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HomeMy WebLinkAboutGARNSEY, LP-2011This Documeelectronically recorfir d by �j,ewart Title 415/11 W FEW"MM7 Torn Daly, Clerk -Recorder FRf_,,E RECORDING REQUESTED NO FEE TO SECTION 27383 2011000179763 12:09pm 04/08111 93 401 Al 2 40 When Recorded Mail to: 0.00 0.00 0.00 0.00 117,00 MO MO 0.00 City of Santa Ana 20 Civic Center Plaza, Lv1-37 P.0, Box 1988 Santa Ana, California 92702 Attention: Housing Programs Coordinator NEIGHBORHOOD STABILIZATION"PROG RAM RENTAL 14OUSING DEVELOPMENT LOAN AGREEMENT THIS LOAN AGREEMENT (the "Agreement") is made and entered as of April 2011, by and between Garnsey, LP , a California limited partnership comprised of OfJDC Properties 1, LLC, ("O.HDC"), a Limited Liability Company, and C&C Properties Group 1, Ll..,C, a Limited Liability Company (together the "Borrower") and the City of Santa Ana, a charter city and municipal corporation duly organized and existing under the COrlStitUtion and laws of the State of California (the "City"). A. Borrower has entered into an agreement to purchase propertylocated at 1,2/6 S. Garnsey Ave., Santa .Aria, California, as more particularly described in the legal description, Exhibit A attached hereto and incorporated herein (the "Property"). B. This Agreement is made pursuant to the authority of 'I'itle'XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law. Ij 1-5 �February 17, 20091) (Recovery Act) and sections 2301-2304 of the Housing and Economic Recovery Act of 2008 (Public Law 110-2,89 July 30, 20081) (HERA), Section 2301-2304 of HERA is known as the "'Neighborhood Stabilization Program" or "NSP" with money funded through the Program as "NSP Funds". The term'*NiSP2" refers to the second appropriation of NSP Funds provided under the Recovery Act. C. The City was notified that its application under the NSP for NSP2 Funds was approved by the U.S. Department of Housing and Urban Development ("FlUD") with fundinc, allocated for acquisition and rehabilitation of the multi -family rental tD component of the NSP. The parties hereto have executed the "Neighborhood C, Stabilization Program (Program 2) Rental Housing Development Agreement" dated Page 1 of 1.4 4/5/1 d March l,2010. Borrower must comply with all of the NSP Program requirem.ents asset forth in the Agreement. Pursuant to this Agreement, NSP2 Funds will be used for the acquisition of the Property and related soft costs, D. The City agrees to loan to Borrowerand Borrower agrees to borrow from the City, the Purchase Price plus related. soft costs, for a total of $4,291,188.00 (the "City Loan") pursuant to the Program, subject to the terms and conditions set forth herein. The City Loan shall be secured by a Deed of Trust in the principal amount of FOUR MILLION TWO IRJNDRED NINETY ONE THOUSAND ONE HUND.T.UED EIGHTY EIGHT DOLLARS ($4,291:,188.00). NOW, -1-1 HEREF'ORE, for good and valuable consideration, the parties agree as follows: Definitions:' Unless otherwise defined, the following capitalized terms shall be defined in this Agreement as follows: "Aft "ordable Rent" means the monthly rents which do not exceed the maximum amount applicable to Very Low Income households, as promulgated by the U.S., Department of Housing and Urban Development (IJUD). "Affordability Period'" also referred to as "Term of Affordability", shall befifty- five (55) years from date OfiSSUance of Certificate of Occupancy. "City Deed of Trust"' me< -u -is the deed of trust securing the City Loan, in the -form attached to this Agreement as Exhibit "B" and incorporated herein by reference, "City.Loan" means the loan to be made by the City to Borrower in the principal amount of FOUR M11,1JON TWO HUNDRED NINETY ONE THOUSAND ONE HLJNDRr-,D EIGHTY EIGHT DOLLARS ($4,291,188.00).in accordance with this Agreement, "Cit �.Mqngge _1" means the City Manager and his/her designee. "City Promissory Note" also referred to as "Note", means the promissory note in .favor of the City, evidencing the City Loan, in the form attached to this Agreement as Exhibit "C" and incorporated herein by reference. "Propert " means the real property located at 326 S. Garnsey Ave., Santa Ana, CA., described in the legal description attached to this Agreement as Exhibit A and incorporated herein by reference. "Very Low Income" means an adjusted income which does not exceed fitfty percent (5(l%) of the Orange County, California PMSA median household income, as adjusted for household size and periodically published by HUD, as such qualifying limit is amended from time to time. Page 2 of 14 415111 1. City Loan. The City agrees to lend to Borrower, and Borrower agrees to borrow from the City, the Note Amount, with interest as provided in Section 4(a) of this Agreement, subject to the conditions and restrictions set forth in this Agreement, in the Promissory Note, the Affordability Covenants and Restrictions, and in the City Deed of Trust. When all conditions to the close of escrow other than payment of the Purchase Price have been satisfied, the City shall deposit the Loan Amount into escrow. The City shall direct the Escrow Agent to apply the proceeds of the City Loan on behalf of Borrower to the Purchase Price of the Property and related soft costs. Borrower shall execute and deliver to the Escrow Agent the Promissory Note, the City Deed of Trust and the Affordability Covenants and Restrictions. 2. Authorized _Use _of_City _Loan. The City Loan proceeds may be used for the purchase of the foreclosed Property, as well as pre -approved reasonable soft costs related to such purchase. 3. Loan Repayment. Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts), 6 (Refinancing Proceeds), 7 (Sale Proceeds) and 8 (Accelerated Loan Repayment). 4. Operating Capital Improvement Loan. If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and the General Partner makes a loan to the Partnership, the reserves must be fully funded prior to payment of said loan. Such loan shall be repaid with the Partnership share of the Residual Receipts. The outstanding loan balance will be reflected in the annual report. 5. Annual Loan Repayment/ Residual Receipts. a. The Borrower shall thereafter make a loan payment to the City annually, in the amount of the lesser of the outstanding balance due under this Note or the City's Percentage of the Residual Receipts, as provided in this Section 5. b. Within one hundred fifty (150) days after the close of the initial Calendar Year following the Issuance of the Certificate of Occupancy and on or before the 150th day of each Calendar Year thereafter, the Borrower shall submit to the City an audited financial statement of Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar Year, along with a computation of the Residual Receipts due to the City for the Calendar Year. c. Except as otherwise provided, the Borrower shall pay to the City 50 percent of the Residual Receipts. Fifty percent (50%) of the Residual Receipts shall remain with the Borrower. Page 3 of 14 415/11 d. The Residual Receipts payment shall be made not later than one hundred fifty (150) days after the close of the Calendar Year. Such payment shall be applied first to any late fees, then to reduce the principal balance of the loan. 6. Loan Repayment From Refnanein2 Proceeds. The Borrower shall make a loan payment to the City from every Refinancing that occurs during the term of this Agreement not to exceed the outstanding balance of principal on this Note, to the extent of the City's Percentage of the Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be applied first to pay Closing Costs; next, the amount necessary to pay in Rill the balance remaining on the Senior Loan; next, the Borrower shall pay to the City the City's Percentage of the Refinancing Proceeds to the extent of the outstanding balance on this Note. Fifty percent (50%) of the Refinancing proceeds shall remain with Borrower. Such payment shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds aie insufficient to repay the Loan in full. 7. Loam Repayment from Sale Proceeds. The Borrower shall make a loan payment, not to exceed the outstanding balance of principal on the Note subject to Section 11 herein, to the City from any Sale that occurs during the term of the City Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in full the balance remaining on the Senior Loan; next the Borrower shall pay to the City the City's Percentage of the total Sale Proceeds, not to exceed the outstanding amount of principal due on this Note. Fifty percent (50%) of the Sale Proceeds shall remain with Borrower. Such payment shall be due on the date of such Sale, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full. 8. Accelerated Loan Payment. The full principal amount outstanding shall be due and payable on the earlier to occur of the following: a. Sale or Refinancing of the Property as provided further in Section 10 hereof; unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the City Loan, the City approves such sale and the purchaser assumes the balance of the City Loan in accordance with the terms of the Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to repay in full the City Loan, the City approves such Refinancing and the Borrower remains obligated pursuant to the terns of this Note. b. In event of default (subject to any applicable notice and cure provisions) pursuant to any of the Loan Documents or the Senior Loan Documents. Page 4of14 4/5/11 C. Any default (subject to any applicable notice and cure provisions by Borrower as to any other loan or loans by City to Borrower with respect to the Property; or d. The date that is fifty-five (55) years after the date of the certificate of occupancy, as issued by the City of Santa Ana. On that date, the City agrees to review the performance of the Property and consider in good faith any reasonable request by Borrower to modify the terms or extend the Terin of this City Loan Note. 9. Prepayment Borrower may prepay the outstanding principal balance under this Note, in whole or in part, at any time without penalty, however the Affordability Covenants and Restrictions still remain for the entire Affordability Period of fifty-five (55) years. 