HomeMy WebLinkAboutDEPOT AT SANTIAGO, LP - 2013FREE 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
LOAN AGREEMENT
by and between the
CITY OF SANTA ANA,
and
DEPOT AT SANTIAGO, L.P.
A- 2013 -072
SPACE ABOVE THIS LINE FOR RE('ORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
(923 N. Santiago Street, Santa Ana, California)
Dated: July 11, 2013
LOAN AGREEMENT
HOME PROGRAM /CDBG FUNDS
THIS LOAN AGREEMENT (the "Agreement ") dated, for identification purposes only, as of
July 11, 2013, is made and entered into by and between the City of Santa Ana, a charter city and
municipal corporation ( "City") and Depot at Santiago, L.P. ( "Developer ") with reference to the
following:
RECITALS:
A. City has received an allocation of funds from the United States Department of
Housing and Urban Development ( "HUD ") under the HOME Investment 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).
B. A portion of City's allocation of HOME Program funds is reserved for Community
Housing Development Organizations (the "HOME Program/CHDO funds "), and the sole
member of Developer's Managing General Partner, Orange Housing Development Corporation,
has qualified and is in good standing as a Community Housing Development Organization.
C. Among the purposes of the HOME Program are (1) to expand the supply of decent,
safe, sanitary, and affordable housing, with primary attention to rental housing, for very low -
income and low- income households; and (2) to provide participating jurisdictions, on a
coordinated basis, with the various forms of federal housing assistance, including capital
investment, mortgage insurance, rental assistance, and other federal assistance, needed (a) to
promote the development of partnerships among the federal government, states and units of
general local government, private industry, and nonprofit organizations able to utilize all
available resources to provide more of such housing, and (b) to expand the capacity of nonprofit
community housing development organizations to develop and manage decent, safe, sanitary and
affordable housing.
D. City is also the recipient of Community Development Block Grant ( "CDBG ") funds
from HUD pursuant to Tile I of the Housing and Community Development Act of 1974, as
amended ( "Act ") and 24 CFR 570 ( "CDBG Regulations ").
E. The City of Santa Ana is authorized by the HOME and CDBG Regulations to expend
funds to increase the supply of low- and moderate - income housing available at affordable housing
costs.
F. Developer is entering into this agreement to acquire and, subject to entitlement
approvals, develop a mixed use project consisting of seventy (70) unit multi- family residential
housing development with retail space and a community room (the "Project ") located at 923 N.
Santiago Street, within the City of Santa Ana, California, and legally described in Exhibit A
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attached hereto (the "Property "). The CDBG funds referenced herein shall assist in the land
acquisition only and the HOME funds will assist in the acquisition and soft costs of said Project.
G. In furtherance of the HOME Program and CDBG guidelines, Developer has
applied to City for a loan with which to:
provide deeper affordability and construct the improvements to the Property,
and
2. thereafter to maintain, operate and professionally manage the Project
as decent, safe, sanitary and affordable rental housing.
H. City, on certain terms and conditions, desires to make such loan ( "City Loan ") to
Developer in order to make possible the acquisition and construction of the Project, thereby
expanding the supply of decent, safe, sanitary and affordable housing.
I. If there is any inconsistency between Federal and State guidelines with regard to any
of the terms and conditions contained herein, the more stringent shall apply.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, City and 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 [no state funds].
"Affordability Restrictions on Transfer of Property" means that certain
document affecting real property benefiting the City, attached hereto as Exhibit B.
"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).
"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.
"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 Project Manager" shall mean the City Manager and his/her designee.
"City Promissory Note" means that certain promissory note in the original
principal amount of $3,000,000 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 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.
"Community Development Block Grant" or "CDBG" has the meaning set
forth in Recital "D" above.
"County " means the County of Orange, California.
"Developer" means Depot at Santiago, LP, a California limited partnership
comprised of OHDC Depot, LLC, California limited liability company as managing general
partner and C &C Depot, 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.
"Escrow Holder" means First American Title Company, 5 First American Way,
Santa Ana, California 92707. The Escrow Officer is Ryan Hahn.
"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.
"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 Program" has the meaning set forth in Recital "A" above
"HOME Regulations" has the meaning set forth in Recital "A" above.
"HUD" means the United States Department of Housing and Urban Development
and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter
comprising any portion of the Property, including, without limitation, landscaping, trees and
plant materials; and offsite improvements (including, without limitation, streets, curbs, storm
drains, and adjacent street lighting).
"Indebtedness" of a person means (a) all indebtedness for borrowed money,
(b) notes payable and drafts accepted representing extensions of credit, whether or not
representing obligations for borrowed money, (c) any obligation for the purchase of property or
services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or
(ii) evidenced by a note or similar instrument, and ( d) all recourse and all non - recourse
indebtedness secured by any Lien on any property or asset of such person (whether or not
assumed by such person).
"Indemnitees" has the meaning set forth in Section 14.5.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
judgments, injunctions, decrees or awards of the United States or any state, county,
municipality or other Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any lien or security interest).
"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'.
"Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Depot at Santiago, L.P., dated as of 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.
"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 923 N. Santiago Street 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 Scope of Work is
attached hereto as Exhibit F.
"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 either a
construction loan in the approximate principal amount of $17,192,490.00 with a term of
approximately two (2) years or a permanent loan in the approximate principal amount of
$4,191,910.00 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.
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"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.
"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.
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 tern "document"
is used in its broadest sense and encompasses agreements, certificates, opinions, consents,
instruments and other written material of every kind. The terns "including" and "include" mean
"including (include) without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement, as now
existing and as the same may from time to time be modified, are incorporated herein by this
reference.
2. [RESERVED]
SCOPE OF WORK/PROJECT BUDGET
A "Scope of Work" for the Property is attached hereto as Exhibit F. Any material change
to the Scope of Work requested by the Developer shall be subject to the prior written approval of
the City Project Manager. The Scope of Works sets forth the construction work that shall be
performed on the Property.
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.
]RESERVED]
5. 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 HOME compliance period is twenty
(20) years, 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.
A. HOME FUNDS:
1. Amount and Purpose. Subject to the terms and conditions of this Agreement,
City agrees to make a loan to Developer from HOME funds in the principal amount of up to
$2,634,566.00 for the Property acquisition and other costs of the Project.
B. CDBG FUNDS:
1. Amount and Purpose. Subject to the terms and conditions of this Agreement,
City agrees to make a loan of CDBG funds to Developer in the principal amount of up to
$365,434 solely for the Property acquisition - related costs of the Project.
6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
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 and California Health and Safety Code ( "H &S ") sections 50052.5 and 33334.3,
as applicable. 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
Manager, City shall have received a certificate to that effect signed by Developer's
Representative.
(h) No Default. No Event of Default by Developer shall have occurred, and no
event shall have occurred which, with the giving of notice or the passage of time or both, would
constitute an Event of Default by Developer under this Agreement, and if requested by the 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 Loan proceeds shall be disbursed through Escrow to finance the acquisition and construction of
the Project (as evidenced in Exhibit E). The Loan proceeds shall not be used for any purpose other
than for acquisition and construction related costs, including Developer fee and soft costs related to
the development of the Project (costs all subject to City's prior review).
6.3 First Disbursement. City's obligation to make the first disbursement of the Loan is
subject to satisfaction of the following conditions precedent:
(a) General Contractor. If the City Project Manager has not yet approved the
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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.
6.4 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.
6.5 Any Disbursement. City's obligation to make any disbursement of the Loan (including
the first and final disbursements is subject to the satisfaction of the following conditions
precedent:
(a) Satisfactory Progress. The City Project Manager shall be satisfied, based
on his/her own inspections or other reliable information, that the construction is progressing
satisfactorily in conformance with all applicable laws and other requirements (including HOME
and CDBG Regulations).
