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HomeMy WebLinkAbout80A - JOINT - AMEND NSPREQUEST FOR COUNCIL/ HOUSING AUTHORITY ACTION MEETING DATE: SEPTEMBER 16, 2013 TITLE: SUBSTANTIAL AMENDMENTS TO NEIGHBORHOOD STABILIZATION PROGRAMS 2 8r 3 AND LOAN AGREEMENT WITH 815 N HARBOR, LP CITY MANAGER EXECU IVE DI CTOR RECOMMENDED ACTION CITY COUNCIL ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on 1 st Reading ? Ordinance on 2nd Reading ? Implementing Resolution ? Set Public Hearing For CONTINUED TO FILE NUMBER 1. Approve a substantial amendment to the Neighborhood Stabilization Program 2 application to add redevelopment activity and allow incomes up to 60 percent Area Median Income, and authorize its submittal to the U.S. Department of Housing and Urban Development. 2. Approve a substantial amendment to the 2013-14 Annual Action Plan revising the Neighborhood Stabilization Program 3 to add redevelopment activity, and authorize its submittal to the U.S. Department of Housing and Urban Development. 3. Authorize the Interim City Manager and the Clerk of the Council to execute a loan agreement with 815 N Harbor, LP in the amount of $2,000,000 subject to non-substantive changes approved by the Interim Executive Director of Community Development and City Attorney. HOUSING AUTHORITY ACTION Authorize the Executive Director of the Housing Authority or designee, contingent upon approval by the U.S. Department of Housing and Urban Development, to complete and execute the Project- Based Vouchers (PBV) Agreement to Enter into Housing Assistance Payments Contract and, after construction of the 815 N. Harbor project, to complete and execute the PBV Housing Assistance Payment Contract between the Housing Authority of the City of Santa Ana and 815 N Harbor, LP for up to eight PBV's, and other necessary documents, for the implementation of project-based vouchers of the 815 N. Harbor project. 80A-1 Substantial Amendments - NSP 2 & 3 and Loan Agreement with 815 N Harbor LP September 16, 2013 Page 2 FINANCE, ECONOMIC DEVELOPMENT AND TECHNOLOGY COMMITTEE REVIEW The Finance, Economic Development and Technology Committee reviewed this matter at its meeting on August 6, 2013. The Committee has reviewed the recommended actions and recommends that the City Council to adopt and authorize actions. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its regular meeting on September 3, 2013, by a vote of 5:0 (Aguinaga, Verino absent) the Community Redevelopment and Housing Commission conducted a public hearing and approved the recommended actions stated above. DISCUSSION SUBSTANTIAL AMENDMENTS TO NEIGHBORHOOD STABILIZATION PROGRAMS 2 & 3 The City of Santa was awarded $10 million in the second round of Neighborhood Stabilization Program (NSP 2) and allocated $1,464,113 in the third round of Neighborhood Stabilization Program (NSP 3) which is to be used to purchase foreclosed or abandoned properties. The proposed substantial amendment for NSP 2 will amend the program activities to include and reallocate funds for the redevelopment activity. This activity will allow the development of rental housing for low-income households at or below 60 percent of area median income. The requirement of 25 percent of NSP 2 funds spent on activities benefiting very low-income households has already been achieved through past activities. The proposed substantial amendment for NSP 3 will add the redevelopment activity. The eligible household incomes will be at 50 percent and 60 percent of the area median income (AMI). The proposed changes for the NSP 2 and NSP 3 are identified as follows: NSP 2 Program Activities Current Proposed Allocation Allocation 1. Down payment Assistance (up to 120% AMI) $ 400,000 $ 400,000 2. Acquisition, Rehabilitation & Resale of Single Family Residences (up to 120% AMI) $ 6,100,000 $ 5,171,380 3. Acquisition & Rehab of Rental Housing (up to 5)% AMI) $ 2,500,000 $ 2,500,000 4. Redevelopment of Vacant Properties as Rental Housing for Low-Income Households (up to 50% AMI) $ 0 $ 742,896 5. Redevelopment of Vacant Properties as Rental Housing $ 0 $ 185,724 80A-2 Substantial Amendments - NSP 2 & 3 and Loan Agreement with 815 N Harbor LP September 16, 2013 Page 3 for Low-Income Households (up to 60% AMI) 6. Administration $ 1,000,000 $ 1,000,000 TOTAL NSP 2 GRANT $ 10,000,000 $ 10,000,000 NSP 3 Program Activities Current Budget Proposed Budget 1. Acquisition, Rehabilitation & Resale of Single Family $ 366,029 $ 0 Residences up to 50% AMI 2. Acquisition, Rehabilitation & Resale of Single Family $ 951,674 $ 246,323 Residences u to 120% AMI 3. Redevelopment of Vacant Properties as Rental Housing $ 0 $ 857,104 for Low-Income Households up to 50% AMI 4. Redevelopment of Vacant Properties as Rental Housing $ 0 $ 214,276 for Low-Income Households up to 60% AMI 5. Administration $ 146,410 $ 146,410 TOTAL NSP 3 GRANT $ 1,464,113 $ 1,464,113 The addition of this activity will help the City to expend the NSP funds within the required expenditure deadlines. In addition, the City will be able to achieve the 100 unit goal requirement for NSP 2 funding. A public notice was published on August 19, 2013, in the Orange County Register, La Opinion and Nguoi Viet News indicating the draft Neighborhood Stabilization Program 2 & 3 substantial amendments was available for review for the required fifteen (15) days. In addition, it was posted on the City's website. LOAN AGREEMENT WITH 815 N HARBOR, LP Orange Housing Development Corporation and C&C Development have been previously approved and contracted to implement the NSP 1 & 2 rental activities. They are currently under contract for an NSP eligible property located at 815 N. Harbor Blvd (Exhibit 3). The proposed partnership is tentatively named 815 N Harbor, LP. The property is located within the proposed Corridor (CDR) Zoning District which is proposed to allow for moderate to high density residential projects. The proposed site is approximately 2.26 acres. Exhibit 4 is the proposed development timeline. 80A-3 Substantial Amendments - NSP 2 & 3 and Loan Agreement with 815 N Harbor LP September 16, 2013 Page 4 The proposed loan agreement between 815 N Harbor, LP and the City of Santa Ana is for $2 million. The funds will come from NSP 2 and NSP 3 allocations, and will be used for the acquisition of the property. When complete, the project will be comprised of 70 two-bedroom and three-bedroom rental units for extremely low-, very low- and low-income households and contain a 3,000 square foot community room. The proposed unit mix and levels of affordability are as follows: Bedroom Size 30% AMI 50% AMI 60% AMI Total Two-Bedroom 5 30 14 49 Three-Bedroom 2 12 6 20 Total 7 42 20 69 The remaining unit will be a three-bedroom unit reserved for the onsite manager. The total project development cost is estimated to be $26.3 million. The tables below show the anticipated funding sources and their uses: Funding Source Amount Conventional Permanent Loan $ 4,370,390 Section 8 Loan 8 Project Based Vouchers $ 719,050 City of Santa Ana NSP 2 Funds $ 928,620 City of Santa Ana NSP 3 Funds $ 1,071,380 Deferred Developer Fee $ 792,342 General Partner Equity $ 100 Limited Partner Equity Tax Credits) $18,405,47 6 TOTAL $26,287,358 Fundin Use Amount Acquisition/Demolition $ 4,086,366 Construction $ 15,336,750 Soft Costs $ 6,013,076 Costs Deferred Until Conversion $ 501,390 Financing Costs $ 349,776 TOTAL $ 26,287,358 80A-4 Substantial Amendments - NSP 2 & 3 and Loan Agreement with 815 N Harbor LP September 16, 2013 Page 5 The loan will be a 55-year affordability term with 0 percent interest rate and payable by residual receipts. The City will record trust deeds and covenants to insure affordability for that period of time. The budget proposal requests eight project based vouchers (PBVs). Unlike conventional housing choice vouchers, PBVs are attached to a specific residential facility. The rental assistance is tied to the unit. The U.S. Department of Housing and Urban Development (HUD) regulations require that the Housing Authority enter into a PBV Agreement to Enter Into Housing Assistance Payments Contract (Exhibit 6) prior to the start of construction, and a PBV Housing Assistance Payments Contact (Exhibit 7) after the completion of construction. Execution of these documents will be contingent upon completion of the National Environmental Policy Act (NEPA) and California Environmental Quality Act (CEQA) requirements, approval of the developer's application for a tax credit allocation, and completion of a subsidy layering analysis by the California Tax Credit Allocation Committee. FISCAL IMPACT Funds will be available in the NSP 2 Program account (Account #14218761-69152) and NSP 3 Program account (Account #14218762-69152). APPROVED AS TO FUNDS AND ACCOUNTS: CA* )?6) Nancy Fong CP Interim Exec ive irector Community Development Agency NF/SLB/kg Francisco G tier Executive Director Finance and Management Services Agency Exhibit: 1. NSP 2 Substantial Amendment 2. NSP 3 Substantial Amendment 3. 815 Harbor Site Map 4. Proposed Development Schedule 5. Loan Agreement 6. PBV Agreement 7. PBV Contract 80A-5 EXHIBIT 1 CITY OF SANTA ANA NSP 2 SUBSTANTIAL AMENDMENT SUBMISSION RATING FACTOR 1: NEED/EXTENT OF THE PROBLEM (a) Target Geography Substantial Amendment does not change the substance of the original application. (b) Market Conditions and Demand Factors Substantial Amendment does not change the substance of the original application. RATING FACTOR 2: DEMONSTRATED CAPACITY AND RELEVANT ORGANIZATIONAL STAFF (a) Past Experience of the Applicant Substantial Amendment does not change the substance of the original application. (b) Management Structure Substantial Amendment does not change the substance of the original application. RATING FACTOR 3: SOUNDNESS OF APPROACH (a) Proposed Activities (1) The City of Santa Ana is amending the proposed activities of NSP 2 funds to include the eligible activities under the eligible use E - Redevelop demolished or vacant properties as housing. With this substantial amendment, the City will re-allocate NSP 2 funds from Program 2 - Acquisition, Rehabilitation and Resale of Single Family Residences to a new Activity under Program 5 - Redevelop demolished or vacant properties as housing up to 50% AMI and Program 6 - Redevelop demolished or vacant properties as housing up to 60% AMI. The new proposed activity under programs 5 and 6, will allow the City to successfully implement and exceed its target goal of 100 units with NSP 2 funds. The new proposed activity will address the cost burden and overpayment on many renters in the city of Santa Ana, as discussed in the original application's Rating Factor 1 (Need/Extent of the Problem). 80A-6 Program Eligible Use CDBG Eligible Activity Proposed Anticipated Responsible Amount Units Entity 1. Financing Direct $400,000 10 City of Santa Downpayment Mechanism for homeownership Ana Housing Assistance Purchase, Assistance 24 CFR Division Redevelopment 570.201(n) of Foreclosed Properties 2. Acquisition, Financing Acquisition, $5,171,380 50 City of Santa Rehabilitation Mechanism for Rehabilitation, Ana Housing & Resale of Purchase, Disposition, Direct Division Single Family Redevelopment homeownership Residences of Foreclosed assistance for single Residential family homes [24 CFR Properties 570.201(a)(b)(i)(n)] 3. Acquisition Financing Acquisition, $2,500,000 30 City of Santa and Rehab of Mechanism for Rehabilitation, Ana Housing Rental Housing Purchase, Disposition, Direct Division Redevelopment homeownership of Foreclosed assistance for Residential residential rental Properties properties 24 CFR 570.201(a)(b)(i)(n) 4. Administration 24 CFR 570.205 and $1,000,000 N/A City of Santa Administration and Planning 206 Ana Housing Costs Division 5. Redevelop Acquisition, $741,896 49 City of Santa Redevelopment demolished or Disposition [24 CFR Ana Housing of Vacant vacant 770201 (a)] Division Properties as properties as and Eligible Rental Housing housing rehabilitation and for Low-Income preservation activities Households for demolished or (up to 50% vacant properties [24 AMI) CFR 570.202] 6. Redevelop Acquisition, $185,724 20 City of Santa Redevelopment demolished or Disposition [24 CFR Ana Housing of Vacant vacant 770201(a)] Division Properties as properties as and Eligible Rental Housing housing rehabilitation and for Low-Income preservation activities Households for demolished or (up to 60% vacant properties [24 AMI) CFR 570.202] 80A-7 (2) Use of Funds and Firm Commitments In additional to the program activities in the City's original application, the City is submitting this substantial amendment to include the addition of Program 5 and 6 to expedite the City's NSP 2 funds, which is described below: Program 5: Redevelopment of Vacant Properties as Rental Housing for Low-Income Households (up to 50% AMI) This program will be used to acquire vacant properties and redevelop as rental housing for low-income households at or below 50 percent of the area median income. After acquisition and redevelopment, such housing will be code compliant, energy-efficient and be restricted to low-income households with income at or below 50 percent of area median income. The City anticipates that through this activity, with leveraged NSP 3 funds, it will facilitate the acquisition of a vacant commercial property in tax default and redevelop the property into 49 rental units for low-income households. Program 6 Redevelopment of Vacant Properties as Rental Housing for Low-Income Households (up to 60% AMI) This program will be used to acquire vacant properties and redevelop as rental housing for low-income households at or below 60 percent of the area median income. After acquisition and redevelopment, such housing will be code compliant, energy-efficient and be restricted to low-income households with income at or below 60 percent of area median income. The City anticipates that through this activity, with leveraged NSP 3 funds, it will facilitate the acquisition of a vacant commercial property in tax default and redevelop the property into 20 rental units for low-income households. (b) Project Completion Schedule The City's substantial amendment submission will allow the City of Santa Ana to successfully reach and exceed the targeted goal of 100 units with NSP 2 funds within the program schedule. 80A-8 (c) Income Targeting The City has exceeded the 25 percent of its NSP 2 grant allocation on households earning less than 50 percent of the area median income. To expedite the City's NSP 2 funds, the City will target though a funding mechanism for the acquisition and redevelopment of rental properties that exclusively serve households at or below 60 percent of the area median income. By expanding our targeted income for rental properties to 60 percent, the City will be able reach additional low-income households in Santa Ana. (d) Continued Affordability Substantial Amendment does not change the substance of the original application. (e) Consultation, Outreach, Communications Substantial Amendment does not change the substance of the original application. (f) Performance and Monitoring Substantial Amendment does not change the substance of the original application. RATING FACTOR 4: LEVERAGING (a) Leveraged Funds Substantial Amendment does not change the substance of the original application. (b) Rubric Substantial Amendment does not change the substance of the original application. RATING FACTOR 5: ENERGY EFFICIENCY IMPROVEMENTS AND SUSTAINABLE DEVELOPMENT FACTORS (a) Transit accessibility Substantial Amendment does not change the substance of the original application. (b) Green building standards Because the proposed change will yield a project that will be new construction, there will be additional Green building standards and energy efficiency incorporated into the units. The project is anticipated to be LEED Gold. (c) Re-use of cleared sites Substantial Amendment does not change the substance of the original application. (d) Deconstruction Substantial Amendment does not change the substance of the original application. 80A-9 RATING FACTOR 6: NEIGHBORHOOD TRANSFORMATION AND ECONOMIC OPPORTUNITY Substantial Amendment does not change the substance of the original application. 80A-10 ATTACHMENT 1 NOTICE OF PROPOSED ACTION TO BE TAKEN BY THE CITY COUNCIL OF THE CITY OF SANTA ANA RESPECTING A PROPOSED SUBSTANIAL AMENDMENTTO THE CITY OF SANTA ANA 2013-14 CONSOLIDATED PLAN ANNUAL UPDATE AND A PROPOSED SUBSTANTIAL AMENDMENTTO THE CITY OF SANTA'S NEIGHBORHOOD STABILIZATION PROGRAM 2 APPLICATION NOTICE IS HEREBY GIVEN that the Community Redevelopment and Housing Commission of the City of Santa Ana will conduct a public hearing on September 3, 2013 at 6:00 p.m. at the 2nd Floor Conference Room, 22 Civic Center Plaza, Santa Ana, CA 92701 on a proposed action approving a substantial amendment to the City's 2013-14 Consolidated Plan Update and a substantial amendment to the City's Neighborhood Stabilization Program 2 (NSP 2) Application. On September 16, 2013 on or about 6:00 p.m. at the City Council Chambers, the City Council will take action on a request to authorize submittal of the substantial amendments to the U.S. Department of Housing and Urban Development (HUD). The proposed amendments will: • Allow incomes up to 60% AMI, and • Add Redevelopment Activity to both NSP 2 and 3. The draft substantial amendments will be available for public review from August 19, 2013 to September 3, 2013 at the following locations Monday through Friday during normal business hours: Housing Department, 20 Civic Center Plaza, 3rd Floor; Community Development Agency, 20 Civic Center Plaza, 6`h Floor; Office of the Clerk of the Council, 20 Civic Center Plaza, Room 809; and the Main Public Library, 26 Civic Center Plaza, Santa Ana, California. Written comments on the proposed amendments must be submitted to the Housing Division on or before September 3, 2013 at 9 a.m. 80A-11 EXHIBIT 2 NSP 3 Substantial Amendment Checklist Jurisdiction: City of Santa Ana Lead Agency: City of Santa Ana Jurisdiction Web Address: www.santa-ana.org/cda/nsp.asp NSP Contact Person: Shelly Landry-Bayle Address: 20 Civic Center Plaza, M-37, Santa Ana, CA 92702 Telephone: (714) 667-2287 Fax: (714) 667-2225 Email: slandry-bayle@santa-ana.org The required elements in the substantial amendment/abbreviated action;plan are: A. Areas of Greatest Need Does the submission identify a neighborhood or neighborhoods as being areas of greatest need with an individual or average combined index score for the grantee's identified target geography that is not less than the lesser of 17 Qr'ihe 20" percentile most needy score in an individual state? See http://www.hud.oov/nso for minlinum thresholds Yes ® No ? Verification-found on page: 1 mended by City Council Action September 4, 2012 to change the Target Geography Area. See Attachment 1 for Ta get Area Map and Tlanning Data B. Distribution afi4t1se of Rinds Does the submission contain a narrative describing how the distribution and uses of the grantee's NSP3 funds wV-III meet the requirements dBection 2301(c)(2) of HERA, as amended by the Recovery Act and the Dodd-Frank Act, that funds be distributed to the areas of greatest need, including those with the greatest percentage of home foreclosures, with the highest percentage of homes financed by a subprime mortgage related loan, and identified by the grantee as likely to face a significant rise in the rate of home forecl"osures? Yes ® No E] Verification found on page: 1 Note: The grantee's narrative must address the three stipulated need categories in the NSP statute, but the grantee may also consider other need categories. C. Definitions and Descriptions For the purposes of the NSP3, do the narratives include: NSP3 Substantial Amendment City of Santa Ana OUA-] Ad a definition of "blighted structure" in the context of state or local law Yes ® No E] Verification found on page: 2 a definition of "affordable rents" Yes ® No E] Verification found on page: 2 • a description of how the grantee will ensure continued affordability for NSP3 assisted housing Yes ® No ? Verification found on page: 2 a description of housing rehabilitation standards that provide for improvements to increase energy efficiency or conservation of such homes and properties or to provide for a renewable energy source or sources on homes or properties that will apply to NSP3-assisted activities (including applicable Energy Star requirements) Yes ® No ? Verification found on page: Attachment 2 a description of how the grantee will complywith rental housing preference Yes ® No E] Verification found on page: 1 a description of how the grantee will meet the vicinity hiring requirement Yes ® No E] Verification found on page: 5, 6, 7 1. V lLLlllGll W See Program Activities 1, 2 & 3 Narratives' D. Housing Market Conditions Does the action plan narrative should specifically address how the grantee's program design will address the local housing market Botlditi6hO 'Verification found on page: 4, 5, 6, 7 Comme{ ts: See Progrefm Activities 1, 2 & 3 Narratives E. Information By,AActivity ` Does the submissioncontain;information by activity describing how the grantee will use the funds, identifying: eligible use of funds under NSP3? Yes ® No ? Verification found on page: 4, 6, 7, 8 correlated eligible activity under CDBG? Yes ® No E] Verification found on page: 4, 6, 7, 8 • the areas of greatest need addressed by the activity or activities? Yes ® No ? Verification found on page: 5, 6, expected benefit to income-qualified persons or households or areas? NSP3 Substantial Amendment City of Santa Ana Yes ® No E] Verification found on page: 5, 6, 7, 8 appropriate performance measures for the activity? Yes ® No ? Verification found on page: 5, 6, 7, 8 amount of funds budgeted for the activity? Yes ® No[-] Verification found on page: 5, 6, 7, 8 the name, location and contact information for the entity that will carry out the activity Yes ® No ? Verification found on page: 5, 6, 7, 8 • expected start and end dates of the activity? Yes ® No E] Verification found on page: 5, 6, 7, 8 • how the grantee shall, to the maximum extent feasible, provide for the hiring of employees who reside in the vicinity of NSP3 projects or contract with small businesses that are owned and operated by persons residing in the vicinity of such project, including information on existing local ordinances that address these requirements? Yes ® No E] Verification found on page: 5, 6, 7 the procedures used to create preferences for the development of affordable rental housing developed with NSP3 funds? Yes ® No[] Verification found on page: 1 City has no applicable ordinance. F. Specific Activity Re4't6emepts Does each a ttv ty narrative descfibe 1 incho(Oing: If the activity provides financing the range of interest rates (if any) Yes :No ? If the activity provides housine • duration or term of assistance? Yes ® No ? general terms under which assistance will be provided, Verification found on page: 6, 7 Verification found on page: 2 tenure of beneficiaries (e.g., rental or homeownership)? Yes ® No E] Verification found on page: 4, 5, 6, 7 does it ensure continued affordability? Yes ® No ? Verification found on page: 2 does the applicant indicate which activities will count toward the statutory requirement that at least 25% of funds must be used for housing individuals and families whose incomes do not exceed 50% of area median income? NSP3 Substantial Amendment City of Santa Ana OUM- 114 Yes ® No ? Verification found on page: 6 G. Low-Income Targeting Has the grantee described how it will meet the statutory requirement that at least 25% of funds must be used for housing individuals and families whose incomes do not exceed 50% of area median income? Yes ® No E] Verification found on page: 3, 6 Has the grantee identified how the estimated amount of funds appropriated or otherwise made available will be used for housing individuals or families whose incomes do not exceed 50% of area median income? Yes ® No ? Verification, found on page: 2-3, 6 Amount budgeted: $857,104.00 Amended by City Council Action September 16, 2013 to include new program activity and to increase tl mated amount of funds appropriated for housing individuals or families whose income do not exceed 50 cent of Area Median Income. City Council Action amended program activities to include the acquisition redevelopment of vacant properties as aental housing for low-income households at or below 50 percent he Area Median Income as established by IILJ;b H. Demolition or Conversion of Low- And Moderate-Income Units Does grantee plan to demolish or convert any law- and moderate-income dwelling units? Yes ? Non Verification found on page: 3 Does the substantial amendment include: • The'number of low- and mode rateAncome dwelling units-i.e., 5 80% of area median income- reasonably expected to 46clemol'ished or converted as a direct result of NSP-assisted activities? Yes E] No ? Verification found on page: N/A • The number of. NSP3 affordable housing units made available to low-, moderate-, and middle- income households-i.e., < 120% of area median income-reasonably expected to be produced by activity and income level as provided for in DRGR, by each NSP3 activity providing such housing (including a proposed time schedule for commencement and completion)? Yes ? No ? Verification found on page: N/A The number of dwelling units reasonably expected to be made available for households whose income does not exceed 50 percent of area median income? Yes ? No[] Verification found on page: N/A NSP3 Substantial Amendment City of Santa Ana OVA- 10 0 1. Public Comment Period Was the proposed action plan amendment published via the grantee jurisdiction's usual methods and on the Internet for no less than 15 calendar days of public comment? Yes ® No ? Verification found on page: Attachment 4 Is there a summary of citizen comments included in the final amendment? Yes ® No[-] Verification found on page: Attachment 5 1. Website Publication The following documents are available on the grantee's website: • Proposed NSP3 Substantial Amendment Yes ® No ? • Final NSP3 Substantial Amendment Yes ® No ? • Subsequent NSP3 Amendments Yes ® No[-] Website URL: www.santa-ana.org/cda/nsp,.asp K. SF424 Does the application contain the SF424 form? Yes® No? L. Certifications (Note: Make sure grantee signs the correct certifications; non-entitlement local governments have to sign a different set of certifications) Certifications for Erttltleme0tsCommunities and5tates: ' The following certifications are complete and accurate: (1) Affirmatively Furthering Fair Housing Yes® No? (2) Anti-Displacement and Relocation Plan Yes® No? (3) Anti-Lobbying Yes® No? (4)`AuthorityofJurisdiction Yes® No? (5) Consistency with Plan Yes® No? (6) Acquisition and Relocation Yes® No? (7) Section 3' Yes® No? (8) Citizen Participation Yes® No? (9) Following a Plan Yes® No? (10) Use of Funds Yes® No? (11) a. Use NSP Funds 5220 of AMI Yes® No? b. No Recovery of Capital Costs through Special Assessments Yes® No? (12) Excessive Force Yes® No? (13) Compliance with Anti-Discrimination Laws Yes® No? (14) Compliance with Lead-Based Paint Procedures Yes® No? (15) Compliance with Laws Yes® No? NSP3 Substantial Amendment City of Santa Ana OUIA- ID Substantially Complete Is the amendment substantially incomplete? Yes? No? If the amendment is substantially incomplete, set for the basis of that determination by using the following as a guide: • The amendment was developed without the requires citizen participation. • The amendment fails to satisfy all of the required elements in the Notice. Comments: Recommended for approval ? Recommended for disapproval ? Date amendment disapproved (in part or in its entirety): Click here to enter a date. Note: Written notification of disapproval must be communicated to the applicant in accordance with 24 CFR 91.500(c). If disapproved, provide documentation, including dates and times on incompleteness determination and discussions with grantee and headquarters. Reviewed by: Click here to enter text. Date: Click here to enter a date. Program Manager: Click.here to errtdr,text. Date: Click here to enter a date. CPD Director: Click here to enter text. Date: Click here to enter a date. ?zj NSP3 Substantial Amendment City of Santa Ana NSP3 Grantee Information NSP3 Program Administrator Contact Information Name (Last, First) Landry-Bayle, Shelly Email Address slandry-bayle@santa-ana.org Phone Number (714)667-2250 Mailing Address 20 Civic Center Plaza, M-37 Santa Ana, CA 92702 Areas of Greatest Need Map Submission The map generated at the HUD NSP3 Mapping Tool for Preparing Action Plan website is included as Attachment 1. Data Sources Used to Determine Areas of Greatest Need Describe the data sources used to determine the areas of greatest need. Response: Foreclosure and Notice of Default data obtained from First American CoreLogic, Inc., a subsidiary of First American Company that specialize in real estate data collection and analysis. Additionally, the City has also analyzed data of all properties offered by the National Community Stabilization Trust (NCST). This data enabled the City to identify those areas with the highest percentage of home foreclosures, the highest percentage of hones financedby subprime mortgage related loans, and most likely to face a significant rise in the rate ©f home foreclosures. The City used this data in conjunction with HUD's NSP3 Mapping Tool website to determine its area of greatest need. Determination of Areas of Greatest Need and Applicable Tiers Describe how the areas of greatest need were established and whether a tiered approach is being utilized to determine the distribution of funding. Response: The areas of greatest need were established by means of a careful evaluation of local housing conditions as shown by the data sources identified above, and an analysis of the relative needs scores of neighborhoods known by staff to be experiencing significant numbers of foreclosures. These needs scores were found on HUD's NSP3 Mapping Tool website. Additionally, staff gave careful consideration to its ability to significantly impact the foreclosure problem in different neighborhoods with the limited funding the City will receive through this third round of NSP funding. Staff prioritized rental housing by first seeking to identify foreclosure impacted rental communities that had appropriate needs scores, as well as acgisition opportunites that could be accessed using the limited NSP3 funds the City anticipates receiving. The City has been unable to identify such neighborhoods, and consequently will be focusing its efforts on owner occupied single family homes. In accordance with recent communications from HUD, the City is not using a tiered approach. It has established a single Area of Greatest Need. NSP3 Substantial Amendment Page 1 City of Santa Ana Definitions and Descriptions Definitions Term Definition Blighted Structure In accordance with Section 33031 of the California Redevelopment Law, the City of Santa Ana will define blighted structures in the following way: "Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions may be caused by serious building code violations, serious dilapidation and deterioration caused by long-term neglect, construction that is vulnerable to serious damage from seismic or geologic hazards, and faulty or inadequate water or sewer utilities." Affordable Rents The City of Santa Ana will define affordable rents in a manner consistent with the requirements of the federal HOME Program for very low income rents: "A rent that does not exceed 30 percent of the adjusted monthly income of a family whose annual income equals 50 percent of the median income for the area as determined by the U.S. Department of Housing and Urban Development, with adjustments for household size and numbers of bedrooms in the unit." Descriptions Term Definition Long-Term Affordability In order to ensure continued affordability to the maximum extent 'practicable and for the longest fesible term for the for-sale and rental propertiesit assists with NSP3 monies, the City will record affordability covenants that will run fbr'a period of45'years for owner-occupied properties and 55 years for rental properties. In addition, the City will obtain promissory notes and record trust deeds to secure the NSP3 funds it invests in these for sale properties. These documents will have a 45 year term, and will require, payment in full if the owner fails to comply with the terms of the covenants. Housing Rehabilitation Standards The City of Santa Ana has modified its existing NSP rehabilitation standards so as to meet the new requirements established for NSP3. These newly revised standards are attached to this Substantial Amendment as Attachment 2. Low-Income Targeting Low-Income Set-Aside Amount Identify the estimated amount of funds appropriated or otherwise made available under the NSP3 to be used to provide housing for individuals or families whose incomes do not exceed 50 percent of area median income. Response: Total low-income set-aside percentage (must be no less than 25 percent): 58.54% NSP3 Substantial Amendment Page 2 City of Santa Ana Total funds set aside for low-income individuals = $857,104.00 Meeting Low-Income Target Provide a summary that describes the manner in which the low-income targeting goals will be met. Response: Participation in the City's programs will be restricted to households who meet NSP income requirements. At least 25 percent of the City's allocation will be used to purchase, rehab and sell homes to households with incomes at or below 50 percent of the area median. The City will carefully examine the incomes of all households selected to participate in it NSP3 activities, including those selected to meet the 50 percent requirement. All households, including those at 50 percent of area median, will be required to enter into 45 year covenants. In addition, the City utilize a funding mechanism for the acquisiton and rehabilitation of rental properties that will sreve households at or below 50 percent of the area median income. The City will adopt an duse HOME Program regulations as they relate to income certification and rent determination. Acquisition and Relocation Demolition or Conversion of LMI Units Does the grantee intend to detpolish or convert any low .and moderate-income dwelling units (i.e., < 80% pf'area'niedian income)? No If yes, fill in the table below: Question Number of Units The number of tow-and moderate-income dwelling units-i.e., < 80% of area median income-reasonably expected to be demolished or converted as a direct result of NSP assisted activities._ N/A The number of NSP affordable housing units made available to low-, moderate-, and middle-income households t,e., < 120%of area median income-reasonably expected to be produced by activity and income level as provided for in DRGR, by each NSP activity providing such housing (including a proposed time schedule for commencement and completion). N/A The number of dwelling units reasonably expected to be made available for households whose income does not exceed 50 percent of area median income. N/A Public Comment Citizen Participation Plan Briefly describe how the grantee followed its citizen participation plan regarding this proposed substantial amendment or abbreviated plan. NSP3 Substantial Amendment Page 3 City of Santa Ana Response: As provided for in HUD's abbreviated citizen participation requirements for NSP3 funding, the City's Substantial Amendment was made available for public review during a fifteen day public review period. Availability of the document was made known by means of notification published on the City's website, as well as notices published in a newspaper of general circulation and two newspapers serving Spanish and Vietnamese speaking populations. The document itself was made available on the City's website on August 19, 2013, and at the other locations provided for in the City's Citizen Participation Plan. A copy of the public notice as published in the general circulation newspaper is attached as Attachment 3. It was also published in a newspaper serving the Spanish speaking community, and in one serving the Vietnamese community. Notices in all languages were published on August 19,2013. Following a public hearing conducted by the City's Redevelopment and Housing Commission on September 3, 2013 and completion of the public review period, the amendment was approved by City Council on September 16, 2013 for submission to HUD. As approved by City Council and submitted to HUD, the Amendment is available for viewing by the public and other interested parties on the City's website at http://www.santa-ana.org/cda/nsp.asp. Summary of Public Comments Received. The summary of public comments received is included as Attachment 4. NSP Information; by, 'OA icy Activity Number 1 Activity Name Acquisition/Rehabilitation/Resale of Foreclosed Single Family Homes for Low- , Moderate-, and Middle-Income Households .Sele ct all that apply: Eligible:USe A: Financing Mechanisms Uses EligiblttUSe B: Acquisition and Rehabilitation 'Eligible Us QC: Land Banking ? Eligible Use Di Demolition ? Eligible Use E: Redevelopment CDBG Activity or Acquisition, Rehabilitation, and Disposition of Homes, and Direct Home Activities Ownership Assistance National Objective LoW Moderate Middle Income Housing (LMMH) This activity will be used to acquire and rehabilitate foreclosed single family housing. After acquisition and rehabilitation, these housing units will be code compliant and contain energy efficiency components. Sale and occupancy will be restricted to households whose annual income does not exceed 120 Activity Description percent of the area median income as determined by HUD. The City will carry out this activity through an intermediary who will be required to leverage the NSP3 funds with other public and/or private funds so as to maximize the number of units produced. This will address local market NSP3 Substantial Amendment City of Santa Ana Page 4 conditions by making affordable financing available to low, moderate and middle income households. The intermediary will also be required to market any employment or contracting opportunities to priority area residents and firms, and to select them to the maximum extent feasible. As necessary to facilitate the ultimate sale of these units to income qualified households, the City may enter into lease-purchase agreements with the selected households. These agreements will be structured so as to enable them to save the funds required to qualify for first mortgage loans. The City will do this only when a sale has not been finalized within six months of the listing date. As necessary to facilitate the ultimate sale of these units to income qualified households, the City may :enter into lease-purchase agreements with the selected households. Those agreements will be structured so as to enable them to save the funds required to qualify for first mortgage loans. The City will do this only when a sale`has not been finalized within six months of the listing date. Location Description Area identified in the attached Exhibit 1 Source of funding Dollar Amount Budget NSP3 $246,323.00 $ =`(OfherfndingsourcQj; $. Total Budget for Activity $246,323.00 Acquisition, rehabilitation and resale of one (1) housing units to households Performance Measures whose annual incomes do not exceed 120 percent of the area median income as established bbyHUD. Projected Start Date 7/1/2011; Projected End Date 7/1/14 Name City Of Santa Ana Location Santa Ana, CA Administrator Contact Info Shelly Landry-Gayle Responsible 20 Civic Center Plaza, M-37 Organization Santa Ana, CA 92702 Ph. (714) 667-2287 SLandryBayle@Santa-Ana.Org NSP3 Substantial Amendment Page 5 City of Santa Ana Activity Number 2 Activity Name° Redevelopment of Vacant Properties as Rental Housing for Low-Income Households Sele ct all that apply: Eligible Use A: Financing Mechanisms Use Eligible Use B: Acquisition and Rehabilitation ? Eligible Use C: Land Banking ? Eligible Use D: Demolition ® Eligible Use E: Redevelopment CDBG Activity or Acquisition, Disposition [24 CFR 770201 (a)], Activities and Eligible rehabilitation and preservation activities for demolished or vacant properties [24 CFR 570.2021 National Objective Low-Income Housing to Meet 25% Set-Aside (LH25) This activity will be used to acquire and redevelop vacant properites as rental housing for low-income households at or below 50 percent of the area median income as established by HUD. The City has budgeted at least 58 percent of the anticipated NSP 3 grant for this activity and will use it to meet its very-low requirement. The term of the loan will be 55 years, and the City will record trust deeds and covenants to insure affordability for that period of time. The interest rate will be 0 percent. The City anticipates that through this Activity Description activity it will facilitate the acqusition,and redeveloment of rental units. The City will carryout this activity through an intermediary who will be requi€ed to leverage the NSP3 fUnds,with other public and/or private funds so as fo'maximize the number of units produced. This will address local market conditions by making affordable rental units available to low-income households. The intermediary will also be required to market any employment or contracting opportunities to priority area residents and firms, and to select themtothe maximum extent feasible. Location Description Area identified in attached;Exhibit 1 Source of Funding Dollar Amount Budget NSP3 _ $857,104.00 (Other funding source) $ (Other funding source) $ Total Budget for Activity $857,104.00 Acqusition; Redevelopment and Construction of rental property with units for Performance Measures low,inme households whose annual income will not exceed 50 percent of the area median income as established by HUD. Projected Start Date 9/1/2013 Projected End Date 4/1/2017 Name City Of Santa Ana Location Santa Ana, CA Responsible Administrator Contact Info Shelly Landry-Bayle Organization 20 Civic Center Plaza, M-37 Santa Ana, CA 92702 (714) 667-2250 SLa ndryBayle@Santa-Ana,Org NSP3 Substantial Amendment Page 6 City of Santa Ana Activity Number 3 Activity Name Redevelopment of Vacant Properties as Rental Housing for Low-Income Households Sele ct all that apply: ? Eligible Use A: Financing Mechanisms Use ? Eligible Use B: Acquisition and Rehabilitation Eligible Use C: Land Banking Eligible Use D: Demolition ® Eligible Use E: Redevelopment CDBG Activity or Acquisition, Disposition [24 CFR 770201 (a)] Activities and Eligible rehabilitation and preservation activities for demolished or vacant properties [24 CFR 570.202] National Objective Low Moderate Middle Income Housing (LMMH) This activity will be used to acquire and redevelop vacant properites as rental housing for low-income households at or below 60 percent of the area median income as established by HUD. The term of3he loan will be 55 years, and the City will record (rust deeds and covenants to insure affordability for that period of time. The interest rate will be 0 percent. The City anticipates that through this activity it will facilitate the acqusition and redeveloment of rental units. Activity Description The City will carryout this activity through an intermediary who will be required to leverage the NSP3 funds with other public and/or private funds so as to maximize the number of units produced. This will address local market conditions by making affordable rental units available to low-income households. The intermediary will also be required to market any employment or contracting opportunities to priority area residents and firms, and',to selectthem to the maxi mum extent feasible. Location Description Area identified in attached Exhibit 1 Source of Funding Dollar Amount Budget NSP3 $214,276.00 (Other funding source) $ (Other funding source) $ Total Budget for Activity $214,276.00 Acqusition Redevelopment and Construction of rental property with units for Performance Measures fow-income households whose annual income will not exceed 60 percent of the area median income as established by HUD. Projected Start Date 9/1/2013 Projected End Date 4/1/2017 Name City Of Santa Ana Location Santa Ana, CA Responsible Administrator Contact Info Shelly Landry-Bayle Organization 20 Civic Center Plaza, M-37 Santa Ana, CA 92702 (714) 667-2250 Stand ryBayle@Santa-Ana.Org NSP3 Substantial Amendment Page 7 City of Santa Ana Activity Number 4 Activity Name Administration and Planning Costs Sele ct all that apply: ? Eligible Use A: Financing Mechanisms Use ? Eligible Use B: Acquisition and Rehabilitation ? Eligible Use C: Land Banking ? Eligible Use D: Demolition Eligible Use E: Redevelopment CDBG Activity or Activities Administration and Planning Costs 24 CFR 570.205 and 206 National Objective (Select One) Activity Description This activity will provide funding needed by the City to operate its NSP3 program. It will be carried.out=by the City of Santa Ana. Location Description N/A Source of Funding Dollar Amount Budget NSP3 $146,410.00 (Other funding source) $, (Other funding source) $ Total Budget for Activity $146,410.00 asures rform N/A ate 7/1/2011 te 7/1/2014 Name CityOf Sant a Ana 7 Location Santa Ana, CA Administrator Contact Info Shelly Landry-Bayle 20 Civic Center Plaza, M-37 Santa Ana, CA 92702 (714) 667-2250 SLa ndryBayle@Santa-Ana.Org NSP3 Substantial Amendment City of Santa Ana Page 8 80A-25 List of Attachments Attachment 1: NSP 3 Target Geography Report and Map Attachment 2: NSP Rehabilitation Standards Attachment 3: Copy of Public Notice Attachment 4: Website Attachment 5: Summary of Public Comments Attachment 6: SF 424 Attachment 7: Certifications f: 3 NSP3 Substantial Amendment Page 9 City of Santa Ana ? Attach P6< P ment 1 as of 9/4/2012 = Lsvseroa a S \ O N L a ? UOMWa Ol1MFl a A " ? ' do- T ?' ]OOINWN] is qy a LO "L i 'ss ? d $ 1E oa4 U 3 T Atl ONW9 ^ IS II)59v1p hV IXJYtl9 AY NIOOWI o- k n arwrvvls M1? ?h L g ?? } •Ma aQ 1S NIbn 3v ? ? 