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HomeMy WebLinkAbout25C - AGMT - HOUSING DEV ORGANIZATIONSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: FEBRUARY 7, 2017 TITLE: APPROVED LIST OF COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS (STRATEGIC PLAN NO 5,3) CITY M AGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: F-11»:ZHV /MIN ❑ As Recommended ❑ As Amended ❑ Ordinance on 1" Reading ❑ Ordinance on 2 n Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER 1. Certify Jamboree Housing Corporation, American Family Housing and Mercy House as Community Housing Development Organizations and place these entities on the Approved List of Community Housing Development Organizations as prequalified to apply for a set -aside of up to $504,550 in HOME Investment Partnerships Program funds for up to a three -year term from March 1, 2017 to February 29, 2020. 2. Authorize the City Manager and the Clerk of the Council to enter into agreement(s) with the Approved List of Community Housing Development Organizations after a project is or projects are submitted by the prequalified entities and approved by staff, subject to non - substantive changes approved by the City Manager and City Attorney. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its regular meeting on December 28, 2016, the Community Redevelopment and Housing Commission recommended the certification and approval of the prequalified Community Housing Development Organizations by a vote of 7:0. DISCUSSION The City of Santa Ana annually receives federal grant funds through the HOME Investment Partnerships Program (HOME) for the development of affordable housing. The U.S. Department of Housing and Urban Development (HUD) has commitment deadlines for these HOME funds that require grant funds to be committed within two years from the date of their original allocation. In addition, the HOME regulations require that participating jurisdictions set -aside at least 15 percent of their HOME allocation for housing that is developed, owned, or sponsored by Community Housing Development Organizations (CHDO). A CHDO is a nonprofit, community - based organization with the capacity to develop affordable housing for the community. In order to qualify for designation as a CHDO, the organization must meet the requirements pertaining to 25C -1 Approved List of Community Housing Development Organizations February 7, 2017 Page 2 their legal status, organization structure, capacity, and experience as required by the HOME regulations. The City of Santa Ana provided organizations with an opportunity to apply for the 15 percent set - aside of CHDO funds under prior Request for Proposals. However, the selected projects were unable to qualify or fully use the CHDO funds made available by the City. In order for the City to fully use this set -aside of HOME funds and meet HUD's commitment deadlines, the City released a Request for Qualifications # 16 -120 (RFQ) for CHDOs on September 26, 2016, for affordable rental and ownership housing in Santa Ana. City Council received and filed the RFQ on September 20, 2016 prior to issuance. The purpose of the RFQ was to qualify and certify CHDOs in order to place them on an Approved CHDO List. Once placed on the Approved CHDO List, selected and approved CHDOs are able to utilize HOME CHDO funds based on the review, approval and selection of the City at its sole discretion for qualified and eligible projects until the funds are fully exhausted within a three -year deadline and /or the City has met its CHDO HOME commitment deadline for each fiscal year. Based on the new HOME rules, HOME commitments cannot occur until all financing for the project has been fully committed. The selected CHDOs will be responsible for contributing and securing additional funds as necessary, for acquiring the land, completing the improvements, and lease -up and operation of each project. The RFQ was placed on the City's website, published in a general circulation newspaper, and directly e- mailed to local housing developers who have previously shown an interest in affordable housing development projects. Three proposals were received by the deadline of October 28, 2016, and were reviewed by a panel based on HUD requirements and the RFQ requirements. Proposals were received by Jamboree Housing Corporation, American Family Housing, and Mercy House. All three proposers qualified as CHDOs and are being recommended by staff for certification and approval for utilizing the CHDO funds. A draft template agreement (Exhibit 1) is being provided only as a reference. This agreement would be executed by City staff with Jamboree Housing Corporation, American Family Housing or Mercy House as Community Housing Development Organizations after submission of a project to utilize HOME CHDO funds based on the review, approval and selection by the City at its sole discretion for qualified and eligible projects until the funds are fully exhausted. This recommended action will facilitate the capacity for these pre - qualified organizations to fully use the CHDO funds made available by the City because the template agreement will not require future consideration by City Council and thereby delay their ability to compete for single - family, duplex, or four -plex developments in the private market which have shorter escrow periods. The City has the following deadlines for these CHDO funds for commitment and expenditures. A commitment is a signed loan agreement after all other funding sources are committed, including Low Income Housing Tax Credits. 25C -2 Approved List of Community Housing Development Organizations February 7, 2017 Page 3 The HOME CHDO Commitment and Expenditure Deadlines are as follows: CHDO Funding Amount Availability Commitment Deadline Expenditure Deadline $161,006.10 Currently Available 07/31/2017 07/31/2020 $171,771.60 Currently Available 07/31/2018 07/31/2021 $171,771.60 * Available 07/01/2017 07/31/2019 07/31/2022 *Estimate for FY 2017 HOME CDHO Funds allocated by the U.S. Department of Housing and Urban Development (HUD). If the City does not award these available funds to one of the three prequalified organizations on the Approved List of Community Housing Development Organizations in a timely manner before July 30 of each fiscal year, the funds will be returned to the Federal government. The purpose of this recommended action is to utilize these funds for the community in an efficient and effective manner, in compliance with HUD's commitment deadlines listed above. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #5 - Community Health, Livability, Engagement and Sustainability, Objective #3 (facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods). FISCAL IMPACT Upon the City's approval of each project utilizing HOME CHDO funds, funds will be available in the HOME Program account (no. 13018780- 69152). Robert C. Coptez Deputy City Ma_nager.._ - -'- City Manager's Office NV /JB APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez Executive Director b Finance & Management Services Agency Exhibit: 1. Community Housing Development Organization Template Agreement 25C -3 25C -4 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Community Development Agency 20 Civic Center Plaza (M -26) P.O. Box 1988 Santa Ana, California 92702 Attention: Housing Division Manager SPACE A13OVE T S NEF RECORDING USE FREE RECORDING REQUESTED [Government Code Section 61031 LOAN AGREEMENT by and between the CITY OF SANTA ANA Dated: And (type of entity) Santa Ana, California) 1 25C -5 LOAN AGREEMENT HOME PROGRAM THIS LOAN AGREEMENT (the "Agreement ") dated, for identification purposes only, as of , is made and entered into by and between the City of Santa Ana, a charter city and municipal corporation (referred to herein as "City") and a , with reference to the following: RECITALS: A. City has received an allocation of funds from the United States Department of Housing and Urban Development ( "HUD ") under the HOME Investment Partnership Program (the "HOME Program ") (42 U.S.C. § 12701, et seq.,) to be used in accordance with applicable statutory requirements and regulations (the "HOME Regulations ") (24 CFR Part 92); B. A portion of City's allocation of HOME Program funds is reserved for Community Housing Development Organizations (the "HOME Program/CHDO fiends "), and has qualified and is in good standing as a Community Housing Development Organization; C, Among the purposes of the HOME Program are (1) to expand the supply of decent, safe, sanitary, and affordable housing, with primary attention to rental housing, for very low- income and low - income Americans; and (2) to provide participating jurisdictions, on a coordinated basis, with the various forms of federal housing assistance, including capital investment, mortgage insurance, rental assistance, and other federal assistance, needed (a) to promote the development of partnerships among the federal government, states and units of general local government, private industry, and nonprofit organizations able to utilize all available resources to provide more of such housing, and (b) to expand the capacity of nonprofit Community Housing Development Organizations to develop and manage decent, safe, sanitary anal affordable housing; D. Developer is the owner of that certain property commonly known as , within the City of Santa Ana, California, and legally described in Exhibit A attached hereto (the "Property "). The loans referenced herein shall assist in the acduisition, new construction and/or rehabilitation of said Property that is improved for a multifamily or single- family residential housing development, E. Developer is on the City Approved list of Community Housing Development Organizations and has been certified and approved to utilize HOME Prograni/CHDO Funds, F. In furtherance of the HOME Program, Developer has applied to City for a loan with which to: 1. provide deeper affordability for a longer term, as well as acquire, construct and /or rehabilitate the Property, and 25C -6 2. thereafter to maintain, operate and professionally manage the Property as decent, safe, sanitary and affordable rental housing. G. City, on certain terms and conditions, desire to make such loan to Developer in order to make possible the acquisition, construction and/or rehabilitation of the Property, thereby eliminating blight while expanding the supply of decent, safe, sanitary and affordable housing. H. If there is any discrepancy between Federal and State guidelines with regard to any of the terms and conditions contained herein, the more stringent shall apply. L The Loan Agreement and all of its attachments shall be enforceable by City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions on Transfer of Property, the City/HOME Loan Note and the City /HOME Deed of Trust provide a means of enforcement by the City if Developer is in breach of its obligations hereunder and thereunder, including liens on the Property, use and deed restrictions and covenants running with the land (24 CFR 92.504 (c) (13)]. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, City and Developer agree as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 Defined Terms. All capitalized terms used herein, including, without limitation, in the Recitals above and in all other Project Documents, unless otherwise expressly defined, are defined where first used in this Agreement and/or as set forth in this Article 1, "Affordable Housing" means housing operated in accordance with the requirements of 24 CFR 92.252 and the rents governed by HUD. "Affordability Restrictions on Transfer of Property" means that certain document affecting real property benefiting the City, attached hereto as Exhibit G. "Affordable Rent" means the monthly rents that are set forth in more detail in Section 7 of this Agreement. "Building Permit" means the building permit(s) issued by City and required for the constriction and/or rehabilitation, if any. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs. "Calendar Year" means each consecutive twelve (12) month period from .January 1 to December 31, "Certificate of Completion" has the meaning set forth in Article 17. 3 25C -7 °°CHDO" means Community Housing Development Organization under the HOME Program. "City" means the City of Santa Ana, California, a charter city and municipal corporation. "City/HOME Loan" means the loan to be made to Developer by City from HOME finds pursuant to Article 5 of this Agreement. "City /HOME Loan Deed of Trust" means the deed of trust encumbering the Property, in the form attached hereto as Exhibit E, to be executed by Developer pursuant to Section 5.13.2 in order to secure the Loan Note. "City /HOME Loan Note" means that certain promissory note in the original principal amount of $ , in the fonn attached hereto as Exhibit P, and to be executed by Developer in favor of City to evidence the obligation of Developer to repay the City/HOME Loan. "Close of Escrow" shall mean the date upon which the City /HOME Loan Deed of Trust is recorded in the Official Records of the County. "Closing Statement" means the final statement of Developer's Escrow account for the purchase and sale of the Property pursuant to the Purchase Contract, "County" means the County of Orange, California. "Developer" means successors and assigns. its "Developer's Representative" shall mean the Chief Execrative Officer of the Administrative General Partner of Developer or his/her designee. "Escrow" means Escrow No. "Escrow Holder" means The Escrow Officer is "Event of Default" has the meaning set forth in Section 20.1. "Executive Director" means the Executive Director of the Community Development Agency, or his /her designee. "Extremely Low Income" an adjusted income which does not exceed thirty percent (30 %) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. 25C -8 "General Partner(s)" means the General Partners of Developer, and their respective successors and assigns. "Governmental Authority" means any governmental or quasi governmental agency, board, bureau, commission, department, court, administrative tribunal or other instrumentality or authority, and any public utility. "Hazardous Materials" means flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including without limitation the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et sM., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.&C. §§ 9601, et seq., as amended. "HOME Compliance Period" is for a period of fifteen (15) years. "HOME Program" has the meaning set forth in Recital "A" above. "HOME Regulations" has the meaning set forth in Recital "A" above. "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof "Improvements" means all improvements and fixtures now and hereafter comprising any portion of the Property, including, without limitation, landscaping, trees and plant materials; and offsite improvements (including, without limitation, streets, curbs, storm drains, and adjacent street lighting), "Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (e) any obligation for the purchase of property or services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii) evidenced by a note or similar instrument, and ( d) all recourse and all non- recourse indebtedness secured by any Lien on any property or asset of such person (whether or not assumed by such person). "Indemnitees" has the meaning set forth. in Section 14.5. "Laws" in ms all statutes, laws, ordinances, regulations, orders, writs, judgments, injunctions, decrees or awards of the United States or any state, county, municipality or other Governmental Authority. "Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any lien or security interest). 5 25C -9 "Limited Partner" means the Limited Partners of Developer, and their successors and assigns. "Loan Documents" means, collectively, this Agreement, the City /HOME Loan Note, the City/HOME Deed of Trust, the Affordability Restrictions on Transfer of Property, and any other agreement, document, or instrument that the City requires in connection with the execution of this Agreement or from time to time to effectuate the purposes of this Agreement. "Low Income" means an adjusted income which does not exceed eighty percent (80 %) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HUD. Also may be referred to interchangeably in the Loan Documents as "Area Median Income" or "AMT ". "Partnership Agreement" means the Agreement of dated as said Partnership Agreement may be amended from time to time. "Permitted Encumbrances for the Affordable Housing Restrictions" means, collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the Executive Director in writing. "Permitted Encumbrances for the City Loan Deed of Trust" means, collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the Executive Director in writing. "Project" means the acquisition, new construction and/or rehabilitation of the Property by Developer pursuant to this Agreement. "Project Budget" means the line -item budget for the Project attached hereto as Exhibit C, as modified from time to time in accordance with this Agreement. "Project Costs" means all costs of any nature incurred in connection with the Project in accordance with generally accepted accounting principles. "Property" means the Property that is located at within the City of Santa Ana, and is more fully described in the "Legal Description" of the Property attached hereto as Exhibit A and incorporated herein by reference. "Senior Lender" means or any other holder of the Senior Loan Note(s). 6 25C -10 "Senior Loan" shall mean the senior loan being made by Senior Lender concurrent to the City Loan for payment of a portion of the aoeuisition, new construction and/or rehabilitation costs, and shall include any subsequent loan that refinances the initial Senior Loan. "Senior Loan Deed of Trust" means the deed of trust securing the Senior Loan by encumbering the Property. "Senior Loan Documents" means, collectively, the loan agreement governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document or instrument that the Senior Lender requires in connection with the Senior Loan. "Senior Loan Note" means the promissory note evidencing the Senior Loan from Senior Lender, "Term" the terns and conditions contained herein shall remain in effect for fifty -five (55) years. "Very Low Income" means an adjusted income which does not exceed fifty percent (50 %) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. 1.2 Singular and Plural Terms, Any defined term used in the plural in this Agreement or any other City Loan Document shall refer to all members of the relevant class and any defined term used in the singular shall refer to any number of the members of the relevant class. 13 References and Other Terms. Any reference to this Agreement or any Loan Document shall include such document both as originally exeouted and as it may from tinge to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references to the same Section in which the reference appears. The tern "document" is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments and other written material of every kind. The terms 'including" and "include" mean "including (include) without limitation." 1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference. 2. [RESERVED] 7 25C -11 SCOPE OF WORK/ PROJECT BUDGET A "Scope of Work" for the Property is attached hereto as Exhibit B. Any material change to the Scope of Work requested by the Developer shall be subject to the prior written approval of the Executive Director. A line -item budget for the Project, including a summary statement of sources and uses of funds, is incorporated into Exhibit C (the "Project Budget "). Any material change to the Project Budget requested by Developer shall be subject to the prior written approval of the Executive Director. 4. [RESERVE' DI 5, LOANS A. CITY LOAN: 1. Amount and Purpose. Subject to the terms and conditions of this Agreement, City agrees to make a loan of HOME fiends to Developer in the principal amount of up to $ (the "City Loan") for the new construction and/or ac uisition and ,rehabilitation of the Property. 2. City /HOME Note and Deed of Trust. The City /HOME Loan shall be evidenced by the City /HOME Loan Note in the form attached hereto as Exhibit E. The City Loan shall be secured by the City/HOME Loan Deed of Trust in the form attached hereto as Exhibit E. The City/HOME Deed of Trust shall be a deed of trust encumbering the Property, subordinate to the Senior Loan(s) made to Developer. 3. City /HOME Loan Terms. The terms and conditions of the City /HOME Loan are as set forth in the City /HOME Loan Note which is a residual receipts note. The HOME compliance period is fifteen (15) years, commencing on the date that all work is complete and the Property is fully occupied. 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS 6.1 Conditions Precedent, City's obligation to disburse the Loan Amount is subject to the satisfaction, or waiver by the Executive Director, of the following conditions precedent: (a) Loan Docuunents. Developer shall have delivered to the Escrow Holder, signed by the authorized officer or officers of Developer, with such signature(s) acknowledged where necessary, each of the following documents: (i) the Loan Agreement; (ii) The City /HOME Loan Note; 25C -12 (iii) The City /HOME Deed of Trust, (iv) The Affordability Restrictions on Transfer of Property; and (b) Title Insurance. City shall have received an LP -10 ALTA Lender's loan policy of title insurance (2006 edition), or evidence of a commitment therefore satisfactory to City, issued by First American Title Insurance Company and in form and substance satisfactory to City, together with all endorsements and binders required, naming City as the insured, in a policy amount of not less than the City /HOME Loan Amount, showing Developer as the fee owner of the Property and insuring the City /HOME Deed of Trust to be valid priority liens on the Property. The City/ TOME Loan Note and Deed of Trust shall be subordinate to the Senior Loan Note and First Deed. (c) Affordability Restrictions on Transfer of Property. Developer shall have delivered to the Escrow Holder, in the form attached hereto as Exhibit G, the Affordability Restrictions on Transfer of Title pursuant to which, among other things, Developer agrees that the Property shall be used only for decent, safe, sanitary and affordable rental housing pursuant to the affordability requirements of Code of Federal Regulations ( "CFR ") section 92.252 or 92.254 and California Health and Safety Code ( "H &S ") sections 50052,5, as applicable. (d) Documents Recorded. This Loan Agreement, the City /HOME Loan Deed of Trust and the Affordability Restrictions on Transfer of Property shall have been recorded in the Official Records of the County. (e) Request for Notice For the benefit of City, Escrow Holder shall have recorded a request for notice of default of the Senior Loan (the "Request for Notice of Default"), (1) Insurance. City shall have received evidence satisfactory to the City Attorney that all of the policies of insurance required by Section 19 of this Agreement are in Rill force and effect. (g) Representations and warranties. The representations and warranties of Developer contained in this Agreement and the other Loan Documents shall be correct as of the Close of Escrow as though made on and as of that date, and if requested by the Executive Director, City shall have received, a certificate to that effect signed by Developer's Representative. (h) No Default. No Event of Default by Developer shall have occurred, and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer under this Agreement, and if requested by the Executive Director, City shall have received a certificate to that effect signed by Developer's Representative. 9 25C -13 6.2 Disbursement Procedures for Loan. A portion of the Loan proceeds shall be disbursed through Escrow to finance the acquisition of the Property, with other proceeds being used for the construction and /or rehabilitation (as evidenced in Exhibit Q. The Loan proceeds shall not be used for any purpose other than for acquisition costs of the Property and/or rehabilitation/construction costs, including a Developer fee and soft; costs related to development of the Project (costs all subject to City's prior review). The City allows for eligible costs to be paid by HOME loan funds that were incurred not more than 24 months prior to the HOME funds commitment date of this loan agreement in accordance with HOME regulations. 6.3 First Disbursement. Agency /City's obligation to make the first disbursement of the Construction and/or Rehabilitation Portion is subject to satisfaction of the following conditions precedent: (a) General Contractor, If the Executive Director has not yet approved the General Contractor, the Executive Director shall have approved the identity and qualifications of the General Contractor. (b) Construction/Rehabilitation Contract. If the Executive Director has not yet approved the Rehabilitation Contract, the Executive Director shall have approved the Rehabilitation Contract. (c) Relocation Plan. If the relocation of any existing tenants is contemplated by the parties, the Executive Director shall have approved a plan for the relocation of such tenants of the Property determined by the Executive Director to be eligible for relocation assistance. 