(b) Condition of Title. Either (i) the City Project Manager reasonably believes
that no event has occurred since the Close of Escrow that would give rise to a colorable claim
against the Property (e.g., a mechanic's lien) superior to the claim of City against the Property
with respect to the subject disbursement, or if such claim is made, then City Project Manager
shall receive satisfactory evidence that such claim has been bonded over until its resolution; or
(ii) City must have received, at Developer's expense but payable out of the Loan proceeds from
the title insurer who issued City's LP -10 Title Policy, all endorsements thereto then reasonably
required by City (including, without limitation, CLTA Form 122 -- priority of advance
endorsements).
(c) Representations and Warranties. The representations and warranties of
Developer contained in this Agreement and the other City Loan Documents shall be correct as of
the date of the disbursement as though made on and as of that date.
(d) No Default. No Event of Default by Developer shall remain uncured
(unless, to the extent permitted under this Agreement, Developer is diligently taking action to
cure such default) 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.
6.6 Final Disbursement. City's obligation to disburse that portion of the Loan funds retained
pursuant to Section 6.12 is subject to the satisfaction of the following additional conditions
precedent:
(a) Construction complete. The construction of the Project shall be complete.
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(b) Certificate of Occupancy Issued. Any portion of the construction work
requiring inspection or certification by any Governmental Authority shall have been inspected
and certified as complete. Developer shall request that the Building Department issue a
Certificate of Completion, a copy of which shall be delivered to the City Project Manager, in
order for final disbursement to occur.
(c) Lien Free. At least one of the following shall have occurred:
(i) Thirty -five (35) days shall have passed since the recording of a
valid notice of completion for the construction, and no mechanic's or materialman's lien
shall be outstanding; or
(ii) Ninety -five (95) days shall have passed since actual completion of
the construction, and no mechanic's or materialman's lien shall be outstanding, or Developer
shall have bonded over any such lien to City's reasonable satisfaction.
6.7 Waiver of Conditions. The conditions set forth pertaining to City's obligation to make
disbursements of the Loan proceeds are for City's benefit only and the City Project Manager may
waive all or any part of such rights by written notice to Developer.
6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line -item by line-
item basis in accordance with the Project Budget and subject to the conditions in this section. In
no event shall City have any obligation to disburse any amount for any item in excess of the
amount allocated to such item in the Project Budget. Disbursements shall be made only upon
Developer's written request in the form of a Disbursement Request showing all costs which
Developer intends to fund with such disbursement, itemized in such detail as City may
reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to
City, including in any event partial lien releases executed by each contractor and subcontractor
who has received any payment for work performed, and (b ) all other documents and information
reasonably required by City. Disbursement Requests shall be submitted no less than ten (10)
Business Days prior to the date of the requested disbursement, and shall not be submitted more
often than monthly.
Prior to each disbursement by City of proceeds of the loan, Developer shall deliver to City a
draw request ( "Draw Request "), and all required supporting information as set forth in the Loan
Documents or as otherwise reasonably required by City in' order to provide information for
evaluating the requested disbursement pursuant to customary construction lending practices of
institutional lenders in Southern California.
City shall notify the Developer of approval or disapproval of each Draw Request within five (5)
Business Days after receipt of the Draw Request, using the City's "Disbursement /Change Order
Approval Notice ". City shall have the right, but not the obligation, to discontinue processing
Draw Requests unless and until receipt of notification from the other of approval or disapproval
of each outstanding Draw Request.
6.9 Manner of Disbursement. City may make any disbursement by check payable to
Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor,
subcontractor or other claimant; or directly to any such claimant; or by any other means
reasonably selected by City.
6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost
reasonably estimated by City or Developer to be required to complete all matters included in any
line item in the Project Budget exceeds the amount allocated to that line item in the Project
Budget, (b) Project costs for any matters not covered by a specific line item have been or will be
incurred, or (c) the undisbursed portion of the Loan proceeds is or may be insufficient to pay all
construction of the Project that may be payable under the City Loan Documents or otherwise in
connection with the construction, Developer shall, within ten (10) days after it receives written
notice thereof from City of any of the foregoing matters, do one or more of the following:
(a) provide satisfactory evidence to City that Developer has previously
paid such excess or otherwise provided for such insufficiency (collectively, the "Excess Cost ")
with funds from a source other than the City Loan;
(b) reallocate sufficient funds to pay the Excess Cost from funds allocated to
"Contingency" in the Project Budget; provided, however, that the City Project Manager's consent
to any such reallocation shall be required; or
(c) deposit an amount equal to the Excess Cost in a non - interest bearing
account (the "Overrun Account ") with City from which withdrawals may be made only with the
consent of the City Project Manager but which will be exhausted prior to any further
disbursement for any line item, so that any resulting surplus in any line item of the Project
Budget will then be reallocated to the line item(s) in which the Excess Costs are expected to be
incurred.
City shall have no obligation to make further disbursements until Developer has paid or
otherwise provided for the overrun as required above. Amounts deposited by Developer in the
Overrun Account for any Excess Costs shall be disbursed by City prior to the disbursement of
any remaining Loan proceeds in the manner described in subsection 93(c).
6.11 Cost Savings. Upon completion of and disbursement for all matters covered by any line
items in the Project Budget, any remaining undisbursed amounts allocated to that line item shall
be reallocated to "Contingency" and thereafter be available for disbursement in accordance with
the terms of this Agreement.
6.12 Retainage. City will withhold a Retainage of 10% from each Disbursement for each
of the Hard Cost line items of the Project Cost Breakdown (and other line items thereof
designated for withholding of retainage) until all conditions to the final Disbursement of Hard
Costs have been satisfied. In lieu of City's withholding Retainage, Developer can by written
notice to City elect not to draw any overhead or profit as would otherwise be permitted under the
Construction Contract until such time as Retainage would otherwise have been released.
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City shall not retain funds for building materials purchased by Developer for which Developer
supplies documentation to City proving payment in full or for soft costs.
6.13 Holdback. The retainage otherwise available for disbursement shall be subject to a
holdback of one hundred twenty -five percent (125 %) of the estimated cost (as determined by the
City Project Manager) for "punch -list' items. Such holdback will be released when all punch -list
items have been completed to the satisfaction of City.
6.14 Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the
making by City of any disbursement with knowledge that any condition to such disbursement is
not fulfilled shall constitute a waiver of such condition only with respect to the particular
disbursement made, and such condition shall be condition to all further disbursements until
fulfilled.
6.15 Modification of Disbursement Conditions and Procedures. The City Project Manager
shall have the authority to modify the disbursement conditions and procedures set forth herein in
order to conform them to the payment provisions of the contract for construction.
6.16 Other Terms and Conditions of Loan.
A. The Note(s) shall become immediately due and payable, in the event of any of
the following:
(1) failure to complete the Project within three (3) years of the recording
date;
(2) violation of any of the use covenants and restrictions contained in this
Agreement after the expiration of any applicable notice and cure periods;
(3) 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 .17 Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges, (b) all
recording fees and charges on any document recorded pursuant to this Agreement, and (c) the
premium for the title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROJECT
7.1 Use Covenants and Restrictions.
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 of
the 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 (except for one unit for the onsite
manager). The Project shall consist of approximately seventy (70) residential units.
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Enforceability of restrictions on the sixty -nine (69) units shall be enforced until the date that is
twenty (20) years after the date on which the Certificate of Completion is issued (HOME
affordability period), unless tax credits are awarded to the Property, then fifty -five (55) years after
the date on which the Certificate of Completion is issued.
