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June 4, 2019File ID: 19-0249
June 11, 201919-0325
TITLE
ORDINANCE OF THE CITY OF CHULA VISTA AMENDING CHULA VISTA MUNICIPAL CODE SECTION
2.05.010 TO ADD THE UNCLASSIFIED POSITION OF FINANCE MANAGER AND DELETE THE FINANCE AND
PURCHASING MANAGER (SECONDREADINGAND ADOPTION) (4/5 VOTE REQUIRED)
RECOMMENDED ACTION
Council adopt the ordinance.
SUMMARY
On May 17, 2019,the City Council was provided the City Manager’s proposed operating and capital
improvement budgets for the City, and the operating budgets for the Housing Authority and for the
Successor Agency to the Redevelopment Agency for Fiscal Year2019-20 (ending June 30, 2020). The
budgets submitted at this time for formal adoption and appropriation represent the City Council’sFiscal
Year 2019-20proposed budget.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed activity, Adoption and Appropriation of the
City, Successor Agency to the Redevelopment Agency, and Housing Authority budgets for Fiscal Year 2019-
20, for compliance with the California Environmental Quality Act (CEQA) and has determined that the
activity is not a “Project” as defined under Section 15378(b)(4) of the State CEQA Guidelines because it
involves only the allocation of funding; therefore, pursuant to Section 15060(c)(3) of the State CEQA
Guidelines the activity is not subject to CEQA. Although environmental review is not necessary at this time,
once projects have been defined, environmental review will be required and a CEQA determination
completedprior to commencing to start of any of the projects identified.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
On April 25, 2019,the Citizens Oversight Committee (COC) for Measure P affirmed that the proposed
budget for Measure P was in compliance with theCity’s approved infrastructure, facilities and equipment
expenditure plan.
On May 16, 2019, the Measure A Citizens’ Oversight Committee (COC) affirmed that the proposed budget
for Measure A was in compliance with the City’s approved Intended Public Safety Expenditure Plan.
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On May16, 2019,as required by the City Charter, the Parks and Recreation Commission reviewed and
approved the Fiscal Year 2019-20proposed budget for the Parks and Recreation Department.
DISCUSSION
Staff submitted the Fiscal Year 2019-20Proposed Budget document to the City Council on May 17, 2019. As
required by the City Charter, the City Manager’s proposed budget was submitted to the City Council at least
thirty-five days before the beginning of the fiscal year. The CityCouncil furthermore set June 4, 2019as the
date for the adoption of the Fiscal Year 2019-20budget. The budget presented for final adoption in this
staff report is the Fiscal Year 2019-20proposed budget accepted by the City Council on May 21, 2019.
In accordancewith the City Charter, a copy of the City Council’s proposed budget was made available on
May 17, 2019,for public review by making a hard copy of the budget available at the City Clerk’s Office and
at the City’s Libraries, as well as posting a copy of the budget on the City’s website.
Attachment A, Recommended Expenditures by Department and Category, summarizes the City Council’s
proposed budget for Fiscal Year 2019-20. The final All Funds expenditure budget submitted for FiscalYear
2019-20 totals $387.3million andincludes transfers out of $68.0million. The General Fund budget totals
$197.0million. The All Funds budget for Fiscal Year 2019-20includes allocations for capital improvement
projects totaling $26.8million. Theremaining $95.5million represents the operating budgets for various
funds including the Successor Agency to the Redevelopment Agency, Housing, Sewer, Development
Services, Fleet, Debt Service, and other funds.
EstimatedAll Funds revenues total $390.3million, the Schedule of Revenues is included as Attachment B.
C ITY C OUNCIL F ISCAL Y EAR 2019-20P ROPOSED B UDGET
(IN THOUSANDS)
DescriptionRevenuesExpendituresNet Impact
General Fund as Proposed in May 18 Budget Document $ 196,967 $ 196,967 $ -
Other Funds as Proposed in May Budget Document $ 193,317 $ 190,314 $ 3,003
Appropriations for FY 2019 $ 390,284 $ 387,281 $ 3,003
Use of Reserves (Excludes General Fund) $ (3,003) $ - $ (3,003)
TOTAL ALL FUNDS $ 387,281 $ 387,281 $ -
Note: The Use of Reserves figure reflects amount of revenues being directed to Other Funds fund balances.
Proposed New Classifications
Approval of Resolution J authorizes amendments to the Compensation Schedule and Classification Plan to
reflect new classifications and the staffing changes proposed in the fiscal year 2019-20budget.The
following table reflects the new titles, bargaining group, and E-Step salary to reflect these changes.
Summary of Proposed New Classifications
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Fiscal Year 2019-2020Compensation Schedule
California Code of Regulations (CCR), Title 2, Section 570.5 (“CCR Section 570.5”) requires that, for
purposes of determining a retiring employee's pension allowance, the pay rate be limited to the amount
listed on a pay schedule that meets all of the following requirements:
1.Has been duly approved and adopted by the employer’s governing body in accordance with
requirements of applicable public meetings laws;
2.Identifies the position title for every employee position;
3.Shows the pay rate for each identified position, which may be stated as a single amount or as
multiple amounts within a range;
4.Indicates the time base, including, but not limited to, whether the time base is hourly, daily, bi-
weekly, monthly, bi-monthly, or annually;
5.Is posted at the office of the employer or immediately accessible and available for public review
from the employer during normal business hours or posted on the employer’s internet website;
6.Indicates an effective date and date of any revisions;
7.Is retained by the employer and available for public inspection for not less than five years; and
8.Does not reference another document in lieu of disclosing the pay rate.
This regulation applies to all employers reporting compensation to California Employees' Retirement
System (CalPERS).
Staff issubmitting the Fiscal Year 2019-2020pay schedule ("Compensation Schedule") that complies with
these requirements to Council for approval. If approved, the duly approved and adopted Compensation
Schedule will be immediately accessible and available for public review on the City's internet website in
accordance with CCR Section 570.5. Failure to comply with this State-mandated approval requirement
would delay computation of a retiring employee's pension allowance by CalPERS. Adoption of the 2019-20
Compensation schedule pertains to resolution (I).
The Compensation Schedule consists of step salary pay for all established positions at the City of Chula
Vista, including hourly and bi-weekly time base. This schedule defines the payment to employees for
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services performed during normal working hours or for time during which the employee is excused from
work because of holidays, sick leave, industrial disability, payments under Labor Code Section 4850,
vacation, compensatory time-off or leave of absence. It is designed and administered to provide and
maintain an equitable wage and salary system at the City that compensates all employees for their work
efforts performed within specific job classifications and corresponding salary ranges, in order to attract
and retain the most highly skilled employees possible.
The Compensation Schedule attached to the attendant resolution (I)reflects the pay rate of all job titles
effectiveJuly 5,2019, and includes the proposed salary adjustments for Executive Management, Senior
Management, Unclassified Middle Management, Confidential Middle Management, Unclassified
Professional, Confidential Professionaland Unclassified Hourly positionswith a represented counterpart.
The Compensation Schedule also reflects scheduled salary adjustments for positions represented by the
Association of Chula Vista Employees (ACE),Chula Vista Police Officers Association (CVPOA), Western
Council of Engineers (WCE)and Chula Vista Mid-Managers/Professional Association, SEIU Local 221
(MMPR/SEIU 221), as negotiated in their respective bargaining agreements. Once approved, any changes
to the adopted Compensation Schedule including, but not limited to, across-the-board increases,
classification changes and salary adjustments approved subsequent to this date will be reflected in a
revised Compensation Schedule which will be submitted to Council for approval.
Position Summary
The City Council Proposed Budget for fiscal year 2019-20 includes 1,054.25positions for all funds. This is a
net increase of 44.00positions when compared to the fiscal year 2018-19adopted budget that included
1,010.25 authorized positions. 21.00 of the 44.00 positions were approved by the CityCouncil during fiscal
year 2018-19.
Fiscal year 2018-19changes in the General Fundresulted in the reduction of 8.00 FTEs and changes to
other fundsresulted in a net increase of 21.00 FTEs. The development of the Fiscal Year 2018-19resulted
in a net increase of 44.00 positions recommended in the Fiscal Year 2019-20budget. In addition to these
net changes, several reclassification studies were completed city-wide to reflect changes of duties
performed by City personnel.
The staffing changes are summarized in the following tables and the Proposed Staffing by
Department/Fund for Fiscal Year 2019-20is included as Attachment C.
Summary of Fiscal Year 2018-19Mid-Year Staffing Changes
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Department/FundProgramPositionFTE
EMS Nurse Coordinator
(1.00)
Reclassification
Advance Life Support Fund (1.00)Fire Captain
1.00
TrainingMultimedia Production Specialist
1.00
City Attorney (1.00)Criminal
Deputy City Attorney III 1.00
Deputy City Clerk I
(1.00)
City Clerk (0.00)Reclassification
Deputy City Clerk II
1.00
Constituent Services Rep (1.00)
City Council (0.00)Reclassification
Sr. Council Asst 1.00
Sr. Conservation Specialist (1.00)
Economic Development (0.00)Reclassification
Environmental Sustainability Manager 1.00
Engineering and Capital Projects
Environmental Health Specialist (2.00)
Reclassification
(0.00)
Storm Environmental Specialist II 2.00
FA Program Assistant
(1.00)
FA Sr. Program Assistant
1.00
FA Analyst
(1.00)
Federal Grants Fund - Police (0.00)Reclassification
FA Intelligence Analyst
1.00
FA Sr. Intelligence Analyst
(1.00)
FA Supervisory Intelligence Analyst
1.00
Fire (-12.00)OperationsFirefighters (112hr)
(12.00)
Human Resources (1.00)Operations
Sr. Human Resources Analyst 1.00
Library Digital Services Manager (1.00)
Library (0.00)Reclassification
Principal Librarian 1.00
Firefighter (112hr)
12.00
Deputy Fire Chief
2.00
FireFire Captain (80hr)
1.00
Fire Captain (84hr)
2.00
Firefighter/Paramedic (84hr)
2.00
Measure A (28.00)
Peace Officer
4.00
Police Agent
1.00
PolicePolice Dispatcher
2.00
Civilian Background Investigator
1.00
Sr. Police Technology Specialist
1.00
Sr. Office Specialist
(1.00)
Sr. Police Records Specialist
1.00
Community Service Officer
(1.00)
Police (0.00)Reclassification
Sr. Parking Enforcement Officer
1.00
Secretary
(1.00)
Community Service Officer
1.00
Management Analyst (1.00)
Sr. Management Analyst 1.00
Locksmith (1.00)
Reclassification
Carpenter 1.00
Public Works (2.00)
Graffiti Abatement Coordinator (1.00)
Public Works Supervisor 1.00
Equipment Operator 1.00
BRT Maintenance
Sr. Maintenance Worker 1.00
CITYWIDE TOTAL 21.00
Fiscal Year 2019-20Staffing Changes
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Department/FundProgramPositionFTE
Records Manager(1.00)
City Clerk (0.00)Reclassification
City Clerk Analyst1.00
Police Services Officer10.00
City Jail (0.00)Jail
Police Srvs Officer Supervisor2.00
CV Housing Authority Fund Transfer to Dev Srvs Fund
Sr. Project Coordinator(1.00)
(0.00)
Housing
Management Analyst1.00
Engineering Tech II(1.00)
Reclassification
Development Services Fund
Development Automation Spec1.00
(2.00)
Land DevelopmentAssociate Engineer1.00
Transfer from HousingSr. Project Coordinator1.00
Engineering and Capital
Transfer to Fleet/PWSecretary(1.00)
Projects (0.00)
Signal MaintenanceTraffic Signal & Lighting Tech II1.00
Collections Supervisor(1.00)
Accountant1.00
Finance (0.00)Reclassification
Finance & Purchasing Manager(1.00)
Finance Manager1.00
Fire (1.00)Fire Prevention
Fire Ins/Inv I1.00
Sr. Maintenance Worker1.00
Gas Tax Fund (2.00)Graffiti
Maintenance Worker II1.00
Fire Captain (84 hr)2.00
Fire
Firefighter/Paramedic (84 hr)2.00
Community Services Officer2.00
Measure A (16.00)
Peace Officer3.00
Police
Police Agent2.00
Police Dispatcher3.00
Police Sergeant2.00
Sr. Park Ranger(1.00)
Parks and Recreation (0.00)Reclassification
Park Ranger Program Manager1.00
Police Services Officer(10.00)
Police (0.00)Jail
Police Srvs Officer Supervisor(2.00)
Fiscal Office Specialist(1.00)
Reclassification
Public Works (1.00)
Sr. Fiscal Office Specialist1.00
Transfer from EngSecretary1.00
Sewer Service Revenue (1.00)Sewer BillingManagement Analyst1.00
TOTAL CITYWIDE23.00
Finally, Chula Vista Municipal Code Section 2.05.010 also needs to be updated to reflect the position
changes impacting the unclassified positions.Chula Vista City Charter Section 500 requires that all
unclassified positions not mentioned specifically in Charter Section 500 be adopted by ordinance.
Adoption of ordinance (K) will add the position title of Finance Manager and delete the Finance and
Purchasing Manager title from theMunicipal Code Section 2.05.010.
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DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council/Successor Agency to the Redevelopment
Agency/Housing Authority members and has found that potential conflicts exist, in that membershave
property holdings within 1,000 feet of the districts listed below:
City Council Conflicts:
o Mayor Salas –Open Space District #20 Zone 7, Open Space District #09, and Open Space
District #10. These conflicts pertain to Resolutions: C and D.
o Council Member McCann –Open Space District #01, Open Space District #20 Zone 7,
Community Facility District 07MEastlake Woods & Vista,and capital projects STL0436 and
TRF0407. These conflicts pertain to Resolutions: B, C, and F.
o Council Member Padilla –Eastlake Maintenance District #1 Zone C and Community Facility
District 07MEastlake Woods & Vista. These conflicts pertainto Resolution: E and F.
Each of the remaining decisions contemplated by this action is either: (i) not site specific; or (ii) ministerial,
secretarial, manual, or clerical in nature, thus, not requiring the members to make or participate in making
a governmental decision, pursuant to California Code of Regulations Title 2, section 18704.4(a)(1); or (iii)
solely concerns the repair, replacement or maintenance of existing streets, sewer, storm drainage or
similar facilities, pursuant to California Code of Regulations Title 2, sections 18700 and 18705.2(c)(1); or
(iv) to the extent that any decision would have a reasonably foreseeable financial effect on the member’s
real property, the effect would be nominal, inconsequential, or insignificant, and, thus, would not be
material, pursuant to California Code of Regulations Title 2, sections 18700 and 18702(b). Consequently,
these decisions do not present real property-related conflicts under the Political Reform Act (Cal. Gov't
Code § 87100, et seq.)
Staff is not independently aware, nor has staff been informed by any City Councilmember, of any other fact
that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy
Community, Strong and Secure Neighborhoods and a Connected Community. This action supports the
Operational Excellence goal by communicating the City’s projected financial position for the current fiscal
year in an open and transparent manner. This transparency supports City Initiative 1.3.1. -“Foster public
trust through an open and ethical government.”
CURRENT-YEAR FISCAL IMPACT
There is no fiscal impact in the current fiscal year as a result of the adoption of thebudget.
ONGOING FISCAL IMPACT
Approval of the proposed budgets will result in the appropriation of $387.3million in funding for the fiscal
year ending June 30, 2020. This amount includesa General Fund budget of $197.0million.
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P ROPOSED F ISCAL Y EAR 2019-20A PPROPRIATIONS BY F UND T YPE
PROPOSED EXPENDITURES
FUND
(thousands)
General Fund$196,967
Capital Funds$840
Debt Funds$11,374
Development Funds$21,439
Enterprise Funds$2,384
Gas Tax Fund$6,803
Grant Funds$19,926
Internal Service Funds$11,563
Measure A Sales Tax Fund$11,083
Measure P Sales Tax Fund$18,266
Open Space Funds$15,302
Other Funds$18,813
Sewer Funds$42,693
Successor Agency Funds$9,829
TOTAL ALL FUNDS$387,281
ATTACHMENTS
A –Recommended Expenditures by Department and Category
B –Schedule of Revenues
C –Proposed Staffing by Department and Fund
Exhibit 1–Fiscal Year 2019-2020Compensation Schedule
Staff Contact: David Bilby, Finance Department
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SECOND READING AND ADOPTION
ORDINANCE NO.
ORDINANCE OF THE CITY OF CHULA VISTA AMENDING
CHULA VISTA MUNICIPAL CODE SECTION 2.05.010 TO
ADD THEUNCLASSIFIED POSITION OFFINANCE
MANAGERANDDELETETHEFINANCEAND
PURCHASING MANAGER
WHEREAS, the Human Resources Department has created new classifications to better
reflect the needs of the City’s workforce; and
WHEREAS, Chula Vista City Charter Section 500(a) requires that all new unclassified
management level positions be adopted by ordinance and a four-fifths vote of the Council.
NOW,THEREFORE,the City Council of the City of Chula Vista does ordain as follows:
Section I.That Section 2.05.010 of the Chula Vista Municipal Code is hereby
amended to read as follows:
2.05.10Unclassified positions established.
In addition to those unclassified positions specifically delineated in Section 500 of the Charter of
the City, there are established the unclassified positions entitled: Administrative Secretary
(Mayor, At Will), Administrative Services Manager, Animal CareFacility Administrator,
Animal Care Facility Manager, Assistant Chief of Police, Assistant Director of Development
Services, Assistant Director of Engineering, Assistant Director of Human Resources, Assistant
Director of Finance, Assistant Director of Public Works, Assistant Director of Recreation,
Budget and Analysis Manager, Building Official/Code Enforcement Manager, Chief of Staff,
Chief Sustainability Officer, City Engineer, City Librarian, Constituent Services Manager,
Deputy City Manager, Deputy Fire Chief, Development Services Department Director, Director
of Community Services, Director of Conservation and Environmental Services, Director of
Economic Development, Fire Division Chief, FA Accounting Technician, FA Administrative
Analyst I, FA Administrative Analyst II, FA Analyst, FA Deputy Executive Director, FA
Executive Director, FA Public Private Partnership and Exercise Program Manager, FA Director
of San Diego Law Enforcement Coordination Center, FA Executive Assistant, FA Financial
Manager, FA Geospatial Intelligence Analyst, FA Graphics Designer/Webmaster, FA
Information Security Program Manager, FA IVDC-LECC Executive Director, FA Law
Enforcement Coordination Center Information Technology Manager, FA Intelligence Analyst,
FA Management Assistant, FA Microcomputer Specialist, FA Network Administrator I, FA
Network Administrator II, FA Program Analyst, FA Program Assistant Supervisor, FA Program
Manager, FA Network Engineer, FA Senior Financial Analyst, FA Senior Intelligence Analyst,
FA Senior Program Assistant, FA Senior Secretary, FA Supervisory Intelligence Analyst,
Finance and Purchasing Manager,Finance Manager, Housing Manager, Human Resources
Operations Manager, Information Technology Manager, Law Office Manager, Office Specialist
(Mayor’sOffice), Parks and Recreation Administrator, Performance and Organizational
Development Manager, Planning Manager, Police Administrative Services Administrator, Police
Captain, Policy Aide, Public Works Superintendent, Purchasing Agent, Real Property Manager,
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Ordinance No.
Page No. 2
Redevelopment and Housing Manager, Revenue Manager, Risk Manager, Senior Council
Assistant, and Traffic Engineer.
Section II.Severability
If any portion of this Ordinance, or its application to any person or circumstance, is for
any reason held to be invalid, unenforceable or unconstitutional, by a court of competent
jurisdiction, that portion shall be deemed severable, and such invalidity, unenforceability or
unconstitutionality shall not affect the validity or enforceability of the remaining portions of the
Ordinance, or its application to any other person or circumstance. The City Council of the City of
Chula Vista hereby declares that it would have adopted each section, sentence, clause or phrase
of this Ordinance, irrespective of the fact that any one or more other sections, sentences, clauses
or phrases of the Ordinance be declared invalid, unenforceable or unconstitutional.
Section III. Construction
The City Council of the City of Chula Vista intends this Ordinance to supplement, not to
duplicate or contradict, applicable state and federal law and this Ordinance shall be construed in
light of that intent.
Section IV. Effective Date
This Ordinance shall take effect and be in force on the thirtieth day after its final passage.
Section V. Publication
The City Clerk shall certify to the passage and adoption of this Ordinance and shall cause
the same to be published or posted according to law.
Presented byApproved as to form by
Courtney ChaseGlen R. Googins
Director of Human ResourcesCity Attorney
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June 11, 2019File ID: 19-0314
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE CONSTRUCTION
OF THE CIVIC CENTER LIBRARY OUTDOOR DECK ADDITION (CIP NO. GGV0244), AMENDING THE FISCAL
YEAR 2018/19 CIP PROGRAM BUDGET, AND APPROPRIATING FUNDS THEREFOR (4/5 VOTE REQUIRED)
RECOMMENDED ACTION
Council adopt the resolution.
SUMMARY
On September 25, 2018, the City Council adopted Resolution 2018-202 accepting and appropriating
Housing-Related Parks (HRP) grant funds in the amount of $629,450 to construct an outdoor deck addition
to the Civic Center Library (CIP No. GGV0244).An updated engineer’s estimate for the project indicateda
total preliminary budget of $1,320,863. On May 7, 2019, the City Council adopted Resolution 2019-072
appropriating $691,413 from the Major Recreation Facility component of the Public Facilities Development
Impact Fee (PFDIF) to supplement the HRP grant funds.Following bidding results of the Request for
Proposals to construct the Outdoor Deck Addition, the updated total project cost, inclusive of construction
costs, soft costs, and 15% construction contingency, is $1,657,770. An additional appropriation from the
Major Recreation Facility component of the Public Facilities Development Impact Fee (PFDIF) to
supplement the HRP grant funds and previously appropriated funding from PFDIF is recommended.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed project for compliance with the
California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Categorical
Exemption pursuant to State CEQA Guidelines Section 15301 Class 1 (Existing Facilities), Section 15303
class 3 (New Construction or Conversion of Small Structures), and Section 15061(b)(3), because it can be
seen with certainty that there is no possibility that the activity in question may have a significant effect on
the environment. Thus, no further environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
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DISCUSSION
On February 7, 2017, the City Council approved submission of aHousing-Related Parks (HRP) Grant
application tothe California Department of HousingCommunity Development Department (Resolution No.
2017-023).
The HRPprogram wasfunded through the passage of Proposition 1C, which creates incentives and rewards
local governments for building affordable housing by providing grant funds for needed parks in those
communities. The grant funds may be used for the creation, development, or rehabilitation of park and/or
recreation facilities. The City was awarded agrant in the amount of $629,450. On September 25, 2018, the
City Council approved Resolution 2018-202 accepting the HRP grant funds and amended the operating and
capital improvement program budgets to appropriate the grant fundsto CIP No. GGV0244 (Civic Center
Library Outdoor Deck Addition).
The initialengineer’s estimatedconstruction costforthe project was$1,153,263. With the inclusion of
$167,600 in design and construction administration and management,the estimated budget for the project
totaled$1,320,863. On May 7, 2019, the City Council adopted Resolution 2019-072appropriating
$691,413 from the Major Recreation Facility component of the Public Facilities Development Impact Fee
(PFDIF) Fund to supplement the HRP grant funds.
Following bidding results of the Request for Proposals to construct the Outdoor Deck Addition, the updated
project cost, inclusive of construction costs, soft costs, and 15% construction contingency, totals
$1,657,770. In order to fully fund the new estimated project cost, the existing appropriation of HRP Grant
Funds and PFDIFFundsmust befurther augmented in the amount of $336,907. Additionally, if the City is
unable to expend the entirety of the HRP grant funds by June 30, 2019, any unexpended funds must be
returned to the State. Should this occur, additional PFDIF funding will be required to complete the project.
Council authorization to expend up to a total of$1,657,770 in PFDIF funds (an increase of $966,357)is
recommended, in the event that none of the grant funds arereimbursable.
Public Facility Construction Priorities and Authorization
In conjunction with the 2011 Growth Management Oversight Commission (GMOC) Report’s
Recommendations and Implementing Actions, a new process for prioritizing public facility construction
was established. The new process requires that PFDIF capital projects be brought forward to Council for
authorization to proceed prior to significant expenditure of project funds. At that time, a list of other PFDIF
eligible projects should be presented to Council, along with staff’s justification for moving forward with the
proposed project.
The prioritization of PFDIF projects reported to GMOC and City Council was most recently updated in
September 2018. The PFDIF capital projects are currently prioritized as follows:
PriorityDescription
1Millenia Fire Station (currently under construction)
2Rancho del Rey Library
3/4Otay Ranch Village 4 Aquatics Center and Recreation Facility
5Millenia Library
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2019-06-11 Agenda PacketPage 107 of 891
The Civic Center Library Outdoor Deck Addition project was not contemplated as a PFDIF program inthe
last facility prioritizationreport to the Council. Moving forward with the Outdoor Deck Addition is
recommended at this time in order to leverage the HRP grant fundsand to provide additional recreational
amenities in Western Chula Vista. If the proposed PFDIF appropriations are approved, the new
prioritization of facilities would be as follows:
PriorityDescription
1Millenia Fire Station (currently under construction)
2Civic Center Library Outdoor Deck Addition
3Rancho del Rey Library
4/5Otay Ranch Village 4 Aquatics Center and Recreation Facility
6Millenia Library
Additional fire and recreational facilities are anticipated to be added to the PFDIF program in conjunction
with a future comprehensive update (currently planned for 2019/2020). An updated facility prioritization
will be presented at that time.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property holdings
within 1,000 feet of the boundaries of the property which is the subject of this action. Consequently, this
item does not present a disqualifying real property-related financial conflict of interest under California
Code of Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the Political Reform Act (Cal. Gov’t
Code §87100, et seq.).
Staff is not independently aware, and has not been informed by any City Councilmember, of any other fact
that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
Project costs totaling$1,657,770as summarized in the table below.
DescriptionAmount
Construction CostsBid$ 1,295,800
Construction Contingency (15%)$ 194,370
Design & Construction Management (Davy)$ 167,600
Total$ 1,657,770
The project will be funded as follows:
Funding SourceAmount
HRP Grant Funds*$ 629,450
PFDIF Funds$ 1,028,320
Total$ 1,657,770
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2019-06-11 Agenda PacketPage 108 of 891
*HRP funds are anticipated to be expended in the current fiscal yearas required by the terms of the grant.
PFDIF expenditures will occur in fiscal year 2018-19 and 2019-20. In the event there are anydelays in the
project,andthe grant funds would notbeexpended by June 30, 2019, or the State denies reimbursement of
the grant funds to the City,staff arerequestingadditional PFDIF funds in the amount of up to $966,357in
order to complete the project.
ONGOING FISCAL IMPACT
Upon completion of the project, the improvements will require routine City maintenance.
ATTACHMENTS
None
Staff Contact: Tiffany Allen, Assistant Director of Development Services
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2019-06-11 Agenda PacketPage 109 of 891
RESOLUTION NO. __________
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA AUTHORIZING THE CONSTRUCTION OF
THE CIVIC CENTER LIBRARY OUTDOOR DECK ADDITION
(CIP NO. GGV0244),AMENDING THE FISCAL YEAR 2018/19
CIP PROGRAM BUDGET,AND APPROPRIATING FUNDS
THEREFOR
WHEREAS, on February 7, 2017, the City Council approved submission of a Housing-
Related Parks (HRP) Grant application to the California Department of Housing Community
Development Department (Resolution No. 2017-023); and
WHEREAS, the HRP Grant funds are to be used for the creation or rehabilitation of
parks and/or recreational facilities that benefit the community and add to the quality of life; and
WHEREAS, On September 25, 2018, the City Council approved Resolution 2018-202
acceptingthe HRP grant funds and amended the operating and capital improvement program
budgets to appropriate $629,450 in HRPgrant fundingto CIP No. GGV0244 (Civic Center
Library Outdoor Deck Addition); and
WHEREAS, on May 7, 2019, the City Council approved Resolution 2019-072amending
the FY2018-19 CIP program budget and appropriating $691,413 from the Major Recreation
Component of the Public Facilities Development Impact Fee (PFDIF) Fund to supplement the
HRP grant funds for the Civic Center Library Outdoor Deck Addition,based onan updated
engineer’s estimate; and
WHEREAS, following a formal bidding process,the estimated project cost totals
$1,657,770,inclusive of construction costs, soft costs, and a fifteen percentconstruction
contingency; and
WHEREAS,the current appropriation of $629,450 in grant funding and $691,413 in
PFDIF fundsis not sufficient to cover all of anticipatedproject costs; and
WHEREAS, if the City isunable to expend all HRP grant fundsby June 30, 2019,
replacementfunding from the PFDIF willbe required to completethe project; and
WHEREAS, the 2011 Growth Management Oversight Commission (GMOC)
Recommendations and Implementing Actions Report recommended the creation of a new
approval processrequiring PFDIF capital projects be brought forward to Council for
authorization to proceed prior to significant expenditure of project funds; and
WHEREAS, the Recommendations and Implementing Actions Report further provided
that at the time of Council consideration of authorization to proceed, a list of other PFDIF
eligible projects should be presented to the City Council, along with staff’s justification for
moving forward with the proposed project; and
2019-06-11 Agenda PacketPage 110 of 891
Resolution No. _________
Page 2
WHEREAS, the City Council adopted Resolution 2011-059, directing the City Manager
to undertake actions necessary to implement report recommendations as presented in the 2011
Recommendations and Implementing Actions Report; and
WHEREAS, the prioritization of PFDIF capital projects was last updated on September
18, 2018 via Resolution 2018-192; and
WHEREAS, per Resolution 2018-192, the prioritization of planned PFDIF capital
projects was as follows: (1) the Millenia (Eastern Urban Center) Fire Station; (2) the Rancho del
Rey Library; (3/4) the Otay Ranch Village 4 Aquatics Center and Recreation Facility; and (5) the
Millenia (Eastern Urban Center) Library; and
WHEREAS, in order to leverage the HRP grant funds and to provide additional
recreational amenities in Western Chula Vista, staff recommends the construction of the Civic
Center Library Outdoor Deck Addition in advance of the Rancho del Rey Library; and
WHEREAS, if authorization to proceed with construction of the Civic Center Library
Outdoor Deck Addition is approved, the new prioritization for the planned PFDIF capital
projects would beas follows: (1) the Millenia (Eastern Urban Center) Fire Station; (2) the Civic
Center Library Outdoor Deck Addition; (3) the Rancho del Rey Library; (4/5) the Otay Ranch
Village 4 Aquatics Center and Recreation Facility; and (6) the Millenia (Eastern Urban Center)
Library.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, that it authorizes the construction of the Civic Center Library Outdoor Deck Addition (CIP
No. GGV0244), amendsthe FY2018-19 CIP program budget,andappropriatesup to an
additional $966,357 from the Major Recreation Component of the Public Facilities Development
Impact Fund.
Presented byApproved as to form by
Tracy LambGlen R. Googins
Director of Community ServicesCity Attorney
2019-06-11 Agenda PacketPage 111 of 891
June 11, 2019File ID: 19-0232
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING THE GANN
INITIATIVE APPROPRIATIONS LIMIT FOR THE CITY OF CHULA VISTA FOR FISCAL YEAR 2019/20
RECOMMENDED ACTION
Council adopt the resolution.
SUMMARY
Article XIIIB of the California Constitution approved by the voters in 1979 and commonly referred to as the
Gann Initiative, requires each local government to establish an Appropriations Limit for the General Fund
by resolution each year at a regularly scheduled meeting or noticed special meeting. The purpose of the
limit is to restrict spending of certain types of revenues to a level predicated on a base year amount
increased annually by an inflation factor.
ENVIRONMENTAL REVIEW
Environmental Notice
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act
State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is
required.
Environmental Determination
The Director of Development Services has reviewed the proposed activity for compliance with the
California Environmental Quality Act (CEQA) and has determined that approval of this resolution
establishing the City’s appropriation limit for fiscal year 2019-20 is not a "Project" as defined under Section
15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA
Guidelines the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
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2019-06-11 Agenda PacketPage 112 of 891
DISCUSSION
Article XIIIB of the California Constitution, approved by the voters in 1979, imposed the concept of
spending limits on local governments. This Constitutional provision and related implementing legislation
specifies that annual increases in general fund appropriations financed from "Proceeds of Taxes" are
limited to a base year (1978-79) amount increased annually by an inflation factor comprised of the change
in population of the City combined with the greater of the change in new non-residential construction or
the change in the California per capita personal income. By definition, "Proceeds of Taxes" includes such
revenues as property taxes, sales and use taxes, utility user taxes, transient occupancy taxes, and state
subventions. Revenues from other sources like fees/charges and federal grants are considered "Non-
Proceeds of Taxes" and are not subject to the annual spending limit. This calculation has always been
perfunctory for the City of Chula Vista, since the proceeds of taxes for the City are far less than the statutory
appropriation limit.
The State Department of Finance and the San Diego County Assessor's Office are charged with providing
the data necessary for local jurisdictions to establish their appropriation limit. According to these sources,
for purposes of the fiscal year 2019-20 calculation, the population increased 1.25%. California per capita
personal income increased by 3.85% and new non-residential construction increased by 5.36%
consequently new non-residential construction was used in the formula to compute the limit since this
increase is the greater of the two amounts.
The fiscal year 2019-20 Appropriation Limit has been calculated as follows:
Fiscal Year 2018-19 Appropriation Limit$922,902,382
Increased by an inflation factor composed
of the increases in Population and
per capita income changeX 1.0668009
Fiscal Year 2019-20 Appropriations Limit$984,553,094
The "Proceeds of Taxes" as included in the fiscal year 2019-20 Proposed Budget that are subject to the
appropriations limit are estimated to be $143,377,972 (see attachment). Therefore, the City has what is
referred to as an appropriation "gap" of $841,175,122 ($984,553,094 -$143,377,972). Simply stated, this
means that the City could collect and spend up to $841,175,122 more in taxes during Fiscal Year 2019-
2020 without exceeding the Constitutional limit.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific
and consequently, the real property holdings of the City Council members do not create a disqualifying real
property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et
seq.).
Staff is not independently aware, and has not been informed by anyCity Councilmember, of any other fact
that may constitute a basis for a decision maker conflict of interest in this matter.
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2019-06-11 Agenda PacketPage 113 of 891
CURRENT-YEAR FISCAL IMPACT
This action will enable the City to appropriate and spend tax revenues estimated at $143,377,972 included
in the proposed budget for fiscal year 2019-2020.
ONGOING FISCAL IMPACT
The adoption of the resolution will result in no on-going fiscal impact.
ATTACHMENTS
1.FY 19-20 Gann Limit
Staff Contact:Patricia Macias
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2019-06-11 Agenda PacketPage 114 of 891
RESOLUTION NO. 2019-__________
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ESTABLISHING THE GANN INITIATIVE
APPROPRIATIONS LIMIT FOR THE CITY OF CHULA VISTA
FOR FISCAL YEAR 2019/20
WHEREAS, Article XIIIB of the California Constitution, approved by the voters in 1979,
imposed the concept of spending limits on local governments; and
WHEREAS, this Constitutional provision and related implementing legislation specifies
that annual increases in appropriations financed from "Proceeds of Taxes"are limited to a base
year (1978-79) amount increased annually by an inflation factor comprised of the change in
population of the City combined with the greater of the change in new non-residential
construction or the change in the California per capita personal income; and
WHEREAS, by definition, "Proceeds of Taxes" includes such revenues as property taxes,
sales and use taxes, utility users taxes, transient occupancy taxes, and state subventions; and
WHEREAS, revenues from other sources like fees/charges and federal grants are
considered "Non-Proceeds of Taxes" and are not subject to the annual spending limit; and
WHEREAS, this calculation has always been perfunctory for the City of Chula Vista,
since the proceeds of taxes for the City are far less than the statutory appropriation limit; and
WHEREAS, the State Department of Finance and the San Diego County Assessor's
Office are charged with providing the data necessary for local jurisdictions to establish their
appropriation limit; and
WHEREAS, according to these sources, for purposes of the fiscal year 2019-2020
calculation, the population increased 1.25%, and
WHEREAS, California per capita personal income increased by 3.85%and new non-
residential construction increased by 5.36% and; consequently new non-residential construction
was used in the formula to compute the limit since this increase is the greater of the two
amounts; and
WHEREAS, the fiscal year 2019-20Appropriation Limit has been calculated to be
$984,553,094; and
WHEREAS, the "Proceeds of Taxes" as included in the fiscal year 2019-20Proposed
Budget that are subject to the appropriations limit are estimated to be $143,377,972; and
WHEREAS, the City has what is referred to as an appropriation "gap" of $841,175,122
($984,553,094-$143,377,972); and
2019-06-11 Agenda PacketPage 115 of 891
Resolution No. 2019-__________
Page 2
WHEREAS, this means that the City could collect and spend up to $841,175,122more in
taxes during Fiscal Year 2019-2020without exceeding the Constitutional limit.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula
Vista does hereby establish an appropriations limit of $984,553,094for Fiscal Year 2019-20
pursuant to the requirements of Article XIIIB of the California Constitutionand California
Government Code section 7910.
Presented byApproved as to form by
__________________________________________________________________
David BilbyGlen R. Googins
Directorof Finance / TreasurerCity Attorney
2019-06-11 Agenda PacketPage 116 of 891
ATTACHMENT A
APPROPRIATION (GANN) LIMIT GAP CALCULATION
FOR FISCAL YEAR 2019-20
FY 2019-20
Proceeds of TaxesProposed Budget
Property Taxes 36,361,038
Property Tax in Lieu of VLF 22,430,251
Sales and Use Taxes 71,659,600
Transient Ocupancy Taxes 4,357,922
Utility Taxes 5,633,423
Other Local Taxes
Real Property Transfer Tax 1,173,550
Business License 1,424,643
State Motor Vehicle Licenses 109,299
State Homeowners Property Taxes 228,246
Total Proceeds of Taxes 143,377,972
Appropriation Limit 984,553,094
GAP (Under Limit) (841,175,122)
Proceeds of Taxes Compared to Legal Spending Limit
$1,200
s
n
o
i
l
l
i
$1,000
M
$800
$600
$400
$200
$0
FY 15-16FY 16-17FY 17-18FY 18-19FY 19-20
Proceeds of TaxesAppropriation Limit
2019-06-11 Agenda PacketPage 117 of 891
June 11, 2019File ID: 19-0218
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE 2019/2020 U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ANNUAL ACTION PLAN FOR THE COMMUNITY
DEVELOPMENT BLOCK GRANT, HOME INVESTMENT PARTNERSHIPS ACT GRANT AND THE EMERGENCY
SOLUTIONS GRANT; AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE AGREEMENTS
WITH EACH SUBRECIPIENT; AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE ANY
AND ALL HUD DOCUMENTS RELATED TO THE GRANTS; AND APPROVING A TENANT-BASED RENTAL
ASSISTANCE PROGRAM AND AUTHORIZING THE DEVELOPMENT SERVICES DIRECTOR TO EXECUTEALL
DOCUMENTS NECESSARY FOR PROGRAM ADMINISTRATION
RECOMMENDED ACTION
Council adopt the resolution.
SUMMARY
On an annual basis, the City of Chula Vista receives Community Development Block Grant (CDBG), HOME
Investment Partnerships (HOME) Program, and Emergency Solutions Grant (ESG) Program funds from the
U.S. Department of Housing and Urban Development (HUD) to contribute towards a number of diverse
programs and services to enhance the quality of life for Chula Vista's low to moderate-income residents. To
receive these funds, the City prepares an annual Action Plan to fund specific activities consistent with the
housing and community development needs of these residents and strategies to address these needs as
identified in the City’s adopted 2015-2019 Five-Year Consolidated Plan.
The 2019/20 Annual Action Plan is included in this report for consideration and approval. Approval to
execute implementing documents is also requested. All required funds will beappropriated in conjunction
with the regular fiscal year 2019/20 budget adoption process.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed activity for compliance with the California
Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA). The proposed activities
listedasItems 1 through 15 as listed in the tables below for the CDBG program arenot a “Project” as
defined under Section 15378(b)(5) of the State CEQA Guidelines because the proposal consists of a
reporting action, is not for a site specific project(s) and will not result in a direct or indirect physical change
in the environmental. Therefore, pursuant to Section15060(c)(3) of the State CEQA Guidelines the activity
is not subject to CEQA. Under NEPA, the activity is exempt pursuant to Title 24, Part 24 CFR 58.35 (a)(1). of
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2019-06-11 Agenda PacketPage 118 of 891
the Code of Federal Regulations and pursuant to the U.S. Department of Housing & Urban Development
Environmental Guidelines.
The proposed projects items 16 to 18 (CDBG) qualify for a Categorical Exemption pursuant to the California
Environmental Quality Act State Guidelines pursuant to Section 15301-Class 1 (Existing Facilities) and
Section 15303-Class 3 (New Construction orConversion of Small Structures). Thus, no further
environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
As an entitlement community with the U.S. Department of Housing and Urban Development(HUD), the City
receives funds under three block grant programs:
• Community Development Block Grant (CDBG)
• Home Investment Partnerships (HOME)
• Emergency Solutions Grant (ESG)
The grant amounts allocated to each jurisdiction are determined using a formula basedon statisticaland
demographic data. The purpose of these funds is to address HUD's goals of providing decenthousing, a
suitable living environment, and to expand economic opportunities principally forlow/moderate-income
persons.
As a recipient of these HUD funds, the City is required to prepare a Consolidated Plan (ConPlan)describing
the housing and community development needs of the City's low and moderate-incomeresidents and
outlining strategies to address those needs over a five year period. The ConPlanprovides the necessary
policy guidance for implementation of programs and services to be funded bythe HUD grants in addressing
the identified needs. Those programs and services to be funded eachyear of the five year ConPlan are
detailed in theCity’s Annual Action Plan, submitted to HUD as itsformal application for funding. The City is
currently planning for the fifthand final year of its 2015-2019ConPlan.
InApril2019, Congress passed the FY 2019Omnibus Spending package, which includedthe entitlement
amounts for theDepartment of Housing and Urban Development programs (CDBG, HOME and ESG). In
addition to the entitlement amounts, the City will be carrying forward an unencumbered balance of
$168,362from CDBG and $1,514,100from HOME (refer to table below for a summary of the totalavailable
funds for the 2019/20program year).
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2019-06-11 Agenda PacketPage 119 of 891
2019/2020 Grant Funding
ENTITLEMENTPRIOR YEAR TOTAL AVAILABLE
PROGRAM
AMOUNT(UNENCUMBERED)FOR 2019/2020
Community Development Block Grant$2,289,117$168,362$2,457,479
Home Investment Partnerships Act$850,160$1,514,100$2,364,260
Emergency Solutions Grant$194,238$0$194,238
Total$3,333,515 $1,682,462 $5,015,977
In developing its 2019/2020Annual Plan, the City released a Notice of Funding Availability (NOFA)for the
available HUD grant funds in January 2019. A total of twenty-five(25) applications werereceived and
reviewed for eligibility and funding consideration. The City Council held a public hearingon April 16, 2019
to review those submitted activities to be included for funding as part of theAnnual Plan. The Action Plan
includes activities groupedinto five distinct categories: I) CDBG Planning andAdministration; II) CDBG
Public Services; III) CDBG Capital Improvement and CommunityDevelopment Projects; IV) ESG Projects;
and, V) HOME Projects.
The following are 2019/2020 proposed activities and recommended funding levels utilizing all funding
resources available.
CDBG Planning and Administration
ItemProgramRecommended
1DSD –Housing DivisionCDBG Administration/Planning$407,823
2CSA of San DiegoFair Housing and Tenant/Landlord Services$50,000
Total$457,823
CDBG Public Services
ItemProgramRecommended
3DSD –Housing DivisionShort-Term Housing Voucher Program$50,000
4Interfaith Shelter NetworkRotational Shelter Network$11,000
5South Bay Community ServicesHomeless Services$39,550
6San Diego Food BankFood 4 Kids Backpack Program$15,000
7Meals and WheelsSenior Care Program$12,000
8South Bay Community ServicesSouth Bay Food Program$10,000
9South Bay Community ServicesFamily Violence Treatment Program$39,000
10Recreation DepartmentTherapeutic Program$20,100
11CV Community CollaborativeFRC Emergency and Basic Services$39,312
12Family Health Center of San DiegoKidCare Express Mobile Med Unit$27,000
13Recreation DepartmentNorman Park Senior Services$30,000
14Community Through HopeProject H.O.P.E.$15,000
Total$307,962
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2019-06-11 Agenda PacketPage 120 of 891
CDBG Capital Improvement and Community Development Projects
ItemProgramRecommended
15DSD –Housing DivisionSection 108 Loan Debt Service Payment$ 764,000
16DSD –Housing DivisionGreen Homes For All Residential Rehabilitation $150,000
Program
17DSD –Housing DivisionCommunity Housing Improvement Loan Program$ 140,194
18Engineering DepartmentAlpineAvenue(Naples to Emerson)$637,500
TOTAL$1,691,694
Capital Project: Alpine Ave (Naples to Emerson)
In2008, HUDapproved a Section 108 Loan for the installation of new curbs, gutters and sidewalks for
eleven streets identifiedin the Castle Park Improvement Project,with improvements to be completed by
2014. One street segmentof the original Project (Alpine Avenue between Naples and Emerson)remains
incompletedue to lack of anticipated resident participation.
In March of 2019, the Cityrefinanced the existing balance of the Section 108 Loan, resulting in a savings of
$600,000 to the City. HUDrequires the City to reinvestthese savings back into the original Projectareafor
the completion of the Castle Park Improvement Project. The savings, along with supplementalCDBG funds,
are sufficient to cover the total design and construction costs for the completion of Alpine Avenueand will
meet the objectives and requirements for the CDBG program.
While the other street segments of the original Project were constructed using a combination of Section
108 Loan proceeds and homeowner participation (via assessment districtpursuant to City Council Policy
505-01), theuse of solely CDBG funds to complete the Project is recommended for several reasons. As
previously described, HUD requires the reinvestment of Project savings back into the original Project area.
In addition, HUD has directed the City to avoid piecemeal and incomplete improvements by “finish\[ing\]
what we start”and to expend CDBG funds for residential street improvements, to the exclusion of
arterial/collector streets. Lastly, federal regulations requirethe City to apply the same funding criteria to
all street types. These rules limit the City’s ability prioritize application of federal funds to
arterial/collector streets over residential streetsor to require homeowner participation when considering
application of federal funds. With the improvement of this final street segment, the Castle Park
Improvement Project will be completed.
ESG Programs
ItemProgramRecommended
19DSD –Housing DivisionESG Planning and Administration $ 14,568
20DSD –Housing DivisionHomeless Prevention and Rapid ReHousing $106,181
21South Bay Community ServicesCasa Nueva Vida Shelter $ 63,777
22DSD –Housing DivisionHomeless Management Information System $ 9,712
TOTAL$194,238
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HOME Projects
ItemProgramRecommended
23DSD –Housing DivisionHOME Planning and Administration $ 85,016
24DSD –Housing DivisionTenant-based Rental Assistance Program $ 200,000
25DSD –Housing DivisionRequest for Proposals –Affordable Housing Project* $ 2,151,720
TOTAL$2,436,736
In order to implement the proposed projects and programs the City must develop an Action Plan for the
2019/2020 program year. The Action Plan has been drafted and released for a 30-day comment review
period with no comments received. Additionally, the City must enter into a formal agreement with HUD
(Attachment No. 2) as well as execute a Subrecipient 2-Party Agreement and MOU with each approved
applicantfor each item listed above(AttachmentsNo. 3 and 4).
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property holdings
within 1,000 feet of the boundaries of the Alpine Street Improvement Project which is the subject of this
action. Consequently, this item does not present a disqualifying real property-related financial conflict of
interest under California Code of Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the
Political Reform Act (Cal. Gov’t Code §87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact
that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no impact to the current fiscal year. All appropriations and expenditures will occur in fiscal year
2019/20and beyond.
ONGOING FISCAL IMPACT
Fiscal year 2019/20 program funding includes current entitlements and roll over of prior year
unencumbered funds, as summarized in the table below.
2019/2020 Grant Funding
ENTITLEMENTPRIOR YEAR TOTAL AVAILABLE
PROGRAM
AMOUNT(UNENCUMBERED)FOR 2019/2020
Community Development Block Grant$2,289,117$168,362$2,457,479
Home Investment Partnerships Act$850,160$1,514,100$2,364,260
Emergency Solutions Grant$194,238$0$194,238
Total$3,333,515 $1,682,462 $5,015,977
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2019-06-11 Agenda PacketPage 122 of 891
The followingappropriations will bemade in conjunction withthe 2019/20City Manager’sBudget to fund
the Annual Action Plan activities previously described and more specifically definedbelow:
Community Development Block Grant (CDBG)
Public Services$307,962
CDBG Administration and Planning$457,823
Section 108 Loan Payment$764,000
Capital Improvement and Housing$927,691
Subtotal$2,457,479
Home Investment Partnerships Act (HOME)
HOME Planning and Administration$85,016
Affordable Housing Projects/Programs$2,279,244
Subtotal$2,414,344
Emergency Solutions Grant (ESG)
ESG Administration and Planning$14,568
Shelter Services$63,777
Homeless Prevention and Rapid ReHousing$115,893
Subtotal$170,773
TOTAL CDBG HOME and ESG$5,015,977
The activities funded through the Community Development Block Grant, Home InvestmentPartnerships
and Emergency Solutions Grant are fully reimbursable from the Department of Housingand Urban
Development, resulting in no fiscal impact to the General Fund. In the remote eventthat HUD should
withdraw these grant funds, the Subrecipient Agreements provide that the City is notobligated to
compensate the sub-recipients for program expenditures.
There is no ongoing fiscal impact to the City's General Fund,as all costs associated with the administration
of the CDBG, HOME and ESG programs are fundedin full by the respective grants.
ATTACHMENTS
Attachment 1: 2019/2020 Annual Action Plan
Attachment 2: Sample CDBG Interdepartmental MOU
Attachment 3: Sample CDBG Subrecipient Agreement
Attachment 4: Sample ESG Subrecipient Agreement
Staff Contact: Angelica Davis, DSD Sr Management Analyst
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2019-06-11 Agenda PacketPage 123 of 891
RESOLUTION NO. __________
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULAVISTAAPPROVING THE2019/2020U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
ANNUAL ACTION PLAN FOR THE COMMUNITY
DEVELOPMENT BLOCK GRANT, HOME INVESTMENT
PARTNERSHIPS ACT GRANT AND THE EMERGENCY
SOLUTIONS GRANT; AUTHORIZING THE CITY MANAGER
OR HIS DESIGNEE TO EXECUTE AGREEMENTS WITH
EACHSUBRECIPIENT;AUTHORIZINGTHECITY
MANAGER OR HIS DESIGNEE TO EXECUTE ANY AND
ALL HUD DOCUMENTS RELATED TO THE GRANTS; AND
APPROVING A TENANT-BASED RENTAL ASSISTANCE
PROGRAM AND AUTHORIZING THE DEVELOPMENT
SERVICES DIRECTOR TO EXECUTEALL DOCUMENTS
NECESSARY FOR PROGRAM ADMINISTRATION
WHEREAS,asaDepartmentofHousingandUrbanDevelopment(HUD)
entitlement community,theCityofChula VistareceivesgrantfundsundertheCommunity
Development BlockGrant(CDBG),EmergencyShelterGrant(ESG),andtheHome
InvestmentPartnerships Program(HOME);and
WHEREAS,Staffhaspreparedthe FiscalYear2019/2020AnnualActionPlan
("ActionPlan")usingthegoalssetforthinthe2015-2019ConsolidatedPlan
("ConsolidatedPlan")andperHUDRulesandRegulations;and
WHEREAS, the City will receive a Fiscal Year 2019/2020 CDBG entitlement of
$2,289,117; a HOMEentitlementof$850,160;andan ESGentitlementof$194,238; and
WHEREAS, the City has $168,362 in CDBG and $1,514,100 in HOME
unencumbered, prior year funds to reallocate to eligible projects; and
WHEREAS,theCityfolloweditsCitizenParticipationPlanandheldpublic
hearings onhousingandcommunityneedsin January and May of 2019,atwhichtime
publictestimonywasreceivedandconsideredbytheCityCouncilwithrespecttotheFY
2019/2020ActionPlan;and
WHEREAS,Staffhasdeterminedthattheproposedactivitiesare eligiblefor
CDBG, ESG, and HOMEfunding; and
WHEREAS, each CDBG project and program meets nationalobjectivestobenefit
primarilylow/incomehouseholdsoraidintheeliminationofslumsandblight;and
WHEREAS,Staffhasdeterminedthatthesubrecipients identifiedintheFY
2019/2020ActionPlanandAttachmentA(attachedhereto)are experiencedand staffed ina
mannersuchthattheycanprepareanddelivertheservicesrequiredbytheCity;and
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WHEREAS,intheeventthatHUDwithdrawstheCity'sCDBGfunding,theCity
isnotobligatedtocompensatethesub/recipients/contractors forprogram expenditures;
WHEREAS, the City Council of the City of Chula Vistadoes hereby approve the
implementation of a Tenant Based Rental Assistance Program, and authorizes the Development
Services Director, or their designee, execute all documents necessary for processing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, thatitapprovestheFiscalYear2019/2020AnnualActionPlan("Action Plan")forthe
CommunityDevelopmentBlockGrant(CDBG),HomeInvestmentPartnershipAct(HOME),
andtheEmergencySolutionsGrant(ESG)Programs.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista, that it
authorizestheCityManagerorhisdesigneetoexecuteanyandallagreementsandnecessary
amendmentsforthemanagementandimplementationoftheFiscal Year2019/2020Action
Plan, Administration and Public Services programs between the City of ChulaVistaandeach
subrecipient,identified intheFY2019/2020ActionPlan,anditfurtherauthorizestheCity
Managerorhisdesigneetomakesuchminormodificationsasmaybe approvedorrequired
bytheCityAttorney.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista,that it
authorizes the City of Chula Vista Development Services Department Director to enter into
Memorandums of Agreement, in substantially the form presented, for the management and
implementation of the Fiscal Year2019/2020Action Plan Capital Improvement and Park
Improvement projects, with theDirectors of Engineering and Capital Projects, Public Works,and
Community Services, and it furtherauthorizes the City Manager or his designee to make such
minor modifications as may beapproved or required by the City Attorney.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista,thatit
authorizestheCityManagertoexecutetheHUDFundingApprovalAgreementsandany
otherrelateddocumentsnecessarytoobtaintheHUDgrants.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista,that it
authorizes funding the 2019/20 HUD Annual Action Plan activities detailed in the Agenda
Statement in the amount of $5,015,977.
Presented byApproved as to form by
Gary Halbert
Glen R. Googins
City Manager
City Attorney
Attachment A
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Resolution No.
Page 3
2019/20 HUD Grant Funding Spending Plan
Development Svcs. Dept. - Hsng.CDBG Administration/Planning$ 407,823
CSAFair Housing Services$ 50,000
Short-Term Housing Voucher Pgm.$ 50,000
Development Svcs. Dept. - Hsng.
Interfaith Shelter NetworkRotational Shelter Network$ 11,000
South Bay Community ServicesHomeless Services$ 39,550
San Diego Food BankFood 4 Kids Backpack Program$ 15,000
Meals and WheelsSenior Care Program$ 12,000
South Bay Community ServicesSouth Bay Food Program$ 10,000
South Bay Community ServicesFamily Violence Treatment Pgm$ 39,000
Recreation DepartmentTherapeutic Program$ 20,100
CV Community CollaborativeFRC Emergency and Basic Svcs$ 39,312
Family Health Center of San DiegoKidCare Express Mobile Med Unit$ 27,000
Recreation DepartmentNorman Park Senior Services$ 30,000
Community Through HopeProject H.O.P.E.$ 15,000
DSD - Housing DivisionSection 108 Loan Payment$ 764,000
DSD - Housing DivisionGreen Homes for All Program$ 150,000
DSD - Housing DivisionCommunity Housing Improvement Loan Pgm.$ 140,194
Public Works DepartmentApline (Naples to Emerson)$ 637,500
Development Svcs. Dept. - Hsng.ESG Administration/Planning$ 14,568
DSD - Housing DivisionHomeless Prevention and Rapid ReHousing $ 106,181
South Bay Community ServicesCasa Nueva Vida Shelter$ 63,777
DSD - Housing DivisionHomeless Management Information System$ 9,712
DSD - Housing DivisionPlanning and Administration$ 85,016
DSD - Housing DivisionTenant-based Rental Assistance Program$ 200,000
DSD - Housing DivisionRFP - Affordable Housing Project$ 2,151,720
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June 11, 2019File ID: 19-0259
TITLE
A.RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LEVYING THE ASSESSMENTS
AND COLLECTIBLES FOR THE FISCAL YEAR 2019/20 FOR OPEN SPACE DISTRICTS 2 THROUGH 8,
11, 14, 15, 17,18, 20 (ZONES 1 THROUGH 6, 8, AND 9), 23, 24, 26, 31, 33, EASTLAKE
MAINTENANCE DISTRICT NO 1 (ZONES A, B, D, AND E), AND BAY BOULEVARD MAINTENANCE
DISTRICT
B.RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LEVYING THE ASSESSMENTS
AND COLLECTIBLES FOR THE FISCAL YEAR 2019/20 FOR OPEN SPACE DISTRICTS 9, 10 AND
TOWN CENTRE MAINTENANCE DISTRICT
C.RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LEVYING THE ASSESSMENTS
AND COLLECTIBLES FOR THE FISCAL YEAR 2019/20 FOR OPEN SPACE DISTRICT 20 (ZONE 7)
D.RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LEVYING THE ASSESSMENTS
AND COLLECTIBLES FOR THE FISCAL YEAR 2019/20 FOR OPEN SPACE DISTRICT 1
E.RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LEVYING THE ASSESSMENTS
AND COLLECTIBLES FOR THE FISCAL YEAR 2019/20 FOR EASTLAKE MAINTENANCE DISTRICT
NO. 1 (ZONE C)
RECOMMENDED ACTION
Council conduct the public hearing and adopt the resolutions.
SUMMARY
The City administers and maintains 36 Open SpaceDistricts and associated zones that have been
established over the last 30 years. The Open Space Districts provide a financing mechanism to maintain the
public open space areas associated with each specific development. The City Council’s approval of the levy
is required by the first week of August in order to meet the annual deadline established by the San Diego
County Auditor-Controller. This item authorizes the assessment of the recommended levy amounts and
ensures that the County Auditor Controller deadlines are met for all 36 of the City’s Open Space Districts.
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ENVIRONMENTAL REVIEW
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act
State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is
required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable
DISCUSSION
Open Space Districts (OSDs) were established in conjunction with each development to ensure a financing
mechanism was available for the funding of perpetual maintenance of common open space areas. The City
levies annual assessments within each OSD to cover the costs of maintenanceassociated with each OSD
area of maintenance. Once City Council approves the annual assessments, they are sent to the County for
inclusion on the secured property tax bills of each affected parcel.
Each year the City Council must take two actions beforelevying the annual assessment. First, Council
approves the Engineer’s Report on Open Space Districts (entitled the “Annual Open Space Districts
Engineer’s Report”, per the attachment of the same name), declares the City's intention to levy the annual
th
assessment, and sets the date and time for a public hearing. The first action was completed on May 7,
2019. The second action is to conduct the public hearing, take and consider public testimony, authorize the
levy of the annual assessment and set the amount to be collected against the assessment. Tonight’s action
is the second step in the annual process.
Pursuant to state law and Municipal Code, the City Engineer has prepared and filed the annual report for all
existing Open Space Districts. The report isattached as Exhibit 3 to this agenda statement. Exhibit 1 lists
the names and locations of the Districts. The annual report allows Council to review the history of the Open
Space Districts. The report includes information regarding:
§The proposed budgets
§Funds remaining in the account
§The proposed assessment (based upon prior year assessment plus an inflation factor)
§The collectible (the amount needed from each property owner to provide sufficient funds
for the following fiscal year’s maintenance)
Improvements and Services
The facilities and items to be maintained by the Open Space Districts currently consist and will remain, in
general, of the following:
§ Irrigation§ Fertilization
§ Aerification§ Pest Control
§ Insect infestation control§ Removal of weeds, trash and litter
§ Removal of noxious plant material§ Trail maintenance
§ Public walkway cleaning§ Low flow and brow channel maintenance
§ Weed abatement§ Slopes and Canyons
§ Pedestrian light maintenance§ Signage within trails/canyons
§ Pruning of trees and shrubs§ Repair of irrigation equipment
§ Irrigation equipment upgrades§ Brush clearance
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§ Encroachment trims§ Fencing maintenance
§ Replacement of dead or diseased plant § Retaining walls
material
Assessments & Collectibles
The City of Chula Vista Municipal Code makes the distinction between the assessment and the amount that
the City may collect against the assessment (i.e., the collectible). Each year, the prior year’s maximum
assessment amount is adjusted by an inflation factor, pursuant to the Municipal Code. This inflation factor
is based upon the lower of two inflation factors: 1) the San Diego Metropolitan Consumer Price Index (CPI),
th
and 2) the Governor’s California 4Quarter per Capita Personal Income Index. In the mid-1990’s (and for
all Open Space Districts established after that date), Council approved the assessments with an inflation
factor. Since that date, Council may annually adjust the assessment by this inflation factor withoutthis
adjustment being construed as an increase, and thus being subject to an OSD balloting, per Proposition 218.
The assessments for FY 2019/20 are proposed at the FY 2018/19 amounts adjusted by the inflation factor
of 3.36% pursuant to the Municipal Code. This index is the lower of the two inflation factors mentioned
above, and represents the percentage change in the San Diego Metropolitan Area All Urban Consumer Price
Index (CPI).
The collectible, is the amount to be actually collected from the property owner and is equal to, or lower
than, the proposed assessment. The collectible is based on the budget, the reserve requirement for
operating and asset replacement activities, prior year’s savings and fund balance, and interest income.
Illustrated in Exhibit 2, are the proposed Assessments and Collectibles for FY 2019/20. The current
amounts in the exhibit are based upon estimated fund balances and EDUs at this time. The Collectibles per
EDU are set at the Assessment per EDU to allow for the collection of up to the maximum amount allowable.
Town Centre LMD: A downtown Property and Business Improvement District (PBID) replaced Town
Centre Landscape Maintenance District (LMD) in 2001. At that time, it was anticipated that the Town
Centre LMD would bedissolved. However, the City determined that there was some potential long-term
exposure for the City based on the remote possibility that the current PBID might not receive sufficient
support for re-approval in the future. If the PBID was not re-approved at some future date, and if the Town
Centre LMD was dissolved, there would no longer be a funding mechanism for downtown landscape
maintenance.
Based on this possibility, the Town Centre LMD remains open as a “contingent” district. This means that
theCity will set the maximum assessment amount for the District on an annual basis, even though property
owners will not be billed any sum on the tax roll. Should the PBID not be re-approved, the Town Centre
LMD will be in place to provide the necessary funding mechanism for downtown landscape maintenance.
The current PBID was renewed with the adoption of Council Resolution No. 2016-122, for a period of ten
(10) years. Given this, the Town Centre LMD will remain a “contingent” district.
Standard Notice Process for Annual Levy
The public hearing was noticed pursuant to Government Code 6061, which requires that a notice be
published in a newspaper of general circulation at least 10 days before the public hearing.
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DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found that potential conflicts exist; in
that members have property holdings within 500 feet of the Open Space Districts listed below by City
Council member. Consequently, pursuant to California Code ofRegulations Title 2, sections 18700 and
18702.2(a)(8), this item presents a disqualifying real property-related financial conflict of interest under
the Political Reform Act (Cal. Gov't Code § 87100, et seq.) for the members identified below:
Mayor Salas-For Open Space Districts No. 9, 10, and Towne Center Maintenance District, which are the
subject of Resolution B of this action.
Council Member McCann -For Open Space District No. 1, which the subject of Resolution D of this action,
For Open Space Districts No. 20 (Zone 7), which is the subject of Resolution C of this action.
Council Member Padilla -For Eastlake Maintenance District No. 1 (ELMD #1) Zone C, which is the subject of
Resolution E of this action.
Staff is not independently aware, and hasnot been informed by any City Council member, of any other fact
that may constitute a basis for a decision maker conflict of interest in this matter.
Staff has reviewed the property holdings of the City Council and has found that potential conflicts exist; in
that members have property holdings within 1,000 feet, but beyond 500 feet of the boundaries of the
property which is the subject of this action. Staff has determined that the decision would change the
parcel’s development potential, income-producingpotential, highest and best use, character, and/or
market value. Consequently, pursuant to California Code of Regulations Title 2, sections 18700 and
18702.2(a)(8), this item presents a disqualifying real property-related financial conflict of interest under
the Political Reform Act (Cal. Gov’t Code § 87100, est seq.) for the members identified below:
Mayor Salas: For Open Space District No. 20 (Zone 7), which is the subject of Resolution C of this action.
Staff is not independently aware, and has not been informed by any City Council member, of any other fact
that may constitute a basis for a decision maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
For Fiscal Year 2019/2020, the full cost of providing landscape maintenance services in the Open Space
Districts totals $3,665,997 and each district is financially self-sustaining. All landscape maintenance costs
are recovered through the OSD collectiblesand reserves of each Open Space District. Given this, there is no
direct impact to the General Fund.
ONGOING FISCAL IMPACT
There are no direct ongoing fiscal impacts to the General Fund.
ATTACHMENTS
1.City of Chula Vista Open Space Districts
2.Historical and Proposed FY 2019/2020 Assessments/Collectibles
3.Annual Open Space Districts Final Engineer’s Report
Staff Contact: David Bilby, MSBA, CPFO, Director of Finance/Treasurer
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RESOLUTION NO. 2019-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA LEVYING THE ASSESSMENTS AND
COLLECTIBLES FOR THE FISCAL YEAR 2019/2020FOR
OPEN SPACE DISTRICTS 2 THROUGH 7, 8, 11, 14, 15,
17,18, 20 (ZONES 1 THROUGH 6, 8, AND 9), 23, 24, 26, 31,
33, EASTLAKE MAINTENANCE DISTRICT NO 1 (ZONES A,
B, D, AND E), AND BAY BOULEVARD MAINTENANCE
DISTRICT
WHEREAS, prior to the adoption of this Resolution, the City Council caused the
formation of various districts under and pursuant to state law; and
WHEREAS, pursuant to Article 4, Chapter 1, part 2 of Division 15 of the California
Streets and Highways Code, also known as “Landscaping and Lighting Act of 1972” and
Chula Vista Municipal Code Chapter 17.07, Spicer Consulting Group, LLChas prepared
and filed, on behalf of and under the direction of the City Engineer, the Annual Open
Space Districts Engineer’s Report (Engineer’s Report) for all existing Open Space
Maintenance Districts in the City; and
WHEREAS, on May 7, 2019, Council approved the Engineer’s Report and set June
11, 2019as the date for the public hearing; and
WHEREAS, the proposed assessments for Fiscal Year 2019/2020are as follows:
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Assessment per EDUCollectible per EDU
ProposedProposedProjected
(5)
Open Space District or ZoneFY 18-19FY 19-20FY 18-19FY 19-20Variance ($)Variance (%)Revenue
2$62.31$64.40$62.31$64.40$2.093.36%$15,971.20
3$426.64$440.98$426.65$440.98$14.343.36%$56,004.46
4$450.62$465.76$450.63$465.77$15.143.36%$96,878.08
5$439.43$454.18$439.43$454.20$14.763.36%$55,409.96
6$217.32$224.62$217.32$224.62$7.303.36%$36,388.44
7$151.79$156.88$151.80$156.90$5.103.36%$15,688.00
8$693.51$716.81$693.51$716.82$23.303.36%$78,848.00
11$134.22$138.73$134.22$138.73$4.513.36%$183,267.88
14$431.44$445.94$431.45$445.94$14.503.36%$384,400.28
15$413.93$427.84$413.94$427.84$13.913.36%$24,386.88
17$198.13$204.78$198.14$204.80$6.663.36%$9,419.88
18$430.00$430.00$468.20$483.93$15.733.36%$187,480.00
20
Zone 1 -Desilting basin$72.34$74.77$72.34$74.77$2.433.36%$65,953.87
Zone 2 -Rice Canyon$5.48$5.66$5.48$5.66$0.183.36%$22,409.07
Zone 3 -H Street$7.81$8.08$7.82$8.08$0.263.36%$49,678.85
Zone 4 -Business Center$60.15$62.18$60.16$62.18$2.023.36%$161,820.60
Zone 5 -SPA I$439.67$454.45$439.68$454.45$14.773.36%$815,737.75
Zone 6 -SPA II$337.82$349.17$337.82$349.17$11.353.36%$200,144.24
Zone 8 -N Desilting Basin$48.06$49.68$48.06$49.68$1.613.36%$5,902.91
Zone 9 -Tel Cyn Channel$38.16$39.45$38.17$39.45$1.283.36%$1,972.77
23$460.00$460.00$535.32$553.31$17.993.36%$52,890.80
24$802.19$829.14$802.19$829.14$26.953.36%$33,165.60
26$629.59$650.74$629.60$650.75$21.153.36%$12,364.06
31$580.00$580.00$650.37$672.23$21.853.36%$199,520.00
(1)
33$0.00$0.00$1,589.50 $1,642.90 $53.413.36%$0.00
ELMD 1
(2)
Otay Lakes Rd
Zone A -Eastlake I$14.86$15.36$14.86$15.36$0.503.36%$133,648.95
Zone B -Eastlake Greens$24.35$25.17$24.35$25.17$0.823.36%$84,982.73
Zone D -Salt Creek I$268.94$277.99$268.95$277.99$9.043.36%$117,810.25
(3)
Zone E -Tel Cyn Channel $20.00$20.00$38.34$39.63$1.293.36%$13,360.60
(4)
Bay Boulevard $1,995.30 $1,995.30 $3,469.75 $3,586.33 $116.583.36%$12,749.97
Total Projected Revenues$3,128,256.08
(1)
OSD 33 was formed several years ago in anticipation of development. The project has not progressed and consequently there is no maintenance.
