HomeMy WebLinkAbout3 - LOAN AGREEMENT FOR AMCAL_2018-01-163-1
3-2
3-3
3-4
PLANNING AND BUILDING AGENCY
A1 GENERAL AGRICULTURAL†
-B PARKING MODIFICATION
C-SM COMMERCIAL SOUTH MAIN
C1 COMMUNITY COMMERCIAL
C1-MD COMM. COMMERCIAL/MUSEUM DISTRICT
C2 GENERAL COMMERCIAL
C3 CENTRAL BUSINESS
C3-A CENTRAL BUSINESS-ARTIST VILLAGE
C4 PLANNED SHOPPING CENTER
C5 ARTERIAL COMMERCIAL
R1 SINGLE FAMILY RESIDENTIAL
R2 TWO FAMILY RESIDENCE
R3 MULTIPLE DENSITY MULTIPLE
FAMILY RESIDENCE
R4 SUBURBAN APARTMENTS
RE RESIDENTIAL ESTATE
SD SPECIFIC DEVELOPMENT
SP SPECIFIC PLAN
CR COMMERCIAL RESIDENTIAL
GC GOVERNMENT CENTER
M1 LIGHT INDUSTRIAL
M2 HEAVY INDUSTRIAL
MO MILITARY OPERA TIONS
O OPEN SPACE
P PROFESSIONAL
PCD PLANNED COMMUNITY DEVELOPMENT
PRD PLANNED RESIDENTIAL DEVELOPMENT
AMCAL FIRST STREET FAMILY APARTMENTS
1440 EAST FIRST STREET
GPA 2016-1 & AA 2016-1
1" = 1000 FEET
= 500 FEET
M2
R4
M1
M1
M2
M1
M2
M2 SD-16
M2
R1
R1
R1
R1
R1
R1
R1 M1 M1
M2 M1
M1M1M1
M2
M1
M1
M1
M1
M1
M1
M2
119'18
0
'
176'
402'
C2-HDII C2-HDII C2-HDII C2-HDII
R3
R1 R1 R1
R3 R3 R3
R3
R3
R3
R3
R3
R3
R3
R3
R3
R3
R3
R3
R3
R2R2R2R2
R3
R3
R3
R3 M1
R3 R2
R1
R1
R1 R1
R1
R1
M1
M1
M1
O
R1
R1
R1R1R1R1
R1
R1
R1
R1
170.9'
21
3
.
5
'
12
0
7
'
767'
R2
HA
T
H
A
W
A
Y
HUNTERAV.CE
D
A
R
S
T
.
KIL
S
O
N
D
R
.
HA
L
L
A
D
A
Y
S
T
.
OA
K
S
T
.
GRANT ST.
MA
P
L
E
S
T
.
HUNTERAV.
GRANT ST.
CHESTNUTAV.
HA
T
H
A
W
A
Y
S
T
A
.
F
E
S
T
.
ST
A
.
F
E
S
T
.
WALNUT ST.
MI
N
N
I
E
S
T
.
CAMILE ST.
MYRTLE ST.
WARREN ST.
CE
D
A
R
S
T
.
CE
D
A
R
S
T
.
HI
C
K
O
R
Y
S
T
.
PINE ST.
ST
A
N
D
A
R
D
S
T
.
MYRTLE ST.
ST
.
WAKEHAM AV.
S
A
N
T
A
F
E
S
T.CAMILE ST.
BISHOP ST.
WALNUT ST.
260'1374'
53
6
'
53
6
.
2
'
M1
R1
R4
C2
812.31
37
8
.
4
9
'
13
9
'
578.99'
14
0
.
0
1
'
53
2
'
M1 C2 C2
R3O
C5
O
.
C
.
F
.
C
.
D
MA
C
C
L
A
Y
S
T
.
WARREN ST.
51
4
.
4
9
'
M1
C1
SD-21
R1
R1
R1
R1
R1
R1
R1 R1
P
C2
R2
PP
O
R1
C2
PC2
C2
P P P P
R2 R2 R2
R2-B
R2 R2
R2R2
R2
C2
118'
160'
110'
277.9'131'14
2
.
7
'
95
.
1
'
16
5
'
19
0
'
19
0
'
185'
174'
15
0
'
33
.
8
'
21
1
.
174'
127'118'
144'
28'
155'
15
5
'
91
'
86
'
202.3'14
9
.
5
'
199.8'
255.1'245.5'
10
0
'
23
8
'
33
3
'
25
3
'
19
3
'
19
0
'
52
3
'
18
3
'
11'
161.2'
50
'
EA
S
T
S
I
D
E
LI
N
W
O
O
D
LY
O
N
S
T
.
WR
I
G
H
T
S
T
.
AV
.
AV
.
MC
C
L
A
Y
S
T
.
MC
C
L
A
Y
S
T
.
6TH ST.
5TH ST.
GR
A
N
D
A
V
.
PALM ST.
M2M2
M2
M2
M2
R3
R3
O
O
M1
M1 R3
R3
C2
C2C2
M1
C2 C2
C2
C2C2
M1 M1
M1
M1
M1
M1
180'
150'
165'
21
2
'
180'180'
180'
15
5
'
175'155'
16
5
'
15
0
'
180'
O
M2
M2
O
R2 R2
R2
R2
R2
R2 R2
R2
R2
R2
R2-HDII C2-HDII C2-HDII
M2-HDII
R3-HDII
R3-HDII
R3-HDII
R3
-HDII
SD-
47SD-
47
R3
-HDII
R3
-HDII
M1
-HDII
M1
-HDII
M1
-HDII
SD-71
R3-HDII
R3-HDII R3-HDII
R3-HDII
15
5
'
M2
M2
M2
C2
R2
R2 R2
R2
C2-HDII
M2-HDII
M2-HDII
M2-HDII
C2-HDII
M2-HDII
C2-HDII
C5-HDII
C2-HDII
50'
12
5
'
700'
500'50
'
EA
S
T
W
O
O
D
A
V
.
2ND ST.
3RD ST.
TE
R
M
I
N
A
L
S
T
.
6TH ST.
S
A
N
T
I
A
G
O
A
V
.
ST
A
F
E
S
T
.
ST
A
F
E
S
T
.
BR
E
E
D
E
N
S
T
.
TE
R
M
I
N
A
L
S
T
.
PO
I
N
S
E
T
T
I
A
S
T
.
6TH ST.
ST
ST
.
BROWN
S
T
.
5TH ST.
GA
R
F
I
E
L
D
PO
R
T
E
R
S
T
.
ST
.
LA
C
Y
M
O
R
T
I
M
E
R
S
T
.
MO
R
T
I
M
E
R
S
T
.
MI
N
T
E
R
S
T
5TH ST.
6TH ST.
G
A
R
F
I
E
L
D
S
T
.
P
O
I
N
S
E
T
T
I
A
S
T
.
3RD ST.
4TH ST.
SANTA
.
A
N
A
B
L
.
2ND ST.
PROJECT SITE
EXHIBIT 1
3-5
This page intentionally left blank
3-6
EXHIBIT 2
3-7
EXHIBIT 2
3-8
EXHIBIT 2
3-9
EXHIBIT 2
3-10
1
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 (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 27383]
LOAN AGREEMENT
by and between the
HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE
HOUSING SUCCESSOR AGENCY
and
AMCAL 1440 Santa Ana Fund, LP, a California limited partnership
(1440 East First Street, Santa Ana, California)
Dated: January 16, 2018
EXHIBIT 3
3-11
2
LOAN AGREEMENT
HOUSING SUCCESSOR AGENCY FUNDS
THIS LOAN AGREEMENT (the “Agreement”) dated, for identification
purposes only, as of January 16, 2018, is made and entered into by and between the
Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a
public body, corporate and politic (“Agency”), and AMCAL 1440 Santa Ana Fund, LP, a
California limited partnership (“Developer”) with reference to the following:
RECITALS:
A. The Agency is authorized by Section 34176 of the Health and Safety Code
to perform housing functions previously performed by the City’s former redevelopment
agency to increase the supply of very low and low-income housing available at affordable
housing costs. Pursuant to subdivision (d) of Section 34176, the low and moderate
income housing asset fund (“LMIHAF”) was established as a housing asset and the funds
in the LMIHAF shall be used in a manner consistent with the affordable housing
requirements of the Community Redevelopment Law of the State of California (“CRL”),
(Part 1 commencing with Section 33000, et seq.). Such uses may include the
construction, preservation, and rehabilitation of affordable housing for low-income
households.
B. Developer requested financial assistance in connection with the proposed
development of a sixty-nine (69) unit affordable housing complex (“Project”) to be
located at 1440 East First Street, Santa Ana, California, and legally described within
Exhibit A attached hereto and incorporated herein (“Property”). The residential units
will be located within six (6) buildings. The rental units (less one manager’s unit) are
100% affordable to family households earning no more than 30% to 60% of the Area
Median Income (“AMI”). The unit mix currently consists of six (6) four-bedroom units,
twenty-eight (28) three-bedroom units, and thirty-five (35) two-bedroom units (one being
a manager’s unit). Eight (8) of the units will be assisted by the Housing Authority of the
City of Santa Ana’s Project-Based Voucher Program. On-site amenities will include a
community room and amenity space including tot lot/play area for children, outdoor
seating, BBQs, a flex play space and planters. The community room will be incorporated
into the development, providing a computer laboratory, kitchen, activity room for
resident activities, and office space for property management and social services staff.
Developer will contract with a qualified non-profit organization (of which LifeSTEPS is
hereby approved by the City) to provide free on-site social services to Project tenants.
Services will be provided in the form of classes and workshops with the subject matter
tailored by a social service coordinator to the specific needs of the community.
C. The City of Santa Ana (“City”) and the Housing Authority of the City of
Santa Ana (“Housing Authority”) reviewed Developer’s request for assistance and at the
City Council/Housing Authority meeting on June 20, 2017, the Housing Authority Board
authorized and approved issuance of a conditional, pre-commitment letter evidencing the
preliminary award of $8,522,740 of funds to the Project (“Agency Loan”), to be funded
EXHIBIT 3
3-12
3
exclusively from the Low and Moderate Income Housing Asset Fund (the “LMIHAF”)
held by the Agency.
D. The amount of the Agency Loan was determined based upon the City and
Agency’s review of the Developer’s request for the receipt of the Agency Loan and the
development proforma and projected cash flows for the Project submitted by the
Developer to the City/Agency as of March 18, 2016 (“Proforma”). The Housing
Authority’s Executive Director has authority to approve revised development proformas
and projected cash flows for the Project; provided, however, that the Agency Loan is not
materially increased or extended.
E. In furtherance of the CRL and the Redevelopment Plan, Developer has
applied to the Agency for a loan with which to:
1. 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.
F. The Agency, on certain terms and conditions, desires to make such
Agency Loan to the Developer in order to make possible the construction of the Project,
thereby expanding the supply of decent, safe, sanitary and affordable housing.
G. 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, Agency and Developer agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Project Documents, unless otherwise
expressly defined, are defined where first used in this Agreement and/or as set forth in
this Article 1.
"Affordability Restrictions on Transfer of Property" means that
certain document affecting real property benefiting the Agency, attached hereto and
incorporated herein as Exhibit B.
"Affordable Housing" means the total housing costs paid by a qualifying
household, which shall not exceed the fraction of gross income specified in accordance
with Sections 50052.5 and 50053 of the Health & Safety Code. In the event of a conflict
between the fractions specified in this Defined Terms section, and those found in
EXHIBIT 3
3-13
4
Sections 50052.5 and 50053 of the Health & Safety Code, the fractions specified by State
law shall control.
“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 California Tax Credit Allocation Committee (TCAC), or by the
State of California, as applicable.
“Agency” means the Housing Authority of the City of Santa Ana, acting
as the Housing Successor Agency, a public body, corporate and politic, exercising
governmental functions and powers, and organized and existing under the CRL. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California
92702. “Agency” shall also refer to the City where the context dictates, to the effect that
the City shall have all rights granted to the Agency hereunder.
"Agency Deed of Trust" means the deed of trust encumbering the
Property, in the form attached hereto as Exhibit C, to be executed by the Developer
pursuant to Section 5.B in order to secure the Agency Loan Note.
“Agency Loan” means a loan in the original principal amount of up to
eight million five hundred twenty-two thousand seven hundred forty dollars ($8,522,740)
to be made to Developer by the Agency to be funded exclusively from the Low and
Moderate Income Housing Asset Fund held by the Agency.
"Agency Promissory Note" means that certain promissory note for
Agency Loan funds in the original principal amount of $8,522,740 in the form attached
hereto as Exhibit D, and to be executed by Developer in favor of Agency to evidence the
obligation of Developer to repay the Agency Loan through residual receipts as further
described in the Agency Promissory Note.
"Building Permit" means the building permit(s) issued by the City and
required for the construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which the City of Santa Ana City Hall is open to the public for the conduct of
City affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 31.
"Certificate of Completion" has the meaning set forth in Section 17.
"City" means the City of Santa Ana, California, a charter city and
municipal corporation. “City” shall also refer to the Agency where the context dictates,
to the effect that the Agency shall have all the rights granted to the City hereunder.
EXHIBIT 3
3-14
5
“City Project Manager” shall mean the City Manager and/or his/her
designee.
"Close of Escrow" shall mean the date upon which the Agency Loan
Agreement and Agency Deed of Trust is recorded in the Official Records of the County.
"Closing Statement" means the final statement of Developer's Escrow
account for the purchase of the Property pursuant to the purchase contract.
"County" means the County of Orange, California.
“Developer” means AMCAL 1440 Santa Ana Fund, LP, a California
limited partnership.
"Developer's Representative" shall mean an officer of the General
Partner of the 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
primary metropolitan statistical area (“PMSA”), adjusted for household size, as published
by HCD in accordance with Sections 50052.5 and 50053 of the Health & Safety Code.
“General Partner” means AMCAL Multi-Housing Two 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. Hazardous Material shall not include (i)
construction products, household cleaners and office materials of the type and quantity
ordinarily used in the normal construction, operation and maintenance of properties
similar to the Project or (ii) small amounts of household mold to the extent promptly
remediated upon discovery.
“HCD” means the California Department of Housing and Community
Development and any successors or assigns thereof.
EXHIBIT 3
3-15
6
"Housing Authority" means the Housing Authority of the City of Santa
Ana, a public body, corporate and politic.
"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, collectively, Bank of America, N.A., a
national banking association, and Banc of America CDC Special Holding Company, Inc.,
a North Carolina corporation.
“Loan Documents” or “Agency Loan Documents” means, collectively,
this Agreement, the Agency Promissory Note, the Agency Deed of Trust, and the
Affordability Restrictions on Transfer of Property, and any other agreement, document,
or instrument that the Agency reasonably 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 HCD in accordance with Sections 50052.5
and 50053 of the Health & Safety Code.
EXHIBIT 3
3-16
7
“Median Income for the Area” means the median income for the Orange
County, California PMSA as most recently determined by HCD. Also may be referred to
interchangeably in the Agency Loan Documents as “Area Median Income” or “AMI”.
“Partnership Agreement” means the Amended and Restated Agreement
of Limited Partnership of AMCAL 1440 SANTA ANA FUND, LP, dated as of
[________, 2018] attached herein as Exhibit H.
"Permitted Encumbrances for the Affordable Housing Restrictions"
means collectively, the Senior Loan Deed of Trust and all other title exceptions and
limitations with respect to the Property hereafter approved by the City Project Manager in
writing.
"Permitted Encumbrances for the Agency Deed of Trust” means the
Senior Loan Deed(s) of Trust and all other title exceptions and limitations with respect to
the Property hereafter approved by the City Project Manager in writing.
"Project" means the construction of the Improvements upon the Property
by Developer pursuant to this Agreement.
"Project Budget" means the line-item budget for the Project attached
hereto as Exhibit E, as modified from time to time in accordance with this Agreement.
"Project Costs" means all costs of any nature incurred in connection with
the Project in accordance with generally accepted accounting principles.
"Property" means the property that is located at 1440 East First 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.
"Senior Lender" means a commercial financial institution providing the
Senior Loan or any other holder of the Senior Loan Note.
"Senior Loan" means a loan from the Senior Lender concurrent to the
Agency Loan for payment of a portion of the acquisition and construction costs, and shall
include any subsequent loan that refinances the initial Senior Loan.
"Senior Loan Deed of Trust" means the first deed(s) of trust securing
the Senior Loan by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement
governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and
EXHIBIT 3
3-17
8
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” means 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 HCD in accordance with Sections 50052.5
and 50053 of the Health & Safety Code.
1.2 Singular and Plural Terms. Any defined term used in the plural in this
Agreement shall refer to all members of the relevant class and any defined term used in
the singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement shall
include such document both as originally executed and as it may from time to time be
modified. References herein to Articles, Sections and Exhibits shall be construed as
references to this Agreement unless a different document is named. References to
subparagraphs shall be construed as references to the same Section in which the reference
appears. The term "document" is used in its broadest sense and encompasses agreements,
certificates, opinions, consents, instruments and other written material of every kind. The
terms "including" and "include” mean "including (include) without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement,
as now existing and as the same may from time to time be modified, are incorporated
herein by this reference.
2. [RESERVED]
3. SCOPE OF WORK/PROJECT BUDGET
A “Scope of Work” and “Schedule of Performance” for the Property is attached
hereto as Exhibit F. Any material change to the Scope of Work/Schedule of
Performance requested by the Developer shall be subject to the prior written approval of
the City Project Manager. The Scope of Work/Schedule of Performance sets forth the
construction work that shall be performed on the Property and timeframes for approvals
and such work.
A line-item budget for the Project, including a summary statement of sources and
uses of funds, is incorporated into Exhibit E ("Project Budget"). Any material change to
the Project Budget requested by Developer shall be subject to the prior written approval
of the City Project Manager as set forth in Section 10.3 hereof.
EXHIBIT 3
3-18
9
4. [RESERVED]
5. AGENCY LOAN:
A. Amount and Purpose. Subject to the terms and conditions of this
Agreement, Agency agrees to make a loan to the Developer from the Low and Moderate
Income Housing Asset Fund (“LMIHAF”) in the principal amount of up to $8,522,740.00
for the acquisition costs and hard and soft costs in constructing the Project.
B. Agency Promissory Note and Deed of Trust. The Agency Loan shall be
evidenced by the Agency Promissory Note in the form attached hereto as Exhibit D. The
Agency Loan shall be secured by the Agency Deed of Trust in the form attached hereto
as Exhibit C.
C. Agency Loan Terms. The terms and conditions of the Agency Loan are
as set forth in the Agency Promissory Note, which is a residual receipts Note. The term
of affordability for the Project is fifty-five (55) years from the receipt of Certificate of
Occupancy for the Project, or repayment of the Agency Loan, whichever is longer.
6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
6.1 Conditions Precedent. Agency's obligation to disburse the Agency Loan
is subject to the satisfaction of the following conditions precedent:
(a) Housing Authority. Review and approval of the documents
evidencing the Agency Loan by the Housing Authority of the City of Santa Ana acting as
the Housing Successor Agency.
(b) Code Compliance. Compliance with California Health and Safety
Code and applicable regulations set forth in Section 34176.
(c) Environmental Review. Compliance with and completion of
environmental review of the Project pursuant to the California Environmental Quality
Act (“CEQA”) and approval thereof.
(d) Affordability Restrictions. The funding of $8,522,740 is from the
Low and Moderate Income Housing Asset Fund, which requires legal restrictions that the
Agency cannot amend or repeal. Sixty-eight (68) of the sixty-nine (69) “Housing Units”
at the Project shall and will be restricted to “Affordable Rent” as defined by the
California Tax Credit Allocation Committee (TCAC) Regulations for a period not less
than fifty-five (55) years pursuant to conditions, covenants and restrictions recorded
against the Project in the Official Records, County of Orange, California. Thirty-four
(34) of the sixty-eight (68) Housing Units at the Project shall and will be restricted to
households earning 30% or less of the AMI, twenty-one (21) of the sixty-eight (68)
Housing Units at the Project shall and will be restricted to households earning 50% or
less of the AMI, and thirteen (13) of the sixty-eight (68) Housing Units at the Project
EXHIBIT 3
3-19
10
shall and will be restricted to households earning 60% or less of the AMI. One (1)
Housing Unit will be rented to an on-site property manager; the manager’s unit will not
be rent restricted.
(e) Loan Documents. Developer shall have delivered to the Escrow
Holder, signed by the authorized officer or officers of Developer, with such signature(s)
acknowledged where necessary, each of the following documents:
(i) this Agency Loan Agreement;
(ii) the Agency Promissory Note ($8,522,740);
(iii) the Agency Deed of Trust; and
(iv) the Affordability Restrictions on Transfer of Property.
(f) Title Insurance. Agency shall have received an American Land
Title Association (ALTA) Extended (LP-10) Loan Policy (6-17-06), or evidence of a
commitment therefore satisfactory to Agency, issued by Commonwealth Land Title
Insurance Company and in form and substance satisfactory to the Agency, together with
all endorsements and binders required, naming Agency as the insured, in a policy amount
of not less than the total Agency Loan Amount, showing Developer as the fee owner of
the Property and insuring the Agency Deed of Trust to be a valid priority lien on the
Property. This Agreement, the Agency Promissory Note, and the Agency Deed of Trust
shall all be subordinate to the Senior Loan Note and Senior Loan Deed of Trust.
