HomeMy WebLinkAboutSANTA ANA ARTS COLLECTIVE, L.P. (META HOUSING PROJECT) - 2017RECORDING REQUESTED BY
FIRST AMERICAN TITLE INSURANCE CO.
NATIONAL COMMERCIAL SERVICES
NCS —18 3 `131— sh
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. BOX 1988
Santa Ana, California 92702
Attention: Cleric of the Council
A-2017.174
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 61031
HOME LOAN AGREEMENT
by and between the
CITY OF SANTA ANA
and
SANTA ANA ARTS COLLECTIVE, L.P., a California limited partnership
(1666 N. Main Street, Santa Ana, California)
THIS DOCUMENT WAS SIGNED IN COUNTERPART
AND ISM BE CONSIDERED AS Dated: July 5, 2017
ONE RECORDABLE DOOCUMENT.
HOME LOAN AGREEMENT
THIS HOME LOAN AGREEMENT (the "Agreement") dated, for identification
purposes only, as of July 5, 2017, is made and entered into by and between the CITY OF
SANTA ANA, a charter city and municipal corporation ("City") and SANTA ANA ARTS
COLLECTIVE, L.P., a California limited partnership ("Developer"), with reference to the
following:
RECITALS:
A. The City has received an allocation of funds from the United States Department
of Housing and Urban Development ('HUD") under the HOME Investment Partnerships
Program ('HOME Program") (42 U.S.C. § 12701, et seq.) to be used in accordance with
applicable statutory requirements and regulations ('HOME Regulations")(24 CFR 92);
B. Among the purposes of the HOME Program are (1) to expand the supply of
decent, safe, sanitary, and affordable housing, with primary attention to rental housing, for very
low-income and low-income Americans; and (2) to provide participating jurisdictions, on a
coordinated basis, with the various forms of federal housing assistance, including capital
investment, mortgage insurance, rental assistance, and other federal assistance, needed (a) to
promote the development of partnerships among the federal government, states and units of
general local government, private industry, and nonprofit organizations able to utilize all
available resources to provide more of such housing, and (b) to expand the capacity of nonprofit
community housing development organizations to develop and manage decent, safe, sanitary and
affordable housing;
C. The City is authorized by the HOME Regulations to expend funds to increase the
supply of very low and low-income housing available at affordable housing costs.
D. The City issued a Request for Proposals on June 1, 2015, seeking affordable
housing projects. After reviewing all applications, the Developer's project was selected and
approved for funding by the Santa Ana City Council on November 3, 2015.
E. Developer is entering into this Agreement to acquire and, subject to entitlement
approvals, develop an adaptive reuse project consisting of a fifty-eight (58) unit multi -family
residential housing development, with live/work units and a possible commercial art studio, as
well as a community room (the "Project") located at 1666 N. Main Street, within the City of
Santa Ana, California, and legally described in Exhibit A attached hereto (the "Property"). The
HOME funds referenced herein shall assist in the acquisition, rehabilitation, construction, and
soft costs of said Project.
F. In furtherance of the HOME Program, Developer has applied to the City for a
loan with which to:
provide deeper affordability and construct the improvements to the
Property; and,
2. thereafter to maintain, operate and professionally manage the Project as
decent, safe, sanitary and affordable rental housing.
G. The City, on certain terms and conditions, desires to make such loan ("HOME
Loan") to Developer in order to make possible the rehabilitation and construction of the Project,
thereby expanding the supply of decent, safe, sanitary and affordable housing.
H. If there is any inconsistency between Federal, State, and local guidelines with
regard to any of the terms and conditions contained herein, the more stringent shall apply.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, City and Developer agree as follows:
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terns 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 California Health and Safety Code
Section 50052.5.
"Affordability Restrictions on Transfer of Property" means that certain
document affecting real property benefiting the City, attached hereto as Exhibit B.
"Affordable Rent" means the monthly rents which do not exceed the maximum
amount applicable to Extremely Low, Very Low and Low Income households, as promulgated
by the U.S. Department of Housing and Urban Development (HUD), or by the California Tax
Credit Allocation Committee, as applicable.
"AHSC Loan" means a permanent loan of Affordable Housing and Sustainable
Communities program funds from HCD administered by the California Strategic Growth
Council in the amount of $4,944,130
"AHSC Deed of Trust' means the any deed(s) of trust securing athe AHSC
Loan encumbering the Property.
"AHSC Documents" means, collectively, the loan agreement governing the
AHSC, the AHSC Note, the AHSC Deed of Trust, and any other agreement, document or
instrument that the Senior Lender requires in connection with the AHSC Loan.
"Building Permit" means the building permit(s) issued by City and required for
the Construction, if any.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday
on which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 30.
"Certificate of Completion" has the meaning set forth in Article 17.
"City" means the City of Santa Ana, California, a charter city and municipal
corporation.
"Close of Escrow" shall mean the date upon which the 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.
"Construction" means the demolition and construction activities required to
construct, until Certificate of Completion, the Project.
"County" means the County of Orange, California.
"Developer" means Santa Ana Arts Collective, L.P., a California limited
partnership.
"Developer's Representative" shall mean an officer of the General Partner of
Developer or his/her designee.
"Event of Default" has the meaning set forth in Section 20.1.
"Extremely Low Income" means an adjusted income which does not exceed
thirty percent (30%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD.
"General Partner(s)" means the Santa Ana Arts Collective, LLC, a California
limited liability company, and W CH Affordable XV111, LLC, a California limited liability
company.
"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 seq., and the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended.
"HOME Compliance Period" means twenty (20) years from the issuance of the
Certificate of Completion or until payment of principal and all accrued interest on the HOME
Loan, whichever comes last.
"HOME Loan" means the loan with principal amount of TWO MILLION, TWO
HUNDRED AND NINETEEN THOUSAND, SEVEN HUNDRED AND SIXTY DOLLARS
($2,219,760.00) to be made to Developer by City from HOME funds pursuant to Article 5 of this
Agreement.
"HOME Loan Deed of Trust" means the deed of trust encumbering the
Property, in the form attached hereto as Exhibit C, to be executed by Developer pursuant to
Section 5.13.2 in order to secure the HOME Loan Promissory Note.
"HOME Loan Promissory Note" means that certain promissory note in the
original principal amount of TWO MILLION, TWO HUNDRED AND NINETEEN
THOUSAND, SEVEN HUNDRED AND SIXTY DOLLARS ($2,219,760.00) in the form
attached hereto as Exhibit D, and to be executed by Developer in favor of City to evidence the
obligation of Developer to repay the HOME Loan.
"HOME Program" has the meaning set forth in ,Recital "A" above
"HOME Regulations" has the meaning set forth in Recital "A" above.
"HOME Units" means the eleven (11) affordable units assisted with HOME
funds.
"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, as required through the City of Santa Ana ,Planning
and ,Building Agency entitlement process.
"Indebtedness" of a person means (a) all indebtedness for borrowed money, (b)
notes payable and drafts accepted representing extensions of credit, whether or not representing
obligations for borrowed money, (c) any obligation for the purchase of property or services in
excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii)
evidenced by a note or similar instrument, and ( d) all recourse and all non-recourse indebtedness
secured by any Lien on any property or asset of such person (whether or not assumed by such
person).
"Indemnitees" has the meaning set forth in Section 14.5.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
judgments, injunctions, decrees or awards of the United States or any state, county, municipality
or other Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any lien or security interest).
"Limited Partner" means the Limited Partners of Developer, and their
successors and assigns.
"Loan Documents" means, collectively, this Agreement, the HOME Loan Note,
the 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 "AMI".
"Partnership Agreement" means the Second Amended and Restated Agreement
of Limited Partnership of Santa Ana Arts Collective, L.P., dated in July 2017.
"Permitted Encumbrances for the Affordable Rousing Restrictions" means,
collectively, the Senior Loan Deed of Trust and AHSC Deed of Trust and all other title exceptions
and limitations with respect to the Property hereafter approved by the Executive Director in
writing, which shall include all title exceptions set forth on City's title policy, all documents
evidencing the State of California Housing and Community Development loan to encumber the
Property and the TCAC Regulatory Agreement.
"Permitted Encumbrances for the HOME 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 which shall
include all title exceptions set forth on City's title policy, all documents evidencing the State of
California Housing and Community Development loan to encumber the Property and the TCAC
Regulatory Agreement.
"Project" means the construction of the Improvements upon the Property by
Developer pursuant to this Agreement.
"Project Budget" means the line -item budget for the Project attached hereto as
Exhibit E, as modified from time to time in accordance with this Agreement.
"Project Costs" means all costs of any nature incurred in connection with the
Project in accordance with generally accepted accounting principles.
"Property" means the property that is located at 1666 N. Main Street in the City of
Santa Ana, and is more fully described in the "Legal Description" of the Property attached hereto as
Exhibit A and incorporated herein by reference.
"Scope of Work/Schedule of Performance" means the detailed statement of the
work to be performed by Developer on and to the Property pursuant to this Agreement, along
with the Schedule of Performance setting forth timeframes for certain tasks, which document is
attached hereto as Exhibit F.
"Section 504" means section 504 of the federal Rehabilitation Act of 1973, codified
at 29 U.S.C. § 701 et seq., and its implementing regulations located at 24 CFR 8.
"Senior Lender" means a commercial financial institution providing the Senior
Loan or any other holder of the Senior Loan Note and its successors and assigns. The initial
Senior Lender will be Bank of America, N.A and California Community Reinvestment
Corporation is projected to become the Senior Lender after conversion of the loan to permanent
status.
"Senior Loan" means a loan from any Senior Lender(s) in a position superior to
the HOME Loan.
"Senior Loan Deed of Trust" means any deed(s) of trust securing any Senior
Loan(s) by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement governing
the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement,
document or instrument that the Senior Lender requires in connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior Loan from
the Senior Lender.
"Term of Affordability" the terns and conditions contained herein shall remain
in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion.
"Very Low Income" means an adjusted income which does not exceed fifty
percent (50%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HUD.
1.2 Sineular and Plural Terms. Any defined term used in the plural in this
Agreement or any other Loan Document shall refer to all members of the relevant class and any
defined term used in the singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement or any Loan
Document shall include such document both as originally executed and as it may from time to
time be modified. References herein to Articles, Sections and Exhibits shall be construed as
references to this Agreement unless a different document is named. References to subparagraphs
shall be construed as references to the same Section in which the reference appears. The term
"document" is used in its broadest sense and encompasses agreements, certificates, opinions,
consents, instruments and other written material of every kind. The terms "including" and
"include" mean "including (include) without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement, as now
existing and as the same may from time to time be modified, are incorporated herein by this
reference.
2. [RESERVED]
SCOPE OF WORK/ PROJECT BUDGET
A Scope of Work and Budget for the Project is attached hereto as Exhibit F. Any
material change to the Scope of Work/Budget 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 E (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.
Notwithstanding the foregoing, the City's approval of a change order shall not be
required unless the approval of the Senior Lender is required with respect to such change order.
4. COMPLIANCE WITH REHABILITATION ACT OF 1973
The design and construction of the Project shall at all times comply with Section 504.
HOME LOAN:
A. Amount and Purpose. Subject to the terms and conditions of this Agreement,
City agrees to make a loan of HOME funds to Developer in the principal amount of up to TWO
MILLION, TWO HUNDRED AND NINETEEN THOUSAND, SEVEN HUNDRED AND
SIXTY DOLLARS ($2,219,760.00) (the "HOME Loan") for the acquisition, rehabilitation,
construction, and soft costs of said Project.
B. HOME Promissory Note and Deed of Trust. The HOME Loan shall be
evidenced by the HOME Loan Promissory Note in the form attached hereto as Exhibit D. The
HOME Loan shall be secured by the HOME Loan Deed of Trust in the form attached hereto as
Exhibit C. The HOME Deed of Trust shall be a deed of trust encumbering the Property,
subordinate to the Senior Loan(s) made to Developer.
C. HOME Loan Terms. The terms and conditions of the HOME Loan are as set
forth in the HOME Loan Promissory Note which is a residual receipts note. The HOME Loan
Promissory Note shall be subordinate to the Senior Loan, and shall continue in full force and
effect for the entire HOME Compliance Period.
6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
6.1 Conditions Precedent. City's obligation to disburse the Loan Amount(s) is subject to the
satisfaction, or waiver by the Executive Director, of the following conditions precedent:
(a) Loan Documents. Developer shall have delivered to the Escrow
Holder, signed by the authorized officer or officers of Developer, with such signature(s)
aelmowledged where necessary, each of the following documents:
(i) this Loan Agreement;
(ii) the HOME Loan Promissory Note;
(iii) the HOME Deed of Trust;
(iv) the Affordability Restrictions on Transfer of Property, and;
(v) the Notice of Affordability.
(b) Title Insurance. City shall have received an ALTA Extended (LP -10)
Loan Policy (6-17-06), or evidence of a commitment therefore satisfactory to City, issued by
First American Title Insurance Company and in form and substance satisfactory to City, together
with all endorsements and binders required, naming City as the insured, in a policy amount of
not less than the total HOME Loan Amount, showing Developer as the fee owner of the Property
and insuring the HOME Deed of Trust to be valid priority liens on the Property. This Agreement,
the HOME Promissory Note, and the HOME Deed of Trust, shall all be subordinate to any
Senior Loan Note and Senior Loan Deed of Trust and to the AHSC Loan Documents.
(c) Affordability Restrictions on Transfer of Property. Developer shall have
delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the Affordability
Restrictions on Transfer of Property pursuant to which, among other things, Developer agrees
that the Property shall be used only for decent, safe, sanitary and affordable rental housing
pursuant to the affordability requirements of Code of Federal Regulations ("CFR") section
92.252 or 92.254 and California Health and Safety Code ("H&S") sections 50052.5 and 33334.3,
as applicable. Except as may be required in connection with the AHSC Loan, the City's
Affordability Restrictions on Transfer of Property shall remain in first position on title and shall
not be subordinated.
(d) Documents Recorded. This Loan Agreement, the HOME Loan Deed of
Trust, the Notice of Affordability and the Affordability Restrictions on Transfer of Property shall
have been recorded in the Official Records of the County.
(e) Request for Notice. For the benefit of City, Escrow Holder shall have
recorded a request for notice of default of the Senior Loan (the "Request for Notice of Default").
(f) Insurance. City shall have received evidence satisfactory to the City Attorney
that all of the policies of insurance required by Section 19 of this Agreement are in full force and
effect.
(g) Representations and Warranties. The representations and warranties of
Developer contained in this Agreement and the other Loan Documents shall be correct in all
material respects 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.
6.2 Disbursement Procedures for Loan. The HOME Loan proceeds shall be disbursed through
Escrow to finance the acquisition and construction of the Project (as evidenced in Exhibit E). The
HOME Loan proceeds shall not be used for any purpose other than for acquisition and
predevelopment and construction related costs, including developer fee and soft costs related to the
development of the Project (costs all subject to City's prior review).
6.3 First Disbursement. City's obligation to make the first disbursement of the Construction
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 Contract. If the Executive Director has not yet approved the
Construction Contract, the Executive Director shall have approved the
Construction Contract.
6.4 Termination for Failure of Condition. If (a) any of the conditions set forth herein are
not timely satisfied or waived by the Executive Director, and (b) City is not in default under this
Agreement, City may terminate this Agreement without any further liability on its part by giving
written notice of termination to Developer. Upon the giving of such notice, all principal, interest
and other amounts owing under the HOME Loan Promissory Note shall be immediately due and
payable, regardless of any other specified due date.
6.5 Anv Disbursement. City's obligation to make any disbursement of the Loan (including
the first and final disbursements) is subject to the satisfaction of the following conditions
precedent:
(a) Satisfactory Progress. The Executive Director shall be satisfied, based on his/her
own inspections or other reliable information that the Construction is progressing
satisfactorily in conformance with all applicable laws and other requirements
(including HOME 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 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
Proceeds, from the title insurer who issued City's LP -10 Title Policy, all
endorsements thereto then reasonably required by City (including, without
limitation, CLTA Form 122 — priority of advance endorsements).
(c) Representations and Warranties. The representations and warranties of Developer
contained in this Agreement and the other HOME Loan Documents shall be
correct in all material respects as of the date of the disbursement as though made
on and as of that date.
(d) No Default. No Event of Default by Developer shall remain uncured (unless, to
the extent permitted under this Agreement, Developer is diligently taking action
to cure such default) and no event shall have occurred which, with the giving of
notice or the passage of time or both, would constitute an Event of ;Default by
Developer.
6.6 Final Disbursement. City's obligation to disburse that portion of the Loan funds retained
pursuant to Section 6.12 is subject to the satisfaction of the following additional conditions
precedent:
(a) Construction Complete. The construction of the Project shall be complete.
(b) Certificate of OccupaneLlssued. Any portion of the construction requiring
inspection or certification by any Governmental Authority shall have been
inspected and certified as complete. Developer shall request that the Building
Department issue a Certificate of 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 (35) days shall have passed since the recording of a valid
notice of completion for the construction, and no mechanic's or material
man's lien shall be outstanding; or
(ii) Ninety-five (95) days shall have passed since actual completion of the
construction, and no mechanic's or materialman's lien shall be
outstanding, or Developer shall have bonded over any such lien to City's
reasonable satisfaction.
6.7 Waiver of Conditions. The conditions set forth pertaining to City's obligation to make
disbursements of the Loan proceeds are for City's benefit only and the Executive Director may
waive all or any part of such rights by written notice to Developer.
6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line -item by line -
item basis in accordance with the Project Budget and subject to the conditions in this section. In
no event shall City have any obligation to disburse any amount for any item in excess of the
amount allocated to such item in the Project Budget. Disbursements shall be made only upon
Developer's written request in the form of a Disbursement Request showing all costs which
Developer intends to fund with such disbursement, itemized in such detail as City may
reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to
City, including in any event partial lien releases executed by each contractor and subcontractor
who has received any payment for work performed, and (b ) all other documents and information
reasonably required by City. Disbursement Requests shall be submitted no less than ten (10)
Business Days prior to the date of the requested disbursement, and shall not be submitted more
often than monthly.
Prior to each disbursement by City of proceeds of the Loan, Borrower shall deliver to City a
draw request ("Draw Request"), and all required supporting information as set forth in the Loan
Documents or as otherwise reasonably required by City in order to provide information for
evaluating the requested disbursement pursuant to customary construction lending practices of
institutional lenders in Southern California.
City shall notify the Developer of approval or disapproval of each Draw Request within five (5)
Business Days after receipt of the Draw Request, using the City's "Disbursement/Change Order
Approval Notice". City shall have the right, but not the obligation, to discontinue processing
Draw Requests unless and until receipt of notification from the other of approval or disapproval
of each outstanding Draw Request.
6.9 Manner of Disbursement. City may make any disbursement by check payable to
Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor,
subcontractor or other claimant; or directly to any such claimant; or by any other means
reasonably selected by City.