(2)
Zones A -D Share in the cost of Otay Lakes Road medians and off-site parkways. Collectible and projected revenue for Otay Lakes Road are reflected
in collectible and projected revenue for Zones A -D.
(3)
Portions of Eastlake I and Eastlake Greens are in this benefit Area.
(4)
Bay Boulevard rates are based on acres.
(5)
The Projected Revenue are preliminary figures based upon the prior year's EDU assignments and the Maximum Rates for Fiscal Year 2019-20
WHEREAS, the City Council of the City of ChulaVista held a public hearing on the
date and time set for such hearing; and
WHEREAS, all interested persons were afforded the opportunity to hear and be
heard; and
WHEREAS, the City Council considered all oral statements and written protests
made or filed by all interested persons.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, as to all Open Space and Maintenance Districts referenced in this Resolution, as
follows:
1.That it finds that written protests against the proposed assessment have not
been made by owners representing more than one-half of the area of land
to beassessed.
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2.That it confirms the diagram and assessment contained in the Engineer’s
Report
3.That it orders that the open space and maintenance facilities bemaintained.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista that
the adoption of this Resolution constitutes the levy of assessments and collectibles as
proposed in the Engineer’s Report for the 2019/2020Fiscal Year for Open Space Districts
2 through 7, 8, 11, 14, 15, 17, 18, 20 (Zones 1 through 6, 8 and 9), 23, 24, 26, 31 33,
Eastlake Maintenance District No 1 (Zones A, B, D, and E), and Bay Boulevard
MaintenanceDistrict.
Presented by:Approved as to form by:
David Bilby, MSBA, CPFOGlen R. Googins
Director of Finance/TreasurerCity Attorney
2019-06-11 Agenda PacketPage 534 of 891
RESOLUTION NO. 2019-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA LEVYING THE ASSESSMENTS AND
COLLECTIBLES FOR THE FISCAL YEAR 2019/2020FOR
OPEN SPACE DISTRICTS 9, 10 AND TOWN CENTRE
MAINTENANCE DISTRICT
WHEREAS, prior to the adoption of this Resolution, the City Council caused the
formation of various districts under and pursuant to state law; and
WHEREAS, pursuant to Article 4, Chapter 1, part 2 of Division 15 of the California
Streets and Highways Code, also known as “Landscaping and Lighting Act of 1972” and
Chula Vista Municipal Code Chapter 17.07, Spicer Consulting Group, LLChas prepared
and filed, on behalf of and under the direction of the City Engineer, the Annual Open
Space Districts Engineer’s Report (Engineer’s Report) for all existing Open Space
Maintenance Districts in the City; and
WHEREAS, on May 7, 2019, Council approved the Engineer’s Report and set June
11, 2019as the date for the public hearing; and
WHEREAS, the proposed assessments for Fiscal Year 2019/2020are as follows:
Assessment per EDUCollectible per EDU
ProposedProposedProjected Revenue
(2)
Open Space District or ZoneFY 18-19FY 19-20FY 18-19FY 19-20Variance ($)Variance (%)
9$196.54$203.14$196.54$203.15$6.603.36%$78,208.90
10$132.62$137.08$132.62$137.08$4.463.36%$90,029.70
(1)
Town Centre $0.00$0.00$0.12$0.13$0.00$0.00
Total Projected Revenues$168,238.60
(1)
Town Centre rates have been based on parcel square footage since FY 2001-02. However, a Downtown PBID replaced this District in 2001, but the
City determined that there was some potential long-term exposure for the City based on the remote potential that the current PBID might not receive
sufficient support for renewal processes.
(2)
The Projected Revenue are preliminary figures based upon the prior year's EDU assignments and the Maximum Rates for Fiscal Year 2019-20
WHEREAS, the City Council of the City of Chula Vista held a public hearing on the
date and time set for such hearing; and
WHEREAS, all interested persons were afforded the opportunity to hear and be
heard; and
WHEREAS, the City Council considered all oral statements and written protests
made or filed by all interested persons.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, as to all Open Space and Maintenance Districts referenced in this Resolution, as
follows:
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1.That it finds that written protests against the proposed assessment have not
been made by owners representing more than one-half of the area of land
to beassessed.
2.That it confirms the diagram and assessment contained in the Engineer’s
Report
3.That it orders that the open space and maintenance facilities bemaintained.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista that
the adoption of this Resolution constitutes the levy of assessments and collectibles as
proposed in the Engineer’s Report for the 2019/2020Fiscal Year for Open Space Districts
9, 10 and Town Centre MaintenanceDistrict.
Presented by:Approved as to form by:
David Bilby, MSBA, CPFOGlen R. Googins
Director of Finance/TreasurerCity Attorney
2019-06-11 Agenda PacketPage 536 of 891
RESOLUTION NO. 2019-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA LEVYING THE ASSESSMENTS AND
COLLECTIBLES FOR THE FISCAL YEAR 2019/2020FOR
OPEN SPACE DISTRICT 20 (ZONE 7)
WHEREAS, prior to the adoption of this Resolution, the City Council caused the
formation of various districts under and pursuant to state law; and
WHEREAS, pursuant to Article 4, Chapter 1, part 2 of Division 15 of the California
Streets and Highways Code, also known as “Landscaping and Lighting Act of 1972” and
Chula Vista Municipal Code Chapter 17.07, Spicer Consulting Group, LLChas prepared
and filed, on behalf of and under the direction of the City Engineer, the Annual Open
Space Districts Engineer’s Report (Engineer’s Report) for all existing Open Space
Maintenance Districts in the City; and
WHEREAS, on May 7, 2019, Council approved the Engineer’s Report and set June
11, 2019as the date for the public hearing; and
WHEREAS, the proposed assessments for Fiscal Year 2019/2020are as follows:
Assessment per EDUCollectible per EDU
ProposedProposedProjected
(1)
Open Space District or ZoneFY 18-19FY 19-20FY 18-19FY 19-20Variance ($)Variance (%)Revenue
OSD 20 Zone 7 -SPA III$208.52$215.53$208.52$215.53$7.013.36%$251,908.75
Total Projected Revenues$251,908.75
(1)
The Projected Revenue are preliminary figures based upon the prior year's EDU assignments and the Maximum Rates for Fiscal Year 2019-20.
WHEREAS, the City Council of the City of Chula Vista held a public hearing on the
date and time set for such hearing; and
WHEREAS, all interested persons were afforded the opportunity to hear and be
heard; and
WHEREAS, the City Council considered all oral statements and written protests
made or filed by all interested persons.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, as to all Open Space and Maintenance Districts referenced in this Resolution, as
follows:
1.That it finds that written protests against the proposed assessment have not
been made by owners representing more than one-half of the area of land
to beassessed.
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2.That it confirms the diagram and assessment contained in the Engineer’s
Report
3.That it orders that the open space andmaintenance facilities be
maintained.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista that
the adoption of this Resolution constitutes the levy of assessments and collectibles as
proposed in the Engineer’s Report for the 2019/2020Fiscal Year for Open Space District
20 (Zone 7).
Presented by:Approved as to form by:
David Bilby, MSBA, CPFOGlen R. Googins
Director of Finance/TreasurerCity Attorney
2019-06-11 Agenda PacketPage 538 of 891
RESOLUTION NO. 2019-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA LEVYING THE ASSESSMENTS AND
COLLECTIBLES FOR THE FISCAL YEAR 2019/2020FOR
OPEN SPACE DISTRICT 1
WHEREAS, prior to the adoption of this Resolution, the City Council causedthe
formation of various districts under and pursuant to state law; and
WHEREAS, pursuant to Article 4, Chapter 1, part 2 of Division 15 of the
California Streets and Highways Code, also known as “Landscaping and Lighting Act of
1972” and Chula Vista Municipal Code Chapter 17.07, Spicer Consulting Group, LLC
has prepared and filed, on behalf of and under the direction of the City Engineer, the
Annual Open Space Districts Engineer’s Report (Engineer’s Report) for all existing
Open Space Maintenance Districts in the City; and
WHEREAS, on May 7, 2019, Council approved the Engineer’s Report and set
June 11, 2019as the date for the public hearing; and
WHEREAS, the proposed assessments for Fiscal Year 2019/2020are as follows:
Assessment per EDUCollectible per EDU
ProposedProposed
(1)
Open Space District or ZoneFY 18-19FY 19-20FY 18-19FY 19-20Variance ($)Variance (%)Projected Revenue
1$134.32$138.84$134.33$138.84$4.513.36%$90,966.89
Total Projected Revenues$90,966.89
(1)
The Projected Revenue are preliminary figures based upon the prior year's EDU assignments and the Maximum Rates for Fiscal Year 2019-20.
WHEREAS, the City Council of the City of Chula Vista held a public hearing on
the date and time set for such hearing; and
WHEREAS, all interested persons were afforded the opportunity to hear and be
heard; and
WHEREAS, the City Council considered all oral statements and written protests
made or filed by all interested persons.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, as to all Open Space and Maintenance Districts referenced in this Resolution, as
follows:
1.That it finds that written protests againstthe proposed assessment have
not been made by owners representing more than one-half of the area of
land to beassessed.
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2.That it confirms the diagram and assessment contained in the Engineer’s
Report
3.That it orders that the open space and maintenance facilities be
maintained.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista that
the adoption of this Resolution constitutes the levy of assessments and collectibles as
proposed in the Engineer’s Report for the 2019/2020Fiscal Year for Open Space
District 1.
Presented by:Approved as to form by:
David Bilby, MSBA, CPFOGlen R. Googins
Director of Finance/TreasurerCity Attorney
2019-06-11 Agenda PacketPage 540 of 891
RESOLUTION NO. 2019-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA LEVYING THE ASSESSMENTS AND
COLLECTIBLES FOR THE FISCAL YEAR 2019/2020FOR
EASTLAKE MAINTENANCE DISTRICT NO. 1 (ZONE C)
WHEREAS, prior to the adoption of this Resolution, the City Council caused the
formation of various districts under and pursuant to state law; and
WHEREAS, pursuant to Article 4, Chapter 1, part 2 of Division 15 of the California
Streets and Highways Code, also known as “Landscaping and Lighting Act of 1972” and
Chula Vista Municipal Code Chapter 17.07, Spicer Consulting Group, LLChas prepared and
filed, on behalf of and under the direction of the City Engineer, the Annual Open Space
Districts Engineer’s Report (Engineer’s Report) for all existing Open Space Maintenance
Districts in the City; and
WHEREAS, on May 7, 2019, Council approved the Engineer’s Report and set June
11, 2019as the date for the public hearing; and
WHEREAS, the proposed assessments for Fiscal Year 2019/2020are as follows:
Assessment per EDUCollectible per EDU
ProposedProposedProjected
(1)
Open Space District or ZoneFY 18-19FY 19-20FY 18-19FY 19-20Variance ($)Variance (%)Revenue
ELMD No. 1 Zone C -Otay
Training Ctr$2.84$2.84$201.65$208.43$6.783.36%$26,626.79
Total Projected Revenues$26,626.79
(1)
The Projected Revenue are preliminary figures based upon the prior year's EDU assignments and the Maximum Rates for Fiscal Year 2019-20.
WHEREAS, the City Council of the City of Chula Vista held a public hearing on the
date and time set for such hearing; and
WHEREAS, all interested persons were afforded the opportunity to hear and be heard;
and
WHEREAS, the City Council considered all oral statements and written protests made
or filedby all interested persons.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, as to all Open Space and Maintenance Districts referenced in this Resolution, as
follows:
1.That it finds that written protests againstthe proposed assessment have not
been made by owners representing more than one-half of the area of land to
beassessed.
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2.That it confirms the diagram and assessment contained in the Engineer’s
Report
3.That it orders that the open space and maintenance facilities bemaintained.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista that
the adoption of this Resolution constitutes the levy of assessments and collectibles as
proposed in the Engineer’s Report for the 2019/2020Fiscal Year for Eastlake
Maintenance District No. 1 (Zone C).
Presented by:Approved as to form by:
David Bilby, MSBA, CPFOGlen R. Googins
Director of Finance/TreasurerCity Attorney
2019-06-11 Agenda PacketPage 542 of 891
June 11, 2019File ID: 19-0254
TITLE
RESOLUTION OF THE CHULA VISTA HOUSING AUTHORITY AUTHORIZING THE EXECUTION AND
DELIVERY OF ITS TAX-EXEMPT MULTIFAMILY HOUSING REVENUE NOTES AND ITS SUBORDINATE
CHULA VISTA HOUSING AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (ST. REGIS PARK
APARTMENTS), COLLECTIVELY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $21,400,000,
AND THE EXECUTION AND DELIVERY OF ITS TAXABLE MULTIFAMILY HOUSING REVENUE NOTES IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $8,000,000 FOR THE PURPOSE OF FINANCING THE
ACQUISITION AND REHABILITATION OF THE ST. REGIS PARK APARTMENTS MULTIFAMILY RENTAL
HOUSING PROJECT; APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF ANYAND ALL
DOCUMENTS NECESSARY TO EXECUTE AND DELIVER THE NOTES, COMPLETE THE TRANSACTION AND
IMPLEMENT THE RESOLUTION;AND RATIFYING AND APPROVING ANY ACTION HERETOFORE TAKEN IN
CONNECTION WITH THE NOTES
RECOMMENDED ACTION
Authority adopt the resolution.
SUMMARY
On March 26, 2019, the Chula Vista Housing Authority (CVHA or the “Authority”) adopted CVHA Resolution
No. 2019-001, approving the execution and delivery of tax-exempt multifamily housing revenue notes in an
aggregate principal amount not to exceed $21,400,000 for the purpose of financing the acquisition and
rehabilitation of the St. Regis Park apartments multifamily rental housing project; approved and authorized
the execution and delivery of any and all documents necessary to execute and deliverthe notes, complete
the transaction and implement theresolution, and ratifying and approving any action heretofore taken in
connection with the notes.
Subsequently, Chelsea Investment Corporation (CICor the “Developer”)notified the CVHA that it was
restructuring thebond financingfor this project. The restructuring is necessary to bring in Southern
California Housing Collaborative, a non-profit 501(C)(3) organization as a 21% member of CIC St. Regis
Park, LLC, leaving Chelsea affiliate as a 79% member. This ensuresthe transaction meets IRS guidelines
and avoids any potential tax implications. Additionally, a taxable series of notesin an amount not to exceed
$8,000,000 is required to meet the costs of the project. The original bond allocation from the California
Debt Limit Allocation Committee (CDLAC) remains unchanged at $21,400,000.
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ENVIRONMENTAL REVIEW
The Project qualifies for a Class 1 Categorical Exemption pursuant to Section 15301 Existing Facilities of
the California Environmental Quality Act State Guidelines because it involves the rehabilitation of existing
facilities which would not result in an expansion of the existing uses.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
The Housing Advisory Commission was not able to consider a recommendation due to lack of quorum.
DISCUSSION
On July 17, 2018, the City Council and the Authority adopted Resolution Nos. 2018-144 and 2018-006,
respectively, approving the use of multifamily housing revenue notes to finance the acquisition and
rehabilitation of existing affordable housing units at St. Regis Park Apartments, totaling 119 affordable
rental units for very low-and low-income families and onemanager’s unit (the “Project”) by Developer.
The Project is located in Southwest Chula Vista at 1025 Broadway.The rehabilitation would improve the
property and extend the term of the affordable rents for 55 years (currently scheduled to expire in 2052).
The City and Authority were advised on this matter by a financing team consisting of Stradling Yocca
Carlson & Rauth as special counsel and bond counsel (together, “Special Counsel”) andRoss Financial as
Financial Advisor.
OnMarch 26, 2019, the Authoritytook action by its Resolution No. 2019-001 authorizingthe execution of
any and all documents necessary toexecute and deliverthe notes and complete the transactionto fund the
Project. Since suchtime, the Developer requestedthat the Authorityapprove arevisedownership and
financing structure and authorize the execution and delivery of the tax-exempt multifamily housing
revenue notesand subordinate bondsfor the Project based upon award of $21,400,000 in bond allocation
from the California Debt Limit Allocation Committee (“CDLAC”)and taxable multifamily housing revenue
notes in an aggregate principal amount not to exceed $8,000,000. CDLAC approved thefinancing structure
and modifications on May 17, 2019.
Revised Ownership Structure
In Consultation with Special Tax Counsel, the Developerisrestructuring the ownership structurefor
Project. This restructuring is necessary in order to bring in Southern California Housing Collaborative, a
non-profit 501(C)(3) organization as a 21% member of CIC St. Regis Park, LLC, leaving Chelsea affiliate as a
79% member. Southern California Housing Collaborativewill also be admitted as a Special Limited Partner
with a .0090% interest. This ensures the transaction meets IRS guidelines regarding disaffiliation of the
seller and buyerto ensure an arm’s length transactionand avoids any potential tax implicationsrelated to
the tax-exempt notes and subordinate bonds.
Please refer to Table I below for the new Ownership Structure.
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Table I –Ownership Structure
OwnerOwner
DescriptionCurrent OwnerNewly Proposed Owners
InterestInterest
Managing00.05%Pacific Southwest 00.0010%Pacific Southwest Community
General PartnerCommunityDevelopment Corporation (PSCDC)
Development
Corporation
Administrative00.05%5.00%CIC St. Regis, LLC
Chelsea Investment
General Partner
Corporation(CIC), Sage Three LLC (79%)
manager
So Cal Housing Collaborative (21%)
Special Limited .0090%So Cal Housing Collaborative
Partner
Investor Limited 99.90%Edison Housing Capital 94.990%Raymond James
PartnerInvestment
Revised Financing Structure
The Project was awarded a maximum private activity bond allocation of $21,400,000 from CDLAC in March
2019. Since such time, the allocation of the bonds has been revised and a tax-exempt subordinate loanand
a taxable senior loanis required. The following is the estimated structure for the maximum $21.4 million
in tax-exempt obligations, along with a taxable series:
$12,800,000 to a Citibank construction-converting-to-permanent loan (Tax-Exempt Series B-1
Note);
$6,800,000 will be allocated to fully finance the Seller Carryback loan(Tax-Exempt Subordinate
Series B-4Bonds); and
$1,800,000 and $4,100,000 to a Citibank construction bridge loan for the amount of construction
loan proceeds that are needed in excess of the $12,800,000 construction-to-permanent loan (Tax-
Exempt Series B-2 and Taxable SeriesB-3 Notes, respectively).
The Taxable Series Note is the primary difference between the current financing approach being presented
and CVHA’s previous approval on March 26th.
The Developer’scurrent pro forma is included as Attachment 2. The Municipal Advisor’s Report is included
as Attachment 3.
Bond Structure
The Housing Authority is being asked to authorize the issuance of up to fourseries of notes and bonds
(Series 2019B-1 through B-4)to finance development costs. The Notes will be purchased in a private
placement byCitibank, N.A.or another affiliate. Citibank has committed to provide tax-exemptandtaxable
construction and permanent financing for the Project. The tax-exempt Seller Carryback bonds will be
subordinate to the other obligations and will be purchased by St. Regis Park, LP(Seller of theproperty) as a
carry back.
At this time, the Chula Vista Housing Authority is being asked to approve in substantial final form all
documents related to the execution and delivery of the notes and bonds. Noteand bond documents
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presented for the CVHA’s consideration have been prepared by Stradling Yocca Carlson & Rauth, serving as
SpecialCounseltothe CVHA.
These documents are listed below:
The Funding Loan Agreement describes the terms and conditions between the Issuer and the
Funding Lender for advancing funds and application of these for the purpose of funding a loan to
the Borrower (Attachment 4).
The Loan Agreement specifiesthe terms and conditions of the Loan financing for the project (see
Attachment 5).
The Bond Regulatory Agreement and Declaration of Restrictive Covenantsspecifies the regulations
for the use and operation of theProject (Attachment6).
The SubordinateIndenture describes the terms and conditions under which the Issuer will issue
theseries of bondssubordinate to the governmental lender notes described in the Funding Loan
Agreement (Attachment 7).
The SubordinateLoan Agreement provides the terms and conditions under which the proceeds of
the subordinatebonds will be advanced to the Borrower for the purpose of funding the subordinate
loanto the Borrower (Attachment 8).
The Subordinate Bond Purchase Agreement establishesthe terms of thesubordinate bond sale
(Attachment 9).
With the redemption of the outstanding Series 2000A and Series 2000B bonds for the Project, a
Termination of Regulatory Agreement and Declaration of Restrictive Covenants in connection with
that issuance is necessary and will be replaced with the associated Bond Regulatory Agreement for
the Multifamily Housing Revenue Notes (St. Regis Park Apartments) 2019 Series B-1 through B-4
(Attachment 10).
Financial Advisor’s Feasibility Analysis
Ross Financial is the CVHA’sFinancial Advisorfor this transaction. After evaluating the terms of the
proposed financing and the public benefits to be achieved, it is the Financial Advisor’s recommendation
that the CVHAproceed with execution and delivery of the notesandsubordinatebonds. The Financial
Advisor’s analysis and recommendation is included as Attachment 3.
Financial Disclosure
Government Code Section5852.1 requires that the governing body of a public body obtain and disclose
certain information about a financing, including conduit revenue obligations, prior to authorizing the
issuance of bonds with a term of greater than 13 months. Such information is to be based on good faith
estimates of the following information made available in a meeting open to the public.Attachment11,
Public Disclosures Relating to Conduit Revenue Obligations, satisfies this requirement.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the CVHAmembers and has found no property holdings within
1,000 feet of the boundaries of the property which is the subject of this action. Consequently, this item
does not present a disqualifying real property-related financial conflict of interest under California Code of
Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the Political Reform Act (Cal. Gov’t Code
§87100, et seq.).
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Staff is not independently aware, and has not been informed by any CVHAmember, of any other fact that
may constitute a basis for a decision-maker conflict of interest in this matter.”
CURRENT-YEAR FISCAL IMPACT
The Multifamily Housing Revenue BondProgram is self-supporting,with the borrower responsible for the
payment of all costs of issuance and other costs of the notesand subordinate bonds. The CVHAwill receive
compensation for its services in execution and delivery of the notesand subordinate bondsby charging an
origination fee equal to 20 basis points (0.20%) of the total original principal amount of the notesand
subordinate bonds, with a minimum fee of $15,000. The originationfee to be paid to the CVHAby the
Developeris estimated at $51,000 (.20% of $25.5 M), with the final amount determined at transaction
closing.The Developer is responsible for payment of all costs under the financing, including BondCounsel
and Financial Advisor Fees.
ONGOING FISCAL IMPACT
The Multifamily Housing Revenue Bond program is self-supporting. Staff costs associated with monitoring
compliance of the regulatory restrictions and administration of the outstanding notesand subordinate
bonds will be reimbursed from an annual administrative fee of $17,000 paid to the CVHAby the Developer.
The notesand subordinate bondswillnot constitute a debt of the City or financially obligate the Cityorthe
CVHA because security for the repayment of the notesand subordinate bondswill be limited to specific
private sources of the development. Neither the faith and credit northe taxing power of the City or the
CVHA will be pledged to the payment of the notesand subordinate bonds. The Developer is responsible
for payment of allcosts under the financing, including the CVHA’s annual administrative fee.
ATTACHMENTS
1.Locator Map
2.Revised Project Pro Forma(5/1/2019)
3.Financial Advisor’s Feasibility Analysis
Bond Loan Documents(Transaction Documents)
4.Funding Loan Agreement
5.Borrower Loan Agreement
6.Bond Regulatory Agreement and Declaration of Restrictive Covenants
7.Subordinate Indenture Agreement
8.Subordinate Loan Agreement
9.Subordinate Bond Purchase Agreement
10.Termination of Bond Regulatory Agreement (2000)
Other:
11.Public Disclosures Relating to Conduit Revenue Obligations
Staff Contact: Jose Dorado, Senior Management Analyst, Chula Vista Housing Authority
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Stradling Yocca Carlson & Rauth
Draft dated June __, 2019
SUBORDINATE LOAN AGREEMENT
among
CHULA VISTA HOUSING AUTHORITY,
as Issuer
U.S. BANK NATIONAL ASSOCIATION,
as Subordinate Trustee
and
ST. REGIS PARK CIC, LP, a California limited partnership,
as Borrower
Relating to
$_________________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(ST. REGIS PARK APARTMENTS)
SUBORDINATE 2019 SERIES B-4
Dated as of June 1, 2019
All of the right, title and interest of the Chula Vista Housing Authority (except for its
Unassigned Rights) in and to this Subordinate Loan Agreement are being assigned to U.S. Bank
National Association, as Subordinate Trustee, as security for the above-referenced bonds
pursuant to a certain Subordinate Indenture of Trust dated as of June 1, 2019.
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ....................................................................................................2
Section 1.1. Definitions ...............................................................................................2
Section 1.2. Interpretation ...........................................................................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS ........................3
Section 2.1. Representations, Warranties and Covenants of the Issuer ......................3
Section 2.2. Representations, Warranties and Covenants of the Borrower ................4
Section 2.3. Representations and Warranties of the Subordinate Trustee ..................8
Section 2.4. Tax Covenants of the Borrower ..............................................................9
Section 2.5. Enforcement of Subordinate Loan Documents .....................................10
ARTICLE III THE SUBORDINATE LOAN ..........................................................................10
Section 3.1. Conditions to Funding the Subordinate Loan .......................................10
Section 3.2. Terms of the Subordinate Loan .............................................................10
Section 3.3. Assignment to Subordinate Trustee ......................................................10
Section 3.4. Investment of Funds ..............................................................................11
Section 3.5. Damage; Destruction and Eminent Domain .........................................11
ARTICLE IV LOAN PAYMENTS .........................................................................................11
Section 4.1. Payments Under the Subordinate Note; Independent Obligation
of Borrower ...........................................................................................11
Section 4.2. Payment of Certain Fees and Expenses Under the Subordinate
Note .......................................................................................................12
Section 4.3. Prepayment of Subordinate Loan ..........................................................12
Section 4.4. ..........................................13
ARTICLE V SPECIAL COVENANTS OF BORROWER ...................................................13
Section 5.1. Performance of Obligations ..................................................................13
Section 5.2. Compliance With Applicable Laws ......................................................13
Section 5.3. Subordinate Indenture Provisions .........................................................13
Section 5.4. Participations in Subordinate Bonds .....................................................14
Section 5.5. Borrower to Maintain Its Existence ......................................................14
Section 5.6. Borrower to Remain Qualified in State and Appoint Agent .................14
Section 5.7. Sale or Other Transfer of Project ..........................................................14
Section 5.8. .............................................14
Section 5.9. Notice of Certain Events .......................................................................14
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TABLE OF CONTENTS
(continued)
Page
Section 5.10. Survival of Covenants ...........................................................................14
Section 5.11. Access to Project; Records ....................................................................14
Section 5.12. Damage, Destruction and Condemnation .............................................15
Section 5.13. Obligation of the Borrower to Acquire and Construct the Project .......15
ARTICLE VI INDEMNIFICATION .......................................................................................15
Section 6.1. Indemnification .....................................................................................15
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ...................................................18
Section 7.1. Events of Default...................................................................................18
Section 7.2. Remedies on Default .............................................................................18
Section 7.3. No Remedy Exclusive ...........................................................................19
Section 7.4. .................................19
Section 7.5. No Additional Waiver Implied by One Waiver ....................................19
ARTICLE VIII MISCELLANEOUS .........................................................................................20
Section 8.1. Notices...................................................................................................20
Section 8.2. Concerning Successors and Assigns .....................................................20
Section 8.3. Governing Law......................................................................................20
Section 8.4. Modifications in Writing .......................................................................20
Section 8.5. Further Assurances and Corrective Instruments ...................................21
Section 8.6. Captions ................................................................................................21
Section 8.7. Severability ...........................................................................................21
Section 8.8. Counterparts ..........................................................................................21
Section 8.9. Amounts Remaining in Subordinate Bond Fund or Other Funds .........21
Section 8.10. Effective Date and Term .......................................................................21
Section 8.11. Cross References ...................................................................................21
Section 8.12. Waiver of Personal Liability .................................................................21
Section 8.13. No Liability of Issuer ............................................................................22
Section 8.14. No Liability of Officers .........................................................................22
Section 8.15. Capacity of the Subordinate Trustee .....................................................23
Section 8.16. Reliance .................................................................................................23
EXHIBIT A FORM OF SUBORDINATE PROMISSORY NOTE
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SUBORDINATE LOAN AGREEMENT
THIS SUBORDINATE LOAN AGREEMENT Subordinate Loan Agreement
made and entered into June 1, 2019, by and among the CHULA VISTA HOUSING
AUTHORITY
public body corporate and politic is duly organized and existing under the Constitution and the
laws of the State of California (State), U.S. BANK NATIONAL ASSOCIATION, a
national banking association, organized and operating under the laws of the United States of
America (together with any successor trustees appointed under the Subordinate Indenture, the
Subordinate Trustee ST. REGIS PARK CIC, LP, a limited partnership duly organized
and existing under the laws of the State of California (together with its successors and assigns
Borrower;
W I T N E S S E T H:
WHEREAS, the Issuer is authorized by Chapter 1 of Part 2 of Division 24 of the
Act
financing, among other things, the acquisition, construction, rehabilitation and equipping of
multifamily rental housing and for the provision of capital improvements in connection therewith
and determined necessary thereto; and
WHEREAS, the Borrower has requested the assistance of the City in financing the
construction and development of a 118-ntal housing
Project
agreed to enter into a Regulatory Agreement and Declaration of Restrictive Covenants of even
Regulatory Agreement
Project; and
WHEREAS, the Issuer has determined to assist in the financing of the Project by issuing
its Chula Vista Housing Authority Multifamily Housing Revenue Bonds (St. Regis Park
Apartments), Subordinate 2019 Series B-4, in the original aggregate principal amount of
$________________ Subordinate BondsSubordinate Indenture of Trust,
dated as of June 1, 2019 Subordinate Indenture
Subordinate Trustee, and the Act, and making a subordinate loan to the Borrower in the amount
Subordinate LoanSubordinate
Subordinate Note
WHEREAS, in order to provide a portion of the funds necessary to finance the Project,
pursuant to and in accordance with the Act, the Issuer has also entered into a Funding Loan
Senior Funding
LenderSenior Fiscal Agent
Senior Funding Loan Agreement
Lender will (i) Senior Funding Loan
(ii) apply the proceeds of Senior Borrower Loan
tSenior Loans
Loan Agreement, by and between the Issuer and Senior
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Borrower Loan Agreement Senior
Loan Agreements
WHEREAS, pursuant to the Senior Funding Loan Agreement, the Issuer executed and
delivered that certain Governmental Lender Multifamily Note dated June __, 2019 in the aggregate
principal amount of $________ and that certain Governmental Lender Multifamily Note dated June
Senior Governmental
NotesSenior Obligations),
and, pursuant to the Senior Borrower Loan Agreement, the Borrower executed and delivered that
certain Borrower Multifamily Note dated June __, 2019 in the aggregate principal amount of
$__________ and that certain Borrower Multifamily Note dated June __, 2019 in the aggregate
principal amount of $__________ (collectively, the
Senior Funding Loan Agreement, the Senior Borrower Loan Agreement, the Senior Governmental
Notes and the Regulatory Agreement, thSenior Loan Documents
WHEREASSubordinate Loan, the Subordinate
Note and this Subordinate Loan Agreement are subordinate in all respects to all payment
obligations under Senior Loan Documents;
NOW, THEREFORE, for and in consideration of the mutual covenants and
representations hereinafter contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
defined in the Subordinate Indenture shall have the same meanings for the purposes of this
Subordinate Loan Agreement. In addition to the words and phrases defined in the Subordinate
Indenture and elsewhere herein, the following words and phrases shall have the following
meanings:
Event of Defaultmeans any of those events specified in and defined by the applicable
provisions of Article VII hereof to constitute an event of default.
Subordinate Loan Agreementmeans this Subordinate Loan Agreement, together with
any amendments hereto.
Taxes means all taxes, water rents, sewer rents, assessments and other governmental or
municipal or public or private dues, fees, charges and levies and any liens (including federal tax
liens) which are or may be levied, imposed or assessed upon the Project or any part thereof, or
upon any leases pertaining thereto, or upon the rents, issues, income or profits thereof, whether
any or all of the aforementioned be levied directly or indirectly or as excise taxes or as income
taxes.
Section 1.2. Interpretation. Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter genders. Words importing the
singular number shall include the plural number and vice versa unless the context shall otherwise
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indicate. Words importing persons include firms, partnerships, limited liability companies, joint
ventures, associations and corporations. References to Articles, Sections and other subdivisions
of this Subordinate Loan Agreement are the Articles, sections and other subdivisions of this
Subordinate Loan Agreement as originally executed.
refer to this Subordinate
execution of this Subordinate Loan Agreement
execution of this Subordinate Loan Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. Representations, Warranties and Covenants of the Issuer. The Issuer
makes the following representations, warranties and covenants:
(a) The Issuer is a public body, corporate and politic, organized and existing under
the laws of the State.
(b) The Issuer has all necessary power and authority to issue the Subordinate Bonds
and to execute and deliver this Subordinate Loan Agreement, the Subordinate Indenture, and the
other Subordinate Loan Documents to which it is a party, and to perform its duties and discharge
its obligations hereunder and thereunder.
(c) The Issuer has taken all action on its part for the issuance of the Subordinate
Bonds and for the execution and delivery thereof.
(d) Each of the Subordinate Loan Documents to which the Issuer is a party has been
duly validly authorized, executed and delivered by the Issuer and, assuming due authorization,
execution and delivery by the other parties thereto, constitutes the legal, valid and binding
obligation of the Issuer enforceable against the Issuer in accordance with its respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting
the rights of creditors generally and general equitable principles.
(e) To the best knowledge of the Issuer, the Issuer has complied with the provisions
of the Act and the laws of the State which are prerequisites to the consummation of the
transactions on the part of the Issuer described or contemplated in the Subordinate Loan
Documents. To the best knowledge of the Issuer, the execution and delivery of the Subordinate
Bonds and the Subordinate Loan Documents to which the Issuer is a party, the consummation of
the transactions on the part of the Issuer contemplated thereby and the fulfillment of or
compliance with the terms and conditions thereof do not conflict with or result in the breach of
any of the terms, conditions or provisions of any agreement or instrument or judgment, order or
decree to which the Issuer is now a party or by which it is bound, nor do they constitute a default
under any of the foregoing or result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature upon any property or assets of the Issuer under the terms of any
instrument or agreement.
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(f) To the best knowledge of the Issuer, no authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory body is required for
the due execution and delivery by the Issuer of, and performance by the Issuer of its obligations
under, any of the Subordinate Loan Documents, which has not been obtained.
(g) To the best knowledge of the Issuer, there is no action, suit, proceeding, inquiry or
investigation pending or threatened against the Issuer by or before any court, governmental
agency or public board or body, norany basis therefor, which
(i) affects or questions the existence or the territorial jurisdiction of the Issuer or the title to office
of any member of the governing body of the Issuer; (ii) affects or seeks to prohibit, restrain or
enjoin the execution and delivery of any Subordinate Loan Documents or the issuance, execution
or delivery of the Subordinate Bonds, as applicable; (iii) affects or questions the validity or
enforceability of the Subordinate Bonds; or (iv) questions the power or authority of the Issuer to
perform its obligations under the Subordinate Bonds or to carry out the transactions
contemplated by the Subordinate Bonds and the Subordinate Loan Documents.
It is expressly acknowledged that the Issuer makes no representation as to the financial
position or business condition of the Borrower and does not represent or warrant as to any of the
statements, materials (financial or otherwise), representations or certifications furnished or to be
made and furnished by the Borrower in connection with the issuance, execution and delivery of
the Subordinate Bonds, as applicable, or as to the correctness, completeness or accuracy of such
statements.
Section 2.2. Representations, Warranties and Covenants of the Borrower. The
Borrower makes the following representations, warranties and covenants, all of which, together
with the other representations and agreements of the Borrower contained in this Subordinate
Loan Agreement, are relied upon by the Issuer and the Subordinate Trustee and serve as a basis
for the undertakings of the Issuer and the Subordinate Trustee contained in this Subordinate Loan
Agreement:
(a) The Borrower is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of California and duly qualified to conduct its business under
the laws of the State and in every other state in which the nature of its business requires such
qualification, has full legal right, power and authority to enter into this Subordinate Loan
Agreement and the other Subordinate Loan Documents, and to carry out and consummate all
transactions contemplated hereby and by the other Subordinate Loan Documents, and by proper
partnership action has duly authorized the execution, delivery and performance of this
Subordinate Loan Agreement and the other Subordinate Loan Documents. All general partners,
if any, of the Borrower are duly incorporated, organized and in good standing under the laws of
their respective states of organization and are duly qualified to transact business in the State.
(b) The Borrower has the legal right, power and authority to (i) own its properties and
assets, including, but not limited to, the Project, (ii) to carry on its business as now being
conducted and the Borrower contemplates it to be conducted with respect to the Project and
(iii) execute and deliver, carry out its obligations under, and close the transactions provided for
in, the Subordinate Loan Documents to which it is a party.
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(c) The officers of the Borrower executing this Subordinate Loan Agreement and the
other Subordinate Loan Documents are duly and properly in office and fully authorized to
execute the same. This Subordinate Loan Agreement and the other Subordinate Loan
Documents have been duly authorized, executed and delivered by the Borrower and, assuming
due authorization, execution and delivery by the other parties thereto, will constitute the legal,
valid and binding agreements of the Borrower enforceable against the Borrower; except in each
case as enforcement may be limited by bankruptcy, insolvency or other laws affecting the
whether enforcement is sought in a proceeding at law or in equity and by public policy.
(d) No consent or approval of any trustee or holder of any indebtedness of the
Borrower, and to the best knowledge of the Borrower and with respect to the Borrower, no
consent, permission, authorization, order or license of, or filing or registration with, any
governmental authority (except with respect to any state sec
necessary in connection with the execution and delivery of this Subordinate Loan Agreement or
the other Subordinate Loan Documents or the consummation of any transaction herein or therein
contemplated, or the fulfillment of or compliance with the terms and conditions hereof or
thereof, except as have been obtained or made and as are in full force and effect.
(e) The execution and delivery of this Subordinate Loan Agreement and the other
Subordinate Loan Documents, the consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms and conditions hereof and
thereof, will not conflict with or constitute a violation or breach of or default (with due notice or
the passage of time or both) under (i) the organizational or other governing documents of the
Borrower or to the best knowledge of the Borrower and with respect to the Borrower, (ii) any
applicable law or administrative rule or regulation, or any applicable court or administrative
decree or order, (iii) any mortgage, deed of trust, Subordinate Loan Agreement, lease, contract or
other agreement or instrument to which the Borrower is a party or by which it or its properties or
assets are otherwise subject or bound, or (iv), except as provided in the Subordinate Loan
Documents, result in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of the Borrower, which conflict, violation, breach,
default, lien, charge or encumbrance might have consequences that would materially and
adversely affect the consummation of the transactions contemplated by this Subordinate Loan
Agreement or the Subordinate Loan Documents, or the financial condition, assets, properties or
operations of the Borrower.
(f) There is no action, suit, proceeding, inquiry or investigation, before or by any
court or federal, state, municipal or other governmental authority, pending, or to the knowledge
of the Borrower, after reasonable investigation, threatened, against or affecting the Borrower or
the assets, properties or operations of the Borrower which, if determined adversely to the
Borrower or its interests, would have a material adverse effect upon the consummation of the
transactions contemplated by, or the validity of, this Subordinate Loan Agreement or the other
Subordinate Loan Documents or upon the financial condition, assets, properties or operations of
the Borrower, and the Borrower is not in default (and no event has occurred and is continuing
which with the giving of notice or the passage of time or both could constitute a default) with
respect to any order or decree of any court or any order, regulation or demand of any federal,
state, municipal or other governmental authority, which default might have consequences that
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would materially and adversely affect the consummation of the transactions contemplated by this
Subordinate Loan Agreement or the other Subordinate Loan Documents or the financial
condition, assets, properties or operations of the Borrower. All tax returns (federal, state and
local) required to be filed by or on behalf of the Borrower have been filed, and all taxes shown
thereon to be due, including interest and penalties, except such, if any, as are being actively
contested by the Borrower in good faith, have been paid or adequate reserves have been made for
the payment thereof which reserves, if any, are reflected in the audited financial statements
described therein. The Borrower enjoys the peaceful and undisturbed possession of all of the
Property.
(g) The Project and the operation of the Project (in the manner contemplated by the
Subordinate Loan Documents) conform with the requirements of the Act as well as all applicable
zoning, planning, building and environmental laws, ordinances and regulations of governmental
authorities having jurisdiction over the Project.
(h) The Borrower has filed or caused to be filed all federal, state and local tax returns
which are required to be filed or has obtained appropriate extensions therefor, and has paid or
caused to be paid all taxes as shown on said returns or on any assessment received by it, to the
extent that such taxes have become due.
(i) The Borrower is not in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or instrument to
which it is a party which default would materially adversely affect the transactions contemplated
by the Subordinate Loan Documents or the operations of the Borrower or the enforceability of
the Subordinate Loan Documents to which the Borrower is a party or the ability of the Borrower
to perform all obligations thereunder.
(j) The Borrower agrees to pay all costs of maintenance and repair, all Taxes and
assessments, insurance premiums (including public liability insurance and insurance against
damage to or destruction of the Project) concerning or in any way related to the Project, or any
part thereof, and any expenses or renewals thereof, and any other governmental charges and
impositions whatsoever, foreseen or unforeseen, and all utility and other charges and assessments
concerning or in any way related to the Project.
(k) If the Borrower is a partnership, all of the partnership interests in the Borrower
are validly issued and are fully registered, if required, with the applicable governmental
there are no outstanding options or rights to purchase or acquire those interests. If the Borrower
is a limited liability company, all of the ownership interests in the Borrower are validly issued
and are fully registered, if required, with the applicable governmental authorities and/or
agencies, and there are no outstanding options or rights to purchase or acquire those interests.
Nothing in this Subordinate Loan Agreement shall prevent the Borrower from issuing additional
partnership interests or ownership interests if such units are issued in accordance with all
applicable securities laws, provided such issuance is in accordance with the Borrow
Partnership Agreement.
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(l) The representations and warranties of the Borrower contained in the Regulatory
Agreement are true and accurate.
(m) The information, statements or reports furnished in writing to the Issuer by the
Borrower in connection with this Subordinate Loan Agreement or the consummation of the
transactions contemplated hereby do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; and the representations and
warranties of the Borrower and the statements, information and descriptions contained in the
Closing Date, are true and correct in all material
respects, do not contain any untrue statement of a material fact, and do not omit to state a
material fact necessary to make the representations, warranties, statements, information and
descriptions contained therein, in the light of the circumstances under which they were made, not
misleading; and any estimates or the assumptions contained in any certificate of the Borrower
delivered as of the Closing Date are reasonable.
(n) The Borrower acknowledges that (i) it understands the nature and structure of the
transactions relating to the financing of the Project, (ii) it is familiar with the provisions of all of
the documents and instruments relating to the financing, (iii) it understands the risks inherent in
such transactions, including without limitation the risk of loss of the Project, and (iv) it has not
relied on the Issuer or the Subordinate Trustee for any guidance or expertise in analyzing the
financial or other consequences of the transactions contemplated by the Subordinate Loan
Documents or otherwise relied on the Issuer or the Subordinate Trustee in any manner.
(o) The Borrower covenants to pay all third-party fees of the financing, including but
not limited to the following:
(i) All taxes and assessments of any type or character charged to the Issuer or
to the Subordinate Trustee affecting the amount available to the Issuer or the Subordinate
Trustee from payments to be received hereunder or in any way arising due to the
transactions contemplated hereby (including taxes and assessments assessed or levied by
any public agency or governmental authority of whatsoever character having power to
levy taxes or assessments) but excluding franchise taxes based upon the capital and/or
income of the Subordinate Trustee and taxes based upon or measured by the net income
of the Subordinate Trustee or the Issuer; provided, however, that the Borrower shall have
the right to protest any such taxes or assessments and to require the Issuer or the
Subordinate Trusteees or
assessments levied upon them and that the Borrower shall have the right to withhold
payment of any such taxes or assessments pending disposition of any such protest or
contest unless such withholding, protest or contest would adversely affect the rights or
interests of the Issuer or the Subordinate Trustee;
(ii) All fees, charges and expenses of the Subordinate Trustee for services
rendered under the Subordinate Indenture, as and when the same become due and
payable;
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(iii) The portion of the annual fee of the Issuer attributable to the Subordinate
Bonds (in addition to the fee attributable to the Senior Obligations, which shall be
payable in accordance with and pursuant to the Senior Loan Documents), payable as set
forth in Section 19 of the Regulatory Agreement, and the fees and expenses of the Issuer
or any agents, attorneys, accountants, consultants selected by the Issuer to act on its
behalf in connection with this Subordinate Loan Agreement, the Regulatory Agreement
or the Subordinate Loan Documents, including, without limitation, any and all expenses
incurred in connection with the authorization, issuance and delivery of the Subordinate
Bonds, as applicable, or in connection with any litigation which may at any time be
instituted involving this Subordinate Loan Agreement, the Regulatory Agreement, or the
Subordinate Loan Documents or any of the other documents contemplated thereby, or in
connection with the reasonable supervision or inspection of the Borrower, its properties,
assets or operations or otherwise in connection with the administration of the foregoing
(except to the extent any such fees or expenses are payable as a result of the gross
negligence or willful misconduct of the Issuer); and
(iv) These obligations and those in Section 6.1 shall remain valid and in effect
notwithstanding repayment of the loan hereunder or termination of this Subordinate Loan
Agreement or the Subordinate Indenture.
Section 2.3. Representations and Warranties of the Subordinate Trustee. The
Subordinate Trustee makes the following representations and warranties:
(a) The Subordinate Trustee is a national banking association, duly organized and
existing under the laws of the United States of America. The Subordinate Trustee is duly
authorized to act as a fiduciary and to execute the trust created by the Subordinate Indenture, and
meets the qualifications to act as Subordinate Trustee under the Subordinate Indenture.
(b) The Subordinate Trustee has complied with the provisions of law which are
prerequisite to the consummation of, and has all necessary power (including trust powers) and
authority (i) to execute and deliver this Subordinate Loan Agreement and the other Subordinate
Loan Documents to which it is a party, (ii) to perform its obligations under this Subordinate
Loan Agreement and the other Subordinate Loan Documents to which it is a party, and (iii) to
consummate the transactions contemplated by this Subordinate Loan Agreement and the other
Subordinate Loan Documents to which it is a party.
(c) The Subordinate Trustee has duly authorized (i) the execution and delivery of this
Subordinate Loan Agreement and the other Subordinate Loan Documents to which it is a party,
(ii) the performance by the Subordinate Trustee of its obligations under this Subordinate Loan
Agreement and the other Subordinate Loan Documents to which it is a party, and (iii) the actions
of the Subordinate Trustee contemplated by this Subordinate Loan Agreement and the other
Subordinate Loan Documents to which it is a party.
(d) Each of the Subordinate Loan Documents to which the Subordinate Trustee is a
party has been duly executed and delivered by the Subordinate Trustee and, assuming due
authorization, execution and delivery by the other parties thereto, constitutes a valid and binding
obligation of the Subordinate Trustee, enforceable against the Subordinate Trustee in accordance
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with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of creditors generally and
by general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(e) No approval, permit, consent, authorization or order of any court, governmental
agency or public board or body not already obtained is required to be obtained by the
Subordinate Trustee as a prerequisite to (i) the execution and delivery of this Subordinate Loan
Agreement and the other Subordinate Loan Documents to which the Subordinate Trustee is a
party (ii) the authentication or delivery of the Subordinate Bonds, (iii) the performance by the
Subordinate Trustee of its obligations under this Subordinate Loan Agreement and the other
Subordinate Loan Documents to which it is a party, or (iv) the consummation of the transactions
contemplated by this Subordinate Loan Agreement and the other Subordinate Loan Documents
to which the Subordinate Trustee is a party. The Subordinate Trustee makes no representation or
warranty relating to compliance with any federal or state securities laws.
Section 2.4. Tax Covenants of the Borrower. The Borrower covenants and agrees
that:
(a) It will at all times comply with the terms of the Tax Certificate and the Regulatory
Agreement;
(b) It will not take, or permit to be taken on its behalf, any action which would cause
the interest payable on the Subordinate Bonds to be included in gross income, for federal income
tax purposes, and will take such action as may be necessary in the opinion of Bond Counsel to
continue such exclusion from gross income, including, without limitation, the preparation and
filing of all statements required to be filed by it in order to maintain the exclusion (including, but
not limited to, the filing of all reports and certifications required by the Regulatory Agreement);
(c) No changes will be made to the Project, no actions will be taken by the Borrower
and the Borrower will not omit to take any actions, which will in any way adversely affect the
tax-exempt status of the Subordinate Bonds;
(d) It will comply with the requirements of Section 148 of the Code and the
Regulations issued thereunder throughout the term of the Subordinate Bonds and will not make
any use of the proceeds of the Subordinate Bonds, or of any other funds which may be deemed to
be proceeds of the Subordinate Bonds under the Code and the related regulations of the United
States Treasury, which would cause the Subordinate Bond
meaning of Section 148 of the Code;
(e) If the Borrower becomes aware of any situation, event or condition which would,
to the best of its knowledge, result in the interest on the Subordinate Bonds becoming includable
in gross income for purposes of federal income tax purposes, it will promptly give written notice
of such circumstance, event or condition to the Issuer and the Subordinate Trustee.
In the event of a conflict between the terms of this Section 2.4 and the Tax Certificate,
the terms of the Tax Certificate shall control.
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Section 2.5. Enforcement of Subordinate Loan Documents. The Subordinate Trustee
may enforce and take all reasonable steps, actions and the proceedings necessary for the
enforcement of all terms, covenants and conditions of the Subordinate Loan Documents as and to
the extent set forth therein.
ARTICLE III
THE SUBORDINATE LOAN
Section 3.1. Conditions to Funding the Subordinate Loan. The Subordinate Loan
shall be deemed funded upon delivery of the Subordinate Note (representing the purchase price
of the Subordinate Bonds) and satisfaction of the following conditions:
(a) The Borrower shall have executed and delivered to the Issuer the Subordinate
Note in the form attached hereto as Exhibit A, with only such changes therein as shall be
approved in writing by the Issuer, and the Issuer shall have endorsed the Subordinate Note to the
Subordinate Trustee;
(b) The Subordinate Mortgage shall have been executed and delivered by the
Borrower and delivered to the title company for recording in the appropriate office for officially
recording real estate documents in the jurisdiction in which the Project is located (the
(c) The Regulatory Agreement shall have been executed and delivered by the parties
and the Subordinate Trustee shall have received evidence satisfactory to it of such delivery;
(d) All other Subordinate Loan Documents not listed above shall have been executed
and delivered by all parties thereto and delivered to the Subordinate Trustee; and
(e) The Borrower shall have delivered to the Subordinate Trustee and the Issuer an
opinion of its counsel or other counsel satisfactory to the Subordinate Trustee and the Issuer.
Section 3.2. Terms of the Subordinate Loan. The Subordinate Loan shall (i) be
evidenced by the Subordinate Note; (ii) be secured by the Subordinate Mortgage; (iii) be in the
original aggregate principal amount of $________________; (iv) bear interest as provided in the
Subordinate Note; (v) provide for payments on the Subordinate Bonds from available Revenues,
if any, in accordance with the Subordinate Note; and (vi) be subject to optional and mandatory
prepayment at the times, in the manner and on the terms, and have such other terms and
provisions, as provided herein and in the Subordinate Note.
Section 3.3. Assignment to Subordinate Trustee. The parties hereto acknowledge, and
the Borrower consents to, the assignment by the Issuer to the Subordinate Trustee pursuant to the
Subordinate Indenture Subordinate Loan
Agreement (excluding the Unassigned Rights), the Subordinate Loan, the Subordinate Mortgage
and the Revenues as security for the payment of the principal of, and interest on the Subordinate
Bonds.
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Section 3.4. Investment of Funds. Except as otherwise provided in the Subordinate
Indenture, any money held as a part of any fund or account established under the Subordinate
Indenture shall be invested or reinvested by the Subordinate Trustee in Investment Securities in
accordance with the Subordinate Indenture.
Section 3.5. Damage; Destruction and Eminent Domain. If, prior to payment in full
of the Subordinate Bonds, the Project or any portion thereof is destroyed or damaged in whole or
in part by fire or other casualty, or title to, or the temporary use of, the Project or any portion
thereof shall have been taken by the exercise of the power of eminent domain, and the Issuer, the
Borrower, or the Subordinate Trustee receives Net Proceeds from insurance or any
condemnation award in connection therewith, such Net Proceeds shall be utilized, after
satisfaction of all payment requirements of the Senior Loan Documents, as provided in the
Subordinate Loan Documents and the Subordinate Indenture.
ARTICLE IV
LOAN PAYMENTS
Section 4.1. Payments Under the Subordinate Note; Independent Obligation of
Borrower.
(a) The Borrower agrees to repay the Subordinate Loan as provided in the
Subordinate Note, and in all instances at the times and in the amounts necessary to enable the
Subordinate Trustee, on behalf of the Issuer, to pay all amounts payable with respect to the
Subordinate Bonds, when due, whether at maturity or upon redemption, acceleration or
otherwise. The obligation of the Borrower to make the payments set forth in this Article IV shall
be an independent and separate obligation of the Borrower from its obligation to make payments
under the Subordinate Note, provided that in all events payments made by the Borrower under
and pursuant to the Subordinate
hereunder on a dollar-for-dollar basis. If for any reason the Subordinate Note or any provision of
the Subordinate Note shall be held invalid or unenforceable against the Borrower by any court of
competent jurisdiction, the Subordinate Note or such provision of the Subordinate Note shall be
deemed to be the obligation of the Borrower pursuant to this Subordinate Loan Agreement to the
full extent permitted by law and such holding shall not invalidate or render unenforceable any of
the provisions of this Article IV and shall not serve to discharge any of the
obligations hereunder or eliminate the credit against such obligations to the extent of payments
made under the Subordinate Note.
(b) The obligations of the Borrower to repay the Subordinate Loan, to perform all of
its obligations under the Subordinate Loan Documents, to provide indemnification pursuant to
Section 6.1 hereof, to pay costs, expenses and charges pursuant to Section 4.2 hereof and to
make any and all other payments required by this Subordinate Loan Agreement, the Subordinate
Indenture or any other documents contemplated by this Subordinate Loan Agreement or by the
Subordinate Loan Documents shall, subject to the limitations set forth in Section 5.1 hereof, be
absolute and unconditional and shall not be subject to diminution by setoff, recoupment,
counterclaim, abatement or otherwise.
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(c) Notwithstanding anything contained in any other provision of this Subordinate
Loan Agreement to the contrary (but subject to the provisions of Section 5.1 hereof and the
Intercreditor Agreement), the following obligations of the Borrower shall be and remain the joint
partners, payable from and enforceable against any and all income, assets and properties of the
BoSubordinate Trustee under Section
4.2 of this Subordinate
Subordinate to pay legal fees and such
expenses under Section 7.4 of this Subordinate Loan Agreement.
Section 4.2. Payment of Certain Fees and Expenses Under the Subordinate Note.
(a) The Borrower shall pay (or cause to be paid by the Subordinate Trustee), in
consideration of the funding of the Subordinate Loan, the following fees, expenses and other
money payable in connection with the Subordinate Loan:
(i) On or prior to the Closing Date, to the Issuer, an initial financing fee
attributable to the Subordinate Bonds (in addition to the fee attributable to the Senior
Obligations, which shall be payable in accordance with and pursuant to the Senior Loan
Documents) in an amount equal to $_____________, together with all third-party and
out-of-pocket expenses of the Issuer (including but not limited to the fees and expenses of
counsel to the Issuer) in connection with the Subordinate Loan and the issuance of the
Subordinate Bonds.
(ii) All other fees and expenses of the Subordinate Trustee and the Issuer
described in Sections 2.2(o)(ii) and 2.2(o)(iii) hereof.
Section 4.3. Prepayment of Subordinate Loan. Subject to the terms and conditions of
the Subordination Agreement (defined in the Subordinate Indenture), the Borrower shall have the
option to prepay the Subordinate Loan in full or in part prior to the payment and discharge of all
the outstanding Subordinate Bonds on any Business Day in accordance with the provisions of the
Subordinate Indenture, this Subordinate Loan Agreement and the Subordinate Note, without the
payment of any premium or fee. The Borrower shall be required to prepay the Subordinate Loan
in each case that Subordinate Bonds are required to be redeemed in accordance with the terms
and conditions set forth in the Subordinate Indenture.
The Subordinate Bonds are subject to redemption in accordance with the terms and
conditions set forth in the Subordinate Indenture. In connection with any prepayment, whether
optional or mandatory, in addition to all other payments required under the Subordinate Note or
the Subordinate Indenture, the Borrower shall pay an amount sufficient to pay the redemption
price of the Subordinate Bonds to be redeemed, including principal and interest, and further
including any interest to accrue with respect to the Subordinate Loan and such Subordinate
Bonds between the prepayment date and the redemption date, together with a sum sufficient to
pay all fees, costs and expenses in connection with such redemption and, in the case of
redemption in whole, to pay all other amounts payable under this Subordinate Loan Agreement
and the Subordinate Indenture. The Borrower shall provide notice of the prepayment to the
Issuer, and the Subordinate Trustee in writing ten (10) days, or such shorter time as is possible in
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the case of mandatory prepayments, prior to the date on which the Borrower will make the
prepayment. Each such notice shall state, to the extent such information is available, (a) the
amount to be prepaid, and (b) the date on which the prepayment will be made by the Borrower.
Section 4.4. Bor. In the event of any
redemption, the Borrower will timely pay, to the Subordinate Trustee an amount equal to the
principal amount of such Subordinate Bonds or portions thereof called for redemption, together
with interest accrued to the redemption date. In addition, the Borrower will timely pay all fees,
costs and expenses associated with any redemption of Subordinate Bonds.
ARTICLE V
SPECIAL COVENANTS OF BORROWER
Section 5.1. Performance of Obligations. The Borrower shall keep and faithfully
perform all of its covenants and undertakings contained herein and in the Subordinate Loan
Documents, including, without limitation, its obligations to make all payments set forth herein
and therein in the amounts, at the times and in the manner set forth herein and therein.
Except as otherwise provided herein or in the Subordinate Loan Documents, the
obligations of the Borrower under this Subordinate Loan Agreement are non-recourse liabilities
of the Borrower and its partners. However, nothing in this Section 5.1 shall limit the right of the
Issuer or the Subordinate Trustee to proceed against the Borrower to recover any fees owing to
any of them or any actual out-of-pocket expenses (including but not limited to actual out-of-
enforcement of any rights under this Subordinate Loan Agreement or the other Subordinate Loan
Documents. In any action or proceeding brought with respect to the Subordinate Loan or the
Subordinate Bonds, no deficiency or other money judgment shall be enforced against the
Borrower or any partner of the Borrower or any successor or assign of the Borrower, and any
judgment obtained shall be enforced only against the Project and other property of the Borrower
encumbered by the Subordinate Loan Documents and not against the Borrower or any partner of
the Borrower or any successor or assign of the Borrower.
Section 5.2. Compliance With Applicable Laws. All work performed in connection
with the Project shall be performed in strict compliance with all applicable federal, state, county
and municipal laws, ordinances, rules and regulations now in force or that may be enacted
hereafter.
Section 5.3. Subordinate Indenture Provisions. The execution of this Subordinate
Loan Agreement shall constitute conclusive evidence of approval of the Subordinate Indenture
by the Borrower. Whenever the Subordinate Indenture by its terms imposes a duty or obligation
upon the Borrower, such duty or obligation shall be binding upon the Borrower to the same
extent as if the Borrower were an express party to the Subordinate Indenture, and the Borrower
shall carry out and perform all of its obligations under the Subordinate Indenture as fully as if the
Borrower were a party to the Subordinate Indenture.
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Section 5.4. Participations in Subordinate Bonds. The Borrower agrees that no
ny
, shall
own or participate in the ownership of the Subordinate Bonds.
Section 5.5. Borrower to Maintain Its Existence. The Borrower agrees to maintain its
existence and maintain its current legal status with authority to own and operate the Project.
Section 5.6. Borrower to Remain Qualified in State and Appoint Agent. The
Borrower will remain duly qualified to transact business in the State and will maintain an agent
in the State on whom service of process may be made in connection with any actions against the
Borrower.
Section 5.7. Sale or Other Transfer of Project. The Borrower may convey and
transfer the Project only upon strict compliance with the provisions of the Senior Loan
Documents, the Regulatory Agreement and the Subordinate Loan Documents.
Section 5.8. . In the event the Borrower fails
to perform any of its obligations under this Subordinate Loan Agreement, and during the
continuance of any Event of Default the Issuer or the Subordinate Trustee, after giving requisite
notice, if any, may, but shall be under no obligation to, perform such obligation and pay all costs
related thereto, and all such costs so advanced by the Issuer or the Subordinate Trustee shall
become an additional obligation of the Borrower hereunder, payable on demand and if not paid
on demand with interest thereon at the default rate of interest payable under the Subordinate
Loan Documents.
Section 5.9. Notice of Certain Events. The Borrower shall promptly advise the Issuer
and the Subordinate Trustee in writing of the occurrence of any Event of Default hereunder or
any event which, with the passage of time or service of notice or both, would constitute an Event
of Default, specifying the nature and period of existence of such event and the actions being
taken or proposed to be taken with respect thereto.
Section 5.10. Survival of Covenants. The provisions of Sections 2.4, 4.2, 6.1 and 7.4 of
this Subordinate Loan Agreement shall survive the expiration or earlier termination of this
Subordinate Loan Agreement and, with regard to the Subordinate Trustee, the resignation or
removal of the Subordinate Trustee.
Section 5.11. Access to Project; Records. Subject to reasonable notice, the Issuer and
the Subordinate Trustee, and the respective duly authorized agents of each, shall have the right
(but not any duty or obligation) at all reasonable times and during normal business hours: (a) to
enter the Project and any other location containing the records relating to the Borrower, the
Project, the Subordinate
the Subordinate
or accounts pertaining to the Borrower, the Project, the Subordinate
compliance with the terms and conditions of the Subordinate Loan Documents; and (c) to require
the Borrower, at the Borrow sole expense, (i) to furnish such documents to the Issuer and the
Subordinate Trustee, as the Issuer or the Subordinate Trustee, as the case may be, from time to
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time, deems reasonably necessary in order to determine that the provisions of the Subordinate
Loan Documents have been complied with and (ii) to make copies of any records that the Issuer
or the Subordinate Trustee or the respective duly authorized agents of each, may reasonably
require. The Borrower shall make available to the Issuer and the Subordinate Trustee, such
information concerning the Project, the Subordinate Mortgage and the Subordinate Loan
Documents as any of them may reasonably request.
Section 5.12. Damage, Destruction and Condemnation. If prior to full payment of the
Subordinate Bonds (or provision for payment of the Subordinate Bonds in accordance with the
provisions of the Subordinate Indenture) the Project or any portion of it is destroyed (in whole or
in part) or is damaged by fire or other casualty, or title to, or the temporary use of, the Project or
any portion of it shall be taken under the exercise of the power of eminent domain by any
governmental body or by any person, firm or corporation acting under governmental authority,
or shall be transferred pursuant to an agreement or settlement in lieu of eminent domain
proceedings, the Borrower shall nevertheless be obligated to continue to pay the amounts
specified in this Subordinate Loan Agreement and in the Subordinate Note to the extent the
Subordinate Loan is not prepaid in accordance with the terms of the Subordinate Loan
Documents.
Section 5.13. Obligation of the Borrower to Acquire and Construct the Project. The
Borrower shall proceed with reasonable dispatch to complete the construction, development and
equipping of the Project. If amounts on deposit in the Subordinate Loan Fund designated for the
Project and available to be disbursed to the Borrower are not sufficient to pay the costs of such
construction, development and equipping, the Borrower shall pay such additional costs from its
own funds. The Borrower shall not be entitled to any reimbursement from the Issuer, the
Subordinate Trustee, or the Subordinate Bondholders in respect of any such costs or to any
diminution or abatement in the repayment of the Subordinate Loan. Neither of the Subordinate
Trustee nor the Issuer makes any representation or warranty, either express or implied, that
money, if any, which will be paid into the Subordinate Loan Fund or otherwise made available to
the Borrower will be sufficient to complete the construction of the Project, and neither of the
Subordinate Trustee nor the Issuer shall be liable to the Borrower, the Subordinate Bondholders
or any other person if for any reason the Project is not completed.
ARTICLE VI
INDEMNIFICATION
Section 6.1. Indemnification. (a) To the fullest extent permitted by law, the Borrower
agrees to indemnify, hold harmless and defend the Issuer, the Subordinate Trustee, and each of
their respective officers, governing members, directors, officials, employees, attorneys and
and all losses, damages, claims,
actions, liabilities, costs and expenses of any conceivable nature, kind or character (including,
settlement (to the extent that the Borrower has consented to such settlement) and amounts paid to
discharge judgments) and amounts paid to discharge judgments) to which the Indemnified
Parties, or any of them, may become subject under or any statutory law (including federal or
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state securities laws) or at common law or otherwise, arising out of or based upon or in any way
relating to:
(i) the Subordinate Bonds, the Subordinate Loan Documents, or the
execution or amendment hereof or thereof or in connection with transactions
contemplated hereby or thereby, including, as applicable, the issuance, issuance, sale or
resale of the Subordinate Bonds;
(ii) any act or omission of the Borrower or any of its agents, contractors,
servants, employees or licensees in connection with the Project, the operation of the
Project, or the condition, environmental or otherwise, occupancy, use, possession,
conduct or management of work done in or about, or from the planning, design,
installation or construction of, the Project or any part thereof;
(iii) any lien (other than a permitted encumbrance) or charge upon payments
by the Borrower to the Issuer and the Subordinate Trustee hereunder, or any taxes
(including, without limitation, all ad valorem taxes and sales taxes), assessments,
impositions and other charges imposed on the Issuer or the Subordinate Trustee in respect
of any portion of the Project (other than income and similar taxes on fees received or
earned in connection therewith);
(iv) any violation of any environmental regulations with respect to, or the
release of any hazardous substances from, the Project or any part thereof during the
period in which the Borrower is in possession or control of the Project;
(v) the enforcement of, or any action taken by, the Issuer or the Subordinate
Trustee related to remedies under, this Subordinate Loan Agreement or the Subordinate
Indenture;
(vi) any untrue statement or misleading statement or alleged untrue statement
or alleged misleading statement of a material fact contained in any offering statement or
disclosure or continuing disclosure document for the Subordinate Bonds or any of the
documents relating to the Subordinate Bonds, or any omission or alleged omission from
any offering statement or disclosure or continuing disclosure document for the
Subordinate Bonds of any material fact necessary to be stated therein in order to make the
statements made therein, in the light of the circumstances under which they were made,
not misleading;
(vii) any Determination of Taxability;
(viii) any breach (or alleged breach) by Borrower of any representation,
warranty or covenant made in or pursuant to this Subordinate Loan Agreement;
(ix) the Project, or the condition, occupancy, use, possession, conduct or
management of, or work done in or about, or from the planning, design, installation, or r
construction of, the Project or any part thereof; or
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(x) the Subordinate Trustee
Subordinate Indenture, or the exercise or performance of any of its powers or duties
thereunder or under any of the documents relating to the Subordinate Bonds to which it is
a party;
except (a) in the case of the foregoing indemnification of (1) the Subordinate Bondholder
Representative or any related Indemnified Party, to the extent such damages are caused by the
gross negligence or willful misconduct of such Indemnified Party, or (2) in the case of the
Subordinate Trustee or any related Indemnified Party, the negligence or willful misconduct of
the Subordinate Trustee, or any breach by such party of its obligations under any of the
Subordinate Loan Documents or any untrue statement or misleading statement of a material fact
by such Indemnified Party contained in any offering statement or document for the Subordinate
Bonds or any of the Subordinate Loan Documents or any omission or alleged omission from any
such offering statement or document of any material fact necessary to be stated therein in order
to make the statements made therein by such Indemnified Party not misleading; or (b) in the case
of the foregoing indemnification of the Issuer or any related Indemnified Party, they shall not be
indemnified by the Borrower with respect to liabilities arising from their own bad faith, fraud or
willful misconduct. In the event that any action or proceeding is brought against any
Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower,
upon written notice from the Indemnified Party (which notice shall be timely given so as not to
thereof, including the employment of counsel reasonably approved by the Indemnified Party, and
shall assume the payment of all expenses related thereto, with full power to litigate, compromise
or settle the same in its sole discretion so long as the Indemnified Party is fully released
(otherwise the Indemnified Party shall have the right to review and approve or disapprove any
such compromise or settlement, which approval shall not be unreasonably withheld). Each
Indemnified Party shall have the right to employ separate counsel in any such action or
proceeding and to participate in the investigation and defense thereof. The Borrower shall pay
the reasonable fees and expenses of such separate counsel; provided, however, that such
Indemnified Party may only employ separate counsel at the expense of the Borrower if and only
sel) an actual
conflict of interest exists by reason of common representation.