(g) 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 California Health
and Safety Code (“H&S”) sections 50052.5 and 33334.3, as applicable. The Agency’s
Affordability Restrictions on Transfer of Property shall remain in first position on title
and shall not be subordinated.
(h) Documents Recorded. This Loan Agreement, the Agency Deed of
Trust, and the Affordability Restrictions on Transfer of Property shall have been recorded
in the Official Records of the County.
(i) Request for Notice. For the benefit of the Agency, Escrow Holder
shall have recorded a Request for Notice of Default of the Senior Loan (the "Request for
Notice of Default").
(j) Insurance. Agency 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.
EXHIBIT 3
3-20
11
(k) 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 Agency shall have received a certificate to that effect signed by Developer's
Representative.
(l) No Default. No Event of Default by Developer shall have
occurred, and no event shall have occurred which, with the giving of notice or the
passage of time or both, would constitute an Event of Default by Developer under this
Agreement, and if requested by the City Project Manager, Agency shall have received a
certificate to that effect signed by Developer's Representative.
(m) The Agency’s obligation to provide the Agency Loan is and shall
remain subject to all covenants, conditions, and restrictions set forth in this Loan
Agreement, and in particular Agency’s analysis of the available funding sources and
development and operating costs of the Project and the overall economic feasibility of the
Project.
6.2 Disbursement Procedures for Loan. The Agency Loan proceeds shall be
disbursed through Escrow to finance the acquisition, development and construction of the
Project (as evidenced in Exhibit E). The Agency 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 Agency’s prior review).
6.3 First Disbursement. Agency's obligation to make the first disbursement
of the Loan is subject to satisfaction of the following conditions precedent:
(a) All grading permits shall have been issued or the City shall have
issued a letter stating that building permits are ready to issue, subject only to payment of
fees and the completion of grading of the Project site.
(b) Developer shall have secured all necessary financing and funding
for the construction and operation of the Project. Such financing and funding shall be
sufficient to pay all Project development costs, through lease-up, as set forth in the final
budget consistent with the approved Proforma (or as otherwise approved by the Agency).
(c) Developer shall have provided evidence to the Agency that the
Developer has obtained insurance policies and certificates or endorsements acceptable to
the Agency, as described in this Loan Agreement.
(d) Developer shall have provided construction security in favor of the
Agency, which may include a completion guarantee from AMCAL Multi-Housing, Inc.
and/or a letter of credit and/or performance and payment bonds from the general
contractor for the Project (or some combination of these), in an amount sufficient to
ensure the Project will be completed and placed in service within the time set forth in the
Project schedule approved by the Agency.
EXHIBIT 3
3-21
12
(e) Developer shall submit and obtain the City Project Manager’s
approval of the construction contract, the identity and qualifications of the General
Contractor, the Partnership Agreement , and management, marketing and tenant selection
plans for the Project.
6.4 Termination for Failure of Condition. If (a) any of the conditions set
forth herein are not timely satisfied (subject to applicable notice and cure rights), and (b)
Agency is not in default under this Agreement, Agency may terminate this Agreement
without any further liability on its part by giving written notice of termination to the
Developer. Upon the giving of such notice, all principal, interest and other amounts will
be due and payable immediately.
6.5 Any Disbursement. Agency's obligation to make any disbursement of the
Loan, including the first and final disbursements, is subject to the satisfaction of the
following conditions precedent:
(a) Satisfactory Progress. The City Project Manager shall be satisfied
that, based on his/her own inspections or other reliable information, the construction is
progressing satisfactorily in conformance with all applicable laws and other
requirements.
(b) Condition of Title. Either (i) the City Project Manager reasonably
believes that no event has occurred since the Close of Escrow that would give rise to a
colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of
Agency against the Property with respect to the subject disbursement, or if such claim is
made, then City Project Manager shall receive satisfactory evidence that such claim has
been bonded over until its resolution; or (ii) Agency must have received, at Developer’s
expense but payable out of the Loan proceeds from the title insurer who issued City's LP-
10 Title Policy, all endorsements thereto then reasonably required by Agency (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 Agency 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 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. Agency'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.
EXHIBIT 3
3-22
13
(b) Certificate of Occupancy Issued. Any portion of the construction work
requiring inspection or certification by any Governmental Authority shall have been
inspected and certified as complete. Developer shall request that the City of Santa Ana
Planning and Building Agency issue a Certificate of Occupancy, a copy of which shall be
delivered to the City Project Manager, in order for final disbursement to occur.
(c) Lien Free. At least one of the following shall have occurred:
(i) Thirty-five (35) days shall have passed since the recording of a
valid notice of completion for the construction, and no mechanic's or materialman’s lien
shall be outstanding; or,
(ii) Ninety-five (95) days shall have passed since actual
completion of the construction, and no mechanic's or materialman’s lien shall be
outstanding, or Developer shall have bonded over any such lien to Agency’s reasonable
satisfaction; or,
(iii) The City has received an endorsement from the Title Company
ensuring no mechanic’s or materialman’s liens.
6.7 Waiver of Conditions. The conditions set forth pertaining to Agency’s
obligation to make disbursements of the Loan proceeds are for Agency's benefit only and
the City Project Manager may waive all or any part of such rights by written notice to
Developer.
6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line-
item by line-item basis in accordance with the Project Budget and subject to the
conditions in this section. In no event shall Agency 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 Agency may reasonably require, accompanied in
each case by (a) invoices and lien releases satisfactory to Agency, 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 Agency. 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 Agency of proceeds of the loan, Developer shall
deliver to Agency a draw request ("Draw Request"), and all required supporting
information as set forth in the Agency Loan Documents or as otherwise reasonably
required by Agency in order to provide information for evaluating the requested
disbursement pursuant to customary construction lending practices of the Senior Lender.
EXHIBIT 3
3-23
14
Agency 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
Agency's "Disbursement/Change Order Approval Notice". Agency 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.
Notwithstanding anything to the contrary set forth herein, to the extent required
by the Senior Lender, the Agency agrees to fully disburse the proceeds of the Loan
(subject to any applicable retainage as contemplated in Section 6.12 hereof) prior to the
disbursement of the Senior Lender.
6.9 Manner of Disbursement. Agency may make any disbursement by
check payable to Developer; or by wire transfer to the Escrow Company; 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
Agency.
6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the
actual cost reasonably estimated by Agency 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 and all other approved financing sources are or may be insufficient to pay
all construction of the Project that may be payable under the Agency Loan Documents or
otherwise in connection with the construction, Developer shall, within ten (10) Business
Days after it receives written notice thereof from Agency of any of the foregoing matters,
do one or more of the following:
(a) provide satisfactory evidence to Agency 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 Agency Loan;
(b) reallocate sufficient funds to pay the Excess Cost from funds
allocated to "Contingency" in the Project Budget; provided, however, that the City
Project Manager's consent to any such reallocation shall be required; or
(c) deposit an amount equal to the Excess Cost in a non-interest
bearing account (the "Overrun Account") with the Senior Lender from which withdrawals
may be made only with the consent of the City Project Manager but which will be
exhausted prior to any further disbursement for any line item, so that any resulting
surplus in any line item of the Project Budget will then be reallocated to the line item(s)
in which the Excess Costs are expected to be incurred.
Agency 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 the Senior
EXHIBIT 3
3-24
15
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. Agency 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 Agency’s withholding
Retainage, Developer can by written notice to Agency 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.
Agency shall not retain funds for building materials purchased by Developer for
which Developer supplies documentation to Agency proving payment in full, land
acquisition costs, or for soft costs.
6.13 Holdback. The retainage otherwise available for disbursement shall be
subject to a holdback of one hundred twenty-five percent (125%) of the estimated cost (as
determined by the City Project Manager) for "punch-list" items. Such holdback will be
released when all punch-list items have been completed to the satisfaction of Agency.
6.14 Waiver of Disbursement Conditions. Unless Agency otherwise agrees
in writing, the making by Agency 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 conditioned to
all further disbursements until fulfilled.
6.15 Modification of Disbursement Conditions and Procedures. The City
Project Manager shall have the authority to modify the disbursement conditions and
procedures set forth herein in order to conform them to the payment provisions of the
contract for construction.
6.16 Other Terms and Conditions of Loan.
A. The Note 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 Loan
Agreement 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; or,
EXHIBIT 3
3-25
16
(3) An Event of Default by Developer which is not timely cured after
expiration of any applicable notice and cure periods pursuant to the terms of this Agreement.
6.17 Closing Costs and Fees. Developer shall pay (a) all escrow fees and
charges, (b) all recording fees and charges on any document recorded pursuant to this
Agreement, and (c) the premium for the title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROJECT
7.1 Use Covenants and Restrictions. Developer agrees and covenants, which
covenants shall run with the land and bind Developer, its successors, its assign and every
successor in interest to the Property that Developer will make all of the rental units on the
Property available to extremely low, very low and low-income households at rents
affordable to such households for fifty-five (55) years (except for one (1) unit for the on-site
manager). The Project shall consist of sixty-nine (69) residential units. Enforceability of
restrictions on the sixty-eight (68) units shall be enforced until the date that is fifty-five (55)
years after the date on which the Certificate of Occupancy is issued.
7.2 Affordability Levels/Unit Mix:
The proposed unit mix and levels of affordability are as follows:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager’s
Unit Total
Two Bedroom 29 4 1 1 35
Three Bedroom 4 17 7 28
Four Bedroom 1 0 5 6
Totals 34 21 13 1 69
The affordable rents charged at the Project must comply with the standards set
forth by the California Tax Credit Allocation Committee (TCAC).
Utility allowances must be deducted from the Maximum Gross Monthly Rent. The
Housing Authority of the City of Santa Ana publishes a utility allowance schedule on an
annual basis. However, in lieu of the utility allowance schedule published by the Housing
Authority, the Developer may elect to use the California Utility Allowance Calculator to the
extent allowed by TCAC.
7.3 Rent Increases: On an annual basis, the Agency shall provide the Developer
with the maximum allowable schedule of rents for the Property which shall correspond to
the maximum rent increase allowed by TCAC. In no event can Developer charge any tenant
more than such amount.
EXHIBIT 3
3-26
17
7.4 Maintenance of the Property. Solely at Developer’s expense, Developer
agrees to maintain the Property in a clean, orderly, 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) calendar days from the date of written notice from the Agency,
unless such condition cannot reasonably be cured within thirty (30) calendar days, in which
case Developer shall have such additional time as reasonably necessary to complete such
cure, the Agency may perform the necessary maintenance and Developer shall pay all
reasonable costs incurred for such maintenance. The Agency shall inspect the Property
annually after the date of issuance of the Certificate of Completion as described in Section
17 of this Agreement.
7.5 Obligation to Refrain from Discrimination. Developer covenants and
agrees for itself, its successors, its assigns and every successor in interest to the Property or
any part thereof, that there shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, disability, religion, sex, marital status,
immigration status, ancestry or national origin in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property nor shall Developer itself or any person
claiming under or through him establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The
foregoing covenants shall run with the land and shall remain in effect for the term of the
Agreement.
8. DEFAULTS AND REMEDIES
8.1 Event of Default. Failure or delay by either party to perform any term or
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 injured 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) calendar 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) calendar days following service of said
notice, unless such default cannot reasonably be cured within thirty (30) calendar days, in
which case Developer shall have such additional time as reasonably necessary to complete
such cure but no more than ninety (90) calendar days, the Agency 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
EXHIBIT 3
3-27
18
damages for any default, or to obtain any other remedy consistent with the purpose of this
Agreement.
8.3 Rights and Remedies are Cumulative. Except with respect to rights and
remedies expressly declared to be exclusive in this Agreement, the rights and remedies of
the parties are cumulative and the exercise by either party of one or more of such rights or
remedies shall not preclude the exercise by it, at the same or different times, of any other
rights or remedies for the same default or any other default by the other party.
8.4 Damages. In the event that the Agency 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
Agency shall be an action for specific performance of such party’s obligations.
8.5 Nonrecourse Liability. Neither Developer, nor any partner of Developer,
shall have any personal liability under this Agreement, or the attached Note and Deed of
Trust, and any judgment, decree or order for the payment of money obtained in any action to
enforce the obligation of Developer to repay the loan evidenced by such documents shall be
enforceable against Developer only to the extent of Developer’s interest in the Property.
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to Agency to enter into this Agreement, Developer
represents and warrants as follows:
9.1 Formation, Qualification and Compliance. AMCAL 1440 Santa Ana
Fund, LP is a California limited partnership. 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 Agency Loan Documents.
9.2.1 Developer has all requisite authority to execute and perform its
obligations under the Agency Loan Documents.
9.2.2 The execution and delivery by Developer of, and the performance
by Developer of its obligations under, each Loan Document that 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;
EXHIBIT 3
3-28
19
(c) result in or require the creation of any lien, claim,
charge or other right of others of any kind (other than under the Agency Loan
Documents) on or with respect to any property now or hereafter owned or leased by
Developer;
(d) to best of its knowledge, violate any provision of
any law presently in effect; or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other
agreement or document to which Developer is a party or by which Developer or any of its
property is bound.
9.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of Agency under the Agency 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 by Developer of, and the performance by
Developer of its obligations under, the Agency Loan Documents; and
(b) the creation of the liens described in the Agency Loan
Documents.
9.3 Financial and Other Information. To the best of Developer’s
knowledge, all financial information furnished to Agency by the Developer or any
affiliate thereof with respect to Developer in connection with the Loan (a) is complete
and correct in all material respects as of the date of preparation thereof, (b) accurately
presents the financial condition of Developer, and (c) has been prepared in accordance
with generally accepted accounting principles consistently applied or in accordance with
such other principles or methods as are reasonably acceptable to Agency. To the best of
Developer’s knowledge, all other documents and information furnished to Agency by the
Developer or any affiliate thereof with respect to Developer, in connection with the Loan,
are correct and complete insofar as completeness is necessary to give the Agency
accurate knowledge of the subject matter. To the best of Developer’s knowledge
Developer has no material liability or contingent liability not disclosed to Agency 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 Agency in
writing.
EXHIBIT 3
3-29
20
9.4 No Material Adverse Change. There has been no material adverse
change in the condition, financial or otherwise, of Developer since the dates of the latest
financial statements furnished to Agency. Since those dates, Developer has not entered
into any material transaction not disclosed in such financial statements or otherwise
disclosed to Agency 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 Agency 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 Agency.
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 Rights of Others. Developer is in compliance with all covenants,
conditions, restrictions, easements, rights of way and other rights of third parties relating
to the Property.
9.8 Litigation. There are no material actions or proceedings pending or, to
the best of the Developer’s knowledge, threatened against or affecting Developer or any
property of Developer before any Governmental Authority, except as disclosed to
Agency 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 Agency, by whatever
means, is accurate, correct and sufficiently complete to give Agency true and accurate
knowledge of its subject matter, and does not contain any misrepresentation or omission.
9.11 Conflicts of Interest. No member, elected official or employee of the
Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any
such member, elected official or employee participate in any decision relating to this
Agreement which affects his/her personal interests or the interests of any corporation,
EXHIBIT 3
3-30
21
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 Agency Officials and Employees. No member, elected
official or employee of the Agency shall be personally liable to the Developer in the event of
any default or breach by the Agency 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
Agency has only agreed to assist the Developer as a means by which to induce the
construction/development of the Project. Accordingly, Developer further expressly
acknowledges and agrees that this Agreement is a personal right of Developer that is neither
negotiable, transferable, nor assignable except as set forth herein. Developer may assign
some or all of its rights under the Agreement only with the prior written consent of the City
Project Manager.
9.14 Applicable Law. This Agreement shall be interpreted, governed and
enforced under federal and California state law with venue in Orange County, California.
9.15 Third Parties. This Agreement is made for the sole benefit of Developer
and the Agency 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 Agency hereunder or arising from any default by Developer, nor
shall the Agency 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 Agency has not at
any time participated in any manner in the management or operation of the Property, and
will not so participate at any time hereafter.
10. CONDITIONS FOR CONSTRUCTION
10.1 Permits and Approvals. Developer shall diligently obtain all permits,
including all building permits, licenses, approvals, exemptions and other authorizations
of Governmental Agencies required in connection with the construction and conversion
of the Property.
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 and/or certification by Governmental Authority has been completed and all
requisite certificates, approvals and other necessary authorizations (including the final
Certificate of Occupancy) have been obtained.
10.3 Change Orders. The contract for construction shall not be modified
except pursuant to change orders. Notwithstanding the foregoing, the City’s approval of
EXHIBIT 3
3-31
22
a change order shall not be required unless the approval of the Senior Lender is required
with respect to such change order. All change orders:
(a) Shall be in writing, numbered in sequence, signed by
Developer and submitted to Agency prior to the proposed effective date thereof and
accompanied by any working drawings and a written narrative of the proposed change;
and,
(b) Shall be subject to the City Project Manager’s prior written
approval.
10.4 Entry and Inspection. At all times prior to completion of the
construction, during regular business hours and subject to reasonable job site safety rules,
Agency 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 [RESERVED]
10.6 Construction Information. From time to time during the course of the
construction, within ten (10) Business Days following Agency’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) calendar
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 Agency by any person
furnishing labor or materials to the Property, Developer shall immediately give written
notice of the same to Agency 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 Agency a surety bond complying with the
requirement of applicable laws for such release, or (c) take such other action as Agency
may require to release Agency from any obligation or liability with respect to such stop
notice or claim.
11. COVENANTS
11.1 Even though the Agency is providing funds authorized by the CRL, the
Agency will utilize federal regulations and requirements referenced below for certain
EXHIBIT 3
3-32
23
covenants in order to reduce repetition and redundancy between local, state and federal
requirements.
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 California Health and Safety
Code section 50052.5 and the California Tax Credit Allocation Committee so as to
qualify the housing on the Property as Affordable Housing with affordable rents.
11.3 Tenant Protection and Selection. Developer shall comply with the same
Tenant Protection and Selection requirements as the federal HOME Investment
Partnerships Program at 24 CFR 92.253.
11.4 Local Preference. Local preference for Santa Ana residents and workers in
tenant selection shall be a requirement of the Project. Subject to applicable laws and
regulations governing nondiscrimination and preferences in housing occupancy required
by HUD or the State of California, as well as the City of Santa Ana Affordable Housing
Funds Policies and Procedures, the Developer shall give preference in leasing units in the
following order of priority:
1. First priority shall be given to persons who have been permanently displaced or
face permanent displacement from housing in Santa Ana as a result of any of the
following:
a. A redevelopment project undertaken pursuant to California’s Community
Redevelopment Law (Health & Safety Code Sections 33000, et seq.) --
applicable only to projects funded by the Low and Moderate Income
Housing Asset Fund.
b. Ellis Act, owner-occupancy, or removal permit eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP Contract by property
owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at least the last 6
months.
11.5 Handicapped Accessibility. Developer shall comply with (a) Section 504
of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b)
EXHIBIT 3
3-33
24
the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR
35-36 in order to make the Project readily accessible to and usable by individuals with
disabilities.
11.6 Use of Debarred, Suspended, or Ineligible Contractors or
Subrecipients. Developer shall comply with the provisions of the federal regulations for
HUD at 24 CFR 570.609 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 a Drug-Free Workplace. Developer shall certify that
Developer will provide a drug-free workplace in accordance with the federal regulations
for HUD at 24 CFR 84.13.
11.8 Lead-Based Paint. Developer shall comply with the requirements, as
applicable of the Lead Safe Housing Rule and implementing regulations at 24 CFR 35, as
applicable.
11.9 Affirmative Marketing. Developer shall implement and perform such
affirmative marketing procedures and requirements for the Property as required by the
federal HOME Investment Partnerships Program at 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. Developer must also follow the requirements of California
Health and Safety Code section 33435.
11.11 Property Standards. Developer shall cause the Property to meet the
housing quality standards set forth in 24 CFR 882.109 at all times, as well as all
applicable local, state and federal codes and ordinances, including zoning ordinances.
Developer shall also cause the Property to meet the current edition of the Model Energy
Code published by the Council of American Building Officials.
11.12 Displacement and Relocation. Developer acknowledges and agrees that,
pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part,
Agency 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 Agency in meeting
the requirements of 24 CFR 92.253 and shall take all actions and measures reasonably
required by the City Project Manager in connection therewith. All applicable state
guidelines must also be followed.
EXHIBIT 3
3-34
25
(a) Developer acknowledges and agrees to hire a Relocation
Consultant to provide relocation services, pursuant to the Uniform
Relocation Act and Real Property Acquisition Policies Act of 1970
(“URA”) and 24 CFR 92.253.
(b) The Agency, Developer, and Relocation Consultant will meet
periodically during the relocation to provide updates and review
tenant files, including at Project approval and prior to final benefit
calculations. The Developer and Relocation Consultant shall carry
out activity in compliance with URA and the Agency’s Acquisition
and Relocation Policy and Procedures Manual (“Manual”).
(c) The Developer and Relocation Consultant shall maintain accurate
records and files pertaining to the temporary and permanent
relocation of tenants, in accordance with URA and the Agency’s
Manual.