10. Acceleration by Reason of Transfer or Financing. a. In order to induce City to make the loan evidenced hereby, Borrower agrees that in the event of any transfer of the Property without the prior written consent of City (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder of the Senior Loan Deed of Trust), City shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. City may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this Section, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall not, however, release Borrower from any liability thereunder without the prior written consent of City. b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or conveyance of the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property, or the lease of all or substantially all of the Property. 'Transfer' shall not include the leasing of individual residential units on the Property, so long as Borrower complies with the provisions of the Loan Agreement and the Affordability Covenants and Restrictions relating to such leasing activity, not shall it include a conveyance of the Property to a limited partnership in which Borrower is a general partner, or to a corporation or limited liability company that is wholly owned by the Borrower or its affiliates and that is formed for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior Loan, without the prior written consent of City (which consent City may grant or deny in its sole discretion), then the entire outstanding balance of the City Loan shall be repaid to the City at the time of each Refinancing or partial Refinancing. Page 5of14 4/5/11 c. Notwithstanding anything to the contrary contained herein, a "transfer" shall not include (anal it shall not be deemed a Sale) (i) a transfer of a general partner's interest in Borrower when made in connection with the exercise by the Borrower's limited partner (the "Limited Partner") of its rights upon a default by a general partner under the Borrower's partnership agreement (the "Partnership Agreement") or upon a general partner's withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting general partner is made within thirty (30) days of such default or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to take action to remove and substitute the general partner with a reasonable period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the Property to the managing general partner of Borrower pursuant to the right of first refusal or to the general partners of Borrower pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Borrower. 11. Event of Default. Subject to the provisions of Sections 14 hereof, the occurrence of any of the following shall be deemed to be an event of default ("Event of Default") hereunder: (a) failure by Borrower to make any payments provided for herein, and if such default is not made good within five (5) days of the due date; (b) failure by Borrower to perform any covenant or agreement in the City Deed of Trust, this Agreement, or the Affordability Covenants and Restrictions within. thirty (30) days after written demand therefor by City (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Borrower fail to promptly commence such cure, and diligently and continuously prosecute same to completion); or (c) a default under the Senior Loan Deed of Trust that remains uncured after the cure period, if any, provided therein. 12. Notice of Default. a. Subject to the applicable cure periods set forth in Section 14 and subject to the further provisions of this Section, failure or delay by the Borrower to perform any term or provision of this Agreement constitutes a default under this Agreement. The Borrower must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. b. The City shall give written notice of default to the Borrower specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. C. Except in the'case of a monetary event of default, the Borrower shall not be in default so Iong as it endeavors to complete such cure, correction or remedy with reasonable diligence, provided such cure, correction or remedy is completed within the Page 6 of 14 applicable time period set forth herein after receipt of written notice (or such additional time as may be deemed by the City to be reasonably necessary to correct the default). d. Any failures or delays by the City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. C. If a monetary event of default occurs under the terms of this Agreement, the Note or the City Deed of Trust, prior to exercising any remedies thereunder City shall give Borrower written notice of such default. Borrower shall have a period of seven (7) days after such notice is received within which to cure the default prior to exercise of remedies by City under this Agreement. f. If a non -monetary event of default occurs under the terms of this Agreement or the Note or City Deed of Trust, prior to exercising any remedies thereunder, City shall give Borrower notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Borrower shall have such period to effect a cure prior to exercise of remedies by the City under this Agreement, the Note and the Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then borrower shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by City. In no event shall City be precluded :from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within one hundred eighty (180) days after the first notice of default is given. 13. Remedies. Upon the occurrence of an Event of Default, after any applicable notice has been provided and the expiration of any applicable cure period therefore, City may declare all sums evidenced hereby immediately due and payable by delivery to the Trustee named in the City Deed of Trust securing the Note, and to Borrower, written declaration of default and demand for sale, and written notice of default and of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for record and City may foreclose on the City Deed of Trust. City shall also deposit with Trustee the Deed of Trust, the Note and all documents evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal shall bear interest at the Bank of America reference rate on the due date of the delinquent payment plus four percent (4%). No delay or omission on the part of the City in exercising any right under the Note or this Loan Agreement shall operate as a waiver of such right. 14. Force Majeure. Page 7 of 14 415/11 Performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the City or any other public or governmental City or entity (except that any act or failure to act of City shall not excuse performance by City); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform.. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time the party claiming such extension gives notice to the other party, provided notice by the party claiming such extension is given within thirty (30) days after the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the City and the Borrower. 15. Nondiscrimination. A. There shall be no discrimination against or segregation of any person., or group of persons, on account of race, color, disability, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any part thereof, nor shall Borrower or any person claiming under or through Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect in perpetuity. B. Borrower covenants by and for itself, its successors and assigns, and all persons claiming under or through thein that there shall be no discrimination against or segregation of, any person or group of persons on . account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Properties. Developer shall refrain from restricting the rental, sale or lease of the Property or any portion thereof on the basis of any of the characteristics listed above. Developer shall also comply with the equal opportunity and fair housing requirements set forth in applicable NSP Regulations. The foregoing covenants shall run with the land and remain in effect in perpetuity. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: Page 8of14 415111 (i) In Leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (in) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (ii) In Contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision -(p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." (iii) In Affordable Housing Restrictions. The foregoing covenants shall (a) be included in the Affordability Restrictions, (b) run with the land, and (c) remain effective for the entire Terni of Affordability (for not fewer than 55 years). C. The covenants established in this Article 15 shall, without regard to technical classification and designation, run with the land and be binding on Borrower and any successor in interest to the Property, in favor of City and its successors and assigns, and shall remain in effect in perpetuity. 16. Use Covenants and Restrictions. A. Borrower agrees and covenants, which covenants shall run with the land and bind Borrower, its successors, its assign and every successor in interest to the Property that Borrower will male all rental units on the Property available to very low households at rents affordable to such households for fifty- five (55) years from the effective date of the issuance of the Certificate of Compliance. B. The Project shall consist of twenty six two-bedroom units, of which twenty-five (25) units will be rented to very low income households (at or below 50% of AMI), and the remaining unit will be reserved for the on-site manager. Page 9 of 14 415111 C. Affordable rents shall be governed as provided in the NSP Regulations. Rental increases shall be in conformance with federal and state law. D. Initial rents may be recalculated to allowable rental amounts at the time of initial lease -up following completion of construction in accordance with any changes in allowable rent and income tables as published by HM. 17. Maintenance of Property. Borrower must maintain the interior and exterior of the improvements and the landscaping on the Property in a manner consistent with community standards which will uphold the value of the Property, in accordance, with this Agreement and the Santa Ana Municipal Code. The maintenance requirements are set forth in specific detail in the recorded Deed of Trust. 