6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost
reasonably estimated by City or Developer to be required to complete all matters included in any
line item in the Project Budget exceeds the amount allocated to that line item in the Project
Budget, (b) Project Costs for any matters not covered by a specific line item have been or will be
incurred, or (c) the undisbursed portion of the Loan proceeds together with any other available
construction sources is or may be insufficient to pay all construction of the Project that may be
payable under the Loan Documents or otherwise in connection with the construction, Developer
shall, within ten (10) days after it receives written notice thereof from City of any of the
foregoing matters, do one or more of the following:
(a) provide satisfactory evidence to City that Developer has previously paid such
excess or otherwise provided for such insufficiency (collectively, the "Excess
Cost") with funds from a source other than the HOME 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
(c) deposit an amount equal to the Excess Cost in a non-interest bearing account (the
"Overrun Account") with City or Senior Lender from which withdrawals may be
made only with the consent of the Executive Director or Senior Lender 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 or Senior Lender prior to the
disbursement of any remaining Loan proceeds in the manner described in subsection 9.3(c).
6.11 Cost Savings. Upon completion of and disbursement for all matters covered by any line
items in the Project Budget, any remaining undisbursed amounts allocated to that line item shall
be reallocated to "Contingency" and thereafter be available for disbursement in accordance with
the terms of this Agreement.
6.12 Retainage City will withhold a Retainage of 10% from each Disbursement for each
of the Hard Cost line items of the Project Cost Breakdown (and other line items thereof
designated for withholding of retainage) until all conditions to the final Disbursement of Hard
Costs have been satisfied. In lieu of City's withholding Retainage, Developer can by written
notice to City elect not to draw any overhead or profit as would otherwise be permitted under the
Construction Contract until such time as Retainage would otherwise have been released.
6.13 Holdback. The retainage otherwise available for disbursement shall be subject to a
holdback of one hundred twenty-five percent (125%) of the estimated cost (as determined by the
Executive Director) for "punch -list" items. Such holdback will be released when all punch -list
items have been completed to the satisfaction of City.
6.14 Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the
making by City of any disbursement with knowledge that any condition to such disbursement is
not fulfilled shall constitute a waiver of such condition only with respect to the particular
disbursement made, and such condition shall be a condition to all further disbursements until
fulfilled.
6.15 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 Contract.
6.16 Other Terms and Conditions of Loan.
A. The Promissory Note shall become immediately due and payable, in the event of any
of the following:
(1) failure to complete the Project within four (4) years of the recording date;
(2) violation of any of the use covenants and restrictions contained in this
Agreement after the expiration of any applicable notice and cure periods;
(3) an Event of Default by Developer which is not timely cured after expiration
of any applicable notice and cure periods pursuant to the terms of this
Agreement.
6.17 Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges, (b) all
recording fees and charges on any document recorded pursuant to this Agreement, and (c) the
premium for the title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
7.1 Use Covenants and Restrictions.
A. The HOME restrictions for the eleven (11) HOME assisted units shall be enforced until the
date that is twenty (20) years after the date on which the Certificate of Completion is issued or until
payment of principal and all accrued interest on the HOME Loan, whichever comes last.
B. Upon expiration of the HOME Compliance Period, the City will enforce affordability of said
units with the same income and rent restrictions as the other units, pursuant to California Health and
Safety Code.
C. The Project shall consist of fifty-seven (57) income restricted units. There shall be
eleven (11) HOME assisted units. The HOME assisted units will be floating units and shall be
distributed throughout the complex with comparable amenities to the other units.
D. The maximum incomes of residential tenants eligible to rent the Units shall be
determined on the basis of the Area Median Income ("AMP') for the Orange County, California
PMSA, published approximately annually by the United States Department of Housing and
Urban Development ("HUD").
E. Affordable rents charged to tenants shall be governed by the HOME Regulations 24 CFR
section 92.2.
7.2 Affordability Levels/Unit Mix:
The proposed unit mix, initial rents, and levels of affordability are as follows:
The remaining unit will be a 2 -bedroom unit reserved for the onsite manager.
HOME Assisted Units
30% AMI
35% AMI
40% AMI
60% AMI
Unit Size
No.
Units
Rent
No. Rent
Units
No. Rent
Units
No.
Units
Rent Total
1 Bedroom
14
$587
6 $685
6 $783
Unit Type
26
2 Bedroom
2
$704
--- ---
--- ---
12
$1,408 14
3 Bedroom
4
$813
--- ---
--- ---
13
$1,627 17
Total
20
17
6
6
25
57
The remaining unit will be a 2 -bedroom unit reserved for the onsite manager.
HOME Assisted Units
(1) In no event shall the rent charged to the HOME assisted units be more than that amount of the
low HOME rent as published by HUD, as amended from time to time.
(2) At the time of project completion, the Developer shall provide to the City the address and/or
unit number of each of the HOME floating units.
(3) Annually with the financial statements, the Developer shall provide an annual report of rents
and occupancy of all assisted units, including the HOME -assisted units, to verify compliance
with affordability requirements. For the HOME assisted -units, information on unit substitution
and filling vacancies shall be provided to ensure that the project maintains the required unit
mix.
The affordable rents charged at the Project must comply with the standards set forth by California
Tax Credit Allocation Committee (TCAC). Notwithstanding anything to the contrary contained in
this Agreement, the Affordability' Restrictions on Transfer of Property, and other than HOME
assisted units, restricted (as to both income and rent levels) at 30% of AMI, in the event of a
foreclosure, or delivery of deed in lieu of foreclosure, of any Senior Loan, then (1) the maximum
qualifying tenant household income shall be increased to 60% of Area Median Income adjusted for
Unit Type
Level of
# of HOME
HOME Share of
Total # of Units
Description/
No. of BRs
Affordability
Assisted Units
Unit Type
Notes
26
1 Bed
1
30% AMI
5
19.23%
14
2 Bed
2
2
14.29%
17
3 Bed
3
4
23.53%
(1) In no event shall the rent charged to the HOME assisted units be more than that amount of the
low HOME rent as published by HUD, as amended from time to time.
(2) At the time of project completion, the Developer shall provide to the City the address and/or
unit number of each of the HOME floating units.
(3) Annually with the financial statements, the Developer shall provide an annual report of rents
and occupancy of all assisted units, including the HOME -assisted units, to verify compliance
with affordability requirements. For the HOME assisted -units, information on unit substitution
and filling vacancies shall be provided to ensure that the project maintains the required unit
mix.
The affordable rents charged at the Project must comply with the standards set forth by California
Tax Credit Allocation Committee (TCAC). Notwithstanding anything to the contrary contained in
this Agreement, the Affordability' Restrictions on Transfer of Property, and other than HOME
assisted units, restricted (as to both income and rent levels) at 30% of AMI, in the event of a
foreclosure, or delivery of deed in lieu of foreclosure, of any Senior Loan, then (1) the maximum
qualifying tenant household income shall be increased to 60% of Area Median Income adjusted for
family size appropriate to the unit, and (2) the maximum annual affordable rent shall be increased to
30% of 60% of Area Median Income, as adjusted for family size appropriate to the unit.
* Utility allowances must be deducted from the Maximum Gross Monthly Rent. The City of Santa
Ana will provide the utility allowances based on the HUD Utility Schedule Model.
7.3 Rent Increases: On an annual basis, the City shall provide Developer with the maximwn
allowable schedule of rents for the Property in accordance with changes in allowable rent and
income tables published by HUD and the California Tax Credit Allocation Committee, provided
however that the rent for the HOME units shall in no event be higher than the rent for the equivalent
non -HOME assisted unit within the Project. In no event can Developer charge any tenant more than
such amount.
7.4 Maintenance of the Property. Solely at Developer's expense, Developer agrees to maintain
the Property in a clean and orderly condition and in good condition and repair and keep the Property
free from any accumulation of debris and waste materials. If at any time Developer fails to
maintain, or cause to be maintained, the Property as required by this section, and said condition is
not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from
the date of written notice from the City, unless such condition cannot reasonably be cured within
thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to
complete such cure, the City may perform the necessary maintenance and Developer shall pay all
reasonable costs incurred for such maintenance. The City shall inspect the Property annually after
the date of issuance of the Certificate of Completion as described in Article 17 of this Agreement.
7.5 Obligation to Refrain from Discrimination. Developer covenants and agrees for itself, its
successors, its assigns and every successor in interest to the Property or any part thereof, that there
shall be no discrimination against or segregation of any person or group of persons on account of
race, color, creed, religion, disability, sex, marital status, ancestry or national origin in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer
itself or any person claiming tinder 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 tern of the Agreement.
8. DEFAULTS AND REMEDIES
8.1 Event of Defanit. Failure or delay by either party to perform any term of provision of this
Agreement within the time periods provided herein for such performance constitutes a default under
the Agreement. If any party defaults in performance of its obligations, covenants or agreements
hereunder, the defaulting party shall be entitled to cure the default in accordance with this section.
The injured party shall give written notice of default to the party in default, specifying the default
complained of by the injure party. Delay in giving such notice shall not constitute a waiver of any
default nor shall it change the time of default. The defaulting party must, within thirty (30) days
following service of said written notice, commence to cure, correct or remedy such failure or delay
and shall complete such cure, correction, or remedy with reasonable diligence. Upon a default by
Developer which is not cured within thirty (30) days following service of said notice, unless such
default cannot reasonably be cured within thirty (30) days, in which case Developer shall have such
additional time as reasonably necessary to complete such cure but no more than ninety (90) days,
the City shall have the right to terminate this Agreement by delivery of written notice of termination
to Developer.
8.2 Institution of Legal Actions. In addition to any other rights or remedies, either party may
institute legal action to cure, correct or remedy any default to recover damages for any default, or to
obtain any other remedy consistent with the purpose of this Agreement.
8.3 Rights and Remedies are Cumulative. Except with respect to rights and remedies
expressly declared to be exclusive in this Agreement, the right and remedies of the parties are
cumulative and the exercise by either party of one or more of such rights or remedies shall not
preclude the exercise by it, at the same or different times, of any other rights or remedies for the
same default or any other default by the other party.
8.4 Damages. In the event that the City is liable for damages to Developer, such liability shall
not exceed costs incurred by the Developer in the performance of this Agreement and shall not
extend to compensation for loss of future income, profits or assets; provided, however, Developer's
only remedy for any breach of this Agreement by the City shall be an action for specific
performance of such party's obligations.
8.5 Nonrecourse Liability. Neither Developer, nor any partner of Developer, shall have any
personal liability under this Agreement, or the attached Note(s) and Deed(s) of Trust, and any
judgment, decree or order for the payment of money obtained in any action to enforce the obligation
of Developer to repay the loan evidenced by such documents shall be enforceable against Developer
only to the extent of Developer's interest in the Property.
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to City to enter into this Agreement, Developer represents and
warrants as follows:
9.1 Formation, Qualification and Comulianee. Developer (a) is a limited partnership,
validly existing and in good standing under the laws of the State of California, (b) has all
requisite authority to conduct its business and own and lease its properties, and (c) is qualified
and in good standing in every jurisdiction in which the nature of its business makes qualification
necessary or where failure to qualify could have a material adverse effect on its financial
condition or the performance of its obligations under the Loan Documents. Developer is in
compliance with all laws applicable to its business and has obtained all approvals, licenses,
exemptions and other authorizations from, and has accomplished all filings, registrations and
qualifications with, any Governmental Authority that are necessary for the transaction of its
business.
9.2 Execution and Performance of Loan Documents.
9.2.1 Developer has all requisite authority to execute and perform its obligations under
the Loan Documents.
9.2.2 The execution and delivery of Developer of, and the performance by Developer of
its obligations under, each Loan Document has been authorized by all necessary
action and does not and will not:
(a) require any consent or approval not heretofore obtained of any person
having any interest in Developer;
(b) violate any provision of, or require any consent or approval not heretofore
obtained under, any articles of incorporation, by-laws or other governing
document applicable to Developer;
(c) result in or require the creation of any lien, claim, charge or other right of
others of any kind (other than under the HOME 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 under the Loan Documents or that would have any material
adverse effect on the financial condition of Developer or the conduct of its
business, under any law, contract, lease or other agreement or document described
in sub -paragraph (d) or (e) of the previous subsection.
9.2.4 No approval, license, exemption or other authorization from, or filing, registration
or qualification with, any Governmental Authority is required which has not been
previously obtained in connection with:
(a) the execution of Developer of, and the performance by Developer of its
obligations under, the Loan Documents; and
(b) the creation of the liens described in the Loan ,Documents.
9.3 Financial and Other Information. To the best of Developer's knowledge, all financial
infomlation furnished to City with respect to Developer in connection with the Loans (a) is
complete and correct in all material respects as of the date of preparation thereof, (b) accurately
presents the financial condition of Developer, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied or in accordance with such other
principles or methods as are reasonably acceptable to City. To the best of Developer's
knowledge, all other documents and information furnished to City with respect to Developer, in
connection with the Loans, are correct and complete insofar as completeness is necessary to give
the City accurate knowledge of the subject matter. To the best of Developer's knowledge
Developer has no material liability or contingent liability not disclosed to City in writing and
there is no material lien, claim, charge or other right of others of any kinds (including liens or
retained security titles of conditional vendors) on any property of Developer not disclosed in
such financial statements or otherwise disclosed to City in writing.
9.4 No Material Adverse Chance. There has been no material adverse change in the
condition, financial or otherwise, of Developer since the dates of the latest financial statements
furnished to City. Since those dates, Developer has not entered into any material transaction not
disclosed in such financial statements or otherwise disclosed to City in writing.
9.5 Tax Liability. Developer has filed all required federal, state and local tax returns and
has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to
City in writing) other than taxes being promptly and actively contested in good faith and by
appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities
(including contested liabilities) in accordance with generally accepted accounting principles or in
accordance with such other principles or methods as are reasonably acceptable to City.
9.6 Governmental Requirements. To best of its knowledge, Developer is in compliance
with all laws relating to the Property and all Governmental Authority approvals, including
zoning, land use, planning requirements, and requirements arising from or relating to the
adoption or amendment of, any applicable general plan, subdivision and parcel map requirement;
environmental requirements, including the requirements of the California Environmental Quality
Act and the National Environmental Policy Act and the preparation and approval of all required
environmental impact statements and reports; use, occupancy and building permit requirements;
and public utilities requirements.
9.7 Riehts of Others. Developer is in compliance with all covenants, conditions, restrictions,
easements, rights of way and other rights of third parties relating to the Property.
9.8 Litivation. There are no material actions or proceedings pending or, to the best of
Developer's knowledge, threatened against or affecting Developer or any property of Developer
before any Govermnental 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 construction and development of
the Project. Accordingly, Developer further expressly acknowledges and agrees that this Agreement
is a personal right of Developer that is neither negotiable, transferable, nor assignable except as set
forth herein. Developer may assign some or all of its rights under the Agreement only with the prior
written consent of the Executive Director (such consent not to be unreasonably withheld), except
that no prior consent is necessary for an assignment by an investor limited partner of Developer to
an affiliate, or as otherwise provided in the Note or Deed(s) of Trust.
9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under federal
and California state laws with venue in Orange County, California.
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 furnished in connection with the Construction of the
Property.
9.16 Control of Property. The parties acknowledge that the City has not at anytime participated
in any manner in the management or operation of the Property, and will not so participate at any
time hereafter.
10. CONDPTIONS FOR CONSTRUCTION
10.1 Permits and Approvals. Developer shall diligently obtain all permits, including all
building permits, licenses, approvals, exemptions and other authorizations of Governmental
Agencies required in connection with the construction and development of the Property.
10.2 Commencement and Completion of Construction. The construction of the Project shall
be considered complete for purposes of this Agreement only when (a) all work described has
been completed and fully paid for, and (b) all work requiring inspection or certification by
Governmental Authority has been completed and all requisite certificates, approvals and other
necessary authorizations (including required final certificates of occupancy) have been obtained.
10.3 Chance Orders. The contract for construction shall not be modified except pursuant
to change orders which require City consent pursuant to this Agreement. All change orders:
(a) Subject to Section 3 above, 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 prior written approval.
10.4 Entry and Inspection. At all times prior to completion of the construction, upon
reasonable notice, City and its agents shall have (a) the right of free access to the Property and all
sites away from the Property where materials for the construction are stored, (b) the right to
inspect all labor performed and materials furnished for the construction, and (c) the right to
inspect and copy all documents pertaining to the construction.
10.5 Compliance with Section 3 Clause. Section 3 of the Housing and Urban Development
act of 1968, 12 U.S.C. 1701 u, as amended by Section 915 of the Housing and Community
Development Act of 1992, requires that economic opportunities generated by HUD financial
assistance for housing and community development programs be targeted toward low- and very
low- income persons. Whenever HUD assistance generates opportunities for employment or
contracting, state and local grantees, as well as other recipients of HUD housing assistance funds
must, to the greatest extent feasible, provide these opportunities to low- and very low- income
persons and to businesses owned by or employing low- and very low- income persons. Section 3
applies to projects for which HUD's share of project costs exceeds $200,000 and contracts and
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. 1701u ("Section 3"). The purpose of Section 3 is to ensure that
employment and other economic opportunities generated by HUD assistance or IND -
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 135, which implement Section 3. As evidenced by their execution of this contract,
the parties to this contract certify that they are under no contractual or other impediment
that would prevent them from complying with the Part 135 regulations.
(c) The contractor agrees to send to each labor organization or representative
of workers with which the contractor has a collective bargaining agreement or other
understanding, if any, a notice advising the labor organization or workers' representative
of the contractor's commitments under this Section 3 clause, and will post copies of
notices in conspicuous places at the work site where both employees and applicants for
training and employment positions can see the notice. The notice shall describe the
Section 3 preference, shall set forth minimum number of job titles subject to hire,
availability of apprenticeship and training positions, the qualifications for each; and the
name and location of person(s) taking applications for each of the position; and the
anticipated date the work shall begin.
(d) The contractor agrees to include this Section 3 clause in every subcontract
subject to compliance with regulations in 24 CFR 135, and agrees to take appropriate
action, as provided in an applicable provision of the subcontract or in this Section 3
clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR
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 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 135 require employment opportunities to be directed, were not filled to
circumvent the contractor's obligations under 24 CFR 135.
(f) Noncompliance with HUD's regulations in 24 CFR 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 Linder 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, Developer shall comply and/or cause compliance with
Section 3 Clause requirements for the Project. For example, when and if Developer or its
contractor(s)/subcontractor(s) hire(s) full time employees, rather than volunteer labor or
materials, Section 3 is applicable and all disclosure and reporting requirements apply.
10.6 Construction Information. From time to time during the course of the construction, but
in no event more often than monthly, within ten (10) Business Days following City's written
demand therefore, Developer shall furnish requested reports of project costs, progress schedules
and contractors' costs breakdowns for the construction, itemized as to trade description and item,
showing the name of the contractor(s) and/or subcontractor(s), and including such indirect costs
as real estate taxes, legal and accounting fees, insurance, architects' and engineers' fees, loan
fees, interest during construction and contractors' overhead.
10.7 Protection Against Liens: Developer shall diligently file a valid Notice of Completion
upon completion of the construction, diligently file a notice of cessation in the event of a
cessation of labor on the construction for a period of thirty (30) days or more, and take all actions
reasonably required to prevent the assertion of claims of lien against the Property. In the event
that any claim of lien is asserted against the property or any stop notice or claim is asserted
against the City by any person furnishing labor or materials to the Property, Developer shall
immediately give written notice of the same to City and shall, promptly and in any event within
ten (10) Business Days after written demand therefor, (a) pay and discharge the same, (b) effect
the release thereof by delivering to City a surety bond complying with the requirement of
applicable laws for such release, or (c) take such other action as City may require to release City
from any obligation or liability with respect to such stop notice or claim.