In addition thereto, the Borrower will pay upon demand all of the fees and expenses paid
or incurred by the Subordinate Trustee and/or the Issuer in enforcing the provisions hereof, as
more fully set forth in this Subordinate Loan Agreement.
(b) The rights of any persons to indemnity hereunder and rights to payment of fees
and reimbursement of expenses pursuant this Subordinate Loan Agreement shall survive the final
payment or defeasance of the Subordinate Bonds and in the case of the Subordinate Trustee any
resignation or removal. The provisions of this Section shall survive the termination of this
Subordinate Loan Agreement.
Nothing contained in this Section 6.1 shall in any way be construed to limit the
indemnification rights of the Issuer contained in Section 9 of the Regulatory Agreement. With
respect to the Issuer, the Regulatory Agreement shall control in any conflicts between this
Section 6.1 and Section 9 of the Regulatory Agreement.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default.
Subordinate
this Subordinate Loan Agreement, one or all of the following events after the expiration of any
applicable cure periods:
(a) Any representation or warranty made by the Borrower in the Subordinate Loan
Documents or any certificate, statement, data or information furnished by the Borrower in
connection therewith or included by the Borrower in its application to the Issuer for assistance
proves at any time to have been incorrect when made in any material respect;
(b) Failure by the Borrower to pay from Revenues any amounts due under this
Subordinate Loan Agreement, the Subordinate Note or the Subordinate Mortgage at the times
and in the amounts required by this Subordinate Loan Agreement, the Subordinate Note and the
Subordinate Mortgage, as applicable; or
(c) f its other covenants,
conditions or agreements contained herein, other than as referred to in clause (a) above, for a
period of thirty (30) days after written notice specifying such failure and requesting that it be
remedied is given by the Issuer or the Subordinate Trustee to the Borrower; provided, however,
that if the failure shall be such that it can be corrected but not within such period, the Issuer and
the Subordinate Trustee will not unreasonably withhold their consent to an extension of such
time if corrective action is instituted by the Borrower within such period and diligently pursued
until the failure is corrected;
Notwithstanding anything herein to the contrary, the Investor Limited Partner shall have
the right, but not the obligation, to cure defaults hereunder in the same manner as the Borrower.
Section 7.2. Remedies on Default. Whenever any Event of Default hereunder shall
have occurred and be continuing, the Subordinate Trustee or the Issuer where so provided may
take any one or more of the following remedial steps:
(a) The Issuer shall cooperate with the Subordinate Trustee as the Subordinate
Trustee acts pursuant to Section 6.02 of the Subordinate Indenture.
(b) In the event any of the Subordinate Bonds shall at the time be Outstanding and
not paid and discharged in accordance with the provisions of the Subordinate Indenture, the
Issuer or the Subordinate Trustee may have access to and inspect, examine and make copies of
the books and records and any and all accounts, data and income tax and other tax returns of the
Borrower.
(c) The Issuer or the Subordinate Trustee may, without being required to give any
notice (other than to the Issuer or the Subordinate Trustee, as applicable), except as provided
herein, pursue all remedies of a creditor under the laws of the State, as supplemented and
amended, or any other applicable laws.
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(d) The Issuer or Subordinate Trustee may take whatever action at law or in equity
may appear necessary or desirable to collect the payments due under this Subordinate Loan
Agreement then due and thereafter to become due, or to enforce performance and observance of
any obligation, agreement or covenant of the Borrower under this Subordinate Loan Agreement.
Any amounts collected pursuant to Article IV and any other amounts which would be
applicable to payment of principal of and interest on the Subordinate Bonds collected pursuant to
action taken under this Section shall be applied in accordance with the provisions of the
Subordinate Indenture.
The provisions of this Section are subject to the further limitation that if, after any Event
of Default hereunder all amounts which would then be payable hereunder by the Borrower if
such Event of Default had not occurred and was not continuing shall have been paid by or on
behalf of the Borrower, and the Borrower shall have also performed all other obligations in
respect of which it is then in default hereunder, and shall have paid the reasonable charges and
expenses of the Issuer and the Subordinate Trustee, including reasonable a
incurred in connection with such default, and if there shall then be no default existing under the
Subordinate Indenture, then and in every such case such Event of Default hereunder shall be
waived and annulled, but no such waiver or annulment shall affect any subsequent or other Event
of Default or impair any right consequent thereon.
Section 7.3. No Remedy Exclusive. No remedy conferred upon or reserved to the
Issuer or the Subordinate Trustee by this Subordinate Loan Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Subordinate Loan
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any Event of Default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the
Issuer or the Subordinate Trustee to exercise any remedy reserved to it in this Article VII, it shall
not be necessary to give any notice, other than such notice as may be expressly required by this
Subordinate Loan Agreement.
Section 7.4. . In the event the
Borrower should default under any of the provisions of this Subordinate Loan Agreement and the
Issuer or the Subordinate Trustee should employ attorneys or incur other expenses for the
collection of loan payments or the enforcement of performance or observance of any obligation
or agreement on the part of the Borrower contained in this Subordinate Loan Agreement or in the
Subordinate Note, the Borrower shall on demand therefor reimburse the reasonable fees of such
attorneys and such other expenses so incurred.
Section 7.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Subordinate Loan Agreement should be breached by any party and
thereafter waived by the other parties, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1. Notices. Whenever in this Subordinate Loan Agreement the giving of
notice by mail or otherwise is required, the giving of such notice may be waived in writing by
the person entitled to receive such notice and in any such case the giving or receipt of such notice
shall not be a condition precedent to the validity of any action taken in reliance upon such
waiver.
Any notice, request, complaint, demand, communication or other paper required or
permitted to be delivered to the Issuer, the Subordinate Trustee, or the Borrower shall be
sufficiently given and shall be deemed given (unless another form of notice shall be specifically
set forth herein) on the Business Day following the date on which such notice or other
communication shall have been delivered to a national overnight delivery service (receipt of
which to be evidenced by a signed receipt from such overnight delivery service) addressed to the
appropriate party at the addresses set forth in Section 10.04 of the Subordinate Indenture or upon
receipt such notice or other communication delivered by facsimile transmission as required or
permitted by this Subordinate Loan Agreement (receipt of which shall be evidenced by
confirmation of transmission). The Issuer, the Subordinate Trustee, or the Borrower may, by
notice given as provided in this paragraph, designate any further or different address to which
subsequent notices or other communication shall be sent.
The Subordinate Trustee agrees to accept and act upon facsimile transmission of written
instructions and/or directions pursuant to this Subordinate Loan Agreement, provided, however,
that subsequent to such facsimile transmission of written instructions shall provide the originally
executed instructions and/or directions shall be provided to the Subordinate Trustee in a timely
manner.
Section 8.2. Concerning Successors and Assigns. All covenants, agreements,
representations and warranties made herein and in the certificates delivered pursuant hereto shall
survive the financing herein contemplated and shall continue in full force and effect so long as
the obligations hereunder are outstanding. Whenever in this Subordinate Loan Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements by or on behalf of the
Borrower which are contained in this Subordinate Loan Agreement shall bind its successors and
assigns and inure to the benefit of the successors and assigns of the Issuer and the Subordinate
Trustee.
Section 8.3. Governing Law. This Subordinate Loan Agreement and the Exhibits
attached hereto shall be construed in accordance with and governed by the laws of the State and,
where applicable, the laws of the United States of America.
Section 8.4. Modifications in Writing. Modification or the waiver of any provisions of
this Subordinate Loan Agreement or consent to any departure by the parties therefrom, shall in
no event be effective unless the same shall be in writing approved by the parties hereto and then
such waiver or consent shall be effective only in the specific instance and for the purpose for
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which given and so long as the interests of any Subordinate Bondholders are not adversely
affected and the Subordinate Trustee consents in writing thereto. No notice to or demand on the
Borrower in any case shall entitle it to any other or further notice or demand in the same
circumstances.
Section 8.5. Further Assurances and Corrective Instruments. The Issuer, the
Subordinate Trustee and the Borrower agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as may reasonably be required for correcting
any inadequate or incorrect description of the performance of this Subordinate Loan Agreement.
Section 8.6. Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of this Subordinate
Loan Agreement.
Section 8.7. Severability. The invalidity or unenforceability of any provision of this
Subordinate Loan Agreement shall not affect the validity of any other provision, and all other
provisions shall remain in full force and effect.
Section 8.8. Counterparts. This Subordinate Loan Agreement may be signed in any
number of counterparts with the same effect as if the signatures thereto and hereto were upon the
same instrument.
Section 8.9. Amounts Remaining in Subordinate Bond Fund or Other Funds. It is
agreed by the parties hereto that any amounts remaining in the Subordinate Bond Fund or other
funds and accounts established under the Subordinate Indenture upon expiration or sooner
termination of the term hereof, shall be paid in accordance with the Subordinate Indenture.
Section 8.10. Effective Date and Term. This Subordinate Loan Agreement shall
become effective upon its execution and delivery by the parties hereto, shall be effective and
remain in full force from the date hereof, and, subject to the provisions hereof, shall expire on
such date as the Subordinate Indenture shall terminate.
Section 8.11. Cross References. Any reference in this Subordinate Loan Agreement to
explicitly provided, be construed as referring, respectively, to an exhibit attached to this
Subordinate Loan Agreement, an article of this Subordinate Loan Agreement, a section of this
Subordinate Loan Agreement, a subsection of the section of this Subordinate Loan Agreement in
which the reference appears and a paragraph of the subsection within this Subordinate Loan
Agreement in which the reference appears. All exhibits attached to or referred to in this
Subordinate Loan Agreement are incorporated by reference into this Subordinate Loan
Agreement.
Section 8.12. Waiver of Personal Liability. No member, officer, agent or employee of
the Issuer or any director, officer, agent or employee of the Borrower shall be individually or
personally liable for the payment of any principal (or redemption price) or interest on the
Subordinate Bonds or any other sum hereunder or be subject to any personal liability or
accountability by reason of the execution and delivery of this Subordinate Loan Agreement; but
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nothing herein contained shall relieve any such member, director, officer, agent or employee
from the performance of any official duty provided by law or by this Subordinate Loan
Agreement.
Section 8.13. No Liability of Issuer. The Issuer shall not be obligated to pay the
principal (or redemption price) of or interest on the Subordinate Bonds, except from Revenues
and other money and assets received by the Subordinate Trustee on behalf of the Issuer pursuant
to this Subordinate Loan Agreement. Neither the faith and credit nor the taxing power of the
State or any political subdivision thereof, nor the faith and credit of the Issuer or any member is
pledged to the payment of the principal (or redemption price) or interest on the Subordinate
Bonds. The Issuer shall not be liable for any costs, expenses, losses, damages, claims or actions,
of any conceivable kind on any conceivable theory, under or by reason of or in connection with
this Subordinate Loan Agreement, the Subordinate Bonds or the Subordinate Indenture, except
only to the extent amounts are received for the payment thereof from the Borrower under this
Subordinate Loan Agreement.
Subordinate Bonds will be provided by the payments made by the Borrower pursuant to this
Subordinate Loan Agreement, together with investment income on certain funds and accounts
held by the Subordinate Trustee under the Subordinate Indenture, and hereby agrees that if the
payments to be made hereunder shall ever prove insufficient to pay all principal (or redemption
price) and interest on the Subordinate Bonds as the same shall become due (whether by maturity,
redemption, acceleration or otherwise), then upon notice from the Subordinate Trustee, the
Borrower shall pay such amounts as are required from time to time to prevent any deficiency or
default in the payment of such principal (or redemption price) or interest, including, but not
limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of
the Subordinate Trustee, the Borrower, the Issuer or any third party, subject to any right of
reimbursement from the Subordinate Trustee, the Issuer or any such third party, as the case may
be, therefor.
Section 8.14. No Liability of Officers. No recourse under or upon any obligation,
covenant, or agreement or in any Subordinate Bonds, or under any judgment obtained against the
Issuer, or by the enforcement of any assessment or by any legal or equitable proceeding by virtue
of any constitution or statute or otherwise or under any circumstances, shall be had against any
incorporator, member, director, commissioner, employee, agent or officer, as such, past, present,
or future, of the Issuer, either directly or through the Issuer, or otherwise, for the payment for or
to the Issuer or any receiver thereof, or for or to the Owner of any Subordinate Bonds, of any
sum that may be due and unpaid by the Issuer upon any of the Subordinate Bonds. Any and all
personal liability of every nature, whether at common law or in equity, or by statute or by
constitution or otherwise, of any such incorporator, member, director, commissioner, employee,
agent or officer, as such, to respond by reason of any act or omission on his or her part or
otherwise, for the payment for or to the Issuer or any receiver thereof, or for or to the Owner of
any Subordinate Bonds, of any sum that may remain due and unpaid upon the Subordinate Bonds
or any of them, is hereby expressly waived and released as a condition of and consideration for
the execution of this Subordinate Loan Agreement and the issuance of the Subordinate Bonds.
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Section 8.15. Capacity of the Subordinate Trustee. The Subordinate Trustee is entering
into this Subordinate Loan Agreement solely in its capacity as Subordinate Trustee and shall be
entitled to the rights, protections, limitations from liability and immunities afforded it as
Subordinate Trustee under the Subordinate Indenture. The Subordinate Trustee shall be
responsible only for the duties of the Subordinate Trustee expressly set forth herein and in the
Subordinate Indenture.
Section 8.16. Reliance. The representations, covenants, agreements and warranties set
forth in this Subordinate Loan Agreement may be relied upon by the Issuer and the Subordinate
Trustee. In performing their duties and obligations under this Subordinate Loan Agreement and
under the Subordinate Indenture, the Issuer and the Subordinate Trustee may rely upon
statements and certificates of the Borrower, upon certificates of tenants believed to be genuine
and to have been executed by the proper person or persons, and upon audits of the books and
records of the Borrower pertaining to occupancy of the Project. In addition, the Issuer and the
Subordinate Trustee may consult with counsel, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered by the Issuer or
the Subordinate Trustee under this Subordinate Loan Agreement and under the Subordinate
Indenture in good faith and in conformity with the opinion of such counsel. It is expressly
understood and agreed by the parties to this Subordinate Loan Agreement (other than the Issuer)
that:
(a) the Issuer may rely conclusively on the truth and accuracy of any certificate,
opinion, notice or other instrument furnished to the Issuer by the Subordinate Trustee, any
Subordinate Bondholder or the Borrower as to the existence of a fact or state of affairs required
under this Subordinate Loan Agreement to be noticed by the Issuer;
(b) the Issuer shall not be under any obligation to perform any record keeping or to
provide any legal service, it being understood that such services shall be performed or caused to
be performed by the Subordinate Trustee or the Borrower, as applicable; and
(c) none of the provisions of this Subordinate Loan Agreement shall require the
Issuer or the Subordinate Trustee to expend or risk its own funds (apart from the proceeds of
Subordinate Bonds issued under the Subordinate Indenture) or otherwise endure financial
liability in the performance of any of its duties or in the exercise of any of its rights under this
Subordinate Loan Agreement, unless it shall first have been adequately indemnified to its
satisfaction against the costs, expenses and liabilities which may be incurred by taking any such
action.
\[Signature Pages Follow\]
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IN WITNESS WHEREOF, the parties hereto have executed this Subordinate
Loan Agreement, all as of the date first set forth above.
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
ATTEST:
Deputy Secretary
\[Signature page Subordinate Loan Agreement St. Regis Park Apartments\]
2019-06-11 Agenda PacketPage 574 of 891
U.S. BANK NATIONAL ASSOCIATION,
as Subordinate Trustee
By: _______________________________________
Authorized Officer
\[Signature page Subordinate Loan Agreement St. Regis Park Apartments\]
2019-06-11 Agenda PacketPage 575 of 891
ST. REGIS PARK CIC, LP,
a California limited partnership
By: Pacific Southwest Community Development
Corporation,
a California nonprofit public benefit
corporation,
its Managing General Partner
By:________________________________
Robert Laing
President and Executive Director
By: CIC St. Regis Park, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation, its Manager
By:___________________________
Cheri Hoffman, President
\[Signature page Subordinate Loan Agreement St. Regis Park Apartments\]
2019-06-11 Agenda PacketPage 576 of 891
EXHIBIT A
FORM OF SUBORDINATE PROMISSORY NOTE
$_________________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(ST. REGIS PARK APARTMENTS)
SUBORDINATE 2019 SERIES B-4
SUBORDINATE PROMISSORY NOTE
US $________________ ____________, 2019
FOR VALUE RECEIVED, ST. REGIS PARK CIC, LP, a California limited partnership
organized and existing under the laws of the State of California (together with its permitted
MakerCHULA VISTA HOUSING
AUTHORITY, a public body corporate and politic is duly organized and existing under the
Constitution and the laws of the State of CaliforniaIssuer
Holder
$________________, on \[June __, 2064\], or earlier as provided herein and in the Subordinate Loan
Agreement (hereinafter defined), together with interest thereon at the rates, at the times and in the
amounts necessary to make payments on the Chula Vista Housing Authority Multifamily Housing
Revenue Bonds (St. Regis Park Apartments), Subordinate 2019 Series B-4 Subordinate
BondsSubordinate Indenture of Trust, dated as of June 1, 2019 (the
Subordinate IndentureU.S. Bank National Association, as trustee
Subordinate TrusteeSubordinate
Bond Payment Date (as defined in the Subordinate Indenture). Maker shall pay to the Holder on or
before each Subordinate Bond Payment Date (as defined in the Subordinate Indenture) on which
interest on the Subordinate Bonds is payable interest on the unpaid balance hereof in an amount in
immediately available funds sufficient to pay the interest on the Subordinate Bonds then due and
payable in accordance with the Subordinate Indenture. Maker shall pay to the Holder on or before
the Maturity Date an amount in immediately available funds sufficient to pay the principal amount
of the Subordinate Bonds and all accrued but unpaid interest thereon. In the event that amounts held
under the Subordinate Indenture and derived from Subordinate Bond proceeds, condemnation
awards or insurance proceeds or investment earnings thereon are applied to the payment of principal
due on the Subordinate Bonds in accordance with the Subordinate Indenture, the principal amount
due hereunder shall be reduced to the extent of the principal amount of the Subordinate Bonds so
paid.
Indebtedness
under, this Note, the Mortgage (as defined herein) or any other Subordinate Loan Document,
including late charges, default interest, and advances to protect the security of the Mortgage as
described in Section 12 of the Mortgage.
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All capitalized terms used but not defined herein shall have the meanings ascribed to them in
the Subordinate Indenture.
All payments under this Note shall be applied first to the payment of interest due and the
balance, if any, shall be applied to the payment of principal.
This Note is secured by a Subordinate Multifamily Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing dated as of June 1, 2019 (as the same may be modified,
Mortgageee for the
benefit of the Subordinate Trustee covering property, with improvements thereon, as more fully
Mortgaged Property
Subordinate Loan Agreement.
1. This Note is subject to the express condition that at no time shall interest be payable
on this Note or under the Mortgage or the Subordinate Loan Agreement at a rate in excess of the
maximum permitted by law; and Maker shall not be obligated or required to pay, nor shall the
Holder be permitted to charge or collect, interest at a rate in excess of such maximum rate. If by the
terms of this Note or of the Mortgage or Subordinate Loan Agreement, Maker is required to pay
interest at a rate in excess of such maximum rate, the rate of interest hereunder or thereunder shall
be deemed to be reduced immediately and automatically to such maximum rate, and any such excess
payment previously made shall be immediately and automatically applied to the unpaid balance of
the principal sum hereof and not to the payment of interest.
2. Amounts payable hereunder representing late payments, penalty payments or the like
shall be payable to the extent allowed by law.
3. This Note is subject to all of the terms, conditions, and provisions of the Subordinate
Loan Agreement, including those respecting prepayment and the acceleration of maturity and the
provisions of Section 4.4 thereof, and is further subject to all of the terms, conditions and provisions
of the Subordinate Indenture. The outstanding principal hereof is subject to acceleration at the same
time or times and under the same terms and conditions, and with the same notice, if any, as provided
under the Subordinate Indenture for the acceleration of payment of the Subordinate Bonds.
4. If there is an Event of Default, then in any such event and subject to the provisions
and requirements of the Subordinate Loan Agreement and the Subordinate Indenture, the Holder
may declare the entire unpaid principal balance of this Note and accrued interest, if any, due and
payable at once. All of the covenants, conditions and agreements contained in the Subordinate Loan
Agreement, the Regulatory Agreement, the Mortgage and all other security instrument and related
Issuer or to the Subordinate Trustee relating to the Project and all other documents and instruments
delivered simultaneously herewith, as the same may be supplemented and amended from time to
Loan Documents
5. No delay or omission on the part of the Holder in exercising any remedy, right or
option under this Note or the Loan Documents shall operate as a waiver of such remedy, right or
option. In any event a waiver on any one occasion shall not be construed as a waiver or bar to any
such remedy, right or option on a future occasion. The rights, remedies and options of the Holder
under this Note and the Loan Documents are and shall be cumulative and are in addition to all of the
rights, remedies and options of the Holder at law or in equity or under any other agreement.
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6. Maker shall pay all costs of collection on demand by the Holder, including without
Indebtedness hereunder, together with interest thereon at the Default Rate to the extent allowed by
law.
7. No amendments or other changes of any nature may be made to this Note except in
writing and subject in all events to the provisions of the Subordinate Indenture and the Subordinate
Loan Agreement. Presentment for payment, notice of dishonor, protest and notice of protest are
hereby waived. The acceptance by the Holder of any amount after the same is due shall not
constitute a waiver of the right to require prompt payment, when due, of all other amounts due
hereunder. The acceptance by the Holder of any sum in an amount less than the amount then due
shall be deemed an acceptance on account only and upon condition that such acceptance shall not
pay such amount then due shall be and continue to be a default notwithstanding such acceptance of
such amount on account, as aforesaid. Consent by the Holder to any action of Maker which is
subject to consent or approval of the Holder hereunder shall not be deemed a waiver of the right to
require such consent or approval to future or successive actions.
8. (a) Neither Borrower nor any of its partners, members and/or managers shall
have any personal liability under this Note, the Mortgage or any other Loan Document for the
repayment of the Indebtedness or for the performance of any other obligations of Borrower under
h respect to
the Mortgaged Property and any other collateral held by Lender as security for the Indebtedness.
against any guarantor of the Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
Losses
fraud or material misrepresentation by Borrower or Guarantor or any general partner, managing
member, manager, officer, director, partner, member, agent or employee of Borrower or Guarantor
in connection with the application for or creation of the Indebtedness or any request for any action
or consent by or on behalf of Lender; or (5) failure to apply Rents, first, to the payment of
reasonable operating expenses (other than property management fees that are not currently payable
Debt Service Amounts
Note, the Mortgage or any other Loan Document (except that Borrower will not be personally liable
(i) to the extent that Borrower lacks the legal right to direct the disbursement of such sums because
of a bankruptcy, receivership or similar judicial proceeding, or (ii) with respect to Rents that are
distributed on account of any calendar year if Borrower has paid all operating expenses and Debt
Service Amounts for that calendar year);
(c) Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any other security, or
pursued any rights against any guarantor, or pursued any other rights available to Lender under this
Note, the Mortgage, any other Loan Document or applicable law. For purposes of this Section 9, the
required or permitted by the Mortgage prior to the occurrence of an Event of Default or (2)
Borrower was unable to apply as required or permitted by the Mortgage because of a bankruptcy,
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receivership, or similar judicial proceeding. To the fullest extent permitted by applicable law, in any
liability under this Section 9, Borrower waives any right to set
off the value of the Mortgaged Property against such personal liability.
(d) Nothing herein or in the other Loan Documents shall be deemed to be a
waiver of any right which the Lender or the Servicer may have under Sections 506(a), 506(b),
1111(b) or any other provision of the United States Bankruptcy Code, as such sections may be
amended, or corresponding or superseding sections of the Bankruptcy Amendments and Federal
Judgeship Act of 1984, to file a claim for the full amount due to the Lender and the Servicer
hereunder and under the other Loan Documents or to require that all collateral shall continue to
secure the amounts due hereunder and under the other Loan Documents.
9. In addition, the Indebtedness evidenced by this Note is and shall be subordinate in
right of payment to the prior payment in full of all amounts then due and payable (including, but not
limited to, all amounts due and payable by virtue of any default or acceleration or upon maturity)
with respect to the Indebtedness evidenced by the Note (as defined by that certain Multifamily Deed
of Trust, Assignment of Rents and Security Agreement and Fixture Filing by the Borrower for the
benefit of the Issuer ) and assigned to Citibank, N.A., as Senior Funding
, in the original aggregate maximum principal amount of
$_______________, executed by Borrower and payable to the Issuer and assigned to the Senior
Funding Lender to the extent and in the manner provided in that certain Subordination Agreement,
dated as of June 1, 2019, by and among the Subordinate Trustee, the Funding Lender, the Senior
Fiscal Agent r. The rights and remedies of the
acquisition of this Note, to have agreed to perform and observe all of the terms, covenants and
Subordinate
Agreement.
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Maker agrees that this Note shall be construed in accordance with and governed by the laws
of the State of California.
ST. REGIS PARK CIC, LP,
a California limited partnership
By: Pacific Southwest Community Development Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By:________________________________
Robert Laing
President and Executive Director
By: CIC St. Regis Park, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation, its Manager
By:___________________________
Cheri Hoffman, President
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ASSIGNMENT
Pay to the order of _____________________, without recourse or warranty, as Subordinate
Trustee under the Subordinate Indenture referred to in the attached Note.
CHULA VISTA HOUSING AUTHORITY
By:
Authorized Signatory
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Stradling Yocca Carlson & Rauth
Draft dated June __, 2019
SUBORDINATE BOND PURCHASE AGREEMENT
by and among
CHULA VISTA HOUSING AUTHORITY,
ST. REGIS PARK CIC, LP,
and
ST. REGIS PARK, L.P.
Dated June 1, 2019
Relating to:
$____________________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(ST. REGIS PARK APARTMENTS)
SUBORDINATE 2019 SERIES B-4
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TABLE OF CONTENTS
Page
Section 1. Definitions ..................................................................................................................... 1
Section 2. Purchase and Sale ......................................................................................................... 1
Section 3. Closing .......................................................................................................................... 1
Section 4. Representations and Warranties of Issuer ..................................................................... 2
Section 5. Representations and Warranties of Borrower ............................................................... 3
Section 6. Covenants ...................................................................................................................... 4
Section 7. Conditions of Closing ................................................................................................... 5
Section 8. Actions and Events at the Closing ................................................................................ 6
Section 9. Termination of Agreement ............................................................................................ 7
Section 10. Fees and Expenses; Costs of Issuance .......................................................................... 8
Section 11. Indemnification by Borrower ........................................................................................ 8
Section 12. Miscellaneous ............................................................................................................. 10
EXHIBIT A Glossary of Terms ......................................................................................................... A-1
EXHIBIT B Terms of Bonds ............................................................................................................. B-1
EXHIBIT C Form of Supplemental Opinion of Bond Counsel ......................................................... C-1
EXHIBIT D Points To Be Covered in Opinion of Counsel to the Issuer/Certificate of Issuer ......... D-1
EXHIBIT E Points To Be Covered in the Opinion of Trustees Counsel/Trustees Certificate ........ F-1
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SUBORDINATE BOND PURCHASE AGREEMENT
ST. REGIS PARK, L.P., a California limited partnership, solely in their capacity as purchaser
of the Bonds described herein (together with its designees, successors and assigns, the Purchaser),
hereby offers to enter into the following agreement with the CHULA VISTA HOUSING
AUTHORITY, a public body, corporate and politic organized and existing under the laws of the
State of California (together with its successors and assigns, the Issuer), and ST. REGIS PARK
CIC, LP, a California limited partnership (together with its permitted successors and assigns, the
Borrower). Upon your acceptance of this offer and your execution and delivery of this
Subordinate Bond Purchase Agreement (this Agreement), this Agreement will be binding upon
each of you and the Purchaser. This offer is made subject to your acceptance, evidenced by your
execution and delivery of this Agreement to the Purchaser, at or prior to 12:00 P.M. Chula Vista,
California time on June 20, 2019 and will expire if not so accepted at or prior to such time (or such
later time as the Purchaser may agree in writing).
Section 1. Definitions. The capitalized terms used in this Agreement have the meanings
assigned to them in the Glossary of Terms attached as Exhibit A hereto.
Section 2. Purchase and Sale.
2.1 Subject to the terms and conditions set forth in this Agreement and the Exhibits
attached hereto, the Purchaser hereby agrees to purchase, or to cause its designee to purchase, all (but
not less than all) of the Bonds from the Issuer and the Issuer hereby agrees to sell to the Purchaser or
to the Purchasers designee, when, as and if issued, all (but not less than all) of the Bonds identified
in Item 1 in Exhibit B attached hereto for a total purchase price equal to the purchase price set forth
as Item 2 on Exhibit B attached hereto.
2.2 The Bonds will (i) be issued in accordance with the Issuers enabling legislation and
all applicable procedural and substantive requirements and the Indenture and (ii) have the payment
related terms (that is, the dated date, maturity date, interest rates, interest payment dates and
redemption provisions) set forth in Item 3 of Exhibit B attached hereto.
Section 3. Closing. The Closing will take place at the time and on the date set forth in
Item 4 of Exhibit B attached hereto or at such other time or on such other date as may be mutually
agreed upon by the parties hereto. At or prior to the Closing, the Issuer will direct the Trustee to
deliver the Bonds to or upon the order of the Purchaser or its designee, in definitive form, duly
executed and authenticated by the Trustee. If the Purchaser receives the Bonds in advance of the
Closing, the Purchaser will hold the Bonds in escrow pending Closing. If Closing does not occur, the
Purchaser will either return the Bonds to the Trustee or destroy the Bonds, as directed by the Trustee.
Subject to the terms and conditions hereof, the Issuer will deliver or cause to be delivered at the Place
of Closing as set forth in Item 4 of Exhibit B attached hereto, the other documents and instruments to
be delivered pursuant to this Agreement (the Closing Documents) and the Purchaser will accept
delivery of the Bonds and Closing Documents and pay the purchase price for the Bonds as set forth
in Section 2.1 above by wire transfer, to the Trustee, in immediately available federal funds, for the
account of the Issuer or as the Issuer directs. The Bonds will be made available to the Purchaser at
least one business day before the Closing for purposes of inspection. The Bonds will be prepared
and delivered as fully registered Bonds without coupons in the denominations set forth in the
Indenture.
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Section 4. Representations and Warranties of Issuer.
4.1 The Issuer hereby makes the following representations and warranties to the
Purchaser and the Borrower, all of which will continue in effect subsequent to the purchase of the
Bonds:
(a) The Issuer is a public body corporate and politic, organized and existing
under the laws of the State of California, has the power and authority to (i) enter into the Resolution
and the Issuer Documents to which it is a party and the transactions contemplated thereby, (ii) issue
the Bonds in the manner contemplated by the Resolution, this Agreement and the Indenture, and
(iii) otherwise consummate the transactions contemplated by the Issuer Documents, and (iii) carry
out its other obligations under this Bond Purchase Agreement and the Issuer Documents, and by
proper action has duly authorized the Issuers execution and delivery of, and its performance under,
the Issuer Documents to which it is a party.
(b) The Issuer is not in default under or in violation of, and the execution and
delivery of the Issuer Documents to which it is a party and its compliance with the terms and
conditions thereof will not conflict or constitute a default under or a violation of, (i) the Act, (ii) to its
knowledge, any other existing laws, rules, regulations, judgments, decrees and orders applicable to it,
or (iii) to its knowledge, the provisions of any agreements and instruments to which the Issuer is a
party, a default under or violation of which would prevent it from entering into this Bond Purchase
Agreement, financing the Project, executing and delivering the other Issuer Documents to which it is
a party or consummating the transactions on its part contemplated thereby, and, to its knowledge, no
event has occurred and is continuing under the provisions of any such agreement or instrument or
otherwise that with the lapse of time or the giving of notice, or both, would constitute such a default
or violation (it being understood, however, that the Issuer is making no representations as to the
necessity of registering the Note pursuant to any securities laws or complying with any other
requirements of securities laws).
(c) No litigation, inquiry or investigation of any kind in or by any judicial or
administrative court or agency is pending with respect to which the Issuer has been served with
process or, to the knowledge of the Issuer, is threatened against the Issuer with respect to (i) the
organization and existence of the Issuer, (ii) its authority to execute or deliver the Issuer Documents
to which it is a party, (iii) the validity or enforceability of any such Issuer Documents or the
transactions contemplated thereby, (iv) the title of any officer of the Issuer who executed such Issuer
Documents or (v) any authority or proceedings relating to the execution and delivery of such Issuer
Documents on behalf of the Issuer, and no such authority or proceedings have been repealed,
revoked, rescinded or amended but are in full force and effect.
(d) The revenues and receipts to be derived from the Note and this Bond
Purchase Agreement have not been pledged previously by the Issuer to secure any of its notes or
bonds.
(e) On the Closing Date, each of the representations and warranties of the Issuer
contained herein and in the Issuer Documents and all other documents executed by the Issuer in
connection with the Bonds shall be true, correct and complete.
4.2 Each of the representations and warranties set forth in this section will survive until
ninety (90) days after the Closing Date.
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4.3 Any certificate signed by any official of the Issuer and delivered to the Borrower or
the Purchaser in connection with the delivery of the Bonds will be deemed to be a representation and
warranty by the Issuer to the Borrower or the Purchaser, as appropriate, as to the statements made
therein.
Section 5. Representations and Warranties of Borrower.
5.1 The Borrower makes the following representations and warranties to the Issuer and
the Purchaser as of the date hereof, all of which will continue in effect in accordance with
Section 12.5 hereof:
(a) The Borrower is, and at all times will be, a limited partnership, duly
organized, validly existing and in good standing under the laws of the State and duly qualified,
authorized and licensed under the laws of the State to transact business as a limited partnership for
the purpose of owning and operating a multifamily senior housing facility in the State. All general
partners of the Borrower (collectively, the Partners), are, and at all times will be organized,
existing and in good standing under the laws of the State and are in good standing and duly qualified,
authorized and licensed under the laws of the State, to the extent required by applicable law. There
are no other general partners of the Borrower, other than the managing general partner and the
administrative general partner.
(b) The Borrower has, and on the Closing Date will have, full legal right, power
and authority (i) to execute and deliver the Loan Documents and (ii) to consummate the transactions
contemplated by this Agreement and the Loan Documents. The Partners have, and on the Closing
Date will have, full legal right, power and authority to execute and deliver this Agreement and the
other Loan Documents on behalf of the Borrower.
(c) Prior to the acceptance hereof, the Borrower has duly authorized the
execution and delivery of this Agreement and the performance by the Borrower of the obligations
contained herein and prior to the Closing Date the Borrower will have duly authorized the
(i) execution and delivery of the Loan Documents, (ii) performance by the Borrower of the
obligations contained in the Loan Documents, and (iii) consummation by the Borrower of all
transactions contemplated by the Loan Documents in connection with the issuance of the Bonds.
(d) All consents, approvals, authorizations or orders of, notices to, or filings,
registrations or declarations with, any court or governmental authority, board, agency, commission or
body having jurisdiction which are required on behalf of the Borrower by the Closing Date or for the
execution and delivery by the Borrower of this Agreement and the other Loan Documents or the
consummation by the Borrower of the transactions contemplated hereby or thereby required by the
Closing Date, have been obtained or will be obtained prior to the Closing Date.
(e) The Borrower has not taken or omitted to take on or prior to the date hereof
any action that would adversely affect the exclusion from gross income for federal income tax
purposes of the interest on the Bonds.
(f) There is no legal action, suit, proceeding, inquiry or investigation at law or in
equity (before or by any court, agency, arbitrator, public board or body or other entity or person)
pending or to the knowledge of the Borrower, threatened against or affecting the Borrower or the
Partners, or, to the knowledge of the Borrower, any basis therefor (i) in any way affecting the
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organization and existence of the Borrower, (ii) contesting or materially affecting the validity or
enforceability of this Agreement or the other Loan Documents, (iii) contesting the powers of the
Borrower or its authority with respect to the Loan Documents, (iv) contesting the authority of the
Partners to act on behalf of the Borrower, (v) wherein an unfavorable decision, ruling or finding
would have a material adverse effect on (A) the operations or the financial position or condition of
the Borrower, (B) the due performance by the Borrower of the Loan Documents as of the Closing
Date, (C) the validity or enforceability of any of the Loan Documents, or (D) the transactions
contemplated hereby or by any Loan Document or (vi) in any way contesting the exclusion from
gross income for federal income tax purposes of the interest on the Bonds.
(g) This Agreement is, and, when executed and delivered by the Borrower and
the other parties thereto, the Loan Documents will be, the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency or other similar laws
affecting creditors rights generally, or by the exercise of judicial discretion in accordance with
general principles of equity.
(h) The execution and delivery by the Borrower of this Agreement and the Loan
Documents and the consummation by the Borrower of the transactions contemplated hereby and
thereby are not prohibited by, do not violate any provision of, and will not result in a breach of or
default under (i) the partnership agreement of the Borrower, (ii) any applicable law, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental body or other requirement to
which the Borrower is subject, or (iii) any contract, indenture, agreement, mortgage, lease, note,
commitment or other obligation or instrument to which the Borrower is a party or by which the
Borrower or its properties is bound.
5.2 Each of the representations and warranties set forth in this Section will survive until
the Maturity Date or the redemption of the Bonds.
5.3 Any certificate signed by the Borrower or the Partners and delivered to the Purchaser
and/or the Issuer shall be deemed a representation and warranty by the Borrower to the Purchaser
and/or the Issuer as to the statements of the Borrower made therein.
Section 6. Covenants.
6.1 The Issuer hereby makes the following covenants with the Purchaser:
(a) Prior to the Closing, the Issuer will not amend, terminate or rescind, and will
not agree to any amendment, termination or rescission of the Resolution or the Issuer Documents
without prior written notice to the Purchaser.
(b) Prior to the Closing, the Issuer will not create, assume or guarantee any
indebtedness payable from, or pledge or otherwise encumber, the revenues, assets, properties, funds
or interests which will be pledged pursuant to the Indenture and the other Issuer Documents.
(c) The Issuer will cause the Bonds to be delivered to the address and at the time
specified by the Purchaser in conjunction with the Closing.
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(d) The Issuer will not take or omit to take any action which will in any way
cause the proceeds of the Bonds to be applied in a manner other than as provided in the Indenture or
which would cause the interest on the Bonds to be includable in the gross income of the holders
thereof for federal income tax purposes.
(e) Prior to the Closing, the Issuer will obtain all governmental consents,
approvals, orders or authorizations of any governmental authority or agency that would constitute a
condition precedent to the performance by it of obligations under the Resolution, this Agreement, the
other Issuer Documents and the Bonds.
6.2 The Borrower hereby makes the following covenants with the Issuer and the
Purchaser:
(a) The Borrower will not take or omit to take any action within its control,
which will in any way cause the proceeds of the Bonds to be applied in a manner other than as
provided in the Indenture or which would cause the interest on the Bonds to be includable in the
gross income of the holders thereof for federal income tax purposes.
(b) Prior to the Closing, the Borrower will obtain all governmental consents,
approvals, orders or authorizations of any governmental authority or agency that would constitute a
condition precedent to the performance by it of its obligations under the Loan Documents as of the
Closing Date. After the Closing, the Borrower will use its best efforts to obtain all governmental
consents, approvals, orders or authorizations of any governmental authority or agency that would
constitute a condition precedent to the performance by it of its obligations under the Loan
Documents.
(c) The Borrower shall not be in default under any of the Loan Documents,
subject to any notice and cure provisions provided therein.
Section 7. Conditions of Closing.
7.1 The Purchaser has entered into this Agreement in reliance upon representations,
covenants and agreements of the Issuer and the Borrower contained herein, in reliance upon the
representations, covenants and agreements to be contained in the documents and instruments to be
delivered at the Closing and upon the performance by the Issuer and the Borrower of their
obligations hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the
Purchasers obligations under this Agreement to purchase, to accept delivery of and to pay for the
Bonds will be subject to the performance by the Issuer and the Borrower of their respective
obligations to be performed by them hereunder at or prior to the Closing, and to the accuracy in all
material respects of the representations, covenants and agreements of the Issuer and of the Borrower
contained herein as of the date hereof and as of the Closing as if made on the Closing Date, and will
also be subject to the following additional conditions:
(a) The Purchaser shall not have discovered any material error, misstatement or
omission in the representations and warranties made by either of the Issuer or the Borrower in this
Agreement, which representations and warranties will be deemed to have been made again at and as
of the time of the Closing and will then be true in all material respects.
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(b) This Agreement, the other Issuer Documents and the Loan Documents each
shall have been executed and delivered by each of the parties thereto, shall be in full force and effect
on and as of the Closing Date and shall be in form and substance satisfactory to the Purchaser and no
event of default shall exist under any such documents, and the Issuer and the Borrower shall have
complied with the terms of the Issuer Documents and Loan Documents, respectively.
7.2 In addition to the conditions set forth in Section 7.1, the obligations of the Purchaser
to consummate at the Closing the transactions contemplated hereby are subject to receipt by the
Purchaser of the following items:
(a) An opinion of Bond Counsel, dated the Closing Date and addressed to the
Purchaser, substantially in the form set forth in Exhibit C;
(b) An opinion of counsel (addressed to the Purchaser and the Trustee) or
certificate of the Issuer, satisfactory in form and substance to the Purchaser, dated the Closing Date
and covering the points identified in Exhibit D;
(c) An opinion or opinions of counsel to the Borrower and the Partners,
addressed to the Issuer and the Purchaser dated the Closing Date in form and substance reasonably
acceptable to Issuer;
(d) A certificate of the Borrower, dated the Closing Date and signed by the
Partners, in form and substance satisfactory to the Purchaser and Bond Counsel, respecting certain
tax matters as may be reasonably required by Bond Counsel to enable it to give its opinion;
(e) An investor letter in form and substance reasonably acceptable to Issuer;
(f) An opinion of counsel to the Trustee or Trustees certificate addressed to the
Purchaser, covering the points identified in Exhibit E;
(g) A properly completed and executed IRS Form 8038;
(h) A certified copy of the Resolution and an executed original of each of the
Issuer Documents and the Loan Documents; and
(i) Such additional financing statements, legal opinions, certificates and other
documents as the Purchaser or Bond Counsel may reasonably deem necessary to evidence the truth
and accuracy as of the Closing Date of the respective representations and warranties herein contained
and to evidence compliance by the Issuer and the Borrower with this Agreement and all applicable
legal requirements, and the due performance and satisfaction by either of you at or prior to such time
of all agreements then to be performed and all conditions then to be satisfied by you.
7.3 If any of the conditions set forth in Sections 7.1 or 7.2 have not been met on the
Closing Date, the Purchaser may, at its sole option, terminate this Agreement or proceed to Closing
upon waiving any rights under this Agreement with respect to any such condition. If this Agreement
is terminated pursuant to this Section, no party will have any rights or obligations to any other party,
except as provided in Section 10.
Section 8. Actions and Events at the Closing. The following events will take place at
the Closing:
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(a) The Issuer will deliver the Bonds to the Purchaser or its designee, at the place
set forth in Item 4 in Exhibit B. The Bonds so delivered will be in the form required by the
Indenture, duly executed on behalf of the Issuer and authenticated by the Trustee, and will be fully
registered in the names requested by the Purchaser or its designee.
(b) The Borrower will deliver or cause to be delivered to the Purchaser at the
place set forth in Item 4 in Exhibit B, or at such other place or places as the parties hereto may
mutually agree upon, the materials described in Section 7.2.
(c) The Purchaser will be deemed to have delivered to the Trustee, for the
account of the Issuer or as Issuer directs, an amount equal to the purchase price of the Bonds as set
forth in Item 2 of Exhibit B by wire transfer to the Trustee, in immediately available federal funds.
Section 9. Termination of Agreement. The Purchaser may terminate this Agreement,
without liability therefor, by notifying you at any time prior to the Closing if:
(a) Any legislation is introduced in, or enacted by, the United States Congress, or
shall have been reported out of committee or be pending in committee, or any decision is rendered by
any court of competent jurisdiction, or any ruling or regulation, temporary regulation, release or
announcement shall have been issued or proposed by the Treasury Department of the United States,
the Internal Revenue Service, or any other agency of the government of the United States that, in the
reasonable judgment of the Purchaser, has the purpose or effect of subjecting interest on the Bonds to
inclusion in gross income for purposes of federal income taxation; or
(b) Any legislation is introduced in, or enacted by the United States Congress or
any action is taken by, or on behalf of, the Securities and Exchange Commission, that, in the opinion
of counsel to the Purchaser has the effect of requiring (i) the contemplated purchase of the Bonds, or
the Indenture or the Loan Agreement to be registered under the 1933 Act or the Indenture to be
qualified under the 1939 Act, or (ii) any governmental consents, approvals, orders or authorizations
for the consummation of the transactions contemplated by this Agreement, the Issuer Documents or
the Loan Documents which cannot, without undue expense, be obtained prior to the Closing Date.
(c) In the judgment of the Purchaser there is a material adverse effect upon the
market for the Bonds or to enforce commitments for the purchase of Bonds because (A) additional
material restrictions not in force as of the date hereof shall have been imposed upon the purchase or
sale in securities generally by any governmental authority or by any national securities exchange;
(B) a general banking moratorium shall have been established by federal, or California authorities; or
(C) any outbreak or material escalation of hostilities, or a war involving the United States of America
shall have been declared, or any other national or international calamity shall have occurred, or any
conflict involving the armed forces of the United States of America shall have escalated to such a
magnitude as to materially affect the ability of the Purchaser to purchase or sell the Bonds, or in the
reasonable opinion of the Purchaser, impractical to enforce commitments for the purchase of the
Bonds; or
(d) Any litigation shall be instituted, pending or threatened to restrain or enjoin
the issuance or sale of the Bonds or in any way contesting any authority or security for or the validity
of the Bonds, or the existence or powers of the Issuer; or
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(e) Legislation shall have been introduced in or enacted by the legislature of the
State that would, in the reasonable judgment of the Purchaser, materially adversely affect the security
for the Bonds; or
(f) There shall have occurred any change that, in the reasonable judgment of the
Purchaser, makes unreasonable or unreliable any of the assumptions upon which (i) yield on the
Bonds for purposes of compliance with the Code, (ii) payment of debt service on the Bonds, or
(iii) the basis for the exclusion from gross income for federal or state income tax purposes of interest
on the Bonds, is predicated; or
(g) The Issuer shall fail to execute and deliver or to obtain one or more filings,
consents, approvals, authorizations, registrations or other action requested by the Purchaser to be
obtained or taken by the Issuer and such failure is based upon the Issuers conclusion that such action
is unduly burdensome and the Purchaser shall reasonably conclude that, as a result of the Issuers
failure to so execute and deliver or to obtain what has been requested by the Purchaser, there will be
a material adverse effect upon the market for the Bonds or to enforce the commitments for the
purchase of Bonds.
Section 10. Fees and Expenses; Costs of Issuance. All reasonable costs, fees and
expenses incident to the performance of the Issuers, the Purchasers and Borrowers obligations in
connection with the issuance and purchase of the Bonds, including the reasonable expenses of
counsel, shall be paid by the Borrower to the Trustee by wire transfer of immediately available funds
on the Closing Date.
Section 11. Indemnification by Borrower.
(a) The Borrower agrees to pay, defend, protect, indemnify, save and hold
harmless the Issuer, the Purchaser and each affiliate, member, officer, director, official, employee
and agent of the Issuer and the Purchaser and each person, if any, who controls any of the foregoing
within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended (referred to herein as an Indemnified Party and
collectively as the Indemnified Parties), against any and all liabilities, losses, damages, costs,
expenses (including reasonable attorneys fees), causes of action (whether in contract, tort or
otherwise), suits, claims, demands and judgments of any kind, character and nature (collectively
referred to herein as the Liabilities) caused by or directly or indirectly arising from or in any way
relating to the Bonds, the Project, the loan of the proceeds of the Bonds, the Loan Agreement, the
Indenture, this Agreement or any document related to the Bonds, the Project, the loan of the proceeds
of the Bonds (the Transaction Documents) or any transaction or agreement, written or oral,
pertaining to the foregoing; provided, however, that the Borrower shall not be required to indemnify,
save or hold harmless an Indemnified Party for losses caused by the gross negligence or the willful
misconduct of the Indemnified Party.
(b) The Borrower also agrees to pay, defend, protect, indemnify, save and hold
harmless the Purchaser and each affiliate, member, officer, director, official, employee and agent of
the Purchaser from and against the Liabilities directly or indirectly arising from or relating to (i) any
errors or omissions of any nature whatsoever contained in any legal proceedings or other official
representation or inducement made by the Issuer pertaining to the Bonds and (ii) any fraud or
misrepresentations or omissions contained in the proceedings of the Issuer pertaining to the financial
condition of the Borrower.
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(c) The Indemnified Party shall, in the event of any claim, suit, action or
proceeding against it with respect to which indemnity may be sought on account of any indemnity
agreement by the Borrower contained herein, promptly give written notice thereof to the Borrower.
When such notice is given, the Borrower shall be entitled to participate, at its own expense, in the
defense of, or if it so elects, to assume the defense of, such claim, suit, action or proceeding, in which
event such defense shall be conducted by counsel chosen by the Borrower, provided that each
Indemnified Party shall have the right to review and approve or disapprove any compromise or
settlement which approval shall not be unreasonably withheld. If the Borrower shall elect not to
assume such defense, it shall assume the payment of all expenses reasonably incurred and related
thereto. Notwithstanding the above, each Indemnified Party shall have the right to employ separate
counsel in any such action or proceeding and to participate in the investigation and defense thereof,
provided that the Borrower shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the Borrower to represent the Indemnified Party would
present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the Indemnified Party and the Borrower and the Indemnified Party shall
have reasonably concluded that there may be legal defenses available to it and/or other Indemnified
Parties that are different from or additional to those available to the Borrower, (iii) the Borrower shall
not have employed counsel satisfactory to the Indemnified Party to represent the Indemnified Party
within a reasonable time after notice of the institution of such action, or (iv) the Borrower shall
authorize the Indemnified Party to employ separate counsel at the expense of the Borrower. Each
and every Indemnified Party shall have the right to compromise, settle or conclude any claim, action
or proceeding against it with the written consent of the Borrower, which consent shall not be
unreasonably withheld. The foregoing notwithstanding, in the event that the Borrower shall assume
such defense and any Indemnified Party or Parties shall be advised by independent legal counsel that
counsel selected by the Borrower is not fully and adequately protecting such party or parties and
representing the interests of such party or parties and the Borrower has been given written notice
thereof and a reasonable opportunity to cure or find other counsel acceptable to the Indemnified
Parties, any such Indemnified Party or Parties shall have the right to conduct its own defense against
any such claim, suit, action or proceeding in addition to or in lieu of any defense conducted by the
Borrower, and the Indemnifying Party shall indemnify and hold harmless such Indemnified Party or
Parties against and from any and all suits, claims, damages, liabilities or reasonable expenses
whatsoever, including reasonable fees and expenses of counsel selected by such Indemnified Party or
Parties incurred by and arising out of or in connection with any such claim, suit, action or
proceeding.
(d) In order to provide for just and equitable contribution in circumstances in
which the indemnity provided for in paragraph (a) or (b) of this Section 11 is for any reason held to
be unavailable, the Borrower and the Indemnified Party shall contribute proportionately to the
aggregate Liabilities to which the Borrower and the Indemnified Party may be subject, so that the
Indemnified Party is responsible for that portion represented by the percentage that the fees paid by
the Borrower to the Indemnified Party in connection with the issuance and administration of the
Bonds bear to the aggregate offering price of the Bonds, with the Borrower responsible for the
balance; provided, however, that in no case shall the Indemnified Party be responsible for any
amount in excess of the fees paid by the Borrower to the Indemnified Party in connection with the
issuance and administration of the Bonds.
(e) The Indemnified Parties, other than the Issuer and the Purchaser, shall be
considered to be third party beneficiaries of this Agreement for purposes of this Section 11. The
provisions of this Section 11 will be in addition to all liability which the Borrower may otherwise
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have and shall survive any termination of this Agreement, the offering and sale of the Bonds and the
payment or provisions for payment of the Bonds. No person guilty of fraudulent misrepresentation
(within the meaning of Section 10(b) of the Securities Exchange Act of 1934) shall be entitled to
contribution from any person who was not guilty of such misrepresentation.
(f) The indemnification hereunder shall be in addition to, and shall not limit, any
indemnity granted by the Borrower pursuant to the Loan Agreement or any other document.
Section 12. Miscellaneous.
12.1 All notices, demands and formal actions hereunder will be writing and mailed,
telecopied, electronically mailed or delivered to the following address or such other address as any of
the parties shall specify:
If to the Purchaser: St. Regis Park, L.P.
6339 Paseo del Lago
Carlsbad, CA 92011
Telephone: (760) 456-6000
Facsimile: (760) 456-6001
If to the Issuer: Chula Vista Housing Authority
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
Telephone: (619) 691-5263
If to the Borrower: St. Regis Park CIC, LP
6339 Paseo del Lago
Carlsbad, CA 92011
Telephone: (760) 456-6000
Facsimile: (760) 456-6001
Attn: Project Manager
c/o Chelsea Investment Corporation
6339 Paseo del Lago
Carlsbad, CA 92011
Attn: Project Manager
with a copy to: Cox, Castle & Nicholson LLP
50 California Street, Suite 3200
San Fransisco, CA 94111
Attention: Ofer Elitzur, Esq.
12.2 This Agreement will inure to the benefit of and be binding upon the parties hereto
and their permitted successors and assigns and will not confer any rights upon any other person.
12.3 This Agreement may not be assigned by the Issuer or the Borrower without the prior
written consent of the Purchaser. This Agreement may be assigned by the Purchaser upon written
notice of such assignment from the Purchaser to the Issuer and the Borrower. The Purchaser may
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designate the entity in whose name the Bonds are to be registered at Closing by providing
registration information to the Trustee and Bond Counsel on or prior to the Closing Date.
12.4 This Agreement may not be amended without the prior written consent of the Issuer,
the Borrower and the Purchaser.
12.5 The representations, covenants and agreements of the Issuer and the Borrower will
not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing
and regardless of (a) any investigations made by or on behalf of the Purchaser (or statements as to the
results of such investigations) concerning such representations, covenants and agreements and
(b) delivery of and payment for the Bonds.
12.6 This Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed and delivered will be an original, but all such counterparts will together
constitute but one and the same instrument.
12.7 This Agreement will become effective and binding upon the respective parties hereto
upon the execution and delivery hereof by the parties hereto and will be valid and enforceable as of
the time of such execution and delivery.
12.8 If any provision of this Agreement is held or deemed to be or is, in fact, inoperative,
invalid or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions because it conflicts with any provision of any constitution, statute, rule of public policy,
or any other reason, such circumstances will not have the effect of rendering the provision in
question inoperable or unenforceable in any other case or circumstance or of rendering any other
provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent
whatever.
12.9 This Agreement will be governed by and construed in accordance with the laws of the
State applicable to agreements to be performed wholly therein.
12.10 Except as provided in Section 11, the obligations of the Purchaser and Borrower
hereunder shall be without recourse to any shareholder, partner, member, trustee, officer, employee,
agent or manager of the Purchaser or Borrower and no shareholder, partner, member, trustee, officer,
employee, agent or manager of the Purchaser or Borrower shall be personally liable for the payment
of any obligation of the Purchaser or Borrower, as applicable, hereunder. In the event any legal
actions or proceedings are brought in respect of such obligations, any judgment against the Purchaser
or Borrower shall be enforced only against the assets of the Purchaser or Borrower, as applicable,
and not against any property of any trustee or manager of the Purchaser or Borrower.
12.11 The Issuer and the Borrower each acknowledge and agree that (i) the purchase and
sale of the Bonds pursuant to this Agreement is an arms-length commercial transaction among the
Issuer, the Borrower, and the Purchaser, (ii) in connection therewith and with the discussions,
undertaking and procedures leading up to the consummation of such transaction, the Purchaser is and
has been acting solely as a principal and is not acting as the agent, advisor, or fiduciary of the Issuer
or the Borrower, (iii) the Purchaser has not assumed an advisory or fiduciary responsibility in favor
of the Issuer or the Borrower with respect to the offering contemplated hereby or the discussions,
undertakings and procedures leading thereto (irrespective of whether the Purchaser has provided
other services or is currently providing other services to the Issuer or the Borrower on other matters)
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and the Purchaser has no obligation to the Issuer or the Borrower with respect to the offering
contemplated hereby except the obligations expressly set forth in this Agreement and (iv) the Issuer
and the Borrower have consulted their own legal, financial and other advisors to the extent they deem
appropriate.
\[Signature pages start on next page\]
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\[Counterpart Signature Page to the St. Regis Park Apartments Subordinate Bond Purchase
Agreement\]
If the foregoing accurately sets forth our mutual understanding concerning the subject matter
hereof, kindly indicate your acceptance by executing this Agreement.
ST REGIS PARK, L.P.
a California limited partnership
By: Pacific Southwest Community Development
Corporation
a California nonprofit public benefit corporation,
its General Partner
By:
Name:
Title:
By: CIC Pear Tree Services Company, LLC,
a California limited liability company,
its General Partner
By:
Name:
Title:
\[Signatures continue on next page\]
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\[Counterpart Signature Page to the St. Regis Park Apartments Subordinate Bond Purchase
Agreement\]
CHULA VISTA HOUSING AUTHORITY,
as Issuer
By:
Executive Director
\[Signatures continue on next page\]
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\[Counterpart Signature Page to the St. Regis Park Apartments Subordinate Bond Purchase
Agreement\]
ST. REGIS PARK CIC, LP,
a California limited partnership
By: Pacific Southwest Community Development
Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By:________________________________
Robert Laing
President and Executive Director
By: CIC St. Regis Park, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation, its Manager
By:___________________________
Cheri Hoffman, President
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EXHIBIT A
GLOSSARY OF TERMS
1933 Act means the Securities Act of 1933, as amended.
1934 Act means the Securities Exchange Act of 1934, as amended.
1939 Act means the Trust Indenture Act of 1939, as amended.
Act means the provisions of Chapter 1 of Part 2 of Division 24 of the California Health and
Safety Code.
Agreement means this Subordinate Bond Purchase Agreement, as amended from time to
time.
Bond Counsel means Stradling, Yocca Carlson & Rauth, PC.
Bonds means the Issuers Chula Vista Housing Authority Multifamily Housing Revenue
Bonds (St. Regis Park Apartments) Subordinate 2019 Series B-4.
Borrower means St. Regis Park CIC, LP, a California limited partnership.
Closing means the proceeding on the Closing Date at which the Bonds are delivered to the
Purchaser.
Closing Date means June __, 2019, the date on which the Closing takes place.
Closing Documents has the meaning ascribed to such term in Section 3 hereof.
Code means the Internal Revenue Code of 1986, as amended, together with all
corresponding and applicable final or temporary regulations and revenue rulings issued or
promulgated thereunder.
Constitution means the Constitution of the State.
Indenture means that certain Subordinate Indenture of Trust dated as of June 1, 2019
between the Issuer and the Trustee.
Indemnified Parties means the Issuer, the Purchaser and each affiliate, member, officer,
director, official, employee and agent of the Issuer and the Purchaser and each person, if any, who
controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as
amended, or Section 20 of the Securities Exchange Act of 1934, as amended.
Investor Limited Partner means Raymond James California Housing Opportunities Fund
VI L.L.C., its successors or assigns.
Issuer means the Chula Vista Housing Authority, a public body, corporate and politic,
organized and existing under the laws of the State of California.
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Issuer Documents means, collectively, the Subordinate Indenture, the Loan Agreement,
this Agreement, and the Subordinate Deed of Trust dated as of June 1, 2019 executed by the Issuer
and all other agreements, documents and certificates as may be required to be executed and delivered
by the Issuer to carry out, give effect to, and consummate the transactions contemplated by this
Agreement or by the other Issuer Documents.
Loan Agreement means that certain Subordinate Loan Agreement dated as of June 1, 2019
among the Issuer, the Trustee and the Borrower.
Loan Documents shall mean the Subordinate Loan Documents, as defined in the Indenture.
Note means that certain Subordinate Multifamily Note from the Borrower relating to the
Bonds and secured by the Subordinate Mortgage.
Partners means all partners, members and other entities that comprise the Borrower and are
included on the Borrowers signature page to this Agreement.
Project means, collectively, the land and residential rental apartment units, and related
fixtures, equipment, furnishings and site improvements known as St. Regis Park Apartments, located
in Chula Vista, California, including the real estate described in the Subordinate Mortgage.
Purchaser means St. Regis Park, L.P., a California limited partnership, or their designee or
nominee, together with their respective permitted successors and assigns hereunder.
Regulatory Agreement means that certain Regulatory Agreement and Declaration of
Restrictive Covenants by and among the Issuer, the Trustee and the Borrower.
Resolution means the resolution or resolutions of the Issuer, authorizing, among other
things, the execution and delivery by the Issuer of the Issuer Documents and the Bonds and the
performance of its obligations thereunder.
State means the State of California.
executed by the Borrower and granting a second lien on the Project for the benefit of the Trustee (by
assignment from the Issuer), including any amendments and supplements thereto.
Trustee means U.S. Bank National Association, or its successors or any other corporation
or association resulting from or surviving any consolidation or merger to which it or its successors
may be a party and any successor trustee at any time serving as successor trustee under the Indenture.
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EXHIBIT B
TERMS OF BONDS
1. Title of Bonds: $____________________ Chula Vista Housing
Authority Multifamily Housing Revenue Bonds
(St. Regis Park Apartments) Subordinate 2019
Series B-4
2. Purchase Price: 100% of Aggregate Original Principal Amount.
3. Payment Related Terms:
(a) Date of the Bonds: June __, 2019
(b) Interest Payment Dates: Subordinate Bond Payment Date, as set forth in
the Indenture
(d) Aggregate Principal Amount: $____________________ purchased upon the
Closing Date.
(d) Maturity Dates: June __, 2064.
(e) Interest Rates: From the Closing Date, the interest rate on the
Bonds shall accrue at a rate equal to the
Applicable Long-Term Federal Rate for the
month the Bonds are issued.
(f) Interest Payments: Commencing the first business day after the
Conversion Date (as such term is defined in the
Indenture).
(g) Redemption Provisions:
(i) Mandatory Redemption: as set forth in the Indenture.
(ii) Optional Redemption: as set forth in the Indenture.
4. Logistics of Closing:
(a) Time of Closing: 12:00 noon, California time.
(b) Date of Closing: June __, 2019
(c) Place of Closing: Stradling Yocca Carlson & Rauth, Newport
Beach, California.
(d) Delivery of Bonds: as directed by Purchaser, subject to the
provisions of Section 3 hereof.
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EXHIBIT C
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
\[Letterhead of Bond Counsel\]
________________, 2019
St. Regis Park, L.P.
6339 Paseo Del Lago
Carlsbad, CA 92011
$____________________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(ST. REGIS PARK APARTMENTS), SUBORDINATE 2019 SERIES B-4
\[After appropriate introductory language, the opinion shall state substantially as follows:\]
(1) The Subordinate Bond Purchase Agreement dated June 1, 2019 has been duly
executed and delivered by, and constitutes the valid and binding agreement of, the Issuer.
(2) The Bonds are not subject to the registration requirements of the Securities Act of
1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of
1939, as amended.
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EXHIBIT D
POINTS TO BE COVERED IN OPINION OF COUNSEL TO THE
ISSUER/CERTIFICATE OF ISSUER
\[After appropriate introductory language, the opinion or certificate shall state substantially as
follows:\]
(1) The Issuer is a public body, corporate and politic, organized and existing under the
laws of the State of California.
(2) The Bond Resolution was duly adopted at a meeting of the governing board of the
Issuer, which was called and held pursuant to law and with all public notice required by law and at
which a quorum was present and acting throughout. The Bond Resolution is in full force and effect
and has not been amended, modified or superseded.
(3) The Issuer Documents have been duly executed and delivered by the Issuer and
(assuming due authorization, execution and delivery by and validity against the other parties thereto)
are valid and binding agreements of the Issuer.
(4) To the best of my knowledge, no action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, regulatory agency, public board or body has been served
upon the Issuer and is pending or is otherwise known to be threatened in any way affecting the
existence of the Issuer, or the titles of the Issuers officials to their respective offices, or seeking to
restrain or to enjoin the issuance, sale or delivery of the Bonds or the application of the proceeds
thereof in accordance with the Indenture, or the collection or application of the Pledged Revenues (as
defined in the Indenture) to pay the principal of and interest on the Bonds, or in any way contesting
or affecting the validity or enforceability of the Issuer Documents or any action of the Issuer
contemplated by any of said documents, or in any way contesting the powers of the Issuer or its
authority with respect to the Issuer Documents or any action on the part of the Issuer contemplated
by any of said documents, nor to my knowledge is there any basis therefor.
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EXHIBIT E
POINTS TO BE COVERED IN THE OPINION OF
TRUSTEES COUNSEL/TRUSTEES CERTIFICATE
\[After appropriate introductory language, the opinion/certificate shall state substantially as follows:\]
(1) The Trustee is a national banking association duly organized, validly existing and in
good standing under the laws of the United States of America with trust powers.
(2) The Trustee has all requisite corporate and trust power, authority and legal right and
has taken all necessary corporate action to: (i) execute and deliver the Indenture and to accept the
trusts created under the Indenture and to perform its obligations thereunder, (ii) execute and deliver
in its capacity as Trustee the Loan Agreement, the Continuing Disclosure Agreement, the
Contingency Draw-Down Agreement, Issuer Assignment and the Regulatory Agreement, as such
documents are defined in the Indenture, (such documents, collectively, with the Indenture, the,
Trustee Documents) and perform the duties and obligations of the Trustee thereunder.
(3) The Trustee has duly authorized, executed and delivered the Trustee Documents.
Assuming the due authorization, execution and delivery thereof by the other parties thereto,
the Trustee Documents are the legal, valid and binding agreements of the Trustee, enforceable in
accordance with their terms against the Trustee.
(4) No authorization, approval, consent, or other order of any governmental agency or
regulatory authority having jurisdiction over the Trustee that has not been obtained is required for the
authorization, execution and delivery by the Trustee of the Trustee Documents.
(5) There is no litigation pending or, to our knowledge, threatened against the Trustee to
restrain the Trustees participation in, or in any way contesting or affecting the creation, organization
or existence of the Trustee or the power of the Trustee with respect to the transactions contemplated
by the Trustee Documents.
(6) The execution and delivery of the Trustee Documents by the Trustee, and compliance
with the provisions thereof will not contravene the Articles of Association or Bylaws of the Trustee
or any law or regulation governing the banking and trust powers of the Trustee or, to our knowledge,
any indenture, mortgage, deed of trust, resolution, note agreement or other agreement or instrument
to which the Trustee is a party or by which the Trustee is bound.
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Recording Requested By and
When Recorded Mail To:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attn: Bradley R. Neal, Esq.
TERMINATION OF REGULATORY AGREEMENT
AND DECLARATION OF RESTRICTIVE COVENANTS
THIS TERMINATION OF REGULATORY AGREEMENT AND DECLARATION OF
RESTRICTIVE COVENANTS (thJune __, 2019, by and among the
Housing Authority of the City of Chula Vista, California, a public body, corporate and politic, duly
organized and existing under the laws of the State of California \[State Street Bank and
Trust Company of California, N.A.\], a national banking association (the Original
St. Regis Park, L.P., a California limited partnership
WHEREAS, Issuer, Original Trustee and the Owner entered into that certain Regulatory
Agreement and Declaration of Restrictive Covenants dated as of June 1, 2000
, recorded on June 22, 2000 as Document No. 2000-0331272 in the Official Records of
the County of San Diego in connection with the issuance of $5,259,000
Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (Pear Tree
Manor Project) Series 2000A and $520,000 Housing Authority of the City of Chula Vista
Multifamily Housing Revenue Bonds (Pear Tree Manor Project) Series 2000B, (collectively, the
WHEREAS, the Regulatory Agreement provides that the Regulatory Agreement shall remain
in full force and effect for the Qualified Project Period, except as provided in Section 7, which
provisions are intended to survive the expiration of the Qualified Project Period; and
WHEREAS, the Bonds have been defeased to be redeemed on June __, 2019 (the
WHEREAS, in connection with the defeasance of the Bonds, a new Regulatory Agreement
and Declaration of Restrictive Covenants dated as of June 1, 2019 has been executed and delivered
with respect to the Property New Regulatory ;
WHEREAS, in consideration of the execution and delivery of the New Regulatory
Agreement, the Regulatory Agreement shall be terminated.
NOW, THEREFORE, the parties hereto acknowledge that the foregoing recitals are true and
correct, and in consideration of the foregoing, the parties hereby agree as follows:
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1. Termination and Release. In connection with the termination of the Regulatory
Agreement, the Owner hereby represents and warrants to the Issuer that the Owner is, and has been
for the term of the Qualified Project Period in material compliance with the terms of the Regulatory
Agreement. Based on and in reliance on the foregoing, the parties acknowledge and agree that the
Regulatory Agreement, and all and several of the terms thereof, have terminated, and shall be of no
further force and effect, except as provided in Section 7, which provisions are intended to survive the
expiration of the Qualified Project Period, and the Issuer shall continue to have the right to enforce
the provisions of Section 7 in accordance with the terms of the Regulatory Agreement. Except as
provided in Section 7 of the Regulatory Agreement, the Owner shall have no continuing obligations
under the Regulatory Agreement upon recordation of this Termination in the Official Records of the
Housing Authority of the City of Chula Vista. However, nothing in this Termination shall be
construed as relieving the Owner of other contractual obligations or any statutory obligations, if any,
including but not limited to California Government Code Section 65863.10.