7.2 Affordability Levels/Unit Mix:
The proposed unit mix and levels of affordability are as follows:
Bedroom
Size
Square
Feet
30%
AMI
40%
AMI
50%
AMI
60%
AMI
Total
1 Bedroom
875
2
3
6
3
14
2 Bedroom
1,085
2
6
11
10
29
3 Bedroom
1,350
3
5
11
7
26
Totals
7
14
28
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 20 -year HOME affordability period, for the eleven (11) HOME 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.
7.3 Rent Increases: On an annual basis, the City shall provide the Developer with the
maximum allowable schedule of rents for the Property. In 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
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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 party 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.
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 party 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 Liability. Neither Developer, nor any partner of Developer, shall have any
personal liability under this Agreement, or the attached Note and Deed of Trust, and any judgment,
decree or order for the payment of money obtained in any action to enforce the obligation of
Developer to repay the loan evidenced by such documents shall be enforceable against Developer
only to the extent of Developer's interest in the Property.
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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. Depot at Santiago, LP, is a California
limited partnership comprised of Orange Housing Development Corporation, and C &C
Development, a California corporation, 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 Execution and Performance of Loan Documents.
9.2.1 Developer has all requisite authority to execute and perform its
obligations under the Loan Documents.
9.2.2 The execution and delivery of Developer of, and the performance by
Developer of its obligations under, each Loan Document has been authorized by all necessary
action and does not and will not:
(a) require any consent or approval not heretofore
obtained of any person having any interest in Developer;
(b) violate any provision of, or require any consent or
approval not heretofore obtained under, any articles of incorporation, by -laws or other governing
document applicable to Developer;
(c) result in or require the creation of any lien, claim,
charge or other right of others of any kind (other than under the City Loan Documents) on or
with respect to any property now or hereafter owned or leased by Developer;
(d) to best of its knowledge, violate any provision of any law
presently in effect;
or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other agreement or
document to which Developer is a party or by which Developer or any of its property is bound.
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9.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of City under the Loan Documents or that would have any material adverse effect
on the financial condition of Developer or the conduct of its business, under any law, contract,
lease or other agreement or document described in sub - paragraph (d) or (e) of the previous
subsection.
9.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which has not
been previously obtained in connection with:
(a) the execution of Developer of, and the
performance by Developer of its obligations under, the Loan Documents; and
(b) the creation of the liens described in the Loan
Documents.
9.3 Financial and Other Information. To the best of Developer's knowledge, all financial
information furnished to City with respect to Developer in connection with the 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
connection with the Loans, are correct and complete insofar as completeness is necessary to give
the City accurate knowledge of the subject matter. To the best of Developer's knowledge
Developer has no material liability or contingent liability not disclosed to City in writing and
there is no material lien, claim, charge or other right of others of any kinds (including liens or
retained security titles of conditional vendors) on any property of Developer not disclosed in
such financial statements or otherwise disclosed to City in writing.
9.4 No Material Adverse 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.
9.5 Tax Liability. Developer has filed all required federal, state and local tax returns and
has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to
City in writing) other than taxes being promptly and actively contested in good faith and by
appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities
(including contested liabilities) in accordance with generally accepted accounting principles or in
accordance with such other principles or methods as are reasonably acceptable to City.
9.6 Governmental Requirements. To 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;
17
environmental requirements, including the requirements of the California Environmental Quality
Act and the National Environmental Policy Act and the preparation and approval of all required
environmental impact statements and reports; use, occupancy and building permit requirements;
and public utilities requirements.
9.7 Riehts of Others. Developer is in compliance with all covenants, conditions, restrictions,
easements, rights of way and other rights of third parties relating to the Property.
9.8 Litisation. There are no material actions or proceedings pending or, to the best of the
Developer's knowledge, threatened against or affecting Developer or any property of Developer
before any Governmental Authority, except as disclosed to City in writing prior to the execution
of this Agreement.
9.9 Bankruptcy. To the best of Developer's knowledge, no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or
other proceedings are pending or threatened against Developer, nor are any of such proceedings
contemplated by Developer.
9.10 Information Accurate. To the best of Developer's knowledge, all information, regardless
of its form, conveyed by Developer to City, by whatever means, is accurate, correct and
sufficiently complete to give City true and accurate knowledge of its subject matter, and does not
contain any misrepresentation or omission.
9.11 Conflicts of Interest. No member, official or employee of the City shall have any personal
interest, direct or indirect, in this Agreement, nor shall any such member, official or employee
participate in any decision relating to this Agreement which affects his/her personal interests or the
interests of any corporation, partnership or association in which he /she has a direct or indirect
financial interest. The Developer warrants that it neither has paid nor given, nor will pay or give,
any third party any money or other consideration for obtaining this Agreement.
9.12 Nonliabitity 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.
9.13 No Assignment. Developer expressly acknowledges and agrees that the City has only
agreed to assist the Developer as a means by which to induce the 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.
9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under federal
and California state law with venue in Orange County California.
In
9.15 Third Parties. This Agreement is made for the sole benefit of Developer and the City and
their successors and assigns, and no other person or persons shall have any rights or remedies under
or by reason of this Agreement or any right to the exercise of any right or power of the City
hereunder or arising from any default by Developer, nor shall the City owe any duty whatsoever to
any claimant for labor performed or materials famished in connection with the construction of the
Property.
9.16 Control of Property. The parties acknowledge that the City has not at anytime participated
in any manner in the management or operation of the Property, and will not so participate at any
time hereafter.
10. CONDITIONS FOR CONSTRUCTION
10.1 Permits and Approvals. 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.
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 Change Orders. The contract for construction shall not be modified except pursuant
to change orders. All change orders:
(a) shall be in writing, numbered in sequence, signed by Developer
and submitted to City prior to the proposed effectiveness thereof and accompanied by any
working drawings and a written narrative of the proposed change.
(b) Shall be subject to the City Project Manager's and Bank's prior
written approval of the City Project Manager and Bank.
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 Compliance with Section 3 Clause. Section 3 of the Housing and Urban Development
act of 1968, 12 U.S.C. 1701u, as amended by Section 915 of the Housing and Community
Development Act of 1992 requires that economic opportunities generated by HUD financial
assistance for housing and community development programs be targeted toward low- and very
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low- income persons. Whenever HUD assistance generates opportunities for employment or
contracting, state and local grantees, as well as other recipients of HUD housing assistance funds
must, to the greatest extent feasible, provide these opportunities to low- and very low- income
persons and to businesses owned by or employing low- and very low- income persons. Section 3
applies to projects for which HUD's share of project costs exceeds $200,000 and contracts and
subcontracts awarded on projects for which HUD's share or project costs exceeds $200,000 and
the contract or subcontract exceeds $100,000.
For purposes of this Section 3 Clause and compliance thereto, whenever the word
"contractor" is used it shall mean and include, as applicable, the Developer, and its contractor
and subcontractor(s), if any. The particular text to be utilized in any and all contracts of any
contractor doing work covered by Section 3 shall be in substantially the form of the following, as
reasonably determined by the City, or as directed by HUD or its representative, and shall be
executed by the applicable contractor under penalty of perjury:
"(a) The work to be performed under this contract is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 U.S.C. 170lu ( "Section 3 "). The purpose of Section 3 is to ensure that
employment and other economic opportunities generated by HUD assistance or HUD -
assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to
low -and very low- income persons [inclusive of Very Low Income Persons, Very Low
Income Households, and Very Low Income Tenants served by the Project], particularly
persons who are recipients of HUD assistance for housing.