11. FEDERAL (HOME PROGRAM) COVENANTS
11.1 Contract Provisions for Non -Federal Entitv Contracts Under Federal
Awards. Developer shall comply with the requirements at Appendix II to Part 200.
11.2 Qualification as Affordable Housing. As more particularly provided in the
Affordability Restrictions on Transfer of Property, Developer shall use, manage and operate the
Property in accordance with the requirements of 24 CFR 92.252 and California Health and
Safety Code section 50052.5 so as to qualify the housing on the Property as Affordable Housing
with affordable rents.
11.3 Tenant and Participant Protection. Developer shall comply with the
requirements of 24 CFR 92.253.
11.4 [Intentionally Omitted]
11.5 Handicapped Accessibility. Developer shall comply with (a) Section 504 of the
Construction Act of 1973, and implementing regulations at 24 CFR 8C governing accessibility of
projects assisted under the HOME Program; and (b) the Americans with Disabilities Act of 1990,
and implementing regulations at 28 CFR 35-36 in order to provide handicapped accessibility 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, as applicable
of the Lead -Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), Lead Safe Housing
Rule, and implementing regulations at 24 CFR 35.
11.9 Affirmative Marketing. Developer shall implement and perforin such
affirmative marketing procedures and requirements for the Property as required by 24 CFR
92.351 and the City of Santa Ana's adopted affirmative marketing procedures and minority
outreach program.
11.10 Equal Opportunity and Fair Housing. Developer shall carry out the
Construction and perform its obligations under this Agreement in compliance with all of the state
and federal laws and regulations regarding equal opportunity and fair housing described in 24
CFR 92.350.
11.11 Property Standards. Developer shall cause the Property to meet the housing
quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal
codes and ordinances, including zoning ordinances. Developer shall also cause the Property to
meet the current edition of the Model Energy Code published by the Council of American
Building Officials.
11.12 Displacement and Relocation. ,Developer acknowledges and agrees that,
pursuant to 24 CFR 92.353 and consistent with the other goals and objectives of this part, City
must ensure that it has taken all reasonable steps to minimize the displacement of persons as a
result of the construction. Furthermore, to the extent feasible, residential tenants must be
provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary and
affordable dwelling unit on the Property upon completion of the construction. Developer agrees
to cooperate fully and completely with City in meeting the requirements of 24 CFR 92.353 and
shall take all actions and measures reasonably required by the City Project Manager in
connection therewith. All applicable state guidelines must also be followed.
11.13 Other Program Requirements. Developer shall carry out each activity in
compliance with all federal laws and regulations described in subpart H of 24 CFR 92, except
that Developer does not assume City's responsibilities for environmental review in 24 CFR
92.352 or the intergovernmental review process in 24 CFR 52.
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. The amount of each request
shall be limited to the amount needed.
11.15 Eligible Costs. Developer shall use HOME Funds only 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 annual inspections of
the HOME assisted units on the Property as required by the Program after the date of
construction completion, with reasonable notice. Developer shall cure any defects or
deficiencies found by the City while conducting such inspections within thirty (30) days of
written notice thereof, or such longer period as is reasonable within the sole discretion of the
City. The City shall monitor, on an ongoing basis, any affordable housing.
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 (5r') 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.
11.21 Other HOME Program Requirements. Developer shall comply with all other
applicable requirements of the HOME Program.
11.22 City Requirements.
Developer shall comply with the following:
(a) Onsite Services: The Developer shall provide on-site services that are available to
the residents and shall report to the City annually the services provided.
(b) Coordination with the WORK Center: The Developer and the Property Manager
shall coordinate with the City's WORK Center to provide services and outreach to
tenants, as well as provide information on employment during the construction of
the Project.
(c) Tenant Satisfaction Survey: The Developer shall complete and submit to the City
biennial tenant satisfaction surveys of tenants.
(d) Rental Inclusionary Housing Manual: The Developer shall also maintain
compliance with the City's Inclusionary Housing Manual for Rental Projects.
11.23 Controlling Covenants. If there is a discrepancy between State and Federal law
with regard to any of the aforementioned covenants, the more stringent shall apply.
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND
REPAIR OF PROPERTY
12.1 Maintenance. Developer shall maintain the Property (and all abutting grounds,
sidewalks, roads, parking and landscape areas which Developer is otherwise required to
maintain) in good condition and repair; shall operate the Property in a businesslike manner; shall
prudently preserve and protect its own as well as the City's interests in connection with the
Property; shall not commit or permit any waste or deterioration of the Property (except for
normal wear and tear); shall not abandon any portion of the Property or leave the Property
unguarded or unprotected; and shall not otherwise act, or fail to act, in such a way as to
unreasonably increase the risk of any damage to the Property or of any other impairment of
City's interests under the Loan Documents. Without limiting the generality of the foregoing, and
except as otherwise agreed by City in writing from time to time, Developer shall promptly and
faithfully perform and observe each of the following provisions:
12.1.1 Alterations and Repair. Developer shall not remove, demolish or
materially alter any Improvement without City's prior consent, except to make non-structural
repairs which preserve or increase the Property's value, and shall promptly restore, in a good and
professional manner, any Improvement (or other aspect or portion of the Property) that is
damaged or destroyed from any cause.
12.2 Compliance. Developer shall comply with all laws and requirements of
Governmental Authority (including, without limitation, all requirements relating to the obtaining
of Governmental Authority approvals), all Governmental Authority approvals and all rights of
third parties, relating to Developer, the Property or Developer's business thereon.
12.3 Taxes and Impositions. Developer shall pay, prior to delinquency, all of the
following (collectively, the "Impositions"): (a) all general and special real property taxes and
assessments imposed on the Property; (b) all other taxes and assessments and charges of every
kind that are assessed upon the Property (or upon the owner and/or operator of the Property) and
that create or may create a lien upon the Property (or upon any personal property or fixtures used
in connection with the Property), including, without limitation, non-governmental levies and
assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees,
taxes and assessments imposed on City (other than City's income or franchise taxes) which are
measured by or based upon (in whole or in part) the amount of the obligations secured by the
Property. If permitted by law, Developer may pay any Imposition in installments (together with
any accrued interest).
12.3.1 Right to Contest. Developer shall not be required to pay any Imposition
so long as (a) its validity is being actively contested in good faith and by appropriate
proceedings, (b) Developer has demonstrated to City's reasonable satisfaction that leaving such
Imposition unpaid pending the outcome of such proceedings could not result in conveyance of
the Property in satisfaction of such Imposition or otherwise impair 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).
12.1.3.1.1 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.
12.1.3.3 Books and Records. Developer shall maintain complete books of
account and other records reflecting its operations (in connection with any other businesses as
well as with respect to the Property), in accordance with generally accepted accounting
principles applied on a consistent basis or in accordance with such other principles or methods as
are reasonably acceptable to City, in accordance with 24 CFR 92.508.
12.4 [Intentionally Omitted]
12.5 Project Operating Budget. 'Developer must promptly deposit all project income
directly into a segregated depository account established exclusively for the Project ("Project
Operating Account"). Until the Certificate of Completion is issued, withdrawals from this
account may be made only in accordance with the provisions of this Agreement and the
approved Budget, as it may be revised from time to time with City approval. Developer may
make withdrawals from this account solely for the payment of Project expenses and Project fees.
Withdrawals from this account for other purposes may be made only with the prior written
approval of the City.
12.6 Replacement Reserve Account. Developer must establish or cause to be
established a segregated interest-bearing replacement reserve depository account ("Replacement
Reserve Account") upon the conversion of the Senior Loan to permanent status. Developer must
make monthly deposits from project income into the Replacement Reserve in accordance with
the Senior Loan Documents, 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 as set forth in the Senior Loan Documents. if no
Senior Loan is in effect, Developer may not withdraw funds from the Replacement Reserve
Account for any other purpose without the prior written approval of the City.
13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and agrees that:
A. In Use of Property. There shall be no discrimination against or segregation of
any person, or group of persons, on account of race, color, creed, religion,
disability, sex, marital status, national origin, or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall
Developer or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendors of the Property.
B. In Affordable Housing Restrictions. The foregoing covenant shall (a) be
included in the Affordability Restrictions on Transfer of Property ("Restrictions"),
(b) run with the land, and (c) remain effective for the tern of the Restrictions (for
55 years).
C. In Employment. In construction on the Property, Developer shall not
discriminate against any employee or applicant because of race, color, creed,
religion, disability, sex, marital status, 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 for the benefit of City, provided that the
foregoing covenant shall not apply to contracts or subcontracts for standard
commercial supplies or raw materials.
14. ENVIRONMENTAL MATTERS
14.1 Representation and Warranty. Except as disclosed in writing to the City, Developer
has no knowledge (a) of the presence on, under or about the Property, now or in the past, of any
Hazardous Materials, or of the transportation to or from the Property of any Hazardous
Materials, (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the
Property, or (c) that there are any underground storage tanks located in, on or under the Property.
14.2 Compliance with Environmental Laws. Developer shall (a) comply with all
environmental laws and environmental permits applicable to the Construction of the Property,
(b) immediately pay or cause to be paid all costs and expenses incurred by reason of such
compliance, (c) keep the Property free and clear of any environmental claims or liens imposed
pursuant to any environmental law, and (d) obtain and renew all environmental permits required
for ownership or use of the Property.
14.3 Presence of Hazardous Materials. Developer shall not, and shall not permit anyone else
to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property,
or transport or permit the transportation of Hazardous Materials to or from the Property except
for de minimis quantities used at the Property in compliance with all applicable environmental
laws and required in connection with the routine operation and maintenance of the Property.
14.4 Notice of Environmental Matters. Developer shall immediately advise City in writing
of any of the following: (a) any pending or threatened environmental claim against Developer or
the Property, (b) any condition or occurrence that (i) results in noncompliance with any
applicable environmental law, (ii) could reasonably be anticipated to cause the Property to be
subject to any restrictions on the ownership, occupancy, use or transferability of the Property
under any environmental Law, or (iii) could reasonably be anticipated to form the basis of an
environmental claim against the Property or Developer.
14.5 Environmental Indemnification by the Developer. Developer agrees to defend,
indemnify and hold harmless the City and its respective officers, directors, employees and agents
(collectively the "Indemnitees ") 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 Indemnitees directly or indirectly based on, or
arising or resulting from the actual or alleged presence of Hazardous Materials on the Property.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the HOME Loan Promissory 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 and administrative general partners 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 HOME Deed of Trust as a
valid subordinate deed of trust to the Senior Deed(s) 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 Project or Property and
involving an amount in excess of $5,000; and any litigation or claim that might
subject Developer or any general partner to liability in excess of $5,000, whether
covered by insurance or not;
(b) any dispute between Developer and a Governmental Authority relating to the
Property/Project, the adverse determination of which might materially affect the
Property/Project;
(c) any change in Developer's principal place of business;
(d) any aspect of the hmprovements 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 and/or the
Project.
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
HOME 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 HOME Deed of Trust or otherwise to carry out the
purposes of the Loan Documents and the transactions contemplated thereunder.
15.5 Annual Financial Statements. Developer shall deliver to City, within one hundred fifty
(150) days after the end of each Calendar Year, (a) a certified public accountant reviewed
balance sheet for ,Developer as of the end of such Calendar Year and a certified public
accountant reviewed statement of profit and loss for Developer and for Developer's operations in
connection with the Property/Project for such Calendar Year, together with all supporting
schedules, (b) a certificate of such certified public accountant that such documents were
reviewed by such certified public accountant in accordance with generally accepted accounting
principles and otherwise comply with generally accepted accounting principles review
requirements, and (c) a certificate of Developer's chief financial officer that such documents: (i)
were prepared in accordance with generally accepted accounting principles applied on a
consistent basis or in accordance with such other principles or methods as are reasonably
acceptable to City, (ii) fairly represent Developer's financial condition, (iii) show all material
liabilities, direct and contingent, and, (iv) fairly represent the results of Developer's operations.
Developer shall also provide the City with any other annual audit reports issued by other
monitoring agencies. Developer shall include in said reports, a document in the "Form of
Residual Receipts Report" attached hereto as Exhibit G and incorporated herein.
15.6 Audits and Access to Records. Developer agrees that City, the U.S. Department of
Housing and Urban Development, the Comptroller General of the United States or any of their
authorized representatives shall have the right of access, upon reasonable notice, to any books,
documents, papers, or other records of Developer which are pertinent to this Agreement in order
to make audits, examinations, abstracts, excerpts or transcripts. Developer will maintain all
books and records pertaining to this Agreement for a period of not less than five (5) years after
all matters pertaining to this Agreement (i.e., audit, disputes or litigation) are resolved in
accordance with applicable federal or state laws, regulations or policies, and when a period of
affordability or recapture applies to Developer's activities, for a period of not less than five (5)
years after the affordability or recapture period ends.
15.7 Termite Inspection Report. Developer shall deliver a termite report pertaining to the
Property to the City every fifth (5") year beginning January 2020.
16. OTHER COVENANTS
While any obligation of Developer under the HOME Promissory Note or 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 Property. Unless and until Developer has received a Certificate of
Completion for the construction from City, Developer shall not sell, lease, sublease or otherwise
transfer all or any part of the Property or any interest therein without the prior written consent of
the Executive Director, which consent may be withheld in the Executive Director's reasonable
discretion. In connection with the foregoing consent requirements, Developer acknowledges that
City relied upon Developer's particular expertise in entering into this Agreement and continues to
rely on such expertise to ensure the satisfactory completion of the Construction.
Notwithstanding anything to the contrary contained herein, a "transfer" shall not include
(i) a transfer of a General Partner's interest in Developer when made in connection with the
exercise by the Developer's limited partner (the "Limited Partner") of "its rights upon a default
by a General Partner under the Developer's Partnership Agreement (the "Partnership
Agreement") or upon a General Partner's withdrawal in violation of the Partnership Agreement,
so long as the removal and substitution of the defaulting General Partner is made within thirty
(30) days of such default or, if such removal and substitution cannot reasonably be completed
within thirty (30) days, so long as the Limited Partner commences to take action to remove and
substitute the General Partner with a reasonable period and thereafter diligently proceeds to
complete such substitution; (ii) any transfer of the Property to the Managing General Partner
pursuant to the right of first refusal or to the General Partners pursuant to the purchase option, as
provided for in the Partnership Agreement; (iii) Any Transfer of the Limited Partner's under and
in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of
an interest in a limited partner of Developer.
17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of Developer, or at
its own election, the City of Santa Ana shall issue a Certificate of Completion. Such Certificate
of Completion shall be, and shall so state, conclusive determination of satisfactory completion of
the Construction.
If City declines to furnish a Certificate of Completion after written request from
Developer, the 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, 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
estimated fair value of the uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of the
Loan Documents or any obligation of Developer to any other party whatsoever, including any
holder of a mortgage or deed of trust. A Certificate of Completion is not "notice of completion"
referred to in Section 3093 of the California Civil Code.
18. INDEMNIFICATION
18.1 Nonliability of City. Developer acknowledges and agrees that:
(a) The relationship between Developer and the City is and shall remain
solely that of Developer and lender, City neither undertakes nor assumes any responsibility to
review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter
in connection with the construction, including matters relating to: (i) the performance of the
construction work, (ii) architects, contractors, subcontractors and materialmen, or the
workmanship of or materials used by any of them, or (iii) the progress of the construction; and
Developer shall rely entirely on its own judgment with respect to such matters and acknowledges
that any review, inspection, supervision, approval or information supplied to Developer by City
in connection with such matters is solely for the protection of City and that neither Developer nor
any third party is entitled to rely on it;
(b) Notwithstanding any other provision of any Loan Document: (i) the City
is not a partner, joint venture, alter -ego, manager, controlling person or other business associate
or participant of any kind of Developer and City does not intend to ever assume any such status;
(ii) City's activities in connection with the Loan shall not be "outside the scope of the activities
of a lender of money" within the meaning of California Civil Code Section 3434, as modified or
recodified from time to time, and City does not intend to ever assume any responsibility to any
person for the quality or safety of the Property; and (iii) City shall not be deemed responsible for
or a participant in any acts, omissions or decisions of Developer;
(c) City shall not be directly or indirectly liable or responsible for any loss or
injury of any kind to any person or property resulting from any construction on, or occupancy or
use of, the Property, whether arising from: (i) any defect in any building, grading, landscaping or
other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer's
agents, employees, independent contractors, licensees or invitees; or (iii) any accident on the
Property or any fire or other casualty or hazard thereon; and
(d) By accepting or approving anything required to be performed or given
to City under the Loan Documents, including any certificate, financial statement, survey,
appraisal or insurance policy, City shall not be deemed to have warranted or represented the
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 Indemnitv. Developer shall defend (by counsel satisfactory to City), indemnify
and save and hold harmless the Indemnitees from and against all claims, damages, demands,
actions, losses, liabilities, costs and expenses (including, without limitation, attorneys' fees and
court costs) arising from or relating to (i) this Agreement; (ii) the making of the Loan(s); (iii) a
claim, demand or cause of action that any person has or asserts against Developer; (iv) any act or
omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or
other person with respect to the Property; or (vi) the ownership, occupancy or use of the
Property. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City
with respect to the consequences of any act of gross negligence or willful misconduct of City.
Developer's obligations under this Section shall survive the cancellation of the HOME
Promissory Note, release and reconveyance of the HOME Deed of Trust, issuance of the
Certificate of Completion, and tern7ination of this Agreement.
18.2.1.1 Notwithstanding the foregoing, neither Developer, nor any of its
partners, shall be personally liable for any indemnification obligation
hereunder which would result as the repayment of principal and/or interest
under the Loan.
18.3 Reimbursement of City. ;Developer shall reimburse City immediately upon
written demand for all costs reasonably incurred by City (including the reasonable fees and
expenses of attorneys, accountants, appraisers and other consultants, whether the same are
independent contractors or employees of City) in connection with the enforcement of the Loan
Documents and all related matters including all claims, demands, causes of action, liabilities,
losses, commissions and other costs against which City is indemnified under the Loan
Documents. Such reimbursement obligations shall bear interest from the date occurring twenty
(20) days after City gives written demand to Developer and shall be secured by the HOME
Deed(s) of Trust. Such reimbursement obligations shall survive the cancellation of the Loan
Promissory Note, release and reconveyance of the HOME Deed of Trust, issuance of a
Certificate of Completion, and termination of this Agreement.
19. INSURANCE, CASUALTY AND CONDEMNATION
19.1 Policies Required. While any obligation of Developer under the Loan Documents
remains outstanding, Developer shall maintain at Developer's sole expense, with insurers either
(i) admitted in California or (ii) are not admitted to California but have an A.M. Best Rating of
"A" or above and reasonably approved by the City, the following policies of insurance in form
and substance reasonably satisfactory to the City Attorney:
(a) worker's compensation insurance and any other insurance required by law in
connection with the construction;
(b) prior to commencement until following completion of the construction, fire and
hazard "all risk" insurance covering 100% of the replacement cost of the
Improvements in the event of fire, lightning, windstorm, vandalism, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the
area where the Property is located; which said insurance shall expressly include
damage or loss by flood or storm;
(c) upon commencement of the construction and at all times prior to completion of
the construction, builder's risk/all risk insurance covering 100% of the
replacement cost of all Improvements (including offsite materials) during the
course of construction in the event of fire, lightning, windstorm, vandalism,
earthquake, malicious mischief and all other risks normally covered by all risk
coverage policies in the area where the Property is located; which said insurance
shall expressly include damage or loss by flood or storm;
(d) 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 reasonable 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" (Form 438BFU) in form mid substance
satisfactory to City, showing the City as encumbrance. The City shall be named as additional
insured(s) in the policies required under subparagraphs (d) and (e). Certificates of insurance for
the above policies (and/or original policies, if required by City) shall be delivered within ten (10)
days after demand therefore, and prior to start of any construction work. All policies insuring
against damage to the Improvements shall contain an agreed value clause sufficient to eliminate
any risk of co-insurance. No less than thirty (30) days prior to the expiration of each policy,
Developer shall deliver to City evidence of renewal or replacement of such policy reasonably
satisfactory to City Attorney.
