) take such other action as City or Agency may
require to release City and/or Agency from any obligation or liability with respect to such stop notice
or claim.
11. FEDERAL (HOME PROGRAM) AND STATE REDEVELOPMENT COVENANTS
11.1 [Intentionally Omitted]
11.2 Oualification as Affordable Housing. As more particularly provided in the
Affordability Restrictions on Transfer of Property, Vista Del Rio shall use, manage and operate the
Property in accordance with the requirements of 24 CFR 92.252 and California Health and Safety
Code section 50052.5 so as to qualify the housing on the Property as Affordable Housing with
affordable rents.
11.3 Tenant and Participant Protection. Vista Del Rio shall comply with the
requirements of 24 CFR 92.253.
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11.4 (Intentionally Omitted
11.5 Handicapped Accessibility. Vista Del Rio shall comply with (a) Section 504 of the
Construction 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 with respect
to all Units at the Project.
11.6 Use of Debarred, Suspended, or Ineligible Participants. Vista Del Rio 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. Vista Del Rio shall certify that Vista Del
Rio will provide a drug-free workplace in accordance with 24 CFR 84.13.
11.8 Lead-Based Paint. Vista Del Rio shall comply with the requirements, as applicable
of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing
regulations at 24 CFR 35.
11.9 Affirmative Marketing. Vista Del Rio 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 (a copy of which is attached hereto and incorporated herein as
Exhibit H).
11.10 Equal Opportunity and Fair Housing. Vista Del Rio 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. Vista Del Rio must also follow the requirements of Health and Safety Code section 33435.
11.11 Property Standards. Vista Del Rio 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. Vista Del Rio shall also cause the Property to meet the
current edition of the Model Energy Code published by the Council of American Building Officials.
11.12 [Intentionally Omitted]
11.13 Other Program Requirements. Vista Del Rio shall carry out each activity in
compliance with all federal laws and regulations described in subpart H of 24 CFR 92, except that
Vista Del Rio 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, Vista Del Rio may not request disbursements of funds under this
Agreement until the funds are needed for payment of eligible costs and all applicable Conditions
Precedent are satisfied. The amount of each request shall be limited to the amount needed to
reimburse Vista Del Rio for Vista Del Rio's actual expenditures, as described in Article 6, et seq.
11.15 Eligible Costs. Vista Del Rio shall use HOME Program funds only to pay costs
defined as "eligible costs" pursuant to 24 CFR 92.206.
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11. 16 Records and Reports. Vista Del Rio shall maintain and from time to time submit to
City or Agency such records, reports and information as the Executive Directors may reasonably
require in order to permit City and Agency to meet the record keeping and reporting requirements
required of it pursuant to 24 CFR 92.508.
11.17 Reserved.
11.18 Conflict of Interest. Vista Del Rio 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. Vista Del Rio shall allow the City to conduct annual inspections of the
HOME Units on the Property as required by the Program after the date of construction completion,
with reasonable notice. Vista Del Rio shall cure any defects or deficiencies found by the City while
conducting such inspections within thirty (30) days of written notice thereof, or such longer period as
is reasonable within the sole discretion of the City. Health and Safety Code section 33418 requires
that the Agency monitor, on an ongoing basis, any affordable housing.
11.20 Recertification of Tenant Income.
(A) Vista Del Rio 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 (5th) year, Vista Del Rio shall
require new original income documents to be submitted by tenants. Tenants in HOME 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 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. Vista Del Rio shall comply with all other
applicable requirements of the HOME Program, the Section 8 Requirements, and the CRL.
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.
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND REPAIR
OF PROPERTY
12.1 Maintenance. Vista Del Rio shall, at its sole cost and expense, maintain or cause to
be maintained the interior and exterior of the Project and all Units thereof and the Property in a
decent, safe and sanitary manner, in accordance with the HUD Housing Quality Standards (HQS)
and the maintenance standards required by Section 92.251 of the HOME Regulations, and in
accordance with the standard of maintenance of first class apartments within Orange County,
California. None of the Units in the Project shall at any time be utilized on a transient basis, nor shall
the Property or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority
house, rooming house, hospital, nursing home, sanitarium or rest home, or be converted to
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condominium ownership. If at any time Vista Del Rio fails to maintain the Project or the Property in
accordance with this Agreement and such condition is not corrected within five (5) Business Days
after written notice from City or Agency with respect to graffiti, debris, and waste material, or thirty
(30) days after written notice from City or Agency with respect to general maintenance, landscaping
and building improvements, then City and Agency, in addition to whatever remedy they may have at
law or at equity, shall have the right to enter upon the applicable portion of the Project or the
Property and perform all acts and work necessary to protect, maintain, and preserve the Project and
the Property, and to attach a lien upon the Property, or to assess the Property, in the amount of the
expenditures arising from such acts and work of protection, maintenance, and preservation by City
and Agency and/or costs of such cure, including a reasonable administrative charge, which amount
shall be promptly paid by Vista Del Rio to City or Agency, as applicable, upon demand. The liens
created under this Section shall be subject and subordinate to the lien of the mortgage or deed of trust
encumbering the Property (or any part of the Property) for the Construction Loan and the Senior
Loan approved pursuant to the terms of this Agreement. The City and/or Agency shall inspect the
Property annually after the date of issuance of the Release of Construction Covenants as described in
Section 310 of the DDA and Vista Del Rio shall cooperate with the City and Agency to make the
Property and all Units thereon available for such inspection.
12. 1.1 Alterations and Repair. Vista Del Rio 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 with Laws. Vista Del Rio 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, all rights of third
parties, and all Governmental Requirements, that are applicable or relate to Vista Del Rio, the
Property, or Vista Del Rio's business thereon.
12.3 Taxes and Impositions. Vista Del Rio 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 or Agency (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, Vista Del Rio may pay any Imposition in installments (together with
any accrued interest).
12.3.1 Right to Contest. Vista Del Rio 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) Vista Del Rio 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 and Agency's interests under the Loan
Documents, and (c) Vista Del Rio has furnished City with a bond or other security satisfactory in an
amount not less than 100% of the applicable claim (including interest and penalties).
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12.3.2 Evidence of Payment. Upon demand by City or Agency from time to time,
Vista Del Rio shall deliver to City or Agency, within thirty (30) days following the due date of any
Imposition, evidence of payment reasonably satisfactory to City.
12.3.3 Books and Records. Vista Del Rio 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 [Intentionally omittedl
12.5 Proiect Operating Budget. Prior to the Closing, and annually thereafter not later
than 60 days prior to the beginning of the next Calendar Year, Vista Del Rio shall submit a projected
operating budget and cash flow ("Operating Budget") to the Executive Directors. The Operating
Budget and cash flow shall be in a form that is reasonably acceptable to the Executive Directors.
Vista Del Rio must promptly deposit all revenue received with respect to the Project directly into a
segregated, interest-bearing depository account established exclusively for the Project ("Project
Operating Account"). Withdrawals from the Project Operating Account may be made only in
accordance with the provisions of this Agreement and the Operating Budget approved annually by
the Executive Directors, as it may be revised from time to time with City and Agency approval.
Vista Del Rio may make withdrawals from the Project Operating Account solely for the payment of
Project expenses and Project fees included in the approved Operating Budget. Withdrawals from the
Project Operating Account for other purposes may be made only with the prior written approval of
the Executive Directors. Further, Vista Del Rio shall obtain the prior written approval of the
Executive Directors for any expenditure from the Project Operating Account that exceeds by ten
percent (10%) or more the amount set forth for the applicable line item in the Operating Budget
and/or for any expenditure that would, cumulatively with all prior expenditures in the applicable
year, exceed the total approved annual Operating Budget for the Project by ten percent (10%) or
more.
12.6 Replacement Reserve Account. Vista Del Rio must establish or cause to be
established a segregated interest-bearing replacement reserve depository account ("Replacement
Reserve Account") no later than sixty (60) days after the Release of Construction Covenants is filed.
Vista Del Rio must make monthly deposits from project income into the Replacement Reserve in
accordance with Vista Del Rio's Budget, as amended from time to time. Vista Del Rio 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. Vista Del Rio may not withdraw funds
from the Replacement Reserve Account for any other purpose without the prior written approval of
the City and Agency.
13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Vista Del Rio 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, marital status, ancestry or national origin in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Vista Del Rio
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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.
13.2 Nondiscrimination in Employment. Vista Del Rio certifies and agrees that all
persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies,
and all subcontractors, bidders and vendors, are and will be treated equally by it without regard to, or
because of race, color, religion, ancestry, national origin, sex, age, pregnancy, childbirth or related
medical condition, medical condition or physical or mental disability, and in compliance with
Title VII of the Civil Rights Act of 1964, 42 U S.C. Section 2000, et seq., the Federal Equal Pay Act
of 1963,29 U.S.C. Section 206(d), the Age Discrimination in Employment Act of 1967, 29 U S.C.
Section 621, et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b,
et seq., 42 U.S.C. Section 1981, the California Fair Employment and Housing Act, Cal. Government
Code Section 12900, et seq., the California Equal Pay Law, Cal. Labor Code Section 1197.5, Cal.
Government Code Section 11135, the Americans with Disabilities Act, 42 U.S.C. Section 12101,
et seq., and all other applicable anti-discrimination laws and regulations of the United States and the
State of California as they now exist or may hereafter be amended.
13.3 Statutory Nondiscrimination Covenants. Except to the extent preferences are
permitted or required by this Agreement, Vista Del Rio covenants by and for itself, its successors and
assigns, and all persons claiming under or through them that there shall be no discrimination against
or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the
Property, nor shall the grantee or any person claiming under or through him or her, establish or
permit any practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
Property. Vista Del Rio shall refrain from restricting the rental, sale or lease of the Property or any
portion thereof on the basis of any of the characteristics listed above. Vista Del Rio shall also
comply with the equal opportunity and fair housing requirements set forth in Section 92.350 of the
HOME Regulations. The foregoing covenants shall run with the land. All such deeds, leases or
contracts shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
13.3.1 In Deeds: "The grantee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that
there shall be no discrimination against or segregation of, any person or group of persons on account
of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases
are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of
Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer,
use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any
person claiming under or through him or her, establish or permit any practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing
covenants shall run with the land."
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13.3.2 In Leases: "The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions: "That there
shall be no discrimination against or segregation of any person or group of persons, on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section
12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself,
or any person claiming under or through him or her, 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, sublessees, subtenants, or vendees in the premises herein leased."
13.3.3 In Contracts: "There shall be no discrimination against or segregation of, any
person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of
the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in
the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the
subject of this Agreement, nor shall the grantee or any person claiming under or through him or her,
establish or permit any practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees
in the premises herein conveyed. The foregoing covenants shall run with the land."
13.4 In Affordable Housing Restrictions. The foregoing covenants shall (a) be included
in the Affordability Restrictions on Transfer of Property, (b) run with the land, and (c) remain
effective for the Term hereof.
14. ENVIRONMENTAL MATTERS
14.1 Representation and Warranty. Except as disclosed in writing to the City, Vista Del
Rio has no knowledge (a) of the presence on, under or about the Property, now or in the past, of any
Hazardous Materials, 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. Vista Del Rio shall (a) comply with all
Environmental Laws and environmental permits applicable to the Construction and/or operation 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, (d) obtain and renew all environmental permits required for
ownership or use of the Property, and (e) comply with any and all Governmental Requirements
relating to Hazardous Materials with respect to the Construction and/or operation of the Project.
14.3 Presence of Hazardous Materials. Vista Del Rio 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 operation and maintenance of the
Property.
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14.4 Notice of Environmental Matters. Vista Del Rio shall immediately advise City in
writing of any of the following: (a) any pending or threatened environmental claim against Vista Del
Rio 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 Vista Del Rio.
14.5 Environmental Indemnification by the Vista Del Rio. Vista Del Rio hereby
agrees, at Vista Del Rio's sole expense, to defend (using counsel satisfactory to Agency and City),
indemnify, assume all responsibility for, and save and hold the Indemnitees harmless from and
against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty,
punitive damage, or expense (including, without limitation, attorney's fees), resulting from, arising
out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous
Materials in violation of Environmental Laws during the period of the Vista Del Rio's ownership of
the Property, on, under, in or about, or the transportation of any such Hazardous Materials to or from,
the Property by Vista Del Rio during the period of the Vista Del Rio's ownership of the applicable
Property, or (ii) the violation, or alleged violation of any Environmental Laws relating to the use,
generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under,
in or about, to or from, the Property during the period of the Vista Del Rio's ownership of the
Property. This indemnity shall include, without limitation, any damage, liability, fine, penalty, cost
or expense arising from or out of any claim, action, suit, or proceeding for personal injury (including
sickness, disease or death), tangible or intangible property damage, compensation for lost wages,
business income, profits or other economic loss, damage to the natural resource or the environment,
nuisance, contamination, leak, spill, release or other adverse effect on the environment.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Vista Del Rio under the Notes or Deeds of Trust remain outstanding,
the following provisions shall apply, except to the extent that Executive Directors otherwise consent
in writing:
15.1 Existence. Vista Del Rio's managing general partner shall maintain its existence in
good standing under the laws of the State of California and Vista Del Rio shall provide
documentation of such status annually to the City.
15.2 Protection of Lien. Vista Del Rio shall maintain the lien of the Deeds of Trust as a
valid second and third priority deed of trust on the Property and take all actions, and execute and
deliver to City and Agency all documents, reasonably required by the Executive Directors from time
to time in connection therewith.
15.3 Notice of Certain Matters. Vista Del Rio shall give notice to City, within ten (10)
days of Vista Del Rio's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the Project or Property and
involving an amount in excess of $5,000; and any litigation or claim that might subject Vista Del Rio
or any general partner to liability in excess of $5,000, whether covered by insurance or not;
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(b) any dispute between Vista Del Rio and a Governmental Authority relating to
the Property/Project, the adverse determination of which might materially affect the Property/Project;
(c) any change in Vista Del Rio'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 Vista Del Rio or any other party under any Senior
Loan document, or the receipt by Vista Del Rio 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 Vista del Rio.
15.4 Further Assurances. Vista Del Rio 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 Deeds of Trust; to subject to the Deeds of Trust any property intended by the terms of any Loan
Document(s) to be covered by the Deeds of Trust or otherwise to carry out the purposes of the Loan
Documents and the transactions contemplated thereunder.
15.5 Annual Audited Financial Statements. Vista Del Rio shall deliver to City, within
one hundred twenty (120) days after the end of each Calendar Year, (a) an audited financial
statement prepared by a certified public accountant for Vista Del Rio as of the end of such Calendar
Year and a certified public accountant reviewed statement of profit and loss for Vista Del Rio and for
Vista Del Rio's operations in connection with the Property/Project 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 Vista Del Rio's chief financial officer 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 represent Vista Del Rio's financial condition, (iii) show all material liabilities, direct and
contingent, and, (iv) fairly represent the results of Vista Del Rio's operations. Vista Del Rio shall
also provide the City with any other annual audit reports issued by or for the benefit of other
monitoring agencies.
15.6 Audits and Access to Records. Vista Del Rio agrees that City, Agency, HUD, 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 Vista
Del Rio which are pertinent to this Agreement in order to make audits, examinations, abstracts,
excerpts or transcripts. Vista Del Rio will maintain all books and records pertaining to this
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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 Vista Del Rio's
activities, for a period of not less than five (5) years after the affordability or recapture period ends.
15.7 Termite Inspection Report. Vista Del Rio shall deliver a termite report pertaining
to the Property/Project to the City every fifth (5th) year beginning January 2013.
16. OTHER NEGATIVE COVENANTS
While any obligation of Vista Del Rio under the Notes or Deeds of Trust remains
outstanding, the following provisions shall apply, except to the extent that Executive Directors
otherwise consent in writing:
16.1 Default on Senior Loan. Vista Del Rio shall not default on any of the Senior Loan
Documents, provided however, that Vista Del Rio shall have such period as is provided in the Senior
Loan Documents during which to effectuate a cure.
16.2 Transfers of Interest in Property or Agreement.
16.2.1 Prohibition. The qualifications and identity of Vista Del Rio are of
particular concern to the Agency and City. It is because of those qualifications and identity that
Agency and City have entered into this Agreement and the other Project Documents with Vista Del
Rio. Therefore, for the period commencing upon the date of this Agreement and until the expiration
of the Term hereof, no voluntary or involuntary successor in interest of Vista Del Rio shall acquire
any rights or power under this Agreement, nor shall Vista Del Rio make any total or partial sale,
transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the
Property or the Improvements thereon (collectively, "Transfer") without prior written approval of the
Agency and City, except as expressly set forth herein. Any proposed total or partial Transfer without
Agency and City approval shall constitute a Default pursuant to Article 20, et seq., hereof.