(b) The parties to this contract agree to comply with HUD's regulations in 24
CFR part 135, which implement Section 3. As evidenced by their execution of this
contract, the parties to this contract certify that they are under no contractual or other
impediment that would prevent them from complying with the part 135 regulations.
(c) The contractor agrees to send to each labor organization or representative
of workers with which the contractor has a collective bargaining agreement or other
understanding, if any, a notice advising the labor organization or workers' representative
of the contractor's commitments under this Section 3 clause, and will post copies of
notices in conspicuous places at the work site where both employees and applicants for
training and employment positions can see the notice. The notice shall describe the
Section 3 preference, shall set forth minimum number of job titles subject to hire,
availability of apprenticeship and training positions, the qualifications for each; and the
name and location of person(s) taking applications for each of the position; and the
anticipated date the work shall begin.
(d) The contractor agrees to include this Section 3 clause in every subcontract
subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate
action, as provided in an applicable provision of the subcontract or in this Section 3
clause, upon a finding that the subcontractor is in violation of the regulations 24 CFR part
135. The contractor will not subcontract with any subcontractor where the contractor has
20
notice or knowledge that the subcontractor has been found in violation of the regulations
in 24 CFR part 135.
(e) The contractor will certify that any vacant employment positions,
including training positions, that are filled (a) after the contractor is selected but before
the contract is executed, and (b) with persons other than those to whom the regulations of
24 CFR part 135 require employment opportunities to be directed, were not filled to
circumvent the contractor's obligations under 24 CFR part 135.
(f) Noncompliance with HUD's regulations in 24 CFR part 135 may result in
sanctions, termination of this contract for default, and debarment or suspension from
future HUD assisted contracts."
After the foregoing Section 3 Clause, there shall be a signature block for the
contractor, as applicable, the following text shall be included immediately above the signature
block: "The contractor /provider by his/her signature affixed hereto declares under penalty of
perjury that contractor has read the requirements of the Section 3 Clause and accepts all its
requirements contained therein for all of his/her operations related to this contract."
To the extent applicable, the Developer shall comply and/or cause compliance
with Section 3 Clause requirements for the Project. For example, when and if Developer or its
contractor(s) /subcontractor(s) hire(s) full time employees, rather than volunteer labor or
materials, Section 3 is applicable and all disclosure and reporting requirements apply.
10.6 Construction Information. From time to time during the course of the construction,
within ten (10) Business Days following 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 Aeainst Liens: Developer shall diligently file a valid Notice of Completion
upon completion of the construction, diligently file a notice of cessation in the event of a
cessation of labor on the construction for a period of thirty (30) days or more, and take all actions
reasonably required to prevent the assertion of claims of lien against the Property. In the event
that any claim of lien is asserted against the property or any stop notice or claim is asserted
against the 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.
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11. FEDERAL - HOME PROGRAM AND CDBG COVENANTS
11.1 CHDO. Orange Housing Development Corporation, the sole member of the
managing general partner of Developer, represents and warrants that it qualifies and is in good
standing as a Community Housing Development Organization under the HOME Program.
Developer hereby covenants and agrees to maintain such status throughout the term of this
Agreement, and to provide the City with written documentation necessary to demonstrate
maintenance of said status on an annual basis.
11.2 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, and California
Health and Safety Code section 50052.5 so as to qualify the housing on the Property as
Affordable Housing with affordable rents.
11.3 Tenant and Participant Protection. Developer shall comply with the
requirements of 24 CFR 92.253.
11.4 [Intentionally Omitted]
11.5 Handicapped Accessibility. Developer shall comply with (a) Section
504 of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C governing
accessibility of projects assisted under the HOME Program; and (b) the Americans with
Disabilities Act of 1990, and implementing regulations at 28 CFR 35 -36 in order to make the
Project readily accessible to and usable by individuals with disabilities.
11.6 Use of Debarred, Suspended, or Inelieible 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 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
22
CFR 92.350. Developer must also follow the requirements of Health and Safety Code section
33435.
11.11 Property Standards. Developer shall cause the Property to meet the housing
quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal
codes and ordinances, including zoning ordinances. Developer shall also cause the Property to
meet the current edition of the Model Energy Code published by the Council of American
Building Officials.
11.12 Displacement and Relocation. Developer acknowledges and agrees that,
pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part, City
must ensure that it has taken all reasonable steps to minimize the displacement of persons as a
result of the 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.
11.13 Other Program Requirements. Developer shall carry out each activity in
compliance with all federal laws and regulations described in subpart H of 24 CFR 92, except
that Developer does not assume City's responsibilities for environmental review in 24 CFR
92.352 or the intergovernmental review process in 24 CFR 92.359.
11.14 Request for Disbursements of Funds. Notwithstanding anything contained in
this Agreement to the contrary, Developer may not request disbursements of funds under this
Agreement until the funds are needed for payment of eligible costs (such funds shall be used
solely towards the acquisition and soft costs of the Project). The amount of each request shall be
limited to the amount needed.
11.15 Eligible Costs. Developer shall use HOME Funds to pay costs defined as
"eligible costs" pursuant to 24 CFR 92.206.
11.16 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.
11.17 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';
23
(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 CDBG 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."
11.18 Conflict of tnterest. Developer shall comply with and be bound by the conflict
of interest provisions set forth at 24 CFR 570.611, as well as state regulations pertaining to
conflict of interest.
11.19 Monitoring. Developer shall allow the City to conduct periodic inspections of
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.
11.20 Recertification of Tenant Income.
(a) Developer shall take all necessary steps to review the income of all tenants
prior to renting to them, as well as reviewing current tenants on an annual basis, in
accordance with HOME regulations and guidelines. Every fifth (5`) year, Developer
shall require new original income documents to be submitted by tenants. Tenants in
HOME assisted units whose incomes no longer comply with federal income guidelines
shall have their rents adjusted in accordance with federal HOME guidelines (24 CFR
92.252- 92.253).
(b) 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.
(c) HOME assisted units continue to qualify as affordable housing despite a
temporary non - compliance caused by increases in the incomes of existing tenants if
actions satisfactory to HUD are being taken to ensure that all vacancies are filled in
accordance with this section until the non - compliance is corrected.
11.21 Other HOME Program Requirements. Developer shall comply with all other
applicable requirements of the HOME Program.
24
11.22 Controlling Covenants. If there is a discrepancy between State and Federal law
with regard to any of the aforementioned covenants, the more stringent shall apply.
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND
REPAIR OF PROPERTY
12.1 Maintenance. Developer shall maintain the Property (and all abutting grounds, sidewalks,
roads, parking and landscape areas which Developer is otherwise required to maintain) in good
condition and repair; shall operate the Property in a businesslike manner; shall prudently
preserve and protect its own as well as the City's interests in connection with the Property; shall
not commit or permit any waste or deterioration of the Property (except for normal wear and
tear); shall not abandon any portion of the Property or leave the Property unguarded or
unprotected; and shall not otherwise act, or fail to act, in such a way as to unreasonably increase
the risk of any damage to the Property or of any other impairment of City's interests under the
Loan Documents. Without limiting the generality of the foregoing, and except as otherwise
agreed by City in writing from time to time, Developer shall promptly and faithfully perform and
observe each of the following provisions:
12.1.1 Alterations and Repair. Developer shall not remove, demolish or materially
alter any Improvement without City's prior consent, except to make non - structural repairs which
preserve or increase the Property's value, and shall promptly restore, in a good and professional
manner, any Improvement (or other aspect or portion of the Property) that is damaged or
destroyed from any cause.
12.2 Compliance. Developer shall comply with all laws and requirements of Governmental
Authority (including, without limitation, all requirements relating to the obtaining of
Governmental Authority approvals), all Governmental Authority approvals and all rights of third
parties, relating to Developer, the Property or Developer's business thereon.