6.4 Termination for Failure of Condition. If (a) any of the conditions set forth herein are not timely satisfied or waived by the Executive Director, and (b) Agency /City is not in default under this Agreement, Agency /City may terminate this Agreement without any further liability on its part by giving written notice of termination to Developer. Upon the giving of such notice, all principal, interest and other amounts owing under the Agency /City Loan Note(s) shall be immediately due and payable, regardless of any other specified due date. 6.5 Any Disbursement. City's obligation to make any disbursement of the Construction /Rehabilitation Portion (including the first and final disbursements) is subject to the satisfaction of the following conditions precedent: (a) Satisfactory Progress. The Executive Director shall be satisfied, based on his /her own inspections or other reliable information, that the construction/rehabilitation is progressing satisfactorily in conformance with all applicable laws and other requirements (including HOME regulations). (b) Condition of Title. Either (i) the Executive Director reasonably believes that no event has occurred since the Close of Escrow that would give rise to a 10 25C -14 colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of City against the Property with respect to the subject disbursement, or (ii) City must have received, at Developer's expense but payable out of the Construction/Rehabilitation Proceeds, from the title insurer who issued City's LP -10 Title Policy, all endorsements thereto then reasonably required by City. (o) Revresemations and Warranties. The representations and warranties of Developer contained in this Agreement and the other City Loan Documents shall be correct as of the date of the disbursement as though made on and as of that date. (d) No Default, No Event of Default by Developer shall remain uncured and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer. 6,6 Final Disbursement. City's obligation to disburse that portion of the construction/rehabilitation portion retained pursuant to Section 6,12 is subject to the satisfaction of the following additional conditions precedent: (a) Construction/Rehabilitation Complete. The construction/rehabilitation shall be complete. (b) Certificate of Occupancy Issued. Any portion of the coustruction/rchabilitation requiring inspection or certification by any Govermnental Authority shall have been inspected and certified as complete. Developer shall request that the Building Department issue a Certificate of Occupancy, a copy of which shall be delivered to the Executive Director, in order for final disbursement to occur. (c) Lien Free. At least one of the following shall have occurred: (i) Thirty -five (3 5) days shall have passed since the recording of a valid notice of completion for the construction/rehabilitation, and no mechanic's or material roan's lien shall be outstanding; or (ii) Ninety -five (95) days shall have passed since actual completion of the rehabilitation and /or construction, and no mechanic's or materialman's lien shall be outstanding, or Developer shall have bonded over any such lien to City's reasonable satisfaction. 6.7 Waiver of Conditions. The conditions set forth pertaining to City's obligation to make disbursements of the rehabilitation or construction portion are for City's benefit only and the Executive Director may waive all or any part of such rights by written notice to Developer. 6.8 Disbursement Requests. The construction or rehabilitation proceeds shall be disbursed on a line -item by line -item basis in accordance with the Project Budget acid subject to the conditions in this section. In no event shall City have any obligation to disburse any amount for any itern in excess of the amount allocated to such item in the 11 25C -15 Project Budget. Disbursements shall be made only upon Developer's written request in the form of a Disbursement Request showing all costs which Developer intends to fund with such disbursement, itemized in such detail as City may reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to City, including in any event partial lien releases executed by each contractor and subcontractor who has received any payment for work performed, and (b ) all other documents and information reasonably required by City. Disbursement Requests shall be submitted no less than ten (10) Business Days prior to the date of the requested disbursement, and shall not be submitted more often than monthly. Prior to each disbursement by City of proceeds of the City Loan, Borrower shall deliver to City and to Senior Lender a draw request ( "Draw Request "), and all required supporting information as set forth in the Loan Documents or as otherwise reasonably required by City or Senior Lender in order to provide information for evaluating the requested disbursement pursuant to customary construction lending practices of institutional lenders in Southern California. City and Senior Lender shall notify the other and Borrower of approval or disapproval of each Draw Request within five (5) business days after receipt of the Draw Request, using the Senior Lender's "Disbursement /Change Order Approval Notice ". City and Senior Lender shall have the right, but not the obligation, to discontinue processing Draw Requests unless and until receipt of notification from the other of approval or disapproval of each outstanding Draw Request, 6.9 Manner of Disbursement. City may make any disbursement by check payable to Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor, subcontractor or other claimant; or directly to any such claimant; or by any other means reasonably selected by City. Disbursement will be made fifteen (15) days from approval. 6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost reasonably estimated by City or Developer to be required to complete all matters included in any line item in the Project Budget exceeds the amount allocated to that line item in the Project Budget, (b) construction/rehabilitation costs for any matters not covered by a specific line item have been or will be incurred, or (c) the undisbursed portion of the construction/rehabilitation portion is or may be insufficient to pay all construction/rehabilitation costs that maybe payable under the City Loan Documents or otherwise in connection with the construction/rehabilitation, Developer shall, within ten (10) days after it receives written notice thereof from City of any of the foregoing matters, do one or more of the following: (a) provide satisfactory evidence to City that Developer has previously paid such excess or otherwise provided for such insufficiency (collectively, the "Excess Cost ") with funds from a source other than the City Loan; (b) reallocate sufficient funds to pay the Excess Cost from funds allocated to "Contingency" in the Project Budget; provided, however, that the Executive Director's consent to any such reallocation shall be required; or 12 25C -16 (c) deposit an amount equal to the Excess Cost in a non - interest bearing account (the "Overrun Account ") with City from which withdrawals may be made only with the consent of the Executive Director but which will be exhausted prior to any further disbursement for any line item, so that any resulting surplus in any line item of the Project Budget will then be reallocated to the line item(s) in which the Excess Costs are expected to be incurred. City shall have no obligation to make further disbursements until Developer has paid or otherwise provided for the overrun as required above. Amounts deposited by Developer in the Overrun Account for any Excess Costs shall be disbursed by City prior to the disbursement of any remaining construction/rehabilitation portion proceeds in the manner described in subsection 93(c). 6.11 Cost Savings. Upon completion of and disbursement for all matters covered by any line items in the Project Budget, any remaining undisbursed amounts allocated to that line item shall be reallocated to "Contingency" and thereafter be available for disbursement in accordance with the terms of this Agreement. 6.12 Retainage. City will withhold a Retainage of 10% from each Disbursement for each of the hard cost line items of the project cost breakdown (and other line items thereof designated for withholding of retainage) until all conditions to the final disbursement of hard costs have been satisfied. In lieu of City's withholding Retainage, Developer can by written notice to City elect not to draw any overhead or profit as would otherwise be permitted tinder the Construction Contract until such time as Retainage would otherwise have been released. City shall not retain funds for building materials purchased by Developer for which Developer supplies documentation to City proving payment in full or for soft costs. 6.12.1 Holdback. The retainage otherwise available for disbursement shall be subject to a holdback of one hundred twenty -five percent (125 %) of the estimated cost (as determined by the Executive Director) for "punch -list" items. Such holdback will be released when all punch -list items have been completed to the satisfaction of City. 6.13 Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the making by City of any disbursement with knowledge that any condition to such disbursement is not fulfilled shall constitute a waiver of such condition only with respect to the particular disbursement made. 6.14 Modification of Disbursement Conditions and Procedures. The Executive Director shall have the authority to modify the disbursement conditions and procedures set forth herein in order to conform them to the payment provisions of the Construction or Rehabilitation Contract. 13 25C -17 6.15 Other Terms and Conditions of Loan. A. The Note shall become immediately due and payable, in the event of any of the following: (1) failure to complete the Project within four (4) years of the recording date; (2) HOME rental units must achieve initial occupancy within 18 months of project completion. (3) violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cure periods; (4) an Event of Default by Developer which is not timely cured after expiration of any applicable notice and cure periods pursuant to the terms of this Agreement. 6 .16 Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges, (b) all recording fees and charges on any document recorded pursuant to this Agreement, and (c) the premium for the title insurance required hereunder. 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 7.1 Use Covenants and Restrictions. A. Developer agrees and covenants, which covenants shall nun with the land and bind Developer, its successors, its assigns and every successor in interest to the Property that Developer will make all rental units on the Property available to low- or very low- income households at rents affordable to such households for fifty -five (55) years from the effective date of this Agreement. The HOME restrictions for the HOME assisted units shall be enforced until the date that is fifteen (15) years after the date on which the City reports the Project as complete to the Department of Housing and Urban Development. The City permits the Developer to limit the eligibility and/or give preference to a particular segment of the population in accordance with 24 CFR 92.253(d). B. The Project shall consist of units, including on -site manager's unit(s), of which there will be . There shall be HOME assisted units. If necessary depending on the number of units in the Project, the HOME assisted units shall be floating units and shall be distributed throughout the complex with comparable amenities to the other units. The affordability mix for the Project is as follows: 14 25C -18 Unit T-Ue AMI Level # of Units 30% AMI _ 50% AMI 30% AMI 60% AMT Manager Unit C. At initial lease up, households in the HOME assisted units cannot earn more than 50% of AMI, however existing tenants at the Property who are otherwise eligible under the HOME Program may continue their tenancy at the Property. Rental increases shall be in conformance with federal and state law. After the fifteen (15) year HOME compliance period, the City shall require that the units remain affordable, with rents calculated based on assumed household size at the same income levels. D. All of the HOME units will be restricted to occupancy by C %) of the Area Median Income (AMI). Current residents whose incomes exceed (_%) of the AMI will be increased to either (__%) percent of their monthly household income or market rent for the neighborhood, whichever is lower. E. Maximum Occupancy will be two (2) people per room plus one (1). Example for a two - bedroom unit, five (5) people would be maximum occupancy, F. Affordable rents shall be governed by California Health and Safety Code Sections 50052.5 and 50053(b)(2), and as provided in the HOME Regulations 24 CFR section 92.2. G. Developer must have a written lease between tenant and owner for a period of at least one year, unless a shorter period is mutually agreed upon. Leases must be consistent with HOME Regulations 24 CFR section 92,209(g). H. Rents During Construction /Rehabilitation: (a) All HOME resits shall be charged not more than the Low HOME rent, as amended from time to time (currently $ for a unit and $ for a unit). 7.2 Affordable Gross Starting Rents (Less Reasonable Utility Allowance); Initial rents may be recalculated to allowable rental amounts at the time of initial lease -up following completion of construction in accordance with any changes in allowable rent and incorne tables as published by HUD. A. HOME Assisted Units # of Units Max Gross Monthly Rent 15 25C -19 (1) In no event shall the rent charged to the HOME assisted tenants be more than that amount of the low rent as published by HUD, as amended from time to time. (2) Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Housing Authority of the City of Santa Ana publishes the Utility Allowance Schedule. (3) At the time of project completion, the Developer shall provide to the City the address and/or unit number of each of the HOME assisted units. (4) Annually with the financial statements, the Developer shall provide an annual report of rents and occupancy of assisted units, including HOME - assisted units, to verify compliance with affordability requirements. For the HOME units, information on unit substitution and filling vacancies shall be provided to ensure that the project maintains the required unit mix. 7.3 Rent Increases: On an annual basis, the City shall provide the Developer with the maximum allowable schedule of rents for the Property. In no event can Developer charge any tenant more than such amount. 7.4 Prohibfted Fees, The Developer and subsequent owner is prohibited from charging fees that are not customary, consistent with HOME Regulations 24 CFR section 92.504(c)(3)(xi). The Developer and subsequent owner can charge reasonable application fees to prospective tenants; other fees only to the extent that they are reasonable and customary for the project area; and fees for services provided to tenants, provided that these services are not mandatory. 7.5 Maintenance of the Property. Solely at Developer's expense, Developer agrees to maintain the Property in a clean and orderly condition and in good condition and repair and keep the Property free from any accumulation of debris and waste materials. If at any time Developer fails to maintain, or cause to be maintained, the Property as required by this section, and said condition is not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from the date of written notice from the City, unless such condition cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure, the City may perform the necessary maintenance and Developer shall pay all reasonable costs incurred for such maintenance. The City shall inspect the Property annually after the date of issuance of the Certificate of Completion as described in Article 17 of this Agreement. During the affordability period, the Property must meet all applicable State and local codes. The Property must be free of all health and safety defects during the affordability period. 7.6 Obligation to Refrain from Discrimination. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, mental or physical disability, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure 16 25C -20 or enjoyment of the Property nor shall Developer itself or any person claiming under or through him establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect for the term of the Agreement, 8, DEFAULTS AND REMEDIES 8.1 Event of Default. Failure or delay by either party to perform any tern of provision of this Agreement within the time periods provided herein for such performance constitutes a default under the Agreement. If any party defaults in perfornance of its obligations, covenants or agreements hereunder, the defaulting party shall be entitled to cure the default in accordance with this section, The injured party shall give written notice of default to the party in default, specifying the default complained of by the injti ted party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. The defaulting party must, within thirty (30) days following service of said written notice, commence to cure, correct or remedy such failure or delay and shall complete such cure, correction, or remedy with reasonable diligence. Upon a default by Developer which is not cured within thirty (30) days following service of said notice, unless such default cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure but no more than ninety (90) days, the City shall have the right to terminate this Agreement by delivery of written notice of termination to Developer, 8.2 Institution of Legal Actions. In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement, 8.3 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 8.4 Damages. In the event that the City is liable for damages to Developer, such liability shall not exceed costs incurred by the Developer in the performance of this Agreement and shall not extend to compensation for loss of future income, profits or assets; provided, however, Developer's only remedy for any breach of this Agreement by the City shall be an action for specific performance of such party's obligations. 8.5 N_onrecourse Liability. Neither Developer, nor any partner of Developer, shall have any personal liability under this Agreement, or the attached Note and Deed of Trust, and any judgment, decree or order for the payment of money obtained in any action to enforce the obligation of Developer to repay the loan evidenced by such documents shall be enforceable against Developer only to the extent of Developer's interest in the Property. 17 25C -21 9, GENERAL PROVISIONS AND WARRANTIES As a material inducement to City to enter into this Agreement, Developer represents and warrants as follows: 9.1 Formation, Qualification and Compliance. the managing general partner of Developer (a) is a non- profit public- benefit corporation, validly existing and in good standing under the laws of the State of California, (b) has all requisite authority to conduct its business and own and lease its properties, and (c) is qualified and in good standing in every jurisdiction in which the nature of its business makes qualification necessary or where failure to qualify could have a material adverse effect on its financial condition or the performance of its obligations under the Loan Documents. Developer is in compliance with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with, any Governmental Authority that are necessary for the transaction of its business. 9.2 Execution and Performance of Loan Documents. 921 Developer has all requisite authority to execute and perform its obligations under the Loan Documents. 9.2.2 The execution and delivery of Developer of, and the performance by Developer of its obligations under, each Loan Document has been authorized by all necessary action and does not and will not: (a) require any consent or approval not heretofore obtained of any person having any interest in Developer; (b) violate any provision of, or require any consent or approval not heretofore obtained Linder, any articles of incorporation, by -laws or other governing document applicable to Developer; (c) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under the City Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer; (d) violate any provision of any law presently in effect; or (e) constitute a breach or default under, or permit the acceleration of obligations owed under, any contract, loan agreement, lease or other agreement or document to which Developer is a party or by which Developer or any of its property is bound. 9.2.3 Developer is not in default, in any respect that is materially adverse to the interests of City Linder the Loan Documents or that would have any material adverse effect on the financial condition of Developer or the conduct of its business, 18 25C -22 under any law, contract, lease or other agreement or document described in sub- paragraph (d) or (e) of the previous subsection. 9.2.4 No approval, license, exemption or other authorization from, or filing, registration or qualification with, any Governmental Authority is required which has not been previously obtained in connection with: (a) the execution of Developer of, and the performance by Developer of its obligations Linder, the Loan Documents; and (b) the creation of the liens described in the Loan Documents, 9.3 Financial and Other Information. To the best of Developer's knowledge, all financial information furnished to City with respect to Developer in connection with the Loan (a) is complete and correct in all material respects as of the date of preparation thereof, (b) accurately presents the financial condition of Developer, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied or in accordance with such other principles or methods as are reasonably acceptable to City. To the best of Developer's knowledge, all other documents and information furnished to City with respect to Developer, in connection with the Loans, are correct and complete insofar as completeness is necessary to give the City accurate knowledge of the subject matter. To the best of Developer's knowledge Developer has no material liability or contingent liability not disclosed to City in writing and there is no material lien, claim, charge or other right of others of any kind's (including liens or retained security titles of conditional vendors) on any property of Developer not disclosed in such financial statements or otherwise disclosed to City in writing. 9.4 No Material Adverse Change. There has been no material adverse change in the condition, financial or otherwise, of Developer since the dates of the latest financial statements furnished to City, Since those dates, Developer has not entered into any material transaction not disclosed in such financial statements or otherwise disclosed to City in writing. 9.5 Tax Liabil ity. Developer has filed all required federal, state and local tax returns and has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to City in writing) other than taxes being promptly and actively contested in good faith and by appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities (including contested liabilities) in accordance with generally accepted accounting principles or in accordance with such other principles or methods as are reasonably acceptable to City. 9.6 Governmental Requirements. Developer is in compliance with all laws relating to the Property and all Governmental Authority approvals, including zoning, land use, planning requirements, and requirements arising from or relating to the adoption or amendment of, any applicable general plan, subdivision and parcel map requirement; environmental requirements, including the requirements of the California Enviromnental Quality Act and the National Environmental Policy Act and the preparation and approval 19 25C -23 of all required environmental impact statements and reports; use, occupancy and building permit requirements; and public utilities requirements, 9.7 Rights of Others. Developer is in compliance with all covenants, conditions, restrictions, easements, rights of way and other rights of third parties relating to the Property. 9.8 Litigation. There are no material actions or proceedings pending or, to the best of the Developer's knowledge, threatened against or affecting Developer or any property of Developer before any Governmental Authority, except as disclosed to City in writing prior to the execution of this Agreement. 9.9 Bankruptcy. To the best of Developer's knowledge, no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Developer, nor are any of such proceedings contemplated by Developer. 9.10 Information Accurate. To the best of Developer's knowledge, all information, regardless of its form, conveyed by Developer to City, by whatever means, is accurate, correct and sufficiently complete to give City true and accurate knowledge of its subject matter, and does not contain any misrepresentation or omission. 9.11 Conflicts of Interest. No member, official or employee of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his/her personal interests or the interests of any corporation, partnership or association in which he/she has a direct or indirect financial interest. The Developer warrants that it neither has paid nor given, nor will pay or give, any third party any money or other consideration for obtaining this Agreement. 9.12 Nonliability of City Officials and Employees, No member, official or employee of the City shall be personally liable to the Developer in the event of any default or breach by the City or for any amount which may become due to Developer or on any obligations under the terms of this Agreement. 9.13 No Assignment. Developer expressly acknowledges and agrees that the City has only agreed to assist the Developer as a means by which to induce the acquisition /rehabilitation/d'evelol)nent of the Property. Accordingly, Developer further expressly acknowledges and agrees that this Agreement is a personal right of Developer that is neither negotiable, transferable, nor assignable except as set forth herein. Developer may assign some or all of its rights under the Agreement only with the prior written consent of the Executive Director (such consent not to be unreasonably withheld), except that no prior consent is necessary for an assignment by a limited partner of Developer to an affiliate, or as otherwise provided in the Deed of Trust. 9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under federal and state laws, 20 25C -24 9.15 Third Parties. This Agreement is made for the sole benefit of Developer and the City and their successors and assigns, and no other person or persons shall have any rights or remedies under or by reason of this Agreement or any right to the exercise of any right or power of the City hereunder or arising from any default by Developer, nor shall the City owe any duty whatsoever to any claimant for labor performed or materials famished in connection with the construction/rehabilitation of the Property. 