16.2.2 Permitted Transfers. Notwithstanding any other provision of this
Agreement to the contrary, Agency and City approval of a Transfer shall not be required in
connection with any of the following:
(a) Any Transfer to an entity or entities in which Vista Del Rio directly or
indirectly retains a minimum of fifty-one percent (51 %) of the ownership or beneficial interest and
retains management and control of the transferee entity or entities.
(b) The conveyance or dedication of any portion of the Property to the City or
other appropriate governmental agency, or the granting of easements or permits to facilitate
construction of the Improvements.
(c) Any requested assignment for financing purposes (subject to such financing
being considered and approved by the Agency pursuant to Section 311 of the DDA), including the
grant of a deed of trust to secure the funds necessary for construction and permanent financing of the
Improvements.
(d) Removal of the investor limited partner of Vista Del Rio upon the expiration
of the fifteen (15) year tax credit compliance period applicable to the Project.
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(e) A Transfer of a General Partner's interest in Vista Del Rio when made in
connection with the exercise by the Limited Partner of its rights upon a default by a General Partner
under the 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.
(f) Any Transfer of the Property to the Managing General Partner pursuant to the
right of first refusal or to the General Partners pursuant to the purchase option, as provided for in the
Partnership Agreement.
(g) Any sale, transfer or other disposition of an interest in the Limited Partner.
(h) Any sale, transfer or other disposition of the Limited Partner's interest in
Vista Del Rio as allowed by the Partnership Agreement.
In the event of a Transfer by Vista Del Rio described above not requiring the City's or
Agency's prior approval, Vista Del Rio nevertheless agrees that at least thirty (30) days prior to such
assignment it shall give written notice to Agency/City of such assignment and satisfactory evidence
that the assignee has assumed in writing through an assignment and assumption agreement all of
Vista Del Rio's obligations set forth in this Agreement. Upon the satisfaction of said obligations and
the Transfer, the assignor shall be released from all obligations to the Agency and City hereunder
(except obligations to indemnify the Agency and City pursuant to Section 14.5 and Article 18, et
seq., of this Agreement).
16.2.3 Agency/City Consideration of Requested Transfer. Agency and City
agree that they will not unreasonably withhold, condition or delay approval of a request for approval
of a Transfer made pursuant to this Section 16.2, provided Vista Del Rio delivers written notice to
the Agency/City requesting such approval. Such notice shall be accompanied by sufficient evidence
regarding the proposed assignee's or purchaser's development and/or operational qualifications and
experience, and its financial commitments and resources, in sufficient detail to enable the Agency to
evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 16.2 and
as reasonably determined by the Agency/City. The Agency/City shall evaluate each proposed
transferee or assignee on the basis of its development and/or qualifications and experience in the
construction of facilities similar to the Improvements, and its financial commitments and resources,
and may reasonably disapprove any proposed transferee or assignee, during the period for which this
Section 16.2 applies, which the Agency/City determines does not possess equal or better
qualifications than the transferring developer. An assignment and assumption agreement in a form
satisfactory to the Agency/City's legal counsel shall also be required for all proposed assignments.
Within fifteen (15) days after the receipt of Vista Del Rio's written notice requesting Agency
approval of an assignment or transfer pursuant to this Section 16.2, the Agency/City shall either
approve or disapprove such proposed assignment or shall respond in writing by stating what further
information, if any, the Agency/City reasonably requires in order to determine the request complete
and determine whether or not to grant the requested approval. Upon receipt of such a response, Vista
Del Rio shall promptly furnish to the Agency/City such further information as may be reasonably
requested and the Agency and City shall approve or disapprove the requested Transfer within fifteen
(15) days after receipt of all such requested information.
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16.2.4 Successors and Assigns. All of the terms, covenants and conditions of this
Agreement shall be binding upon Vista Del Rio and its permitted successors and assigns. Whenever
the term "Vista Del Rio" is used in this Agreement, such term shall include any other permitted
successors and assigns as herein provided.
16.2.5 Assignment by City or Agency. City and Agency may assign or transfer
any of their rights or obligations under this Agreement without the approval of the Vista Del Rio.
17. [RESERVED]
18. INDEMNIFICATION
18.1 Nonliability of Agency and City. Vista Del Rio acknowledges and agrees that:
(a) The relationship between Vista Del Rio, Agency, and City is and shall remain
solely that of borrower and lender, neither City nor Agency undertakes nor assumes any
responsibility to review, inspect, supervise, approve (other than for aesthetics) or to inform Vista Del
Rio 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
Vista Del Rio shall rely entirely on its own judgment with respect to such matters and acknowledges
that any review, inspection, supervision, approval or information supplied to Vista Del Rio by City or
Agency in connection with such matters is solely for the protection of City and Agency and that
neither Vista Del Rio nor any third party is entitled to rely on it;
(b) Notwithstanding any other provision of any Loan Document: (i) the Agency
and City are not a partner, joint venture, alter-ego, manager, controlling person or other business
associate or participant of any kind with Vista Del Rio and City does not intend to ever assume any
such status; (ii) City's and Agency's activities in connection with the Loans 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 neither City nor Agency intends to ever
assume any responsibility to any person for the quality or safety of the Property or Project; and
(iii) neither City nor Agency shall be deemed responsible for or a participant in any acts, omissions
or decisions of Vista Del Rio;
(c) Neither City nor Agency shall 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 or Project, whether arising from: (i) any defect in any building,
grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of Vista Del Rio
or any of Vista Del Rio's agents, employees, independent contractors, licensees or invitees; or
(iii) any accident on the Property or Project or any fire or other casualty or hazard thereon; and
(d) By accepting or approving anything required to be performed or given to City
or Agency under the Loan Documents, including any certificate, financial statement, survey,
appraisal or insurance policy, neither City nor Agency shall 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 or Agency to anyone.
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18.2 Indemnity. Vista Del Rio shall defend (by counsel 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) this Agreement; (ii) the making of the Loans; (iii) a claim,
demand or cause of action that any person has or asserts against Vista Del Rio; (iv) any act or
omission of Vista Del Rio, any contractor, subcontractor or material supplier, engineer, architect or
other person with respect to the Property or Project; or (vi) the ownership, occupancy or use of the
Property or Project. Notwithstanding the foregoing, Vista Del Rio shall not be obligated to
indemnify City or Agency with respect to the consequences of any act of gross negligence or willful
misconduct of City or Agency or any breach by the City or Agency of any Loan Document. Vista
Del Rio's obligations under this Section shall survive the cancellation of the Notes, release and
reconveyance of the Deeds of Trust, issuance of the Release of Construction Covenants, and
termination of this Agreement.
18.2.1 Notwithstanding the foregoing, neither Vista Del Rio, 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 Loans.
18.3 Reimbursement of City and Agency. In the event of Default, Vista Del Rio shall
reimburse City and/or Agency immediately upon written demand for all costs reasonably incurred by
City and/or Agency (including the reasonable fees and expenses of attorneys, expert witnesses,
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 and Agency are indemnified under the Loan Documents. Such
reimbursement obligations shall bear interest from the date occurring twenty (20) days after City or
Agency gives written demand to Vista Del Rio and shall be secured by the Deeds of Trust. Such
reimbursement obligations shall survive the cancellation of the Notes, release and reconveyance of
the Deeds of Trust, issuance of a Release of Construction Covenants, and termination of this
Agreement.
19. INSURANCE, CASUALTY AND CONDEMNATION
19.1 Policies Required. While any obligation of Vista Del Rio under the Loan
Documents remains outstanding, Vista Del Rio shall maintain at Vista Del Rio'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: [Subject to review by City Risk
Manager]
(a) worker's compensation insurance and any other insurance required by law in
connection with the construction;
(b) prior to commencement until 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; which said
insurance shall expressly include damage or loss by flood or storm;
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(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; which said insurance shall
expressly include damage or loss by flood or storm;
(d) general liability insurance in amounts reasonably required by City from time
to time, and in no event less than $5,000,000 for "single" occurrence;
(e) public liability insurance in amounts reasonably required by City from time to
time, and in no event less than $1,000,000 for "single" occurrence;
(f) property damage insurance in amounts reasonable required by City from time
to time, and in no event less than $1,000,000.
(g) any other insurance reasonably required by Agency/City.
All such insurance shall provide that it may not be canceled or materially modified without
thirty (30) days prior written notice to City and Agency. The policies required under subparagraphs
(b) and (c) shall include a "lender's loss payable endorsement" (Form 438BFU) in form and
substance satisfactory to City, showing the Agency and the City as loss payees. The Agency and the
City shall be named as additional insured(s) in the policies required under subparagraphs (d), (e) and
(f). 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 thirty (30) days prior to the expiration
of each policy, Vista Del Rio shall deliver to City evidence of renewal or replacement of such policy
reasonably satisfactory to City Attorney and/or City Risk Manager.
19.2 City Attorney and/or City Risk Manager May Modify. The City Attorney and/or
City Risk Manager may modify the type and amounts of insurance (including reasonable increases
in policy limits) required pursuant to this Section.
19.3 Claims and Proceedings. Vista Del Rio shall give City and Agency immediate
notice of any material casualty to any portion of the Property/Project, 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 and Agency with copies of all documents which pertain to
any such casualty or Condemnation. Vista Del Rio shall take all action reasonably required by the
Executive Directors in connection therewith to protect the interests of Vista Del Rio, City, and
Agency, and City 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. Vista Del Rio shall not settle, adjust, or compromise any claim, action, adjustment or
proceeding without the prior written approval of the Executive Directors, which approval shall not be
unreasonably withheld or delayed.
19.4 Delivery of Proceeds to City/Agency. In the event that, notwithstanding the
"lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty
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insurance policy described herein are paid to Vista Del Rio, Vista Del Rio shall, subject to any
superior rights of the Senior Lender, deliver such proceeds to the Agency and City immediately upon
receipt.
19.5 Application of Casualty Insurance Proceeds. Any proceeds collected (the
"Proceeds") under any casualty insurance policy described in this Agreement shall be disbursed to
Vista Del Rio 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 Vista
Del Rio, City, and Agency) following the occurrence of the damage for which the Proceeds are
collected:
(a) Vista Del Rio shall demonstrate to the Executive Directors' reasonable
satisfaction that the Proceeds (together with amounts deposited by Vista Del Rio pursuant to
subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of
the Property, within a time period reasonably determined by the Executive Directors, to at least the
value it had immediately prior to sustaining the damage. Such demonstration shall include delivery
to City and Agency of (i) plans and specifications reasonably satisfactory to City and Agency, and
(ii) a construction contract in form and content, and with a contractor, reasonably satisfactory to City
and Agency.
(b) To the extent that the Proceeds are insufficient to accomplish the restoration
required above, Vista Del Rio shall deliver to City and Agency funds (the "Shortfall Funds") in the
amount of such shortfall, which funds shall be assigned to City and Agency as security for Vista Del
Rio's obligation hereunder and held and disbursed in the same manner as the Proceeds.
(c) Vista Del Rio shall execute such documents as the Executive Directors
require to evidence and secure Vista Del Rio's obligation to use all amounts disbursed for the
diligent restoration of the Property.
(d) No Event of Default shall remain uncured.
19.6 Method of Disbursement and Undisbursed Funds. Any Proceeds and Shortfall
Funds to be disbursed to Vista Del Rio shall be held by Agency/ City and disbursed in accordance
with the then customary disbursement procedures and related provisions. Any amounts remaining
undisbursed following completion of such restoration shall be returned to Vista Del Rio up to the
amount of any Shortfall Funds deposited by Vista Del Rio, and any other amounts remaining shall
either be paid to Vista Del Rio or applied by City and Agency against any obligations to City or
Agency that are secured by a lien on the Property, as they elect in their sole and absolute discretion.
19.7 Failure to Satisfy Conditions. In the event that Vista Del Rio 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 and Agency against any
obligations to City or 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 City and Agency in their sole and
absolute discretion.
19.8 Restoration. Nothing in this Article 19 shall be construed to excuse Vista Del Rio
from repairing and restoring all damage to the Property in accordance with other Loan Document
provisions, regardless of whether insurance proceeds are available or sufficient.
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19.9 Condemnation; Treatment of Compensation. Subject to any superior rights of
Senior Lender, Vista Del Rio hereby assigns to the Agency and City, as security for all obligations to
Agency or City secured by a lien on the Property, all amounts payable to Vista Del Rio in connection
with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation").
Subject to any superior rights of Senior Lender, Vista Del Rio shall deliver such remaining
Compensation to City and Agency immediately upon receipt. If the taking results in a loss of the
Property to an extent that, in the reasonable opinion of the Executive Directors, renders or is likely to
render the Property not economically viable or if, in the Executive Directors' reasonable judgment
Vista Del Rio's security is otherwise impaired, City and 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 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 and Agency shall be paid to
Vista Del Rio or Vista Del Rio's assignee. Neither City nor Agency shall have any obligation to take
any action in connection with any actual or threatened condemnation or other proceeding.
19.9.1 Notwithstanding the foregoing, as long as the value of City's and Agency's
liens are not impaired, any condemnation proceeds may be used by Vista Del Rio for repair and/or
restoration of the project.
19.10 Waiver of Subrogation. Vista Del Rio hereby waives all rights to recover against
the Agency or the City (or any officer, employee, agent or representative of Agency or City) for any
loss incurred by Vista Del Rio 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. Vista Del Rio 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. Failure by either party to perform any action or covenant
required by this Agreement or any other Project Document within the time periods provided herein
(or therein) following notice and failure to cure as described hereafter, constitutes a "Default" or
"Event of Default" under this Agreement. A party claiming a Default shall give written notice of
Default to the other party specifying the Default complained of. Except as otherwise expressly
provided in this Agreement, the claimant shall not institute any proceeding against any other party,
and the other party shall not be in Default if such party within thirty (30) days from receipt of such
notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay
and shall complete such cure, correction or remedy with diligence. Without limiting the generality of
the foregoing, the occurrence of any of the following, whatever the reason therefor, shall constitute
an Event of Default by Vista Del Rio under this Agreement:
(a) Vista Del Rio fails to make any payment of principal or interest under the
Notes when due, and such failure is not cured within fifteen (15) Business Days after Vista Del Rio's
receipt of written notice that such payment was not received when due;
(b) Vista Del Rio 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 Vista
Del Rio's receipt of written notice that such obligation was not performed when due;
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(c) Vista Del Rio 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 Vista Del Rio'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 Vista Del Rio (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) Vista Del Rio is in default of the Disposition and Development Agreement.
(f) The Property is materially damaged or destroyed by fire or other casualty
unless Vista Del Rio fulfills the Restoration Conditions set forth in the insurance provisions of this
Agreement within ninety (90) days (unless extended pursuant to Section 19.5) and thereafter
diligently restores the Property in accordance with this Agreement;
(g) Work on the construction ceases for thirty (30) consecutive days for any
reason (other than governmental orders, decrees or regulations, acts of God or any other deity, strikes
or other causes beyond Vista Del Rio'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 and the Schedule of Performance;
(h) Vista Del Rio is enjoined or otherwise prohibited by any Governmental
Authority from constructing and/or occupying the improvements and such injunction or prohibition
continues unstayed for sixty (60) days or more for any reason;
(i) [intentionally omitted];
0) Vista Del Rio is dissolved, liquidated or terminated, or all or substantially all
of the assets of Vista Del Rio are sold or otherwise transferred without the Executive Directors' prior
written consent;
(k) Vista Del Rio 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 Vista Del Rio 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 Vista Del Rio and the appointment continues undischarged or
unstayed for ninety (90) days; or Vista Del Rio institutes or consents to any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship,
liquidation, Construction or similar proceeding relating to it or any part of its property; or any similar
proceeding is instituted without the consent of Vista Del Rio 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 Vista Del Rio and is not released, vacated or fully bonded
within ninety (90) days after its issue or levy; or
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(1) (i) any of the Senior Loan documents is revoked or terminated, in whole or in
part and for any reason (except due to repayment of such loans), without the Executive Directors'
prior written consent, or (ii) Vista Del Rio defaults or otherwise fails to perform any of its duties or
obligations under or in connection with any of the Senior Loan documents, subject to all applicable
notice and cure periods, or (iii) 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. Notwithstanding anything to the contrary contained herein, City hereby agrees that any
cure of any default made or tendered by the Limited Partner shall be deemed to be a cure by Vista
Del Rio and shall be accepted or rejected on the same basis as if made or tendered by Vista Del Rio.