(d) The Developer and Relocation Consultant shall provide all
relocation and tenant files to the Agency once relocation is
complete at the Project.
11.13 Other Program Requirements. Developer shall carry out each activity in
compliance with all federal laws and regulations described in subpart H of 24 CFR 570,
except that Developer does not assume Agency's responsibilities for environmental
review in 24 CFR 92.352 or the intergovernmental review process in 24 CFR 92.359.
11.14 Request for Disbursements of Funds. Notwithstanding anything
contained in this Agreement to the contrary, Developer may not request disbursements of
funds under this Agreement until the funds are needed for payment of eligible costs. The
amount of each request shall be limited to the amount needed.
11.15 Eligible Costs. Developer shall use funds from the Low and Moderate
Income Housing Asset Fund to pay eligible costs identified only within the Project
Budget attached herewith as Exhibit E.
11.16 Records and Reports. Developer shall maintain and from time to time
submit to Agency such records, reports and information as the City Project Manager may
reasonably require in order to meet Agency record keeping and reporting requirements.
11.17 Uniform Administrative Requirements. Developer shall comply with
the requirements and standards of OMB Circular No. A-122, "Cost Principles for Non-
Profit Organizations," and with the following Attachments to OMB Circular No. A-110:
(a) Attachment A, "Cash Depositories", except for paragraph 4
concerning deposit insurance;
(b) Attachment B, "Bonding and Insurance";
EXHIBIT 3
3-35
26
(c) Attachment C, "Retention and Custodial Requirements for
Records”;
(d) Attachment F, "Standards for Financial Management Systems";
(e) Attachment H, "Monitoring and Reporting Program Performance",
Paragraph 2;
(f) Attachment O, "Procurement Standards."
11.18 Conflict of 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 Agency to conduct annual
inspections of each of the assisted units on the Property after the date of construction
completion, with reasonable notice. Developer shall cure any defects or deficiencies
found by the Agency while conducting such inspections within ten (10) Business Days of
written notice thereof, or such longer period as is reasonable within the sole discretion of
the Agency.
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.
At a minimum, every fifth (5th) year, Developer shall require new original income
documents to be submitted by tenants.
(b) Developer shall allow the Agency to conduct periodic reviews of
tenant files and files relating to affirmative marketing and outreach to insure the Project’s
compliance with applicable regulations and guidelines.
(c) Agency 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 the Agency are being taken to ensure that all vacancies
are filled in accordance with this section until the non-compliance is corrected.
11.21 Other Requirements. Developer shall comply with all other applicable
requirements, including the following:
(a) Onsite Services: The Developer shall provide on-site services
that are available to the residents and shall report to the Agency
annually the services provided.
(b) Coordination with the WORK Center: The Developer and the
Property Manager shall coordinate with the City’s WORK
EXHIBIT 3
3-36
27
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 Agency biennial tenant satisfaction surveys of
tenants.
11.22 Controlling Covenants. If there is a discrepancy between Local, 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
business-like manner; shall prudently preserve and protect its own as well as the
Agency'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 Agency's interests under the
Agency Loan Documents. Without limiting the generality of the foregoing, and except as
otherwise agreed by Agency 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 Agency’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. Subject to any property tax abatement available,
the 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
EXHIBIT 3
3-37
28
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 Agency (other than Agency'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 Agency's reasonable
satisfaction that leaving such Imposition unpaid pending the outcome of such
proceedings could not result in conveyance of the Property in satisfaction of such
Imposition or otherwise impair the Agency’s interests under the Agency Loan
Documents, and (c) Developer has furnished Agency with a bond or other security
satisfactory in an amount not less than 100% of the applicable claim (including interest
and penalties).
12.3.2 Evidence of Payment. Upon demand by Agency from time to
time, Developer shall deliver to Agency, within thirty (30) calendar days following the
due date of any Imposition, evidence of payment reasonably satisfactory to Agency.
12.3.3 Books and Records. Developer shall maintain complete books of
account and other records reflecting its operations (in connection with any other
businesses as well as with respect to the Property), in accordance with generally accepted
accounting principles applied on a consistent basis or in accordance with such other
principles or methods as are reasonably acceptable to Agency.
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”). Withdrawals from this account may be made
only in accordance with the provisions of this Agreement and the approved Operating
Budget, as it may be revised from time to time with prior Agency 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 Agency.
12.6 Replacement Reserve Account. Developer must establish or cause to be
established a segregated replacement reserve depository account (“Replacement Reserve
Account”) no later than the commencement of the permanent financing period for the
Project. Developer must make monthly deposits from project income into the
Replacement Reserve in accordance with Developer’s Budget, as amended from time to
time. Developer may withdraw funds from the Replacement Reserve Account solely to
fund capital improvements for the Project, such as replacing or repairing structural
elements, fixtures or equipment of the Project that are reasonably required to preserve the
EXHIBIT 3
3-38
29
Project. Developer may not withdraw funds from the Replacement Reserve Account for
any other purpose without the prior written approval of the Agency.
13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and
agrees that:
(a) In Use of Property. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed,
disability, religion, sex, marital status, national origin, immigration status, or ancestry in
the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property,
nor shall Developer or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendors
of the Property.
(b) In Affordable Housing Restrictions. The foregoing covenant
shall (a) be included in the Affordability Restrictions on Transfer of Property, (b) run
with the land, and (c) remain effective for the term of the agreement (for 55 years).
(c) In Employment. In construction on the Property, Developer shall
not discriminate against any employee or applicant because of race, color, creed, religion,
sex, marital status, disability, national origin, immigration status, or ancestry. Developer
shall take affirmative action to ensure that applicants are employed, and that employees
are treated during employment, without regard to their race, color, disability, creed,
religion, sex, marital status, disability, national origin, immigration status, 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 Agency, 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
Agency, 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
EXHIBIT 3
3-39
30
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
Agency 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 Agency and its respective officers, directors,
employees and agents (collectively the "lndemnitees") from and against any and all
obligations (including removal and remediation), losses, claims (including third party
claims), suits, judgments, liabilities, penalties, damages (including consequential and
punitive damages), costs and expenses (including consultants, and attorneys' fees) of
whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or
asserted against the lndemnitees directly or indirectly based on, or arising or resulting
from the actual or alleged presence of Hazardous Materials on the Property other than
resulting from the gross negligence or willful misconduct of any Indemnitee.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the Agency Promissory Note or Agency
Deed of Trust remain outstanding, the following provisions shall apply, except to the
extent that City Project Manager otherwise consents in writing:
15.1 Existence. The sole member of Developer’s General Partner shall
maintain its existence in good standing under the laws of the State of California.
15.2 Protection of Lien. Developer shall maintain the lien of the Agency
Deed of Trust as a valid second priority deed of trust on the Property and take all actions,
and execute and deliver to Agency all documents, reasonably required by Agency from
time to time in connection therewith.
15.3 Notice of Certain Matters. Developer shall give notice to Agency, within
ten (10) Business Days of Developer's learning thereof, of each of the following:
EXHIBIT 3
3-40
31
(a) any filed litigation or claim affecting or relating to the
Property and involving an amount in excess of $5,000; and any litigation or claim that
might subject Developer or any general partner to liability in excess of $5,000, whether
covered by insurance or not;
(b) any dispute between Developer and a Governmental
Authority relating to the Property, the adverse determination of which might materially
affect the Property;
(c) any change in Developer's principal place of business;
(d) any aspect of the Improvements that is not in substantial
conformity with City of Santa Ana approved building plans or municipal code;
(e) any Event of Default or event which, with the giving of
notice or the passage of time or both, would constitute an Event of Default;
(f) any material default by Developer or any other party under
any Senior Loan document, or the receipt by Developer of any notice of default under
any Senior Loan document;
(g) the creation or imposition of any mechanics’ or
materialmans’ lien or other lien against the Property which might materially affect the
Property; and/or
(h) any material adverse change in the financial condition of
Developer.
15.4 Further Assurances. Developer shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to Agency all documents, and take all
actions, reasonably required by Agency from time to time to confirm the rights created or
now or hereafter intended to be created under the Agency Loan Documents; to protect
and further the validity, priority and enforceability of the Agency 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 Agency Deed of Trust or otherwise to carry out the purposes of the
Agency Loan Documents and the transactions contemplated thereunder, provided,
however, Developer shall have not obligation to take any action, or execute any
document, which would alter a material term of any Loan Document.
15.5 Annual Financial Statements. Developer shall deliver to Agency, within
one hundred fifty (150) calendar days after the end of each Calendar Year, (a) a certified
public accountant reviewed balance sheet for Developer as of the end of such Calendar
Year and a certified public accountant reviewed statement of profit and loss for
Developer and for Developer's operations in connection with the Property for such
Calendar Year, together with all supporting schedules, (b) a certificate of such certified
public accountant that such documents were reviewed by such certified public accountant
in accordance with generally accepted accounting principles and otherwise comply with
EXHIBIT 3
3-41
32
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
Agency, (ii) fairly present Developer's financial condition, (iii) show all material
liabilities, direct and contingent, and (iv) fairly present the results of Developer's
operations. Developer shall also provide the Agency 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 Agency or any of
their authorized representatives shall have the right of access, upon reasonable notice and
during normal business hours, 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 Agency every fifth (5th) year beginning January 2023.
16. OTHER COVENANTS
While any obligation of Developer under the Agency Note or Agency Deed of
Trust remain outstanding, the following provisions shall apply, except to the extent that
City Project Manager otherwise consents in writing:
16.1 Default on Senior Loan. Developer shall not default on any of the Senior
Loan Documents, provided however, that Developer shall have such period as is provided
in the Senior Loan Documents during which to effectuate a cure.
16.2 Sale or Lease of Property. Unless and until Developer has received a
Certificate of Occupancy, Developer shall not sell, lease (other than to tenants meeting
the requirements set forth in this Agreement), sublease or otherwise transfer all or any
part of the Property or any interest therein without the prior written consent of the City
Project Manager, which consent may be withheld in the City Project Manager's
reasonable discretion. In connection with the foregoing consent requirements, Developer
acknowledges that Agency 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
EXHIBIT 3
3-42
33
connection with the exercise by the Limited Partner of its rights upon a default by a
General Partner under 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) calendar days of such default or, if
such removal and substitution cannot reasonably be completed within thirty (30) calendar
days, so long as the Limited Partner commences to take action to remove and substitute
the General Partner within 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 one or more of the General Partners
pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any
transfer of the Limited Partner’s interest in connection with a default by the Limited
Partner under and in accordance with the Partnership Agreement; and (iv) any sale,
transfer or other disposition of the Limited Partner’s interest in the Developer or of an
interest in the Limited Partner.
17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of
Developer, or at its own election, the Agency 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 Agency declines to furnish a Certificate of Completion after written request
from Developer, the City Project Manager shall, within thirty (30) calendar 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, Agency may, in its sole and absolute
discretion, issue the Certificate of Completion upon the posting with Agency of a bond or
other form of security acceptable to the City Project Manager in the amount of the fair
value of the uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of
the Agency 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 Agency. Developer acknowledges and agrees that:
(a) The relationship between Developer and the Agency is and
shall remain solely that of Developer and lender. Agency 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,
EXHIBIT 3
3-43
34
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 Agency in connection
with such matters is solely for the protection of Agency 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 Agency is not a partner, joint venture, alter-ego, manager, controlling person or other
business associate or participant of any kind of Developer and Agency does not intend to
ever assume any such status; (ii) Agency’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
Agency does not intend to ever assume any responsibility to any person for the quality or
safety of the Property; and (iii) Agency shall not be deemed responsible for or a
participant in any acts, omissions or decisions of Developer;
(c) Agency 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 Agency under the Loan Documents, including any certificate, financial
statement, survey, appraisal or insurance policy, Agency 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 Agency to
anyone.
18.2 Indemnity. Developer shall defend (by counsel satisfactory to Agency),
indemnify, 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 (v) the ownership, occupancy or use of the Property. Notwithstanding the
foregoing, Developer shall not be obligated to indemnify Agency with respect to the
consequences of any act of gross negligence or willful misconduct of Agency.
Developer's obligations under this Section shall survive the cancellation of the Agency
Promissory Note, release and re-conveyance of the Agency Deed of Trust, issuance of the
Certificate of Completion, and termination of this Agreement.
EXHIBIT 3
3-44
35
18.2.1 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 Agency. Developer shall reimburse Agency
immediately upon written demand for all costs reasonably incurred by Agency (including
the reasonable fees and expenses of attorneys, accountants, appraisers and other
consultants, whether the same are independent contractors or employees of Agency) 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 Agency is indemnified under the Loan Documents. Such reimbursement
obligations shall bear interest from the date occurring twenty (20) calendar days after
Agency gives written demand to Developer and shall be secured by the Agency Deed of
Trust. Such reimbursement obligations shall survive the cancellation of the Loan Note,
release and re-conveyance of the Agency 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 Agency, the
following policies of insurance in form and substance reasonably satisfactory to the City
Attorney:
(a) worker’s compensation insurance and any other insurance required
by law in connection with the construction;
(b) prior to commencement and following completion of the
construction, fire and hazard "all risk" insurance covering 100% of the replacement cost
of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the area
where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(c) upon commencement of the construction and at all times prior to
completion of the construction, builder's risk-all risk insurance covering 100% of the
replacement cost of all Improvements (including offsite materials) during the course of
construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the area
where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(d) public liability insurance in amounts reasonably required by
Agency from time to time, and in no event less than $1,000,000 for "single occurrence;"
EXHIBIT 3
3-45
36
(e) property damage insurance in amounts reasonably required by the
Agency from time to time, and in no event less than $1,000,000; and
(f) any other insurance reasonably required by Agency.
All such insurance shall provide that it may not be canceled or materially
modified without thirty (30) days prior written notice to Agency. The policies required
under subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in
form and substance satisfactory to Agency, showing the Agency as encumbrance. The
Agency shall be named as an additional insured in the policies required under
subparagraphs (d) and (e). Certificates of insurance for the above policies (and/or original
policies, if required by Agency) shall be primary and delivered within ten (10) Business
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) calendar days
prior to the expiration of each policy, Developer shall deliver to Agency evidence of
renewal or replacement of such policy reasonably satisfactory to the City Attorney.
19.2 City Attorney May Modify. The City Attorney may modify the type and
amounts of insurance required pursuant to this Section.
19.3 Claims and Proceedings. Developer shall give Agency immediate
notice of any material casualty to any portion of the Property, whether or not covered by
insurance, and of the initiation or threatened initiation of any proceeding for the
condemnation or other taking for public or quasi-public use of any portion of the Property
(collectively, "Condemnation"), and shall provide Agency with copies of all documents
which pertain to any such casualty or Condemnation. Developer shall take all action
reasonably required by Agency in connection therewith to protect the interests of
Developer and/or Agency, and Agency shall be entitled (without regard to the adequacy
of its security) to participate in any action, claim, adjustment or proceeding and to be
represented therein by counsel of its choice. Developer shall not settle, adjust, or
compromise any claim, action, adjustment or proceeding without prior written approval,
which approval shall not be unreasonably withheld or delayed.
19.4 Delivery of Proceeds to Agency. 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 Agency
immediately upon receipt.
19.5 Application of Casualty Insurance Proceeds. Any proceeds collected (the
"Proceeds") under any casualty insurance policy described in this Agreement shall be
disbursed to Developer as provided below, but only upon fulfillment of each of the
following conditions (the "Restoration Conditions") within ninety (90) calendar days
(unless extended by mutual agreement of Developer and Agency) following the
occurrence of the receipt of the Proceeds:
EXHIBIT 3
3-46
37
(a) Developer shall demonstrate to Agency's reasonable
satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to
subparagraph (b) and any undisbursed loan and tax credit proceeds available to the
Developer) will be adequate to repair the Improvements and to restore the fair market
value of the Property, within a time period reasonably determined by Agency and Senior
Lender, to at least the value it had immediately prior to sustaining the damage. Such
demonstration shall include delivery to Agency of (i) plans and specifications reasonably
satisfactory to Agency, and (ii) a construction contract in form and content, and with a
contractor, reasonably satisfactory to Agency.
(b) To the extent that the Proceeds (together with all
undisbursed Loan proceeds and any other financing proceeds available to the Developer)
are insufficient to accomplish the restoration required above, Developer shall deliver to
Agency funds (the "Shortfall Funds") in the amount of such shortfall, which funds shall
be assigned to Agency 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 Agency
reasonably 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 Agency and disbursed in
accordance with then customary disbursement procedures and related provisions. Any
amounts remaining undisbursed following completion of such restoration shall be
returned to Developer up to the amount of any Shortfall Funds deposited by Developer,
and any other amounts remaining shall either be paid to Developer or applied by Agency
against any obligations to Agency that are secured by a lien on the Property, as they elect
in their sole and absolute discretion.
19.7 Failure to Satisfy Conditions. In the event that Developer fails to fulfill
the Restoration Conditions within one hundred eighty (180) days (unless extended
pursuant to Section 19.5) following the date Proceeds are received, the Proceeds shall be
applied by Agency against any obligations to Agency 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 Agency in its sole and absolute discretion.
19.8 Restoration. Nothing in this Section 19 shall be construed to excuse
Developer from repairing and restoring all damage to the Property in accordance with
other Loan Document provisions, regardless of whether insurance proceeds are available
or sufficient.
19.9 Condemnation; Treatment of Compensation. Subject to any
superior rights of Senior Lender, Developer hereby assigns to the Agency, as security for
all obligations to Agency secured by a lien on the Property, all amounts payable to
EXHIBIT 3
3-47
38
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 Agency immediately
upon receipt. If the taking results in a loss of the Property to an extent that, in the
reasonable opinion of Agency, renders or is likely to render the Property not
economically viable or if, in Agency’s reasonable judgment Developer’s security is
otherwise impaired, Agency 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 Agency 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 Agency shall be paid to
Developer or Developer’s assignee. Agency 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 Agency’s
liens are not impaired, any condemnation proceeds may be used by the Developer for
repair and/or restoration of the Project.
19.9.2 Notwithstanding the foregoing, during the tax credit compliance
period for the Project, as determined under Section 42 of the Internal Revenue Code, any
condemnation proceeds may be used by the Developer for repair and/or restoration of the
Project.
19.10 Waiver of Subrogation. Developer hereby waives all rights to
recover against the Agency (or any officer, employee, agent or representative of Agency)
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 Agency Promissory Note when due, and such failure is not cured
within ten (10) 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 ten
(10) Business Days after Developer's receipt of written notice that such obligation was
not performed when due;
EXHIBIT 3
3-48
39
(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) calendar 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) calendar day period, such failure shall not
be an Event of Default so long as Developer (in any event, within ten (10) Business Days
after receipt of such notice) commences to cure, and thereafter diligently (in any event
within ninety (90) calendar days after receipt of such notice) prosecutes such cure to
completion;
(d) Any representation or warranty in any Loan Document
proves to have been incorrect in any material respect when made;
(e) The Property is materially damaged or destroyed by fire or
other casualty unless Developer fulfills the Restoration Conditions set forth in the
insurance provisions of this Agreement within one hundred twenty (120) calendar 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);
(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) calendar days or more for any
reason;
(h) Developer is dissolved, liquidated or terminated, or all or
substantially all of the assets of Developer are sold or otherwise transferred without the
City Project Manager's prior written consent;
(i) Developer is the subject of an order for relief by a
bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or
makes an assignment for the benefit of creditors; or Developer applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer for it or any part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without the
application or consent of Developer and the appointment continues undischarged or
unstayed for ninety (90) calendar 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) calendar 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) calendar days after its issue or levy.
EXHIBIT 3
3-49
40
(j) The following occurs: (i) any of the Senior Loan
documents is revoked or terminated, in whole or in part and for any reason (except due to
repayment of such loans), without the City Project Manager's prior written consent, or (ii)
Developer defaults or otherwise fails to perform any of its duties or obligations under or
in connection with any of the Senior Loan documents, subject to all applicable notice and
cure periods, or (iii) any of the Senior Loan documents is amended, supplemented or
otherwise modified without Agency's prior written consent, which consent shall not be
unreasonably withheld. Notwithstanding anything to the contrary contained herein,
Agency hereby agrees that any cure of any default made or tendered by Developer’s
Limited Partner shall be deemed to be a cure by Developer and shall be accepted or
rejected on the same basis as if made or tendered by Developer.
20.2 Remedies upon Default. Upon the occurrence of any Event of Default,
Agency 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 Agency's part, cause all
such amounts to be immediately due and payable;
(b) In its own right or by a court-appointed receiver, take possession of
the Property, enter into contracts for and otherwise proceed with the completion of the
construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including, without limitation, the right to seek specific performance and
the right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as Agency elects in its sole and absolute discretion;
and,
(d) Suspend or terminate the award of Agency funds if Developer fails
to comply with any term of such award.
20.3 Cumulative Remedies: No Waiver. Agency's rights and remedies under
the Loan Documents are cumulative and in addition to all rights and remedies provided
by law. The exercise by Agency 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 Agency in the exercise of any other right or remedy. No
waiver of any default shall be implied from any omission by Agency 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. Agency's consent to or approval of any act by Developer requiring further
EXHIBIT 3
3-50
41
consent or approval shall not be deemed to waive or render unnecessary Agency's
consent to or approval of any subsequent act. The Agency's acceptance of the late
performance of any obligation shall not constitute a waiver by Agency of the right to
require prompt performance of all further obligations; Agency'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 Agency's acceptance of any partial performance shall not
constitute a waiver by Agency of any rights.
21. MISCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of Agency to Developer, or any other
claim by developer against Agency, 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: AMCAL 1440 Santa Ana Fund, LP
c/o AMCAL Multi-Housing, Inc.
17862 E. 17th Street, Suite 209
Tustin, CA 92780
Attention: Mario Turner
With a copy to: AMCAL Multi-Housing, Inc.
30141 Agoura Road, Suite 100
Agoura Hills, CA 91301
Attention: General Counsel
Banc of America CDC Special Holding Company, Inc.
Community Development Banking
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Bank of America, N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
EXHIBIT 3
3-51
42
If to Agency: Housing Authority of the City of Santa Ana
Executive Director
20 Civic Center Plaza (M-26)
P.0. 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) business days after deposit in the U.S. Mail,
postage prepaid. The foregoing notwithstanding, the non-receipt of any notice as the
result of a change of address of which the sending party was not notified or as the result
of a refusal to accept delivery shall be deemed receipt of such notice.
21.3 Survival of Representations and Warranties. All representations and
warranties in the Loan Documents shall survive the making of the Loan(s) described
herein and have been or will be relied on by Agency 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 Agency, and no other person
shall have any rights hereunder or by reason hereof; provided, however, Limited Partner
is intended to be a direct beneficiary of the provisions set forth in Sections 21.17, 21.18,
and 21.19 hereof, and is entitled to bring an action to enforce the same independent of
any rights of Developer.
21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind,
and shall inure to the benefit of, Developer and Agency 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 Agency, which consent may be withheld in Agency's
sole and absolute discretion. Any such assignment without such consent shall, at
Agency's option, be void.
21.6 Prior Agreements; Amendments; Consents. This Agreement (together
with the other Loan Documents) contains the entire agreement between the Agency and
Developer with respect to the Loan and the Property, and all prior negotiations,
understandings and agreements are superseded by this Agreement and such other Loan
Documents. No modification of any Loan Document (including waivers of rights and
conditions) shall be effective unless in writing and signed by the party against whom
enforcement of such modification is sought, and then only in the specific instance and for
the specific purpose given.
EXHIBIT 3
3-52
43
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
Agency 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, elected official or employee of the
Agency 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 [Reserved]
21.15 Plans and Data. Where Developer does not proceed with the work and
construction of the Project, and when this Agreement is terminated with respect thereto
for any reason, Developer shall deliver to Agency any and all plans and data concerning
the Property, and Agency or any person or entity designated by Agency shall have the
right to use such plans and data without compensation to Developer. Such right of
Agency shall be subject to any right of the preparer of the plans to their use.
EXHIBIT 3
3-53
44
21.16 Authority to Enter Agreement. Each undersigned represents and
warrants that its signature herein below has the power, authority and right to bind their
respective parties to each of the terms of this Agreement, and shall indemnify the Agency
fully, including reasonable costs and attorney’s fees, for any injuries or damages to Agency
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 Agency (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
Limited Partner of its interest in the Developer to an entity controlled or managed by an
entity which is related to or under common control with the 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 Agency and shall not shall not constitute a default or an Event
of Default under this Agreement or the Loan Documents or accelerate the maturity of the
Agency Loan. If the Limited Partner exercises its right to remove a General Partner,
Agency will not unreasonably withhold its consent to the substitute general partner;
provided however, the consent of either the Agency shall not be required if the substitute
general partner is an affiliate of the Limited Partner. The substitute general partner shall
assume all of the rights and obligations of the removed general partner hereunder.
21.19 Limited Partner Protections. Notwithstanding anything to the contrary
in this Agreement or the Loan Documents:
(a) If Limited Partner presents payment or otherwise cures a monetary
or non-monetary default within the cure periods set forth in the Loan Documents, Agency
will accept such action as curing the respective default under the Loan Documents. For
avoidance of doubt, Limited Partner is not obligated to cure any default.
(b) The Agency Loan has not been and will not be cross-defaulted or
cross-collateralized with any other loan made with respect to another property.
EXHIBIT 3
3-54
EXHIBIT 3
3-55
46
DEVELOPER:
AMCAL 1440 Santa Ana Fund, LP, a California limited partnership
By: AMCAL Multi-Housing, Inc.,
A California corporation,
Its Administrative General Partner
By: ____________________________________
By: Las Palmas Foundation,
A California nonprofit public benefit corporation,
Its Managing General Partner
By:
EXHIBIT 3
3-56
47
EXHIBITS
A. Legal Description
B. Affordability Restrictions on Transfer of Property
C. Agency Deed of Trust
D. Agency Promissory Note
E. Project Budget
F. Scope of Work / Schedule of Performance
G. Form of Residual Receipts Report
H. Partnership Agreement
EXHIBIT 3
3-57
Exhibit A: Legal
Description
EXHIBIT 3
3-58
Order No: 91910077-917-CG8-KRE
EXHIBIT “A”
All that certain real property situated in the County of Orange, State of California, described as follows:
Parcel 1:
The Easterly 112.51 feet of the Westerly 437.51 feet of that portion of land allotted to N. O. Stafford and C. Tustin, in the
City of Santa Ana, County of Orange, State of California, as described in the Final Decree of partition of the Rancho
Santiago De Santa Ana, which was entered September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of
the 17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at the intersection of the center lines of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Excepting therefrom, that portion of the North 71.00 feet as described in the Deed to the City of Santa Ana, recorded April
15, 1960 in Book 5196, Page 381 of Official Records.
Parcel 2:
A non-exclusive easement for ingress and egress over the South 25 feet of the Westerly 325 feet of that portion of the land
allotted to N. O. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the
final decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in
Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County,
California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Parcel 3:
The Westerly 175.00 feet of the Easterly 375.00 feet of that portion of the land allotted to N. O. Stafford and C. Tustin, in
the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho
Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of
the 17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
EXHIBIT 3
3-59
Order No: 91910077-917-CG8-KRE
Excepting therefrom, the South 21 feet of the North 71 feet thereof.
Parcel 4:
A non-exclusive easement for ingress and egress over the South 25 feet of that portion of the land allotted to N. O. Stafford
and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of
the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the
District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Excepting therefrom, the Easterly 375.00 feet.
Parcel 5:
A non-exclusive easement for ingress and egress, for sewer lines, public utilities and drainage and the maintenance of these
items over the South 25 feet of the following described land:
The Westerly 437 feet of that portion of the land allotted to N. O. Stafford and C. Tustin, in the City of Santa Ana, County of
Orange, State of California, as described in the final decree of partition of the Rancho Santiago De Santa Ana, which was
entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for
Los Angeles County, California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in Book 47, Page
32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest
corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Assessor’s Parcel Number: 011-154-43
EXHIBIT 3
3-60
Exhibit B:
Affordability
Restrictions on
Transfer of Property
EXHIBIT 3
3-61
1
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 (M-30)
P.O. Box 1988
Santa Ana, CA 92702-1988
Attention: Clerk of the Council
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
{Address: 1440 East First Street, Santa Ana, California}
THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the
"Restrictions") are entered into by and between AMCAL 1440 Santa Ana Fund, LP, a California
limited partnership (“Developer”) and the Housing Authority of the City of Santa Ana, acting as
the Housing Successor Agency, a public body, corporate and politic (“Agency”).
RECITALS:
A. Developer is the owner of that certain real property located at 1440 East First
Street, Santa Ana, California (the “Property”), more particularly described in Exhibit A, which is
attached hereto and incorporated herein by this reference.
B. The Agency is authorized by Section 34176 of the Health and Safety Code to
perform housing functions previously performed by the City’s former redevelopment agency to
increase the supply of very low and low-income housing available at affordable housing costs.
Pursuant to subdivision (d) of Section 34176, the low and moderate income housing asset fund
(“LMIHAF”) was established as a housing asset and the funds in the LMIHAF shall be used in a
manner consistent with the affordable housing requirements of the Community Redevelopment
Law of the State of California (“CRL”), (Part 1 commencing with Section 33000, et seq.). Such
uses may include the construction, preservation, and rehabilitation of affordable housing for low-
income households.
C. The City and the Housing Authority of the City of Santa Ana (“Housing
Authority”) reviewed Developer’s request for assistance and at the City Council/Housing
Authority meeting on June 20, 2017, the Housing Authority Board authorized and approved
issuance of a conditional, pre-commitment letter evidencing the preliminary award of $8,522,740
of funds to the Project (“Agency Loan”), to be funded exclusively from the Low and Moderate
Income Housing Asset Fund (the “LMIHAF”) held by the Agency.
EXHIBIT 3
3-62
2
D. For the purpose of providing sixty-eight (68) units of housing that will be
affordable to Extremely-Low, Very-Low and Low Income households (“Assisted Units”) and
one (1) manager’s unit, the Developer and the Agency have entered into that certain Loan
Agreement, dated on or about the date hereof (the “Agency Loan Agreement”) to which these
Restrictions are attached as Exhibit B, which, along with all of its attachments, is incorporated
herein by this reference (any capitalized term that is not otherwise defined in these Restrictions
shall have the meaning ascribed to such term in the Agency Loan Agreement).
E. In furtherance of the LMIHAF goals, Developer has applied to the Agency for a
loan with which to:
1. 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.
F. The Agency, on certain terms and conditions, desires to make such loan (“Agency
Loan”) to Developer in order to make possible the construction of the Project, thereby expanding
the supply of decent, safe, sanitary and affordable housing.
G. 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.
H. The Agency Loan Agreement, Agency Deed of Trust, and Agency Promissory
Note, dated concurrently herewith (collectively the "Loan Documents") are entered into for the
purpose of providing for affordable extremely low, very low, and low-income residential rental
units in the City of Santa Ana pursuant to the LMIHAF regulations and guidance.
NOW, THEREFORE, AGENCY AND OWNER COVENANT AND AGREE AS
FOLLOWS:
1. DEFINITIONS
"Affordable Housing" means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified in accordance with Sections
50052.5 and 50053 of the Health & Safety Code. In the event of a conflict between the fractions
specified in this Defined Terms section, and those found in Sections 50052.5 and 50053 of the
Health & Safety Code, the fractions specified by State law shall control.
"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
California Tax Credit Allocation Committee (TCAC), or by the State of California, as applicable.
“Agency” means the Housing Authority of the City of Santa Ana, acting as the Housing
Successor Agency, a public body, corporate and politic, exercising governmental functions and
powers, and organized and existing under the CRL. The principal office of the Agency is located at
EXHIBIT 3
3-63
3
20 Civic Center Plaza, Santa Ana, California 92702. “Agency” shall also refer to the City where the
context dictates, to the effect that City shall have all rights granted to the Agency hereunder.
"Agency Deed of Trust" means the deed of trust encumbering the Property, in the form
attached as Exhibit C to the Agency Loan Agreement, to be executed by Developer pursuant to
Section 5.B.1 in order to secure the Agency Loan Note.
"Agency Loan" means a loan in the original principal amount of up to eight million five
hundred twenty-two thousand seven hundred forty dollars ($8,522,740) to be made to Developer
by the Agency to be funded exclusively from the Low and Moderate Income Housing Asset
Fund held by the Agency.
"Agency Loan Agreement" means the Loan Agreement regarding the loan of LMIHAF
funds between the Agency and the Developer, and any attachments thereto.
"Agency Loan Documents" means, collectively, the Agency Loan Agreement, Agency
Promissory Note, Agency Deed of Trust and this Agreement, and any other agreement,
document, or instrument that the Agency requires in connection with the execution of this
Agreement or from time to time to effectuate the purposes of this Agreement.
"Agency Promissory Note" means that certain promissory note for Agency Loan funds
in the original principal amount of $8,522,740 in the form attached as Exhibit D to the Agency
Loan Agreement, and to be executed by Developer in favor of Agency to evidence the obligation
of Developer to repay the Agency Loan through residual receipts as further described in the
Agency Promissory Note.
"Agreement” means this Affordability Restrictions on Transfer of Property between the
Agency and the Owner affecting real property.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the Agency Funds.
"Building Permit" means the building permit(s) issued by the City and required for the
construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on
which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"Certificate of Completion" has the meaning set forth in Article 17 of the Agency Loan
Agreement.
"City" means the City of Santa Ana, California, a charter city and municipal corporation.
“City” shall also refer to the Agency where the context dictates, to the effect that the Agency
shall have all the rights granted to the City hereunder.
EXHIBIT 3
3-64
4
"City Project Manager" shall mean the City Manager and/or his/her designee.
"Close of Escrow" shall mean the date upon which the Agency Loan Agreement and
Agency Deed of Trust is recorded in the Official Records of the County.
"Closing Statement" means the final statement of Developer’s Escrow account for the
purchase of the Property pursuant to the purchase contract.
"County" means the County of Orange, California.
“Developer” or “Owner” means AMCAL 1440 Santa Ana Fund, LP, a California
limited partnership.
"Event of Default" has the meaning set forth in Section 20.1 of the Agency Loan
Agreement.
"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 TCAC in accordance with Sections 50052.5 and 50053 of the
Health & Safety Code.
"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. Hazardous Material shall not include (i)
construction products, household cleaners and office materials of the type and quantity ordinarily
used in the normal construction, operation and maintenance of properties similar to the Project or
(ii) small amounts of household mold to the extent promptly remediated upon discovery.
"HCD" means the California Department of Housing and Community Development
(HCD) and any successors or assigns thereof.
"Housing Authority" means the Housing Authority of the City of Santa Ana, a public
body, corporate and politic.
"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
EXHIBIT 3
3-65
5
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 of the Agency Loan
Agreement.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments,
injunctions, decrees or awards of the United States or any state, county, municipality or other
Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of
any kind (including any conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any lien or security interest).
“Loan Documents” or “Agency Loan Documents” means, collectively, this
Agreement, the Agency Promissory Note, the Agency Deed of Trust, and the Affordability
Restrictions on Transfer of Property, and any other agreement, document, or instrument that the
Agency reasonably 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 TCAC in accordance with Sections 50052.5 and 50053 of the Health &
Safety Code.
"Median Income for the Area" means the median income for the Orange County,
California PMSA as most recently determined by HCD. Also may be referred to
interchangeably in the Agency Loan Documents as "Area Median Income" or "AMI".
"Permitted Encumbrances for the Affordable Housing Restrictions" means
collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with
respect to the Property hereafter approved by the City Project Manager in writing.
"Permitted Encumbrances for the Agency Deed of Trust" means the Senior Loan
Deed(s) of Trust and all other title exceptions and limitations with respect to the Property
hereafter approved by the City Project Manager in writing.
"Project" means the construction of the Improvements upon the Property by Developer
pursuant to this Agreement.
"Project Budget" means the line-item budget for the Project attached as Exhibit E to the
Agency Loan Agreement, as modified from time to time in accordance with the Agency Loan
Agreement.
EXHIBIT 3
3-66
6
"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 1440 East First 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.
“Restricted Units” means the units restricted as affordable by the Agency Loan
Documents.
"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, which is
attached as Exhibit F to the Agency Loan Agreement.
"Senior Lender" means a commercial financial institution providing the Senior Loan or
any other holder of the Senior Loan Note.
"Senior Loan" means a loan from the Senior Lender concurrent to the Agency Loan for
payment of a portion of the acquisition and construction costs, and shall include any subsequent
loan that refinances the initial Senior Loan.
"Senior Loan Deed of Trust" means the first deed(s) of trust securing the Senior Loan
by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement governing the
Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement,
document or instrument that the Senior Lender requires in connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior Loan from the
Senior Lender.
"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 TCAC in accordance with Sections 50052.5 and 50053 of the
Health & Safety Code.
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, Very Low, and Low Income households, as provided in the Agency Loan Agreement and
these Restrictions.
EXHIBIT 3
3-67
7
3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROPERTY
3.1 Use Covenants and Restrictions.
a. Developer agrees and covenants, which covenants shall run with the land
and bind Developer, its successors, its assign and every successor in interest to the Property that
Developer will make all rental units on the Property available to extremely-low, 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 Occupancy.
b. The Project shall consist of approximately sixty-nine (69) units of which
there will be six (6) four-bedroom units, twenty-eight (28) three-bedroom units, and thirty-five
(35) two-bedroom units (one being a manager’s unit). Thirty-four (34) of the sixty-eight (68)
Housing Units at the Project shall and will be restricted to households earning 30% or less of the
AMI, twenty-one (21) of the sixty-eight (68) Housing Units at the Project shall and will be
restricted to households earning 50% or less of the AMI, and thirteen (13) of the sixty-eight (68)
Housing Units at the Project shall and will be restricted to households earning 60% or less of the
AMI. The affordability mix for the Project is as follows:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager’s
Unit Total
Two Bedroom 29 4 1 1 35
Three Bedroom 4 17 7 28
Four Bedroom 1 0 5 6
Totals 34 21 13 1 69
c. The affordable rents charged at the Project must comply with the standards
set forth by the California Tax Credit Allocation Committee (TCAC).
d. Utility allowances must be deducted from the Maximum Gross Monthly
Rent. The Housing Authority of the City of Santa Ana publishes a utility allowance schedule on an
annual basis. However, in lieu of the utility allowance schedule published by the Housing
Authority, the Developer may elect to use the California Utility Allowance Calculator to the extent
allowed by TCAC.
3.2 Rent Increases:
A. On an annual basis, the Agency shall provide the Developer with the maximum allowable
schedule of rents for the Property, which shall correspond to the maximum rent increase allowed by
TCAC. In no event can Developer charge any tenant more than such amount.
EXHIBIT 3
3-68
8
B. Developer, 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 TCAC. The City Project
Manager, or designee, shall notify the Owner in writing of the adjusted allowable maximum
incomes and rents as allowed by TCAC.
C. In no event shall the rent charged to the tenant of a Restricted Unit be more than that amount of
the rent as published by TCAC, as amended from time to time.
D. It is anticipated that eight (8) Housing Units in the Project will be partially subsidized
through a Project-Based Housing Assistance Payments Contract or other rental subsidy (the
"Rental Subsidy"). If in the future operation of the Project the Rental Subsidy is terminated
through no fault of the Borrower, or any change in federal law occurs or any action (or inaction)
by Congress or any federal or State agency occurs which results in a reduction, termination or
nonrenewal of the Rental Subsidy, the Borrower shall notify the Agency of such occurrence, the
impact of such termination on the financial feasibility of the Project (including Borrower's
obligation to comply with this Section 3.1), and Borrower's efforts to find an alternative subsidy.
If the Agency in its sole and absolute discretion determines that the Borrower's requirement to
rent eight (8) Housing Units to Extremely-Low and Very-Low income households in accordance
with Section 3.1 has a detrimental impact on the financial feasibility of the Project given the loss
of the Rental Subsidy, then only upon approval by the Agency in its sole and absolute discretion
the Borrower may increase the rents on one or more of the Housing Units to 50% Area Median
Income as necessary to maintain the financial stability of the Project (but in no event to rents
above the rents published by TCAC for Low Income households) or implement the remedial
measures set forth in California Code of Regulations Title 4, Division 17, Chapter 1, Section
10337(a)(2) or successor regulation applicable to California's Federal and State Low Income
Housing Tax Credit Program, provided that subsequent legislative or judicial interpretation of
the CRL and LMIHAF regulations and guidance allows for such remedial measures.
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,
Very-Low and Low Income households;
(b) Are reasonably related to program eligibility and the applicants' ability to
perform the obligations of the lease;
(c) Reserved;
(d) Provide for:
(i) The selection of tenants from a written waiting list in the
chronological order of their application based on the Santa Ana Local Preference, insofar as is
practicable; and,
EXHIBIT 3
3-69
9
(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 meet the Local Preference as more fully described in the Loan Agreement with
first priority for persons who have been permanently displaced or face permanent displacement
from housing in Santa Ana and second priority for persons who are either residents of Santa Ana
and/or working in Santa Ana at least 32 hours per week for at least the last 6 months; and,
(f) Carry out the Affirmative Marketing procedures of the City of Santa Ana,
which are designed to provide information and otherwise attract eligible persons from all racial,
ethnic and gender groups in the housing market area to the units. The Owner and the Agency
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.
B. Owner, its successors and assigns, shall not refuse to lease a unit to a holder of a rental
voucher under 24 CFR part 887 (Housing Choice Voucher Program) or to a holder of a
comparable document evidencing participation in a federally funded tenant-based assistance
program (e.g. HUD-Veterans Affairs Support Housing) because of the status of the prospective
tenant as a holder of such certificate of family participation, rental voucher, or comparable
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;
EXHIBIT 3
3-70
10
(f) Agreement by the tenant to waive any right to a trial by jury;
(g) Agreement by the tenant to waive the tenant's right to appeal, or to
otherwise challenge in court, a court decision in connection with the lease; and
(h) Agreement by the tenant to pay attorney's fees or other legal costs even if
the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may
be obligated to pay costs if the tenant loses.
D. Owner, its successors or assigns, must adhere to state law requirements with regard to
termination of tenancy.