9.16 Control of Property. The parties acknowledge that the City has not at any time participated in any manner in the management or operation of the Property, and will not so participate at any time hereafter. 10. CONDITIONS FOR CONSTRUCTION OR REHABILITATION 10.1 Permits and Approvals. Developer shall diligently obtain all permits, including all building permits, licenses, approvals, exemptions and other authorizations of Governmental Agencies required in connection with the construction/rehabilitation and conversion of the Property. 10.2 Commencement and Completion of Construction /Rehabilitation. The construction/rehabilitation shall be considered complete for purposes of this Agreement only when (a) all work described has been completed and fully paid for, and (b) all work requiring inspection or certification by Governmental Authority has been completed and all requisite certificates, approvals and other necessary authorizations (including required final certificates of occupancy) have been obtained. 10.3 Change Orders. The Construction/Rehabilitation Contract shall not be modified except pursuant to change orders. All change orders: (a) shall be in writing, numbered in sequence, signed by Developer and submitted to City prior to the proposed effectiveness thereof and accompanied by any working drawings and a written narrative of the proposed change. (b) Shall be subject to the Executive Director's and Bank's prior written approval of the Executive Director and Bank. 10.4 Entry and Inspection. At all times prior to completion of the construction/rehabilitation, upon reasonable notice, City and their agents shall have (a) the right of free access to the Property and all sites away from the Property where materials for the construction/rehabilitation are stored, (b) the right to inspect all labor performed and materials furnished for the construction/rehabilitation, and (c) the right to inspect and copy all documents pertaining to the construction/rehabilitation. 10.5 Compliance with Section 3 Clause. Section 3 of the Housing and Urban Development Act of 1968, 12 U.S.C. 1701u, as amended by Section 915 of the Housing and Community Development Act of 1992 requires that economic opportunities generated by HUD financial assistance for housing and community development programs be targeted toward low- and very low- income persons. Whenever HUD 21 25C -25 assistance generates opportunities for employment or contracting, state and local grantees, as well as other recipients of HUD housing assistance funds roust, to the greatest extent feasible, provide these opportunities to low - and very low- income persons and to businesses owned by or employing low - and very low- income persons. Section 3 applies to projects for which HUD's share of project costs exceeds $200,000 and contracts and subcontracts awarded on projects for which HUD's share or project costs exceeds $200,000 and the contract or subcontract exceeds $100,000. For purposes of this Section 3 Clause and compliance thereto, whenever the word "contractor" is used it shall mean and include, as applicable, the Developer, and its contractor and subcontractor(s), if any. The particular text to be utilized in any and all contracts of any contractor doing work covered by Section 3 shall be in substantially the form of the following, as reasonably determined by the City, or as directed by HUD or its representative, and shall be executed by the applicable contractor under penalty of perjury: "(a) The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 170lu ( "Section 3 "). The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD- assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to low- and very low- income persons [inclusive of Very Low Income Persons, Very Low Income Households, and Very Low Income Tenants served by the Project], particularly persons who are recipients of HUD assistance for housing. (b) The parties to this contract agree to comply with HUD's regulations in 24 CFR part 135, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are wider no contractual or other impediment that would prevent them from complying with the part 135 regulations. (c) The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers' representative of the contractor's commitments under this Section 3 clause, and will post copies of notices in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference, shall set forth minimum number of job titles subject to hire, availability of apprenticeship and training positions, the qualifications for each; and the name and location of person(s) taking applications for each of the position; and the anticipated date the work shall begin. (d) The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in 22 25C -26 violation of the regulations in 24 CFR part 135. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 CFR part 135. (e) The contractor will certify that any vacant employment positions, including training positions, that are filled (a) after the contractor is selected but before the contract is executed, and (b) with persons other than those to whom the regulations of 24 CFR part 135 require employment opportunities to be directed, were not filled to circumvent the contractor's obligations under 24 CFR part 135. (f) Noncompliance with HUD's regulations in 24 CFR part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts." After the foregoing Section 3 Clause, there shall be a signature block for the contractor, as applicable, the following text shall be included immediately above the signature block: "The contractor /provider by his/her signature affixed hereto declares under penalty of perjury that contractor has read the requirements of the Section 3 Clause and accepts all its requirements contained therein for all of his/her operations related to this contract" To the extent applicable, the Developer shall comply and /or cause compliance with Section 3 Clause requirements for the Project. For example, when and if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, rather than volunteer labor or materials, Section 3 is applicable and all disclosure and reporting requirements apply. 10,6 Construction /Rehabilitation Information. From time to time during the course of the construction/rehabilitation, within ten (10) Business Days following City's written demand therefore, Developer shall furnish requested reports of project costs, progress schedules and contractors' costs breakdowns for the constntction/rehabilitation, itemized as to trade description and item, showing the name of the contractor(s) and /or subeontractor(s), and including such indirect costs as real estate taxes, legal and accounting fees, insurance, architects' and engineers' fees, loan fees, interest during construction and contractors' overhead. 10.7 Protection Against Liens. Developer shall diligently file a valid Notice of Completion upon completion of the construction/rebabilitation, diligently file a notice of cessation in the event of a cessation of labor on the construction/rehabilitation for a period of thirty (30) days or more, and take all actions reasonably required to prevent the assertion of claims of lien against the Property. In the event that any claim of lien is asserted against the property or any stop notice or claim is asserted against the City by any person furnishing labor or materials to the Property, Developer shall immediately give written notice of the same to City and shall, promptly and in any event within ten (10) Business Days after written demand therefor, (a) pay and discharge the smile, (b) effect the release thereof by delivering to City a surety bond complying with the requirement of applicable laws for such release, or (c) take such other action as City may 23 25C -27 require to release City from any obligation or liability with respect to such stop notice or claim. 10.8 General Contractors who are Related Parties to the Developer. If the Project is developed with general contractors who are Related Parties to the Developer, the Developer must be audited to the subcontractor level by an outside auditing firm approved by the City. The Developer shall pay for the audit to the subcontractor level by an outside auditing firm. 11. FEDERAL (HOME PROGRAM) COVENANTS 11.1 CHDO. the managing general partner of Developer, represents and warrants that it qualifies and is in good, standing as a Community Housing Development Organization under the HOME Program. Developer hereby covenants and agrees to maintain such status throughout the term of this Agreement, and to provide the Agency and City with written documentation necessary to demonstrate maintenance of said status on an annual basis. 11.2 Oualification as Affordable Housing. As more particularly provided in the Affordability Restrictions on Transfer of Property, Developer shall use, manage and operate the Property in accordance with the requirements of 24 CFR 92.252 so as to qualify the housing on the Property as Affordable Housing with affordable rents. 11.3 Tenant and Participant Protection. Developer shall comply with the requirements of 24 CFR 92.253. 11.4 [Intentionally Omitted] 11.5 Handicapped Accessibility. Developer shall comply with (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C governing accessibility of projects assisted under the HOME Program; and (b) the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35 -36 in order to provide handicapped accessibility to the extent readily achievable. 11.6 Use of Debarred. Suspended, or Ineligible Participants. Developer shall comply with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. 11.7 Maintenance of Drug -Free Workplace. Developer shall certify that Developer will provide a drug -free workplace in accordance with 24 CFR 84,13. 11,8 Lead -Based Paint. Developer shall comply with the requirements of the Lead -Based Paint Poisoning Prevention Act (42 U.S.C. 4821 -4846) and implementing regulations at 24 CFR 35, as applicable. 11.9 Affirmative Marketing, Developer shall implement and perform such affirmative marketing procedures and requirements for the Property (24 CFR 92.351) in 24 25C -28 compliance with the City's adopted Program (a copy of which is attached hereto and incur;• lied herein as Exhibit 111. 11.10 Equal Opportunity and Fair I f oushig. Developer s!: )d carry out the eonst-uclinn /rehabilitation its obligations under this Agreement in compliance tv ith all of the state anu 1udcral laws and regulaou:io- regarding equal opportunity and fan 1i:,utiing described in 2y e TR 92.350. 11.11 Property Standards. Developer shall caul u the Property to meet the 'lousing quality standards set forth in 24 CI - -R �'� ? 109, as well as als : amlicable local, state and federal codes and ordinances, including zoning ordinances. Developer sball also cause the Piul>�,+y to meet the cunt at edition of the Model Lin ny Code published I,y I,. 11,e Council of American Ruilding Officials, 11.12 Displacement and Relocation. Developer acknowledges and agrees that, pursuant to 24 CPR 92.253 and consistent with the other goals and objectives of this part, City must ensure that ii has taken all reasonable steps to minimize the displacement of persons as a result of the Project. Furthermore, to the extent feasible, residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary and affordable dwelling unit on the Property upon completion of the construction /rehabilitation. Developer agrees to cooperate fully and completely with City in meeting the requirements of 24 CFR 92.253 and shall take all actions and measures reasonably required by the Executive Director in connection therewith. All applicable state guidelines must also be followed. (a) Developer acknowledges and agrees to hire a Relocation Consultant I provide relocation services, pursuant to the Uniform Relocation Act and Real 'Property Acquisiti<m Policies Act of 1970 ( "URA ") and 24 CFR 92.253, (b) The City, Devclopt ^r. and Relocation Consultant will meet periodically during the relocation to provide updates and review tenant files, including at Project approval and prior to final benefit calculations. The Developer and Relocation Consultant shall carry out activity in compliance with URA and the City's Acquisition and Relocation Policy and Procedures Manual ( "Manual "). (e) The Developer and Relocation Consultant shall maintain accurate records and files pertaining to the temporary and permanent relocation of tenants, in accordance with URA and the City's Manual. (d) The Developer and Relocation Consultant shall provide all relocation and tenant files to the City once relocation is complete at the Project. 11.13 Other Program Requirements. Developer shall carry out each activity in compliance with all federal laws and regulations described in subpart H of 24 CFR 92, 25 25C -29 except that Developer does not assume City's responsibilities for environmental review in 24 CFR 92.352 or the intergovernmental review process in 24 CFR 92.359, 11.14 Request for Disbursements of Funds. Notwithstanding anything contained in this Agreement to the contrary, Developer may not request disbursements of funds under this Agreement until the funds are needed for payment of eligible costs (such funds shall be used solely towards the acquisition, construction and /or rehabilitation of the Property). The amount of each request shall be limited to the amount needed. 11.15 Eligible Costs. Developer shall use HOME Funds to pay costs defined as "eligible costs" pursuant to 24 CFR 92.206, 11.16 Records and Reports. Developer shall maintain and from time to time submit to City such records, reports and information as the Executive Director may reasonably require in order to permit City to meet the record keeping and reporting requirements required of it pursuant to 24 CFR 92.508. 11.17 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Developer shall comply with the requirements and standards of 2 CFR 200. 11.18 Conflict of Interest. Developer shall comply with and be bound by the conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations pertaining to conflict of interest. 11.19 Monitoring. Developer shall allow the City to conduct periodic inspections of the HOME assisted units on the Property as required by the Program after the date of construction/rehabilitation completion, with reasonable notice, Developer shall cure any defects or deficiencies Found by the City while conducting such inspections within two weeks of written notice thereof, or such longer period as is reasonable within the sole discretion of the City. 11.20 Recertification of Tenant Income. (A) Developer shall take all necessary steps to review the income of all tenants prior to renting to them, as well as reviewing current tenants on an annual basis, in accordance with HOME regulations and guidelines, Every fifth (5`h) year, Developer shall require new original income documents to be submitted by tenants. Tenants in HOME assisted units whose incomes no longer comply with federal income guidelines shall have their rents adjusted in accordance with federal HOME guidelines (24 CFR 92.252 - 92.253). (B) HOME assisted units continue to qualify as affordable housing despite a temporary non - compliance caused by increases in the incomes of existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies are filled in accordance with this section until the non - compliance is corrected. 26 25C -30 11.21 Other HOME Program Requirements, Developer shall comply with all other applicable requirements of the HOME Program, 11.22 Controlling Covenants. If there is a discrepancy between State and Federal law with regard to any of the aforementioned covenants, the more stringent shall apply. 12, MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND REPAIR OF PROPERTY 12.1 Maintenance, Developer shall maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise required to maintain) in good condition and repair; shall operate the Property in a businesslike manner; shall prudently preserve and protect its own as well as the City's interests in connection with the Property; shall not commit or permit any waste or deterioration of the Property (except for normal wear and tear); shall not abandon any portion of the Property or leave the Property unguarded or unprotected; and shall not otherwise act, or fail to act, in such a way as to unreasonably increase the risk of any damage to the Property or of any other impairment of City's interests under the Loan Documents. Without limiting the generality of the foregoing, and except as otherwise agreed by City in writing from time to tune, Developer shall promptly and faithfully perform and observe each of the following provisions: 12.1.1 Alterations and Repair. Developer shall not remove, demolish or materially alter any Improvement without City's prior consent, except to make non- structural repairs which preserve or increase the Property's value, and shall promptly restore, in a good and professional manner, any Improvement (or other aspect or portion of the Property) that is damaged or destroyed from any cause. 12.2 Compliance. Developer shall comply with all laws and requirements of Governmental Authority (including, without limitation, all requirements relating to the obtaining of Governmental Authority approvals), all Governmental Authority approvals and all rights of third parties, relating to Developer, the Property or Developer's business thereon. 12.3 Taxes and Impositions. Developer shall pay, prior to delinquency, all of the following (collectively, the "Impositions "): (a) all general and special real property taxes and assessments imposed on the Property; (b) all other taxes and assessments and charges of every kind that are assessed upon the Property (or upon the owner and /or operator of the Property) and that create or may create a lien upon the Property (or upon any personal property or fixtures used in connection with the Property), including, without limitation, non-governmental levies and assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees, taxes and assessments imposed on City (other than City's income or franchise taxes) which are measured by or based upon (in whole or in part) the amount of the obligations secured by the Property. If permitted by law, Developer may pay any Imposition in installments (together with any accrued interest). 27 25C -31 12.1.3,1 Right to Contest. Developer shall not be required to pay any Imposition so long as (a) its validity is being actively contested in good faith and by appropriate proceedings, (b) Developer has demonstrated to City's reasonable satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings could not result in conveyance of the Property in satisfaction of such Imposition or otherwise impair City's interests under the Loan Documents, and (c) Developer has furnished City with a bond or other security satisfactory in an amount not less than 100% of the applicable claim (including interest and penalties). 12.1.3.2 Evidence of Payment. Upon demand by City from time to time, Developer shall deliver to City, within thirty (30) days following the due date of any Imposition, evidence of payment reasonably satisfactory to City. 12.1,33 Books and Records. Developer shall maintain complete books of account and other records reflecting its operations (in connection with any other businesses as well as with respect to the Property), in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City, in accordance with 24 CFR 92.508. 12.4 Project Operating Account. Subject to the requirements of the Senior Lender, Developer must promptly deposit all project income directly into a segregated depository account established exclusively for the Project ( "Project Operating Account "). Withdrawals from this account may be made only in accordance with the provisions of this Agreement and the approved Project Budget, as it maybe revised from time to time with City approval. Developer may make withdrawals from this account solely for the payment of project expenses (including, without limitation, funding reserves and the malting of debt service payments), project fees and permitted distributions to the partners of the Developer. Withdrawals from this account for other purposes may be made only with the prior written approval of the City. 12.5 Replacement Reserve Account, Developer must establish or cause to be established a segregated interest - bearing replacement reserve depository account ( "Replacement Reserve Account ") no later than sixty (60) days after the Certificate of Completion is filed. Developer must make monthly deposits from project income into the Replacement Reserve in accordance with Developer's Budget, as amended from time to time. Developer may withdraw funds from the Replacement Reserve Account solely to fund capital improvements for the Project, such as replacing or repairing structural elements, furniture, fixtures or equipment of the Project that are reasonably required to preserve the Project. Developer may not withdraw funds from the Replacement Reserve Account for any other purpose without the prior written approval of the City. 13. NONDISCRIMINATION COVENANTS 13.1 Obligation to Refrain from Discrimination. Developer covenants and agrees that: 28 25C -32 A. In Use of Proper. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, mental or physical disability, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Developer or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendors of the Property. B. In Affordable Housing Restrictions. The foregoing covenant shall (a) be included in the Affordability Restrictions on Transfer of Property, (b) run with the land, and (c) remain effective for the term of the contract (for 55 years). C. In Employment. In construction/rehabilitation of the Property, Developer shall not discriminate against any employee or applicant because of race, color, creed, religion, sex, marital status, mental or physical disability, national origin, or ancestry. Developer shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, creed, religion, sex, marital status, national origin, or ancestry. D. In all Contracts. Developer shall cause the foregoing covenants to be inserted in all contracts for any work covered by this Agreement so that such provisions will be binding upon each contractor and subcontractor for the benefit of City, provided that the foregoing covenant shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. 14. ENVIRONMENTAL MATTERS 14,1 Representation and Warranty. Except as disclosed in writing to the City, Developer has no knowledge (a) of the presence on, under or about the Property, now or in the past, of any Hazardous Materials, or of the transportation to or from the Property of any Hazardous Materials, (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the Property, or (c) that there are any underground storage tanks located in, on or under the Property. 14,2 Compliance with Environmental Laws. Developer shall (a) comply with all environmental laws and environmental permits applicable to the Constru tion/Relrabilitation of the Property, (b) immediately pay or cause to be paid all costs and expenses incurred by reason of such compliance, (c) keep the Property free and clear of any environmental claims or liens imposed pursuant to any environmental law, and (d) obtain and renew all environmental permits required for ownership or use of the Property. 14.3 Presence of Hazardous Materials. Developer shall not, and shall not Pell-nit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property, or transport or permit the transportation of Hazardous Materials to or from the Property except for de minimis quantities used at the Property in 29 25C -33 compliance with all applicable environmental laws and required in connection with the routine operation and maintenance of the Property. 14A Notice of Environmental Matters. Developer shall immediately advise City in writing of any of the following: (a) any pending or threatened environmental claim against Developer or the Property, (b) any condition or occurrence that (i) results in noncompliance with any applicable environmental law, (ii) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental Law, or (iii) could reasonably be anticipated to form the basis of an environmental claim against the Property or Developer. 14.5 Environmental Indemnification by the Developer. Developer agrees to defend, indemnify and hold harmless the City and their respective officers, directors, employees and agents (collectively the "lndemnitees ") from and against any and all obligations (including removal and remediation), losses, claims (including third party claims), suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including consultants, and attorneys' fees) of whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or asserted against the lndemnitees directly or indirectly based on, or arising or resulting from the actual or alleged presence of Hazardous Materials on the Property other than arising from the gross negligence, willful misconduct and /or illegal actions of any Indemnitee. 15, OTHER AFFIRMATIVE COVENANTS While any obligation of Developer under the City Loan Note or Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that Executive Director otherwise consents in writing: 15.1 Existence. Developer's Managing General Partner shall maintain its existence in good standing under the laws of the State of California, and Developer shall provide documentation of such status annually to the City. 15.2 Protection of Lien. Developer shall maintain the lien of the City Deed of Trust as a valid second priority deed of trust on the Property and take all actions, and execute and deliver to City all documents, reasonably required by City from time to time in connection therewith. 