12.3 Taxes and Impositions. Developer shall pay, prior to delinquency, all of the
following (collectively, the "Impositions "): (a) all general and special real property taxes and
assessments imposed on the Property; (b) all other taxes and assessments and charges of every
kind that are assessed upon the Property (or upon the owner and /or operator of the Property) and
that create or may create a lien upon the Property (or upon any personal property or fixtures used
in connection with the Property), including, without limitation, non - governmental levies and
assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees,
taxes and assessments imposed on City (other than City's income or franchise taxes) which are
measured by or based upon (in whole or in part) the amount of the obligations secured by the
Property. If permitted by law, Developer may pay any Imposition in installments (together with
any accrued interest).
12.3.1 Right to Contest. Developer shall not be required to pay any Imposition
so long as (a) its validity is being actively contested in good faith and by appropriate
proceedings, (b) Developer has demonstrated to City's reasonable satisfaction that leaving such
Imposition unpaid pending the outcome of such proceedings could not result in conveyance of
the Property in satisfaction of such Imposition or otherwise impair the City's interests under the
25
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).
12.3.2 Evidence of Payment. Upon demand by City from time to time,
Developer shall deliver to City, within thirty (30) days following the due date of any Imposition,
evidence of payment reasonably satisfactory to City.
12.3.3 Books and Records. Developer shall maintain complete books of account
and other records reflecting its operations (in connection with any other businesses as well as
with respect to the Property), in accordance with generally accepted accounting principles
applied on a consistent basis or in accordance with such other principles or methods as are
reasonably acceptable to City, in accordance with 24 CFR 92.508.
12.4 Payment of Fees. Developer shall pay annually to City on December 1 of each year,
monitoring and administrative fees described in the Bond Regulatory Agreement between the
Housing Authority of the City of Santa Ana and the Developer, executed upon issuance of bonds
pertaining to this Project.
12.5 Proiect 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.
12.6 Replacement Reserve Account. Developer must establish or cause to be established a
segregated interest - bearing replacement reserve depository account ( "Replacement Reserve
Account ") no later than sixty (60) days after the Notice of Completion is filed. 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.
13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and agrees that:
(a) In Use of Property. There shall be no discrimination against or segregation of
any person, or group of persons, on account of race, color, creed, 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
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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.
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
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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;
(d) any aspect of the Improvements that is not in substantial
conformity with the plans or code;
(e) any Event of Default or event which, with the giving of
notice or the passage of time or both, would constitute an Event of Default;
m
M 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. Developer shall
include in said reports, a document in the "Form of Residual Receipts Report" attached hereto as
Exhibit G and incorporated herein.
15.6 Audits and Access to Records. Developer agrees that City, the U.S. Department of
Housing and Urban Development, the Comptroller General of the United States or any of their
authorized representatives shall have the right of access, upon reasonable notice, to any books,
documents, papers, or other records of Developer which are pertinent to this Agreement in order
to make audits, examinations, abstracts, excerpts or transcripts. Developer will maintain all
books and records pertaining to this Agreement for a period of not less than five (5) years after
all matters pertaining to this Agreement (i.e., audit, disputes or litigation) are resolved in
accordance with applicable federal or state laws, regulations or policies, and when a period of
affordability or recapture applies to Developer's activities, for a period of not less than five (5)
years after the affordability or recapture period ends.
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15.7 Termite Inspection Report. Developer shall deliver a termite report pertaining to the
Property to the City every fifth (5`) year beginning January 2018.
16. OTHER COVENANTS
While any obligation of Developer under the City Note or City Deed of Trust remain
outstanding, the following provisions shall apply, except to the extent that 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 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.
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,
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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
18.1 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;
(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
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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.
18.2.1 Nothwithstanding the foregoing, neither Developer, nor any of its partners, shall
be personally liable for any indemnification obligation hereunder which would
result as the repayment of principal and /or interest under the Loan.
18.3 Reimbursement of City. Developer shall reimburse City immediately upon written
demand for all costs reasonably incurred by City (including the reasonable fees and expenses of
attorneys, accountants, appraisers and other consultants, whether the same are independent
contractors or employees of City) in connection with the enforcement of the Loan Documents
and all related matters including all claims, demands, causes of action, liabilities, losses,
commissions and other costs against which City is indemnified under the Loan Documents. Such
reimbursement obligations shall bear interest from the date occurring twenty (20) days after City
gives written demand to Developer and shall be secured by the City Deed of Trust. Such
reimbursement obligations shall survive the cancellation of the 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 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
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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
shall deliver to City evidence of renewal or replacement of such policy reasonably satisfactory to
the City Attorney.
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.
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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 (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
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. 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
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 damage occurs, the Proceeds shall be
applied by City against any obligations to City that are secured by a lien on the Property, and the
selection of which such obligations to apply the Proceeds against shall be made by City in its
sole and absolute discretion.
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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 Note. If so applied, any award in excess of the unpaid balance of the
Note and other sums due to City shall be paid to Developer or Developer's assignee. City shall
have no obligation to take any action in connection with any actual or threatened condemnation
or other proceeding.
19.9.1 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.
19.9.2 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 Subrogation. 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
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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 (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;
(h) 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 ninety (90) days; or any judgment, writ, warrant of
9M
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
0) (i) any of the Senior Loan documents is revoked or terminated, in whole or
in part and for any reason (except due to repayment of such loans), without the 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 amended,
supplemented or otherwise modified without City's prior written consent, which consent shall not
be unreasonably withheld. Notwithstanding anything to the contrary contained herein, City
hereby agrees that any cure of any default made or tendered by 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:
(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 HOME /CDBG 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
37
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.
21. MISCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the existence at any
time of any obligation or liability of City to Developer, or any other claim by developer against
City, in connection with the Loan or otherwise, Developer hereby waives any right it might
otherwise have (a) to offset any such obligation, liability or claim against Developer's obligations
under the Loan Documents, or (b) to claim that the existence of any such outstanding obligation,
liability or claim excuses the nonperformance by Developer of any of its obligations under the
Loan Documents.
21.2 Notices. All notices, demands, approvals and other communications provided for in the
Loan Documents shall be in writing and be delivered to the appropriate party by personal service
or U.S. mail at its address as follows:
If to Developer: Depot at Santiago, 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
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
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
W..'
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 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.
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
39
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 Payment of Consideration. Developer warrants that it has not paid
or given, and will not pay or give, any third person any money or other consideration for
obtaining this Agreement.
21.14 Nonliability of City Officials and Employees. No member, official or employee of
City shall be personally liable to Developer, or any successor in interest, in the event of any
default or breach by City or for any amount which may become due to Developer or successor,
or on any obligation under the terms of this Agreement.
21.15 Plans and Data. 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 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
.M
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: CITY OF SA ANA
Maria D. Huizar Kevin O'R rke
Clerk of the Council 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
CALIFORNIA ALL- PURPOSE ACKNOWLEDGMENT
State of California
County of Orange
}SS.
On July 15, 2013 before me Claudia M. FemandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Kevin O'Rourke
CLAUDIA M. FERNANDEZ SHAW[
Commission # 1875128 `
Z -s Notary Public • California i
Z
Orange County
Va i My Comm. ExOires Jan 25, 2014
Place Notary Seal Above
who proved to me on the basis of satisfactory
evidence to be the person(;3'j whose name($]
mare- subscribed to thee' within instrument
and acknowledged to me that 103hhefthey
executed the same in 24*Oneir-
authorized capacity(ie�, and that by
FheF/ttleir signature on the instrument the
person( or the entit� upon behalf of which
the person) acted, executed the instrument.