E. Owner shall maintain the improvements on the Property in compliance with housing quality
standards as defined by HUD in the federal regulations at 24 CFR 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, immigration status, 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. No later than the closing date for the construction loan for the Project, Owner shall submit to
the City Project Manager a Management Plan in a form that is acceptable including, but not
limited to, the components listed above and below. Approval of the Management Plan must be
obtained from the City Project Manager no 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 City Project Manager, for the term of the income and rent restrictions
contained in these Restrictions. The components of the Management Plan shall include:
(a) Management Agent. Owner shall submit the name and qualifications of
the proposed Management Agent. The City Project Manager shall approve or disapprove the
proposed Management Agent in writing based on the experience and qualifications of the
Management Agent. The City hereby approves FPI Property Management as the initial
Management Agent for the Property.
(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.
EXHIBIT 3
3-71
11
(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 City Project Manager. The budget and cash flow shall be
in a form that is acceptable to the City Project Manager.
(d) Tenant Selection Policies. Owner shall include in the Management Plan
the tenant selection policies in accordance with Section 4 above.
H. If at any time the Agency determines that the units are not being managed or maintained in
accordance with the approved Management Plan, Agency shall provide Owner with notice
thereof which notice shall include a reasonable cure period not less than thirty (30) calendar
days. If the deficiencies have not been cured within the cure period provided in the Agency
notice Owner shall change the management agent or the practices complained of, upon receipt of
written notice from the City Manager. The Agency 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) calendar days prior written notice, at the direction of the
City Project Manager. Within ten (10) Business Days following a direction of the City Project
Manager to replace the management agent, the Owner shall select another management agent or
make other arrangements satisfactory to the City Project Manager or designee for continuing
management of the units.
I. The covenants established in these Restrictions and any amendments hereto approved by the
Agency, and Owner shall, without regard to technical classification and designation, be binding
for the benefit and in favor of the Agency and their respective successors and assigns. These
Restrictions shall remain in effect for fifty-five (55) years from the effective date of issuance of
the Certificate of Occupancy. The covenants against discrimination shall remain in effect for the
period of these Restrictions.
J. Owner shall not request disbursement of Agency funds until the funds are needed to pay
eligible costs. The Agency shall have the right to disapprove any request if the Agency
determines the request is for an ineligible item or is otherwise not in compliance with or
inconsistent with the Loan Agreements and these Restrictions.
K. Owner shall prepare, maintain and submit to the Agency, as appropriate, the following
records and reports:
a. Annual Reports. Owner shall file with the Agency 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
EXHIBIT 3
3-72
12
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
housing quality 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.
(4) General management performance, including tenant relations and other
relevant information.
(5) Records that demonstrate that the units meet the affordability requirements
described herein 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 Agency Deed of Trust, with a loss payable endorsement
naming the Agency as a loss payee together with other approved lenders (as their interests may
appear), with a "Replacement Cost Endorsement" in an amount sufficient to prevent the Owner
or the Agency 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 City Project Manager.
(7) Evidence of a currently paid liability insurance policy, naming the Agency
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 (5th) year.
(9) Such other information as may be reasonably required by the City Project
Manager or his/her designee.
b. Records and Audits. Owner shall maintain the following general program
records, and make them available for inspection by the Agency or the State:
(1) records which demonstrate that the project meets the Housing Quality
Standards as specified in 24 CFR 92.251;
(2) records for each Restricted Unit.
(3) records which demonstrate compliance with the tenant and participant
protections, as specified in 24 Section 29.253;
EXHIBIT 3
3-73
13
(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 Agency 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);
(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 the Lead Safe
Housing Rule;
(8) reserved;
(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. Reserved.
d. If so directed by the Agency 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 Agency, as depository.
e. All records, accounts, documentation and other materials relevant to the Project
shall be accessible at any time to the authorized representatives of the Agency or the State, on
reasonable prior notice, for the purpose of examination or audit.
f. Reserved.
g. Owner shall permit the Agency to perform an Annual Physical Inspection of the
Property with reasonable notice. Owner shall cooperate with this Inspection and shall take all
steps necessary to quickly correct any code deficiencies identified during the Inspection.
EXHIBIT 3
3-74
14
L. The Agency 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 Agency 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 Agency in
accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions
on Transfer of Property, the Agency Note and the Agency Deed of Trust provide a means of
enforcement by the Agency if Owner is in breach of its obligations hereunder and thereunder,
including liens on the Property, deed restrictions and covenants running with the land.
EXHIBIT 3
3-75
EXHIBIT 3
3-76
16
DEVELOPER:
AMCAL 1440 Santa Ana Fund, LP, a California limited partnership
By: AMCAL Multi-Housing, Inc.,
a California corporation,
its Administrative General Partner
By: ____________________________________
By: Las Palmas Foundation,
a California nonprofit public benefit corporation,
its Managing General Partner
By: ____________________________________
EXHIBIT 3
3-77
Exhibit C:
Deed of Trust
EXHIBIT 3
3-78
1
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 27383
When Recorded Mail to:
Clerk of the Council
City of Santa Ana
20 Civic Center Plaza
P.O. Box 1988 (M-30)
Santa Ana, California 92702
Attn: Clerk of the Council
AGENCY DEED OF TRUST
AND ASSIGNMENT OF RENTS
THIS AGENCY DEED OF TRUST AND ASSIGNMENT OF RENTS (the “Deed of
Trust") made this 16 day of January, 2018, by between AMCAL 1440 Santa Ana Fund, LP, a
California limited partnership (the "Trustor"), AmeriNat, a Minnesota corporation (the
“Trustee"), and the Housing Authority of the City of Santa Ana, acting as the Housing Successor
Agency, a public body, corporate and politic (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 1440 East First 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 Agency 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 Agency Loan Agreement entered into between the Trustor and the Beneficiary, dated
concurrently herewith, which Agreement is on file with the Beneficiary as a public record;
TOGETHER with the right, power and authority during the continuance of this Trust, 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
EXHIBIT 3
3-79
2
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 the Promissory
Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of eight
million five hundred twenty-two thousand seven hundred forty dollars ($8,522,740) (the “Agency
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
Agency Promissory Note and the Agency Loan Agreement, to benefit the Property. A copy of said
Agency Loan Agreement is on file as a public record with the Beneficiary and is incorporated
herein by reference (the “Agreement”). Trustor acknowledges that but for the execution of this
Agency Deed of Trust, the Beneficiary would not enter into the Agency Loan Agreement or Agency
Promissory Note secured by this Agency Deed of Trust.
2. Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the
right to grant and convey the Security; that other than this Deed of Trust, the Security is not
encumbered except for obligations secured by deeds of trust, or any other security agreement, to
secure financing or refinancing for the purchase and rehabilitation of the Property.
3. Repayment of the Loan. Trustor will promptly repay, when due, the principal loan
amount, as required by the Agency Promissory Note secured by this Deed of Trust.
4. Subordination. This obligation secured by this Deed of Trust shall be subordinated
to the Senior Loan, but the Agency’s Affordability Restrictions on Transfer of Property shall remain
in first place.
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 all applicable notice and cure provisions). Trustor will pay all taxes, assessments and
other charges, fines and impositions attributable to the Security which may attain a priority over this
Deed of Trust, by Trustor making any payment, when due, directly to the payee thereof. Trustor
will promptly furnish to the Beneficiary all notices of amounts due under this paragraph, and in the
event Trustor makes payment directly, Trustor will promptly discharge any lien which has priority
over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed
of Trust securing any senior lender or any other lien described in this paragraph so long as Trustor
will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to
EXHIBIT 3
3-80
3
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 Agency Loan Agreement. All insurance
policies and renewals thereof will include a standard mortgagee clause with standard lender's
endorsement in favor of the holder of the 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 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 thirty (30) calendar 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 the 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 the 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 thirty (30) calendar 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 the 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 the 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.
EXHIBIT 3
3-81
4
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 Agency
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 upon reasonable prior notice 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, all notices, demands, approvals and other communications provided for in this
Agency Deed of Trust shall be in writing and be delivered by certified U.S. mail, return receipt
requested, at the address as follows:
If to Trustor: AMCAL 1440 Santa Ana Fund, LP
c/o AMCAL Multi-Housing, Inc.
17862 E. 17th Street, Suite 209
Tustin, CA 92780
Attention: Mario Turner
With a copy to: AMCAL Multi-Housing, Inc.
30141 Agoura Road, Suite 100
Agoura Hills, CA 91301
Attention: General Counsel
EXHIBIT 3
3-82
5
Banc of America CDC Special Holding Company, Inc.
Community Development Banking
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
If to Trustee: AmeriNat
8121 E. Florence Avenue
Downey, California 90240
If to Beneficiary: Housing Authority of the City of Santa Ana
Executive Director
20 Civic Center Plaza (M-26)
P.0. 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) business 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.
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
Agency Promissory Note conflicts with applicable law, such conflict will not affect other provisions
of this Deed of Trust or the Agency Promissory Note which can be given effect without the
conflicting provision, and to this end the provisions of the Deed of Trust and the Agency
Promissory Note are declared to be severable.
17. Captions. The captions and headings in this Deed of Trust are for convenience only
and are not to be used to interpret or define the provisions hereof.
18. Default in Foreclosure; Remedies. Upon Trustor's breach of any covenant or
agreement of Trustor in this Deed of Trust or the Agency 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 thirty (30) calendar days from the date the notice is
EXHIBIT 3
3-83
6
received by Trustor as shown on the return receipt, by which such breach is to be cured provided,
however, that if such default is not reasonable susceptible to being cured within thirty (30) calendar
days, Trustor shall have a reasonable period to cure the defect so long as Trustor is diligently
prosecuting the cure to completion; and (4) that failure to cure such breach on or before the date
specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale
of the Security. The notice will also inform Trustor of Trustor's right to reinstate after acceleration
and the right to bring a court action to assert the non-existence of default or any other defense of
Trustor to acceleration and sale.
Notwithstanding anything to the contrary contained herein, a "default” shall not include
any transaction not considered a “transfer” under Section 16.2 of the Loan Agreement.
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 Agency 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, et seq., as amended from time to time; or (e) exercise all other rights and
remedies provided herein, in the instruments by which Trustor acquires title to any Security, or in
any other document or agreement now or hereafter evidencing, creating or securing all or any
portion of the obligations secured hereby, or provided by law.
Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any cure of
any default made or tendered by Trustor’s limited partner shall be deemed to be a cure by Trustor
and shall be accepted or rejected on the same basis as if made or tendered by Trustor.
The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in
pursuing the remedies provided in this paragraph, including, but not limited to, reasonable 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 three (3) business
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
EXHIBIT 3
3-84
7
the Agency 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 Trustor's obligation to pay the sums secured by this Deed of Trust shall
continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the
obligations secured hereby will remain in full force and effect as if no acceleration had occurred.
20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to
notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
21. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the
Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust
and the Agency 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 any notice of default and/or
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, Agency 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)
EXHIBIT 3
3-85
8
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written
above.
AMCAL 1440 Santa Ana Fund, LP, a California limited partnership
By: AMCAL Multi-Housing, Inc.,
a California corporation,
its Administrative General Partner
By: ____________________________________
By: Las Palmas Foundation,
a California nonprofit public benefit corporation,
its Managing General Partner
By: ____________________________________
EXHIBIT 3
3-86
Exhibit D:
Promissory Note
EXHIBIT 3
3-87
1
HOUSING FUNDS PROMISSORY NOTE
SECURED BY AGENCY DEED OF TRUST
FOR THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA
(1440 East First Street, Santa Ana, California)
$8,522,740.00 January 16, 2018
Santa Ana, California
1. Principal Amount of Loan
FOR VALUE RECEIVED, AMCAL 1440 Santa Ana Fund, LP, a California limited
partnership (“Borrower”), hereby promises to pay to the Housing Authority of the City of Santa
Ana, acting as the Housing Successor Agency, a public body, corporate and politic (“Agency”), a
principal amount not to exceed EIGHT MILLION FIVE HUNDRED TWENTY-TWO
THOUSAND SEVEN HUNDRED FORTY DOLLARS ($8,522,740) or so much thereof as may
be advanced by the Agency to the Borrower, due and payable with three percent simple interest
(3%) commencing upon filing of the Notice of Completion by residual receipts over the fifty-five
(55) year term, pursuant to the Agency Loan Agreement (said “Agreement”) between Borrower
and the Agency dated concurrently herewith, which is incorporated herein by this reference. This
loan is made pursuant to subdivision (d) of Section 34176 of the California Health and Safety
Code to establish the low and moderate income housing asset fund (“LMIHAF”) with money
funded as “Agency Housing Funds or Agency Funds”. Any capitalized term not otherwise
defined in this Promissory Note shall have the meaning ascribed to such term in the Agreement.
The obligation of Borrower to Agency hereunder is subject to the terms of said Agreement, the
Affordability Restrictions on Transfer of Property, Agency Deed of Trust and this Promissory
Note. Said documents are public records on file in the offices of the Agency, and the provisions
of said documents are incorporated herein by this reference.
This Promissory Note, said Agreement, the Affordability Restrictions on Transfer of
Property, and the Agency 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 Agency. Any capitalized term which is not otherwise defined herein shall have the
meaning ascribed to such term in the Agreement.
This Promissory Note evidences the obligation of Borrower to the Agency for the
repayment of the Agency Loan of Agency Funds attributable to the acquisition, development,
and construction of the Property, and related soft costs.
This Promissory Note is payable at the principal office of the City of Santa Ana –
Community Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Attn:
Housing Division, or at such other place as the holder hereof may inform Borrower in writing, in
lawful money of the United States.
EXHIBIT 3
3-88
2
2. Definitions.
For the purpose of calculating the payments to be made by Borrower to Agency pursuant
to this Promissory Note, the following terms shall have the following respective meanings:
“Agency Assisted Units” shall mean those rental units constructed on the Property which
are subject to the term of affordability.
“Agency Funds” shall mean the money provided by the Housing Successor Agency for
the acquisition and construction of the rental units hereunder.
“Agency Deed of Trust” shall mean the Agency Deed of Trust in favor of the Agency,
securing the Agency Loan, substantially in the form attached to the Agreement as Exhibit D,
which is incorporated herein by this reference.
“Agency Loan” shall mean the loan evidenced by this Promissory Note repayable to the
Agency in accordance with the terms of this Promissory Note and secured by the Agency Deed
of Trust.
"Agency’s Percentage" with reference to the Residual Receipts, shall mean fifty percent
(50%) of the total Residual Receipts from the Property as further described in Section 5 hereof.
“Agreement” means the Agency Loan Agreement between the Agency and the
Developer, and any attachments or amendments thereto.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the Agency and the Agency Funds.
“Area Median Income” means the median income figures for Orange County as
published by the California Department of Housing and Community Development (HCD). Also
may be referred to as “AMI” herein.
“Borrower” means AMCAL 1440 Santa Ana Fund, LP, a California limited partnership.
“Calendar Year” means each consecutive twelve (12) month period from January 1 to
December 31.
"Closing Costs" shall mean:
(i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a
result of the Sale, which shall not in any event exceed the customary amount charged-for similar
transactions in the immediate market place, costs of title insurance premiums, documentary
stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably
incurred with respect to the Property, in each case actually paid by Borrower as a condition of
the Sale.
EXHIBIT 3
3-89
3
(ii) In the case of a Refinancing, the reasonable and necessary costs of
consummating such Refinancing, including, without limitation, loan fees, loan repayment
charges, costs of title insurance premiums, escrow fees, recording fees and attorneys' fees.
"Gross Revenues" shall mean all revenues and receipts of every kind actually received by
Borrower from operating the Property, and all parts thereof, including, but not limited to, income
from both cash and credit transactions, rental from leased and/or subleased spaces and parking
fees and charges (but not including security deposits and other tenant deposits, except to the
extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues also
includes any casualty insurance proceeds in excess of those used to restore the Property and any
rental interruption insurance proceeds. Any credit consideration shall be included in Gross
Revenues at the time cash proceeds (principal and/or other) are received. Borrower shall
establish and maintain accounts for the Gross Revenues (the "Project Accounts") that are
segregated from revenues and income received by Borrower from all other projects. Gross
Revenues shall also include all interest earned on the Project Accounts.
“Housing Successor Agency Loan” means the loan made by the Housing Authority of the
City of Santa Ana, acting as the Housing Successor Agency to the Developer in the original
principal amount of $8,522,740.
“Operating Expenses” shall mean the sum of the following:
(i) payments of principal and interest and all other charges relating to the Senior
Loan(s);
(ii) a property management fee equal to 8% of gross rents;
(iii) Owner Administration Fee of 5% of gross rents;
(iv) deposits into required reserves;
(v) any deferred developer fee;
(vi) all other actual, reasonable cash operating costs and expenses, calculated on an
annual basis, that are directly attributable to managing and operating the Property, including,
without limiting the generality of the foregoing, the following: costs and expenses for real and
personal property taxes, special assessments or similar charges; water, fuel, electricity and other
utilities; heating, ventilation and air conditioning expenses; labor; supplies; tools; equipment;
insurance; advertising and marketing; accounting and legal fees; brokerage commissions and
other leasing expenses; 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.
EXHIBIT 3
3-90
4
(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 Orange County, California area.
“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 HCD.
“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 HCD.
“Property” shall mean that property located at 1440 East First 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 a new Senior Loan, except for the payoff of the conventional lender’s
acquisition loan for the Property.
"Refinancing Proceeds" shall be disbursed as set forth in Section 6 hereof.
"Residual Receipts" shall mean the Gross Revenues from the Property for each year, less
deductions for Operating Expenses from the Property, 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 Promissory
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 loan made to Borrower, for payment of Acquisition
and/or Construction Costs, and shall include any subsequent loan that refinances said Senior
Loan.
EXHIBIT 3
3-91
5
"Term" the term for repayment of this Promissory Note shall mean fifty-five (55) years
from the date of recording of the Deed of Trust securing the Promissory Note.
"Term of Affordability" the term of affordability shall be fifty-five (55) years.
“Very Low Income” means an adjusted income which does not exceed fifty percent
(50%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HCD.
3. Loan Repayment.
Borrower shall make payments to the Agency 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 Receipts.
a. Commencing on the date one hundred fifty (150) calendar 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 thereafter make a loan
payment to the Agency annually, in the amount of the lesser of the outstanding balance due
under this Promissory Note or the Agency’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 Agency 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 an Agency Loan payment then due.
c. Except as otherwise provided, the Borrower shall pay to the Agency the Agency's
Percentage of the Residual Receipts as payment of principal. At least fifty percent (50%) of the
Residual Receipts shall remain with the Borrower, with all Residual Receipts remaining with
Borrower to the extent the Agency Loan has been fully repaid.
d. Borrower shall retain fifty percent (50%) of the Residual Receipts. The other fifty
percent (50%) will be the Agency’s Percentage of the Residual Receipts and applied to the
EXHIBIT 3
3-92
6
Agency Loan. 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 principal balance of the loan.
6. Loan Repayment from Refinancing Proceeds.
The Borrower shall make a loan payment to the Agency from every Refinancing that
occurs during the term of this Promissory Note (other than refinancing of the conventional lender
acquisition and/or construction loan) not to exceed the outstanding balance of principal on this
Promissory Note, to the extent of the Agency’s Percentage of the Refinancing Proceeds (if any),
as follows: the cash proceeds from such Refinancing shall be applied first to pay Closing Costs;
next, the amount necessary to pay in full the balance remaining on the Senior Loan; next, the
Borrower shall pay to the Agency the Agency's Percentage of the Refinancing Proceeds of which
Agency Percentage shall be used to repay the Agency Loan to the extent of the outstanding
balance on this Promissory Note; and next, the amount necessary to pay any deferred developer
fee in full. 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 Promissory Note has been fully paid. Such payment shall be due on
the date of such Refinancing, and shall be applied to reduce the principal balance of the Loan.
The Agency shall not be required to reconvey the lien of the Deed of Trust if Refinancing
Proceeds are insufficient to repay the Agency Loan in full.
7. Loan Repayment from Sale Proceeds.
The Borrower shall make a loan payment, not to exceed the outstanding balance of
principal on this Promissory Note subject to Section 14 herein, to the Agency from any Sale that
occurs during the term of the Agency Loan, to the extent of the Agency’s Percentage of the Sale
Proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in
full the balance remaining on the Senior Loan; next, the Borrower shall pay to the Agency the
Agency's Percentage of the Refinancing Proceeds of which Agency Percentage shall be used to
repay the Agency Loan not to exceed the outstanding amount of principal due on this Promissory
Note; and next to pay the amount necessary to pay any deferred developer fee in full. 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
Promissory Note has been fully paid. Such payment shall be due on the date of such Sale, and
shall be applied to reduce the principal balance of the Loan. The Agency shall not be required to
reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full.
8. Accelerated Loan Payment.
The full principal amount outstanding shall be due and payable on the earlier to occur of
the following:
EXHIBIT 3
3-93
7
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
Agency Loan, the Agency approves such sale and the purchaser assumes the balance of the
Agency Loan in accordance with the terms of this Promissory Note; or (ii) in the case of a
Refinancing in which the Refinancing Proceeds are insufficient to repay in full the Agency Loan,
the Agency approves such Refinancing and the Borrower remains obligated pursuant to the terms
of this Promissory Note.
b. An event of default (subject to any applicable notice and cure provisions)
pursuant to any of the Loan Documents or the Senior Loan Documents.
c. Any default (subject to any applicable notice and cure provisions by Borrower) as
to any other loan or loans by Agency to Borrower with respect to the Property; or
d. The date that is fifty-five (55) years after the date of execution of this Promissory
Note. On that date, the Agency 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
Agency Promissory Note.