18. Handicapped Accessibility. Borrower shall comply with (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations, and (b) the Americans with Disabilities Act of 1990, and implementing regulations in order to provide handicapped accessibility to the extent readily achievable. 19. Loan Servicing. The City may contract with a private lender to originate and service the City Loan, and any costs associated therewith shall be paid by the Borrower. 20. Indemnification. Borrower shall indemnify, defend and hold harmless the City, the City, and their respective officers, agents, employees, legal counsel, representatives and volunteers, from and against any loss, liability, claim or judgment relating in any manner to the Property or this Agreement. Borrower shall remain fully obligated for the payment of taxes, liens and assessments relating to the Property. There shall be no reduction in taxes for Borrower, nor any transfer or responsibility to the City to make such payments, by virtue of the City Loan. 21, Insurance. Borrower shall maintain, during the term of the City Loan, an all-risk property insurance policy insuring the Property in an amount equal to the full replacement value of the structures on the Property. The policy shall name the City as loss payee and shall contain a statement of obligation on behalf of the insurance carrier to notify the City of any material change, cancellation or termination of coverage at least 30 days in advance of the effective date of such material change, cancellation or termination. Borrower shall deliver a copy of the certificate of insurance and loss payee endorsement to the City at the time of escrow closing, and Borrower shall annually deliver a copy of the certificate of insurance and loss payee endorsement to the City, signed by an authorized agent of the insurance carrier and setting forth the general provisions of coverage. The copy of the certificate of insurance and loss payee endorsement shall be delivered to the City as follows: City of Santa Ana, Community Development Agency 20 Civic Center Plaza, M37 P.O. Box 1988 Page 10 of 14 4/5/11 Santa Ana, Ca 92702 Attention: Housing Programs Coordinator Any certificate of insurance required by this section must be a in a form, content and with an insurance company that is acceptable to the City in its sole discretion. 22. Non -Waiver. Failure to exercise or delay in exercising any right the City may have or be entitled to, in the event of default hereunder, shall not constitute a waiver of such right or any other right in the event of a subsequent default. 23. Documents. Borrower has reviewed and agrees to execute the following documents in substantially the form as attached to this Agreement prior to receiving the City Loan, and any other documents or instruments reasonably required by City or a participating entity to complete the transaction contemplated herein: (a) Property Legal Description (Exhibit A); (b) Deed of Trust (Exhibit B); and, (c) City Promissory Note (Exhibit C) and, (d) Affordability Covenants and Restrictions (Exhibit D). Borrower agrees and acknowledges that this Agreement and the City Deed of Trust and the Affordability Covenants and Restrictions shall be recorded against the Property with the County Recorder of the County of Orange and shall appear of record with respect to and as an encumbrance against the Property. 24. Further Assurances. Borrower shall execute any further documents consistent with the terms of this Agreement, including documents in recordable form, as the City may from time to time find necessary or appropriate to effectuate its purposes in entering into this Agreement and making the City Loan. 25. Records and Reports. Developer shall maintain and from time to time submit to Agency/City such records, reports and information as the Executive Director may reasonably require in order to permit City to meet the record keeping and reporting requirements required of it pursuant to NSP Regulations. 26. 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. 27. Severability. In the event that any provision or clause of this Agreement conflicts with applicable law, such conflict will not affect other provisions of this Agreement which can be given effect without the conflicting provision, and to this end the provisions of the Agreement are declared to be severable. Page I 1 of 14 4/5/11 28. Amendment of Agreement. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement executed by Borrower and the duly authorized representative of the City. 29. Assignment by City Permitted. The City may, in its sole and absolute discretion, assign its rights under this Agreement and/or its right to receive repayment of the City Loan without obtaining the consent of Borrower. 30. Assignment of Borrower Prohibited. In no event shall Borrower assign or transfer any portion of this Agreement or any rights herein without the prior express written consent of the City, which consent the City may give or withhold in its sole and absolute discretion. This provision shall not affect or diminish the City's right to assign all or any portion of its rights under this Agreement or to the proceeds of the City Loan hereunder. 31. Relationship of Borrower and Ci . The relationship of Borrower and City pursuant to this Agreement is that of debtor and creditor and shall not be, or be construed to be a joint venture, equity venture, partnership or other relationship. 32. Notices. (a) Except as otherwise expressly provided in this Agreement, in every case when, under the provisions of this Agreement, it shall be necessary or desirable for one party to serve any notice, request demand, report or other communication on another party, the same shall be in writing and shall not be effective for any purpose unless served (i) personally, (ii) by independent, reputable, overnight commercial courier, or (iii) by deposit in the United States mail, postage and fees fully prepaid, registered or certified mail, with return receipt requested, addresses as follows: To Borrower: Garnsey, LP c/o Orange Housing Development Corporation 414 East Chapman Avenue Orange, California 92866 Attn: Executive Director With a copy to: C&C Development Co., LLC 14211 Yorba St., Ste. 200 Tustin, CA 92781 Ph: 714-288-7600 (x250) 866-570-0728 (fax) To the City City of Santa Ana - Community Development Agency 20 Civic Center Plaza, M37 P.O. Box 1988 Santa Ana, CA 92702 Attention: Housing and Neighborhood Development Division Page 12 of 14 4/5/11 33. Attorney's Fees and Costs: In the event that any action is instituted to enforce payment or performance under this Agreement, or otherwise in connection with this Agreement, the parties agree that the prevailing party shall be reimbursed by the other party for all costs and all attorneys fees incurred by the prevailing party in such action. 34. Entire Agreement, This Agreement, together with all attachments hereto and all documents executed pursuant hereto, constitutes the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all prior negotiations, discussions and previous agreements between the City and Borrower concerning all or any part of the subject matter of this Agreement. 35. Conflict of Interest. No member, official or employee of the Agency or 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 the Agreement which affects his/her personal interests or the interests of any corporation, partnership or association in which he/she is directly or indirectly interested. 36. Nonliability of Agency/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. 37. Legal Advice. Each party represents and warrants to the other the following: they have carefiilly read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 38. Captions. The captions and headings in this Agreement are for convenience only and are not to be used to interpret or define the provisions hereof. Page 13 of 14 415111 IN WITNESS WHEREOF, the patties have executed this Agreement as of the day and year written below. CITY OF SANTA ANA 9 A-�' 6zw DAVID N. REAM City Manager APPROVED AS TO FORM: City Attorney By: LISA E. STORCK Assistant City Attorney Garnsey, LP, a California limited partnership MANAGING GENERAL PARTNER OHDC Properties 1, LLC a California limited liability company ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit corporation, its sole member By: Eunice Bobert, Chief E cutive Officer DEVELOPER GENERAL PARTNER C&C Properties Group 1, LLC a California limited liability company By: _ Todd R. Cottle, its member By: Cottle Family Trust Dated 318187, By. � arry A. Cottle, its Trustee Page 14 of 14 CALIFORNIA ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGMENT State of California County of On I before tree,l �/ (Here insert name and title If the officer) personally appeared IV(/ &4i� who proved to tate on the basis of satisfactory cviden 'o be the personkwhose name i /a subscribed to the within instrument and ac nowledged to me that h s l"tl�,y executed the same in Is th r authorized capacity( and that by is Ither signature(�n e instrument the person(k& the entity upon behalf of which the personacted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WI SS my hanAand official seal. (Notary Seal) Signature of Notary Public ADDITIONAL OPTIONAL INFORMATION DESCRIPTION OF THE ATTACHED DOCUMENT (Title or description of attached document) (Title or description of attached document continued) Number of Pages ._ Document Date (Additional information) CAPACITY CLAIMED BY THE SIGNER • Individual (s) o Corporate Officer (Title) © Partner(s) ul Attorney -in -Fact * Trustee(s) * Other 2008 Vcrsiori CAPA vl2.10.07 800-873.9865 www.NotaiyClasses.coin VALERIE L. ELLIOTT Commission # 1741513 Notary Public • California Orange County MYCvmrn. E PkiwApr 24, 2011 W- - _ INSTRUCTIONS FOR COMPLETING THIS FORM Any acknowledgment completed in California must contain verbiage exactly as appears above in the notary section or a separate acknowledgment form rnust be properly completed and attached to that document. The only exception is if a document is to be recorded outside of Califbrnia. In such instances, any alternative acknowledgment verbiage as may be printed on such a document so lung as the verbiage does not require the notaiy