2. Counterparts. This Termination may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute but one and the same
instrument.
3. Capitalized Terms. Capitalized terms used but undefined herein shall have the
meanings given to them in the Regulatory Agreement.
\[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK\]
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IN WITNESS WHEREOF, the undersigned have executed this Termination as of the date
indicated above.
HOUSING AUTHORITY OF THE CITY OF
CHULA VISTA
By:
Gary Halbert,
Executive Director
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U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Its: Authorized Officer
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ST REGIS PARK, L.P.
a California limited partnership
By: Pacific Southwest Community Development
Corporation
a California nonprofit public benefit corporation,
its General Partner
By:
Name:
Title:
By: CIC Pear Tree Services Company, LLC,
a California limited liability company,
its General Partner
By:
Name:
Title:
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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, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose names(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 OF NOTARY PUBLIC
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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, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose names(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 OF NOTARY PUBLIC
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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, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose names(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 OF NOTARY PUBLIC
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Real property in the County of San Diego, State of California, described as follows:
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RESOLUTION NO.
RESOLUTION OF THE CHULA VISTA HOUSING AUTHORITY
AUTHORIZING THE EXECUTION AND DELIVERYOF ITS TAX-
EXEMPT MULTIFAMILY HOUSING REVENUE NOTESAND ITS
SUBORDINATE CHULAVISTAHOUSINGAUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS (ST. REGIS PARK
APARTMENTS),COLLECTIVELYINANAGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $21,400,000, AND THE
EXECUTION AND DELIVERY OF ITS TAXABLE MULTIFAMILY
HOUSING REVENUE NOTESIN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $8,000,000FOR THE PURPOSE OF
FINANCING THE ACQUISITION AND REHABILITATION OF THE
ST. REGIS PARKAPARTMENTSMULTIFAMILY RENTAL
HOUSING PROJECT; APPROVING AND AUTHORIZING THE
EXECUTION AND DELIVERY OF ANY AND ALL DOCUMENTS
NECESSARY TO EXECUTE AND DELIVER THE NOTES,
COMPLETE THE TRANSACTION AND IMPLEMENT THIS
RESOLUTION;AND RATIFYING AND APPROVING ANY ACTION
HERETOFORE TAKEN IN CONNECTION WITH THE NOTES
, pursuant to the Housing Authorities Law, Chapter1 of Part2 of Division24 of
WHEREAS
the California Health and Safety Code (“Housing Authorities Law”), the Chula Vista Housing
Authority, a public body corporate and politic organized, existing and operating pursuant to the
Housing Authorities Law, the Chula Vista Housing Authority (the “Authority”) is empowered to
execute and deliver obligationsfor the purpose of financing the acquisition, construction,
rehabilitation, refinancing, development, and operation of multifamily rental housing; and
WHEREAS, St. Regis Park CIC, LP, a California limited partnership (the “Borrower”),
intends to acquire and rehabilitatea 118-unit plus one manager’s unit multifamily rental housing
project located at 1025 Broadwayin Chula Vista, California known as the “St. Regis Park
Apartments” (the “Project”); and
WHEREAS, the Borrowerhas requested Authority to execute and delivertax-exempt
multifamily housing revenue notesin one or more series(the “Tax-Exempt Notes”),and one or more
series of taxable multifamily housing revenue notes (the “Taxable Notes,” and, together with the
Tax-Exempt Notes, the “Notes”)and a series of tax-exempt multifamily housing revenuebonds
subordinate to the Notes (the “Subordinate Bonds,” and, together with the Tax-Exempt Notes, the
“Tax-Exempt Obligations”), and to loan the proceeds of the Notesand Subordinate Bondsto the
Borrowerto finance the acquisition, rehabilitation and equipping of the Project;and
WHEREAS, the aggregate principal amount of the Tax-Exempt Notesand Subordinate
Bonds, collectively,shall not exceed $21,400,000, and the aggregate principal amount of the Taxable
Notes shall not exceed $8,000,000; and
WHEREAS, Authority, by action of its Board of Commissioners (the “Board”), desires to
assist the Borrowerand to increase the supply of affordable housing by making the units in the
Project available for low and very low income persons or families, and in order to accomplish such
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purposes it is desirable for Authority to provide for the execution and Deliveryof the Notesand
financing of the Project; and
WHEREAS,the Notes will be executed and deliveredpursuant to the Funding Loan
Agreement (the “Funding Loan Agreement”), by and between the Authority andU.S. Bank National
Association, as fiscal agent(the “Fiscal Agent”), and the proceeds of the Noteswill be loaned to the
Borrowerpursuant tothe Borrower Loan Agreement, between the Authority and the Borrower (the
“Borrower Loan Agreement”);
WHEREAS, Citibank, N.A. (“Citibank”) will act as the Funding Lender under the Funding
Loan Agreement;and
WHEREAS, the Authority will loan the proceeds of the Notesto the Borrower and the
Borrower will use the proceeds of the Notesexclusively to finance the costs of acquisition,
rehabilitationand equipping of the Project and the costs of executing and delivering the Notes; and
WHEREAS,the Subordinate Bondswill be issuedpursuant to a Subordinate Indenture of
Trust (the “Subordinate Indenture”), between the Authority and U.S. Bank National Association, as
subordinate trustee(the “Subordinate Trustee”), and the proceeds of the Subordinate Bondswill be
loaned to the Borrower pursuant to the SubordinateLoan Agreement, by and amongthe Authority,
the Borrowerand Subordinate Trustee(the Subordinate LoanAgreement”);and
WHEREAS,the Subordinate Bonds shall be purchased by St. Regis Park, L.P., a California
limited partnership(the “Subordinate Bonds Purchaser”) pursuant to the terms of the Subordinate
Bond Purchase Agreement, by and among the Authority, the Borrower and the Subordinate Bonds
Purchaser (the “Subordinate Bond Purchase Agreement”); and
WHEREAS, the Authority will loan the proceeds of the Subordinate Bondsto the Borrower
and the Borrower will use the proceeds of the Subordinate Bondsexclusively to finance the costs of
acquisition, rehabilitationand equipping of the Project and the costs of issuing the Subordinate
Bonds; and
WHEREAS, Government Code Section 8869.85 requires a local agency to file an
application with the California Debt Limit Allocation Committee (“Committee”) prior to the issuance
of tax-exempt multifamily housing revenue bonds and the Authority has filed such an application;
and
WHEREAS, the Committee has allocated to the Project $21,400,000 of the State of
California 2019State ceiling for private activity bonds under Section146 of the Internal Revenue
Code of 1986; and
WHEREAS, it is the intent of the Authority to enter into bond documentation to govern the
Notes being executed and delivered(collectively, the “Transaction Documents”), including: (1) the
Funding Loan Agreement; (2) the Borrower Loan Agreement; (3) a regulatory agreement and
declaration of restrictive covenants, by and betweenthe Authorityandthe Borrower(the “Regulatory
Agreement”); (4) the Subordinate Indenture, (5) Subordinate Loan Agreementand (6) Subordinate
Bond Purchase Agreement; and
2
2019-06-11 Agenda PacketPage 621 of 891
WHEREAS, it appears that each of the documents and instruments described herein now
before this meeting is in a substantially appropriate form and is an appropriate instrument to be
executed and delivered for the purposes intended.
NOW, THEREFORE, THE BOARD OF COMMISSIONERS OF THE CHULAVISTA
HOUSING AUTHORITYDOES HEREBY RESOLVE, ORDER AND DETERMINE AS
FOLLOWS:
1.Authorization of Notes. In accordance with the Housing Authorities Law and
pursuant to theFundingLoanAgreement, Authority authorizes the execution and delivery of notesin
one or more series of tax-exempt notes and one or more series of taxable notesdesignated as “Chula
Vista Housing AuthorityMultifamily Housing Revenue Notes(St. Regis Park Apartments) 2019
Series B-___”(collectively, the “Notes”), with an interest rate orrates, a maturity date or dates and
other terms as provided in the Funding Loan Agreementas finally executed for the Notes. The Notes
shall be in substantially the form set forth in and otherwise in accordance with the Funding Loan
Agreement, and shall be executed on behalf of Authority by the manual or facsimile signature of the
Chair of the Board of Commissioners of the Authority (the “Chair”) or the Executive Director of the
Authority (the “Executive Director”), and the Notes shall be attested by the manual or facsimile
signature of the Secretary of the Board of Commissioners of the Authority(“Secretary”).
2.Authorization of Subordinate Bonds. In accordance with the Housing Authorities
Law and pursuant to the Subordinate Indenture, Authority authorizesthe issuance of a series of tax-
exempt bonds subordinate to the Notes designated as “Chula Vista Housing Authority Multifamily
Housing Revenue Bonds (St. Regis Park Apartments) Subordinate 2019 Series B-__” (the
“Subordinate Bonds”), with an interest rateor rates, a maturity date or dates and other terms as
provided in the Subordinate Indenture as finally executed for the Subordinate Bonds. The
Subordinate Bonds shall be in substantially the form set forth in and otherwise in accordance with the
Subordinate Indenture, and shall be issued on behalf of Authority by the manual or facsimile
signature of the Chair or the Executive Director, and the Subordinate Notes shall be attested by the
manual or facsimile signature of the Secretary.
3.Approval of Transaction Documents. The form of each of the Transaction
Documents, in substantially the form on file with the Secretary, is hereby approved. The Chair, the
Executive Director, and their authorized designee(s) (each, an “Authorized Officer”) are authorized
to execute, and the Secretary is authorized to attest, each of the Transaction Documentsin
substantially said form, with such additions thereto and changes therein as the Authorized Officer
may approve or recommend in accordance with Section 5hereof. The date, maturity date or dates,
interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of
execution, place of payment, terms of redemption, and other terms of the Notesshall be as provided
in the Funding Loan Agreementas finally executed, and the date, maturity date or dates, interest rate
or rates, interest payment dates, denominations, form, registration privileges, manner of execution,
place of payment, terms of redemption, and other terms of the Subordinate Bonds shall be as
provided in the Subordinate Indenture as finally executed.
4.Approval of TransactionDocuments. Any Authorized Officer is authorized to
execute and deliver, and the Secretary is authorized to attest, any and all certificates, agreements and
other documents ancillary to the Transaction Documentsin the formsapproved by the City Attorney,
as general counsel to Authority (“General Counsel”),and by special counsel and bond counsel to the
Authority and City on these matters, Stradling Yocca Carlson & Rauth (together, “Special Counsel”).
3
2019-06-11 Agenda PacketPage 622 of 891
5.Approval of Changes to Documents. Any Authorized Officer executing a document
approved herein, in consultation with General Counsel and Special Counsel, is authorized to approve
and make such modifications, changes or additions to Transaction Documentsor other documents as
may be necessary or advisable, and the approval of any modification, change or addition to any of the
aforementioned agreements shall be evidenced conclusively by the execution and delivery thereof by
such Authorized Officer and approval as to form by General Counsel and Special Counsel. Further,
any Authorized Officer, acting alone, is authorized to execute any assignment agreement related to
any mortgage note, mortgage, deed of trust or other document related to the loansmade to the
Borrowerfrom the proceeds of the Notesand the Subordinate Bonds.
6.Actions Ratified and Authorized. All actions heretofore taken by the officers,
employees and agents of Authority with respect to the execution anddeliveryof the Notesand the
issuance of the Subordinate Bonds are approved, confirmed and ratified, and the officers, employees
and agents of Authority are authorized and directed, for and in the name and on behalf of Authority,
to do any and all thingsand take any and all actions and execute and deliver any and all certificates,
agreements and other documents, including, but not limited to, those documents described in the
Transaction Documentsand the other documents herein approved, which they, or any of them, may
deem necessary or advisable in order to consummate the lawful executionand delivery of the Notes
and to effectuate the purposes thereof and of the documents herein approved in accordance with this
resolution and resolutions heretofore adopted by the Board. In the event that the Secretary is
unavailable to sign any document related to the Notesor Subordinate Bonds, any Deputy Secretary
of the Authority may sign on behalf of the Secretary.
7.Further Consents, Approvals and Other Actions. All consents, approvals, notices,
orders, requests and other actions permitted or required by any of the documents authorized by this
Resolution or otherwise appropriate in the administration of the Notesand Subordinate Bondsand
the lending program financed thereby, including without limitation any of the foregoing that may be
necessary or desirable in connection with any amendment of such documents, any transfer of the
Project, any substitution of security for the Notes or Subordinate Bonds, or any prepayment of the
Notesor Subordinate Bondsmay be taken or given by theChairor theExecutive Director, and the
Chairor theExecutive Directorare hereby authorized and directed to give any such consent,
approval, notice, order or request and to take any such action which such officer may deem necessary
or desirable to further the purposes of this Resolution.
8.Conflicting Resolutions Repealed. As to the Notes, all prior resolutions or parts
thereof, if any, in conflict herewith are, to the extent of such conflict, repealed.Specifically, this
resolution hereby amends, restates and supercedes HA Resolution No.2019-001 adopted by the
Board on March 26, 2019 in its entirety.
9.Severability. If any section, paragraph or provision of this Resolution shall be held to
be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any remaining sections, paragraphs or provisions of this
Resolution.
10.Effectiveness of Resolution and Date Thereof. This Resolution shall take effect upon
its adoption.
11.Certification. The Secretary shall certify to the passage and adoption of this
Resolution.
4
2019-06-11 Agenda PacketPage 623 of 891
The foregoing Resolution was passed and adopted by the Board of Commissioners of the
Chula Vista Housing Authority,California, this 11thday of June, 2019, by the following vote, to wit:
AYES:
NOES:
ABSENT:
Mayor
ATTEST:
_____________________________
Secretary
5
2019-06-11 Agenda PacketPage 624 of 891
STATE OF CALIFORNIA)
) ss.
COUNTY OF SAN DIEGO)
I, _______________, Secretary of the Chula Vista Housing Authority, California, hereby
certify that the above and foregoing Resolution was duly and regularly adopted by the Board of
Commissioners at a regular meeting thereof held on the 11th day of June, 2019.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 11th day of June, 2019.
Secretary of the Housing Authority of the City of
Chula Vista, California
6
2019-06-11 Agenda PacketPage 625 of 891
Page 626 of 891
2019-06-11 Agenda Packet
Page 627 of 891
2019-06-11 Agenda Packet
OPERATING BUDGET & INCOME ANALYSIS
St. Regis Park Resyndication
5/17/2019
Year2019
MSASan Diego
4 Person 50% AMI$53,500
TCACRDA
SquareTotalGrossRentUtility MonthlyAnnual
Rent:Restriction%AMIUnitsFeet/UnitSq. Ft.RentsAdjustmentAllowanceNet RentRent
1BR/1BARDA60%45502,200$ 1,204 $ (168)$ 37 $ 999 $ 47,952
1BR/1BARDA50%1550550$ 1,004 $ (141)$ 37 $ 826 $ 9,912
2BR/1BARDA60%7775057,750$ 1,445 $ (280)$ 47 $ 1,118 $ 1,033,032
2BR/1BALIHTC60%107507,500$ 1,445 $ -$ 47 $ 1,398 $ 167,760
2BR/1BARDA50%2275016,500$ 1,204 $ (233)$ 47 $ 924 $ 243,936
3BR/1BARDA60%39752,925$ 1,669 $ (374)$ 58 $ 1,237 $ 44,532
3BR/1BARDA50%1975975$ 1,391 $ (312)$ 58 $ 1,021 $ 12,252
3BR/1BALIHTCMGR1975975$ - $ -$ -$ - $ -
0$ -
Total Rents11989,375129,9481,559,376
Community Room/Office3,000
% Loss to Efficiency32%43,471
Construction Square Feet135,846
Income from OperationsPUPM
Laundry$ 13 19,020
Other Income (App. Fees, Late, etc.)$ 13 18,108
Sub-Total$ 26 1,596,504
Less: Vacancies @5%79,825
Commercial Income0
Less: Vacancies @25%0
Total Income1,516,679
Operating ExpensesPUPACompsDiffNotes
Admin$ 454 $ -$ 45454,038
Management Fee$ 600 $ 60071,400
Utilities$ 1,819$ -$ 1,819216,449
Payroll$ 1,286$ -$ 1,286153,034
Repair & Maintenance$ 700 $ -$ 70083,300
Insurance$ 168 $ -$ 16819,940
Taxes (HOA, CFD)$ 16 $ -$ 161,956
Other$ -$ -$ -0
Total Expenses$ 5,043$ -$ 5,043600,117
Net Operating Income916,562
Reserves$300.00/unit35,700
Services
Issuer and Monitoring Fee0.125%17,000
RDA Annual Monitoring Fee0.000%1,014
Net Income Available for Debt Service862,848
DSC TEST1.15
Construction/Perm
Loan Sizing16,435,196
Loan - Tranche A
Loan Amount12,800,000
Interest4.74%
Term17
Amortization35
Debt Service Coverage1.15
Monthly Payment62,493
Annual Payment749,919
Cash Flow After D/S112,929 112,929
2019-06-11 Agenda PacketPage 629 of 891
TAX CREDITS & BASIS CALCULATION
St. Regis Park Resyndication
5/17/2019
ACTUAL OR EST.Acq.Rehab
DESCRIPTION OF COSTSOF COSTSELIGIBLE BASISELIGIBLE BASIS
ACQUISITION
Land Cost$ 2,600,000 XXXXXXXXXXXXXXXXXXXXXX
Legal & Carrying Costs$ 5,000 XXXXXXXXXXXXXXXXXXXXXX
Land Lease Rent Prepayment$ -XXXXXXXXXXXXXXXXXXXXXX
Verifiable Carrying Costs$ -XXXXXXXXXXXXXXXXXXXXXX
Existing Improvement Costs$ 12,824,770 $ 12,824,770XXXXXXXXXXX
Other: Closing Costs$ -XXXXXXXXXXXXXXXXXXXXXX
TOTAL LAND/AQUISITION COSTS$ 15,429,770 $ 12,824,770$ -
REHABILITATION
Site Work$ 352,729 $ 352,729
Structures$ 5,558,813 $ 5,558,813
GC Contingency$ 295,577 $ 295,577
General Requirements$ 248,285 $ 248,285
Contractor Overhead$ 372,427 $ 372,427
Contractor Profit$ 248,285 $ 248,285
Architect $ 200,635 $ 200,635
TOTAL REHABILITATION COSTS$ 7,276,751 $ - $ 7,276,751
RELOCATION
Temporary Relocation$ 91,000 $ 91,000
Temporary Relocation$ 595,000 $ 595,000
TOTAL RELOCATION COSTS$ 686,000 $ - $ 686,000
ARCHITECTURAL FEES
Architect $ 35,000 $ 35,000
Landscape$ 15,036 $ 15,036
TOTAL ARCHITECTURAL COSTS$ 50,036 $ - $ 50,036
SURVEY & ENGINEERING
Civil$ 55,536 $ 55,536
ALTA$ 6,000 $ 6,000
Energy Consultant$ 17,500 $ 17,500
TOTAL SURVEY & ENGINEERING$ 79,036 $ - $ 79,036
CONTINGENCY COSTS
Hard Cost Contingency$ 727,675 $ 727,675
Soft Cost Contingency$ 112,034 $ 112,034
TOTAL CONTINGENCY COSTS$ 839,709 $ - $ 839,709
CONSTRUCTION PERIOD EXPENSES
Construction Loan Interest$ 1,071,082 $ 334,640
Seller Note Interest$ 140,760 $ 70,380
City of CV RDA Soft Loan Interest$ 1,261,493 $ 13,880
Origination Fee$ 196,923 $ 59,077
Owner Paid Bonds$ -$ -
Lender Inspection Fees$ 22,500 $ 22,500
Taxes During Construction$ 7,500 $ 7,500
Other: Application fee$ -$ -
Insurance During Construction$ 81,770 $ 18,913
Title and Recording Fees$ 35,000 $ 35,000
Construction Mgmt. and Monitoring$ -$ -
Predevelopment Loan Interest$ -$ -
Other: Bank Due Diligence$ 20,087 $ 20,087
Other: Predevelopment Loan Fees/Interest$ 75,000 $ 75,000
TOTAL CONSTRUCTION PERIOD EXPENSE$ 2,912,116 $ - $ 656,976
PERMANENT FINANCING EXPENSES
Loan Origination Fee$ 10,000 XXXXXXXXXXXXXXXXXXXXXX
Credit Enhancement & Application Fee$ -XXXXXXXXXXXXXXXXXXXXXX
Title and Recording Fees$ 7,500 XXXXXXXXXXXXXXXXXXXXXX
Property Taxes$ -XXXXXXXXXXXXXXXXXXXXXX
Other: Issuer's Financial Advisor Fee$ 61,500 XXXXXXXXXXXXXXXXXXXXXX
2019-06-11 Agenda PacketPage 632 of 891
Other: Issuer Fee$ 84,985 XXXXXXXXXXXXXXXXXXXXXX
Other: Misc. Perm Financing Expenses$ 5,000 XXXXXXXXXXXXXXXXXXXXXX
TOTAL PERMANENT FINANCING COSTS$ 168,985 $ - $ -
LEGAL FEES
Construction Lender Legal$ 77,500 $ 38,750
Permanent Lender Legal$ 7,500 XXXXXXXXXXX
Sponsor Legal$ 73,180 $ 36,590
Organizational Legal$ -XXXXXXXXXXX
Bond Legal$ 75,000 XXXXXXXXXXX
CPA, Opinion$ -$ -
Other: GP Legal$ 15,000 $ 7,500
TOTAL LEGAL $ 248,180 $ - $ 82,840
CAPITALIZED RESERVES
Operating Reserve$ 350,684 XXXXXXXXXXXXXXXXXXXXXX
TOTAL RESERVE COSTS$ 350,684 $ - XXXXXXXXXXX
REPORTS & STUDIES
Market Study$ 20,000 $ 20,000
Appraisal$ 10,250 $ 10,250
Environmental$ 3,400 $ 3,400
Other: Lender Deposit$ -$ -
PNA$ 15,000 $ 15,000
Other: Phase I$ 5,000 $ 5,000
TOTAL REPORTS & STUDIES$ 53,650 $ - $ 53,650
OTHER EXPENSES
TCAC App./Alloc/Monitoring Fees$ 60,014 XXXXXXXXXXXXXXXXXXXXXX
CDLAC/CDIAC Fees$ 14,160 XXXXXXXXXXX
Local Permit Fees$ 68,000 $ 68,000
Syndicator/Investor Fees & Expenses$ 35,000 XXXXXXXXXXXXXXXXXXXXXX
Furnishings$ 20,000 $ 20,000
Final Cost Audit Expense$ 22,500 $ 22,500
Marketing$ 20,000 XXXXXXXXXXXXXXXXXXXXXX
MGP Services Fee$ 10,000 XXXXXXXXXXX
Accounting/Finance/Admin$ 48,575 $ 48,575
Trustee Fee/Legal$ 5,000 XXXXXXXXXXX
Bond Performance Deposit$ 100,000 XXXXXXXXXXX
TOTAL OTHER COSTS$ 482,649 $ - $ 238,475
DEVELOPER COSTS
Developer Fee Calculation$ 3,418,236 $ 1,923,716$ 1,494,521
Developer Fee$ 3,418,236 $ 1,923,716$ 1,494,521
TOTAL DEVELOPER FEE$ 3,418,236 $ 1,923,716$ 1,494,521
TOTAL RESIDENTIAL COSTS$ 31,995,801 $ 14,748,486$ 11,457,993
TOTAL COMMERCIAL COSTS$ -$ -
TOTAL PROJECT AND BASIS COSTS$ 31,995,801 $ 14,748,486$ 11,457,993
Adjustment for Excess Basis$ -
Additional Amount Voluntarily Excluded From Basis$ -
Requested Unadjusted Eligible Basis$ 14,748,486$ 11,457,993
130% DIFFICULT DEVELOPMENT FACTOR?Tract #: Not Avail.y$ 14,895,391
Credit Reduction0.00%$ -
Total Adjusted Qualified Basis$ 14,895,391
TX CREDITS @ % LI Eligible@ Tx Credit Rt100.00%3.25%3.25%
Jun-19
TX CREDITS @ % LI Eligible$ 479,326 $ 484,100
TX CREDITS OVER TEN YEARS$ 4,793,260 $ 4,841,000
TX CREDIT EQ'Y@$/Credit@% Investment$ 0.9000 94.99%$ 8,236,425
2019-06-11 Agenda PacketPage 633 of 891
0000000000000
15,95137,01215,951
19191919
790,191653,977136,214106,814143,560256,439143,560540,641
9,688,5549,552,3409,291,2822,604,1629,404,1621,233,7341,233,734
00000000000
12,78437,01212,784
18181818
790,191662,590127,601106,814127,838106,814115,054252,642115,054519,580
9,816,1559,688,5549,153,6952,491,2829,291,2821,233,7341,233,734
0000000000
12,24737,01212,247
17171717
790,191670,659119,532229,281122,467122,467106,814110,220248,817110,220495,352
9,935,6879,816,1559,015,0982,353,6959,153,6951,233,7341,233,734
0000000000
11,31637,01211,316
16161616
790,191678,217111,974342,439113,158113,158229,281101,843244,869101,843470,587
9,935,6878,872,0722,215,0989,015,0981,233,7341,233,734
10,047,661
effective DSC when refinancing principal onlyAssumes only refinancing principal at Year 15, no cash outPotential additional proceeds
00000000000
1.29
6.75%
12,79637,01212,796
15151515
790,191790,191685,297104,894470,398127,958127,958342,439115,163241,385115,163444,890
1,020,9618,745,8492,072,0728,872,0721,233,7341,233,734
10,152,55510,152,55510,047,661
0000000000
12,25937,01212,259
14749,919493,391256,52814592,985122,587122,587470,39814110,328237,865110,32814420,674
8,618,3121,945,8498,745,8491,233,7341,233,734
10,409,08310,152,555
Refinance Loan = 30 Yrs.NOIDSCRInterest RateLoan AmtAnnual Pmt
0000000000
11,71937,01211,719
13131313
749,919505,000244,919710,170117,185117,185592,985105,467234,309105,467395,921
8,489,4691,818,3128,618,3121,233,7341,233,734
10,654,00210,409,083
0000000000
11,17637,01211,176
12121212
749,919516,083233,835821,928111,758111,758710,170100,582230,718100,582370,627
8,359,3331,689,4698,489,4691,233,7341,233,734
18,224,91120,602,53610,887,83710,654,002
0000000000
95,67895,67810,63137,01210,631
11111111
749,919526,666223,253928,237106,309106,309821,928227,091344,791
8,227,9211,559,3338,359,3331,233,7341,233,734
11,111,09010,887,837
0000000000
10101090,75890,7581010,08437,01210,084
749,919536,769213,150100,843100,843928,237223,429318,410
1,029,0798,095,2501,427,9218,227,9211,233,7341,233,734
11,324,24011,111,090
0000000000
9,5369,536
9999
95,36395,36385,82785,82737,012
749,919546,415203,504219,733291,482
1,124,4421,029,0797,961,3441,295,2508,095,2501,233,7341,233,734
11,527,74411,324,240
Value in Yr 15, 6% CapOutstanding Debt
0000000000
8,9878,987
8888
89,87489,87480,88780,88737,012
749,919555,625194,294216,004264,007
1,214,3161,124,4427,826,2271,161,3447,961,3441,233,7341,233,734
11,722,03811,527,744
0000000000
8,4388,438
7777
84,37984,37975,94175,94137,012
749,919564,417185,501212,242235,982
1,298,6951,214,3167,689,9261,026,2277,826,2271,233,7341,233,734
11,907,53911,722,038
0000000000
7,8887,888
6666
78,88178,88170,99370,99337,012
749,919572,812177,106208,448889,926207,408
1,377,5771,298,6957,552,4717,689,9261,233,7341,233,734
12,084,64511,907,539
0000000000
7,3387,338
5555
73,38573,38566,04666,04637,012
749,919580,827169,091204,623752,471178,284
1,450,9621,377,5777,413,8947,552,4711,233,7341,233,734
12,253,73712,084,645
0000000000
6,7896,789
4444
67,89267,89261,10361,10337,012
749,919588,479161,439200,769613,894148,610
1,518,8531,450,9627,274,2277,413,8941,233,7341,233,734
12,415,17612,253,737
0000000000
6,2416,241
3333
62,40562,40556,16556,16537,012
749,919595,785154,133196,885474,227118,387
1,581,2591,518,8537,133,5087,274,2271,233,7341,233,734
12,569,30912,415,176
0000000000
5,6935,693
2222
56,92956,92951,23651,23637,01287,616
749,919602,761147,158192,973333,508
1,638,1881,581,2596,991,7717,133,5081,233,7341,233,734
12,716,46712,569,309
70000000000
8,4748,474
1111
83,53384,74284,74276,26876,26837,01256,297
437,453353,920189,838191,771
Yr 2020
1,722,9291,638,1886,878,2006,991,7711,233,7341,233,734
12,800,00012,716,467
Not included in minimum gainSimple
00000000000000
354555
4.74%0.00%2.76%3.00%
01
62,49378,20078,20027,75927,759
6/1/202012/31/192019
749,919
1,722,9291,722,9291,722,9296,800,0006,800,0006,878,2001,233,7341,233,7341,233,734
12,800,00012,800,00012,800,000
cash flow
50.0%90.0%
100.0%
St. Regis Park Resyndication 1st Mortgage Loan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceConversionBeginning BalanceDebt ServiceInterestPrincipalUnpaid Accrued InterestLoan
Payoff/RefinanceEnding BalanceDeferred Developer FeeLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInterest EarnedInterest PaidUnpaid Accrued
InterestPrincipalLoan Payoff/RefinanceEnding BalanceSeller NoteLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInterest EarnedInterest PaidUnpaid
Accrued InterestPrincipalLoan Payoff/RefinanceEnding BalanceCity of Chula Vista Loan- assumption of debtLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInteres
t EarnedInterest PaidUnpaid Accrued InterestPrincipalLoan Payoff/RefinancePrincipal Balance
00000000000000
43,81637,01243,816
39393939
790,191287,178503,013394,347219,535394,347979,358550,864
4,254,4923,751,4787,954,1697,779,3581,233,7341,233,734
00000000000000
43,25337,01243,253
38383838
790,191318,985471,207389,276224,094389,276557,668
4,725,6984,254,4928,119,3511,154,1697,954,1691,233,7341,233,734
00000000000000
42,64637,01242,646
37373737
790,191348,780441,411383,812228,384383,812563,909
5,167,1104,725,6988,274,7791,319,3518,119,3511,233,7341,233,734
00000000000000
41,99737,01241,997
36363636
790,191376,691413,500377,977232,402377,977569,542
5,580,6105,167,1108,420,3541,474,7798,274,7791,233,7341,233,734
00000000000000
41,31037,01241,310
35353535
790,191402,838387,354371,793236,146371,793574,528
5,967,9645,580,6108,556,0011,620,3548,420,3541,233,7341,233,734
00000000000000
40,58737,01240,587
34343434
790,191427,331362,861365,279239,614365,279578,826
6,330,8245,967,9648,681,6661,756,0018,556,0011,233,7341,233,734
00000000000000
39,82837,01239,828
33333333
790,191450,275339,916358,455242,806358,455582,401
6,670,7416,330,8248,797,3151,881,6668,681,6661,233,7341,233,734
00000000000000
39,03837,01239,038
32323232
790,191471,769318,423351,341245,721351,341585,217
6,989,1646,670,7418,902,9351,997,3158,797,3151,233,7341,233,734
00000000000000
38,21737,01238,217
31313131
790,191491,903298,288343,953248,359343,953587,243
7,287,4526,989,1648,998,5282,102,9358,902,9351,233,7341,233,734
00000000000000
37,36837,01237,368
30303030
790,191510,764279,427336,310250,722336,310588,448
7,566,8797,287,4529,084,1172,198,5288,998,5281,233,7341,233,734
00000000000000
36,49237,01236,492
29292929
790,191528,433261,758328,428252,809328,428588,803
7,828,6377,566,8799,159,7362,284,1179,084,1171,233,7341,233,734
00000000000000
35,59237,01235,592
28282828
790,191544,984245,207320,324254,622320,324588,283
8,073,8447,828,6379,225,4382,359,7369,159,7361,233,7341,233,734
00000000000000
34,66837,01234,668
27272727
790,191560,489229,702312,011256,163312,011586,863
8,303,5468,073,8449,281,2862,425,4389,225,4381,233,7341,233,734
00000000000000
33,72337,01233,723
26262626
790,191575,014215,178303,506257,435303,506584,519
8,518,7248,303,5469,327,3572,481,2869,281,2861,233,7341,233,734
00000000000000
32,75837,01232,758
25252525
790,191588,620201,571294,823258,439294,823581,230
8,720,2958,518,7249,363,7412,527,3579,327,3571,233,7341,233,734
00000000000000
31,77537,01231,775
24242424
790,191601,366188,826285,974259,179285,974576,976
8,909,1218,720,2959,390,5362,563,7419,363,7411,233,7341,233,734
00000000000000
30,77537,01230,775
23232323
790,191613,305176,886276,974259,657276,974571,739
9,086,0078,909,1219,407,8532,590,5369,390,5361,233,7341,233,734
00000000000000
29,75937,01229,759
22222222
790,191624,490165,701267,834259,876267,834565,502
9,251,7089,086,0079,415,8112,607,8539,407,8531,233,7341,233,734
00000000000000
28,73037,01228,730
21212121
790,191634,968155,223258,566259,841258,566558,249
9,406,9319,251,7089,414,5352,615,8119,415,8111,233,7341,233,734
00000000000000
27,68737,01227,687
20202020
790,191644,783145,408249,182259,555249,182549,966
9,552,3409,406,9319,404,1622,614,5359,414,5351,233,7341,233,734
50.0%90.0%
100.0%
St. Regis Park Resyndication 1st Mortgage Loan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceConversionBeginning BalanceDebt ServiceInterestPrincipalUnpaid Accrued InterestLoan
Payoff/RefinanceEnding BalanceDeferred Developer FeeLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInterest EarnedInterest PaidUnpaid Accrued
InterestPrincipalLoan Payoff/RefinanceEnding BalanceSeller NoteLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInterest EarnedInterest PaidUnpaid
Accrued InterestPrincipalLoan Payoff/RefinanceEnding BalanceCity of Chula Vista Loan- assumption of debtLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInteres
t EarnedInterest PaidUnpaid Accrued InterestPrincipalLoan Payoff/RefinancePrincipal Balance
Assumes only refinancing principal at Year 15, no cash out
00000000000000000000
2,4952,495
83,17783,177
54545454
1,224,859
00000000000000
2,7782,778
35,67535,67583,177
53535353
100,656103,434100,656
1,189,1831,141,6821,106,006
00000000000000
32,89032,89037,01280,32744,551
52525252
100,656124,878
1,191,6691,123,9031,091,0131,233,7341,189,183
00000000000000
62,26062,26037,01243,315
51515151
125,155125,155
2,255,8021,126,3931,064,1331,191,6691,233,7341,233,734
00000000000000
90,88790,88737,012
50505050
125,346125,346131,458
3,293,0251,128,1111,037,2232,255,8021,233,7341,233,734
00000000000000
37,012
49494949
118,772118,772125,455125,455219,791
4,303,3451,129,0931,010,3203,293,0251,233,7341,233,734
00000000000000
37,012
48484848
145,916145,916983,458125,486125,486308,234
5,286,8031,129,3744,303,3451,233,7341,233,734
0000000000000000000
37,012
47474747
172,320172,320956,668125,443125,443396,708
6,243,4711,128,9885,286,8031,233,7341,233,734
0000000000000000000
52,85837,01252,858
46464646
475,723180,469180,469295,254485,139
6,538,7256,243,4711,233,7341,233,734
000000000000000
45,82546,13037,01246,130
45454545
678,891724,716678,891415,170186,773186,773228,397500,985
6,767,1226,538,7251,233,7341,233,734
00000000000000
92,89332,87845,88637,01245,886
44444444
790,191697,299678,891412,971192,848380,093510,103
1,376,1896,987,2456,767,1221,233,7341,233,734
48,073,041
00000000000000
45,58137,01245,581
43434343
790,191136,984653,207410,228198,687410,228187,245518,977
2,029,3961,376,1897,198,7876,987,2451,233,7341,233,734
00000000000000
45,21937,01245,219
42424242
790,191178,288611,904406,967204,281406,967398,787527,546
2,641,3002,029,3967,401,4737,198,7871,233,7341,233,734
Value at Yr 45, 7% Cap
00000000000000
44,80237,01244,802
41414141
790,191216,980573,212403,217209,624403,217601,473535,752
3,214,5122,641,3007,595,0667,401,4731,233,7341,233,734
00000000000000
44,33437,01244,334
40404040
790,191253,225536,967399,002214,710399,002795,066543,542
3,751,4783,214,5127,779,3587,595,0661,233,7341,233,734
50.0%90.0%
100.0%
St. Regis Park Resyndication 1st Mortgage Loan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceConversionBeginning BalanceDebt ServiceInterestPrincipalUnpaid Accrued InterestLoan
Payoff/RefinanceEnding BalanceDeferred Developer FeeLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInterest EarnedInterest PaidUnpaid Accrued
InterestPrincipalLoan Payoff/RefinanceEnding BalanceSeller NoteLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInterest EarnedInterest PaidUnpaid
Accrued InterestPrincipalLoan Payoff/RefinanceEnding BalanceCity of Chula Vista Loan- assumption of debtLoan AmountInterest RateTermMonthly PaymentAnnual Debt ServiceBeginning BalancePaymentsInteres
t EarnedInterest PaidUnpaid Accrued InterestPrincipalLoan Payoff/RefinancePrincipal Balance
000000
15
2034
1.36
1,5347,5637,563
53,99917,00012.51%28.19%12,79612,796
907,731749,919255,917127,958127,958115,163
(105,328)
2,106,5532,001,2251,093,4951,039,495
000000
14
2033
1.35
1,4897,3437,343
52,42717,00012.23%27.82%12,25912,259
881,292749,919245,174122,587122,587110,328
(103,262)
2,065,2481,961,9861,080,6941,028,267
000000
13
2032
1.33
1,4467,1297,129
50,90017,00011.93%27.39%11,71911,719
855,623749,919234,370117,185117,185105,467
(101,238)
2,024,7531,923,5151,067,8921,016,992
000000
12
2031
1.32
1,4046,9216,921
49,41717,00011.61%26.91%11,17611,176
(99,253)
830,702749,919223,515111,758111,758100,582
1,985,0521,885,7991,055,0971,005,680
000000
11
2030
1.30
1,3636,7206,720
47,97817,00011.27%26.36%95,67810,63110,631
(97,306)
806,507994,338749,919212,618106,309106,309
1,946,1291,848,8231,042,316
000000
10
2029
1.29
1,3236,5246,524
46,58017,00010.91%25.76%90,75810,08410,084
(95,399)
783,017982,975749,919201,685100,843100,843
1,907,9701,812,5721,029,555
9000000
2028
1.27
1,2856,3346,3349,5369,536
45,22417,00010.53%25.09%95,36395,36385,827
(93,528)
760,210971,597749,919190,726
1,870,5591,777,0311,016,821
8000000
2027
1.26
1,2476,1496,1498,9878,987
43,90617,00010.14%24.35%89,87489,87480,887
(91,694)
738,068960,212749,919179,748
1,833,8811,742,1871,004,119
7000000
2026
1.24
1,2115,9705,9709.72%8,4388,438
42,62817,00023.55%84,37984,37975,941
(89,896)
716,571991,456948,828749,919168,758
1,797,9231,708,027
6000000
2025
1.23
1,1765,7965,7969.28%7,8887,888
41,38617,00022.68%78,88178,88170,993
(88,133)
695,700978,836937,450749,919157,763
1,762,6691,674,536
5000000
2024
1.21
1,1415,6285,6288.82%7,3387,338
40,18117,00021.73%73,38573,38566,046
(86,405)
675,437966,265926,084749,919146,769
1,728,1071,641,702
4000000
2023
1.20
1,1085,4645,4648.34%6,7896,789
39,01017,00020.71%67,89267,89261,103
(84,711)
655,764953,748914,737749,919135,783
1,694,2231,609,512
3000000
2022
1.18
1,0765,3055,3057.83%6,2416,241
37,87417,00019.60%62,40562,40556,165
(83,050)
636,664941,288903,414749,919124,811
1,661,0031,577,953
2000000
2021
1.17
1,0445,1505,1507.31%5,6935,693
36,77117,00018.42%56,92956,92951,236
(81,422)
618,121928,892892,121749,919113,858
1,628,4341,547,012
1000000
2020
1.41
1,0145,0005,0008,4748,474
35,70017,00013.04%28.24%84,74284,74276,268
(66,882)
600,117670,650634,950437,453169,484
1,337,6501,270,767
6/1/2020
Conversion
5%8%
12%
125%
DSCR
2.00%3.00%3.00%0.00%4.74%0.00%3.00%3.00%3.00%0.00%2.76%3.00%5.01%
89.99%
94.99%
100.00%
0
1,0145,000
Inflation @Inflation @Inflation @
Dev Fee Paid when using 3/3 trendingPrincipal Balance
OPERATIONAL CASH FLOW
St. Regis Park Resyndication 5/17/2019Gross RevenueVacancyNet RevenueOperating Expenses Net Operating IncomeReplacement ReservesServicesCash Available to Debt ServicePrincipal and
InterestIssuer and Monitoring FeeRDA Annual Monitoring FeeManaging GP FeeLP Fee Net Project Cash FlowTCAC Gross Revenue TestTCAC Debt Service TestUMR Operating Expense TestDistributions:
Deferred Developer Fee Cash Available After Deferred Fee Payment Seller Note & InterestCash Available After Seller NoteCity of Chula Vista Loan- assumption of debtCash Flow Available
After Soft Loan Loans Partnership Admin Fee Cash Flow Available after Partnership Admin FeeLP DistributionGP Distribution
R OSS F INANCIAL
1736 Stockton Street, Suite One San Francisco, CA 94133 (415) 912-5612 FAX (415) 912-5611
May 23, 2019
Mr. Jose Dorado
Senior Management Analyst
City of Chula Vista Housing Division
276 Fourth Street
Chula Vista, CA 1910
Re: St. Regis Park Apartments
Dear Mr. Dorado:
This feasibility analysis amends and restates the prior analysis performed by Ross
Financial dated March 14, 2019. The amended and restated analysis was occasioned by a
change in financing structure that was need for compliance with Federal Tax Code
requirements.
The Chula Vista Housing Authority (the “Housing Authority”) has retained Ross
Financial as its municipal advisor to analyze the feasibility of issuing taxable and tax-
exempt obligations (the “Obligations”) for the St. Regis Park Apartments (the
“Development”).
This feasibility analysis reviews the following items:
Overview of the Development
Proposed financing approach
Benefits and risks to Housing Authority
Public purpose
Recommendations
Ross Financial has based its analysis of the Development’s financial feasibility on
materials provided by the Housing Authority and Chelsea Investment Corporation
(“Chelsea”), which has created the development and borrower entity for the
Development. The materials include: (1) the application to the California Debt Limit
Allocation Committee (“CDLAC”), (2) the financing commitments from Citibank, N.A.,
as construction and permanent lender (the “Lender”) and St. Regis Park, LP as purchaser
of the tax-exempt subordinate bonds, (3) the market study performed by Kinetic
Valuation Group in support of the application to CDLAC, and (4) Chelsea’s pro forma
financial schedules for the Development. Ross Financial has not visited the site of the
proposed Development, has had no role in the selection of the Lender and has had no role
in the creating the overall financing structure.
2019-06-11 Agenda PacketPage 638 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 2 of 10
O VERVIEW OF D EVELOPMENT
Development Summary. The Development is an acquisition-rehabilitation of a
multifamily housing rental development located at 1025 Broadway Avenue in Chula
Vista. The Development consists of ten garden-style 2-story wood frame buildings with
stucco siding and pitched clay tile roofs that contain 119 one, two- and three-bedroom
units, two laundry rooms and a leasing office. The Development was constructed in 1978
as a market rate development and most recently rehabilitated in 2000 when Chelsea
acquired it to convert to affordable housing. Site amenities include a playground, 142
surface parking spaces, two swimming pools, a community room and a computer lab.
Unit amenities include blinds, carpeting, a ceiling fan and coat closet as well as a
refrigerator, stove/oven and garbage disposal.
The scope of rehabilitation is substantial:
12 units will be converted for disabled accessible use
5 units will be converted for hearing/visually impaired use
Patch, seal, stripe pavement and parking areas:
Replace handrails on stairs
Repair building exteriors and landscaping
Install ADA path of travel upgrades
Install new storm drains
Replace exterior doors and hardware
Replace roof
Replace flooring, fixtures in laundry, leasing office and restrooms
Replace carpet with vinyl flooring in units
Replace appliances in units
Upgrade electrical, including: install GCIs, replace interior and exterior fixtures,
new wiring for bath fans, laundry exhaust and boiler
Install humidstat fans and replace bath fans with fresh air vents
Install new laundry dryers/venting
Upgrade plumbing, including: re-pipe units, replace plumbing fixtures, tubs,
shower values and p-traps
New signage and fencing
The unit mix and affordability restrictions for the Development will not change from its
current configuration:
St. Regis Park Unit Mix 50% AMI** 60% AMI**
1 Bedroom/1 Bath 5 1 4
2 Bedroom/1 Bath 109 22 87
3 Bedroom/1 Bath 5* 1 3
Total Units 119 24 94
*Includes one manager’s unit
** AMI = Area median income; Manager’s unit is not subject to affordability restrictions
2019-06-11 Agenda PacketPage 639 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 3 of 10
Description of Project Site. The Development sits on 4.31 acres at 1025 Broadway
Avenue. Access to the Development is from the east side of Broadway Avenue, which
runs north-south and provides access to Moss Street to the north. Moss Street, in turn,
runs east-west and provides access to Interstate 5 via Industrial Boulevard.
The Development is located in the Chula Vista Elementary School District and the
Sweetwater Union High School District. The nearest schools are: Rice Elementary
School, Chula Vista Middle School and Chula Vista High School, located between 0.6 to
1.6 from the Development. According to the market study, the Development is located
1.3 miles from the Scripps Mercy Hospital Chula Vista, 0.3 miles from Walmart, 0.6
miles from CVS, 0.6 miles from Food 4 Less and 1.1 miles from the South Chula Vista
Library.
Project Ownership/Borrower. The ownership entity for the Development will be St.
Regis Park CIC, L.P., (the “Borrower”), a single asset California limited partnership
consisting of: (1) a limited liability corporation created by Pacific Southwest Community
Development Corporation, a 501(c)(3) nonprofit public benefit corporation, which will
act as the managing general partner; (2) CIC St. Regis Park LLC, an entity created by
Chelsea, which will act as the administrative general partner; and (3) an investor limited
partner that will be an entity formed by Raymond James & Associates. According to its
application to CDLAC, Chelsea has more than 30 years of experience in financing,
developing and/or rehabilitating multifamily rental housing. According to Chelsea, this
experience encompasses 6,952 units in Southern California, including more than 4,797
affordable housing units in San Diego County. Chelsea’s most recent development
activity in Chula Vista includes:
Duetta Apartments, a 87-unit new construction family project located at 1715
th
Orion Avenue, which opened in the 4 quarter of 2017;
Volta Apartments, a 123-unit new construction senior project located at 1734
th
Solstice Avenue, which opened in the 4 quarter of 2017.
Re-syndication.The overall transaction is in the nature of a re-syndication. The Borrower
will be acquiring the Development from a seller, St. Regis Park, LP (the “Seller”), which
was also created by Chelsea. The acquisition and rehabilitation of the Development will
qualify for new tax-exempt financing and a re-syndication of tax credits. To assist in
funding the acquisition of the Development, the Seller will be providing carry back
financing by purchasing tax-exempt subordinate revenue bonds secured by certain
residual receipts from the Development.
CDLAC/CTCAC. On January 18, 2019, the Housing Authority filed a joint application
to CDLAC and CTCAC requesting a private activity bond allocation of $21,400,000 for
the Development and new 4% Federal tax credits. CDLAC awarded the allocation in the
requested amount at its meeting of March 20, 2019. The allocation will expire on
2019-06-11 Agenda PacketPage 640 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 4 of 10
September 16, 2019. CTCAC reserved 4% Federal tax credits at its meeting also on
March 20, 2019.
In connection with the CDLAC application process, on July 17, 2018, the Housing
Authority adopted a resolution of intent to issue tax-exempt obligations for the
Development and authorized the submission of an application to CDLAC. On the same
date, a TEFRA hearing, duly noticed, was held before the City Council at which time the
Development was approved for purposes of Section 147 of the Internal Revenue Code.
P ROPOSED F INANCING
Project Costs and Funding. According to most recent projections provided by Chelsea,
the total cost of the Development, including construction and all soft costs, is estimated at
$37,752,376. The estimated sources and uses of funds will differ during the construction
period and following construction and lease-up (“at permanent”). The following table
allocates these sources and uses during construction and at permanent based on the most
recent projections, which remain subject to change based on final costs and loan
underwriting:
Sources of Funds Construction*Permanent*
Tax-Exempt Senior Note Proceeds $12,150,000$12,150,000
Taxable Senior Note Proceeds 6,702,6950
Tax-Exempt Subordinate Seller Carryback Bond 9,250,0009,250,000
Taxable Subordinate Seller Carryback Loan 1,850,0001,850,000
Low Income Housing Tax Credit Equity 984,2449,842,442
Housing Authority Loan 1,233,7341,233,734
Accrued Soft Loan Interest 295,824295,824
Income from Operations/Performance Bond Refund 488,282747,136
Transferred Reserves 287,057287,057
Deferred Developer Fees 02,096,182
Total$33,241,837$37,752,376
Uses of Funds
Acquisition $20,424,770$20,424,770
Rehab Costs (plus contingency) 8,004,4268,004,426
Impact and Permit Fees 68,00068,000
Architectural & Engineering 145,990148,990
Financing Fees and Interest 2,597,0983,100,257
Legal and Miscellaneous Soft Costs 1,397,6181,483,998
Reserves 103,934350,665
Developer Fee** 500,0004,171,270
Total33,241,837$37,752,376
* Totals may not add due to rounding
**Cash developer fee is $2,075,088
In aggregate, the sources and uses do not differ materially from ones presented in the
th
March 14 analysis. The primary differences are: (a) the Senior Notes are anticipated to
2019-06-11 Agenda PacketPage 641 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 5 of 10
have a tax-exempt and taxable series instead of two tax-exempt series and (b) the Seller
carryback financing currently is currently anticipated to be bifurcated into two
components: a tax-exempt Seller carry back bond and a taxable loan. The final structure
will depend on the final tax analysis. It is possible that the taxable Senior Note may be
further divided between a taxable and tax-exempt series and the taxable seller carryback
loan may not be needed.
The Financing Approach. The Obligations requested by the Borrower to be issued by
the Housing Authority will consist of two basic elements: (a) senior Obligations in the
form of tax-exempt and taxable notes (the “Notes”) evidencing loans to be made by
Citibank, N.A. and (b) tax-exempt seller carryback financing in the form of subordinated
bonds to be purchased by the Seller (the “Subordinate Bonds”).
The Notes
Housing Authority will issue the Notes in an estimated aggregate amount of $18,852,695
tofinance a portion of the costs of acquiring and rehabilitating the Development. The
Notes will have the following features:
The Notes will be funded by Citibank, N.A. (the “Lender”);
The Notes will be issued on a draw down basis;
The Notes will be issued in either two or three series:
o The 2019 Series B-1 Note will be issued in the approximate amount of
$12,150,000, is expected to mature or be subject to mandatory tender in 17
years after closing, will amortize on a 35-year basis and will bear interest
at a tax-exempt fixed rate assumed to be 5.15% for underwriting purposes.
o The 2019 Series B-2 Note will be issued in the approximate amount of
$6,702,695, is expected to be repaid within 3 years and will bear interest
only at a taxable variable rate that is assumed to be 4.90% for
underwriting purposes;
o The amounts of the 2019 Series B-1 and B-2 Notes remain subject to final
underwriting and tax-analysis but amount of the 2019 Series B-1 Note and
the Subordinate Bonds will not exceed $21,400,000 in the aggregate. As
indicated previously, it is possible that the 2019 Series B-2 Note may be
replaced by two series: one taxable and the other tax-exempt.
Following construction and lease up (at “conversion”),
o The 2019 Series B-2 Note (whether or not divided into two series) will be
repaid in full from tax credit investor funds, and
o The 2019 Series B-1 Note will remain outstanding and will begin
amortization
The Notes are expected to close on or about June 19, 2019.
The Lender will execute an investor letter in which it will represent that it has sufficient
knowledge and experience to evaluate the risks and merits associated with making the
2019-06-11 Agenda PacketPage 642 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 6 of 10
loans evidenced by the Notes and has indicated its intention to hold the Notes for its
account. The Lender may transfer all or a portion of the Notes only to transferees that
execute a document with similar representations.
The primary difference in the Note financing between the current approach and the one
th
described in the March 14 analysis is that interest on the 2019 Series B-2 Note is
currently taxable (although the potential remains for a portion of the 2019 Series B-2
Note to be split off into a third series).
The Subordinate Bonds
th
In the original plan of finance described in the March 14 analysis, the Seller was to
provide subordinate carryback in an estimated amount of $12,500,000 to finance a
portion of the costs of acquiring the Development. In the revised plan of finance, the
amount of Seller carryback financing currently is being reduced to an estimated total of
$11,100,000, of which $9,500,000 will be structured as tax-exempt financing in the form
of the Subordinate Bonds and the remainder taxable Seller carry back financing.
Depending on the final tax analysis, the need for the taxable Seller carry back financing
may be reduced or eliminated.
As currently structured, the Subordinate Bonds will have the following features:
The Subordinate Bonds will be deemed funded by St. Regis Park, L.P., the Seller
in an amount of approximately $9,500,000;
The Subordinate Bonds, as well as the additional Seller carryback financing, will
mature in 45 years after the Conversion Date (expected to be June 2020);
In essence, the Subordinate Bonds will be non-defaulting. Interest and principal
on the Subordinate Bonds will be payable monthly, after Conversion, from 90%
of available Development cash flow, after payment of operating expenses, debt
service on the Notes, and repayments of deferred developer fee;
Interest on the Subordinate Bonds will be a tax-exempt fixed rate equal to the
Applicable Long-Term Federal Rate (“AFR”) for June (when the Bonds will be
issued); the AFR for May 2019 is 2.74%.
Housing Authority Financial Involvement. The Housing Authority, as successor agency
to the Redevelopment Agency of the City of Chula Vista, has an existing loan with
respect to the Development in the amount of $1,387,152, which it funded in June 2000
(the “Original CVHA Loan”) pursuant to a loan agreement secured by a deed of trust and
an affordable housing agreement (collectively, the “Original CVHA Loan Documents”).
In connection with the issuance of the Notes, the Original CVHA Loan Documents will
be terminated and the promissory note, which evidenced the Original CVHA Loan, will
be amended, restated and assumed by the Borrower (the “A&R CVHA Note”). Under the
terms of the A&R CVHA Note:
2019-06-11 Agenda PacketPage 643 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 7 of 10
The Borrower will repay the outstanding principal amount ($1,387,152) of the
Original CVHA Loan at the closing of the Notes, leaving an unpaid balance of
approximately $1,233,734, representing accrued interest on the Original CVHA Loan.
The A&R CVHA Note will bear simple interest at the rate of 3%;
The A&R CVHA Note will be payable from a percentage of residual receipts
(“Residual Receipts”) of the Project after payment of operating expenses, senior debt
service, certain other required expenses and application of required percentages of net
cash flow for deferred developer fee and repayment of the Subordinate Bonds and
remaining Seller carry back loan.
The A&R CVHA Note will mature in 55 years
The Project will remain subject to the following affordability restrictions:
o 24 units will be restricted to households with incomes do not exceed 50%
AMI, and
o 94 units will be restricted to households with incomes that do not exceed 60%
AMI
Affordability Restrictions. The Development will be subject to the following regulatory
restrictions (collectively, the “Regulatory Agreements”) and terms:
Tax-Exempt Note Regulatory Agreement requirements (including voluntary elections
made to CDLAC) for a 55-year term;
Tax Credit Regulatory Agreement requirements under which all units must be
affordable at 60% AMI for a 55-year term to remain eligible for tax credits; and
A Declaration of Covenants, Conditions and Restrictions under which all units must
be affordable at 60% AMI for the 55 year loan term.
Development Cash Flow. The Borrower provided pro forma cash flows for the
Development. The following table summarizes key elements of the most recent pro
forma:
2019-06-11 Agenda PacketPage 644 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 8 of 10
Assumptions
Vacancy 5%
Revenue Escalation 2%
Expense Escalation 3%
Cash Flow and Coverage
1
Stabilized Net Income – First Full Year $1,547,012
Expenses (618,121)
Replacement Reserve (36,771)
Housing Authority Bond Monitoring Fee (17,000)
Housing Authority Loan Monitoring Fee (1,044)
Net Operating Income Available for Debt Service $874,076
3
Debt Service Coverage 1.17x
2
Note Debt Service (749,841)
Managing GP Fee (5,150)
LP Fee (5,150)
Estimated Net Project Cash Flow $113,935
Deferred Developer Fee (50% of excess flow) (56,968)
Available Cash Flow after Deferred Developer Fee $56,968
Repayment of Seller Loan (90% of excess cash flow) (51,271)
Available Cash Flow after Deferred Developer Fee 5,697
Repayment of Housing Authority Loan (10% of Excess Cash Flow) (5,697)
Net Cash Flow for Partnership Admin and GP/LP Distributions $0
1
Conversion is projected to occur on June 1, 2020; first full year of stabilized net income reflects projected
cash flow for 2021, with revenues and expenses escalated from prior partial year
2
Assumes an initial permanent loan par of $12,500,000 @ 5.15% interest and 35 year amortization
3
Net operating income divided by Note Debt Service
The following table shows the Borrower’s most recent projected cash flow for the
Development during first full five years following stabilized occupancy:
2019-06-11 Agenda PacketPage 645 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 9 of 10
Year
EscalationRevenues12345
2.00%Gross Scheduled Rent1,628,4341,661,0031,694,2231,728,1071,762,669
less 5% vacancy(81,422)(83,050)(84,711)(86,405)(88,133)
Total Net Income1,547,0121,577,9531,609,5121,641,7021,674,536
Expenses
3.00%Operating Expenses(618,121)(636,665)(655,765)(675,438)(695,701)
3.00%Replacement Reserve(36,771)(37,874)(39,010)(40,181)(41,386)
Issuer Bond Monitoring Fee(17,000)(17,000)(17,000)(17,000)(17,000)
3.00%Housing Authority Loan Monitoring Fee(1,044)(1,075)(1,108)(1,141)(1,175)
Total Expenses + Reserves (672,936)(692,614)(712,883)(733,759)(755,262)
Net Operating Income874,076885,338896,629907,943919,274
5.15%Bond Debt Service(749,841)(749,841)(749,841)(749,841)(749,841)
Debt Service Coverage1.17x1.18x1.20x1.21x1.23x
Available Cash Flow after Bond Debt Service 124,235135,497146,788158,102169,433
3.00%Managing GP Fee(5,150)(5,305)(5,464)(5,628)(5,796)
3.00%LP Fee(5,150)(5,305)(5,464)(5,628)(5,796)
Project Cash Flow afterGPand LPFees113,935124,888135,861146,847157,840
Deferred Developer Fee (50% of excess cash flow)(56,968)(62,444)(67,930)(73,423)(78,920)
Project Cash Flow after Deferred Developer Fee56,96862,44467,93073,42378,920
Repayment of Seller Loan (90% of excess cash flow)(51,271)(56,200)(61,137)(66,081)(71,028)
Project Cash Flow after Seller Note5,6976,2446,7937,3427,892
Repayment of CVHA Loan (10% of excess cash flow)(5,697)(6,244)(6,793)(7,342)(7,892)
Cash Flow after Payment of CVHA Loan00000
PartnershipAdmin Fee and LP/GP Distributions00000
P UBLIC P URPOSE
The Obligations are expected to result in the long-term affordability of 118 one, two and
three-bedroom units in the City of Chula Vista: 24 units will be restricted and affordable
to households earning 50% AMI; 94 units will be restricted and affordable to households
earning 60% AMI; 1 unit will be occupied by a resident manager.
The Obligations and the Regulatory Agreements will require that these affordability
levels be maintained for a period of 55 years.
B ENEFITS AND R ISKS TO THE H OUSING A UTHORITY
The Obligations provide a vehicle for financing a portion of the acquisition and
rehabilitation costs of the Development. As proposed, the Obligations will result in the
long-term affordability of 118 one, two and three-bedroom units in the City of Chula
Vista with units restricted to income levels described in “Public Purpose” above.
The Obligations do not pose undue financial risk to the Housing Authority. The
Obligations are not direct obligations of the Housing Authority or the City of Chula
Vista. The Notes will evidence loans to be funded by the Lender, which has indicated its
intention to hold the Notes for its own account. The 2019 Series B-2 Note is expected to
be repaid in full after the Development’s construction and lease-up.
The Subordinate Obligations represent the same kind of seller carryback financing
contemplated by the original plan of finance – except interest will be tax-exempt.
If the Housing Authority issues the Obligations, the Housing Authority will receive an
issuer fee at closing of $56,205 equal to 0.20% times the initial aggregate par amount of
the Notes and Subordinate Bonds ($28,102,695) based on current projections). The
2019-06-11 Agenda PacketPage 646 of 891
Mr. Jose Dorado
Re: St. Regis Park Apartments
May 23, 2019
Page 10 of 10
Housing Authority also would receive an annual Obligation monitoring fee of $17,000
and a loan monitoring fee of $1,044 (subject to escalation).
Costs of issuance will be funded by the Borrower from low income housing tax credit
contributions and/or other funds of the Borrower.
R ECOMMENDATIONS
Ross Financial recommends that the Housing Authority proceed with the issuance of the
Obligations based on the following findings:
The Obligations will achieve a public purpose by providing 118 affordable units, with
all units restricted to income levels at 50% and 60% of AMI.
The Notes will evidence tax-exempt loans funded by a well-established, highly
capitalized bank that is active in affordable housing lending. The Notes will be
subject to restrictive transfer limitations at all times. The Subordinate Bonds represent
tax-exempt Seller carryback financing.
The Borrower will pay issuance costs from sources other than Obligation proceeds.
Based on estimates provided by the Borrower, there should be sufficient funds to
complete the Development and the Development provides adequate cash flow to
cover debt service on the Notes.
If there is any additional information you require concerning the Development, Ross
Financial will be pleased to provide a supplemental analysis.
Very truly yours,
Peter J. Ross
Principal
2019-06-11 Agenda PacketPage 647 of 891
Stradling Yocca Carlson & Rauth
Draft dated May 8, 2019
FUNDING LOAN AGREEMENT
among
CITIBANK, N.A.,
as Funding Lender
and
CHULA VISTA HOUSING AUTHORITY,
as Governmental Lender
and
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
dated as of ______________ 1, 2019
relating to:
$______________
Chula Vista Housing Authority
Multifamily Housing Revenue Note
(St. Regis Park Apartments) 2019 Series B-1
$______________
Chula Vista Housing Authority
Multifamily Housing Revenue Note
(St. Regis Park Apartments) 2019 Series B-2
$______________
Chula Vista Housing Authority
Multifamily Housing Revenue Note
(St. Regis Park Apartments) 2019 Series B-3 (Taxable)
2019-06-11 Agenda PacketPage 648 of 891
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions ................................................................................................................. 2
Section 1.2 Effect of Headings and Table of Contents .............................................................. 12
Section 1.3 Date of Funding Loan Agreement ........................................................................... 12
Section 1.4 Designation of Time for Performance ..................................................................... 12
Section 1.5 Interpretation ........................................................................................................... 12
ARTICLE II
TERMS; GOVERNMENTAL LENDER NOTES
Section 2.1 Terms ....................................................................................................................... 12
Section 2.2 Form of Governmental Lender Notes ...................................................................... 14
Section 2.3 Execution and Delivery of Governmental Lender Notes ........................................ 14
Section 2.4 Required Transferee Representations; Participations; Sale and Assignment .......... 15
ARTICLE III
PREPAYMENT
Section 3.1 Prepayment of the Governmental Lender Notes from Prepayment under the
Corresponding Borrower Notes ............................................................................... 16
Section 3.2 Notice of Prepayment .............................................................................................. 16
ARTICLE IV
SECURITY
Section 4.1 Security for the Funding Loan ................................................................................. 16
Section 4.2 Delivery of Security ................................................................................................ 17
ARTICLE V
LIMITED LIABILITY
Section 5.1 Source of Payment of Funding Loan and Other Obligations .................................. 18
Section 5.2 Exempt from Individual Liability ............................................................................ 18
ARTICLE VI
CLOSING CONDITIONS; APPLICATION OF FUNDS
Section 6.1 Conditions Precedent to Closing ............................................................................. 19
ARTICLE VII
FUNDS AND ACCOUNTS
Section 7.1 Authorization to Create Funds and Accounts .......................................................... 20
Section 7.2 Investment of Funds ................................................................................................ 20
Section 7.3 Establishment of Funds ........................................................................................... 20
Section 7.4 Funding Loan Payment Fund .................................................................................. 21
Section 7.5 Expense Fund .......................................................................................................... 21
Section 7.6 Closing Costs Fund.................................................................................................. 22
Section 7.7 Project Fund............................................................................................................. 22
Section 7.8 Rebate Fund ............................................................................................................. 25
i
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TABLE OF CONTENTS
(continued)
Page
Section 7.9 Investments .............................................................................................................. 26
ARTICLE VIII
REPRESENTATIONS AND COVENANTS
Section 8.1 General Representations .......................................................................................... 27
Section 8.2 No Encumbrance on Security .................................................................................. 28
Section 8.3 Repayment of Funding Loan ................................................................................... 28
Section 8.4 Servicer .................................................................................................................... 28
Section 8.5 Borrower Loan Agreement Performance ................................................................ 28
Section 8.6 Maintenance of Records; Inspection of Records ..................................................... 28
Section 8.7 Tax Covenants ......................................................................................................... 29
Section 8.8 Performance by the Borrower ................................................................................. 30
ARTICLE IX
DEFAULT; REMEDIES
Section 9.1 Events of Default ..................................................................................................... 30
Section 9.2 Acceleration of Maturity; Rescission and Annulment ............................................ 31
Section 9.3 Additional Remedies; Funding Lender Enforcement .............................................. 31
Section 9.4 Application of Money Collected ............................................................................. 33
Section 9.5 Remedies Vested in Funding Lender ...................................................................... 33
Section 9.6 Restoration of Positions ........................................................................................... 34
Section 9.7 Rights and Remedies Cumulative ........................................................................... 34
Section 9.8 Delay or Omission Not Waiver ............................................................................... 34
Section 9.9 Waiver of Past Defaults ........................................................................................... 34
Section 9.10 Remedies Under Borrower Loan Agreement or Borrower Notes ........................... 34
Section 9.11 Waiver of Appraisement and Other Laws ............................................................... 34
Section 9.12 Suits to Protect the Security .................................................................................... 35
Section 9.13 Remedies Subject to Applicable Law ...................................................................... 35
Section 9.14 Assumption of Obligations ...................................................................................... 35
ARTICLE X
AMENDMENT; AMENDMENT OF BORROWER LOAN AGREEMENT
AND OTHER DOCUMENTS
Section 10.1 Amendment of Funding Loan Agreement ............................................................... 35
Section 10.2 Amendments Require Funding Lender Consent ..................................................... 36
Section 10.3 Consents and Opinions ............................................................................................ 36
ARTICLE XI
THE FISCAL AGENT
Section 11.1 Appointment of Fiscal Agent; Acceptance .............................................................. 36
Section 11.2 Certain Duties and Responsibilities of Fiscal Agent ............................................... 36
Section 11.3 Notice of Defaults.................................................................................................... 37
Section 11.4 Certain Rights of Fiscal Agent ................................................................................ 37
Section 11.5 Not Responsible for Recitals ................................................................................... 39
Section 11.6 May Hold Funding Loan ......................................................................................... 39
ii
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TABLE OF CONTENTS
(continued)
Page
Section 11.7 Moneys Held Hereunder .......................................................................................... 39
Section 11.8 Compensation and Reimbursement ......................................................................... 39
Section 11.9 Fiscal Agent Required; Eligibility ........................................................................... 40
Section 11.10 Resignation and Removal; Appointment of Successor ........................................... 40
Section 11.11 Acceptance of Appointment by Successor .............................................................. 41
Section 11.12 Merger, Conversion, Consolidation or Succession to Business .............................. 41
Section 11.13 Appointment of Co-Fiscal Agent ............................................................................ 41
Section 11.14 Loan Servicing......................................................................................................... 42
Section 11.15 No Recourse Against Officers or Employees of Fiscal Agent ................................ 42
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices ..................................................................................................................... 42
Section 12.2 Term of Funding Loan Agreement .......................................................................... 45
Section 12.3 Successors and Assigns ........................................................................................... 45
Section 12.4 Legal Holidays......................................................................................................... 45
Section 12.5 Governing Law ........................................................................................................ 45
Section 12.6 Severability .............................................................................................................. 45
Section 12.7 Execution in Several Counterparts .......................................................................... 46
Section 12.8 Nonrecourse Obligation of the Borrower ................................................................ 46
Section 12.9 Waiver of Trial by Jury ........................................................................................... 46
Section 12.10 Electronic Transactions ........................................................................................... 46
Section 12.11 Reference Date ........................................................................................................ 46
EXHIBIT A FORM OF GOVERNMENTAL LENDER NOTES ................................................ A-1
EXHIBIT B FORM OF REQUIRED TRANSFEREE REPRESENTATIONS ............................ B-1
EXHIBIT C FORM OF WRITTEN REQUISITION OF THE BORROWER PROJECT
FUND ........................................................................................................................ C-1
EXHIBIT D FORM OF WRITTEN REQUISITION OF THE BORROWER CLOSING
COSTS FUND .......................................................................................................... D-1
EXHIBIT E FISCAL AGENT WIRING INSTRUCTIONS ......................................................... E-1
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2019-06-11 Agenda PacketPage 651 of 891
FUNDING LOAN AGREEMENT
This Funding Loan Agreement, dated as of ______________ 1, 2019 (this Funding Loan
Agreement), is entered into by CITIBANK, N.A., (together with any successor hereunder, the
Funding Lender), the CHULA VISTA HOUSING AUTHORITY, a public body corporate and
politic, organized and existing under the laws of the State of California (together with its successors
and assigns, the Governmental Lender) and U.S. BANK NATIONAL ASSOCIATION, a
national banking association duly organized and existing under the laws of the United States of
America, as fiscal agent (together with its successors and assigns, the Fiscal Agent).