20.2 Remedies Upon Default. Upon the occurrence of any Event of Default, City or
Agency may, at their respective option and in their absolute discretion, do any or all of the following:
(a) By written notice to Vista Del Rio, 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 (e) shall automatically, without notice or other
action on the part of City or Agency, 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/Project, 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 or Agency elects in their sole and absolute discretion; and,
(d) Suspend or terminate the award of HOME Program funds, if Vista Del Rio
fails to comply with any term or condition of such award.
(e) Suspend or terminate the award of the tax increment funds or Agency Loan
proceeds if Vista Del Rio fails to comply with any term of that award.
(f) Authority may suspend or terminate the award of any Project Based Section 8
assistance if Vista Del Rio fails to comply with any term or condition of that award.
20.3 Cumulative Remedies: No Waiver. City's and 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 City or 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 or City in the exercise of any other right or remedy. No waiver of any default shall be
implied from any omission by City or 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. City's or Agency's consent to or approval of any act by Vista Del Rio
requiring further consent or approval shall not be deemed to waive or render unnecessary City's or
Agency's consent to or approval of any subsequent act. The Agency or the City's acceptance of the
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late performance of any obligation shall not constitute a waiver by City or Agency of the right to
require prompt performance of all further obligations; City's or 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
City's or Agency's acceptance of any partial performance shall not constitute a waiver by City or
Agency of any rights.
Notwithstanding anything to the contrary contained in the Loan Documents, the City and the
Agency hereby agree that any cure of any default made or tendered by the Limited Partner shall be
deemed to be a cure by Vista Del Rio and shall be accepted or rejected on the same basis as if made
or tendered by Vista Del Rio. Copies of all notices which are sent to Vista Del Rio under the terms
of the Loan Documents shall also be sent to the Limited Partner at an address to be provided in
writing to the City and the Agency by the Limited Partner.
21. MISCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the existence at any
time of any obligation or liability of City or Agency to Vista Del Rio, or any other claim by Vista Del
Rio against City or Agency, in connection with the Loans or otherwise, Vista Del Rio hereby waives
any right it might otherwise have (a) to offset any such obligation, liability or claim against Vista Del
Rio'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 Vista Del Rio 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 Vista Del Rio: Vista Del Rio Housing Partners, L.P.
c/o Foundation for Affordable Housing V, Inc.
30950 Rancho Viejo Road, Suite 100
San Juan Capistrano, CA 92675
Attention: Deborrah Willard
Telephone: (949) 443-9101
Email: deb@ffah.org
If to City/Agency: City of Santa Ana
Executive Director (CDA/RDA)
20 Civic Center Plaza (M-37)
P. O. Box 1988
Santa Ana, California 92702
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
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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 Loans described herein and have been or will be
relied on by City notwithstanding any investigation made by either party.
21.4 (Intentionally Omittedl.
21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall
inure to the benefit of, Vista Del Rio, Agency, and City and their respective successors and assigns.
Other than as expressly provided to the contrary in this Agreement, Vista Del Rio shall not assign
any of its rights or obligations under any Loan Document without the prior written consent of the
Executive Directors, which consent may be withheld in the Executive Directors' sole and absolute
discretion. Any such assignment without such consent shall, at the Executive Directors' option, be
void.
21.6 Prior Agreements; Amendments; Consents. This Agreement (together with the
other Loan Documents) contains the entire agreement between the Agency, City and Vista Del Rio
with respect to the Loans 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. Vista Del Rio 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, Vista Del Rio 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 Project Document, this Agreement, unless otherwise expressly provided, shall
prevail; however, 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.
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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 or the City
shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to
the Agreement which is prohibited by law.
21.13 Warranty Against Payment of Consideration. Vista Del Rio 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 and Agency Officials and Employees. No member, official or
employee of City or Agency shall be personally liable to Vista Del Rio, or any successor in interest,
in the event of any default or breach by City or Agency or for any amount which may become due to
Vista Del Rio or successor, or on any obligation under the terms of this Agreement.
21.15 Plans and Data. Should Vista Del Rio not proceed with the work and construction
of the Property, and upon termination of this Agreement for any reason, Vista Del Rio shall deliver to
City any and all plans and data concerning the Property/Project, and City or any person or entity
designated by City shall have the right to use such plans and data without compensation to Vista Del
Rio. 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 Agency and 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 Subsequent Approvals. Except where otherwise indicated, all subsequent approvals
identified in this Agreement, other than approvals by the City Council of the City of Santa Ana, shall
not be unreasonably withheld, delayed or conditioned.
21.18 City, Agency and Authority Approvals and Actions. The City, Agency and
Authority shall maintain authority of this Agreement and the authority to implement this Agreement
through the Executive Directors. The Executive Directors shall have the authority to make
approvals, issue interpretations, waive provisions, and/or enter into amendments of this Agreement
on behalf of the City, Agency and Authority so long as such actions do not materially or substantially
change the uses or development permitted on the Property, or materially or substantially add to the
costs incurred or to be incurred by the City, Agency or Authority as specified herein, and such
approvals, interpretations, waivers and/or amendments may include extensions of time to perform as
specified in the Schedule of Performance. All other material and/or substantial interpretations,
waivers, or amendments shall require the consideration, action and written consent of the City
Council, Agency Board and Authority Board.
(Signatures appear on following pages)
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
executed on the date set forth at the beginning of this Agreement.
ATTEST:
Maria D. Huizar, Secretary
APPROVED AS TO FORM
By:
Lisa E. Storck
Assistant Counsel
ATTEST:
Maria D. Huizar, Cleric of the Council
APPROVED AS TO FORM
By:
Lisa E. Storck
Assistant City Attorney
AGENCY:
COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF SANTA ANA, a public body,
corporate and politic
By:
Nancy T. Edwards, Interim Executive Director
CITY:
CITY OF SANTA ANA, a municipal corporation
By:
Dave N. Ream, City Manager
DOCSOC/1475221 v5/200272-0004
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VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership
By:
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By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
Deborrah A. Willard, President
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Real property in the City of Santa Ana, County of Orange, State of California, described as follows:
IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING A PORTION OF THE
NORTHEAST QUARTER OF SECTION 2, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE
RANCHO LAS BOLSAS, AS PER MAP RECORDED IN BOOK 51, PAGE 12 OF
MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY, AS DESCRIBED IN A DEED TO
THE NEWBERT PROTECTION DISTRICT, RECORDED OCTOBER 16, 1919 IN BOOK 339
PAGE 382 OF DEEDS IN THE OFFICE OF SAID COUNTY RECORDER MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST NORTHEASTERLY CORNER OF LOT 38 OF TRACT NO. 2887
AS SHOWN ON A MAP FILED IN BOOK 117, PAGES 28 THROUGH 30, INCLUSIVE, OF
MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY, BEING ALSO THE WESTERLY
CORNER OF THAT CERTAIN STRIP OF LAND DEEDED TO THE CITY OF SANTA ANA ON
MAY 14, 2002 BY INSTRUMENT NO. 20020400664 OF OFFICIAL RECORDS OF SAID
COUNTY, THE SOUTHERLY LINE OF SAID STRIP BEING A TANGENT CURVE, CONCAVE
SOUTHERLY AND HAVING A RADIUS OF 867.00 FEET, THENCE SOUTHEASTERLY
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 10° 23'48", AN ARC LENGTH
OF 157.32 FEET TO THE END OF SAID CURVE; THENCE SOUTH 69° 55' 32" EAST A
DISTANCE OF 77.35 FEET ALONG THE SOUTHERLY LINE OF SAID STRIP; THENCE
DEPARTING SAID SOUTHERLY LINE ON A COURSE BEARING SOUTH 20° 04'28" WEST
A DISTANCE OF 7.00 FEET; THENCE NORTH 69° 55' 32" WEST A DISTANCE OF 28.00
FEET; THENCE SOUTH 62° 04' 28" WEST A DISTANCE OF 13.38 FEET; THENCE SOUTH
14° 04' 28" WEST A DISTANCE OF 36.00 FEET; THENCE SOUTH 40° 01' 11" EAST A
DISTANCE OF 27.44 FEET; THENCE SOUTH 25° 35' 43" EAST A DISTANCE OF 29.37 FEET
TO THE BEGINNING OF A NON-TANGENT CURVE, CONCAVE SOUTHWESTERLY,
HAVING A RADIAL BEARING OF SOUTH 39° 52'08" WEST AND A RADIUS OF 42.00
FEET; THENCE SOUTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
50° 45'00" AN ARC LENGTH OF 37.20 FEET TO THE END OF SAID CURVE; THENCE
ALONG A LINE TANGENT TO SAID CURVE SOUTH 00° 37'08" WEST A DISTANCE OF
140.00 FEET; THENCE SOUTH 89° 22' 52" EAST A DISTANCE OF 14.00 FEET TO A POINT
ON THE NORTHWESTERLY LINE OF "PARCEL 1" OF A DOCUMENT RECORDED IN
BOOK 9034, PAGE 417, OFFICIAL RECORDS OF SAID COUNTY; THENCE SOUTH 26° 53'
03" WEST A DISTANCE OF 534.66 FEET ALONG THE NORTHWESTERLY LINE OF SAID
"PARCEL 1" TO A POINT ON THE EASTERLY LINE OF SAID TRACT 2887; THENCE
NORTH 0° 37'08" EAST ALONG SAID EASTERLY LINE A DISTANCE OF 802.28 FEET TO
THE POINT OF BEGINNING.
The area of the described land consisting of 2.740 acres, more or less.
DOCSOC/ 1475221 v5/200272-0004
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EXHIBIT B
AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Community Redevelopment Agency of the
City of Santa Ana
20 Civic Center Plaza (M-37)
Santa Ana, CA 92702
Attn: Executive Director
This document is exempt from payment of a
recording fee pursuant to Government Code
Sections 27383 and 6103.
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
(1600 West Memory Lane, Santa Ana, CA)
(Multi-Family Rental Units)
NOTICE IS HEREBY GIVEN, that the Community Redevelopment
Agency of the City of Santa Ana ("Agency"), to carry out certain obligations under
the Community Redevelopment Law of the State of California (Health and Safety
Code Section 33000 et seq.) and the Redevelopment Plan for the Merged
Redevelopment Project Areas, has required Vista Del Rio Housing Partners, L.P., a
California limited partnership ("Owner"), to enter into certain affordability
covenants and restrictions entitled Affordability Restrictions on Transfer of
Property ("Restrictions"). The Restrictions shall be recorded with the Orange
County Recorder concurrently with this Notice, with reference to certain real
property located at 1600 West Memory Lane, Santa Ana, CA ("Property"),
designated as Assessor's Parcel Nos. [ I and more particularly
described in Attachment No.l, attached hereto and incorporated herein by
reference.
The affordability covenants and restrictions contained in the Restrictions
include without limitation and as further described in the Restrictions:
The Project consists of a forty-one (41) unit rental project with
fifteen (15) studio units, twenty-one (21) one-bedroom units,
and five (5) two-bedroom units, all but one unit of which will
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be restricted to rental and occupancy by Extremely Low Income
or Very Low Income households paying an Affordable Rent,
determined in accordance with the lower and more restrictive of
the regulations applicable to federal 9% low and moderate
income tax credits and the California Community
Redevelopment Law, Health and Safety Code Section 33000, et
seq. (and, with respect to four (4) of the studio units, four (4) of
the one-bedroom units, and three (3) of the two-bedroom units,
which shall be fixed HOME Units, the regulations
implementing the HOME Investments Partnership Program
("HOME Program") set forth at 24 CFR §92.1, et seq.) Six (6)
of the studio units, ten (10) of the one-bedroom units and four
(4) of the two-bedroom units are to be restricted to Extremely
Low Income households, and all but one (1) of the remaining
units at the Project shall be restricted to Very Low Income
households for a period of not fewer than 55 years (15 years
with respect to the HOME Program requirements).
This Notice of Affordability Restrictions on Transfer of Property is being
recorded for the purpose of providing notice only and it in no way modifies the
provisions of the Restrictions. In the event of any conflict between this Notice and
the Restrictions, the terms of the Restrictions shall prevail.
The Restrictions have been recorded concurrently herewith and shall remain
in effect for not fewer than fifty-five (55) years.
This Notice is being recorded in the Official Records of Orange County,
California by the Agency in compliance with Health and Safety Code Section
33334.3(f)(3)(B), as amended, and shall be indexed against the Agency and the
Owner.
[Signatures appear on following pages.]
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IN WITNESS WHEREOF, the parties hereto have caused this Notice of
Affordability Restrictions on Transfer of Property to be executed as of the date set
forth at the beginning of this Notice.
AGENCY:
COMMUNITY REDEVELOPMENT
AGENCY OF THE CITY OF SANTA
ANA
a public body, corporate and politic
By:
Nancy T. Edwards,
Interim Executive Director
ATTEST:
Maria D. Huizar
Agency Recording Secretary
APPROVED AS TO FORM:
By:
Lisa E. Storck, Assistant Counsel
[Signatures continue on following page.]
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[Signatures continue from previous page.]
OWNER:
VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership
By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
By:
Deborrah A. Willard, President
I
?I
I
I
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Santa Ana
Community Development Agency
Housing Department M-37
20 Civic Center Plaza, 3rd Floor
P.O. Box 1988
Santa Ana, California 92702
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
(1600 West Memory Lane, Santa Ana, CA)
These AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the
"Restrictions") are entered into as of the day of , 2011, by and among and Vista Del Rio
Housing Partners, L.P., a California limited partnership (referred to herein as the "Vista Del Rid'),
the City of Santa Ana, a charter city (the "City"), and the Community Redevelopment Agency of the
City of Santa Ana, a public body, corporate and politic (the "Agency").
RECITALS:
A. Vista Del Rio is the owner of that certain real property located at 1600 West Memory
Lane (the "Property") located in the City of Santa Ana more particularly described in Exhibit A,
which is attached hereto and incorporated herein by this reference.
B. For the purpose of providing forty-one (41) residential rental units of housing that
will be affordable to Extremely Low Income and Very Low Income households (collectively,
"Assisted Units"), Vista Del Rio and the City have entered into that certain Loan Agreement, dated
and recorded against the Property concurrently herewith (the "Agreement") to which these
Restrictions are attached as Exhibit B 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 Agreement). In addition, the Agency, Santa Ana Housing
Authority and Vista Del Rio have entered into that certain Disposition and Development Agreement
dated July 20, 2009, the First Amendment to the Disposition and Development Agreement dated
March 15, 2010, the Second Amendment to the Disposition and Development Agreement dated
December 20, 2010, and the Third Amendment to the Disposition and Development Agreement
dated (the "DDA"), which provides for the acquisition of the Property and
construction and operation of the Project as Affordable Housing by Vista Del Rio.
C. The Agreement provides, among other things, for the use of the Property for
affordable housing with the Assisted Units being restricted to being rented to Extremely Low Income
and Very Low Income households.
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D. The Agreement contains certain provisions relating to the use, operation,
management and maintenance of the Property.
NOW, THEREFORE, CITY, AGENCY, AND VISTA DEL RIO COVENANT AND
AGREE AS FOLLOWS:
1. COVENANT TO OPERATE AFFORDABLE HOUSING
Vista Del Rio covenants and agrees (for itself, its successors, its assigns, and every successor
in interest to the Property or any part thereof) that Vista Del Rio, such successors, and such assigns
shall use the Property exclusively to provide affordable housing for Extremely Low Income and Very
Low Income households, as provided in these Restrictions, the Agreement, and the DDA. The terms,
provisions, and covenants set forth in the Agreement and the DDA are hereby incorporated herein by
this reference as if set forth in full herein.
2. RESERVED.
3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
3.1 Use Covenants and Restrictions.
A. Vista Del Rio agrees and covenants, which covenants shall run with the land
and bind Vista Del Rio, its successors, its assign and every successor in interest to the Property that
Vista Del Rio will make all Assisted Units on the Property available solely to Extremely Low
Income and Very Low Income households at Affordable Rents. The HOME Regulations applicable
to the eleven (11) HOME Units shall be enforced during the entire HOME Compliance Period. Upon
expiration of the HOME Compliance Period, the City and Agency will enforce affordability of said
Assisted Units with the same income and rent restrictions as the other Assisted Units, pursuant to the
requirements of Section 50052.5 of the Health and Safety Code and the CRL. Vista Del Rio further
covenants and agrees that the Property shall be developed, operated, managed and maintained in
accordance with Specific Development No. 83; Amendment Application 08-11, as approved by the
City of Santa Ana Planning and Building Agency and by the Santa Ana City Council pursuant to
Ordinance No. NS-2790 of the City of Santa Ana, adopted August 3, 2009.