15.3 Notice of Certain Matters. Developer shall give notice to City, within ten (10) days of Developer's learning thereof, of each of the following: (a) any filed litigation or claim affecting or relating to the Property and involving an amount in excess of $5,000; and any litigation or claim that might subject Developer or any general partner to liability in excess of $5,000, whether covered by insurance or not; 30 25C -34 (b) any dispute between Developer and a Governmental Authority relating to the Property, the adverse determination of which might materially affect the Property; (c) any change in Developer's principal place of business; (d) any aspect of the Improvements that is not in substantial conformity with the plans or code; (e) any Event of Default or event which, with the giving of notice or the passage of time or both, would constitute an Event of Default; (f) any material default by Developer or any other party under any Senior Loan document, or the receipt by Developer of any notice of default under any Senior Loan document; (g) the creation or imposition of any mechanics' or materialmans' lien or other lien against the Property which might materially affect the Property; and /or (h) any material adverse change in the financial condition of Developer. 15.4 Further Assurances. Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to City all documents, and take all actions, reasonably required by City from time to time to confirm the rights created or now or hereafter intended to be created under the Loan Documents; to protect and further the validity, priority and enforceability of the City Deed of Trust; to subject to the Deed of Trust any property intended by the terms of any Loan Document(s) to be covered by the City Deed of Trust or otherwise to carry out the purposes of the Loan Documents and the transactions contemplated thereunder. Notwithstanding anything to the contrary set forth herein, the Developer shall have no obligation to execute any document, or take any action, which would (i) change a material term of any Loan Document, (ii) change or impair any material right of Developer and/or (iii) increase the liability of Developer or any partner thereof. 15.5 Annual Financial Statements. Developer shall deliver to City, within one hundred twenty (120) days after the end of each Calendar Year, (a) a certified public accountant reviewed balance shoot for Developer as of the end of such Calendar Year and a certified public accountant reviewed statement of profit and loss for Developer and for Developer's operations in connection with the Property for such Calendar Year, together with all supporting schedules, (b) a certificate of such certified public accountant that such documents were reviewed by such certified public accountant in accordance with generally accepted accounting principles and otherwise comply with generally accepted accounting principles review requirements, and (c) a certificate of Developer's Administrative General Partner that such documents: (i) were prepared in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City, 31 25C -35 (ii) fairly present Developer's Financial condition, (iii) show all material liabilities, direct and contingent, and (iv) fairly present the results of Developer's operations. Developer shall also provide the City with any other annual audit reports issued by other monitoring agencies. 15.6 Audits and Access to Records. Developer agrees that City, the U.S. Department of Housing and Urban Development, the Comptroller General of the United States or any of their authorized representatives shall have the right of access, upon reasonable notice, to any books, documents, papers, or other records of Developer which are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts or transcripts. Developer will maintain all books and records pertaining to this Agreement for a period of not less than five (5) years after all matters pertaining to this Agreement (i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or state laws, regulations or policies, and when a period of affordability or recapture applies to Developer's activities, for a period of not less than five (5) years after the affordability period ends. 15.7 Termite Inspection Report. Developer shall deliver a termite report pertaining to the Property to the City every fifth (5th) year beginning 16. OTHER NEGATIVE COVENANTS While any obligation of Developer under the City Note or City Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that Executive Director otherwise consents in writing: 16.1 Default on Senior Loan. Developer shall not default on any of the Senior Loan documents, provided however, that Developer shall have such period as is provided in the Senior Loan Documents during which to effectuate a cure. 16.2 Sale or Lease of Propertv. Unless and until Developer has received a Certificate of Completion for the construction/rehabilitatian from City, Developer shall not sell, lease, sublease or otherwise transfer all or any part of the Property or any interest therein without the prior written consent of the Executive Director, which consent maybe withheld in the Executive Director's reasonable discretion. In connection with the foregoing consent requirements, Developer aclmowledges that City relied upon Developer's particular expertise in entering into this Agreement and continues to rely on such expertise to ensure the satisfactory completion of the construction /rehabilitation. Notwithstanding anything to the contrary contained herein, a "transfer" shall not include (i) a transfer of a General Partner's interest in Developer when made in connection with the exercise by the Developer's limited partner (the "Limited Partner ") of its rights upon a default by a General Partner under the Developer's Partnership Agreement (the "Partnership Agreement ") or upon a General Partner's withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting General Partner is made within thirty (30) days of such default or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to talce action to remove and substitute the General 32 25C -36 Partner with a reasonable period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the Property to the Managing General Partner pursuant to the right of first refusal or to the General Partners pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Developer. 17. CERTIFICATE OF COMPLETION Upon satisfactory completion of the construction/rehabilitation and upon the request of Developer, or at its own election, the City of Santa Ana shall issue a Certificate of Completion. Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction/rehabilitation. If City declines to furnish a Certificate of Completion after written request from Developer, the Executive Director shall, within thirty (30) days after receipt of the request, provide Developer with a written statement of the reasons therefore, The statement shall contain a description of the action Developer must take to obtain a Certificate of Completion. If the reason therefore is that the Developer has not completed a minor portion of the Construction/Rehabilitation, City may, in its sole and absolute discretion, issue the Certificate of Completion upon the posting with City of a bond or other form of security acceptable to the Executive Director in the amount of the fair value of the uncompleted work. A Certificate of Completion is not evidence of compliance with or satisfaction of the Loan Documents or any obligation of Developer to any other party whatsoever, including any holder of a mortgage or deed of trust. A Certificate of Completion is not "notice of completion" referred to in Section 3093 of the California Civil Code. 18, INDEMNIFICATION 18.1 Nonliability of City. Developer acknowledges and agrees that: (a) The relationship between Developer and City is and shall remain solely that of borrower and lender, City neither undertakes nor assumes any responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter in connection with the constntction/rchabilitationi, including matters relating to: (i) the performance of the construction/rehabilitation work, (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them, or (iii) the progress of the construction/rehabilitation; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledges that any review, inspection, supervision, approval or information supplied to Developer by City in connection with such matters is solely for the protection of City and that neither Developer nor any third party is entitled to rely on it; (b) Notwithstanding any other provision of any Loan Document: (i) the City is not a partner, joint venture, alter -ego, manager, controlling person or other 33 25C -37 business associate or participant of any kind of Developer and City does not intend to ever assume any such status; (ii) City's activities in connection with the Loan(s) shall not be "outside the scope of the activities of a lender of money" within the meaning of California Civil Code Section 3434, as modified or recodified from time to time, and City does not intend to ever assume any responsibility to any person for the quality or safety of the Property; and (iii) City shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; (c) City shall not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or property resulting from any construction on, or occupancy or use of, the Property, whether arising from: (i) any defect in any building, grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer's agents, employees, independent contractors, licensees or invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon; and (d) By accepting or approving anything required to be performed or given to City raider the Loan Documents, including any certificate, financial statement, survey, appraisal or insurance policy, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone. 18.2 Indemnity Developer shall defend (by counsel satisfactory to City), indemnify and save and hold harmless the Indemnitees from and against all claims, damages, demands, actions, losses, liabilities, costs and expenses (including, without limitation, attorneys' fees and court costs) arising from or relating to (i) this Agreement; (ii) the making of the Loan(s); (iii) a claim, demand or cause of action that any person has or asserts against Developer; (v) any act or omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Property; or (vi) the ownership, occupancy or use of the Property. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with respect to the consequences of any act of illegal conduct, gross negligence or willful misconduct of City. Developer's obligations under this Section shall survive the cancellation of the City Loan Note, release and reconveyance of the City Deed of Trust, issuance of the Certificate of Completion, and termination of this Agreement, 18.2.1 Nothwithstanding the foregoing, neither Developer, nor any of its partners, shall be personally liable for any indemnification obligation hereunder which would result as the repayment of principal and /or interest under the Loan. 18.3 Reimbursement of City. Developer shall reimburse City immediately upon written demand for all costs reasonably incurred by City (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of City) in connection with the enforcement of the Loan Documents and all related matters including all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City is indemnified under the Loan Documents, Such reimbursement obligations shall 34 25C -38 bear interest from the date occurring twenty (20) days after City gives written demand to Developer and shall be secured by the City Deed of Trust. Such reimbursement obligations shall survive the cancellation of the Loan Note, release and reconveyance of the City Deed of Trust, issuance of a Certificate of Completion, and termination of this Agreement 19. INSURANCE, CASUALTY AND CONDEMNATION 19.1 Policies Required. While any obligation of Developer under the Loan Documents remains outstanding, Developer shall maintain at Developer's sole expense, with insurers either (i) admitted in California or (ii) are not admitted to California but have an A.M. Best Rating of "A" or above and reasonably approved by the City, the following policies of insurance in form and substance reasonably satisfactory to the City Attorney: (a) worker's compensation insurance and any other insurance required by law in connection with the construction/rehabilitation; (b) prior to commencement and following completion of the construction/rehabilitation, fire and hazard "all risk" insurance covering 100% of the replacement cost of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (c) upon commencement of the construction/rehabilitation and at all times prior to completion of the construction/rehabilitation, builder's risk -all risk insurance covering 100% of the replacement cost of all Improvements (including offsite materials) during the course of construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (d) public liability insurance in amounts reasonably required by City from time to time, and in no event less than $1,000,000 for "single occurrence;" (e) property damage insurance in amounts reasonably required by City from time to time, and in no event less than $1,000,000; and (f) any other insurance reasonably required by City. All such insurance shall provide that it may not be canceled or materially modified without thirty (30) days prior written notice to City. The policies required under subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in form and substance satisfactory to City, showing the City as encumbrance. The City shall be named as an additional insured(s) in the policies required under subparagraphs (d) and (e) with primary coverage. Certificates of insurance for the above policies (and /or original policies, if required by City) shall be delivered within ten (10) days after demand 35 25C -39 therefore, and prior to start of any construction/rehabilitation work. All policies insuring against damage to the Improvements shall contain an agreed value clause sufficient to eliminate any risk of co- insurance. No less than thirty (30) days prior to the expiration of each policy, Developer shall deliver to City evidence of renewal or replacement of such policy reasonably satisfactory to City Attorney. 19.2 City Attorney May Modify. The City Attorney may modify the type and amounts of insurance required pursuant to this Section. 19.3 Claims and Proceedings. Developer shall give City immediate notice of any material casualty to any portion of the Property, whether or not covered by insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or other taking for public or quasi- public use of any portion of the Property (collectively, "Condemnation "), and shall provide City with copies of all documents which pertain to any such casualty or Condemnation. Developer shall take all action reasonably required by City in connection therewith to protect the interests of Developer and /or City, and City shall be entitled (without regard to the adequacy of its security) to participate in any action, claim, adjustment or proceeding and to be represented therein by counsel of its choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without prior written approval, which approval shall not be unreasonably withheld or delayed. 19.4 Delivery of Proceeds to City. In the event that, notwithstanding the "lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance policy described herein are paid to Developer, Developer shall, subject to any superior rights of the Senior Lender., deliver such proceeds to the City immediately upon receipt. 19.5 Application of Casualtv Insurance Proceeds. Any proceeds collected (the "Proceeds ") under any casualty insurance policy described in this Agreement shall be disbursed to Developer as provided below, but only upon fulfillment of each of the following conditions (the "Restoration Conditions ") within ninety (90) days (unless extended by mutual agreement of Developer and City) following the occurrence of the damage for which the Proceeds are collected: (a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of the Property, within two years (or such longer time period reasonably determined by City), to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to City of (i) plans and specifications reasonably satisfactory to City, and (ii) a consnuction/rchabilitation contract in form and content, and with a contractor, reasonably satisfactory to City. (b) To the extent that the Proceeds are insufficient to accomplish the restoration required above, Developer shall deliver to City (the "Shortfall Funds ") in the amount of such shortfall, which Rinds shall be assigned to City as security 36 25C -40 for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds. (c) Developer shall execute such documents as City requires to evidence and secure Developer's obligation to use all amorurts disbursed for the diligent restoration of the Property. (d) No Event of Default shall remain uncured. 19.6 Method of Disbursement and Undisbursed Funds, Any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in accordance with then customary disbursement procedures and related provisions. Any amounts remaining undisbursed following completion of such restoration shall be returned to Developer up to the amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall either be paid to Developer or applied by City against any obligations to City that are secured by a lien on the Property, as they elect in their sole and absolute discretion, 19.7 Failure to Satisfy Conditions. In the event that Developer fails to fulfill the Restoration Conditions within ninety (90) days (unless extended pursuant to Section 19.5) following the date on which the damage occurs, the Proceeds shall be applied by City against any obligations to City that arc secured by a lien on the Property, and the selection of which such obligations to apply the Proceeds against shall be made by City in their sole and absolute discretion. 19.8 Restoration. Nothing in this Article 19 shall be construed to excuse Developer from repairing and restoring all damage to the Property in accordance with other Loan Document provisions, regardless of whether insurance proceeds are available or sufficient. 19.9 Condemnation: Treatment of Compensation. Subject to any superior rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to City secured by a lien on the Property, all amounts payable to Developer in connection with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation "). Subject to any superior rights of Senior Lender, Developer shall deliver such remaining Compensation to City immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely to render the Property not economically viable or if, in City's reasonable judgment Developer's security is otherwise impaired, City may apply the Compensation received due to judgment or settlement in connection with any condemnation or other taking to reduce the unpaid obligations secured in such order as City may determine, and without any adjustment in the amount or due dates of payments due under the Note. If so applied, any award in excess of the unpaid balance of the Note and other sums due to City shall be paid to Developer or Developer's assignee. City shall have no obligation to take any action in connection with any acfard or threatened condemnation or other proceeding, 37 25C -41 19.9.1 Notwithstanding the foregoing, as long as the value of City's liens are not impaired, any condemnation proceeds may be used by the .Borrower for repair and /or restoration of the Project. 19.10 Waiver of Subrogation. Developer hereby waives all rights to recover against the City (or any officer, employee, agent or representative of the City) for any loss incurred by Developer from any cause insured against or required by any Loan Document, to be insured against; provided,,however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation. 20. DEFAULTS AND REMEDIES 20.1 Events of Default. The occurrence of any of the following, whatever the reason therefore, shall constitute an Event of Default by Developer: (a) Developer fails to make any payment of principal or interest under the City Loan Note when clue, and such failure is not cured within fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; (b) Developer fails to perform any other obligation for the payment of money under any Loan Document, and such failure is not cured within fifteen (15) Business Days after Developer's receipt of written notice that such obligation was not performed when due; (c) Developer fails to perform any obligation (other than the obligations described in subparagraphs (a) and (b) above) under any Loan Document, and such failure is not cured within thirty (30) days after Developer's receipt of written notice that such obligation was not performed; provided that, if cure cannot reasonably be effected within such thirty (30) -day period, such faihxre shall not be an Event of Default so long as Developer (in any event, within ten (10) days after receipt of such notice) commences to cure, and thereafter diligently (in any event within ninety (90) days after receipt of such notice) prosecutes such cure to completion; (d) Any representation or warranty in any Loan Document proves to have been incorrect in any material respect when made; (e) The Property is materially damaged or destroyed by fire or other casualty unless Developer fulfills the Restoration Conditions set forth in the insurance provisions of this Agreement within ninety (90) days (unless extended pursuant to Section 19.5) and thereafter diligently restores the Property in accordance with this Agreement; (fj Work on the construction/rehabilitation ceases for thirty (3 0) consecutive days for any reason (other than governmental orders, decrees or regulations, acts of God or any other deity, strikes or other causes beyond Developer's reasonable 38 25C -42 control), provided that the same do not, in the aggregate and in the City's reasonable judgment, threaten to delay the completion of the construction/rehabilitation beyond the required completion date set forth in this Agreement; (g) Developer is enjoined or otherwise prohibited by any Governmental Authority from constructing and /or occupying the improvements and such injunction or prohibition continues unstayed for sixty (60) days or more for any reason; (h) Developer is dissolved, liquidated or terminated, or all or substantially all of the assets of Developer are sold or otherwise transferred without the Executive Director's prior written consent; (i) Developer is the subject of an order for relief by a bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or Developer applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or any part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of Developer and the appointment continues undischarged or unstayed for ninety (90) days; or Developer institutes or consents to any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship, liquidation, rehabilitation or similar proceeding relating to it or any part of its property; or any similar proceeding is instituted without the consent of Developer and continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of attachment or execution, or similar process is issued or levied against any property of Developer and is not released, vacated or fully bonded within ninety (90) days after its issue or levy; or (j) any of the Senior Loan documents is revolted or terminated, in whole or in part and for any reason (except due to repayment of such loans), without the Executive Director's prior written consent, or (ii) Developer defaults or otherwise fails to perform any of its duties or obligations under or in connection with any of the Senior Loan documents, subject to all applicable notice and cure periods, or (iii) any of the Senior Loan docmmnts is amended, supplemented or otherwise modified without City's prior written consent, which consent shall not be unreasonably withheld. Notwithstanding anything to the contrary contained herein, City hereby agrees that any cure of any default made or tendered by Developer's Limited Partner shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer. 20.2 Remedies Upon Default. Upon the occurrence of any Event of Default, City may, at its option and in its absoli to discretion, do any or all of the following: (a) By written notice to Developer, declare the principal of all amounts owing wider the Loan Documents, together with all accrued interest and other amounts owing in connection therewith, to be immediately due and payable, regardless of any other specified due date; provided that any Event of Default described in Section 39 25C -43 20.1 shall automatically, without notice or other action on City's part, cause all such amounts to be immediately due and payable; (b) In its own right or by a court - appointed receiver, take possession of (he Property, enter into contracts for and otherwise proceed with the completion of the construction/rehabilitation by expenditure of its own funds; (c) Exercise any of its rights under the Loan Documents and any rights provided by law, including, without limitation, the right to seek specific performance and the right to foreclose on any security and exercise any other rights with respect to any security, all in such order and manner as City elects in its sole and absolute discretion; and, (d) Suspend or terminate the award of HOME funds if Developer fails to comply with any term of that award. 