R E C I T A L S :
WHEREAS, the Governmental Lender is a public body, corporate and politic, duly
organized and validly existing under the laws of the State of California; and
WHEREAS, the Governmental Lender is empowered pursuant to Chapter 1 of Part 2 of
Division 24 of the California Health and Safety Code (the Act) to: (a) make loans to any person to
provide financing for residential rental developments located within the jurisdiction of the
Governmental Lender and intended to be occupied in part by persons of low and moderate income;
(b) incur indebtedness for the purpose of obtaining moneys to make such loans and provide such
financing, to establish any required reserve funds and to pay administrative costs and other costs
incurred in connection with the incurrence of such indebtedness of the Governmental Lender; and
(c) pledge all or any part of the revenues, receipts or resources of the Governmental Lender,
including the revenues and receipts to be received by the Governmental Lender from or in connection
with such loans, and to mortgage, pledge or grant security interests in such loans or other property of
the Governmental Lender in order to secure the payment of the principal of, prepayment premium, if
any, on and interest on such indebtedness of the Governmental Lender; and
WHEREAS, ST. REGIS PARK CIC, LP, a California limited partnership (the Borrower),
has requested that the Governmental Lender enter into this Funding Loan Agreement under which
the Funding Lender will (i) advance funds (the Funding Loan) to or for the account of the
Governmental Lender, and (ii) apply the proceeds of the Funding Loan to make a loan (the
Borrower Loan) to the Borrower to finance the acquisition, rehabilitation and equipping of a 118
unit plus multifamily rental housing project located at 1025 Broadway in the City of
Chula Vista, County of San Diego, California, known as St. Regis Park Apartments; and
WHEREAS, simultaneously with the delivery of this Funding Loan Agreement, the
Governmental Lender and the Borrower will enter into a Borrower Loan Agreement of even date
herewith (as it may be supplemented or amended, the Borrower Loan Agreement), whereby the
Borrower agrees to make loan payments to the Governmental Lender in an amount that, when added
to other funds available under this Funding Loan Agreement, will be sufficient to enable the
Governmental Lender to repay the Funding Loan and to pay all costs and expenses related thereto
when due; and
WHEREAS, to evidence its payment obligations under the Borrower Loan Agreement, the
Borrower will execute and deliver to the Governmental Lender its Borrower Notes (as defined
herein) and the obligations of the Borrower under the Borrower Notes will be secured by a lien on
and security interest in the Project (as defined herein) pursuant to a Multifamily Deed of Trust,
2019-06-11 Agenda PacketPage 652 of 891
Assignment of Rents, Security Agreement and Fixture Filing (California), of even date herewith (the
Security Instrument), made by the Borrower in favor of the Governmental Lender, as assigned to
the Funding Lender to secure the performance by the Governmental Lender of its obligations under
the Funding Loan; and
WHEREAS, the Governmental Lender has executed and delivered to the Funding Lender its
Multifamily Housing Revenue Note (St. Regis Park Apartments), 2019 Series B-Series B-1
Governmental Lender Note
(St. Regis Park Apartments), 2019 Series B-Series B-2 Governmental Lender Note
together with the Series B-Tax-Exempt Governmental Lender
Notes B-3
Series B-3 Governmental Lender Note-Exempt
Governmental Lender Notes
the payments due to the Funding Lender under the Funding Loan as provided in this Funding Loan
Agreement, all things necessary to make the Funding Loan Agreement the valid, binding and legal
limited obligation of the Governmental Lender, have been done and performed and the execution and
delivery of this Funding Loan Agreement and the execution and delivery of the Governmental
Lender Notes, subject to the terms hereof, have in all respects been duly authorized.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the premises and the mutual representations,
covenants and agreements herein contained, the parties hereto do hereby agree as follows:
Definitions. For all purposes of this Funding Loan Agreement, except as
otherwise expressly provided or unless the context otherwise clearly requires:
(a) Unless specifically defined herein, all capitalized terms shall have the
meanings ascribed thereto in the Borrower Loan Agreement.
(b) The terms herein, hereof and hereunder and other words of similar
import refer to this Funding Loan Agreement as a whole and not to any particular Article, Section or
other subdivision. The terms agree and agreements contained herein are intended to include and
mean covenant and covenants.
(c) All references made (i) in the neuter, masculine or feminine gender shall be
deemed to have been made in all such genders, and (ii) in the singular or plural number shall be
deemed to have been made, respectively, in the plural or singular number as well. Singular terms
shall include the plural as well as the singular, and vice versa.
(d) All accounting terms not otherwise defined herein shall have the meanings
assigned to them, and all computations herein provided for shall be made, in accordance with the
Approved Accounting Method. All references herein to Approved Accounting Method refer to
such principles as they exist at the date of application thereof.
2
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(e) All references in this instrument to designated Articles, Sections and
other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as
originally executed.
(f) All references in this instrument to a separate instrument are to such separate
instrument as the same may be amended or supplemented from time to time pursuant to the
applicable provisions thereof.
(g) References to the Tax-Ex-
--Exempt Governmental Lender Notes are to the exclusion of
interest on the Tax-Exempt Governmental Lender Notes (other than any portion of the Tax-Exempt
Governmental Len
the meaning of Section 147 of the Code) from gross income for federal income tax purposes pursuant
to Section 103(a) of the Code.
(h) The following terms have the meanings set forth below:
Act means Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code.
Additional Borrower Payments shall have the meaning given such term in the Borrower
Loan Agreement.
Affiliate means, as to any Person, any other Person that, directly or indirectly, is in Control
of, is Controlled by or is under common Control with such Person.
Approved Transferee means (a) a qualified institutional buyer (QIB) as defined in
Rule 144A promulgated under the Securities Act that is a financial institution or commercial bank
having capital and surplus of $5,000,000,000 or more, (b) an affiliate of the Funding Lender, or (c) a
trust or custodial arrangement established by the Funding Lender or one of its affiliates the beneficial
interests in which will be owned only by QIBs.
Authorized Amount means $__________, the maximum principal amount of the Funding
Loan under this Funding Loan Agreement.
Authorized Governmental Lender Representative means the Chairperson, Vice
Chairperson, Executive Director, or Treasurer of the Governmental Lender, or any person or persons
designated to act on behalf of the Governmental Lender by a certificate filed with the Borrower,
Funding Lender and Servicer, if any, containing the specimen signatures of such person or persons
and signed on behalf of the Governmental Lender by its Chairperson, Vice Chairperson, Executive
Director, or Treasurer of the Governmental Lender.
Borrower means St. Regis Park CIC, LP, a California limited partnership.
Borrower Loan shall mean the mortgage loan made by the Governmental Lender to the
Borrower pursuant to the Borrower Loan Agreement in the aggregate principal amount of the
Borrower Loan Amount, as evidenced by the Borrower Notes.
Borrower Loan Agreement shall mean the Borrower Loan Agreement, of even date
herewith, between the Governmental Lender and the Borrower, as supplemented, amended or
replaced from time to time in accordance with its terms.
3
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Borrower Loan Agreement Default shall mean any event of default set forth in
Section 8.1 of the Borrower Loan Agreement. A Borrower Loan Agreement Default shall exist if a
Borrower Loan Agreement Default shall have occurred and be continuing beyond any applicable
cure period.
Borrower Loan Amount shall mean $__________, the maximum principal amount of the
Borrower Loan under the Borrower Loan Agreement.
Borrower Loan Documents shall have the meaning given such term in the Borrower Loan
Agreement.
Borrower Notes shall mean, collectively, the Series B-1 Borrower Note, the Series B-2
Borrower Note and the Series B-3 Borrower Note;
Borrower Notes.
Business Day shall mean any day other than (i) a Saturday or a Sunday, or (ii) a day on
which federally insured depository institutions in New York, New York or California are authorized
or obligated by law, regulation, governmental decree or executive order to be closed.
Closing Costs has the meaning given to the term Costs of Funding in the Borrower Loan
Agreement.
Closing Date shall mean June __, 2019, the date that initial Funding Loan proceeds are
disbursed hereunder.
Code means the Internal Revenue Code of 1986 as in effect on the date of execution and
delivery of the Governmental Lender Notes or (except as otherwise referenced herein) as it may be
amended to apply to obligations issued on the Closing Date, together with applicable proposed,
temporary and final regulations promulgated, and applicable official public guidance published,
under the Code.
Construction Funding Agreement means that certain Construction Funding Agreement
of even date herewith, between the Funding Lender, as agent for the Governmental Lender, and
Borrower, pursuant to which the Borrower Loan will be advanced by the Funding Lender (or the
Servicer on its behalf), as agent of the Governmental Lender, to the Fiscal Agent for disbursement to
the Borrower and setting forth certain provisions relating to disbursement of the Borrower Loan
during construction, insurance and other matters, as such agreement may be amended, modified,
supplemented and replaced from time to time.
Contingency Draw-Down Agreement-Down Agreement of
even date herewith among the Fiscal Agent, the Funding Lender, and the Borrower relating to
possible conversion of the portion of the Funding Loan evidenced by the Tax-Exempt Governmental
Lender Notes from a draw down loan to a fully funded loan.
Control shall mean, with respect to any Person, either (a) ownership directly or through
other entities of more than 50% of all beneficial equity interest in such Person, or (b) the possession,
directly or indirectly, of the power to direct or cause the direction of the management and policies of
such Person, through the ownership of voting securities, by contract or otherwise.
Conversion has the meaning given to such term in the Borrower Loan Agreement.
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Conversion Date shall have the meaning given such term in the Construction Funding
Agreement.
Default shall mean the occurrence of an event, which, under any Funding Loan Document,
would, but for the giving of notice or passage of time, or both, be an event of default under the
applicable Funding Loan Document or a Borrower Loan Agreement Default.
Draw-Down Notice shall mean a notice described in Section 1.01 of the Contingency
Draw-Down Agreement regarding the conversion of the Funding Loan from a draw down loan to a
fully funded loan.
Equity Investor shall mean Raymond James California Housing Opportunities Fund VI
L.L.C., a Florida limited liability company, and its permitted successors and assigns.
Event of Default shall have the meaning ascribed thereto in Section 9.1 hereof.
Fair Market Value shall mean the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arms length transaction (determined as of the date
the contract to purchase or sell the investment becomes binding) if the investment is traded on an
established securities market (within the meaning of section 1273 of the Code) and, otherwise, the
term Fair Market Value means the acquisition price in a bona fide arms length transaction (as
referenced above) if (a) the investment is a certificate of deposit that is acquired in accordance with
applicable regulations under the Code, (b) the investment is an agreement with specifically
negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for
example, a guaranteed investment contract, a forward supply contract or other investment agreement)
that is acquired in accordance with applicable regulations under the Code, (c) the investment is a
United States Treasury Security--State and Local Government Series that is acquired in accordance
with applicable regulations of the United States Bureau of Public Debt, or (d) any commingled
investment fund in which the City and related parties do not own more than a ten percent (10%)
beneficial interest therein if the return paid by the fund is without regard to the source of the
investment. To the extent required by the Regulations, the term investment will include a hedge.
Fiscal Agent shall mean U.S. Bank National Association, which entity is appointed
pursuant to Section 11.1 to serve as Fiscal Agent under this Funding Loan Agreement, and any
successor thereto pursuant to Section 11.10.
Fiscal Agents Fees
ordinary fees and expenses in rendering its services under this Funding Loan Agreement during each
12-month period, payable on the Closing Date and annually in advance, which fee is equal to
$2,000.00.
Funding Lender shall mean Citibank N.A., a national banking association, and any
successor under this Funding Loan Agreement and the Borrower Loan Documents.
Funding Loan Agreement shall mean this Funding Loan Agreement, by and among the
Funding Lender, the Governmental Lender and the Fiscal Agent, as it may from time to time be
supplemented, modified or amended by one or more agreements or other instruments supplemental
hereto entered into pursuant to the applicable provisions hereof.
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Funding Loan Documents shall mean (a) this Funding Loan Agreement, (b) the Borrower
Loan Agreement, (c) the Regulatory Agreement, (d) the Tax Certificate, (e) the Borrower Loan
Documents, (f) all other documents evidencing, securing, governing or otherwise pertaining to the
Funding Loan, and (g) all amendments, modifications, renewals and substitutions of any of the
foregoing.
Governmental Lender shall mean the Chula Vista Housing Authority.
Governmental Lender Notes shall mean, collectively, the Series B-1 Governmental
Lender Note, the Series B-2 Governmental Lender Note and the Series B-3 Governmental Lender
Note
Highest Rating Category shall mean, with respect to a Permitted Investment, that the
Permitted Investment is rated by S&P or Moodys in the highest rating category given by that rating
agency for that general category of security. By way of example, the Highest Rating Category for
tax-exempt municipal debt established by S&P is A1+ for debt with a term of one year or less and
AAA for a term greater than one year, with corresponding ratings by Moodys of MIG1 (for
fixed rate) or VMIG1 (for variable rate) for three months or less and Aaa for greater than three
months. If at any time (a) both S&P and Moodys rate a Permitted Investment and (b) one of those
ratings is below the Highest Rating Category, then such Permitted Investment will, nevertheless, be
deemed to be rated in the Highest Rating Category if the lower rating is no more than one rating
category below the highest rating category of that rating agency. For example, a Permitted
Investment rated AAA by S&P and Aa3 by Moodys is rated in the Highest Rating Category. If,
however, the lower rating is more than one full rating category below the Highest Rating Category of
that rating agency, then the Permitted Investment will be deemed to be rated below the Highest
Rating Category. For example, a Permitted Investment rated AAA by S&P and A1 by Moodys
is not rated in the Highest Rating Category.
Maturity Date shall mean (i) with respect to the Series B-1 Governmental Lender Note
\[November 1, 2051\], (ii) with respect to the Series B-2 Governmental Lender Note \[November 1,
2021\], and (iii) with respect to the Series B-3 Governmental Lender Note \[_____________\].
Maximum Rate shall mean the lesser of (a) 12% per annum, and (b) the maximum interest
rate that may be paid on the Funding Loan under State law.
Minimum Beneficial Ownership Amount shall mean an amount no less than fifteen
percent (15%) of the outstanding principal amount of the Funding Loan, or the full outstanding
principal amount of the Funding Loan, if such principal amount is less than $100,000.
Moodys shall mean Moodys Investors Service, Inc., or its successor.
Negative Arbitrage Account means the Negative Arbitrage Account of the Project Fund
established under Section 7.3, as otherwise described in the Contingency Draw-Down Agreement.
Negative Arbitrage Deposit has the meaning set forth in the Contingency Draw-Down
Agreement.
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Noteowner or owner of the means the owner of the
Governmental Lender Notes as shown on the registration books maintained by the Funding Lender
pursuant to Section 2.4(e).
Ongoing Governmental Lender Fee shall mean the ongoing portion of the Annual
Administration Fee (as that term is defined in the Regulatory Agreement) that is payable after the
Closing Date.
Opinion of Counsel shall mean a written opinion from an attorney or firm of attorneys,
acceptable to the Funding Lender and the Governmental Lender with experience in the matters to be
covered in the opinion; provided that whenever an Opinion of Counsel is required to address the
exclusion of interest on the Tax-Exempt Governmental Lender Notes from gross income for purposes
of federal income taxation, such opinion shall be provided by Tax Counsel.
Permitted Investments shall mean, to the extent authorized by law for investment of any
moneys held under this Funding Loan Agreement, but only to the extent that the same are acquired at
Fair Market Value:
(a) Direct obligations of the United States of America including obligations
issued or held in book-entry form on the books of the Department of the Treasury of the United
States of America (Government Obligations).
(b) Direct obligations of, and obligations on which the full and timely payment of
principal and interest is unconditionally guaranteed by, any agency or instrumentality of the United
States of America or direct obligations of the World Bank, which obligations are rated in the Highest
Rating Category.
(c) Demand deposits or time deposits with certificates of deposit issued by the
Fiscal Agent or its affiliates or any bank organized under the laws of the United States of America or
any state or the District of Columbia which has combined capital, surplus and undivided profits of
not less than $50,000,000 and maturing in less than 365 days; provided that the Fiscal Agent or such
other institution has been rated at least VMIG-1/A-1+ by Moodys/S&P which deposits or
certificates are fully insured by the Federal Deposit Insurance Corporation or collateralized pursuant
to the requirements of the Office of the Comptroller of the Currency.
(d) Bonds (including tax-exempt bonds), bills, notes or other obligations of or
secured by Fannie Mae, Freddie Mac, the Federal Home Loan Bank or the Federal Farm Credit
Bank.
(e) Money market funds rated AAA by S&P which are registered with the
Securities and Exchange Commission and which meet the requirements of Rule 2(a)(7) of the
Investment Company Act of 1940, as amended, which may be administered by the Fiscal Agent or its
affiliates.
(f) Collateralized Investment Agreements or Repurchase Agreements with
financial institutions rated in the A category or higher without regard to qualifiers, by at least one
Rating Agency. The agreement must be continually collateralized with obligations specified in
paragraphs (a), (b) and/or (d) above, eligible for wire through the Federal Reserve Bank System or
the DTC/PTC as applicable, and at a level of at least 103% of the amount on deposit and valued no
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less than daily. The collateral must be held by a third party custodian and be free and clear of all
liens and claims of third parties. Securities must be valued daily, marked-to-market at current market
price plus accrued interest. If the market value of the securities is found to be below the required
level, the provider must restore the market value of the securities to the required level within one (1)
business day. Permitted collateral must be delivered to and held in a segregated account by the
Fiscal Agent or a custodian (the Collateral Agent), and the Collateral Agent cannot be the provider.
The collateral must be delivered to the Collateral Agent before/simultaneous with payment
(perfection by possession of certificated securities). Acceptable collateral must be free and clear of
all liens and claims of third parties and shall be registered in the name of the Collateral Agent for the
benefit of the Governmental Lender and Fiscal Agent. The agreement shall state that the Collateral
Agent has a valid and perfected first priority security interest in the securities, any substituted
securities and all proceeds thereof.
(g) Any other investment authorized by the laws of the State, if such investment
is approved in advance in writing by the Funding Lender in its sole discretion.
Permitted Investments shall not include any of the following:
(1) Except for any investment described in the next sentence, any investment or
any agreement with a maturity profile greater than the date(s) on which funds
representing the corpus of the investment may be needed under the Funding
Loan Documents. This exception (1) shall not apply to Permitted
Investments listed in paragraph (g).
(2) Any obligation bearing interest at an inverse floating rate.
(3) Any investment which may be prepaid or called at a price less than its
purchase price prior to stated maturity.
(4) Any investment the interest rate on which is variable and is established other
than by reference to a single index plus a fixed spread, if any, and which
interest rate moves proportionately with that index.
Person shall mean any individual, corporation, limited liability company, partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county or municipal government
or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of
any of the foregoing.
Pledged Revenues shall mean the amounts pledged under this Funding Loan Agreement to
the payment of the principal of, prepayment premium, if any, and interest on the Funding Loan and
the Governmental Lender Notes, consisting of the following: (i) all income, revenues, proceeds and
other amounts to which the Governmental Lender is entitled (other than amounts received by the
Governmental Lender with respect to the Unassigned Rights) derived from or in connection with the
Project and the Funding Loan Documents, including all Borrower Loan Payments due under the
Borrower Loan Agreement and the Borrower Notes, payments with respect to the Borrower Loan
Payments and all amounts obtained through the exercise of the remedies provided in the Funding
Loan Documents and all receipts credited under the provisions of this Funding Loan Agreement
against said amounts payable, and (ii) moneys held in the funds and accounts established under this
Funding Loan Agreement, together with investment earnings thereon.
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Prepayment Premium shall mean (i) any premium payable by the Borrower pursuant to
the Borrower Loan Documents in connection with a prepayment of the Borrower Notes (including
any prepayment premium as set forth in the Borrower Notes) and (ii) any premium payable on the
Governmental Lender Notes pursuant to this Funding Loan Agreement.
Project shall have the meaning given to that term in the Borrower Loan Agreement.
Regulations shall mean with respect to the Code, the relevant U.S. Treasury regulations
and proposed regulations thereunder or any relevant successor provision to such regulations and
proposed regulations.
Regulatory Agreement shall mean that certain Regulatory Agreement and Declaration of
Restrictive Covenants, dated as of the date hereof, between the Governmental Lender and the
Borrower, as hereafter amended or modified.
Remaining Funding Loan Proceeds Account means the Remaining Funding Loan
Proceeds Account of the Project Fund established under Section 7.3, as otherwise described in the
Contingency Draw-Down Agreement.
Remaining Funding Loan Proceeds Account Earnings Subaccount has the meaning set
forth in the Contingency Draw-Down Agreement.
Required Transferee Representations shall mean the representations in substantially the
form attached to this Funding Loan Agreement as Exhibit B.
Resolution shall mean the resolution of the Governmental Lender authorizing the Funding
Loan and the execution and delivery of the Funding Loan Documents to which the Governmental
Lender is a party.
Responsible Officer
vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, any senior associate, any associate or any other officer of the Fiscal Agent within
the corporate trust office designated for the Fiscal Agent in Section 12.1 hereof (or any successor
those performed by the persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is ref
of and familiarity with the particular subject and having direct responsibility for the administration of
this Funding Loan Agreement.
Securities Act shall mean the Securities Act of 1933, as amended.
Security shall have the meaning assigned to it in Section 4.1.
Security Instrument shall mean the Multifamily Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing (California) (as amended, restated and/or supplemented from
time to time) of even date herewith, made by the Borrower in favor of the Governmental Lender, as
assigned to the Funding Lender to secure the performance by the Governmental Lender of its
obligations under the Funding Loan.
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Series B-1 Borrower Note
Date, in the original maximum principal amount of $______________, made by the Borrower and
payable to the Governmental Lender, evidencing the loan of the proceeds of the Series B-1
Governmental Lender Note, as endorsed and assigned by the Governmental Lender without recourse
to the Funding Lender, as executed by the Borrower, and as it may thereafter be amended or
supplemented from time to time.
Series B-1 Governmental Lender Notean that certain Chula Vista Housing
Authority Multifamily Housing Revenue Note (St. Regis Park Apartments) 2019 Series B-1, dated
the Closing Date, in the original maximum principal amount of $______________, made by the
Governmental Lender and payable to the Funding Lender, as executed by the Governmental Lender
and as it may thereafter be amended or supplemented from time to time.
Series B-2 Borrower Note
Date, in the original maximum principal amount of $______________, made by the Borrower and
payable to the Governmental Lender, evidencing the loan of the proceeds of the Series B-2
Governmental Lender Note, as endorsed and assigned by the Governmental Lender without recourse
to the Funding Lender, as executed by the Borrower, and as it may thereafter be amended or
supplemented from time to time.
Series B-2 Governmental Lender Note shall mean that certain Chula Vista Housing
Authority Multifamily Housing Revenue Note (St. Regis Park Apartments) 2019 Series B-2, dated
the Closing Date, in the original maximum principal amount of $______________, made by the
Governmental Lender and payable to the Funding Lender, as executed by the Governmental Lender
and as it may thereafter be amended or supplemented from time to time.
Series B-3 Borrower Note
Closing Date, in the original maximum principal amount of $______________, made by the
Borrower and payable to the Governmental Lender, evidencing the loan of the proceeds of the Series
B-3 Governmental Lender Note, as endorsed and assigned by the Governmental Lender without
recourse to the Funding Lender, as executed by the Borrower, and as it may thereafter be amended or
supplemented from time to time.
Series B-3 Governmental Lender NoteTaxable Governmental Lender Note
mean that certain Chula Vista Housing Authority Multifamily Housing Revenue Note (St. Regis Park
Apartments) 2019 Series B-3 (Taxable), dated the Closing Date, in the original maximum principal
amount of $______________, made by the Governmental Lender and payable to the Funding
Lender, as executed by the Governmental Lender and as it may thereafter be amended or
supplemented from time to time.
Servicer shall mean any Servicer appointed by the Funding Lender to perform certain
servicing functions with respect to the Funding Loan and on the Borrower Loan pursuant to a
separate servicing agreement to be entered into between the Funding Lender and the Servicer.
Initially the Servicer shall be the Funding Lender pursuant to this Funding Loan Agreement.
Servicing Agreement shall mean any servicing agreement entered into between the
Funding Lender and a Servicer with respect to the servicing of the Funding Loan and/or the
Borrower Loan.
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S&P shall mean S&P Global Ratings, a business unit Ratings
Services, and its successors
State shall mean the State of California.
Tax Certificate shall mean the Tax Certificate and Agreement, dated the Closing Date,
executed and delivered by the Governmental Lender and the Borrower, as it may be amended from
time to time.
Tax Counsel shall mean (a) Stradling Yocca Carlson & Rauth, a Professional Corporation,
or (b) any other attorney or firm of attorneys designated by the Governmental Lender and approved
by the Funding Lender having a national reputation for skill in connection with the authorization and
issuance of municipal obligations under Sections 103 and 141 through 150 (or any successor
provisions) of the Code.
Tax Counsel Approving Opinion shall mean an opinion of Tax Counsel substantially to
the effect that the Tax-Exempt Governmental Lender Notes constitutes a valid and binding obligation
of the Governmental Lender and that, under existing statutes, regulations published rulings and
judicial decisions, the interest on the Tax-Exempt Governmental Lender Notes is excludable from
gross income for federal income tax purposes (subject to the inclusion of such customary exceptions
as are acceptable to the recipient thereof).
Tax Counsel No Adverse Effect Opinion shall mean an opinion of Tax Counsel
substantially to the effect that the taking of the action specified therein will not, in and of itself,
adversely affect any exclusion of interest on the Tax-Exempt Governmental Lender Notes from gross
income for purposes of federal income taxation (subject to the inclusion of such customary
exceptions as are acceptable to the recipient thereof).
Tax-Exempt Governmental Lender Notes-1
Governmental Lender Note and the Series B--Exempt
one of such Tax-Exempt Governmental Lender Notes.
UCC shall mean the Uniform Commercial Code as in effect in the State.
Unassigned Rights shall mean the Governmental Lenders rights to (a) reimbursement and
payment of its fees, costs and expenses and the Rebate Amount under Section 2.5 of the Borrower
Loan Agreement and Section 5 of the Regulatory Agreement, (b) access to the Project under
Section 5.17 of the Borrower Loan Agreement, (c) indemnification under Section 5.15 of the
Borrower Loan Agreement and Section 9 of the Regulatory Agreement, (d) attorneys fees under
Sections 5.11, 5.14 and 10.05 of the Borrower Loan Agreement and Section 20 of the Regulatory
Agreement, (e) receive notices, reports and other statements and its rights to consent to certain
matters, including but not limited to its right to consent to amendments to this Funding Loan
Agreement, the Borrower Loan Agreement and the Regulatory Agreement, and otherwise as
provided in this Funding Loan Agreement and the Borrower Loan Agreement, (f) seek performance
by the Borrower of its obligations under the Regulatory Agreement, and (g) seek performance of, and
enforce, various tax covenants as described in Section 2.2(b)(i) of the Borrower Loan Agreement,
including but not limited to those in Sections 5.34 and 5.35 of the Borrower Loan Agreement.
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Written Certificate, Written Certification, Written Consent, Written Direction,
Written Notice, Written Order, Written Registration, Written Request, and Written
Requisition shall mean a written certificate, direction, notice, order or requisition signed by an
Authorized Borrower Representative, an Authorized Governmental Lender Representative or an
authorized representative of the Funding Lender and delivered to the Funding Lender, the Servicer or
such other Person as required under the Funding Loan Documents.
Yield shall mean yield as defined in Section 148(h) of the Code and any regulations
promulgated thereunder.
Effect of Headings and Table of Contents. The Article and Section
headings herein and in the Table of Contents are for convenience only and shall not affect the
construction hereof.
Date of Funding Loan Agreement. The date of this Funding Loan
Agreement is intended as and for a date for the convenient identification of this Funding Loan
Agreement and is not intended to indicate that this Funding Loan Agreement was executed and
delivered on said date.
Designation of Time for Performance. Except as otherwise expressly
provided herein, any reference in this Funding Loan Agreement to the time of day shall mean the
time of day in the city where the Funding Lender maintains its place of business for the performance
of its obligations under this Funding Loan Agreement.
Interpretation. The parties hereto acknowledge that each of them and their
respective counsel have participated in the drafting and revision of this Funding Loan Agreement.
Accordingly, the parties agree that any rule of construction that disfavors the drafting party shall not
apply in the interpretation of this Funding Loan Agreement or any amendment or supplement or
exhibit hereto.
Terms.
(a) Principal Amount. The total principal amount of the Funding Loan is hereby
expressly limited to the Authorized Amount.
(b) Draw-Down Funding. The Funding Loan is originated on a draw-down basis.
The proceeds of the Funding Loan shall be advanced by the Funding Lender to the Fiscal Agent
(pursuant to the wiring instructions on Exhibit E attached hereto) for deposit by the Fiscal Agent to
the Project Fund for the account of the Governmental Lender as and when needed to make each
advance in accordance with the disbursement provisions of the Borrower Loan Agreement and the
Construction Funding Agreement. Subject to the terms and conditions of the Borrower Loan
Agreement, the Funding Lender agrees to advance, on behalf of the Governmental Lender, to the
Fiscal Agent for deposit by the Fiscal Agent to the Project Fund $_____________ on the Closing
Date. The Borrower Loan advances and Funding Loan advances shall be allocated first to the Series
B-1 Borrower Note and the related Series B-1 Governmental Lender Note and, once the foregoing
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have been fully funded, then to the Series B-2 Borrower Note and the related Series B-2
Governmental Lender Note. Notwithstanding anything in this Funding Loan Agreement to the
contrary, no additional amounts of the Funding Loan may be drawn down and funded hereunder after
the third anniversary of the Closing Date; provided, however, that upon the delivery of a Tax
Counsel No Adverse Effect Opinion to the Governmental Lender and the Funding Lender such date
may be changed to a later date as specified in such Tax Counsel No Adverse Effect Opinion. The
portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes shall be
drawn down first, in its entirety, before the portion of the Funding Loan evidenced by the Taxable
Governmental Lender Note is drawn down.
The Governmental Lender consents to the terms of the Contingency Draw-Down
Agreement and agrees to take all actions requested in writing by the Funding Lender or the Borrower
that are reasonably required of the Governmental Lender, in connection with the conversion of the
Funding Loan to a fully drawn loan pursuant to the provisions of the Contingency Draw-Down
Agreement in the event a Draw-Down Notice is filed by the Funding Lender or the Borrower, all at
the expense of the Borrower. The Funding Lender authorizes and directs the Fiscal Agent to enter
into the Contingency Draw-Down Agreement.
(c) Origination Date; Maturity. The Funding Loan shall be originated on the
Closing Date and shall mature on the corresponding Maturity Date at which time the entire principal
amount of the portion of the Funding Loan evidenced by the applicable Governmental Note, to the
extent not previously paid, and all accrued and unpaid interest, shall be due and payable.
(d) Principal. The outstanding principal amount of each Governmental Lender
Note and of the Funding Loan as of any given date shall be the total amount advanced to the Fiscal
Agent by the Funding Lender to or for the account of the Governmental Lender to fund
corresponding advances with respect to the corresponding Borrower Note under the Borrower Loan
Agreement and the Construction Funding Agreement as proceeds of the Borrower Loan, less any
payments of principal of the Governmental Lender Note previously received upon payment of
corresponding principal amounts under the corresponding Borrower Note, including regularly
scheduled principal payments and voluntary and mandatory prepayments. The principal amount of
each Governmental Lender Note and interest thereon shall be payable on the basis specified in this
paragraph (d) and in paragraphs (e) and (f) of this Section 2.1.
The Fiscal Agent shall keep a record of all principal advances and principal
repayments made under each Governmental Lender Note and shall upon written request provide the
Governmental Lender with a statement of the outstanding principal balance of each Governmental
Lender Note and the Funding Loan.
(e) Interest. Interest shall be paid on the outstanding principal amount of each
Governmental Lender Note at the rate or rates set forth in the corresponding Borrower Note and
otherwise as set forth in the Borrower Loan Agreement.
(f) Corresponding Payments. The payment or prepayment of principal, interest
and premium, if any, due on the Funding Loan and each Governmental Lender Note shall be
identical with and shall be made on the same dates, terms and conditions, as the principal, interest,
premiums, late payment fees and other amounts due on the corresponding Borrower Note. The
Series B-1 Governmental Lender Note shall be payable from payments on the corresponding Series
B-1 Borrower Note, the Series B-2 Governmental Lender Note shall be payable from payments on
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the related Series B-2 Borrower Note and the Series B-3 Governmental Lender Note shall be payable
from payments on the related Series B-3 Borrower Note. Any payment or prepayment made by the
Borrower of principal, interest, Premium, if any, due on a Borrower Note shall be deemed to be like
payments or prepayments of principal, interest and Premium, if any, due on the Funding Loan and
the corresponding Governmental Lender Note.
(g) Usury. The Governmental Lender intends to conform strictly to the usury
laws applicable to this Funding Loan Agreement and the Governmental Lender Notes and all
agreements made in the Governmental Lender Notes, this Funding Loan Agreement and the Funding
Loan Documents are expressly limited so that in no event whatsoever shall the amount paid or agreed
to be paid as interest or the amounts paid for the use of money advanced or to be advanced hereunder
exceed the highest lawful rate prescribed under any law which a court of competent jurisdiction may
deem applicable hereto. If, from any circumstances whatsoever, the fulfillment of any provision of
the Governmental Lender Notes, this Funding Loan Agreement or the other Funding Loan
Documents shall involve the payment of interest in excess of the limit prescribed by any law which a
court of competent jurisdiction may deem applicable hereto, then the obligation to pay interest
hereunder shall be reduced to the maximum limit prescribed by law. If from any circumstances
whatsoever, the Funding Lender shall ever receive anything of value deemed interest, the amount of
which would exceed the highest lawful rate, such amount as would be excessive interest shall be
deemed to have been applied, as of the date of receipt by the Funding Lender, to the reduction of the
principal remaining unpaid hereunder and not to the payment of interest, or if such excessive interest
exceeds the unpaid principal balance, such excess shall be refunded to the Borrower. This paragraph
shall control every other provision of the Governmental Lender Notes, this Funding Loan Agreement
and all other Funding Loan Documents.
In determining whether the amount of interest charged and paid might otherwise exceed the
limit prescribed by law, the Governmental Lender intends and agrees that (i) interest shall be
computed upon the assumption that payments under the Borrower Loan Agreement and other
Funding Loan Documents will be paid according to the agreed terms, and (ii) any sums of money
that are taken into account in the calculation of interest, even though paid at one time, shall be spread
over the actual term of the Funding Loan.
Form of Governmental Lender Notes. As evidence of its obligation to
repay the Funding Loan, simultaneously with the delivery of this Funding Loan Agreement to the
Funding Lender, the Governmental Lender hereby agrees to execute and deliver the Governmental
Lender Notes. The Governmental Lender Notes shall be substantially in the respective forms set
forth in Exhibit A attached hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Funding Loan Agreement.
In connection with Conversion, the Funding Lender shall have the right to exchange the then
existing Series B-1 Governmental Lender Note on or after the Conversion Date for a new Series B-1
Governmental Lender Note with a dated date of the Conversion Date and in a stated principal amount
equal to the then outstanding principal amount of the Series B-1 Governmental Lender Note, which
amount will equal the Permanent Period Amount (as defined in the Borrower Loan Agreement) of
the Borrower Loan, but shall not otherwise change any material terms of the Series B-1
Governmental Lender Note.
Execution and Delivery of Governmental Lender Notes. The
Governmental Lender Notes shall be executed on behalf of the Governmental Lender by the manual
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or facsimile signature of the Authorized Governmental Lender Representative and attested by the
manual or facsimile signature of its Secretary or Deputy Secretary of Chula Vista Housing Authority.
The manual or facsimile signatures of individuals who were the proper officers of the Governmental
Lender at the time of execution shall bind the Governmental Lender, notwithstanding that such
individuals or any of them shall have ceased to hold such offices prior to the execution and delivery
of the Governmental Lender Notes or shall not have held such offices at the date of the
Governmental Lender Notes.
Required Transferee Representations; Participations; Sale and
Assignment.
(a) The Funding Lender shall deliver to the Governmental Lender and the Fiscal
Agent the Required Transferee Representations in substantially the form attached hereto as Exhibit B
on the Closing Date.
(b) The Funding Lender shall have the right to sell (i) the Governmental Lender
Notes and the Funding Loan or (ii) any portion of or a participation interest in the Governmental
Lender Notes and the Funding Loan, to the extent permitted by clause (c) below, provided that such
sale shall be only to Approved Transferees that execute and deliver to the Funding Lender, with a
copy to the Governmental Lender and the Fiscal Agent, the Required Transferee Representations.
(c) Notwithstanding the other provisions of this Section 2.4, no beneficial
ownership interest in the Governmental Lender Notes and Funding Loan shall be sold in an amount
that is less than the Minimum Beneficial Ownership Amount.
(d) No service charge shall be made for any sale or assignment of any portion of
the Governmental Lender Notes, but the Governmental Lender may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection with any
such sale or assignment. Such sums shall be paid in every instance by the purchaser or assignee of
the Funding Loan or portion thereof.
(e) The Governmental Lender Notes, or any interest therein, shall be in fully
registered form transferable to subsequent owners only on the registration books which shall be
maintained by the Funding Lender for such purpose and which shall be open to inspection by the
Governmental Lender. The Governmental Lender Notes shall not be transferred through the services
of the Depository Trust Company or any other third party registrar.
The Fiscal Agent acknowledges that the Funding Lender is the initial registered
owner of the Governmental Lender Notes and shall remain the sole registered owner of the
Governmental Lender Notes except as provided herein. The Funding Lender shall provide written
notice to the Fiscal Agent of any transfer by the Funding Lender of the Governmental Lender Notes
or any interest of the Funding Lender in the Governmental Lender Notes.
(f) The parties agree that no rating shall be sought from a rating agency with
respect to the Funding Loan or the Governmental Lender Notes.
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Prepayment of the Governmental Lender Notes from Prepayment under
the Corresponding Borrower Notes. The Governmental Lender Notes are subject to voluntary and
mandatory prepayment as follows:
(a) Each Governmental Lender Note shall be subject to voluntary prepayment in
full or in part by the Governmental Lender, from funds received by the Fiscal Agent from the
Borrower under the Borrower Loan Agreement to the extent and in the manner and on any date that
the related Borrower Note is subject to voluntary prepayment as set forth therein, at a prepayment
price equal to the principal balance of the related Borrower Note to be prepaid, plus interest thereon
to the date of prepayment and the amount of any Prepayment Premium payable under the related
Borrower Note, plus any Additional Borrower Payments due and payable under the Borrower Loan
Agreement through the date of prepayment.
Except as specifically permitted in the Borrower Notes, the Borrower shall not have
the right to voluntarily prepay all or any portion of the Borrower Notes, thereby causing the related
Governmental Lender Note to be prepaid, without the prior written consent of Funding Lender,
which may be withheld in Funding Lenders sole and absolute discretion.
(b) Each Governmental Lender Note shall be subject to mandatory prepayment in
whole or in part upon prepayment of the related Borrower Note at the direction of the Funding
Lender in accordance with the terms of the related Borrower Note at a prepayment price equal to the
outstanding principal balance of the related Borrower Note prepaid, plus accrued interest plus any
other amounts payable under the related Borrower Note or the Borrower Loan Agreement.
Notice of Prepayment. Notice of prepayment of a Governmental Lender
Note shall be deemed given to the extent that notice of prepayment of the related Borrower Note is
timely and properly given to the Funding Lender (with a copy to the Governmental Lender) in
accordance with the terms of the related Borrower Note and the Borrower Loan Agreement, and no
separate notice of prepayment of a Governmental Lender Note is required to be given.
Security for the Funding Loan. To secure the payment of the Funding Loan
and each Governmental Lender Note, to declare the terms and conditions on which the Funding Loan
and each Governmental Lender Note are secured, and in consideration of the premises and of the
funding of the Funding Loan by the Funding Lender, the Governmental Lender by these presents
does grant, bargain, sell, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set
over and confirm to the Funding Lender (except as limited herein), a lien on and security interest in
the following described property (excepting, however, in each case, the Unassigned Rights) (said
property, rights and privileges being herein collectively called, the Security):
(a) All right, title and interest of the Governmental Lender in, to and under the
Borrower Loan Agreement and the Borrower Notes, including, without limitation, all rents, revenues
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and receipts derived by the Governmental Lender from the Borrower relating to the Project and
including, without limitation, all Pledged Revenues, Borrower Loan Payments and Additional
Borrower Payments derived by the Governmental Lender under and pursuant to, and subject to the
provisions of, the Borrower Loan Agreement; provided that the pledge and assignment made under
this Funding Loan Agreement shall not impair or diminish the obligations of the Governmental
Lender under the provisions of the Borrower Loan Agreement;
(b) All right, title and interest of the Governmental Lender in, to and under,
together with all rights, remedies, privileges and options pertaining to, the Funding Loan Documents,
and all other payments, revenues and receipts derived by the Governmental Lender under and
pursuant to, and subject to the provisions of, the Funding Loan Documents;
(c) Any and all moneys and investments from time to time on deposit in, or
forming a part of, all funds and accounts created and held under this Funding Loan Agreement and
any amounts held at any time in the Remaining Funding Loan Proceeds Account, any Negative
Arbitrage Deposit and any other amounts held under the Contingency Draw-Down Agreement,
subject to the provisions of this Funding Loan Agreement permitting the application thereof for the
purposes and on the terms and conditions set forth herein; and
(d) Any and all other real or personal property of every kind and nature or
description, which may from time to time hereafter, by delivery or by writing of any kind, be
subjected to the lien of this Funding Loan Agreement as additional security by the Governmental
Lender or anyone on its part or with its consent, or which pursuant to any of the provisions hereof or
of the Borrower Loan Agreement may come into the possession or control of the Fiscal Agent, the
Funding Lender or a receiver appointed pursuant to this Funding Loan Agreement; and the Funding
Lender and the Fiscal Agent are hereby authorized to receive any and all such property as and for
additional security for the Funding Loan and each Governmental Lender Note and to hold and apply
all such property subject to the terms hereof.
The pledge and assignment of and the security interest granted in the Security pursuant to this
Section 4.1 for the payment of the principal of, premium, if any, and interest on each Governmental
Lender Note, in accordance with its terms and provisions, and for the payment of all other amounts
due hereunder, shall attach and be valid and binding from and after the time of the delivery of the
Governmental Lender Notes by the Governmental Lender. The Security so pledged and then or
thereafter received by the Governmental Lender, Fiscal Agent or the Funding Lender shall
immediately be subject to the lien of such pledge and security interest without any physical delivery
or recording thereof or further act, and the lien of such pledge and security interest shall be valid and
binding and prior to the claims of any and all parties having claims of any kind in tort, contract or
otherwise against the Governmental Lender irrespective of whether such parties have notice thereof.
Delivery of Security. To provide security for the payment of the Funding
Loan and each Governmental Lender Note, the Governmental Lender has pledged and assigned to
secure payment of the Funding Loan and the Governmental Lender Notes its right, title and interest
in the Security to the Funding Lender. In connection with such pledge, assignment, transfer and
conveyance, there shall be delivered to the Funding Lender, by or at the expense of the Borrower, the
following documents or instruments promptly following their execution and, to the extent applicable,
their recording or filing:
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(a) Each Borrower Note endorsed without recourse to the Funding Lender by the
Governmental Lender;
(b) The originally executed Borrower Loan Agreement and Regulatory
Agreement;
(c) The originally executed Security Instrument and all other Borrower Loan
Documents existing at the time of delivery of the Borrower Notes and an assignment for security of
the Security Instrument from the Governmental Lender to the Funding Lender, in recordable form;
(d) Uniform Commercial Code financing statements or other chattel security
documents giving notice of the Funding Lenders status as an assignee of the Governmental Lenders
security interest in any personal property forming part of the Project, in form suitable for filing; and
(e) Uniform Commercial Code financing statements giving notice of the pledge
by the Governmental Lender of the Security pledged under this Funding Loan Agreement.
There shall be delivered and deposited with the Funding Lender such additional documents,
financing statements, and instruments as the Funding Lender may reasonably require from time to
time for the better perfecting and assuring to the Funding Lender of its lien and security interest in
and to the Security including, at the request of the Funding Lender, any amounts held under the
Contingency Draw-Down Agreement, in each case at the expense of the Borrower.
Source of Payment of Funding Loan and Other Obligations. The Funding
Loan is a limited obligation of the Governmental Lender, payable solely from the Pledged Revenues
and other funds and moneys and Security pledged and assigned hereunder. NONE OF THE
GOVERNMENTAL LENDER (EXCEPT AS PROVIDED IN THE FIRST SENTENCE OF THIS
SECTION 5.1), THE CITY OF CHULA VISTA, THE STATE, OR ANY POLITICAL
SUBDIVISION THEREOF (EXCEPT THE GOVERNMENTAL LENDER, TO THE LIMITED
EXTENT SET FORTH HEREIN), SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT
OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE FUNDING LOAN OR
FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY
KIND WHATSOEVER WITH RESPECT THERETO EXCEPT AS SET FORTH HEREIN, AND
NONE OF THE FUNDING LOAN, OR THE GOVERNMENTAL LENDER NOTES OR ANY OF
THE GOVERNMENTAL LENDERS AGREEMENTS OR OBLIGATIONS WITH RESPECT TO
THE FUNDING LOAN, THE GOVERNMENTAL LENDER NOTES, OR HEREUNDER OR
UNDER ANY OF THE OTHER FUNDING LOAN DOCUMENTS, SHALL BE CONSTRUED TO
CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR
A LOAN OF THE CREDIT OF OR A MORAL OBLIGATION OF ANY OF THE FOREGOING
WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION
WHATSOEVER. THE GOVERNMENTAL LENDER HAS NO TAXING POWER.
Exempt from Individual Liability. No covenant, condition or agreement
contained herein shall be deemed to be a covenant, agreement or obligation of any present or future
member of the Board of Commissioners, officer, director, employee or agent of the Governmental
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Lender in his individual capacity, and none of the members of the Board of Commissioners, the
officers, directors, employees or agents of the Governmental Lender executing the Governmental
Lender Notes or this Funding Loan Agreement shall be liable personally on the Governmental
Lender Notes or under this Funding Loan Agreement or be subject to any personal liability or
accountability by reason of the issuance of the Governmental Lender Notes or the execution of this
Funding Loan Agreement or any of the Funding Loan Documents.
Conditions Precedent to Closing. Closing of the Funding Loan on the
Closing Date shall be conditioned upon satisfaction or waiver by the Funding Lender in its sole
discretion of each of the conditions precedent to closing set forth in this Funding Loan Agreement,
including but not limited to the following:
(a) Receipt by the Funding Lender of the original Governmental Lender Notes;
(b) Receipt by the Funding Lender of the original executed Borrower Notes,
endorsed without recourse to the Funding Lender by the Governmental Lender;
(c) Receipt by the Funding Lender of executed counterpart copies of this Funding
Loan Agreement, the Borrower Loan Agreement, the Construction Funding Agreement, the
Regulatory Agreement, the Tax Certificate and the Security Instrument;
(d) Receipt by the Funding Lender of a certified copy of the Resolution;
(e) Executed Required Transferee Representations from the Funding Lender;
(f) Delivery into escrow of all amounts required to be paid in connection with the
origination of the Borrower Loan and the Funding Loan and any underlying real estate transfers or
transactions, including the Costs of Funding Deposit, in accordance with Section 2.3(c)(ii) of the
Borrower Loan Agreement;
(g) Receipt by the Funding Lender of a Tax Counsel Approving Opinion;
(h) Receipt by the Funding Lender of an Opinion of Counsel from Tax Counsel
to the effect that the Governmental Lender Notes are exempt from registration under the Securities
Act of 1933, as amended, and this Funding Loan Agreement is exempt from qualification under the
Trust Indenture Act of 1939, as amended;
(i) Delivery of an opinion of counsel to the Borrower addressed to the
Governmental Lender to the effect that the Borrower Loan Documents and the Regulatory
Agreement are valid and binding obligations of the Borrower that are enforceable against the
Borrower in accordance with their terms, subject to such exceptions and qualifications as are
acceptable to the Governmental Lender; and
(j) Receipt by the Funding Lender of any other documents or opinions that the
Funding Lender or Tax Counsel may require.
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Authorization to Create Funds and Accounts. Except as provided in
Section 7.3 hereof, no funds or accounts shall be established in connection with the Funding Loan at
the time of closing and origination of the Funding Loan. The Funding Lender, the Fiscal Agent and
the Servicer, if any, and any designee of the Funding Lender or the Servicer, are authorized to
establish and create from time to time such other funds and accounts or subaccounts as may be
necessary for the deposit of moneys (including, without limitation, insurance proceeds and/or
condemnation awards), if any, received by the Governmental Lender, the Fiscal Agent, the Funding
Lender or the Servicer pursuant to the terms hereof or any of the other Funding Loan Documents and
not immediately transferred or disbursed pursuant to the terms of the Funding Loan Documents
and/or the Borrower Loan Documents.
Investment of Funds. Amounts held in any funds or accounts created under
this Funding Loan Agreement shall be invested by the Fiscal Agent, the Funding Lender, the Servicer
or the designee of the Funding Lender or Servicer, as applicable, in Permitted Investments at the
written direction of the Borrower, subject in all cases to the restrictions of Section 8.7 hereof and of
the Tax Certificate. The Borrowers instruction shall be sufficient evidence that the investment
constitutes a Permitted Investment (including as to the legality thereof). In the absence of any such
instruction, monies shall be held uninvested. Permitted Investments purchased as an investment of
moneys in any fund shall be deemed to be part of such fund or account. All interest or gain derived
from the investment of amounts in any of the funds or accounts established hereunder shall be
deposited in such fund or account. For purposes of acquiring any investments hereunder, the Fiscal
Agent may commingle funds held by it hereunder, except as provided in Section 7.8(h) hereof with
respect to the Rebate Fund. The Fiscal Agent shall incur no liability for losses arising from any
investments made pursuant to this Section.
The Fiscal Agent shall furnish the Borrower and Funding Lender periodic cash transaction
statements that include detail for all investment transactions effected by the Fiscal Agent or brokers
selected by the Borrower. Upon the Borrowers or Funding Lenders election, such statements will
be delivered via the Fiscal Agents online service, and upon electing such service, paper statements
will be provided only upon request. The Borrower waives the right to receive brokerage
confirmations of security transactions effected by the Fiscal Agent as they occur, to the extent
permitted by law. The Borrower further understands that trade confirmations for securities
transactions effected by the Fiscal Agent will be available upon request and at no additional cost, and
other trade confirmations may be obtained from the applicable broker.
Establishment of Funds. There are established with the Fiscal Agent the
following funds and accounts:
(a) The Funding Loan Payment Fund;
(b) The Project Fund (consisting solely of a Note Proceeds Account, an Equity
Account, a Remaining Funding Loan Proceeds Account and a Negative Arbitrage Account);
(c) The Expense Fund;
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(d) The Closing Costs Fund; and
(e) The Rebate Fund (to be established by the Fiscal Agent once the Fiscal Agent
is required to deposit or transfer, as applicable, amounts to the Rebate Fund in accordance with
Section 7.8(a)).
All money required to be deposited with or paid to the Fiscal Agent for the account of any of
the funds or accounts created by this Funding Loan Agreement shall be held by the Fiscal Agent for
the benefit of the Funding Lender, and except for money held in the Expense Fund or the Rebate
Fund, shall, while held by the Fiscal Agent, constitute part of the Pledged Revenues and be subject to
the lien hereof.
All money to be deposited with or paid to the Fiscal Agent shall be wired to the Fiscal Agent
pursuant to the wiring instructions contained in Exhibit E attached hereto. The Fiscal Agent shall
provide Written Notice of any change to such wiring instructions to the Funding Lender and the
Borrower no less than five (5) Business Days prior to the next payment date for which such revised
instructions will be applicable.
Funding Loan Payment Fund. The Governmental Lender and the Borrower
shall have no interest in the Funding Loan Payment Fund or the moneys therein, which shall always
be maintained by the Fiscal Agent completely separate and segregated from all other moneys held
hereunder and from any other moneys of the Governmental Lender and the Borrower.
The Fiscal Agent shall deposit into the Funding Loan Payment Fund any amounts received
from or on behalf of the Borrower as payments of principal of or premium and interest on the
Borrower Loan and any other amounts received by the Fiscal Agent that are subject to the lien and
pledge of this Funding Loan Agreement, including any Pledged Revenues not required to be
deposited to the Expense Fund or not otherwise specifically directed in writing to be deposited into
other funds created by this Funding Loan Agreement.
The Fiscal Agent shall apply all amounts on deposit in the Funding Loan Payment Fund in
the following order of priority:
First, to pay or provide for the payment of the interest then due on the Funding Loan
to the Funding Lender or any transferee of the Funding Lender with respect to the Funding Loan;
Second, to pay or provide for the payment or the prepayment (together with any
Prepayment Premium payable in connection with such prepayment) of principal on the Funding Loan
to the Funding Lender or any transferee of the Funding Lender with respect to the Funding Loan,
provided moneys have been transferred or deposited into the Funding Loan Payment Fund for such
purpose; and
Third, to pay or provide for the payment of the Funding Loan on the Maturity Date to
the Funding Lender or any transferee of the Funding Lender with respect to the Funding Loan.
Expense Fund. The Fiscal Agent shall deposit into the Expense Fund the
amounts required by the Regulatory Agreement or the Borrower Loan Agreement to be paid by the
Borrower to the Governmental Lender or the Fiscal Agent on behalf of the Borrower. Amounts on
deposit in the Expense Fund shall be used to pay the fees and expenses of the Governmental Lender
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and the Fiscal Agent, as and when the same become due. In that regard, moneys in the Expense
Fund shall be withdrawn or maintained, as appropriate, by the Fiscal Agent to pay (i) the Ongoing
Governmental Lender Fee to the Governmental Lender as and when due, (ii) the Fiscal Agents Fees
to the Fiscal Agent when due, (iii) upon receipt, to the Fiscal Agent, any amounts due to the Fiscal
Agent which have not been paid, other than amounts paid in accordance with clause (ii) hereof, and
(iv) upon receipt, to, or at the direction of, the Governmental Lender, any amounts owing the
Governmental Lender by the Borrower and then due and unpaid, other than amounts paid in
accordance with clause (i) hereof.
In the event that the amounts on deposit in the Expense Fund are not equal to the amounts
payable from the Expense Fund as provided in the preceding paragraph on any date on which such
amounts are due and payable, the Fiscal Agent shall give notice to the Borrower of such deficiency
and of the amount of such deficiency and request payment within two Business Days to the Fiscal
Agent of the amount of such deficiency.
Written notice of any insufficiency, which would result in the Governmental Lender not
receiving the Ongoing Governmental Lender Fee on the applicable due date, shall be provided by the
Fiscal Agent to the Governmental Lender (with a copy to the Borrower and the Funding Lender)
within 10 days of the respective due date.
Upon payment by the Borrower to the Fiscal Agent of such deficiency, the amounts for
which such deficiency was requested shall be paid by the Fiscal Agent.
Notwithstanding anything herein to the contrary, the Governmental Lender, shall prepare and
submit a written invoice to the Borrower for payment of the Ongoing Governmental Lender Fee not
later than 30 days prior to the due date for payment of such Ongoing Governmental Lender Fee, the
Fiscal Agent shall remit moneys received by the Borrower to the Governmental Lender for payment
of such fee.
Closing Costs Fund. Amounts in the Closing Costs Fund shall be disbursed
by the Fiscal Agent to pay Closing Costs on the Closing Date or as soon as practicable thereafter as
follows: moneys on deposit in the Closing Costs Fund shall be applied to pay Closing Costs at the
written direction of the Authorized Borrower Representative, consented to by the Funding Lender
and the Governmental Lender, in the form attached hereto as Exhibit D. Any interest earnings on
amounts on deposit in the Closing Costs Fund shall remain in the Closing Costs Fund. Any moneys
remaining in the Closing Costs Fund (including investment proceeds) after the earlier of (i) the
payment of all costs of issuance as certified in writing to the Fiscal Agent by the Borrower or (ii) a
period of six (6) months after the Closing Date, shall be paid to or at the direction of the Borrower
and the Closing Costs Fund shall be closed.
Project Fund.
(a) All proceeds of the Funding Loan provided by the Funding Lender shall be
deposited to the Note Proceeds Account of the Project Fund and disbursed as herein provided;
provided, however, that (i) the initial disbursement of the Funding Loan on the Closing Date shall be
sent by the Funding Lender to Fiscal Agent, which shall then transfer such funds to the Title
Company, and (ii) any proceeds of the Funding Loan funded pursuant to the Contingency Draw-
Down Agreement shall be deposited to the Remaining Funding Loan Proceeds Account of the
Project Fund and disbursed as herein provided. The Fiscal Agent shall disburse moneys in the
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Project Fund for the rehabilitation, construction, improvement and equipping of the Project, to pay
other Qualified Project Costs and to pay other costs related to the Project as provided herein.
Not less than 97% of the moneys deposited in and credited to the Note Proceeds
Account and Remaining Funding Loan Proceeds Account of the Project Fund representing the
proceeds of the Funding Loan, including Investment Income thereon, will be expended for Qualified
Project Costs (the 97% Requirement). The amounts on deposit in the Note Proceeds Account and
Remaining Funding Loan Proceeds Account of the Project Fund shall not be applied to the payment
of Closing Costs.
Before any payment shall be made from the Note Proceeds Account of the Project
Fund, the Regulatory Agreement shall have been executed and submitted to a title company for
recordation in the official records of San Diego County and there shall be filed with the Fiscal Agent
a Written Requisition of the Borrower substantially in the form attached hereto as Exhibit C and
approved by the Funding Lender pursuant to the terms, conditions and provisions of the Construction
Funding Agreement.
In addition to the above, in connection with a Written Requisition:
(i) Only the signature of an authorized officer of the Funding Lender
shall be required on a Written Requisition during any period in which a default by the Borrower has
occurred and is then continuing under the Borrower Loan (Written Notice of which default has been
given in writing by an authorized officer of the Funding Lender to the Fiscal Agent and the
Governmental Lender, and the Fiscal Agent shall be entitled to conclusively rely on any such Written
Notice as to the occurrence and continuation of such a default).
(ii) The Fiscal Agent shall disburse amounts in the Note Proceeds
Account of the Project Fund for the payment of interest due on the Governmental Lender Notes upon
receipt from the Funding Lender of a statement detailing the amount due (and without any need for a
Written Requisition signed by the Funding Lender or any approval by an Authorized Representative
of the Borrower) so long as the amounts to be disbursed do not exceed $__________ in the
aggregate.
(iii) The Fiscal Agent may conclusively rely on all Written Requisitions,
the execution of the Written Requisitions by the Authorized Borrower Representative and the
approval of all Written Requisitions by the Funding Lender, as required by this Section, as conditions
of payment from the Project Fund, which Written Requisitions constitute, as to the Fiscal Agent,
irrevocable determinations that all conditions to payment of the specified amounts from the Project
Fund have been satisfied. These documents shall be retained by the Fiscal Agent, subject at all
reasonable times to examination by the Borrower, the Governmental Lender, the Funding Lender and
the agents and representatives thereof upon reasonable notice to the Fiscal Agent. The Fiscal Agent
is not required to inspect the Project or the rehabilitation or construction work or to make any
independent investigation with respect to the matters set forth in any Written Requisition or other
statements, orders, certifications and approvals received by the Fiscal Agent. The Fiscal Agent is not
required to obtain completion bonds, lien releases or otherwise supervise the acquisition,
rehabilitation, construction, equipping, improvement and installation of the Project.
(b) Upon receipt of each Written Requisition submitted by the Borrower and
approved in writing by the Funding Lender, the Fiscal Agent shall promptly, but in any case within
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three Business Days, make payment from the appropriate Account within the Project Fund in
accordance with such Written Requisition. The Fiscal Agent shall have no duty to determine
whether any requested disbursement from the Project Fund complies with the terms, conditions and
provisions of the Funding Loan Documents, constitutes payment of Qualified Project Costs or
complies with the 97% Requirement. The approval in writing of a Written Requisition by the
Funding Lender shall be deemed a certification and, insofar as the Fiscal Agent and the
Governmental Lender are concerned, shall constitute conclusive evidence that all of the terms,
conditions and requirements of the Funding Loan Documents applicable to such disbursement have
been fully satisfied or waived and the Written Requisition from the Borrower shall, insofar as the
Fiscal Agent and the Governmental Lender, as applicable, are concerned, constitute conclusive
evidence that the costs described in the Written Requisition constitute Qualified Project Costs or
other permitted Project costs.
The Fiscal Agent shall provide Written Notice to the Borrower, the Funding Lender
and the Governmental Lender if there are not sufficient funds available to or on deposit with the
Fiscal Agent to make the disbursements as and when required by this Section 7.7(b). Except as
provided in the next sentence, all such payments shall be made by check or draft payable, or by wire
transfer, either: (i) directly to the person, firm or corporation to be paid; (ii) to the Borrower and
such person, firm or corporation; or (iii) upon receipt by the Funding Lender of evidence that the
Borrower has previously paid such amount and Written Direction to the Fiscal Agent as to such as
evidenced by the Funding Lenders approval of the Written Requisition, to the Borrower. Upon the
occurrence of an Event of Default of the Borrower of which the Fiscal Agent has knowledge as
provided herein, which is continuing under the Funding Loan Documents, with the Written Consent
of the Funding Lender, the Fiscal Agent may apply amounts on deposit in the Project Fund to the
payment of principal of and interest on the Funding Loan. If a Written Requisition signed by the
Authorized Borrower Representative and countersigned by an authorized officer of the Funding
Lender is received by the Fiscal Agent, the requested disbursement shall be paid by the Fiscal Agent
as soon as practicable, but in no event later than three Business Days following receipt thereof by the
Fiscal Agent. Upon final disbursement of all amounts on deposit in the Project Fund, the Fiscal
Agent shall close the Project Fund.
(c) Moneys deposited to the Negative Arbitrage Account of the Project Fund
pursuant to the Contingency Draw-Down Agreement, together with investment earnings thereon,
which shall be retained therein, shall be transferred to the Funding Loan Payment Fund and applied
pursuant to Section 7.4 on each Borrower Loan Payment Date to the extent necessary to enable the
Fiscal Agent to pay interest due on the Funding Loan on such date. The transfer of moneys from the
Negative Arbitrage Account of the Project Fund to the Funding Loan Payment Fund shall occur
automatically without the need for a Written Requisition of the Borrower, or consent of the Funding
Lender.
(d) Amounts on deposit in the Borrower Equity Account of the Project Fund shall
be disbursed from time to time by the Fiscal Agent to pay designated amounts as set forth in and
upon receipt of a Written Requisition of the Borrower signed by an Authorized Borrower
Representative and the Funding Lender.
(e) Prior to any mandatory prepayment of the Funding Loan pursuant to the
terms hereof, any amounts then remaining in the Project Fund shall, at the written direction of the
Funding Lender, be transferred to the Funding Loan Payment Fund to be applied to the prepayment
of the Funding Loan pursuant hereto.
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Rebate Fund.
(a) The Fiscal Agent shall deposit or transfer to the credit of the Rebate Fund
each amount delivered to the Fiscal Agent by the Borrower for deposit thereto and each amount
directed by the Borrower to be transferred thereto.
(b) Within 15 days after each receipt or transfer of funds to the Rebate Fund, the
Fiscal Agent shall withdraw from the Rebate Fund and pay to the United States of America the entire
balance of the Rebate Fund.
(c) All payments to the United States of America pursuant to this Section shall be
made by the Fiscal Agent for the account and in the name of the Governmental Lender and shall be
paid through the United States Mail (return receipt requested or overnight delivery), addressed to the
appropriate Internal Revenue Service Center and accompanied by the appropriate Internal Revenue
Service forms (such completed and signed forms to be provided to the Fiscal Agent by the Borrower
or the Rebate Analyst).
(d) The Fiscal Agent shall preserve all statements, forms and explanations
received from the Borrower and delivered to the Fiscal Agent and all records of transactions in the
Rebate Fund until six years after the retirement of the Tax-Exempt Governmental Lender Notes.
(e) The Fiscal Agent may conclusively rely on the instructions of the Borrower
(based upon the report of the Rebate Analyst) with regard to any actions to be taken by it pursuant to
this Section and shall have no liability for any consequences of any failure of the Borrower or the
Rebate Analyst to perform its duties or obligations or to supply accurate or sufficient instructions.
Except as specifically provided in subsection (b) above, the Fiscal Agent shall have no duty or
responsibility with respect to the Rebate Fund or the Borrowers duties and responsibilities with
respect thereto except to follow the Borrowers specific written instruction related thereto.
(f) If at any time during the term of this Funding Loan Agreement the
Governmental Lender or the Borrower desires to take any action that would otherwise be prohibited
by the terms of this Section, such person shall be permitted to take such action if it shall first obtain
and provide to the other persons named herein, a Tax Counsel No Adverse Effect Opinion and an
opinion of Tax Counsel that such action shall be in compliance with the laws of the State and the
terms of this Funding Loan Agreement.
(g) Moneys and securities held by the Fiscal Agent in the Rebate Fund shall not
be deemed funds of the Governmental Lender and are not pledged or otherwise subject to any
security interest in favor of the Owners to secure the Governmental Lender Notes or any other
obligations.
(h) Moneys in the Rebate Fund may be separately invested and reinvested by the
Fiscal Agent, at the request of and as directed in writing by the Borrower, in Permitted Investments,
subject to the Code. The Fiscal Agent shall sell and reduce to cash a sufficient amount of such
Permitted Investments, as directed in writing by the Borrower, whenever the cash balance in the
Rebate Fund is insufficient for its purposes.
(i) Notwithstanding anything to the contrary in this Funding Loan Agreement, no
payment shall be made by the Fiscal Agent to the United States if the Borrower shall furnish to the
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Governmental Lender and the Fiscal Agent an opinion of Tax Counsel to the effect that such
payment is not required under Section 148(d) and (f) of the Code in order to maintain the exclusion
from gross income for federal income tax purposes of interest on the Tax-Exempt Governmental
Lender Notes. In such event the Borrower shall be entitled to withdraw funds from the Rebate Fund
to the extent the Borrower shall provide a Tax Counsel No Adverse Effect Opinion to the
Governmental Lender and the Fiscal Agent with respect to such withdrawal.
(j) The Fiscal Agent shall keep and make available to the Governmental Lender
and the Borrower records concerning the investments of all funds held by the Fiscal Agent pursuant
to the Funding Loan Agreement including date bought and sold, price and commission paid, and bids
taken, if any, and shall keep all such records until six years after the date on which neither of the
Tax-Exempt Governmental Lender Notes are Outstanding in order to enable the Borrower to make
the computations required under Section 148(f) of the Code.
(k) Notwithstanding the foregoing, the computations and payments of rebate
amounts referred to in this Section 7.8 need not be made to the extent that neither the Governmental
Lender nor the Borrower will thereby fail to comply with any requirements of Section 148(f) of the
Code based on a Tax Counsel No Adverse Effect Opinion, a copy of which shall be provided to the
Fiscal Agent and the Governmental Lender. In the event of any conflict between the requirements of
this Section 7.8 and those of the Tax Certificate, the Tax Certificate shall control.
Investments.
(a) Amounts on deposit in the Project Fund shall be invested in Permitted
Investments directed in writing by the Borrower. Investment Income earned on amounts on deposit
in each account of the Project Fund shall be retained in and credited to and become a part of the
amounts on deposit in that account of the Project Fund.