B. The Project shall consist of forty income restricted Assisted Units (and one
unrestricted manager's unit). There shall be eleven (11) HOME Units. The eleven HOME Units will
be fixed units and shall be distributed throughout the complex with comparable amenities to the other
Assisted Units.
C. At initial lease up, all households selected to rent and occupy the HOME
Units shall be Very Low Income households and all households selected to rent and occupy the
remaining Assisted Units shall be Extremely Low Income and Very Low Income households, in
accordance with the schedule set forth in Section 3.2 below. All rental increases shall be in
conformance with federal and state law and approved by the Executive Directors.
D. The rent charged for the on-site property manager's unit shall not be
restricted.
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E. Affordable Rents charged to tenants shall be governed by California Health
and Safety Code Sections 50052.5, 50053(b)(1), and 50053(b)(2), and as provided in the HOME
Regulations 24 CFR section 92.2, whichever is less.
3.2 Affordable Gross Starting Rents (Less Reasonable Utilitv Allowance). Initial
rents may be recalculated to allowable rental amounts at the time of initial lease-up following
completion of Construction in accordance with any changes in allowable rent and income tables as
published by HUD and the State of California, Department of Housing and Community
Development.
A. Agency and HOME Units.
Agency, City, and Vista Del Rio agree that the breakdown of unit affordability for the
Assisted Units shall be as follows, under this Agreement:
The rents charged at the Project must comply with the lowest and most restrictive of the
following standards:
1. The calculation methodology defined in (i) Section 50053(b)(1) for
Extremely Low Income Households, or (ii) Section 50053(b)(2) for Very Low Income Households;
2. The rents published for Low Income Housing Tax Credit (Tax Credit)
projects by the California Tax Credit Allocation Committee (TCAC); and
3. With respect to the HOME Units, the Low HOME rents published by
HUD.
Agency, City, and Vista Del Rio agree that effective 2010 the initial maximum gross monthly
Affordable Rents and the breakdown of unit affordability for the Extremely Low Income Assisted
Units shall be as follows:
Studio Extremely Low Units
One Bedroom Extremely Low Units
Two Bedroom Extremely Low Units
# of Units # of
(Agency) HOME units
4 2
8 2
2 2
Max. Gross
Monthly Rents*
$488
$523
$627
Agency, City, and Vista Del Rio agree that effective 2010 the initial maximum gross monthly
Affordable Rents and the breakdown of unit affordability for the Very Low Income Assisted Units
shall be as follows:
# of Units # of HOME Maw Gross
(Agency) units Monthly Rents *
Studio Very Low Units 7 2 $753
One Bedroom Very Low Units 8 2 $861
Two Bedroom Very Low Units 0 1 $969
*Utilities Allowances must be deducted from the Maximum Gross Monthly Affordable Rent.
The applicable utilities allowances are determined periodically by the Authority.
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Maximum Gross Monthly Rents shall be recalculated following issuance of a Release of
Construction Covenants but prior to the time of initial lease-up in accordance with any changes in
allowable rent and income tables as published by HUD and the State of California, and shall be as
approved by the Executive Directors in writing in accordance with this Section. Such Maximum
Gross Monthly Rents charged to the first tenants of the 41 units (40 Assisted Units plus manager's
unit) shall constitute the Initial Rental Schedule.
3.3 Rental Vouchers.
(a) In the event Vista Del Rio rents an Assisted Unit to a household holding a
Portable Voucher, the rental agreement (or lease agreement, as applicable) between Vista Del Rio, as
landlord, and the tenant shall expressly provide that the monthly rent charged shall be the Affordable
Rent required hereunder for the Assisted Unit (not fair market rent) and that the rent collected
directly from such tenant holding a portable rental voucher shall be not more than 40% of the
tenant's actual gross income pursuant to the applicable voucher program regulations; i.e., the rent
charged to such tenant under the rental agreement shall be the Affordable Rent chargeable hereunder
and not fair market rent for the area, as would otherwise be permitted under the applicable Portable
Voucher program. Thus, the subsidy payment to Vista Del Rio under any Portable Voucher shall not
exceed the difference between forty percent (40%) of the tenant's actual gross income and
Affordable Rent chargeable for the applicable Assisted Unit hereunder (and under the Affordability
Restrictions).
(b) The parties acknowledge that Vista Del Rio and Authority intend to enter into
the HAP Contract and that the Senior Lender is anticipated to underwrite a Senior Loan based in part
on the Project Based Section 8 subsidy to the Project under the HAP Contract, including payments
thereunder equal to the difference between 30% of each tenant household's actual gross income and
the fair market rent for the area. In the event that, during the Term hereof, a new Housing Assistance
Payments Contract is proposed to be entered into (or is entered into) with respect to any Assisted
Units at the Project not already receiving Project Based Section 8 assistance under the HAP Contract
(or those Units, after expiration of the HAP Contract), Vista Del Rio shall cause the rental agreement
(or lease agreement, as applicable) for each Assisted Unit receiving Project Based Section 8
assistance pursuant to such new Housing Assistance Payments Contract (but not the HAP Contract)
to provide that the monthly rent charged under such rental agreement (or lease agreement, as
applicable) shall not exceed the Affordable Rent required hereunder for the Assisted Unit (not fair
market rent). Thus, the subsidy payment to Vista Del Rio under any project-based rental voucher
(other than with respect to the subsidy pursuant to the HAP Contract) shall not exceed the difference
between thirty percent (30%) of the tenant's actual gross income and Affordable Rent chargeable for
the applicable Assisted Unit hereunder (and under the Regulatory Agreement).
(c) Vista Del Rio hereby acknowledges and agrees that, upon completion of
construction of the Project and leasing of the Assisted Units to Extremely Low Income and Very
Low Income households pursuant to this Agreement, the DDA and the Affordability Restrictions,
Vista Del Rio will have received governmental subsidies from Authority, City, Agency and TCAC
(through the Tax Credits allocated to the Project) in exchange for Vista Del Rio's agreement to limit
the rents charged to tenants of the Project to an Affordable Rent and Vista Del Rio further
acknowledges and agrees that, except for the HAP Contract payments with respect to between 7 and
10 Assisted Units (as determined by Authority), which are part of the approved financing for the
Project, acceptance of additional governmental rental subsidies resulting in total, cumulative rent
payments to Vista Del Rio in excess of an Affordable Rent for any of the Assisted Units at the
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Project would constitute an unjustified windfall to Vista Del Rio at the expense of Authority and the
federal and state governments. Further, with respect to the HOME Units, the HOME Regulations
prohibit application of any Project Based Section 8 assistance, Portable Voucher, or other rental
subsidy that, cumulatively with the rent to be paid by the tenant household, exceeds an Affordable
Rent calculated pursuant to the HOME Regulations.
3.4 Rent Increases. On an annual basis, the Executive Directors shall provide Vista Del
Rio with the maximum allowable schedule of Affordable Rents for the Property in accordance with
changes in allowable rent and income tables published by HUD and the State of California, provided
however that the rent for the HOME units shall in no event be higher than the rent for the equivalent
Assisted Unit. In no event shall Vista Del Rio charge any tenant more than the Affordable Rents
prescribed for the Assisted Units pursuant to these Restrictions and as directed by the Executive
Directors.
4. RENT LIMITATIONS. Vista Del Rio, its successors and assigns shall not charge rents for
the Assisted Units in excess of the amounts set forth herein, as adjusted on the basis of the revised
schedules of Area Median Income issued from time-to-time by HUD. The Executive Directors shall
notify Vista Del Rio in writing of the adjusted allowable maximum incomes and rents.
5. MANAGEMENT PLAN. Vista Del Rio shall adopt and include as part of its Management
Plan (described in Section 11 below), written tenant selection policies and criteria for the Assisted
Units, that meet the following requirements:
households;
(a) Are consistent with the purpose of providing housing for Very Low Income
(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) To the extent allowed by applicable federal, state and local law, provide first
priority in the selection of qualified eligible tenants to households that are referred by the City or
Agency;
(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 Assisted Units. Vista Del Rio, the City
and Agency shall cooperate to effectuate this provision prior to the initial renting, or upon occurrence
of a vacancy, and the re-renting of any Assisted Units ( 24 CFR 92.351); and
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(g) The Project shall serve the needs of individuals and families who require
special needs housing, specifically persons with disabilities. For purposes of this Section, the term
"persons with disabilities" includes, but is not limited to, any physical or mental disability as defined
in Government Code Section 12955.3. The Project shall be designed for occupancy by persons with
disabilities, by, for example, including design features that makes the Project physically accessible to
people with mobility impairments. To the extent permitted by law, Vista Del Rio shall lease each of
the forty Assisted Units (not including the manager's unit) to persons with disabilities or to families
which include one or more persons with disabilities.
6. RENTAL VOUCHER TENANTS. Vista Del Rio, its successors and assigns, shall not
refuse to lease an Assisted 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 such tenants, including the tenant contribution and rental
assistance, shall not exceed the allowable rents as described above.
7. LEASE PROVISIONS. Any lease of any of the Assisted Units must be for not less than
one year. The lease may not contain any of the following provisions (in which references to "owner"
shall mean the Vista Del Rio, 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 Assisted Unit after the tenant has moved out of the
Assisted 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;
to the tenant;
(d) Agreement of the tenant that the owner may institute a lawsuit without notice
(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.
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8. SUCCESSORS AND ASSIGNS. Vista Del Rio, its successors or assigns, must adhere to
state law requirements with regard to termination of tenancy.
9. MAINTENANCE OF PROPERTY. Vista Del Rio shall, at its sole cost and expense,
maintain or cause to be maintained the interior and exterior of the Project and all Assisted Units
thereof and the Property in a decent, safe and sanitary manner, in accordance with the HUD Housing
Quality Standards (HQS) and the maintenance standards required by Section 92.251 of the HOME
Regulations, and in accordance with the standard of maintenance of first class apartments within
Orange County, California. None of the Assisted Units in the Project shall at any time be utilized on
a transient basis, nor shall the Property or any portion thereof ever be used as a hotel, motel,
dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest
home, or be converted to condominium ownership. If at any time Vista Del Rio fails to maintain the
Project or the Property in accordance with this Agreement and such condition is not corrected within
five (5) Business Days after written notice from City or Agency with respect to graffiti, debris, and
waste material, or thirty (30) days after written notice from City or Agency with respect to general
maintenance, landscaping and building improvements, then City and Agency, in addition to whatever
remedy they may have at law or at equity, shall have the right to enter upon the applicable portion of
the Project or the Property and perform all acts and work necessary to protect, maintain, and preserve
the Project and the Property, and to attach a lien upon the Property, or to assess the Property, in the
amount of the expenditures arising from such acts and work of protection, maintenance, and
preservation by City and Agency and/or costs of such cure, including a reasonable administrative
charge, which amount shall be promptly paid by Vista Del Rio to City or Agency, as applicable,
upon demand. The liens created under this Section shall be subject and subordinate to the lien of the
mortgage or deed of trust encumbering the Property (or any part of the Property) for the Senior Loan
approved pursuant to the terms of the DDA. The City and/or Agency shall inspect the Property
annually after the date of issuance of the Release of Construction Covenants as described in Section
310 of the DDA and Vista Del Rio shall cooperate with the City and Agency to make the Property
and all Assisted Units thereon available for such inspection.
Vista Del Rio 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.
10. NONDISCRIMINATION COVENANTS
10.1 Obligation to Refrain from Discrimination Vista Del Rio 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, marital status, ancestry or national origin in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Vista Del Rio
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.
10.2 Nondiscrimination in Employment Vista Del Rio certifies and agrees that all
persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies,
and all subcontractors, bidders and vendors, are and will be treated equally by it without regard to, or
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because of race, color, religion, ancestry, national origin, sex, age, pregnancy, childbirth or related
medical condition, medical condition or physical or mental disability, and in compliance with Title
VII of the Civil Rights Act of 1964, 42 U S.C. Section 2000, et seq., the Federal Equal Pay Act of
1963,29 U.S.C. Section 206(d), the Age Discrimination in Employment Act of 1967, 29 U S.C.
Section 621, et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b, et
seq., 42 U.S.C. Section 1981, the California Fair Employment and Housing Act, Cal. Government
Code Section 12900, et seq., the California Equal Pay Law, Cal. Labor Code Section 1197.5, Cal.
Government Code Section 11135, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et
seq., and all other applicable anti-discrimination laws and regulations of the United States and the
State of California as they now exist or may hereafter be amended.
10.3 Statutory Nondiscrimination Covenants. Except to the extent preferences are
permitted or required by this Agreement, Vista Del Rio covenants by and for itself, its successors and
assigns, and all persons claiming under or through them that there shall be no discrimination against
or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the
Property, nor shall the grantee or any person claiming under or through him or her, establish or
permit any practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
Property. Vista Del Rio shall refrain from restricting the rental, sale or lease of the Property or any
portion thereof on the basis of any of the characteristics listed above. Vista Del Rio shall also
comply with the equal opportunity and fair housing requirements set forth in Section 92.350 of the
HOME Regulations. The foregoing covenants shall run with the land. All such deeds, leases or
contracts shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
(a) In Deeds: "The grantee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that
there shall be no discrimination against or segregation of, any person or group of persons on account
of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases
are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of
Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer,
use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any
person claiming under or through him or her, establish or permit any practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing
covenants shall run with the land."
(b) In Leases: "The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions: "That there
shall be no discrimination against or segregation of any person or group of persons, on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section
12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself,
or any person claiming under or through him or her, establish or permit any such practice or practices
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of discrimination or segregation with reference to the selection, location, number, use, or occupancy,
of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased."
(c) In Contracts: "There shall be no discrimination against or segregation of, any
person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of
the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (in) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in
the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the
subject of this Agreement, nor shall the grantee or any person claiming under or through him or her,
establish or permit any practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees
in the premises herein conveyed. The foregoing covenants shall run with the land."
10.4 In Affordable Housing Restrictions. The foregoing covenants shall (a) be included
in the Affordability Restrictions on Transfer of Property, (b) run with the land, and (c) remain
effective for the Term hereof.
11. MANAGEMENT OF PROJECT. Not later than five (5) business days prior to the
execution of the documents, Vista Del Rio shall submit to the Executive Directors a Management
Plan in a form that is acceptable to the Executive Directors, including, but not limited to, the
components listed below. Approval of the Management Plan must be obtained from the Executive
Directors not later than the time for the Closing. Vista Del Rio 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 Directors, for the term of the income and rent restrictions
contained in these Restrictions. The components of the Management Plan shall include:
(a) Management Agent. Vista Del Rio shall submit the name and qualifications
of the proposed Management Agent. The Executive Directors shall approve or disapprove the
proposed Management Agent in writing based on the experience and qualifications of the
Management Agent. The John Stewart Company is hereby approved as the initial Management
Agent.
(b) Management Agreement. Vista Del Rio shall submit a copy of the proposed
management agreement specifying the amount of the management fee, and the relationship and
division of responsibilities between Vista Del Rio and Management Agent. Such management
agreement (including the management fee) shall be reasonably acceptable to the Executive Directors.
(c) Project Operating Budget. Prior to the Closing, and annually thereafter not
later than 60 days prior to the beginning of the next Calendar Year, Vista Del Rio shall submit a
projected operating budget and cash flow ("Operating Budget") to the Executive Directors. The
Operating Budget and cash flow shall be in a form that is reasonably acceptable to the Executive
Directors. Vista Del Rio must promptly deposit all revenue received with respect to the Project
directly into a segregated, interest-bearing depository account established exclusively for the Project
("Project Operating Account"). Withdrawals from the Project Operating Account may be made only
in accordance with the provisions of the Loan Agreement and the Operating Budget approved
annually by the Executive Directors, as it may be revised from time to time with City and Agency
approval. Vista Del Rio may make withdrawals from the Project Operating Account solely for the
payment of Project expenses and Project fees included in the approved Operating Budget.
Withdrawals from the Project Operating Account for other purposes may be made only with the prior
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written approval of the Executive Directors. Further, Vista Del Rio shall obtain the prior written
approval of the Executive Directors for any expenditure from the Project Operating Account that
exceeds by ten percent (10%) or more the amount set forth for the applicable line item in the
Operating Budget and/or for any expenditure that would, cumulatively with all prior expenditures in
the applicable year, exceed the total approved annual Operating Budget for the Project by ten percent
(10%) or more.
(d) Tenant Selection Policies. Vista Del Rio shall include in the Management
Plan the tenant selection policies in accordance with Section 5, above.