9. Prepayment
Borrower may prepay the outstanding principal balance under this Promissory 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 Agency pursuant to the terms hereof shall be
applied first to sums, other than principal, due the Agency pursuant to this Promissory Note, and
the balance, if any, to the payment of principal.
b. If any payment is not received by the Agency within ten (10) Business Days after
Borrower's receipt of written notice that such payment was not received when due; then in
addition to the remedies conferred upon the Agency pursuant to this Promissory 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 Agency for the expense of handling the
delinquency and (ii) the amount due and unpaid, excluding the late charge, shall bear interest at
the highest annual rate which may lawfully be charged and collected under applicable law on the
obligation evidenced by this Promissory Note, computed from the date on which the amount was
due and payable until paid. Without prejudice to the rights of the Agency hereunder or under any
EXHIBIT 3
3-94
8
of the other Loan Documents, Borrower shall indemnify the Agency against, and shall pay the
Agency 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
Agency under this Promissory 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
Agency setting forth the basis for the determination of the amounts necessary to indemnify the
Agency in respect of such expenses or direct loss, submitted to Borrower by the Agency, shall be
conclusive and binding for all purposes except as immediately corrected by Borrower notice to
Agency.
12. Security
This Promissory Note is secured by the recorded Deed of Trust.
13. Acceleration by Reason of Transfer or Financing.
a. In order to induce Agency to make the loan evidenced hereby, Borrower agrees
that in the event of any transfer of the Property without the prior written consent of Agency
(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), Agency 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. Agency 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 Agency.
b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or convey
the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by
operation of law or otherwise, the execution of any installment land sale contract or similar
instrument affecting all or a portion of the Property, or the lease of all or substantially all of the
Property. “Transfer” shall not include the leasing of individual residential units on the Property,
so long as Borrower complies with the provisions of the Loan Agreement and the Affordability
Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of
the Property to a limited partnership in which Borrower is a general partner, or to a corporation
or limited liability company that is wholly owned by the Borrower or its affiliates and that is
formed for the sole purpose of owning and operating the Property, or the sale back to the
Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the
balance of the Senior Loan, without the prior written consent of Agency (which consent Agency
may grant or deny in its sole discretion), then the entire outstanding balance of the Agency Loan
shall be repaid to the Agency at the time of each Refinancing or partial Refinancing.
Additionally, a "Transfer” shall not include any transaction not considered a “transfer” under
Section 16.2 of the Loan Agreement.
EXHIBIT 3
3-95
9
14. Event of Default.
Subject to the provisions of Sections 23 hereof, the occurrence of any of the following
shall be deemed to be an event of default ("Event of Default'') hereunder: (a) failure by Borrower
to make any payments provided for herein, and if such default is not made good within ten (10)
Business Days after Developer's receipt of written notice that such payment was not received
when due; (b) failure by Borrower to perform any covenant or agreement in the Deed of Trust,
the Agreement, or the Affordability Covenants and Restrictions within thirty (30) calendar days
after written demand therefor by Agency (or, in the event that more than thirty (30) calendar
days is reasonably required to cure such default, should Borrower fail to promptly commence
such cure, and diligently and continuously prosecute same to completion); or (c) a default under
the Senior Loan Deed of Trust that remains uncured after any applicable notice has been
provided and the expiration of any applicable cure period therefore, if any, provided therein.
15. Remedies.
Upon the occurrence of an Event of Default, after any applicable notice has been
provided and the expiration of any applicable cure period therefore, Agency may declare all
sums evidenced hereby immediately due and payable by delivery to the Trustee named in the
Deed of Trust securing this Promissory Note, and to Borrower, written declaration of default and
demand for sale, and written notice of default and of election to cause the Property to be sold,
which notice Trustee shall cause to be duly filed for record and Agency may foreclose on the
Deed of Trust. Agency shall also deposit with Trustee the Deed of Trust, this Promissory 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
Agency in exercising any right under this Promissory Note or under any of the other Loan
Documents shall operate as a waiver of such right.
16. Attorney Fees.
If this Agency 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 Promissory Note is intended to be severable. In the event any
term or provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms
and provisions hereof, which terms and provisions shall remain binding and enforceable.
EXHIBIT 3
3-96
10
18. Number and Gender.
In this Promissory 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 Agency 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 Agency Loan
or for any other amounts under any of the documentation evidencing, securing or describing the
Agency Loan. The sole recourse of Agency under this Promissory Note and the Deed of Trust
for repayment of the Agency Loan and for such other amounts arising therefrom shall be the
exercise of its rights against the Property and related security thereunder.
20. Subordination.
It is hereby expressly agreed and acknowledged by Borrower and Agency that the Deed
of Trust is a subordinate Deed of Trust to the Senior Loan, and that this Promissory Note is
subject and subordinate to any Senior Loan Deed of Trust, as further described in the
Subordination Agreement between the Agency and Senior Lender.
21. Notice of Default.
a. Subject to the applicable cure periods set forth in Section 14 and subject to the further
provisions of this Section 21, failure or delay by the Borrower to perform any term or provision
of this Promissory Note constitutes a default under this Promissory 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 Agency shall give written notice of default to the Borrower specifying the
default complained of by the Agency. 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 Agency to be reasonably necessary to correct the default).
d. Any failures or delays by the Agency 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 Agency in asserting any of its rights and remedies shall not deprive the Agency 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.
EXHIBIT 3
3-97
11
e. If a monetary event of default occurs under the terms of this Promissory Note or the
Deed of Trust, prior to exercising any remedies thereunder Agency shall give Borrower written
notice of such default. Borrower shall have a period of ten (10) business days after such notice is
received within which to cure the default prior to exercise of remedies by Agency under this
Promissory Note and the Deed of Trust.
f. If a non-monetary event of default occurs under the terms of this Promissory Note
or the Deed of Trust, prior to exercising any remedies thereunder, Agency shall give Borrower
notice of such default. If the default is reasonably capable of being cured within thirty (30)
calendar days, Borrower shall have such period to effect a cure prior to exercise of remedies by
the Agency under this Promissory Note and the Deed of Trust. If the default is such that it is not
reasonably capable of being cured within thirty (30) calendar 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 Agency. In no event shall
Agency be precluded from exercising remedies if its security becomes or is about to become
materially jeopardized by any failure to cure a default or the default is not cured within one
hundred eighty (180) days after the first notice of default is given.
22. Insurance and Condemnation.
In the event of any fire or other casualty to the Property or eminent domain proceedings
resulting in condemnation of the Property or any part thereof, Borrower shall have the right to
rebuild the Property, and to use all available insurance or condemnation proceeds therefor,
provided that (a) such proceeds are sufficient to keep the Agency Loan in balance and rebuild the
Property in a manner that provides adequate security to Agency for repayment of the Agency
Loan or if such proceeds are insufficient then Borrower shall have funded any deficiency, (b)
Agency 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
Promissory 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 Agency Loan in a manner that provides adequate security for repayment
of the remaining balance of the Agency Loan.
23. Force Majeure.
Notwithstanding specific provisions of this Promissory 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 Agency or any other public or governmental Agency or entity (except
that any act or failure to act of Agency shall not excuse performance by Agency); or any other
EXHIBIT 3
3-98
12
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)
calendar days after the commencement of the cause. Times of performance under this
Promissory Note may also be extended in writing by the Agency and the Borrower.
24. Assignments.
The Agency, and the assignee of the Agency, shall have the right to assign this
Promissory Note and the Deed of Trust securing this Promissory Note, without any further act of
Borrower. The assignee shall give notice to Borrower as soon as practicable after such
assignment.
EXHIBIT 3
3-99
13
This Agency Promissory Note is hereby agreed to and executed on the date first set forth above.
"BORROWER"
AMCAL 1440 Santa Ana Fund, LP, a California limited partnership
By: AMCAL Multi-Housing, Inc.
a California corporation,
its Administrative General Partner
By: ____________________________________
By: Las Palmas Foundation,
a California nonprofit public benefit corporation,
its Managing General Partner
By: ____________________________________
EXHIBIT 3
3-100
Exhibit E:
Project Budget
EXHIBIT 3
3-101
9% tax credits Local Private Private
Residential
Rental
Component
Costs
Total
Development
Costs
LIHTC Equity
Investment
City of Santa Ana -
Successor Agency
funds
Bank of America -
Construction
Loan
Deferred Costs SOURCES
TOTAL
ACQUISITION
Lesser of Land Cost or Value $4,500,000 $4,500,000 $4,500,000 $4,500,000
Legal & Closing Costs $19,375 $19,375 $19,375 $19,375
Verifiable Carrying Costs $765,983 $765,983 $765,983 $765,983
Other: (Predevelopment Loan Interest)$61,000 $61,000 $61,000 $61,000
Total Acquisition $5,346,358 $5,346,358 $5,346,358
RELOCATION
Permanent Relocation $955,161 $955,161 $955,161 $955,161
Total Relocation $955,161 $955,161 $955,161
CONSTRUCTION
Off-Site Improvements $193,393 $193,393 $193,393 $193,393
Site Work (hard costs)$1,945,880 $1,945,880 $1,945,880 $1,945,880
Structures (hard costs)$11,253,686 $11,253,686 $11,253,686 $11,253,686
Demolition & Remediatoin $350,000 $350,000 $350,000 $350,000
General Requirements $1,075,033 $1,075,033 $1,075,033 $1,075,033
Contractor Overhead $457,696 $457,696 $457,696 $457,696
Contractor Profit $457,696 $457,696 $457,696 $457,696
Total Construction $15,733,384 $15,733,384 $15,733,384
ARCHITECTURAL
Design $941,550 $941,550 $941,550 $941,550
Total Architectural Costs $941,550 $941,550 $941,550
SURVEY & ENGINEERING
Survey & Engineering $480,046 $480,046 $394,819 $85,227 $480,046
Environmental Consultants $205,650 $205,650 $205,650 $205,650
Misc. Consultants $13,051 $13,051 $13,051 $13,051
Total Survey & Engineering $698,747 $698,747 $698,747
CONTINGENCY COSTS
Hard Cost Contingency $786,669 $786,669 $786,669 $786,669
Soft Cost Contingency $465,550 $465,550 $465,550 $465,550
Total Contingency Costs $1,252,219 $1,252,219 $1,252,219
CONSTRUCTION PERIOD EXPENSES
Construction Loan Interest $820,239 $820,239 $820,239 $820,239
Origination Fee $225,295 $225,295 $225,295 $225,295
Improvement Bond Premium $15,000 $15,000 $15,000 $15,000
Closing Costs $30,000 $30,000 $30,000 $30,000
Property Taxes $130,542 $130,542 $130,542 $130,542
Insurance During Construction $196,667 $196,667 $196,667 $196,667
Title and Recording Fees $57,000 $57,000 $57,000 $57,000
Total Construction Expenses $1,474,743 $1,474,743 $1,474,743
PERMANENT FINANCING EXPENSES
Loan Origination Fee(s)$76,870 $76,870 $76,870 $76,870
Closing Fees & Reports $20,000 $20,000 $11,643 $8,357 $20,000
Title and Recording Fees $10,000 $10,000 $10,000 $10,000
Insurance $50,000 $50,000 $50,000 $50,000
Total Permanent Financing $156,870 $156,870 $156,870
LEGAL FEES
Construction Lender Legal Expenses $80,000 $80,000 $80,000 $80,000
Permanent Lender Legal Fees $20,000 $20,000 $20,000 $20,000
Sponsor Legal Fees $150,000 $150,000 $150,000 $150,000
Total Legal Fees $250,000 $250,000 $250,000
CAPITALIZED RESERVES
Operating Reserve $214,053 $214,053 $214,053 $214,053
Total Capitalized Reserves $214,053 $214,053 $214,053
REPORTS & STUDIES
Appraisal & Market Study $31,125 $31,125 $31,125 $31,125
Other: Accounting $54,900 $54,900 $54,900 $54,900
Total Reports & Studies $86,025 $86,025 $86,025
OTHER
TCAC App./Alloc./Monitor Fees $119,548 $119,548 $119,548 $119,548
Local Permit Fees $693,785 $693,785 $511,029 $182,756 $693,785
Other Impact Fees $1,331,050 $1,331,050 $128,564 $1,202,486 $1,331,050
Furnishings $75,900 $75,900 $75,900 $75,900
Marketing $114,999 $114,999 $29,772 $85,227 $114,999
Total Other Costs $2,335,282 $2,335,282 $2,335,282
DEVELOPER COSTS
Developer Fee/Overhead/Profit $1,944,989 $1,944,989 $170,454 $629,341 $1,145,194 $1,944,989
Other: Non-Profit Partner Fee $100,000 $100,000 $100,000 $100,000
Total Developer Costs $2,044,989 $2,044,989 $2,044,989
TOTAL DEVELOPMENT COST $31,489,381 $31,489,381 $2,291,944 $8,522,740 $19,529,503 $1,145,194 $31,489,381
COSTS
EXHIBIT 3
3-102
Exhibit F: Scope of
Work / Schedule of
Performance
EXHIBIT 3
3-103
Exhibit F- Scope of Work
First Street Apartments
OVERVIEW
AMCAL Multi-Housing proposes to develop a multi-family apartment complex consisting of
seven buildings (Six Residential + One Community Laundry Building) on one site located at
1440 East First Street Santa Ana, CA 92701, with the following unit plan:
35 Two Bedroom / Two Bath 782 Average Square Feet
28 Three Bedroom / Two Bath 1,031 Square Feet
6 Four Bedroom / Two Bath 1,219 Square Feet
69 Total Units
Of the 69 total units, 68 will be reserved for affordable households and 1 unit will be an
unrestricted Manager’s Unit.
Unit Types: Flats
Buildings: Six (6) Residential + One (1) Community Laundry Building
Number of Stories: Three Stories from grade (three residential levels with tuck under
parking and additional on grade parking).
Construction: Type V
Energy Efficiency: LEED Silver
Site Area: 2.16 Gross Acres (94,098 SF)
Laundry Facility: A central laundry building will be provided for all residents
including a total of seven (7) washers and seven (7) dryers.
Community Room: A 2,008 square foot Community Space will be provided including
a community kitchenette, lounge, computer lab, and supportive
services offices.
EXHIBIT 3
3-104
TYPE OF CONSTRUCTION AND DESIGN
Project Design Elements:
Conventional wood frame
Brick veneer exteriors & stucco
Ornamental balcony railings
Double Loaded Corridors
Concrete slab on grade
69 tuck under parking spaces/ 50 on-grade parking spaces = 119 Total parking spaces
Unique floor plans, custom-designed interiors
Contemporary style
Appeals to the current residential rental market
Elegant and spacious floor plans
Interior common space which includes a Community Room measuring approximately
2,008 SF and includes a kitchenette, lounge, community services area, leasing offices,
and computer room
Common area features including extensive landscaping with barbeque area, a variety of
plant life, walkways, children’s play area and seating areas for parents and residents
The development will meet LEED Silver requirements
Security cameras and controlled access
*In addition, all design elements listed below will be in compliance with all current codes, standards and
ordinances as required by the City of Santa Ana.
Grading/Drainage
Paving
Retaining Walls
Walls, Fencing, and Gates
Landscaping and Irrigation: The use of drought and disease resistant vegetation, water
efficient sprinklers, and EPA Water-Sense labeled irrigation controllers will be
incorporated.
Site Lighting: Appropriate timers and Energy Star labeled fixtures will be installed.
Interior Stairs, Railings, and Landings
Garages, Carports, and Outbuildings
Foundations
Porches, and Balconies
Exterior Walls
Roofs: Building shall use roofing that is light in color to prevent heat gain.
Exterior Doors: Energy Star labeled doors will be installed.
Windows: Energy Star labeled windows will be installed.
Floors: All floors, except for the bedrooms, will have vinyl plank flooring. Bedrooms
will be carpeted
EXHIBIT 3
3-105
Walls and Ceilings
Interior Doors
Kitchen Cabinets and Countertops: Medium grade, KCMA labeled (or approved equal)
cabinets will be installed.
Kitchen Sinks, Faucets, and Garbage Disposals: EPA Water Sense labeled faucets will be
installed.
Kitchen Appliances and Fixtures: Energy Star labeled appliances will be installed.
Bathroom Fixtures and Equipment: EPA Water Sense labeled faucets, valves and
showerheads will be installed, as well as Energy Star labeled light fixtures and
equipment.
Water Supply, Waste, and Vent Piping
Water Heaters: Conventional water heater tanks will be installed.
Electrical Service and Wiring
Electrical Switches, Outlets, and Light Fixtures: Energy Star labeled fixtures will be
installed.
Heating, Ventilation and Air Conditioning: Energy Star labeled appliances and
programmable thermostats will be installed.
Smoke Alarms / Carbon Monoxide Alarms: Interconnected combination alarms will be
installed.
Unit Interiors:
Interior designs incorporate wood doors, vinyl windows, painted gypsum board walls and
ceilings, and window privacy by use of mini-blinds
Cabinets will be of pre-manufactured wood with plastic laminate countertops
Kitchens will include a refrigerator, electric stove and cooktop with vented hood, garbage
disposal, and dishwasher
Bathrooms will include fiberglass bath/shower units, mirror, vanity, and medicine cabinet
EXHIBIT 3
3-106
First Street Project Schedule
Item Date
Plan Check Complete ‐ Building Permit Ready 01/16/18
Partnership Closing 02/28/18
Construction Start 03/01/18
50% Complete 12/01/18
Construction Completion (18 months) 09/01/19
Final Certificate of Occupancy 09/01/19
Complete Move In Tenants 12/31/19
3‐months stabilized occupancy 03/31/20
Close on Permanent Financing/Conversion 03/31/20
Receive 8609 Certificate from TCAC 09/30/20
EXHIBIT 3
3-107
Exhibit G: Form of
Residual Receipts
Report
EXHIBIT 3
3-108
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 not include interest income from replacement and operating
reserves nor interest income on tenant security deposits) (2) $ _
Additional Income (for example, vending machine income, tenant forfeited
deposits, laundry income not paid to the residents' association)
Total Annual Project Revenue (Add lines 1, 2, and 3)
(3) $. _
(4) $ _
Operating Expenses 1
Please report Operating Expenses incurred for the year ending _
on the following lines:
Operating and Maintenance Expenses (5) $. _
Utilities
Property Management Expenses and On-Site Staff Payroll
Administrative Expenses
Property Taxes
Insurance
(6) $ _
(7) $ _
(8) $ _
(9) $ _
(10) $ _
EXHIBIT 3
3-109
Other Expenses
Please list these expenses:
(11) $ _
Total Annual Operating Expenses for the Housing Project
(12)
$
(Add lines 5, 6, 7, 8, 9, 10, and 11)
Net Operating Income (Subtract Line 12 from Line 4)
(13)
$
Do not include expense unrelated to the operation 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
(14)
$
other parties that may have such approval rights) and Obligated Secondary
Subordinate Debt Service Payments (as approved by the Agency and other parties
that may have such approval rights)
Scheduled Deposits to Reserves (as approved by the Agency)
(15)
$
Additional Payment Obligations (such as partnership management fees, deferred
(16)
$
developer fees, or repayments on loans to partners, as approved by the Agency to
have priority over Residual Receipt Payment to the Agency)
Total Additional Cash Flow Payments (Add lines 14, 15, and 16)
(17)
$
Residual Receipts for Year Ending
(18)
$
(Subtract Line 17 from Line 13)
Percentage of Residual Receipts to be Paid to the Agency (as shown in the
(19)
%
Promissory Note by and between the Agency and Borrower dated
Amount Payable to the Agency (Multiply Line 18 by Line 19) (20) $ _
The amount payable to the Agency listed on Line 20 is subject to payment according to the terms of the
Promissory Note by and between the Agency and Borrower dated . If Line 20 is
$0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check
payable to and attach to this report.
EXHIBIT 3
3-110
Exhibit H:
Partnership
Agreement
EXHIBIT 3
3-111
EXHIBIT 3
3-112
EXHIBIT 3
3-113
EXHIBIT 3
3-114
EXHIBIT 3
3-115
EXHIBIT 3
3-116
EXHIBIT 3
3-117
EXHIBIT 3
3-118
EXHIBIT 3
3-119
EXHIBIT 3
3-120
EXHIBIT 3
3-121
EXHIBIT 3
3-122
EXHIBIT 3
3-123
EXHIBIT 3
3-124
EXHIBIT 3
3-125
EXHIBIT 3
3-126
EXHIBIT 3
3-127
EXHIBIT 3
3-128
EXHIBIT 3
3-129
EXHIBIT 3
3-130
EXHIBIT 3
3-131
EXHIBIT 3
3-132
EXHIBIT 3
3-133
EXHIBIT 3
3-134
EXHIBIT 3
3-135
EXHIBIT 3
3-136
EXHIBIT 3
3-137
This page intentionally left blank
3-138
*** DISTRIBUTED FOR DISCUSSION PURPOSES ONLY - CREDIT APPROVAL HAS
NOT BEEN OBTAINED ***
Subordination Agreement (Affordable) Page 1
(First Street Apartments)
BN 31557804v4
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
Buchalter, a Professional Corporation )
1000 Wilshire Blvd., Suite 1500 )
Los Angeles, CA 90017 )
Attention: Scott M. Salomon, Esq. )
---------------------------- [Space Above This Line For Recording Data] ----------------------------
SUBORDINATION AGREEMENT
(1440 East First Street, Santa Ana, California)
This SUBORDINATION AGREEMENT (this “Agreement”) dated as of [_________,
2018], is executed by and among (i) BANK OF AMERICA, N.A., a national banking association
(“Senior Lender”), (ii) the HOUSING AUTHORITY OF THE CITY OF SANTA ANA, acting
as the Housing Successor Agency, a public body, corporate and politic (“Subordinate Lender”),
and (iii) AMCAL 1440 SANTA ANA FUND, LP, a California limited partnership
(“Borrower”).