1 5 ? ' y ` :? „ 5 y? Y y„ ? ? 'IY . ? 4 rsC' ? +K ? rt _? a . « ? u 1 •y 1 L3MOlJ 11. . m ? . ' { a y ? ~ 4' o ?. '?` 1S 1U151rtl t xtL? ? ? g p .t=p S v{ ? t \ N f? .! r ? $ a lv y + ? '? .Y rt 15 M]FLIVJ m ' V{ R i y ? ? ? 4 4 ? 4 . $ S NJNBI'Tit: , Q. 3 V n a w,o ro?arYrv x^ a W ? a i ft\ Ls aaow. BN R L m m M N ? M O 06 06 N N N a m a z Z o N cn = N O Z ? O O O 80A-21 Attachment 1 as of 9/4/2012 "NSP Planning Data" are: 1) the NSP 2 boundaries, including census tract 748.06 (which is not part of the project, and 2) the planning data of census tract 748.06. Therefore, the impact score is the first document's impact score (234) minus the second document's impact score (7) for a project area impact score of 227. 80A-28 Neighborhood ID: 1104095 NSP3 Planning Data Grantee ID: 0633420E Grantee State: CA Grantee Name: SANTA ANA Grantee Address: 20 Civic Center Plaza, M-37 Santa Ana CA 92702 Grantee Email: SKutner@santa-ana.org Neighborhood Name: NSP2 and 3 w/o hole Date:2012.09.06 00:00:00 NSP3 Score The neighborhoods identified by the NSP3 grantee as being the areas of greatest need must have an individual or average combined index score for the grantee's identified target geography that is not less than the lesser of 17 or the twentieth percentile most needy score in an individual state. For example, if a state's twentieth percentile most needy census tract is 18, the requirement will be a minimum need of 17. If, however, a state's twentieth percentile most needy census tract is 15, the requirement will be a minimum need of 15. If more than one neighborhood is identified in the Action Plan, HUD will average the Neighborhood Scores, weighting the scores by the estimated number of housing units in each identified neighborhood. Neighborhood NSP3 Score: 18.7 State Minimum Threshold NSP3 Score: 17 Total Housing Units in Neighborhood: 27480 Area Benefit Eligibility Percent Persons Less than 120% AMI: 91.62 Percent Persons Less than 80% AMI: 76.38 Neighborhood Attributes (Estimates) Vacancy Estimate USPS data on addresses not receiving mail in the last 90 days or "NoStat" can be a useful measure of whether or not a target area has a serious vacancy problem. For urban neighborhoods. HUD has found that neighborhoods with a very high number vacant addresses relative to the total addresses in an area to be a very good indicator of a current for potentially serious blight problem. The USPS "NoStat" indicator can mean different things. In rural areas, it is an indicator of vacancy. However, it can also be an address that has been issued but not ever used, it can indicate units under development, and it can be a very distressed property (most of the still flood damaged properties in New Orleans are NoStat). When using this variable, users need to understand the target area identified. In addition, the housing unit counts HUD gets from the US Census indicated above are usually close to the residential address counts from the USPS below. However, if the Census and USPS counts are substantially different for your identified target area, users are advised to use the information below with caution. For example if there are many NoStats in an area for units never built, the USPS residential address count may be larger than the Census number; if the area is a rural area largely served by PO boxes it may have fewer addresses than housing units. USPS Residential Addresses in Neighborhood: 27821 Residential Addresses Vacant 9D or more days (LISPS, March 2010): 391 Residential Addresses NoStat (USPS, March 2010): 364 117 80A-29 Foreclosure Estimates HUD has developed a model for predicting where foreclosures are likely. That model estimates serious delinquency rates using data on the leading causes of foreclosures - subprime loans (HMDA Census Tract data on high cost and highly leveraged loans), increasing unemployment (BLS data on unemployment rate change), and fall in home values (FHFA data on house price change). The predicted serious delinquency rate is then used to apportion the state total counts of foreclosure starts (from the Mortgage Bankers Association) and REOs (from RealtyTrac) to individual block groups. Total Housing Units to receive a mortgage between 2004 and 2007: 13512 Percent of Housing Units with a high cost mortgage between 2004 and 2007: 32.5 Percent of Housing Units 90 or more days delinquent or in foreclosure: 18.23 Number of Foreclosure Starts in past year. 1159 Number of Housing Units Real Estate Owned July 2009 to June 2010: 653 HUD is encouraging grantees to have small enough target areas for NSP 3 such that their dollars will have a visible impact on the neighborhood. Nationwide there have been over 1.9 million foreclosure completions in the past two years. NSP 1, 2, and 3 combined are estimated to only be able to address 100,000 to 120,000 foreclosures. To stabilize a neighborhood requires focused investment. Estimated number of properties needed to make an impact in identified target area (20% of REO in past year): 234 Supporting Data Metropolitan Area (or non-metropolitan area balance) percent fall in home value since peak value (Federal Housing Finance Agency Home Price Index through June 2010):-29.3 Place (if place over 20,000) or county unemployment rate June 2005': 5.7 Place (if place over 20,000) or county unemployment rate June 2010': 14.4 'Bureau of Labor Statistics Local Area Unemployment Statistics Market Analysis HUD is providing the data above as a tool for both neighborhood targeting and to help inform the strategy development. Some things to consider: 1. Persistent Unemployment. Is this an area with persistently high unemployment? Serious consideration should be given to a rental strategy rather than a homeownership strategy. 2. Home Value Change and Vacancy. Is this an area where foreclosures are largely due to a combination of falling home values, a recent spike in unemployment, and a relatively low vacancy rate? A down payment assistance program may be an effective strategy. 3. Persistently High Vacancy. Are there a high number of substandard vacant addresses in the target area of a community with persistently high unemployment? A demolition/land bank strategy with selected acquisition rehab for rental or lease-purchase might be considered. 4. Historically low vacancy that is now rising. A targeted strategy of acquisition for homeownership and rental to retain or regain neighborhood stability might be considered. 5. Historically high cost rental market. Does this market historically have very high rents with low vacancies? A strategy of acquiring properties and developing them as long-term affordable rental might be considered. Latitude and Longitude of corner points 2/7 80A-30 -117.863903 33.716630 -117.863731 33.727052 -117.864246 33.733477 -117.859783 33.734048 -117.859612 33.743897 -117.858410 33.744040 -117.858238 33.745610 -117.859268 33.746039 -117.859097 33.749036-117.864418 33.749464-117.864246 33.753746-117.86785133.753603 -117.867851 33.762880 -117.869911 33.762880 -117.869911 33.762024 -117.880383 33.762166 -117.880211 33.763594 -117.882786 33.764164 -117.882614 33.761596 -117.885189 33.761738 -117.885189 33.760454 -117.897034 31760026 -117.896690 33.753889 -117.893772 33.753603 -117.893944 33.749179 -117.908707 33.749464 -117.907505 33.752747 -117.912998 33.756315 -117.920380 33.756172 -117.920380 33.745468 -117.911625 33.745325 -117.915230 33.727623 -117.894630 33.727623 -117.896519 33.716772 Blocks Comprising Target Neighborhood 3/7 80A-31 060590741021000,060590741021005,060590741021004,060590741021001,060590741021003, 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060590750032008,060590750032007,060590750032005,060590750032001,060590750032002, 060590750033000,060590750033003,060590750033004,060590750033001,060590750033002, 060590751001000,060590751001006,060590751001008,060590751001010,060590751001011, 060590751001009,060590751001007,060590751001005,060590751001002,060590751001003, 060590751001004,060590751001001,060590751002000,060590751002003,060590751002004, 060590751002006,060590751002008,060590751002009,060590751002007,060590751002005, 060590751002001,060590751002002,060590751003000,060590751003004,060590751003006, 060590751003007,060590751003005,060590751003003,060590751003001,060590751003002, 060590751004000,060590751004004,060590751004006,060590751004008,060590751004007, 060590751004005,060590751004003,060590751004001,060590751004002,060590752012004, 060590752021000,060590752021014,060590752021013,060590752021012,060590752021011, w 80A-34 060590752021010,060590752021009,060590752021008,060590752021003,060590752021004, 060590752021005,060590752021007,060590752021006,060590752021002,060590752021001, 060590752022000,060590752022008,060590752022014,060590752022013,060590752022012, 060590752022011,060590752022010,060590752022009,060590752022007,060590752022002, 060590752022004,060590752022005,060590752022006,060590752022003,060590752022001, 060590891041003,060590891051000,060590891051004,060590891051006,060590891051999, 060590891051007,060590891051005,060590891051003,060590891051001,060590891051002, 060590891052000,060590891052005,060590891052007,060590891052006,060590891052004, 060590891052001,060590691052003,060590891052002,060590891053000,060590891053999, 060590891053004, 060590891053001, 060590891053003, 060590891053002, 717 80A-35 Neighborhood ID: 2968475 NSP3 Planning Data Grantee ID: 0633420E Grantee State: CA Grantee Name: SANTA ANA Grantee Address: 20 Civic Center Plaza, M-37 Santa Ana CA 92702 Grantee Email: SKutner@santa-ana.org Neighborhood Name: NSP 2 and 3 donut hole Date:2012-09-06 00:00:00 NSP3 Score The neighborhoods identified by the NSP3 grantee as being the areas of greatest need must have an individual or average combined index score for the grantee's identified target geography that is not less than the lesser of 17 or the twentieth percentile most needy score in an individual state. For example, if a state's twentieth percentile most needy census tract is 18, the requirement will be a minimum need of 17. If, however, a state's twentieth percentile most needy census tract is 15, the requirement will be a minimum need of 15. If more than one neighborhood is identified in the Action Plan, HUD will average the Neighborhood Scores, weighting the scores by the estimated number of housing units In each identified neighborhood. Neighborhood NSP3 Score: 18 State Minimum Threshold NSP3 Score: 17 Total Housing Units in Neighborhood: 916 Area Benefit Eligibility Percent Persons Less than 120%AMI: 96.19 Percent Persons Less than 80% AMI: 82.92 Neighborhood Attributes (Estimates) Vacancy Estimate USPS data on addresses not receiving mail in the last 90 days or "NoStat" can be a useful measure of whether or not a target area has a serious vacancy problem. For urban neighborhoods, HUD has found that neighborhoods with a very high number vacant addresses relative to the total addresses in an area to be a very good indicator of a current for potentially serious blight problem. The USPS "NoStat" indicator can mean different things. In rural areas, it is an indicator of vacancy. However, it can also be an address that has been issued but not ever used, it can indicate units under development, and it can be a very distressed property (most of the still flood damaged properties in New Orleans are NoStat). When using this variable, users need to understand the target area identified. In addition, the housing unit counts HUD gets from the US Census indicated above are usually close to the residential address counts from the USPS below. However, if the Census and USPS counts are substantially different for your identified target area, users are advised to use the information below with caution. For example if there are many NoStats in an area for units never built, the USPS residential address count may be larger than the Census number; if the area is a rural area largely served by PO boxes it may have fewer addresses than housing units. USPS Residential Addresses in Neighborhood: 884 Residential Addresses Vacant 90 or more days (USPS, March 2010): 9 Residential Addresses NoStat (USPS, March 2010): 14 1/3 80A-36 Foreclosure Estimates HUD has developed a model for predicting where foreclosures are likely. That model estimates serious delinquency rates using data on the leading causes of foreclosures - subprime loans (HMDA Census Tract data on high cost and highly leveraged loans), increasing unemployment (BLS data on unemployment rate change), and fall in home values (FHFA data on house price change). The predicted serious delinquency rate is then used to apportion the state total counts of foreclosure starts (from the Mortgage Bankers Association) and REOs (from RealtyTrac) to individual block groups. Total Housing Units to receive a mortgage between 2004 and 2007: 400 Percent of Housing Units with a high cost mortgage between 2004 and 2007: 30.3 Percent of Housing Units 90 or more days delinquent or in foreclosure: 16.9 Number of Foreclosure Starts in past year: 33 Number of Housing Units Real Estate Owned July 2009 to June 2010: 18 HUD is encouraging grantees to have small enough target areas for NSP 3 such that their dollars will have a visible impact on the neighborhood. Nationwide there have been over 1.9 million foreclosure completions in the past two years. NSP 1, 2, and 3 combined are estimated to only be able to address 100,000 to 120,000 foreclosures. To stabilize a neighborhood requires focused investment. Estimated number of properties needed to make an impact in identified target area (20% of RED in past year): 7 Suooorting Data Metropolitan Area (or non-metropolitan area balance) percent fall in home value since peak value (Federal Housing Finance Agency Home Price Index through June 2010): -29.3 Place (if place over 20,000) or county unemployment rate June 2005': 5.7 Place (if place over 20,000) or county unemployment rate June 2010': 14.4 'Bureau of Labor Statistics Local Area Unemployment Statistics Market Analysis: HUD is providing the data above as a tool for both neighborhood targeting and to help inform the strategy development. Some things to consider: . 1. Persistent Unemployment. Is this an area with persistently high unemployment? Serious consideration should be given to a rental strategy rather than a homeownership strategy. 2. Home Value Change and Vacancy. Is this an area where foreclosures are largely due to a combination of falling home values, a recent spike in unemployment, and a relatively low vacancy rate? A down payment assistance program may be an effective strategy. 3. Persistently High Vacancy. Are there a high number of substandard vacant addresses in the target area of a community with persistently high unemployment? A demolition/land bank strategy with selected acquisition rehab for rental or lease-purchase might be considered. 4. Historically low vacancy that is now rising. A targeted strategy of acquisition for homeownership and rental to retain or regain neighborhood stability might be considered. 5. Historically high cost rental market. Does this market historically have very high rents with low vacancies? A strategy of acquiring properties and developing them as long-term affordable rental might be considered. Latitude and Longitude of corner points -117.899952 33.739901 -117.900124 33.738759 -117.899094 33.738759 -117.898579 33.734904 -117.885189 33.734762 -117.885704 33.738759 -117.893944 33.738045 -117.894287 33.739901 2/3 80A-37 Blocks Comprising Target Neighborhood 060590748061000,060590748061003,060590748061005,060590748061006,060590748061004, 060590748061001,060590748061002,060590748062000,060590748062003,060590748062004, 060590748062006,060590748062008,060590748062010,060590748062012,060590748062011, 060590748062009,060590748062007,060590748062005,060590748062001,060590748062002, 3/3 80A-38 ATTACHMENT 2 NSP REHABILITATION STANDARDS PREFACE The primary purpose of these standards is to address the quality of workmanship and materials expected, and to achieve consistency throughout the NSP3 program activities administered by the City of Santa Ana. These standards are not intended to reduce or exclude the requirements of any federal, state or local codes, standards, ordinances and regulations that apply to residential rehabilitation. WORKMANSHIP • All work shall be performed in a professional and workmanlike manner. • The quality and durability of the work shall meet or exceed the standards established by the construction industry and various trades. MATERIALS & EQUIPMENT • All materials and equipment shall comply with and be installed in accordance with the manufacturer's requirements and all applicable codes, standards, ordinances and regulations. If a discrepancy occurs between the requirements, the more stringent shall prevail. • Unless otherwise specified, all materials and equipment shall be medium grade. • Economy grade materials and equipment are unacceptable. • All materials and equipment shall be new, in excellent condition, and delivered to the job in the manufacturer's original packaging. • The description of materials and equipment found in this document establish a minimum standard. ENERGY EFFICIENCY, WATER CONSERVATION & RECYCLED MATERIALS To the extent possible and practical, standard measures related to energy conservation, energy efficiency, water conservation and the use of recycled materials have been incorporated herein. Gut rehabilitation or new construction of residential buildings up to three stories will be designed to meet the standard for Energy Star Qualified New Homes. Gut rehabilitation or new construction of mid or high rise multi-family housing must be designed to meet the American Society of heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 901-2004, Appendix G plus 20 percent. LEAD-BASED PAINT All housing built before 1978 must comply with 24 CFR Part 35 Subpart 1 and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead-based paint hazards. HUD's guidelines are available at httr)://www.hud.ciovZoffices/lead/"lbp/hudguidelines /indexcfm. BUILDING STANDARDS Minimum Standard • The site shall be hazard-free and sanitary. • The site and all paving shall drain away from the dwelling and accessory buildings. • Paving and walkways shall be hazard-free and intact. • Landscaping and irrigation systems shall be hazard-free and in relatively good condition. All dead vegetation shall be removed. • Fencing walls and gates hazard free and intact. AII. gates shall be in NSP3 Substantial Amendment City of Santa Ana 80A-39 ATTACHMENT 2 good working order. • The site shall be free from trash, debris and hazardous materials. • Accessory buildings shall be safe and sound. Paving . All new paving and walkways shall be constructed with concrete (2,000 PSI @ 28 days). . Driveways shall be reinforced with wire mesh. Sawn expansion- contraction joints shall be placed every 8 feet in both directions. • All paving and walkways shall be finished with a light broom texture. • All walkways shall be at least 3 feet wide. Sawn expansion- contraction 'oints shall be laced eve 4 feet. Landscaping & Irrigation To the extent possible and practical all new landscaping shall be drought resistant. • When a lawn is being replaced, the new lawn area shall be reduced to aid in the reduction of water consumption. • New irrigation controllers shall be weather or sensor based and EPA Water-Sense qualified. • All new irri ation systems shall be designed to conserve water. Fences, Walls & Gates . All new wood fences shall be made from good quality materials. They shall be properly supported with 4X4 pressure treated posts (8 feet C.C.) and 2X4 rails (top and bottom). The posts shall be embedded in a concrete footing at least 18" deep. • All new block walls shall be constructed with 6X8X16 concrete block. They shall be properly supported by a continuous footing and reinforced with steel bar. PORCHES, Minimum Standard Safe and structural) sound. Rehabilitation Porches, steps, balconies and railing that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Concrete 2,000 PSI (minimum). Finishes • Zero or low VOC rimers, paint and Minimum Standard . Safe and structurally sound _ Rehabilitation Foundations that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • If the project involves a gut rehab, raised foundations shall be Concrete 2,000 PSI (minimum). EXTERIOR WALLS Minimum Standard Safe, structural) sound and weather-tight. _ Rehabilitation Exterior walls that do not meet the minimum standard shall be e laced. Practical, cost effective repairs are acceptable as long as NSP3 Substantial Amendment City of Santa Ana 80A-40 ATTACHMENT 2 compliance with the minimum standard will be achieved. • Seal alljoints. • If the project involves a gut rehab, all exterior walls shall be insulated. EXTERIOR DOORS Minimum Standard • Safe, sound, weather-tight and in good working order. • Five or more ears of practical utility. Rehabilitation • Exterior doors that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. New Doors EPA Energy Star qualified zero or low VOC finish New Hardware Reputable manufacturer, lifetime finish. Minimum Standard • Safe, sound and in good working order. • Five or more ears of practical utility. Rehabilitation • Garage doors that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Minimum Standard Safe, sound, weather-tight and in good working order. • Five or more ears of practical utility. Rehabilitation Windows that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. New Windows • Reputable manufacturer. • EPA Energy Star qualified. Minimum Standard • Homes built before 1978 must comply with 24 CFR Part 35 Subpart 1 and HUD's Lead Safe Housing Rule regarding the evaluation and control ''. of lead-based paint hazards. All exterior paint shall be intact and corrosion free. • Five or more years of practical utility _ _ Rehabilitation • All surfaces to be painted shall be prepared properly. All loose material and peeling paint shall be removed. • All holes and cracks shall be filled and finished so that they blend into the surrounding area. • All stucco surfaces to be painted shall receive a complete and even coverage of stucco paint. All wood surfaces to be painted shall receive a complete and even coverage of flat exterior paint. • Poor workmanship will not be tolerated New Paint Reputable manufacturer. • Highest quality available. NSP3 Substantial Amendment City of Santa Ana 80A-41 ATTACHMENT2 • Zero or low VOC paint, caulking and fillers. Minimum Standard . Safe and structurally sound. . All plaster, drywall and paneling shall be safe and intact. Rehabilitation Walls, floors and ceilings that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. . If the project involves a gut rehab, the attic, walls and floor on raised foundations shall be insulated. Minimum Standard • Safe, sound and sanitary. • Five or more years oftractical utility. _ Rehabilitation . Floor coverings that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Replacement Floor . Carpet & Pad (Reputable manufacturer, recycled materials). Coverings Resilient Flooring (Reputable manufacturer, 10 year wear warranty). . Ceramic Tile (Reputable manufacturer) Minimum Standard . Safe, sound and in good working order. • Five or more ears of practical utiliV. Rehabilitation . Interior doors that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Replacement Doors & • Doors (Reputable manufacturer, masonite, raised panel). Hardware . Hardware (Reputable manufacturer, lifetime finish). Minimum Standard Homes built before 1978 must comply with 24 CFR Part 35 Subpart J and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead-hased paint hazards. . All interior paint shall be intact, corrosion-free and sanitary. . Five or more years of practical utility. Rehabilitation . All surfaces to be painted shall be prepared properly. All loose material and peeling paint shall be removed. • All holes and cracks shall be filled and finished so that they blend into the surrounding area. • All surfaces to be painted shall receive a complete and even coverage of flat paint (semi-gloss in kitchens, bathrooms and laundry rooms). . Poor workmanship will not be tolerated New Paint Reputable manufacturer. • Highest quality available. • Zero or low VOC paint, caulking and fillers. NSP3 Substantial Amendment City of Santa Ana 80A-42 ATTACHMENT 2 KITCHEN CABINETS & COUN TERTOPS Minimum Standard • Cabinets shall be safe, sound, sanitary and in good working order. • Countertops shall be safe, sound, sanitary and watertight. • Five or more years of practical utility. Rehabilitation Cabinets and countertops that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as com fiance with the minimum standard will be achieved. Replacement Cabinets Reputable manufacturer. • Solid hardwood face-frames, door-frames and drawer fronts. • Metal and nylon drawer guides. • Low or zero VOC adhesives and finishes. Replacement Reputable manufacturer. Countertops 4" ceramic tile, 6" backsplash, bull-nose ed e. 111111.10001 ?i I M, IM 1 Minimum Standard - . Safe, sound, sanitary and in good working order. • Faucets shall (at a minimum) be equipped with a low-flow aerator. Five or more years of practical utility. Rehabilitation • Kitchen fixtures, equipment and appliances that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Replacement Sinks . Reputable manufacturer. • 18- ua a (minimum) stainless steel. Replacement Faucets • EPA Water-Sense qualified. • Reputable manufacturer. • Brass construction, metal housing. Replacement Disposals Reputable manufacturer. • 1/2 HP motor (minimum). • Stainless steel swivel lugs. Replacement _ EPA Energy Star qualified. Dishwashers Re utable manufacturer. Replacement Range EPA Energy Star qualified. Hoods • Reputable manufacturer. Replacement Ranges . Reputable manufacturer. • Pilot-free ignition. • Four sealed burners. • Self-cleaning oven with timer. Replacement Cook Tops _ Reputable manufacturer. • Pilot-free ignition. • Four sealed burners, Wall Ovens • Reputable manufacturer. • Pilot-free ignition. Self-cleaningoven with timer. BATHROOM FIXTURES & EQUIPMENT -in NSP3 Substantial Amendment City of Santa Ana 80A-43 ATTACHMENT 2 Minimum Standard Safe, sound, sanitary and in good working order. • Faucets shall (at a minimum) be equipped with a low-flow aerator. • Showerheads shall (at a minimum) be equipped with low-flow aerator. • Porcelain sinks shall be free from any cracks or chips. • Steel sinks shall be free from any rust or corrosion. • Five or more ears of practical utility. Rehabilitation Bathroom fixtures and equipment that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. . Toilets that require more than 1.6 GPF shall be replaced regardless of their condition. Replacement Sinks • Reputable manufacturer. • Cast iron, white enamel finish. Replacement Faucets EPA Water-Sense qualified. . Reputable manufacturer. • Brass construction, metal housing. Replacement Toilets J Reputable manufacturer. . EPA Water-Sense qualified (1.28 GPF) Replacement Tubs _ Reputable manufacturer. . Cast iron body, white enamel finish, slip resistant bottom. . EPA Water-Sense qualified plumbing fixtures. Replacement Reputable manufacturer. Combination Cast iron body, white enamel finish, slip resistant bottom. Tub-Showers . 4" ceramic tile surround. . Anodized aluminum doors with tempered glass. . EPA Water-Sense qualified lumbin fixtures. Replacement Showers Reputable manufacturer. • 4" ceramic tile. . Anodized aluminum door with tempered glass. • EPA Water-Sense jualified plumbing fixtures. Replacement Reputable manufacturer. Medicine Cabinets . Steel body, beveled mirror door. Towel Bars &Toilet • Reputable manufacturer. Paper Holders Metal construction, polished chrome finish. WATER SUPPLY WASTE , Minimum Standard VENT PIPING • Safe, sound and leak-free. Rehabilitation Piping (supply, waste and vent) that does not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Replacement _ Copper, type "L". Water Supply Piping _ Replacement _ Schedule 40 ABS. Waste & Vent Pi in NSP3 Substantial Amendment City of Santa Ana 80A-44 ATTACHMENT 2 WATER H E EAT RS Minimum Standard • Safe, sound and in good working order. • Five or more ears of practical utilit . Rehabilitation Water heaters that do not meet the minimum standard shall b-e replaced. Practical, cost effective repairs are acceptable as long as co mpliance with the minimum standard will be achieved. Replacement • Reputable manufacturer. Water Heaters (Tank) • EPA Energy Star qualified. • 40-gallon insulated tank. Replacement . Reputable manufacturer. Water Heater EPA Energy Star qualified. (Tank-Less) ELECTRICAL SERVICE AND W IRING Minimum Standard • Safe, sound and in good working order. . 100-am ere minimum service. Rehabilitation Electrical service panels, breakers and wiring that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • Knob and tube wiring shall be replaced regardless of its condition. • Overhead wiring from a dwelling to a detached garage or accessory building shall be installed underground regardless of its condition. Replacement • Reputable manufacturer. Service • 100-ampere (minimum). Replacement Romex (NM cable). Wiring ELECTRICAL SWITCHES, OUT LETS & LIGHTING FIXTURES Minimum Standard . Safe, sound and in good working order. • Light fixtures shall (at a minimum) be equipped with CFL bulbs. • Exterior lighting fixtures used for security shall be equipped with a motion sensor. Rehabilitation • Electrical switches, outlets and lighting fixtures that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • All new light fixtures shall be. U.L. approved and Energy Star qualified. • Outlets located within 6 feet of a source of water shall be ground fault protected. • Exterior switches and outlets shall be weatherproof. Replacement . U.L. approved. Switches & Outlets Replacement Reputable manufacturer. Lighting Fixtures U.L. approved and EPA Energy Star qualified. NSP3 Substantial Amendment City of Santa Ana 80A-45 ATTACHMENT2 HVAC Minimum Standard . _ Safe, sound and in good working order. . Eight or more years of practical utility. Rehabilitation HVAC that does not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. . Tune-up all HVAC equipment (as a minimum). . Seal all ducts (as a minimum). . All new HVAC equipment shall be sized pro erl . Furnaces Reputable manufacturer. . EPA Energy Star qualified. Central Air Conditioners . Reputable manufacturer. . EPA Energy Star qualified. Thermostats . Reputable manufacturer. . EPA Energy Star qualified. . Programmable. Minimum Standard . Additions and alterations that were constructed without a building permit and are clearly substandard shall be removed. . Additions and alterations that were constructed without a building permit, but appear to be compliant, shall be inspected by the City's Building Official to determine if a building permit can be issued and they can be saved. NSP3 Substantial Amendment City of Santa Ana 80A-46 NSP - NEW CONSTRUCTION STANDARDS A. Local Codes and zoning Any housing constructed with NSP funds must meet all applicable local codes, rehabilitation standards, and zoning ordinances at the time of project completion. Applicable Building Standards Adopted By the City of Santa Ana: 2010 California Building Code (CBC) 2010 California Electrical Code (CEC) 2010 California Mechanical Code (CMC) Santa Ana Municipal Code (SAMC) 2010 California Fire Code (CFC) NFPA - Referenced National Fire Codes 2008 California Energy Code (Title 24, Part 6) B. Green Building The state-developed residential energy code known as Title 24, Part 6, exceeds the 2009 IECC, and is mandatory statewide. Buildings must also meet requirements set by CALGreen, the statewide green building code. All new construction of residential buildings shall, at a minimum, comply with the codes referenced above and meet the Energy Star standard. Sub-recipients are strongly encouraged to exceed Title 24 and achieve a LEED certification. C. Section 504 Section 504 of the Rehabilitation Act of 1973 prohibits discrimination in federally-assisted activities and programs on the basis of handicap, and imposes requirements to ensure that qualified individuals with handicaps have access to these programs and activities. For new construction of multi-family projects (five or more units), a minimum of 5% of the units in the project (but not less than one unit) must be accessible to individuals with mobility impairments, and at a minimum, an additional 2% of the units (but not less than one unit) must be accessible to individuals with sensory impairments. The total number of units in a NSP-assisted project, regardless of whether they are all NSP assisted, is used as the basis for determining the minimum number of accessible units 80A-47 ATTACHMENT 3 NOTICE OF PROPOSED ACTION TO BE TAKEN BY THE CITY COUNCIL OF THE CITY OF SANTA ANA RESPECTING A PROPOSED SUBSTANIAL AMENDMENT TO THE CITY OF SANTA ANA 2013-14 CONSOLIDATED PLAN ANNUAL UPDATE AND A PROPOSED SUBSTANTIAL AMENDMENT TO THE CITY OF SANTA'S NEIGHBORHOOD STABILIZATION PROGRAM 2 APPLICATION NOTICE IS HEREBY GIVEN that the Community Redevelopment and Housing Commission of the City of Santa Ana will conduct a public hearing on September 3, 2013 at 6:00 p.m. at the 2n' Floor Conference Room, 22 Civic Center Plaza, Santa Ana, CA 92701 on a proposed action approving a substantial amendment to the City's 2013-14 Consolidated Plan Update and a substantial amendment to the City's Neighborhood Stabilization Program 2 (NSP 2) Application. On September 16, 2013 on or about 6:00 p.m. at the City Council Chambers, the City Council will take action on a request to authorize submittal of the substantial amendments to the U.S. Department of Housing and Urban Development (HUD). The proposed amendments will: • Allow incomes up to 60%AMI, and • Add Redevelopment Activity to both NSP 2 and 3. The draft substantial amendments will be available for public review from August 19, 2013 to September 3, 2013 at the following locations Monday through Friday during normal business hours: Housing Department, 20 Civic Center Plaza, 3`d Floor; Community Development Agency, 20 Civic Center Plaza, 6th Floor; Office of the Clerk of the Council, 20 Civic Center Plaza, Room 809; and the Main Public Library, 26 Civic Center Plaza, Santa Ana, California. Written comments on the proposed amendments must be submitted to the Housing Division on or before September 3, 2013 at 9 a.m. 80A-48 ATTACHMENT 4 Elope i7.•: p {o- c% tb_ :L cc s: 1 P x^i_ Neighborhood Stabilization Programs II Communities across the eountrv have been severely impacted b.v mortgage foreclosures and declining propern values. In response Congress passed the Housing and Economic Recovery Act of 2008 which funded the Neighborhood Stabilization Program (-NSP) to help revitalize and stabilize impacted communities The propose of N'SP is to provide targeted assistance to 5t ate and local go• ernments to acquire and redevelop foreclosed homes and residential properties that might othensise became sources of blight nithm their communities. Through the NSP. HUD has allocated Sg.92 billion to communities nanain,ide ofidtich S,5,-43.1$1 ,as, allot, tort to the City of Santa All. The City submitted their Substantial V11e. dment to U.S Department of Housing and Urban Development (HUD), -hich explains the programs to be implemented. .As a part of the Cit 's NSP, the City trill be, implementing five programs'. Dmw npay-ment is,ntant; ,hqu 'ition Rehabilitation of Single Family Homes; Acquisition Ez Rehabilitation of Condominiums and Historic Homes; Acquisition'Re halOhtation of Rental Housing; and Redevelopment. For more information on the Ciro s homeot, nte11ig Fr rnv5 Neighborhood Stabilization Program 2 (NSP 2) The American Recovery and Reinvestment Act of 2oog (ARRA) provided additional fimdin; for NSP activities to states local governments, non profits, and a consortium of nonprofit entities on a competihs e basis. An ap ibcation eras submitted bs (:it}'staff on iuh it,, 7000 to the US Department of Housing and Urban Development (HUD) tar these additional NSP funds. The Ct} , as atrarded Sio million to undertake the same activities/programs as NSP 1. The programs are: • Downpayment Assistance • Acquisition and Rehabilitation of Single Famil'v Homes • Acquisition and Rehabilitation of Rental Housing • Administration Public comment document f' eon NSP 2Substantial A end t Neighborhood Stabilization Program 3 (NSP 3) The U.S. Department of Housitlg and Urban Development (HUD) has allocated the amount of 331,46q.ug in NSP g funds to the City of Santa Ana through the Frank-Dodd Act. To receive these funds the Cite adopted a substantl_1,pmendrient n-hich was submitted to HUD on February 28, 2011. The City ,ill be implementing the following programs: Acquisition%Rehabo Resale-,5o Percent of Area Median AcquisitionRehab; Resale-120 Percent of Area 1leman Administration Public tom neat d [ fn zor^ NSP z Substantal 4 ne doe . Reporting Recipients of NSP funds are required to report specified information to the Department of Housing and Urban Development (HUD) 30 days after the end of each calendar quarter through the Disaster Recn cry Grant R_Ooi n? So stem ( DRGR) T HL, include,. but is not'iowed to a detailed list of all projects and acm in,, for which funds mere ob t„ ated or es nded. an f-. air eon otthm rninleti,n st dui of the prract or actn itv, and an estimate of the number of fobs ci Bated nr retained. 'Phe rollo a ,i are the t i of that i1a I a n sub mitten: Quart€rJ]..Progr soRcPart._..3aria try 'L S,Zl nrlrr]t_ 1 s Rtynrf-..,Jrn iS? 1• thglpgli March 31::+o13 t}R ny,h ylerrla„ai,,•o}g thl xivh Drrgepty?, ' '49 K,go.t Qp3r[ rls Pt ogii'?? ( SSuber I S2o ,,n,1, Fios, R•p. I um 1_ tlq?s7u„h D•vanbcrst ?oi7. Qnaterl} ProZie'ss Report irnu rU j,yhrough Nl n hal "'0t. t u vt u• Pn? t ?H.11"e1 ,) I L,, i tn?. ev_h il, ,lobar 31•11).d Qu]rh]ly Ptn .ty., Rti"' t,J]h i lhl%W,l riua]terli Fri?ie -RlP)Mr Jul; 1 Hn45]I Q]ta]erSh?S?re?3Fr7i st J.M1FIlt Srp Gym ner!19. `G.il Sugirm b:pr,,,,,o .•01a tlvnty+h 5elReldFhSr?a 2ox;> i QStatterl3' ProEre?. Rcp;?rt_:?prl 1 lluougkuli Y1 tC ` 0 sq;2 QnaC el'.t' Prggrrs Iu,POrr:._ApnI I Ihr9l)Z Jgne 0 201:1 Quirtrrh P o re srepprt Almll Nt?,k,h n{pr Z9, 2012 !2ua1-tg3h,_PrDzTe,& Report-J2ntmvi t rou,hyfarch3x 2012 uartedv Progress Rebart- dcto'onr 1 through Decen]berzl X011 Quarterh+ Proms c? Report- Tell, x through 5eptember ,o 2011 Qr arterly Progress Report - a rll x tl]r,omll Julx 30.' , t uarterh' Progress Remrt - January i ', through ,starch 3x 2o1x Qual2erh' Progress Report - October 1 through December 312010 duaiterh P g - Reo 2- Jul' x through September io 2oxo 4 terly P g ss Rep t o it 1 through JJune 102010 Quarter9r Progress R Dart - J nuar v 1 thmu=h \I arch 31, 2010 Quarterly Prowess Report - October x through December 21 2000 Qpp}'te11v},lrg •reSS lteypSt ?!Px t t_Fmx?IrSS,PCetnber 32,-;,g1q Qsl7[frly Pxa.re4t_-R?vort__...A-y*;l i t}imij&tl Jun,e.3o 2009 Qgarfierly Pcw„le? RrPodaa-lanu'm_c...a thro u &I I --l iadl-1--, a i_. Quarterh' Proere_+ Report- October t thgll Dece nbec^t ro-i Quarterly pros ? Report- J I v I through Sep'eruber 302011 tlarterly Pttlaress Report- A21JI 2011 throp?h June ;_o. ^_oii Quarterly Program sR pott- January 1 through Starch 11 2m x Quarterh Emm-l< Report - October i through December x. 20:0 Quarterly pv>F, e s 1{eport Jdnl1 tk I Ilwough Siarrlix1_.-2(m, 1 ter[erb' Pt r Refit October 1 t1u01,L7 December ?i nii QVarterl}'_Pi ogress. Report Lujvj--dir9Lh heptenlbe-w 2cii )uarterlc Pro re s Report apl'71 t ul?u June 1001 :or] Qumteily Pro res Repoq January t ttrqu&h March zl 2oxx Quarterh-ProuessReport -Ju,.1 though September 302010 Quarterly Progress F [ April 1 through June to 2010 Quarterly Progr ac Report - January I through March 31 010 oaCmcf nt a., r: cee-tr ?a.;, gang. Cd_g,. .q64-._a^^ 80A-50 ATTACHMENT 5 SUMMARY OF PUBLIC COMMENTS Public Comments period will end on September 3, 2013 at 9 a.m. NSP3 Substantial Amendment City of Santa Ana APPLICATION FOR Otda Approved No. 3076-0006 Version 7/D9 FEDERAL ASSISTANCE 2. DATE SUBMITTED - Applicanlldentifer - March 1, 2011 1. TYPE OF SUBMISSION: 3. DATE RECEIVED BY STATE Slate AppUcalinn Identifier Appllcagon PWappllcation Q Construction [] Construction 4. DATE RECEIVED BY FEDERAL AGENCY Federal Identifier -C truetlon ns r 6. APPLICANT INFORMATION Legal Name: Organizational Unit: City of Santa Ana Communilyt Development Agency Organizational DUNS: 083153247 Division: Housing Division Name and telephone number of person to be contacted on matters anter Plaza Civic M-37 Involving thisapplication (give area code , Prefix: First Name: Shefl r - W Middle Name (.La ndry-Bayla Zip Code 92702 Suffix: rot no, United States Email: slandry-baylog5 santa-anaorg 6. EMPLOYER IDENTIFICATION NUMBER (EIN) : Phone Number (give area caeo) Fox Number (9ivo oroa code) nn-?n 0- ._ L'JI4.1L_J 714-867-2284 714-667-2225 8. TYPE APPLICATION: T. T. TYPE OF APPLICANT: (See back of form for Application Types) A/ New 2Y Continuation r Revision Il Revision, enter appropriate letter(s) In box(es) C. Municipal See back of form for description of letters,) I_1 Other (specify) O Ll O h t er (specify) 9. NAME OF FEDERAL AGENCY: U.S. Department of Housing and Urban Development 10. CATALOG OF FEDERAL DOMESTIC ASSISTANCB NUMBER: 11. DESCRIPTIVE TITLE OF APPLICANT'S PROJECT: MZ_g1M? LJ Neighborhood Slatelllzallon Program 3 will be used to create new TITLE (Name of Pro rem): homeownership opportunities for Low., Moderate-, and Middle-Income Neighborhood Stabi9zation Program Formula Grants (Round 3) households via the acquisition, rehabilitation, and/or resale of foreclosed 12. AREAS AFFECTED BV PROJECT (CB/es, Counties, States, efcj.' and/or abandoned residantlal properties. Santa Ana, CA 13. PROPOSED PROJECT Sl n D l 14, CONGRESSIONAL DISTRICTS OF: a a e: Ending Date: a. Applicant b. ProJeci 71112011 7/1/2014 4G & 47 7 16. ESTIMATED FUNDING: 16, lb APPLICATION SUBJECT TO REVIEW BY STATE EXECUTIVE a. Federal 1,484,113 0 12372 PROCESS? THIS PREAPPUCATIONAPPLICATION WAS MADE a. Yes. In AVAILABLE TO THE STATE EXEC b. Applicant UTIVE ORDER 12372 PROCESS FOR REVIEW ON c. State ----- OA"I E: d. Local b. No. PROGRAM I$ NOT COVERED BY E. 0.12372 'Vo e. Other OR PROGRAM HAS NOT BEEN SELECTED BY STATE 1. Program Income POR REVIEW 17. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? g. TOTAL 1,484,113' dyes If'Yes' attach an explanation. VJ No 18. TO THE BEST OF MY KN OWLEDGE AND BELIEF, ALL DATA IN THIS APPL ICATION/PREAPPLICATION ARE TRUE AND CORRECT T OCUMENTHAS BEEN DUL Y AUTHORIZED BY THE GOVERNING BODY OF TH . HE E APPLICANT AND THE APPLICANT WILL C L TTACHED ASSURANCES IF ' THE ASSISTANCE IS AWARDED. OMP Y WITH THE I z _ f x 10 i : Firs?Name Davd Iddle Name N Lest Name Ream uffx Tile ity M anager C Telephone Number (9Na area code) . Signature of Au odze Representative 714-647-6713 Date Siggned Pebrua 23, 2011 Authorized for Local Reoroduction Standard Form 424 (ReV.9.2003) Prescribed bV OMB Circular A-102 80A-52 ATTACHMENT 7 Certifications Certifications for State and Entitlement Communities (1) Affirmatively furthering fair housing. The jurisdiction certifies that it will affirmatively further fair housing, which means that it will conduct an analysis to identify impediments to fair housing choice within the jurisdiction, take appropriate actions to overcome the effects of any impediments identified through that analysis, and maintain records reflecting the analysis and actions in this regard. (2) Anti-displacement and relocation plan. The applicant certifies that it has in effect and is following a residential anti-displacement and relocation assistance plan. (3) Anti-lobbying. The jurisdiction must submit a certification with regard to compliance with restrictions on lobbying required by 24 CFR part 87, together with disclosure forms, if required by that part. (4) Authority of jurisdiction. The jurisdiction certifies that the consolidated plan or abbreviated plan, as applicable, is authorized under state and local law (as applicable) and that the jurisdiction possesses the legal authority to carry out the programs for which It Is seeking funding, in accordance with applicable HUD regulations and other program requirements. (5) Consistency with plan. The jurisdiction certifies that the housing activities to be undertaken with NSP funds are consistent with Its consolidated plan or abbreviated plan, as applicable. (6) Acquisition and relocation. The jurisdiction certifies that it will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601), and implementing regulations at 49 CFR part 24, except as those provisions are modified by the notice for the NSP program published by HUD. (7) Section 3. The jurisdiction certifies that It will comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part 135. (8) Citizen participation. The jurisdiction certifies that it is in full compliance and following a detailed citizen participation plan that satisfies the requirements of Sections 24 CFR 91.105 or 91.115, as modified by NSP requirements. (9) Following a plan. The jurisdiction certifies it is following a current consolidated plan (or Comprehensive Housing Affordability Strategy) that has been approved by HUD. (Only States and entitlement jurisdictions use this certification.] (10) Use of funds. The jurisdiction certifies that it will comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Title XII of Division A of the American Recovery and Reinvestment Act of 2009 by spending 50 percent of its grant funds within 2 years, and spending 100 percent within 3 years, of receipt of the grant. (11) The jurisdiction certifies; a. that all of the NSP funds made available to it will be used with respect to individuals and families whose incomes do not exceed 120 percent of area median Income; and NSP3 Substantial Amendment City of Santa Ana 80A-53 ATTACHMENT 7 b. The jurisdiction will not attempt to recover any capital costs of public improvements assisted with CDBG funds, including Section 108 loan guaranteed funds, by assessing any amount against properties owned and occupied by persons of low- and moderate-income, including any fee charged or assessment made as a condition of obtaining access to such public improvements. However, If NSP funds are used to pay the proportion of a fee or assessment attributable to the capital costs of public improvements (assisted in part with NSP funds) financed from other revenue sources, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds. In addition, with respect to properties owned and occupied by moderate-income (but not low-income) families, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than NSP funds if the jurisdiction certifies that it lacks NSP or CDBG funds to cover the assessment. (12) Excessive force. The jurisdiction certifies that it has adopted and is enforcing: a. A policy prohibiting the use of excessive force bylaw enforcement agencies within its jurisdiction against any individuals engaged in nonviolent civil rights demonstrations; and b. A policy of enforcing applicable state and local laws against physically barring entrance to, or exit from, a facility or location that is the subject of such nonviolent civil rights demonstrations within its jurisdiction. (13) Compliance with anti-discrimination laws. The jurisdiction certifies that the NSP grant will be conducted and administered in conformity with Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and Implementing regulations. (14) Compliance with lead-based paint procedures. The jurisdiction certifies that its activities concerning lead-based paint will comply with the requirements of part 35, subparts A, B, J, K, and R of this title. (15) Compliance with laws. The jurisdiction certifies that it will comply with applicable laws. (16) Vicinity hiring. The jurisdiction certifies that it will, to the maximum extent feasible, provide for hiring of employees that reside in the vicinity of NSP3 funded projects or contract with small businesses that are owned and operated by persons residing in the vicinity of NSP3 projects. (17) Development of affordable rental housing. The jurisdiction certifies that it will be abide by the procedures described in its NSP3 Abbreviated Plan to create preferences for the development of affordable rental housing for properties assisted with NSP3 funds. a??, 62uc' 4 Signature/Authorized Official Date Title -L)- NSP3 Substantial Amendment City of Santa Ana 80A-54 PROPOSED PROJECT LOCATION 803-815 NORTH HARBOR BOULEVARD 0 F w w J w O ~ m HAZARD AVENUE w w H N } w J w w Q m m cc Q LL VY EXHIBIT 3 80A-55 d' m 2 X W 0 N L ti 9 u u a N F N A O U U N u O w ? ? d e U W= z F ? T ? C y O N C U Y w, W O m p O ? Q C U O O N .0 Q O d ? O U {p 2 A+ W = F a Z ? P N 8 CO W d o d °' O N ? N z w C ^ ii O U L ?M o n a b N U N a U m o N ?'E6gz a E b0 k" W N F O a' Q?U r T N W ? ?Q O a g€ N p u p d 5 h W C n U ? L a a+e 2 E E N 0 L N z ? :0 O i L U A Q F Q e o " e H A > E N V] ? U Q W b e d N .y O N Q Q ei a L C .? a ri d o o E cN x o U 80A-56 EXHIBIT 5 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Community Development Agency 20 Civic Center Plaza (M-37) P.O. Box 1988 Santa Ana, California 92702 Attention: Housing Manager SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 61031 LOAN AGREEMENT by and between the CITY OF SANTA ANA, and 815 N HARBOR, L.P. (815 N Harbor Boulevard, Santa Ana, California) Dated: September 2013 80A-57 LOAN AGREEMENT NEIGHBORHOOD STABILIZATION PROGRAM FUNDS THIS LOAN AGREEMENT (the "Agreement") dated, for identification purposes only, as of September , 2013, is made and entered into by and between the City of Santa Ana, a charter city and municipal corporation ("City") and 815 N Harbor, L.P. ("Developer") with reference to the following: RECITALS A. Developer has entered into an agreement (the "Purchase Agreement") to purchase property, located at 815 N. Harbor Boulevard, Santa Ana, California, as more particularly described in the legal description, Exhibit A attached hereto and incorporated herein (the "Property"). Pursuant to the Purchase Agreement, the price to be paid for the Property, is $3,856,366 (the "Purchase Price"). B. This Agreement is made pursuant to the authority of Title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5 {February 17, 2009)) (Recovery Act) and sections 2301-2304 of the Housing and Economic Recovery Act of 2008 (Public Law 110-289 {July 30, 2008}) (HERA). Section 2301-2304 of HERA is known as the "Neighborhood Stabilization Program" or "NSP" with money funded through the Program as "NSP Funds". The term "NSP2" refers to the second appropriation of NSP Funds provided under the Recovery Act, and the term "NSP3" refers to the third appropriation of NSP Funds provided under the Recovery Act. C. The City was notified that its application under the NSP for NSP2 Funds was approved by the U.S. Department of Housing and Urban Development ("HUD") with funding allocated for acquisition and construction of the multi-family rental component of the NSP. The parties hereto have executed the "Neighborhood Stabilization Program (Program 2) Rental Housing Development Agreement" dated March 1, 2010 in the amount not to exceed $6,500,000 but no less than $2,500,000 plus program income. Developer must comply with all of the NSP Program requirements as set forth in the Agreement. Pursuant to this Agreement, NSP2 and NSP3 Funds will be used for the acquisition of the Property. This agreement amends the agreement dated March 1, 2010 to include redevelopment activities as authorized by the substantial amendment. D. On March 4, 2011, the City was notified that its application under the NSP for NSP 3 Funds was approved by HUD. Funding for the Developer is allocated for acquisition and construction of the multi-family rental components of the NSP 3 program in an amount not to exceed $1,500,000. E. A Request for Proposals was issued by the City to competitively choose a Developer for the NSP Funds. Developer was awarded an agreement for the NSP1 Funds for the Rental Program, further funding for NSP2 and now this Agreement, due to its successful implementation of said agreements to use such Funds. 80A-58 F. The City agrees to loan to Developer and Developer agrees to borrow from the City, money towards acquisition of the Property, for a total of $2,000,000.00 (the "City Loan") pursuant to the Program, subject to the terms and conditions set forth herein. The City Loan shall be secured by a Deed of Trust in the principal amount of Two Million Dollars ($2,000,000.00). G. Developer is entering into this agreement to acquire and, subject to entitlement approvals, develop a mixed use project consisting of approximately seventy (70) unit multi- family residential housing development with a community room (the "Project") located at 815 N. Harbor Street, within the City of Santa Ana, California, and legally described in Exhibit A attached hereto (the 'Property"). NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, City and Developer agree as follows: DEFINITIONS AND INTERPRETATION 1.1 Defined Terms. All capitalized terms used herein, including, without limitation, in the Recitals above and in all other Project Documents, unless otherwise expressly defined, are defined where first used in this Agreement and/or as set forth in this Article 1. "Affordable Housing" means housing operated in accordance with the requirements of 24 CFR 92.252 and 24 CFR 570. "Affordability Period" also referred to as "Term of Affordability", shall be fifty- five (55) years from date of issuance of Certificate of Completion. "Affordable Rent" means the monthly rents which do not exceed the maximum amount applicable to Extremely Low, Very Low and Low Income households, as promulgated by the U.S. Department of Housing and Urban Development (HUD). "Affordability Restrictions on Transfer of Property" means that certain document affecting real property benefiting the City, attached hereto as Exhibit B. "Agreement" means this Neighborhood Stabilization Program Agreement between the City and the Developer, and any attachments thereto. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the NSP 2 and NSP 3 Funds. 'Building Permit' means the building permit(s) issued by City and required for the construction, if any. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs. 80A-59 "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 31. corporation. "Certificate of Completion" has the meaning set forth in Article 17. "City" means the City of Santa Ana, California, a charter city and municipal "City Deed of Trust" means the deed of trust encumbering the Property, in the form attached hereto as Exhibit C, to be executed by Developer pursuant to Section 5.13.2 in order to secure the Loan Note. "City Loan" means the loan to be made by the City to Developer in the principal amount of Two Million Dollars ($2,000,000.00) in accordance with this Agreement. "City Project Manager" shall mean the City Manager and/or his/her designee. "City Promissory Note" means that certain promissory note in the original principal amount of $2,000,000 in the form attached hereto as Exhibit D, and to be executed by Developer in favor of City to evidence the obligation of Developer to repay the City Loan through residual receipts as further described in the City Promissory Note. "Close of Escrow" shall mean the date upon which the Loan Agreement and City Deed of Trust is recorded in the Official Records of the County. "Closing Statement" means the final statement of Developer's Escrow account for the purchase of the Property pursuant to the purchase contract. "County" means the County of Orange, California. "Developer" means 815 N Harbor, LP, a California limited partnership comprised of OHDC 815 N Harbor, LLC, California limited liability company as managing general partner and C&C 815 N Harbor, LLC, a California limited liability company, as developer general partner. "Developer's Representative" shall mean the Chief Executive Officer of the Managing General Partner of Developer or his/her designee. "Escrow" means Escrow No. 588306-A. "Escrow Holder" means First American Title Company, 5 First American Way, Santa Ana, California 92707. "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 published by HUD. 4 80A-60 "Event of Default" has the meaning set forth in Section 8.1. "Foreclosed" As defined by HUD for the purposes of NSP means "A home or residential property has been foreclosed upon if any of the following conditions apply" (a) The property's current delinquency status is at least 60 days delinquent under the Mortgage Bankers of America delinquency calculation and the owner has been notified; (b) the property owner is 90 days or more delinquent on tax payments; (c) under state, local, or tribal law, foreclosure proceedings have been initiated or completed; or (d) foreclosure proceedings have been completed and title has been transferred to an intermediary aggregator or servicer that is not an NSP grantee, contractor, subrecipient, developer, or end user. "Governmental Authority" means any governmental or quasi governmental agency, board, bureau, commission, department, court, administrative tribunal or other instrumentality or authority, and any public utility. "Hazardous Materials" means flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including without limitation the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et sec., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended. "HOME" means the HOME Investment Partnership Program (the "HOME Program") (42 U.S.C. §12701, et seq.,) to be used in accordance with applicable statutory requirements and regulations (the "HOME Regulations") (24 CFR Part 92). "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "Improvements" means all improvements and fixtures now and hereafter comprising any portion of the Property, including, without limitation, landscaping, trees and plant materials; and offsite improvements (including, without limitation, streets, curbs, storm drains, and adjacent street lighting). "Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (c) any obligation for the purchase of property or services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii) evidenced by a note or similar instrument, and (d) all recourse and all non-recourse indebtedness secured by any Lien on any property or asset of such person (whether or not assumed by such person). "Indemnitees" has the meaning set forth in Section 18.2. "Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments, injunctions, decrees or awards of the United States or any state, county, municipality or other Governmental Authority. 80A-61 "Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any lien or security interest). "Loan Documents" means, collectively, this Agreement, the City Promissory Note, the City Deed of Trust, and the Affordability Restrictions on Transfer of Property, and any other agreement, document, or instrument that the City requires in connection with the execution of this Agreement or from time to time to effectuate the purposes of this Agreement. "Low Income" means an adjusted income which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HUD. Also may be referred to interchangeably in the Loan Documents as "Area Median Income" or "AMP'. "Neighborhood Stabilization Program" (NSP) has the meaning set forth in the Recitals above. "Neighborhood Stabilization Program (NSP) Regulations" has the meaning set forth in the Recitals above. "NSP Assisted Units" shall mean those residential units constructed which are subject to the term of affordability. "NSP Funds" shall mean the money provided under the NSP 2 and NSP 3 Program for the development of affordable rental units. "Partnership Agreement" means the Amended and Restated Limited Partnership Agreement of 815 N Harbor L.P., dated as of August 30, 2013. "Permitted Encumbrances for the Affordable Housing Restrictions" means collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. "Permitted Encumbrances for the City Deed of Trust" means the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. "Project" means the construction of the Improvements upon the Property by Developer pursuant to this Agreement. "Project Budget" means the line-item budget for the Project attached hereto as Exhibit E, as modified from time to time in accordance with this Agreement. 6 80A-62 "Project Costs" means all costs of any nature incurred in connection with the Project in accordance with generally accepted accounting principles. "Property" means the property that is located at 815 N. Harbor Boulevard in the City of Santa Ana, and is more fully described in the "Legal Description" of the Property attached hereto as Exhibit A and incorporated herein by reference. "Scope of Work" means the detailed statement of the work to be performed by Developer on and to the Property pursuant to this Agreement, which is attached hereto as Exhibit F. "Schedule of Performance" means the detailed schedule setting forth timeframes for certain tasks, which document is attached hereto as Exhibit G. "Senior Lender" means a commercial financial institution providing the Senior Loan or any other holder of the Senior Loan Note. "Senior Loan" means a loan from the Senior Lender, which is any of an acquisition loan in the approximate amount of $2,000,000 from Grandpoint Bank, a construction loan in the approximate principal amount of $17,607,180 with a term of approximately two (2) years or permanent loan(s) in the approximate principal amount of $5,089,440.00 with a term of approximately 18 years and an amortization period of 30 years. "Senior Loan Deed of Trust" means the first deed of trust securing the Senior Loan by encumbering the Property. "Senior Loan Documents" means, collectively, the loan agreement governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document or instrument that the Senior Lender requires in connection with the Senior Loan. "Senior Loan Note" means the promissory note evidencing the Senior Loan from the Senior Lender. Exhibit H. "Target Area" shall mean the map attached hereto and incorporated herein as "Term of Affordability" the terms and conditions contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. "Vicinity" shall mean the Target Area as identified by the City for the NSP funds and approved by HUD. 80A-63 1.2 Singular and Plural Terms. Any defined term used in the plural in this Agreement 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 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. SCOPE OF WORKIPROJECT BUDGET A "Scope of Work" (Exhibit F) and "Schedule of Performance" (Exhibit G) for the Property is attached hereto. Any material change to the Scope of Work and/or Schedule of Performance requested by the Developer shall be subject to the prior written approval of the City Project Manager. The Scope of Work and/or Schedule sets forth the construction work that shall be performed on the Property and timeframes for approvals and such work. A line-item budget for the Project, including a summary statement of sources and uses of funds, is incorporated into Exhibit E (the "Project Budget"). Any material change to the Project Budget requested by Developer shall be subject to the prior written approval of the City Project Manager. 3. CITY LOAN: The City Loan shall be evidenced by the City Promissory Note in the form attached hereto as Exhibit D. The City Loan shall be secured by the City Deed of Trust in the form attached hereto as Exhibit C. The terms and conditions of the City Loan are as set forth in the City Promissory Note which is a residual receipts note. The NSP terms of affordable compliance period is fifty-five (55) years or repayment, commencing on the date that all work is complete and the Property is fully occupied, however the term of affordability for the Project is fifty-five years or repayment of the City Loan, whichever is longer. 3.1 City Loan. The City agrees to lend to Developer, and Developer agrees to borrow from the City, the City Promissory Note Amount, with interest as provided in Section 4(a) of this Agreement, subject to the conditions and restrictions set forth in this Agreement, in the City Promissory Note, the Affordability Restrictions on Transfer of Property, and in the City Deed of Trust. When all conditions to the close of escrow other than payment of the Purchase Price have been satisfied, the City shall deposit the City Loan Amount into escrow. The City shall direct the Escrow Agent to apply the proceeds of the City Loan on behalf of Developer to 8 80A-64 the Purchase Price of the Property and related soft costs. Developer shall execute and deliver to the Escrow Agent the Promissory City, the City Deed of Trust and the Affordability Restrictions on Transfer of Property. 3.2 Authorized Use of City Loan. The City Loan proceeds may be used for the acquisition of the foreclosed Property, as well as pre-approved reasonable soft costs related to such purchase. 3.3 Loan Repayment. Developer shall make payments to the City as provided in Sections 3.4 (Residual Receipts), 3.5 (Refinancing Proceeds), 3.6 (Sale Proceeds) and 3.7 (Accelerated Loan Repayment). 3.4 Annual Loan Repayment/ Residual Receipts. a. The Developer shall make a loan payment to the City annually, in the amount of the lesser of the outstanding balance due under the City Promissory Note or the City's percentage of the residual receipts, as provided in this Section 3.4. b. Within one hundred fifty (150) days after the close of the initial Calendar Year following the issuance of the Certificate of Completion and on or before the 150th day of each Calendar Year thereafter, the Developer shall submit to the City an audited financial statement of gross revenues and operating expenses attributable to the Property for the applicable Calendar Year, along with a computation of the residual receipts due to the City for the Calendar Year. c. Except as otherwise provided, the Developer shall pay to the City fifty percent (50%) of the Residual Receipts. Fifty percent (50%) of the Residual Receipts shall remain with the Developer. d. The Residual Receipts payment shall be made not later than one hundred fifty (150) days after the close of the Calendar Year. Such payment shall be applied first to any late fees, then to reduce the principal balance of the loan. 3.5 Loan Repayment from Refinancing Proceeds. The Developer shall make a loan payment to the City from every refinancing that occurs during the term of this Agreement not to exceed the outstanding balance of principal on this City Promissory Note, to the extent of the City's percentage, which is fifty percent (50%), 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 amount necessary to pay any deferred developer fee in full; and next, the Developer shall pay to the City the City's percentage of the remaining Refinancing Proceeds to the extent of the outstanding balance on this City Promissory Note. At least fifty percent (50%) of the Refinancing proceeds shall remain with Developer, with all remaining Refinancing proceeds remaining with the Developer to the extent the outstanding balance of the City Promissory Note has been fully paid.. Such payment shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance of the City Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Refinancing Proceeds are insufficient to repay the City Loan in full. 9 80A-65 3.6 Loan Repayment from Sale Proceeds. The Developer shall make a loan payment, not to exceed the outstanding balance of principal on the City Promissory Note to the City from any Sale that occurs during the term of the City Loan, to the extent of the City's percentage of the Sale proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in full the balance remaining on the Senior Loan; next, the amount necessary to pay any deferred developer fee in full, and next, the Developer shall pay to the City the City's percentage of the remaining sale proceeds, not to exceed the outstanding amount of principal due on this City Promissory Note. At least fifty percent (50%) of the Sale proceeds shall remain with Developer, with all remaining Sale proceeds remaining with the Developer to the extent the outstanding balance of the City Promissory Note has been fully paid. Such payment shall be due on the date of such Sale, and shall be applied to reduce the principal balance of the City Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Sale proceeds are insufficient to repay the City Loan in full. 3.7 Accelerated Loan Payment. The full principal amount outstanding shall be due and payable on the earlier to occur of the following: a. Sale or Refinancing of the Property as provided herein; unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the City Loan, the City approves such sale and the purchaser assumes the balance of the City Loan in accordance with the terms of the City Promissory Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to repay in full the City Loan, the City approves such Refinancing and the Developer remains obligated pursuant to the terms of this City Promissory Note; or b. In event of default (subject to any applicable notice and cure provisions) pursuant to any of the City Loan Documents or the Senior Loan Documents; or c. Any default (subject to any applicable notice and cure provisions by Developer as to any other loan or loans by City to Developer with respect to the Property; or d. The date that is fifty-five (55) years after the date of the Certificate of Completion, is issued by the City of Santa Ana. On that date, the City agrees to review the performance of the Property and consider in good faith any reasonable request by Developer to modify the terms or extend the Term of the City Promissory Note. 3.8 Prepayment Developer may prepay the outstanding principal balance under the City Promissory Note, in whole or in part, at any time without penalty, however the Affordability Restrictions on Transfer of Property still remain for the entire Affordability Period of fifty-five (55) years. 3.9 Acceleration by Reason of Transfer or Financing. a. In order to induce City to make the loan evidenced hereby, Developer agrees that in the event of any transfer of the Property without the prior written consent of City (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, 10 80A-66 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 such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this Section, 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 Developer from any liability thereunder without the prior written consent of City. b. As used herein, "transfer" includes the sale, agreement to sell, transfer or conveyance of the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property, or the lease of all or substantially all of the Property. 'Transfer' shall not include the leasing of individual residential units on the Property, so long as Developer complies with the provisions of the Loan Agreement and the Affordability Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of the Property to a limited partnership in which Developer is a general partner, or to a corporation or limited liability company that is wholly owned by the Developer or its affiliates and that is formed for the sole purpose of owning and operating the Property, or the sale back to the Developer. In the event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior Loan, without the prior written consent of City (which consent City may grant or deny in its sole discretion), then the entire outstanding balance of the City Loan 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 (and it shall not be deemed a sale) (i) a transfer of a general partner's interest in Developer when made in connection with the exercise by the Developer's limited partner (the "Limited Partner") of its rights upon a default by a general partner under the Developer's partnership agreement (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; (ii) any transfer of the Property to the managing general partner of Developer pursuant to the right of first refusal or to the general partners of Developer pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Developer. 4. [RESERVED] 5. [RESERVED] 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS 11 80A-67 6.1 Conditions Precedent. City's obligation to disburse the loan is subject to the satisfaction, or waiver by the City Project Manager, of the following conditions precedent: a. Loan Documents. Developer shall have delivered to the Escrow Holder, signed by the authorized officer or officers of Developer, with such signature(s) acknowledged where necessary, each of the following documents: (i) this Loan Agreement; (ii) the City Promissory Note; (iii) the City Deed of Trust; and (iv) the Affordability Restrictions on Transfer of Property. b. Title Insurance. City shall have received an LP-10 ALTA Lender loan policy of title insurance (1970 edition), or evidence of a commitment therefore satisfactory to City, issued by First American Title Insurance Company and in form and substance satisfactory to City, together with all endorsements and binders required, naming City as the insured, in a policy amount of not less than the total City Loan Amount, showing Developer as the fee owner of the Property and insuring the City Deed of Trust to be a valid priority lien on the Property. The City Promissory Note and Deed of Trust shall be subordinate to the Senior Loan Note and Senior Loan Deed of Trust. C. Affordability Restrictions on Transfer of Propert y. Developer 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, Developer agrees that the Property shall be used only for decent, safe, sanitary and affordable rental housing pursuant to the affordability requirements of Code of Federal Regulations ("CFR") section 92.252 or 92.254. The City's Affordability Restrictions on Transfer of Property shall remain in first position on title and shall not be subordinated. d. Documents Recorded. This Loan Agreement, the City Deed 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, Escrow Holder shall have recorded a request for notice of default of the Senior Loan (the "Request for Notice of Default"). f Insurance. City shall have received evidence satisfactory to the City Attorney that all of the policies of insurance required by Section 19 of this Agreement are in full force and effect. g. Representations and Warranties. The representations and warranties of Developer contained in this Agreement and the other Loan Documents shall be correct as of the Close of Escrow as though made on and as of that date, and if requested by the City Project 12 80A-68 Manager, City shall have received a certificate to that effect signed by Developer's Representative. f. No Default. No Event of Default by Developer shall have occurred, and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer under this Agreement, and if requested by the City Project Manager, City shall have received a certificate to that effect signed by Developer's Representative. 6.2 Disbursement Procedures for Loan(s). The City Loan proceeds shall be disbursed through Escrow to finance the acquisition and soft costs of the Project Budget (as evidenced in Exhibit E). The City Loan proceeds shall not be used for any purpose other than for acquisition and soft costs related to the development of the Project (costs all subject to City's prior review). 6.3 Termination for Failure of Condition. If (a) any of the conditions set forth herein are not timely satisfied (subject to applicable notice and cure rights) or waived by the City Project Manager, and (b) City is not in default under this Agreement, City may terminate this Agreement without any further liability on its part by giving written notice of termination to Developer. Upon the giving of such notice, all principal, interest and other amounts owing under the specified due date. 6.4 Other Terms and Conditions of City Loan. a. The City Promissory Note shall become immediately due and payable, in the event of any of the following: (1) failure to complete the Project within four (4) years of the recording date unless such time is extended by written consent of the City Project Manager which shall not be unreasonable withheld; (2) Developer fails to show diligence in obtaining financing for construction which shall not be unreasonable withheld if unsuccessful in obtaining tax credits; (3) violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cure periods; (4) an Event of Default by Developer which is not timely cured after expiration of any applicable notice and cure periods pursuant to the terms of this Agreement. 6.5 Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges, (b) all recording fees and charges on any document recorded pursuant to this Agreement, and (c) the premium for the title insurance required hereunder. 13 80A-69 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROJECT 7.1 Use Covenants and Restrictions. a. Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assign and every successor in interest to the Property that Developer will make all rental units on the Property available to extremely-low, very low and low income households at rents affordable to such households for fifty- five (55) years from the effective date of the issuance of the Certificate of Completion. b. The Project shall consist of approximately seventy (70) units of which there will be forty-nine (49) two-bedroom units and twenty-one (21) three-bedroom units. There will be seven (7) units with incomes at or below 30% AMI, forty-two (42) units for households with incomes at or below 50% AMI; twenty (20) units for households with incomes at or below 60% AMI; and the remaining unit will be reserved for the on-site manager. If entitlement changes the number of units, the City Project Manager must approve affordability mix. C. Affordable rents shall be governed as provided in the NSP Regulations. Rental increases shall be in conformance with federal and state law. d. 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. 7.2 Affordability Levels/Unit Mix: The proposed unit mix and levels of affordability are as follows: Bedroom Size 30% AMI 50% AMI 60% AMI Total 2 Bedroom 5 30 14 49 3 Bedroom 2 12 6 20 Totals 7 42 20 69 The remaining unit will be a 3-bedroom unit reserved for the onsite manager. The affordable rents charged at the Project must comply with the lowest of the following standards: 1. The standards set forth by California Tax Credit Allocation Committee (TCAC), or 2. During the 55-year affordability period for the sixty-nine (69) NSP assisted units, the rent schedule periodically published by HUD. * Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Housing Authority of the City of Santa Ana publishes the utility allowance. 14 80A-70 7.3 Rent Increases: On an annual basis, the City shall provide the Developer with the maximum allowable schedule of rents for the Property. hi no event can Developer charge any tenant more than such amount. 7.4 Maintenance of the Property. Solely at Developer's expense, Developer agrees to maintain the Property in a clean and orderly condition and in good condition and repair and keep the Property free from any accumulation of debris and waste materials. If at any time Developer fails to maintain, or cause to be maintained, the Property as required by this section, and said condition is not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from the date of written notice from the City, unless such condition cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure, the City may perform the necessary maintenance and Developer shall pay all reasonable costs incurred for such maintenance. The City shall inspect the Property annually after the date of issuance of the Certificate of Completion as described in Section 17 of this Agreement. 7.5 Obligation to Refrain from Discrimination. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, disability, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer itself or any person claiming under or through him establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect for the term of the Agreement. 8. DEFAULTS AND REMEDIES 8.1 Event of Default. Failure or delay by either party to perform any term of provision of this Agreement within the time periods provided herein for such performance constitutes a default under the Agreement. If any party defaults in performance of its obligations, covenants or agreements hereunder, the defaulting party shall be entitled to cure the default in accordance with this section. The injured parry shall give written notice of default to the party in default, specifying the default complained of by the injure party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. The defaulting party must, within thirty (30) days following service of said written notice, commence to cure, correct or remedy such failure or delay and shall complete such cure, correction, or remedy with reasonable diligence. Upon a default by Developer which is not cured within thirty (30) days following service of said notice, unless such default cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure but no more than ninety (90) days, the City shall have the right to terminate this Agreement by delivery of written notice of termination to Developer. 8.2 Institution of Legal Actions. In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. 15 80A-71 8.3 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the right and remedies of the parties are cumulative and the exercise by either parry of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 8.4 Damages. In the event that the City is liable for damages to Developer, such liability shall not exceed costs incurred by the Developer in the performance of this Agreement and shall not extend to compensation for loss of future income, profits or assets; provided, however, Developer's only remedy for any breach of this Agreement by the City shall be an action for specific performance of such party's obligations. 8.5 Nonrecourse Liabilitv. Neither Developer, nor any partner of Developer, shall have any personal liability under this Agreement, or the attached City Promissory Note and Deed of Trust, and any judgment, decree or order for the payment of money obtained in any action to enforce the obligation of Developer to repay the loan evidenced by such documents shall be enforceable against Developer only to the extent of Developer's interest in the Property. 9. GENERAL PROVISIONS AND WARRANTIES As a material inducement to City to enter into this Agreement, Developer represents and warrants as follows: 9.1 Formation, Qualification and Compliance. 815 N Harbor, LP, is a California limited partnership comprised of OHDC 815 N Harbor, LLC, a California limited liability company with Orange Housing Development Corporation as its sole member, and C&C 815 N Harbor, LLC, a California limited liability company„ as the general partners. Orange Housing Development Corporation is (a) a non-profit public-benefit corporation, validly existing and in good standing under the laws of the State of California, (b) has all requisite authority to conduct its business and own and lease its properties, and (c) is qualified and in good standing in every jurisdiction in which the nature of its business makes qualification necessary or where failure to qualify could have a material adverse effect on its financial condition or the performance of its obligations under the Loan Documents. Developer is in compliance with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with, any Governmental Authority that are necessary for the transaction of its business. 9.2 Senior Lender. Developer shall provide City with a minimum of three (3) lending institutions to insure the most competitive interest rate, fees and services for construction and permanent financing loans. If lender not the lowest, Developer must provide documentation supporting their decision. 9.3 Execution and Performance of Loan Documents. a. Developer has all requisite authority to execute and perform its obligations under the Loan Documents. 16 80A-72 b. The execution and delivery of Developer of, and the performance by Developer of its obligations under, each Loan Document has been authorized by all necessary action and does not and will not: (1) require any consent or approval not heretofore obtained of any person having any interest in Developer; (2) violate any provision of, or require any consent or approval not heretofore obtained under, any articles of incorporation, by-laws or other governing document applicable to Developer; (3) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under the City Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer; presently in effect; or (4) to best of its knowledge, violate any provision of any law (5) constitute a breach or default under, or permit the acceleration of obligations owed under, any contract, loan agreement, lease or other agreement or document to which Developer is a party or by which Developer or any of its property is bound. C. Developer is not in default, in any respect that is materially adverse to the interests of City under the Loan Documents or that would have any material adverse effect on the financial condition of Developer or the conduct of its business, under any law, contract, lease or other agreement or document described in sub-paragraph (4) or (5) of the previous subsection. d. 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: (1) the execution of Developer of, and the performance by Developer of its obligations under, the Loan Documents except for necessary City permits necessary for the demolition and construction work on the Property as called for in the Loan Documents; and (2) the creation of the liens described in the Loan Documents. 9.4 Financial and Other Information. To the best of Developer's knowledge, all financial information furnished to City with respect to Developer in connection with the Loans (a) is complete and correct in all material respects as of the date of preparation thereof, (b) accurately presents the financial condition of Developer, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied or in accordance with such other principles or methods as are reasonably acceptable to City. To the best of Developer's knowledge, all other documents and information furnished to City with respect to Developer, in 17 80A-73 connection with the Loans, are correct and complete insofar as completeness is necessary to give the City accurate knowledge of the subject matter. As of the date of this Agreement, to the best of Developer's knowledge Developer has no material liability or contingent liability not disclosed to City in writing and there is no material lien, claim, charge or other right of others of any kinds (including liens or retained security titles of conditional vendors) on any property of Developer not disclosed in such financial statements or otherwise disclosed to City in writing. " 9.5 No Material Adverse Chance. There has been no material adverse change in the condition, financial or otherwise, of Developer since the dates of the latest financial statements furnished to City. Since those dates, Developer has not entered into any material transaction not disclosed in such financial statements or otherwise disclosed to City in writing. 9.6 Tax Liability. Developer has filed all required federal, state and local tax returns and has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to City in writing) other than taxes being promptly and actively contested in good faith and by appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities (including contested liabilities) in accordance with generally accepted accounting principles or in accordance with such other principles or methods as are reasonably acceptable to City. 9.7 Governmental Requirements. To best of its knowledge, Developer is in compliance with all laws relating to the Property and all Governmental Authority approvals, including zoning, land use, planning requirements, and requirements arising from or relating to the adoption or amendment of, any applicable general plan, subdivision and parcel map requirement; environmental requirements, including the requirements of the California Environmental Quality Act and the National Environmental Policy Act and the preparation and approval of all required environmental impact statements and reports; use, occupancy and building permit requirements; and public utilities requirements. 9.8 Rights of Others. Developer is in compliance with all covenants, conditions, restrictions, easements, rights of way and other rights of third parties relating to the Property. 9.9 Litigation. There are no material actions or proceedings pending or, to the best of the Developer's knowledge, threatened against or affecting Developer or any property of Developer before any Governmental Authority, except as disclosed to City in writing prior to the execution of this Agreement. 9.10 Bankruptcy. To the best of Developer's knowledge, no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Developer, nor are any of such proceedings contemplated by Developer. 9.11 Information Accurate. To the best of Developer's knowledge, all information, regardless of its form, conveyed by Developer to City, by whatever means, is accurate, correct and sufficiently complete to give City true and accurate knowledge of its subject matter, and does not contain any misrepresentation or omission. 18 80A-74 9.12 Conflicts of Interest. No member, official or employee of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his/her personal interests or the interests of any corporation, partnership or association in which he/she has a direct or indirect financial interest. The Developer warrants that it neither has paid nor given, nor will pay or give, any third party any money or other consideration for obtaining this Agreement. 9.13 Nonliability of City Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer in the event of any default or breach by the City or for any amount which may become due to Developer or on any obligations under the terms of this Agreement. 