12. If at any time the City or Agency determines that the Assisted Units are not being managed
or maintained in accordance with the approved Management Plan, Vista Del Rio shall change the
Management Agent or the practices complained of, upon receipt of written notice from the Executive
Directors. The Executive Directors may require Vista Del Rio 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 Vista Del Rio without
penalty, upon thirty (30) days prior written notice, at the direction of the Executive Directors. Within
ten (10) days following a direction of the Executive Directors to replace the Management Agent, the
Vista Del Rio shall select another Management Agent or make other arrangements satisfactory to the
Executive Directors or designee for continuing management of the Assisted Units.
13. COVENANTS. The covenants established in these Restrictions and any amendments hereto
approved by the City, Agency and Vista Del Rio shall, without regard to technical classification and
designation, be binding for the benefit and in favor of the City, the Agency, and their respective
successors and assigns. These Restrictions shall remain in effect for fifty-five (55) years from the
recordation of the Release of Construction Covenants ("Term"). In its discretion, the City may defer
repayment of the Loans or the City and 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 Term of these Restrictions.
14. DISBURSEMENT. Vista Del Rio shall not request disbursement of any proceeds of the
Loans 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)(10)].
15. REPORTS. Vista Del Rio 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. Vista Del Rio 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 Vista Del Rio as to such
information as the City Executive Director may then require, including, but not limited to, the
following:
(1) The fiscal condition of the Project, including the Annual Budget and Project
Cash Flow report required by Section 12.5 of the Loan Agreement which shall include an audited
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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 (including a calculation of the
Residual Receipts available to make payments on the Loans); a detailed itemized listing of income
and expenses; and the amounts of any fiscal reserves. Such Annual Budget and audited financial
statement shall be prepared in accordance with generally accepted accounting practices, consistently
applied (and in accordance with Section 15.5 of the Loan Agreement).
(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 Vista Del Rio 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 Assisted 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 Assisted 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 Deeds of Trust, with a loss payable endorsement naming the Agency
and 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 Vista Del Rio, Agency 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 (5th) year.
(9) Such other information as may be reasonably required by the Executive
Directors or their designee(s).
b. Records and Audits. Vista Del Rio 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;
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(2) records, for each HOME 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 Program funds;
(B) 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 Vista Del
Rio'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 Vista Del Rio
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
(10) any other reports issued by other monitoring agencies.
c. All records, accounts, documentation and other materials pertaining to the Project
must be retained for the most recent five year period, except that construction records may be
retained for five years after the date the Release of Construction Covenants is recorded against the
Property and 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 expiration of the Term
hereof. Vista Del Rio 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 Term 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 Agency, the
State, the Office of the Auditor General of HUD, and/or their representatives shall have unrestricted
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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 Agency, City, the State or HUD upon termination of the Loan
Agreement, Vista Del Rio shall cause all records, accounts, documentation and all other materials
relevant to the work to be delivered to the Agency, 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 Agency, 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. Vista Del Rio shall reasonably cooperate
with City in performing such audit.
16. THIRD PARTY BENEFICIARY. The Santa Ana Housing Authority ("Authority") is an
intended third party beneficiary of the terms and provisions of these Restrictions and the covenants
herein, with full right (but no obligation) to enforce the terms, provisions, and covenants contained
herein. City, Agency and Authority are each beneficiaries hereunder, 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.
The City, Agency, and Authority shall have the right if the covenants are breached, 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. COVENANTS RUN WITH LAND. The covenants and agreements contained herein shall
run with the land and not be personal obligations of Vista Del Rio.
18. TRANSFERS OF INTEREST IN PROPERTY OR AGREEMENT
18.1 Prohibition. The qualifications and identity of Vista Del Rio are of particular
concern to the Agency and City. It is because of those qualifications and identity that Agency and
City have entered into the Loan Agreement and the other Project Documents with Vista Del Rio.
Therefore, for the period commencing upon the date of the Loan Agreement and until the expiration
of the Term hereof, no voluntary or involuntary successor in interest of Vista Del Rio shall acquire
any rights or power under the Loan Agreement or these Restrictions, nor shall Vista Del Rio make
any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the
whole or any part of the Property or the Improvements thereon (collectively, "Transfer") without
prior written approval of the Agency and City, except as expressly set forth herein. Any proposed
total or partial Transfer without Agency and City approval shall constitute a Default pursuant to
Article 20, et seq., hereof.
18.2 Permitted Transfers. Notwithstanding any other provision of the Loan Agreement
or these Restrictions to the contrary, Agency and City approval of a Transfer shall not be required in
connection with any of the following:
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(a) Any Transfer to an entity or entities in which Vista Del Rio directly or
indirectly retains a minimum of fifty-one percent (51 %) of the ownership or beneficial interest and
retains management and control of the transferee entity or entities.
(b) The conveyance or dedication of any portion of the Property to the City or
other appropriate governmental agency, or the granting of easements or permits to facilitate
construction of the Improvements.
(c) Any requested assignment for financing purposes (subject to such financing
being considered and approved by the Agency pursuant to Section 311 of the DDA), including the
grant of a deed of trust to secure the funds necessary for construction and permanent financing of the
Improvements.
(d) Removal of the investor limited partner of Vista Del Rio upon the expiration
of the fifteen (15) year tax credit compliance period applicable to the Project.
(e) A Transfer of a General Partner's interest in Vista Del Rio when made in
connection with the exercise by the Limited Partner of its rights upon a default by a General Partner
under the 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.
(f) Any Transfer of the Property to the Managing General Partner pursuant to the
right of first refusal or to the General Partners pursuant to the purchase option, as provided for in the
Partnership Agreement.
(g) Any sale, transfer or other disposition of an interest in the Limited Partner.
(h) Any sale, transfer or other disposition of the Limited Partner's interest in
Vista Del Rio as allowed by the Partnership Agreement.
In the event of a Transfer by Vista Del Rio described above not requiring the City's or
Agency's prior approval, Vista Del Rio nevertheless agrees that at least thirty (30) days prior to such
assignment it shall give written notice to Agency/City of such assignment and satisfactory evidence
that the assignee has assumed in writing through an assignment and assumption agreement all of
Vista Del Rio's obligations set forth in the Loan Agreement and these Restrictions. Upon the
satisfaction of said obligations and the Transfer, the assignor shall be released from all obligations to
the Agency and City hereunder (except obligations to indemnify the Agency and City pursuant to
Section 14.5 and Article 18, et seq., of the Loan Agreement).
18.3 Agency/City Consideration of Requested Transfer. Agency and City agree that
they will not unreasonably withhold, condition or delay approval of a request for approval of a
Transfer made pursuant to this Section 18.3, provided Vista Del Rio delivers written notice to the
Agency/City requesting such approval. Such notice shall be accompanied by sufficient evidence
regarding the proposed assignee's or purchaser's development and/or operational qualifications and
experience, and its financial commitments and resources, in sufficient detail to enable the Agency to
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evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 18.3 and
as reasonably determined by the Agency/City. The Agency/City shall evaluate each proposed
transferee or assignee on the basis of its development and/or qualifications and experience in the
construction of facilities similar to the Improvements, and its financial commitments and resources,
and may reasonably disapprove any proposed transferee or assignee, during the period for which this
Section 18.3 applies, which the Agency/City determines does not possess equal or better
qualifications than the transferring developer. An assignment and assumption agreement in a form
satisfactory to the Agency/City's legal counsel shall also be required for all proposed assignments.
Within fifteen (15) days after the receipt of Vista Del Rio's written notice requesting Agency
approval of an assignment or transfer pursuant to this Section 18.3, the Agency/City shall either
approve or disapprove such proposed assignment or shall respond in writing by stating what further
information, if any, the Agency/City reasonably requires in order to determine the request complete
and determine whether or not to grant the requested approval. Upon receipt of such a response, Vista
Del Rio shall promptly furnish to the Agency/City such further information as may be reasonably
requested and the Agency and City shall approve or disapprove the requested Transfer within fifteen
(15) days after receipt of all such requested information.
18.4 Successors and Assigns. All of the terms, covenants and conditions of this
Agreement shall be binding upon Vista Del Rio and its permitted successors and assigns. Whenever
the term "Vista Del Rio" is used in this Agreement, such term shall include any other permitted
successors and assigns as herein provided.
19. ENFORCEMENT OF AGREEMENTS. The Loan Agreement and all of its attachments
shall be enforceable by City, Agency and Authority in accordance with the terms thereof. Each of
the Loan Agreement, these Restrictions, the City/HOME Loan Note, the Agency Loan Note, the
City/HOME Loan Deed of Trust, and the Agency Loan Deed of Trust provide a means of
enforcement by the City and the Agency if Vista Del Rio is in breach of its obligations hereunder and
thereunder, including liens on the Property, deed restrictions and covenants running with the land [24
CFR 92.504 (c) (13)].
20. SUBORDINATION OF AFFORDABILITY RESTRICTIONS. In the event the
Executive Directors find that an economically feasible method of financing for the construction and
operation of the Project without the subordination of the Affordability Restrictions is not reasonably
available, Executive Directors may agree to subordinate the covenants contained in the Affordability
Restrictions to the Senior Loan and/or the Tax Credit Regulatory Agreement, subject to the terms of
this Section 20. Each and any subordination agreement evidencing or affirming Agency's and City's
subordination of the Affordability Restrictions entered into by Agency and/or City shall contain
written commitments which the Executive Directors find are reasonably designed to protect
Agency's and City's investment in the Project in the event of default; any such subordination
agreement(s) shall contain contractual obligation of such Senior Lender to include, without
limitation, the following: (a) concurrent delivery to Agency and City of a true copy of each and any
notice provided by the Senior Lender for the Project to Vista Del Rio (as its borrower) during the
term of the Senior Loan for the Project; (b) a reasonably extended cure period and right to Agency
and City to cure and assume the Senior Loan, and/or other senior lien(s) for the Project upon the
same terms applicable to the approved financing to Vista Del Rio pursuant to the loan documents
applicable thereto with such right, but with no obligation, to the Agency and City being available
both from the date of issuance of any notice of default through and after the recordation of a formal
Notice of Default by the Senior Lender for the Project pursuant to applicable California Code of
Civil Procedure foreclosure requirements, and (c) a right of Agency and City to cure a default on
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each of the senior loan(s) for the Project prior to foreclosure and after recordation of a Notice of
Default pursuant to applicable California Code of Civil Procedure requirements; and such cure rights
may also include: (1) a right of Agency and City to negotiate with the Senior Lender(s) for the
Project after notice of default from the Senior Lender(s) and prior to foreclosure, (2) an agreement
that if prior to foreclosure of the Senior Loan for the Project, Agency or City takes title to the
Property and cures the default on the senior loan(s) for the Project, the Senior Lender(s) will not
exercise any right it may have to accelerate the Senior Loan by reason of the transfer of title to
Agency or City, and (3) a right of Agency and City to acquire Vista Del Rio's interest in the Property
from Vista Del Rio at any time after a material default on the Senior Loan for the Project.
[Signatures appear on following pages.]
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IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions
on Transfer of Property to be executed as of the date first set forth above.
ATTEST:
Maria D. Huizar, Secretary
APPROVED AS TO FORM
By:
ATTEST:
Maria D. Huizar, Cleric of the Council
APPROVED AS TO FORM
By:
Lisa E. Storck
Assistant Counsel
Lisa E. Storck
Assistant City Attorney
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AGENCY:
COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF SANTA ANA, a public body,
corporate and politic
By:
Nancy T. Edwards, Interim Executive Director
CITY:
CITY OF SANTA ANA, a municipal corporation
By:
Dave N. Ream, City Manager
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VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership
By:
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By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
Deborrah A. Willard, President
EXHIBIT C
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 27383
When Recorded Mail to:
City of Santa Ana - Community Development Agency
20 Civic Center Plaza
P.O. Box 1988
Santa Ana, California 92702
Attn: Executive Director
CITY/HOME LOAN
DEED OF TRUST
AND ASSIGNMENT OF RENTS
This CITY/HOME LOAN DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed
of Trust") is made this day of March 2011, among Vista Del Rio Housing Partners L.P., a
California limited partnership (the "Trustor"), First American Title Insurance Company, a California
corporation (the "Trustee"), and the City of Santa Ana, a charter city and municipal corporation duly
organized and existing under the Constitution and laws of the State of California (the `Beneficiary").
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
Attachment No. 1 and more commonly known 1600 West Memory Lane, 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, all of
which, including replacements and additions thereto, shall be deemed to be and remain a part of the
Property covered by this 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 Deed of Trust or in the
performance of any agreement secured by this 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 furnished 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 therefore, whether or not the same are, or shall be
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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 a Promissory
Note to the Beneficiary executed by Trustor, dated concurrently herewith in the principal amount of
One Million Five Hundred Thousand Dollars ($1,500,000.00) (the "Loan"); (b) the payment and
performance of the covenants and agreements of Trustor contained in the Loan Agreement recorded
with the County of Orange as Document No. , by and among Trustor, Beneficiary, and
Agency (the "Agreement"), (c) the payment and performance of the covenants and agreements of
Trustor contained in the Disposition and Development Agreement dated July 20, 2009, the First
Amendment to the Disposition and Development Agreement dated March 15, 2010, the Second
Amendment to the Disposition and Development Agreement dated December 20, 2010, and the
Third Amendment to the Disposition and Development Agreement dated , by and
among Trustor, Agency, and Santa Ana Housing Authority (the "Authority") (collectively, the
"DDA"); (d) the payment and performance of the covenants and agreements of Trustor contained in
the Affordability Restrictions on Transfer of Property by and among Agency, Trustor and
Beneficiary, dated as recorded concurrently herewith (the "Affordability Restrictions") and (e) the
payment of all other sums, with interest thereon, advanced in accordance herewith to protect the
security of this 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. This Deed of Trust is executed and delivered, along with the Promissory
Note, pursuant to and in implementation of the 41 unit special needs affordable multi-family
residential project in the aforementioned Agreement and DDA entered into by and between the
Beneficiary and Trustor, to benefit the Property, a copy of which is on file as a public record with the
Beneficiary. Trustor acknowledges that but for the execution of this Deed of Trust, the Beneficiary
would not enter into the Promissory Note secured by this 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 other than this 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 development of the Property.
3. Repayment of the Loan. Trustor will promptly repay, when due, the principal and
interest, if any, as required by the Promissory Note secured by this Deed of Trust.
4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to
any and all obligations secured by deeds of trust, or any other security agreement, to secure financing
or refinancing for the purchase and rehabilitation of the Property; subject to and provided that the
Beneficiary and such Senior Lender enter into a subordination agreement providing notice and cure
rights to Beneficiary that are reasonably acceptable to the Executive Directors and consistent with the
requirements of Section 20 of the Affordability Restrictions.
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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. Trustor
will pay all taxes, assessments and other charges, fines and impositions attributable to the Security
which may attain a priority over this 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 Deed of Trust; provided that Trustor will not be
required to discharge the lien of the 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' 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 Deed of Trust is
not thereby impaired. If such restoration or repair is not economically feasible or if the security of
this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance
proceeds will be used to repay the grant under this 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 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 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 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
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under this 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 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 Promissory
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 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 Deed of Trust.
11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and
cumulative to any other right or remedy under this Deed of Trust or any other 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 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 Deed of Trust will be given by certified mail,
return receipt requested, addressed to Trustor at Vista Del Rio Housing Partners, L.P., c/o Foundation
for Affordable Housing V, Inc.,30950 Rancho Viejo Road, Suite 100, San Juan Capistrano, CA
92675, and (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:
City Manager, or at such other address as the Beneficiary may designate by notice to Trustor as
provided above. Notice shall be effective as of the date received by the Beneficiary as shown on the
return receipt.
15. Governing Law. This Deed of Trust shall be governed by the laws of the State of
California.
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16. Severability. In the event that any provision or clause of this Deed of Trust or the
Promissory Note conflicts with applicable law, such conflict will not affect other provisions of this
Deed of Trust or the Promissory Note which can be given effect without the conflicting provision,
and to this end the provisions of the Deed of Trust and the Promissory Note are declared to be
severable.
17. Captions. The captions and headings in this 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 Deed of Trust or the Promissory Note secured by this Deed of Trust,
including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of
Trust, or any default under any other agreement the performance of which is secured by this Deed of
Trust, the Beneficiary may declare all sums secured by this 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 Deed of Trust and sale of the Security. The notice will also
inform Trustor 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 Trustor to acceleration and sale.
If the breach is not cured on or before the date specified in the notice or such longer period as
provided above, the Beneficiary, at the Beneficiary's option, may: (a) declare all of the sums secured
by this 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; (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
any 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 Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise
the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof; (d) 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 (e) 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.
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.