19.2 City Attorney Mal Modify. The City Attorney may modify the type and amounts of
insurance required pursuant to this Section. Notwithstanding the foregoing, so long as the
Property complies with the Senior Lender's insurance requirements, the City Attorney will not
require additional insurance coverage unless (i) such additional insurance is required by
applicable law or (ii) if not required by additional law, such additional insurance shall only be
required if it is readily available on commercially reasonable terms and the cost thereof can be
borne by the Borrower from available Borrower revenues without causing the Borrower to
default under the Senior Loan or the Partnership Agreement.
19.3 Claims and Proceedings. Developer shall give City immediate notice of
any material casualty to any portion of the Property/Project, whether or not covered by
insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or
other taking for public or quasi -public use of any portion of the Property (collectively,
"Condemnation"), and shall provide City with copies of all documents which pertain to any such
casualty or Condemnation. Subject to the rights of any Senior Lender, 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 of Senior Lender, if any, or if there is
not a Senior Lender, the City, which approval shall not be unreasonably withheld or delayed.
19.4 Delivery of Proceeds to City. In the event that, notwithstanding the "lender's
loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance
policy described herein are paid to Developer, Developer shall, subject to any superior rights of
the Senior Lender, deliver such proceeds to the City immediately upon receipt.
19.5 Application of Casualty Insurance Proceeds. Any proceeds collected (the "Proceeds")
under any casualty insurance policy described in this Agreement shall be disbursed to Developer
as provided in the Senior Loan Documents, provided if there is no Senior Loan then as provided
below, but only upon fulfillment of each of the following conditions (the "Restoration
Conditions") within ninety (90) days (unless extended by mutual agreement of Developer and
City) following the occurrence of the damage for which the Proceeds are collected:
(a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds
(together with amounts deposited by Developer pursuant to subparagraph (b)) will
be adequate to repair the Improvements and to restore the fair market value of the
Property, within a time period reasonably determined by City, to at least the value
it had immediately prior to sustaining the damage. Such demonstration shall
include delivery to City of (i) plans and specifications reasonably satisfactory to
City, and (ii) a construction contract in form and content, and with a contractor,
reasonably satisfactory to City.
(b) To the extent that the Proceeds are insufficient to accomplish the restoration
required above, Developer shall deliver to City funds (the "Shortfall Funds") in
the amount of such shortfall, which funds shall be assigned to City as security for
Developer's obligation hereunder and held and disbursed in the same manner as
the Proceeds.
(c) Developer shall execute such documents as City requires to evidence and secure
Developer's obligation to use all amounts disbursed for the diligent restoration of
the Property.
(d) No Event of Default shall remain uncured.
19.6 Method of Disbursement and Undisbursed Funds. Any Proceeds and Shortfall
Funds to be disbursed to Developer shall be held by City and disbursed in accordance with the
then customary disbursement procedures and related provisions of the Senior Loan, or the City,
as applicable. 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 Senior Lender if
any or by City against any obligations to Senior Lender or City, as applicable, 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 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.
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 actual or threatened condemnation or other proceeding.
19.9.1 Notwithstanding the foregoing, as long as the value of City's liens are not
impaired, any condemnation proceeds may be used by the Borrower for repair and/or restoration
of the project.
19.9 Waiver of Subrogation. Developer hereby waives all rights to recover against the City
(or any officer, employee, agent or representative of City) for any loss incurred by Developer
from any cause insured against or required by any Loan Document, to be insured against;
provided, however, that this waiver of subrogation shall not be effective with respect to any
insurance policy if the coverage thereunder would be materially reduced or impaired as a result.
Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of
subrogation.
20. DEFAULTS AND REMEDIES
20.1 Events of Default. The occurrence of any of the following, whatever the reason
therefore, shall constitute an Event of Default by Developer:
(a) Developer fails to make any payment of principal or interest under the HOME
Loan Note(s) when due, and such failure is not cured within fifteen (15) Business
Days after Developer's receipt of written notice that such payment was not
received when due;
(b) Developer fails to perform any other obligation for the payment of money under
any Loan Document, and such failure is not cured within fifteen (15) Business
Days after Developer's receipt of written notice that such obligation was not
performed when due;
(c) Developer fails to perform any obligation (other than the obligations described in
subparagraphs (a) and (b) above) under any Loan Document, and such failure is
not cured within thirty (30) days after Developer's receipt of written notice that
such obligation was not performed; provided that, if cure cannot reasonably be
effected within such thirty (30) day period, such failure shall not be an Event of
Default so long as Developer (in any event, within ten (10) days after receipt of
such notice) commences to cure, and thereafter diligently (in any event within
ninety (90) days after receipt of such notice) prosecutes such cure to completion;
(d) Any representation or warranty in any ,Loan Document proves to have been
incorrect in any material respect when made;
(e) The Property is materially damaged or destroyed by fire or other casualty unless
Developer fulfills the Restoration Conditions set forth in the insurance provisions
of this Agreement within ninety (90) days (unless extended pursuant to Section
19.5) and thereafter diligently restores the Property in accordance with this
Agreement;
(f) Work on the construction ceases for thirty (30) consecutive days for any reason
(other than governmental orders, decrees or regulations, acts of God or any other
deity, strikes or other causes beyond Developer's reasonable control), provided
that the same do not, in the aggregate and in the City's reasonable judgment,
threaten to delay the completion of the construction beyond the required
completion date set forth in this Agreement and the Schedule of Performance;
(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, Construction or similar
proceeding relating to it or any part of its property; or any similar proceeding is
instituted without the consent of Developer and continues undismissed or
unstayed for ninety (90) days; or any judgment, writ, warrant of 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 revoked 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) an Event of Default occurs under the
Senior Loan Documents and the Senior Lender declares that a default has
occurred.
In addition, if an Event of Default occurs hereunder, prior to taking any remedy
under this Agreement or any other document evidencing or securing the Loan,
City shall first give notice of the occurrence of such Event of Default to the
Limited Partner and the Limited Partner shall have not less than 30 days to cure
such Event of Default, provided if in order to cure such Event of Default the
Limited Partner gives notice to the City that Limited Partner must remove and
replace the general partner or general partners of Developer, Limited Partner shall
have until 30 days following the effective date of such removal and replacement
to cure such Event of Default.
20.2 Remedies Upon Default. Upon the occurrence of any Event of Default, City may, at its
option and in its absolute discretion, do any or all of the following:
(a) By written notice to Developer, declare the principal of all amounts owing under
the Loan Documents, together with all accrued interest and other amounts owing
in connection therewith, to be immediately due and payable, regardless of any
other specified due date; provided that any Event of Default described in Section
20.1 (e) shall automatically, without notice or other action on City's part, cause all
such amounts to be immediately due and payable;
(b) In its own right or by a court-appointed receiver, take possession of the
Property/Project, enter into contracts for and otherwise proceed with the
completion of the construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights provided by
law, including, without limitation, the right to seek specific performance and the
right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as City 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 or condition of such award.
20.3 Cumulative Remedies: No Waiver. City's rights and remedies under the Loan
Documents are cumulative and in addition to all rights and remedies provided by law. The
exercise by City of any right or remedy shall not constitute a cure or waiver of any default, nor
invalidate any notice of default or any act done pursuant to any such notice, nor prejudice the
City in the exercise of any other right or remedy. No waiver of any default shall be implied from
any omission by City to take action on account of such default if such default persists or is
repeated. No waiver of any default shall affect any default other than the default expressly
waived, and any such waiver shall be operative only for the time and to the extent stated. No
waiver of any provision of any Loan Document shall be construed as a waiver of any subsequent
breach of the same provision. City's consent to or approval of any act by Developer requiring
further consent or approval shall not be deemed to waive or render unnecessary City's consent to
or approval of any subsequent act. The City's acceptance of the late performance of any
obligation shall not constitute a waiver by City of the right to require prompt performance of all
further obligations; City's acceptance of any performance following the sending or filing of any
notice of default shall not constitute a waiver of either party's right to proceed with the exercise
of its remedies for any unfulfilled obligations; and City's acceptance of any partial performance
shall not constitute a waiver by City of any rights.
21. MISCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the existence at any
time of any obligation or liability of City to Developer, or any other claim by Developer against
City, in connection with the Loan or otherwise, Developer hereby waives any right it might
otherwise have (a) to offset any such obligation, liability or claim against Developer's obligations
under the Loan Documents, or (b) to claim that the existence of any such outstanding obligation,
liability or claim excuses the nonperformance by Developer of any of its obligations under the
Loan Documents.
21.2 Notices. All notices, demands, approvals and other communications provided for in the
Loan Documents shall be in writing and be delivered to the appropriate party by personal service
or U.S. Mail at its address as follows:
If to Developer: Santa Ana Arts Collective, L.P.
c/o Meta Housing Corporation
1640 Sepulveda Blvd, Ste. 425
Los Angeles, CA 90025
Attention: President
With a copy to: Bank of America CDC Special
Holding Company, Inc.
Community Development Banking
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Bank of America, N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
WCH Affordable XVIII, LLC
Attn: Graham Espley-Jones
151 Kalmus Drive, 05
Costa Mesa, CA 92626
Fax: (714) 597-8320
If to City: City of Santa Ana
Community Development Agency
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
Attention: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to all other parties. All
notices personally served shall be effective when actually received. All notices mailed shall be
effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing
notwithstanding, the non -receipt of any notice as the result of a change of address of which the
sending party was not notified or as the result of a refusal to accept delivery shall be deemed
receipt of such notice.
21.3 Survival of Representations and Warranties. All representations and warranties in the
Loan Documents shall survive the snaking of the Loan(s) described herein and have been or will
be relied on by City notwithstanding any investigation made by either party.
21.4 No Third Parties Benefited. This Agreement is made for the purpose of setting forth
rights and obligations of Developer and the City, and no other person shall have any rights
hereunder or by reason hereof.
21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure
to the benefit of, Developer and City and their respective successors and assigns. Other than as
expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights
or obligations under any Loan Document without the prior written consent of City, which
consent may be withheld in City's sole and absolute discretion. Any such assignment without
such consent shall, at City's option, be void.
21.6 Prior Agreements; Amendments; Consents. This Agreement (together with the other
Loan Documents) contains the entire agreement between the City and Developer with respect to
the Loan(s) and the Property, and all prior negotiations, understandings and agreements are
superseded by this Agreement and such other Loan Documents. No modification of any Loan
Document (including waivers of rights and conditions) shall be effective unless in writing and
signed by the party against whom enforcement of such modification is sought, and then only in
the specific instance and for the specific purpose given.
21.7 Governing Law. All of the Loan Documents shall be governed by, and construed and
enforced in accordance with, the laws of the State of California and Federal law, whichever is
more stringent. Developer irrevocably and unconditionally submits to the jurisdiction of the
Superior Court of the State of California for the County of Orange or the United States District
Court of the Central ,District of California, as City may deem appropriate, in connection with any
legal action or proceeding arising out of or relating to this Agreement or the Loan Documents.
Assuming proper service of process, Developer also waives any objection regarding personal or
in rem jurisdiction or venue.
21.8 Severability of Provisions. No provision of any Loan Document that is held to be
unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of
the Loan Documents are hereby declared to be severable.
21.9 Headings. Article and section headings are included in the Loan Documents for
convenience of reference only and shall not be used in construing the Loan Documents.
21.10 Conflicts. In the event of any conflict between the provisions of this Agreement and
those of any other Loan Document, this Agreement, unless otherwise expressly provided, shall
prevail; provided however that, with respect to any matter addressed in both such documents, the
fact that one document provides for greater, lesser or different rights or obligations than the other
shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be
simultaneously enforced or performed.
21.11 Time of the Essence. Time is of the essence under this Agreement and in the performance
of every term, covenant, and obligation contained herein.
21.12 Conflict of Interest. No member, official or employee of the City shall have any direct
or indirect interest in this Agreement, nor participate in any decision relating to the Agreement
which is prohibited by law.
21.13 Warranty Against Payment of Consideration. Developer warrants that it has not paid
or given, and will not pay or give, any third person any money or other consideration for
obtaining this Agreement.
21.14 Nonliability of City Officials and Employees. No member, official or employee of
City shall be personally liable to Developer, or any successor in interest, in the event of any
default or breach by City or for any amount which may become due to Developer or successor,
or on any obligation under the tem-is of this Agreement.
21.15 Plans and Data. Should Developer not proceed with the work and construction of the
Property, and upon termination of this Agreement for any reason, Developer shall deliver to City
any and all plans and data concerning the Property/Project, and City or any person or entity
designated by City shall have the right to use such plans and data without compensation to _
Developer. Such right of City shall be subject to any right of the preparer of the plans to their
use.
21.16 Authority to Enter Agreement. Each undersigned represents and warrants that its
signature hereinbelow has the power, authority and right to bind their respective parties to each of
the terms of this Agreement, and shall indemnify the City fully, including reasonable costs and
attorney's fees, for any injuries or damages to City in the event that such authority or power is not,
in fact, held by the signatory or is withdrawn.
21.17 Transfer of Developer Limited Partner's Interest. Notwithstanding anything to the
contrary in this Agreement or the Loan Documents, no consent shall be required of the City (and
it shall not be deemed a default or an Event of Default under any of the Loan Documents), in
connection with the transfer and/or the assignment by the Developer's limited partner.
21.18 Removal of Developer's General Partner. Notwithstanding anything to the contrary in
this Agreement or the Loan Documents, the removal and/or replacement of a General Partner for
cause in accordance with the Partnership Agreement shall not require the consent of the City and
shall not constitute a default or an Event of Default under this Agreement or the Loan Documents
or accelerate the maturity of the HOME Loan. If the Developer's limited partner exercises its right
to remove a General Partner, City will not unreasonably withhold its consent to the substitute
general partner; provided however, the consent of either the City shall not be required if the
substitute general partner is an affiliate of the Developer's limited partner. The substitute general
partner shall assume all of the rights and obligations of the removed general partner hereunder.
21.19 Subseuuent Approvals. Except where otherwise indicated, all subsequent approvals
identified in this Agreement, other than approvals by the City Council of the City of Santa Ana,
shall not be unreasonably withheld, delayed or conditioned.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed
on the date set forth at the beginning of this Agreement.
ATTEST:
A�
Maria D. Huizar
Clerk of the Council
APPROVED AS TO FORM
Sonia R. Carvalho
RECOMMENDED FOR APPROVAL:
<r
Robert C. Cortez
Acting Executive Director
Community Development Agency
{Signatures continue on following page)
CITY OF SANTA ANA
C nthia J. Ku
nterim City Manager
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document, to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of Orange )
On July 24, 2017 before me, Rosa A. Flores, Notary Public
(insert name and title of the officer)
personally appeared Cynthia J. Kurtz who proved to me on the basis of satisfactory evidence to
be the personfsj whose names) is-/atesubscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies), and that by hlslher/their
signature,(sf on the instrument the personK,, or the entity upon behalf of which the person(s")'acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
ROSA A.FLORES
Commission M 2057129
°--: Notary Public • California a
Orange County
C� M Comm. Ex fires Feb 7, 2018 r
Signaturey' 1���--' � � �''� (Seal)
DEVELOPER:
Santa Ana Arts Collective, L.P., a California limited partnership
By: Santa Ana Arts Collective, LLC,
a California limited liability company,
its general partner
A.
B.
C.
D.
E.
F.
G.
By:
Kasey Burke, Vice t si ent
WCH AffoN
a California 1
its managing
XVIII, LLC,
:d liability company,
XI partner
SIGNED IN COUNTERPART
Graham P. Espy -Jones, President
EXHIBITS
Legal Description
Affordability Restrictions on Transfer of Property
HOME Deed of Trust
HOME Promissory Note
Project Budget
Scope of Work / Schedule of Performance
Fonn of Residual Receipts Report
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of Los Angeles
On
July 13, 2017
before me, Rutzel M. Castillo, Notary Public
(insert name and title of the officer)
personally appeared Kasey Burke
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal. M. CASTILLO
commission # 2100468
a NoWy PubOc - 041"Gmla
Los Agit Cowy
Signature i� �(' ��� (Seal)
GOVERNMENT CODE 27361.7
I CERTIFY UNDER THE PENALTY OF PERJURY THAT THE NOTARY SEAL
ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED TO
READS AS FOLLOWS:
NAME OF NOTARY: RUTZEL M. CASTILLO
COMMISSION NO.: 2100469
DATE COMMISSION EXPIRES: MAY 19, 2019
MANUFACTURERNENDOR NO.: NNA1
COUNTY WHERE BOND IS FILED: LOS ANGELES, CA
PLACE OF EXECUTION: LOS ANGELES, CA
DATED: JULY 24, 2017
FIRST AMERICAN TITLE INSURANCE COMPANY
DEVELOPER:
Santa Ana Arts Collective, L.P., a California limited partnership
By: Santa Ana Arts Collective, LLC,
a California limited liability company,
its general partner
R
SIGNED IN COUNTERPART
Kasey Burke, Vice President
By: WCH Affordable XVIII, LLC,
a California limited liability company,
its managing general partner
By:� L/ )
Sandra Gibbons, E ecutive Vice President / CFO
EXHIBITS
A. Legal Description
B. Affordability Restrictions on Transfer of Property
C. HOME Deed of Trust
D. HOME Promissory Note
E. Project Budget
F. Scope of Work / Schedule of Performance
G. Foran of Residual Receipts Report
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document
to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California 1
County of Orange J}
On July 13, 2017 before me, Leanne Truofreh, Notary Public
Date Here Insert Name and Title of the Officer
personally appeared Sandra Gibbons
Name(s) of Signer(s)
who proved to me on the basis of satisfactory evidence to be the person whose name((} Is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in hWher/t4efr
authorized capacity('res), and that by his/her/their signatureA on the instrument the personA, or the entity
upon behalf of which the person() acted, executed the instrument.
• ,.;�s;,,,,�,, LEANNE TRUOFREH
•� � �,; Commission # 2064657
Notary Public -California n
Orange County
My Comm. Expires N1ay 12, 2018
Place Notary Seal and/or Stamp Above
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
OPTIONAL
Signature bf Notary
Completing this information can deter alteration of the document or
fraudulent reattachment of this form to an unintended document.