I certify under PENALTY OF PERJURY under
the laws of the State of California that the
foregoing is true and correct.
Z nd and official seal.
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signers)
Signer's Name:
❑ Individual
❑ Corporate Officer - Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Number of Pages:
Signer is Representing: Interim City Manager,
City of Santa Ana
DEVELOPER:
Depot at Santiago, LP, a California limited partnership
By: OHDC Depot, LLC,
a California limited liability company,
its managing general partner
By: Orange Housing Development Corporation,
a California nonprofit corporation, its sole member
By: ✓G /�-4z
Eunice Bobert, Chief Executive Officer
By: C &C Depot, 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: n�
arry A. Cottle, Trustee
42
CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
State of California
County of Orange }SS.
On July 11, 2013 before me Claudia M. FemandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Eunice Bobert
Name(s) of Signer(s)
CLAUDIA M. FERNANDU SHAW
Commission # 1875128
a -u Notary Public - California z
i Orange County '
My Comm. Expires Jan 25, 2014!
Place Notary Seal Above
who proved to me on the basis of satisfactory
evidence to be the personk< whose name
cg,8lare subscribed to the within instruTfent
and acknowledged to me that ,�ip/shefthey
executed the same in Ir
authorized capacity(io), and that by
10 /herftheir signatureA on the instrument the
person�6), or the entity upon behalf of which
the personS4 acted, executed the instrument.
I certify under PENALTY OF PERJURY under
the laws of the State of California that the
foregoing is true and correct.
ATNESS rfiv hand and official sealOi
OPTIONAL v
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document Date:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer — Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer is Representing
Number of Pages:
CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
State of California
County of Orange
} SS.
On July 11, 2013 before me Claudia M. FemandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Todd R. Cottle _
i I@ CLAUDIA M. FERNANDEZ SHAW
Commission B 1875128
Notary Public • California i
Orange County
Place Notary Seal Above
who proved to me on the basis of satisfactory
evidence to be the personX whose name(g)
cQie subscribed to thd within instrument
and acknowledged to me that 42skekhey
executed the same in da/fiM—r7iFeir
authorized capacity(io), and that by
he#theirsignature(.d) on the instrument the
person(; or the entity upon behalf of which
the person(,} acted, executed the instrument.
I certify under PENALTY OF PERJURY under
the laws of the State of California that the
foregoing is true and correct. i
mC�r�haand and official seal.
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer — Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer is Representing
Number of Pages:
CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
State of California
County of Orange }SS.
On July 11, 2013 before me Claudia M. FemandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Barry A. Cottle
Name(s) of Signers)
CLAUDIA M. FERNANDEZ SHAW
r Commission N 1875128
-s Notary Public - California i
_ Orange County
My Comm. Expires Jan 25, 2014'
Place Notary Seal Above
who proved to me on the basis of satisfactory
evidence to be the person) whose name(4)
,GFare- subscribed to the within instrument
and acknowledged to me that cl§/abetthey
executed the same in i9wherttheir
authorized capacity(ie and that by
,s/her/th'eir signature( 'on the instrument the
person( or the entity upon behalf of which
the per on(p�acted, executed the instrument.
I certify under PENALTY OF PERJURY under
the laws of the State of California that the
foregoing is true and correct.
hand and official
Though the information below is not required by law, it may prove valuable to persons relying on the
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer- Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer is Representing
Number of Pages:
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Santa Ana
Community Development Agency
Housing Department M -37
20 Civic Center Plaza, P Floor
P.O. Box 1988
Santa Ana, California 92702
A- 2013 -072 SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
(923 N. Santiago Street, Santa Ana, CA)
THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the
"Restrictions ") are entered into as of the I Ith day of July 2013, by and among Depot at Santiago,
L.P., a California limited partnership (referred to herein as the "Developer ") and the City of
Santa Ana, a charter city and municipal corporation (the "City ").
RECITALS:
A. Developer is the owner of that certain real property located at 923 N. Santiago Street
(the "Property ") located in the City of Santa Ana more particularly described in Exhibit A, which
is attached hereto and incorporated herein by this reference.
B. For the purpose of providing approximately seventy (70) residential rental units of
housing that will be affordable to Extremely Low, Very Low and Low Income households
( "Assisted Units ") with the exception of the on -site manager unit, Developer and the City have
entered into that certain Loan Agreement, dated on or about the date hereof (the "Agreement') to
which these Restrictions are attached as Exhibit B which, along with all of its attachments, is
incorporated herein by this reference (any capitalized term that is not otherwise defined in these
Restrictions shall have the meaning ascribed to such term in the Agreement).
C. The Agreement provides, among other things, for the use of the Property for
affordable housing with the Assisted Units being restricted to being rented to Extremely Low,
Very Low and Low Income households.
D. The Agreement contains certain provisions relating to the use of the Property.
NOW, THEREFORE, DEVELOPER AND CITY COVENANT AND AGREE AS
FOLLOWS:
1076 01 13 33691A
I . Developer covenants and agrees (for itself, its successors, its assigns, and every
successor in interest to the Property or any part thereof) that Developer, such successors, and
such assigns shall use the Property exclusively to provide affordable housing for Extremely Low,
Very Low and Low Income households, as provided in these Restrictions and in the Agreement.
2. RESERVED.
AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
3.1 Use Covenants and Restrictions/Proiect Mix.
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 of the 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 (except for the unit for the
onsite Manager). The Project shall consist of approximately seventy (70) residential units.
Enforceability of restrictions on the sixty -nine (69) units shall be enforced until the date that is twenty
(20) years after the date on which the Certificate of Completion is issued (HOME affordability period),
unless tax credits are awarded to the Property, then fifty -five (55) years after the date on which the
Certificate of Completion is issued. These Affordability Restrictions on Transfer of Property shall
remain in first position on title and shall not be subordinated.
B. The proposed unit mix and levels of affordability are as follows:
Bedroom
Size
Square
Feet
30%
AMI
40%
AMI
50%
AMI
60%
AMI
Total
1 Bedroom
875
2
3
6
3
14
2 Bedroom
1,085
2
6
11
10
29
3 Bedroom
1,350
3
5
11
7
26
Totals
7
14
28
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 20 -year HOME affordability period, for the eleven (11) HOME assisted units, the
rent schedule periodically published by HUD.
* Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Santa Ana
Housing Authority publishes the utility allowance.
1076A01A1333691.1
3.2 Affordable Gross Starting Rents (Less Reasonable Utility Allowance): Initial rents
may be recalculated to allowable rental amounts at the time of initial lease -up following completion
of construction in accordance with any changes in allowable rent and income tables as published by
HUD and the California Tax Credit Allocation Committee ( "TCAC "), as amended from time to
time.
3.3 Rent Increases: On an annual basis, the City shall provide the Developer with the
maximum allowable schedule of rents for the Property. In no event can Developer charge any
tenant more than such amount.
4. Developer, its successors and assigns shall not charge rents for the Units in excess
of the revised schedules of area median incomes issued from time -to -time by HUD for the
HOME units during the 20 year HOME affordability period or by TCAC. The Deputy City
Manager shall notify Developer in writing of the adjusted allowable maximum incomes and
rents.
5. Developer shall adopt and include as part of its Management Plan (described in
Section I 1 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;
(f) Carry out the Affirmative Marketing procedures adopted by the City of
Santa Ana, which are designed to provide information and otherwise attract eligible persons from
all racial, ethnic and gender groups in the housing market area to the units. Developer and City
shall cooperate to effectuate this provision prior to the initial renting, or upon occurrence of a
vacancy, and the re- renting of any Restricted Units (24 CFR 92.351).