RECITALS:
A. Pursuant to that certain Construction Loan Agreement dated as of the date hereof,
executed by and between Borrower and Senior Lender (as amended, restated, replaced,
supplemented or otherwise modified from time to time, the “Senior Loan Agreement”), Senior
Lender has agreed to make a loan to Borrower in the original principal amount of [Nineteen
Million Fifty-Six Thousand Four Hundred Ninety-Five and 00/100 Dollars ($19,056,495)] (the
“Senior Loan”), as evidenced by that certain Promissory Note dated as of the date hereof,
executed by Borrower and made payable to the order of Senior Lender in the amount of the
Senior Loan (as amended, restated, replaced, supplemented or otherwise modified from time to
time, the “Senior Note”).
B. In addition to the Senior Loan Agreement, the Senior Loan and the Senior Note
are also secured by a certain Construction Deed of Trust, Assignment, Security Agreement and
Fixture Filing dated as of the date hereof (as amended, restated, replaced, supplemented or
otherwise modified from time to time, the “Senior Security Instrument”), encumbering the
property described on Exhibit A attached hereto and described in the Senior Security Instrument
as the “Mortgaged Property.” The Senior Security Instrument shall be recorded substantially
concurrently herewith in the Official Records of Orange County (“Official Records”).
C. Borrower has requested Senior Lender to permit that certain subordinate loan in
the amount of $[8,522,740] (the “Subordinate Loan”) from the Low and Moderate Income
EXHIBIT 4
3-139
Subordination Agreement (Affordable) Page 2
(First Street Apartments)
Housing Asset Fund of the Subordinate Lender to Borrower and to allow the Subordinate Loan to
be secured by a mortgage lien against the Mortgaged Property.
D. Upon satisfaction of all conditions set forth in the Senior Loan Agreement, the
Senior Loan will convert (“Conversion”) to a Permanent Loan, as defined in the Senior Loan
Agreement
E. Senior Lender has agreed to permit the Subordinate Loan and to allow the
subordinate mortgage lien against the Mortgaged Property subject to all of the conditions
contained in this Agreement.
F. Subordinate Lender has agreed to subordinate the Subordinate Loan and the
Subordinate Loan Documents, as defined herein, to the Senior Loan and the Senior Loan
Documents, as defined herein, with the specific exclusion of the Affordability Restrictions, as
defined herein.
AGREEMENTS:
NOW, THEREFORE, in order to induce Senior Lender to permit the Subordinate Loan to
Borrower and to allow a subordinate mortgage lien against the Mortgaged Property, and in
consideration thereof, Senior Lender, Subordinate Lender and Borrower agree as follows:
1. Recitals.
The recitals set forth above are incorporated herein by reference.
2. Definitions.
In addition to the terms defined in the Recitals to this Agreement, for purposes of this
Agreement the following terms have the respective meanings set forth below:
“Affiliate” means, when used with respect to a Person, any corporation, partnership, joint
venture, limited liability company, limited liability partnership, trust or individual Controlled by,
under common Control with, or which Controls such Person, and in all cases any other Person
that holds fifty percent (50%) or more of the ownership interests in such Person.
“Affordability Restrictions” means the Affordability Restrictions on Transfer of Property [of
even date herewith] by and between the Borrower and Subordinate Lender, which shall be
specifically excluded from the terms, covenants or conditions of this Agreement.
“Borrower” means the Person named as such in the first paragraph on page 1 of this Agreement,
any successor or assign of Borrower, including without limitation, a receiver, trustee or debtor-
in-possession and any other Person (other than Senior Lender) who acquires title to the
Mortgaged Property after the date of this Agreement.
“Business Day” means any day other than (a) a Saturday, (b) a Sunday, (c) a day on which
Senior Lender or Subordinate Lender is not open for business, or (d) a day on which the Federal
Reserve Bank of New York is not open for business.
EXHIBIT 4
3-140
Subordination Agreement (Affordable) Page 3
(First Street Apartments)
“Condemnation Action” means any action or proceeding, however characterized or named,
relating to any condemnation or other taking, or conveyance in lieu thereof, of all or any part of
the Mortgaged Property, whether direct or indirect.
“Control” (including with correlative meanings, the terms “Controlling,” “Controlled by” and
“under common Control with”), as applied to any entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or operations of such
entity, whether through the ownership of voting securities, ownership interests or by contract or
otherwise.
“Default Notice” means: (a) a copy of any written notice from Senior Lender to Borrower and
Subordinate Lender stating that a Senior Loan Default has occurred under the Senior Loan
Documents; or (b) a copy of the written notice from Subordinate Lender to Borrower and Senior
Lender stating that a Subordinate Loan Default has occurred under the Subordinate Loan
Documents or the Affordability Restrictions. Each Default Notice shall specify the default upon
which such Default Notice is based.
“Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability
company or any other organization or entity (whether governmental or private).
“Permanent Loan Agreement” means that certain Multifamily Loan and Security Agreement to
be delivered by Borrower to Senior Lender in connection with the Permanent Loan.
“Permanent Note” means that certain Multifamily Note in the amount of up to $[7,425,426] to
be delivered by Borrower to Senior Lender to evidence the Permanent Loan.
“Permanent Mortgage” means that certain Multifamily Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing to be delivered by Borrower to Senior Lender
and encumbering the Property to secure the obligations of Borrower under the Permanent Note,
which Permanent Mortgage will become the Senior Security Instrument upon Conversion.
“Permanent Loan Documents” means the Permanent Note, the Permanent Mortgage,
Permanent Loan Agreement and all other documents evidencing, securing or otherwise executed
and delivered in connection with the Permanent Loan.
“Senior Lender” means the Person named as such in the first paragraph on Page 1 of this
Agreement, its successors and assigns and any other Person who becomes the legal holder of the
Senior Loan after the date of this Agreement. Following Conversion, the Senior Lender means
the holder of the Permanent Loan.
“Senior Loan Default” means the occurrence of an “Event of Default” as that term is defined in
the Senior Loan Documents, including, following Conversion of the Senior Loan, the Permanent
Loan Documents.
“Senior Loan Documents” means the Senior Security Instrument, the Senior Note, the Senior
Loan Agreement, and all other “Loan Documents” as that term is defined in the Senior Loan
Agreement, and following the Conversion of the Senior Loan, the Permanent Loan Documents.
EXHIBIT 4
3-141
Subordination Agreement (Affordable) Page 4
(First Street Apartments)
“Subordinate Lender” means the Person named as such in the first paragraph on page 1 of this
Agreement, any successor or assign of Subordinate Lender, including without limitation, a
receiver, trustee or debtor-in-possession and any other Person who becomes the legal holder of
the Subordinate Note after the date of this Agreement.
“Subordinate Loan Agreement” means the Loan Agreement [of even date herewith] by and
between Borrower and Subordinate Lender.
“Subordinate Loan Default” means a default by Borrower in performing or observing any of
the terms, covenants or conditions in the Subordinate Loan Documents or Affordability
Restrictions to be performed or observed by it, which continues beyond any applicable period
provided in the Subordinate Loan Documents or Affordability Restrictions for curing the default.
“Subordinate Loan Documents” means the Subordinate Note, the Subordinate Mortgage, the
Subordinate Loan Agreement, and all other documents evidencing, securing or otherwise
executed and delivered in connection with the Subordinate Loan, but specifically excluding the
Affordability Restrictions.
“Subordinate Mortgage” means the Agency Deed of Trust and Assignment of Rents [of even
date herewith and to be recorded in the Official Records concurrently herewith] by Borrower, as
trustor, in favor of Subordinate Lender, as beneficiary.
“Subordinate Note” means the Housing Funds Promissory Note Secured by Agency Deed of
Trust for the Housing Authority of the City of Santa Ana [of even date herewith] issued by
Borrower to Subordinate Lender in the maximum principal amount of $[8,522,740].
3. Permission to Place Mortgage Lien Against Mortgaged Property.
Senior Lender agrees, notwithstanding the prohibition against inferior liens on the
Mortgaged Property contained in the Senior Loan Documents and subject to the provisions of
this Agreement, to permit Subordinate Lender to record or retain the Affordability Restrictions
(which shall not be subordinate to the Senior Loan Documents), the Subordinate Mortgage and
other recordable Subordinate Loan Documents against the Mortgaged Property to secure
Borrower’s obligation to repay the Subordinate Note and all other obligations, indebtedness and
liabilities of Borrower to Subordinate Lender under and in connection with the Subordinate
Loan.
4. Borrower’s and Subordinate Lender’s Representations and Warranties.
Borrower and Subordinate Lender each makes the following representations and
warranties to Senior Lender:
(a) Subordinate Loan Documents.
The Subordinate Loan is evidenced by the Subordinate Note and is secured by the
Subordinate Mortgage, the Subordinate Loan Agreement and the Subordinate Loan Documents.
EXHIBIT 4
3-142
Subordination Agreement (Affordable) Page 5
(First Street Apartments)
(b) [Reserved].
(c) Relationship of Borrower to Subordinate Lender and Senior Lender.
Subordinate Lender is not an Affiliate of Borrower and is not in possession of any facts
which would lead it to believe that Senior Lender is an Affiliate of Borrower.
(d) Term.
The term of the Subordinate Note does not end before the stated term of the Senior Note.
(e) Subordinate Loan Documents.
The executed Subordinate Loan Documents are substantially in the same forms as those
submitted to, and approved by, Senior Lender prior to the date of this Agreement.
5. Deliveries.
Borrower shall submit the following items to Senior Lender the later of (a) ten (10)
Business Days after the date on which the proceeds of the Subordinate Loan are disbursed to
Borrower, and (b) the effective date of the Senior Loan Documents:
(1) Title Policy Endorsement.
An endorsement to the policy of title insurance insuring the lien of the Senior
Security Instrument which insures that (A) there are no liens or other encumbrances
affecting the Mortgaged Property, other than “Permitted Encumbrances” (as defined in
the Senior Security Instrument), the Subordinate Mortgage, and other Subordinate Loan
Documents filed or recorded against the Mortgaged Property, (B) the lien of the
Subordinate Mortgage is subordinate to the lien of the Senior Security Instrument, and
(C) this Agreement has been recorded among the applicable land records.
(2) Certification.
A certification from Borrower and Subordinate Lender to Senior Lender that the
Subordinate Loan Documents do not contain any changes from the Subordinate Loan
Documents submitted to, and approved by, Senior Lender prior to the date of this
Agreement.
(3) Subordinate Loan Documents.
A complete set of the fully executed Subordinate Loan Documents, certified by
Borrower to be true, correct and complete.
(4) Senior Loan Documents.
An executed copy of each of the Senior Loan Documents, certified by Borrower to
be true, correct and complete.
EXHIBIT 4
3-143
Subordination Agreement (Affordable) Page 6
(First Street Apartments)
6. Terms of Subordination.
(a) Agreement to Subordinate.
Senior Lender and Subordinate Lender agree that (1) the indebtedness evidenced by the
Subordinate Loan Documents is and shall be subordinated in right of payment, to the extent and
in the manner provided in this Agreement, to the prior payment in full of the Indebtedness
evidenced by the Senior Loan Documents, and (2) the liens, terms, covenants and conditions of
the Subordinate Mortgage and the other Subordinate Loan Documents are and shall be subject
and subordinate in all respects to the liens, terms, covenants and conditions of the Senior
Security Instrument and the other Senior Loan Documents and to all advances heretofore made or
which may hereafter be made pursuant to the Senior Security Instrument and the other Senior
Loan Documents (including but not limited to, all sums advanced for the purposes of (A)
protecting or further securing the lien of the Senior Security Instrument, curing defaults by
Borrower under the Senior Loan Documents or for any other purpose expressly permitted by the
Senior Loan Documents, or (B) constructing, renovating, repairing, furnishing, fixturing or
equipping the Mortgaged Property).
(b) Subordination of Subrogation Rights.
Subordinate Lender agrees that if, by reason of its payment of real estate taxes or other
monetary obligations of Borrower, or by reason of its exercise of any other right or remedy under
the Subordinate Loan Documents, it acquires by right of subrogation or otherwise a lien on the
Mortgaged Property which (but for this subsection) would be senior to the lien of the Senior
Security Instrument, then, in that event, such lien shall be subject and subordinate to the lien of
the Senior Security Instrument.
(c) Payments Before Senior Loan Default.
Until Subordinate Lender receives a Default Notice (or otherwise acquires actual
knowledge) of a Senior Loan Default, Subordinate Lender shall be entitled to retain for its own
account all payments made under or pursuant to the Subordinate Loan Documents.
(d) Payments After Senior Loan Default.
Borrower agrees that, after it receives a Default Notice (or otherwise acquires knowledge)
of a Senior Loan Default, it will not make any payments under or pursuant to the Subordinate
Loan Documents (including but not limited to principal, interest, additional interest, late payment
charges, default interest, attorneys’ fees, or any other sums secured by the Subordinate Loan
Documents) without Senior Lender’s prior written consent. Subordinate Lender agrees that, after
it receives a Default Notice from Senior Lender with written instructions directing Subordinate
Lender not to accept payments from Borrower on account of the Subordinate Loan, it will not
accept any payments under or pursuant to the Subordinate Loan Documents (including but not
limited to principal, interest, additional interest, late payment charges, default interest, attorneys’
fees, or any other sums secured by the Subordinate Loan Documents) without Senior Lender’s
prior written consent. If Subordinate Lender receives written notice from Senior Lender that the
Senior Loan Default which gave rise to Subordinate Lender’s obligation not to accept payments
EXHIBIT 4
3-144
Subordination Agreement (Affordable) Page 7
(First Street Apartments)
has been cured, waived, or otherwise suspended by Senior Lender, the restrictions on payment to
Subordinate Lender in this Section 6 shall terminate, and Senior Lender shall have no right to any
subsequent payments made to Subordinate Lender by Borrower prior to Subordinate Lender’s
receipt of a new Default Notice from Senior Lender in accordance with the provisions of this
Section 6(d).
(e) Remitting Subordinate Loan Payments to Senior Lender.
If, after Subordinate Lender receives a Default Notice from Senior Lender in accordance
with Section 6(d), Subordinate Lender receives any payments under the Subordinate Loan
Documents, Subordinate Lender agrees that such payment or other distribution will be received
and held in trust for Senior Lender and unless Senior Lender otherwise notifies Subordinate
Lender in writing, will be promptly remitted, in kind to Senior Lender, properly endorsed to
Senior Lender, to be applied to the principal of, interest on and other amounts due under the
Senior Loan Documents in accordance with the provisions of the Senior Loan Documents. By
executing this Agreement, Borrower specifically authorizes Subordinate Lender to endorse and
remit any such payments to Senior Lender, and specifically waives any and all rights to have such
payments returned to Borrower or credited against the Subordinate Loan. Borrower and Senior
Lender acknowledge and agree that payments received by Subordinate Lender, and remitted to
Senior Lender under this Section 6, shall not be applied or otherwise credited against the
Subordinate Loan, nor shall the tender of such payment to Senior Lender waive any Subordinate
Loan Default which may arise from the inability of Subordinate Lender to retain such payment or
apply such payment to the Subordinate Loan.
(f) Notice of Payment from Other Persons.
Subordinate Lender agrees to notify (telephonically or via email, followed by written
notice) Senior Lender of Subordinate Lender’s receipt from any Person other than Borrower of a
payment with respect to Borrower’s obligations under the Subordinate Loan Documents,
promptly after Subordinate Lender obtains knowledge of such payment.
(g) Agreement Not to Commence Bankruptcy Proceeding.
Subordinate Lender agrees to notify (telephonically or via email, followed by written
notice) Senior Lender prior to commencing, or joining with any other creditor to commence any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings against or with
respect to Borrower.
(h) Affordability Restrictions Following Foreclosure of First Mortgage.
Subordinate Lender agrees that although the Affordability Restrictions remain senior to the lien
of the Senior Loan Documents, in the event title to the Property is transferred as a result of a
foreclosure, a deed in lieu of foreclosure or other realization upon the Property under the Senior
Loan Documents, notwithstanding anything to the contrary contained in the Affordability
Restrictions, sixty-eight (68) of the units subject to restriction under the Affordability
Restrictions shall be restricted for rental to and occupancy by households whose income does not
exceed 60% of the AMI (as defined in the Affordability Restrictions), and the rent in such units
EXHIBIT 4
3-145
Subordination Agreement (Affordable) Page 8
(First Street Apartments)
shall be restricted to the produce of thirty percent (30%) of sixty percent (60%) of the AMI, as
adjusted for household size.
7. Default Under Subordinate Loan Documents.
(a) Notice of Subordinate Loan Default and Cure Rights.
Subordinate Lender shall deliver to Senior Lender a Default Notice within five (5)
Business Days in each case where Subordinate Lender has given a Default Notice to Borrower.
Failure of Subordinate Lender to send a Default Notice to Senior Lender shall not prevent the
exercise of Subordinate Lender’s rights and remedies under the Subordinate Loan Documents,
subject to the provisions of this Agreement. Senior Lender shall have the right, but not the
obligation, to cure any Subordinate Loan Default within sixty (60) days following the date of
such notice; provided, however that Subordinate Lender shall be entitled, during such sixty (60)
day period, to continue to pursue its rights and remedies under the Subordinate Loan
Documents. All amounts paid by Senior Lender in accordance with the Senior Loan Documents
to cure a Subordinate Loan Default shall be deemed to have been advanced by Senior Lender
pursuant to, and shall be secured by, the Senior Loan Agreement and the Senior Security
Instrument.
(b) Subordinate Lender’s Exercise of Remedies After Notice to Senior Lender.
If a Subordinate Loan Default occurs and is continuing, Subordinate Lender agrees that,
without Senior Lender’s prior written consent, it will not commence foreclosure proceedings
with respect to the Mortgaged Property under the Subordinate Loan Documents or exercise any
other rights or remedies it may have under the Subordinate Loan Documents, including, but not
limited to accelerating the Subordinate Loan (and enforcing any “due on sale” provision included
in the Subordinate Loan Documents), collecting rents, appointing (or seeking the appointment of)
a receiver or exercising any other rights or remedies thereunder unless and until it has given
Senior Lender at least sixty (60) days prior written notice; during such sixty (60) day period,
provided, however, such limitation on the remedies of Subordinate Lender shall not derogate or
otherwise limit Subordinate Lender’s rights, following an event of default under the Subordinate
Loan Documents to (a) compute interest on all amounts due and payable under the Subordinate
Loan at the default rate described in the Subordinate Loan Documents, (b) compute prepayment
premiums and late charges, (c) enforce against any person, other than Borrower and any
guarantors or indemnitors under the Senior Loan Documents, any guaranty of the obligations of
Borrower under the Subordinate Loan, and (d) seek specific performance to enforce covenants
and agreements of Borrower relating to income, rent, or affordability restrictions contained in the
Affordability Restrictions, and (e) appear in, defend or bring an action in connection with the
Property in Subordinate Lender’s capacity as a municipal authority to the extent required by law.
(c) Cross Default.
Borrower and Subordinate Lender agree that a Subordinate Loan Default shall constitute
a Senior Loan Default under the Senior Loan Documents and Senior Lender shall have the right
to exercise all rights or remedies under the Senior Loan Documents in the same manner as in the
case of any other Senior Loan Default. If Subordinate Lender notifies Senior Lender in writing
EXHIBIT 4
3-146
Subordination Agreement (Affordable) Page 9
(First Street Apartments)
that any Subordinate Loan Default of which Senior Lender has received a Default Notice has
been cured or waived, as determined by Subordinate Lender in its sole discretion, then provided
that Senior Lender has not conducted a sale of the Mortgaged Property pursuant to its rights
under the Senior Loan Documents, any Senior Loan Default under the Senior Loan Documents
arising solely from such Subordinate Loan Default shall be deemed cured, and the Senior Loan
shall be reinstated, provided, however, that Senior Lender shall not be required to return or
otherwise credit for the benefit of Borrower any default rate interest or other default related
charges or payments received by Senior Lender during such Senior Loan Default.
8. Default Under Senior Loan Documents.
(a) Notice of Senior Loan Default and Cure Rights.
Senior Lender shall deliver to Subordinate Lender a Default Notice within five (5)
Business Days in each case where Senior Lender has given a Default Notice to Borrower.