Description of Attached Document
Title or Type of Document: HOME Loan
Document Date: July 5, 2017
Signer(s) Other Than Named Above:
Capacity(les) Claimed by Signer(s)
Signer's Name:
❑ Corporate Officer — Title(s):
❑ Partner— ❑ Limited ❑ General
❑ Individual ❑ Attorney in Fact
❑ Trustee ❑ Guardian of Conservator
❑ Other:
Signer is Representing:
02017 National Notary Association
NumberofPages:
Signer's Name:
❑ Corporate Officer — Title(s):
❑ Partner— ❑ Limited ❑ General
❑ Individual
❑ Trustee
❑ Other:
Signer is Representing:
❑ Attorney in Fact
❑ Guardian of Conservator
Description
EXHIBIT A
PARCEL A
THAT PORTION OF SECTION 12, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE CITY OF
SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING A PORTION OF THE LAND
ALLOCATED TO JACOB ROSS IN DECREE OF PARTITION OF THAT RANCHO SANTIAGO DE
SANTA ANA, RECORDED IN BOOK "B" OF JUDGEMENTS OF 17TH JUDICIAL DISTRICT COURT OF
CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID SECTION 12, BEING ALSO THE
INTERSECTION OF THE CENTER LINES OF SEVENTEENTH STREET AND MAIN STREET AS SAID
INTERSECTION IS SHOWN ON A MAP FILED IN BOOK 11 PAGE 18 OF RECORD OF SURVEYS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, CALIFORNIA;
THENCE ALONG THE NORTHERLY LINE OF SAID NORTHEAST QUARTER, NORTH 89° 5640"
WEST 289.89 FEET;
THENCE SOUTH 00 16'25" WEST 230.00 FEET;
THENCE PARALLEL WITH THE NORTHERLY LINE OF SAID NORTHEAST QUARTER, SOUTH 890
56'40" EAST 289.78 FEET TO THE EASTERLY LINE OF SAID NORTHEAST QUARTER;
THENCE ALONG SAID EASTERLY LINE NORTH 00 16' 40" EAST 230.00 FEET TO THE POINT OF
BEGINNING.
EXCEPT THE NORTHERLY 40.00 FEET THEREOF.
ALSO EXCEPT THE EASTERLY 35.00 FEET THEREOF.
PARCEL B:
NON-EXCLUSIVE EASEMENTS FOR VEHICLE INGRESS, EGRESS, PARKING AND INCIDENTAL
PURPOSES, AS MORE PARTICULARLY SET FORTH IN THAT CERTAIN "DECLARATION OF
EASEMENT FOR VEHICLE INGRESS, EGRESS AND PARKING" RECORDED OCTOBER 04, 2005 AS
INSTRUMENT NO. 2005000786645 OF OFFICIAL RECORDS.
APN:
005-153-19 (Affects a portion of said land)
005-153-20 (Affects a portion of said land)
Exhibit B:
Affordability
Restrictions on
Transfer of Property
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 27383
When Recorded Mail to:
City of Santa Ana
Cleric of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, CA 92702-1988
Attention: Clerk of the Council
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
{Address: 1666 N. Main Street, Santa Ana, CA}
THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the
"Restrictions") are entered into by and between Santa Ana Arts Collective, LP, a California
limited partnership ("Owner") and the City of Santa Ana, a charter city and municipal
corporation (the "City").
RECITALS:
A. The City has received an allocation of funds from the United States Department
of Housing and Urban Development ("HUD") under the HOME Investment Partnerships
Program ("HOME Program") (42 U.S.C. § 12701, et seq.) to be used in accordance with
applicable statutory requirements and regulations ("HOME Regulations")(24 CFR 92);
B. Among the purposes of the HOME Program are (1) to expand the supply of
decent, safe, sanitary, and affordable housing, with primary attention to rental housing, for very
low-income and low-income Americans; and (2) to provide participating jurisdictions, on a
coordinated basis, with the various forms of federal housing assistance, including capital
investment, mortgage insurance, rental assistance, and other federal assistance, needed (a) to
promote the development of partnerships among the federal government, states and units of
general local government, private industry, and nonprofit organizations able to utilize all
available resources to provide more of such housing, and (b) to expand the capacity of nonprofit
community housing development organizations to develop and manage decent, safe, sanitary and
affordable housing;
C. The City is authorized by the HOME Regulations to expend funds to increase the
supply of very low and low-income housing available at affordable housing costs.
D. The City issued a Request for Proposals on June 1, 2015, seeking affordable
housing projects. After reviewing all applications, the Owner's project was selected and
approved for funding by the Santa Ana City Council on November 3, 2015.
E. Owner is entering into this Agreement to acquire and, subject to entitlement
approvals, develop an adaptive reuse project consisting of a fifty-eight (5 8) unit multi -family
residential housing development, with live/work units and a possible commercial art studio, as
well as a community room (the "Project") located at 1666 N. Main Street, within the City of
Santa Ana, California, and legally described in Exhibit A attached hereto (the "Property"). The
HOME funds referenced herein shall assist in the acquisition, rehabilitation, construction, and
soft costs of said Project.
F. In furtherance of the HOME Program, Owner has applied to the City for a loan
with which to:
provide deeper affordability and construct the improvements to the
Property; and,
2. thereafter to maintain, operate and professionally manage the Project as
decent, safe, sanitary and affordable rental housing.
G. The City, on certain terms and conditions, desires to make such loan ("HOME
Loan") to Owner in order to make possible the rehabilitation and construction of the Project,
thereby expanding the supply of decent, safe, sanitary and affordable housing.
H. If there is any inconsistency between Federal, State, and local guidelines with regard
to any of the terms and conditions contained herein, the more stringent shall apply.
I. Owner and the City are concurrently entering into that certain HOME Loan
Agreement. The Loan Agreement, HOME Deed of Trust, and HOME Promissory Note, dated
concurrently herewith (collectively the "Loan Agreements") are entered into for the purpose of
providing for affordable extremely low and very low income residential rental units in the City
of Santa Ana pursuant to the HOME Program regulations and guidance.
NOW, THEREFORE, CITY AND OWNER COVENANT AND AGREE AS FOLLOWS:
Definitions
"AHSC Loan" means a permanent loan of Affordable Housing and Sustainable
Communities program funds from HCD administered by the California Strategic Growth
Council in the amount of $4,944,130
"AHSC Deed of Trust" means the any deed(s) of trust securing the AHSC Loan
encumbering the Property.
"AHSC Loan Documents" means, collectively, the loan agreement governing the
AHSC, the AHSC Note, the AHSC Deed of Trust, and any other agreement, document or
instrument that the Senior Lender requires in connection with the AHSC Loan.
"Affordable Housing" means housing operated in accordance with the requirements of
24 CFR 92.252 and the rents governed by California Health and Safety Code Section 50052.5.
"Affordable stent" means the monthly rents which do not exceed the maximum amount
applicable to Extremely Low, Very Low and Low Income households, as promulgated by the
U.S. Department of Housing and Urban Development (HUD), or by the California Tax Credit
Allocation Committee, as applicable.
"Building Permit" means the building permit(s) issued by City and required for the
Construction, if any.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on
which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 30.
"Certificate of Completion" has the meaning set forth in Article 17.
"City" means the City of Santa Ana, California, a charter city and municipal corporation.
"Close of Escrow" shall mean the date upon which the HOME Loan Deed of Trust is
recorded in the Official Records of the County.
"Closing Statement" means the final statement of Owner's Escrow account for the
purchase and sale of the Property pursuant to the Purchase Contract.
"Construction" means the demolition and construction activities required to construct,
until Certificate of Completion, the Project.
"County" means the County of Orange, California.
"Event of Default" has the meaning set forth in Section 20.1.
"Extremely Low Income" means an adjusted income which does not exceed thirty
percent (30%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HUD.
"General Partner(s)" means the Santa Ana Arts Collective, LLC, a California limited
liability company and WCH Affordable XVIII, LLC, a California limited liability company.
"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 seq., and the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. §§ 9601, et seq., as amended.
"HOME Compliance Period" means twenty (20) years from the issuance of the
Certificate of Completion or until payment of principal and all accrued interest on the HOME
Loan, whichever comes last.
"HOME Loan" means the loan with principal amount of TWO MILLION, TWO
HUNDRED AND NINETEEN THOUSAND, SEVEN HUNDRED AND SIXTY DOLLARS
($2,219,760.00) to be made to Owner by City from HOME funds pursuant to Article 5 of this
Agreement.
"HOME Loan Deed of Trust" means the deed of trust encumbering the Property, in the
form attached as Exhibit C to the Loan Agreement, to be executed by Owner pursuant to Section
5.13.2 in order to secure the HOME Loan Promissory Note.
"HOME Loan Promissory Note" means that certain promissory note in the original
principal amount of TWO MILLION, TWO HUNDRED AND NINETEEN THOUSAND,
SEVEN HUNDRED AND SIXTY DOLLARS ($2,219,760.00) in the form attached hereto as
Exhibit D, and to be executed by Owner in favor of City to evidence the obligation of Owner to
repay the HOME Loan.
"HOME Program" has the meaning set forth in Recital "A" above
"HOME Regulations" has the meaning set forth in Recital "A" above.
"HOME Units" means the eleven (11) affordable units assisted with HOME funds.
"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, as required through the City of Santa Ana Planning and Building
Agency entitlement process.
"Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes
payable and drafts accepted representing extensions of credit, whether or not representing
obligations for borrowed money, (c) any obligation for the purchase of property or services in
excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii)
evidenced by a note or similar instrument, and ( d) all recourse and all non-recourse indebtedness
secured by any Lien on any property or asset of such person (whether or not assumed by such
person).
"Indemnitees" has the meaning set forth in Section 14.5.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments,
injunctions, decrees or awards of the United States or any state, county, municipality or other
Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of
any kind (including any conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any lien or security interest).
"Limited Partner" means the Limited Partners of Owner, and their successors and
assigns.
"Loan Documents" means, collectively, this Agreement, the HOME Loan Note, the
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 "AMP'.
"Owner" means Santa Ana Arts Collective, L.P., a California limited partnership.
"Owner's Representative" shall mean an officer of the General Partner of Owner or
his/her designee.
"Partnership Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of Santa Ana Arts Collective, L.P., dated in July 2017.
"Permitted Encumbrances for the Affordable Housing Restrictions" means,
collectively, the Senior Loan Deed of Trust and AHSC Loan Documents and all other title
exceptions and limitations with respect to the Property hereafter approved by the Executive
Director in writing.
"Permitted Encumbrances for the HOME Loan Deed of Trust" means, collectively,
the Senior Loan Deed of Trust and AHSC Loan Documents and all other title exceptions and
limitations with respect to the Property hereafter approved by the Executive Director in writing.
"Project" means the construction of the Improvements upon the Property by Owner
pursuant to this Agreement.
"Project Budget" means the line -item budget for the Project attached as Exhibit E to the
Loan Agreement, as modified from time to time in accordance with 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 1666 N. Main Street in the City of Santa
Ana, and is more fully described in the "Legal Description" of the Property attached hereto as
Exhibit A and incorporated herein by reference.
"Scope of Work/Schedule of Performance" means the detailed statement of the work
to be performed by Owner on and to the Property pursuant to this Agreement, along with the
Schedule of Performance setting forth timeframes for certain tasks, which document is attached
as Exhibit F to the Loan Agreement.
"Section 504" means section 504 of the federal Rehabilitation Act of 1973, codified at 29
U.S.C. § 701 et seq., and its implementing regulations located at 24 CFR 8.
"Senior Lender" means a commercial financial institution providing the Senior Loan or
any other holder of the Senior Loan Note.
"Senior Loan" means a loan from any Senior Lender(s) in a position superior to the
HOME Loan.
"Senior Loan Deed of Trust" means any deed(s) of trust securing any Senior Loan by
encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement governing the Senior
Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document
or instrument that the Senior Lender requires in connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior Loan from the
Senior Lender.
"Term of Affordability" the terms and conditions contained herein shall remain in effect
for fifty-five (55) years from the date of issuance of the Certificate of Completion.
"Very Low Income" means an adjusted income which does not exceed fifty percent
(50%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HUD.
2. Use of the Property. Owner covenants and agrees (for itself, its successors, its
assigns, and every successor in interest to the Property of any part thereof) that Owner, such
successors, and assigns shall use the Property to provide affordable rental housing, for Extremely
Low and Very Low Income households, as provided in the Loan Agreement and these
Restrictions
AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
3.1 Use Covenants and Restrictions.
a. Owner agrees and covenants, which covenants shall run with the land and bind
Owner, its successors, its assign and every successor in interest to the Property that Owner will make
all rental units on the Property available to extremely -low, very low and low income households at
rents affordable to such households for fifty- five (55) years from the effective date of the issuance of
the Certificate of Completion.
b. The eleven (11) HOME assisted units shall be enforced until the date that is
twenty (20) years after the date on which the City reports the Project as complete to HUD. Upon
expiration of the twenty (20) year HOME compliance period, the City will enforce affordability of the
eleven (11) units with the same income and rent restrictions as the other forty-six (46) units operated
on the Property, pursuant to the California Health and Safety Code.
C. The Project shall consist of approximately fifty-eight (58) units of which
there will be twenty-six (26) one -bedroom units, fifteen (15) two-bedroom units and seventeen
(17) three-bedroom units. There will be twenty (20) units for households with incomes at or
below 30% AMI, six (6) units for households with incomes at or below 35% AMI, six (6) units
for households with incomes at or below 40% AMI, twenty-five (25) units for households with
incomes at or below 60% AMI; and the remaining unit will be reserved for the on-site manager.
d. The proposed unit mix, initial rents, and levels of affordability are as
follows:
The remaining unit will be a 2 -bedroom unit reserved for the onsite manager.
HOME Assisted Units
30% AMI
35% AMI
40% AMI
60% AMI
Unit Size
No.
Units
Rent
No. Rent
Units
No. Rent
Units
No. Rent Total
Units
1 Bedroom
14
$587
6 $685
6 $783
26
2 Bedroom
2
$704
--- ---
--- ---
12 $1,408 14
3 Bedroom
4
$813
--- ---
--- ---
13 $1,627 17
Total
20
2 Bed
6
6
25 57
The remaining unit will be a 2 -bedroom unit reserved for the onsite manager.
HOME Assisted Units
Unit Type
Level of
# of HOME
HOME Share of
Total # of Units
Description/No
No. of BRs
Affordability
Assisted Units
Unit Type
tes
26
1 Bed
1
30% AMI
5
19.23%
14
2 Bed
2
2
14.29%
17
3 Bed
3
4
23.53%
(1) In no event shall the rent charged to the HOME assisted units be more than that amount of
the low HOME rent as published by HUD, as amended from time to time.
(2) At the time of project completion, the Developer shall provide to the City the address and/or
unit number of each of the HOME floating units.
(3) Annually with the financial statements, the Developer shall provide an annual report of rents
and occupancy of all assisted units, including the HOME -assisted units, to verify
compliance with affordability requirements. For the HOME assisted -units, information on
unit substitution and filling vacancies shall be provided to ensure that the project maintains
the required unit mix.
The affordable rents charged at the Project must comply with the standards set forth by California
Tax Credit Allocation Committee (TCAC). Notwithstanding anything to the contrary contained in
this Agreement, the Affordability Restrictions on Transfer of Property, and other than HOME
assisted units, restricted (as to both income and rent levels) at 30% of AMI, in the event of a
foreclosure, or delivery of deed in lieu of foreclosure, of any Senior Loan, then the (1) the
maximum qualifying tenant household income shall be increased to 60% of Area Median Income
adjusted for family size appropriate to the unit, and (2) the maximum annual affordable rent shall be
increased to 30% of 60% of Area Median Income, as adjusted for family size appropriate to the unit
* Utility allowances must be deducted from the Maximum Gross Monthly Rent. The City of Santa
Ana will provide the utility allowances based on the HUD Utility Schedule Model.
e. Initial rents may be recalculated to allowable rental amounts at the time of
initial lease -up following completion of construction in accordance with any changes in allowable
rent and income tables as published by HUD.
3.2 Rent Increases:
A. On an annual basis, the City shall provide the Owner with the maximum allowable schedule of
incomes and rents (less utility allowance appropriate for the Restricted Units) for the Property.
B. Owner, its successors and assigns shall not charge rents for the Restricted Units in excess of
the amounts set forth in the tables as adjusted from time -to -time by HUD. The Housing
Manager shall notify Owner in writing of the adjusted allowable maximum incomes and rents.
4. Miscellaneous Provisions
A. Owner shall adopt and include as part of its Management Plan (described in subsection G
below), written tenant selection policies and criteria for the Units, that meet the following
requirements:
(a) Are consistent with the purpose of providing housing for Extremely Low
and Very Low Income households;
(b) Are reasonably related to program eligibility and the applicants' ability to
perform the obligations of the lease;
(c) Give reasonable consideration to the housing needs of households that
would have a preference under 42 CFR §906.211 (Federal selection preferences for admission to
Public Housing);
(d) Provide for:
(i) The selection of tenants from a written waiting list in the
chronological order of their application, insofar as is practicable; and
(ii) The prompt written notification to any rejected applicant of the
grounds for any rejection;
(e) Provide first priority in the selection of qualified eligible tenants to
households that are referred by the City; and
(1) Carry out the Affirmative Marketing procedures of the City of Santa Ana,
which are designed to provide information and otherwise attract eligible persons from all racial,
ethnic and gender groups in the housing market area to the units. Owner, the City shall
cooperate to effectuate this provision prior to the initial renting, or upon occurrence of a vacancy,
and the re -renting of any Restricted Units (24 CFR 92.351).
B. Owner, its successors and assigns, shall not refuse to lease a unit to a holder of a rental
voucher under 24 CFR part 982 (Housing Choice Voucher Program) or to a holder of a
comparable document evidencing participation in a HOME tenant -based rental 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.
C. Any lease of any of the Units must be for not less than one year, unless by mutual agreement
between the tenant and the Owner. Should the tenant and Owner agree to a term of less than one
year, said agreement shall be expressed in some type of written form, signed by the tenant, and
maintained in the tenant's rental file held by the Owner. The lease may not contain any of the
following provisions (in which references to "Owner" shall mean the Owner, its successors or
assigns):
(a) Agreement by the tenant to be sued, to admit guilt, or to a judgment in
favor of the owner in a lawsuit brought in connection with the lease;
(b) Agreement by the tenant that the owner may take, hold, or sell personal
property of household members without notice to the tenant and a court decision on the rights of
the parties. This prohibition, however, does not apply to an agreement by the tenant concerning
disposition of personal property remaining in the housing Unit after the tenant has moved out of
the Unit. The owner may dispose of this personal property in accordance with state law;
(c) Agreement by the tenant not to hold the owner or the owner's agent legally
responsible for any action or failure to act, whether intentional or negligent;
(d) Agreement of the tenant that the owner may institute a lawsuit without
notice to the tenant;
(e) Agreement by the tenant that the owner may evict the tenant or household
members without instituting a civil court proceeding in which the tenant has the opportunity to
present a defense, or before a court decision on the rights of the parties;
(i) Agreement by the tenant to waive any right to a trial by jury;
(g) Agreement by the tenant to waive the tenant's right to appeal, or to
otherwise challenge in court, a court decision in connection with the lease; and
(h) Agreement by the tenant to pay attorney's fees or other legal costs even if
the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may
be obligated to pay costs if the tenant loses.
D. Owner, its successors or assigns, must adhere to state law requirements with regard to
termination of tenancy.
E. Owner shall maintain the improvements on the Property in compliance with all applicable
housing quality standards [24CFR 92.504 (c)(6)] and state and local code requirements and shall
keep the Property free from any unreasonable accumulation of debris or waste materials. Owner
shall also maintain in a healthy condition any landscaping planted on the Property.