1076A01A1333691.1
6. Developer, its successors and assigns, shall not refuse to lease a unit to a holder of
a rental voucher under 24 CFR part 887 (Housing Choice Voucher Program) or to a holder of a
comparable document evidencing participation in a HOME tenant -based assistance program
because of the status of the prospective tenant as a holder of such certificate of family
participation, rental voucher, or comparable HOME tenant -based assistance document. Total
rents charged to such tenants, including the tenant contribution and rental assistance, shall not
exceed the allowable rents as described above.
7. Any lease of any of the units must be for not less than one year. The lease may
not contain any of the following provisions (in which references to "owner" shall mean the
Developer, its successors or assigns):
(a) Agreement by the tenant to be sued, to admit guilt, or to a judgment in
favor of the owner in a lawsuit brought in connection with the lease;
(b) Agreement by the tenant that the owner may take, hold, or sell personal
property of household members without notice to the tenant and a court decision on the rights of
the parties. This prohibition, however, does not apply to an agreement by the tenant concerning
disposition of personal property remaining in the housing Unit after the tenant has moved out of
the Unit. The owner may dispose of this personal property in accordance with state law;
(c) Agreement by the tenant not to hold the owner or the owner's agent
legally responsible for any action or failure to act, whether intentional or negligent;
(d) Agreement of the tenant that the owner may institute a lawsuit without
notice to the tenant;
(e) Agreement by the tenant that the owner may evict the tenant or household
members without instituting a civil court proceeding in which the tenant has the opportunity to
present a defense, or before a court decision on the rights of the parties;
(f) Agreement by the tenant to waive any right to a trial by jury;
(g) Agreement by the tenant to waive the tenant's right to appeal, or to
otherwise challenge in court, a court decision in connection with the lease; and
(h) Agreement by the tenant to pay attorney's fees or other legal costs even if
the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may
be obligated to pay costs if the tenant loses.
8. Developer, its successors or assigns, must adhere to state law requirements with
regard to termination of tenancy.
9. Developer shall maintain the improvements on the Property in compliance with
all applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local code
1076A01A1333691.1
requirements and shall keep the Property free from any unreasonable accumulation of debris or
waste materials. Developer shall also maintain in a healthy condition any landscaping planted on
the Property.
10. Developer covenants and agrees for itself, its successors, its assigns and every
successor in interest to the Property or any part thereof, there shall be no discrimination against
or segregation of any person, or group of persons, on account of race, color, creed, religion, sex,
disability, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy,
tenure or enjoyment of the Property nor shall the Developer itself or any person claiming under
or through it establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees of the Property, as required by the Title VI of the Civil Rights
Act of 1964, the Fair Housing Act (42 U.S.C. § 3601 -20) and all implementing regulations, and
the Age Discrimination Act of 1975, and all implementing regulations.
11. Not later than five (5) business days prior to the execution of the documents,
Developer shall submit to the Deputy City Manager or his/her designee, a Management Plan in a
form that is acceptable to the Deputy City Manager, including, but not limited to, the
components listed below. Approval of the Management Plan must be obtained from the City no
later than the time for the Closing. Developer shall manage the Assisted Units in accordance
with the approved Management Plan, including such amendments as may be approved in writing
from time to time by the City, for the term of the income and rent restrictions contained in these
Restrictions. The components of the Management Plan shall include:
(a) Management Agent. Developer shall submit the name and qualifications
of the proposed Management Agent. The City shall approve or disapprove the proposed
Management Agent in writing based on the experience and qualifications of the Management
Agent.
(b) Management Agreement. Developer shall submit a copy of the
proposed management agreement specifying the amount of the management fee, and the
relationship and division of responsibilities between Developer and Management Agent.
(c) Annual Budget and Projected Cash Flows. Prior to the Closing, and
annually thereafter not later than one hundred fifty (150) days after the close of each calendar
year thereafter, Developer shall submit a projected operating budget and cash flow to the City.
The budget and cash flow shall be in a form that is acceptable to the City.
(d) Tenant Selection Policies. Developer shall include in the Management
Plan the tenant selection policies in accordance with Section 5, above.
12. If at any time the City determines that the units are not being managed or
maintained in accordance with the approved Management Plan, Developer shall change the
management agent or the practices complained of, upon receipt of written notice from the City.
The City may require Developer to change management practices or to terminate the
management contract and designate and retain a different management agent. The management
1076 \01 \1333691.1
agreement shall provide that it is subject to termination by Developer without penalty, upon
thirty (30) days prior written notice, at the direction of the City. Within ten (10) days following a
direction of the City to replace the management agent, the Developer shall select another
management agent or make other arrangements satisfactory to the City or designee for
continuing management of the units.
13. The covenants established in these Restrictions and any amendments hereto
approved by the City and Developer shall, without regard to technical classification and
designation, be binding for the benefit and in favor of the City, and its respective successors and
assigns. These Restrictions shall remain in effect for twenty (20) years unless tax credits are
awarded to the Property in which case 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 it may determine are necessary for the continued
maintenance and operation of the Assisted Units. The covenants against discrimination shall
remain in effect for the period of these Restrictions.
14. Developer shall prepare, maintain and submit to the City, as appropriate, the
following records and reports in compliance with 24 CFR 92.504 (c) (12):
a. Annual Reports. Developer shall file with the City an Annual Report (herein
referred to as the "Annual Report") within one hundred fifty (150) days following the end of
each calendar year, commencing with the end of the calendar year (or portion thereof) in which
the closing occurs. The Annual Report shall contain a certification by Developer as to such
information as the Deputy City 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 10(c) of the Affordable Housing Restrictions
which shall include a financial statement for the previous calendar year that includes a balance
sheet and a profit and loss statement indicating any surplus or deficit in operating accounts; a
detailed itemized listing of income and expenses; and the amounts of any fiscal reserves. Such
Annual Budget and financial statement shall be prepared in accordance with generally accepted
accounting practices. The Deputy City Manager may require that the financial statement be
audited at Developer's expense by an independent certified public accountant acceptable to the
Deputy City Manager.
(2) Any substantial physical defects in the Project, including a description of
any major repair or maintenance work undertaken or needed in the previous and current years.
Such statement shall describe what steps Developer has taken in order to maintain the Project in
a safe and sanitary condition in accordance with applicable housing and building codes and the
property standards set forth in 24 CFR 92.251.
(3) The occupancy of the units indicating the income of each current resident
and the current rents charged each resident and whether those rents include utilities, including
records that demonstrate that the Project meets the requirements of 24 CFR 92.253 for tenant and
participant protection under the HOME Program.
1076 \01 \1333691.1
(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.
(6) Evidence of a currently paid hazard insurance policy in accordance with
the requirements 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 Developer or City from
becoming a co- insurer under the terms of the policy, but in any event in an amount not less than
100% of the then full replacement cost, to be determined at least once annually and subject to
reasonable approval by the Deputy City Manager.
(7) Evidence of a currently paid liability insurance policy, naming the City as
additional insured and in a form approved by the City Attorney with coverage as described in the
Loan Agreement.
(8) Termite reports pertaining to the Property every fifth (51) year.
(9) Such other information as may be reasonably required by the Deputy City
Manager or his/her designee.
b. Records and Audits. Developer 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 Assisted Unit, which demonstrate that the project meets
the requirements of 24 CFR 92.252.