9.14 No Assignment. Developer expressly acknowledges and agrees that the City has only agreed to assist the Developer as a means by which to induce the construction/development of the Project. Accordingly, Developer further expressly acknowledges and agrees that this Agreement is a personal right of Developer that is neither negotiable, transferable, nor assignable except as set forth herein. Developer may assign some or all of its rights under the Agreement only with the prior written consent of the City Project Manager (such consent not to be unreasonably withheld), except that no prior consent is necessary for an assignment by a limited partner of Developer to an affiliate, or as otherwise provided in the Deed of Trust. 9.15 Applicable Law. This Agreement shall be interpreted, governed and enforced under federal and California state law with venue in Orange County California. 9.16 Third Parties. This Agreement is made for the sole benefit of Developer and the City and their successors and assigns, and no other person or persons shall have any rights or remedies under or by reason of this Agreement or any right to the exercise of any right or power of the City hereunder or arising from any default by Developer, nor shall the City owe any duty whatsoever to any claimant for labor performed or materials furnished in connection with the construction of the Property. 9.17 Control of Property. The parties acknowledge that the City has not at any time participated in any manner in the management or operation of the Property, and will not so participate at any time hereafter. 10. CONDITIONS FOR CONSTRUCTION 10.1 Permits and Approvals. Developer shall diligently obtain all permits, including all building permits, licenses, approvals, exemptions and other authorizations of Governmental Agencies required in connection with the construction and conversion of the Property. a. General Contractor. If the City Project Manager has not yet approved the General Contractor, the City Project Manager shall have approved the identity and qualifications of the General Contractor. b. Contract for Construction. The City Project Manager must have reviewed and approved the contract for construction. 19 80A-75 10.2 Commencement and Completion of Construction. The construction of the Project 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 occupancy) have been obtained. 10.3 [Intentionally Omitted] 10.4 Entry and Inspection. At all times prior to completion of the construction, upon reasonable notice, City and its 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 Economic Opportunities for Low Income People. (24 CFR 570.487, Section 3 of the Housing and Urban Development Act of 1968, 12 USC 170 In, as amended by Section 915 of the Housing and Community Development Act of 1992). Developer certifies that it implements a policy in accordance with Section 3 of the Housing and Urban Development Act of 1968 that requires employment and other economic opportunities arising in connection with housing rehabilitation, housing construction and other public construction projects shall, to the extent feasible and consistent with existing federal, state and local laws and regulations, be given to low and very low-income persons. 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. To the extent applicable, the Developer shall comply and/or cause compliance with Section 3 Clause requirements for the NSP. For example, when and if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, Section 3 is applicable and all disclosure and reporting requirements apply. To the maximum extent feasible, the Developer shall provide for the hiring of employees who reside in the vicinity of the Target Area or contract with small businesses that are owned and/or operated by persons residing in the vicinity of the Target Area. The Developer shall report to the City information regarding efforts taken to comply with this section through the Vicinity Hiring Report (Exhibit I) 15 days after the end of each calendar quarter. 10.6 Construction Information. From time to time during the course of the construction, within ten (10) Business Days following City's written demand therefore, Developer shall furnish requested reports of project costs, progress schedules and contractors' costs breakdowns for the construction, itemized as to trade description and item, showing the name of the contractor(s) and/or subcontractor(s), and including such indirect costs as real estate taxes, legal and accounting fees, insurance, architects' and engineers' fees, loan fees, interest during construction and contractors' overhead. 10.7 Protection Against Liens: Developer shall diligently file a valid Notice of Completion upon completion of the construction, diligently file a notice of cessation in the event of a cessation of labor on the construction for a period of thirty (30) days or more, and take all 20 80A-76 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 City by any person furnishing labor or materials to the Property, Developer shall immediately give written notice of the same to City and shall, promptly and in any event within ten (10) Business Days after written demand therefor, (a) pay and discharge the same, (b) effect the release thereof by delivering to City a surety bond complying with the requirement of applicable laws for such release, or (c) take such other action as City may require to release City from any obligation or liability with respect to such stop notice or claim. 11. GOVERNMENT REQUIREMENTS 11.1 Qualification as Affordable Housing. As more particularly provided in the Affordability Restrictions on Transfer of Property, Developer shall use, manage and operate the Property in accordance with the requirements of 24 CFR 92.252, 24 CFR 570 so as to qualify the housing on the Property as Affordable Housing with affordable rents. 11.2 Tenant and Participant Protection. Developer shall comply with the requirements of 24 CFR 92.253. 11.3 [Intentionally Omitted] 11.4 Handicapped Accessibilitv. Developer shall comply with (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations; and (b) the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to make the Project readily accessible to and usable by individuals with disabilities. 11.6 Use of Debarred, Suspended, or Ineligible Participants. Developer shall comply with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. 11.7 Maintenance of Drug-Free Workplace. Developer shall certify that Developer will provide a drug-free workplace in accordance with 24 CFR 84.13. 11.8 Lead-Based Paint. Developer shall comply with the requirements, 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. Developer shall implement and perform such affirmative marketing procedures and requirements for the Property as required by 24 CFR 92.351 and the City of Santa Ana's adopted affirmative marketing procedures and minority outreach program. 11.10 Property Standards. Developer shall cause the Property to meet the housing quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal codes and ordinances, including zoning ordinances. Developer shall also cause the Property to 21 80A-77 meet the current edition of the Model Energy Code published by the Council of American Building Officials. 11.11 Displacement and Relocation. Developer acknowledges and agrees that, pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part, City must ensure that it has taken all reasonable steps to minimize the displacement of persons as a result of the construction. Furthermore, to the extent feasible, residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary and affordable dwelling unit on the Property upon completion of the construction. Developer agrees to cooperate fully and completely with City in meeting the requirements of 24 CFR 92.253 and shall take all actions and measures reasonably required by the City Project Manager in connection therewith. All applicable state guidelines must also be followed. 11.12 Other Program Requirements. Developer shall carry out each activity in compliance with all federal laws and regulations described in subpart H of 24 CFR 92, except that Developer does not assume City's responsibilities for environmental review in 24 CFR 92.352 or the intergovernmental review process in 24 CFR 92.359. 11.13 Request for Disbursements of Funds. Notwithstanding anything contained in this Agreement to the contrary, Developer may not request disbursements of funds under this Agreement until the funds are needed for payment of eligible costs (such funds shall be used solely towards the acquisition and soft costs of the Project). The amount of each request shall be limited to the amount needed. 11.14 Eligible Costs. Developer shall use NSP Funds to pay costs defined as "eligible costs" pursuant to 24 CFR 92.206. 11.15 Records and Reports. Developer shall maintain and from time to time submit to City such records, reports and information as the City Project Manager may reasonably require in order to permit City to meet the record keeping and reporting requirements required of it pursuant to 24 CFR 92.508. 11.16 Use of Debarred. Suspended, or Ineligible Participants. Developer shall comply with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. 11.17 Maintenance of Drug-Free Workplace. Developer shall certify that Developer will provide a drug-free workplace in accordance with 24 CFR 84.13. 11.18 Books and Records. Developer shall maintain complete books of account and other records, reports and information, as the Executive Director may reasonably require, reflecting its operations (in connection with any other businesses as well as with respect to the NSP Assisted Units), 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, to meet the record keeping and reporting requirements required of it in accordance with 24 CFR 92.508. 22 80A-78 11.19 Equal Opportunity and Fair Housing. Developer shall carry out the construction and perform its obligations under this Agreement in compliance with all of the state and federal laws and regulations regarding equal opportunity and fair housing described in 24 CFR 92.350. 11.20 Conflict of interest. Developer shall comply with and be bound by the conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations pertaining to conflict of interest. I. 11.21 Uniform Administrative Requirements. Developer shall comply with the requirements and standards of OMB Circular No. A-122, "Cost Principles for Non-Profit Organizations," and with the following Attachments to OMB Circular No. A-110: a. Attachment A, "Cash Depositories", except for paragraph 4 concerning deposit insurance; b. Attachment B, 'Bonding and Insurance"; C. Attachment C, "Retention and Custodial Requirements for Records", except that in lieu of the provisions in paragraph 4, the retention period for records pertaining to individual NSP activities starts from the date of submission of the annual performance and evaluation report, as prescribed in 24 CFR 570.507, in which the specific activity is reported on for the final time; d. Attachment F, "Standards for Financial Management Systems"; e. Attachment H, "Monitoring and Reporting Program Performance", Paragraph 2; f Attachment O, "Procurement Standards." 11.22 Monitoring. Developer shall allow the City to conduct periodic inspections of each of the assisted units on the Property as required by the Program after the date of construction completion, with reasonable notice. Developer shall cure any defects or deficiencies found by the City while conducting such inspections within two weeks of written notice thereof, or such longer period as is reasonable within the sole discretion of the City. 11.23 Recertification of Tenant Income. a. The HOME program guidelines and regulations will be used for the recertification of Tenant Income for the Project. b. Developer shall take all necessary steps to review the income of all tenants prior to renting to them, as well as reviewing current tenants on an annual basis, in accordance with HOME regulations and guidelines. Every fifth (5'h) year, Developer shall require new original income documents to be submitted by tenants. Tenants in NSP assisted units whose incomes no longer comply with federal income guidelines shall have their rents adjusted in accordance with federal HOME guidelines (24 CFR 92.252-92.253). 23 80A-79 C. Developer shall allow the City to conduct periodic reviews of tenant files and files relating to affirmative marketing and outreach to insure the Project's compliance with applicable regulations and guidelines. d. NSP assisted units continue to qualify as affordable housing despite a temporary non-compliance caused by increases in the incomes of existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies are filled in accordance with this section until the non-compliance is corrected. 11.24 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. Developer shall maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise required to maintain) in good condition and repair; shall operate the Property in a businesslike manner; shall prudently preserve and protect its own as well as the City's interests in connection with the Property; shall not commit or permit any waste or deterioration of the Property (except for normal wear and tear); shall not abandon any portion of the Property or leave the Property unguarded or unprotected; and shall not otherwise act, or fail to act, in such a way as to unreasonably increase the risk of any damage to the Property or of any other impairment of City's interests under the Loan Documents. Without limiting the generality of the foregoing, and except as otherwise agreed by City in writing from time to time, Developer shall promptly and faithfully perform and observe each of the following provisions: a. Alterations and Repair. Developer shall not remove, demolish or materially alter any Improvement without City's prior consent, other than demolition of existing improvements and except to make non-structural repairs which preserve or increase the Property's value, and shall promptly restore, in a good and professional manner, any Improvement (or other aspect or portion of the Property) that is damaged or destroyed from any cause. 12.2 Compliance. Developer shall comply with all laws and requirements of Governmental Authority (including, without limitation, all requirements relating to the obtaining of Governmental Authority approvals), all Governmental Authority approvals and all rights of third parties, relating to Developer, the Property or Developer's business thereon. 12.3 Taxes and Impositions. Developer shall pay, prior to delinquency, all of the following (collectively, the "Impositions"): (a) all general and special real property taxes and assessments imposed on the Property; (b) all other taxes and assessments and charges of every kind that are assessed upon the Property (or upon the owner and/or operator of the Property) and that create or may create a lien upon the Property (or upon any personal property or fixtures used in connection with the Property), including, without limitation, non-governmental levies and assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees, taxes and assessments imposed on City (other than City's income or franchise taxes) which are 24 80A-80 measured by or based upon (in whole or in part) the amount of the obligations secured by the Property. If permitted by law, Developer may pay any Imposition in installments (together with any accrued interest). a. Right to Contest. Developer shall not be required to pay any Imposition so long as (a) its validity is being actively contested in good faith and by appropriate proceedings, (b) Developer has demonstrated to City's reasonable satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings could not result in conveyance of the Property in satisfaction of such Imposition or otherwise impair the City's interests under the Loan Documents, and (c) Developer 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). b. Evidence of Payment. Upon demand by City from time to time, Developer shall deliver to City, within thirty (30) days following the due date of any Imposition, evidence of payment reasonably satisfactory to City. C. Books and Records. Developer shall maintain complete books of account and other records reflecting its operations (in connection with any other businesses as well as with respect to the Property), in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City, in accordance with 24 CFR 92.508. 12.4 Project Operating Budget. Developer must promptly deposit all project income directly into a segregated depository account established exclusively for the Project ("Project Operating Account"). Withdrawals from this account may be made only in accordance with the provisions of this Agreement and the approved Budget, as it may be revised from time to time with prior City approval. Developer may make withdrawals from this account solely for the payment of Project expenses and Project fees. Withdrawals from this account for other purposes may be made only with the prior written approval of the City which must be consistent with other lender and investor approvals. 12.5 Replacement Reserve Account. Developer must establish or cause to be established a segregated interest-bearing replacement reserve depository account ("Replacement Reserve Account") concurrently with conversion from the construction loan to the conventional permanent loan. Developer must make monthly deposits from project income into the Replacement Reserve in accordance with Developer's Budget, as amended from time to time. Developer may withdraw funds from the Replacement Reserve Account solely to fund capital improvements for the Project, such as replacing or repairing structural elements, furniture, fixtures or equipment of the Project that are reasonably required to preserve the Project. Developer may not withdraw funds from the Replacement Reserve Account for any other purpose without the prior written approval of the City which must be consistent with other lender and investor approvals. 13. NONDISCRIMINATION COVENANTS that: 13.1 Obligation to Refrain from Discrimination. Developer covenants and agrees 25 80A-81 a. In Use of Property. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, disability, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Developer or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendors of the Property. b. In Affordable Housing Restrictions. The foregoing covenant shall (a) be included in the Affordability Restrictions on Transfer of Property, (b) run with the land, and (c) remain effective for the term of the contract (for 55 years). C. In Employment. In construction on the Property, Developer shall not discriminate against any employee or applicant because of race, color, creed, religion, sex, marital status, disability, national origin, or ancestry. Developer shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, disability, creed, religion, sex, marital status, disability, national origin, or ancestry. d. In all Contracts. Developer shall cause the foregoing covenants to be inserted in all contracts for any work covered by this Agreement so that such provisions will be binding upon each contractor for the benefit of City, provided that the foregoing covenant shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. 14. ENVIRONMENTAL MATTERS 14.1 Representation and Warranty. Except as disclosed in writing to the City, Developer 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. Developer shall (a) comply with all environmental laws and environmental permits applicable to the construction of the Property, (b) immediately pay or cause to be paid all costs and expenses incurred by reason of such compliance, (c) keep the Property free and clear of any environmental claims or liens imposed pursuant to any environmental law, and (d) obtain and renew all environmental permits required for ownership or use of the Property. 14.3 Presence of Hazardous Materials. Developer shall not, and shall not permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property, or transport or permit the transportation of Hazardous Materials to or from the Property except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine operation and maintenance of the Property or except use of commercially available household products by tenants. 26 80A-82 14.4 Notice of Environmental Matters. Developer shall immediately advise City in writing of any of the following: (a) any pending or threatened environmental claim against Developer or the Property, (b) any condition or occurrence that (i) results in noncompliance with any applicable environmental law, (ii) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental Law, or (iii) could reasonably be anticipated to form the basis of an environmental claim against the Property or Developer. 14.5 Environmental Indemnification by the Developer. Developer agrees to defend, indemnify and hold harmless the City and its respective officers, directors, employees and agents (collectively the "lndemnitees ") from and against any and all obligations (including removal and remediation), losses, claims (including third party claims), suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including consultants, and attorneys' fees) of whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or asserted against the lndemnitees directly or indirectly based on, or arising or resulting from the actual or alleged presence of Hazardous Materials on the Property. 15. OTHER AFFIRMATIVE COVENANTS While any obligation of Developer under the City Promissory Note or Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that City Project Manager otherwise consents in writing: 15.1 Existence. The sole member of Developer's managing general partner (OHDC) shall maintain its existence in good standing under the laws of the State of California, and its status as a CHDO under federal law and Developer shall provide documentation of such status annually to the City. 15.2 Protection of Lien. Developer shall maintain the lien of the City Deed of Trust as a valid second priority deed of trust on the Property and take all actions, and execute and deliver to City all documents, reasonably required by City from time to time in connection therewith. 15.3 Notice of Certain Matters. Developer shall give notice to City, within ten (10) days of Developer's learning thereof, of each of the following: a. any filed litigation or claim affecting or relating to the Property and involving an amount in excess of $5,000; and any litigation or claim that might subject Developer or any general partner to liability in excess of $5,000, whether covered by insurance or not; b. any dispute between Developer and a Governmental Authority relating to the Property, the adverse determination of which might materially affect the Property; C. any change in Developer's principal place of business; 27 80A-83 d. any aspect of the Improvements that is not in substantial conformity with the plans or code; C. any Event of Default or event which, with the giving of notice or the passage of time or both, would constitute an Event of Default; f. any material default by Developer or any other party under any Senior Loan document, or the receipt by Developer of any notice of default under any Senior Loan document; g. the creation or imposition of any mechanics' or materialmans' lien or other lien against the Property which might materially affect the Property; and/or h. any material adverse change in the financial condition of Developer. 15.4 Further Assurances. Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to City all documents, and take all actions, reasonably required by City from time to time to confirm the rights created or now or hereafter intended to be created under the Loan Documents; to protect and further the validity, priority and enforceability of the City Deed of Trust; to subject to the Deed of Trust any property intended by the terms of any Loan Document(s) to be covered by the City Deed of Trust or otherwise to carry out the purposes of the Loan Documents and the transactions contemplated thereunder. 15.5 Annual Financial Statements. Developer shall deliver to City, within one hundred fifty (150) days after the end of each Calendar Year, (a) a certified public accountant reviewed balance sheet for Developer as of the end of such Calendar Year and a certified public accountant reviewed statement of profit and loss for Developer and for Developer's operations in connection with the Property for such Calendar Year, together with all supporting schedules, (b) a certificate of such certified public accountant that such documents were reviewed by such certified public accountant in accordance with generally accepted accounting principles and otherwise comply with generally accepted accounting principles review requirements, and (c) a certificate of Developer's 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 present Developer's financial condition, (iii) show all material liabilities, direct and contingent, and (iv) fairly present the results of Developer's operations. Developer shall also provide the City with any other annual audit reports issued by other monitoring agencies. 15.6 Audits and Access to Records. Developer agrees that City, the U.S. Department of Housing and Urban Development, the Comptroller General of the United States or any of their authorized representatives shall have the right of access, upon reasonable notice, to any books, documents, papers, or other records of Developer which are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts or transcripts. Developer will maintain all books and records pertaining to this Agreement for a period of not less than five (5) years after all matters pertaining to this Agreement (i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or state laws, regulations or policies, and when a period of 28 80A-84 affordability or recapture applies to Developer's activities, for a period of not less than five (5) years after the affordability or recapture period ends. 15.7 Termite Inspection Report. Developer shall deliver a termite report pertaining to the Property to the City every fifth (5') year beginning January 2021. 16. OTHER COVENANTS While any obligation of Developer under the City Promissory Note or City Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that City Project Manager otherwise consents in writing: 16.1 Default on Senior Loan. Developer shall not default on any of the Senior Loan documents, provided however, that Developer shall have such period as is provided in the Senior Loan Documents during which to effectuate a cure. 16.2 Sale or Lease of Property. Unless and until Developer has received a Certificate of Completion for the construction from City, Developer shall not sell, lease, sublease or otherwise transfer all or any part of the Property or any interest therein, other than leases of the existing improvements prior to their demolition and commencement of construction of the Project if allowable under NSP regulations, without the prior written consent of the City Project Manager, which consent may be withheld in the City Project Manager's reasonable discretion. In connection with the foregoing consent requirements, Developer acknowledges that City relied upon Developer's particular expertise in entering into this Agreement and continues to rely on such expertise to ensure the satisfactory completion of the construction. Notwithstanding anything to the contrary contained herein, a "transfer" shall not include (i) a transfer of a General Partner's interest in Developer when made in connection with the exercise by the Developer's limited partner (the "Limited Partner") of its rights upon a default by a General Partner under the Developer's Partnership Agreement (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; (ii) 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; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Developer. 16.3 Nondiscrimination a. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, disability, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any part thereof, nor shall Developer or any person claiming under or through 29 80A-85 Developer 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, or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect in perpetuity. b. Developer 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. Developer shall also comply with the equal opportunity and fair housing requirements set forth in applicable NSP Regulations. The foregoing covenants shall run with the land and remain in effect in perpetuity. 17. CERTIFICATE OF COMPLETION Upon satisfactory completion of the construction and upon the request of Developer, or at its own election, the City of Santa Ana shall issue a Certificate of Completion. Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction. If City declines to furnish a Certificate of Completion after written request from Developer, the City Project Manager shall, within thirty (30) days after receipt of the request, provide Developer with a written statement of the reasons therefore. The statement shall contain a description of the action Developer must take to obtain a Certificate of Completion. If the reason therefore is that the Developer has not completed a minor portion of the construction, City may, in its sole and absolute discretion, issue the Certificate of Completion upon the posting with City of a bond or other form of security acceptable to the City Project Manager in the amount of the fair value of the uncompleted work. A Certificate of Completion is not evidence of compliance with or satisfaction of the Loan Documents or any obligation of Developer to any other party whatsoever, including any holder of a mortgage or deed of trust. A Certificate of Completion is not "notice of completion" referred to in Section 3093 of the California Civil Code. 18. INDEMNIFICATION t8.1 Nonliability of City. Developer acknowledges and agrees that: a. The relationship between Developer and the City is and shall remain solely that of Developer and lender, City neither undertakes nor assumes any responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter in connection with the construction, including matters relating to: (i) the performance of the construction work, (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them, or (iii) the progress of the construction; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledges that any review, inspection, supervision, approval or information supplied to Developer by City in connection with such matters is solely for the protection of City and that neither Developer nor any third party is entitled to rely on it; 30 80A-86 b. Notwithstanding any other provision of any Loan Document: (i) the City is not a partner, joint venture, alter-ego, manager, controlling person or other business associate or participant of any kind of Developer and City does not intend to ever assume any such status; (ii) City's activities in connection with the Loan 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 City does not intend to ever assume any responsibility to any person for the quality or safety of the Property; and (iii) City shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; C. City shall not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or property resulting from any construction on, or occupancy or use of, the Property, whether arising from: (i) any defect in any building, grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer's agents, employees, independent contractors, licensees or invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon; and d. By accepting or approving anything required to be performed or given to City under the Loan Documents, including any certificate, financial statement, survey, appraisal or insurance policy, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone. 18.2 Indemnity. Developer shall defend (by counsel 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, attorneys' fees and court costs) arising from or relating to (i) this Agreement; (ii) the making of the Loan(s); (iii) a claim, demand or cause of action that any person has or asserts against Developer; (iv) any act or omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Property; or (vi) the ownership, occupancy or use of the Property. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with respect to the consequences of any act of gross negligence or willful misconduct of City. Developer's obligations under this Section shall survive the cancellation of the City Promissory Note, release and reconveyance of the City Deed of Trust, issuance of the Certificate of Completion, and termination of this Agreement. a. Notwithstanding the foregoing, neither Developer, nor any of its partners, shall be personally liable for any indemnification obligation hereunder which would result as the repayment of principal and/or interest under the Loan. 18.3 Reimbursement of City. Developer shall reimburse City immediately upon written demand for all costs reasonably incurred by City (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of City) in connection with the enforcement of the Loan Documents and all related matters including all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City is indemnified under the Loan Documents. Such reimbursement obligations shall bear interest from the date occurring twenty (20) days after City gives written demand to Developer and shall be secured by the City Deed of 31 80A-87 Trust. Such reimbursement obligations shall survive the cancellation of the Loan Note, release and reconveyance of the City Deed of Trust, issuance of a Certificate of Completion, and termination of this Agreement 19. INSURANCE, CASUALTY AND CONDEMNATION 19.1 Policies Required. While any obligation of Developer under the Loan Documents remains outstanding, Developer shall maintain at Developer's sole expense, with insurers either (i) admitted in California or (ii) are not admitted to California but have an A.M. Best Rating of "A" or above and reasonably approved by the City, the following policies of insurance in form and substance reasonably satisfactory to the City Attorney: a. worker's compensation insurance to extent Developer has employees and any other insurance required by law in connection with the construction; b. prior to commencement and following completion of the construction, fire and hazard "all risk" insurance covering 100% of the replacement cost of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); C. upon commencement of the construction and at all times prior to completion of the construction, builder's risk-all risk insurance covering 100% of the replacement cost of all Improvements (including offsite materials) during the course of construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); d. public liability insurance in amounts reasonably required by City from time to time, and in no event less than $1,000,000 for "single occurrence;" e. property damage insurance in amounts reasonably required by the City from time to time, and in no event less than $1,000,000; and f. any other insurance reasonably required by City. All such insurance shall provide that it may not be canceled or materially modified without thirty (30) days prior written notice to City. The policies required under subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in form and substance satisfactory to City, showing the City as encumbrance. The City shall be named as an additional insured in the policies required under subparagraphs (d) and (e). Certificates of insurance for the above policies (and/or original policies, if required by City) shall be primary and 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, Developer 32 80A-88 shall deliver to City evidence of renewal or replacement of such policy reasonably satisfactory to the City Attorney. The copy of the certificate of insurance and loss payee endorsement shall be delivered to the City as follows: City of Santa Ana, Community Development Agency 20 Civic Center Plaza, M-37 P.O. Box 1988 Santa Ana, CA 92702 Attention: Housing Manager Any certificate of insurance required by this section must be in a form, content and with an insurance company that is acceptable to the City in its sole discretion. 19.2 City Attorney May Modify. The City Attorney may modify the type and amounts of insurance required pursuant to this Section. 19.3 Claims and Proceedings. Developer shall give City immediate notice of any material casualty to any portion of the Property, whether or not covered by insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or other taking for public or quasi-public use of any portion of the Property (collectively, "Condemnation"), and shall provide City with copies of all documents which pertain to any such casualty or Condemnation. Developer shall take all action reasonably required by City in connection therewith to protect the interests of Developer and/or City, and City shall be entitled (without regard to the adequacy of its security) to participate in any action, claim, adjustment or proceeding and to be represented therein by counsel of its choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without prior written approval, which approval shall not be unreasonably withheld or delayed. 19.4 Delivery of Proceeds to City. In the event that, notwithstanding the "lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance policy described herein are paid to Developer, Developer shall, subject to any superior rights of the Senior Lender, deliver such proceeds to the City immediately upon receipt. 19.5 Application of Casualty Insurance Proceeds. Any proceeds collected (the "Proceeds") under any casualty insurance policy described in this Agreement shall be disbursed to Developer as provided below, but only upon fulfillment of each of the following conditions (the "Restoration Conditions") within ninety (90) days after the applicable insurance company has processed any claim (unless extended by mutual agreement of Developer and City) following the occurrence of the damage for which the Proceeds are collected: a. Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of the Property, within a time period reasonably determined by City, to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to City of (i) plans and 33 80A-89 specifications reasonably satisfactory to City, and (ii) a construction contract in form and content, and with a contractor, reasonably satisfactory to City. b. To the extent that the Proceeds are insufficient to accomplish the restoration required above, Developer shall deliver to City funds (the "Shortfall Funds") in the amount of such shortfall, which funds shall be assigned to City as security for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds. C. Developer shall execute such documents as City requires to evidence and secure Developer's obligation to use all amounts disbursed for the diligent restoration of the Property. d. No Event of Default shall remain uncured. 19.6 Method of Disbursement and Undisbursed Funds. Subject to the rights of Senior Lender, any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in accordance with then customary disbursement procedures and related provisions. Any amounts remaining undisbursed following completion of such restoration shall be returned to Developer up to the amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall, subject to the rights of Senior Lender either be paid to Developer or applied by City against any obligations to City 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 Developer fails to fulfill the Restoration Conditions within one hundred twenty (120) days (unless extended pursuant to Section 19.5) following the date on which the applicable insurance company has processed any claim, the Proceeds shall be applied by City against any obligations to City that are secured by a lien on the Property, and the selection of which such obligations to apply the Proceeds against shall be made by City in its sole and absolute discretion. 19.8 Restoration. Nothing in this Section 19 shall be construed to excuse Developer 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. 19.9 Condemnation; Treatment of Compensation. Subject to any superior rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to City secured by a lien on the Property, all amounts payable to Developer in connection with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation"). Subject to any superior rights of Senior Lender, Developer shall deliver such remaining Compensation to City immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely to render the Property not economically viable or if, in City's reasonable judgment Developer's security is otherwise impaired, City may apply the Compensation received due to judgment or settlement in connection with any condemnation or other taking to reduce the unpaid obligations secured in such order as City may determine, and without any adjustment in the amount or due dates of payments due under the City Promissory Note. If so applied, any award in excess of the unpaid balance of the City Promissory Note and other sums due to City shall be paid to Developer or 34 80A-90 Developer's assignee. City shall have no obligation to take any action in connection with any actual or threatened condemnation or other proceeding. a. Notwithstanding the foregoing, as long as the value of City's liens are not impaired, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. b. Nothwithstanding the foregoing, during the tax credit compliance period for the Project, as determined under Section 42 of the Internal Revenue Code, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. 19.10 Waiver of Subro¢ation. Developer hereby waives all rights to recover against the City (or any officer, employee, agent or representative of City) for any loss incurred by Developer from any cause insured against or required by any Loan Document, to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation. 20. DEFAULTS AND REMEDIES 20.1 Events of Default. The occurrence of any of the following, whatever the reason therefore, shall constitute an Event of Default by Developer: a. Developer fails to make any payment of principal or interest under the City Promissory Note when due, and such failure is not cured within fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; b. Developer fails to perform any other obligation for the payment of money under any Loan Document, and such failure is not cured within fifteen (15) Business Days after Developer's receipt of written notice that such obligation was not performed when due; C. Developer fails to perform any obligation (other than the obligations described in subparagraphs (a) and (b) above) under any Loan Document, and such failure is not cured within thirty (30) days after Developer's receipt of written notice that such obligation was not performed; provided that, if cure cannot reasonably be effected within such thirty (30)-day period, such failure shall not be an Event of Default so long as Developer (in any event, within ten (10) days after receipt of such notice) commences to cure, and thereafter diligently (in any event within ninety (90) days after receipt of such notice) prosecutes such cure to completion; d. Any representation or warranty in any Loan Document proves to have been incorrect in any material respect when made; e. The Property is materially damaged or destroyed by fire or other casualty unless Developer fulfills the Restoration Conditions set forth in the insurance provisions of this Agreement within one hundred twenty (120) days after the applicable insurance company has 35 80A-91 processed any claim (unless extended pursuant to Section 19.5) and thereafter diligently restores the Property in accordance with this Agreement; f. 