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19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the
sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by the
Beneficiary to enforce this 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 Deed of Trust or at any time prior to entry of
a judgment enforcing this Deed of Trust if. (a) Trustor pays the Beneficiary all sums which would be
then due under this Deed of Trust and no acceleration under the Promissory Note has occurred;
(b) Trustor cures all breaches of any other covenants or agreements Trustor contained in this Deed of
Trust and the Covenants; (c) Trustor pays all reasonable expenses incurred by the Beneficiary and the
Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust and the
Covenants, 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 Deed of Trust, the Beneficiary's interest in the Security and
Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon
such payment and cure by Trustor, this 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 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 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 Deed of
Trust and expiration of the Term of the Agreement and the Term of the Affordability Restrictions,
the Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of
Trust and the Promissory 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 Trustor at the address set forth in Section 14 above.
24. Nonrecourse Liability. Neither Trustor nor any general partner of Trustor shall have
any personal liability under the Loan Agreement, Promissory Note, and this 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. Third Party Beneficiaries. Agency and Authority are third party beneficiaries of
Beneficiary's rights hereunder, with full right (but no obligation) to enforce the terms and exercise
the remedies provided to Beneficiary hereunder.
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IN WITNESS WHEREOF, Trustor has executed this City/HOME Loan Deed of Trust and
Assignment of Rents as of the date first written above.
By:
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"Trustor"
VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership
By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
Deborrah A. Willard, President
EXHIBIT D
CITY/HOME LOAN NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO THE CITY OF SANTA ANA, CALIFORNIA
$1,500,000.00 , 2011
Santa Ana, California
1. Principal Amount of City/HOME Loan
For value received, Vista Del Rio Housing Partners, L.P., a California limited partnership
(`Borrower"), promises to pay to the order of the City of Santa Ana ("City"), at 20 Civic Center
Plaza, 3rd Floor, Santa Ana, California 92702, 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 ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000.00) or so much thereof as shall be disbursed
hereunder, with three percent interest (3.0%).
In implementation of the acquisition and development of that certain real property in the
City, described in the Loan Agreement as the "Property," commonly known as 1600 Memory Lane,
Santa Ana, California, and operation of the Property as affordable rental housing for Extremely Low
Income and Very Low Income households, (a) the Community Redevelopment Agency for the City
of Santa Ana ("Agency"), the Santa Ana Housing Authority ("Authority"), and Borrower have
heretofore entered into that certain Disposition and Development Agreement (as amended, the
"DDA"), (b) City, Agency and Borrower have entered into that certain "Loan Agreement" dated
concurrently herewith and recorded against the Property (the Loan Agreement and DDA are
collectively referred to herein as the "Agreement"), and (c) City, Agency and Borrower have entered
into those certain Affordability Restrictions on Transfer of Property, dated concurrently herewith and
recorded against the Property ("Affordability Restrictions"). This Note is made pursuant to, entitled
to the benefits of and referred to as the City/HOME Loan Note in the Loan Agreement. This Note is
secured by that certain City/HOME Loan Deed of Trust and Assignment of Rents between Borrower
and City, dated concurrently herewith (the "City/HOME Loan Deed of Trust"). This Note, the Loan
Agreement, the Affordability Restrictions, and the City/HOME Loan Deed of Trust are sometimes
collectively referred to herein as the "Loan Documents." The Loan Documents and the rights and
responsibilities of Borrower thereunder inure to the benefit of the City, Agency and Authority. 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:
"City/HOME Loan" shall mean the loan evidenced by this Note.
"Calendar Year" means each consecutive twelve (12) month period from January I to
December 30.
"Closing Costs" shall mean:
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(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
completing such Refinancing, including, without limitation, loan fees, loan repayment charges, costs
of title insurance premiums, escrow fees, recording fees and attorneys' fees.
"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 also includes any
casualty insurance proceeds in excess of those used to restore the Property and 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. Gross Revenues shall not include loan proceeds or capital
contributions.
"Operating Expenses" shall mean the sum of the following:
(i) scheduled payments of principal and interest and all other charges relating to
the Senior Loan(s);
(ii) all other actual, reasonable cash operating costs and expenses, calculated on
an annual basis, that are directly attributable to managing and operating the Property, 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) 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.
(iii) a management fee equal to $55 per unit a month (increasing by CPI):
(iv) deposits into required reserves
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(v) payments due on any deferred Developer Fees;
(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 Partnership
Agreement.
"Project" shall mean the acquisition, development, operation, maintenance, and
management of the Property as affordable housing by Borrower pursuant to the Agreement.
"Property" shall mean the real property located at 1600 Memory Lane, Santa Ana,
California, described in the City/HOME Loan Deed of Trust.
"Refinancing" shall mean changing the then existing financing on the Property by, without
limitation, modifying the interest rate and/or the term of the existing Senior Loan, increasing or
reducing the amount of the existing Senior Loan, paying off the existing Senior Loan 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 applicable to each such year less the items listed in the
Partnership Agreement in Section 5.1(a)(i)-(ix) 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) 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 or limited partner in the Borrower, or any interest by any individual or
entity which holds an interest in any such general or limited 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 thirty-five percent (35%) 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.
"Sale Proceeds" shall mean the proceeds received by Borrower in connection with any Sale.
"Senior Loan" shall mean the senior loan being made by ,
concurrent to the City/HOME Loan for payment of a portion of the Construction costs incurred by
Vista Del Rio relating to the Project, as approved by the Executive Directors, 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
this Note.
3. City/HOME Loan Repayment.
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).
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4. Reserved.
5. Annual City/HOME Loan Repayment.
a. Borrower shall make a City/HOME 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
Residual Receipts, as provided in this Section 5.
b. Within one hundred twenty (120) days after the close of the initial Calendar Year
following the year the Project is placed-in-service and on or before the 120th day of each Calendar
Year thereafter, the Borrower shall submit to the City audited financial statements including 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/HOME Loan payment then due.
C. The Borrower shall pay to the City seventy-five percent (75%) of the Residual
Receipts ("City's Percentage of Residual Receipts") as payment of principal and interest under the
City/HOME Loan. The remaining twenty five percent (25%) of the Residual Receipts shall remain
with the Borrower. Pursuant to the Loan Agreement, the Borrower has also received a loan of tax
increment funds from the Agency in the original principal amount of $469,000 ("Agency Loan").
The City's Percentage of Residual Receipts for each year shall be applied to repay the amounts
owing under this Note and the amounts owing under the Agency Loan, as follows: 24% of the City's
Percentage of Residual Receipts will be applied to repay the Agency Loan and 76% of the City's
Percentage of Residual Receipts will be applied to repay amounts owing under this Note. Upon
repayment in full of all amounts owing under the Agency Loan, the entire City's Percentage of
Residual Receipts shall be allocated to repayment of the amounts owing hereunder in accordance
with Section 13.a. hereof.
d. The Residual Receipts payment shall be made not later than one hundred fifty (150)
days after the close of the Calendar Year.
6. Reserved.
7. City/HOME Loan Repayment from Refinancing Proceeds.
The Borrower shall make a City/HOME 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 the balance remaining on the Senior Loan; next, the Borrower
shall pay to the City fifty percent (50%) of the Refinancing Proceeds ("City's Percentage of the
Refinancing Proceeds") to the extent of the outstanding balance on this Note. The remaining
Refinancing proceeds shall remain with Borrower. Such payment shall be due on the date of such
Refinancing, and shall be applied first to any accrued but unpaid interest, then to reduce the principal
balance of the City/HOME Loan. The City shall not be required to reconvey the lien of the
City/HOME Loan Deed of Trust if Refinancing Proceeds are insufficient to repay the City/HOME
Loan in full. While any amounts owing under the Agency Loan remain unpaid, the City's
Percentage of the Refinancing Proceeds shall be allocated between repayment of this Note and the
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Agency Loan Note in the same manner as the City's Percentage of Residual Receipts as described in
Section 5.c.
8. City/HOME Loan Repayment from Sale Proceeds.
The Borrower shall make a City/HOME 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/HOME 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 the balance remaining on the
Senior Loan; next the Borrower shall pay to the City fifty percent (50%) of the total Sale Proceeds
("City's Percentage of the 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 City/HOME Loan. The City shall not be required to reconvey the lien of the
City/HOME Deed of Trust if Sale Proceeds are insufficient to repay the City/HOME Loan in full.
While any amounts owing under the Agency Loan remain unpaid, the City's Percentage of the Sale
Proceeds shall be allocated between repayment of this Note and the Agency Loan Note in the same
manner as the City's Percentage of Residual Receipts as described in Section 5.c.
Buy Out Option.
In the event that there is a decision to sell the Property, the Managing General Partner of
Borrower shall be given the first right of refusal or the General Partners may exercise the purchase
option pursuant to the Borrower's Partnership Agreement (and any amendments thereto). If neither
of these options or the right of first refusal are exercised by the General Partners of Borrower, then
the City shall have the second right of refusal, subject to the terms and conditions of Section 42(i)(7)
of the Internal Revenue Code.
10. Accelerated Citv/HOME Loan Pavment.
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 Sale Proceeds are insufficient to repay in full the City/HOME
Loan, the City approves such sale and the purchaser assumes the balance of the City/HOME Loan in
accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the Refinancing
Proceeds are insufficient to repay in full the City/HOME Loan, the City approves such Refinancing
and the Borrower remains obligated pursuant to the terms of this Note;
b. In event of default pursuant to any of the Loan Documents or the Senior Loan
Documents;
C. Any default by Borrower as to any other loan or loans by City or Agency to Borrower
with respect to the Property; or
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d. The date that is fifty five (55) years after the date of this Note. On that date, the City
agrees to review the performance of the Property and consider in good faith any reasonable request
by Borrower to modify the terms of this Note or extend the Term of this City/HOME Loan 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.
All payments hereunder shall be made 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 the highest annual rate
which may lawfully be charged and collected under applicable law on the obligation evidenced by
this Note, 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 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. Security
This Note is secured by the City/HOME Loan Deed of Trust.
15. Acceleration by Reason of Transfer or Financing.
a. In order to induce City to make the City/HOME Loan evidenced hereby, Borrower
agrees that in the event of any Transfer (defined in Section 16.2 of the Loan Agreement) 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, without prior demand or notice, to declare all sums secured
hereby immediately due and payable. 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
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such consent in its sole discretion and, if consent should be given, any such Transfer shall be subject
to this Section 15, and any such Transferee shall assume all obligations hereunder and agree to be
bound by all provisions contained herein. Such assumption shall not, however, release Borrower
from any liability thereunder without the prior written consent of City.
b. 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/HOME Loan together
with all accrued and unpaid interest, shall be repaid to the City at the time of each Refinancing or
partial Refinancing.
C. Notwithstanding anything to the contrary contained herein, a "Transfer" shall not
include a Permitted Transfer as set forth in Section 16.2.2 of the Loan Agreement.
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, if such default is not cured within fifteen (15) calendar days
of the due date; (b) failure by Borrower to perform any covenant or agreement in the Deed of Trust,
the Agreement, or the Affordability Restrictions 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); or (c) a default under the Senior Loan Deed of Trust that remains uncured after
the cure period, if any, provided therein.
17. Remedies.
Upon the occurrence 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/HOME Loan 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/HOME Loan Deed of Trust.
City shall also deposit with Trustee the City/HOME Loan Deed of Trust, this Note and all documents
evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of
Default (and so long as such Event of Default shall continue), the entire balance of principal together
with all accrued interest shall bear interest at the Bank of America reference rate on the due date of
the delinquent payment plus four percent (4%). No delay or 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. Attornevs' Fees.
If this City/HOME 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 and expert witness fees, whether or not any action or proceeding is
brought to enforce the provisions hereof.
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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/HOME Loan is a nonrecourse obligation of the Borrower. Neither Borrower nor
any other party shall have any personal liability for repayment of the City/HOME Loan or for any
other amounts under any of the documentation evidencing, securing or describing the City/HOME
Loan. The sole recourse of City under this Note and the City/HOME Loan Deed of Trust for
repayment of the City/HOME Loan and for such other amounts arising therefrom shall be the
exercise of its rights against the Property and related security thereunder.
22. Subordination.
a. It is hereby expressly agreed and acknowledged by Borrower and City that the
City/HOME Loan Deed of Trust is a subordinate deed of trust, and that this Note is subject and
subordinate to the Senior Loan Deeds of Trust held by the Senior Lender, subject to and provided
that the City and such Senior Lender enter into a subordination agreement providing notice and cure
rights to City that are reasonably acceptable to the Executive Directors and consistent with the
requirements of Section 20 of the Affordability Restrictions.
b. City acknowledges that Borrower and the California Tax Credit Allocation
Committee intend to enter into, or concurrently with the execution and delivery of the Loan
Documents are entering into, an extended use agreement, which constitutes the extended low-income
housing commitment described in Section 42(h)(6)(B) of the Internal Revenue Code, as amended.
City agrees to subordinate the provisions of this Note to the relevant provisions of said extended use
agreement. This subordination is being made in consideration of the allocation of tax credits to the
project to be constructed on the Property, absent which the development of the Project would not
occur, and this City/HOME Loan would not be made.
23. Notice of Default.
a. Subject to the applicable cure periods set forth in Section 16 and extensions of time
set forth in Section 25, and subject to the further provisions of this Section 23, failure or delay by the
Borrower to perform any term or provision of this Note constitutes a default under this Note. The
Borrower must immediately commence to cure, correct, or remedy such failure or delay and shall
complete such cure, correction or remedy-with reasonable diligence and during any period of curing
shall not be in default.
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b. The City shall give written notice of default to the Borrower, specifying the default
complained of by the City. Delay in giving such notice shall not constitute a waiver of any default
nor shall it change the time of default.
C. Except in the case of a monetary event of default, the Borrower shall not be in default
so long as it endeavors to complete such cure, correction or remedy with reasonable diligence,
provided such cure, correction or remedy is completed within the applicable time period set forth
herein after receipt of written notice (or such additional time as may be deemed by the City to be
reasonably necessary to correct the default).
d. Any failures or delays by the City in asserting any of its rights and remedies as to any
default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the
City in asserting any of its rights and remedies shall not deprive the City of its right to institute and
maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any
such rights or remedies.
e. If a monetary event of default occurs under the terms of this Note or the City/HOME
Loan Deed of Trust, prior to exercising any remedies thereunder City shall give Borrower written
notice of such default. Borrower shall have a period of seven (7) days after such notice is given
within which to cure the default prior to exercise of remedies by City under this Note and the
City/HOME Loan Deed of Trust.
f. If a non-monetary event of default occurs under the terms of this Note or the
City/HOME Loan Deed of Trust, prior to exercising any remedies thereunder, City shall give
Borrower notice of such default. If the default is reasonably capable of being cured within thirty (30)
days, Borrower shall have such period to effect a cure prior to exercise of remedies by the City under
this Note and the Deed of Trust. If the default is such that it is not reasonably capable of being cured
within thirty (30) days, and Borrower (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 Borrower
shall have such additional time as is reasonably necessary to cure the default prior to exercise of any
remedies by City. In no event shall City be precluded from exercising remedies if its security
becomes or is about to become materially jeopardized by any failure to cure a default or the default is
not cured within one hundred eighty (180) days after the first notice of default is given.
24. Insurance and Condemnation.
In the event of any fire or other casualty to the Project or eminent domain proceedings
resulting in condemnation of the Project or any part thereof, Borrower shall have the right to rebuild
the Project, and to use all available insurance or condemnation proceeds therefor, provided that
(a) such proceeds are sufficient to keep the City/HOME Loan in balance and rebuild the Project in a
manner that provides adequate security to City for repayment of the City/HOME Loan or if such
proceeds are insufficient then Borrower shall have funded any deficiency, (b) City shall have the
right to approve plans and specifications for any major rebuilding and the right to approve
disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or
similar arrangement, and (c) no material default then exists under this Note or the Deed of Trust. If
the casualty or condemnation affects only part of the Project and total rebuilding is infeasible, then
proceeds may be used for partial rebuilding and partial repayment of the City/HOME Loan in a
manner that provides adequate security for repayment of the remaining balance of the City/HOME
Loan.
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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 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 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 City and the Borrower.
26. Assignments.
The City, and any assignee of the City, shall have the right to assign this Note and the 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.
27. Agency and Authority Right to Enforce.
The Agency and Authority are each intended third party beneficiaries of City's rights under
this Note, with full rights (but no obligation) to enforce all of Borrower's obligations hereunder.
{Signatures appear on following page)
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This City/HOME Loan Note is hereby entered into as of the date first stated hereinabove.
VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership
By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
By:
Deborrah A. Willard, President
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EXHIBIT E
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 27383
When Recorded Mail to:
Community Redevelopment Agency of the City of Santa Ana
20 Civic Center Plaza
P.O. Box 1988
Santa Ana, California 92702
Attn: Executive Director
AGENCY LOAN
DEED OF TRUST
AND ASSIGNMENT OF RENTS
This AGENCY LOAN DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of
Trust") is made this day of March 2011, among Vista Del Rio Housing Partners L.P., a
California limited partnership (the "Trustor"), First American Title Insurance Company, a California
corporation (the "Trustee"), and the Community Redevelopment Agency of the City of Santa Ana, a
public body, corporate and politic (the `Beneficiary").
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
Attachment No. 1 and more commonly known 1600 West Memory Lane, 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, all of
which, including replacements and additions thereto, shall be deemed to be and remain a part of the
Property covered by this 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 Deed of Trust or in the
performance of any agreement secured by this 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 furnished 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 therefore, whether or not the same are, or shall be
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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 a Promissory
Note to the Beneficiary executed by Trustor, dated concurrently herewith in the principal amount of
One Million Five Hundred Thousand Dollars ($1,500,000.00) (the "Loan"); (b) the payment and
performance of the covenants and agreements of Trustor contained in the Loan Agreement recorded
with the County of Orange as Document No. , by and among Trustor, Beneficiary, and
City (the "Agreement"), (c) the payment and performance of the covenants and agreements of
Trustor contained in the Disposition and Development Agreement dated July 20, 2009, the First
Amendment to the Disposition and Development Agreement dated March 15, 2010, the Second
Amendment to the Disposition and Development Agreement dated December 20, 2010, and the
Third Amendment to the Disposition and Development Agreement dated , by and
among Trustor, Beneficiary, and Santa Ana Housing Authority (the "Authority") (collectively, the
"DDA"); (d) the payment and performance of the covenants and agreements of Trustor contained in
the Affordability Restrictions on Transfer of Property by and among City, Trustor and Beneficiary,
dated as recorded concurrently herewith (the "Affordability Restrictions") and (e) the payment of all
other sums, with interest thereon, advanced in accordance herewith to protect the security of this
Deed of Trust; and the performance of the covenants and agreements of Trustor contained herein.
TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS:
I . Agency. This Deed of Trust is executed and delivered, along with the
Promissory Note, pursuant to and in implementation of the 41 unit special needs affordable multi-
family residential project in the aforementioned Agreement and DDA entered into by and between
the Beneficiary and Trustor, to benefit the Property, a copy of which is on file as a public record with
the Beneficiary. Trustor acknowledges that but for the execution of this Deed of Trust, the
Beneficiary would not enter into the Promissory Note secured by this 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 other than this 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 development of the Property.
3. Repayment of the Loan. Trustor will promptly repay, when due, the principal and
interest, if any, as required by the Promissory Note secured by this Deed of Trust.
4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to
any and all obligations secured by deeds of trust, or any other security agreement, to secure financing
or refinancing for the purchase and rehabilitation of the Property; subject to and provided that the
Beneficiary and such Senior Lender enter into a subordination agreement providing notice and cure
rights to Beneficiary that are reasonably acceptable to the Executive Directors and consistent with the
requirements of Section 20 of the Affordability Restrictions.
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
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has priority over this Instrument, including Trustor's covenants to make payments when due. Trustor
will pay all taxes, assessments and other charges, fines and impositions attributable to the Security
which may attain a priority over this 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 Deed of Trust; provided that Trustor will not be
required to discharge the lien of the 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' 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 Deed of Trust is
not thereby impaired. If such restoration or repair is not economically feasible or if the security of
this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance
proceeds will be used to repay the grant under this 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 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 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 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 this 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
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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 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 Promissory
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 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 Deed of Trust.
11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and
cumulative to any other right or remedy under this Deed of Trust or any other 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 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 Deed of Trust will be given by certified mail,
return receipt requested, addressed to Trustor at Vista Del Rio Housing Partners, L.P., c/o Foundation
for Affordable Housing V, Inc.,30950 Rancho Viejo Road, Suite 100, San Juan Capistrano, CA
92675, and (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, or at such other address as the Beneficiary may designate by notice to Trustor as
provided above. Notice shall be effective as of the date received by the Beneficiary as shown on the
return receipt.
15. Governing Law. This 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 Deed of Trust or the
Promissory Note conflicts with applicable law, such conflict will not affect other provisions of this
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Deed of Trust or the Promissory Note which can be given effect without the conflicting provision,
and to this end the provisions of the Deed of Trust and the Promissory Note are declared to be
severable.
17. Captions. The captions and headings in this 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 Deed of Trust or the Promissory Note secured by this Deed of Trust,
including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of
Trust, or any default under any other agreement the performance of which is secured by this Deed of
Trust, the Beneficiary may declare all sums secured by this 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 Deed of Trust and sale of the Security. The notice will also
inform Trustor 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 Trustor to acceleration and sale.
If the breach is not cured on or before the date specified in the notice or such longer period as
provided above, the Beneficiary, at the Beneficiary's option, may: (a) declare all of the sums secured
by this 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; (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
any 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 Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise
the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof, (d) 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 (e) 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.
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 Deed of Trust, Trustor will have the right to have any proceedings begun by the
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Beneficiary to enforce this 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 Deed of Trust or at any time prior to entry of
a judgment enforcing this Deed of Trust i£ (a) Trustor pays the Beneficiary all sums which would be
then due under this Deed of Trust and no acceleration under the Promissory Note has occurred;
(b) Trustor cures all breaches of any other covenants or agreements Trustor contained in this Deed of
Trust and the Covenants; (c) Trustor pays all reasonable expenses incurred by the Beneficiary and the
Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust and the
Covenants, 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 Deed of Trust, the Beneficiary's interest in the Security and
Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon
such payment and cure by Trustor, this 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 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 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. Reconve,, ate. Upon payment or forgiveness of all sums secured by this Deed of
Trust and expiration of the Term of the Agreement and the Term of the Affordability Restrictions,
the Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of
Trust and the Promissory 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 Trustor at the address set forth in Section 14 above.
24. Nonrecourse Liability. Neither Trustor nor any general partner of Trustor shall have
any personal liability under the Loan Agreement, Promissory Note, and this 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. Third Party Beneficiaries. City and Authority are third party beneficiaries of
Beneficiary's rights hereunder, with full right (but no obligation) to enforce the terms and exercise
the remedies provided to Beneficiary hereunder.
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IN WITNESS WHEREOF, Trustor has executed this Agency Loan Deed of Trust and
Assignment of Rents as of the date first written above.
By:
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"Trustor"
VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership
By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
Deborrah A. Willard, President
8OB-108
EXHIBIT F
AGENCY LOAN NOTE
SECURED BY SUBORDINATED DEED OF TRUST TO THE
COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA
$469,000.00 , 2011
Santa Ana, California
1. Principal Amount of Agency Loan
For value received, Vista Del Rio Housing Partners, L.P., a California limited partnership
("Borrower"), promises to pay to the order of the Community Redevelopment Agency of the City of
Santa Ana ("Agency"), at 20 Civic Center Plaza, Santa Ana, California 92702, 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 FOUR HUNDRED THOUSAND SIXTY-NINE DOLLARS ($469,000.00) or so
much thereof as shall be disbursed hereunder, with three percent interest (3.0%).
In implementation of the acquisition and development of that certain real property in the City
of Santa Ana ("City"), described in the Loan Agreement as the "Property," commonly known as
1600 Memory Lane, Santa Ana, California, and operation of the Property as affordable rental
housing for Extremely Low Income and Very Low Income households, (a) Agency, the Santa Ana
Housing Authority ("Authority"), and Borrower have heretofore entered into that certain Disposition
and Development Agreement (as amended, the "DDA"), (b) City, Agency and Borrower have
entered into that certain "Loan Agreement" dated concurrently herewith and recorded against the
Property (the Loan Agreement and DDA are collectively referred to herein as the "Agreement"), and
(c) City, Agency and Borrower have entered into those certain Affordability Restrictions on Transfer
of Property, dated concurrently herewith and recorded against the Property ("Affordability
Restrictions"). This Note is made pursuant to, entitled to the benefits of and referred to as the
Agency Loan Note in the Loan Agreement. This Note is secured by that certain Agency Loan Deed
of Trust and Assignment of Rents between Borrower and Agency, dated concurrently herewith (the
"Agency Loan Deed of Trust"). This Note, the Loan Agreement, the Affordability Restrictions, and
the Agency Loan Deed of Trust are sometimes collectively referred to herein as the "Loan
Documents." The Loan Documents and the rights and responsibilities of Borrower thereunder inure
to the benefit of the City, Agency and Authority. 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:
"Agency Loan" shall mean the loan evidenced by this Note.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 30.
"Closing Costs" shall mean:
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(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
completing such Refinancing, including, without limitation, loan fees, loan repayment charges, costs
of title insurance premiums, escrow fees, recording fees and attorneys' fees.
"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 also includes any
casualty insurance proceeds in excess of those used to restore the Property and 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. Gross Revenues shall not include loan proceeds or capital
contributions.
"Operating Expenses" shall mean the sum of the following:
(i) scheduled payments of principal and interest and all other charges relating to
the Senior Loan(s);
(ii) all other actual, reasonable cash operating costs and expenses, calculated on
an annual basis, that are directly attributable to managing and operating the Property, 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.
(b) 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.
(iii) a management fee equal to $55 per unit a month (increasing by CPI):
(iv) deposits into required reserves
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(v) payments due on any deferred Developer Fees;
(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 Partnership
Agreement.
"Project" shall mean the acquisition, development, operation, maintenance, and
management of the Property as affordable housing by Borrower pursuant to the Loan Agreement.
"Property" shall mean the real property located at 1600 Memory Lane, Santa Ana,
California, described in the Agency Loan Deed of Trust.
"Refinancing" shall mean changing the then existing financing on the Property by, without
limitation, modifying the interest rate and/or the term of the existing Senior Loan, increasing or
reducing the amount of the existing Senior Loan, paying off the existing Senior Loan 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 applicable to each such year less the items listed in the
Partnership Agreement in Section 5. 1 (a)(i)-(ix) 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) 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 or limited partner in the Borrower, or any interest by any individual or
entity which holds an interest in any such general or limited 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 thirty-five percent (35%) 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.
"Sale Proceeds" shall mean the proceeds received by Borrower in connection with any Sale.
"Senior Loan" shall mean the senior loan being made by ,
concurrent to the Agency Loan for payment of a portion of the Construction costs incurred by Vista
Del Rio relating to the Project, as approved by the Executive Directors, 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
this Note.
3. Loan Repayment.
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).
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4. Reserved.
5. Annual Loan Repayment.
a. Borrower shall 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 Residual
Receipts, as provided in this Section 5.
b. Within one hundred twenty (120) days after the close of the initial Calendar Year
following the year the Project is placed-in-service and on or before the 120th day of each Calendar
Year thereafter, the Borrower shall submit to the Agency audited financial statements, including 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. The Borrower shall pay to the Agency seventy-five percent (75%) of the Residual
Receipts ("Agency's Percentage of Residual Receipts") as payment of principal and interest under
the Agency Loan. The remaining twenty five percent (25%) of the Residual Receipts shall remain
with the Borrower. Pursuant to the Loan Agreement, the Borrower has also received a loan of
HOME Program funds from the City in the original principal amount of $1,500,000 ("City/HOME
Loan"). The Agency's Percentage of Residual Receipts for each year shall be applied to repay the
amounts owing under this Note and the amounts owing under the City/HOME Loan, as follows:
76% of the Agency's Percentage of Residual Receipts will be applied to repay the City/HOME Loan
and 24% of the Agency's Percentage of Residual Receipts will be applied to repay amounts owing
under this Note. Upon repayment in full of all amounts owing under the City/HOME Loan, the
entire Agency's Percentage of Residual Receipts shall be allocated to repayment of the amounts
owing hereunder in accordance with Section 13.a. hereof.
d. The Residual Receipts payment shall be made not later than one hundred fifty (150)
days after the close of the Calendar Year.
6. Reserved.
7. Loan Renavment from Refinancing Proceeds.
The Borrower shall make a loan payment to the Agency 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 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 the balance remaining on the Senior Loan; next, the Borrower shall pay to the
Agency fifty percent (50%) of the Refinancing Proceeds ("Agency's Percentage of the Refinancing
Proceeds") to the extent of the outstanding balance on this Note. The remaining Refinancing
proceeds shall remain with Borrower. Such payment shall be due on the date of such Refinancing,
and shall be applied first to any accrued but unpaid interest, then to reduce the principal balance of
the Agency Loan. The Agency shall not be required to reconvey the lien of the Agency Loan Deed
of Trust if Refinancing Proceeds are insufficient to repay the Agency Loan in full. While any
amounts owing under the City/HOME Loan remain unpaid, the Agency's Percentage of the
Refinancing Proceeds shall be allocated between repayment of this Note and the City/HOME Loan
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Note in the same manner as the Agency's Percentage of Residual Receipts as described in
Section 5.c.
8. Loan Repavment 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 the balance remaining on the Senior Loan;
next the Borrower shall pay to the Agency fifty percent (50%) of the total Sale Proceeds ("Agency's
Percentage of the 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 Agency 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 Agency Loan. The Agency shall not be required to reconvey the lien of the Agency Loan
Deed of Trust if Sale Proceeds are insufficient to repay the Agency Loan in full. While any amounts
owing under the City/HOME Loan remain unpaid, the Agency's Percentage of the Sale Proceeds
shall be allocated between repayment of this Note and the City/HOME Loan Note in the same
manner as the Agency's Percentage of Residual Receipts as described in Section 5.c.
9. Buy Out Option.
In the event that there is a decision to sell the Property, the Managing General Partner of
Borrower shall be given the first right of refusal or the General Partners may exercise the purchase
option pursuant to the Borrower's Partnership Agreement (and any amendments thereto). If neither
of these options or the right of first refusal are exercised by the General Partners of Borrower, then
the Agency shall have the second right of refusal, subject to the terms and conditions of Section
42(i)(7) of the Internal Revenue Code.
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 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 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. In event of default pursuant to any of the Loan Documents or the Senior Loan
Documents;
C. Any default by Borrower as to any other loan or loans by Agency to Borrower with
respect to the Property; or
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d. The date that is fifty five (55) years after the date of this Note. On that date, the
Agency agrees to review the performance of the Property and consider in good faith any reasonable
request by Borrower to modify the terms of this Note or extend the Term of this Agency Loan 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 Monev.
All payments hereunder shall be made in lawful money of the United States of America.
13. Annlication of Pavments; 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.
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 the
highest annual rate which may lawfully be charged and collected under applicable law on the
obligation evidenced by this Note, 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. Security
This Note is secured by the Agency Loan 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 (defined in Section 16.2 of the Loan Agreement) 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, without prior demand or notice, to declare all sums secured
hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a
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waiver of the right to require consent to future or successive transactions. Agency may grant or deny
such consent in its sole discretion and, if consent should be given, any such Transfer shall be subject
to this Section 15, and any such Transferee shall assume all obligations hereunder and agree to be
bound by all provisions contained herein. Such assumption shall not, however, release Borrower
from any liability thereunder without the prior written consent of Agency.
b. 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. Notwithstanding anything to the contrary contained herein, a "Transfer" shall not
include a Permitted Transfer as set forth in Section 16.2.2 of the Loan Agreement.
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, if such default is not cured within fifteen (15) calendar days
of the due date; (b) failure by Borrower to perform any covenant or agreement in the Deed of Trust,
the Agreement, or the Affordability Restrictions 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); or (c) a default under the Senior Loan Deed of Trust that remains
uncured after the cure period, if any, provided therein.
17. Remedies.
Upon the occurrence 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 Loan 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 Loan Deed of Trust.
Agency shall also deposit with Trustee the Agency Loan Deed of Trust, this Note and all documents
evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of
Default (and so long as such Event of Default shall continue), the entire balance of principal together
with all accrued interest shall bear interest at the Bank of America reference rate on the due date of
the delinquent payment plus four percent (4%). 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. Attornevs' 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 and expert witness fees, whether or not any action or proceeding is brought to enforce
the provisions hereof.
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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 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 Loan 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.