to do something that is illegal for a notmy in California (i.e. certifying the authorized capacity of the signet). Please check the document carefully for proper notarial wording and attach this form if required. • State and County information must be the State and County where the document signer(s) personally appeared before the notary public for acknowledgment. • Date of notarization must be the date that the signer(s) personally appeared which must also be the same date the acknowledgment is completed. • The notary public must print his or her name as it appears within his or her commission followed by a comma and then your title (notary public), • Print the name(s) of document signer(s) who personally appear at the time of notarization. • Indicate the correct singular or plural forms by crossing off incorrect forms (i.e. 4,ie/she44eyr is •faire ) or circling the correct forms. Failure to correctly indicate this information inay lead to rejection of document recording. • The notary seal impiession must be clear and photographically reproducible. Impression must not cover text or lines. if seal impression smudges, re -seal if a sufficient area permits, otherwise complete a different ackriowledgnient form. Signature of the notary public must match the signature on file with the office of the county clerk. caa Additional information is not required but could help to ensure this acknowledgment is not misused or attached to a different document, c�3 Indicate title or type of attached document, number ofpages and date. OR Indicate the capacity claimed by the signer. If the claimed capacity is a corporate officer, indicate the title (i.e, CEO, CFO, Secretary). Securely attach this document to the signed document CALIFORNIA ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGMENT State of California County of Axl On ( before me,A4 %� f�O (i leve insert name a d title of the personally appeared l.b` Iii i L who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same In his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. ViA�LERIE L. ELLIOTT Commi4slon # 1741513 WITN SS my hand and official seal. < ° - Notary Public - California z • Orange County � }. AMComm•Fappr24,2D11 (NotarySeal) rF9rW__ Signature of ]Votary Public ADDITIONAL OPTIONAL INFORMATION DESCRIPTION OF THE ATTACHED DOCUMENT (Title or description of attached docmnent) (Title or description of attached document continued) Number of Pages __ Document Date (Additional information) CAPACITY CLAIMED BY THE SIGNER * Individual (s) ❑ Corporate Officer (Title) © Partner(s) U Attorney -in -Fact F1 'frustee(s) El Other 2008 Version CAPA v12.10.07 800-873-9865 www.NolaryClasses.coni INSTRUCTIONS FOR COMPLETING THIS FORM 11ny acknowledgment completed in California must contain verbiage exactly as appears above in the notary section or a separate acknowledgment form must be properly completed and attached to that docutnent. The only exception is if a document is to be recorded outside of California, in such instances, any alternative acknowledgment verbiage as may be printed on such a document so long as the verbiage does not require the notary to do something that is illegal for a notary in Colfornia (i.e. certifying the authorized capacity of the signe)). Please check the document carefully for proper notarial wording and attach this form ifrequired. • State and County information must be the State and County where the document signer(s) personally appeared before the notary public for acknowledgment. • Date of natari7ation must be the date that the signer(s) personally appeared which must also be the same date the acknowledgment is completed. • The notary public must print his or her name as it appears within his or her commission followed by a corruna and then your title (notary public). • Print the name(s) of document signer(s) who personally appear at the time of notarization. Indicate the correct singular or plural forms by crossing off incorrect forms (i.e. 4ke1sheA4e5,,— is 4"e) or circling the correct forms. Failure to correctly indicate this information may lead to rejection of document recording. • The notary seal impression must be clear and photographically reproducible. Impression must not cover text or lines. If seal impression smudges, re -seal if a sufficient area permits, otherwise complete a different acknowledgment form. Signature of the notary public must match the signature on file with the office of the county clerk, c�a Additional information is not required but could help to ensure this acknowledgment is not misused or attached to a different document. caR Indicate title or type of attached document, number of pages and date. ca Indicate the capacity claimed by the signer. If the claimed capacity is a corporate officer, indicate the title (i.e. CLQ, CFO, Secretary). Securely attach this document to the signed document CALIFORNIA ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGMENT State of California County of (%_.4 ( On �i` before me, vql 6 G � � c (l-iere insert name and Aft of the officer) personally appeared it ' c e_ who proved to me on the basis of satisfactory evidence to be the person whose name(�asubscribed to the within instrument and a owledged to me, that P$<1lih executed the salve in th�i• authorized capacity(i ,and that b is th�ignature�on the in the personWor the entity upon behalf of which the person(�cted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. TNESS axly hand and official seal. c (Notary Seal) Signature of Notary Public VALERIE L ELLIOTT Commission # 1743513 No#pry Public - California z ' orange County MyComm. EOwApr 24, 2013 ADDITIONAL OPTIONAL INFORMATION DESCRIPTION OF THE ATTACHED DOCUMENT (Title or description of attached document) (Title or description of attached document continued) Number of Pages Document Date (Additional information) CAPACITY CLAIMED BY THE SIGNER ❑ Individual (s) * Corporate Officer (Title) © Partner(s) Attomey-in-Fact o Trustee(s) rt Other 2005 Version CAPA v12.10.07 800-873-9865 www.NotaryClasses.corn INSTRUCTIONS FOR COMPLETING THIS FORM Any acknowledgment completed in California must contain verbiage exactly as appears above in the notary section or a separate acknowledgment form must be properly completed and attached to that document. The only exception is if a document is to be recorded outside of California, In such instances, any alternative acknowledgment verbiage as may be printed on such a document so long as the verbiage does not require the notary to do something that is illegalfor a notary in California (Le. certifying the authorized capacity of the signer). Please check the documem carefidlyfor proper notarial wording and attach this form if required. • State and County information must be the State and County where the document signer(s) personally appeared before the notary public for acknowledgment. • Date of notarization must be the date that the signer(s) personally appeared which must also be the same date the acknowledgment is completed. The notary public must print his or her name as it appears within his or her commission followed by a comma and then your title (notary public). • print the name(s) of document signer(s) who personally appear at the time of notarization. Indicate the correct singular or plural forms by crossing off incorrect forms (i.e. 4fefshcA4ey7 is 4w ) or circling the correct forms. Failure to correctly indicate this information may lead to rejection ofdocurnent recording. The notary seal impression must be clear and photographically reproducible. Impression must not cover text or lines. If seal impression smudges, re -seal if a sufficient area permits, otherwise complete a different acknowledgment form. Signature of the notary public must match the signature on file with the office of the county clerk. ca3 Additional information is not required but could help to ensure this acknowledgment is not misused or attached to a different document. M Indicate title or type of attached document, number ofpagcs and date. OR Indicate the capacity claimed by the signor. If the claimed capacity is a corporate officer, indicate the title (i.e' CLO, CFO, Secretary), Securely attach this document to the signed document CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT State of California County of Orange SS City of Santa Ana On this 7th day of April, 2011, before me, Maria R. Huizar , Notary Public, personally appeared David N. Ream who proved to me on the basis of satisfactory evidence to be the p rs /persons whose Q,-gi �eln­amesctglare subscribed to the within instrument and acknowledged to me that ij she4hey executed the same indjWherA reir authorized pac' Ica�and that by herftheir s' na Isi�-tures on the instrument the r�/pefsons, or the entity upon behalf of which the peen/per-sans 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. Witness my hand and official seal. NOTARY SEAL iA Cam�wnwon "o cow* � MyccmMI1 V 11 CAPACITY CLAIMED BY SIGNER: Witness my hand and official seal. Signature of Notary SIGNER IS REPRESENTING: THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED TO THE BELOW: NEIGHBORHOOD STABILIZATION PROGRAM RENTAL HOUSING DEVELOPMENT LOAN AGREEMENT TITLE OR TYPE OF DOCUMENT: NUMBER OF PAGES: DATE OF DOCUMENT: SIGNER (S) OTHER THAN NAMED ABOVE: Individuals) _ Corporate ❑ Officers Title(s) ❑ Partner(s) ❑ General Partner of a Limited ❑ Partnership ❑ Attorney -in -Fact ❑ Trustee (s) ❑ Subscribing Witness ❑ Guardian/Conservator ❑ Other: Witness my hand and official seal. Signature of Notary SIGNER IS REPRESENTING: THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED TO THE BELOW: NEIGHBORHOOD STABILIZATION PROGRAM RENTAL HOUSING DEVELOPMENT LOAN AGREEMENT TITLE OR TYPE OF DOCUMENT: NUMBER OF PAGES: DATE OF DOCUMENT: SIGNER (S) OTHER THAN NAMED ABOVE: FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: Community Development Agency City of Santa Ana 20 Civic Center Plaza P.O. Box 1988 (M-37) Santa Ana, California 92702 Attn: Housing Manager CITY DEED OF TRUST AND ASSIGNMENT OF RENTS THIS CITY DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of `frust") made this I day of April, 2011, by between Garnsey, LP, a California limited partnership comprised of 01 -IDC Properties 