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 Developer's reasonable control), provided that the same do not, in the aggregate and in the City's reasonable judgment, threaten to delay the completion of the construction beyond the required completion date set forth in this Agreement; g. Developer is enjoined or otherwise prohibited by any Governmental Authority from constructing and/or occupying the improvements and such injunction or prohibition continues unstayed for sixty (60) days or more for any reason; It. Developer is dissolved, liquidated or terminated, or all or substantially all of the assets of Developer are sold or otherwise transferred without the City Project Manager's prior written consent; i. Developer is the subject of an order for relief by a bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or Developer applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or any part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of Developer and the appointment continues undischarged or unstayed for ninety (90) days; or Developer institutes or consents to any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship, liquidation, construction or similar proceeding relating to it or any part of its property; or any similar proceeding is instituted without the consent of Developer and continues undismissed or unstayed for one hundred twenty (120) days; or any judgment, writ, warrant of attachment or execution, or similar process is issued or levied against any property of Developer and is not released, vacated or fully bonded within ninety (90) days after its issue or levy; or j. (i) any of the Senior Loan documents is revoked or terminated, in whole or in part for any reason if Developer cannot replace with another loan within sixty (60) days of such revocation or termination (except due to repayment of such loans), without the City Project Manager's prior written consent, or (ii) Developer 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 materially amended, supplemented or otherwise modified without City's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to the contrary contained herein, City hereby agrees that any cure of any default made or tendered by Developer's Limited Partner shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer. 20.2 Remedies Upon Default. Upon the occurrence of any Event of Default, City may, at its option and in its absolute discretion, do any or all of the following: 36 80A-92 a. By written notice to Developer, declare the principal of all amounts owing under the Loan Documents, together with all accrued interest and other amounts owing in connection therewith, to be immediately due and payable, regardless of any other specified due date; provided that any Event of Default described in Section 20.1 (e) shall automatically, without notice or other action on City's part, cause all such amounts to be immediately due and payable; b. In its own right or by a court-appointed receiver, take possession of the Property, enter into contracts for and otherwise proceed with the completion of the construction by expenditure of its own funds; C. Exercise any of its rights under the Loan Documents and any rights provided by law, including, without limitation, the right to seek specific performance and the right to foreclose on any security and exercise any other rights with respect to any security, all in such order and manner as City elects in its sole and absolute discretion; and, d. Suspend or terminate the award of NSP funds if Developer fails to comply with any term of such award. 20.3 Cumulative Remedies: No Waiver. City's rights and remedies under the Loan Documents are cumulative and in addition to all rights and remedies provided by law. The exercise by City of any right or remedy shall not constitute a cure or waiver of any default, nor invalidate any notice of default or any act done pursuant to any such notice, nor prejudice the City in the exercise of any other right or remedy. No waiver of any default shall be implied from any omission by City to take action on account of such default if such default persists or is repeated. No waiver of any default shall affect any default other than the default expressly waived, and any such waiver shall be operative only for the time and to the extent stated. No waiver of any provision of any Loan Document shall be construed as a waiver of any subsequent breach of the same provision. City's consent to or approval of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary City's consent to or approval of any subsequent act. The City's acceptance of the late performance of any obligation shall not constitute a waiver by City of the right to require prompt performance of all further obligations; City's acceptance of any performance following the sending or filing of any notice of default shall not constitute a waiver of either party's right to proceed with the exercise of its remedies for any unfulfilled obligations; and City's acceptance of any partial performance shall not constitute a waiver by City of any rights. 20.4 Force Maieure. 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 37 80A-93 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 Agreement may also be extended in writing by the City and the Developer. 21. MISCELLANEOUS 21.1 ObliLations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any other claim by developer against City, in connection with the City Loan or otherwise, Developer hereby waives any right it might otherwise have (a) to offset any such obligation, liability or claim against Developer's obligations under the Loan Documents, or (b) to claim that the existence of any such outstanding obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under the Loan Documents. 21.2 Notices. All notices, demands, approvals and other communications provided for in the Loan Documents shall be in writing and be delivered to the appropriate party by personal service or U.S. mail at its address as follows: If to Developer: 815 N Harbor, LP c/o Orange Housing Development Corporation 414 E. Chapman Avenue Orange, CA 92866 Attention: Chief Executive Officer With a copy to: C&C Development Co., LLC 14211 Yorba Street, Suite 200 Tustin, CA 92781 With a copy to: Goldfarb & Lipman LLP 1300 Clay Street, 11'h Floor Oakland, CA 94612 Attention: Lynn Hutchins If to City: City of Santa Ana City Project Manager (CDA) 20 Civic Center Plaza (M-25) P.O. Box 1988 Santa Ana, California 92702 With a copy to: Office of the City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 38 80A-94 Addresses for notice may be changed as required by written notice to all other parties. All notices personally served shall be effective when actually received. All notices mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing notwithstanding, the non-receipt of any notice as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such notice. 21.3 Survival of Representations and Warranties. All representations and warranties in the Loan Documents shall survive the making of the Loan(s) described herein and have been or will be relied on by City notwithstanding any investigation made by either party. 21.4 No Third Parties Benefited. This Agreement is made for the purpose of setting forth rights and obligations of Developer and the City, and no other person shall have any rights hereunder or by reason hereof. 21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Developer and City and their respective successors and assigns. Other than as expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or obligations under any Loan Document without the prior written consent of City, which consent may be withheld in City's sole and absolute discretion. Any such assignment without such consent shall, at City's option, be void. 21.6 Prior Agreements; Amendments; Consents. This Agreement (together with the other Loan Documents) contains the entire agreement between the City and Developer with respect to the City Loan and the Property, and all prior negotiations, understandings and agreements are superseded by this Agreement and such other Loan Documents. No modification of any Loan Document (including waivers of rights and conditions) shall be effective unless in writing and signed by the party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given. 21.7 Governing Law. All of the Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California and Federal law, whichever is more stringent. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Agreement or the Loan Documents. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue. 21.8 Severability of Provisions. No provision of any Loan Document that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of the Loan Documents are hereby declared to be severable. 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. 39 80A-95 21.10 Conflicts. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, this Agreement, unless otherwise expressly provided, shall prevail; provided however that, with respect to any matter addressed in both such documents, the fact that one document provides for greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed. 21.11 Time of the Essence. Time is of the essence under this Agreement and in the performance of every term, covenant, and obligation contained herein. 21.12 Conflict of Interest. No member, official or employee of the City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement which is prohibited by law. 21.13 Warranty Against Pavment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement. 21.14 Nonliabilitv of Citv Officials and Emplovees. No member, official or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Developer or successor, or on any obligation under the terms of this Agreement. 21.15 Plans and Data. Where Developer does not proceed with the work and construction of the Project, and when this Agreement is terminated with respect thereto for any reason, Developer shall deliver to City any and all plans and data concerning the Property, and City or any person or entity designated by City shall have the right to use such plans and data without compensation to Developer. Such right of City shall be subject to any right of the preparer of the plans to their use. 21.16 Authority to Enter Agreement. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify the City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. 21.17 Transfer of Developer Limited Partner's Interest. Notwithstanding anything to the contrary in this Agreement or the Loan Documents, no consent shall be required of the City (and it shall not be deemed a default or an Event of Default under any of the Loan Documents), in connection with the transfer and/or the assignment by the Developer's limited partner of its interest in the Developer to an entity controlled or managed by an entity which is related to or under common control with the Developer's limited partner. 21.18 Removal of Developer's General Partner. Notwithstanding anything to the contrary in this Agreement or the Loan Documents, the removal and/or replacement of a General Partner for cause in accordance with the Partnership Agreement shall not require the consent of the City and shall not shall not constitute a default or an Event of Default under this Agreement 40 80A-96 or the Loan Documents or accelerate the maturity of the City Loan. If the Developer's limited partner exercises its right to remove a General Partner, City will not unreasonably withhold its consent to the substitute general partner; provided however, the consent of either the City shall not be required if the substitute general partner is an affiliate of the Developer's limited partner. The substitute general partner shall assume all of the rights and obligations of the removed general partner hereunder. 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 Clerk of the Council CITY OF SANTA ANA Kevin O'Rourke Interim City Manager APPROVED AS TO FORM Sonia R. Carvalho City Attorney By: Lisa E. Storck Assistant City Attorney (Signatures continue on following page) 41 80A-97 DEVELOPER: 815 N Harbor, LP, a California limited partnership By: OHDC 815 N Harbor, LLC, a California limited liability company, its managing general partner By: Orange Housing Development Corporation, a California nonprofit corporation, its sole member By: Eunice Bobert, Chief Executive Officer By: C&C 815 N Harbor, LLC, a California limited liability company, its developer general partner By: Todd R. Cottle, its member By: The Cottle Family Trust Dated 3/8/1987, its member By: Barry A. Cottle, Trustee 42 80A-98 LIST OF EXHIBITS Exhibit A - Legal Description Exhibit B - Affordability Restrictions Exhibit C - City Deed of Trust Exhibit D - City Promissory Note Exhibit E - Project Budget Exhibit F - Scope of Work Exhibit G - Schedule of Performance Exhibit H - Target Area Map Exhibit I - Vicinity Hiring Report 43 80A-99 Exhibit "A" Legal Description Real property in the City of Santa Ana, County of Orange, State of California, described as follows: LOTS 1 TO 6 INCLUSIVE, AND 11 TO 16 INCLUSIVE, ALL IN BLOCK C OF TRACT NO. 490, AS SHOWN ON A MAP RECORDED IN BOOK 17, PAGE 22 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING FROM SAID LOTS 13 AND 14, THE LAND DESCRIBED IN A DEED TO THE CITY OF SANTA ANA RECORDED NOVEMBER 19, 1971 IN BOOK 9894, PAGE 267 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. ALSO EXCEPTING FROM SAID LOTS 14 AND 15, THE LAND DESCRIBED IN A DEED TO THE CITY OF SANTA ANA RECORDED OCTOBER 02, 1978 IN BOOK 12865, PAGE 1879 OF SAID OFFICIAL RECORDS. APN: 198-162-44 and 198-162-44 and 198-162-44 and 198-162-44 and 198-162-44 and 198- 162-44 and 198-162-46 and 198-162-46 and 198-162-46 and 198-162-02 and 198-162-02 and 198-162-02 and 198-162-03 and 198-162-03 and 198-162-03 and 198-162-03 and 198-162-03 and 198-162-03 and 198-162-45 and 198-162-45 and 198-162-45 and 198-162-42 and 198-162- 42 and 198-162-42 and 198-162-43 and 198-162-43 and 198-162-43 and 198-162-43 44 80A-100 Exhibit "B" AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY {Address: 815 N. Harbor Boulevard, Santa Ana, CA) THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the "Restrictions") are entered into by and between 815 N Harbor, LP, a California limited partnership ("Owner") comprised of OHDC 815 N Harbor, LLC, ("OHDC"), a California limited liability company, and C&C 815 N Harbor, LLC, a California limited liability company and the City of Santa Ana, a charter city and municipal corporation (the "City"). RECITALS: A. Owner is purchasing that certain real property located at 815 N. Harbor Boulevard (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. This Agreement is made pursuant to the authority of Title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5 {February 17, 2009}) (Recovery Act) and sections 2301-2304 of the Housing and Economic Recovery Act of 2008 (Public Law 110-289 {July 30, 2008}) (HERA). Section 2301-2304 of HERA is known as the "Neighborhood Stabilization Program" or "NSP" with money funded through the Program as "NSP Funds". The term "NSP2" refers to the second appropriation of NSP Funds provided under the Recovery Act, and the term "NSP3" refers to the third appropriation of NSP Funds provided under the Recovery Act. C. The City was notified that its application under the NSP for NSP2 Funds was approved by the U.S. Department of Housing and Urban Development ("HUD") with funding allocated for acquisition and construction of the multi-family rental component of the NSP. The parties hereto have executed the "Neighborhood Stabilization Program (Program 2) Rental Housing Development" dated March 1, 2010 in the amount not to exceed $6,500,000 but no less than $2,500,000 plus program income. The parties hereto have executed the "Neighborhood Stabilization Program Loan Agreement. Owner must comply with all of the NSP Program requirements as set forth in the Agreement. Pursuant to this Agreement, NSP2 and NSP3 Funds will be used for the acquisition of the Property. This Loan agreement amends the agreement dated March 1, 2010 to include redevelopment activities as authorized by the substantial amendment. D. On March 4, 2011, the City was notified that its application under the NSP for NSP 3 Funds was approved by HUD. Funding for the Owner is allocated for acquisition and construction of the multi-family rental components of the NSP 3 program in an amount not to exceed $1,500,000. 45 80A-101 E. A Request for Proposals was issued by the City to competitively choose a developer for the NSP Funds. Owner was awarded an agreement for the NSP1 Funds for the Rental Program, further funding for NSP2 and now this Agreement, due to its successful implementation of said agreements to use such Funds. F. Owner and the City are concurrently entering into that certain Loan Agreement. The Loan Agreement, Deed of Trust and Promissory Note, dated concurrently herewith (collectively the "Loan Agreements") are entered into for the purpose of providing for affordable very low income residential rental units in the City of Santa Ana pursuant to the NSP2 and NSP3 regulations and guidance. NOW, THEREFORE, CITY AND OWNER COVENANT AND AGREE AS FOLLOWS: 1. Definitions "Affordable Housing" means housing operated in accordance with the requirements of 24 CFR 92.252 and 24 CFR 570. "Affordability Period" also referred to as "Term of Affordability", shall be fifty- five (55) years from date of issuance of Certificate of Completion. "Affordable Rent" means the monthly rents which do not exceed the maximum amount applicable to Extremely Low, Very Low and Low Income households, as promulgated by the U.S. Department of Housing and Urban Development (HUD). "Agreement" means this Affordability Restrictions on Transfer of Property between the City and the Owner affecting real property. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the NSP 2 and NSP 3 Funds. "Building Permit" means the building permit(s) issued by City and required for the construction, if any. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs. "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 31. "Certificate of Completion" has the meaning set forth in Article 17. "City" means the City of Santa Ana, California, a charter city and municipal corporation. 46 80A-102 "City Deed of Trust" means the deed of trust encumbering the Property, in the form attached as Exhibit C to the Loan Agreement, to be executed by Owner pursuant to Section 5.B.2 in order to secure the Loan Note. "City Loan" means the loan to be made by the City to Owner in the principal amount of Two Million Dollars ($2,000,000.00) in accordance with this Agreement. "City Project Manager" shall mean the City Manager and/or his/her designee. "City Promissory Note" means that certain promissory note in the original principal amount of $2,000,000 in the form attached as Exhibit D to the Loan Agreement, and to be executed by Owner in favor of City to evidence the obligation of Owner to repay the City Loan through residual receipts as further described in the Promissory Note. "Close of Escrow" shall mean the date upon which the Loan Agreement and City Deed of Trust recorded in the Official Records of the County. "Closing Statement" means the final statement of Owner's Escrow account for the purchase of the Property pursuant to the purchase contract. "County" means the County of Orange, California. "Owner" means 815 N Harbor, LP, a California limited partnership comprised of OHDC 815 N Harbor, LLC, California limited liability company as managing general partner and C&C 815 N Harbor, LLC, a California limited liability company, as developer general partner. "Owner's Representative" shall mean the Chief Executive Officer of the Managing General Partner of Owner or his/her designee. "Escrow" means Escrow No. 588306-A. "Escrow Holder" means First American Title Company, 5 First American Way, Santa Ana, and California 92707. "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 published by HUD. "Event of Default" has the meaning set forth in Section 20.1. "Foreclosed" As defined by HUD for the purposes of NSP means "A home or residential property has been foreclosed upon if any of the following conditions apply" (a) The property's current delinquency status is at least 60 days delinquent under the Mortgage Bankers of America delinquency calculation and the owner has 47 80A-103 been notified; (b) the property owner is 90 days or more delinquent on tax payments; (c) under state, local, or tribal law, foreclosure proceedings have been initiated or completed; or (d) foreclosure proceedings have been completed and title has been transferred to an intermediary aggregator or servicer that is not an NSP grantee, contractor, subrecipient, developer, or end user. "Governmental Authority" means any governmental or quasi governmental agency, board, bureau, commission, department, court, administrative tribunal or other instrumentality or authority, and any public utility. "Hazardous Materials" means flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including without limitation the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et sec, and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended. "HOME" means the HOME Investment Partnership Program (the "HOME Program") (42 U.S.C. §12701, et seq.,) to be used in accordance with applicable statutory requirements and regulations (the "HOME Regulations") (24 CFR Part 92). "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "Improvements" means all improvements and fixtures now and hereafter comprising any portion of the Property, including, without limitation, landscaping, trees and plant materials; and offsite improvements (including, without limitation, streets, curbs, storm drains, and adjacent street lighting). "Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (c) any obligation for the purchase of property or services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii) evidenced by a note or similar instrument, and (d) all recourse and all non-recourse indebtedness secured by any Lien on any property or asset of such person (whether or not assumed by such person). "Indemnitees" has the meaning set forth in Section 18.2. . "Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments, injunctions, decrees or awards of the United States or any state, county, municipality or other Governmental Authority. "Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention 48 80A-104 agreement, any lease in the nature thereof, and any agreement to give any lien or security interest). "Loan Agreement" means the Loan Agreement regarding the loan of Neighborhood Stabilization Program funds between the City and the Owner, and any attachments thereto. "Loan Documents" means, collectively, the Loan Agreement, the City Promissory Note, the City Deed of Trust, and this Agreement, and any other agreement, document, or instrument that the City requires in connection with the execution of this Agreement or from time to time to effectuate the purposes of this Agreement. "Low Income" means an adjusted income which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HUD. Also may be referred to interchangeably in the Loan Documents as "Area Median Income" or "AMP. "Neighborhood Stabilization Program" (NSP) has the meaning set forth in the Recitals above. "Neighborhood Stabilization Program (NSP) Regulations" has the meaning set forth in the Recitals above. "NSP Assisted Units" shall mean those residential units constructed which are subject to the term of affordability. "NSP Funds" shall mean the money provided under the NSP 2 and NSP 3 Program for the development of affordable rental units. "Partnership Agreement" means the Amended and Restated Limited Partnership Agreement of 815 N Harbor, L.P., dated as of August 30, 2013. "Permitted Encumbrances for the Affordable Housing Restrictions" means collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. "Permitted Encumbrances for the City Deed of Trust" means the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. 49 80A-105 "Project" means the construction of the Improvements upon the Property by Owner pursuant to this Agreement. "Project Budget" means the line-item budget for the Project attached as Exhibit E to the Loan Agreement, as modified from time to time in accordance with the Loan Agreement. "Project Costs" means all costs of any nature incurred in connection with the Project in accordance with generally accepted accounting principles. "Property" means the property that is located at 815 N. Harbor Boulevard in the City of Santa Ana, and is more fully described in the "Legal Description" of the Property attached hereto as Exhibit A and incorporated herein by reference. "Scope of Work" means the detailed statement of the work to be performed by Owner on and to the Property pursuant to this Agreement, which is attached as Exhibit F to the Loan Agreement. "Schedule of Performance" means the detailed schedule setting forth timeframes for certain tasks, which document is attached as Exhibit G to the Loan Agreement. "Senior Lender" means a commercial financial institution providing the Senior Loan or any other holder of the Senior Loan Note. "Senior Loan" means a loan from the Senior Lender, which is any of an acquisition loan in the approximate amount of $2,000,000 from Grandpoint Bank, a construction loan in the approximate principal amount of $17,607,180.00 with a term of approximately two (2) years or a permanent loan(s) in the approximate principal amount of $5,089,440.00 with a term of approximately 18 years and an amortization period of 30 years. "Senior Loan Deed of Trust" means the first deed of trust securing the Senior Loan by encumbering the Property. "Senior Loan Documents" means, collectively, the loan agreement governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document or instrument that the Senior Lender requires in connection with the Senior Loan. "Senior Loan Note" means the promissory note evidencing the Senior Loan from the Senior Lender. "Target Area" shall mean the map attached as Exhibit H to the Loan Agreement. 50 80A-106 "Term of Affordability" the terms and conditions contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. "Vicinity" shall mean the Target Area as identified by the City for the NSP funds and approved by HUD. 2. Use of the Property. Owner covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property of any part thereof) that Owner, such successors, and assigns shall use the Property to provide affordable rental housing, for Very Low Income households, as provided in the Loan Agreement and these Restrictions, provided however that the Owner may lease out the existing improvements for other uses on a short-term basis prior to the commencement of construction of the Project. 3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 3.1 Use Covenants and Restrictions a. Owner agrees and covenants, which covenants shall run with the land and bind Owner, its successors, its assign and every successor in interest to the Property that Owner will make all rental units on the Property available to extremely-low, very low and low income households at rents affordable to such households for fifty- five (55) years from the effective date of the issuance of the Certificate of Completion. b. The Project shall consist of approximately seventy (70) units of which there will be forty-nine (49) two-bedroom units and twenty-one (21) three- bedroom units. There will be seven (7) units with incomes at or below 30% AMI, forty- two (42) units for households with incomes at or below 50% AMI; twenty (20) units for households with incomes at or below 60% AMI; and the remaining unit will be reserved for the on-site manager. If entitlement changes the number of units, the City Project Manager must approve affordability mix. C. Affordable rents shall be governed as provided in the NSP Regulations. Rental increases shall be in conformance with federal and state law. d. 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. 3.2 Rent Increases: 51 80A-107 A. On an annual basis, the City shall provide the Owner with the maximum allowable schedule of incomes and rents (less utility allowance appropriate for the NSP Assisted Unit for the Property. B. Owner, its successors and assigns shall not charge rents for the NSP Assisted Units in excess of the amounts set forth in the tables as adjusted from time-to-time by HUD. The City Manager shall notify Owner in writing of the adjusted allowable maximum incomes and rents. 4. Miscellaneous Provisions: A. Owner shall adopt and include as part of its Management Plan (described in subsection G below), written tenant selection policies and criteria for the Units, that meet the following requirements: (a) Are consistent with the purpose of providing housing for Very Low Income households; (b) Are reasonably related to program eligibility and the applicants' ability to perform the obligations of the lease; (c) 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) Provide first priority in the selection of qualified eligible tenants to households that are referred by the City; and (f) Carry out the Affirmative Marketing procedures of the City of Santa Ana, which are designed to provide information and otherwise attract eligible persons from all racial, ethnic and gender groups in the housing market area to the units. Owner, the City shall cooperate to effectuate this provision prior to the initial renting, or upon occurrence of a vacancy, and the re-renting of any NSP Assisted Units (24 CFR 92.351). B. Owner, its successors and assigns, shall not refuse to lease a unit to a holder of a rental voucher under 24 CFR part 887 (Housing Choice Voucher Program) or to a holder of a comparable document evidencing participation in a HOME tenant-based assistance program because of the status of the prospective tenant as a holder of such certificate of 52 80A-108 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. C. Any lease of any of the Units must be for not less than one year, unless by mutual agreement between the tenant and the Owner. Should the tenant and Owner agree to a term of less than one year, said agreement shall be expressed in some type of written form, signed by the tenant, and maintained in the tenant's rental file held by the Owner. The lease may not contain any of the following provisions (in which references to "Owner" shall mean the Owner, its successors or assigns): (a) Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; (b) Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing Unit after the tenant has moved out of the Unit. The owner may dispose of this personal property in accordance with state law; (c) Agreement by the tenant not to hold the owner or the owner's agent legally responsible for any action or failure to act, whether intentional or negligent; (d) Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant; (e) Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; (f) Agreement by the tenant to waive any right to a trial by jury; (g) Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and (h) Agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. D. Owner, its successors or assigns, must adhere to state law requirements with regard to termination of tenancy. E. Owner shall maintain the improvements on the Property in compliance with all applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local code requirements and shall keep the Property free from any unreasonable accumulation of 53 80A-109 debris or waste materials. Owner shall also maintain in a healthy condition any landscaping planted on the Property. F. Owner covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, disability, sex, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Owner itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property, as required by the Title VI of the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age Discrimination Act of 1975, and all implementing regulations. G. Not later than the closing for the construction loan for the Project, Owner shall submit to the City Project Manager a Management Plan in a form that is acceptable including, but not limited to, the components listed below. Approval of the Management Plan must be obtained from the City Project Manager not later than the time for the issuance of a certificate of occupancy for the Project. Owner shall manage the NSP Assisted Units in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by the City Project Manager, for the term of the income and rent restrictions contained in these Restrictions. The components of the Management Plan shall include: (a) Management Agent. Owner shall submit the name and qualifications of the proposed Management Agent. The City Project Manager shall approve or disapprove the proposed Management Agent in writing based on the experience and qualifications of the Management Agent. The City hereby approves Advanced Property Services as the proposed Management Agent for the Project. (b) Management Agreement. Owner shall submit a copy of the proposed management agreement specifying the amount of the management fee, and the relationship and division of responsibilities between Owner and Management Agent. (c) Annual Budget and Protected Cash Flows. Prior to the issuance of a certificate of occupancy for the Project, and annually thereafter not later than one hundred fifty (150) days after the close of each calendar year thereafter, Owner shall submit a projected operating budget and cash flow to the City Project Manager. The budget and cash flow shall be in a form that is acceptable to the City Project Manager. (d) Tenant Selection Policies. Owner shall include in the Management Plan the tenant selection policies in accordance with Section 4, above. H. If at any time the City determines that the units are not being managed or maintained in accordance with the approved Management Plan, Owner shall change the management agent or the practices complained of, upon receipt of written notice from the City 54 80A-110 Manager. The City Manager may require Owner 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 Owner without penalty, upon thirty (30) days prior written notice, at the direction of the City Manager. Within ten (10) days following a direction of the City Manager to replace the management agent, the Owner shall select another management agent or make other arrangements satisfactory to the City Manager or designee for continuing management of the units. I. The covenants established in these Restrictions and any amendments hereto approved by the City, and Owner shall, without regard to technical classification and designation, be binding for the benefit and in favor of the City and their respective successors and assigns. These Restrictions shall remain in effect for fifty-five (55) years. In its discretion, the City may defer repayment of the Loan or the City may agree to such reasonable modifications to the requirements of these Restrictions, as they may determine are necessary for the continued maintenance and operation of the NSP Assisted Units. The covenants against discrimination shall remain in effect for the period of these Restrictions. J. Owner shall not request disbursement of NSP funds until the funds are needed to pay eligible costs. The City shall have the right to disapprove any request if the City determines the request is for an ineligible item or is otherwise not in compliance with or inconsistent with the Loan Agreements and these Restrictions [24 CFR 92.504 (c)(10)]. K. Owner 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. Owner shall file with the City an Annual Report (herein referred to as the "Annual Report") within one hundred fifty (150) days following the end of each calendar year, commencing the Calendar Year following the issuance of the Certificate of Completion. The Annual Report shall contain a certification by Owner as to such information as the City Project Manager 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 4.G. (c) of the this Agreement which shall include an audited financial statement for the previous calendar year that includes a balance sheet and a profit and loss statement indicating any surplus or deficit in operating accounts; a detailed itemized listing of income and expenses; and the amounts of any fiscal reserves. Such Annual Budget and audited financial statement shall be prepared in accordance with generally accepted accounting practices. (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 Owner 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 55 80A-111 92.251. (3) The occupancy of the units indicating the income of each current resident and the current rents charged each resident and whether those rents include utilities, including records that demonstrate that the Project meets the requirements of the NSP Program. (4) General management performance, including tenant relations and other relevant information. (5) Records that demonstrate that the units meet the affordability requirements of 24 CFR 92.252, for the required period of affordability. (6) Evidence of a currently paid hazard insurance policy in accordance with the requirements of Section 6 of the City Deed of Trust, with a loss payable endorsement naming the City as a loss payee together with other approved lenders (as their interests may appear), with a 'Replacement Cost Endorsement' in amount sufficient to prevent Owner 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 Agreements. (8) Termite reports pertaining to the Property every fifth (5 h) year. (9) Such other information as may be reasonably required by the City Manager or his/her designee. b. Records and Audits. Owner shall maintain the following general program records, and make them available for inspection by the City, the State or HUD: (1) records which demonstrate that the project meets the property standard specified in 24 CFR 92.251; (2) records, for each NSP Assisted Unit, which demonstrates that the project meets the requirements of 24 CFR 92.252. (3) records which demonstrate compliance with the tenant and participant protections, as specified in 24 Section 29.253; (4) records which demonstrate compliance with the Equal Opportunity and Fair Housing requirements outlined in these Restrictions, including: (A) data on the extent to which each racial and ethnic group 56 80A-112 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 NSP 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 Owner'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 date on which Owner obtained ownership of the Property; 92.355; (7) records concerning lead-based paint in accordance with 24 CFR (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 pertaining to each calendar year of NSP funds must be retained for the most recent five year period, except that for rental housing projects, records may be retained for five years after the project completion date; except that records of individual tenant income verifications, project rents and project inspections must be retained for the most recent five year period, until five years after the affordability period terminates (24 CFR 92.508). Owner shall cooperate with the City to retain all books and records relevant to the Loan Agreement for a minimum of five years after the expiration of the Loan Agreement and any and all amendments hereto, or for five years after the conclusion or resolution of any and all audits or litigation relevant to the Loan Agreement, whichever is later. The City, the State, the Office of the Auditor General of HUD, and/or their representatives shall have unrestricted reasonable access to all locations, books, and records for the purpose of monitoring, auditing, or otherwise examining said locations, books, and records with or without prior notice. 57 80A-113 d. If so directed by the City or HUD upon termination of the Loan Agreement, Owner shall cause all records, accounts, documentation and all other materials relevant to the work to be delivered to the City or HUD, as depository. e. All records, accounts, documentation and other materials relevant to the Project shall be accessible at any time to the authorized representatives of the City, 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. Owner shall reasonably cooperate with City in performing such audit. g. Owner shall permit the City to perform an Annual Physical Inspection of the Property with at least seven (7) days notice. Owner shall cooperate with this Inspection and shall take all steps necessary to quickly correct any code deficiencies identified during the Inspection. L. The City is the beneficiary of the terms and provisions of these Restrictions and the covenants herein, both for and in its 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 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. M. The covenants and agreements contained herein shall run with the land and not be personal obligations of Owner. Upon the sale, conveyance or other transfer of the Property (a "Transfer") and the assumption of the obligations hereunder by a transferee, Owner's liability for performance shall be terminated as to any obligation to be performed hereunder after the date of such Transfer. N. The Loan Agreement and all of its attachments shall be enforceable by the City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions on Transfer of Property, the City Note and the City Deed of Trust provide a means of enforcement by the City if Owner 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)]. 58 80A-114 IN WITNESS WHEREOF, the parties hereto have executed these Affordability Restrictions on Transfer of Property as of the date and year first stated above. CITY OF SANTA ANA Kevin O'Rourke Interim City Manager APPROVED AS TO FORM: Sonia R. Carvalho City Attorney By: Lisa Storck Assistant City Attorney OWNER: 815 Harbor, LP, a California limited partnership MANAGING GENERAL PARTNER OHDC 815 N Harbor, LLC a California limited liability company ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit corporation, its sole member By: Eunice Bobert, Chief Executive Officer DEVELOPER GENERAL PARTNER C&C 815 N Harbor, LLC a California limited liability company By: Todd R. Cottle, its member By: Cottle Family Trust Dated 3/8/87, By: Barry A. Cottle, its Trustee 59 80A-115 Exhibit "C" CITY DEED OF TRUST AND ASSIGNMENT OF RENTS THIS CITY DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of Trust") made this day of September, 2013, by between 815 N Harbor, LP , a California limited partnership comprised of OHDC 815 N Harbor, LLC, ("OHDC"), a California Limited Liability Company, and C&C 815 N Harbor, LLC, a California Limited Liability Company (together the "Trustor"), AmeriNational Community Services, a California corporation (the "Trustee"), and the City of Santa Ana, a charter city and municipal corporation (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 Exhibit A and more commonly known as 815 N. Harbor Boulevard, 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 City Deed of Trust; provided that so long as Truster is not in default hereunder, it shall be permitted to control the Property in accordance with the requirements of that certain Neighborhood Stabilization Program Loan Agreement entered into between the Trustor and the Beneficiary, dated concurrently herewith, which Agreements are both on file with the Beneficiary as a public record; 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 under 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 therefor, whether or not the same are, or shall be attached to said building or 60 80A-116 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 of even date herewith in the principal amount of Two Million Dollars ($2,000,000.00) (the "City Promissory Note"); (b) the performance of the covenants and agreements of Borrower contained in a certain Agreement as hereinafter defined; and (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this 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 Agreement. This Deed of Trust is executed and delivered, along with the City Note and the Loan Agreement, to benefit the Property. A copy of said Loan Agreement is on file as a public record with the Beneficiary and is incorporated herein by reference (the "Agreement"). Trustor acknowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter into the Agreement or City 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 rehabilitation of the Property. 3. Repayment of the Loan. Trustor will promptly repay, when due, the principal loan amount, as required by the City Promissory Note secured by this Deed of Trust. 4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to the Senior Loan, but the City's Affordability Restrictions on Transfer of Property shall remain in first place except that the City's Affordability Restrictions on Transfer of Property shall be subordinated to Trustor's Senior Loan for acquisition. 5. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform all of Trustor's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this Instrument, including Trustor's covenants to make payments when due (subject to an applicable notice and cure provisions). Trustor will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this 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; 61 80A-117 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 subject to the rights of any senior lender. In the event of loss, Trustor will give prompt notice to the insurance carver 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 loan secured by 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 the Deed of Trust securing any senior lender, eminent domain, 62 80A-118 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 City 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 City Deed of Trust will be given by certified mail, return receipt requested, addressed to Trustor at 414 East Chapman Avenue, Orange, California, 92866, with copies to C&C 815 N Harbor, LLC at 14211 Yorba St., Suite 200, Tustin, California 92870 (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: Housing Manager, or at such other address as the Beneficiary may designate by notice to Trustor as provided above, and (c) to 63 80A-119 Trustee at 8121 E. Florence Avenue, Downey, California 90240. Notice shall be effective as of the date received as shown on the return receipt. 15. Governing Law. This Deed of Trust shall be governed by the laws of the State of California with venue in Orange County. 