F. Owner covenants and agrees for itself, its successors, its assigns and every successor in
interest to the Property or any part thereof, there shall be no discrimination against or segregation
of any person, or group of persons, on account of race, color, creed, religion, disability, sex,
marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or
enjoyment of the Property nor shall the Owner itself or any person claiming under or through it
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Property, as required by the Title VI of the Civil Rights Act of 1964, the Fair
Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age Discrimination
Act of 1975, and all implementing regulations.
G. Not later than the closing for the construction loan for the Project, Owner shall submit to the
Housing Manager a Management Plan in a form that is acceptable including, but not limited to,
the components listed below. Approval of the Management Plan must be obtained from the
Housing Manager not later than the time for the issuance of a certificate of occupancy for the
Project. Owner shall manage the Restricted Units in accordance with the approved Management
Plan, including such amendments as may be approved in writing from time to time by the
Housing Manager, for the term of the income and rent restrictions contained in these
Restrictions. The components of the Management Plan shall include:
(a) Management Agent. Owner shall submit the name and qualifications of
the proposed Management Agent. The City shall approve or disapprove the proposed
Management Agent in writing based on the experience and qualifications of the Management
Agent.
(b) Management Agreement. Owner shall submit a copy of the proposed
management agreement specifying the amount of the management fee, and the relationship and
division of responsibilities between Owner and Management Agent.
(c) Annual Budget and Projected Cash Flows. Prior to the issuance of a
certificate of occupancy for the Project, and annually thereafter not later than one hundred fifty
(150) days after the close of each calendar year thereafter, Owner shall submit a projected
operating budget and cash flow to the Housing Manager. The budget and cash flow shall be in a
form that is acceptable to the Housing Manager.
(d) Tenant Selection Policies. Owner shall include in the Management Plan
the tenant selection policies in accordance with Section 4, above.
H. If at any time the City determines that the units are not being managed or maintained in
accordance with the approved Management Plan, Owner shall change the management agent or
the practices complained of, upon receipt of written notice from the City Manager. The City
Manager may require Owner to change management practices or to terminate the management
contract and designate and retain a different management agent. The management agreement
shall provide that it is subject to termination by Owner without penalty, upon thirty (30) days
prior written notice, at the direction of the City Manager. Within ten (10) days following a
direction of the City Manager to replace the management agent, the Owner shall select another
management agent or make other arrangements satisfactory to the City Manager or designee for
continuing management of the units.
I. The covenants established in these Restrictions and any amendments hereto approved by the
City, and Owner shall, without regard to technical classification and designation, be binding for
the benefit and in favor of the City and their respective successors and assigns. These
Restrictions shall remain in effect for fifty-five (55) years. In its discretion, the City may defer
repayment of the Loan or the City may agree to such reasonable modifications to the
requirements of these Restrictions, as they may determine are necessary for the continued
maintenance and operation of the Restricted Units. The covenants against discrimination shall
remain in effect for the period of these Restrictions.
J. Owner 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 Agreements and these Restrictions [24 CFR 92.504 (c)(10)].
K. Owner shall prepare, maintain and submit to the City, as appropriate, the following records
and reports in compliance with 24 CFR 92.504 (e) (12):
a. Annual Reports. Owner shall file with the City an Annual Report (herein referred
to as the "Annual Report") within one hundred fifty (150) days following the end of each
calendar year, commencing the Calendar Year following the issuance of the Certificate of
Completion. The Annual Report shall contain a certification by Owner as to such information as
the City Project Manager may then require, including, but not limited to, the following:
(1) The fiscal condition of the Project, including the Annual Budget and
Project Cash Flow report required by Section 4.G. (c) of this Agreement which shall include an
audited financial statement for the previous calendar year that includes a balance sheet and a
profit and loss statement indicating any surplus or deficit in operating accounts; a detailed
itemized listing of income and expenses; and the amounts of any fiscal reserves. Such Annual
Budget and audited financial statement shall be prepared in accordance with generally accepted
accounting practices.
(2) Any substantial physical defects in the Project, including a description of
any major repair or maintenance work undertaken or needed in the previous and current years.
Such statement shall describe what steps Owner has taken in order to maintain the Project in a
safe and sanitary condition in accordance with applicable housing and building codes and the
property standards set forth in 24 CFR 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, for the required period of affordability.
(6) Evidence of a currently paid hazard insurance policy in accordance with
the requirements of Section 6 of the HOME Deed of Trust, with a loss payable endorsement
naming the City as a loss payee together with other approved lenders (as their interests may
appear), with a "Replacement Cost Endorsement' in amount sufficient to prevent Owner or City
from becoming a co-insurer under the terms of the policy, but in any event in an amount not less
than 100% of the then full replacement cost, to be determined at least once annually and subject
to reasonable approval by the Executive Director.
(7) Evidence of a currently paid liability insurance policy, naming the City as
additional insured and in a form approved by the City Attorney with coverage as described in the
Loan Agreements.
(8) Termite reports pertaining to the Property every fifth (5t") year.
(9) Such other information as may be reasonably required by the City Manager or
his/her designee.
b. Records and Audits. Owner shall maintain the following general program
records, and make thein available for inspection by the City, the State or HUD:
(1) records which demonstrate that the project meets the property standard
specified in 24 CFR 92.251;
(2) records, for each 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 Owner's
outreach programs to minority-owned and women -owned businesses to meet the minority
outreach requirements of 24 CFR 92.350;
(5) documentation of the steps taken to carry out an affirmative marketing
program in accordance with 24 CFR 92.351, if applicable;
(6) if applicable, records which demonstrate compliance with the
requirements relating to relocation of displaced persons, as described in 24 CFR 92.353. At a
minimum, these shall include project occupancy lists identifying the name and address of all
persons occupying the project property up until the date of the date on which Owner obtained
ownership of the Property;
(7) records concerning lead-based paint in accordance with 24 CFR 92.355;
(8) if applicable, records which support any requests for waivers of the
conflict of interest prohibition as stated in 24 CFR 92.356;
(9) records of certifications of contractor qualifications as they relate to the
debarment and suspension requirement as stated in 24 CFR 92.357 and 24 CFR Part 24; and
(10) any other reports issued by other monitoring agencies.
C. All records pertaining to each calendar year of HOME funds must be retained
for the most recent five year period, except that for rental housing projects, records may be
retained for five years after the project completion date; except that records of individual tenant
income verifications, project rents and project inspections must be retained for the most recent
five year period, until five years after the affordability period terminates (24 CFR 92.508).
Owner shall cooperate with the City to retain all books and records relevant to the Loan
Agreement for a minimum of five years after the expiration of the Loan Agreement and any and
all amendments hereto, or for five years after the conclusion or resolution of any and all audits or
litigation relevant to the Loan Agreement, whichever is later. The City, the State, the Office of
the Inspector 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 or HUD upon termination of the Loan Agreement,
Owner shall cause all records, accounts, documentation and all other materials relevant to the
work to be delivered to the City or HUD, as depository.
C. All records, accounts, documentation and other materials relevant to the Project
shall be accessible at any time to the authorized representatives of the City, or HUD, on
reasonable prior notice, for the purpose of examination or audit.
f. Pursuant to 24 CFR Part 44, the City shall perforin an annual audit at the close of
each calendar year in which these Restrictions are in effect. Owner shall reasonably cooperate
with City in performing such audit.
g. Owner shall permit the City to perform an Annual Physical Inspection of the
Property with at least seven (7) days notice. Owner shall cooperate with this Inspection and shall
take all steps necessary to quickly correct any code deficiencies identified during the Inspection.
L. The City is the beneficiary of the terms and provisions of these Restrictions and the covenants
herein, both for and in its own right and for the purposes of protecting the interests of the
community and other parties, public or private, for whose benefit these Restrictions and the
covenants running with the land have been provided. The City shall have the right if the
covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits
at law or in equity or other proper proceedings to enforce the curing of such breaches to which
they or any other beneficiaries of these Restrictions and covenants are entitled.
M. The covenants and agreements contained herein shall run with the land and not be personal
obligations of Owner. Upon the sale, conveyance or other transfer of the Property (a "Transfer")
and the assumption of the obligations hereunder by a transferee, Owner's liability for
performance shall be terminated as to any obligation to be performed hereunder after the date of
such Transfer.
N. The Loan Agreement and all of its attachments shall be enforceable by the City in
accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions
on Transfer of Property, the HOME Note and the HOME Deed of Trust provide a means of
enforcement by the City if Owner is in breach of its obligations hereunder and thereunder,
including liens on the Property, deed restrictions and covenants running with the land [24 CFR
92.504 (c) (13)].
IN WITNESS WHEREOF, the parties hereto have executed these Affordability Restrictions on
Transfer of Property as of the date and year first stated above.
ATTEST:
Maria D. Huizar
Clerk of the Council
APPROVED AS TO FORM
Sonia R. Carvalho
City Attorney
By: Ryan O. Hodge
Assistant City Attorney
RECOMMENDED FOR APPROVAL:
Robert C. Cortez
Acting Executive Director
Community Development Agency
CITY OF SANTA ANA
Cynthia J. Kurtz
Interim City Manager
OWNER:
Santa Ana Arts Collective, LP, a California limited partnership
By: Santa Ana Arts Collective, LLC,
A California limited liability company,
its administrative general partner
In
Kasey Burke, Vice President
By: WCH Affordable XVIII, LLC,
a California limited liability company
its managing general partner
Sandra Gibbons, Executive Vice President / CFO
Exhibit Co. HOME
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza
P.O. Box 1988 (M-30)
Santa Ana, California 92702
Attn: Clerk of the Council
ROMEE DEED OF TRUST
AND ASSIGNMENT OF RENTS
THIS HOME DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of Trust')
made this 5r' day of July, 2017, by and between Santa Ana Arts Collective, LP, a California
limited partnership (the "Trustor"), AmeriNat, a Minnesota corporation (the "Trustee"), and the
City of Santa Ana, a charter city and municipal corporation (the 'Beneficiary").
Trustor, in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the
property located in the City of Santa Ana, County of Orange, State of California, described in the
attached Exhibit A and more commonly known as 1666 N. Main Street, Santa Ana, California (the
"Property");
TOGETHER with all the improvements now or hereafter erected on the Property, and all
easements, rights, appurtenances and all fixtures now or hereafter attached to the Property, all of
which, including replacements and additions thereto, shall be deemed to be and remain a part of the
Property covered by this HOME Deed of Trust; provided that so long as Trustor is not in default
hereunder, it shall be permitted to control the Property in accordance with the requirements of
that certain HOME Loan Agreement entered into between the Trustor and the Beneficiary, dated
concurrently herewith (the "Agreement'), which Agreement is on file with the Beneficiary as a
public record;
TOGETHER with the right, power and authority during the continuance of these Trusts, to
collect the rents, issues, and profits of the Property, reserving unto the Trustor the right, prior to any
default by Trustor in payment of the indebtedness secured by this Deed of Trust or in the
performance of any agreement under this Deed of Trust, to collect and retain these rents, issues and
profits as they become due and payable; and,
TOGETHER with all articles of personal property or fixtures now or hereafter attached to or
used in and about the building or buildings now erected, or hereafter to be erected, on the Property
which are necessary to the complete and comfortable use and occupancy of such building or
buildings for the purposes for which they were or are to be erected, including all other goods and
chattels and personal property as are ever used or furnished in operating a building, or the activities
conducted therein, similar to the one herein described and referred to, and all renewals or
replacements thereof or articles in substitution therefor, whether or not the same are, or shall be
attached to said building or buildings in any manner; and all of the foregoing, together with the
Property, is herein referred to as the "Security";
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever;
TO SECURE to the Beneficiary (a) the repayment of the sums evidenced by a Promissory
Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of TWO
MILLION, TWO HUNDRED AND NINETEEN THOUSAND, SEVEN HUNDRED AND
SIXTY DOLLARS ($2,219,760.00) (the "HOME Promissory Note"); (b) the performance of the
covenants and agreements of Borrower contained in a certain Agreement as hereinafter defined; and
(c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect
the security of this Deed of Trust; and the performance of the covenants and agreements of Trustor
contained herein.
TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS:
1. The Agreement. This Deed of Trust is executed and delivered, along with the
HOME Promissory Note and the Agreement, to benefit the Property. A copy of the Agreement is
on file as a public record with the Beneficiary and is incorporated herein by reference. Trustor
acknowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter into
the Agreement or HOME Promissory Note secured by this Deed of Trust.
2. Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the
right to grant and convey the Security; that other than this Deed of Trust, the Security is not
encumbered except for obligations secured by deeds of trust, or any other security agreement, to
secure financing or refinancing for the purchase and rehabilitation of the Property.
3. Renavment of the Loan. Trustor will promptly repay, when due, the principal loan
amount, as required by the HOME Promissory Note secured by this Deed of Trust.
4. Subordination. This obligation secured by this Deed of Trust shall be subordinated
to the Senior Loan and AHSC Loan, but the City's Affordability Restrictions on Transfer of
Property shall remain in first place with respect to the Senior Loan and subordinate with respect to
the AHSC Loan.
5, Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform all of
Trustor's obligations under any mortgage, deed of trust or other security agreement with a lien
which has priority over this Instrument, including Trustor's covenants to make payments when due
(subject to an applicable notice and cure provisions). Trustor will pay all taxes, assessments and
other charges, Imes and impositions attributable to the Security which may attain a priority over this
Deed of Trust, by Trustor malting any payment, when due, directly to the payee thereof. Trustor
will promptly furnish to the Beneficiary all notices of amounts due under this paragraph, and in the
event Trustor makes payment directly, Trustor will promptly discharge any lien which has priority
over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed
of Trust securing any senior lender or any other lien described in this paragraph so long as Trustor
will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to
the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in,
legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security
or any part thereof.
6. Hazard Insurance. Trustor will keep the Security insured by such insurance policies
in such amounts and for such periods as called for in the Agreement. All insurance policies and
renewals thereof will include a standard mortgagee clause with standard lender's endorsement in
favor of the holder of any senior lender and the Beneficiary as their interests may appear and in a
form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its
designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the
Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all
renewal notices and all receipts of paid premiums subject to the rights of any senior lender. In the
event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its
designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made
promptly by Trustor. The Beneficiary shall receive 30 days advance notice of cancellation of any
insurance policies required under this Section.
Unless the Beneficiary and Trustor otherwise agree in writing, insurance proceeds, subject
to the rights of any senior lender, will be applied to restoration or repair of the Security damaged,
provided such restoration or repair is economically feasible and the security of this Deed of Trust is
not thereby impaired. If such restoration or repair is not economically feasible or if the security of
this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance
proceeds will be used to repay the loan secured by this Deed of Trust, with the excess, if any, paid
to Trustor. If the Security is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary,
or its designated agent within 30 days from the date notice is mailed by either of them to Trustor
that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its
designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's
option either to restoration or repair of the Security or to repay the loan.
If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in and to
any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior
to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed
of Trust immediately prior to such sale or acquisition subject to the rights of any senior lender.
7. Preservation and Maintenance of Security. Trustor will keep the Security in good
repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the Beneficiary's Security. If Trustor fails to perform the covenants
and agreements contained in this Deed of Trust or if any action or proceeding is commenced which
materially affects the Beneficiary's interest in the Security, including, but not limited to, default
under the Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement,
or arrangements or proceedings involving a bankrupt or decedent, then the Beneficiary, at the
Beneficiary's option, upon notice to Trustor, may make such appearances, disburse such sums and
take such action as it determines necessary to protect the Beneficiary's interest, including, but not
limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs.
Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon,
will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and the
Beneficiary agree to other terms of payment, such amount will be payable upon notice from the
Beneficiary to Trustor requesting payment thereof, and will bear interest from the date of
disbursement at the rate payable from time to time on outstanding principal under the HOME
Promissory Note unless payment of interest at such rate would be contrary to applicable law, in
which event such amounts will bear interest at the highest rate permissible under applicable law.
Nothing contained in this paragraph will require the Beneficiary to insure any expense or take any
action hereunder.
9. Inspection. The Beneficiary may make, or cause to be made, reasonable entries
upon and inspections of the Security during normal business hours; provided that the Beneficiary
will give Trustor reasonable notice of inspection.
10. Forbearance by the Beneficiary Not a Waiver. Any forbearance by the Beneficiary
in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy.
The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary
will not be a waiver of the Beneficiary's right to accelerate the maturity of the indebtedness secured
by this Deed of Trust.
11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and
cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded
by law or equity, and may be exercised concurrently, independently or successively.
12. Successors and Assigns Bound. The covenants and agreements herein contained
shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the
Beneficiary and Trustor subject to the provisions of this Deed of Trust.
13. Joint and Several Liability. All covenants and agreements of Trustor shall be joint
and several.
14. Notice. Except for any notice required under applicable law to be given in another
manner, (a) any notice to Trustor provided for in this HOME Deed of Trust will be given by
certified mail, return receipt requested, addressed to Trustor at 1640 Sepulveda Blvd, Suite 425, Los
Angeles, California, 90025 with a copy to Bank of America CDC Special Holding Company, Inc.
Community Development Banking, MA1-225-02-02, 225 Franklin Street, Boston, MA 02110
and WCH Affordable XVIII, LLC Attn: Graham Espley-Jones, 151 Kalmus Drive, 05, Costa
Mesa, CA 92626, (b) any notice to the Beneficiary will be given by certified mail, return receipt
requested, to the Beneficiary at 20 Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702,
Attention: Housing Manager, or at such other address as the Beneficiary may designate by notice to
Trustor as provided above, and (c) to Trustee at 8121 E. Florence Avenue, Downey, California
90240. Notice shall be effective as of the date received as shown on the return receipt.
15. Governing Law. This Deed of Trust shall be governed by the laws of the State of
California with venue in Orange County.
16. Severability. In the event that any provision or clause of this Deed of Trust or the
HOME Loan Note conflicts with applicable law, such conflict will not affect other provisions of this
El
Deed of Trust or the HOME Promissory Note which can be given effect without the conflicting
provision, and to this end the provisions of the Deed of Trust and the HOME Loan Note are
declared to be severable.
17. Captions. The captions and headings in this Deed of Trust are for convenience only
and are not to be used to interpret or define the provisions hereof.
18. Default in Foreclosure: Remedies. Upon Trastor's breach of any covenant or
agreement of Trustor in this Deed of Trust or the HOME Promissory Note secured by this Deed of
Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed
of Trust, the Beneficiary may declare all sums secured by this Deed of Trust immediately due and
payable by delivering to Trustor notice thereof specifying: (1) The breach; (2) the action required to
cure such breach; (3) a date not less than 30 days from the date the notice is received by 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, Trustor shall have a reasonable
period to cure the defect so long as Trustor is diligently prosecuting the cure to completion; and (4)
that failure to cure such breach on or before the date specified in the notice may result in
acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice will also
inform Trustor of Truster's right to reinstate after acceleration and the right to bring a court action to
assert the non-existence of default or any other defense of Trustor to acceleration and sale.
Notwithstanding anything to the contrary contained herein, a "default" shall not include
(i) a transfer of a general partner's interest in Trustor when made in connection with the exercise
by the Trustor's limited partner (the "Limited Partner") of its rights upon a default by a general
partner under the Trustor's Amended and Restated Limited Partnership Agreement (the
"Partnership Agreement") or upon a general partner's withdrawal in violation of the Partnership
Agreement, so long as the removal and substitution of the defaulting general partner is made
within thirty (30) days of such default or, if such removal and substitution cannot reasonably be
completed within thirty (30) days, so long as the Limited Partner commences to take action to
remove and substitute the general partner with a reasonable period and thereafter diligently
proceeds to complete such substitution; (ii) any transfer of the Property to the managing general
partner of Trustor pursuant to the right of first refusal or to the general partners of Trustor
pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer
of the Limited Partner's interest under and in accordance with the Partnership Agreement; and
(iv) any sale, transfer or other disposition of a limited partner interest or an interest in a limited
partner of the Trustor, (v) any sale, transfer or other disposition of an interest in a limited partner
of the Borrower.