Failure of Senior Lender to send a Default Notice to Subordinate Lender shall not prevent the
exercise of Senior Lender’s rights and remedies under the Senior Loan Documents, subject to the
provisions of this Section 8(a), nor shall such failure constitute a default by Senior Lender under
this Agreement. Subordinate Lender shall have the right, but not the obligation, to cure any such
Senior Loan Default within sixty (60) days following the date of such Default Notice; provided,
however, that Senior Lender shall be entitled during such sixty (60) day period to continue to
pursue its remedies under the Senior Loan Documents. Subordinate Lender may have up to
ninety (90) days from the date of the Default Notice to cure a non-monetary default if during
such ninety (90) day period Subordinate Lender keeps current all payments required by the
Senior Loan Documents. In the event that such a non-monetary default creates an unacceptable
level of risk relative to the Mortgaged Property, or Senior Lender’s secured position relative to
the Mortgaged Property, as determined by Senior Lender in its sole discretion, then Senior
Lender may exercise during such ninety (90) day period all available rights and remedies to
protect and preserve the Mortgaged Property and the rents, revenues and other proceeds from the
Mortgaged Property. All amounts paid by Subordinate Lender to Senior Lender to cure a Senior
Loan Default shall be deemed to have been advanced by Subordinate Lender pursuant to, and
shall be secured by the Second Mortgage Loan Agreement and the Subordinate Mortgage.
(b) Cross Default.
Subordinate Lender agrees that, notwithstanding any contrary provision contained in the
Subordinate Loan Documents, a Senior Loan Default shall not constitute a default under the
Subordinate Loan Documents (if no other default has occurred under the Subordinate
Loan Documents) until either (1) Senior Lender has accelerated the maturity of the Senior Loan,
or (2) Senior Lender has taken affirmative action to exercise its rights under the Senior Loan
Documents to collect rent, to appoint (or seek the appointment of) a receiver or to foreclose on
(or to exercise a power of sale contained in) the Senior Loan Documents. At any time after a
Senior Loan Default is determined to constitute a default under the Subordinate Loan
Documents, Subordinate Lender shall be permitted to pursue its remedies for default under the
Subordinate Loan Documents, subject to the restrictions and limitations of this Agreement. If at
any time Borrower cures any Senior Loan Default to the satisfaction of Senior Lender, as
evidenced by written notice from Senior Lender to Subordinate Lender, any default under the
EXHIBIT 4
3-147
Subordination Agreement (Affordable) Page 10
(First Street Apartments)
Subordinate Loan Documents arising from such Senior Loan Default shall be deemed cured and
the Subordinate Loan shall be retroactively reinstated as if such Senior Loan Default had never
occurred.
9. Conflict.
Borrower, Senior Lender and Subordinate Lender each agrees that, in the event of any
conflict or inconsistency between the terms of the Senior Loan Documents, the Subordinate Loan
Documents and the terms of this Agreement, the terms of this Agreement shall govern and
control solely as to the following: (a) the relative priority of the security interests of Senior
Lender and Subordinate Lender in the Mortgaged Property; (b) the timing of the exercise of
remedies by Senior Lender and Subordinate Lender under the Senior Loan Documents and the
Subordinate Loan Documents, respectively; and (c) solely as between Senior Lender and
Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations
which Senior Lender and Subordinate Lender have agreed to as expressly provided in this
Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not,
and shall not be deemed to: extend Borrower’s time to cure any Senior Loan Default or
Subordinate Loan Default, as the case may be; give Borrower the right to notice of any Senior
Loan Default or Subordinate Loan Default, as the case may be other than that, if any, provided,
respectively under the Senior Loan Documents or the Subordinate Loan Documents; or create
any other right or benefit for Borrower as against Senior Lender or Subordinate Lender.
10. Rights and Obligations of Subordinate Lender Under the Subordinate Loan
Documents and of Senior Lender under the Senior Loan Documents.
Subject to each of the other terms of this Agreement, all of the following provisions shall
supersede any provisions of the Subordinate Loan Documents covering the same subject matter:
(a) Protection of Security Interest.
Subordinate Lender shall not, without the prior written consent of Senior Lender in each
instance, take any action which has the effect of increasing the indebtedness outstanding under,
or secured by, the Subordinate Loan Documents, except that Subordinate Lender shall have the
right to advance funds to cure Senior Loan Defaults pursuant to Section 8(a) and advance funds
pursuant to the Subordinate Loan Documents for the purpose of paying real estate taxes and
insurance premiums, making necessary repairs to the Mortgaged Property and curing other
defaults by Borrower under the Subordinate Loan Documents.
(b) Condemnation or Casualty.
Following the occurrence of (1) a Condemnation Action, or (2) a fire or other casualty
resulting in damage to all or a portion of the Mortgaged Property (collectively, a “Casualty”), at
any time or times when the Senior Security Instrument remains a lien on the Mortgaged Property
the following provisions shall apply:
(A) Subordinate Lender hereby agrees that its rights (under the
Subordinate Loan Documents or otherwise) to participate in any proceeding or
EXHIBIT 4
3-148
Subordination Agreement (Affordable) Page 11
(First Street Apartments)
action relating to a Condemnation Action or a Casualty, or to participate or join in
any settlement of, or to adjust, any claims resulting from a Condemnation Action
or a Casualty shall be and remain subject and subordinate in all respects to Senior
Lender’s rights under the Senior Loan Documents with respect thereto, and
Subordinate Lender shall be bound by any settlement or adjustment of a claim
resulting from a Condemnation Action or a Casualty made by Senior Lender;
provided, however, this subsection or anything contained in this Agreement shall
not limit the rights of Subordinate Lender to file any pleadings, documents, claims
or notices with the appropriate court with jurisdiction over the proposed
Condemnation Action or Casualty; and
(B) all proceeds received or to be received on account of a
Condemnation Action or a Casualty, or both, shall be applied (either to payment
of the costs and expenses of repair and restoration or to payment of the Senior
Loan) in the manner determined by Senior Lender in its sole discretion; provided,
however, that if Senior Lender elects to apply such proceeds to payment of the
principal of, interest on and other amounts payable under the Senior Loan, any
proceeds remaining after the satisfaction in full of the principal of, interest on and
other amounts payable under the Senior Loan shall be paid to, and may be applied
by, Subordinate Lender in accordance with the applicable provisions of the
Subordinate Loan Documents, provided however, Senior Lender agrees to consult
with Subordinate Lender in determining the application of Casualty proceeds,
provided further however that in the event of any disagreement between Senior
Lender and Subordinate Lender over the application of Casualty proceeds, the
decision of Senior Lender, in its sole discretion, shall prevail.
(c) Insurance.
Subordinate Lender agrees that all original policies of insurance required pursuant to the
Senior Security Instrument shall be held by Senior Lender. The preceding sentence shall not
preclude Subordinate Lender from requiring that it be named as a loss payee, as its interest may
appear, under all policies of property damage insurance maintained by Borrower with respect to
the Mortgaged Property, provided such action does not affect the priority of payment of the
proceeds of property damage insurance under the Senior Security Instrument, or that it be named
as an additional insured under all policies of liability insurance maintained by Borrower with
respect to the Mortgaged Property.
(d) No Modification of Subordinate Loan Documents.
Borrower and Subordinate Lender each agree that, until the principal of, interest on and
all other amounts payable under the Senior Loan Documents have been paid in full, it will not,
without the prior written consent of Senior Lender in each instance, increase the amount of the
Subordinate Loan, increase the required payments due under the Subordinate Loan, decrease the
term of the Subordinate Loan, increase the interest rate on the Subordinate Loan, or otherwise
amend the Subordinate Loan terms in a manner that creates an adverse effect upon Senior Lender
under the Senior Loan Documents. Any unauthorized amendment of the Subordinate Loan
EXHIBIT 4
3-149
Subordination Agreement (Affordable) Page 12
(First Street Apartments)
Documents or assignment of Subordinate Lender’s interest in the Subordinate Loan without
Senior Lender’s consent shall be void ab initio and of no effect whatsoever.
11. Modification or Refinancing of Senior Loan.
Subordinate Lender consents to any agreement or arrangement in which Senior Lender
waives, postpones, extends, reduces or modifies any provisions of the Senior Loan Documents,
including any provision requiring the payment of money. Subordinate Lender further agrees that
its agreement to subordinate hereunder shall extend to any new mortgage debt which is for the
purpose of refinancing all or any part of the Senior Loan (including reasonable and necessary
costs associated with the closing and/or the refinancing) so long as the new mortgage debt does
not increase the maximum principal amount of the Senior Loan; and that all the terms and
covenants of this Agreement shall inure to the benefit of any holder of any such refinanced debt;
and that all references to the Senior Loan, the Senior Note, the Senior Loan Agreement, the
Senior Security Instrument, the Senior Loan Documents and Senior Lender shall mean,
respectively, the refinance loan, the refinance note loan agreement, the mortgage securing the
refinance note, all documents evidencing securing or otherwise pertaining to the refinance note
and the holder of the refinance note. Notwithstanding anything to the contrary in this Section 11,
or in Section 6(a) above, the Senior Lender shall not, without the prior written consent of the
Subordinate Lender in each instance, which shall not be unreasonably withheld, take any action
which has the effect of increasing the indebtedness outstanding under, or secured by, the Senior
Loan Documents, increasing the required payments due under the Senior Loan, decreasing the
term of the Senior Loan, or increasing the interest rate on the Senior Loan, except that the Senior
Lender shall have the right to advance funds to cure Subordinate Loan Defaults pursuant to
Section 7(a) above and advance funds pursuant to the Senior Loan for the purpose of paying real
estate taxes and insurance premiums, making necessary repairs to the Property and curing other
defaults by the Borrower under the Senior Loan Documents. Following Conversion, all the terms
and covenants of this Agreement shall inure to the benefit of any holder of the Permanent Loan;
and all references to the Senior Loan, the Senior Security Instrument, the Senior Note and the
Senior Loan Documents shall mean, respectively, the Permanent Loan, the Permanent Mortgage,
the Permanent Note and the Permanent Loan Documents.
12. Default by Subordinate Lender or Senior Lender.
If Subordinate Lender or Senior Lender defaults in performing or observing any of the
terms, covenants or conditions to be performed or observed by it under this Agreement, the other,
non-defaulting lender shall have the right to all available legal and equitable relief.
13. Reinstatement.
To the extent that Borrower makes a payment to Senior Lender or Senior Lender receives
any payment or proceeds of the collateral securing the Senior Loan for Borrower’s benefit, which
payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable doctrine, then to the extent of
such payment or proceeds received and not retained by Senior Lender, this Agreement shall be
reinstated and continue in full force and effect until full and final payment shall have been made
EXHIBIT 4
3-150
Subordination Agreement (Affordable) Page 13
(First Street Apartments)
to Senior Lender. Subordinate Lender agrees to hold in trust for Senior Lender and promptly
remit to Senior Lender any payments received by Subordinate Lender after such invalidated,
rescinded or returned payment was originally made.
14. Notices.
(a) Process of Serving Notice.
All notices under this Agreement shall be:
(1) in writing and shall be:
(A) delivered, in person;
(B) mailed, postage prepaid, either by registered or certified delivery,
return receipt requested;
(C) sent by overnight courier; or
(D) sent by electronic mail with originals to follow by overnight
courier;
(2) addressed to the intended recipient at the address(es) below the signature
block, as applicable; and
(3) deemed given on the earlier to occur of:
(A) the date when the notice is received by the addressee; or
(B) if the recipient refuses or rejects delivery, the date on which the
notice is so refused or rejected, as conclusively established by the records of the
United States Postal Service or any express courier service.
(b) Change of Address.
Any party to Agreement may change the address to which notices intended for it are to be
directed by means of notice given to the other parties identified in this Agreement.
(c) Receipt of Notices.
Senior Lender, Subordinate Lender or Borrower shall not refuse or reject delivery of any
notice given in accordance with this Agreement. Each party is required to acknowledge, in
writing, the receipt of any notice upon request by the other party.
EXHIBIT 4
3-151
Subordination Agreement (Affordable) Page 14
(First Street Apartments)
15. General.
(a) Assignment/Successors.
This Agreement shall be binding upon Borrower, Senior Lender and Subordinate Lender
and shall inure to the benefit of the respective legal successors, transferees and assigns of
Borrower, Senior Lender and Subordinate Lender. Borrower shall not assign any of its rights and
obligations under this Agreement without the prior written consent of Senior Lender and
Subordinate Lender.
(b) No Partnership or Joint Venture.
Senior Lender’s permission for the placement of the Subordinate Loan does not constitute
Senior Lender as a joint venturer or partner of Subordinate Lender. Neither party hereto shall
hold itself out as a partner, agent or Affiliate of the other party hereto.
(c) Senior Lender’s and Subordinate Lender’s Consent.
Wherever Senior Lender’s consent or approval is required by any provision of this
Agreement, such consent or approval may be granted or denied by Senior Lender in its sole and
absolute discretion, unless otherwise expressly provided in this Agreement. Wherever
Subordinate Lender’s consent or approval is required by any provision of this Agreement, such
consent or approval may be granted or denied by Subordinate Lender in its sole and absolute
discretion, unless otherwise expressly provided in this Agreement.
(d) Further Assurances.
Subordinate Lender, Senior Lender and Borrower each agrees, at Borrower’s expense, to
execute and deliver all additional instruments and/or documents reasonably required by any other
party to this Agreement in order to evidence that the Subordinate Mortgage is subordinate to the
lien, covenants and conditions of the Senior Loan Documents, or to further evidence the intent of
this Agreement.
(e) Amendment.
This Agreement shall not be amended except by written instrument signed by all parties
hereto.
(f) Governing Law.
This Agreement shall be governed by the laws of the jurisdiction in which the Mortgaged
Property is located without giving effect to any choice of law provisions thereof that would result
in the application of the laws of another jurisdiction. Senior Lender, Subordinate Lender and
Borrower agree that any controversy arising under or in relation to this Security Instrument shall
be litigated exclusively in the jurisdiction in which the Mortgaged Property is located. The stat e
and federal courts and authorities with jurisdiction in such locale shall have exclusive
jurisdiction over all controversies that arise under or in relation to this Agreement. The parties
hereto irrevocably consent to service, jurisdiction, and venue of such courts for any such
EXHIBIT 4
3-152
Subordination Agreement (Affordable) Page 15
(First Street Apartments)
litigation and waive any other venue to which any might be entitled by virtue of domicile,
habitual residence or otherwise.
(g) Severable Provisions.
If any provision of this Agreement shall be invalid or unenforceable to any extent, then
the other provisions of this Agreement, shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
(h) Term.
The term of this Agreement shall commence on the date hereof and shall continue until
the earliest to occur of the following events: (1) the payment in full of the principal of, interest on
and other amounts payable under the Senior Loan Documents; (2) the payment in full of the
principal of, interest on and other amounts payable under the Subordinate Loan Documents, other
than by reason of payments which Subordinate Lender is obligated to remit to Senior Lender
pursuant to Section 6 hereof; (3) the acquisition by Senior Lender of title to the Mortgaged
Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power
of sale contained in, the Senior Loan Documents; or (4) the acquisition by Subordinate Lender of
title to the Mortgaged Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the
exercise of a power of sale contained in, the Subordinate Loan Documents, but only if such
acquisition of title does not violate any of the terms of this Agreement.
(i) Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be
considered an original for all purposes; provided, however, that all such counterparts shall
together constitute one (1) and the same instrument.
(j) Sale of Senior Loan.
Nothing in this Agreement shall limit Senior Lender’s (including any assignee or
transferee of Senior Lender) right to sell or transfer the Senior Loan, or any interest in the Senior
Loan. The Senior Loan or a partial interest in the Senior Loan (together with this Agreement and
the other Loan Documents) may be sold one or more times without prior notice to Borrower.
[Remainder of Page Intentionally Blank]
EXHIBIT 4
3-153
Subordination Agreement (Affordable) Page S-1
(First Street Apartments)
IN WITNESS WHEREOF, Borrower, Senior Lender and Subordinate Lender have
signed and delivered this Agreement under seal (where applicable) or have caused this
Agreement to be signed and delivered under seal (where applicable) by a duly authorized
representative. Where applicable law so provides, Borrower, Senior Lender and Subordinate
Lender intend that this Agreement shall be deemed to be signed and delivered as a sealed
instrument.
SENIOR LENDER:
BANK OF AMERICA, N.A.,
a national banking association
By:
Name: Karen Davis
Title: Vice President
Address for notices:
Bank of America, N.A.
Mail Code # CA4-704-06-06
2000 Clayton Road, Building D, 6th Floor
Concord, CA 94520
Attention: Loan Administration Manager
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 )
) SS.
COUNTY OF )
On , before me,
Date Name And Title Of Officer (e.g. “Jane Doe, Notary Public”)
personally appeared ,
Name of Signer(s)
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.
Signature (Seal)
EXHIBIT 4
3-154
EXHIBIT 4
3-155
Subordination Agreement (Affordable) Page S-3
(First Street Apartments)
A notary public or other officer completing this certificate verifies only the identity of the ind ividual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On , before me,
Date Name And Title Of Officer (e.g. “Jane Doe, Notary Public”)
personally appeared ,
Name of Signer(s)
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.
Signature (Seal)
EXHIBIT 4
3-156
Subordination Agreement (Affordable) Page S-4
(First Street Apartments)
IN WITNESS WHEREOF, Borrower, Senior Lender and Subordinate Lender have
signed and delivered this Agreement under seal (where applicable) or have caused this
Agreement to be signed and delivered under seal (where applicable) by a duly authorized
representative. Where applicable law so provides, Borrower, Senior Lender and Subordinate
Lender intend that this Agreement shall be deemed to be signed and delivered as a sealed
instrument.
BORROWER:
AMCAL 1440 SANTA ANA FUND, LP,
a California limited partnership
By: AMCAL Multi-Housing, Inc.,
a California corporation,
its Administrative General Partner
By:
Name:
Title:
By: Las Palmas Foundation,
a California nonprofit public benefit
corporation,
its Managing General Partner
By:
Name:
Title:
Address for notices:
AMCAL 1440 Santa Ana Fund, L.P.
c/o AMCAL Multi-Housing, Inc.
30141 Agoura Road, Suite #100
Agoura Hills, CA 91301
Attention: General Counsel
EXHIBIT 4
3-157
Subordination Agreement (Affordable) Page S-5
(First Street Apartments)
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 )
) SS.
COUNTY OF )
On , before me,
Date Name And Title Of Officer (e.g. “Jane Doe, Notary Public”)
personally appeared ,
Name of Signer(s)
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.
Signature (Seal)
EXHIBIT 4
3-158
Subordination Agreement (Affordable) Page S-6
(First Street Apartments)
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 )
) SS.
COUNTY OF )
On , before me,
Date Name And Title Of Officer (e.g. “Jane Doe, Notary Public”)
personally appeared ,
Name of Signer(s)
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.
Signature (Seal)
EXHIBIT 4
3-159
Subordination Agreement (Affordable) Page A-1
(First Street Apartments)
EXHIBIT A
LEGAL DESCRIPTION
[to be inserted]
EXHIBIT 4
3-160
Order No: 91910077-917-CG8-KRE
EXHIBIT “A”
All that certain real property situated in the County of Orange, State of California, described as follows:
Parcel 1:
The Easterly 112.51 feet of the Westerly 437.51 feet of that portion of land allotted to N. O. Stafford and C. Tustin, in the
City of Santa Ana, County of Orange, State of California, as described in the Final Decree of partition of the Rancho
Santiago De Santa Ana, which was entered September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of
the 17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at the intersection of the center lines of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Excepting therefrom, that portion of the North 71.00 feet as described in the Deed to the City of Santa Ana, recorded April
15, 1960 in Book 5196, Page 381 of Official Records.
Parcel 2:
A non-exclusive easement for ingress and egress over the South 25 feet of the Westerly 325 feet of that portion of the land
allotted to N. O. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the
final decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in
Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County,
California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Parcel 3:
The Westerly 175.00 feet of the Easterly 375.00 feet of that portion of the land allotted to N. O. Stafford and C. Tustin, in
the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho
Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of
the 17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
EXHIBIT 4
3-161
Order No: 91910077-917-CG8-KRE
Excepting therefrom, the South 21 feet of the North 71 feet thereof.
Parcel 4:
A non-exclusive easement for ingress and egress over the South 25 feet of that portion of the land allotted to N. O. Stafford
and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of
the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the
District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in
Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the
Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Excepting therefrom, the Easterly 375.00 feet.
Parcel 5:
A non-exclusive easement for ingress and egress, for sewer lines, public utilities and drainage and the maintenance of these
items over the South 25 feet of the following described land:
The Westerly 437 feet of that portion of the land allotted to N. O. Stafford and C. Tustin, in the City of Santa Ana, County of
Orange, State of California, as described in the final decree of partition of the Rancho Santiago De Santa Ana, which was
entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for
Los Angeles County, California, described as follows:
Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in Book 47, Page
32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest
corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian;
Thence North 89° 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in
a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records;
Thence South 0° 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation;
Thence South 89° 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of
said Mc Clay Street;
Thence North 0° 06' 48" West 398.34 feet to the point of beginning.
Assessor’s Parcel Number: 011-154-43
EXHIBIT 4
3-162
This page intentionally left blank