16. Severability. In the event that any provision or clause of this Deed of Trust or the City Loan Note conflicts with applicable law, such conflict will not affect other provisions of this Deed of Trust or the City Note which can be given effect without the conflicting provision, and to this end the provisions of the Deed of Trust and the City Loan 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 City 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, 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. Notwithstanding anything to the contrary contained herein, a "default" shall not include (i) a transfer of a general partner's interest in Trustor when made in connection with the exercise by the Trustor's limited partner (the "Limited Partner") of its rights upon a default by a general partner under the Trusters Amended and Restated Limited Partnership Agreement (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; (ii) any transfer of the Property to the managing general partner of Trustor pursuant to the right of first refusal or to the general partners of Trustor pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of a limited partner interest or an interest in a limited partner of the Trustor, provided that after any such sale, transfer or other disposition an affiliate 64 80A-120 of the Trustor's limited partner is the managing member or general partner of such transferee limited partner. If the breach is not cured on or before the date specified in the notice or such longer period as provided above or in the City Note or the Agreement, the Beneficiary, at the Beneficiary's option, may: (a) declare all of the sums secured by this City Deed of Trust to be immediately due and payable without 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 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. Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any cure of any default made or tendered by Trustor's limited partner shall be deemed to be a cure by Trustor and shall be accepted or rejected on the same basis as if made or tendered by Trustor. The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attomeys' fees. 19. Trustees Rieht 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 anytime 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 City Note has occurred; (b) Trustor cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (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 in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable attorneys' fees; and (d) 65 80A-121 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 Truster'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 parry unless brought by Trustee. 21. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the City Note to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from time to time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 23. Request for Notice. Trustor requests that copies of the notice of default and notice of sale be sent to Trustee at the address set forth in Section 14 above. 24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor shall have any personal liability under the Agreement, City 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 Truster to repay the loan evidenced by such documents shall be enforceable against Trustor only to the extent of Trustor's interest in the Property. (Signatures on Following Page) 66 80A-122 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above. 815 N HARBOR, LP a California limited partnership MANAGING GENERAL PARTNER OHDC 815 N Harbor, LLC a California limited liability company ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit corporation, its sole member By: Eunice Bobert, Chief Executive Officer DEVELOPER GENERAL PARTNER C&C 815 N Harbor, LLC a California limited liability company By: Todd R. Cottle, its member By: Cottle Family Trust Dated 3/8/87, By: Barry A. Cottle, its Trustee 67 80A-123 Exhibit "D" CITY PROMISSORY NOTE SECURED BY SUBORDINATED DEED OF TRUST TO THE CITY OF SANTA ANA, CALIFORNIA (815 N. Harbor Boulevard) $2,000.000.00 September, 2013 Santa Ana, California 1. Principal Amount of Loan FOR VALUE RECEIVED, 815 N Harbor, LP, a limited partnership comprised of OHDC 815 N Harbor, LLC, ("OHDC" ), a California Limited Liability Company, and C&C 815 N Harbor, LLC, a California Limited Liability Company ("Borrower"), hereby promises to pay to the CITY OF SANTA ANA, a charter city and municipal corporation ("City"), or order, a principal amount not to exceed TWO MILLION DOLLARS ($2,000,000.00) or so much thereof as may be advanced by the City to the Borrower, due and payable with 0% interest by residual receipts over the fifty-five (55) year term, pursuant to the Neighborhood Stabilization Program Loan Agreement (said "Agreement") between Borrower and the City dated concurrently herewith, which are both incorporated herein by this reference. This loan is made pursuant to the "Neighborhood Stabilization Program" or "NSP" with money funded through the Program as "NSP Funds". The term "NSP2" refers to the second appropriation of NSP Funds provided under the Recovery Act the Housing and Economic Recovery Act of 2008 (Section 2301-2304 of HERA), and the term "NSP3" refers to the third appropriation of NSP Funds provided under the Recovery Act. Any capitalized term not otherwise defined in this Note shall have the meaning ascribed to such term in the Agreement. The obligation of Borrower to City hereunder is subject to the terms of said Agreement, the Affordability Restrictions on Transfer of Property, Deed of Trust and this Note. Said documents are public records on file in the offices of the City, and the provisions of said documents are incorporated herein by this reference. This Note, said Agreement, the Affordability Restrictions on Transfer of Property, and the Deed of Trust are sometimes collectively referred to herein as the "Loan Documents." The Loan Documents and the rights and responsibilities inure to the benefit of the City of Santa Ana. Any capitalized term which is not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. 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: 68 80A-124 "Acquisition Costs" shall mean the costs and expenses of Borrower to acquire the Property and related soft costs, as set forth in the Project Budget attached to the Loan Agreement. "Agreement" means the Loan Agreement between the City and the Developer, and any attachments or amendments thereto. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the NSP, and the NSP Funds. "Area Median Income" means the median income figures for Orange County as published by the U.S. Department of Housing and Urban Development (HUD). Also may be referred to as "AMI" herein. "Borrower" means 815 N Harbor, LP, a California limited partnership comprised of OHDC 815 N Harbor, LLC, a California limited liability company as managing general partner and C&C 815 N Harbor, LLC, a California limited liability company as developer general partner. "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 30. "City Loan" shall mean the loan evidenced by this Note repayable to the City in accordance with the terms of this Note and secured by the Deed of Trust. "City's Percentage" with reference to the Residual Receipts, shall mean fifty percent (50%) of the total Residual Receipts from the Property as further described in Section 5 hereof. "Closing Costs" shall mean: (i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a result of the Sale, which shall not in any event exceed the customary amount charged-for similar transactions in the immediate market place, costs of title insurance premiums, documentary stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably incurred with respect to the Property, in each case actually paid by Borrower as a condition of the Sale. (ii) In the case of a Refinancing, the reasonable and necessary costs of consumating 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 69 80A-125 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 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. "Operating Expenses" shall mean the sum of the following: (i) payments of principal and interest and all other charges relating to the Senior Loan(s); (ii) a property management fee equal to 8% of gross rents; (iii) Owner Administration Fee of 5% of gross rents; (iv) deposits into required reserves; (v) any deferred developer fee; (vi) 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. (vii) Any other expenses necessary to meet senior lender requirements and requirements of Borrower's limited partner, or its assignee, as set forth in Borrower's Agreement of Limited Partnership (the "Partnership Agreement"). 70 80A-126 "Deed of Trust" shall mean the Deed of Trust in favor of the City, securing the City Loan, substantially in the form attached to the Agreement as Exhibit B, which is incorporated herein by this reference. "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 published by HUD. "Low Income" means an adjusted income which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. "Neighborhood Stabilization Program" (NSP) has the meaning set forth in the Recitals above. "NSP Assisted Units" shall mean those rental units purchased and rehabilitated on Eligible Properties which are subject to the term of affordability. "NSP2 Funds" shall mean the money provided under the NSP2 Program for the acquisition of the rental units hereunder. "NSP3 Funds: shall mean the money provided under the NSP3 Program for the acquisition of the rental units hereunder. "Propert y' shall mean that property located at 815 N. Harbor Boulevard, Santa Ana, California. "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, except for the payoff of the conventional lender's acquisition loan for the Property.. "Refinancing Proceeds" shall be disbursed as set forth in Section 6 hereof. "Residual Receipts" shall mean the Gross Revenues from the Property for each year, less deductions for Operating Expenses from the same building, applicable to each such year to the extent not already deducted as an Operating Expense. "Sale" shall mean any transfer, assignment, or conveyance or lease 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 71 80A-127 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. Notwithstanding anything to the contrary contained herein, a "Sale" shall not include any transaction not considered a "transfer' under Section 13. ( "Senior Loan" shall mean any senior loan made to Borrower, for payment of Acquisition and/or Rehabilitation Costs, and shall include any subsequent loan that refinances said Senior Loan. "Term" the term for repayment of this Note shall mean fifty-five (55) years from the date of recording of the Deed of Trust securing the Note. "Term of Affordability" the term of affordability shall be fifty-five (55) years. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. 3. This Note evidences the obligation of Borrower to the City for the repayment of the City Loan of NSP2 and NSP3 Funds attributable to the acquisition of the Property, and related soft costs. 4. This Note is payable at the principal office of City of Santa Ana - Community Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Art: Housing Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful money of the United States. 3. Loan Repayment. Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts), 6 (Refinancing Proceeds), 7 (Sale Proceeds) and 9 (Accelerated Loan Repayment) of the Agreement. 4. Operating Capital Improvement Loan. If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and the General Partner makes a loan to the Partnership, the reserves must be fully funded prior to payment of said loan. The outstanding loan balance will be reflected in the annual report. 5. Annual Loan Repavment/ Residual Receipts. a. Commencing on the date one hundred fifty (150) days after the close of the initial Calendar Year following the issuance of the Certificate of Completion and on or before the 150`h day of each Calendar Year thereafter the Borrower shall thereafter make a loan payment to the City annually, in the amount of the lesser of the outstanding 72 80A-128 balance due under this Note or the City's Percentage of the Residual Receipts, as provided in this Section 5. b. Within one hundred fifty (150) days after the close of the initial Calendar Year following the Issuance of the Certificate of Completion and on or before the 150th day of each Calendar Year thereafter, the Borrower shall submit to the City an audited financial statement of Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar Year, along with a computation of the amount of the Residual Receipts applicable to such Calendar Year with which to make a City Loan payment then due. c. Except as otherwise provided, the Borrower shall pay to the City the City's Percentage of the Residual Receipts as payment of principal. At least fifty percent (50%) of the Residual Receipts shall remain with the Borrower, with all Residual Receipts remaining with Borrower to the extent the City Loan has been fully repaid. d. The Residual Receipts payment shall be made not later than one hundred fifty (150) days after the close of the Calendar Year. Such payment shall be applied first to any late fees, then to reduce the principal balance of the loan. 6. Loan Repayment from Refinancing Proceeds. The Borrower shall make a loan payment to the City from every Refinancing that occurs during the term of this Note (other than refinancing of the conventional lender acquisition loan) not to exceed the outstanding balance of principal 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 amount necessary to pay any deferred developer fee in full; and next, the Borrower shall pay to the City the City's Percentage of the Refinancing Proceeds to the extent of the outstanding balance on this Note. At least fifty percent (50%) of the Refinancing proceeds shall remain with Borrower, with all remaining Refinancing proceeds remaining with the Developer to the extent the outstanding balance of the Note has been fully paid. Such payment shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Refinancing Proceeds are insufficient to repay the Loan in full. 7. Loan Repayment from Sale Proceeds. The Borrower shall make a loan payment, not to exceed the outstanding balance of principal on this Note subject to Section 14 herein, to the City from any Sale that occurs during the term of the City Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in full the balance remaining on the Senior Loan; next, the amount necessary to pay any deferred developer fee in full; and next, the Borrower shall pay to the City the City's Percentage of the total Sale Proceeds, not to exceed the outstanding amount of principal due on this Note. At least fifty percent (50%) of the Sale Proceeds shall remain with Borrower, with all remaining Refinancing proceeds remaining with the Developer to the 73 80A-129 extent the outstanding balance of the Note has been fully paid. Such payment shall be due on the date of such Sale, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full. 8. Accelerated Loan Payment. The full principal amount outstanding 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 13 hereof, unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the City Loan, the City approves such sale and the purchaser assumes the balance of the City Loan in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to repay in full the City Loan, the City approves such Refinancing and the Borrower remains obligated pursuant to the terms of this Note. b. In event of default (subject to any applicable notice and cure provisions) pursuant to any of the Loan Documents or the Senior Loan Documents. C. Any default (subject to any applicable notice and cure provisions by Borrower as to any other loan or loans by City to Borrower with respect to the Property; or d. The date that is fifty five (55) years after the date of execution 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 or extend the Term of this City Note. 9. Prepayment Borrower may prepay the outstanding principal balance under this Note, in whole or in part, at any time without penalty, however the Affordability Covenants and Restrictions still remain for the entire Affordability Period of fifty-five (55) years. 10. Lawful Money. Principal is payable in lawful money of the United States of America. 11. 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, due the City pursuant to this Note, and the balance, if any, to the payment of principal. 74 80A-130 b. If any payment is not received by the City within fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; 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 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. 12. Security This Note is secured by the recorded Deed of Trust. 13. Acceleration by Reason of Transfer or Financine. a. In order to induce City to make the loan evidenced hereby, Borrower agrees that in the event of any transfer of the Property without the prior written consent of City (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder of the Senior Loan Deed of Trust), City shall have the absolute right at its option, 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 such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this Section 13, 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. As used herein, "transfer" includes the Sale, agreement to sell, transfer or conveyance of the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property, or the lease of all or substantially all of the Property. 'Transfer' shall not include the leasing of individual residential units on the Property, so long as Borrower complies with the provisions of the 75 80A-131 Loan Agreement and the Affordability Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of the Property to a limited partnership in which Borrower is a general partner, or to a corporation or limited liability company that is wholly owned by the Borrower or its affiliates and that is formed for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior Loan, without the prior written consent of City (which consent City may grant or deny in its sole discretion), then the entire outstanding balance of the City Loan 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 (and it shall not be deemed a Sale) (i) a transfer of a general partner's interest in Borrower when made in connection with the exercise by the Borrower's limited partner (the "Limited Partner") of its rights upon a default by a general partner under the Borrower's partnership agreement (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; (ii) any transfer of the Property to the managing general partner of Borrower pursuant to the right of first refusal or to the general partners of Borrower pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Borrower. 14. Event of Default. Subject to the provisions of Sections 23 hereof, the occurrence of any of the following shall be deemed to be an event of default ("Event of Default") hereunder: (a) failure by Borrower to make any payments provided for herein, and if such default is not made good within fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; (b) failure by Borrower to perform any covenant or agreement in the Deed of Trust, the Agreement, or the Affordability Covenants and 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 any applicable notice has been provided and the expiration of any applicable cure period therefore„ if any, provided therein. 15. 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 76 80A-132 sums evidenced hereby immediately due and payable by delivery to the Trustee named in the 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 Deed of Trust. City shall also deposit with Trustee the Deed of Trust, this Note and all documents evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal 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. 16. Attorney Fees. If this City Promissory Note is not paid when due or if any Event of Default occurs, Borrower promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions hereof. 17. Severabilitv. 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. 18. 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. 19. Non-recourse. The City Loan is a nonrecourse obligation of the Borrower. Neither Borrower, nor its partners nor any other party shall have any personal liability for repayment of the City Loan or for any other amounts under any of the documentation evidencing, securing or describing the City Loan. The sole recourse of City under this Note and the Deed of Trust for repayment of the City Loan and for such other amounts arising therefrom shall be the exercise of its rights against the Property and related security thereunder. 20. Subordination. It is hereby expressly agreed and acknowledged by Borrower and City that the Deed of Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior Deed of Trust. 77 80A-133 21. Notice of Default. a. Subject to the applicable cure periods set forth in Section 14 and subject to the further provisions of this Section 21, 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. 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 Deed of Trust, prior to exercising any remedies thereunder City shall give Borrower written notice of such default. Borrower shall have a period of fifteen (15 Business Days after such notice is received within which to cure the default prior to exercise of remedies by City under this Note and the Deed of Trust. f. If a non-monetary event of default occurs under the terms of this Note or the 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. 22. Insurance and Condemnation. In the event of any fire or other casualty to the Property or eminent domain proceedings resulting in condemnation of the Property or any part thereof, Borrower shall 78 80A-134 have the right to rebuild the Property, and to use all available insurance or condemnation proceeds therefor, provided that (a) such proceeds are sufficient to keep the City Loan in balance and rebuild the Property in a manner that provides adequate security to City for repayment of the City 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 Property and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the City Loan in a manner that provides adequate security for repayment of the remaining balance of the City Loan. 23. 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. 24. Assignments. The City, and the 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. 79 80A-135 This City Promissory Note is hereby agreed to and executed on the date first set forth above. "BORROWER" 815 N HARBOR, LP, a California limited partnership MANAGING GENERAL PARTNER OHDC 815 N Harbor, LLC a California limited liability company ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit corporation, its sole member By: Eunice Bobert, Chief Executive Officer DEVELOPER GENERAL PARTNER C&C 815 N Harbor, LLC a California limited liability company By: Todd R. Cottle, its member By: Cottle Family Trust Dated 3/8/87, By: Barry A. Cottle, its Trustee 80 80A-136 Exhibit "E" Project Budget 81 80A-137 815 N Harbor Version: Preliminary Feasibility (9%) Page 1 of 8 Revised: 712612013 SOURCES OF FUNDS PERMANENT SOURCES Total Term Amount Interest (Yrs) Comments Conventional Perm Loan $4,370,390 6.50% 30 Conventional Section 8 Loan $719,050 6.50% 20 Based on 8 project based Section 8 vouchers City of Santa Ana - NSP $2,000,000 Deferred Developer Fee $792,342 General Partner Equity $100 Limited Partner Equity $18,405,476 Federal Tax Credit Pricing: $0.99 TOTAL $26,287,358 vs. TDC $26,287,358 Financing Surplus/(Gap) $0 CONSTRUCTION SOURCES Total Term Amount Interest (Mnts) Comments Conventional Construction Loan $17,607,180 3.00% 24 City of Santa Ana - NSP $2,000,000 Deferred Developer Fee $792,342 General Partner Equity $100 Limited Partner Equity $4,601,369 25% of Total Equity. Dev. Fee Deferred Until Completion $784,977 Other Costs Deferred Until Completion $501,390 Refer to Development Budget for Details. TOTAL $26,287,358 vs. TDC $26,287,358 Financing Surplus/(Gap) $0 File: 130726_N Harbor prf 80A-138 815 N Harbor Page 2 of8 Revised: 712612013 Version: Preliminary Feasibility (9%) DEVELOPMENT BUDGET Tax Credit Elialble Total Total Project Residential Depreciable Non - Acq. Construction Item Costs Costs (100%) Residential Depreciable Amortize Expense Basis /Rehab Basis ACOUISITTON Lesser of Land Cost or Value $3,856,365 $3,856,366 $0 $3,856,366 Demolition $200,000 $200,000 $0 $200,000 $0 Legal: Acquisition $30,000 $30,000 $0 30000 $0 Subtotal Acquisition $4,086,366 $4,086,366 $0 $4,086,366 $0 $0 $0 $0 CONSTRUCTION Residential Structures (Inc. Site Work)* $12,550,000 $12,550,000 $12,550,000 $12,550,000 GC Gen. Requtrement $191,250 $191,250 $191,250 $191,250 GC Overhead $573,750 $573,750 $573,750 $573,750 Contractor Profit $1,020,000 $1,020,000 $1,020,000 $1,020,000 Construction Bonds $275,000 $275,000 $275,000 $275,000 Construction Contingency (5%) $726,750 $726,750 $726,75D $726,750 Subtotal Construction $15,336,750 $15,336,750 $15,336,750 $0 $0 $0 $0 $15,336,750 SOFT C05T5 Local Development Impact Fees $1,250,000 $1,250,000 $1,250,000 $1,250,000 Local Permit Processing Fees $215,000 $215,000 $215,000 $215,000 Environmental Studies - CEQA $40,000 $40,000 $40,000 $40,000 Appraisal $15,000 $15,000 $15,000 $15,000 Architectural Design & Supervision $718,504 $718,504 $718,504 $718,504 Market Study $15,000 $15,000 $0 $15,000 $0 Survey & Engineering $300,000 $300,000 $300,000 $300,000 Syndication Consultant $65,000 $65,000 $0 $65,000 $0 Legal: Construction $20,000 $20,000 $20,000 $20,000 Legal: Permanent $20,000 $20,000 $0 $20,000 $0 Legal: Organization of Partnership $20,000 $20,000 $0 $20,000 $0 Legal: Syndication $40,000 $40,000 $0 $40,000 s0 Title/Retarding/Escrow - Acquisition $20,000 $20,000 $0 $20,000 $0 Title/Recording/Escrow - Construction $20,000 $20,000 $20,000 $20,000 Cunst. Loan Interest (60% ADS) $633,859 $633,859 $475,394 $158,465 $475,394 Marketing (lease-up, Advertisement, Setup) $40,000 $40,000 $0 $40,000 $0 Lender Construction Inspection $15,000 $15,000 $15,000 ;15,00 Furnishing Excluded from Contract $50,000 $50,000 $0 $50,000 $ $0 Insurance $120,000 $120,000 $90,000 $30,000 $90,000 Real Estate Taxes $84,840 $84,840 $63,630 $21,210 $63,630 TCAC App/Allocation - (Monitoring Fee Below) $76,373 ;76,373 $0 $76,373 $0 Soft Cost Contingency $150,000 $150,000 $150,000 ;150,000 Investor Due Diligence $54,500 $54,500 $0 $54,500 $0 Audit/Cost Certification $30,000 $30,000 $30,000 $30,000 Developer Fee (Overhead) $500,000 $500,000 $500,000 $0 $500,000 Developer Fee(Prorit) $1,500000 $1,500,000 $900,000 $600,000 $0 $900,000 Subtotal Solt Costs $6,013,076 $6,013,076 $4,802,528 $829,500 $131,373 $249,675 $0 $4,802,528 COSTS DEFERRED UNTIL CONVERSION Title/Recording/Escrow - Permanent $10,000 $10,000 $0 $10,000 $0 Operating Reserve $396,600 $396,600 $0 $396,600 $0 Replacement Reserve $66,500 $66,500 $0 $66,500 $0 TCAC Monitoring Fee $28,290 $28,290 $0 $28,290 $0 Subtotal Deferred Costs $501,390 $501,390 $0 $463,100 $38,290 $0 $0 $0 FINANCING COSTS Constr. Lender Orig. Fees $176,072 $176,072 $176,072 $176,072 Constr. Lender Expense $60,000 $60,000 ;60,000 $60,000 Constr. Lender Legal $45,000 ;45,000 $45,000 $45,00 Perm Lender Orig. Fees $43,704 $93,704 $0 $43,704 $ $0 Perm Lender Legal s25,000 $25,000 $0 $25,000 $0 Subtotal Financing Costs $349,776 $349,776 $281,072 $0 $58,704 $0 $0 $281,072 TOTAL DEVELOPMENT COST $26,287,358 $26,2HJ,358 $20,420,350 $5,378,966 $238,367 ;249,675 $0 $20,420,350 Costs do not assume payment of Davis Bacon wages. File: 130726_N Harbor pff 80A-139 Exhibit "F" Scope of Work SCOPE OF DEVELOPMENT The proposed project will consists of the construction of an affordable, multifamily rental project comprised of 70 units, 3,000 sf community room. The site is located at 803-815 N. Harbor Boulevard. The development will be constructed on approximately 2.26 acres (131,916 s.f) and will have 49 two-bedroom units and 21 three bedroom units. Ten percent of the units (or 7 units) will be rented to, extremely low income families with household incomes at or below 30% of the A 41(Area Median Income), 42 units will be rented to very low income families with household incomes at or below 50% of AMI, and 20 units will be rented to families with household incomes at or below 60%. The one remaining unit will be designated as a manager's unit. The building will be a podium design with contemporary architecture. The property will feature gated pedestrian and auto access, tot lot, onsite laundry facilities, community room, leasing office, shaded courtyards, and raised planters. The units shall incorporate design elements and building, practices that will reduce the maintenance and utility costs and also reduce the adverse environmental impacts otherwise associated with residential construction. Such design elements and practices may include, but are not limited to environmentally sensitive landscaping, installation of energy efficient furnaces and water heaters (Energy Star Appliances), and installation of high efficiency toilets. The Project will be fully landscaped including irrigation. Landscape materials 'will be low maintenance and drought resistant. Landscaping All areas of the Site that are not occupied by buildings, driveways, walkways, and parking shall be landscaped and maintained. Landscaping may consist of grass lawns, groundcovers, shrubs, trees, decorative block walls, screenings, and terraces' as reasonably approved by the Planning Department. A permanent water sprinkler system shall be provided in all landscaped areas to insure proper maintenance. Refuse An enclosed refuse area or areas shall be provided at locations in accordance with the requirements of the City of Santa Ana. Refuse areas shall be designed with building materials compatible with those used for the other structures on the site. Utilities Developer shall be responsible for all utility relocation or installations on the premises; and hookups to sewers, drains, water and gas distribution lines, electric, telephone, and telegraph lines; and for hookup to all other public utility lines. All utility services on-side shall be installed 82 80A-140 underground or concealed within buildings and no mechanical equipment or meters shall be exposed at ground level as required by the Santa Ana Municipal Code. Public Improvements Developer, at its sole cost and expense, including costs of design plans and specifications, shall construct all on-and off-site improvements required for the premises all in accordance with technical specifications, standards and practices of the City of Santa Ana. 83 80A-141 Exhibit "G" Schedule of Performance Proposed Development Schedule Event Start Date Finance, Economic Development and Technology 8/8/13 Committee Housing Commission 9/3/13 City Council 9/16/13 Site Acquired 10/22/13 Begin Entitlements 11/2013 City Staff Approval of Entitlements 6/2014 9% Tax Credit Application 7/2014 9% Tax Credit Award 10/2014 Begin Construction Documents 10/2014 Construction Financing Secured 11/2014 Tax Credit Investor Secured 11/2014 Begin Construction/Building Permit issued 3/2015 Construction Completed 12/2016 Project Fully Leased 3/2017 84 80A-142 Exhibit "H" Target Area Map 85 80A-143 a 13 tl3aOA N t P a0 Natld Ollla ^ I d 0 pop e3 w1 p o U is 30oiaewvo ay i ^ tl N 2P nv anvae .? is n3ssvlo ?o AV NIOJNII J?0 ^ n aatlobbis <'t' S ^ 8 ' + is w vw ¢ AtlhWVObO k 1 a3M0 lf 13 l! 3 13 b3M° E ^ ^ O 1 is is lolsiae " is lols'ee ab \ 1LIYb is w0 p \ a_ ^ ^ 1 p ^ ` 15 M3lnaltlj ??P?P s 3 F O ? o As 1 inairrd ^ CL e ? m m m p ebb w a?aes m m W ? ame aoebv ame aoeaNa '^ ^ + ? v m +, q 2 °' m T L v ? n m 153dOHM3N ? K rn M ° M o 0 06 c N N N a d a CO a Z z ? o 0 0 Exhibit "I" Vicinity Hiring Report VICINITY HIRING REPORT Job/Position Dates Advertising Location Available/Posted Medium 86 80A-145 EXHIBIT 6 OMB Approval No. 2577-0169 (exp. 04130/2014) This agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless that collection displays a valid OMB control number. Assurances of confidentiality are not provided under this collection. 1.1 Parties This Agreement to Enter into Housing Assistance Payments Contract ("Agreement") is entered into between: Housing Authority of the City of Santa Ana ("PHA") and 815 N Harbor, LP 1.2 Purpose The owner agrees to develop the Housing Assistance Payments Contract ("HAP contract") units to in accordance with Exhibit B to comply with Housing Quality Standards ("HQS"), and the PHA agrees that, upon timely completion of such development in accordance with the terms of the Agreement, the PHA will enter into a HAP contract with the owner of the contract units. 1.3 Contents of Agreement This Agreement consists of Part I, Part II and the following Exhibits: EXHIBIT A: The approved owner's PBV proposal. (Selection of proposals must be in accordance with 24 CFR 983.5 1.) Page 1 of 17 HUD 52531A Agreement, Part I of 2 Previous Editions are obsolete ("owner"). Project-based Voucher Program 80A-146 EXHIBIT B: Description of work to be performed under this Agreement, including: • if the Agreement is for rehabilitation of units, this exhibit must include the rehabilitation work write-up and, where the PHA has determined necessary, specifications and plans. • if the Agreement is for new construction of units, the work description must include the working drawings and specifications. • any additional requirements beyond HQS relating to quality, design and architecture that the PHA requires. • work items resulting from compliance with the design and construction requirements of the Fair Housing Act and implementing regulations at 24 CFR 100.205 and the accessibility requirements under section 504 of the Rehabilitation Act of 1973 and implementing regulations at 24 CFR 8.22 and 8.23. EXHIBIT C: Description of housing, including: • project site. • total number of units in project covered by this Agreement. • location of contract units on site. • number of contract units by area (size) and number of bedrooms and bathrooms. • services, maintenance, or equipment to be supplied by the owner without charges in addition to the rent to owner. • utilities available to the contract units, including a specification of utility services to be paid by owner (without charges in addition to rent) and utility services to be paid by the tenant. • estimated initial rent to owner for the contract units. EXHIBIT D: The HAP contract. 1.4 Significant Dates A. Effective Date of the Agreement: The Agreement must be executed promptly after PHA notice of proposal selection to the owner has been given. The PHA may not enter this Agreement with the owner until any required subsidy layering review has been performed and an environmental review has been satisfactorily completed in accordance with HUD requirements. B. A project may either be a single-stage or multi-stage project. A single- stage project will have the same Agreement effective date for all contract units. A multi-stage project will have separate effective dates for each stage. Page 2 of 17 HUD 52531 A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-147 7 Single-stage project i. Effective Date for all contract units: ii. Date of Commencement of the Work: The date for commencement of work is not later than calendar days after the effective date of this Agreement. iii. Time for Completion of Work: The date for completion of the work is not later than calendar days after the effective date of this Agreement. 0 Multi-Stage Project Enter the information for each stage upon execution of the Agreement for the corresponding stage. STAGE NUMBER OF UNITS EFFECTIVE DATE DATE OF COMMENCEMENT OF WORK TIME FOR COMPLETION OF WORK 1.5 Nature of the Work This Agreement is for New Construction of units to be assisted by the project-based voucher program. Q This Agreement is for Rehabilitation of units to be assisted by the project-based voucher program. Page 3 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-148 1.6 Schedule of Completion A. Timely Performance of Work: The owner agrees to begin work no later than the date for commencement of work as stated in section 1.4. In the event the work is not commenced, diligently continued and completed as required under this Agreement, the PHA may terminate this Agreement or take other appropriate action. The owner agrees to report promptly to the PHA the date work is commenced and furnish the PHA with progress reports as required by the PHA. B. Time for Completion: All work must be completed no later than the end of the period stated in section 1.4. Where completion in stages is provided for, work related to units included in each stage shall be completed by the stage completion date and all work on all stages must be completed no later than the end of the period stated in section 1.4. C. Delays: If there is a delay in the completion due to unforeseen factors beyond the owner's control as determined by the PHA, the PHA agrees to extend the time for completion for an appropriate period as determined by the PHA in accordance with HUD requirements. 1.7 Changes in Work A. The owner must obtain prior PHA approval for any change from the work specified in Exhibit B which would alter the design or quality of the rehabilitation or construction. The PHA is not required to approve any changes requested by the owner. PHA approval of any change may be conditioned on establishment of a lower initial rent to owner as determined by PHA in accordance with HUD requirements. B. If the owner makes any changes in the work without prior PHA approval, the PHA may establish lower initial rents to owner as determined by the PHA in accordance with HUD requirements. C. The PHA may inspect the work during rehabilitation or construction to ensure that work is proceeding on schedule, is being accomplished in accordance with the terms of the Agreement, meets the level of material described in Exhibit B and meets typical levels of workmanship for the area. Page 4 of 17 HUD 52531A Agreement, Part I of 2 Previous Editions are obsolete Project-based Voucher Program 80A-149 1.8 Work Completion A. Conformance with Exhibit B: The work must be completed in accordance with Exhibit B. The owner is solely responsible for completion of the work. B. Evidence of Completion: When the work in completed, the owner must provide the PHA with the following: 1. A certification by the owner that the work has been completed in accordance with the HQS and all requirements of this Agreement. 2. A certification by the owner that the owner has complied with labor standards and equal opportunity requirements in the development of the housing. (See 24 CFR 983.155 (b)(1)(ii).) Additional Evidence of Completion: At the discretion of the PHA, or as required by HUD, the owner may be required to submit additional documentation as evidence of completion of the housing. Check the following that apply: Q A certificate of occupancy or other evidence that the contract units comply with local requirements. J7 An architect or developer's certification that the housing complies with: the HQS; State, local or other building codes; Zoning; The rehabilitation work write-up for rehabilitated housing; The work description for newly constructed housing; or Any additional design or quality requirements pursuant to this Agreement. Page 5 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-150 1.9 Inspection and Acceptance by the PHA of Completed Contract Units A. Completion of Contract Units: Upon receipt of owner notice of completion of contract units, the PHA shall take the following steps: 1. Review all evidence of completion submitted by owner. 2. Inspect the units to determine if the housing has been completed in accordance with this Agreement, including compliance with the HQS and any additional requirements imposed by the PHA under this Agreement. B. Non-Acceptance: If the PHA determines the work has not been completed in accordance with this Agreement, including non-compliance with the HQS, the PHA shall promptly notify the owner of this decision and the reasons for the non- acceptance. The parties must not enter into the HAP contract at this point. However, work deficiencies may be corrected in accordance with Section 1.10 of this Agreement. C. Acceptance: If the PHA determines that the work has been completed in accordance with this Agreement, and that the owner has submitted all required evidence of completion, the PHA must submit the HAP contract for execution by the owner and must then execute the HAP contract. 1.10 Acceptance Where Work Deficiencies Exist A. If the PHA determines that work deficiencies exist, the PHA shall determine whether and to what extent the deficiencies are correctable, whether the units will be accepted after correction of the deficiencies, and the requirements and procedures (consistent with HUD requirements) for such correction and acceptance of contract units. The PHA shall notify the owner of the PHA's decision. B. Completion in Stages: When the units will be completed in stages, the procedures of this section shall apply to each stage. 1.11 Execution of HAP Contract A. Time and Execution: Upon acceptance of the units by the PHA, the owner and the PHA execute the HAP contract. Page 6 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-151 B. Completion in Stages: When the units will be completed in stages, the number and types of units in each stage, and the initial rents to owner for such units, shall be separately shown in the HAP contract for each stage. Upon acceptance of the first stage, the owner shall execute the HAP contract and the signature block provided in the HAP contract for that stage. Upon acceptance of each subsequent stage, the owner shall execute the signature block provided in the HAP contract for such stage. C. Form of HAP contract: The terms of the HAP contract shall be provided in Exhibit D of this Agreement. There shall be no change in the terms of the HAP contract unless such change is approved by HUD headquarters. Prior to execution by the owner, all blank spaces in the HAP contract shall be completed by the PHA. D. Survival of Owner Obligations: Even after execution of the HAP contract, the owner shall continue to be bound by all owner obligations under the Agreement. 1.12 Initial Determination of Rents A. The estimated initial rent to owner shall be established in Exhibit C of this Agreement. B. The initial rent to owner is established at the beginning of the HAP contract term. C. The estimated and initial contract rents for each unit may in no event exceed the amount authorized in accordance with HUD requirements. Where the estimated or the initial rent to owner exceeds the amount authorized under HUD requirements, the PHA shall establish a lower estimated or initial rent to owner (as applicable), in accordance with HUD requirements. 1.13 Uniform Relocation Act A. A displaced person must be provided relocation assistance at the levels described in and in accordance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4201- 4655) and implementing regulations at 49 CFR part 24. B. The cost of required relocation assistance may be paid with funds provided by the owner, or with local public funds, or with funds available from other sources. Payment of relocation assistance must be in accordance with HUD requirements. Page 7 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-152 C The acquisition of real property for a project to be assisted under the project- based voucher program is subject to the URA and 49 CFR part 24, subpart B. D. The PHA must require the owner to comply with the URA and 49 CFR part 24. E. In computing a replacement housing payment to a residential tenant displaced as a direct result of privately undertaken rehabilitation or demolition of the real property, the term "initiation of negotiations" means the execution of the Agreement between the owner and the PHA. 1.14 Protection of In-Place Families A. In order to minimize displacement of in-place families, if a unit to be placed under HAP contract is occupied by an eligible family on the proposal selection date, the in-place family must be placed on the PHA's waiting list (if it is not already on the list) and, once its continued eligibility is determined, given an absolute selection preference and referred to the project owner for an appropriately sized unit in the project. B. This protection does not apply to families that are not eligible to participate in the program on the proposal selection date. C. The term "in-place family" means an eligible family residing in a proposed contract unit on the proposal selection date. D. Assistance to in-place families may only be provided in accordance with HUD requirements. 1.15 Termination of Agreement and HAP Contract The Agreement or HAP contract may be terminated upon at least 30 days notice to the owner by the PHA or HUD if the PHA or HUD determines that the contract units were not eligible for selection in conformity with HUD requirements. 1.16 Rights of HUD if PHA Defaults Under Agreement If HUD determines that the PHA has failed to comply with this Agreement, or has failed to take appropriate action, to HUD's satisfaction or as directed by HUD, for enforcement of the PHA's rights under this Agreement, HUD may assume the PHA's rights and obligations under the Agreement, and may perform the obligations and enforce the rights of the PHA under the Agreement. HUD will, if it determines that the owner is not in Page 8 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-153 default, pay annual contributions for the purpose of providing housing assistance payments with respect to the dwelling unit(s) under this Agreement for the duration of the HAP contract. 