20.3 Cumulative Remedies: No Waiver. City's rights and remedies under the Loan Documents are cumulative and in addition to all rights and remedies provided by law. The exercise by City of any right or remedy shall not constitute a cure or waiver of any default, nor invalidate any notice of default or any act done pursuant to any such notice, nor prejudice the City in the exercise of any other right or remedy, No waiver of any default shall be implied from any omission by City to take action on account of such default if such default persists or is repeated, No waiver of any default shall affect any default other than the default expressly waived, and any such waiver shall be operative only for the time and to the extent stated. No waiver of any provision of any Loan Document shall be construed as a waiver of any subsequent breach of the same provision. City's consent to or approval of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary City's consent to or approval of any subsequent act. The City's acceptance of the late performance of any obligation shall not constitute a waiver by City of the right to require prompt performance of all further obligations; City's acceptance of any performance following the sending or filing of any notice of default shall not constitute a waiver of either party'"' right to proceed with the exercise of its remedies for any unfulfilled obligations; and City's acceptance of any partial performance shall not constitute a waiver by City of any rights. 21. MISCELLANEOUS 21.1 Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any other claim by developer against City, in connection with the Loan or otherwise, Developer hereby waives any right it might otherwise have (a) to offset any such obligation, liability or claim against Developer's obligations under the Loan Docinnents, or (b) to claim that the existence of any such outstanding obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under the Loan Documents. 21.2 Notices. All notices, demands, approvals and other communications provided for in the Loan Docuuments shall be in writing and be delivered to the appropriate party by personal service or U.S. mail at its address as follows: 40 25C -44 If to Developer: With a copy to: If to City: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M -26) P.O. Box 1988 Santa Ana, California 92702 With a copy to: City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M -29) Santa Ana, California 92702 Addresses for notice may be changed as required by written notice to all other parties. All notices personally served shall be effective when actually received. All notices mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing notwithstanding, the non- receipt of any notice as the result of a change of address of which the sending party was not notified or as the result of a refasal to accept delivery shall be deemed receipt of such notice. 21.3 Survival of Representations and Warranties. All representations and warranties in the Loan Documents shall survive the making of the Loan described herein and have been or will be relied on by City notwithstanding any investigation made by either party. 21.4 No Third Parties Benefited, This Agreement is made for the purpose of setting forth rights and obligations of Developer and the City, and no other person shall have any rights hereunder or by reason hereof. 21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall imue to the benefit of, Developer and City and their respective successors and assigns. Other than as expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or obligations under any Loan Document without the prior written consent of City, which consent may be withheld in City's sole and absolute discretion. Any such assignment without such consent shall, at City's option, be void. 21.6 Prior Agreements; Amendments; Consents. This Agreement (together with the other Loan Documents) contains the entire agreement between the City and Developer with respect to the Loan and the Property, and all prior negotiations, 41 25C -45 understandings and agreements are superseded by this Agreement and such other Loan Documents. No modification of any Loan Document (including waivers of rights and conditions) shall be effective unless in writing and signed by the party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given. 21.7 Governing Law. All of the Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California and Federal law, whichever is more stringent. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the Comity of Orange or the United States District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Agreement or the Loan Documents. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue. 21.8 Severability of Provisions. No provision of any Loan Document that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of the Loan Documents are hereby declared to be severable. 21.9 Headings. Article and section headings are included in the Loan Documents for convenience of reference only and shall not be used in construing the Loan Documents, 21,10 Conflicts. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, this Agreement, unless otherwise expressly provided, shall prevail; provided however that, with respect to any matter addressed in both such documents, the fact that one document provides for greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed. 21.11 Time of the Essence. Time is of the essence under this Agreement and in the performance of every term, covenant, and obligation contained herein. 21.12 Conflict of Interest. No member, official or employee of the City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement which is prohibited by law. 21.13 Warranty Against Payment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement. 21.14 Nonliability of City Officials and Employees. No member, official or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Developer or successor, or on any obligation Linder the terms of this Agreement. 42 25C -46 21.15 Plans and Data, Where Developer does not proceed with the work and constructiordrehabilitation of the Property, and when this Agreement is terminated with respect thereto for any reason, Developer shall deliver to City any and all plans and data concerning the Property, and City or any person or entity designated by City shall have the right to use such plans and data without compensation to Developer. Such right of City shall be subject to any right of the preparer of the plans to their use, 21.16 Authority to Enter Agreement. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify the City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. 43 25C -47 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date set forth at the beginning of this Agreement. DEVELOPER By: By: Dated: MANAGING GENERAL PARTNER m Dated; 44 25C -48 ATTEST: Maria D, Huizar Clerk of the Council Dated: APPROVED AS TO FORM: SONIA R.,OAV-NLHO, City Attorney 51 Attorney Dated: RECOMMENDED FOR APPROVAL: Robert C. Cortez Deputy City Manager CI'T'Y OF SANTA ANA Gerardo Mouet Acting City Manager Dated: 45 25C -49 EXHIBITS Exhibit A —SAMPLE Legal Description Exhibit B — SAMPLE Scope of Work Exhibit C — SAMPLE Project Budget (Sources and Uses) Exhibit D — SAMPLE Schedule of Performance Exhibit E — City /HOME Loan Deed of Trust Exhibit F — City /HOME Loan Note Exhibit G — Affordability Restrictions on Transfer of Property Exhibit H — SAMPLE Affirmative Marketing Program Guidelines Exhibit I — SAMPLE Form of Residual Receipts Exhibit J - Rehab Standards 25C -50 .xh'ib'lt A SAMPLE Legal Description 25C -51 EXHIBITA LEGAL DESCRIPTION All that certain real property situated in the County of Orange, State of California, described as follows: PARCEL 1: THAT PORTION OF LOT 14 OF THE MABURY TRACT, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AB SHOWN ON A MAP RECORDED IN BOOK 36, PAGE 65 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF PARCEL 1, AS SHOWN ON A MAP THEREOF FILED IN BOOK 30, PAGE 7 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG THE EASTERLY LINE OF SAID PARCEL 1, NORTH 0° 16'13" WEST 324.91 FEETTO THE NORTHEAST CORNER THEREOF; THENCE ALONG THE NORTHERLY LINE OF SAID PARCEL 1, SOUTH 89° 36'54" WEST 200.00 FEET; THENCE PARALLEL WITH THE EASTERLY LINE OF SAID PARCEL 1, SOUTH 0° 16' 13" EAST325.26 FEET TO THE CENTER LINE OF FIRST STREET, AS SHOWN ON SAID PARCEL MAP, BEING ALSO THE SOUTHWEST CORNER OF SAID PARCEL 1; THENCE ALONG THE SOUTHERLY LINE THEREOF, NORTH 89° 30'48" EAST 200.00 FEETTO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION THEREOF INCLUDED WITHIN THE LINES OF FIRSTSTREET, AS SHOWN ON A MAP THEREOF FILED IN BOOK 30, PAGE 7 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. ALSO EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES LYING BELOW A DEPTH OF 500 FEET FROM THE SURFACE OF SAID LAND, BUT WITHOUTTHE RIGHT OF ENTRY UPON ANY PORTION OF THE SURFACE ABOVE A DEPTH OF 500 FEET, TO TAKE, MARKET, MINE, EXPLORE OR DRILL FOR SAME, AS RESERVED IN THE DEED RECORDED JANUARY 15, 1970 IN BOOK 9191, PAGE 366 OF OFFICIAL RECORDS. PARCEL 2: AN EASEMENT FOR A COMMON DRIVEWAY INCLUDED WITHIN A STRIP OF LAND 15.00 FEET WIDE, OVER THAT PORTION OF LOT 14 OF THE MABURY TRACT, IN THE CITY OF SANTA ANA, AS SHOWN ON A MAP RECORDED IN BOOK 36, PAGE 65 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, THE EASTERLY LINE THEREOF DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP DESCRIBED ABOVE, THENCE NORTHERLY ALONG THE WESTERLY LINE THEREOF, 305.00 FEET. EXCEPTING THEREFROM THAT PORTION THEREOF INCLUDED WITHIN THE LINES OF FIRST STREET, AS SHOWN ON A MAP FILED IN BOOK 30, PAGE 7 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. Assessor's Parcel Number: 400-091-17 25C -52 Exhibit B - SAMPLE m 0 0 � 0 mm 760� 1 0 25C -53 SUMMARY OF REHAB WORK 2151,E. First Street Santa Ana, CA SITE & BUILDING EXTERIOR • Re- surface asphalt paving. • Replace sidewalks. • Replace patio and front yard landscaping and Irrigation system. • Install patio furnishings. + Repair existing stairs and railing. • Replace coating on balconies, • Install new accessible mailboxes. Install new signage. • Install new doors. • Replace material on mansard walls. • Remove brick veneer on exterior walls. INTERIOR • Reconfiguration Into a 72 -unit complex. • Paint all units. • Install new ADA flooring, • Install new bathroom accessories. • Install new cabinets. • Install new windows and window coverings. • Install new doors. • Remodeling of office and community room. 25C -54 Exhibit C - SAMPLE (Sources and Uses) 25C -55 25C -56 TCAC /CDIAC App /Allocatlon /MOnitoring Fees 43,892 43,892 43,692 Environmental Audlt 40,000 40,000 40,000 Local Development Impact Fees 402,830 208,033 194,797 402,830 Permlt Processing Fees 100,000 100,000 100,000 Capital Fees _ Marketing 20,000 20,000 20,000 urnk Fhings 126,000 126,000 126,000 Market Study 51500 51500 5,500 Accounting /Relmbursables , Soft Coat Contingency 69,271 69,221 69,221 Other; Relocatlon 360,000 360,000 360,000 Other: Survey 13,500 13go 13,500 Other: CDLAC Performram Deposit 75,000 75,000 75,000 Other: Other: Other, Other: Total Other Costs 1,255,943 208,033 1,047,910 1,255,943 SUBTOTAL PROJECT COST 15,982,098 1,199,869 6,713,276 1,738,42D 6,330,633 15,9821098 d6VE40FEP GO$TS ;: Developer OVerhead/ProFlt 2,122,988 1,496,561 626,427 2,122,988 Consultant /Processing Agent Project Administratlon , Broker Fees Paid to a Related Party Coast. Oversight by Developer 68,000 6B4O00 68,000 Other, (Speclfy) _ Total OBVelapaY Crisis 2,190,988 1,564,961 626,427 2,190,908 TOTAL PROJECT COST5 18,173,086 1,199,869 A,710,170 1,736,420 7,895,194 626,427 18,173,086 25C -57 Schedule of 25C -58 EXHIBIT D Schedule of Performance GUEST HOUSE - SANTA ANA PROJECT TIMELINE 6/3/16 City Council CUP Approval Oct -15 Property Acquisition Dec -15 Project Based Vouchers Award Mar -16 HOM E Funds Application Mar -16 4% LIHTC +Tax Exempt Bond Application May -16 4% Federal +Tax Exempt Bond Award 7/22/16 Formal Commitment of HOME Funds 7/25/16 Construction Commence/ LP Closing 11/15/16 Anticipated Construction Completion 7/15/17 100% Occupancy 8 /15/17 Perm Loan Closing (Conversion) 12/17/17 8609s 1/16/18 Federal Tax Credit Equity 6,713,176 Tax Exempt Permanent Loan - Tranche A (Tenant) - 1,738,420 Tax Exempt Permanent Loan - Tranche B (Voucher) 7,895,194 HOME Loan 1,199,869 Developer Deferred Fees 626,427 TOTAL 18,173,086 Acquisition Costs 6,824,125 Direct Construction Costs 5,663,049 Construction Contingency 566,305 Indirect and Soft Costs 1,759,631 Developer Fee 2,122,988 Financing Costs 622,145 Project Reserves 614,844 TOTAL 18,173,086 Fed Tax Credit Equity Pricing 1,07 4% Credits to Investor 6,273,996 Acquisition Bridge Loan 6,482,919 Tax Exempt Construction Loan 13,958,579 ## of LIHTC / PBV Units 71 ## of Non - LIHTC /PBV Manager Units 1 Total Units 72 25C -59 Exhibit E - City/HOME Deed of Trust 25C -60 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 -26) Santa Ana, California 92702 Attn: Housing Division Manager CITY DEED OF TRUST AND ASSIGNMENT OF RENTS THIS CITY DEED OF TRUST AND ASSIGNMENT OF RENTS (the "City Deed of Trust ") made this _ day of , 2017 by , a (the "Truster "), a (the "Trustee "), and the City of Santa Ana, a charter city and municipal corporation (the "Beneficiary"). Truster, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the property located in the City of Santa Ana, County of Orange, State of California, described in the attached Exhibit A and more commonly known as (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; TOGETHER with the right, power and aurthority during the continuance of these Trusts, to collect the rents, issues, and profits of the Property, reserving unto the Truster the right, prior to any default by'frustor in payment of the indebtedness secured by this City Deed of Trust or in the performance of any agreement under this City Deed of Trust, to collect and retain these rents, issues and profits as they become due and payable; and, TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected, or hereafter to be erected, on the Property which are necessary to the complete and comfortable use and 25C -61 occupancy of such birlding 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 mamler; 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 ($ ) (the "City Loan Note "); (b) the performance of the covenants and agreements of Borrower contained in a certain Loan Agreement as hereinafter defined; and (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this City Deed of Trust; and the performance of the covenants and agreements of Truster contained herein, TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS: 1. The Loan Agreement. This City Deed of Trust is executed and delivered, along with the City Loan Note acid 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 City Deed of Trust, the Beneficiary would not enter into the Agreement or City Loan Note secured by this City Deed of Trust. 2. Trustofs Estate, Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security; that other than this City Deed of Trust, the Security is not encumbered except for obligations secured by deeds of trust, or any other security agreement, to secure financing or refinancing for the purchase, construction and/or rehabilitation of the Property. 3, Repayment of the Loan. Truster will promptly repay, when due, the principal and interest, as required by the City Loan Note secured by this City Deed of Trust. 4. Subordination, This obligation secured by this City Deed of Trust shall be subordinated to the Senior Loan and to the City Deed of Trust and Note, 5. Prior Mortgages and Deeds of Trust; Charges; Liens. Truster 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 Truster's covenants to make payments when due (subject to an applicable notice and cure provisions). Trustor will pay all taxes, assessments and other charges, fines and impositions attributable to the Security 2 25C -62 which may attain a priority over this Deed of Trust, by Truster 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, Truster will promptly discharge any lien which has priority over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed of Trust securing any senior lender or any other lien described in this paragraph so long as Trustor will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof. 6. Hazard Insurance. Truster 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, Truster 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 City Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this City Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance proceeds will be used to repay the loan secured by this 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 Beneflciary's option either to restoration or repair of the Security or to repay the loan. If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this City Deed of Trust immediately prior to such sale or acquisition subject to the rights of any senior lender. 7. Preservation and Maintenance of Security. Trustor will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 3 25C -63 8. Protection of the Beneficiary's Securi ty. If Truster fails to perform the covenants and agreements contained in this City Deed of Trust or if any action or proceeding is commenced which materially affects the Beneficiary's interest in the Security, including, but not limited to, default under the City Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a banlmlpt or decedent, then the Beneficiary, at the Beneficiary's option, upon notice to Truster, may make such appearances, disburse such sums and take such action as it determines necessary to protect the Beneficiary's interest, including, but not limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs, Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon, will become an indebtedness of Trustor secured by this City Deed of Trust. Unless Truster and the Beneficiary agree to other terms of payment, such amount will be payable upon notice from the Beneficiary to Trustor requesting payment thereof, and will bear interest from the date of disbursement at the rate payable from time to time on outstanding principal under the City Loan Note unless payment of interest at such rate would be contrary to applicable law, in which event such amounts will bear interest at the highest rate permissible Linder 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 light or remedy. The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary will not be a waiver of the Beneficiary's right to accelerate the maturity of the indebtedness secured by this City Deed of Trust. 11, Remedies Cumulative, All remedies provided in this City Deed of Trust are distinct and cumulative to any other right or remedy under this City Deed of Trust or any other doctumnt, or afforded by law or equity, and may be exercised concurrently, independently or successively. 12. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the Lights hereunder shall inure to, the respective successors and assigns of the Beneficiary and Truster subject to the provisions of this City Deed of Trust. 13. Joint and Several Liabiliiv. All covenants and agreements of Truster 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 Tnistor provided for in this City Deed of Trust will be given by certified mail, return receipt requested, addressed to Trustor at (b) any notice to the Beneficiary will 25C -64 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 Division Manager, or at such other address as the Beneficiary may designate by notice to Trustor as provided above, and (c) to Trustee at Notice shall be effective as of the date received as shown on the return receipt. 15, Governing. This City Deed of Trust shall be governed by the laws of the State of Califonria. 16. Severability. In the event that any provision or clause of this City Deed of Trust or the City Loan Note conflicts with applicable law, such conflict will not affect other provisions of this City Deed of Trust or the City Loan Note which can be given effect without the conflicting provision, and to this end the provisions of the City Deed of Trust and the City Loan Note are declared to be severable. 17. Captions. The captions and headings in this City Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. 18. Default in Foreclosure; Remedies. Upon Trustor's breach of any covenant or agreement of Truster in this City Deed of Trust or the City Loan Note secured by this City Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this City Deed of Trust, the Beneficiary may declare all sums secured by this City Deed of Trust immediately due and payable by delivering to Trustor notice thereof specifying: (1) The breach; (2) the action required to cure such breach; (3) a date not less than 30 days from the date the notice is received by Truster 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, Truster shall have a reasonable period to cure the defect so long as Trustor is diligently prosecuting the cure to completion; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this City Deed of Trust and sale of the Security. The notice will also inform Trustor of 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 Truster's limited partner (the "Limited Partner ") of its rights upon a default by a general partner under the Truster's Agreement of 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 (3 0) 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 5 25C -65 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 Trustor, provided that after any such sale, transfer or other disposition an affiliate of Trustor remains the managing member or general partner of such 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 Loan Note or the Agreement, the Beneficiary, at the Beneficiary's option, may, (a) declare all of the sums secured by this City Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; (b) either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereot) 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; (o) 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, gt M., 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 Truster's limited partner shall be deemed to be a cure by Trustor and shall be accepted or rejected on the same basis as if made or tendered by Trustor. The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. 19. Tnistor's Right to Reinstate, Notwithstanding the Beneficiary's acceleration of the sums secured by this City Deed of Trust, Trustor will have the right to have any proceedings begun by the Beneficiary to enforce this City Deed of Trust discontinued at any time prior to S days before sale of the Security pursuant to the power of sale contained in this City Deed of Trust or at any time prior to entry of a judgment enforcing this City Deed of Trust if. (a) Trustor pays the Beneficiary all sums which would be then due under this 6 25C -66 City Deed of Trust and no acceleration under the City Loan Note has occlrxed; (b) Trustor cures all breaches of any other covenants or agreements of Truster contained in this Deed of Trust and the Affordability Restrictions on Transfer of Property; (c) Truster pays all reasonable expenses incurred by the Beneficiary and the Trustee in enforcing the covenants and agreements of Truster contained in this City Deed of Trust and the Affordability Restrictions, and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable attorneys' fees; and (d) Trustor takes such action as the Beneficiary may reasonably require to assure that the lien of this City Deed of Trust, the Beneficiary's interest in the Security and Trustor's obligation to pay the sums secured by this City Deed of Trust shall continue unimpaired. Upon such payment and cure by Truster, this City Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 20. Acceptance by Trustee Trustee accepts this Trust when this City Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party to this City Deed of Trust of pending sale under any other deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee, 21. Reconve a'1 Lice, Upon payment or forgiveness of all surns secured by this City Deed of Trust, the Beneficiary will request the Trustee to reconvey the Security and will surrender this City Deed of Trust and the City Loan Note to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 22. ,Substitute Trustee. The Beneficiary, at the Benefrciaiy's option, may from time to time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 23. Request for Notice. Trustor requests that copies of the notice of default and notice of sale be sent to Trustee at the address set forth in Section 14 above. 24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor shall have any personal liability under the Loan Agreement, City Loan Note, and this City Deed of Trust and any judgment, decree or order for payment of money obtained in any action to enforce the obligation of Truster to repay the loan evidenced by such documents shall be enforceable against Trustor only to the extent of Truster's interest in the Property. 