(b) Amounts on deposit in the Funding Loan Payment Fund, Expense Fund,
Rebate Fund and Closing Costs Fund shall be invested in Permitted Investments directed in writing
by the Borrower. Investment Income earned on amounts on deposit in each account of the Funding
Loan Payment Fund, Expense Fund, Rebate Fund and Closing Costs Fund shall be retained in and
credited to and become a part of the amounts on deposit in that account of the Funding Loan
Payment Fund, Expense Fund, Rebate Fund and Closing Costs Fund.
The Fiscal Agent may make any and all investments permitted under this Funding Loan
Agreement through its own trust or banking department or any affiliate and may pay said department
reasonable, customary fees for placing such investments. The Fiscal Agent and its affiliates may act
as principal, agent, sponsor, advisor or depository with respect to Permitted Investments under this
Funding Loan Agreement. The Fiscal Agent shall not be liable for any losses from investments made
by the Fiscal Agent in accordance with this Funding Loan Agreement.
The Governmental Lender, the Funding Lender and the Borrower (by its execution of the
Borrower Loan Agreement) acknowledge that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Governmental Lender or the Funding Lender
the right to receive brokerage confirmations of security transactions as they occur, the Governmental
Lender and the Funding Lender will not receive such confirmations to the extent permitted by law.
The Fiscal Agent shall furnish the Borrower, the Funding Lender and the Governmental Lender (to
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the extent requested by such parties) periodic cash transaction statements which shall include detail
for all investment transactions, if any, made by the Fiscal Agent hereunder.
General Representations. The Governmental Lender makes the following
representations as the basis for the undertakings on its part herein contained:
(a) The Governmental Lender is a public body corporate and politic, organized
and existing under the laws of the State, has the power and authority to (i) enter into the Funding
Loan Documents to which it is a party and the transactions contemplated thereby, (ii) incur the
limited obligation represented by the Governmental Lender Notes and the Funding Loan, and apply
the proceeds of such obligation or loan to finance the Project, and (iii) carry out its other obligations
under this Funding Loan Agreement and the Governmental Lender Notes, and by proper action has
duly authorized the Governmental Lenders execution and delivery of, and its performance under, the
Funding Loan Documents to which it is a party.
(b) The Governmental Lender is not in default under or in violation of, and the
execution and delivery of the Funding Loan Documents to which it is a party and its compliance with
the terms and conditions thereof will not conflict or constitute a default under or a violation of, (i) the
Act, (ii) to its knowledge, any other existing laws, rules, regulations, judgments, decrees and orders
applicable to it, or (iii) to its knowledge, the provisions of any agreements and instruments to which
the Governmental Lender is a party, a default under or violation of which would prevent it from
entering into the Funding Loan Agreement, executing and delivering the Governmental Lender
Notes, financing the Project, executing and delivering the other Funding Loan Documents to which it
is a party or consummating the transactions on its part contemplated thereby, and, to its knowledge,
no event has occurred and is continuing under the provisions of any such agreement or instrument or
otherwise that with the lapse of time or the giving of notice, or both, would constitute such a default
or violation (it being understood, however, that the Governmental Lender is making no
representations as to the necessity of registering the Governmental Lender Notes or the Borrower
Notes pursuant to any securities laws or complying with any other requirements of securities laws).
(c) To the best knowledge of the Governmental Lender, no litigation, inquiry or
investigation of any kind in or by any judicial or administrative court or agency is pending with
respect to which the Governmental Lender has been served with process or, to the knowledge of the
Governmental Lender, is threatened against the Governmental Lender with respect to (i) the
organization and existence of the Governmental Lender, (ii) its authority to execute or deliver the
Funding Loan Documents to which it is a party, (iii) the validity or enforceability of any such
Funding Loan Documents or the transactions contemplated thereby, (iv) the title of any officer of the
Governmental Lender who executed such Funding Loan Documents or (v) any authority or
proceedings relating to the execution and delivery of such Funding Loan Documents on behalf of the
Governmental Lender, and no such authority or proceedings have been repealed, revoked, rescinded
or amended but are in full force and effect.
(d) The revenues and receipts to be derived from the Borrower Loan Agreement,
the Borrower Notes and this Funding Loan Agreement have not been pledged previously by the
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Governmental Lender to secure any of its notes or bonds other than the Funding Loan Agreement as
evidenced by the Governmental Lender Notes.
THE GOVERNMENTAL LENDER MAKES NO REPRESENTATION, COVENANT OR
AGREEMENT AS TO THE FINANCIAL POSITION OR BUSINESS CONDITION OF THE
BORROWER OR THE PROJECT AND DOES NOT REPRESENT OR WARRANT AS TO ANY
STATEMENTS, MATERIALS, REPRESENTATIONS OR CERTIFICATIONS FURNISHED BY
THE BORROWER IN CONNECTION WITH THE FUNDING LOAN OR THE BORROWER
LOAN, OR AS TO THE CORRECTNESS, COMPLETENESS OR ACCURACY THEREOF.
No Encumbrance on Security. The Governmental Lender will not
knowingly create or knowingly permit the creation of any mortgage, pledge, lien, charge or
encumbrance of any kind on the Security or any part thereof prior to or on a parity with the lien of
this Funding Loan Agreement, except as expressly permitted or contemplated by the Funding Loan
Documents.
Repayment of Funding Loan. Subject to the provisions of Articles III
and V hereof, the Governmental Lender will duly and punctually repay, or cause to be repaid, the
Funding Loan, as evidenced by the Governmental Lender Notes, as and when the same shall become
due, all in accordance with the terms of the Governmental Lender Notes and this Funding Loan
Agreement.
Servicer. The Funding Lender may appoint a Servicer to service and
administer the Funding Loan and/or the Borrower Loan on behalf of the Funding Lender, including
without limitation the fulfillment of rights and responsibilities granted by Governmental Lender to
Funding Lender pursuant to Section 2.1 of the Borrower Loan Agreement.
Borrower Loan Agreement Performance.
(a) The Funding Lender and the Servicer, if any, on behalf of the Governmental
Lender, may (but shall not be required or obligated to) perform and observe any agreement or
covenant of the Governmental Lender under the Borrower Loan Agreement subject to the terms and
provisions contained therein, all to the end that the Governmental Lenders rights under the Borrower
Loan Agreement may be unimpaired and free from default.
(b) The Governmental Lender will promptly notify the Borrower, the Servicer
and the Funding Lender in writing of the occurrence of any Borrower Loan Agreement Default,
provided that the Governmental Lender has received written notice or otherwise has knowledge of
such event.
Maintenance of Records; Inspection of Records.
(a) The Fiscal Agent shall keep and maintain adequate records pertaining to any
funds and accounts established hereunder, including all deposits to and disbursements from said
funds and accounts and shall keep and maintain the registration books for the Governmental Lender
Notes and interests therein. The Fiscal Agent shall retain in its possession all certifications and other
documents presented to it, all such records and all records of principal, interest and premium paid on
the Funding Loan, subject to the inspection of the Funding Lender and the Governmental Lender and
their representatives at all reasonable times and upon reasonable prior notice.
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(b) The Governmental Lender and the Funding Lender will at any and all times,
upon the reasonable request of the Servicer, if any, the Borrower, the Fiscal Agent, the Governmental
Lender or the Funding Lender, afford and procure a reasonable opportunity by their respective
representatives to inspect the books, records, reports and other papers of the Governmental Lender or
the Funding Lender, as appropriate, relating to the Project and the Funding Loan, if any, and (at their
own expense) to make copies thereof.
Tax Covenants. The Governmental Lender covenants to and for the benefit
of the Funding Lender that, notwithstanding any other provisions of this Funding Loan Agreement or
of any other instrument, it will:
(a) Require the Borrower to execute the Regulatory Agreement as a condition of
funding the Borrower Loan;
(b) Not take or cause to be taken any action or actions, or fail to take any action
or actions, which would cause the interest payable on the Tax-Exempt Governmental Lender Notes
to be includable in gross income for federal income tax purposes;
(c) Whenever and so often as requested in writing by Funding Lender, the
Governmental Lender (at the sole cost and expense of the Borrower), shall do and perform all acts
and things permitted by law and necessary or desirable in order to assure that interest paid by the
Governmental Lender on the Tax-Exempt Governmental Lender Notes will be excluded from the
gross income of the Noteowner, for federal income tax purposes, pursuant to Section 103 of the
Code, except in the event where any owner of the Tax-Exempt Governmental Lender Notes or a
portion thereof is a substantial user of the facilities financed with the Funding Loan or a related
person within the meaning of Section 147(a) of the Code;
(d) Not take any action nor, solely in reliance upon the covenants and
representations of the Borrower in the Borrower Loan Agreement, in the Regulatory Agreement and
in the Tax Certificate, knowingly permit or suffer any action to be taken if the result of the same
would be to cause the Governmental Lender Notes to be federally guaranteed within the meaning
of Section 149(b) of the Code and the Regulations;
(e) Require the Borrower to agree, solely by causing the Borrower to execute and
deliver the Borrower Loan Agreement, not to commit any act and not to make any use of the
proceeds of the Funding Loan, or any other moneys which may be deemed to be proceeds of the
Funding Loan pursuant to the Code, which would cause the Tax-Exempt Governmental Lender
Notes to be arbitrage bonds within the meaning of Sections 103(b) and 148 the Code, and to
comply with the requirements of the Code throughout the term of the Funding Loan; and
(f) Require the Borrower, solely by causing the Borrower to execute and deliver
the Borrower Loan Agreement, to take all steps necessary to compute and pay any rebatable arbitrage
in accordance with Section 148(f) of the Code.
In furtherance of the covenants in this Section 8.7, the Governmental Lender and the
Borrower shall execute, deliver and comply with the provisions of the Tax Certificate (it being
understood that the obligations of the Fiscal Agent with respect to the Tax Certificate are to follow
the written directions of the Governmental Lender or Borrower, and that the Fiscal Agent shall not be
responsible for monitoring the compliance of the Governmental Lender or Borrower therewith),
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which are by this reference incorporated into this Funding Loan Agreement and made a part of this
Funding Loan Agreement as if set forth in this Funding Loan Agreement in full. In the event of any
conflict between this Funding Loan Agreement and the Tax Certificate, the requirements of the Tax
Certificate shall control.
For purposes of this Section 8.7 the Governmental Lenders compliance shall be based solely
on matters within the Governmental Lenders knowledge and control and no acts, omissions or
directions of the Borrower, the Funding Lender or any other Persons shall be attributed to the
Governmental Lender.
In complying with the foregoing covenants, the Governmental Lender may rely from time to
time on a Tax Counsel No Adverse Effect Opinion or other appropriate opinion of Tax Counsel.
Performance by the Borrower. Without relieving the Governmental Lender
from the responsibility for performance and observance of the agreements and covenants required to
be performed and observed by it hereunder, the Borrower, on behalf of the Governmental Lender,
may (but is under no obligation to) perform any such agreement or covenant if no Borrower Loan
Agreement Default or Potential Default under (and as such term is defined in) the Borrower Loan
Agreement exists.
Events of Default. Any one or more of the following shall constitute an
event of default (an Event of Default) under this Funding Loan Agreement (whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or Governmental Authority):
(a) A default in the payment of any interest upon the Governmental Lender Notes
when such interest becomes due and payable;
(b) A default in the payment of principal of, or premium on, the Governmental
Lender Notes when such principal or premium becomes due and payable, whether at its stated
maturity, by declaration of acceleration or call for mandatory prepayment or otherwise;
(c) Subject to Section 8.8 hereof, default in the performance or breach of any
material covenant or warranty of the Governmental Lender in this Funding Loan Agreement (other
than a covenant or warranty or default in the performance or breach of which is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for a period of 30 days
after there has been given written notice, as provided in Section 12.1 hereof, to the Governmental
Lender and the Borrower by the Funding Lender or the Servicer, specifying such default or breach
and requiring it to be remedied and stating that such notice is a Notice of Default under this
Funding Loan Agreement; provided that, so long as the Governmental Lender has commenced to
cure such failure to observe or perform within the thirty (30) day cure period, the subject matter of
the default is not capable of cure within said thirty (30) day period and the Governmental Lender is
diligently pursuing such cure to the Funding Lenders satisfaction, with the Funding Lenders
Written Direction or Written Consent, then the Governmental Lender shall have an additional period
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of time as reasonably necessary (not to exceed 30 days unless extended in writing by the Funding
Lender) within which to cure such default;
(d) A default in the payment of any Additional Borrower Payments; or
(e) Any other Default or Event of Default under any of the other Funding
Loan Documents (taking into account any applicable grace periods therein).
Acceleration of Maturity; Rescission and Annulment.
(a) Subject to the provisions of Section 9.9 hereof, upon the occurrence of an
Event of Default under Section 9.1 hereof, then and in every such case, the Funding Lender may
declare the principal of the Funding Loan and the Governmental Lender Notes and the interest
accrued to be immediately due and payable, by notice to the Governmental Lender, Borrower and the
Equity Investor, and upon any such declaration, all principal of and Prepayment Premium, if any, and
interest on the Funding Loan and the Governmental Lender Notes shall become immediately due and
payable.
(b) At any time after a declaration of acceleration has been made pursuant to
subsection (a) of this Section, the Funding Lender may by Written Notice to the Governmental
Lender rescind and annul such declaration and its consequences if:
(i) there has been deposited with the Funding Lender a sum sufficient to
pay (1) all overdue installments of interest on the Funding Loan, (2) the principal of and Prepayment
Premium on the Funding Loan that has become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor in the Funding Loan, (3) to
the extent that payment of such interest is lawful, interest upon overdue installments of interest at the
rate or rates prescribed therefor in the Funding Loan, and (4) all sums paid or advanced by the
Funding Lender and the reasonable compensation, expenses, disbursements and advances of the
Funding Lender, its agents and counsel (but only to the extent not duplicative with subclauses (1) and
(3) above); and
(ii) all Events of Default, other than the non-payment of the principal of
the Funding Loan that has become due solely by such declaration of acceleration, have been cured or
have been waived in writing as provided in Section 9.9 hereof.
No such rescission and annulment shall affect any subsequent default or impair any
right consequent thereon.
(c) Notwithstanding the occurrence and continuation of an Event of Default, it is
understood that the Funding Lender shall pursue no remedies against the Borrower, any of the
Borrowers partners or the Project if no Borrower Loan Agreement Default has occurred and is
continuing. An Event of Default hereunder shall not in and of itself constitute a Borrower Loan
Agreement Default.
Additional Remedies; Funding Lender Enforcement.
(a) Upon the occurrence of an Event of Default, the Funding Lender may, subject
to the provisions of this Section 9.3 and Section 9.9 hereof, proceed to protect and enforce its rights
by mandamus or other suit, action or proceeding at law or in equity. No remedy conferred by this
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Funding Loan Agreement upon or remedy reserved to the Funding Lender is intended to be exclusive
of any other remedy, but each such remedy shall be cumulative and shall be in addition to any other
remedy given to the Funding Lender hereunder or now or hereafter existing at law or in equity or by
statute.
(b) Upon the occurrence and continuation of any Event of Default, the Funding
Lender may proceed forthwith to protect and enforce its rights and this Funding Loan Agreement by
such suits, actions or proceedings as the Funding Lender, in its sole discretion, shall deem expedient.
Funding Lender shall have upon the occurrence and continuation of any Event of Default all rights,
powers, and remedies with respect to the Security as are available under the Uniform Commercial
Code applicable thereto or as are available under any other applicable law at the time in effect and,
without limiting the generality of the foregoing, the Funding Lender may proceed at law or in equity
or otherwise, to the extent permitted by applicable law:
(i) to take possession of the Security or any part thereof, with or without
legal process, and to hold, service, administer and enforce any rights thereunder or thereto, and
otherwise exercise all rights of ownership thereof, including (but not limited to) the sale of all or part
of the Security;
(ii) to become mortgagee of record for the Borrower Loan including,
without limitation, completing the assignment of the Security Instrument by the Governmental
Lender to the Funding Lender as anticipated by this Funding Loan Agreement, and recording the
same in the real estate records of the jurisdiction in which the Project is located, without further act
or consent of the Governmental Lender, and to service and administer the same for its own account;
(iii) to service and administer the Funding Loan as agent and on behalf of
the Governmental Lender or otherwise, and, if applicable, to take such actions necessary to enforce
the Borrower Loan Documents and the Funding Loan Documents on its own behalf, and to take such
alternative courses of action, as it may deem appropriate; or
(iv) to take such steps to protect and enforce its rights whether by action,
suit or proceeding in equity or at law for the specific performance of any covenant, condition or
agreement in the Governmental Lender Notes, this Funding Loan Agreement or the other Funding
Loan Documents, or the Borrower Loan Documents, or in and of the execution of any power herein
granted, or for foreclosure hereunder, or for enforcement of any other appropriate legal or equitable
remedy or otherwise as the Funding Lender may elect.
(c) Whether or not an Event of Default has occurred, the Funding Lender, in its
sole discretion, shall have the sole right to waive or forbear from enforcing any term, condition,
covenant or agreement of the Security Instrument, the Borrower Loan Agreement, the Borrower
Notes or any other Borrower Loan Documents or Funding Loan Documents applicable to the
Borrower, or any breach thereof, other than a covenant that would adversely impact the tax-exempt
status of the interest on the Tax-Exempt Governmental Lender Notes, and provided that the
Governmental Lender may seek specific performance by the Borrower to enforce the Unassigned
Rights; provided, however, that any such forbearance by the Funding Lender in the exercise of its
remedies under the Funding Loan Documents shall not be construed as a waiver by the Funding
Lender of any Conditions to Conversion (as such term is defined in the Borrower Loan Agreement).
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(d) If the Borrower defaults in the performance or observance of any covenant,
agreement or obligation of the Borrower set forth in the Regulatory Agreement, and if such default
remains uncured for a period of 60 days after the Borrower, the Equity Investor and the Funding
Lender receive Written Notice stating that a default under the Regulatory Agreement has occurred
and specifying the nature of the default, the Funding Lender shall have the right to seek specific
performance of the provisions of the Regulatory Agreement or to exercise its other rights or remedies
thereunder.
(e) If the Borrower defaults in the performance of its obligations under the
Borrower Loan Agreement (subject to applicable notice and cure periods) to make rebate payments,
to comply with any applicable continuing disclosure requirements, or to make payments owed
pursuant to Sections 2.5, 5.14 or 5.15 of the Borrower Loan Agreement for fees, expenses or
indemnification, the Funding Lender shall have the right to exercise all its rights and remedies
thereunder (subject to the last paragraph of Section 9.14 hereof).
Application of Money Collected. Any money collected by the Funding
Lender pursuant to this Article and any other sums then held by the Funding Lender as part of the
Security, shall be applied in the following order, at the date or dates fixed by the Funding Lender:
(a) First: To the payment of any and all amounts due under the Funding Loan
Documents other than with respect to principal and interest accrued on the Funding Loan, including,
without limitation, any amounts due to the Governmental Lender, the Funding Lender, the Servicer,
the Fiscal Agent and the Rebate Analyst;
(b) Second: To the payment of the whole amount of the Funding Loan, as
evidenced by the Governmental Lender Notes, then due and unpaid in respect of which or for the
benefit of which such money has been collected, with interest (to the extent that such interest has
been collected or a sum sufficient therefor has been so collected and payment thereof is legally
enforceable at the respective rate or rates prescribed therefor in the Funding Loan) on overdue
principal of, and Prepayment Premium and overdue installments of interest on the Funding Loan;
provided, however, that partial interests in any portion of the Funding Loan shall be paid in such
order of priority as may be prescribed by Written Direction of the Funding Lender in its sole and
absolute discretion; and
(c) Third: The payment of the remainder, if any, to the Borrower or to
whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may
direct.
If and to the extent this Section 9.4 conflicts with the provisions of the Servicing Agreement,
the provisions of the Servicing Agreement shall control. Capitalized terms used in this Section 9.4
but not otherwise defined in this Funding Loan Agreement shall have the meanings given such terms
in the Servicing Agreement.
Remedies Vested in Funding Lender. All rights of action and claims under
this Funding Loan Agreement or the Governmental Lender Notes may be prosecuted and enforced by
the Funding Lender without the possession of the Governmental Lender Notes or the production
thereof in any proceeding relating thereto.
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Restoration of Positions. If Funding Lender shall have instituted any
proceeding to enforce any right or remedy under this Funding Loan Agreement and such proceeding
shall have been discontinued or abandoned for any reason or shall have been determined adversely to
the Funding Lender, then and in every such case the Governmental Lender and the Funding Lender
shall, subject to any determination in such proceeding, be restored to their former positions
hereunder, and thereafter all rights and remedies of the Governmental Lender and the Funding
Lender shall continue as though no such proceeding had been instituted.
Rights and Remedies Cumulative. No right or remedy herein conferred
upon or reserved to the Funding Lender is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Delay or Omission Not Waiver. No delay or omission of the Funding
Lender to exercise any right or remedy accruing upon an Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every
right and remedy given by this Article or by law to the Funding Lender may be exercised from time
to time, and as often as may be deemed expedient, by Funding Lender. No waiver of any default or
Event of Default pursuant to Section 9.9 hereof shall extend to or shall affect any subsequent default
or Event of Default hereunder or shall impair any rights or remedies consequent thereon.
Waiver of Past Defaults. Before any judgment or decree for payment of
money due has been obtained by the Funding Lender, the Funding Lender may, subject to Section 9.6
hereof, by Written Notice to the Governmental Lender and the Borrower, waive any past default
hereunder or under the Borrower Loan Agreement and its consequences except for default in
obligations due the Governmental Lender pursuant to or under the Unassigned Rights. Upon any
such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Funding Loan Agreement and the Borrower
Loan Agreement; but no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
Remedies Under Borrower Loan Agreement or Borrower Notes. As set
forth in this Section 9.10 but subject to Section 9.9 hereof, the Funding Lender shall have the right, in
its own name or on behalf of the Governmental Lender, to declare any default and exercise any
remedies under the Borrower Loan Agreement or the Borrower Notes, whether or not the
Governmental Lender Notes have been accelerated or declared due and payable by reason of an
Event of Default.
Waiver of Appraisement and Other Laws.
(a) To the extent permitted by law, the Governmental Lender will not at any time
insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay,
extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement
of this Funding Loan Agreement; and the Governmental Lender, for itself and all who may claim
under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all
such laws. The Governmental Lender, for itself and all who may claim under it, waives, to the extent
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that it may lawfully do so, all right to have the property in the Security marshaled upon any
enforcement hereof.
(b) If any law now in effect prohibiting the waiver referred to in clause (a) shall
hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any
part of the contract herein contained or to preclude the application of this Section 9.11.
Suits to Protect the Security. The Funding Lender shall have power to
institute and to maintain such proceedings as it may deem expedient to prevent any impairment of the
Security by any acts that may be unlawful or in violation of this Funding Loan Agreement and to
protect its interests in the Security and in the rents, issues, profits, revenues and other income arising
therefrom, including power to institute and maintain proceedings to restrain the enforcement of or
compliance with any Governmental Authority enactment, rule or order that may be unconstitutional
or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order would
impair the security hereunder or be prejudicial to the interests of the Funding Lender.
Remedies Subject to Applicable Law. All rights, remedies and powers
provided by this Article may be exercised only to the extent that the exercise thereof does not violate
any applicable provision of law in the premises, and all the provisions of this Article are intended to
be subject to all applicable mandatory provisions of law which may be controlling in the premises
and to be limited to the extent necessary so that they will not render this Funding Loan Agreement
invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
Assumption of Obligations. In the event that the Funding Lender or its
assignee or designee shall become the legal or beneficial owner of the Project by foreclosure or deed
in lieu of foreclosure, such party shall succeed to the rights and the obligations of the Borrower under
the Borrower Loan Agreement, the Borrower Notes, the Regulatory Agreement and any other
Funding Loan Documents to which the Borrower is a party. Such assumption shall be effective from
and after the effective date of such acquisition and shall be made with the benefit of the limitations of
liability set forth therein and without any liability for the prior acts of the Borrower.
It is the intention of the parties hereto that upon the occurrence and continuance of an Event
of Default hereunder, rights and remedies may be pursued pursuant to the terms of the Funding Loan
Documents.
Amendment of Funding Loan Agreement. Any of the terms of this
Funding Loan Agreement and the Governmental Lender Notes may be amended or waived only by
an instrument signed by the Funding Lender and the Governmental Lender, provided, however, no
such amendment which materially affects the rights, duties, obligations or other interests of the
Borrower or Fiscal Agent shall be made without the consent of the Borrower or Fiscal Agent, as
applicable, and, provided further, that if the Borrower is in default under any Funding Loan
Document, no Borrower consent shall be required unless such amendment has a material adverse
effect on the rights, duties, obligations or other interests of the Borrower. All of the terms of this
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Funding Loan Agreement shall be binding upon the successors and assigns of and all persons
claiming under or through the Governmental Lender or any such successor or assign, and shall inure
to the benefit of and be enforceable by the successors and assigns of the Funding Lender.
Amendments Require Funding Lender Consent. The Governmental
Lender shall not consent to any amendment, change or modification of the Borrower Loan
Agreement or any other Borrower Loan Document or Funding Loan Document without the prior
Written Consent of the Funding Lender.
Consents and Opinions. No amendment to this Funding Loan Agreement or
any other Funding Loan Document entered into under this Article X or any amendment, change or
modification otherwise permitted under this Article X shall become effective unless and until (i) the
Funding Lender shall have approved the same in writing in its sole discretion and (ii) the Funding
Lender shall have received, at the expense of the Borrower, a Tax Counsel No Adverse Effect
Opinion and an Opinion of Counsel substantially to the effect that any such proposed amendment is
authorized and complies with the provisions of this Funding Loan Agreement and is a valid and
binding obligation of the parties thereto, subject to normal exceptions relating to bankruptcy,
insolvency and equitable principles limitations.
Appointment of Fiscal Agent; Acceptance. The Governmental Lender
hereby appoints Fiscal Agent as fiscal agent hereunder. The Fiscal Agent shall signify its acceptance
of the duties and obligations imposed upon it by this Funding Loan Agreement by executing this
Funding Loan Agreement.
Certain Duties and Responsibilities of Fiscal Agent.
(a) The Fiscal Agent undertakes to perform such duties and only such duties as
are specifically set forth in this Funding Loan Agreement, and no implied covenants or obligations
shall be read into this Funding Loan Agreement against the Fiscal Agent.
(b) If an event of default exists hereunder or under any Borrower Loan
Document, the Fiscal Agent shall exercise such of the rights and powers vested in it by this Funding
Loan Agreement, and exercise any rights or duties or remedies solely at the written direction of the
Funding Lender.
(c) No provision of this Funding Loan Agreement shall be construed to relieve
the Fiscal Agent from liability for its own negligent action, its own negligent failure to act, or its own
willful misconduct, in each case, as finally adjudicated by a court of law, except that:
(i) This subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) The Fiscal Agent shall not be liable for any error of judgment made in
good faith, unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent
facts;
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(iii) The Fiscal Agent shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the direction of the Funding Lender relating to the
time, method and place of conducting any proceeding for any remedy available to the Fiscal Agent,
or exercising any power conferred upon the Fiscal Agent under this Funding Loan Agreement; and
(iv) No provision of this Funding Loan Agreement shall require the Fiscal
Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against such risk or
liability is not assured to it in its sole discretion.
(v) Subject to its rights to indemnification pursuant to Section 11.4
hereof, the Fiscal Agent is directed to enter into the Borrower Loan Documents to which it is a party
and other related documents (including the Regulatory Agreement), solely in its capacity as Fiscal
Agent.
(d) Whether or not therein expressly so provided, every provision of this Funding
Loan Agreement and the other Funding Loan Documents relating to the conduct or affecting the
liability of or affording protection to the Fiscal Agent shall be subject to the provisions of this
Section.
(e) The Fiscal Agent may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal
Agent and conforming to the requirements of this Funding Loan Agreement; but in the case of any
such certificates or opinions which by any provision hereof are specifically required to be furnished
to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Funding Loan Agreement.
(f) The permissive rights of the Fiscal Agent to do things enumerated in this
Funding Loan Agreement shall not be construed as a duty.
Notice of Defaults. Upon the occurrence of any default hereunder or under
any Borrower Loan Document and provided that a Responsible Officer of the Fiscal Agent has actual
knowledge or has received Written Notice of the existence of such default, promptly, and in any
event within 15 days, the Fiscal Agent shall transmit to the Governmental Lender, the Borrower, the
Equity Investor, the Servicer, if any, and the Funding Lender, in the manner and at the addresses for
notices set forth in Section 12.1 hereof, notice of such default hereunder known to the Fiscal Agent
pursuant to Section 11.4(g) hereof, unless such default shall have been cured or waived.
Certain Rights of Fiscal Agent. Except as otherwise provided in
Section 11.1 hereof:
(a) The Fiscal Agent may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note, debenture, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or parties;
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(b) Any request or direction of the Governmental Lender mentioned herein shall
be sufficiently evidenced by a certificate or order executed by an Authorized Governmental Lender
Representative;
(c) Whenever in the administration of this Funding Loan Agreement, the
Regulatory Agreement or any Borrower Loan Document the Fiscal Agent shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any action hereunder, the
Fiscal Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon a Written Certificate of the Governmental Lender, the Funding Lender, the
Servicer or the Borrower, as appropriate;
(d) The Fiscal Agent shall be under no obligation to exercise any of the rights or
powers vested in it by this Funding Loan Agreement or any Borrower Loan Document at the request
or direction of the Funding Lender, pursuant to this Funding Loan Agreement, unless the Funding
Lender shall have offered to the Fiscal Agent in writing security or indemnity reasonably satisfactory
to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction, except costs, expenses and liabilities which are
adjudicated to have resulted from its own negligence or willful misconduct, provided, that nothing
contained in this subparagraph (d) shall be construed to require such security or indemnity for the
performance by the Fiscal Agent of its obligations under Article VII hereof;
(e) The Fiscal Agent shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note, debenture, coupon or other paper or document but the Fiscal
Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Fiscal Agent shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books and records of the Governmental Lender, if any, and of the
Borrower, in either case personally or by agent or attorney after reasonable notice and during normal
business hours;
(f) The Fiscal Agent may execute any of its powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys and pay reasonable
compensation thereto and the Fiscal Agent shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by it hereunder. The Fiscal Agent may
act upon the advice of counsel of its choice concerning all matters hereof and the Fiscal Agent shall
not be responsible for any loss or damage resulting from any action or inaction taken in good faith
reliance upon said advice; and
(g) The Fiscal Agent shall not be required to take notice or be deemed to have
notice of any default hereunder or under any Borrower Loan Document except for failure by the
Borrower to make payments of principal, interest, premium, if any, or Ongoing Governmental
Lender Fee when due, unless a Responsible Officer of the Fiscal Agent shall be specifically notified
by a Written Direction of such default by the Governmental Lender, the Servicer or the Funding
Lender, and all notices or other instruments required by this Funding Loan Agreement or under any
Borrower Loan Document to be delivered to the Fiscal Agent, must, in order to be effective, be
delivered in writing to a Responsible Officer of the Fiscal Agent at the Office of the Fiscal Agent,
and in the absence of such Written Notice so delivered the Fiscal Agent may conclusively assume
there is no default as aforesaid.
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Not Responsible for Recitals. The recitals contained herein and in the
Governmental Lender Notes shall be taken as the statements of the Governmental Lender, and the
Fiscal Agent assumes no responsibility for their correctness. The Fiscal Agent makes no
representations as to the value or condition of the Pledged Revenues, the Security or any part thereof,
or as to the title of the Governmental Lender thereto or as to the security afforded thereby or hereby,
or as to the validity or sufficiency of this Funding Loan Agreement or of the Funding Loan.
The Fiscal Agent shall have no responsibility or liability with respect to any information,
statement or recital in any offering memorandum or other disclosure material prepared or distributed
with respect to the funding of the Funding Loan.
The Fiscal Agent shall not be required to monitor the financial condition of the Borrower or
the physical condition of the Project. The Fiscal Agent shall be under no obligation to analyze,
review or make any credit decisions with respect to any financial statements, reports, notices,
certificates or documents received hereunder but shall hold such financial statements reports, notices,
certificates and documents solely for the benefit of, and review by, the Funding Lender and such
other parties to whom the Fiscal Agent may provide such information pursuant to this Funding Loan
Agreement.
The Fiscal Agent makes no representations as to and shall have no responsibility for the
sufficiency of the insurance required under any of the Borrower Loan Documents.
May Hold Funding Loan. The Fiscal Agent in its individual or any other
capacity may become the owner or pledgee of the Funding Loan and may otherwise deal with the
Governmental Lender, the Funding Lender and the Borrower with the same rights it would have if it
were not Fiscal Agent.
Moneys Held Hereunder. Moneys held by the Fiscal Agent hereunder need
not be segregated from other funds except to the extent required by law. The Fiscal Agent shall be
under no liability for interest on any moneys received by it hereunder except as otherwise provided
herein.
Compensation and Reimbursement. Under the Borrower Loan Agreement,
the Borrower has agreed to, except as otherwise expressly provided herein, pay the Fiscal Agent its
fees and reimburse the Fiscal Agent as provided in this Funding Loan Agreement or the Borrower
Loan Agreement, upon its request for all reasonable expenses, disbursements and advances incurred
or made by the Fiscal Agent in accordance with any provision of this Funding Loan Agreement
(including the reasonable fees, expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to the Fiscal Agents negligence or
willful misconduct, both as finally adjudicated by a court of law.
When the Fiscal Agent incurs expenses or renders service in connection with any bankruptcy
or insolvency proceeding, such expenses (including the fees and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of administration under any
bankruptcy law or law relating to creditors rights generally.
(a) The Governmental Lender has no obligation to pay the Fiscal Agent for
services rendered.
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(b) As security for the performance of the obligations of the Borrower under this
Section and for the payment of such compensation, expenses, reimbursements and indemnity, the
Fiscal Agent shall have the right to use and apply any moneys held by it as Pledged Revenues.
(c) The Fiscal Agents rights to compensation and reimbursement shall survive
its resignation or removal, the payment of the Funding Loan or the Borrower Loan or the release of
this Funding Loan Agreement.
Fiscal Agent Required; Eligibility. Any successor Fiscal Agent shall at all
times be a trust company, a state banking corporation or a national banking association with the
authority to accept trusts in the State approved in writing by the Governmental Lender and either
(a) have a combined capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition, (b) be a wholly owned subsidiary of a bank holding company,
or a wholly owned subsidiary of a company that is a wholly owned subsidiary of a bank holding
company, having a combined capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition, have at least $500,000,000 of trust assets under management
and have a combined capital and surplus of at least $2,000,000 as set forth in its most recent
published annual report of condition, or (c) be otherwise acceptable to the Funding Lender in its sole
and absolute discretion.
Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Fiscal Agent hereunder and no appointment
of a successor Fiscal Agent pursuant to this Article shall become effective until the written
acceptance by the successor Fiscal Agent of such appointment.
(b) The Fiscal Agent may resign at any time by giving 60 days Written Notice
thereof to the Governmental Lender, the Borrower, the Servicer, if any, and the Funding Lender.
(c) The Fiscal Agent may be removed at any time with 30 days notice by (i) the
Governmental Lender, (ii) the Borrower (unless the Borrower is in default under any of the Borrower
Loan Documents), subject to applicable notice and cure periods, with the Written Consent of the
Funding Lender and the Governmental Lender, or (iii) the Funding Lender with the Written Consent
of the Governmental Lender and Written Notice delivered to the Fiscal Agent and the Borrower.
(d) If the Fiscal Agent shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the Office of the Fiscal Agent for any cause, the Governmental Lender
shall promptly appoint a successor Fiscal Agent, with the consent of the Funding Lender, which
consent shall not be unreasonably withheld. In case all or substantially all of the Pledged Revenues
and Security shall be in the possession of a receiver or trustee lawfully appointed, such receiver or
trustee may similarly appoint a successor to fill such vacancy until a new Fiscal Agent shall be so
appointed by the Governmental Lender. If, within 60 days after such resignation, removal or
incapability or the occurrence of such vacancy, the Governmental Lender has failed to so appoint a
successor Fiscal Agent, then a successor Fiscal Agent shall be appointed by the Funding Lender
(from any of the institutions approved by the Governmental Lender to serve as a fiscal agent or
trustee) with Written Notice thereof delivered to the Governmental Lender, the Borrower, the
Servicer, if any, and the retiring Fiscal Agent, and the successor Fiscal Agent so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Fiscal Agent and supersede
the successor Fiscal Agent appointed by such receiver or Fiscal Agent. If no successor Fiscal Agent
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shall have been appointed by the Governmental Lender or the Funding Lender and accepted
appointment within 60 days after such resignation, removal or incapability or the occurrence of such
vacancy, the Fiscal Agent may petition any court of competent jurisdiction for the appointment of a
successor Fiscal Agent.
(e) The retiring Fiscal Agent shall cause Written Notice of each resignation and
each removal of the Fiscal Agent and each appointment of a successor Fiscal Agent to be provided to
the Funding Lender. Each notice shall include the name of the successor Fiscal Agent and the
address of the office of the successor Fiscal Agent.
Acceptance of Appointment by Successor.
(a) Every successor Fiscal Agent appointed hereunder shall execute,
acknowledge and deliver to the Governmental Lender and to the retiring Fiscal Agent an instrument
accepting such appointment, and thereupon the resignation or removal of the retiring Fiscal Agent
shall become effective and such successor Fiscal Agent, without any further act, deed or conveyance,
shall become vested with all the estates, properties, rights, powers and duties of the retiring Fiscal
Agent; notwithstanding the foregoing, on request of the Governmental Lender or the successor Fiscal
Agent, such retiring Fiscal Agent shall, upon payment of its charges, execute and deliver an
instrument conveying and transferring to such successor Fiscal Agent all the estates, properties,
rights, powers and trusts of the retiring Fiscal Agent, and shall duly assign, transfer and deliver to
such successor Fiscal Agent all property and money held by such retiring Fiscal Agent hereunder.
Upon request of any such successor Fiscal Agent, the Governmental Lender shall execute any and all
instruments for more fully and certainly vesting in and confirming to such successor Fiscal Agent all
such estates, properties, rights and powers.
(b) No successor Fiscal Agent shall accept its appointment unless at the time of
such acceptance such successor Fiscal Agent shall be qualified and eligible under this Article, to the
extent operative.
Merger, Conversion, Consolidation or Succession to Business. Any
corporation into which the Fiscal Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the Fiscal Agent shall
be a party, or any corporation succeeding to all or substantially all of the corporate trust business of
the Fiscal Agent, shall be the successor of the Fiscal Agent hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, to the extent operative, without the
execution or filing of any paper or any further act on the part of any of the parties hereto.
Notwithstanding the foregoing, any such successor Fiscal Agent shall cause Written Notice of such
succession to be delivered to the Funding Lender within 30 days of such succession.
Appointment of Co-Fiscal Agent. It is recognized that in case of litigation
under this Funding Loan Agreement, the Borrower Loan Agreement, any other Borrower Loan
Document or the Regulatory Agreement, and in particular in case of the enforcement of any of them
on default, or in case the Fiscal Agent deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Fiscal
Agent or hold title to the properties, as herein provided, or take any other action which may be
desirable or necessary in connection therewith, it may be necessary that the Fiscal Agent appoint an
additional individual or institution as a separate or co-fiscal agent. The following provisions of this
Section are adopted to these ends.
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The Fiscal Agent is hereby authorized to appoint an additional individual or institution as a
separate or co-fiscal agent hereunder, upon Written Notice to the Governmental Lender, the Funding
Lender and the Borrower, and with the consent of the Governmental Lender and the Funding Lender,
but without the necessity of further authorization or consent, in which event each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or
intended by this Funding Loan Agreement, any Borrower Loan Document, the Regulatory
Agreement or the Borrower Loan Agreement to be exercised by or vested in or conveyed to the
Fiscal Agent with respect thereto shall be exercisable by and vest in such separate or co-fiscal agent
but only to the extent necessary to exercise such powers, rights and remedies, and every covenant
and obligation necessary to the exercise thereof by such separate or co-fiscal agent shall run to and be
enforceable by either of them.
Should any instrument in writing from the Governmental Lender be required by the separate
fiscal agent or co-fiscal agent appointed by the Fiscal Agent for more fully and certainly vesting in
and confirming to him or it such properties, rights, powers, duties and obligations, any and all such
instruments in writing shall, on request of the Fiscal Agent, be executed, acknowledged and delivered
by the Governmental Lender. In case any separate fiscal agent or co-fiscal agent, or a successor to
either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights,
powers, duties and obligations of such separate fiscal agent or co-fiscal agent, so far as permitted by
law, shall vest in and be exercised by the Fiscal Agent until the appointment of a successor to such
separate fiscal agent or co fiscal agent.
Loan Servicing. The Governmental Lender and the Fiscal Agent
acknowledge that the Funding Lender shall have the right to appoint a Servicer to service and
administer the Funding Loan and the Borrower Loan as set forth in a Servicing Agreement. The
Governmental Lender and the Fiscal Agent shall not be responsible for monitoring the performance
of any Servicer or for any acts or omissions of such Servicer. The Funding Lender may, in its sole
discretion, terminate or replace the Servicer.
No Recourse Against Officers or Employees of Fiscal Agent. No recourse
with respect to any claim related to any obligation, duty or agreement contained in this Funding Loan
Agreement or any other Funding Loan Document shall be had against any officer or employee, as
such, of the Fiscal Agent, it being expressly understood that the obligations, duties and agreements of
the Fiscal Agent contained in this Funding Loan Agreement and the other Funding Loan Documents
are solely corporate in nature.
Notices. All notices, demands, requests and other communications required
or permitted to be given by any provision of this Funding Loan Agreement shall be in writing and
sent by first class, regular, registered or certified mail, commercial delivery service, overnight
courier, telegraph, telex, telecopier or facsimile transmission, air or other courier, hand delivery, to
the party to be notified addressed as follows:
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If to the Fiscal Agent: U.S. Bank National Association
Global Corporate Trust
633 West 5th Street, 24th Floor
Los Angeles, California 90071
Attention: Ismael Diaz
Ref: CV MF (St. Regis Park Apartments) 2019
Telephone: (213) 615-6063
Facsimile: (213) 615-6197
If to the Governmental Lender: Chula Vista Housing Authority
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
Telephone: (619) 691-5263
If to the Borrower: St. Regis Park CIC, LP
6339 Paseo del Lago
Carlsbad, CA 92011
Telephone: (760) 456-6000
Facsimile: (760) 456-6001
Attn: Project Manager
c/o Chelsea Investment Corporation
6993 Paseo del Lago
Carlsbad, CA 92011
Attn: Project Manager
with a copy to: Cox, Castle & Nicholson LLP
50 California Street, Suite 3200
San Fransisco, CA 94111
Attention: Ofer Elitzur, Esq.
If to the Equity Investor: Raymond James California Housing Opportunities
Fund VI L.L.C.
c/o Raymond James Tax Credit Funds, Inc.
880 Carillion Parkway
St. Petersburg, Florida 33716
Attention: Steven J. Kropf, President
with a copy to: Bocarsly, Emden, Cowan, Esmail & Arndt, LLP
633 West Fifth Street, 64th Floor
Los Angeles, California 90071
Attention: Kyle Arndt
Telephone: (213) 239-8048
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If to the Funding Lender: Citibank, N.A.
388 Greenwich Street, 8th Floor
New York, New York 10013
Attention: Transaction Management Group
Re: St. Regis Park Apartments
Deal ID #__________
Facsimile: (212) 723-8209
and to: Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Re: St. Regis Park Apartments
Deal ID # __________
Facsimile: (805) 557-0924
prior to the Conversion Date, with a copy to:
Citibank, N.A.
388 Greenwich Street, 8th Floor
New York, New York 10013
Attention: Account Specialist
Re: St. Regis Park Apartments
Deal ID# __________
Facsimile: (212) 723-8209
following the Conversion Date with a copy to:
c/o Berkadia Commercial Servicing Department
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Client Relations Manager
Re: St. Regis Park Apartments
Deal ID# __________
Facsimile: (215) 328-0305
and a copy of any notices of default sent to:
Citibank, N.A.
388 Greenwich Street, 17th Floor
New York, New York 10013
Re: St. Regis Park Apartments
Deal ID# __________
Facsimile: (646) 291-5754
Any such notice, demand, request or communication shall be deemed to have been given and
received for all purposes under this Funding Loan Agreement: (i) three Business Days after the same
is deposited in any official depository or receptacle of the United States Postal Service first class, or,
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if applicable, certified mail, return receipt requested, postage prepaid; (ii) on the date of transmission
when delivered by telecopier or facsimile transmission, telex, telegraph or other telecommunication
device, provided any telecopy or other electronic transmission received by any party after 4:00 p.m.,
local time, as evidenced by the time shown on such transmission, shall be deemed to have been
received the following Business Day; (iii) on the next Business Day after the same is deposited with
a nationally recognized overnight delivery service that guarantees overnight delivery; and (iv) on the
date of actual delivery to such party by any other means; provided, however, if the day such notice,
demand, request or communication shall be deemed to have been given and received as aforesaid is
not a Business Day, such notice, demand, request or communication shall be deemed to have been
given and received on the next Business Day. Any facsimile signature by a Person on a document,
notice, demand, request or communication required or permitted by this Funding Loan Agreement
shall constitute a legal, valid and binding execution thereof by such Person.
Any party to this Funding Loan Agreement may change such partys address for the purpose
of notice, demands, requests and communications required or permitted under this Funding Loan
Agreement by providing written notice of such change of address to all of the parties by written
notice as provided herein.
Term of Funding Loan Agreement. This Funding Loan Agreement shall be
in full force and effect until all payment obligations of the Governmental Lender hereunder have
been paid in full and the Funding Loan has been retired or the payment thereof has been provided
for; except that on and after payment in full of the Governmental Lender Notes, this Funding Loan
Agreement shall be terminated, without further action by the parties hereto.
Successors and Assigns. All covenants and agreements in this Funding Loan
Agreement by the Governmental Lender shall bind its successors and assigns, whether so expressed
or not.
Legal Holidays. In any case in which the date of payment of any amount due
hereunder or the date on which any other act is to be performed pursuant to this Funding Loan
Agreement shall be a day that is not a Business Day, then payment of such amount or such act need
not be made on such date but may be made on the next succeeding Business Day, and such later
payment or such act shall have the same force and effect as if made on the date of payment or the
date fixed for prepayment or the date fixed for such act, and no additional interest shall accrue for the
period from and after such date and prior to the date of payment.
Governing Law. This Funding Loan Agreement shall be governed by and
shall be enforceable in accordance with the laws of the State applicable to contracts made and
performed in the State.
Severability. If any provision of this Funding Loan Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions
shall not in any way be affected or impaired. In case any covenant, stipulation, obligation or
agreement contained in the Governmental Lender Notes or in this Funding Loan Agreement shall for
any reason be held to be usurious or in violation of law, then such covenant, stipulation, obligation or
agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the
Governmental Lender or the Funding Lender only to the full extent permitted by law.
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Execution in Several Counterparts. This Funding Loan Agreement may be
contemporaneously executed in several counterparts, all of which shall constitute one and the same
instrument and each of which shall be, and shall be deemed to be, an original.
Nonrecourse Obligation of the Borrower. Except as otherwise provided in
the Borrower Loan Agreement, any obligations of the Borrower under this Funding Loan Agreement
are without recourse to the Borrower or to the Borrowers partners or members, as the case may be,
and the provisions of Section 11.1 of the Borrower Loan Agreement are by this reference
incorporated herein.
Waiver of Trial by Jury. IF AND TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, EACH OF THE GOVERNMENTAL LENDER AND THE
FUNDING LENDER (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS FUNDING LOAN AGREEMENT OR
THE RELATIONSHIP BETWEEN THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO
THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY
AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
IF FOR ANY REASON THIS WAIVER IS DETERMINED TO BE UNENFORCEABLE,
ALL DISPUTES WILL BE RESOLVED BY JUDICIAL REFERENCE PURSUANT TO THE
PROCEDURES SET FORTH IN THE SECURITY INSTRUMENT.
Electronic Transactions. The transactions described in this Funding Loan
Agreement may be conducted and the related documents may be stored by electronic means. Copies,
telecopies, facsimiles, electronic files and other reproductions of original executed documents shall
be deemed to be authentic and valid counterparts of such original documents for all purposes,
including the filing of any claim, action or suit in the appropriate court of law.
Reference Date. This Funding Loan Agreement is dated for reference
purposes only as of the first day of ___________ 2019.
\[Remainder of Page Intentionally Left Blank\]
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IN WITNESS WHEREOF, the Funding Lender, the Fiscal Agent and the Governmental
Lender have caused this Funding Loan Agreement to be duly executed as of the date first written
above.
FUNDING LENDER:
CITIBANK, N.A.
By:
Name:
Title: Authorized Signatory
GOVERNMENTAL LENDER:
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
FISCAL AGENT:
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
By:
Authorized Signatory
\[Signature Page to Funding Loan Agreement St. Regis Park Apartments\]
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2019-06-11 Agenda PacketPage 698 of 891
EXHIBIT A
FORM OF GOVERNMENTAL LENDER NOTES
THIS NOTE MAY BE OWNED ONLY BY A PERMITTED TRANSFEREE IN
ACCORDANCE WITH THE TERMS OF THE FUNDING LOAN AGREEMENT, AND THE
HOLDER HEREOF, BY THE ACCEPTANCE OF THIS FUNDING LOAN AGREEMENT
(A) REPRESENTS THAT IT IS A PERMITTED TRANSFEREE AND
(B) ACKNOWLEDGES THAT IT CAN ONLY TRANSFER THIS GOVERNMENTAL
LENDER NOTE TO ANOTHER PERMITTED TRANSFEREE IN ACCORDANCE WITH
THE TERMS OF THE FUNDING LOAN AGREEMENT.
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE NOTE
(ST. REGIS PARK APARTMENTS),
\[2019 SERIES B-1\]\[2019 SERIES B-2\]\[2019 SERIES B-3 (TAXABLE)\]
$__________ ___________, 2019
FOR VALUE RECEIVED, the undersigned CHULA VISTA HOUSING AUTHORITY
(Obligor) promises to pay to the order of CITIBANK, N.A. (Holder) the maximum principal
sum of \[__________ DOLLARS ($__________), on __________ 1, 20__\], or earlier as provided
herein, together with interest thereon at the rates, at the times and in the amounts provided below.
Obligor shall pay to the Holder on or before each date on which payment is due under that
certain Funding Loan Agreement, dated as of ______________ 1, 2019 (the Funding Loan
Agreement), among Obligor, Holder and U.S. Bank National Association, as fiscal agent (Fiscal
Agent), an amount in immediately available funds sufficient to pay the principal amount of and
Prepayment Premium, if any, on this Governmental Lender Note then due and payable, whether by
maturity, acceleration, prepayment or otherwise. In the event that amounts held derived from
proceeds of this Governmental Lender Note, condemnation awards or insurance proceeds or
investment earnings thereon are applied to the payment of principal due on this Governmental
Lender Note in accordance with the Funding Loan Agreement, the principal amount due hereunder
shall be reduced to the extent of the principal amount of this Governmental Lender Note so paid.
Capitalized terms not otherwise defined herein shall have the meaning assigned in the Funding Loan
Agreement.
Obligor shall pay to the Holder on or before each date on which interest on the Funding Loan
is payable interest on the unpaid balance hereof in an amount in immediately available funds
sufficient to pay the interest on this Governmental Lender Note then due and payable in the amounts
and at the rate or rates set forth in the Funding Loan Agreement.
This Governmental Lender Note is a pass-through obligation relating to a construction and
permanent loan (the Borrower Loan) made by Obligor from proceeds of the Funding Loan to ST.
REGIS PARK CIC, LP, a California limited partnership, as borrower (the Borrower), under that
certain Borrower Loan Agreement, dated as of ______________ 1, 2019, (as the same may be
modified, amended or supplemented from time to time, the Borrower Loan Agreement), between
the Obligor and the Borrower, evidenced by the \[Series B-1\]\[Series B-2\]\[Series B-3\] Borrower Note
(as defined in the Borrower Loan Agreement). Reference is made to the Borrower Loan Agreement
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and to the \[Series B-1\]\[Series B-2\]\[Series B-3\] Borrower Note for complete payment and
prepayment terms of the \[Series B-1\]\[Series B-2\]\[Series B-3\] Borrower Note, payments on which are
passed-through under this Governmental Lender Note.
This Governmental Lender Note is a limited obligation of the Obligor, payable solely from
the Pledged Revenues and other funds and moneys and Security pledged and assigned under the
Funding Loan Agreement. None of the Governmental Lender, the State, or any political subdivision
thereof (except the Governmental Lender, to the limited extent set forth herein) or any public agency
shall in any event be liable for the payment of the principal of, premium (if any) or interest on this
Governmental Lender Note or the Funding Loan or for the performance of any pledge, obligation or
agreement of any kind whatsoever with respect thereto except as set forth herein and in the Funding
Loan Agreement, and none of the Funding Loan or this Governmental Lender Note or any of the
Governmental Lenders agreements or obligations with respect to the Funding Loan or this
Governmental Lender Note shall be construed to constitute an indebtedness of or a pledge of the faith
and credit of or a loan of the credit of or a moral obligation of any of the foregoing within the
meaning of any constitutional or statutory provision whatsoever. The Governmental Lender has no
taxing power.
All capitalized terms used but not defined herein shall have the meanings ascribed to them in
the Funding Loan Agreement or in the Borrower Loan Agreement.
This Governmental Lender Note is subject to the express condition that at no time shall
interest be payable on this Governmental Lender Note or the Funding Loan at a rate in excess of the
Maximum Rate provided in the Funding Loan Agreement; and Obligor shall not be obligated or
required to pay, nor shall the Holder be permitted to charge or collect, interest at a rate in excess of
such Maximum Rate. If by the terms of this Governmental Lender Note or of the Funding Loan
Agreement, Obligor is required to pay interest at a rate in excess of such Maximum Rate, the rate of
interest hereunder or thereunder shall be deemed to be reduced immediately and automatically to
such Maximum Rate, and any such excess payment previously made shall be immediately and
automatically applied to the unpaid balance of the principal sum hereof and not to the payment of
interest.
Amounts payable hereunder representing late payments, penalty payments or the like shall be
payable to the extent allowed by law.
This Governmental Lender Note is subject to all of the terms, conditions, and provisions of
the Funding Loan Agreement, including those respecting prepayment and the acceleration of
maturity and those respecting limitations of liability in Article V of the Funding Loan Agreement.
If there is an Event of Default under the Funding Loan Documents, then in any such event
and subject to the requirements set forth in the Funding Loan Agreement, the Holder may declare the
entire unpaid principal balance of this Governmental Lender Note and accrued interest, if any, due
and payable at once. All of the covenants, conditions and agreements contained in the Funding Loan
Documents are hereby made part of this Governmental Lender Note.
No delay or omission on the part of the Holder in exercising any remedy, right or option
under this Governmental Lender Note or the Funding Loan Documents shall operate as a waiver of
such remedy, right or option. In any event a waiver on any one occasion shall not be construed as a
waiver or bar to any such remedy, right or option on a future occasion. The rights, remedies and
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options of the Holder under this Governmental Lender Note and the Funding Loan Documents are
and shall be cumulative and are in addition to all of the rights, remedies and options of the Holder at
law or in equity or under any other agreement.
Obligor shall pay all costs of collection on demand by the Holder, including without
limitation, reasonable attorneys fees and disbursements, which costs may be added to the
indebtedness hereunder, together with interest thereon, to the extent allowed by law, as set forth in
the Funding Loan Agreement.
This Governmental Lender Note may not be changed orally. Presentment for payment,
notice of dishonor, protest and notice of protest are hereby waived. The acceptance by the Holder of
any amount after the same is due shall not constitute a waiver of the right to require prompt payment,
when due, of all other amounts due hereunder. The acceptance by the Holder of any sum in an
amount less than the amount then due shall be deemed an acceptance on account only and upon
condition that such acceptance shall not constitute a waiver of the obligation of Obligor to pay the
entire sum then due, and Obligors failure to pay such amount then due shall be and continue to be a
default notwithstanding such acceptance of such amount on account, as aforesaid. Consent by the
Holder to any action of Obligor which is subject to consent or approval of the Holder hereunder shall
not be deemed a waiver of the right to require such consent or approval to future or successive
actions.
This Governmental Lender Note (and the Funding Loan that it represents), and any interests
herein or therein, are transferable by the registered owner hereof, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Funding Loan Agreement. Upon
such transfer a new fully registered Governmental Lender Note will be issued to the transferee in
exchange herefor. The Obligor, the Funding Lender and the Fiscal Agent may treat the registered
owner hereof as the absolute owner hereof for all purposes, and the Obligor and the Funding Lender
shall not be affected by any notice to the contrary.
The Obligor hereby certifies that all of the conditions, things and acts required to exist, to
have happened and to have been performed precedent to and in the issuance of this Governmental
Lender Note do exist, have happened and have been performed in due time, form and manner as
required by the Constitution and laws of the State (including the Act) and that the amount of this
Governmental Lender Note, together with all other indebtedness of the Obligor, does not exceed any
limit prescribed by the Constitution or laws of the State.
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Governmental Lender Note by its authorized representative as of the date first set forth above. The
undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed
instrument.
OBLIGOR:
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
\[SEAL\]
ATTEST:
By:
Deputy Secretary
\[Signature Page to Governmental Lender Note St. Regis Park Apartments\]
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CERTIFICATE OF AUTHENTICATION
This Governmental Lender Note is the Governmental Lender Note described in the within
mentioned Funding Loan Agreement.
Date of Authentication: __________________
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
By
Authorized Signatory
\[Signature Page to Governmental Lender Note St. Regis Park Apartments\]
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EXHIBIT B
FORM OF REQUIRED TRANSFEREE REPRESENTATIONS
\[_________________, 20__\]
The undersigned, as holder (the Holder) of a loan (the Funding Loan) in the maximum
principal amount of $__________ from CITIBANK, N.A. (Funding Lender) to CHULA VISTA
HOUSING AUTHORITY (Governmental Lender) pursuant to a Funding Loan Agreement dated as
of June 1, 2019 (the Funding Loan Agreement) among the Funding Lender, the Governmental
Lender and U.S. Bank National Association, as fiscal agent (the Funding Loan), evidenced by the
Chula Vista Housing Authority Multifamily Housing Revenue Note (St. Regis Park Apartments)
2019 Series \[B-1\]\[B-2\]\[B-3 (Taxable)\] (the Governmental Lender Note), or an interest therein,
hereby represents that:
1. The Holder has sufficient knowledge and experience in financial and business matters
with respect to the evaluation of residential real estate developments such as the Project to be able to
evaluate the risk and merits of the investment represented by the Funding Loan. We are able to bear
the economic risks of such investment.
2. The Holder acknowledges that it has either been supplied with or been given access
to information, including financial statements and other financial information, to which a reasonable
investor would attach significance in making investment decisions, and the Holder has had the
opportunity to ask questions and receive answers from knowledgeable individuals concerning the
Governmental Lender, the Project, the use of proceeds of the Funding Loan and the Funding Loan
and the security therefor so that, as a reasonable investor, the Holder has been able to make its
decision to \[extend/purchase\] the Funding Loan \[or an interest therein\]. In entering into this
transaction, the Holder acknowledges that it has not relied upon any representations or opinions of
the Governmental Lender relating to the legal consequences to the Funding Lender or other aspects
of its making the Funding Loan and acquiring the Governmental Lender Note, nor has it looked to or
expected, the Governmental Lender to undertake or require any credit investigation or due diligence
reviews relating to the Borrower, its financial condition or business operations, the Project (including
the financing or management thereof), or any other matter pertaining to the merits or risks of the
transactions contemplated by the Funding Loan Agreement and the Borrower Loan Agreement, or
the adequacy of the funds pledged to the Funding Lender to secure repayment of the Governmental
Lender Note.
3. The Holder is an Approved Transferee.
4. The Holder acknowledges that it is purchasing \[an interest in\] the Funding Loan for
investment for its own account and not with a present view toward resale or the distribution thereof,
in that it does not now intend to resell or otherwise dispose of all or any part of its interests in the
Funding Loan; provided, however, that the Holder may sell or transfer the Governmental Lender
Note and the Funding Loan as provided in Section 2.4 of the Funding Loan Agreement.
5. In the event any placement memorandum to be provided to any subsequent buyer or
beneficial owner of such portion of the Funding Loan will disclose information with respect to the
Governmental Lender other than its name, location and type of political subdivision and general
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information with respect to the Funding Loan and Borrower Loan and related documents, the Holder
will provide the Governmental Lender with a draft of such placement memorandum and the
Governmental Lender shall have the right to approve any description of the Governmental Lender
therein (which approval shall not be unreasonably withheld).
6. The Holder understands that the Funding Loan is a limited obligation of the
Governmental Lender; payable solely from funds and moneys pledged and assigned under the
Funding Loan Agreement, and that the liabilities and obligations of the Governmental Lender with
respect to the Funding Loan are expressly limited as set forth in the Funding Loan Agreement and
related documents.
7. Capitalized terms used herein and not otherwise defined have the meanings given
such terms in the Funding Loan Agreement.
\[_______________\],
as Holder
By
Name
Its
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EXHIBIT C
FORM OF WRITTEN REQUISITION
OF THE BORROWER PROJECT FUND
Draw #______
To: U.S. Bank National Association, as Fiscal Agent (the Fiscal Agent) under that certain
Funding Loan Agreement, dated as of ______________ 1, 2019, among Citibank, N.A., as
Funding Lender, the Chula Vista Housing Authority, as Governmental Lender, and the Fiscal
Agent (the Funding Loan Agreement), pursuant to which the Chula Vista Housing
Authority Multifamily Housing Revenue Notes (St. Regis Park Apartments) 2019 Series B-1,
2019 Series B-2 and 2019 Series B-3 (Taxable) (collectively, the Governmental Lender
Note issued.
1. You are requested to disburse funds from the Project Fund pursuant to Section 7.7 of
the Funding Loan Agreement in the amount(s) and to the person(s) as follows:
\[Insert grid (see below) summarizing all funds, including amount, source and payee, which
are being requisitioned from the Fiscal Agent pursuant to this requisition.\]
Amount Funding Source Payable To
2. The undersigned certifies that:
(i) the obligation stated on the requisition has been incurred in or about the
rehabilitation or equipping of the Project, each item is a proper charge against the Project Fund, and
the obligation has not been the basis for a prior requisition that has been paid;
(ii) such requisition contains no items representing any Costs of Issuance or any
other amount constituting an issuance cost under Section 147(g) of the Code, unless such item is
being paid solely from the Equity Account of the Project Fund;
(iii) not less than 97% of the sum of: (A) the amounts requisitioned by this
Requisition to be funded with the proceeds of the Tax-Exempt Governmental Lender Notes plus
(B) all amounts allocated to the Tax-Exempt Governmental Lender Notes previously disbursed from
the Note Proceeds Account of the Project Fund, have been or will be applied by the Borrower to pay
Qualified Project Costs;
(iv) to the undersigneds current, actual knowledge, as of the date hereof no event
or condition has happened or is happening or exists that constitutes, or that with notice or lapse of
time or both, would constitute, an Event of Default under the Funding Loan Agreement; and
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(v) attached as Schedule I to this Requisition is an exhibit that allocates the
amount requested hereby from each account of the Project Fund among the sources for payment.
3. You hereby authorize Funding Lender to use the wire instructions contained in
Exhibit E of the Funding Loan Agreement to wire the funds to, and Funding Lender may continue to
rely on these instructions until it shall have received any written notice of modification or revocation
from you.
Dated:______________________
St. Regis Park CIC, LP,
a California limited partnership
By: Pacific Southwest Community Development Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By:________________________________
Robert Laing
President and Executive Director
By: CIC St. Regis Park, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation, its Manager
By:___________________________
Cheri Hoffman, President
Approved by:
CITIBANK, N.A.,
as Funding Lender
By:
Authorized Signer
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EXHIBIT D
FORM OF WRITTEN REQUISITION
OF THE BORROWER CLOSING COSTS FUND
To: U.S. Bank National Association, as Fiscal Agent (the Fiscal Agent) under that certain
Funding Loan Agreement, dated as of ______________ 1, 2019, among Citibank, N.A., as
Funding Lender, Chula Vista Housing Authority, as Governmental Lender, and the Fiscal
Agent (the Funding Loan Agreement).
1. You are requested to disburse funds from the Closing Costs Fund pursuant to
Section 7.6 of the Funding Loan Agreement in the amount(s), to the person(s) and for the purpose(s)
set forth on Schedule I attached hereto and incorporated herein by reference. An invoice or other
appropriate evidence of the obligations described on Schedule I is attached hereto. All payments will
be made by check or wire transfer in accordance with the payment instructions set forth on Schedule
I (or on the attached invoice) and the Fiscal Agent shall have no obligation to authenticate such
payment instructions or the authority under which they were given.
2. The undersigned certifies that as of the date hereof no event or condition has
happened or is happening or exists that constitutes, or that with notice or lapse of time or both, would
constitute, an Event of Default under the Funding Loan Agreement.
Dated: ____________________
BORROWER:
St. Regis Park CIC, LP,
a California limited partnership
By: Pacific Southwest Community Development Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By:________________________________
Robert Laing
President and Executive Director
By: CIC St. Regis Park, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation, its Manager
By:___________________________
Cheri Hoffman, President
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The foregoing Requisition is hereby consented to:
FUNDING LENDER:
CITIBANK, N.A.
By:
__________,Vice President
GOVERNMENTAL LENDER:
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
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Schedule I
Payment Instructions
Payee Purpose Amount of Payment
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EXHIBIT E
FISCAL AGENT WIRING INSTRUCTIONS
Bank Name: U.S. Bank, N.A.
Bank City and State: Minneapolis, MN
ABA Number: 091000022
Account Name: U.S. Bank Trust N.A.
Account Number: 180121167365
Reference: CV MF (St. Regis Park Apartments)
2019
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2019-06-11 Agenda PacketPage 711 of 891
Stradling Yocca Carlson & Rauth
Draft dated May 8, 2019
BORROWER LOAN AGREEMENT
between the
CHULA VISTA HOUSING AUTHORITY,
as Governmental Lender
and
ST. REGIS PARK CIC, LP,
a California limited partnership
as Borrower
dated as of June 1, 2019
relating to:
$______________
Funding Loan originated by CITIBANK, N.A., as Funding Lender
from the proceeds of the
$_________________
Chula Vista Housing Authority
Multifamily Housing Revenue Note
(St. Regis Park Apartments) 2019 Series B-1
$_________________
Chula Vista Housing Authority
Multifamily Housing Revenue Note
(St. Regis Park Apartments) 2019 Series B-2
and
$______________
Chula Vista Housing Authority
Multifamily Housing Revenue Note
(St. Regis Park Apartments) 2019 Series B-3 (Taxable)
The interest of the Governmental Lender in this Borrower Loan Agreement (except for certain rights
described herein)
Chula
Vista Housing Authority ion, as fiscal
agent, and the Funding Lender, under which the Funding Lender is originating a loan to the
Governmental Lender the proceeds of which are to be used to fund the Borrower Loan made under
this Borrower Loan Agreement.