1.17 Owner Default and PHA Remedies A. Owner Default Any of the following is a default by the owner under the Agreement: I. The owner has failed to comply with any obligation under the Agreement. 2. The owner has violated any obligation under any other housing assistance payments contract under Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f). 3. The owner has committed any fraud or made any false statement to the PHA or HUD in connection with the Agreement. 4. The owner has committed fraud, bribery or any other corrupt or criminal act in connection with any Federal housing assistance program. 5. If the property where the contract units are located is subject to a lien or security interest securing a HUD loan or a mortgage insured by HUD and: A. The owner has failed to comply with the regulations for the applicable mortgage insurance or loan program, with the mortgage or mortgage note, or with the regulatory agreement; or B. The owner has committed fraud, bribery or any other corrupt or criminal act in connection with the HUD loan or HUD-insured mortgage. 6. The owner has engaged in any drug-related criminal activity or any violent criminal activity. B. PHA Remedies If the PHA determines that a breach has occurred, the PHA may exercise any of its rights or remedies under the Agreement. Page 9 of 17 HUD 52531 A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-1 54 2. The PHA must notify the owner in writing of such determination. The notice by the PHA to the owner may require the owner to take corrective action (as verified by the PHA) by a time prescribed in the notice. 3. The PHA's rights and remedies under the Agreement include, but are not limited to: (i) terminating the Agreement; and (ii) declining to execute the HAP contract for some or all of the units. C. PHA Remedy is not Waived The PHA's exercise or non-exercise of any remedy for owner breach of the Agreement is not a waiver of the right to exercise that remedy or any other right or remedy at any time. 1.18 PHA and Owner Relation to Third Parties A. Selection and Performance of Contractor 1. The PHA has not assumed any responsibility or liability to the owner, or any other party for performance of any contractor, subcontractor or supplier, whether or not listed by the PHA as a qualified contractor or supplier under the program. The selection of a contractor, subcontractor or supplier is the sole responsibility of the owner and the PHA is not involved in any relationship between the owner and any contractor, subcontractor or supplier. 2. The owner must select a competent contractor to undertake rehabilitation or construction. The owner agrees to require from each prospective contractor a certification that neither the contractor nor its principals is presently debarred, suspended, proposed for debarment, declared ineligible, or otherwise excluded from participation in contracts by any Federal department or agency or the Comptroller General. The owner agrees not to award contracts to, otherwise engage in the service of, or fund any contractor that does not provide this certification. B. Injury Resulting from Work under the Agreement: The PHA has not assumed any responsibility for or liability to any person, including a worker or a resident of the unit undergoing work pursuant to this Agreement, injured as a result of the work or as a result of any other action or failure to act by the owner, or any contractor, subcontractor or supplier. Page 10 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-155 C. Legal Relationship: The owner is not the agent of the PHA and this Agreement does not create or affect any relationship between the PHA and any lender to the owner or any suppliers, employees, contractor or subcontractors used by the owner in the implementation of the Agreement. D. Exclusion of Third Party Claims: Nothing in this Agreement shall be construed as creating any right of any third party (other than HUD) to enforce any provision of this Agreement or the HAP contract, or to assert any claim against HUD, the PHA or the owner under the Agreement or the HAP contract. E. Exclusion of Owner Claims against HUD: Nothing in this Agreement shall be construed as creating any right of the owner to assert any claim against HUD. 1.19 PHA-Owned Units Notwithstanding Section 1.18 of this Agreement, a PHA may own units assisted under the project-based voucher program, subject to the special requirements in 24 CFR 983.59 regarding PHA-owned units. 1.20 Conflict of Interest A. Interest of Members, Officers, or Employees of PHA, Members of Local Governing Body, or Other Public Officials No present or former member or officer of the PHA (except tenant- commissioners), no employee of the PHA who formulates policy or influences decisions with respect to the housing choice voucher program or project-based voucher program, and no public official or member of a governing body or State or local legislator who exercises functions or responsibilities with respect to these programs, shall have any direct or indirect interest, during his or her tenure or for one year thereafter, in the Agreement or HAP contract. 2. HUD may waive this provision for good cause. B. Disclosure The owner has disclosed to the PHA any interest that would be a violation of the Agreement or HAP contract. The owner must fully and promptly update such disclosures. Page 1 I of 17 HUD 52531A Agreement, Part I of 2 Previous Editions are obsolete Project-based Voucher Program 80A-1 56 1.21 Interest of Member or Delegate to Congress No member of or delegate to the Congress of the United States of America or resident- commissioner shall be admitted to any share or part of the Agreement or HAP contract or to any benefits arising from the Agreement or HAP contract. 1.22 Transfer of the Agreement, HAP Contract or Property A. PHA Consent to Transfer The owner agrees that the owner has not made and will not make any transfer in any form, including any sale or assignment, of the Agreement, HAP contract or the property without the prior written consent of the PHA. A change in ownership in the owner, such as a stock transfer or transfer of the interest of a limited partner, is not subject to the provisions of this section. Transfer of the interest of a general partner is subject to the provisions of this section. B. Procedure for PHA Acceptance of Transferee Where the owner requests the consent of the PHA for a transfer in any form, including any sale or assignment, of the Agreement, the HAP contract or the property, the PHA must consent to a transfer of the Agreement or HAP contract if the transferee agrees in writing (in a form acceptable to the PHA) to comply with all the terms of the Agreement and HAP contract, and if the transferee is acceptable to the PHA. The PHA's criteria for acceptance of the transferee must be in accordance with HUD requirements. C. When Transfer is Prohibited The PHA will not consent to the transfer if any transferee, or any principal or interested party is debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424, or is listed on the U.S. General Services Administration list of parties excluded from Federal procurement or nonprocurement programs. 1.23 Exclusion from Federal Programs A. Federal Requirements The owner must comply with and is subject to requirements of 2 CFR part 2424. Page 12 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-157 B. Disclosure The owner certifies that: The owner has disclosed to the PHA the identity of the owner and any principal or interested party. 2. Neither the owner nor any principal or interested party is listed on the U.S. General Services Administration list of parties excluded from Federal procurement and nonprocurement programs; and none of such parties are debarred, suspended, subject to a limited denial of participation or otherwise excluded under 2 CFR part 2424. 1.24 Lobbying Certifications A. The owner certifies, to the best of owner's knowledge and belief, that: No Federally appropriated funds have been paid or will be paid, by or on behalf of the owner, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of the Agreement or HAP contract, or the extension, continuation, renewal, amendment, or modification of the HAP contract. 2. If any funds other than Federally appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the Agreement or HAP contract, the owner must complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions. B. This certification by the owner is a prerequisite for making or entering into this transaction imposed by 31 U.S.C. 1352. Page 13 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-158 1.25 Subsidy Layering A. Owner Disclosure The owner must disclose to the PHA, in accordance with HUD requirements, information regarding any related assistance from the Federal Government, a State, or a unit of general local government, or any agency or instrumentality thereof, that is made available or is expected to be made available with respect to the contract units. Such related assistance includes, but is not limited to, any loan, grant, guarantee, insurance, payment, rebate, subsidy, credit, tax benefit, or any other form of direct or indirect assistance. B. Limit of Payments Housing assistance payments under the HAP contract must not be more than is necessary, as determined in accordance with HUD requirements, to provide affordable housing after taking account of such related assistance. The PHA will adjust in accordance with HUD requirements the amount of the housing assistance payments to the owner to compensate in whole or in part for such related assistance. 1.26 Prohibition of Discrimination A. The owner may not refuse to lease contract units to, or otherwise discriminate against, any person or family in leasing of a contract unit, because of race, color, religion, sex, national origin, disability, age or familial status. B. The owner must comply with the following requirements: The Fair Housing Act (42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et seq. ; Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1959- 1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107; title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1; the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CPR part 146; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at part 8 of this title; title 11 of the Americans with Disabilities Act, 42 U.S.C. 12101 et seq. ; 24 CFR part 8; section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations at 24 CFR part 135; Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964- Page 14 of 17 HUD 52531 A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-159 1965 Comp., p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 1966-1970 Comp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and implementing regulations at 41 CFR chapter 60; Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women's Business Enterprise). C. The PHA and the owner must cooperate with HUD in the conducting of compliance reviews and complaint investigations pursuant to all applicable civil rights statutes, Executive Orders, and all related rules and regulations. 1.27 PHA and HUD Access to Premises and Owner Records A. The owner must furnish any information pertinent to this Agreement as may be reasonably required from time to time by the PHA or HUD. The owner shall furnish such information in the form and manner required by the PHA or HUD. B. The owner must permit the PHA or HUD or any of their authorized representatives to have access to the premises during normal business hours and, for the purpose of audit and examination, to have access to any books, documents, papers and records of the owner to the extent necessary to determine compliance with the Agreement. 1.28 Notices and Owner Certifications A. Where the owner is required to give any notice to the PHA pursuant to this Agreement, such notice shall be in writing and shall be given in the manner designated by the PHA. B. Any certification or warranty by the owner pursuant to the Agreement shall be deemed a material representation of fact upon which reliance was placed when this transaction was entered into. Page 15 of 17 HUD 52531A Agreement, Part 1 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-160 1.29 HUD Requirements A. The Agreement and the HAP contract shall be interpreted and implemented in accordance with all statutory requirements, and with all HUD requirements, including amendments or changes in HUD requirements. The owner agrees to comply with all such laws and HUD requirements B. HUD requirements are requirements that apply to the project-based voucher program. HUD requirements are issued by HUD Headquarters as regulations, Federal Register notices or other binding program directives. 1.30 Applicability of Part II provisions - Check all that apply Training, Employment and Contracting Opportunities Section 2.1 applies if the total of the contract rents for all units under the proposed HAP contract, over the maximum term of the contract, is more than $200,000. D Equal Employment Opportunity Section 2.2 only applies to construction contracts of more than $10,000. ?x Labor Standards Requirements Sections 2.4, 2.8 and 2.10 apply when this Agreement covers nine or more units. ? Flood Insurance Section 2.11 applies if units are located in areas having special flood hazards and in which flood insurance is available under the National Flood Insurance Program. Page 16 of 17 HUD 52531A Agreement, Part I of 2 Previous Editions are obsolete Project-based Voucher Program 80A-161 EXECUTION OF THE AGREEMENT PUBLIC HOUSING AGENCY Name (Print) Housing Authority of the City of Santa Ana Bv: Signature of Authorized Representative Official title (Print): OWNER Name (Print) 815 N Harbor, LP By: Signature of Authorized Representative Official Title (Print): Date: Page 17 of 17 HUD 52531A Agreement, Part 1 oft Previous Editions are obsolete Project-based Voucher Program 80A-162 OMB Approval No. 2577-0169 (exp. 04/30/2014) 2.1 Training, Employment and Contracting (a) The project assisted under this Agreement is subject to the requirements of section 3 of the Housing Urban Development Act of 1968, as amended, 12 U.S.C. 1701u. The owner shall carry out the provisions of section 3 and the regulations issued by HUD as set forth in 24 CFR part 135 and all applicable rules and orders of HUD issued thereunder prior to the execution of this Agreement. This shall be a condition of the Federal financial assistance provided to the project, binding upon the owner, the owner's contractors and subcontractors, successors and assigns. Failure to fulfill these requirements shall subject the owner, the owner's contractors and subcontractors, successors and assigns to the sanctions specified by this Agreement, and to such sanctions as are specified by 24 CFR part 135. (b) The owner shall incorporate or cause to be incorporated into any contract or subcontract for work pursuant to this Agreement in excess of $100,000 the following clause: (1) The work to be performed under this contract is subject to the requirements of section 3 of the Housing Urban Development Act of 1968, as amended, 12 U.S.C. 1701u. 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, particularly persons who are recipients of HUD assistance for housing. Page 1 of 15 HUD 52531 B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-163 This agency may not conduct or sponsor, and a person is not required to respond toga collection of information unless that collection displays a valid OMB control number. Assurances of confidentiality are not provided under this collection. (2) The parties to this Agreement agree to comply with HUD's regulations in 24 CFR part 135, which implement section 3. As evidenced by their execution of this Agreement, the parties to this Agreement certify that they are under no contractual or other impediment that would prevent them from complying with the part 135 regulations. (3) 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 the notice 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, and shall set forth minimum number and job titles subject to hire, availability of apprenticeship and training positions, the qualifications for each; the name and location of the person(s) taking applications for each of the positions; and the anticipated date the work shall begin. (4) The contractor agrees to include this section 3 clause in every subcontract subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR part 135. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 CFR part 135. (5) The contractor will certify that any vacant employment positions, including training positions, that are filled (1) after the contractor is selected but before the contract is executed, and (2) 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. (6) Noncompliance with HUD's regulations in 24 CFR part 135 may result in sanctions, termination of this Agreement for default, and debarment or suspension from future HUD assisted contracts. (7) With respect to work performed in connection with section 3 covered Indian housing assistance, section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 405e) also applies to the work to be performed under this contract. Section 7(b) requires that to the greatest extent feasible: (i) preference and opportunities for training and employment shall be given to Page 2 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-164 Indians, and (ii) preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprise. Parties to this contract that are subject to the provisions of section 3 and section 7(b) agree to comply with section 3 to the maximum extent feasible, but not in derogation of compliance with section 7(b). 2 EQUAL EMPLOYMENT OPPORTUNIT (a) The owner shall incorporate or cause to be incorporated into any contract in excess of $10,000 for construction work, or modification thereof, as defined in the regulations of the Secretary of Labor at 41 CFR chapter 60, which is to be performed pursuant to this Agreement, the following nondiscrimination clause: During the performance of this contract, the contractor agrees as follows: (1) The contractor will not discriminate against any employee or applicant for employment because of race, color, creed, religion, sex, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, creed, sex, or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoffs or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination clause. (2) The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, creed, sex, or national origin. (3) The contractor will send to each labor union or representative of workers with which the contractor has a collective bargaining agreement or other contract or understanding, a notice to be provided by or at the direction of the Government advising the labor union or workers representative of the contractor's commitments under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. Page 3 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-165 (4) The contractor of will comply with all provisions of Executive Order No. 11246 of September 24, 1965, and with the rules, regulations, and relevant orders of the Secretary of Labor. (5) The contractor will furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to its books, records, and accounts by HUD and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations and orders. (6) In the event of the contractor's noncompliance with the nondiscrimination clauses of this contract or with any of the rules, regulations, or orders, the contract may be canceled, terminated, or suspended in whole or in part and the contractor may be declared ineligible for further contracts in accordance with procedures authorized in Executive Order No. 11246 of September 24, 1965, and such other sanctions as may be imported and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor or as otherwise provided by law. (7) The contractor will include the provisions of paragraphs (1) through (7) in every subcontract or purchase order unless exempted by the rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order No. 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The contractor wilt take such action with respect to any subcontract or purchase order as the Government may direct as a means of enforcing such provisions including sanctions for noncompliance; provided, however, that in the event a contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the Government, the contractor may request the United States to enter into such litigation to protect the interest of the United States. (b) The owner agrees to be bound by the above nondiscrimination clause with respect to his or her own employment practices when participating in federally assisted construction work. (c) The owner agrees to assist and cooperate actively with HUD and the Secretary of Labor in obtaining the compliance of contractors and subcontractors with the nondiscrimination clause and the rules, regulations, and relevant orders of the Secretary of Labor, to furnish HUD and the Secretary of Labor such information Page 4 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-166 as they may require for the supervision of such compliance, and to otherwise assist HUD in the discharge of HUD's primary responsibility for securing compliance. (d) The owner further agrees to refrain from entering into any contract or contract modification subject to Executive Order No. 11246 of September 24, 1965, with a contractor debarred from, or who has not demonstrated eligibility for, Government contracts and federally assisted construction contracts pursuant to the Executive Order and will carry out such sanctions and penalties for violation of the nondiscrimination clause as may be imposed upon contractors and subcontractors by HUD or the Secretary of Labor pursuant to the Executive Order. In addition, if the owner fails or refuses to comply with these undertakings, HUD may take any or all of the following actions; cancel, terminate, or suspend in whole or in part this Agreement; refrain from extending any further assistance to the owner under the program with respect to which the failure or refusal occurred until satisfactory assurance of future compliance has been received from the owner, and refer the case to the Department of Justice for appropriate legal proceedings. 3 RESERVED 4 HUD-FEDERAL LABOR STANDARDS PROVISIONS The owner is responsible for inserting the entire text of section 2.4 of this Agreement in all construction contracts and, if the owner performs any rehabilitation work on the project, the owner must comply with all provisions of section 2.4. (Note: Sections 2.4(b) and (c) apply only when the amount of the prime contract exceeds $100,000.) (a)(1)(i) Minimum Wages. All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project) will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made part hereof regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. Contributions made or costs reasonably anticipated for bona fide fringe benefits under section 1(b)(2) of the Davis-Bacon Act on behalf of laborers or Page 5 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-167 mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of 29 CFR 5.5(a)(1)(iv); also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs, which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly period. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as provided in 29 CFR 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein: Provided, That the employer's payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination (including any additional classification and wage rates conformed under 29 CFR 5.5(a)(1)(ii) and the Davis-Bacon poster (WH-1321)) shall be posted at all times by the contractor and its subcontractors at the site of the work in a prominent and accessible place where it can be easily seen by the workers. (ii)(A) Any class of laborers or mechanics which is not listed in the wage determination and which is to be employed under the contract shall be classified in conformance with the wage determination. HUD shall approve an additional classification and wage rate and fringe benefits therefore only when the following criteria have been met: (1) The work to be performed by the classification requested is not performed by a classification in the wage determination; (2) The classification is utilized in the area by the construction industry; and (3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination. (B) If the contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and HUD or its designee agree on the classification and wage rate (including the amount designated for fringe benefits where appropriate), a report of the action taken shall be sent by HUD or its designee to the Administrator of the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Washington, D. C. 20210. The Administrator, or an authorized representative, will approve, modify, or disapprove every additional classification action within 30 days of receipt and so advise HUD or its designee or will notify HUD or its designee within the 30-day period that additional time is necessary. Page 6 of 15 HUD 52531 B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-168 (C) In the event the contractor, the laborers or mechanics to be employed in the classification or their representatives, and HUD or its designee do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), HUD or its designee shall refer the questions, including the views of all interested parties and the recommendation of HUD or its designee, to the Administrator for determination. The Administrator, or an authorized representative, will issue a determination within the 30 days of receipt and so advise HUD or its designee or will notify HUD or its designee within 30-day period that additional time is necessary. (D) The wage rate (including fringe benefits where appropriate) determined pursuant to subparagraphs (1)(B) or (C) of this paragraph, shall be paid to all workers performing work in the classification under this contract from the first day on which work is performed in the classification. (iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor shall either pay the benefit as stated in the wage determinations or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof. (iv) If the contractor does not make payments to a trustee or other third person, the contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program: Provided, That the Secretary of Labor has found, upon the written request of the contractor, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of Labor may require the contractor to set aside in a separate account assets for the meeting of obligations under the plan or program. (2) Withholding. HUD or its designee shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld from the contractors under this contract or any other Federal contract with the same prime contractor, or any other Federally-assisted contract subject to Davis-Bacon prevailing wage requirements, which is held by the same prime contractor so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees and helpers, employed by the contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee or helper, employed or working on the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), all or part of the wages required by the contract, HUD or its designee may, after written notice to the contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such Page 7 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-169 violations have ceased. HUD or its designee may, after written notice to the contractor, disburse such amounts withheld for and on account of the contractor or subcontractor to the respective employees to whom they are due. (3)(i) Payrolls and Basic Records. Payrolls and basic records relating thereto shall be maintained by the contractor during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work (or under the United States Housing Act of 1937, or under the Housing Act of 1949, in the construction or development of the project). Such records shall contain the name, address, and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in section l(b)(2)(B) of the Davis-Bacon Act), daily and weekly number of hours worked, deductions made and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5 (a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in section 1(b)(2)(B) of the Davis-Bacon Act, the contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual cost incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. (ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to HUD or its designee if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to HUD or its designee. The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i). This information may be submitted in any form desired. Optional Form WH-347 is available for this purpose and may be purchased from the Superintendent of Documents (Federal Stock Number 029-005-00014-1), U.S. Government Printing Office, Washington, DC 20402. The prime contractor is responsible for the submission of copies of payrolls by all subcontractors. (B) Each payroll submitted shall be accompanied by a "Statement of Compliance," signed by the contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract and shall certify the following: Page 8 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-170 (1) That the payroll for the payroll period contains the information required to be maintained under 29 CFR 5.5 (a)(3)(i) and that such information is correct and complete; (2) That each laborer or mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in 29 CFR part 3; (3) That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract. (C) The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH-347 shall satisfy the requirement for submission of the "Statement of Compliance" required by paragraph (a)(3)(ii)(B) of this section. (D) The falsification of any of the above certifications may subject the contractor or subcontractor to civil or criminal prosecution under section 1001 of Title 18 and section 231 of Title 31 of the United States Code. (iii) The contractor or subcontractor shall make the records required under paragraph (a)(3)(i) of this section available for inspection, copying, or transcription by authorized representatives of HUD or its designee or the Department of Labor, and shall permit such representatives to interview employees during working hours on the job. If the contractor or subcontractor fails to submit the required records or to make them available, HUD or its designee may, after written notice to the contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds. Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 CFR 5.12. (4)(i) Apprentices and Trainees. Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Bureau of Apprenticeship and Training, or with a State Apprenticeship Agency recognized by the Bureau, or if a person is employed in his or her first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been certified by the Bureau of Apprenticeship and Training or a State Apprenticeship Agency (where appropriate) to be eligible for probationary Page 9 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-171 employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the contractor as to the entire work force under the registered program. Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. Where a contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeymen's hourly rate) specified in the contractor's or subcontractor's registered program shall be observed. Every apprentice must be paid at not less than the rate specified in the registered program for the apprentice's level of progress, expressed as a percentage of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. In the event the Bureau of Apprenticeship and Training, or a State Apprenticeship Agency recognized by the Bureau, withdraws approval of an apprenticeship program, the contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (ii) Trainees. Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U.S. Department of Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified in the approved program for the trainee's level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour Division determines that there is an apprenticeship program associated with the corresponding journeyman wage rate on the wage determination which provides for less than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee 10 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-172 rate who is not registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Employment and Training Administration withdraws approval of a program, the contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (iii) Equal Employment Opportunity. The utilization of apprentices, trainees and journeymen under this part shall be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended, and 29 CFR part 30. (5) Compliance with Copeland Act Requirements. The contractor shall comply with the requirements of 29 CFR part 3 which are incorporated by reference in this Agreement. (6) Subcontracts. The contractor or subcontractor will insert in any subcontracts the clauses contained in section 2.4(a)(1) through (11) and such other clauses as HUD or its designee may by appropriate instructions require, and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in this section 2.4(a). (7) Contract Terminations; Debarment. A breach of the contract clauses in 29 CFR 5.5 may be grounds for termination of the contract, and for debarment as a contractor and a subcontractor as provided in 29 CFR 5.12. (8) Compliance with Davis-Bacon and Related Act Requirements. All rulings and interpretations of the Davis-Bacon and related Acts contained in 29 CFR parts 1, 3, and 5 are herein incorporated by reference in this contract. (9) Disputes Concerning Labor Standards. Disputes arising out of the labor standards provisions of this contract shall not be subject to the general disputes clause of this contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR parts 5, 6, and 7. Disputes within the meaning of this clause include disputes between the contractor (or any of its subcontractors) and HUD or its designee, the U. S. Department of Labor, or the employees or their representatives. Page 11 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-173 (10)(i) Certification of Eligibility. By entering into this Agreement, the contractor certifies that neither it (nor he or she) nor any person or firm who has an interest in the contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1) or to be awarded HUD contracts or participate in HUD programs pursuant to 24 CFR part 24. (ii) No part of this Agreement shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1) or to be awarded HUD contracts or participate in HUD programs pursuant to 24 CFR part 24. (iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001. Additionally, U.S. Criminal Code, section 1010, Title 18, U.S.C., "Federal Housing Administration transactions, provides in part: "Whoever, for the purpose of ...influencing in any way the action of such Administration ...makes, utters or publishes any statement, knowing the same to be false... shall be fined not more than $5,000 or imprisoned not more than two years, or both." 11. Complaints. Proceedings, or Testimony by Employees. No laborer or mechanic to whom the wage, salary, or other labor standards provisions of this Agreement are applicable shall be discharged or in any other manner discriminated against by the Contractor or any subcontractor because such employee has filed any complaint or instituted or caused to be instituted any proceeding or has testified or is about to testify in any proceeding under or relating to the labor standards applicable under this Agreement to his employer. (b) Contract Work Hours and Safety Standards Act. The provisions of this paragraph (b) are applicable only where the amount of the prime contract exceeds $100,000. As used in this paragraph, the terms "laborers" and "mechanics" include watchmen and guards. (1) Overtime Requirements. No contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek. (2) Violation: Liability for Unpaid Wages; Liquidated Damages. In the event of any violation of the clause set forth in subparagraph (1) of this paragraph, the contractor and any subcontractor responsible therefore shall be liable for the unpaid wages. In addition, such contractor and subcontractor shall be liable to the United States (in the case of work Page 12 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-174 done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in subparagraph (1) of this paragraph, in the sum of $10 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by the clause set forth in subparagraph (1) of this paragraph. (3) Withholding for Unnaid Wages and Liquidated Damages. HUD or its designee shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any monies payable on account of work performed by the contractor or subcontractor under any such contract or any other Federal contract with the same prime contractor, or any other Federally-assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime contractor such sums as may be determined to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in subparagraph (2) of this paragraph. (4) Subcontractors. The contractor or subcontractor shall insert in any subcontracts the clauses set forth in subparagraph (1) through (4) of this paragraph and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in subparagraphs (1) through (4) of this paragraph. (c) Health and Safety. The provisions of this paragraph (c) are applicable only where the amount of the prime contract exceeds $100,000. (1) No laborer or mechanic shall be required to work in surroundings or under working conditions which are unsanitary, hazardous or dangerous to his health and safety as determined under construction safety and health standards promulgated by the Secretary of Labor by regulation. (2) The contractor shall comply with all regulations issue by the Secretary of Labor pursuant to Title 29 part 1926 and failure to comply may result in imposition of sanctions pursuant to the Contract Work Hours and Safety Standards Act, 40 USC 3701 et seq. (3) The contractor shall include the provisions of this paragraph in every subcontract so that such provisions will be binding on each subcontractor. The contractor shall take such action with respect to any subcontract as the Secretary of Housing and Page 13 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-175 Urban Development or the Secretary of Labor shall direct as a means of enforcing such provisions. 2.5-2.7 RESERVED 2.8 WAGE AND CLAIMS ADJUSTMENT The owner shall be responsible for the correction of all violations under section 2.4, including violations committed by other contractors. In cases where there is evidence of underpayment of salaries or wages to any laborers or mechanics (including apprentices and trainees) by the owner or other contractor or a failure by the owner or other contractor to submit payrolls and related reports, the owner shall be required to place an amount in escrow, as determined by HUD sufficient to pay persons employed on the work covered by the Agreement the difference between the salaries or wages actually paid such employees for the total number of hours worked and the full amount of wages required under this Agreement, as well as an amount determined by HUD to be sufficient to satisfy any liability of the owner or other contractor for liquidated damages pursuant to section 2.4. The amounts withheld may be disbursed by HUD for and on account of the owner or other contractor to the respective employees to whom they are due, and to the Federal Government in satisfaction of liquidated damages under section 2.4. 2.9 RESERVE 2.10 EVIDENCE OF UNITS COMPLETION; ESCRO (a) The owner shall evidence the completion of the unit(s) by furnishing the PHA, in addition to the requirements listed in Part I of this Agreement, a certification of compliance with the provisions of sections 2.4 and 2.8 of this Agreement, and that to the best of the owner's knowledge and belief there are no claims of underpayment to laborers or mechanics in alleged violation of these provisions of the Agreement. In the event there are any such pending claims to the knowledge of the owner, the PHA, or HUD, the owner will place a sufficient amount in escrow, as directed by the PHA or HUD, to assure such payments. (b) The escrows required under this section and section 2.8 of shall be paid to HUD, as escrowee, or to an escrowee designated by HUD, and the conditions and manner of releasing such escrows shall be designated and approved by HUD. Page 14 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-176 11 FLOOD INSURANCE If the project is located in an area that has been identified by the Federal Emergency Management Agency as an area having special flood hazards and if the sale of flood insurance has been made available under the National Flood Insurance Program, the owner agrees that: (1) the project will be covered, during the life of the property, by flood insurance in an amount at least equal to its development or project cost (less estimated land cost) or to the limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less; and (2) that it will advise any prospective purchaser or transferee of the property in writing of the continuing statutory requirement to maintain such flood insurance during the life of the property. Page 15 of 15 HUD 52531B Agreement, Part 2 of 2 Previous Editions are obsolete Project-based Voucher Program 80A-177 EXHIBIT 7 OMB Approval No. 2577-0169 (exp. 04/30/2014 U.S. Department Of Housing and Urban Development Office of Public and Indian Housing SECTION 8 PROJECT-BASED VOUCHER PROGRAM PBV HOUSING ASSISTANCE PAYMENTS CONTRACT NEW CONSTRUCTION OR REHABILITATION PART I OF HAP CONTRACT This agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless that collection displays a valid OMB control number. Assurances of confidentiality are not provided under this collection. L CONTRACT INFORMATION a. Parties This housing assistance payments (HAP) contract is entered into between: Housing Authority of the City of Santa Ana (PHA) and 815 N Harbor, LP b. Contents of contract (owner). The HAP contract consists of Part 1, Part 2 and the contract exhibits listed in paragraph c. c. Contract exhibits The HAP contract includes the following exhibits: EXHIBIT A: TOTAL NUMBER OF UNITS IN PROJECT COVERED BY THIS HAP CONTRACT; INITIAL RENT TO OWNER; AND THE NUMBER AND DESCRIPTION OF THE CONTRACT UNITS. (See 24 CFR 983.203 for required items.) If this is a multi-stage project, this exhibit must include a description of the units in each completed phase. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page- 1 - of Part t 80A-178 EXHIBIT B: SERVICES, MAINTENANCE AND EQUIPMENT TO BE PROVIDED BY THE OWNER WITHOUT CHARGES IN ADDITION TO RENT TO OWNER EXHIBIT C: UTILITIES AVAILABLE IN THE CONTRACT UNITS, INCLUDING A LISTING OF UTILITIY SERVICES TO BE PAID BY THE OWNER (WITHOUT CHARGES IN ADDITION TO RENT TO OWNER) AND UTILITIES TO BE PAID BY THE TENANTS EXHIBIT D: FEATURES PROVIDED TO COMPLY WITH PROGRAM ACCESSIBILITY FEATURES OF SECTION 504 OF THE REHABILITATION ACT OF 1973 ADDITIONAL EXHIBITS d. Single-Stage and Multi-Stage Contracts (Check the applicable box.) ?X Single-Stage Project This is a single-stage project. For all contract units, the effective date of the HAP contract is: The PHA enters the effective date, and executes the HAP contract, after completion and PHA acceptance of all units in the single stage project. 2. ? Multi-Stage Project This is a multi-stage project. The units in each completed stage are designated in Exhibit A The PHA enters the effective date for each stage after completion and PHA acceptance of all units in that stage. The PHA enters the effective date for each stage in the "Execution of HAP contract for contract units completed in stages" (starting on page 8). The annual anniversary date of the HAP contract for all contract units in this multi-stage project is the anniversary of the effective date of the HAP contract for the contract units included in the first stage. The expiration date of the HAP contract for all of the contract units completed in stages must be concurrent with the end of the HAP contract term for the units included in the first stage. (See 24 CFR 983.206(c).) Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 2 - of Part I 80A-179 C. Term of the HAP contract 1. Beginning of Term The PHA may not enter into a HAP contract for any contract unit until the PHA has determined that the unit complies with the housing quality standards. The term of the HAP contract for any unit begins on the effective date of the HAP contract. 2. Length of initial term a. Subject to paragraph 2.b, the initial term of the HAP contract for any contract units is: b. The initial term of the HAP contract for any unit may not be less than one year, nor more than fifteen years. 