7 25C -67 IN WITNESS WHEREOF, Trustor has executed this City Deed of Trust as of the date first written above. ADMINISTRATIVE GENERAL PARTNER a a a By: Dated: MANAGING GENERAL PARTNER a By: Dated: 25C -68 Exhibit F - • . I =0;� 25C -69 CITY LOAN NOTE SECURED BY SUBORDINATED DEED OF TRUST TO THE CIi'Y OF SANTA ANA, CALIFORNIA Santa Ana, California 1. Principal Amount of Loan For value received, and , a ( "Borrower ") promises to pay to the order of THE CITY OF SANTA ANA ( "City "), at 20 Civic Center Plaza, 6'" Floor, Santa Ana, California 92701, or at such other place as the City may from time to time designate in writing, or to the assignee of the City, the principal sum of ($ ) or so much thereof as shall be disbursed hereunder, with three percent interest (3 %) commencing upon filing of Notice of Completion. City and Borrower have heretofore entered into that certain Loan Agreement dated concurrently herewith (the "Loan Agreement "), pertaining to the acquisition and rehabilitation of certain real property described in the Loan Agreement as the "Property," commonly known as and the operation of the Property as affordable housing for Extremely -Low, Very -Low and Low Income households. This Note is made pursuant to, entitled to the benefits of and referred to as the City Loan Note in the Loan Agreement; that certain "Affordability Restrictions on Transfer of Property" between Borrower and City, dated on or about the date hereof; and that certain Subordinated City Deed of Trust and Assignment of Rents between Borrower and City, dated on or about the date hereof (the "City Deed of Trust "). This Note, the Loan 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 term which is not otherwise defined herein shall have the meaning ascribed to such term in the Loan Agreement, 2. Definitions. For the purpose of calculating the payments to be made by Borrower to City pursuant to this Note, the following teens shall have the following respective meanings: "Acquisition Costs" shall mean the costs and expenses of Borrower to acquire the Property, as set forth in the Project Budget attached to the Loan Agreement. "City Loan" shall mean the loan evidenced by this Note. 25C -70 "City's Percentage" with reference to the Residual Receipts, shall mean fifty percent (50 %) of the City's share of the total Residual Receipts from the Property as further described in Section 5 hereof. "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 31. "Closing Costs" shall mean: (i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a result of the Sale, which shall not in any event exceed the customary amount charged -for similar transactions in the immediate market place, costs of title insurance premiums, documentary stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably incurred with respect to the Property, in each case actually paid by Borrower as a condition of the Sale. (ii) In the case of a Refinancing, the reasonable and necessary costs of consummating such Refinancing, including, without limitation, loan fees, loan repayment charges, costs of title insurance premiums, escrow fees, recording fees and attorneys' fees. "Gross Revenues" shall mean all revenues and receipts of every kind actually received by Borrower from operating the Property, and all parts thereof, including, but not limited to, income from both cash and credit transactions, rental from leased and /or subleased spaces and parking fees and charges (but not including security deposits and other tenant deposits, except to the extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues also includes any casualty insurance proceeds in excess of those used to restore the Property and any rental interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at the time cash proceeds (principal, interest and /or other) are received. Borrower shall establish and maintain accounts for the Gross Revenues (the "'Project Accounts ") that are segregated from revenues and income received by Borrower from all other projects. Gross Revenues shall also include all interest earned on the Project Accounts. "Operating Expenses" shall mean the sun of the following: (i) payments of principal and interest and all other charges relating to the Senior Loan(s); a property management fee no greater than % of gross rents; (iii) Owner Partnership Management and Asset Management Fees not to exceed of gross rents; (iv) Deposits into required reserves; (v) all other actual, reasonable cash operating costs and expenses, calculated on an 25C -71 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) Reserved. (c) Any expenses, compensation or fees paid to any affiliate of Borrower shall only be included as Operating Expenses to the extent they are not in excess of the reasonable expenses, compensation or fees which would be payable to unrelated third parties in arms - length transactions for similar services in the Santa Ana, California area. (vi) Any other expenses necessary to meet senior lender requirements and requirements of Borrower's limited partner, or its assignee, as set forth in Borrower's Agreement of Limited Partnership (the "Partnership Agreement "). (vii) Deferred Developer Fees. "Project" shall mean the acquisition and rehabilitation of the Property by Borrower pursuant to the Loan Agreement. "Property" shall mean the real property located at in the City Deed of Trust. described "Refinancing" shall mean changing the then existing financing on the Property by, without limitation, modifying the interest rate and /or the term of the existing Senior Loan, increasing or reducing the amount of the existing Senior Loan, paying off the existing Senior Loan and obtaining new Senior Loan. "Refinancing Proceeds" shall be disbursed as set forth in Section 7 hereof, "Residual Receipts" shall mean the Gross Revenues from the Properties located at , for each year, less deductions for Operating Expenses from the same buildings, applicable to each such year less the items listed in Article 5 of the Partnership Agreement, to the extent not already deducted as an Operating Expense. "Sale" shall mean any transfer, assignment, conveyance or lease (other than to a tenant: for occupancy or a transaction set forth in Section 15(c) hereof) of the Property or any portion 25C -72 thereof, or any interest therein by the Borrower, and includes any transfer, assigmnent or sale of any partnership interest in the Borrower by an individual or entity which is a general or limited partner in the Borrower, or any interest by any individual or entity which holds an interest in any such general or limited partner in the Borrower, which brings the cumulative total of all such direct and indirect transfers, assignments and sales during the term of this Note to more than thirty -five percent (35 %) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a direct or indirect partnership interest thereafter. Sale includes a sale in condemnation or under threat thereof. Sale does not include dedications and grants of easements to public and private utility companies of the kind customary in real estate development. "Sale Proceeds" shall be disbursed as set forth in Section 8 hereof. "Senior Loan" shall mean the senior loan being made by , concurrent to the City Loan for payment of a portion of the Acquisition and Rehabilitation Costs, and shall include any subsequent loan that refinances the initial Senior Loan. "Term." the term for repayment of this Note shall mean fifty -five (55) years from the date of recording. Loan Repayment. Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts), 7 (Refinancing Proceeds), 8 (Sale Proceeds) and 10 (Accelerated Loan Repayment). 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 repayment of said loan. Such loan shall be repaid with net cash flow prior to the residual receipt split. The outstanding loan balance will be reflected in the annual report. 5. Annual Loan Repayment. a. After any deferred Developer Fee has been paid, as set forth hereinabove, the Borrower shall thereafter make a loan payment to the City annually, in the amount of the lesser of the outstanding balance due under this Note or the City's Percentage of the Residual Receipts, as provided in this Section 5. b. Within one hundred twenty (120) days after the year in which the rehabilitation of the Project is completed, and on or before the 120th day of each Calendar Year thereafter, the Borrower shall submit to the City a detailed statement of Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar Year, along with a computation of the amount of the Residual Receipts applicable to such Calendar Year with which to make a City Loan payment then due, 0 25C -73 c. Except as otherwise provided in Section 4, the Borrower shall pay to the City the fifty percent (50 %) of the Residual Receipts as payment of principal and interest under their loans. The remaining amount of the Residual Receipts shall remain with the Borrower to be used by Borrower as determined by the General Partners of Borrower, including, without limitation, for distribution to the partners of the Borrower. d. The Residual Receipts payment shall be made not later than one hundred fifty (150) days after the close of the Calendar Year. Such payment shall be applied first to any accrued but unpaid interest, if any, then to reduce the principal balance of the loans. 6. Reserved. 7. Loan Reoavment from Refinancing Proceeds. The Borrower shall make a loan payment to the City from every Refinancing that occurs during the term of this Note not to exceed the outstanding balance of principal and interest on this Note, to the extent of the City's Percentage of the Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be applied first to pay Closing Costs; next, the amount necessary to pay in full the balance remaining on the Senior Loan; next, the Borrower shall pay to the City fifty percent (50 %) of the Refinancing Proceeds to the extent of the outstanding balance on this Note. The remaining Refinancing proceeds shall remain with Borrower to be used by Borrower as determined by the General Partners of Borrower, including, without limitation, for distribution to the partners of the Borrower. Such payment shall be due on the date of such Refinancing, and shall be applied first to any accrued but unpaid interest, then to reduce the principal balance of the Loans. The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loans in full, 8. Loan Repayment from Sale Proceeds. The Borrower shall make a loan payment, not to exceed the outstanding balance of principal and interest on this Note, to the City from any Sale that occurs during the term of the City Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in fall the balance remaining on the Senior Loan; next the Borrower shall pay to the City fifty percent (50 %) of the total Sale Proceeds, not to exceed the outstanding amount of principal and interest due on this Note. This fifty percent (50 %) represents the total payment due under the City Note. The remaining Sale Proceeds shall remain with Borrower. Such payment shall be due on the date of such Sale, and shall be applied first to any accrued but unpaid interest, then to reduce the principal balance of the Loans, The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loans in full. 9. Buy Out Option. Prior to the initial disbursement under this Note, the Borrower shall grant to the City a Right of First Refusal (subject to any purchase option and/or right for first refusal granted to one 25C -74 or more of the general partners of the Borrower) (the "City Right of First Refusal ") to acquire the Property if Borrower desires to transfer the Property to an entity which is not affiliated with one or more of Borrower's general partners. The City Right of First Refusal shall be in form and substance acceptable to the City and shall comply with all applicable Tax Credit requirements. 10. Accelerated Loan Payment, The full principal amount outstanding plus accrued but unpaid interest thereon, shall be due and payable on the earlier to occur of the following: a. Sale or Refinancing of the Property as provided further in Section 15 hereof; unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the City Loan, the City approves such sale -and the purchaser assumes the balance of the City Loan in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to repay in Hill the City Loan, the City approves such Refinancing and the Borrower remains obligated pursuant to the terns of this Note. In event of default pursuant to any of the Loan Documents or the Senior Loan Documents. c. Any default by Borrower as to any other loan or loans by City 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 Tern of this City Loan Note, 11. Prepayment Borrower may prepay the outstanding principal balance under this Note, in whole or in part, together with any accrued but unpaid interest, if any, and other sums owed to the City under this Note, if any, at any time without penalty. 12. Lawful Money. Principal and interest are payable in lawful money of the United States of America. 13. Application of Payments, Late Charges. a. Any payments received by the City pursuant to the terns hereof shall be applied first to sums, other than principal and interest, due the City pursuant to this Note, next to the payment of all interest accrued to the date of such payment, and the balance, if any, to the payment of principal. 25C -75 b, If any payment is not received by the City within ten (10) days following the due date thereof, then in addition to the remedies conferred upon the City pursuant to this Note and the other Loan Documents, (i) a late charge of four percent (4 %) of the amount due and Lmpaid will be added to the delinquent amount to compensate the City for the expense of handling the delinquency and (ii) the amount due and unpaid, excluding the late charge, shall bear interest at the highest annual rate which may lawfully be charged and collected under applicable law on the obligation evidenced by this Note, computed from the date on which the amount was due and payable until paid. Without prejudice to the rights of the City hereunder or under any of the other Loan Documents, Borrower shall indemnify the City against, and shall pay the City on dernand, any expense or loss which it may sustain or incur as a result of the failure by Borrower to pay when due any installment of interest and /or principal, fees, or other amounts payable to the City under this Note or any other Loan Document, to the extent that any such expense or loss is not recovered pursuant to such foregoing provisions. A certificate of the City setting forth the basis for the determination of the amounts necessary to indemnify the City in respect of such expenses or direct loss, submitted to Borrower by the City, shall be conclusive and binding for all purposes except as immediately corrected by Borrower notice to City. 14. Security This Note is secured by the City Deed of Trust. 15. Acceleration by Reason of Transfer or )Financine. a. In order to induce City to make the loan evidenced hereby, Borrower . —. agrees that in the event of any transfer of the Property without the prior written consent of City (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder of the Senior Loan Deed of Trust), City shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. City may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this Section 12, 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 Affordable Housing 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 that is wholly owned by the Borrower and that is formed for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the event of any 25C -76 Refinancing or partial Refinancing in an amount in excess of the balance of the Senior Loan, without the prior written consent of City (which consent City may grant or deny in its sole discretion), then the entire outstanding balance of the City Loan together with all accrued and unpaid interest, shall be repaid to the City at the time of each Refinancing or partial Refinancing. c. Notwithstanding anything to the contrary contained herein, a "transfer" shall not include (i) a transfer of any general partner's interest in Borrower when made in connection with the exercise by the Borrower's limited partner (the "Limited Partner ") of its rights upon a default by a general partner under the Borrower's partnership agreement (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 accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Borrower. 16. Event of Default. Subject to the provisions of Sections 23 and 25 hereof, the occurrence of any of the following shall be deemed to be an event of default ( "Event of Default ") hereunder: (a) failure by Borrower to make any payments provided for herein, and if such default is not made good within five (S) days of the due date; (b) failure by Borrower to perform any covenant or agreement in the Deed of Trust, the Loan Agreement, or the Affordability Restrictions on Transfer of Property within thirty (30) days after written demand therefor by City (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Borrower fail to promptly commence such cure, and diligently and continuously prosecute same to completion); or (c) a default under the Senior Loan Deed of Trust that remains uncured after the cure period, if any, provided therein. 17. Remedies. Upon the occurrence of an Event of Default, after any applicable notice has been provided and the expiration of any applicable cure period therefore, City may declare all sums evidenced hereby immediately due and payable by delivery to the Trustee named in the City 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 duty filed for record and City may foreclose on the City Deed of Trust. City shall also deposit with Trustee the Deed of Trust, this Note and all documents evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal together with all accrued interest shall bear interest at the reference rate on the 25C -77 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. 13. Attorneys' Fees. If this City Loan Note is not paid when due or if any Event of Default occurs, Borrower promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions hereof. 19. Severability. Every provision of this Note is intended to be severable, In the event any term or provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terns and provisions hereof, which terms and provisions shall remain binding and enforceable. 20. Number and Gender. In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires. 21. Non - recourse. The City Loan is a nonrecourse obligation of the Borrower. Neither Borrower nor any other party shall have any personal liability for repayment of the City Loan or for any other amounts under any of the documentation evidencing, securing or describing the City Loan. The sole recourse of City under this Note and the Deed of Trust for repayment of the City Loan and for such other amounts arising therefrom shall be the exercise of its rights against the Property and related security thereunder. 22. Subordination. It is hereby expressly agreed and aclarowledged by Borrower and City that the City Deed of Trust is a subordinate deed of trust, and that this Note is subject and subordinate to the Senior Loan Deed of Trust held by 25C -78 23. Notice of Default. a. Subject to the applicable cure periods set forth in Section 16 and extensions of time set forth in Section 25, and subject to the further provisions of this Section 23, failure or delay by the Borrower to perform any term or provision of this Note constitutes a default under this Note. The Borrower must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy -with reasonable diligence and during any period of curing shall not be in default. b. The City shall give written notice of default to the Borrower, specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. C. Except in the case of a monetary event of default, the Borrower shall not be in default so long as it endeavors to complete such cure, correction or remedy with reasonable diligence, provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be deemed by the City to be reasonably necessary to correct the default). d. Any failures or delays by the City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. C. If a monetary event of default occurs under the terns of this 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 given within which to cure the default prior to exercise of remedies by City under this Note and the City Deed of Trust. f. If a non- monetary event of default occurs under the terms of this Note or the 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 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 (ISO) days after the first notice of default is given. 10 25C -79 24. Insurance and Condemnation. 24.1 Policies Required. While any obligation of Developer under the Loan Documents remains outstanding, Developer shall maintain at Developer's sole expense, with insurers either (i) admitted in California or (ii) are not admitted to California but have an A.M. Best Rating of "A" or above and reasonably approved by the City, the following policies of insurance in fonn and substance reasonably satisfactory to the City Attorney: (a) worker's compensation insurance and any other insurance required by law in connection with the rehabilitation; (b) prior to cominenoement and following r..ompletion of the rehabilitation, fire and hazard "all risk" insurance covering 100% of the replacement cost of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (c) upon commencement of the rehabilitation and at all times prior to completion of the rehabilitation, builder's risk -all risk insurance covering 100% of the replacement cost of all Improvements (including offsite materials) during the course of construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (d) public liability insurance in amouuits reasonably required by City from time to time, and in no event less than $1,000,000 for "single occurrence;" (e) property damage insurance in amounts reasonably required by City from time to time, and in no event less than $1,000,000; and (1) any other insurance reasonably required by City. All such insurance shall provide that it may not be canceled or materially modified without thirty (30) days prior written notice to City, The policies required under subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in form and substance satisfactory to City, showing the City as encumbrance. The City shall be named as an additional insured(s) in the policies required under subparagraphs (d) and (e) with primary coverage. Certificates of insurance for the above policies (and /or original policies, if required by City) shall be delivered within ten (10) days after demand therefore, and prior to start of any rehabilitation work. All policies insuring against damage to the Improvements shall contain an agreed value clause sufficient to eliminate any risk of co- insurance. No less than thirty (30) days prior to the expiration of each policy, Developer shall deliver to City evidence of renewal or replacement of such policy reasonably satisfactory to City Attorney. 11 25C -80 24.2 City Attorney May Modify. The City Attorney may modify the type and amounts of insurance required pursuant to this Section. 24.3 Claims and Proceedings. Developer shall give City immediate notice of any material casualty to any portion of the Property, whether or not covered by insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or other taking for public or quasi - public use of any portion of the Property (collectively, "Condemnation "), and shall provide City with copies of all documents which pertain to any such casualty or Condemnation.. Developer shall take all action reasonably required by City in connection therewith to protect the interests of Developer and /or City, and City shall be entitled (without regard to the adequacy of its security) to participate in any action, claim, adjustment or proceeding and to be represented therein by counsel of its choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without prior written approval, which approval shall not be unreasonably withheld or delayed. 24.4 Delivery of Proceeds to City. In the event that, notwithstanding the "lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance policy described herein are paid to Developer, Developer shall, subject to any superior rights of the Senior Lender, deliver such proceeds to the City immediately upon receipt. 24.5 Application of Casualty Insurance Proceeds. Any proceeds collected (the "Proceeds ") under any casualty insurance policy described in this Agreement shall be disbursed to Developer as provided below, but only upon fulfillment of each of the following conditions (the "Restoration Conditions ") within ninety (90) days (unless extended by mutual agreement of Developer and City) following the occurrence of the damage for which the Proceeds are collected: (a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of the Property, within two years (or such longer time period reasonably determined by City), to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to City of (i) plans and specifications reasonably satisfactory to City, and (ii) a rehabilitation contract in form and content, and with a contractor, reasonably satisfactory to City. (b) To the extent that the .Proceeds are insufficient to accomplish the restoration required above, , Developer shall deliver to City (the "Shortfall Funds ") in the amount of such shortfall, which funds shall be assigned to City as security for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds. (c) Developer shall execute such documents as City requires to evidence and secure Developer's obligation to use all amounts disbursed for the diligent restoration of the Property. 12 25C -81 (d) No Event of Default shall remain uncured. 24.6 Method of Disbursement and Undisbursed Funds. Any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in accordance with then customary disbursement procedures and related provisions. Any amounts remaining undisbursed following completion of such restoration shall be returned to Developer Lip to the amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall either be paid to Developer or applied by City against any obligations to City that are secured by a lien on the Property, as they elects in their sole and absolute discretion. 24." Failure to Satisfy Conditions. In the event that Developer fails to fulfill the Restoration Conditions within ninety (90) days (unless extended pursuant to Section 19.5) following the date on which the damage occurs, the Proceeds shall be applied by City against any obligations to City that are secured by a lien on the Property, and the selection of which such obligations to apply the Proceeds against shall be made by City in their sole and absolute discretion. 24.8 Restoration. Nothing in this Article 19 shall be construed to excuse Developer from repairing and restoring all damage to the Property in accordance with other Loan Document provisions, regardless of whether insurance proceeds are available or sufficient. 249 Condemnation, Treatment of Compensation Subject to any superior rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to City secured by a lien on the Property, all amounts payable to Developer in connection with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation "), Subject to any superior rights of Senior Lender, Developer shall deliver such remaining Compensation to City immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely to render the Property not economically viable or if, in City's reasonable judgment Developer's security is otherwise impaired, City may apply the Compensation received due to judgment or settlement in connection with any condemnation or other taking to reduce the unpaid obligations secured in such order as City may determine, and without any adjustment in the amount or due dates of payments due under the Note. If so applied, any award in excess of the unpaid balance of the Note and other sums due to City shall be paid to Developer or Developer's assignee. City shall have no obligation to take any action in connection with any actual or threatened condemnation or other proceeding. 