2019-06-11 Agenda PacketPage 712 of 891
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Specific Definitions ................................................................................................... 2
Section 1.2 Definitions .................................................................................................................. 2
ARTICLE II
GENERAL
Section 2.1 Origination of Borrower Loan ................................................................................. 17
Section 2.2 Security for the Funding Loan ................................................................................. 18
Section 2.3 Loan; Borrower Notes; Conditions to Closing ........................................................ 19
Section 2.4 Borrower Loan Payments ........................................................................................ 20
Section 2.5 Additional Borrower Payments ................................................................................ 21
Section 2.6 Overdue Payments; Payments in Default................................................................. 22
Section 2.7 Calculation of Interest Payments and Deposits to Real Estate Related
Reserve Funds .......................................................................................................... 22
Section 2.8 Grant of Security Interest; Application of Funds ..................................................... 22
Section 2.9 Marshalling; Payments Set Aside ............................................................................ 23
Section 2.10 Borrower Loan Disbursements ................................................................................ 23
ARTICLE III
CONVERSION
Section 3.1 Conversion Date and Extension of Outside Conversion Date ................................. 23
Section 3.2 ....................... 24
Section 3.3 Mandatory Prepayment of the Borrower Loan ........................................................ 24
Section 3.4 Release of Remaining Loan Proceeds ...................................................................... 24
Section 3.5 No Amendment ........................................................................................................ 24
Section 3.6 Determinations by Funding Lender ......................................................................... 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower Representations ........................................................................................ 25
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1 Existence .................................................................................................................. 36
Section 5.2 Taxes and Other Charges ......................................................................................... 36
Section 5.3 Repairs; Maintenance and Compliance; Physical Condition ................................... 36
Section 5.4 Litigation .................................................................................................................. 36
Section 5.5 Performance of Other Agreements .......................................................................... 37
Section 5.6 Notices ..................................................................................................................... 37
Section 5.7 Cooperate in Legal Proceedings .............................................................................. 37
Section 5.8 Further Assurances ................................................................................................... 37
Section 5.9 Delivery of Financial Information ........................................................................... 38
Section 5.10 Environmental Matters ............................................................................................. 38
Section 5.11 ............................................... 38
Section 5.12 Estoppel Statement ................................................................................................... 38
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TABLE OF CONTENTS
(continued)
Page
Section 5.13 Defense of Actions ................................................................................................... 38
Section 5.14 Expenses .................................................................................................................. 39
Section 5.15 Indemnity ................................................................................................................. 40
Section 5.16 No Warranty of Condition or Suitability by the Governmental Lender or
Funding Lender ........................................................................................................ 42
Section 5.17 Right of Access to the Project .................................................................................. 42
Section 5.18 Notice of Default ...................................................................................................... 42
Section 5.19 Covenant with Governmental Lender and Funding Lender ..................................... 42
Section 5.20 Obligation of the Borrower to Construct or Rehabilitate the Project....................... 43
Section 5.21 Maintenance of Insurance ........................................................................................ 43
Section 5.22 Information; Statements and Reports ....................................................................... 43
Section 5.23 Additional Notices ................................................................................................... 44
Section 5.24 Compliance with Other Agreements; Legal Requirements ..................................... 45
Section 5.25 Completion and Maintenance of Project .................................................................. 45
Section 5.26 Fixtures .................................................................................................................... 46
Section 5.27 Income from Project ................................................................................................ 46
Section 5.28 Leases and Occupancy Agreements ......................................................................... 46
Section 5.29 Project Agreements and Licenses ............................................................................ 47
Section 5.30 Payment of Debt Payments ...................................................................................... 47
Section 5.31 ERISA ...................................................................................................................... 47
Section 5.32 Patriot Act Compliance ............................................................................................ 47
Section 5.33 Funds from Equity Investor ..................................................................................... 48
Section 5.34 Tax Covenants ......................................................................................................... 48
Section 5.35 Payment of Rebate ................................................................................................... 53
Section 5.36 Covenants under Funding Loan Agreement ............................................................ 54
Section 5.37 Continuing Disclosure Agreement ........................................................................... 54
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1 Management Agreement .......................................................................................... 54
Section 6.2 Dissolution ............................................................................................................... 55
Section 6.3 Change in Business or Operation of Property .......................................................... 55
Section 6.4 Debt Cancellation ..................................................................................................... 55
Section 6.5 Assets ....................................................................................................................... 55
Section 6.6 Transfers .................................................................................................................. 55
Section 6.7 Debt .......................................................................................................................... 55
Section 6.8 Assignment of Rights ............................................................................................... 55
Section 6.9 Principal Place of Business ...................................................................................... 55
Section 6.10 Partnership Agreement ............................................................................................. 56
Section 6.11 ERISA ...................................................................................................................... 56
Section 6.12 No Hedging Arrangements ...................................................................................... 56
Section 6.13 Loans and Investments; Distributions; Related Party Payments ............................. 56
Section 6.14 ...................................................... 56
Section 6.15 Personal Property ..................................................................................................... 57
Section 6.16 Fiscal Year ............................................................................................................... 57
Section 6.17 Publicity ................................................................................................................... 57
Section 6.18 Subordinate Loan Documents .................................................................................. 57
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TABLE OF CONTENTS
(continued)
Page
ARTICLE VII
RESERVED
ARTICLE VIII
DEFAULTS
Section 8.1 Events of Default ..................................................................................................... 57
Section 8.2 Remedies .................................................................................................................. 62
ARTICLE IX
SPECIAL PROVISIONS
Section 9.1 Sale of Note and Secondary Market Transaction ..................................................... 66
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices ..................................................................................................................... 69
Section 10.2 Brokers and Financial Advisors ............................................................................... 71
Section 10.3 Survival .................................................................................................................... 71
Section 10.4 Preferences ............................................................................................................... 71
Section 10.5 Waiver of Notice ...................................................................................................... 71
Section 10.6 Offsets, Counterclaims and Defenses ...................................................................... 72
Section 10.7 Publicity ................................................................................................................... 72
Section 10.8 Construction of Documents ..................................................................................... 72
Section 10.9 No Third Party Beneficiaries ................................................................................... 72
Section 10.10 Assignment .............................................................................................................. 72
Section 10.11 \[Reserved\] ................................................................................................................ 73
Section 10.12 Governmental Lender, Funding Lender and Servicer Not in Control; No
Partnership ............................................................................................................... 73
Section 10.13 Release ..................................................................................................................... 74
Section 10.14 Term of Borrower Loan Agreement ........................................................................ 74
Section 10.15 Reimbursement of Expenses .................................................................................... 74
Section 10.16 Permitted Contests ................................................................................................... 74
Section 10.17 Funding Lender Approval of Instruments and Parties ............................................. 75
Section 10.18 Funding Lender Determination of Facts .................................................................. 75
Section 10.19 Calendar Months ...................................................................................................... 75
Section 10.20 Determinations by Lender ........................................................................................ 75
Section 10.21 Governing Law ........................................................................................................ 75
Section 10.22 Consent to Jurisdiction and Venue........................................................................... 75
Section 10.23 Successors and Assigns ............................................................................................ 76
Section 10.24 Severability .............................................................................................................. 76
Section 10.25 Entire Agreement; Amendment and Waiver ............................................................ 76
Section 10.26 Counterparts ............................................................................................................. 76
Section 10.27 Captions ................................................................................................................... 76
Section 10.28 Servicer .................................................................................................................... 76
Section 10.29 Beneficiary Parties as Third Party Beneficiary ........................................................ 76
Section 10.30 Waiver of Trial by Jury ............................................................................................ 76
Section 10.31 Time of the Essence ................................................................................................. 77
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TABLE OF CONTENTS
(continued)
Page
Section 10.32 \[Reserved\] ................................................................................................................ 77
Section 10.33 Reference Date ......................................................................................................... 77
ARTICLE XI
LIMITATIONS ON LIABILITY
Section 11.1 Limitation on Liability ............................................................................................. 77
Section 11.2 Limitation on Liability of Governmental Lender .................................................... 77
Section 11.3 Waiver of Personal Liability .................................................................................... 78
Section 11.4
Commissioners, Officers, Employees, Etc ............................................................... 78
Section 11.5 Delivery of Reports, Etc .......................................................................................... 79
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BORROWER LOAN AGREEMENT
This Borrower Loan Agreement, dated as of June 1, 2019 Borrower Loan
Agreement is entered into by the CHULA VISTA HOUSING AUTHORITY, a public body
corporate and politic, organized and existing under the laws of the State of California (together with
Governmental LenderST. REGIS PARK CIC, LP, a
Borrower
R E C I T A L S :
WHEREAS, the Governmental Lender is a public body, corporate and politic, duly
organized and validly existing under the laws of the State of California; and
WHEREAS, the Governmental Lender is empowered pursuant to Chapter 1 of Part 2 of
Division 24 of the California Act make loans to any person to
provide financing for residential rental developments located within the City of Chula Vista,
California, and intended to be occupied in part or in whole by persons of low and moderate income;
(b) borrow funds for the purpose of obtaining moneys to make such loans and provide such
financing, to establish necessary reserve funds and to pay administrative costs and other costs
incurred in connection with any such borrowing by the Governmental Lender; and (c) pledge all or
any part of the revenues, receipts or resources of the Governmental Lender, including the revenues
and receipts to be received by the Governmental Lender from or in connection with such loans, and
to mortgage, pledge or grant security interests in such loans or other property of the Governmental
Lender in order to secure the repayment of any such borrowing by the Governmental Lender; and
WHEREAS, the Borrower has applied to the Governmental Lender for a loan (the
Borrower Loan18 unit plus
multifamily rental housing project located at 1025 Broadway in the City of Chula
VistaSt. Regis Park Apartments
WHEREAS
are evidenced by the Borrower Notes, as defined herein; and
WHEREAS, the Borrower has requested that the Governmental Lender enter into that
certain Funding Funding Loan Agreement
Fiscal Agent
Funding Lender loan (the
Funding Loan
Governmental Lender Notes (as defined herein) in connection therewith), the proceeds of which will
be loaned under this Borrower Loan Agreement to the Borrower to finance the acquisition and
construction of the Project (as defined herein); and
WHEREAS, the Borrower Loan is secured by, among other things, that certain Multifamily
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California) (as
Security Instrument
herewith and assigned to the Funding Lender to secure the Funding Loan, encumbering the Project,
and will be advanced to the Borrower pursuant to this Borrower Loan Agreement, the Funding Loan
Agreement and the Construction Funding Agreement (as defined herein); and
2019-06-11 Agenda PacketPage 717 of 891
A G R E E M E N T :
NOW, THEREFORE, in consideration of the premises and the mutual representations,
covenants and agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Specific Definitions. For all purposes of this Borrower Loan Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) Unless specifically defined herein, all capitalized terms shall have the
meanings ascribed thereto in the Security Instrument or, if not defined in the Security Instrument, in
the Funding Loan Agreement.
(b) All accounting terms not otherwise defined herein shall have the meanings
assigned to them, and all computations herein provided for shall be made, in accordance with GAAP.
(c)
other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as
originally executed.
(d) All references in this instrument to a separate instrument are to such separate
instrument as the same may be amended or supplemented from time to time pursuant to the
applicable provisions thereof.
(e) Unless otherwise specified, (i) all references to sections and schedules are to
those in this Borrower Loan Agreement, (ii)
of similar import refer to this Borrower Loan Agreement as a whole and not to any particular
provision, (iii) all definitions are equally applicable to the singular and plural forms of the terms
defined and (iv)
Section 1.2 Definitions. The following terms, when used in this Borrower Loan
Agreement (including when used in the above recitals), shall have the following meanings:
Act
Act of Bankruptcy(or any other
commencement of a bankruptcy or similar proceeding) under any applicable bankruptcy, insolvency,
reorganization, or similar law, now or hereafter in effect; provided that, in the case of an involuntary
proceeding, such proceeding is not dismissed within ninety (90) days after the commencement
thereof.
ADA 4.1.38 hereof.
Additional Borrower Payments 2.5
(Additional Borrower Payments), Section 2.6 (Overdue Payments; Payments in Default),
Section 3.3.3 of the Construction Funding Agreement (Borrower Loan in Balance), Section 5.14
(Expenses), and Section 10 of the Borrower Notes (Voluntary and Involuntary Prepayments).
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2019-06-11 Agenda PacketPage 718 of 891
Administrative General PartnerCIC St. Regis Park, LLC, a California
limited liability company.
Agreement of Environmental Indemnification
Environmental Indemnification, of even date herewith, executed by the Borrower and Guarantor for
the benefit of the Beneficiary Parties (as defined therein) and any lawful holder, owner or pledgee of
the Borrower Note from time to time.
Appraisal
be (i) performed by a qualified appraiser licensed in the State selected by Funding Lender, and
(ii) satisfactory to Funding Lender (including, without limitation, as adjusted pursuant to any internal
review thereof by Funding Lender) in all respects.
Approved Developer Fee Schedulell have the meaning set forth in the Construction
Funding Agreement.
Architect
Borrower may engage from time to time, with the approval of Funding Lender, to design any portion
of the Improvements, including the preparation of the Plans and Specifications.
to time may execute pursuant to which Borrower engages such Architect to design any portion of the
Improvements, including the preparation of the Plans and Specifications, as approved by Funding
Lender.
Authorized Borrower Representative
authorized to act on behalf of the Borrower by a written certificate furnished to the Governmental
Lender, the Funding Lender, the Fiscal Agent and the Servicer and containing the specimen signature
of such person and signed on behalf of the Borrower by its Borrower Controlling Entity which
certificate may designate one or more alternates.
Bankruptcy Code
amended from time to time, or any substitute or replacement legislation.
Bankruptcy Eventy Instrument.
Bankruptcy Proceeding 4.1.8 hereof.
Beneficiary Parties
Lender.
Borrowerthis Borrower Loan
Agreement.
Borrower Affiliate any
entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of
the outstanding voting securities of Borrower, its general partner or the Guarantor, (ii) any
corporation 20 percent or more of whose outstanding voting securities are directly or indirectly
owned, controlled or held with power to vote by the Borrower, its general partner or the Guarantor,
(iii) any partner of Borrower, its general partner or the Guarantor, or (iv) any other person that is
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2019-06-11 Agenda PacketPage 719 of 891
related (to the third degree of consanguinity) by blood or marriage to the Borrower, its general
partner or the Guarantor (to the extent any of the Borrower, its general partner or the Guarantor is a
natural person).
Borrower Controlling Entity
Borrower Deferred Equity
Agreement.
Borrower Initial Equity
Agreement.
Borrower Loan
Borrower pursuant to this Borrower Loan Agreement, in the maximum principal amount of the
Borrower Loan Amount, as evidenced by the Borrower Notes.
Borrower Loan Agreement
Borrower Loan Amount$______________, the original maximum principal
amount of the Borrower Notes.
Borrower Loan Documents
Funding Agreement, the Borrower Notes, the Security Instrument, the Agreement of Environmental
Indemnification, the Replacement Reserve Agreement, the Guaranty, the Contingency Draw Down
Agreement, and all other documents or agreements evidencing or relating to the Borrower Loan.
Borrower Loan Payment Date the date upon which regularly scheduled
Borrower Loan Payments are due pursuant to the Borrower Notes, or (ii) any other date on which the
Borrower Notes are prepaid or paid, whether at the scheduled maturity or upon the acceleration of the
maturity thereof.
Borrower Loan Payments
Borrower Notes.
Borrower Loan Proceeds
accordance with Section 2.10 of this Borrower Loan Agreement, Section 7.7 of the Funding Loan
Agreement and the Construction Funding Agreement.
Borrower Notesely, the Series B-1 Borrower Note, the Series B-2
Borrower Note and the Series B-3 Note;
Notes.
Borrower Payment Obligations
under the Borrower Loan Documents, including, but not limited to, the Borrower Loan Payments and
the Additional Borrower Payments.
Business Day a Saturday or Sunday, or (ii) a day on
which the Fiscal Agent or federally insured depository institutions in New York, New York or
California are authorized or obligated by law, regulation, governmental decree or executive order to
be closed.
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2019-06-11 Agenda PacketPage 720 of 891
Calculation Period consecutive full Calendar Months occurring prior
to the Conversion Date, as the same may be extended in accordance with Section 3.1 hereof.
Calendar Month calendar months of the year.
reciprocal easement agreements affecting the Project or the Mortgaged Property.
Closing DateJune __, 2019, the date that the initial Borrower Loan Proceeds are
disbursed hereunder.
Code or
(except as otherwise referenced herein) as it may be amended to apply to obligations issued on the
Closing Date, together with applicable proposed, temporary and final regulations promulgated, and
applicable official public guidance published, under the Code.
Collateral this Borrower Loan Agreement
(including, without limitation, all property in which the Funding Lender is granted a security interest
pursuant to any provision of this Borrower Loan Agreement), (ii) the Security Instrument, or (iii) any
other Security Document, which Collateral shall include the Project, all of which collateral is pledged
and assigned to Funding Lender under the Funding Loan Agreement to secure the Funding Loan.
Completionll have the meaning set forth in Section 5.25.
Completion Date
Agreement.
Computation Date 1.148 3(e) of the
Regulations.
Condemnationll mean any action or proceeding or notice relating to any proposed or
actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Project,
whether direct or indirect.
Conditions to Conversionforth in the Construction Funding
Agreement.
Construction Consultant-party architect or engineer selected and
retained by Funding Lender, at the cost and expense of Borrower, to monitor the progress of
construction and/or rehabilitation of the Project and to inspect the Improvements to confirm
compliance with this Borrower Loan Agreement.
Construction Contract
time to time may execute pursuant to which Borrower engages the Contractor to construct any
portion of the Improvements, as approved by Funding Lender.
Construction Funding Agreement
of even date herewith, between the Funding Lender, as agent for the Governmental Lender, and
Borrower, pursuant to which the Borrower Loan will be advanced by the Funding Lender (or the
Servicer on its behalf), as agent of the Governmental Lender, to the Fiscal Agent for disbursement to
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2019-06-11 Agenda PacketPage 721 of 891
the Borrower and setting forth certain provisions relating to disbursement of the Borrower Loan
during construction, insurance and other matters, as such agreement may be amended, modified,
supplemented and replaced from time to time.
Construction Schedulerehabilitation progress
with the anticipated commencement and completion dates of each phase of construction or
rehabilitation, as the case may be, and the anticipated date and amounts of each Disbursement for the
same, as approved by Funding Lender, as assignee of the Governmental Lender.
Contingency Draw-Down Agreement-Down Agreement of
even date herewith, among the Fiscal Agent, the Funding Lender and the Borrower relating to
possible conversion of the portion of the Funding Loan evidenced by the Tax-Exempt Governmental
Lender Note from a draw down loan to a fully funded loan.
Continuing Disclosure Agreement
Agreement of even date herewith, between the Borrower and the Funding Lender, pursuant to which
the Borrower agrees to provide certain information with respect to the Project, the Borrower and the
Funding Loan subsequent to the Closing Date, as amended, supplemented or restated from time to
time.
Contractorlicensed general contractor or subcontractor that Borrower may
directly engage from time to time, with the approval of Funding Lender, to construct and/or
rehabilitate any portion of the Improvements.
Contractual Obligationy debt or equity security issued by
that Person, and any indenture, mortgage, deed of trust, contract, undertaking, instrument or
agreement (written or oral) to which such Person is a party or by which it is bound, or to which it or
any of its assets is subject.
Conversion
have been satisfied in accordance with the provisions of this Borrower Loan Agreement and the
Construction Funding Agreement.
Conversion Dateate to be designated by Funding Lender once the
Conditions to Conversion have been satisfied, the determination of the Permanent Period Amount
has been made and any loan balancing payments in accordance with Section 3.3 hereof and the
Construction Funding Agreement have been made. The Conversion Date must occur no later than
the Outside Conversion Date.
Cost Breakdown
Construction Funding Agreement, as the same may be amended from time to time with Funding
Cost of Improvements
Breakdown.
Costs of Funding
expenses and other charges incurred in connection with the funding of the Borrower Loan and the
Funding Loan, the negotiation and preparation of this Borrower Loan Agreement and each of the
6
2019-06-11 Agenda PacketPage 722 of 891
other Borrower Loan Documents and Funding Loan Documents and shall include, but shall not be
limited to, the following: (i) counsel fees (including but not limited to Tax Counsel, counsel to the
financial advisor fees
incurred in connection with the closing of the Borrower Loan and the Funding Loan; (iii) certifying
and authenticating agent fees and expenses related to funding of the Funding Loan; (iv) recording
fees; (v) any additional fees charged by the Governmental Lender or the Fiscal Agent; and (vi) costs
incurred in connection with the required public notices generally and costs of the public hearing.
Costs of Funding Deposit
Borrower with the Stewart Title of California, Inc. to pay Costs of Funding in connection with the
closing of the Borrower Loan and the Funding Loan on the Closing Date.
Date of Disbursement
DayDays
Debt
indebtedness (whether recourse or nonrecourse, short term or long term, direct or contingent), all
committed and unfunded liabilities, and all unfunded liabilities, that would appear upon a balance
sheet of such Person prepared in accordance with GAAP.
Default Rate
Determination of Taxability a determination by the Commissioner or any
District Director of the Internal Revenue Service, (ii) a private ruling or Technical Advice
Memorandum concerning the Tax-Exempt Governmental Lender Notes issued by the National Office
of the Internal Revenue Service in which Governmental Lender and Borrower were afforded the
opportunity to participate, (iii) a determination by any court of competent jurisdiction, (iv) the
enactment of legislation or (v) receipt by the Funding Lender, at the request of the Governmental
Lender, the Borrower or the Funding Lender, of an opinion of Tax Counsel, in each case to the effect
that the interest on the Tax-Exempt Governmental Lender Notes is includable in gross income for
federal income tax purposes of any holder or any former holder of all or a portion of the
Governmental Lender Notes, ot
147(a) of the Code); provided, however, that
no such Determination of Taxability under clause (i) or (iii) shall be deemed to have occurred if the
Governmental Lender (at the sole expense of the Borrower), the Funding Lender (at the sole expense
of the Borrower) or the Borrower is contesting such determination, has elected to contest such
determination in good faith and is proceeding with all applicable dispatch to prosecute such contest
until the earliest of (a) a final determination from which no appeal may be taken with respect to such
determination, (b) abandonment of such appeal by the Governmental Lender or the Borrower, as the
case may be, or (c) one year from the date of initial determination.
Developer Fee
Disbursement
Moneys pursuant to this Borrower Loan Agreement.
Engineer
environmental or other engineer that Borrower may engage from time to time, with the approval of
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2019-06-11 Agenda PacketPage 723 of 891
Funding Lender, to perform any engineering services with respect to any portion of the
Improvements.
to time may execute pursuant to which Borrower engages such Engineer to perform any engineering
services with respect to any portion of the Improvements, as approved by Funding Lender.
Equipment
Instrument.
Equity Contributions
Borrower, in accordance with and subject to the terms of the Partnership Agreement.
Equity Investor
L.L.C., a Florida limited liability company, and its permitted successors and assigns.
ERISA
from time to time, and the rules and regulations promulgated thereunder.
ERISA Affiliate
trades and business (whether or not incorporated) under common control and all other entities which,
together with the Borrower, are treated as a single employer under any or all of Section 414(b), (c),
(m) or (o) of the Code.
Event of Defaultefault set forth in Section 8.1 of this Borrower
continuing beyond any applicable cure period.
Excess Revenues Section 2.2(e) hereof.
Exchange Act
Expenses of the Project
for the operation, maintenance and current repair of the Project, as calculated in accordance with
GAAP, and shall include, without limiting the generality of the foregoing, salaries, wages, employee
benefits, cost of materials and supplies, costs of routine repairs, renewals, replacements and
alterations occurring in the usual course of business, costs and expenses properly designated as
capital expenditures (e.g. repairs which would not be payable from amounts on deposit in a repair
and replacement fund held pursuant to the Borrower Loan Documents), a management fee (however
characterized) not to exceed the Underwritten Management Fee, costs of billings and collections,
costs of insurance, and costs of audits. Expenses of the Project shall not include any payments,
however characterized, on account of any subordinate financing in respect of the Project or other
indebtedness, allowance for depreciation, amortization or other non-cash items, gains and losses or
prepaid expenses not customarily prepaid.
Extended Outside Conversion Datein the Construction
Funding Agreement.
Fair Market Value
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2019-06-11 Agenda PacketPage 724 of 891
the contract to purchase or sell the investment becomes binding) if the investment is traded on an
established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the
ion (as
referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with
applicable regulations under the Code, (ii) the investment is an agreement with specifically
negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for
example, a guaranteed investment contract, a forward supply contract or other investment agreement)
that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a
United States Treasury Security State and Local Government Series that is acquired in accordance
with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is an
interest in any commingled investment fund in which the Governmental Lender and related parties
do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is
without regard to the source of investment.
Fiscal Agent to the
Funding Loan Agreement. Initially, the Fiscal Agent is U.S. Bank National Association.
Funding Lender
as lender under the Funding Loan.
Funding Loanoan in the original maximum principal amount of
$______________ made by Funding Lender to Governmental Lender under the Funding Loan
Agreement, the proceeds of which are used by the Governmental Lender to make the Borrower Loan.
Funding Loan Agreementans the Funding Loan Agreement, of even date herewith,
among the Governmental Lender, the Fiscal Agent and the Funding Lender, as it may from time to
time be supplemented, modified or amended by one or more amendments or other instruments
supplemental thereto entered into pursuant to the applicable provisions thereof.
Funding Loan Documents
Agreement.
GAAP
application thereof and consistently applied throughout the periods covered by the applicable
financial statements.
General Partner the Administrative General Partner, (ii) the
Managing General Partner, and/or (iii) any other Person that the partners of the Borrower, with the
approval pursuant to the Borrower Loan Documents), selected to be a general partner of the
Borrower.
Governmental Authority any governmental municipality or political
subdivision thereof, (ii) any governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality or public body, or (iii) any court, administrative tribunal or
public utility, agency, commission, office or authority of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city or otherwise), now or hereafter in
existence.
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2019-06-11 Agenda PacketPage 725 of 891
Governmental Lenderve the meaning set forth in the recitals to this Borrower
Loan Agreement.
Governmental Lender NotesB-1 Governmental
Lender Note, the Series B-2 Governmental Lender Note and the Series B-3 Governmental Lender
Note.
payable to
the Governmental Lender on the Closing Date pursuant to Section 2.3(c)(iii) hereof.
Gross Income
collected by or on behalf of Borrower and derived from the ownership or operation of the Project, if
any, and all rights to receive the same, whether in the form of accounts, accounts receivable, contract
rights or other rights, and the proceeds of such rights, and whether now owned or held or hereafter
coming into existence and proceeds received upon the foreclosure sale of the Project. Gross Income
shall not include loan proceeds, equity or capital contributions, or tenant security deposits being held
by Borrower in accordance with applicable law.
Gross Proceedswithout duplication, the aggregate of:
(a) the net amount (after payment of all expenses of originating the Funding
Loan) of Funding Loan proceeds received by the Governmental Lender as a result of the origination
of the Funding Loan;
(b) all amounts received by the Governmental Lender as a result of the
investment of the Funding Loan proceeds;
(c) any amounts held in any fund or account to the extent that the Governmental
Lender reasonably expects to use the amounts in such fund to pay any portion of the Funding Loan;
and
(d) any securities or obligations pledged by the Governmental Lender or by the
Borrower as security for the payment of any portion of the Funding Loan.
Guarantor Chelsea Investment Corporation, a California
corporation, (ii) Emmerson Construction, Inc., a California Corporation (with respect to its
Completion Guaranty only), and (iii) any other person or entity which may hereafter become a
.
Guaranty the Completion and Repayment Guaranty, by the
Guarantor for the benefit of the Beneficiary Parties (as defined therein), (ii) the Exceptions to Non-
Recourse Guaranty, by Guarantor for the benefit of the Beneficiary Parties (as defined therein), and
(iii) the Completion Guaranty of Emmerson Construction, Inc. for the benefit of the Beneficiary
Parties (as defined therein) each of which is of even date herewith.
Improvements18-unit unit multifamily rental housing
St. Regis Park Apartments
buildings, structures, fixtures, wiring, systems, equipment and other improvements and personal
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property to be constructed, rehabilitated and/or installed at or on the Land in accordance with the
Cost Breakdown and the Plans and Specifications.
Indemnified Party 5.15 hereof.
Installment Computation Dateate other than the first
Computation Date or the final Computation Date.
Interest Rate
Borrower Notes.
Interim Phase Amount$______________.
Landproperty described on Exhibit A to the Security Instrument.
Late Charge
under the Borrower Notes, as provided in Section 7 of the Borrower Notes and Section 2.5 hereof.
Legal Action
law or in equity or before or by any foreign or domestic court, arbitrator or other Governmental
Authority.
Legal Requirementsrs, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting all or part of the Project or
any property (including the Project) or the construction, rehabilitation, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations
and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instrument, either of record or known to the Borrower, at any time in force affecting
all or part of the Project, including any that may (i) require repairs, modifications or alterations in or
to all or part of the Project, or (ii) in any way limit the use and enjoyment thereof.
Liabilities forth in Section 5.15 hereof.
Licenses 4.1.22 hereof.
Lien
to, or a claim by, any Person other than the owner of the Project, whether such interest is based on
common law, statute or contract, including the lien or security interest arising from a deed of trust,
mortgage, deed to secure debt, assignment, encumbrance, pledge, security agreement, conditional
sale or trust rece
include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting the Project.
Management Agreement
and the Manager, pursuant to which the Manager is to manage the Project, as same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
Manager
approved by the Funding Lender in accordance with the terms of the Security Instrument, this
Borrower Loan Agreement or any of the other Borrower Loan Documents.
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Managing General PartnerPacific Southwest Community Development
Corporation, a California nonprofit public benefit corporation, as managing general partner of the
Borrower.
Material Adverse Change(a) has or
could reasonably be expected to have any material adverse effect whatsoever upon the validity or
enforceability of this Borrower Loan Agreement or any other Borrower Loan Document; (b) is or
could reasonably be expected to be material and adverse to the business, properties, assets, financial
condition, results of operations of the Borrower, General Partner, Guarantor or the Mortgaged
Property; (c) could reasonably be expected to impair materially the ability of the Borrower, General
Partner or Guarantor to duly and punctually pay or perform any of their respective obligations under
any of the Borrower Loan Documents to which they are a party; or (d) impairs materially or could
reasonably be expected to impair materially any rights of or benefits available to the Governmental
Lender under this Borrower Loan Agreement or any other Borrower Loan Document, including,
without limitation, the ability of Governmental Lender or, upon the assignment of the Borrower Loan
to it, of the Funding Lender, to the extent permitted, to enforce its legal remedies pursuant to this
Borrower Loan Agreement or any other Borrower Loan Document.
Mortgaged Property term in the Security Instrument.
Net Operating Income the Gross Income, less (ii) the Expenses of the
Project.
Nonpurpose Investment 148(b)
of the Code) that is acquired with the Gross Proceeds of the Funding Loan and which is not acquired
to carry out the governmental purpose of the Funding Loan.
Ongoing Governmental Lender Fee
Lender Fee (as that term is defined in the Regulatory Agreement) that is payable after the Closing
Date.
Other Borrower Moneys
Proceeds and includes, but is not limited to, the Subordinate Debt, Net Operating Income, the
tions and any other funds contributed by or loaned to the Borrower for
application to the Costs of the Improvements or other costs associated with the Project.
Other Charges
other charges, including vault charges and license fees for the use of vaults, chutes and similar areas
adjoining the Project, now or hereafter levied or assessed or imposed against the Project or any part
thereof.
Outside Conversion Dateg set forth in the Construction Funding
Agreement.
Partnership Agreement
Agreement of Limited Partnership of the Borrower dated as of June 1, 2019, as the same may be
amended, restated or modified from time to time in accordance with its terms.
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Patriot Act
Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, as the same
may be amended from time to time, and corresponding provisions of future laws.
Patriot Act Offense 4.1.48 hereof.
Permanent Period
Date (as defined in the Funding Loan Agreement).
Permanent Period Amount
the first day of the Permanent Period following the applicable calculation provided for in the
Construction Funding Agreement.
Permitted Encumbrancesave the meaning given to that term in the Security
Instrument.
Permitted Lease
approved by Funding Lender, to a residential tenant in compliance with the Legal Requirements,
providing for an initial term of not less than six (6) months nor more than two (2) years.
Person
association, a limited liability company, a corporation, a trust, any other legal entity, or any
Governmental Authority.
Plan an employee benefit or other plan established or maintained by the
Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate makes or is
obligated to make contributions and (ii) which is covered by Title IV of ERISA or Section 302 of
ERISA or Section 412 of the Code.
Plans and Specifications
changes thereto pursuant to the approval process set forth in the Construction Funding Agreement,
for the construction and/or rehabilitation, as the case may be, of the Project approved by Funding
Lender.
Potential Default
Agreement or any other Borrower Loan Document, would, but for the giving of notice or passage of
time, or both, be an Event of Default.
Prepayment Premium
Borrower Loan Documents in connection with a prepayment of the Borrower Notes (including any
prepayment premium as set forth in the Borrower Notes).
Project
Improvements thereon owned by the Borrower and encumbered by the Security Instrument, together
with all rights pertaining to such real property and Improvements, as more particularly described in
Project Agreements and Licenses Construction Contracts,
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authorizations, approvals and agreements relating to use, occupancy, operation or leasing of the
Project or the Mortgaged Property.
Provided Information 9.1.1 (a) hereof.
Qualified Project Costs
Rebate AmountRebate
Analyst as required to be rebated or paid as a yield reduction payment to the United States of
America with respect to the portion of the Funding Loan evidenced by the Tax-Exempt
Governmental Lender Notes.
Rebate Analystyst selected by the Borrower and acceptable to
the Governmental Lender and the Funding Lender.
Borrower to the Rebate Analyst.
Rebate Fundeated pursuant to Section 5.35 hereof.
Regulatory Agreement
Covenants, dated as of June 1, 2019, between the Governmental Lender and the Borrower.
Related Documents any agreement or other document (other than
the Borrower Loan Documents) granting a security interest (including each agreement that is the
subject of any Borrower Loan Document), and any other agreement, instrument or other document
(not constituting a Borrower Loan Document) relating to or executed in connection with the
transactions contemplated by this Borrower Loan Agreement, but excluding the Partnership
Agreement.
Replacement Reserve Agreement
even date herewith, between the Borrower and the Funding Lender, as the same may be amended,
restated or supplemented from time to time.
Replacement Reserve Fund Requirement
time to time under the Replacement Reserve Agreement.
Retainage
Review Fee
in connection with the review of requests from the Borrower in connection with events requiring the
consent and/or approval of the Funding Lender, including, but not limited to, subordinate financings
and easements.
Secondary Market Disclosure Document
Section 9.1.2 hereof.
Secondary Market Transaction 9.1.1 hereof.
Securities 9.1.1 hereof.
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Securities Act
Security Documentse Security Instrument, the Replacement Reserve
Agreement, the Collateral Agreements, the Collateral Assignments, this Borrower Loan Agreement,
the Agreement of Environmental Indemnification, and such other security instruments that Funding
Lender may reasonably request.
Security Instrument
Agreement.
Series B-1 Borrower Note
Date, in the original maximum principal amount of $_________________, made by the Borrower
and payable to the Governmental Lender, evidencing the loan of the proceeds of the Series B-1
Governmental Lender Note, as endorsed and assigned by the Governmental Lender without recourse
to the Funding Lender, as executed by the Borrower, and as it may thereafter be amended or
supplemented from time to time.
Series B-1 Governmental Lender NoteChula Vista Housing
Authority Multifamily Housing Revenue Note (St. Regis Park Apartments) 2019 Series B-1, dated
the Closing Date, in the original maximum principal amount of $_________________, made by the
Governmental Lender and payable to the Funding Lender, as executed by the Governmental Lender
and as it may thereafter be amended or supplemented from time to time.
Series B-2 Borrower Note
Date, in the original maximum principal amount of $_________________, made by the Borrower
and payable to the Governmental Lender, evidencing the loan of the proceeds of the Series B-2
Governmental Lender Note, as endorsed and assigned by the Governmental Lender without recourse
to the Funding Lender, as executed by the Borrower, and as it may thereafter be amended or
supplemented from time to time.
Series B-2 Governmental Lender NoteChula Vista Housing
Authority Multifamily Housing Revenue Note (St. Regis Park Apartments) 2019 Series B-2, dated
the Closing Date, in the original maximum principal amount of $_________________, made by the
Governmental Lender and payable to the Funding Lender, as executed by the Governmental Lender
and as it may thereafter be amended or supplemented from time to time
Series B-3 Borrower Note (Taxable), dated the
Closing Date, in the original maximum principal amount of $_________________, made by the
Borrower and payable to the Governmental Lender, evidencing the loan of the proceeds of the
Series B-3 Governmental Lender Note, as endorsed and assigned by the Governmental Lender
without recourse to the Funding Lender, as executed by the Borrower, and as it may thereafter be
amended or supplemented from time to time.
Series B-3 Governmental Lender NoteTaxable Governmental Lender Noteshall
mean that certain Chula Vista Housing Authority Multifamily Housing Revenue Note (St. Regis Park
Apartments) 2019 Series B-3 (Taxable), dated the Closing Date, in the original maximum principal
amount of $_________________, made by the Governmental Lender and payable to the Funding
Lender, as executed by the Governmental Lender and as it may thereafter be amended or
supplemented from time to time.
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Servicer
service the Borrower Loan. The initial Servicer shall be Citibank, N.A.
Servicing Agreement
between the Servicer and the Funding Lender relating to the servicing of the Borrower Loan and any
amendments thereto or any replacement thereof.
S&P
State
Subordinate Bonds mean the subordinate bonds issued by the Governmental Lender
under the Subordinate Indenture in the aggregate principal amount of not to exceed
$________________.
Subordinate Debt
Borrower in the amount of \[$1,275,778\] being made by the City of Chula Vista as of the Closing
Date and the subordinate loan from which the Subordinate Bonds are payable.
Subordinate IndentureSubordinate Indenture of Trust, by and between
the Governmental Lender and the Subordinate Trustee, dated as of June 1, 2019, pursuant to which
the Subordinate Bonds shall be issued.
Subordinate LenderCity of Chula Vista and the Government Lender, as
applicable.
Subordinate LoanSubordinate Bonds by the
Governmental Lender to the Borrower pursuant to the Subordinate Loan Agreement.
Subordinate Loan AgreementSubordinate Loan Agreement, by and
among the Governmental Lender, the Subordinate Trustee and the Borrower, dated as of June 1,
2019, pursuant to which the Subordinate Loan is made to the Borrower.
Subordinate Loan Documentsthe Subordinate Loan Agreement,
the Subordinate Indenture and all instruments, agreements and other documents evidencing, securing
or otherwise relating to the Subordinate Debt or executed and delivered by Borrower and/or
Subordinate Lender in connection with the Subordinate Debt.
Subordinate Trusteeank National Association, as trustee under the
Subordinate Indenture, and any successor in interest thereto.
Substantial Completion Date
Funding Agreement.
Substantially CompleteSubstantially Completed
in the Construction Funding Agreement.
Tax Counsel
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Taxes
sewer rents, now or hereafter levied or assessed or imposed against all or part of the Project.
Tax-Exempt Governmental Lender Notes shall mean, collectively, the Series B-1
Governmental Lender Note and the Series B-2 Governmental Lender Note; Tax-Exempt
Governmental Lender NoteTax-Exempt Governmental Lender Notes.
Term 10.14.
Title Company
Title Insurance Policy
to the Funding Lender, issued with respect to the Mortgaged Property and insuring the lien of the
Security Instrument.
Transferecurity Instrument.
UCC
Unassigned Rights
Underwritten Management Feeon
Funding Agreement.
Unit
Written ConsentWritten Notice
an Authorized Borrower Representative or an authorized representative of the Governmental Lender
or the Funding Lender, as appropriate.
ARTICLE II
GENERAL
Section 2.1 Origination of Borrower Loan. In order to provide funds for the purposes
provided herein, the Governmental Lender agrees that it will, in accordance with the Act, enter into
the Funding Loan Agreement and accept the Funding Loan from the Funding Lender. The proceeds
of the Funding Loan shall be advanced by the Funding Lender and disbursed by the Fiscal Agent to
the Borrower in accordance with the terms of the Construction Funding Agreement and this
Borrower Loan Agreement; provided that the first such disbursement on the Closing Date shall be
made by the Funding Lender to the Fiscal Agent, which shall transfer such funds to the Title
Company as specified in Section 7.7(a) of the Funding Loan Agreement.
The Governmental Lender hereby appoints the Funding Lender as its agent with full
authority and power to act on its behalf to disburse the Borrower Loan for the account of the
Governmental Lender, to take certain actions and exercise certain remedies with respect to the
Borrower Loan, and for the other purposes set forth in this Borrower Loan Agreement and to do all
other acts necessary or incidental to the performance and execution thereof. This appointment is
coupled with an interest and is irrevocable except as expressly set forth herein. Accordingly,
references to the rights of the Funding Lender to take actions under this Borrower Loan Agreement
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shall refer to Funding Lender in its role as agent of the Governmental Lender. The Funding Lender
may designate Servicer to fulfill the rights and responsibilities granted by Governmental Lender to
Funding Lender pursuant to this Section 2.1. Notwithstanding the foregoing, disbursements of the
Borrower Loan shall be made from the Project Fund held by the Fiscal Agent pursuant to the
Funding Loan Agreement.
Section 2.2 Security for the Funding Loan.
(a) As security for the Funding Loan, the Governmental Lender has pledged and
assigned to the Funding Lender under and pursuant to the Funding Loan Agreement (a) the Borrower
Notes and all of its right, title and interest in and to this Borrower Loan Agreement and the Borrower
Loan Documents (except for the Unassigned Rights) and all revenues and receipts therefrom and the
security therefor (including the Security Instrument) and (b) the amounts on deposit from time to
time in any and all funds established under the Funding Loan Agreement. All revenues and assets
pledged and assigned thereby shall immediately be subject to the lien of such pledge without any
physical delivery thereof or any further act, except in the case of the Borrower Notes, which shall be
delivered to the Funding Lender. The Borrower hereby acknowledges and consents to such
assignment to the Funding Lender.
(b) With respect to the Unassigned Rights, subject to the limitations set forth in
this Section 2.2, the Governmental Lender may:
(i) Tax Covenants. Seek specific performance of, and enforce, the tax
covenants in Section 8.7 of the Funding Loan Agreement, the provisions of the Regulatory
Agreement, the Tax Certificate and the covenants of the Borrower in Section 5.34 of this Borrower
Loan Agreement, and seek injunctive relief against acts which may be in violation of any of the
tion 5.35 to pay amounts for
credit to the Rebate Fund;
(ii) Regulatory Agreement. Seek specific performance of the obligations
of the Borrower or any other owner of the Project under the Regulatory Agreement and injunctive
relief against acts which may be in violation of the Regulatory Agreement or otherwise in accordance
with the provisions of the Regulatory Agreement; provided, however, that the Governmental Lender
may enforce any right it may have under the Regulatory Agreement for monetary damages only
against Excess Revenues (defined below), if any, of the Borrower, unless Funding Lender otherwise
specifically consents in writing to the use of other funds; and
(iii) Reserved Rights. Take whatever action at law or in equity which
appears necessary or desirable to enforce the other Unassigned Rights, provided, however, that the
Governmental Lender or any person under its control may only enforce any right it may have for
monetary damages against Excess Revenues, if any, of the Borrower, unless Funding Lender
otherwise specifically consents in writing to the enforcement against other funds of the Borrower.
(c) In no event shall the Governmental Lender, except at the express written
direction of the Funding Lender:
(i) prosecute its action to a lien on the Project; or
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(ii) except in connection with actions under Section 2.2(b) above, take
any action which may have the effect, directly or indirectly, of impairing the ability of the Borrower
to timely pay the principal of, interest on, or other amounts due under, the Borrower Loan or of
causing the Borrower to file a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Borrower under any applicable liquidation, insolvency,
bankruptcy, rehabilitation, composition, reorganization, conservation or other similar law in effect
now or in the future; or
(iii) interfere with the exercise by Funding Lender or Servicer of any of
their rights under the Borrower Loan Documents upon the occurrence of an event of default by the
Borrower under the Borrower Loan Documents or the Funding Loan Documents; or
(iv) take any action to accelerate or otherwise enforce payment or seek
other remedies with respect to the Borrower Loan or the Funding Loan.
(d) The Governmental Lender shall provide Written Notice to the Funding
Lender and the Servicer immediately upon taking any action at law or in equity to exercise any
remedy or direct any proceeding under the Borrower Loan Documents or the Funding Loan
Documents.
(e) As used in this Section
period, the net cash flow of the Borrower available for distribution to shareholders, members or
partners (as the case may be) for such period, after the payment of all interest expense, the
amortization of all principal of all indebtedness coming due during such period (whether by maturity,
mandatory sinking fund payment, acceleration or otherwise), the payment of all fees, costs and
expenses on an occasional or recurring basis in connection with the Borrower Loan or the Funding
Loan, the payment of all operating, overhead, ownership and other expenditures of the Borrower
directly or indirectly in connection with the Project (whether any such expenditures are current,
capital or extraordinary expenditures), and the setting aside of all reserves for taxes, insurance, water
and sewer charges or other similar impositions, capital expenditures, repairs and replacements and all
other amounts which the Borrower is required to set aside pursuant to agreement, but excluding
depreciation and amortization of intangibles.
Section 2.3 Loan; Borrower Notes; Conditions to Closing.
(a) The Funding Loan shall be funded directly to the Fiscal Agent by the Funding
Lender for disbursement to the Borrower pursuant to the Construction Funding Agreement in one or
more installments not to exceed the Borrower Loan Amount in accordance with the disbursement
procedures set forth in the Construction Funding Agreement and the Funding Loan Agreement,
except for the initial disbursement of the Funding Loan as provided in Section 7.7(a) of the Funding
Loan Agreement. Upon funding of each installment of the Funding Loan, the Governmental Lender
shall be deemed to have made the Borrower Loan to the Borrower in a like principal amount. The
Borrower Loan advances and Funding Loan advances shall be allocated first to the Series B-1
Borrower Note and the related Series B-1 Governmental Lender Note and, once the foregoing have
been fully funded, then to the Series B-2 Borrower Note and the related Series B-2 Governmental
Lender Note, and, once the foregoing have been fully funded, then to the Series B-3 Borrower Note
and the related Series B-3 Governmental Lender Note. The Borrower Loan shall mature and be
payable at the times and in the amounts required under the terms hereof and of the Borrower Notes.
The proceeds of the Borrower Loan shall be used by the Borrower to pay costs of the acquisition,
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construction, rehabilitation, development, equipping and/or operation of the Project. The Borrower
hereby accepts the Borrower Loan and acknowledges that the Governmental Lender shall cause the
Funding Lender to fund the Borrower Loan in the manner set forth herein and in the Funding Loan
Agreement. The Governmental Lender acknowledges that the Borrower Loan shall be funded by the
Funding Lender to the Fiscal Agent for the account of the Governmental Lender, except as otherwise
provided in Section 7.7 of the Funding Loan Agreement with respect to the funding thereof on the
Closing Date.
(b) The Borrower hereby accepts the Borrower Loan. As evidence of its
obligation to repay the Borrower Loan, simultaneously with its execution and delivery of this
Borrower Loan Agreement, the Borrower hereby agrees to execute and deliver the Borrower Notes.
The Borrower Loan shall mature and be payable at the times and in the amounts required under the
terms hereof and of the Borrower Notes.
(c) Closing of the Borrower Loan on the Closing Date shall be conditioned upon
satisfaction or waiver by the Governmental Lender and the Funding Lender, in their sole discretion,
of each of the conditions precedent to closing set forth in the Funding Loan Agreement and this
Borrower Loan Agreement, including but not limited to the following:
(i) evidence of proper recordation of the Security Instrument, an
assignment of the Security Instrument from the Governmental Lender to the Funding Lender, the
Regulatory Agreement, and each of the other documents specified for recording in instructions
delivered to the Title Company by counsel to the Funding Lender (or that such documents have been
delivered to an authorized agent of the Title Company for recordation under binding recording
Funding Lender);
(ii) delivery to the Fiscal Agent or into escrow with the Title Company
(or separate escrow company, if applicable) of all amounts required to be paid in connection with the
origination of the Borrower Loan and the Funding Loan and any underlying real estate transfers or
transactions, including the Costs of Funding Deposit and the Borrower Initial Equity, all as specified
in written instructions delivered to the Title Company by counsel to the Funding Lender (or such
other counsel as may be acceptable to the Funding Lender) and/or as specified in a closing
memorandum of the Funding Lender; and
(iii) payment of all fees payable in connection with the closing of the
of the Fiscal Agent and the Funding Lender.
In addition, closing of the Borrower Loan shall be subject to the delivery of an opinion of
counsel to the Borrower addressed to the Governmental Lender and the Funding Lender, dated the
Closing Date, in form and substance acceptable to Tax Counsel, regarding the due execution by the
Borrower of, and the enforceability against the Borrower of, the Borrower Loan Documents.
Section 2.4 Borrower Loan Payments.
(a) The Borrower shall make Borrower Loan Payments in accordance with the
Borrower Notes. Each Borrower Loan Payment made by the Borrower shall be made in funds
immediately available through and including the Conversion Date on the Borrower Loan Payment
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Date, to the Fiscal Agent by 2:00 p.m., New York City time, or, if to the Servicer by 11:00 a.m., New
York City time, and after the Conversion Date on the date that is two (2) Business Days prior to the
Borrower Loan Payment Date to the Servicer, by 11:00 a.m., New York City time. Each such
payment shall be made to the Fiscal Agent or the Servicer, as applicable, by deposit to such account
as the Fiscal Agent or Servicer, as applicable, may designate by Written Notice to the Borrower.
Whenever any Borrower Loan Payment shall be stated to be due on a day that is not a Business Day,
such payment shall be due on the first Business Day immediately thereafter. In addition, the
Borrower shall make Borrower Loan Payments in accordance with the Borrower Notes in the
amounts and at the times necessary to make all payments due and payable on the Funding Loan. All
payments made by the Borrower hereunder or by the Borrower under the other Borrower Loan
Documents, shall be made irrespective of, and without any deduction for, any set-offs or
counterclaims, but such payment shall not constitute a waiver of any such set offs or counterclaims.
(b) Unless there is no Servicer, payments of principal and interest on the
Borrower Notes shall be paid to the Servicer and the Servicer shall then remit such funds to the
Fiscal Agent. If there is no Servicer, payments of principal and interest on the Borrower Notes shall
be paid directly to the Fiscal Agent.
Section 2.5 Additional Borrower Payments.
(a) The Borrower shall pay the following amounts:
(i) to the Fiscal Agent, the Rebate Amount then due, if any, to be
deposited in the Rebate Fund as specified in Section 5.35 hereof and t
any other costs incurred to calculate such Rebate Amount (to the extent such costs are not included in
the Borrower Loan Payment);
(ii) to the Governmental Lender, any and, on demand, all fees, charges,
costs, advances, indemnities and expenses, including agent and counsel fees, of the Governmental
Lender incurred by the Governmental Lender at any time in connection with the Borrower Loan
Documents, the Funding Loan Documents or the Project, including, without limitation, the Ongoing
Governmental Lender Fee, counsel fees and expenses incurred in connection with the interpretation,
performance, or amendment and all counsel fees and expenses relating to the enforcement of the
Borrower Loan Documents or the Funding Loan Documents or any other documents relating to the
Project or the Borrower Loan or in connection with questions or other matters arising under such
documents or in connection with any federal or state tax audit;
(iii) \[Reserved\];
(iv) all Costs of Funding and fees, charges and expenses, including agent
and counsel fees incurred in connection with the origination of the Borrower Loan and the Funding
Loan, as and when the same become due;
(v) to the Funding Lender, on demand, all charges, costs, advances,
indemnities and expenses, including agent and counsel fees, of the Funding Lender incurred by the
Funding Lender at any time in connection with the Borrower Loan, the Funding Loan or the Project,
including, without limitation, any Review Fee, reasonable counsel fees and expenses incurred in
connection with the interpretation, performance, or amendment and all counsel fees and expenses
relating to the enforcement of the Borrower Loan Documents or the Funding Loan Documents or any
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other documents relating to the Project or the Borrower Loan or in connection with questions or other
matters arising under such documents or in connection with any federal or state tax audit;
(vi) all Late Charges due and payable under the terms of the Borrower
Notes and Section 2.6 hereof; provided, however, that all payments made pursuant to this subsection
(vi) shall be made to the Servicer, and if there is no Servicer, such payments shall be made to the
Funding Lender; and
(vii) to the Fiscal Agent, all fees, charges, costs, advances, indemnities and
expenses, including agent and counsel fees, of Fiscal Agent incurred under the Borrower Loan
Documents or the Funding Loan Documents as and when the same become due.
(b) The Borrower shall pay to the party entitled thereto as expressly set forth in
this Borrower Loan Agreement or the other Borrower Loan Documents or Funding Loan Documents:
(i) all expenses incurred in connection with the enforcement of any rights
under this Borrower Loan Agreement or any other Borrower Loan Document, the Regulatory
Agreement, or any Funding Loan Document by the Governmental Lender, the Funding Lender, the
Fiscal Agent or the Servicer;
(ii) all other payments of whatever nature that the Borrower has agreed to
pay or assume under the provisions of this Borrower Loan Agreement or any other Borrower Loan
Document or Funding Loan Document; and
(iii) all expenses, costs and fees relating to inspections of the Project
required by the Governmental Lender, the Funding Lender, the Fiscal Agent, the Servicer or the
Construction Consultant, in accordance with the Borrower Loan Documents or the Funding Loan
Documents or to reimburse such parties for such expenses, costs and fees.
Section 2.6 Overdue Payments; Payments in Default. If any Borrower Payment
Obligation is not paid by or on behalf of the Borrower when due, the Borrower shall pay to the
Servicer a Late Charge in the amount and to the extent set forth in the Borrower Notes, if any.
Section 2.7 Calculation of Interest Payments and Deposits to Real Estate Related
Reserve Funds. The Borrower acknowledges as follows: (a) calculation of all interest payments
shall be made by the Funding Lender; (b) deposits with respect to the Taxes and Other Charges shall
be calculated by the Servicer or if there is no Servicer, the Funding Lender in accordance with the
Security Instrument; and (c) deposits with respect to any replacement reserve funds required by the
Funding Lender shall be calculated by the Servicer in accordance with the Replacement Reserve
Agreement. In the event and to the extent that the Servicer or the Funding Lender, pursuant to the
terms hereof, shall determine at any time that there exists a deficiency in amounts previously owed
but not paid with respect to deposits to such replacement reserve fund, such deficiency shall be
immediately due and payable hereunder following Written Notice to the Borrower.
Section 2.8 Grant of Security Interest; Application of Funds. To the extent not
inconsistent with the Security Instrument and as security for payment of the Borrower Payment
Obligations and the performance by the Borrower of all other terms, conditions and provisions of the
Borrower Loan Documents, the Borrower hereby pledges and assigns to the Fiscal Agent and the
Funding Lender, and grants to the Fiscal Agent and the Funding Lender, a security interest in, all the
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d to all payments to or moneys held in the funds and accounts
created and held by the Fiscal Agent, the Funding Lender or the Servicer for the Project. This
Borrower Loan Agreement is, among other things, intended by the parties to be a security agreement
for purposes of the UCC. Upon the occurrence and during the continuance of an Event of Default
hereunder, the Fiscal Agent, the Funding Lender and the Servicer shall apply or cause to be applied
any sums held by the Fiscal Agent, the Funding Lender and the Servicer with respect to the Project in
accordance with the provisions of Article IX of the Funding Loan Agreement to the extent applicable
sole and absolute discretion.
Section 2.9 Marshalling; Payments Set Aside. The Governmental Lender, the Fiscal
Agent and the Funding Lender shall be under no obligation to marshal any assets in favor of the
Borrower or any other Person or against or in payment of any or all of the proceeds. To the extent
that the Borrower makes a payment or payments or transfers any assets to the Governmental Lender,
the Fiscal Agent or the Funding Lender, or the Governmental Lender, the Fiscal Agent or the
Funding Lender enforces its liens, and such payment or payments or transfers, or the proceeds of
such enforcement or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any other party in connection
with any insolvency proceeding, or otherwise, then: (i) any and all obligations owed to the
Governmental Lender, the Fiscal Agent or the Funding Lender and any and all remedies available to
the Governmental Lender, the Fiscal Agent or the Funding Lender under the terms of the Borrower
Loan Documents and the Funding Loan Documents or in law or equity against the Borrower,
Guarantor or General Partner and/or any of their properties shall be automatically revived and
reinstated to the extent (and only to the extent) of any recovery permitted under clause (ii) below; and
(ii) the Governmental Lender, the Fiscal Agent and the Funding Lender shall be entitled to recover
(and shall be entitled to file a proof of claim to obtain such recovery in any applicable bankruptcy,
insolvency, receivership or fraudulent conveyance or fraudulent transfer proceeding) either: (x) the
amount of payments or the value of the transfer or (y) if the transfer has been undone and the assets
returned in whole or in part, the value of the consideration paid to or received by the Borrower for
the initial asset transfer, plus in each case any deferred interest from the date of the disgorgement to
the date of distribution to the Governmental Lender, the Fiscal Agent or the Funding Lender in any
bankruptcy, insolvency, receivership or fraudulent conveyance or fraudulent transfer proceeding, and
incurred by the Governmental Lender, the Fiscal Agent or the Funding Lender in connection with the
exercise by the Governmental Lender, the Fiscal Agent or the Funding Lender of its rights under this
Section 2.9.
Section 2.10 Borrower Loan Disbursements. Proceeds of the Borrower Loan shall be
disbursed by the Fiscal Agent upon approval by the Funding Lender, as agent for the Governmental
Lender, pursuant to the Construction Funding Agreement, to or for the benefit of the Borrower as
provided in Section 7.7 of the Funding Loan Agreement.
ARTICLE III
CONVERSION
Section 3.1 Conversion Date and Extension of Outside Conversion Date. Borrower
shall satisfy each of the Conditions to Conversion and cause the Conversion Date to occur on or
before the Outside Conversion Date (including the Extended Outside Conversion Date, if any), as
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further provided in the Construction Funding Agreement. The failure to satisfy each of the
Conditions to Conversion on or before the Outside Conversion Date shall constitute an Event of
Default under the Borrower Loan Documents.
Section 3.2 Notice From Funding Lender; Funding .
Following satisfaction of all of the Conditions to Conversion, Funding Lender shall deliver Written
Notice to Borrower (with a copy to the Governmental Lender and the Fiscal Agent) of: (i) the
Conversion Date, (ii) the amount of the Permanent Period Amount, (iii) any required prepayment of
the Borrower Notes (as described below in Section 3.3) and (iv) any amendments to the amortization
schedule, as applicable.
amendments to the
amortization of the Borrower Loan shall be, in the absence of manifest error, conclusive and binding
on all parties.
Section 3.3 Mandatory Prepayment of the Borrower Loan. As further provided in the
Construction Funding Agreement, if and to the extent the Permanent Period Amount is less than the
Interim Phase Amount, Funding Lender may in its sole discretion require Borrower to make a partial
prepayment of the Borrower Loan in an amount equal to the difference between the Interim Phase
Amount and the Permanent Period Amount, provided, however, that if the Permanent Period Amount
is less than the Minimum Permanent Period Amount (as defined in the Construction Funding
Agreement), then Funding Lender may in its sole discretion require Borrower to prepay the Borrower
Loan in full.
Any prepayment in full or in part of the Borrower Loan required pursuant to the preceding
paragraph shall be subject to a prepayment premium under certain circumstances as more particularly
set forth in the Borrower Notes.
Section 3.4 Release of Remaining Loan Proceeds. If and to the extent that the
Permanent Period Amount is greater than the principal amount of the Borrower Loan which has
previously been disbursed to Borrower, Funding Lender shall deliver Written Notice thereof to
Borrower (with a copy to the Governmental Lender) on or before the Conversion Date. Within ten
(10) business days after delivery of such notice, but in no event later than the Outside Conversion
Date, Funding Lender shall advance to the Fiscal Agent, for deposit by the Fiscal Agent to the Note
Proceeds Account of the Project Fund under the Funding Loan Agreement, Funding Loan proceeds
so that the aggregate principal amount of the Funding Loan and of the Borrower Loan disbursed
equals the Permanent Period Amount. Any Borrower Loan proceeds previously disbursed to the
Borrower in excess of the Permanent Period Amount shall be paid by Borrower to Fiscal Agent.
Section 3.5 No Amendment. Nothing contained in this Article III shall be construed to
amend, modify, alter, change or supersede the terms and provisions of the Borrower Notes, Security
Instrument, the Construction Funding Agreement or any other Borrower Loan Document and, if there
shall exist a conflict between the terms and provisions of this Article III and those of the Borrower
Notes, Security Instrument, the Construction Funding Agreement or other Borrower Loan
Documents, then the terms and provisions of the Borrower Notes, Security Instrument, the
Construction Funding Agreement and other Borrower Loan Documents shall control; provided,
however, that in the event of a conflict between the terms and provisions of this Article III and those
III shall control.
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Section 3.6 Determinations by Funding Lender. In any instance where the consent or
approval of Funding Lender may be given or is required, or where any determination, judgment or
decision is to be rendered by Funding Lender under this Article III, including in connection with the
Construction Funding Agreement, the granting, withholding or denial of such consent or approval
and the rendering of such determination, judgment or decision shall be made or exercised by the
Funding Lender (or its designated representative), at its sole and exclusive option and in its sole and
absolute discretion.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower Representations. To induce the Governmental Lender to execute
this Borrower Loan Agreement and to induce the Funding Lender to make Disbursements, the
Borrower represents and warrants for the benefit of the Governmental Lender, the Funding Lender,
the Fiscal Agent and the Servicer, that the representations and warranties set forth in this Section 4.1
are complete and accurate in all material respects as of the Closing Date and, subject to Section 4.2,
shall survive the making of the Borrower Loan and will be complete and accurate in all material
respects, and deemed remade, except as otherwise noted through notice to Funding Lender and
approved by Funding Lender, as of the date of each Disbursement, as of the original Outside
Conversion Date, as of the date of any extension thereof and as of the Conversion Date in accordance
with the terms and conditions of the Borrower Notes:
Section 4.1.1 Organization; Special Purpose. The Borrower is a limited
partnership in good standing under the laws of the State (and under the laws of the state in which the
Borrower was formed if the Borrower was not formed under the laws of the State), has full legal
right, power and authority to enter into the Borrower Loan Documents to which it is a party, and to
carry out and consummate all transactions contemplated by the Borrower Loan Documents to which
it is a party, and by proper limited partnership action has duly authorized the execution, delivery and
performance of the Borrower Loan Documents to which it is a party. The Person(s) of the Borrower
executing the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is
a party are fully authorized to execute the same. The Borrower Loan Documents and the Funding
Loan Documents to which the Borrower is a party have been duly authorized, executed and delivered
by the Borrower. The sole business of the Borrower is the ownership, management and operation of
the Project.
Section 4.1.2 Proceedings; Enforceability. Assuming due execution and
delivery by the other parties thereto, the Borrower Loan Documents and the Funding Loan
Documents to which the Borrower is a party will constitute the legal, valid and binding agreements
of the Borrower enforceable against the Borrower in accordance with their terms; except in each case
as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of
inciples regardless of whether
enforcement is sought in a proceeding at law or in equity and by public policy.
Section 4.1.3 No Conflicts. The execution and delivery of the Borrower Loan
Documents and the Funding Loan Documents to which the Borrower is a party, the consummation of
the transactions herein and therein contemplated and the fulfillment of or compliance with the terms
and conditions hereof and thereof, will not conflict with or constitute a violation or breach of or
default (with due notice or the passage of time or both) under the Partnership Agreement of the
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Borrower or to the best knowledge of the Borrower and with respect to the Borrower, any applicable
law or administrative rule or regulation, or any applicable court or administrative decree or order, or
any mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to
which the Borrower is a party or by which it or its properties are otherwise subject or bound, or result
in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever (other than
the lien of the Security Instrument) upon any of the property or assets of the Borrower, which
conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would
materially and adversely affect the consummation of the transactions contemplated by the Borrower
Loan Documents and the Funding Loan Documents, or the financial condition, assets, properties or
operations of the Borrower.
Section 4.1.4 Litigation; Adverse Facts. There is no Legal Action, nor is there a
basis known to Borrower for any Legal Action, before or by any court or federal, state, municipal or
other governmental authority, pending, or to the knowledge of the Borrower, after reasonable
investigation, threatened, against or affecting the Borrower, the General Partner or the Guarantor, or
their respective assets, properties or operations which, if determined adversely to the Borrower or its
interests, would have a material adverse effect upon the consummation of the transactions
contemplated by, or the validity of, the Borrower Loan Documents or the Funding Loan Documents,
upon the ability of each of Borrower, General Partner and Guarantor to perform their respective
obligations under the Borrower Loan Documents, the Funding Loan Documents and the Related
Documents to which it is a party, or upon the financial condition, assets (including the Project),
properties or operations of the Borrower, the General Partner or the Guarantor. None of the
Borrower, General Partner or Guarantor is in default (and no event has occurred and is continuing
which with the giving of notice or the passage of time or both could constitute a default) with respect
to any order or decree of any court or any order, regulation or demand of any federal, state, municipal
or other governmental authority, which default might have consequences that would materially and
adversely affect the consummation of the transactions contemplated by the Borrower Loan
Documents and the Funding Loan Documents, the ability of each of Borrower, General Partner and
Guarantor to perform their respective obligations under the Borrower Loan Documents, the Funding
Loan Documents and the Related Documents to which it is a party, or the financial condition, assets,
properties or operations of the Borrower, General Partner or Guarantor. None of Borrower, General
Partner or Guarantor are (a) in violation of any applicable law, which violation materially and
adversely affects or may materially and adversely affect the business, operations, assets (including
the Project), financial condition of Borrower, General Partner or Guarantor, as applicable; (b) subject
to, or in default with respect to, any other Legal Requirement that would have a material adverse
effect on the business, operations, assets (including the Project), financial condition of Borrower,
General Partner or Guarantor, as applicable; or (c) in default with respect to any agreement to which
Borrower, General Partner or Guarantor, as applicable, are a party or by which they are bound, which
default would have a material adverse effect on the business, operations, assets (including the
Project), financial condition of Borrower, General Partner or Guarantor, as applicable; and (d) there
is no Legal Action pending or, to the knowledge of Borrower, threatened against or affecting
Borrower, General Partner or Guarantor questioning the validity or the enforceability of this
Borrower Loan Agreement or any of the other Borrower Loan Documents or the Funding Loan
Documents or of any of the Related Documents. All tax returns (federal, state and local) required to
be filed by or on behalf of the Borrower have been filed, and all taxes shown thereon to be due,
including interest and penalties, except such, if any, as are being actively contested by the Borrower
in good faith, have been paid or adequate reserves have been made for the payment thereof which
reserves, if any, are reflected in the audited financial statements described therein. The Borrower
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enjoys the peaceful and undisturbed possession of all of the premises upon which it is operating its
facilities.
Section 4.1.5 Agreements; Consents; Approvals. Except as contemplated by
the Borrower Loan Documents and the Funding Loan Documents, the Borrower is not a party to any
agreement or instrument or subject to any restriction that would materially adversely affect the
business prospects, except the Permitted Encumbrances. The Borrower is not in default in any
material respect in the performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Permitted Encumbrance or any other agreement or instrument to which it
is a party or by which it or the Project is bound.
No consent or approval of any trustee or holder of any indebtedness of the Borrower,
and to the best knowledge of the Borrower and only with respect to the Borrower, no consent,
permission, authorization, order or license of, or filing or registration with, any governmental
necessary in connection with the execution and delivery of the Borrower Loan Documents or the
Funding Loan Documents, or the consummation of any transaction herein or therein contemplated, or
the fulfillment of or compliance with the terms and conditions hereof or thereof, except as have been
obtained or made and as are in full force and effect.
Section 4.1.6 Title. The Borrower shall have marketable title to the Project free
and clear of all Liens except the Permitted Encumbrances. The Security Instrument, when properly
recorded in the appropriate records, together with any UCC financing statements required to be filed
in connection therewith, will create (i) a valid, perfected first priority lien on the fee interest in the
Project and (ii) perfected security interests in and to, and perfected collateral assignments of, all
personalty included in the Project (including the Leases), all in accordance with the terms thereof, in
there are no delinquent real property taxes or assessments, including water and sewer charges, with
respect to the Project, nor are there any claims for payment for work, labor or materials affecting the
Project which are or may become a Lien prior to, or of equal priority with, the Liens created by the
Borrower Loan Documents and the Funding Loan Documents.
Section 4.1.7 Survey. To the best knowledge of the Borrower, the survey for the
Project delivered to the Governmental Lender and the Funding Lender does not fail to reflect any
material matter affecting the Project or the title thereto.
Section 4.1.8 No Bankruptcy Filing. The Borrower is not contemplating either
the filing of a petition by it under any state or federal bankruptcy or insolvency law or the liquidation
knowledge of any Person contemplating the filing of any such petition against it. As of the Closing
Date, the Borrower has the ability to pay its debts as they become due.
Section 4.1.9 Full and Accurate Disclosure. No statement of fact made by the
Borrower in any Borrower Loan Document or any Funding Loan Document contains any untrue
statement of a material fact or omits to state any material fact necessary to make statements
contained therein in light of the circumstances in which they were made, not misleading. There is no
material fact or circumstance presently known to the Borrower that has not been disclosed to the
Governmental Lender and the Funding Lender which materially and adversely affects the Project or
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the business, operations or financial condition or business prospects of the Borrower or the
Bor
Borrower Loan Documents and Funding Loan Documents to which it is a party in a timely manner.
Section 4.1.10 No Plan Assets
as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets of the
29 C.F.R. Section 2510.3 101.
Section 4.1.11 Compliance. The Borrower, the Project and the use thereof will
comply, to the extent required, in all material respects with all applicable Legal Requirements. The
Borrower is not in default or violation of any order, writ, injunction, decree or demand of any
Governmental Authority, the violation of which would materially adversely affect the financial
condition or business prospects or the business of the Borrower. There has not been committed by
the Borrower or any Borrower Affiliate involved with the operation or use of the Project any act or
omission affording any Governmental Authority the right of forfeiture as against the Project or any
Loan Document or any Funding Loan Documents.
Section 4.1.12 Contracts. All service, maintenance or repair contracts affecting
and its affiliates or the affiliates of the Borrower Controlling Entity of the Borrower) in the ordinary
comparable to existing market rates.
Section 4.1.13 Financial Information. All financial data, including any
statements of cash flow and income and operating expense, that have been delivered to the
Governmental Lender or the Funding Lender in respect of the Project by or on behalf of the
Borrower, to the best knowledge of the Borrower, (i) are accurate and complete in all material
respects, as of their respective dates, (ii) accurately represent the financial condition of the Project as
of the date of such reports, and (iii) to the extent prepared by an independent certified public
accounting firm, have been prepared in accordance with GAAP consistently applied throughout the
periods covered, except as disclosed therein. Other than pursuant to or permitted by the Borrower
Loan Documents or the Funding Loan Documents or the Borrower organizational documents, the
Borrower has no contingent liabilities, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments. Since the date of such financial statements,
there has been no materially adverse change in the financial condition, operations or business of the
Borrower from that set forth in said financial statements.
Section 4.1.14 Condemnation. No Condemnation or other proceeding has been
all or part of the Project or for the relocation of roadways providing access to the Project.
Section 4.1.15 Federal Reserve Regulations. No part of the proceeds of the
meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other
purpose that would be inconsistent with such Regulation U or any other regulation of such Board of
Governors, or for any purpose prohibited by Legal Requirements or any Borrower Loan Document or
Funding Loan Document.