1, LLC, ("OHDC"), a Limited Liability Company, and C&C Properties Group 1, LLC, a Limited Liability Company (together the "Trustor"), AmeriNational Community Services, a California corporation (the "Trustee"), and the City of Santa Ana, a charter city and municipal corporation (the "Beneficiary"). Trustor, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the properly located in the City of Santa Ana, County of Orange, State of California, described in the attached Exhibit A and more commonly known as 326 Garnsey Street, Santa Ana, California (the "Property"); TOGETHER with all the improvements now or hereafter erected on the Property, and all easements, rights, appurtenances and all fixtures now or hereafter attached to the Property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the Property covered by this City Deed of Trust; provided that so long as Trustor is not in default hereunder, it shall be permitted to control the Property in accordance with the requirements of that certain Neighborhood Stabilization Program (Program 2) Rental Housing Development Agreement entered into between the Trustor and the Beneficiary, dated March 1, 2010 and the Loan Agreement, dated concurrently herewith, which Agreements are both on file with the Beneficiary as a public record; TOGETHER with the right, power and authority during the continuance of these Trusts, to collect the rents, issues, and profits of the Property, reserving unto the Trustor the right, prior to any default by Trustor in payment of the indebtedness secured by this Deed of Trust or in the performance of any agreement under this Deed of Trust, to collect and retain these rents, issues and profits as they become due and payable; and, TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected, or hereafter to be erected, on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner; and all of the foregoing, together with the Property, is herein referred to as the "Security"; To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever; TO SECURE to the Beneficiary (a) the repayment of the sums evidenced by a Promissory Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of Four Million Two Hundred Ninety One Thousand One Hundred Eighty Eight Dollars ($4,291,188.00) (the "City Promissory Note"); (b) the performance of the covenants and agreements of Borrower contained in a certain Agreement as hereinafter defined; and (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of Trustor contained herein. TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS: 1. The Agreement. This Deed of Trust is executed and delivered, along with the'City Note and the Loan Agreement, to benefit the Property. A copy of said Loan Agreement is on file as a public record with the Beneficiary and is incorporated herein by reference (the "Agreement"). Trustor acknowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter into the Agreement or City Note secured by this Deed of Trust. 2. Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security; that other than this Deed of Trust, the Security is not encumbered except for obligations secured by deeds of trust, or any other security agreement, to secure financing or refinancing for the purchase and rehabilitation of the Property. 3. Rep4Ment of the Loan. Trustor will promptly repay, when due, the principal loan amount, as required by the City Promissory Note secured by this Deed of Trust. 4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to the Senior Loan., but the City's Affordability Covenants and Restrictions shall remain in first place. S. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform all of Trustor's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this Instrument, including Trustor's covenants to snake payments when due (subject to an applicable notice and cure provisions). Trustor will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of Trust, by Trustor making any payment, when due, directly to the payee thereof. Trustor will promptly furnish to the Beneficiary all notices of amounts due under this paragraph, and in the event Trustor makes payment directly, Trustor will promptly discharge any lien which has priority over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed of Trust securing any senior lender or any other lien described in this paragraph so long as Trustor will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof. b. Hazard Insurance. Trustor will keep the Security insured by such insurance policies in such amounts and for such periods as called for in the Agreement. All insurance policies and renewals thereof will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of any senior lender and the Beneficiary as their interests may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor. The Beneficiary shall receive 30 days advance notice of cancellation of any insurance policies required under this Section. Unless the Beneficiary and Trustor otherwise agree in writing, insurance proceeds, subject to the rights of any senior lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance proceeds will be used to repay the loan secured by this Deed of Trust, with the excess, if any, paid to Trustor. If the Security is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or its designated agent within 30 days from the date notice is mailed by either of them to Trustor that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or repair of the Security or to repay the loan. If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of any senior lender. 7. Preservation and Maintenance of Secqj1y. Trustor will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 8. Protection of the Benefici `s Security. if Trustor fails to perform the covenants and agreements contained in this Deed of Trust or if any action or proceeding is commenced which materially affects the Beneficiary's interest in the Security, including, but not limited to, default under the Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the Beneficiary, at the Beneficiary's option, upon notice to Trustor, may make such appearances, disburse such sums and take such action as it determines necessary to protect the Beneficiary's interest, including, but not limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs. Any amounts disbursed by the Beneficiary pursuant to t%s paragraph, with interest thereon, will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and the Beneficiary agree to other terms of payment, such amount will be payable upon notice from the Beneficiary to Trustor requesting payment thereof, and will bear interest from the date of disbursement at the rate payable from time to time on outstanding principal under the City Note unless payment of interest at such rate would be contrary to applicable law, in which event such amounts will bear interest at the highest rate permissible under applicable law. Nothing contained in this paragraph will require the Beneficiary to insure any expense or take any action hereunder. 9. Inspection. The Beneficiary may make, or cause to be made, reasonable entries upon and inspections of the Security during normal business hours; provided that the Beneficiary will give Trustor reasonable notice of inspection. 10. forbearance by the Beneficiary Not a Waiver. Any forbearance by the Beneficiary in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary will not be a waiver of the Beneficiary's right to accelerate the maturity of the indebtedness secured by this Deed of Trust. 11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 4 12. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the Beneficiary and Trustor subject to the provisions of this Deed of Trust. 13. Joint and Several Liabili . All covenants and agreements of Trustor shall be joint and several. 14. Notice. Except for any notice required under applicable law to be given in another manner, (a) any notice to Trustor provided for in this City Deed of Trust will be given by certified mail, return receipt requested, addressed to Trustor at 414 East Chapman Avenue, Orange, California, 92866, with copies to C&C Properties Group I, LLC at 14211 Yorba St., Suite 200, Tustin, California 92870 (b) any notice to the Beneficiary will be given by certified mail, return receipt requested, to the Beneficiary at 20 Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention: Housing Manager, or at such other address as the Beneficiary may designate by notice to Trustor as provided above, and (c) to Trustee at 8121 E. Florence Avenue, Downey, California 90240. Notice shall be effective as of the date received as shown on the return receipt. 15. Governin Law. This Deed of Trust shall be governed by the laws of the State of California. 16. Severability. In the event that any provision or clause of this Deed of Trust or the City Loan Note conflicts with applicable law, such conflict will not affect other provisions of this Deed of Trust or the City Note which can be given effect without the conflicting provision, and to this end the provisions of the Deed of Trust and the City Loan Note are declared to be severable. 17. Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. 