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 HOME Promissory Note or the Agreement, the Beneficiary, at the
Beneficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be
immediately due and payable without further demand and may invoke the power of sale and any
other remedies permitted by California law; (b) either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the
adequacy of its security, enter upon the Security and take possession thereof (or any part thereof)
and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it
deems necessary or desirable to preserve the value or marketability of the Property, or part thereof
or interest therein, increase the income therefrom or protect the security thereof. The entering upon
and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any
act done in response to such breach and, notwithstanding the continuance in possession of the
Security, the Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust,
or by law upon occurrence of any uncured breach, including the right to exercise the power of sale;
(c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or
specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of
default and demand for sale, pursuant to the provisions for notice of sale found at California Civil
Code Sections 2924, etsem., 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.
In addition, if an Event of Default occurs hereunder or under the Note, prior to taking any
remedy under this Deed of Trust or any other document evidencing or securing this Note,
Beneficiary shall first give notice of the occurrence of such Event of Default to the Limited Partner
and the Limited Partner shall have not less than 30 days to cure such Event of Default, provided if in
order to cure such Event of Default the Limited Partner gives notice to the Beneficiary that Limited
Partner must remove and replace the general partner or general partners of Trustor, Limited Partner
shall have until 30 days following the effective date of such removal and replacement to cure such
Event of Default,..
The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in
pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys'
fees.
19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the
sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by
the Beneficiary to enforce this Deed of Trust discontinued at any time prior to 5 days before sale of
the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to
entry of a judgment enforcing this Deed of Trust if (a) Trustor pays the Beneficiary all sums which
would be then due under this Deed of Trust and no acceleration under the HOME Promissory Note
has occurred; (b) Trustor cures all breaches of any other covenants or agreements of Trustor
contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by the Beneficiary
and the Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of
Trust and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to,
reasonable attorneys' fees; and (d) Trustor takes such action as the Beneficiary may reasonably
require to assure that the lien of this Deed of Trust, the Beneficiary's interest in the Security and
Truster's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon
such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will
remain in full force and effect as if no acceleration had occurred.
20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to
notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
21. Reconvevance. Upon payment of all sums secured by this Deed of Trust, the
Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust
0
and the HOME Promissory Note to the Trustee. The Trustee will reconvey the Security without
warranty and without charge to the person or persons legally entitled thereto. Such person or
persons will pay all costs of recordation, if any.
22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from time to
time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The
successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein
and by applicable law.
23. Request for Notice. Trustor requests that copies of the notice of default and notice
of sale be sent to Trustee at the address set forth in Section 14 above.
24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor shall have any
personal liability under the Agreement, HOME Promissory Note, and this Deed of Trust and any
judgment, decree or order for payment of money obtained in any action to enforce the obligation of
Trustor to repay the loan evidenced by such documents shall be enforceable against Trustor only to
the extent of Trustor's interest in the Property.
(Signatures on Following Page)
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written
above.
SANTA ANA ARTS COLLECTIVE, LP,
a California limited partnership
By: Santa Ana Arts Collective, LLC,
a California limited liability company,
its administrative general partner
Kasey Burke, Vice President
By: WCH Affordable XVIII, LLC,
a California limited liability company,
its managing general partner
By:
Sandra Gibbons, Executive Vice President / CFO
Exhibit Do. HOME
p
romissory -Note
HOME FUNDS PROMISSORY NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO THE CITY OF SANTA ANA, CALIFORNIA
(1666 N. Main Street)
$2,219,760.00 July 5, 2017
Santa Ana, California
1. Principal Amount of Loan
FOR VALUE RECEIVED, Santa Ana Arts Collective, LP, a California limited
partnership ("Borrower"), hereby promises to pay to the CITY OF SANTA ANA, a charter city
and municipal corporation ("City"), or order, a principal amount not to exceed TWO MILLION,
TWO HUNDRED AND NINETEEN THOUSAND, SEVEN HUNDRED AND SIXTY
DOLLARS ($2,219,760.00) or so much thereof as shall be disbursed hereunder, with three
percent simple interest ( 3%) commencing upon filing of Notice of Completion, pursuant to the
HOME Loan Agreement (said "Agreement") between Borrower and the City dated concurrently
herewith, which is incorporated herein by this reference. This loan is made pursuant to the
HOME Investment Partnerships Program with money funded through the Program as "HOME
Funds". Any capitalized term not otherwise defined in this Note shall have the meaning ascribed
to such term in the Agreement. The obligation of Borrower to City hereunder is subject to the
terms of said Agreement, the Affordability Restrictions on Transfer of Property, HOME Deed of
Trust, and this Note. Said documents are public records on file in the offices of the City, and the
provisions of said documents are incorporated herein by this reference.
This Note, said Agreement, the Affordability Restrictions on Transfer of Property, and
the HOME 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 tern in the Agreement.
This Note evidences the obligation of Borrower to the City for the repayment of the
HOME Loan of HOME Funds attributable to the adaptive reuse and construction of the Property,
and related soft costs.
This Note is payable at the principal office of City of Santa Ana — Community
Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Art: Housing
Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful
money of the United States,
L&GAL US W H 90423673.1
2. Definitions.
For the purpose of calculating the payments to be made by Borrower to City pursuant to
this Note, the following terms shall have the following respective meanings:
"Agreement" means the HOME Loan Agreement between the City and the Developer,
and any attachments or amendments thereto.
"AHSC Loan" means a permanent loan of Affordable Housing and Sustainable
Communities program funds from HCD administered by the California Strategic Growth
Council in the amount of $4,944,130
"AHSC Deed of Trust" means the any deed(s) of trust securing athe AHSC Loan
encumbering the Property.
"AHSC Documents" means, collectively, the loan agreement governing the AHSC, the
AHSC Note, the AHSC Deed of Trust, and any other agreement, document or instrument that the
Senior Lender requires in connection with the AHSC Loan.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the HOME Investment Partnerships Program, and the
HOME Funds.
"Area Median Income" means the median income figures for Orange County as
published by the U.S. Department of Housing and Urban Development (HUD). Also maybe
referred to as "AMI" herein.
"Borrower" means Santa Ana Arts Collective, LP, a California limited partnership.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 30.
"City's Percentage" with reference to the Residual Receipts, shall mean thirty point
thirteen percent (30.13%) of the total Residual Receipts from the Property, which shall be
applicable to the HOME Loan, CDBG Loan, and Inclusionary Loan, as further described in
Section 5 hereof.
"Closing Costs" shall mean:
(i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a
result of the Sale, which shall not in any event exceed the customary amount charged -for similar
transactions in the immediate market place, costs of title insurance premiums, documentary
stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably
incurred with respect to the Property, in each case actually paid by Borrower as a condition of
the Sale.
LBGAL_US_W # 90423673.1
(ii) In the case of a Refinancing, the reasonable and necessary costs of
consumating such Refinancing, including, without limitation, loan fees, loan repayment charges,
costs of title insurance premiums, escrow fees, recording fees and attorneys' fees.
"Extremely Low Income" means an adjusted income which does not exceed thirty
percent (30%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HUD.
"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. Borrower shall establish and maintain accounts for the
Gross Revenues (the "'Project Accounts") that are segregated from revenues and income received
by Borrower from all other projects. Gross Revenues shall also include all interest earned on the
Project Accounts. Gross Revenues shall not include capital contribution and loan proceeds
received by borrower from any source.
"HOME Assisted Units" shall mean those rental units purchased and rehabilitated on the
Property which are subject to the term of affordability.
"HOME Deed of Trust" shall mean the HOME Deed of Trust in favor of the City,
securing the HOME Loan, substantially in the form attached to the Agreement as Exhibit C,
which is incorporated herein by this reference.
"HOME Funds" shall mean the money provided under the HOME Program for the
rehabilitation of the rental units hereunder.
"HOME Loan" shall mean the loan evidenced by this Note repayable to the City in
accordance with the terms of this Note and secured by the HOME Deed of Trust.
"HOME Investment Partnerships Program" (HOME) has the meaning set forth in the
Recitals above.
"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.
"Operating Expenses" shall mean the sum of the following:
(i) payments of principal and interest and all other charges relating to the Senior
Loan(s);
LEGAL _US_W #90423673.1
(ii) general partner fee and tax credit investor management fees pursuant to the
Borrower's amended and restated partnership agreement ("Partnership Agreement");
(iii) the cost of any supportive services provided to tenants of the Property,
including fees and reimbursements payable to the provider or coordinator of such supportive
services;
(iv) debt service payments (excluding debt service due from residual receipts or
surplus cash of the Property) on senior loan obligations associated with the Property, and
approved by Lender;
(v) tax credit adjustment payments payable to Maker's tax credit investor pursuant
to Borrower's Partnership Agreement;
(vi) payments made on loans advanced by any partner or member of Borrower for
the purpose of paying operating expenses of the Property;
(vii) a property management fee equal to 8% of gross rents;
(viii) Owner Administration Fee of 5% of gross rents;
(ix) deposits into required reserves;
(x) any deferred developer fee;
(xi) all other actual, reasonable cash operating costs and expenses, calculated on an
annual basis, that are directly attributable to managing and operating the Property, including,
without limiting the generality of the foregoing, the following: costs and expenses for real and
personal property taxes, special assessments or similar charges; water, fuel, electricity and other
utilities; heating, ventilation and air conditioning expenses; labor; supplies; tools; equipment;
insurance; advertising and marketing; accounting and legal fees; brokerage commissions and
other leasing expenses; reasonable reserves for all anticipated expenses as approved by the City;
and other such items constituting operation, maintenance and repair costs actually paid by the
Borrower, subject to the following conditions:
(a) Depreciation and amortization expenses shall not be considered
Operating Expenses, except as otherwise provided herein.
(b) Any expenses, compensation or fees paid to any affiliate of Borrower
shall only be included as Operating Expenses to the extent they are not in excess of the
reasonable expenses, compensation or fees which would be payable to unrelated third parties in
arms -length transactions for similar services in the Santa Ana, California area.
LEGAL_US_W # 90423673.1
(vii) Any other expenses necessary to meet senior lender requirements and
requirements of Borrower's limited partner, or its assignee, as set forth in Borrower's Agreement
of Limited Partnership (the "Partnership Agreement").
"Prop ertX" shall mean that property located at 1666 N. Main Street, Santa Ana,
California.
"Refinancing" shall mean changing the then existing financing on the Property by,
without limitation, modifying the interest rate and/or the term of the existing Senior Loan,
increasing or reducing the amount of the existing Senior Loan, paying off the existing Senior
Loan and obtaining new Senior Loan, except for the payoff of the conventional lender's
acquisition loan for the Property. Notwithstanding the projected sale of the senior permanent
loan on the Project to California Community Reinvestment Corporation (`CCRC") and any
subsequent transfer of the loan in whole or in part by CCRC shall not be deemed a Refinancing
for purposes hereof.
"Refinancing Proceeds" shall be disbursed as set forth in Section 6 hereof.
"Residual Receipts" shall mean the Gross Revenues from the Property for each year, less
deductions for Operating Expenses from the same building, applicable to each such year to the
extent not already deducted as an Operating Expense.
"Sale" shall mean any transfer, assignment, or conveyance or lease of the Property or any
portion thereof, or any interest therein by the Borrower, and includes any transfer, assignment or
sale of any partnership interest in the Borrower by an individual or entity which is a general or
limited partner in the Borrower, or any interest by any individual or entity which holds an
interest in any such general or limited partner in the Borrower, which brings the cumulative total
of all such direct and indirect transfers, assignments and sales during the term of this Note to
more than thirty-five percent (35%) of the ownership interests in the Borrower, and any such
transfer, assignment or sale of a direct or indirect partnership interest thereafter. Sale includes a
sale in condemnation or under threat thereof. Sale does not include dedications and grants of
easements to public and private utility companies of the kind customary in real estate
development. Notwithstanding anything to the contrary contained herein, a "Sale" shall not
include any transaction not considered a "transfer' under Section 13.
"Senior Loan" shall mean any senior loans made to Borrower, for payment of acquisition
and/or rehabilitation/construction costs, and shall include any subsequent loan that refinances
said Senior Loan.
"Term" the tern for repayment of this Note shall mean fifty-five (55) years from the date
of recording of the loan from the State of California Department of Housing and Community
Development to Borrower, but in no event shall the Term end later than July 1, 2075.
"Term of Affordability" the term of affordability shall be fifty-five (55) years.
LEGAL US wfl90423673.1
"Very Low Income" means an adjusted income which does not exceed fifty percent
(50%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HUD.
3. Loan Repayment.
Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts),
6 (Refinancing Proceeds), 7 (Sale Proceeds) and 9 (Accelerated Loan Repayment) of the
Agreement.
4. Operating Capital Improvement Loan.
If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and
the General Partner makes a loan to the Partnership, the reserves must be fully funded prior to
payment of said loan. The outstanding loan balance will be reflected in the annual report.
5. Annual Loan Repayment/ Residual Receiuts.
a. Commencing on the date one hundred fifty (150) days after the close of the initial
Calendar Year following the issuance of the Certificate of Completion and on or before the 150'h
day of each Calendar Year thereafter the Borrower shall thereafter make a loan payment to the
City annually, in the amount of the lesser of the outstanding balance due under this Note or the
City's Percentage of the Residual Receipts, as provided in this Section 5.
b. Within one hundred fifty (150) days after the close of the initial Calendar Year
following the Issuance of the Certificate of Completion and on or before the 150th day of each
Calendar Year thereafter, the Borrower shall submit to the City an audited financial statement of
Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar
Year, along with a computation of the amount of the Residual Receipts applicable to such
Calendar Year with which to make a HOME Loan payment then due.
c. Except as otherwise provided, the Borrower shall pay to the City the City's
Percentage of the Residual Receipts as payment of interest and then to principal. At least fifty
percent (50%) of the Residual Receipts shall remain with the Borrower, with all Residual
Receipts remaining with Borrower to the extent the HOME Loan has been fully repaid.
d. Borrower shall retain fifty percent of the Residual Receipts. The other fifty percent
shall be divided according to the table below:
SOURCE
PERCENTAGE
CDBG Loan
2.01%
HOME Loan
8.92%
Inclusionary Housing Loan
19.20%
State of California Housing and Community
19.87%
LEGAL_US_W #90423673.1 6
Development Affordable Housing Loan
TOTAL
1 50.00%
As Borrower repays its loans, the payment percentage applied to the remaining loans
shall increase.
e. The Residual Receipts payment shall be made not later than one hundred fifty (150)
days after the close of the Calendar Year. Such payment shall be applied first to any late fees,
then to reduce the interest and then to principal balance of the loan.
6. Loan Repayment from Refinancing Proceeds.
The Borrower shall make a loan payment to the City from every Refinancing that occurs
during the term of this Note (other than refinancing of the conventional lender acquisition and
construction loan) not to exceed the outstanding balance of principal on this Note, to the extent
of the City's Percentage of the Refinancing Proceeds (if any), as follows: the cash proceeds from
such Refinancing shall be applied first to pay Closing Costs; next, the amount necessary to pay
in full the balance remaining on the Senior Loan and AHSC Loan; next, the amount necessary to
pay any deferred developer fee in full; and next, the Borrower shall pay to the City the City's
Percentage of the Refinancing Proceeds to the extent of the outstanding balance on this Note. At
least fifty percent (50%) of the Refinancing proceeds shall remain with Borrower, with all
remaining Refinancing proceeds remaining with the Borrower to the extent the outstanding
balance of the Note has been fully paid. Such payment shall be due on the date of such
Refinancing, and shall be applied to reduce the interest and then principal balance of the Loan.
The City shall not be required to reconvey the lien of the Deed of Trust if Refinancing Proceeds
are insufficient to repay the Loan in full.
Loan Reuavment from Sale Proceeds.
The Borrower shall make a loan payment, not to exceed the outstanding balance of
principal on this Note subject to Section 14 herein, to the City from any Sale that occurs during
the term of the City Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows:
gross sale proceeds are applied first to pay Closing Costs, next to pay in full the balance
remaining on the Senior Loan and AHSC Loan; next, the amount necessary to pay any deferred
developer fee in full; and next, ,the Borrower shall pay to the City the City's Percentage of the
total Sale Proceeds, not to exceed the outstanding amount of principal due on this Note. At least
fifty percent (50%) of the Sale Proceeds shall remain with Borrower, with all remaining
Refinancing proceeds remaining with the Borrower to the extent the outstanding balance of the
Note has been fully paid. Such payment shall be due on the date of such Sale, and shall be
applied to reduce the interest and principal balance of the Loan. The City shall not be required to
reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full.
8. Accelerated Loan Payment.
LEGAL_US_W #90423673.1
The full principal amount outstanding shall be due and payable on the earlier to occur of
the following:
a. Sale or Refinancing of the Property as provided further in Section 13 hereof,
unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay
in full the HOME Loan, the City approves such sale in the exercise of its
reasonable discretion and the purchaser assumes the balance of the HOME Loan
in accordance with the terms of this Note; or (ii) in the case of a Refinancing in
which the Refinancing Proceeds are insufficient to repay in full the HOME Loan,
the City approves such Refinancing in the exercise of its reasonable discretion and
the Borrower remains obligated pursuant to the terms of this Note.
b. In event of default (subject to any applicable notice and cure provisions) pursuant
to any of the Loan Documents and AHSC Loan Documents.
C. Any default (subject to any applicable notice and cure provisions) by Borrower as
to any other loan or loans by City to Borrower with respect to the Property; or
d. The expiration of the Term of this Note. On that date, the City agrees to review
the performance of the Property and consider in good faith any reasonable request
by Borrower to modify the terms or extend the Term of this HOME Note.
9. Prepayment
Borrower may prepay the outstanding principal balance under this Note, in whole or in
part, at any time without penalty, however the Affordability Covenants and Restrictions still
remain for the entire Affordability Period of fifty-five (55) years.
10. Lawful Money.
Principal is payable in lawful money of the United States of America.
11. Application of Payments, Late Charges.
a. Any payments received by the City pursuant to the terms hereof shall be applied
first to sums, other than principal, due the City pursuant to this Note, and the
balance, if any, to the payment of principal.
b. If any payment is not received by the City within fifteen (15) Business Days after
Developer's receipt of written notice that such payment was not received when
due; then in addition to the remedies conferred upon the City pursuant to this Note
and the other Loan Documents, (i) a late charge of four percent (4%) of the
amount due and unpaid will be added to the delinquent amount to compensate the
City for the expense of handling the delinquency and (ii) the amount due and
unpaid, excluding the late charge, shall bear interest at the highest annual rate
LEQAL_US_W # 90423673.1
which may lawfully be charged and collected under applicable law on the
obligation evidenced by this Note, computed from the date on which the amount
was due and payable until paid. Without prejudice to the rights of the City
hereunder or under any of the other Loan Documents, Borrower shall indemnify
the City against, and shall pay the City on demand, any expense or loss which it
may sustain or incur as a result of the failure by Borrower to pay when due any
installment of principal, fees, or other amounts payable to the City under this Note
or any other Loan Document, to the extent that any such expense or loss is not
recovered pursuant to such foregoing provisions. A certificate of the City setting
forth the basis for the determination of the amounts necessary to indemnify the
City in respect of such expenses or direct loss, submitted to Borrower by the City,
shall be conclusive and binding for all purposes except as immediately corrected
by Borrower notice to City.