24.9.1 Notwithstanding the foregoing, as long as the value of City's liens are not impaired, any condemnation proceeds may be used by the Borrower for repair and /or restoration of the Project. 13 25C -82 24,10 Waiver of Subro as tion, Developer hereby waives all rights to recover against the City (or any officer, employee, agent or representative of the City) for any loss incurred by Developer from any cause insured against or required by any Loan Document, to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation. 25. Force Maieure. Notwithstanding specific provisions of this Note, performance hereunder shall not be ccmed to be in default where delays or defaults are due to; war; insuarection; 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; govenunental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the City or any other public or governmental City or entity (except that any act or failure to act of City shall not excuse performance by City); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform, An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time the party claiming such extension gives notice to the other party, provided notice by the party claiming such extension is given within thirty (30) days after the commencement of the cause. Times of performance under this Note may also be extended in writing by the City and the Borrower, 26. Assignments, The City, and the assignee of the City, shall have the right to assign this Note and the Deed of Trust securing this Note, without any further act of Borrower. The assignee shall give notice to Borrower as soon as practicable after such assigranent. 14 25C -83 This City Note is hereby agreed to and executed on the date first set forth above. "BORROWER" ADMINISTRATIVE GENERAL PARTNER Dated: MANAGING GENERAL PARTNER m Dated: 15 25C -84 Exhibit G - Affordability Restrictions on Transfer of Propertl 25C -85 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of Santa Ana Community Development Agency Housing Department M -26 20 Civic Center Plaza, 6th Floor P.O. Box 1988 Santa Ana, California 92702 SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY THESE AFFORDABLE HOUSING RESTRICTIONS ON TRANSFER OF PROPERTY (the "Restrictions ") are entered into as of , by and among and (referred to herein as the "Developer ") a the City of Santa Ana, a charter city and municipal corporation (the "City "). RECITALS: A. Developer is the owner of that certain real property located at , (the "Property ") located in the City of Santa Ana more particularly described in Exhibit A, which is attached hereto and incorporated herein by this reference. B. For the purpose of providing units of housing that will be affordable to Extremely -Low, Very -Low and Low Income households ( "Assisted Units "), the Developer, the City have entered into that certain Loan Agreement, dated on or about the date hereof (the "Loan Agreement ") to which these Restrictions are attached as Exhibit G, which, along with all of its attachments, is incorporated herein by this reference (any capitalized tern that is not otherwise defined in these Restrictions shall have the meaning ascribed to such terin in the Loan Agreement). C. The Loan Agrmnent provides, among other things, for the use of the Property for affordable housing with all Assisted Units being restricted to Extremely -Low, Very - Low and Low income households, at Affordable Rent(s). D. The Loan Agreement contains certain provisions relating to the use of the Property. 25C -86 NOW, THEREFORE, CITY AND DEVELOPER COVENANT AND AGREE AS FOLLOWS: 1. Developer covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property or any part thereof) that Developer, such successors, and such assigns shall use the Property exclusively to provide affordable housing of Extremely -Low, Very -Low and Low Income households, as provided in these Restrictions and in the Loan Agreement, 2. Developer, for itself and its successors and assigns, hereby covenants and agrees that all of the apartments in the Property (less one manager's unit) (the "Units ") shall be rented exclusively, at Affordable Rent, to Extremely -Low, Very -Low and Low Income households to the extent provided for herein. Area median income levels and Affordable Rents are subject to adjustment from time to time as provided in Section 3 below. 3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 3.1 Use Covenants and Restrictions. A. Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assign and every successor in interest to the Property that Developer will make all rental units on the Property available to extremely low and very low households at rents affordable. to such households for fifty -five (55) years from the effective date of this Agreement. The HOME restrictions for the HOME assisted units shall be enforced until the date that is fifteen (15) years after the date on which the City reports the Project as complete to the Department of Housing and Urban Development. Upon expiration of the 15 year HOME compliance period, the City will enforce affordability of the units with the same income and rent restrictions as the other units, pursuant to City guidelines and the California Health and Safety Code, The City permits the Developer to limit the eligibility and /or give preference to a particular segment of the population in accordance with 24 CFR 92.253(d), B. The Project shall consist of units, including of which there will be There shall be HOME assisted units, The HOME assisted units shall be units and shall be distributed throughout the complex with comparable amenities to the other units. The affordability mix for the Project is as follows: Unit Type AMI Level # of Units Studio XX % AMI XX One - Bedroom XX % AMI XX Two - Bedroom XX % AMI XX Three - Bedroom _)ff % AMI XX Four - Bedroom XX % AMI XX Studio Manager' Unit XX 2of12 25C -87 C. At initial lease up, households in the HOME assisted units cannot earn more than 50% of AMI, however existing tenants at the Property who are otherwise eligible under the HOME Program may continue their tenancy at the Property, Rental increases shall be in conformance with federal and state law. After the fifteen (15) year HOME compliance period, the City shall require that the units remain affordable, with rents calculated based on assumed household size at the same income levels, as required by the California Health & Safety Code. D. All of the HOME units will be restricted to occupancy by fifty percent (50 %) of the Area Median Income (AMI). Current residents whose incomes exceed eighty percent (80 %) of the AMI will be allowed to remain. Rents for these households will be increased to either thirty (30 %) percent of their monthly household income or market rent for the neighborhood, whichever is lower. E. Affordable rents shall be governed by California Health and Safety Code Sections 50052.5 and 50053(b)(1), and as provided in the HOME Regulations 24 CFR section 42.2, F. Rents During Constxuction/Rehabilitation: (a) All HOME units shall be charged the Low HOME rent, as amended from time to time (currently $ for - bedroom unit and $ for a unit). 3.2 Affordable Gross Starting Rents (Less Reasonable Utility Allowance): Initial rents maybe recalculated to allowable rental amounts at the time of initial lease -up following completion of construction/rehabilitation in accordance with any changes in allowable rent and income tables as published by HUD. Rents for non -HOME assisted units will be based on the rents published annually by California Tax Credit Allocation Committee (TCAC). A. HOME Assisted Units Rent # of Units Max Gross Monthly Low Studio $ 1 Bedroom $' 2 Bedroom $ _ 3 Bedroom _ $ 4 Bedroom $ _ 5 Bedroom $ (1) In no event shall the rent charged to the tenant of the HOME assisted units be more than that amount of the low rent as published by HUD, as amended from time to tune. (2) Utility allowances must be deducted from the Maxim= Gross Monthly Rent. The. Housing Authority of the City of Santa Ana publishes the Utility Allowance Schedule. 3of12 25C -88 (3) At the time of project completion, the Developer shall provide to the City the address and/or unit number of each of the HOME assisted units. (4) Annually with the financial statements, the Developer shall provide an annual report of rents and occupancy of assisted units, including HOME - assisted units, to verify compliance with affordability requirements. For the HOME units, information on unit substitution and filling vacancies shall be provided to ensure that the project maintains the required unit mix. 3.3 pent Increases: On an annual basis, the City shall provide the Developer with the maximunn allowable schedule of rents for the Property, In no event can Developer charge any tenant more than such amount. 4. Developer, its successors and assigns shall not charge rents for the Units in excess of the amounts set forth herein, as adjusted on the basis of the revised schedules of area median incomes issued from time -to -time by HUD, The City shall notify Developer in writing of the adjusted allowable maximum incomes and rents. 5. Developer shall adopt and include as part of its Management Plan (described in Section 1 I below), written tenant selection policies and criteria for the Units, that meet the following requirements: (a) Are consistent with the purpose of providing housing for Extremely Low and Very Low Income households; (b) Are reasonably related to program eligibility mud the applicants' ability to perform the obligations of the lease; (c) Give reasonable consideration to the housing needs of households that would have a preference under 42 CFR §906,211 (Federal selection preferences for admission to Public Housing); (d) Provide for: (i) The selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and (ii) The prompt written notification to any rejected applicant of the grounds for any rejection; (e) Provide first priority in the selection of qualified eligible tenants to households that are referred by the City; and (i) Carry out the Affirmative Marketing procedures of the City of Santa Ana, which are designed to provide information and otherwise attract eligible persons from all racial, ethnic and gender groups in the housing market area to the units. Developer shall cooperate with the City to effectuate this provision prior to the initial renting, or upon occurrence of a vacancy, and the re- renting of any Restricted Units (24 4of1.2 25C -89 CFR 92.351). 6. Developer, its successors and assigns, shall not refuse to lease a unit to a holder of a rental voucher under 24 CFR part 887 (Housing Choice Voucher Program) or to a holder of a comparable document evidencing participation in a HOME tenant -based assistance program because of the status of the prospective tenant as a holder of such certificate of family participation, rental voucher, or comparable HOME tenant -based assistance document. Total rents changed to such tenants, including the tenant contribution and rental assistance, shall not exceed the allowable rents as described above. 7. Any lease of any of the units must be for not less than one year, unless by mutual agreement between the tenant and the Developer. Should the tenant and Developer agree to a term of less than one year, said agreement shall be expressed in some type of written form, signed by the tenant, and maintained in the tenant's rental file held by the Developer, The lease may not contain any of the following provisions (in which references to "owner" shall mean the Developer, its successors or assigns): (a) Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; (b) Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties, This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing Unit after the tenant has moved out of the Unit. The owner may dispose of this personal property in accordance with state law; (c) Agreement by the tenant not to hold the owner or the owner's agent legally responsible for any action or failure to act, whether intentional or negligent; (d) Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant; (e) Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; (f) Agreement by the tenant to waive any right to a trial by jury; (g) Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and (h) Agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. 8. Developer, its successors or assigns, must adhere to state law requirements with regard to termination of tenancy. 5of12 25C -90 9. Developer shall maintain the improvements on the Property in compliance with all applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local code requirements (California Health and Safety Code section 33418), and shall keep the Property free from any unreasonable accumulation of debris or waste materials. Developer shall also maintain in a healthy condition any landscaping planted on the Property. 10. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, mental or physical disability, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property, as required by the Title VI of the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601 -20) and all implementing regulations, and the Age Discrimination Act of 1975, and all implementing regulations , 11. Not later than five (5) business days prior to the execution of the docu rents, Developer shall submit to the Executive Director a Management Plan in a form that is acceptable to the Executive Director, including, but not limited to, the components listed below. Approval of the Management Plan must be obtained from the Executive Director not later than the time for the Closing. Developer shall manage the Assisted Units in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by the Executive Director, for the tern of the income and rent restrictions contained in these Restrictions. The components of the Management Plan shall include: (a) Management Agent. Developer shall submit the name and qualifications of the proposed Management Agent, The Executive Director shall approve or disapprove the proposed Management Agent in writing based on the experience and qualifications of the Management Agent, The City hereby approves as the initial Management Agent. (b) Management Agreement. Developer shall submit a copy of the proposed management agreement specifying the amount of the management fee, and the relationship and division of responsibilities between Developer and Management Agent. (c) Annual Budget and Projected Cash Flows Prior to the Closing, and annually thereafter not later than ninety (90) days after the close of each calendar year thereafter, Developer shall submit a projected operating budget and cash flow to the Executive Director. The budget and cash flow shall be in a form that is acceptable to the Executive Director. (d) Tenant Selection Policies Developer shall include in the Management Plan the tenant selection policies in accordance with Section 4, above. 6of12 25C -91 12, If at any time the City determines that the units are not being managed or maintained in accordance with the approved Management Plan, the City shall send the Developer a detailed description of the management deficiencies (a "Deficiency Notice "), If the deficiencies set forth in the Deficiency Notice are not cured within thirty (30) days (or such longer period as may be reasonably designated by the City), with the exception of HOME regulations that require a shorter period, the Executive Director may require Developer to change management practices or to terminate the management contract and designate and retain a different management agent. The management agreement shall provide that it is subject to termination by Developer without penalty, upon thirty (30) days prior written notice, at the direction of the Executive Director. Within ten (10) days following a direction of the Executive Director to replace the management agent in accordance with the terms hereof, the Developer shall select another management agent or make other arrangements satisfactory to the Executive Director or designee for continuing management of the units. 13. The covenants established in these Restrictions and any amendments hereto approved by the City and Developer shall, without regard to technical classification and designation, be binding for the benefit and in favor of the City and their respective successors and assigns, These Restrictions shall remain in effect for fifty -five (55) years. In its discretion, the City may defer repayment of the HOME Loan or the City may agree to such reasonable modifications to the requirements of these Restrictions, as they may detenine are necessary for the continued maintenance and operation of the Assisted Units. The covenants against discrimination shall remain in effect for the period of these Restrictions. 14. Developer shall not request disbursement of HOME funds until the funds are needed to pay eligible costs. The City shall have the right to disapprove any request if the City determines the request is for an ineligible item or is otherwise not in compliance with or inconsistent with the Loan Agreement and these Restrictions [24 CFR 92.504 (c)(10)]. 15. Developer shall prepare, maintain and submit to the City, as appropriate, the following records and reports in compliance with 24 CFR 92.504 (c) (12): a. Annual Reports. Developer shall file with the City an Annual Report (herein referred to as the "Annual Report ") within one hundred twenty (120) days following the end of each calendar year, commencing with the end of the calendar year (or portion thereof) in which the Real Estate Closing occurs, The Annual Report shall contain a certification by Developer as to such information as the City Executive Director may then require, including, but not limited to, the following: (1) The fiscal condition of the Project, including the Annual Budget and Project Cash Flow report required by Section 10 (c) of the Affordable Housing Restrictions which shall include a financial statement for the previous calendar year that includes a balance sheet and a profit and loss statement indicating any surplus or deficit in operating accounts; a detailed itemized listing of income and expenses; and the amounts of any fiscal reserves. Such Annual Budget and financial statement shall be prepared in 7of12 25C -92 accordance with generally accepted accounting practices. The City Executive Director may require that the financial statement be audited at Developer's expense by an independent certified public accountant acceptable to the Executive Director. (2) Any substantial physical defects in the Project, including a description of any major repair or maintenance work undertaken or needed in the previous and current years. Such statement shall describe what steps Developer has taken in order to maintain the Project in a safe and sanitary condition in accordance with applicable housing and building codes and the property standards set forth in 24 CFR 92,251. (3) The occupancy of the units indicating the income of each current resident and the current rents charged each resident and whether those rents include utilities, including records that demonstrate that the Project meets the requirements of 24 CFR 92.253 for tenant and participant protection under the HOME Program. (4) General management performance, including tenant relations and other relevant information. (5) Records that demonstrate that the units meet the affordability requirements of 24 CFR 92.252, 50052.5 and 50053(b)(1) of the California Health and Safety Code, for the required period of affordability according to section 33334.3 of the California Health and Safety Code. (6) Evidence of a currently paid hazard insurance policy in accordance with the requirements of Section 6 of the City /HOME Deed of Trust, with a loss payable endorsement naming the City as a loss payee(s) together with other approved lenders (as their interests may appear), with a "Replacement Cost Endorsement" in amount sufficient to prevent Developer or City from becoming a co- insurer under the terms of the policy, but in any event in an amount not less than 100% of the then full replacement cost, to be determined at least once annually and subject to reasonable approval by the Executive Director. (7) Evidence of a currently paid liability insurance policy, naming the City as additional insured and in a form approved by the City Attorney with coverage as described in the Loan Agreement. (8) Termite reports pertaining to the Property every fifth (51h) year, (9) Such other information as may be reasonably required by the Executive Director or his/her designee. b. Records and Audits. Developer shall maintain the following general program records, and make them available for inspection by the City, the State or HUD: (1) records which demonstrate that the project meets the property standard specified in 24 CFR 92.251; 8of12 25C -93 (2) records, for each HOME Assisted Unit, which demonstrates that the project meets the requirements of 24 CFR 92.252. (3) records which demonstrate compliance with the tenant and participant protections, as specified in 24 Section 29.253; (4) records which demonstrate compliance with the Equal Opportunity and Fair Housing requirements outlined in these Restrictions, including; (A) data on the extent to which each racial and ethnic group and single head of household (by gender of head of household) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with HOME funds; (B) documentation of actions undertaken to meet the equal opportunity requirements of 24 CFR 92.350, which implements Section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701u); (C) documentation and data on the steps taken to implement Developer's outreach programs to minority -owned and women -owned businesses to meet the minority outreach requirements of 24 CFR 92,350; (5) documentation of the steps taken to carry out an affirmative marketing program in accordance with 24 CFR 92.351, if applicable; (6) if applicable, records which demonstrate compliance with the requirements relating to relocation of displaced persons, as described in 24 CFR 92.353. At a minimum, these shall include project occupancy lists identifying the name and address of all persons occupying the project property up until the date of the Real Estate Closing (i.e., the date on which Developer obtained site control); (7) records concerning lead -based paint in accordance with 24 CFR 92.355; (8) if applicable, records which support any requests for waivers of the conflict of interest prohibition as stated in 24 CFR 92.356; (9) records of certifications of contractor qualifications as they relate to the debannent and suspension requirement as stated in 24 CFR 92.357 and 24 CFR Part 24; and (10) any other reports issued by other monitoring agencies. C. All records pertaining to each calendar year of HOME funds must be retained for the most recent five year period, except that for rental housing projects, records may be retained for five years after the project completion date; except that records of individual tenant income verifications, project rents and project inspections 9of12 25C -94 must be retained for the most recent five year period, until five years after the affordability period terminates (24 CFR 92.508). Developer shall cooperate with the City to retain all books and records relevant to the Lean Agreement for a minimum of five years after the expiration of the Loan Agreement and any and all amendments hereto, or for five years after the conclusion or resolution of any and all audits or litigation relevant to the Loan Agreement, whichever is later, The City, the State, the Office of the Auditor General of HUD, and /or their representatives shall have unrestricted reasonable access to all locations, books, and records for the purpose of monitoring, auditing, or otherwise examining said locations, books, and records with or without prior notice. d. If so directed by the City, the State or HUD upon termination of the Loan Agreement, Developer shall cause all records, accounts, documentation and all other materials relevant to the work to be delivered to the City, the State or HUD, as depository. e. All records, accounts, documentation and other materials relevant to the Project shall be accessible at any time to the authorized representatives of the City, the State or HUD, on reasonable prior notice, for the purpose of examination or audit. £ Pursuant to 24 CFR Part 44, the City shall perform an annual audit at the close of each calendar year in which these Restrictions are in effect, Developer shall reasonably cooperate with City in performing such audit. 16. The City is a beneficiary of the terms and provisions of these Restrictions and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit these Restrictions and the covenants running with the land have been provided. The City shall have the right if the covenants are breached, to exercise all rights and remedies, and to maintain any actions or snits at law or in equity or other proper proceedings to enforce the curing of such breaches to which they or any other beneficiaries of these Restrictions and covenants are entitled. 17. The covenants and agreements contained herein shall run with the land and not be personal obligations of Developer. Upon the sale, conveyance or other transfer of the Property (a "Transfer ") and the assuumption of the obligations hereunder by a transferee, Developer's liability for performance shall be terminated as to any obligation to be performed hereunder after the date of such Transfer. 18. The Loan Agreement and all of its attachments shall be enforceable by City in accordance with the terns thereof. Each of the Loan Agreement, the Affordability Restrictions on Transfer of Property, the City /HOME Loan Note and the City /HOME Deed of Trust provide a means of enforcement by the City if Developer is in breach of its obligations hereunder and thereunder, including liens on the Property, use and deed restrictions and covenants running with the land [24 CFR 92.504 (c) (13)]. 