18. Default in Foreclosure; Remedies. Upon Trustor's breach of any covenant or agreement of Trustor in this Deed of Trust or the City Note secured by this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the Beneficiary may declare all suras secured by this Deed of Trust immediately due and payable by delivering to Trustor notice thereof specifying: (1) The breach; (2) the action required to cure such breach; (3) a date not less than 30 days from the date the notice is received by Trustor as shown on the return receipt, by which such breach is to be cured provided, however, that if such default is not reasonable susceptible to being cured within 30 days, Trustor shall have a reasonable period to cure the defect so long as Trustor is diligently prosecuting the cure to completion; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice will also inform Trustor of Trustor's right to reinstate after acceleration and the right to bring a court action to assert the non-existence of default or any other defense of Trustor to acceleration and sale. Notwithstanding anything to the contrary contained herein, a "default" shall not include (i) a transfer of a general partner's interest in Trustor when made in connection with the exercise by the Trustor's limited partner (the "Limited Partner") of its rights upon a default by a general partner under the Trustor's Amended and Restated Limited Partnership Agreement (the "Partnership Agreement") or upon a general partner's withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting general partner is made within thirty (30) days of such default or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to take action to remove and substitute the general partner with a reasonable period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the Property to the managing general partner of Trustor pursuant to the right of first refusal or to the general partners of Trustor pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of a limited partner interest or an interest in a limited partner of the Trustor, provided that after any such sale, transfer or other disposition an affiliate of the Trustor's limited partner is the managing member or general partner of such transferee limited partner. If the breach is not cured on or before the date specified in the notice or such longer period as provided above or in the City Note or the Agreement, the Beneficiary, at the Beneficiary's option, may: (a) declare all of the sums secured by this City Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; (b) either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any pari thereof) and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any cure of any default made or tendered by Trustor's limited partner shall be deemed to be a 6 cure by Trustor and shall be accepted or rejected on the same basis as if made or tendered by Trustor. The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. 19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by the Beneficiary to enforce this Deed of Trust discontinued at any time prior to 5 days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at anytime prior to entry of a judgment enforcing this Deed of Trust if.- (a) Trustor pays the Beneficiary all sums which would be then due under this Deed of Trust and no acceleration under the City Note has occurred; (b) Trustor cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by the Beneficiary and the Trustee in enl'oreing the covenants and agreements of Trustor contained in this Deed of Trust and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable attorneys' fees; and (d) Trustor takes such action as the Beneficiary may reasonably require to assure that the lien of this Deed of Trust, the Beneficiary's interest in the Security and Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party to this Deed of Trust of pending; sale under any other deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 21. Reconveyance. Upon payment of all sures secured by this Deed of Trust, the Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the City Note to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from time to time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 23. Request for Notice. Trustor requests that copies of the notice of default and notice of sale be sent to Trustee at the address set forth in Section 14 above. 24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor shall 7 have any personal liability under the Agreement, City Note, and this Deed of Trust and any judgment, decree or order for payment of money obtained in any action to enforce the obligation of Trustor to repay the loan evidenced by such documents shall be enforceable against Trustor only to the extent of Tiustor's interest in the Property. IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first mitten above. GARNSEY, LP a California limited partnership MANAGING GENERAL PARTNER OHDC Properties I, LLC a California limited liability company ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit corporation, its sole member By: Eunice Bobert, Chief Executive Officer DEVELOPER GENERAL PARTNER C&C Properties Group I, LLC a California limited liability company I Todd R. Cottle, its member By: Cottle Family Trust Dated 3/8/87, IN Barry A. Cottle, its Trustee 8 Exhibit C C� 11��7Z1�u � �.YyY!] 3i�►t� SECURED BY SUBORDINATED DEED OF TRUST TO THE CITY OF SANTA ANA, CALIFORNIA (326 South Garnsey Street) $4,291,188.00 April , 2011 Santa Ana, California 1. Principal Amount of Loan FOR VALUE RECEIVED, Garnsey, LP, a limited partnership comprised of OHDC Properties I, LLC, ("OHDC"), a a Limited Liability Company, and C&C Properties Group I, LLC, a Limited Liability Company ("Borrower"), hereby promises to pay to the CITY OF SANTA ANA, a charter city and municipal corporation ("City"), or order, a principal amount not to exceed FOUR MILLION TWO HUNDRED NINETY ONE THOUSAND ONE HUNDRED EIGHTY EIGHT DOLLARS ($4,291,188.00) or so much thereof as may be advanced by the City to the Borrower, due and payable with 0% interest by residual receipts over the fifty-five (SS) year term., pursuant to the Neighborhood Stabilization Program (Program 2) Rental Housing Development Agreement dated March 1, 2010, between Borrower and the City and the Loan Agreement (said "Agreement") dated concurrently herewith, which are both incorporated herein by this reference. This loan is made pursuant to the "Neighborhood Stabilization Program" or "NSP" with money funded through the Program as "NSP bunds". The term "NSP2" refers to the second appropriation of NSP Funds provided under the Recovery Act the Housing and Economic Recovery Act of 2008 (Section 2301-2304 of HERA). Any capitalized term not otherwise defined in this Note shall have the meaning ascribed to such term in the Agreement. The obligation of Borrower to City hereunder is subject to the terms of said Agreement, the Affordability Covenants and Restrictions, Deed of Trust and this Note. Said documents are public records on file in the offices of the City, and the provisions of said documents are incorporated herein by this reference. This Note, said Agreement, the Affordability Restrictions on Transfer of Title, and the Deed of Trust are sometimes collectively referred to herein as the "Loan Documents." The Loan Documents and the rights and responsibilities inure to the benefit of the City of Santa Ana. Any capitalized terra which is not otherwise defined herein shall have the meaning -ascribed to such terra in the Agreement. 2. Definitions. For the purpose of calculating the payments to be made by Borrower to City pursuant to this Note, the following terms shall have the following respective meanings: "Acquisition Costs" shall mean the costs and expenses of Borrower to acquire the Property and related soft costs, as set forth in the Project Budget attached to the Loan Agreement. "Agreement" means the Loan Agreement between the City and the Developer, and any attachments or amendments thereto. "_Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the NSP, and the NSP bunds. "Area Median Income" means the median income figures for Orange County as published by the U.S. Department of Housing and Urban Development (HUD). Also may be referred to as "AMI" herein. "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 30. "City Loan" shall mean the loan evidenced by this Note repayable to the City in accordance with the terms of this Note and secured by the Deed of Trust. "City's Percentage" with reference to the Residual Receipts, shall mean fifty percent (50%) of the total Residual Receipts from the Property as further described in Section 5 hereof. "Closing Costs" shall mean: (i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a result of the Sale, which shall not in any event exceed the customary amount charged -for similar transactions in the immediate market place, costs of title insurance premiums, documentary stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably incurred with respect to the Property, in each case actually paid by Borrower as a condition of the Sale. (ii) In the case of a Refinancing, the reasonable and necessary costs of consumating such Refinancing, including, without limitation, loan fees, loan repayment charges, costs of title insurance premiums, escrow fees, recording fees and attorneys' fees. "Gross Revenues" shall mean all revenues and receipts of every kind actually received by Borrower from operating the Property, and all parts thereof, including, but not limited to, income from both cash and credit transactions, rental from leased and/or subleased spaces and parking fees and charges (but not including security deposits and other tenant deposits, except to the extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues also includes any casualty insurance proceeds in excess of those used to restore the Property and any rental interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at the time cash proceeds (principal and/or other) are received. Borrower shall establish and maintain accounts for the Gross Revenues (the "'Project Accounts") that are F1 segregated from revenues and income received by Borrower from all other projects. Gross Revenues shall also include all interest eared on the Project Accounts. "Operating Expenses" shall mean the sum of the following: (i) payments of principal and interest and all other charges relating to the Senior Loan(s); (ii) a property management fee equal to 7% of gross rents; (iii) Owner Administration Fee of S% of gross rents; (iv) Deposits into required reserves; (v) all other actual, reasonable cash operating costs and expenses, calculated on an annual basis, that are directly attributable to managing and operating the Property, including, without limiting the generality of the foregoing, the following: costs and expenses for real and personal property taxes, special assessments or similar charges; water, fuel, electricity and other utilities; heating, ventilation and air conditioning expenses; labor; supplies; tools; equipment; insurance; advertising and marketing; accounting and legal fees; brokerage commissions and other leasing expenses; reasonable reserves for all anticipated expenses as approved by the City; and other such items