12. Security
This Note is secured by the recorded Deed of Trust.
13. Acceleration by Reason of Transfer or Financing.
a. In order to induce City to make the loan evidenced hereby, Borrower agrees that
in the event of any transfer of the Property without the prior written consent of
City (other than a transfer resulting from a foreclosure, or conveyance by deed in
lieu of foreclosure, by the holder of the Senior Loan Deed of Trust or the AHSC
Deed of Trust), City shall have the absolute right at its option, without prior
demand or notice, to declare all sums secured hereby immediately due and
payable. Consent to one such transaction shall not be deemed to be a waiver of the
right to require consent to future or successive transactions. City may grant or
deny such consent in its sole discretion and, if consent should be given, any such
transfer shall be subject to this Section 13, and any such transferee shall assume
all obligations hereunder and agree to be bound by all provisions contained
herein. Such assumption shall not, however, release Borrower from any liability
thereunder without the prior written consent of City.
b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or
conveyance of the Property, or any portion thereof or interest therein, whether
voluntary, involuntary, by operation of law or otherwise, the execution of any
installment land sale contract or similar instrument affecting all or a portion of the
Property, or the lease of all or substantially all of the Property. 'Transfer' shall not
include the leasing of individual residential units on the Property, so long as
Borrower complies with the provisions of the Loan Agreement and the
Affordability Covenants and Restrictions relating to such leasing activity, nor
shall it include a conveyance of the Property to a limited partnership in which
Meta Housing Corporation or a limited liability wholly owned by Meta Housing
Corporation is a general partner, or to a corporation or limited liability company
LEQAL_US_W # 90423673.1 9
that is wholly owned by the Borrower or its affiliates and that is formed for the
sole purpose of owning and operating the Property, or the sale back to the
Borrower. In the event of any Refinancing or partial Refinancing in an amount in
excess of the balance of the Senior Loan and AHSC 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 HOME Loan shall be repaid
to the City at the time of each Refinancing or partial Refinancing.
C. Notwithstanding anything to the contrary contained herein, a "transfer" shall not
include (and it shall not be deemed a Sale) (i) a transfer of a general partner's
interest in Borrower when made in connection with the exercise by the
Borrower's limited partner (the "Limited Partner") of its rights upon a default by a
general partner under the Borrower's partnership agreement (the "Partnership
Agreement") or upon a general partner's withdrawal in violation of the
Partnership Agreement, so long as the removal and substitution of the defaulting
general partner is made within thirty (30) days of such default or, if such removal
and substitution cannot reasonably be completed within thirty (30) days, so long
as the Limited Partner commences to take action to remove and substitute the
general partner with a reasonable period and thereafter diligently proceeds to
complete such substitution; (ii) any transfer of the Property to the managing
general partner of Borrower pursuant to the right of first refusal or to the general
partners of Borrower pursuant to the purchase option, as provided for in the
Partnership Agreement; (iii) any transfer of the Limited Partner's interest under
and in accordance with the Partnership Agreement; and (iv) any sale, transfer or
other disposition of an interest in a limited partner of the Borrower.
14. Event of Default.
Subject to the provisions of Section23 hereof, the occurrence of any of the following
shall be deemed to be an event of default ("Event of Default") hereunder: (a) failure by Borrower
to make any payments provided for herein, and if such default is not made good within fifteen
(15) Business Days after Developer's receipt of written notice that such payment was not
received when due; or (b) failure by Borrower to perform any covenant or agreement in the Deed
of Trust, the Agreement, or the Affordability Covenants and Restrictions within thirty (30) days
after written demand therefor by City (or, in the event that more than thirty (30) days is
reasonably required to cure such default, should Borrower fail to promptly commence such cure,
and diligently and continuously prosecute same to completion).
15. Remedies.
Upon the occurrence of an Event of Default, after any applicable notice has been
provided and the expiration of any applicable cure period therefore and subject to the provisions
of Section 21 hereof, City may declare all sums evidenced hereby immediately due and payable
by delivery to the Trustee named in the Deed of Trust securing this Note, and to Borrower,
written declaration of default and demand for sale, and written notice of default and of election
LEGAL_US_W H 90423673.1 10
to cause the Property to be sold, which notice Trustee shall cause to be duly filed for record and
City may foreclose on the Deed of Trust. City shall also deposit with Trustee the Deed of Trust,
this Note and all documents evidencing expenditures secured thereby and evidenced hereby.
Upon the occurrence of an Event of Default (and so long as such Event of Default shall
continue), the entire balance of principal shall bear interest at the Bank of America reference rate
on the due date of the delinquent payment plus four percent (4%). No delay or omission on the
part of the City in exercising any right under this Note or under any of the other Loan Documents
shall operate as a waiver of such right.
16. Attornev Fees.
If this HOME Promissory Note is not paid when due or if any Event of Default occurs,
Borrower promises to pay all costs of enforcement and collection, including but not limited to,
reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the
provisions hereof.
17. Severability.
Every provision of this Note is intended to be severable. hi the event any term or
provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and
provisions hereof, which terms and provisions shall remain binding and enforceable.
18. Number and Gender.
In this Note the singular shall include the plural and the masculine shall include the
feminine and neuter gender, and vice versa, if the context so requires.
19. Non-recourse.
The HOME Loan is a nonrecourse obligation of the Borrower. Neither Borrower, nor its
partners nor any other party shall have any personal liability for repayment of the HOME Loan
or for any other amounts under any of the documentation evidencing, securing or describing the
HOME Loan. The sole recourse of City under this Note and the Deed of Trust for repayment of
the HOME Loan and for such other amounts arising therefrom shall be the exercise of its rights
against the Property and related security thereunder.
20. Subordination.
It is hereby expressly agreed and aclmowledged by Borrower and City that the Deed of
Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior
Deed of Trust.
21. Notice of Default.
LAGAL_US_W # 90423673.1 11
a. Subject to the applicable cure periods set forth in Section 14 and subject to the further
provisions of this Section 21, failure or delay by the Borrower to perform any term or provision
of this Note constitutes a default under this Note. The Borrower must immediately commence to
cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy
with reasonable diligence.
b. The City shall give written notice of default to the Borrower specifying the default
complained of by the City. Delay in giving such notice shall not constitute a waiver of any
default nor shall it change the time of default.
c. Except in the case of a monetary event of default, the Borrower shall not be in
default so long as it endeavors to complete such cure, correction or remedy with reasonable
diligence, provided such cure, correction or remedy is completed within the applicable time
period set forth herein after receipt of written notice (or such additional time as may be deemed
by the City to be reasonably necessary to correct the default).
d. Any failures or delays by the City in asserting any of its rights and remedies as to
any default shall not operate as a waiver of any default or of any such rights or remedies. Delays
by the City in asserting any of its rights and remedies shall not deprive the City of its right to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert,
or enforce any such rights or remedies.
e. If a monetary event of default occurs under the terms of this Note or the Deed of
Trust, prior to exercising any remedies thereunder City shall give Borrower written notice of
such default. Borrower shall have a period of fifteen (15) Business Days after such notice is
received within which to cure the default prior to exercise of remedies by City under this Note
and the Deed of Trust.
f If a non -monetary event of default occurs under the terms of this Note or the Deed
of Trust, prior to exercising any remedies thereunder, City shall give Borrower notice of such
default. If the default is reasonably capable of being cured within thirty (30) days, Borrower shall
have such period to effect a cure prior to exercise of remedies by the City under this Note and the
Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty
(30) days, and Borrower (i) initiates corrective action within said period, and (ii) diligently,
continually, and in good faith works to effect a cure as soon as possible, then borrower shall have
such additional time as is reasonably necessary to cure the default prior to exercise of any
remedies by City. In no event shall City be precluded from exercising remedies if its security
becomes or is about to become materially jeopardized by any failure to cure a default or the
default is not cured within one hundred eighty (18 0) days after the first notice of default is given.
g. In addition, if an Event of Default occurs hereunder, prior to taking any remedy under
this Note or any other document evidencing or securing this Note, City shall first give notice of
the occurrence of such Event of Default to the Limited Partner and the Limited Partner shall have
not less than 30 days to cure such Event of Default, provided if in order to cure such Event of
Default the Limited Partner gives notice to the City that Limited Partner must remove and
LEGAL_US_W # 90423673.1 12
replace the general partner or general partners of Borrower, Limited Partner shall have until 30
days following the effective date of such removal and replacement to cure such Event of
Default,.
22. Insurance and Condemnation.
In the event of any fire or other casualty to the Property or eminent domain proceedings
resulting in condemnation of the Property or any part thereof, Borrower shall have the right to
rebuild the Property, and to use all available insurance or condemnation proceeds therefor,
provided that (a) such proceeds are sufficient to keep the HOME Loan in balance and rebuild the
Property in a manner that provides adequate security to City for repayment of the HOME Loan
or if such proceeds are insufficient then Borrower shall have funded any deficiency, (b) City
shall have the right to approve plans and specifications for any major rebuilding and the right to
approve disbursements of insurance or condemnation proceeds for rebuilding under a
construction escrow or similar arrangement, and (c) no material default then exists under this
Note or the Deed of Trust. If the casualty or condemnation affects only part of the Property and
total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial
repayment of the HOME Loan in a manner that provides adequate security for repayment of the
remaining balance of the HOME Loan.
23. Force Maieure.
Notwithstanding specific provisions of this Note, performance hereunder shall not be
deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs;
riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy;
epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental
restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor,
materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to
act of the City or any other public or governmental City or entity (except that any act or failure to
act of City shall not excuse performance by City); or any other causes beyond the reasonable
control or without the fault of the party claiming an extension of time to perform. An extension
of time for any such cause shall be for the period of the enforced delay and shall commence to
run from the time the party claiming such extension gives notice to the other party, provided
notice by the party claiming such extension is given within thirty (30) days after the
commencement of the cause. Times of performance under this Note may also be extended in
writing by the City and the Borrower.
24. Assignments.
The City, and the assignee of the City, shall have the right to assign this Note and the
Deed of Trust securing this Note, without any further act of Borrower. The assignee shall give
notice to Borrower as soon as practicable after such assignment.
LEGAL_US_W #90423673.1 13
This City Promissory Note is hereby agreed to and executed on the date first set forth above.
"BORROWER"
SANTA ANA ARTS COLLECTIVE, LP, a California limited partnership
By: Santa Ana Arts Collective, LLC,
a California limited liability company,
its administrative general partner
Kasey Burke, Vice President
By: WCH Affordable XVIII, LLC,
a California limited liability company,
its managing general partner
0
Sandra Gibbons, Executive Vice President / CFO
LEGAL_US_W # 90423673.1 14
Exhibit Ee. Project
Budget
Santa Ana Arts Collective Protect Budoot
ACQUISITION
RELOCATION
CON$TPUGTION
DUPPMUSE
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CONTINGENCY COSTS
'CONSTRUCTION PERIOD EXPENSES
PERMANENT FINANCING EXPENSES
LEGAL FEES
CAPITALREO RESERVES
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!DEVELOPER COSTS
Exhibit Fee Scope of
Work /Schedule of
Ivi
EXHIBIT F
SCOPE OF WORK & SCHEDULE OF PERFORMANCE
I. SCOPE OF DEVELOPMENT:
The property address of the site subject to this agreement is 1666 North Main Street, at the
signalized intersection of 17th Street and Main Street, in the Midtown Specific Plan Zoning
District (SP -3). The development site consists of two parcels held as one, of 48,399 square feet
total (or 1.11 acres). The development site is currently improved with a five -story office building,
one level of subterranean parking, and approximately 0.5 acre of surface parking. The office
building was built in 1968 and has 62,724 rentable square feet.
In November 2014, the Santa Ana City Council approved an adaptive reuse ordinance, which
provides alternative building and fire standards in order to convert non-residential buildings built
before 1974 into dwelling units, guest rooms or joint living and work quarters. 1666 North Main
Street qualifies for this ordinance because of the building's age, non-residential use, and location in
the Midtown Specific Plan Zoning District.
The development is a fifty-eight (58) unit affordable housing development that would adaptively
reuse the five -story office building as forty-eight (48) residential flats, and newly construct ten (10)
additional residential lofts, townhomes, and flats on the office building's former surface parking
area. A mix of twenty-six (26) 1 -bedroom, fifteen (15) 2 -bedroom, and seventeen (17) 3 -bedroom
units will be spread throughout the adaptively reused office building and ground -level new
construction. Building heights range from two (2) stories in the former surface parking areas to five
(5) stories in the adaptively reused building. An existing subterranean parking garage will be
restriped for 113 parking spaces. Parking will be accessed via the existing drive aisle from North
Sycamore Street to the west.
The 1968 office building is constructed of reinforced concrete panels with tinted window panels, in
the international style of architecture, which has its roots in the modernist design movement of the
twentieth century. The new development would preserve the former office building's clean,
contemporary lines and add new, modern lofts and townhomes to complement the character of the
office building and more broadly Midtown.
To complement and sustain the proposed artist concept, Meta Housing Corporation has included
approximately 5,992 square feet of community space distributed throughout the development. That
space is proposed to be allocated to the following uses: a community art gallery, art garden, maker
spaces, music room, rehearsal room, community room with community kitchen, computer room,
property management office, services office, common laundry facility, a courtyard, and tot lot. The
approximate 1300 square foot community art gallery, art garden, and maker spaces will be located
on North Main Street.
II. SCHEDULE OF PERFORMANCE:
A. GENERAL
1. Insurance. Developer shall furnish or cause to be furnished As a Condition Precedent to
appropriate certificates of insurance and/or endorsements to disbursement of any portion of
City wldch meet all requirements of the Agreement. the loan, but no later than ten
days after close of escrow.
B. PROJECT FINANCING
1. Submission of Evidence of Financing. Developer shall submit Not later than thirty (30) days
to City evidence of financing for the Project after allocation of tax credit
financing by CTCAC.
2. Receipt of All Funding Commitments Necessary to Complete Not tater than thirty (30) days
Construction of the Improvements. Developer shall use its best before Construction Close.
and good faith efforts to secure irrevocable funding
commitments from TCAC, Senior Lender, and other available
funding sources which when combined with the Loans shall
equal no less than the total cost to construct the Improvements,
as set forth in the approved Project Budget. Developer shall
submit such eormmitments to City for review.
3. Approval of Developer's Evidence of Financing City must
approve Developer's evidence of financing as required by
the Agreement.
C. CONSTRUCTION OF IMPROVEMENTS
Design Development Drawings. Developer shall prepare and
submit ,Design Development Drawings to City for review and
approval.
2. Approval of Design Development Drawings. City Housing
staff shall review and approve, approve with conditions, or
disapprove the Design Development Drawings.
Not tater than twenty (20)
business days after receipt of a
complete submittal from
Developer
Within seven (7) months
following the date of the
Loan Agreement.
Within fourteen (14) days of
Developer' s complete
submittal of the Design
Development Drawings.
The Schedule of Performance is subject to revision from time to time as mutually agreed upon in
writing between Developer and the City Manager or his/her designee ("City Manager"), and City
Manager is authorized on behalf of City to agree to make such revisions as he deems reasonably
necessary. The City Manager, in his/her sole discretion, may elect to bring to the City Council for
consideration and action any modifications to this Schedule of Performance. It is understood that the
Schedule of Perfolmance is subject to all of the telms and conditions set forth in the text of the
Agreement. The summary of the items of perfolmance in the Schedule of Performance is not
intended to supersede or modify the more complete description in the text of the Agreement; in the
event of any inconsistency between the Schedule of Performance and the text of the Agreement, the
text shall govern. In the event the City Manager deems it necessary to bring to City Council for
consideration one or more modifications to this Schedule of Performance, the discretion to do so is
expressly reserved to the City Manager. The time periods set fol lh herein for City approval of plans
and drawings and other submittals that are submitted to City by Developer shall only apply and
commence upon Developer' s complete submittal of all the required information. In no event shall an
incomplete submittal by Developer trigger any City obligations of review and/or approval hereunder;
provided, however, that City shall notify Developer of an incomplete submittal as soon as is
practicable and in no event later than the applicable time set forth for City action on the particular
item in question. If any of the foregoing performance measurements are not met then it will be
deemed a default as defined in Section 20 and any remedies shall be cured according to said Section
of the Agreement.
Exhibit G.* Form of
Residual Receipts
Report
EXHIBIT G
FORM OF RESIDUAL RECEIPTS REPORT
Community Development 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 Project 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 BULinclude interest income from replacement and operating
reserves nor interest income on tenant security deposits) (Z) $
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) $
Operating Expenses
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
Property Taxes
(8)
(9)
Insurance (1 0) $
Other Expenses
Please list these expenses:
Total Annual Operating Expenses for the Housing Project
(Add lines 5, 6, 7, 8, 9, 10, and 11)
Net Operating Income (Subtract Line 12 from Line 4)
Do not include expense unrelated to the operation ofthe 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
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)
Additional Payment Obligations (such as partnership management fees, deferred
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, 15, and 16)
Residual Receipts for Year Ending
(Subtract Line 17 from Line 13)
Percentage of Residual Receipts to be Paid to the Agency (as shown in the
Promissory Note by and between the Agency and Borrower dated
Amount Payable to the Agency (Multiply Line 18 by Line 19)
(12)
(13)
(14) $
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.
Revision to Design Development Drawings. Developer shall Within fourteen (14) days of
revise and resubmit Design Development Drawings to conditional approval or
address conditions or disapproval to the satisfaction of City. disapproval, subject to
extension based upon extent of
revisions requested.
4. Management Plan. Developer shall submit its proposed Not later than twenty (20)
Management Plan to City for review and approval. business days after receipt of a
complete submittal from
Developer
5. Approval of Management Plan. City shall review and approve, Within fourteen (14) days of
approve with conditions, or disapprove the Management Plan. receipt of a complete submittal
from Developer.
6. Revision to Management Plan. Developer shall revise Within fourteen (14) days of
Management Plan if conditionally approved or disapproved by receipt of disapproved
City. Management Plan from City.
7. Approval of Revised Management Plan. City shall review and Within fourteen (14) days of
approve, approve with conditions, or disapprove revised
receipt of a complete submittal
Management Plan.
of revised Management Plan
from Developer, but not later
than 120 days prior to project
completion.
8. Progress Payments. During construction Developer shall
Commencing thirty (30) days
prepare monthly written progress reports and submit to City
after start of the Construction
Manager.
work through completion.
9. Commencement of Construction of the Improvements No later than July 28, 2017
Developer shall cause the Constriction of the Improvements to
be conunenced by Contractor.
10. Completion of Construction of the Improvements. Developer On or before November 1,
shall complete all work of the Construction of the 2018 (subject to extension by
Improvements. City based upon substantial
progress toward completion of
construction by Developer).
11. Release of Construction Covenants. City to furnish Developer Within thirty (30) days of
with a Release of Construction Covenants. receipt of Developer request
and only after Developer's
satisfactory completion of the
Construction of the
hmprovements.