3. Extension of term The PHA and owner may agree to enter into an extension of the HAP contract at the time of initial HAP contract execution or any time prior to expiration of the contract. Any extension, including the term of such extension, must be in accordance with HUD requirements. A PHA must determine that any extension is appropriate to achieve long-term affordability of the housing or expand housing opportunities. 4. Requirement for sufficient appropriated funding a. The length of the initial term and any extension term shall be subject to availability, as determined by HUD, or by the PHA in accordance with HUD requirements, of sufficient appropriated funding (budget authority), as provided in appropriations acts and in the PHA's annual contributions contract (ACC) with HUD, to make full payment of housing assistance payments due to the owner for any contract year in accordance with the HAP contract. b. The availability of sufficient funding must be determined by HUD or by the PHA in accordance with HUD requirements. If it is determined that there may not be sufficient funding to continue housing assistance payments for all contract units and for the full term of the HAP contract, the PHA has the right to terminate the HAP contract by notice to the owner for all or any of the contract units. Such action by the PHA shall be implemented in accordance with HUD requirements. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 3 - of Part I 80A-180 Occupancy and payment 1. Payment for occupied unit During the term of the HAP contract, the PHA shall make housing assistance payments to the owner for the months during which a contract unit is leased to and occupied by an eligible family. If an assisted family moves out of a contract unit, the owner may keep the housing assistance payment for the calendar month when the family moves out ("move-out month"). However, the owner may not keep the payment if the PHA determines that the vacancy is the owner's fault. 2. Vacancy payment THE PHA HAS DISCRETION WHETHER TO INCLUDE THE VACANCY PAYMENT PROVISION (PARAGRAPH Q), OR TO STRIKE THIS PROVISION FROM THE HAP CONTRACT FORM. a. If an assisted family moves out of a contract unit, the YHA may provide vacancy payments to the owner for a PHA-determined vacancy period extending from the beginning of the first calendar month after the move-out month for a period not exceeding two full months following the move-out month. b. The vacancy payment to the owner for each month of the maximum two-month period will be determined by the PHA, and cannot exceed the monthly rent to owner under the assisted lease, minus any portion of the rental payment received by the owner (including amounts available from the tenant's security deposit). Any vacancy payment may only cover the period the unit remains vacant. C. The PHA may only make vacancy payments to the owner if. The owner gives the PHA prompt, written notice certifying that the family has vacated the unit and the date when the family moved out (to the best of the owner's knowledge and belief); 2. The owner certifies that the vacancy is not the fault of the owner and that the unit was vacant during the period for which payment is claimed; The owner certifies that it has taken every reasonable action to minimize the likelihood and length of vacancy; and Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 4 - of Part 1 80A-181 4. The owner provides any additional information required and requested by the PHA to verify that the owner is entitled to the vacancy payment. d. The PHA must take every reasonable action to minimize the likelihood and length of vacancy. e. The owner may refer families to the PHA, and recommend selection of such families from the PHA waiting list for occupancy of vacant units. The owner must submit a request for vacancy payments in the form and manner required by the PHA and must provide any information or substantiation required by the PHA to determine the amount of any vacancy payments. 3. PHA is not responsible for family damage or debt to owner Except as provided in this paragraph f (Occupancy and Payment), the PHA will not make any other payment to the owner under the HAP contract. The PHA will not make any payment to owner for any damages to the unit, or for any other amounts owed by a family under the family's lease. g. Income-mixing requirement 1. Except as provided in paragraphs g.2 and 3, the PHA will not make housing assistance payments under the HAP contract for more than 25 percent of the total number of dwelling units (assisted or unassisted) in any project. The term "project" means a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land assisted under this HAP contract. 2. The limitation in paragraph g.I does not apply to single-family buildings. 3. In referring eligible families to the owner for admission to the number of contract units in any project exceeding the 25 percent limitation under paragraph g.1, the PHA shall give preference to elderly or disabled families, or to families receiving supportive services, for the number of contract units designated for occupancy by such families. The owner shall rent the designated number of contract units to such families referred by the PHA from the PHA waiting list. 4. The PHA and owner must comply with all HUD requirements regarding income mixing. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 5 - of Part 1 80A-182 5. The following specifies the number of contract units (if any): a. Designated for occupancy by disabled families; b Designated for occupancy by elderly families; C. Designated for occupancy by elderly or disabled families; or d. Designated for occupancy by families receiving supportive services. ? Check this box if any contract units are designated for disabled families. The following number of contract units shall be rented to disabled families: ? Check this box if any contract units are designated for elderly families. The following number of contract units shall be rented to elderly families: ? Check this box if any contract units are designated for elderly or disabled families. The following number of contract units shall be rented to elderly or disabled families: ® Check this box if any contract units are designated for families receiving supportive services. The following number of contract units shall be rented to families receiving supportive services: 8 contract units Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 6 - of Part I 80A-183 EXECUTION OF HAP CONTRACT FOR SINGLE-STAGE PROJECT HOUSING AGENCY (PHA) e of PHA (Print) Housing Authority of the City of Santa Ana of authorized representative and official title (Print) ame of Owner (Print) 815 N Harbor, LP of authorized representative Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 7 - of Part 1 80A-184 EXECUTION OF HAP CONTRACT FOR CONTRACT UNITS COMPLETED AND ACCEPTED IN STAGES (For multi-stage projects, at acceptance of each stage, the PHA and the owner sign the HAP contract execution for the completed stage.) STAGE NO. 1. The Contract is hereby executed for the contract units in this stage. STAGE EFFECTIVE DATE. The effective date of the Contract for this stage is: PUBLIC HOUSING AGENCY (PHA) Name of PHA (Print) By: Signature of authorized representative Name and official title (Print) Date • WNER Name of Owner (Print) By: Signature of authorized representative Name and title (Print) Date Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 8 - of Part I 80A-185 STAGE NO. 2. The Contract is hereby executed for the contract units in this stage. STAGE EFFECTIVE DATE. The effective date of the Contract for this stage is: PUBLIC HOUSING AGENCY (PHA) Name of PHA (Print) By: Signature of authorized representative Name and official title (Print) Date OWNER Name of Owner (Print) By: Signature of authorized representative Name and title (Print) Date Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 9 - of Part 1 80A-186 AGE NO. 3. The Contract is hereby executed for the contract units in this stage. AGE EFFECTIVE DATE. The effective date of the Contract for this stage is: IC HOUSING AGENCY (PHA) of PHA (Print) and official title (Print) of Owner (Print) of authorized representative and title (Print) Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 10 - of Part 1 80A-187 STAGE NO. The Contract is hereby executed for the contract units in this stage. STAGE EFFECTIVE DATE. The effective date of the Contract for this stage is: PUBLIC HOUSING AGENCY (PHA) Name of PHA (Print) B: Signature of authorized representative Name and official title (Print) Date OWNER Name of Owner (Print) By: Signature of authorized representative Name and title (Print) Pate Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 11 - of Part 1 80A-188 OMB Approval No. 2577-0169 (exp. 4/3012014) U.S. Department Of Housing and Urban Development Office of Public and Indian Housing SECTION 8 PROJECT-BASED VOUCHER PROGRAM PBV HOUSING ASSISTANCE PAYMENTS CONTRACT NEW CONSTRUCTION OR REHABILITATION PART 2 OF HAP CONTRACT This agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless that collection displays a valid OMB control number. Assurances of confidentiality are not provided under this collection. 2. DEFINITIONS Agreement. Agreement to enter into HAP Contract between the owner and the PHA. The HAP contract was entered into following new construction or rehabilitation of the contract units by the owner pursuant to an Agreement. Contract units. The housing units covered by this HAP contract. The contract units are described in Exhibit A. Family. The persons approved by the PHA to reside in a contract unit with assistance under the program. HAP contract. This housing assistance payments contract between the PHA and the owner. The contract consists of Part 1, Part 2, and the contract exhibits (listed in section Lc of the HAP contract). Housing assistance payment. The monthly assistance payment by the PHA for a contract unit, which includes: (1) a payment to the owner for rent to the owner under the family's lease minus the tenant rent; and (2) an additional payment to or on behalf of the family if the utility allowance exceeds total tenant payment. Household. The family and any PHA-approved live-in aide. Housing quality standards (HQS). The HUD minimum quality standards for dwelling units occupied by families receiving project-based voucher program assistance. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 1 - of Part 2 80A-189 HUD. U.S. Department of Housing and Urban Development HUD requirements. HUD requirements which apply to the project-based voucher program. HUD requirements are issued by HUD headquarters, as regulations, Federal Register notices or other binding program directives. Newly constructed housing. Housing units that do not exist on the proposal selection date and are developed after the date of selection pursuant to an Agreement between the PHA and owner for use under the project-based voucher program. Owner. Any person or entity who has the legal right to lease or sublease a unit to a participant. Premises. The building or complex in which a contract unit is located, including common areas or grounds. Principal or interested party. This term includes a management agent and other persons or entities participating in project management, and the officers and principal members, shareholders, investors, and other parties having a substantial interest in the HAP contract, or in any proceeds or benefits arising from the HAP contract. Program. The project-based voucher program (see authorization for project-based assistance at 42 U.S.C. 1437f(o)(13)). PHA. Public Housing Agency. The agency that has entered into the HAP contract with the owner. The agency is a public housing agency as defined in the United States Housing Act of 1937 (42 U.S.C. 1437a(b)(6)). Proposal selection date. The date the PHA gives written notice of proposal selection to the owner whose proposal is selected in accordance with the criteria established in the PHA's administrative plan. Rehabilitated housing. Housing units that exist on the proposal selection date, but do not substantially comply with the HQS at that date, and are developed, pursuant to an Agreement between the PHA and owner, for use under the project-based voucher program. Rent to owner. The total monthly rent payable to the owner under the lease for a contract unit. Rent to owner includes payment for any housing services, maintenance and utilities to be provided by the owner in accordance with the lease. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 2 - of Part 2 80A-190 Tenant. The person or persons (other than a live-in aide) who executes the lease as a lessee of the dwelling unit. Tenant rent. The portion of the rent to owner payable by the family, as determined by the PHA in accordance with HUD requirements. The PHA is not responsible for paying any part of the tenant rent. 3. PURPOSE a. This is a HAP contract between the PHA and the owner. b. The purpose of the HAP contract is to provide housing assistance payments for eligible families who lease contract units that comply with the HUD HQS from the owner. C. The PHA must make housing assistance payments to the owner in accordance with the HAP contract for contract units leased and occupied by eligible families during the HAP contract term. HUD provides funds to the PHA to make housing assistance payments to owners for eligible families. 4. RENT TO OWNER: HOUSING ASSISTANCE PAYMENTS a. Amount of initial rent to owner The initial rent to owner for each contract unit is stated in Exhibit A, which is attached to and made a part of the HAP contract. At the beginning of the HAP contract term, and until rent to owner is adjusted in accordance with section 5 of the HAP contract, the rent to owner for each bedroom size (number of bedrooms) shall be the initial rent to owner amount listed in Exhibit A. b. HUD rent requirements Notwithstanding any other provision of the HAP contract, the rent to owner may in no event exceed the amount authorized in accordance with HUD requirements. The PHA has the right to reduce the rent to owner, at any time, to correct any errors in establishing or adjusting the rent to owner in accordance with HUD requirements. The PHA may recover any overpayment from the owner. C. PHA payment to owner Each month the PHA must make a housing assistance payment to the owner for a unit under lease to and occupied by an eligible family in Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 3 - of Part 2 80A-191 accordance with the HAP contract. 2. The monthly housing assistance payment to the owner for a contract unit is equal to the amount by which the rent to owner exceeds the tenant rent. 3. Payment of the tenant rent is the responsibility of the family. The PHA is not responsible for paying any part of the tenant rent, or for paying any other claim by the owner against a family. The PHA is only responsible for making housing assistance payments to the owner on behalf of a family in accordance with the HAP contract. 4. The owner will be paid the housing assistance payment under the HAP contract on or about the first day of the month for which payment is due, unless the owner and the PHA agree on a later date. 5. To receive housing assistance payments in accordance with the HAP contract, the owner must comply with all the provisions of the HAP contract. Unless the owner complies with all the provisions of the HAP contract, the owner does not have a right to receive housing assistance payments. 6. If the PHA determines that the owner is not entitled to the payment or any part of it, the PHA, in addition to other remedies, may deduct the amount of the overpayment from any amounts due the owner, including amounts due under any other housing assistance payments contract. 7. The owner will notify the PHA promptly of any change of circumstances that would affect the amount of the monthly housing assistance payment, and will return any payment that does not conform to the changed circumstances. d. Termination of assistance for family The PHA may terminate housing assistance for a family under the HAP contract in accordance with HUD requirements. The PHA must notify the owner in writing of its decision to terminate housing assistance for the family in such case. 5. ADJUSTMENT OF RENT TO OWNER a. PHA determination of adjusted rent At each annual anniversary during the term of the HAP contract, the PHA Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 4 - of Part 2 80A-192 shall adjust the amount of rent to owner, upon request to the PHA by the owner, in accordance with law and HUD requirements. In addition, the PHA shall adjust the rent to owner when there is a five percent or greater decrease in the published, applicable Fair Market Rent in accordance with 24 CFR 983.302. 2. The adjustment of rent to owner shall always be determined in accordance with all HUD requirements. The amount of the rent to owner may be adjusted up or down, in the amount defined by the PHA in accordance with HUD requirements. b. Reasonable rent The rent to owner for each contract unit, as adjusted by the PHA in accordance with 24 CFR 983.303, may at no time exceed the reasonable rent charged for comparable units in the private unassisted market. The reasonable rent shall be determined by the PHA in accordance with HUD requirements. C. No special adjustments The PHA will not make any special adjustments of the rent to owner. d. Owner compliance with HAP contract The PHA shall not approve, and the owner shall not receive, any increase of rent to owner unless all contract units are in accordance with the HQS, and the owner has complied with the terms of the assisted leases and the HAP contract. e. Notice of rent adjustment Rent to owner shall be adjusted by written notice by the PHA to the owner in accordance with this section. Such notice constitutes an amendment of the rents specified in Exhibit A. 6. OWNER RESPONSIBILITY The owner is responsible for: a. Performing all management and rental functions for the contract units. b. Maintaining the units in accordance with HQS. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 5. of Part 2 80A-193 C. Complying with equal opportunity requirements. d. Enforcing tenant obligations under the lease. e. Paying for utilities and housing services (unless paid by the family under the lease). f Collecting from the tenant: 1. Any security deposit; 2. The tenant rent; and 3. Any charge for unit damage by the family. 7. OWNER CERTIFICATION The owner certifies that at all times during the term of the HAP contract: a. All contract units are in good and tenantable condition. The owner is maintaining the premises and all contract units in accordance with the HQS. b. The owner is providing all the services, maintenance and utilities as agreed to under the HAP contract and the leases with assisted families. C. Each contract unit for which the owner is receiving housing assistance payments is leased to an eligible family referred by the PHA, and the lease is in accordance with the HAP contract and HUD requirements. d. To the best of the owner's knowledge, the members of the family reside in each contract unit for which the owner is receiving housing assistance payments, and the unit is the family's only residence. e. The owner (including a principal or other interested party) is not the parent, child, grandparent, grandchild, sister, or brother of any member of a family residing in a contract unit. f The amount of the housing assistance payment is the correct amount due under the HAP contract. g. The rent to owner for each contract unit does not exceed rents charged by the owner for other comparable unassisted units. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 6 - of Part 2 80A-194 h. Except for the housing assistance payment and the tenant rent as provided under the HAP contract, the owner has not received and will not receive any payments or other consideration (from the family, the PHA, HUD, or any other public or private source) for rental of the contract unit. The family does not own, or have any interest in the contract unit. If the owner is a cooperative, the family may be a member of the cooperative. 8. CONDITION OF UNITS a. Owner maintenance and operation The owner must maintain and operate the contract units and premises to provide decent, safe and sanitary housing in accordance with the HQS, including performance of ordinary and extraordinary maintenance. The owner must provide all the services, maintenance and utilities set forth in Exhibits B and C, and in the lease with each assisted family. b. PHA inspections 1. The PHA must inspect each contract unit before execution of the HAP contract. The PHA may not enter into a HAP contract covering a unit until the unit fully complies with the HQS. 2. Before providing assistance to a new family in a contract unit, the PHA must inspect the unit. The PHA may not provide assistance on behalf of the family until the unit fully complies with the HQS. 3. At least annually during the term of the HAP contract, the PHA must inspect a random sample, consisting of at least 20 percent of the contract units in each building, to determine if the contract units and the premises are maintained in accordance with the HQS. Turnover inspections pursuant to paragraph 2 of this section are not counted towards meeting this annual inspection requirement. 4. If more than 20 percent of the annual sample of inspected contract units in a building fail the initial inspection, the PHA must reinspect 100 percent of the contract units in the building. 5. The PHA must inspect contract units whenever needed to determine that the contract units comply with the HQS and that the owner is providing Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 7 - of Part 2 80A-195 maintenance, utilities, and other services in accordance with the HAP contract. The PHA must take into account complaints and any other information that comes to its attention in scheduling inspections. C. Violation of the housing quality standards If the PHA determines a contract unit is not in accordance with the HQS, the PHA may exercise any of its remedies under the HAP contract for all or any contract units. Such remedies include termination, suspension or reduction of housing assistance payments, and termination of the HAP contract. 2. The PHA may exercise any such contractual remedy respecting a contract unit even if the family continues to occupy the unit. 3. The PHA shall not make any housing assistance for a dwelling unit that fails to meet the HQS, unless the owner corrects the defect within the period specified by the PHA and the PHA verifies the correction. If a defect is life threatening, the owner must correct the defect within no more than 24 hours. For other defects, the owner must correct the defect within no more than 30 calendar days (or any PHA-approved extension). d. Maintenance and replacement-owner's standard practice Maintenance and replacement (including redecoration) must be in accordance with the standard practice for the building concerned as established by the owner. 9. LEASING CONTRACT UNITS a. Selection of tenants During the term of the HAP contract, the owner must lease all contract units to eligible families selected and referred by the PHA from the PHA waiting list. (See 24 CFR 983.251.) 2. The owner is responsible for adopting written tenant selection procedures that are consistent with the purpose of improving housing opportunities for very low-income families and reasonably related to program eligibility and an applicant's ability to perform the lease obligations. Consistent with HUD requirements, the owner may apply its own admission procedures in determining whether to admit a family referred Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 8 - of Part 2 80A-196 by the PHA for occupancy of a contract unit. The owner may refer families to the PHA, and recommend selection of such families from the PHA waiting list for occupancy of vacant units. 4. The owner must promptly notify in writing any rejected applicant of the grounds for rejection. 5. The PHA must determine family eligibility in accordance with HUD requirements. 6. The contract unit leased to each family must be appropriate for the size of the family under the PHA's subsidy standards. 7. If a contract unit was occupied by an eligible family at the time the unit was selected by the PHA, or is so occupied on the effective date of the HAP contract, the owner must offer the family the opportunity to lease the same or another appropriately-sized contract unit with assistance under the HAP contract. 8. The owner is responsible for screening and selecting tenants from the families referred by the PHA from its waiting list. b. Vacancies 1. The owner must promptly notify the PHA of any vacancy in a contract unit. After receiving the owner notice, the PHA shall make every reasonable effort to refer a sufficient number of families for owner to fill the vacancy. 2. The owner must rent vacant contract units to eligible families on the PHA waiting list referred by the PHA. 3. The PHA and the owner must make reasonable good faith efforts to minimize the likelihood and length of any vacancy. 4. If any contract units have been vacant for a period of 120 or more days since owner notice of vacancy (and notwithstanding the reasonable good faith efforts of the PHA to fill such vacancies), the PHA may give notice to the owner amending the HAP contract to reduce the number of contract units by subtracting the number of contract units (by number of bedrooms) that have been vacant for such period. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 9 - of Part 2 80A-197 10. TENANCY a. Lease The lease between the owner and each assisted family must be in accordance with HUD requirements. In all cases, the lease must include the HUD-required tenancy addendum. The tenancy addendum must include, word-for-word, all provisions required by HUD. b. Termination of tenancy The owner may only terminate a tenancy in accordance with the lease and HUD requirements. 2. The owner must give the PHA a copy of any owner eviction notice to the tenant at the same time that the owner gives notice to the tenant. Owner eviction notice means a notice to vacate, or a complaint or other initial pleading used to commence an eviction action under State or local law. C. Family payment 1. The portion of the monthly rent to owner payable by the family ("tenant rent") will be determined by the PHA in accordance with HUD requirements. The amount of the tenant rent is subject to change during the term of the HAP contract. Any changes in the amount of the tenant rent will be effective on the date stated in a notice by the PHA to the family and the owner. 2. The amount of the tenant rent as determined by the PHA is the maximum amount the owner may charge the family for rent of a contract unit, including all housing services, maintenance and utilities to be provided by the owner in accordance with the HAP contract and the lease. 3. The owner may not demand or accept any rent payment from the tenant in excess of the tenant rent as determined by the PHA. The owner must immediately return any excess rent payment to the tenant. 4. The family is not responsible for payment of the portion of the contract rent covered by the housing assistance payment under the HAP contract. The owner may not terminate the tenancy of an assisted family for nonpayment of the PHA housing assistance payment. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 10 - of Part 2 80A-198 The PHA is only responsible for making the housing assistance payments to the owner on behalf of the family in accordance with the HAP contract. The PHA is not responsible for paying the tenant rent, or any other claim by the owner. d. Other owner charges 1. Except as provided in paragraph 2, the owner may not require the tenant or family members to pay charges for meals or supportive services. Nonpayment of such charges is not grounds for termination of tenancy. 2. In assisted living developments receiving project-based voucher assistance, owners may charge tenants, family members, or both for meals or supportive services. These charges may not be included in the rent to owner, nor may the value of meals and supportive services be included in the calculation of reasonable rent. Non-payment of such charges is grounds for termination of the lease by the owner in an assisted living development. 3. The owner may not charge the tenant or family members extra amounts for items customarily included in rent in the locality or provided at no additional cost to the unsubsidized tenant in the premises. C. Security deposit 1. The owner may collect a security deposit from the family. 2. The owner must comply with HUD and PHA requirements, which may change from time to time, regarding security deposits from a tenant. 3. The PHA may prohibit security deposits in excess of private market practice, or in excess of amounts charged by the owner to unassisted families. 4. When the family moves out of the contract unit, the owner, subject to State and local law, may use the security deposit, including any interest on the deposit, in accordance with the lease, as reimbursement for any unpaid tenant rent, damages to the unit or other amounts which the family owes under the lease. The owner must give the family a written list of all items charged against the security deposit and the amount of each item. After deducting the amount used as reimbursement to the owner, the owner must Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 11 - of Part 2 80A-199 promptly refund the full amount of the balance to the family. If the security deposit is not sufficient to cover amounts the family owes under the lease, the owner may seek to collect the balance from the family. However, the PHA has no liability or responsibility for payment of any amount owed by the family to the owner. 11. FAMILY RIGHT TO MOVE a. The family may terminate its lease at any time after the first year of occupancy. The family must give the owner advance written notice of intent to vacate (with a copy to the PHA) in accordance with the lease. If the family has elected to terminate the lease in this manner, the PHA must offer the family the opportunity for tenant-based rental assistance in accordance with HUD requirements. b. Before providing notice to terminate the lease under paragraph a, the family must first contact the PHA to request tenant-based rental assistance if the family wishes to move with continued assistance. If tenant-based rental assistance is not immediately available upon lease termination, the PHA shall give the family priority to receive the next available opportunity for tenant-based rental assistance. 12. OVERCROWDED, UNDER-OCCUPIED, AND ACCESSIBLE UNITS The PHA subsidy standards determine the appropriate unit size for the family size and composition. The PHA and owner must comply with the requirements in 24 CFR 983.259. 13. PROHIBITION OF DISCRIMINATION a. The owner may not refuse to lease contract units to, or otherwise discriminate against any person or family in leasing of a contract unit, because of race, color, religion, sex, national origin, disability, age or familial status. b. The owner must comply with the following requirements: The Fair Housing Act (42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et seg. ; Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1959- 1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107; title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1; the Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 12 - of Part 2 80A-200 Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CFR part 146; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at part 8 of this title; title II of the Americans with Disabilities Act, 42 U.S.C. 12101 et seq. ; 24 CFR part 8; section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations at 24 CFR part 135; Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964- 1965 Comp., p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 1966-1970 Camp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and implementing regulations at 41 CFR chapter 60; Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women's Business Enterprise). C. The PHA and the owner must cooperate with HUD in the conducting of compliance reviews and complaint investigations pursuant to all applicable civil rights statutes, Executive Orders, and all related rules and regulations. 14. PHA DEFAULT AND HUD REMEDIES If HUD determines that the PHA has failed to comply with the HAP contract, or has failed to take appropriate action to HUD's satisfaction or as directed by HUD, for enforcement of the PHA's rights under the HAP contract, HUD may assume the PHA's rights and obligations under the HAP contract, and may perform the obligations and enforce the rights of the PHA under the HAP contract. 15. OWNER DEFAULT AND PHA REMEDIES a. Owner default Any of the following is a default by the owner under the HAP contract: The owner has failed to comply with any obligation under the HAP contract, including the owner's obligations to maintain all contract units in accordance with the housing quality standards. 2. The owner has violated any obligation under any other housing assistance payments contract under Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f). Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 13 - of Part 2 80A-201 3. The owner has committed any fraud or made any false statement to the PHA or HUD in connection with the HAP contract. 4. The owner has committed fraud, bribery or any other corrupt or criminal act in connection with any Federal housing assistance program. 5. If the property where the contract units are located is subject to a lien or security interest securing a HUD loan or a mortgage insured by HUD and: A. The owner has failed to comply with the regulations for the applicable mortgage insurance or loan program, with the mortgage or mortgage note, or with the regulatory agreement; or B. The owner has committed fraud, bribery or any other corrupt or criminal act in connection with the HUD loan or HUD-insured mortgage. 6. The owner has engaged in any drug-related criminal activity or any violent criminal activity. b. PHA remedies If the PHA determines that a breach has occurred, the PHA may exercise any of its rights or remedies under the HAP contract. 2. The PHA must notify the owner in writing of such determination. The notice by the PHA to the owner may require the owner to take corrective action (as verified by the PHA) by a time prescribed in the notice. 3. The PHA's rights and remedies under the HAP contract include recovery of overpayments, termination or reduction of housing assistance payments, and termination of the HAP contract. C. PHA remedy is not waived The PHA's exercise or non-exercise of any remedy for owner breach of the HAP contract is not a waiver of the right to exercise that remedy or any other right or remedy at any time. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 14 - of Part 2 80A-202 16. OWNER DUTY TO PROVIDE INFORMATION AND ACCESS REQUIRED BY HUD OR PHA a. Required information The owner must prepare and furnish any information pertinent to the HAP contract as may reasonably be required from time to time by the PHA or HUD. The owner shall furnish such information in the form and manner required by the PHA or HUD. b. PHA and HUD access to premises The owner must permit the PHA or HUD or any of their authorized representatives to have access to the premises during normal business hours and, for the purpose of audit and examination, to have access to any books, documents, papers and records of the owner to the extent necessary to determine compliance with the HAP contract, including the verification of information pertinent to the housing assistance payments or the HAP contract. 17. PHA AND OWNER RELATION TO THIRD PARTIES a. Injury because of owner action or failure to act The PHA has no responsibility for or liability to any person injured as a result of the owner's action or failure to act in connection with the implementation of the HAP contract, or as a result of any other action or failure to act by the owner. b. Legal relationship The owner is not the agent of the PHA. The HAP contract does not create of affect any relationship between the PHA and any lender to the owner or any suppliers, employees, contractors or subcontractors used by the owner in connection with the implementation of the HAP contract. C. Exclusion of third party claims Nothing in the HAP contract shall be construed as creating any right of a family or other third party (other than HUD) to enforce any provision of the HAP contract, or to assert any claim against HUD, the PHA or the owner under the HAP contract. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 15 - of Part 2 80A-203 it. Exclusion of owner claims against HUD Nothing in the HAP contract shall be construed as creating any right of the owner to assert any claim against HUD. 18. PHA-OWNED UNITS Notwithstanding Section 17 of this HAP contract, a PHA may own units assisted under the project-based voucher program, subject to the special requirements in 24 CFR 983.59 regarding PHA-owned units. 19. CONFLICT OF INTEREST a. Interest of members, officers, or employees of PHA, members of local governing body, or other public officials 1. No present or former member or officer of the PHA (except tenant- commissioners), no employee of the PHA who formulates policy or influences decisions with respect to the housing choice voucher program or project-based voucher program, and no public official or member of a governing body or State or local legislator who exercises functions or responsibilities with respect to these programs, shall have any direct or indirect interest, during his or her tenure or for one year thereafter, or in the HAP contract. 2. HUD may waive this provision for good cause. b. Disclosure The owner has disclosed to the PHA any interest that would be a violation of the HAP contract. The owner must fully and promptly update such disclosures. C. Interest of member of or delegate to Congress No member of or delegate to the Congress of the United States of America or resident-commissioner shall be admitted to any share or part of this HAP contract or to any benefits arising from the contract. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 16 - of Part 2 80A-204 20. EXCLUSION FROM FEDERAL PROGRAMS a. Federal requirements The owner must comply with and is subject to requirements of 2 CFR part 2424. b. Disclosure The owner certifies that: The owner has disclosed to the PHA the identity of the owner and any principal or interested party. 2. Neither the owner nor any principal or interested party is listed on the U.S. General Services Administration list of parties excluded from Federal procurement and nonprocurement programs; and none of such parties are debarred, suspended, subject to a limited denial of participation or otherwise excluded under 2 CFR part 2424. 21. TRANSFER OF THE CONTRACTOR PROPERTY a. When consent is required The owner agrees that neither the HAP contract nor the property may be transferred without the advance written consent of the PHA in accordance with HUD requirements. 2. "Transfer" includes: A. Any sale or assignment or other transfer of ownership, in any form, of the HAP contract or the property; B. The transfer of any right to receive housing assistance payments that may be payable pursuant to the HAP contract; C. The creation of a security interest in the HAP contract or the property: D. Foreclosure or other execution on a security interest; or E. A creditor's lien, or transfer in bankruptcy. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 17 - of Part 2 80A-205 3. If the owner is a corporation, partnership, trust or joint venture, the owner is not required to obtain advance consent of the PHA pursuant to paragraph a for transfer of a passive and non-controlling interest in the ownership entity (such as a stock transfer or transfer of the interest of a limited partner), if any interests so transferred cumulatively represent less than half the beneficial interest in the HAP contract or the property. The owner must obtain advance consent pursuant to paragraph a for transfer of any interest of a general partner. b Transferee assumption of HAP contract No transferee (including the holder of a security interest, the security holder's transferee or successor in interest, or the transferee upon exercise of a security interest) shall have any right to receive any payment of housing assistance payments pursuant to the HAP contract, or to exercise any rights or remedies under the HAP contract, unless the PHA has consented in advance, in writing to such transfer, and the transferee has agreed in writing, in a form acceptable to the PHA in accordance with HUD requirements, to assume the obligations of the owner under the HAP contract, and to comply with all the terms of the HAP contract. C. Effect of consent to transfer The creation or transfer of any security interest in the HAP contract is limited to amounts payable under the HAP contract in accordance with the terms of the HAP contract. 2. The PHA's consent to transfer of the HAP contract or the property does not to change the terms of the HAP contract in any way, and does not change the rights or obligations of the PHA or the owner under the HAP contract. The PHA's consent to transfer of the HAP contract or the property to any transferee does not constitute consent to any further transfers of the HAP contract or the property, including further transfers to any successors or assigns of an approved transferee. d. When transfer is prohibited The PHA will not consent to the transfer if any transferee, or any principal or interested party is debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424, or is listed on the Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 18 - of Part 2 80A-206 U.S. General Services Administration list of parties excluded from Federal procurement or nonprocurement programs. 22. SUBSIDY LAYERING a. Ow ner disclosure The owner must disclose to the PHA, in accordance with HUD requirements, information regarding any related assistance from the Federal Government, a State, or a unit of general local government, or any agency or instrumentality thereof, that is made available or is expected to be made available with respect to the contract units. Such related assistance includes, but is not limited to, any loan, grant, guarantee, insurance, payment, rebate, subsidy, credit, tax benefit, or any other form of direct or indirect assistance. b. Limit of payments Housing assistance payments under the HAP contract must not be more than is necessary, as determined in accordance with HUD requirements, to provide affordable housing after taking account of such related assistance. The PHA will adjust in accordance with HUD requirements the amount of the housing assistance payments to the owner to compensate in whole or in part for such related assistance. 23. OWNER LOBBYING CERTIFICATIONS a. The owner certifies, to the best of owner's knowledge and belief, that: 1. No Federally appropriated funds have been paid or will be paid, by or on behalf of the owner, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of the HAP contract, or the extension, continuation, renewal, amendment, or modification of the HAP contract. 2. If any funds other than Federally appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the HAP contract, the owner must complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 19 - of Part 2 80A-207 accordance with its instructions. b. This certification by the owner is a prerequisite for making or entering into this transaction imposed by 31 U.S.C. 1352. 24. COMPLETION AND ACCEPTANCE OF CONTRACT UNITS The owner certifies that the contract units have been completed in accordance with the Agreement. Completion and acceptance of the units is subject to the provisions of the Agreement. 25. TERMINATION OF HAP CONTRACT FOR WRONGFUL SELECTION OF CONTRACT UNITS The HAP contract may be terminated upon at least 30 days notice to the owner by the PHA or HUD if the PHA or HUD determines that the contract units were not eligible for selection in conformity with HUD requirements. 26. NOTICES AND OWNER CERTIFICATIONS a. Where the owner is required to give any notice to the PHA pursuant to the HAP contract or any other provision of law, such notice must be in writing and must be given in the form and manner required by the PHA. b. Any certification or warranty by the owner pursuant to the HAP contract shall be deemed a material representation of fact upon which reliance was placed when this transaction was made or entered into. 27. ENTIRE AGREEMENT, INTERPRETATION a. The Agreement and the HAP contract, including the exhibits, is the entire agreement between the PHA and the owner. b. The Agreement and the HAP contract must be interpreted and implemented in accordance with all statutory requirements, and with all HUD requirements, including amendments or changes in HUD requirements during the term of the HAP contract. The owner agrees to comply with all such laws and HUD requirements. Project-based Voucher Program HAP Contract for New Construction or Rehabilitation Previous editions are obsolete HUD 52530A Page - 20 - of Part 2 80A-208