constituting operation, maintenance and repair costs actually paid by the Borrower, subject to the following conditions: (a) Depreciation and amortization expenses shall not be considered Operating Expenses, except as otherwise provided herein. (b) All furniture, fixtures, machinery and equipment expenditures with an individual cost of $1,000 or more and a useful life of more than one year, shall be amortized over a period determined in accordance with generally accepted accounting principles (except to the extent purchased with reserve funds which have otherwise been included as an Operating Expense). Such amortization shall assume equal annual installments of principal and interest with an interest factor at the actual rate not to exceed the reference rate of the Bank of America plus two percent (2%) if such furniture, fixtures, machinery and equipment are financed, or said reference rate plus two percent (2%) if paid for in cash by Borrower. All furniture, fixtures, machinery and equipment with an individual cost of less than $200 or a useful life of less than one year shall be treated as expense items. (c) Any expenses, compensation or fees paid to any affiliate of Borrower shall only be included as Operating Expenses to the extent they are not in excess of the reasonable expenses, compensation or fees which would be payable to unrelated third parties in arras -length transactions for similar services in the Santa Ana, California area. 3 (vi) Any other expenses necessary to meet senior lender requirements and requirements of Borrower's limited partner, or its assignee, as set forth in Borrower's Agreement of Limited Partnership (the "Partnership Agreement"). "Deed of Trust" shall mean the Deed of Trust in favor of the City, securing the City Loan, substantially in the form attached to the Agreement as Exhibit B, which is incorporated herein by this reference. "Neighborhood Stabilization Program" (NSP) has the meaning set forth in the Recitals above. "NSP Assisted Units" shall mean those rental units purchased and rehabilitated on Eligible Properties which are subject to the tern of affordability. "NSP2 Funds" shall mean the money provided under the NSP2 Program for the acquisition of the rental units hereunder. "Property" shall mean that property located at 326 S. Garnsey Street, Santa Ana, California. "Refinancing" shall mean changing the then existing financing on the Property by, without limitation, modifying the interest rate and/or the term of the existing Senior Loan, increasing or reducing the amount of the existing Senior Loan, paying off the existing Senior Loan and obtaining new Senior Loan. "Refinancing Proceeds" shall be disbursed as set forth in Section 6 hereof. "Residual Receipts" shall mean the Gross Revenues from the Property for each year, less deductions for Operating Expenses from the same building, applicable to each such year to the extent not already deducted as an Operating Expense. "Sale" shall mean any transfer, assignment, or conveyance or lease of the Property or any portion thereof, or any interest therein by the Borrower, and includes any transfer, assignment or sale of any partnership interest in the Borrower by an individual or entity which is a general or limited partner in the Borrower, 'or any interest by any individual or entity which holds an interest in any such general or limited partner in the Borrower, which brings the cumulative total of all such direct and indirect transfers, assignments and sales during the term of this Note to more than thirty-five percent (35%) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a direct or indirect partnership interest thereafter. Sale includes a sale in condemnation or under threat thereof. Sale does not include dedications and grants of easements to public and private utility companies of the bind customary in real estate development. M "Senior Loan" shall mean any senior loan made to Borrower, for payment of Acquisition and/or Rehabilitation Costs, and shall include any subsequent loan that refinances said Senior Loan. "Term" the term for repayment of this Note shall mean fifty-five (55) years from the date of recording of the Deed of Trust securing the Note. "Term of Affordability" the term of affordability shall be fifty-five (5 5) years. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median incorne for the Orange County, California PMSA, adjusted for household size, as published by HUD. 3. This Note evidences the obligation of Borrower to the City for the repayment of the City Loan of NSP2 Funds attributable to the acquisition of the Property, and related soft costs. 4. This Note is payable at the principal office of City of Santa Ana— Community Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Att: Housing Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful money of the United States. 3. Loan Repayment. Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts), 6 (Refinancing Proceeds), 7 (Sale Proceeds) and 9 (Accelerated Loan Repayment). 4. Operating Capital Improvement Loan. If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and the General Partner makes a loan to the Partnership, the reserves must be fully funded prior to payment of said loan. Such loan shall be repaid with the Partnership share of the Residual Receipts. The outstanding loan balance will be reflected in the annual report. 5. Annual Loan Repayment/ Residual Receipts. a. The Borrower shall thereafter make a loan payment to the City annually, in the amount of the lesser of the outstanding balance due under this Note or the City's Percentage of the Residual Receipts, as provided in this Section 5. b. Within one hundred fifty (150) days after the close of the initial Calendar Year following the Issuance of the Certificate of Occupancy for the building and on or before the 150th day of each Calendar Year thereafter, the Borrower shall submit to the City an audited financial statement of Gross Revenues and Operating Expenses attributable to the Property for 5 the applicable Calendar Year, along with a computation of the amount of the Residual Receipts applicable to such Calendar Year with which to make a City Loan payment then due. c. Except as otherwise provided, the Borrower shall pay to the City the City's Percentage of the Residual Receipts as payment of principal. Fifty percent (50%) of the Residual Receipts shall remain with the Borrower. d. The Residual Receipts payment shall be made not later than one hundred fifty (15 0) days after the close of the Calendar Year. Such payment shall be applied first to any late fees, then to reduce the principal balance of the loan. 6. Loan Repayment from Refinancing Proceeds. The Borrower shall mare a loan payment to the City from every Refinancing that occurs during the term of this Note not to exceed the outstanding balance of principal on this Note, to the extent of the City's Percentage of the Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be applied first to pay Closing Costs; next, the amount necessary to pay in full the balance remaining on the Senior Loan; next, the Borrower shall pay to the City the City's Percentage of the Refinancing Proceeds to the extent of the outstanding balance on this Note. Fifty percent (50%) of the Refinancing proceeds shall remain with Borrower, Such payment shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in fiill. 7. Loan Repayment from Sale Proceeds. The Borrower shall make a loan payment, not to exceed the outstanding balance of principal on this Note subject to Section 14 herein, to the City from. any Sale that occurs during the term of the City Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in full the balance remaining on the Senior Loan; next the Borrower shall pay to the City the City's Percentage of the total Sale Proceeds, not to exceed the outstanding amount of principal due on this Note. Fifty percent (50%) of the Sale Proceeds shall remain with Borrower. Such payment shall be due on the date of such Sale, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full. S. Accelerated Loan. Payment. The full principal amount outstanding shall be due and payable on the earlier to occur of the following: a. Sale or Refinancing of the Property as provided further in Section 13 hereof; unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the City Loan, the City approves such sale and the purchaser assumes the balance of the City Loan in G'7 accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to repay in full the City Loan, the City approves such Refinancing and the Borrower remains obligated pursuant to the terms of this Note, b. In event of default (subject to any applicable notice and cure provisions) pursuant to any of the Loan Documents or the Senior Loan Documents. c. Any default (subject to any applicable notice and cure provisions by Borrower as to any other loan or loans by City to Borrower with respect to the Property; or d. The date that is fifty five (55) years after the date of execution of this Note. On that date, the City agrees to review the performance of the Property and consider in good faith any reasonable request by Borrower to modify the terms or extend the Term of this City Note. 9. Prepayment Borrower may prepay the outstanding principal balance under this Note, in whole or in part, at any time without penalty, however the Affordability Covenants and Restrictions still remain for the entire Affordability Period of fifty-five (55) years. 10. Lawful Money. Principal is payable in lawful money of the United States of America. 