10 of 12 25C -95 IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions on Transfer of Property to be executed on the date set forth hereinabove. ATTEST: Maria D, Huizar Clerk of the Council Dated: APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: Ryan O. Hodge Assistant City Attorney Dated: RECOMMENDED FOR APPROVAL: Robert C. Cortez Deputy City Manager CITY OF SANTA ANA Gerardo Mouet Acting City Manager Dated: 11 of 12 25C -96 ADMINISTRATIVE GENERAL PARTNER Dated: MANAGING GENERAL PARTNER Dated: 12 of 12 25C -97 Exhibit H — SAMPLE Affirmative r- 25C -98 Will I EXI3IBIT II 212Ale3LS. CITY OF SANTA ANA AFFIRMATIVE MARI£ETING AND MINORITY OUTREACH PROGRAM AFFIRMATIVE MARKETING PROGRAM The City of Santa Ana is a participating jurisdiction in the federal HOME Investment Partnership Program (HOME) and the Community, Development Block Grant Program (CDBG). Federal law requires that all. participating jurisdictions adopt affirmative .marketing policies that.include: A. Methods to inform the public about federal fair housing laws and the City's affirmative marketing policy; B. Requirements, and practices owners niust adhere to in order to carry out this policy; C. Procedures owners must use to inform and solicit applications from persons in the housing market area who are not likely to apply for the housing without special outreach; D. Records that owners and the City will keep describing the actions they have taken to affirmatively market units and records to assess the results of these actions; and E. A description of how the City will annually assess the success of affrmiative marketing actions and determine what corrective actions are needed. The City's affirmative marketing procedures and requirements for rental and homebuyer Projects containing five or more HOME or.CDBG- assisted housing units are set forth below. These procedures and requirements constitute the City's Affirmative Marketing Program, These procedures and requirements do not apply to .families with Section-8 tenant -based rental housing I assistance or families with tenant -based rental assistance provided with HOME funds. A. Met /rods to inform the publle aboutfederal fair housing tarps: The City will display the Equal Rousing logotype or slogan in housing - related press releases and solicitations for owners, and on the website page for the City's Housing and Neighborhood Development Division. '.� The City will request that the County of Orange include information on the City's HOME and CDBG- assisted rental units in its countywide Affordable housing List maintained by the County. This list can be fotmd on the internet at bttp: / /ranvw.oaca aoy/housitsU /Affordable 400usinaList.htrn. The City will maintain a link to this website on the website page for the City's Housing and EXIEIIBIT ] Resolution No. 2003 -031 Page 3 of 25C -99 Neighborhood Development.Divislon and for the Santa Ana Housirig Authority. ,Copies of the list will be available at the public reception counters for the Housing and Neighborhood Development Division and the Santa Ana Housing Authority, B. Requirements and practices owners mast adhere to; - The City will require owners of City HOME and CDBG assisted rental units covered under this marketing plan. to display the Equal Rousing Opportunity logotype or slogan in all correspondence with current or potential tenants; and on lease agreements. The City will require them to display the fair housing poster in their leasing offices, and to develop written procedures for selecting tenants. These procedures must meet the following criteria. c They must be consistent with the purpose of providing housing for very low - income and low- income families; o They must be reasonably related to .program eligibility and the applicants° ability to perform the obligations of the lease; o They must give reasonable consideration to the housing needs of families that would have a federal preidrence under section 60(4)(A) of the Act; o They must provide for the selection of tenants from a written waiting list in chronological order of their application, insofar as is practicable; o They must call for prontpt written notification to any rejected applicant of the grounds for any rejection: -- - - 'C Proceduresforownerst •S The City will require owners of City HOME and CDBG- assisted rental units to continuously review the demographic makeup of their tenants. If and when such review indicates that their tenants no longer reflect the City's minority population, they will be required to inform the City of that fact and request City review and approval of steps they will take to correct that deficiency. S Compliance with the City's affirmative marketing requirements and procedures will bo. made an obligation of all rental property owners receiving HOME or CDBG assistance from the City of Santa Ana, and will be enforceable by means of appropriate actions described in loan documents recorded thrmigh the County of Orange. D. Record keeping; The City will require owners of its HOME and - CDBG- assisted rental units covered under this marketing plan to make an annual report to the City detailing the steps they have taken to comply with this program. They will also be required to report on the ethnicity of their tenants, as well as rents, income levels, and other household characteristics. Reports will be made on a form that is acceptable to Resolution No. 2003 -031 LXHIBIT I Page 4of5 25C -100 2/24/b3L5, the City of Santa Ana, and that wilf enable the City to capture the data it needs to evaluate owner compliance with this program.'.' rogram. • • The City will maintain records on owner reports and its evaluation of those reports for a period of not less Than ten years after expiration of the affordability period required by applicable HUD regulations. E. Annual assessment: »� Upon receipt of owner reports, the City will evaluate the ethnic and racial characteristics of tenants •being, 'served 'to determine if they reflect the City's housing market. If they do not, the City will direct the owner to take further affirmative marketing steps to correct the' imbalance. The City will track and evaluate the steps taken to ensure they have the desired effect. MINORITY OUTREACH PROGRA As a participating jurisdiction, the City is also required to adopt certain affirmative steps to ensure maximum feasible participation in ROME and CDBG- funded projects by minority business enterprises, women's business enterprises, labor surplus area firms and other small businesses. These affirmative steps are listed below and constitute the City's Minority Outreach Procedures and Requirements Program for IIONM and CDBG - funded projects, The City will plaee qualified small and minority businesses and women's business enterprises on sdlicitation lists; 4* The City will assure that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources; The City will divide total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority business; and women's business enterprises; 4• Thd City will use the services and . assistance of the Small Business Administration and the Minority Business Development Agency of the Department of Commerce; and The City will require the prime contractor, if subcontracts are to be let, to take the affirmative steps listed above. The City will annually review the results of these procedures to determine if additional steps should be taken, EXHIBIT z Resolution No. 2003 -031 Page 5 of 5 25C -101 Exhibit I � SAMPLE Form of Residual 25C -102 EXI�TBIT G FORM OF RESIDUAL RECEIPTS REPORT Community Redevelopment Agency of the City of Santa Ana Residual Receipts Report for the Year Ending Date Prepared Please complete the following information and execute the certification at the bottom of this form. Annual Proiect Revenue Please report Annual Project Revenue for the year ending on the following lines: Rent Payments (including Section 8 tenant assistance payments, if any) (1) $ Interest Income (do not include interest income from replacement and operating reserves nor interest income on tenant security deposits) (2) $_ Additional Income (for example, vending machine income, tenant forfeited deposits, laundry income not paid to the residents' association) (3) $ Total Annual Project Revenue (Add lines 1, 2, and 3) (4) $T Operating Exnensesr Please report Operating Expenses 'incurred for the year ending on the following lines: Operating and Maintenance Expenses Utilities (5) (6) Property Management Expenses and On -Site Staff Payroll (7) Administrative Expenses (8) Property Taxes (4) Insurance (10) 25C -103 Other Fxpenses (1l) Please list these expenses: Total Annual Operating Expenses for the Rousing Project (12) (Add lines 5, 6, 7, 8, 9, 10, and 11) Net Operating Income (Subtract Line 12 from Line 4) (13) Do not include expense unrelated to the operation of the Rental Portion of the Project, such as depreciation, amortization, accrued principal and interest expense on deferred payment debt, or capital expenditures. Additional Cash Flow Payments Obligated First Mortgage Debt Service Payments (as approved by the Agency and (14) $ other parties that may have such approval rights) and Obligated Secondary Subordinate Debt Service Payments (as approved by the Agency and other parties that may have such approval rights) Scheduled Deposits to Reserves (as approved by the Agency) (15) $ Additional Payment Obligations (such as partnership management fees, deferred (16) $ developer fees, or repayments on loans to partners, as approved by the Agency to have priority over Residual Receipt Payment to the Agency) Total Additional Cash Flow Payments (Add lines 14,1$, and 16) (17) $ Residual Receipts for Year Ending (18} $ (Subtract Line 17 from Line 13) Percentage of Residual Receipts to be Paid to the Agency (as shown in the (19) Promissory Note by and between the Agency and Borrower dated Amount Payable to the Agency (Multiply Line 18 by Line 19) (20) The amount payable to the Agency listed on Line 20 is subject to payment according to the terms of the Promissory Note by and between the Agency and Borrower dated . If Line 20 is $0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check payable to and attach to this report. 25C -104 AN IL 02"1 -t! I • M 0 -t- q 641 25C -105 EXHIBIT J CITY OF SANTA ANA REHABILITATION STANDARDS PREFACE The primary purpose of these standards is to address the quality of workmanship and materials expected, and to achieve consistency throughout the program activities administered by the City of Santa Ana. These standards are not intended to reduce or exclude the requirements of any federal, state or local codes, standards, ordinances and regulations that apply to residential rehabilitation. WORKMANSHIP • All work shall be performed in a professional and workmanlike manner. • The quality and durability of the work shall meet or exceed the standards established by the construction Industry and various trades. MATERIALS & EQUIPMENT • All materials and equipment shall comply with and be installed in accordance with the manufacturer's requirements and all applicable codes, standards, ordinances and regulations. If a discrepancy occurs between the requirements, the more stringent shall prevail. • Unless otherwise specified, all materials and equipment shall be medium grade. • Economy grade materials and equipment are unacceptable, * All materials and equipment shall be new, in excellent condition, and delivered to the job in the manufacturer's original packaging. • The description of materials and equipment found in this document establish a minimum standard. ENERGY EFFICIENCY, WATER CONSERVATION & RECYCLED MATERIALS To the extent possible and practical, standard measures related to energy conservation, energy efficiency, water conservation and the use of recycled materials have been incorporated herein. Gut rehabilitation or new construction of residential buildings up to three stories will be designed to meet the standard for Energy Star Qualified New Homes. Gut rehabilitation or new construction of mid or high rise multi - family housing must be designed to meet the American Society of heating, Refrigerating and Air - Conditioning Engineers (ASHRAE) Standard 90.1 -2004, Appendix G plus 20 percent. LEAD -BASED PAINT All housing built before 1978 must comply with 24 CPR Part 35 Subpart J and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead -based paint hazards. HUD's guidelines are available at httD: / /www.hud.aov /offices /lead /Ibn /hudRuidelities Andex.cfm, • The site and all paving shall drain away from the dwelling and accessory buildings, but not onto adjacent properties. • Paving and walkways shall be hazard -free and intact. • Landscaoine and irrieation systems shall be hazard -free and in 25C -106 91 M ! ! Minimum Standard • Roofs shall be safe and structurally sound, • Roof coverings shall be intact and watertight. • Roofing metal and flashing shall be intact and rust free. • Gutters and downspouts shall be intact and rust free. • Roof coverings with five or less years of useful life shall be replaced. _ Rehabilitation Roofs that do not meet the minimum standard shall be replaced, Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • The replacement of roofing includes the replacement of all metal (roofjacks and flashing). • Gutters and downspouts shall be installed to properly discharge rain water run -off, Roof Coverings • 25 -year, 3 -tab, self - sealing composition shingle. Built-up membrane (hot mop) system on all flat roofs. 25C -107 relatively good condition. All dead vegetation shall be removed, • Fencing, walls and gates hazard -free and intact, All gates shall be in good working order. • The site shall be free from trash, debris and hazardous materials. • Accessory buildings shall be safe and sound. Paving • All new paving and walkways shall be constructed with concrete (2,000 PSI @ 28 days), • Driveways shall be reinforced with wire mesh. Sawn expansion- contraction joints shall be placed every 8 feet in both directions. • All paving and walkways shall be finished with a light broom texture. • All walkways shall be at least 3 feet wide. Sawn expansion - contraction joints shall be placed every 4 feet. Landscaping & • To the extent possible and practical all new landscaping shall be Irrigation drought resistant. • When a lawn is being replaced, the new lawn area shall be reduced to aid in the reduction of water consumption. • New irrigation controllers shall be weather or sensor based and EPA Water -Sense qualified. • All new irrigation systems shall be designed to conserve water. Fences, Walls & Gates • All new wood fences shall be made from good quality materials, They shall be properly supported with 4X4 pressure treated posts (8 feet O.C.) and 2X4 rails (top and bottom). The posts shall be embedded in a concrete footing at least 18" deep. • All new block walls shall be constructed with 6X8X16 concrete block. They shall be properly supported by a continuous footing and reinforced with steel bar. 91 M ! ! Minimum Standard • Roofs shall be safe and structurally sound, • Roof coverings shall be intact and watertight. • Roofing metal and flashing shall be intact and rust free. • Gutters and downspouts shall be intact and rust free. • Roof coverings with five or less years of useful life shall be replaced. _ Rehabilitation Roofs that do not meet the minimum standard shall be replaced, Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • The replacement of roofing includes the replacement of all metal (roofjacks and flashing). • Gutters and downspouts shall be installed to properly discharge rain water run -off, Roof Coverings • 25 -year, 3 -tab, self - sealing composition shingle. Built-up membrane (hot mop) system on all flat roofs. 25C -107 Lighter colored coverings are preferred for energy efficiency. Standard • Safe, straccturall sound and watertight. lion -6 Decks, balconies and railing that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • Zero or low VOC nrimers. paint and coatines. Minimum Standard Safe and stracturally sound. Rehabilitation • Ext. steps, stairways and railing that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Finishes • Zero or low VOC nrimers. Daint and coatines. Minimum_ Standard • Safe and structurally sound. _ Rehabilitation • Foundations that do not meet the minimum standard shall be replaced. 'Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • If the project involves a gut rehab, raised foundations shall be I Concrete • 2,000 PSI (minimum), I Minimum Standard • Safe, structurally sound and watertight. Rehabilitation Exterior walls that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • If the project involves a gut rehab, all exterior walls shall be insulated. Minimum Standard • Safe, sound, weather-tght and in good working order. Rehabilitati on • Exterior doors that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. New Doors • EPA Energy Star qualified, zero or low VOC finish, New Hardware • Reputable manufacturer, lifetime finish. txirtx72[� Ti 4 +'tT7R' 25C -108 Minimum Standard a Safe, sound and in good working order. Doors shall be impermeable (primed and painted). • Five or more years of tactical utility. Rehabilitation • Garage doors and openers that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved, Y Minimum Standard • Windows shall be safe, sound, weather -tight and in good working order. • Windows that can be opened shall have a tight- fitting insect screen. • Five or more ears of practical utility. Rehabilitation • Windows that do not meet the minimum standard shall be replaced, Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. New Windows • Reputable manufacturer. • EPA Ener Star qualified. Minimum Standard • J • • Homes built before 1978 must comply with 24 CFR Part 35 Subpart and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead -based paint hazards. All exterior paint shall be intact and free of corrosion. Five or more years of practical utility Rehabilitation • _ All surfaces to be painted shall be prepared properly. All loose material and peeling paint shall be removed. • All holes and cracks shall be filled and finished so that they blend into the surrounding area. • All stucco surfaces to be painted shall receive a complete and even coverage of stucco paint. • All wood surfaces to be painted shall receive a complete and even coverage of flat exterior paint. • Poor workmanship will not be tolerated, New Paint • Reputable manufacturer. • Highest quality available. • Zero or low VOC paint, caulldne and fillers. Minimum Standard • Safe and shucturally sound. • All plaster, drywall and paneling shall be safe and intact. Rehabilitation • Walls and wall coverings that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • If the project involves a gut rehab, the attic, walls and floor on 25C -109 �� raised � foundations shall be insulated. �_�. i la i Minimum Standard • Safe, sound acid sanitary. • Five or more years of practical utility Rehabilitation • Floor coverings that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Replacement Floor • Carpet & Pad (Reputable manufacturer, recycled materials). Coverings a Resilient Flooring (Reputable manufacturer, 10 year wear warranty). • Ceramic Tile Reputable manufachirer Minimum Standard • Homes built before 1978 must comply with 24 CFR Part 35 Subpart J and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead -based paint hazards. • All interior paint shall be intact and corrosion -free. • Five or EMU ofpractical utility. Rehabilitation • All surfaces to be painted shall be prepared properly. All loose material and peeling paint shall be removed, • All holes and cracks shall be filled and finished so that they blend into the surrounding area. • All surfaces to be painted shall receive a complete and even coverage of flat paint (semi -gloss in ldtohens, bathrooms and laundry rooms). • Poor workmanship will not be tolerated. New Paint • Reputable manufacturer. • Highest quality available. • Zero or low VOC Taint. caulkine and fillers, Minimum Standard • Cabinets shall be safe, sound, sanitary and in good working order. • Countertops shall be safe, sound, sanitary and watertight. • Five or more vears of practical utility. 25C -110 Rehabilitation . Cabinets and countertops that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Replacement Cabinets • Reputable manufacturer. • Solid hardwood face- frames, door - frames and drawer fronts, • Metal and nylon drawer guides. • Low or zero VOC adhesives and finishes. Replacement • Reputable manufacturer. Countertops • 4" ceramic tile, 6" backs lash, bull -nose edge. Minimum Standard • Safe, sound. sanitary and in good workinu order. 25C -111 Minimum Standard • Safe, sound, sanitary and in good working order. • Faucets shall (at a minimum) be equipped with a low -flow aerator. _ • Five or more years of practical utility. Rehabilitation • Kitchen fixtures, equipment and appliances that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. Replacement Sinks Reputable manufacturer. • 1 S -guage (minimurn) stainless steel, ____ Replacement Faucets • EPA Water -Sense qualified. • Reputable manufacturer. • Brass construction, metal housing, Replacement Disposals • Reputable manufacturer. • %z HP motor (minimum). • Stainless steel swivell hti Replacement • EPA Energy Star qualified, Dishwashers • Reputable manufacturer. _ Replacement Range • EPA Energy Star qualified. Hoods • Rye utable manufacturer. Replacement Ranges • Reputable manufacturer. • Pilot -free ignition. • Four sealed burners. • Self - cleaning oven with timers Replacement Cook Tops • Reputable manufacturer. • Pilot -free ignition. • Four sealed burners. Wall Ovens • Reputable manufacturer. • Pilot -free ignition. • Self- cleaninj oven with timer, _ Minimum Standard • Safe, sound. sanitary and in good workinu order. 25C -111 _Minimum Standard • Safe, sound and leak -free. Rehabilitation . Piping (supply, waste and vent) that does not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. 25C -112 • Faucets shall (at a minimum) be equipped with a low -flow aerator. • Showerheads shall (at a minimum) be equipped with low -flow aerator. • Porcelain sinks shall be free from any cracks or clips. • Steel sinks shall be free from any rust or corrosion. • Five or more years of practical utility. Rehabilitation ! Bathroom fixtures and equipment that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • Toilets that require more than 1.6 GPF shall be replaced regardless of their condition. Replacement Sinks • Reputable manufacturer. « Cast iron white enamel finish. Replacement I�'aucets • EPA Water -Sense qualified. • Reputable manufacturer. Brass construction, metal housing. Replacement Toilets • Reputable manufacturer.~ • EPA Water -Sense ualified Q,28 GPF)_ Replacement Tubs • Reputable manufacturer. • Cast iron body, white enamel finish, slip resistant bottom. EPA Water-Sense ualiled lumbing fixtures, Replacement • Reputable manufacturer. Combination • Cast iron body, white enamel finish, slip resistant bottom. Tub - Showers . 4" ceramic tile surround. • Anodized aluminum doors with tempered glass. EPA Water -Sense qualified plumbing fixtures. Replacement Showers . Reputable manufacturer. 4" ceramic tile. • Anodized aluminum door with tempered glass. _ + EPA Water -Sense gttalifred lumbing fixtures. Replacement • Reputable manufacturer. Medicine Cabinets • Steel body, beveled mirror door. Towel Bars & Toilet . Reputable manufacturer. Paper Holders . Metal construction, polished chrome finish. _Minimum Standard • Safe, sound and leak -free. Rehabilitation . Piping (supply, waste and vent) that does not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. 25C -112 Water Su I Pi in Replacement Schedule 40 ABS. Waste & Vent Piping Minimum Standard • Safe, sound and in good working order. • 100 -am ere minimum service. Rehabilitation • Electrical service panels, breakers and wiring that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • Knob and tube wiring shall be replaced regardless of its condition. • Overhead wiring from a dwelling to a detached garage or accessory _ building shall be installed_ underground regardless of its condition. Replacement • Reputable manufacturer. Service • 100 - ampere (minimum). Replacement • Romex (NM cable). Minimum Standard • Safe, sound and in good working order. • Light fixtures shall (at a minimum) be equipped with CFL bulbs. • Exterior lighting fixtures used for security shall be equipped with a motion sensor. Rehabilitation • Electrical switches, outlets and lighting fixtures that do not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • All new light fixtures shall be UL, approved and Energy Star qualified. • Outlets located within 6 feet of a source of water shall be around 25C -113 fault protected. • Exterior switches and _outlets shall be weatherproof. Replacement • U.L, approved. Switches &c Outlets Replacement • Reputable manufacturer. Lighting Fixtures • U.L. approved and EPA Ener y Star qualified. Minimum Standard • Safe, sound and in good working order. • Five or more years of practical utility, _ Rehabilitation • HVAC that does not meet the minimum standard shall be replaced. Practical, cost effective repairs are acceptable as long as compliance with the minimum standard will be achieved. • Tune -up all HVAC equipment (as a minimum). • Seal all ducts (as a minimum). • All new HVAC equipment shall be sized properly. Furnaces • Reputable manufacturer. + EPA Energy Star goal feed. Central Air s Reputable manufacturer. Conditioners • EPA EneSYar qualified. Thermostats • Reputable manufacturer. + EPA Energy Star qualified. e Programmable, Minimum Standard • Additions and alterations that were constructed without a building permit and are clearly substandard shall be removed. • Garages converted to living quarters shall be returned to their original use. • Additions and alterations that were constructed without a building permit, but appear to be compliant, shall be inspected by the City's Building Official to determine if a building permit can be issued 25C -114