22. Subordination.
a. It is hereby expressly agreed and acknowledged by Borrower and Agency that the
Agency Loan Deed of Trust is a subordinate deed of trust, and that this Note is subject and
subordinate to the Senior Loan Deeds of Trust held by the Senior Lender, subject to and provided
that the Agency and such Senior Lender enter into a subordination agreement providing notice and
cure rights to Agency that are reasonably acceptable to the Executive Directors and consistent with
the requirements of Section 20 of the Affordability Restrictions.
b. Agency acknowledges that Borrower and the California Tax Credit Allocation
Committee intend to enter into, or concurrently with the execution and delivery of the Agency Loan
Documents are entering into, an extended use agreement, which constitutes the extended low-income
housing commitment described in Section 42(h)(6)(B) of the Internal Revenue Code, as amended.
Agency agrees to subordinate the provisions of this Note to the relevant provisions of said extended
use agreement. This subordination is being made in consideration of the allocation of tax credits to
the project to be constructed on the Property, absent which the development of the Project would not
occur, and this Agency Loan would not be made.
23. Notice of Default.
a. Subject to the applicable cure periods set forth in Section 16 and extensions of time
set forth in Section 25, and subject to the further provisions of this Section 23, failure or delay by the
Borrower to perform any term or provision of this Note constitutes a default under this Note. The
Borrower must immediately commence to cure, correct, or remedy such failure or delay and shall
complete such cure, correction or remedy-with reasonable diligence and during any period of curing
shall not be in default.
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b. The Agency shall give written notice of default to the Borrower, specifying the
default complained of by the Agency. Delay in giving such notice shall not constitute a waiver of
any default nor shall it change the time of default.
C. Except in the case of a monetary event of default, the Borrower shall not be in default
so long as it endeavors to complete such cure, correction or remedy with reasonable diligence,
provided such cure, correction or remedy is completed within the applicable time period set forth
herein after receipt of written notice (or such additional time as may be deemed by the Agency to be
reasonably necessary to correct the default).
d. Any failures or delays by the Agency in asserting any of its rights and remedies as to
any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by
the Agency in asserting any of its rights and remedies shall not deprive the Agency of its right to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or
enforce any such rights or remedies.
e. If a monetary event of default occurs under the terms of this Note or the Agency Loan
Deed of Trust, prior to exercising any remedies thereunder Agency shall give Borrower written
notice of such default. Borrower shall have a period of seven (7) days after such notice is given
within which to cure the default prior to exercise of remedies by Agency under this Note and the
Agency Loan Deed of Trust.
f. If a non-monetary event of default occurs under the terms of this Note or the Agency
Loan Deed of Trust, prior to exercising any remedies thereunder, Agency shall give Borrower notice
of such default. If the default is reasonably capable of being cured within thirty (30) days, Borrower
shall have such period to effect a cure prior to exercise of remedies by the Agency under this Note
and the Deed of Trust. If the default is such that it is not reasonably capable of being cured within
thirty (30) days, and Borrower (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 Borrower shall have
such additional time as is reasonably necessary to cure the default prior to exercise of any remedies
by Agency. In no event shall Agency be precluded from exercising remedies if its security becomes
or is about to become materially jeopardized by any failure to cure a default or the default is not
cured within one hundred eighty (180) days after the first notice of default is given.
24. Insurance and Condemnation.
In the event of any fire or other casualty to the Project or eminent domain proceedings
resulting in condemnation of the Project or any part thereof, Borrower shall have the right to rebuild
the Project, and to use all available insurance or condemnation proceeds therefor, provided that
(a) such proceeds are sufficient to keep the Agency Loan in balance and rebuild the Project in a
manner that provides adequate security to Agency for repayment of the Agency Loan or if such
proceeds are insufficient then Borrower shall have funded any deficiency, (b) Agency shall have the
right to approve plans and specifications for any major rebuilding and the right to approve
disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or
similar arrangement, and (c) no material default then exists under this Note or the Deed of Trust. If
the casualty or condemnation affects only part of the Project and total rebuilding is infeasible, then
proceeds may be used for partial rebuilding and partial repayment of the Agency Loan in a manner
that provides adequate security for repayment of the remaining balance of the Agency Loan.
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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 any assignee of the Agency, shall have the right to assign this Note and the
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.
27. City and Authority Right to Enforce.
The City and Authority are each intended third party beneficiaries of Agency's rights under
this Note, with full rights (but no obligation) to enforce all of Borrower's obligations hereunder
{Signatures on following page}
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This Agency Loan Note is hereby entered into as of the date first stated hereinabove.
VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership
By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
By:
Deborrah A. Willard, President
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EXHIBIT G
DOCSOC/ 1475221 v5/200272-0004
SCOPE OF WORK/BUDGET
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EXHIBIT H
DOCSOC/ 1475221 v5/200272-0004
MARKETING PLAN
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THIRD AMENDMENT TO DISPOSITION AND
DEVELOPMENT AGREEMENT WITH
VISTA DEL RIO HOUSING PARTNERS, L.P.
This THIRD AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT
(the "Amendment") is entered into as of this day of March, 2011, by and among the
COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA, a public body,
corporate and politic (the "Agency"), the SANTA ANA HOUSING AUTHORITY, a public body,
corporate and politic (the "Authority"), and VISTA DEL RIO HOUSING PARTNERS, L.P., a
California limited partnership ("Vista Del Rio").
RECITALS
A. The Parties entered into that certain agreement for the sale of certain real property
located at 1600 W. Memory Lane by the Agency to Vista del Rio based upon the terms and
conditions contained in that certain "Disposition and Development Agreement" dated as of July 20,
2009, amended by (i) that certain First Amendment to Disposition and Development Agreement
dated as of March 15, 2010, and (ii) that certain Second Amendment to Disposition and Development
Agreement dated as of December 20, 2010, hereinafter collectively referred to as the "Agreement."
B. The Parties hereto now desire to further amend said Agreement to provide for (i) a
loan of funds to Vista Del Rio by the Agency from its Low and Moderate Income Housing Fund
maintained pursuant to Health and Safety Code Section 33334.2, et seq., and (ii) the Authority to
provide a specified number of Project Based Section 8 vouchers to the Project, all as described in
more detail below.
C. All other related exhibits, attachments and documents shall be amended accordingly.
D. All terms used herein shall have the meanings set forth herein, in the Loan
Agreement (as revised pursuant to Section 8), and/or the Agreement as applicable.
WHEREFORE, in consideration of the mutual and respective covenants and promises
hereinafter contained and made, and subject to all of the terms and conditions of said Agreement as
hereby amended, the parties hereto do hereby agree as follows:
The Authority, who is a party to this Amendment, shall be a party to the Agreement.
2. The following definitions shall be added to the definitions contained in Section 100
of the Agreement:
"`Authority' shall mean the Santa Ana Housing Authority, a public body,
corporate and politic, exercising governmental functions and powers and
organized and existing under the California Housing Authority Law, Part 2 of
Division 24, Section 34200, et seq. of the Health and Safety Code."
"`Project Based Section 8' shall mean housing choice vouchers held by the
City and/or Authority pursuant to annual and/or multi-year contribution
contract(s) with HUD, which may be used to assist specific housing units as
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authorized by and subject to Section 8(o)(13) of the U.S. Housing Act of
1937, 42 U.S.C. Section 1437f(o)(13), and the implementing regulations set
forth at 24 CFR Part 983, and HR3221, enacted July 30, 2008. Pursuant to
Section 311.7 of this Agreement, Authority has agreed to provide no less than
seven (7) but no more than ten (10) Project Based Section 8 vouchers as
assistance for an equal number of Units subject to the fulfillment or waiver of
the Agency's Conditions Precedent and the provisions of Section 311.7,
including without limitation Vista Del Rio securing financing in accordance
with Section 311. In all events, Authority's obligation to provide Project
Based Section 8 assistance to the Project is expressly conditioned upon the
satisfactory completion of environmental review and the Authority's receipt
of a release of federal funds from HUD."
3. A new Section 311.7 is hereby added which shall read as follows:
"Subject to the fulfillment or waiver of the Agency's Conditions Precedent
and further subject to HUD approval and allocation of funding by HUD or a
successor federal governmental agency administering the Project Based
Section 8 program, Authority shall provide no fewer than seven (7) but no
more than ten (10) Project Based Section 8 vouchers as assistance for an
equal number of Units. The Authority's obligations pursuant to this
Section 311.7 shall at all times be subject to compliance with all legal
requirements of and prerequisites to the Project Based Section 8 assistance.
The exact number of the Project Based Section 8 vouchers that will be
provided to the Project shall be determined by the Executive Director in his or
her sole and absolute discretion, based upon the financing that Vista Del Rio
obtains for the Project and upon a subsidy layering review performed by the
Authority and HUD (or other entity approved by HUD). The Executive
Director shall also designate the specific Units which shall be assisted by
Project Section 8 vouchers in his or her sole and absolute discretion. In the
event Project Based Section 8 assistance is provided to HOME Units, the rent
charged pursuant to the tenant rental agreement shall not exceed the Low
HOME rent applicable to the Unit, pursuant to the HOME Program and the
HOME Regulations."
4. The first sentence of Section 205 of the Agreement is amended to read:
"The Closing of the Conveyance of the Site and the Authority's provision of
Project Based Section 8 assistance to the Project are expressly conditioned
upon the satisfaction (or written waiver by the benefited Party or Parties in its
or their sole and absolute discretion) of the following terms and conditions
within the times designated below:"
5. A new Section 309.2 is hereby added which shall read as follows:
"Prevailing Wage Laws. Vista Del Rio shall carry out the construction of
the Project and the overall development of the Site in conformity with all
applicable federal, state and local labor laws and regulations, including,
without limitation, as applicable, the requirements to pay prevailing wages
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under federal law (the Davis-Bacon Act, 40 U.S.C. Section 3141, et seq., and
the regulations promulgated thereunder set forth at 29 CFR Part 1
(collectively, "Davis-Bacon")) and California law (Labor Code Section 1720,
et seq.). The parties acknowledge that a financing structure utilizing Project
Based Section 8 vouchers may trigger a requirement to pay prevailing wages
and comply with Davis-Bacon, as may other federal and/or state funding
sources and financing scenarios trigger compliance with applicable state and
federal prevailing wage laws and regulations. The applicability of federal,
state and local prevailing wage laws will be triggered by the final financing
structure and sources of funding of the Project, as approved by the Executive
Director pursuant to Section 311.
"Vista Del Rio shall be solely responsible, expressly or impliedly, for
determining and effectuating compliance with all applicable federal, state and
local public works requirements, prevailing wage laws, labor laws and
standards, and Agency, City, and Authority make no representation, either
legally and/or financially, as to the applicability or non-applicability of any
federal, state and local laws to the Project or any part thereof, either onsite or
offsite. Vista Del Rio expressly, knowingly and voluntarily acknowledges
and agrees that Agency, City, and Authority have not previously represented
to Vista Del Rio or to any representative, agent or Affiliate of Vista Del Rio,
or its Contractor or any subcontractor(s) for the construction or development
of the Project, in writing or otherwise, in a call for bids or otherwise, that the
work and construction undertaken pursuant to this Agreement is (or is not) a
"public work," as defined in Section 1720 of the Labor Code or under
Davis-Bacon.
"Vista Del Rio knowingly and voluntarily agrees that Vista Del Rio shall
have the obligation to provide any and all disclosures or identifications as
required by Labor Code Section 1781 and/or by Davis-Bacon, as the same
may be amended from time to time, or any other similar law or regulation.
Vista Del Rio shall indemnify, protect, pay for, defend (with legal counsel
acceptable to Agency, City and Authority) and hold harmless the Agency,
City, and Authority, and their elected and appointed officers, directors,
employees and agents, from and against any and all loss, liability, damage,
claim, cost, expense and/or "increased costs" (including reasonable attorneys
fees, court and litigation costs, and fees of expert witnesses) which, in
connection with the development, construction (as defined by applicable law)
and/or operation of the Project, including, without limitation, any and all
public works (as defined by applicable law), results or arises in any way from
any of the following: (i) the noncompliance by Vista Del Rio of any
applicable local, state and/or federal law or regulation, including, without
limitation, any applicable federal and/or state labor laws or regulations
(including, without limitation, if applicable, the requirement to pay state
and/or federal prevailing wages); (ii) the implementation of Section 1781 of
the Labor Code and/or by Davis Bacon, as the same may be amended from
time to time, or any other similar law or regulation; and/or (iii) failure by
Vista Del Rio to provide any required disclosure or identification as required
by Labor Code Section 1781 and/or by Davis Bacon, as the same may be
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amended from time to time, or any other similar law or regulation. It is
agreed by the parties that, in connection with the development and
construction (as defined by applicable law or regulation) of the Project,
including, without limitation, any and all public works (as defined by
applicable law or regulation), Vista Del Rio shall bear all risks of payment or
non-payment of prevailing wages under applicable federal, state and local law
or regulation and/or the implementation of Labor Code Section 1781 and/or
by Davis Bacon, as the same may be amended from time to time, and/or any
other similar law or regulation. "Increased costs," as used in this Section
309.2, shall have the meaning ascribed to it in Labor Code Section 1781, as
the same may be amended from time to time. The foregoing indemnity shall
survive termination of this Agreement and shall continue after completion of
the construction and development of the Project by Vista Del Rio."
6. A new Section 401.10 is hereby added which shall read as follows:
"Occupancy Limits. The maximum occupancy of the Units in the Project
shall not exceed such number of persons as is equal to two persons per
bedroom, plus one. Thus, for the studio Units, the maximum occupancy shall
not exceed two (2) persons. For the one (1) bedroom Units, the maximum
occupancy shall not exceed three (3) persons. For the two (2) bedroom Units,
the maximum occupancy shall not exceed five (5) persons. Notwithstanding
the foregoing, Units assisted with Project Based Section 8 vouchers shall be
subject to any federal occupancy standard applicable to housing so assisted."
7. Section 312 shall be replaced in its entirety with the following:
"Loan Agreement. Prior to and as a condition of Closing, Vista Del Rio shall
execute the Loan Agreement in substantially the form attached to the Third
Amendment to Disposition and Development Agreement as Exhibit 1 which
is incorporated herein by this reference ("Loan Agreement"). The Loan
Agreement shall provide for (i) the City to make a loan of One Million Five
Hundred Thousand Dollars ($1,500,000.00) in federal HOME Program funds
to Vista Del Rio, which shall carry a three percent (3.0%) interest rate, and
shall be a residual receipts loan; and (ii) the Agency to make a loan of Four
Hundred Sixty-Nine Thousand Dollars ($469,000) from the Agency's low
and moderate income housing fund, which shall carry a three percent (3.0%)
interest rate, and shall be a residual receipts loan. Vista Del Rio's obligations
under the Loan Agreement shall be evidenced by two promissory notes in the
respective principal amounts of One Million Five Hundred Thousand Dollars
($1,500,000.00) and Four Hundred Sixty-Nine Thousand Dollars ($469,000),
and secured by separate deeds of trust in the respective amounts of One
Million Five Hundred Thousand Dollars ($1,500,000.00) and Four Hundred
Sixty-Nine Thousand Dollars ($469,000). The form of promissory notes and
deeds of trust evidencing and securing the City/HOME Loan and Agency
Loan, respectively, are attached to the Loan Agreement as Exhibits C, D, E,
and F. "
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8. The HOME Loan Agreement attached to the Agreement as Attachment No. 8,
together with all of the exhibits thereto, is hereby deleted and replaced with the Loan
Agreement, together with its exhibits, attached to this Amendment as Exhibit 1.
9. In the event any provision of or definition in the Agreement is in conflict with or
contradicts Section 7, in respect of affordability requirements, use, and maintenance
of the Property, the Loan Agreement shall control.
10. In the event any provision of or definition in the Agreement is in conflict with or
contradicts any provision of the Loan Agreement, the Loan Agreement shall control;
however, 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.
11. All other related exhibits, attachments and documents shall be amended accordingly,
where necessary to implement the intent of this Amendment.
12. Except as hereinabove modified, the terms and conditions of the Agreement remain
unchanged and in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to
Disposition and Development Agreement as of the date and year first above written.
ATTEST:
By:
Maria D. Huizar
Secretary
APPROVED AS TO FORM:
By:
Lisa E. Storck
Assistant General Counsel
ATTEST:
By:
Maria D. Huizar
Secretary
APPROVED AS TO FORM:
By:
Lisa E. Storck
Assistant General Counsel
DOC SOC/ 1475220v4/200272-0004
COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF SANTA ANA
By:
Nancy Edwards
Interim Executive Director
SANTA ANA HOUSING AUTHORITY
By:
Nancy Edwards
Interim Executive Director
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VISTA DEL RIO HOUSING PARTNERS, L.P. a
California limited partnership
By:
By: Foundation for Affordable Housing V,
Inc. a California nonprofit public benefit
corporation, its Managing General Partner
Deborrah A. Willard, President
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EXHIBIT 1
[Insert Loan Agreement]
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