11. Application of Payments; Late Charges. a. Any payments received by the City pursuant to the terms hereof shall be applied first to sums, other than principal, due the City pursuant to this Note, and the balance, if any, to the payment of principal. b. If any payment is not received by the City within ten (10) days following the due date thereof, then in addition to the remedies confcrred upon the City pursuant to this Note and the other Loan Documents, (i) a late charge of four percent (4%) of the amount due and unpaid will be added to the delinquent amount to compensate the City for the expense of handling the delinquency and (ii) the amount due and unpaid, excluding the late charge, shall bear interest at the highest anrival rate which may lawfully be charged and collected under applicable law on the obligation evidenced by this Note, computed from the date on which the amount was due and payable until paid. Without prejudice to the rights of the City hereunder or under any of the other Loan Documents, Borrower shall indemnify the City against, and shall pay the City on demand, any expense or loss which it may sustain or incur as a result of the failure by Borrower to pay when due any installment of principal, fees, or other amounts payable to the City under this Note or any other Loan Document, to the extent that any such expense or loss is not recovered pursuant to such foregoing provisions. A certificate of the City setting forth the basis for the determination of the amounts necessary to indemnify the City in respect of such 7 expenses or direct loss, submitted to Borrower by the City, shall be conclusive and binding for all purposes except as immediately corrected by Borrower notice to City. 12. Securi This Note is secured by the recorded Deed of Trust. 13. Acceleration by Reason of Transfer or Financing a. In order to induce City to make the loan evidenced hereby, Borrower agrees that in the event of any transfer of the Property without the prior written consent of City (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder of the Senior Loan Deed of Trust), City shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. City may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this Section 13, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall not, however, release Borrower from any liability thereunder without the prior written consent of City. b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or conveyance of the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property, or the lease of all or substantially all of the Property. 'Transfer' shall not include the leasing of individual residential units on the Property, so long as Borrower complies with the provisions of the Loan Agreement and the Affordability Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of the Property to a limited partnership in which Borrower is a general partner, or to a corporation or limited liability company that is wholly owned by the Borrower or its affiliates and that is formed for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior Loan, without the prior written consent of City (which consent City may grant or deny in its sole discretion), then the entire outstanding balance of the City Loan shall be repaid to the City at the time of each Refinancing or partial Refinancing. c. Notwithstanding anything to the contrary contained herein, a "transfer" shall not include (and it shall not be deemed a Sale) (i) a transfer of a general partner's interest in Borrower when made in connection with the exercise by the Borrower's limited partner (the "Limited Partner") of its rights upon a default by a general partner under the Borrower's partnership agreement (the "Partnership Agreement") or upon a general partner's withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting general partner is made within thirty (30) days of such default or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to take action to remove and substitute the general partner with a reasonable period and thereafter diligently proceeds to complete such substitution;'(ii) any transfer of the Property to the managing general partner of Borrower pursuant to the right of first refusal or to the general partners of Borrower pursuant to the purchase option, as provided for in the Partnership'Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Borrower. 14. Event of Default. Subject to the provisions of Sections 23 hereof, the occurrence of any of the following shall be deemed to be an event of default ("Event of Default") hereunder: (a) failure by Borrower to make any payments provided for herein, and if such default is not made good within five (5) days of the due date; (b)- failure by Borrower to perform any covenant or agreement in the Deed of Trust, the Agreement, or the Affordability Covenants and Restrictions within thirty (30) days after written demand therefor by City (or, in the event. that more than thirty (30) days is reasonably required to cure such default, should Borrower fail to promptly commence such cure, and diligently and continuously prosecute same to completion); or (c) a default under the Senior Loan. Deed of Trust that remains uncured after the cure period, if any, provided therein. 15. Remedies. Upon the occurrence of an Event of Default, after any applicable notice has been provided and the expiration of any applicable cure period therefore, City may declare all sums evidenced hereby immediately due and payable by delivery to the Trustee named in the Deed of Trust securing this Note, and to Borrower, written declaration of default and demand for sale, and written notice of default and of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for record and City may foreclose on the Deed of Trust. City shall also deposit with Trustee the Deed of Trust, this Note and all documents evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal shall bear interest at the Bank of America reference rate on the due date of the delinquent payment plus four percent (4%). No delay or omission on the part of the City in exercising any right under this Note or under any of the other Loan Documents shall operate as a waiver of such right. 16. Attorney Fees. If this City Promissory Note is not paid when due or if any Event of Default occurs, Borrower promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions hereof. E 17. Severability. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. 18. Number and Gentler. In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires. 19. Non-recourse. The City Loan is a nonrecourse obligation of the Borrower. Neither Borrower, nor its partners nor any other party shall have any personal liability for repayment of the City Loan or for any other amounts under any of the documentation evidencing, securing or describing the City Loan. The sole recourse of City under this Note and the Deed of Trust for repayment of the City Loan and for such other amounts arising therefrom shall be the exercise of its rights against the Property and related security thereunder. 20. Subordination. It is hereby expressly agreed and acknowledged by Borrower and City that the Deed of Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior Deed of Trust. 21. Notice of Default. a. Subject to the applicable cure periods set forth in Section 14 and subject to the fitrther provisions of this Section 21, failure or delay by the Borrower to perform any term or provision of this Note constitutes a default under this Note. The Borrower must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. b. The City shall give written notice of default to the Borrower specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. C. Except in the case of a monetary event of default, the Borrower shall not be in default so long as it endeavors to complete such cure, correction or remedy with reasonable diligence, provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be deemed by the City to be reasonably necessary to correct the default). 10 d. Any failures or delays by the City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. e. If a monetary event of default occurs under the terms of this Note or the Deed of Trust, prior to exercising any remedies thereunder City shall give Borrower written notice of such default. Borrower shall have a period of seven (7) days after such notice is received within which to cure the default prior to exercise of remedies by City under this Note and the Deed of Trust. £ If a non -monetary event of default occurs under the terms of this Note or the Deed of Trust, prior to exercising any remedies thereunder, City shall give Borrower notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Borrower shall have such period to effect a cure prior to exercise of remedies by the City under this Note and the Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as passible, then borrower shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by City. In no event shall City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within one hundred eighty (180) days after the first notice of default is given. 22. Insurance and Condemnation. In the event of any fire or other casualty to the Property or eminent domain proceedings resulting in condemnation of the Property or any part thereof, Borrower shall have the right to rebuild the Property, and to use all available 'insurance or condemnation proceeds therefor, provided that (a) such proceeds are sufficient to keep the City Loan in balance and rebuild the Property in a manner that provides adequate security to City for repayment of the City Loan or if such proceeds are insufficient then Borrower shall have funded any deficiency, (b) City shall have the right to approve plans and specifications for any major rebuilding and the right to approve disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or similar arrangement, and (c) no material default then exists under this Note or the Deed of Trust. If the casualty or condemnation affects only part of the Property and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the City Loan in a manner that provides adequate security for repayment of the remaining balance of the City Loan. 23. Force Maieure. Notwithstanding specific provisions of this Note, performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; 11 This City Promissory Note is hereby agreed to and executed on the date first set forth above. i7IZSAV1041 GARNSEY, LP, a California limited partnership MANAGING GENERAL PARTNER OHDC Properties 1, LLC a California limited liability company ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit corporation, its sole member IC Eunice Bobert, Chief Executive Officer DEVELOPER GENERAL PARTNER C&C Properties Group 1, LLC a California limited liability company Todd R. Cottle, its member By: Cottle Family Trust Dated 318187, Mw Barry A. Cottle, its Trustee 13