(3) records which demonstrate compliance with the tenant and participant
protections, as specified in 24 Section 29.253;
(4) records which demonstrate compliance with the Equal Opportunity and
Fair Housing requirements outlined in these Restrictions, including:
(A) data on the extent to which each racial and ethnic group and single
head of household (by gender of head of household) have applied for, participated in, or
benefited from, any program or activity funded in whole or in part with HOME funds;
(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);
1076A01A1333691.1
(C) documentation and data on the steps taken to implement
Developer's outreach programs to minority -owned and women -owned businesses to meet the
minority outreach requirements of 24 CFR 92.350;
(5) documentation of the steps taken to carry out an affirmative marketing
program in accordance with 24 CFR 92.351, if applicable;
(6) if applicable, records which demonstrate compliance with the
requirements relating to relocation of displaced persons, as described in 24 CFR 92.353. At a
minimum, these shall include project occupancy lists identifying the name and address of all
persons occupying the project property up until the date of the Real Estate Closing (i.e., the date
on which Developer obtained site control);
(7) records concerning lead -based paint in accordance with 24 CFR 92.355;
(8) if applicable, records which support any requests for waivers of the
conflict of interest prohibition as stated in 24 CFR 92.356;
(9) records of certifications of contractor qualifications as they relate to the
debarment and suspension requirement as stated in 24 CFR 92.357 and 24 CFR Part 24; and
(10) any other reports issued by other monitoring agencies.
C. All records pertaining to each calendar year of HOME funds must be retained for
the most recent five year period, except that for rental housing projects, records may be retained
for five years after the project completion date; except that records of individual tenant income
verifications, project rents and project inspections must be retained for the most recent five year
period, until five years after the affordability period terminates (24 CFR 92.508). Developer shall
cooperate with the City to retain all books and records relevant to the Loan Agreement for a
minimum of five years after the expiration of the Loan Agreement and any and all amendments
hereto, or for five years after the conclusion or resolution of any and all audits or litigation
relevant to the Loan Agreement, whichever is later. The City, the State, the Office of the
Auditor General of HUD, and /or their representatives shall have unrestricted reasonable access
to all locations, books, and records for the purpose of monitoring, auditing, or otherwise
examining said locations, books, and records with or without prior notice.
d. If so directed by the City, the State or HUD upon termination of the Loan
Agreement, Developer shall cause all records, accounts, documentation and all other materials
relevant to the work to be delivered to the City, the State or HUD, as depository.
e. All records, accounts, documentation and other materials relevant to the Project
shall be accessible at any time to the authorized representatives of the City, the State or HUD, on
reasonable prior notice, for the purpose of examination or audit.
The City shall perform an annual audit at the close of each calendar year in which
1076A01A1333691.1
these Restrictions are in effect. Developer shall reasonably cooperate with City in performing
such audit.
16. 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.
17. The covenants and agreements contained herein shall run with the land and not be
personal obligations of Developer. Upon the sale, conveyance or other transfer of the Property
(a "Transfer ") and the assumption of the obligations hereunder by a transferee, Developer's
liability for performance shall be terminated as to any obligation to be performed hereunder after
the date of such Transfer.
18. The Loan Agreement and all of its attachments shall be enforceable by the
City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability
Restrictions on Transfer of Property, the City Promissory Note and the City Deed of Trust
provide a means of enforcement by the City if Developer is in breach of its obligations hereunder
and thereunder, including liens on the Property, deed restrictions and covenants running with the
land [24 CFR 92.504 (c) (13)].
1076A01 A 133369L 1
IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions to be
executed on the date set forth hereinabove.
ATTEST:
Maria D. Huizar
Clerk of the Council
APPROVED AS TO FORM:
Sonia R. Carvalho
City Attorney
By:
Lisa S orck
Assistant City Attorney
DEVELOPER:
CITY OF S ANA
Kevin O'Rourke
Interim City Manager
Depot at Santiago, L.P., a California limited partnership
By: OHDC Depot, LLC,
a California limited liability company,
its managing general partner
By: Orange Housing Development Corporation,
a California nonprofit corporation, its sole member
By: t
Eunice Bo rtChief ExecYltive Officer
By: C &C Depot, 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: y
arry A. Cottle" ru e
10
1076A01A1333691.1
CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
State of California
County of Orange
ISS.
On July 11, 2013 before me Claudia M. FernandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Eunice Bobert
--------------
CLAUDIA M. FERNANDEZ SHAW
Commission * 1875128
z , -e Notary Public - California z
Z Orange County s
My Comm. Expires Jan 25, 2014
Place Notary Seal Above
who proved to me on the basis of satisfactory
evidence to be the person�o whose name(4
Fare subscribed to the within instrument
and acknowledged to me that W eY
executed the same in 4�l3erfttre
authorized capacity(jes), and that by
ct4i/ erftHeir— signaturefsj on the instrument the
person , or the entity upon behalf of which
the petson
/Xacted, executed the instrument.
I certify u nder PENALTY OF PERJURY under
the laws of the State of California that the
foregoing is true and correct.
m (hand and official seal.
Though the information below is not required by law, it may prove valuable to persons relying on the
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer — Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer is Representing
CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
State of California
County of Orange
ISS.
On July 11, 2013 before me Claudia M. FemandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Todd R. Cottle
CLAUDIA M. FERNANDEZ SHAW
Commission # 1875128
< -d Notary Public - California z
i Orange County '
My Comm. Expires Jan 25, 2014
Place Notary Seal Above
who proved to me on the basis of satisfactory
evidence to be the person0 6 whose name�s)
ciV subscribed to the within instrument
and acknowledged to me that Ja /she/thvy
executed the same in tai is'heowlerr
authorized capacity(ie�K and that by
QQis'ih@# ieirsignature(,s'f on the instrument the
person( or the entity upon behalf of which
the per onA acted, executed the instrument.
I certify under PENALTY OF PERJURY under
the laws of the State of California that the
foregoing is true and correct.
hand and official
` OPTIONAL C/
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document Date:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer— Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer is Representing
Number of Pages:
CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
State of California
County of Orange
}SS.
On July 11, 2013 before me Claudia M. FernandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Barry A. Cottle
CLAUDIA M. FERNANDEZ SHAW
Commission F 1875128
Notary Public - California z
= Orange County
My Comm. Expires Jan 25, 2014
Place Notary Seal Above
who proved to me on the basis of satisfactory
evidence to be the personV whose nameW
,_Wie subscribed to the within instrument
and acknowledged to me that Aj& t, y
executed the same in dtetr
authorized capacity(igg), and that by
�S�Mef4their signatureV on the instrument the
person4,e'f, or the entity upon behalf of which
the person( acted, executed the instrument.
I certify under PENALTY OF PERJURY under
the laws of the State of California that the
foregoing is true and correct. 1�1
OPTIONAL
official seal.
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer — Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer is Representing
CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
State of California
County of Orange }SS.
On July 15, 2013 before me Claudia M. FernandezShaw, Notary Public
Date Name and Title of Officer (e.g., "Jane Doe, Notary Public ")
personally appeared Kevin O'Rourke
Name(s) of Signer(s)
who proved to me on the basis of satisfactory
evidence to be the person()' whose name(a)
.laFe subscribed to the within instrument
and acknowledged to me that c6b/sheH#1ey
executed the same infkerkheir
authorized capacity(i9), and that by
GS/ irsignature,K) on the instrument the
person , or the entity upon behalf of which
the pe son( acted, executed the instrument.
CLAUDIA M. FERNANDEZ SHAW
Commission # 1875128 1 certify under PENALTY OF PERJURY under
Notary Public - California i the laws of the State of California that the
Z orange county = foregoing is true and correct.
My Comm. Expires Jan 25, 2014
YVITNE my hand and officia e
r
Place Notary Seal Above or
_ Signature of No ry ublic
/ OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document:
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer — Title(s):
❑ Partner -- ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer is Representing: Interim City Manager,
City of Santa Ana
u
1076A01A1333691.1