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Section 4.1.16 Utilities and Public Access
knowledge, the Project is or will be served by water, sewer, sanitary sewer and storm drain facilities
adequate to service it for its intended uses. All public utilities necessary or convenient to the full use
and enjoyment of the Project are or will be located in the public right-of-way abutting the Project,
and all such utilities are or will be connected so as to serve the Project without passing over other
property absent a valid easement. All roads necessary for the use of the Project for its current
purpose have been or will be completed and dedicated to public use and accepted by all
Governmental Authorities. Except for Permitted Encumbrances, the Project does not share ingress
and egress through an easement or private road or share on-site or off-site recreational facilities and
amenities that are not located on the Project and under the exclusive control of the Borrower, or
where there is shared ingress and egress or amenities, there exists an easement or joint use and
maintenance agreement under which (i) access to and use and enjoyment of the easement or private
road and/or recreational facilities and amenities is perpetual, (ii) the number of parties sharing such
easement and/or recreational facilities and amenities must be specified, (iii)
responsibilities and share of expenses are specified, and (iv) the failure to pay any maintenance fee
with respect to an easement will not result in a loss of usage of the easement.
Section 4.1.17 Not a Foreign Person
within the meaning of §1445(f)(3) of the Code.
Section 4.1.18 Separate Lots. Each parcel comprising the Land is a separate tax
lot and is not a portion of any other tax lot that is not a part of the Land.
Section 4.1.19 Assessments. Except as disclosed in the Title Insurance Policy,
public improvements or otherwise affecting the Project, or any contemplated improvements to the
Project that may result in such special or other assessments.
Section 4.1.20 Enforceability. The Borrower Loan Documents and the Funding
Loan Documents are not subject to, and the Borrower has not asserted, any right of rescission, set-
off, counterclaim or defense, including the defense of usury.
Section 4.1.21 Insurance. The Borrower has obtained the insurance required by
this Borrower Loan Agreement, if applicable, and the Security Instrument and has delivered to the
Servicer copies of insurance policies or certificates of insurance reflecting the insurance coverages,
amounts and other requirements set forth in this Borrower Loan Agreement, if applicable, and the
Security Instrument.
Section 4.1.22 Use of Property; Licenses. The Project will be used exclusively as
a multifamily rental housing project and other appurtenant and related uses, which use is consistent
with the zoning classification for the Project. All certifications, permits, licenses and approvals,
including certificates of completion and occupancy permits required for the legal use or legal,
nonconforming use, as applicable, occupancy and operation of the Project (collectively, the
of the Project have been obtained. To
Borrower have been validly issued and are in full force and effect. The Borrower has no reason to
believe that any of the Licenses required for the future use and occupancy of the Project and not
heretofore obtained by the Borrower will not be obtained by the Borrower in the ordinary course
following the Completion Date. No Licenses will terminate, or become void or voidable or
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terminable, upon any sale, transfer or other disposition of the Project, including any transfer pursuant
to foreclosure sale under the Security Instrument or deed in lieu of foreclosure thereunder. The
Project does not violate any density or building setback requirements of the applicable zoning law
except to the extent, if any
knowledge, pending or threatened that would result in a change of the zoning of the Project.
Section 4.1.23 Flood Zone. As of the Closing Date, no structure within the
Mortgaged Property lies or is located in an identifiable or designated Special Flood Hazard Area.
Subsequent to the Closing Date, if the Mortgaged Property is determined to be in a Special Flood
Hazard Area, Borrower will obtain appropriate flood insurance as required under the National Flood
Insurance Act of 1968, Flood Disaster Protection Act of 1973, or the National Flood Insurance
Reform Act of 1994 as amended or as required by the Servicer pursuant to its underwriting
guidelines.
Section 4.1.24 Physical Condition. The Project, including all Improvements,
parking facilities, systems, fixtures, Equipment and landscaping, are or, after completion of the
construction, rehabilitation and/or repairs, as appropriate, will be in good and habitable condition in
all material respects and in good order and repair in all material respects (reasonable wear and tear
excepted). The Borrower has not received notice from any insurance company or bonding company
of any defect or inadequacy in the Project, or any part thereof, which would adversely affect its
insurability or cause the imposition of extraordinary premiums or charges thereon or any termination
of any policy of insurance or bond. The physical configuration of the Project is not in material
violation of the ADA, if required under applicable law.
Section 4.1.25 Encroachments. All of the Improvements included in determining
the appraised value of the Project will lie wholly within the boundaries and building restriction lines
of the Project, and no improvement on an adjoining property encroaches upon the Project, and no
easement or other encumbrance upon the Project encroaches upon any of the Improvements, so as to
affect the value or marketability of the Project, except those insured against by the Title Insurance
Policy or disclosed in the survey of the Project as approved by the Servicer.
Section 4.1.26 State Law Requirements. The Borrower hereby represents,
covenants and agrees to comply with the provisions of all applicable state laws relating to the
Borrower Loan, the Funding Loan and the Project.
Section 4.1.27 Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person
under applicable Legal Requirements in connection with the transfer of the Project to the Borrower
have been paid. All mortgage, mortgage recording, stamp, intangible or other similar taxes required
to be paid by any Person under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of the Borrower Loan
Documents and the Funding Loan Documents have been or will be paid.
Section 4.1.28 Investment Company Act. The Borrower is not (i)
Investment Company Act of 1940, as amended; or (ii)
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Section 4.1.29 Fraudulent Transfer. The Borrower has not accepted the
Borrower Loan or entered into any Borrower Loan Document or Funding Loan Document with the
actual intent to hinder, delay or defraud any creditor, and the Borrower has received reasonably
equivalent value in exchange for its obligations under the Borrower Loan Documents and the
Funding Loan Documents. Giving effect to the transactions contemplated by the Borrower Loan
assets
exceeds and will, immediately following the execution and delivery of the Borrower Loan
subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of the
liabilities, including the maximum amount of its contingent liabilities or its debts as such debts
execution and delivery of the Borrower Loan Documents and the Funding Loan Documents will not,
constitute unreasonably small capital to carry out its business as conducted or as proposed to be
conducted. The Borrower does not intend to, and does not believe that it will, incur debts and
liabilities (including contingent liabilities and other commitments) beyond its ability to pay such
debts as they mature (taking into account the timing and amounts to be payable on or in respect of
obligations of the Borrower).
Section 4.1.30 Ownership of the Borrower. Except as set forth in the Partnership
Agreement of the Borrower and the exhibits thereto, the Borrower has no obligation to any Person to
purchase, repurchase or issue any ownership interest in the Borrower.
Section 4.1.31 Environmental Matters
the Project is not in violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or cleanup, and will
comply with covenants and requirements relating to environmental hazards as set forth in the
Security Instrument. The Borrower will execute and deliver the Agreement of Environmental
Indemnification on the Closing Date.
Section 4.1.32 Name; Principal Place of Business. Unless prior Written Notice is
given to the Funding Lender, the Borrower does not use and will not use any trade name, and has not
done and will not do business under any name other than its actual name set forth herein. The
principal place of business of the Borrower is its primary address for notices as set forth in
Section 10.1 hereof, and the Borrower has no other place of business, other than the Project and such
principal place of business.
Section 4.1.33 Subordinated Debt. There is no secured or unsecured
indebtedness with respect to the Project or any residual interest therein, other than Permitted
Encumbrances and the permitted secured indebtedness described in Section 6.7 hereof, except an
unsecured deferred developer fee not to exceed the amount permitted by Funding Lender as
determined on the Closing Date.
Section 4.1.34 Filing of Taxes. The Borrower has filed (or has obtained effective
extensions for filing) all federal, state and local tax returns required to be filed and has paid or made
adequate provision for the payment of all federal, state and local taxes, charges and assessments, if
any, payable by the Borrower.
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Section 4.1.35 General Tax. All representations, warranties and certifications of
the Borrower set forth in the Regulatory Agreement and the Tax Certificate are incorporated by
reference herein and the Borrower will comply with such as if set forth herein.
Section 4.1.36 Approval of the Borrower Loan Documents and Funding Loan
Documents. By its execution and delivery of this Borrower Loan Agreement, the Borrower
approves the form and substance of the Borrower Loan Documents and the Funding Loan
Documents, and agrees to carry out the responsibilities and duties specified in the Borrower Loan
Documents and the Funding Loan Documents to be carried out by the Borrower. The Borrower
acknowledges that (a) it understands the nature and structure of the transactions relating to the
financing of the Project, (b) it is familiar with the provisions of all of the Borrower Loan Documents
and the Funding Loan Documents and other documents and instruments relating to the financing,
(c) it understands the risks inherent in such transactions, including without limitation the risk of loss
of the Project, and (d) it has not relied on the Governmental Lender, the Funding Lender, the Fiscal
Agent or the Servicer for any guidance or expertise in analyzing the financial or other consequences
of the transactions contemplated by the Borrower Loan Documents and the Funding Loan
Documents or otherwise relied on the Governmental Lender, the Funding Lender, the Fiscal Agent or
the Servicer in any manner.
Section 4.1.37 Funding Loan Agreement. The Borrower has read and accepts
and agrees that it is bound by the Funding Loan Agreement and the Funding Loan Documents.
Section 4.1.38 Americans with Disabilities Act. The Project, as designed, will
conform in all material respects with all applicable zoning, planning, building and environmental
laws, ordinances and regulations of governmental authorities having jurisdiction over the Project,
Section 4.1.39 Requirements of Act, Code and Regulations. The Project
satisfies all requirements of the Act, the Code and the Regulations applicable to the Project.
Section 4.1.40 Regulatory Agreement. The Project is, as of the date of
origination of the Funding Loan, in compliance with all requirements of the Regulatory Agreement to
the extent such requirements are applicable; and the Borrower intends to cause the residential units in
the Project to be rented or available for rental on a basis which satisfies the requirements of the
Regulatory Agreement, including all applicable requirements of the Act and the Code and the
Regulations, and pursuant to leases which comply with all applicable laws.
Section 4.1.41 Intention to Hold Project. The Borrower intends to hold the
Project for its own account and has no current plans, and except as set forth in the Partnership
Agreement has not entered into any agreement, to sell the Project or any part of it; and the Borrower
intends to occupy the Project or cause the Project to be occupied and to operate it or cause it to be
operated at all times during the term of this Borrower Loan Agreement in compliance with the terms
of this Borrower Loan Agreement and the Regulatory Agreement and does not know of any reason
why the Project will not be so used by it in the absence of circumstances not now anticipated by it or
totally beyond its control.
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Section 4.1.42 Concerning General Partner.
(a) The managing general partner of Borrower is the Managing General Partner,
a California limited liability company, and the co-general partner of Borrower is the Administrative
General Partner, a California limited liability company, and each of the Managing General Partner
and Administrative General Partner is duly organized and validly existing under the laws of the State
of California. The General Partner has all requisite power and authority, rights and franchises to
enter into and perform its obligations under the Borrower Loan Documents and the Funding Loan
Documents to be executed by it for its own account and on behalf of Borrower, as general partner of
Borrower, under this Borrower Loan Agreement and the other Borrower Loan Documents and the
Funding Loan Documents.
(b) The General Partner has made all filings (including, without limitation, all
required filings related to the use of fictitious business names) and is in good standing in the State
and in each other jurisdiction in which the character of the property it owns or the nature of the
business it transacts makes such filings necessary or where the failure to make such filings could
have a material adverse effect on the business, operations, assets, or financial condition of General
Partner.
(c) The General Partner is duly authorized to do business in the State.
(d) The execution, delivery and performance by Borrower of the Borrower Loan
Documents and the Funding Loan Documents have been duly authorized by all necessary action of
General Partner on behalf of Borrower, and by all necessary action on behalf of General Partner.
(e) The execution, delivery and performance by General Partner, on behalf of
Borrower, of the Borrower Loan Documents and the Funding Loan Documents will not violate
(i) any other Legal Requirement affecting General
Partner or any of its properties; or (iii) any agreement to which General Partner is bound or to which
it is a party; and will not result in or require the creation (except as provided in or contemplated by
this Borrower Loan Agreement) of any Lien upon any of such properties, any of the Collateral or any
of the property or funds pledged or delivered to Funding Lender pursuant to the Security Documents.
Section 4.1.43 Government and Private Approvals. All governmental or
regulatory orders, consents, permits, authorizations and approvals required for the construction,
rehabilitation, use, occupancy and operation of the Improvements, that may be granted or denied in
the discretion of any Governmental Authority, have been obtained and are in full force and effect (or,
in the case of any of the foregoing that Borrower is not required to have as of the Closing Date, will
be obtained), and will be maintained in full force and effect at all times during the construction or
rehabilitation of the Improvements. All such orders, consents, permits, authorizations and approvals
that may not be denied in the discretion of any Governmental Authority shall be obtained prior to the
commencement of any work for which such orders, consents, permits, authorizations or approvals are
required, and, once obtained, such orders, consents, permits, authorizations and approvals will be
maintained in full force and effect at all times during the construction or rehabilitation of the
Improvements. Except as set forth in the preceding two sentences, no additional governmental or
regulatory actions, filings or registrations with respect to the Improvements, and no approvals,
authorizations or consents of any trustee or holder of any indebtedness or obligation of Borrower, are
required for the due execution, delivery and performance by Borrower or General Partner of any of
the Borrower Loan Documents or the Funding Loan Documents or the Related Documents executed
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by Borrower or General Partner, as applicable. All required zoning approvals have been obtained,
and the zoning of the Land for the Project is not conditional upon the happening of any further event.
Section 4.1.44 Concerning Guarantor. The Borrower Loan Documents and the
Funding Loan Documents to which the Guarantor is a party or a signatory executed simultaneously
with this Borrower Loan Agreement have been duly executed and delivered by Guarantor and are
legally valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors
Section 4.1.45 No Material Defaults. Except as previously disclosed to Funding
Lender and the Governmental Lender in writing, there exists no material violation of or material
default by Borrower under, and, to the best knowledge of Borrower, no event has occurred which,
upon the giving of notice or the passage of time, or both, would constitute a material default with
respect to: (i) the terms of any instrument evidencing, securing or guaranteeing any indebtedness
secured by the Project or any portion or interest thereof or therein; (ii) any lease or other agreement
affecting the Project or to which Borrower is a party; (iii) any license, permit, statute, ordinance, law,
judgment, order, writ, injunction, decree, rule or regulation of any Governmental Authority, or any
determination or award of any arbitrator to which Borrower or the Project may be bound; or (iv) any
mortgage, instrument, agreement or document by which Borrower or any of its respective properties
is bound; in the case of any of the foregoing: (1) which involves any Borrower Loan Document or
Funding Loan Document; (2) which involves the Project and is not adequately covered by insurance;
(3) that might materially and adversely affect the ability of Borrower, General Partner or Guarantor
or to perform any of its respective obligations under any of the Borrower Loan Documents or the
Funding Loan Documents or any other material instrument, agreement or document to which it is a
party; or (4) which might adversely affect the priority of the Liens created by this Borrower Loan
Agreement or any of the Borrower Loan Documents or the Funding Loan Documents.
Section 4.1.46 Payment of Taxes. Except as previously disclosed to Funding
Lender in writing: (i) all tax returns and reports of Borrower, General Partner and Guarantor
required to be filed have been timely filed, and all taxes, assessments, fees and other governmental
charges upon Borrower, General Partner and Guarantor, and upon their respective properties, assets,
income and franchises, which are due and payable have been paid when due and payable; and
(ii) Borrower knows of no proposed tax assessment against it or against General Partner or Guarantor
that would be material to the condition (financial or otherwise) of Borrower, General Partner or
Guarantor, and neither Borrower nor General Partner have contracted with any Governmental
Authority in connection with such taxes.
Section 4.1.47 Rights to Project Agreements and Licenses. Borrower is the
legal and beneficial owner of all rights in and to the Plans and Specifications and all existing Project
Agreements and Licenses, and will be the legal and beneficial owner of all rights in and to all future
s and all Project
Agreements and Licenses is not subject to any present claim (other than under the Borrower Loan
Documents and the Funding Loan Documents or as otherwise approved by Funding Lender in its sole
discretion), set-off or deduction other than in the ordinary course of business.
Section 4.1.48 Patriot Act Compliance. Borrower is not now, nor has ever been
(i) listed on any Government Lists (as defined below), (ii) a person who has been determined by a
Governmental Authority to be subject to the prohibitions contained in Presidential Executive Order
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No. 13224 (September 23, 2001) or any other similar prohibitions contained in the rules and
regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect
thereof, (iii) indicted for or convicted of any felony involving a crime or crimes of moral turpitude or
for any Patriot Act Offense, or (iv) under investigation by any Governmental Authority for alleged
l mean any violation of the
criminal laws of the United States of America or of any of the several states, or that would be a
criminal violation if committed within the jurisdiction of the United States of America or any of the
several states, relating to terrorism or the laundering of monetary instruments, including any offense
under (A) the criminal laws against terrorism; (B) the criminal laws against money laundering,
(C) Bank Representative Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986,
as amended, or (E)
commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes hereof, the
the Specially Designated Nationals and Blocked Persons
any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and
Regulations of OFAC that Funding Lender notified Borrower in writing is now included in
any similar lists maintained by the United States Department of State, the
United States Department of Commerce or any other Governmental Authority or pursuant to any
Executive Order of the President of the United States of America that Funding Lender notified
Section 4.1.49 Rent Schedule. Borrower has prepared a prospective Unit
absorption and rent collection schedule with respect to the Project substantially in the form attached
as an exhibit to the Construction Funding Agreement, which schedule takes into account, among
other relevant factors (i) a schedule of minimum monthly rentals for the Units, and (ii) any and all
concessions including free rent periods, and on the basis of such schedule, Borrower believes it will
collect rents with respect to the Project in amounts greater than or equal to debt service on the
Borrower Loan.
Section 4.1.50 Other Documents. Each of the representations and warranties of
Borrower or General Partner contained in any of the other Borrower Loan Documents or the Funding
Loan Documents or Related Documents is true and correct in all material respects (or, in the case of
representations or warranties contained in any of the other Borrower Loan Documents or Funding
Loan Documents or Related Documents that speak as of a particular date, were true and correct in all
material respects as of such date). All of such representations and warranties are incorporated herein
for the benefit of Funding Lender.
Section 4.1.51 Subordinate Loan Documents. The Subordinate Loan Documents
are in full force and effect and the Borrower has paid all commitment fees and other amounts due and
payable to the Subordinate Lender(s) thereunder. There exists no material violation of or material
default by the Borrower under, and no event has occurred which, upon the giving of notice or the
passage of time, or both, would constitute a material default under the Subordinate Loan Documents.
Section 4.1.52 \[Reserved\].
Section 4.1.53 Survival of Representations and Covenants. All of the
representations and warranties in Section 4.1 hereof and elsewhere in the Borrower Loan Documents
(i) shall survive for so long as any portion of the Borrower Payment Obligations remains due and
owing and (ii) shall be deemed to have been relied upon by the Governmental Lender and the
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Servicer notwithstanding any investigation heretofore or hereafter made by the Governmental Lender
or the Servicer or on its or their behalf, provided, however, that the representations, warranties and
covenants set forth in Section 4.1.31 hereof shall survive in perpetuity and shall not be subject to the
exculpation provisions of Section 11.1 hereof.
ARTICLE V
AFFIRMATIVE COVENANTS
During the term of this Borrower Loan Agreement, the Borrower hereby covenants and
agrees with the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer that:
Section 5.1 Existence. The Borrower shall (i) do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its existence and its material rights, and
franchises, (ii) continue to engage in the business presently conducted by it, (iii) obtain and maintain
all material Licenses, and (iv) qualify to do business and remain in good standing under the laws of
the State.
Section 5.2 Taxes and Other Charges. The Borrower shall pay all Taxes and Other
Charges as the same become due and payable and prior to their becoming delinquent in accordance
with the Security Instrument, except to the extent that the amount, validity or application thereof is
being contested in good faith as permitted by the Security Instrument.
The Borrower covenants to pay all taxes and Other Charges of any type or character charged
to the Funding Lender affecting the amount available to the Funding Lender from payments to be
received hereunder or in any way arising due to the transactions contemplated hereby (including
taxes and Other Charges assessed or levied by any public agency or governmental authority of
whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based
upon the capital and/or income of the Funding Lender and taxes based upon or measured by the net
income of the Funding Lender; provided, however, that the Borrower shall have the right to protest
protest and contest any such taxes or Other Charges levied upon them and that the Borrower shall
have the right to withhold payment of any such taxes or Other Charges pending disposition of any
such protest or contest unless such withholding, protest or contest would adversely affect the rights
or interests of the Funding Lender. This obligation shall remain valid and in effect notwithstanding
repayment of the Borrower Loan hereunder or termination of this Borrower Loan Agreement.
Section 5.3 Repairs; Maintenance and Compliance; Physical Condition. The
Borrower shall cause the Project to be maintained in a good, habitable and safe (so as to not threaten
the health or
wear and tear excepted) as set forth in the Security Instrument and shall not remove, demolish or
materially alter the Improvements or Equipment (except for removal of aging or obsolete equipment
or furnishings in the normal course of business), except as provided in the Security Instrument.
Section 5.4 Litigation. The Borrower shall give prompt Written Notice to the
Governmental Lender, the Funding Lender and the Servicer of any litigation, governmental
proceedings or claims or investigations regarding an alleged actual violation of a Legal Requirement
ondition (financial or otherwise) or business or the Project.
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Section 5.5 Performance of Other Agreements. The Borrower shall observe and
perform in all material respects each and every term to be observed or performed by it pursuant to the
terms of any agreement or instrument affecting or pertaining to the Project.
Section 5.6 Notices. The Borrower shall promptly advise the Governmental Lender, the
Funding Lender and the Servicer of (i)
condition, assets, properties or operations other than general changes in the real estate market,
(ii) any fact or circumstance affecting the Borrower or the Project that materially and adversely
wer
Loan Document to which it is a party in a timely manner, or (iii) the occurrence of any Potential
Default or Event of Default of which the Borrower has knowledge. If the Borrower becomes subject
to federal or state securities law filing requirements, the Borrower shall cause to be delivered to the
Governmental Lender, the Funding Lender and the Servicer any Securities and Exchange
Commission or other public filings, if any, of the Borrower within two (2) Business Days of such
filing.
Section 5.7 Cooperate in Legal Proceedings. The Borrower shall cooperate fully with
the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer with respect to, and
permit the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer at their
option, to participate in, any proceedings before any Governmental Authority that may in any way
affect the rights of the Governmental Lender, the Funding Lender, the Fiscal Agent and/or the
Servicer under any Borrower Loan Document or Funding Loan Document.
Section 5.8 Further Assurances
expense (except as provided in Section 9.1 hereof), (i) furnish to the Servicer and the Funding Lender
all instruments, documents, boundary surveys, footing or foundation surveys (to the extent that
footprints), certificates, plans and specifications, appraisals, title and other insurance reports and
agreements relating to the Project, reasonably requested by the Servicer or the Funding Lender for
the better and more efficient carrying out of the intents and purposes of the Borrower Loan
Documents and the Funding Loan Documents; (ii) execute and deliver to the Servicer and the
Funding Lender such documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the Borrower Loan, as the Servicer, the Fiscal Agent (at the direction
of the Funding Lender) and the Funding Lender may reasonably require from time to time; (iii) do
and execute all and such further lawful and reasonable acts, conveyances and assurances for the
better and more effective carrying out of the intents and purposes of the Borrower Loan Documents
and the Funding Loan Documents, as the Servicer, the Fiscal Agent (at the direction of the Funding
Lender) or the Funding Lender shall reasonably require from time to time; provided, however, with
respect to clauses (i)-(iii) above, the Borrower shall not be required to do anything that has the effect
of (A) changing the essential economic terms of the Borrower Loan or (B) imposing upon the
Borrower greater personal liability under the Borrower Loan Documents and the Funding Loan
Documents; and (iv)
Potential Default or Event of Default for so long as such Potential Default or Event of Default, as
applicable, is continuing pay for (a) reports of UCC, federal tax lien, state tax lien, judgment and
pending litigation searches with respect to the Borrower and (b) searches of title to the Project, each
such search to be conducted by search firms reasonably designated by the Servicer, the Fiscal Agent
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(at the direction of the Funding Lender) or the Funding Lender in each of the locations reasonably
designated by the Servicer, the Fiscal Agent or the Funding Lender.
Section 5.9 Delivery of Financial Information. After notice to the Borrower of a
Secondary Market Disclosure Document, the Borrower shall, concurrently with any delivery to the
Funding Lender or the Servicer, deliver copies of all financial information required under Article IX.
Section 5.10 Environmental Matters. So long as the Borrower owns or is in possession
of the Project, the Borrower shall (a) keep the Project in compliance with all Hazardous Materials
Laws (as defined in the Security Instrument), (b) promptly notify the Funding Lender and the
Servicer if the Borrower shall become aware that any Hazardous Materials (as defined in the Security
Instrument) are on or near the Project in violation of Hazardous Materials Laws, and (c) commence
and thereafter diligently prosecute to completion all remedial work necessary with respect to the
Project required under any Hazardous Material Laws, in each case as set forth in the Security
Instrument or the Agreement of Environmental Indemnification.
Section 5.11 . The Borrower
covenants to pay the reasonable fees and expenses of the Governmental Lender (including the
Ongoing Governmental Lender Fee), the Fiscal Agent and the Funding Lender or any agents,
attorneys, accountants, consultants selected by the Governmental Lender, the Fiscal Agent or the
Funding Lender to act on its behalf in connection with this Borrower Loan Agreement and the other
Borrower Loan Documents, the Regulatory Agreement and the Funding Loan Documents, including,
without limitation, any and all reasonable expenses incurred in connection with the making of the
Borrower Loan or in connection with any litigation which may at any time be instituted involving the
Borrower Loan, this Borrower Loan Agreement, the other Borrower Loan Documents, the
Regulatory Agreement and the Funding Loan Documents or any of the other documents
contemplated thereby, or in connection with the reasonable supervision or inspection of the
Borrower, its properties, assets or operations or otherwise in connection with the administration of
the foregoing. This obligation shall remain valid and in effect notwithstanding repayment of the
Borrower Loan hereunder or termination of this Borrower Loan Agreement.
Section 5.12 Estoppel Statement. The Borrower shall furnish to the Funding Lender, the
Fiscal Agent or the Servicer for the benefit of the Funding Lender or the Servicer within ten
(10) days after request by the Funding Lender and the Servicer, with a statement, duly acknowledged
and certified, setting forth (i) the unpaid principal of the Borrower Notes, (ii) the applicable Interest
Rate, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses
to the payment of the Borrower Payment Obligations, and (v) that the Borrower Loan Documents
and the Funding Loan Documents to which the Borrower is a party are valid, legal and binding
obligations of the Borrower and have not been modified or, if modified, giving particulars of such
modification, and no Event of Default exists thereunder or specify any Event of Default that does
exist thereunder. The Borrower shall use commercially reasonable efforts to furnish to the Funding
Lender or the Servicer, within 30 days of a request by the Funding Lender or Servicer, tenant
estoppel certificates from each commercial tenant at the Project in form and substance reasonably
satisfactory to the Funding Lender and the Servicer; provided that the Funding Lender and the
Servicer shall not make such requests more frequently than twice in any year.
Section 5.13 Defense of Actions. The Borrower shall appear in and defend any action or
proceeding purporting to affect the security for this Borrower Loan Agreement hereunder or under
the Borrower Loan Documents and the Funding Loan Documents, and shall pay, in the manner
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required by Section 2.4 hereof, all costs and expenses, including the cost of evidence of title and
Borrower fails to perform any of the covenants or agreements contained in this Borrower Loan
Agreement or any other Borrower Loan Document, or if any action or proceeding is commenced that
or any part thereof, including eminent domain, code enforcement or proceedings of any nature
whatsoever under any Federal or state law, whether now existing or hereafter enacted or amended,
then the Funding Lender may make such appearances, disburse such sums and take such action as the
Funding Lender deems necessary or appropriate to protect its interests. Such actions include
the security of the Project, and payment, purchase, contest or compromise of any encumbrance,
charge or lien which in the judgment of Funding Lender appears to be prior or superior to the
Borrower Loan Documents or the Funding Loan Documents. The Funding Lender shall have no
obligation to do any of the above. The Funding Lender may take any such action without notice to or
demand upon the Borrower. No such action shall release the Borrower from any obligation under
this Borrower Loan Agreement or any of the other Borrower Loan Documents or Funding Loan
Documents. In the event (i) that the Security Instrument is foreclosed in whole or in part or that any
Borrower Loan Document is put into the hands of an attorney for collection, suit, action or
foreclosure, or (ii) of the foreclosure of any mortgage, deed of trust or deed to secure debt prior to or
subsequent to the Security Instrument or any Borrower Loan Document in which proceeding the
Funding Lender is made a party or (iii) of the bankruptcy of the Borrower or an assignment by the
Borrower for the benefit of its creditors, the Borrower shall be chargeable with and agrees to pay all
connection with any appellate proceeding or post-judgment action involved therein, which shall be
due and payable together with all required service or use taxes.
Section 5.14 Expenses. The Borrower shall pay all reasonable expenses incurred by the
Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer (except as provided in
Section 9.1 hereof) in connection with the Borrower Loan and the Funding Loan, including
and fees,
charges or taxes for the recording or filing of the Borrower Loan Documents and the Funding Loan
Documents. The Borrower shall pay or cause to be paid all reasonable expenses of the Governmental
Lender, the Funding Lender, the Fiscal Agent and the Servicer (except as provided in Section 9.1
hereof) in connection with the issuance or administration of the Borrower Loan and the Funding
Loan, including audit costs, inspection fees, settlement of condemnation and casualty awards, and
premiums for title insurance and endorsements thereto. The Borrower shall, upon request, promptly
reimburse the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer for all
reasonable amounts expended, advanced or incurred by the Governmental Lender, the Funding
Lender, the Fiscal Agent and the Servicer to collect the Borrower Notes, or to enforce the rights of
the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer under this
Borrower Loan Agreement or any other Borrower Loan Document, or to defend or assert the rights
and claims of the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer under
the Borrower Loan Documents and the Funding Loan Documents arising out of an Event of Default
or with respect to the Project (by litigation or other proceedings) arising out of an Event of Default,
accountants, and investigation expenses as may be reasonably incurred by the Governmental Lender,
the Funding Lender, the Fiscal Agent and the Servicer in connection with any such matters (whether
or not litigation is instituted), together with interest at the Default Rate on each such amount from the
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Date of Disbursement until the date of reimbursement to the Governmental Lender, the Funding
Lender, the Fiscal Agent and the Servicer, all of which shall constitute part of the Borrower Loan and
the Funding Loan and shall be secured by the Borrower Loan Documents and the Funding Loan
Documents. The obligations and liabilities of the Borrower under this Section 5.14 shall survive the
Term of this Borrower Loan Agreement and the exercise by the Governmental Lender, the Funding
Lender, the Fiscal Agent or the Servicer, as the case may be, of any of its rights or remedies under
the Borrower Loan Documents and the Funding Loan Documents, including the acquisition of the
Project by foreclosure or a conveyance in lieu of foreclosure. Notwithstanding the foregoing, the
Borrower shall not be obligated to pay amounts incurred as a result of the gross negligence or willful
misconduct of any other party, and any obligations of the Borrower to pay for environmental
inspections or audits will be governed by Section 18(i) and 43(i) of the Security Instrument.
Section 5.15 Indemnity. In addition to its other obligations hereunder, and in addition to
any and all rights of reimbursement, indemnification, subrogation and other rights of Governmental
Lender, the Fiscal Agent or Funding Lender pursuant hereto, pursuant to the Regulatory Agreement
and under law or equity, to the fullest extent permitted by law, the Borrower agrees to indemnify,
hold harmless and defend the Governmental Lender, the Funding Lender, the Fiscal Agent, the
Servicer, the Beneficiary Parties, Citigroup, Inc., and each of their respective commissioners,
Indemnified Party
all losses, damages, claims, actions, liabilities, reasonable costs and expenses of any nature, kind or
amounts paid in settlement (to the extent that the Borrower has consented to such settlement) and
amounts paid to discharge judgments) (hereinafter, Liabilities
Parties, or any of them, may become subject under federal or state securities laws or any other
statutory law or at common law or otherwise, to the extent arising out of or based upon or in any way
relating to:
(a) The Borrower Loan Documents and the Funding Loan Documents or the
execution or amendment thereof or in connection with transactions contemplated thereby, including
the sale, transfer or resale of the Borrower Loan or the Funding Loan, except with respect to any
IX);
(b) Any act or omission of the Borrower or any of its agents, contractors,
servants, employees or licensees in connection with the Borrower Loan, the Funding Loan or the
Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use,
possession, conduct or management of work done in or about, or from the planning, design,
acquisition, construction, installation or rehabilitation of, the Project or any part thereof;
(c) Any lien (other than a Permitted Lien) or charge upon payments by the
Borrower to the Governmental Lender, the Fiscal Agent or the Funding Lender hereunder, or any
taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions
and Other Charges imposed on the Governmental Lender, the Fiscal Agent or the Funding Lender in
respect of any portion of the Project;
(d) Any violation of any environmental law, rule or regulation with respect to, or
the release of any toxic substance from, the Project or any part thereof during the period in which the
Borrower is in possession or control of the Project;
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(e) The enforcement of, or any action taken by the Governmental Lender, the
Fiscal Agent or the Funding Lender related to remedies under, this Borrower Loan Agreement and
the other Borrower Loan Documents and the Funding Loan Documents;
(f) Any untrue statement or misleading statement or alleged untrue statement or
alleged misleading statement of a material fact by the Borrower made in the course of Borrower
applying for the Borrower Loan or the Funding Loan or contained in any of the Borrower Loan
Documents or Funding Loan Documents to which the Borrower is a party;
(g) Any Determination of Taxability;
(h) Any breach (or alleged breach) by Borrower of any representation, warranty
or covenant made in or pursuant to this Borrower Loan Agreement or in connection with any written
or oral representation, presentation, report, appraisal or other information given or delivered by
Borrower, General Partner, Guarantor or their Affiliates to Governmental Lender, the Fiscal Agent
the Borrower Loan and the Funding Loan (including, without limitation, any breach or alleged
breach by Borrower of any agreement with respect to the provision of any substitute credit
enhancement);
(i) any failure (or alleged failure) by Borrower, the Funding Lender or
Governmental Lender to comply with applicable federal and state laws and regulations pertaining to
the making of the Borrower Loan and the Funding Loan;
(j) the Project, or the condition, occupancy, use, possession, conduct or
management of, or work done in or about, or from the planning, design, acquisition, installation,
construction or rehabilitation of, the Project or any part thereof; or
(k) the use of the proceeds of the Borrower Loan and the Funding Loan,
except in the case of the foregoing indemnification of the Governmental Lender or any related
Indemnified Party, to the extent such damages are caused by the willful misconduct of such
Indemnified Party, and except in the case of the foregoing indemnification of the Funding Lender or
the Servicer or any related Indemnified Party, to the extent such damages are caused by the gross
negligence or willful misconduct of such Indemnified Party. Notwithstanding anything herein to the
9.1.4 hereof
with respect to any securitization or Secondary Market Transaction described in Article IX hereof
shall be limited to the indemnity set forth in Section 9.1.4 hereof. In the event that any action or
proceeding is brought against any Indemnified Party with respect to which indemnity may be sought
hereunder, the Borrower, upon written notice from the Indemnified Party (which notice shall be
investigation and defense thereof, including the employment of counsel reasonably approved by the
Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to
litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall
have the right to review and approve or disapprove any such compromise or settlement, which
approval shall not be unreasonably withheld. Each Indemnified Party shall have the right to employ
separate counsel in any such action or proceeding and to participate in the investigation and defense
thereof. The Borrower shall pay the reasonable fees and expenses of such separate counsel;
provided, however, that such Indemnified Party may only employ separate counsel at the expense of
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the Borrower if and on
counsel) a conflict of interest exists or could arise by reason of common representation.
Notwithstanding any transfer of the Project to another owner in accordance with the
provisions of this Borrower Loan Agreement or the Regulatory Agreement, the Borrower shall
remain obligated to indemnify each Indemnified Party pursuant to this Section 5.15 if such
subsequent owner fails to indemnify any party entitled to be indemnified hereunder, unless the
Governmental Lender and the Funding Lender have consented to such transfer and to the assignment
of the rights and obligations of the Borrower hereunder.
The rights of any persons to indemnity hereunder shall survive the final payment or
defeasance of the Borrower Loan and the Funding Loan and in the case of the Servicer, any
resignation or removal. The provisions of this Section 5.15 shall survive the termination of this
Borrower Loan Agreement.
The foregoing provisions of this Section 5.15 are not intended to and shall not negate,
modify, limit or change the provisions of Section 9 of the Borrower Notes.
Section 5.16 No Warranty of Condition or Suitability by the Governmental Lender or
Funding Lender. Neither the Governmental Lender nor the Funding Lender makes any warranty,
either express or implied, as to the condition of the Project or that it will be suitable for the
Section 5.17 Right of Access to the Project. The Borrower agrees that the Governmental
Lender, the Funding Lender, the Servicer and the Construction Consultant, and their duly authorized
agents, attorneys, experts, engineers, accountants and representatives shall have the right, but no
obligation, at all reasonable times during business hours and upon reasonable notice, to enter onto the
Land (a) to examine, test and inspect the Project without material interference or prejudice to the
to perform such work in and about the Project made necessary by
y of the provisions of this Borrower Loan Agreement. The
Governmental Lender, the Funding Lender, the Servicer, and their duly authorized agents, attorneys,
accountants and representatives shall also be permitted, without any obligation to do so, at all
reasonable times and upon reasonable notice during business hours, to examine the books and
records of the Borrower with respect to the Project.
Section 5.18 Notice of Default. The Borrower will advise the Governmental Lender, the
Funding Lender, the Fiscal Agent and the Servicer promptly in writing of the occurrence of any
Potential Default or Event of Default hereunder, specifying the nature and period of existence of such
event and the actions being taken or proposed to be taken with respect thereto.
Section 5.19 Covenant with Governmental Lender and Funding Lender. The
Borrower agrees that this Borrower Loan Agreement is executed and delivered in part to induce the
purchase by others of the Governmental Lender Notes and, accordingly, all covenants and
agreements of the Borrower contained in this Borrower Loan Agreement are hereby declared to be
for the benefit of the Governmental Lender, the Fiscal Agent, the Funding Lender and any lawful
owner, holder or pledgee of the Borrower Notes or the Governmental Lender Notes from time to
time.
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Section 5.20 Obligation of the Borrower to Construct or Rehabilitate the Project. The
Borrower shall proceed with reasonable dispatch to construct or rehabilitate, as appropriate, and
equip the Project. If the proceeds of the Borrower Loan, together with the Other Borrower Moneys,
available to be disbursed to the Borrower are not sufficient to pay the costs of such construction or
rehabilitation, as appropriate, and equipping, the Borrower shall pay such additional costs from its
own funds. The Borrower shall not be entitled to any reimbursement from the Governmental Lender,
the Fiscal Agent, the Funding Lender or the Servicer in respect of any such costs or to any
diminution or abatement in the repayment of the Borrower Loan. The Governmental Lender, the
Fiscal Agent and the Funding Lender shall not be liable to the Borrower or any other person if for
any reason the Project is not completed or if the proceeds of the Borrower Loan are insufficient to
pay all costs of the Project. The Governmental Lender, the Fiscal Agent and the Funding Lender do
not make any representation or warranty, either express or implied, that moneys, if any, which will
be made available to the Borrower will be sufficient to complete the Project, and the Governmental
Lender, the Fiscal Agent and the Funding Lender shall not be liable to the Borrower or any other
person if for any reason the Project is not completed.
Section 5.21 Maintenance of Insurance. Borrower will maintain the insurance required
by the Security Instrument.
Section 5.22 Information; Statements and Reports. Borrower shall furnish or cause to
be furnished to Funding Lender and, with respect to subsection (a) only, to Governmental Lender:
(a) Notice of Default. As soon as possible, and in any event not later than five
(5) Business Days after the occurrence of any Event of Default or Potential Default, a statement of an
Authorized Representative of Borrower describing the details of such Event of Default or Potential
Default and any curative action Borrower proposes to take;
(b) Financial Statements; Rent Rolls. In the manner and to the extent required
under the Security Instrument, such financial statements, expenses statements, rent rolls, reports and
other financial documents and information as required by the Security Instrument and the other
Borrower Loan Documents and Funding Loan Documents, in the form and within the time periods
required therein;
(c) General Partner. As soon as available and in any event within one hundred
twenty (120) days after the end of each fiscal year of General Partner, copies of the financial
statements of General Partner as of such date, prepared in substantially the form previously delivered
to the Governmental Lender and Funding Lender and in a manner consistent therewith, or in such
form (which may include a form prepared in accordance with GAAP) as Funding Lender may
reasonably request;
(d) Leasing Reports. Prior to the Conversion Date, on a monthly basis (and in
any event within fifteen (15) days after the end of each Calendar Month), a report of all efforts made
by Borrower, if any, to lease all or any portion of the Project during such Calendar Month and on a
cumulative basis since Project inception, which report shall be prepared and delivered by Borrower,
shall be in form and substance satisfactory to Funding Lender, and shall, if requested by Funding
Lender, be supported by copies of letters of intent, leases or occupancy agreements, as applicable;
(e) Audit Reports. Promptly upon receipt thereof, copies of all reports, if any,
submitted to Borrower by independent public accountants in connection with each annual, interim or
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special audit of the financial statements of Borrower made by such accountants, including the
comment letter submitted by such accountants to management in connection with their annual audit;
(f) Notices; Certificates or Communications. Immediately upon giving or receipt
thereof, copies of any notices, certificates or other communications delivered at the Project or to
Borrower or General Partner naming Governmental Lender or Funding Lender as addressee or which
could reasonably be deemed to affect the structural integrity of the Project or the ability of Borrower
to perform its obligations under the Borrower Loan Documents and the Funding Loan Documents;
(g) Certification of Non-Foreign Status. Promptly upon request of Funding
Lender from time to time, a Certification of Non-Foreign Status, executed on or after the date of such
request by Funding Lender;
(h) Compliance Certificates. Together with each of the documents required
pursuant to Section 5.22(b) hereof submitted by or on behalf of Borrower, a statement, in form and
substance satisfactory to Funding Lender and certified by an Authorized Borrower Representative, to
the effect that Borrower is in compliance with all covenants, terms and conditions applicable to
Borrower, under or pursuant to the Borrower Loan Documents and the Funding Loan Documents and
under or pursuant to any other Debt owing by Borrower to any Person, and disclosing any
noncompliance therewith, and any Event of Default or Potential Default, and describing the status of
applicable; and
(i) Other Items and Information. Such other information concerning the assets,
business, financial condition, operations, property and results of operations of Borrower, General
Partner, Guarantor or the Project, as Funding Lender or Governmental Lender reasonably requests
from time to time.
Borrower shall furnish to Governmental Lender, upon its written request, any of the items
described in the foregoing subsections (b) through and including (i) above.
Section 5.23 Additional Notices. Borrower will, promptly after becoming aware thereof,
give notice to Funding Lender and the Governmental Lender of:
(a) any Lien affecting the Project, or any part thereof, other than Liens expressly
permitted under this Borrower Loan Agreement;
(b) any Legal Action which is instituted by or against Borrower, General Partner
or Guarantor, or any Legal Action which is threatened against Borrower, General Partner or
Guarantor which, in any case, if adversely determined, could have a material adverse effect upon the
business, operations, properties, assets, management, ownership or financial condition of Borrower,
General Partner, Guarantor or the Project;
(c) any Legal Action which constitutes an Event of Default or a Potential Default
or a default under any other Contractual Obligation to which Borrower, General Partner or Guarantor
is a party or by or to which Borrower, General Partner or Guarantor, or any of their respective
properties or assets, may be bound or subject, which default would have a material adverse effect on
the business, operations, assets (including the Project), or financial condition of Borrower, General
Partner or Guarantor, as applicable;
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(d) any default, alleged default or potential default on the part of Borrower under
default received from any other party thereto);
(e) any notice of default, alleged default or potential default on the part of
Borrower received from any tenant or occupant of the Project under or relating to its lease or
occupancy agreement (together with a copy of any such notice), if, in the aggregate, notices from at
least fifteen percent (15%) of the tenants at the Project have been received by Borrower with respect
to, or alleging, the same default, alleged default or potential default;
(f) any change or contemplated change in (i)
ters or principal place of business; (ii) the legal, trade, or
fictitious business names used by Borrower or General Partner; or (iii) the nature of the trade or
business of Borrower; and
(g) any default, alleged default or potential default on the part of any general or
limited partner (including, without limitation, General Partner and the Equity Investor) under the
Partnership Agreement.
Section 5.24 Compliance with Other Agreements; Legal Requirements.
(a) Borrower shall timely perform and comply with, and shall cause General
Partner to timely perform and comply with the covenants, agreements, obligations and restrictions
imposed on them under the Partnership Agreement, and Borrower shall not do or permit to be done
s under any of the foregoing.
(b) Borrower will comply and, to the extent it is able, will require others to
comply with, all Legal Requirements of all Governmental Authorities having jurisdiction over the
Project or construction and/or rehabilitation of the Improvements, and will furnish Funding Lender
with reports of any official searches for or notices of violation of any requirements established by
such Governmental Authorities. Borrower will comply and, to the extent it is able, will require
others to com
private contracts and leases which affect ownership, construction, rehabilitation, equipping, fixturing,
use or operation of the Project, and all other agreements requiring a certain percentage of the Units to
be rented to persons of low or moderate income. The Improvements, when completed, shall comply
with all applicable building, zoning and other Legal Requirements, and will not violate any
restrictions of record against the Project or the terms of any other lease of all or any portion of the
Project. Funding Lender and Governmental Lender shall at all times have the right to audit, at
percentage of
the Units to be rented to persons of low or moderate income, and Borrower shall supply all such
information with respect thereto as Funding Lender or Governmental Lender, as applicable, may
request and otherwise cooperate with Funding Lender or Governmental Lender, as applicable, in any
such audit. Without limiting the generality of the foregoing, Borrower shall properly obtain, comply
with and keep in effect (and promptly deliver copies to Funding Lender of) all permits, licenses and
approvals which are required to be obtained from Governmental Authorities in order to construct,
occupy, operate, market and lease the Project.
Section 5.25 Completion and Maintenance of Project. Borrower shall cause the
construction or rehabilitation, as the case may be, of the Improvements, to be prosecuted with
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diligence and continuity and completed substantially in accordance with the Plans and Specifications,
and in accordance with the Construction Funding Agreement, free and clear of any liens or claims for
liens (but w 10.16 hereof)
a residential apartment complex in good order and condition, ordinary wear and tear excepted. A
maintenance program shall be in place at all times to assure the continuation of first class
maintenance.
Section 5.26 Fixtures. Borrower shall deliver to Funding Lender, on demand, any
contracts, bills of sale, statements, receipted vouchers or agreements under which Borrower or any
other Person claims title to any materials, fixtures or articles incorporated into the Improvements.
Section 5.27 Income from Project. Borrower shall first apply all Gross Income to
Expenses of the Project, including all amounts then required to be paid under the Borrower Loan
Documents and the Funding Loan Documents and the funding of all sums necessary to meet the
Replacement Reserve Fund Requirement, before using or applying such Gross Income for any other
purpose. Prior to the Conversion Date, except for the Asset Management Fee, as defined in and
payable pursuant to the Partnership Agreement, or as otherwise permitted by the Borrower Loan
Documents or the Funding Loan Documents or the Subordinate Loan Documents, Borrower shall not
make or permit any distributions or other payments of Net Operating Income to its partners,
shareholders or members, as applicable, in each case, without the prior Written Consent of Funding
Lender.
Section 5.28 Leases and Occupancy Agreements.
(a) Lease Approval.
(i) Borrower may enter into leases of space within the Improvements
(and amendments to such leases) in the ordinary course of business with bona fide third party tenants
(A) The lease is a Permitted Lease;
(B) Borrower, acting in good faith following the exercise of due
diligence, has determined that the tenant meets requirements imposed under any applicable CC&R
and is financially capable of performing all of its obligations under the lease; and
(C) The lease conforms to the Rent Schedule attached as an
-length transaction, subject to
the requirement that the Borrower comply with any applicable CC&R.
(ii) If any Event of Default has occurred and is continuing, Funding
approval prior to execution. Borrower shall comply with any such demand by Funding Lender.
(iii) No approval of any lease by Funding Lender shall be for any purpose
Loan Documents. No
approval by Funding Lender shall result in a waiver of any default of Borrower. In no event shall
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any approval by Funding Lender of a lease be a representation of any kind with regard to the lease or
its enforceability, or the financial capacity of any tenant or guarantor.
(b) . Borrower shall perform all obligations required to be
performed by it as landlord under any lease affecting any part of the Project or any space within the
Improvements.
(c) Leasing and Marketing Agreements. Except as may be contemplated in the
Funding Lender enter into any leasing or marketing agreement and Funding Lender reserves the right
to approve the qualifications of any marketing or leasing agent.
Section 5.29 Project Agreements and Licenses. To the extent not heretofore delivered to
Funding Lender, Borrower will furnish to Funding Lender, as soon as available, true and correct
copies of all Project Agreements and Licenses and the Plans and Specifications, together with
assignments thereof to Funding Lender and consents to such assignments where required by Funding
Lender, all in form and substance acceptable to Funding Lender. Neither Borrower nor General
Partner has assigned or granted, or will assign or grant, a security interest in any of the Project
Agreements and Licenses, other than to Funding Lender.
Section 5.30 Payment of Debt Payments. In addition to its obligations under the
Borrower Notes, Borrower will (i) duly and punctually pay or cause to be paid all principal of and
interest on any Debt of Borrower as and when the same become due on or before the due date;
(ii) comply with and perform all conditions, terms and obligations of other instruments or agreements
evidencing or securing such Debt; (iii) promptly inform Funding Lender of any default, or
anticipated default, under any such note, agreement, instrument; and (iv) forward to Funding Lender
a copy of any notice of default or notice of any event that might result in default under any such note,
agreement, instrument, including Liens encumbering the Project, or any portion thereof, which have
been subordinated to the Security Instrument (regardless of whether or not permitted under this
Borrower Loan Agreement).
Section 5.31 ERISA. Borrower will comply, and will cause each of its ERISA Affiliates
to comply, in all respects with the provisions of ERISA.
Section 5.32 Patriot Act Compliance. Borrower shall use its good faith and
commercially reasonable efforts to comply with the Patriot Act and all applicable requirements of
Governmental Authorities having jurisdiction over Borrower and/or the Project, including those
compliance with the Patriot Act and all applicable requirements of Governmental Authorities having
jurisdiction over Borrower and/or the Project, including those relating to money laundering and
terrorism. In the event that Borrower fails to comply with the Patriot Act or any such requirements of
Governmental Authorities, then Funding Lender may, at its option, cause Borrower to comply
therewith and any and all costs and expenses incurred by Funding Lender in connection therewith
shall be secured by the Security Instrument and shall be immediately due and payable.
Borrower covenants that it shall comply with all Legal Requirements and internal
requirements of Funding Lender relating to money laundering, anti-terrorism, trade embargos and
economic sanctions, now or hereafter in effect. Without limiting the foregoing, Borrower shall not
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warranties in Section 4.1.48 and this Section 5.32 become untrue or inaccurate at any time during the
term of the Funding Loan.
representations, warranties and obligations under Section 4.1.48 and this Section 5.32 remain true
and correct and have not been breached, and in addition, upon request of any Beneficiary Party,
Borrower covenants to provide all information required to satisfy obligations under all Legal
Requirements and internal requirements of Funding Lender relating to money laundering, anti-
terrorism, trade embargos and economic sanctions, now or hereafter in effect, during the term of the
Funding Loan. Borrower shall immediately notify the Funding Lender in writing of (a) Borr
actual knowledge that any of such representations, warranties or covenants are no longer true and
have been breached, (b) Borrower has a reasonable basis to believe that they may no longer be true
and have been breached or (c) Borrower becomes the subject of an investigation by Governmental
Authorities related to money laundering, anti-terrorism, trade embargos and economic
sanctions. Borrower shall also reimburse Funding Lender for any expense incurred by Funding
Lender in evaluating the effect of an investigation by Governmental Authorities on the Funding
license from Governmental Authorities as may be necessary for Funding Lender to enforce its rights
under the Funding Loan Documents, and in complying with all Legal Requirements and internal
requirements of Funding Lender relating to money laundering, anti-terrorism, trade embargos and
economic sanctions, now or hereafter in effect applicable to Funding Lender as a result of the
existence of such an event and for any penalties or fines imposed upon Funding Lender as a result
thereof.
Section 5.33 Funds from Equity Investor. Borrower shall cause the Equity Investor to
fund all installments of the Equity Contributions in the amounts and at the times subject and
according to the terms of the Partnership Agreement.
Section 5.34 Tax Covenants. The Borrower further represents, warrants and covenants as
follows:
(a) General. The Borrower shall not take any action or omit to take any action
which, if taken or omitted, respectively, would adversely affect the exclusion of interest on the Tax-
Exempt Governmental Lender Notes from gross income (as defined in Section 61 of the Code), for
federal income tax purposes and, if it should take or permit any such action, the Borrower will take
all lawful actions that it can take to rescind such action promptly upon having knowledge thereof and
that the Borrower will take such action or actions, including amendment of this Borrower Loan
Agreement, the Security Instrument and the Regulatory Agreement, as may be necessary, in the
opinion of Tax Counsel, to comply fully with all applicable rules, rulings, policies, procedures,
regulations or other official statements promulgated or proposed by the Department of the Treasury
or the Internal Revenue Service applicable to the Tax-Exempt Governmental Lender Notes, the
Funding Loan or affecting the Project. Capitalized terms used in this Section 5.34 shall have the
respective meanings assigned to them in the Regulatory Agreement or, if not defined therein, in the
Funding Loan Agreement. With the intent not to limit the generality of the foregoing, the Borrower
covenants and agrees that, prior to the final maturity of the Tax-Exempt Governmental Lender Notes,
unless it has received and filed with the Governmental Lender and the Funding Lender a Tax
Counsel No Adverse Effect Opinion, as such term is defined in the Funding Loan Agreement (other
than with respect to interest on any portion of the Tax-Exempt Governmental Lender Notes for a
period during which such portion of the Tax-Exempt Governmental Lender Notes are held by a
Tax-Exempt Governmental
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rms are used in Section 147(a) of the Code), the
Borrower will comply with this Section 5.34.
(b) Use of Proceeds. The use of the net proceeds of the Funding Loan at all times
will satisfy the following requirements:
(i) Limitation on Net Proceeds. At least 95% of the net proceeds of the
portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes (within the
meaning of the Code) actually expended by Borrower shall be used to pay Qualified Project Costs
meaning of Sections 1.103-8(a)(3) and 1.103-8(b)(4)(iii) of the Regulations).
(ii) Limit on Costs of Funding. The proceeds of the Funding Loan will be
expended by Borrower for the purposes set forth in this Borrower Loan Agreement and in the
Funding Loan Agreement and no portion thereof in excess of two percent of the proceeds of the
portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Note, within the
meaning of Section 147(g) of the Code, will be expended to pay Costs of Funding.
(iii) Prohibited Facilities. The Borrower shall not use or permit the use of
any proceeds of the portion of the Funding Loan evidenced by the Tax-Exempt Governmental
Lender Notes or any income from the investment thereof to provide any airplane, skybox, or other
private luxury box, health club facility, any facility primarily used for gambling, or any store the
principal business of which is the sale of alcoholic beverages for consumption off premises.
(iv) Limitation on Land. Less than 25 percent of the net proceeds of the
portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes actually
expended by Borrower will be used, directly or indirectly, for the acquisition of land or an interest
therein, nor will any portion of the net proceeds of the portion of the Funding Loan evidenced by the
Tax-Exempt Governmental Lender Notes be used, directly or indirectly, for the acquisition of land or
an interest therein to be used for farming purposes.
(v) Limitation on Existing Facilities. No portion of the net proceeds of
the portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes will be
used for the acquisition of any existing property or an interest unless (A) the first use of such
property is pursuant to such acquisition or (B) the rehabilitation expenditures with respect to any
building and the equipment therefor equal or exceed 15 percent of the cost of acquiring such building
financed with the proceeds of the portion of the Funding Loan evidenced by the Tax-Exempt
Governmental Lender Notes (with respect to structures other than buildings, this clause shall be
applied by substituting 100 percent for 15 percent). For purposes of the preceding sentence, the term
147(d)(3) of the Code.
(vi) Accuracy of Information. The information furnished by the Borrower
and used by the Governmental Lender in preparing its certifications with respect to Section 148 of
149(e) of the Code is
accurate and complete as of the date of origination of the Funding Loan.
(vii) Limitation of Project Expenditures. The acquisition and construction
of the Project were not commenced (within the meaning of Section 144(a) of the Code) prior to the
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60th day preceding the adoption of the resolution of the Governmental Lender with respect to the
Project on July 17, 2018, and no obligation for which reimbursement will be sought from proceeds of
the portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes relating
to the acquisition or construction of the Project was paid or incurred prior to 60 days prior to such
surveying, soil testing, reimbursement bond issuance and similar costs incurred prior to the
commencement of the acquisition and construction of the Project.
(viii) Qualified Costs. The Borrower hereby represents, covenants and
warrants that the proceeds of the portion of the Funding Loan evidenced by the Tax-Exempt
Governmental Lender Notes shall be used or deemed used by Borrower exclusively to pay Qualified
Project Costs.
(c) Limitation on Maturity. The average maturity of the Tax-Exempt
Governmental Lender Notes does not exceed 120 percent of the average reasonably expected
economic life of the Project to be financed by the Funding Loan, weighted in proportion to the
respective cost of each item comprising the property the cost of which has been or will be financed,
directly or indirectly, with the net proceeds of the portion of the Funding Loan evidenced by the Tax-
Exempt Governmental Lender Notes. For purposes of the preceding sentence, the reasonably
expected economic life of property shall be determined as of the later of (A) the Closing Date for the
Funding Loan or (B) the date on which such property is placed in service (or expected to be placed in
service). In addition, land shall not be taken into account in determining the reasonably expected
economic life of property.
(d) No Arbitrage. The Borrower shall not take any action or omit to take any
action with respect to the Gross Proceeds of the Funding Loan or of any amounts expected to be used
to pay the principal thereof or the interest thereon which, if taken or omitted, respectively, would
cause the Tax-Exempt Governmental Lender Notes t
meaning of Section 148 of the Code. Except as provided in the Funding Loan Agreement and this
Borrower Loan Agreement, the Borrower shall not pledge or otherwise encumber, or permit the
pledge or encumbrance of, any money, investment, or investment property as security for payment of
any amounts due under this Borrower Loan Agreement or the Borrower Notes relating to the portion
of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes, shall not establish
any segregated reserve or similar fund for such purpose and shall not prepay any such amounts in
advance of the redemption date of an equal principal amount of the Funding Loan, unless the
Borrower has obtained in each case a Tax Counsel No Adverse Effect Opinion with respect to such
action, a copy of which shall be provided to the Governmental Lender and the Funding Lender. The
Borrower shall not, at any time prior to the final maturity of the Funding Loan, invest or cause any
Gross Proceeds to be invested in any investment (or to use Gross Proceeds to replace money so
invested), if, as a result of such investment the Yield of all investments acquired with Gross Proceeds
(or with money replaced thereby) on or prior to the date of such investment exceeds the Yield of the
portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes to the
Maturity Date, except as permitted by Section 148 of the Code and Regulations thereunder or as
provided in the Regulatory Agreement. The Borrower further covenants and agrees that it will
comply with all applicable requirements of said Section 148 and the rules and Regulations thereunder
relating to the portion of the Funding Loan evidenced by the Tax-Exempt Governmental Lender
Notes and the interest thereon, including the employment of a Rebate Analyst acceptable to the
Governmental Lender and Funding Lender for the calculation of rebatable amounts to the United
States Treasury Department. The Borrower agrees that it will cause the Rebate Analyst to calculate
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the rebatable amounts not later than forty-five days after the fifth anniversary of the Closing Date and
each five years thereafter, and not later than forty-five days after the final Computation Date, and
agrees that the Borrower will pay all costs associated therewith. The Borrower agrees to provide
evidence of the employment of the Rebate Analyst satisfactory to the Governmental Lender and
Funding Lender and will provide to the Governmental Lender copies of all rebate calculations
obtained from the Rebate Analyst.
(e) No Federal Guarantee. Except to the extent permitted by Section 149(b) of
the Code and the Regulations and rulings thereunder, the Borrower shall not take or omit to take any
action which would cause the Tax-Exempt Gover
within the meaning of Section 149(b) of the Code and the Regulations and rulings thereunder.
(f) Representations. The Borrower has supplied or caused to be supplied to Tax
Counsel all documents, instruments and written information requested by Tax Counsel, and all such
documents, instruments and written information supplied by or on behalf of the Borrower at the
request of Tax Counsel, which have been reasonably relied upon by Tax Counsel in rendering its
opinion with respect to the exclusion from gross income of the interest on the Tax-Exempt
Governmental Lender Notes for federal income tax purposes, are true and correct in all material
respects, do not contain any untrue statement of a material fact and do not omit to state any material
fact necessary to be stated therein in order to make the information provided therein, in light of the
circumstances under which such information was provided, not misleading, and the Borrower is not
aware of any other pertinent information which Tax Counsel has not requested.
(g) Qualified Residential Rental Project. The Borrower hereby covenants and
of Section 142(d) of the Code, on a continuous basis during the longer of the Qualified Project Period
(as defined in the Regulatory Agreement) or any period during which any portion of the Tax-Exempt
Governmental Lender Notes remain outstanding, to the end that the interest on the Tax-Exempt
Governmental Lender Notes shall be excluded from gross income for federal income tax purposes.
The Borrower hereby covenants and agrees, continuously during the Qualified Project Period, to
comply with all the provisions of the Regulatory Agreement.
(h) Information Reporting Requirements. The Borrower will comply with the
information reporting requirements of Section 149(e)(2) of the Code requiring certain information
regarding the Tax-Exempt Governmental Lender Notes to be filed with the Internal Revenue Service
within prescribed time limits.
(i) Funding Loan Not a Hedge Bond. The Borrower covenants and agrees that
not more than 50% of the proceeds of the portion of the Funding Loan evidenced by the Tax-Exempt
Governmental Lender Notes will be invested in Nonpurpose Investments having a substantially
guaranteed Yield for four years or more within the meaning of Section 149(f)(3)(A)(ii) of the Code,
and the Borrower reasonably expects that at least 85% of the spendable proceeds of the portion of the
Funding Loan evidenced by the Tax-Exempt Governmental Lender Notes will be used to carry out
the governmental purposes of the Funding Loan within the three-year period beginning on the
Closing Date.
(j) Termination of Restrictions. Although the parties hereto recognize that,
subject to the provisions of the Regulatory Agreement, the provisions of this Borrower Loan
Agreement shall terminate in accordance with Section 10.14 hereof, the parties hereto recognize that
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pursuant to the Regulatory Agreement, certain requirements, including the requirements incorporated
by reference in this Section, may continue in effect beyond the term hereof.
(k) Public Approval. The Borrower covenants and agrees that the proceeds of the
Funding Loan will not be used by Borrower in a manner that deviates in any substantial degree from
the Project described in the written notice of a public hearing regarding the Funding Loan.
(l) 40/60 Test Election. The Borrower and the Governmental Lender hereby
elect to apply the requirements of Section 142(d)(1)(B) to the Project. The Borrower hereby
represents, covenants and agrees, continuously during the Qualified Project Period, to comply with
all the provisions of the Regulatory Agreement.
(m) Modification of Tax Covenants. Subsequent to the origination of the Funding
Loan and prior to its payment in full (or provision for the payment thereof having been made in
accordance with the provisions of the Funding Loan Agreement), this Section 5.34 hereof may not be
amended, changed, modified, altered or terminated except as permitted herein and by the Funding
Loan Agreement and with the Written Consent of the Governmental Lender and the Funding Lender.
Anything contained in this Borrower Loan Agreement or the Funding Loan Agreement to the
contrary notwithstanding, the Governmental Lender, the Funding Lender and the Borrower hereby
agree to amend this Borrower Loan Agreement and, if appropriate, the Funding Loan Agreement and
the Regulatory Agreement, to the extent required, in the opinion of Tax Counsel, in order for interest
on the Tax-Exempt Governmental Lender Notes to remain excludable from gross income for federal
income tax purposes. The party requesting such amendment, which may include the Funding
Lender, shall notify the other parties to this Borrower Loan Agreement of the proposed amendment
and send a copy of such requested amendment to Tax Counsel. After review of such proposed
amendment, Tax Counsel shall render to the Funding Lender and the Governmental Lender an
opinion as to the effect of such proposed amendment upon the includability of interest on the Tax-
Exempt Governmental Lender Notes in the gross income of the recipient thereof for federal income
tax purposes. The Borrower shall pay all necessary fees and expenses incurred with respect to such
amendment. The Borrower, the Governmental Lender and, where applicable, the Funding Lender
per written instructions from the Governmental Lender shall execute, deliver and, if applicable, the
Borrower shall file of record, any and all documents and instruments, including without limitation, an
amendment to the Regulatory Agreement, with a file-stamped copy to the Funding Lender, necessary
to effectuate the intent of this Section 5.34, and the Borrower and the Governmental Lender hereby
appoint the Funding Lender as their true and lawful attorney-in-fact to execute, deliver and, if
applicable, file of record on behalf of the Borrower or the Governmental Lender, as is applicable, any
such document or instrument (in such form as may be approved by and upon instruction of Tax
Counsel) if either the Borrower or the Governmental Lender defaults in the performance of its
obligation under this Section 5.34; provided, however, that the Funding Lender shall take no action
under this Section 5.34 without first notifying the Borrower or the Governmental Lender, as is
applicable, of its intention to take such action and providing the Borrower or the Governmental
Lender, as is applicable, a reasonable opportunity to comply with the requirements of this
Section 5.34.
The Borrower irrevocably authorizes and directs the Funding Lender and any other agent
designated by the Governmental Lender to make payment of such amounts from funds of the
Borrower, if any, held by the Funding Lender, or any agent of the Governmental Lender or the
Funding Lender. The Borrower further covenants and agrees that, pursuant to the requirements of
Treasury Regulation Section 1.148-1(b), it (or any related person contemplated by such regulations)
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will not purchase interests in the portion of the Funding Loan evidenced by the Tax-Exempt
Governmental Lender Notes or the Tax-Exempt Governmental Lender Notes.
Section 5.35 Payment of Rebate.
(a) Arbitrage Rebate. The Borrower agrees to take all steps necessary to
compute and pay any rebatable arbitrage relating to the portion of the Funding Loan evidenced by the
Tax-Exempt Governmental Lender Notes or the Tax-Exempt Governmental Lender Notes in
accordance with Section 148(f) of the Code including:
(i) Delivery of Documents and Money on Computation Dates. The
Borrower will deliver to the Fiscal Agent, with a copy to the Funding Lender, within 55 days after
each Computation Date:
(A) with a copy to the Governmental Lender, a statement, signed
by the Borrower, stating the Rebate Amount as of such Computation Date;
(B) if such Computation Date is an Installment Computation Date,
an amount that, together with any amount then held for the credit of the Rebate Fund, is equal to at
e to the United States (as that term is used in Section 1.148-3(f)(1) of the
Regulations), or (2) if such Computation Date is the final Computation Date, an amount that,
together with any amount then held for the credit of the Rebate Fund, is equal to the Rebate Amount
that term is used in Section 1.148-3(f)(1) of the Regulations); and
(C) with a copy to the Governmental Lender, an Internal Revenue
Service Form 8038-T properly signed and completed as of such Computation Date.
(ii) Correction of Underpayments. If the Borrower shall discover or be
notified as of any date that any payment paid to the United States Treasury pursuant to this
Section 5.35 of an amount described in Section 5.35(a)(i)(A) or (B) above shall have failed to satisfy
any requirement of Section 1.148-3 of the Regulations (whether or not such failure shall be due to
any default by the Borrower, the Governmental Lender or the Funding Lender), the Borrower shall
(1) pay to the Fiscal Agent (for deposit to the Rebate Fund) and cause the Fiscal Agent to pay to the
United States Treasury from the Rebate Fund the underpayment of the Rebate Amount, together with
any penalty and/or interest due, as specified in Section 1.148-3(h) of the Regulations, within
175 days after any discovery or notice and (2) deliver to the Fiscal Agent an Internal Revenue
Service Form 8038-T completed as of such date. If such underpayment of the Rebate Amount,
together with any penalty and/or interest due, is not paid to the United States Treasury in the amount
and manner and by the time specified in the Regulations, the Borrower shall take such steps as are
necessary to prevent the Tax-Exempt Governmental Lender Notes from becoming arbitrage bonds
within the meaning of Section 148 of the Code.
(iii) Records. The Borrower shall retain all of its accounting records
relating to the funds established under this Borrower Loan Agreement and all calculations made in
preparing the statements described in this Section 5.35 for at least six years after the later of the final
maturity of the Governmental Lender Notes or the date the Funding Loan is retired in full.
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(iv) Costs. The Borrower agrees to pay all of the fees and expenses of a
nationally recognized Tax Counsel, the Rebate Analyst a certified public accountant and any other
necessary consultant employed by the Borrower or the Funding Lender in connection with computing
the Rebate Amount.
(v) No Diversion of Rebatable Arbitrage. The Borrower will not
indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing
requirements to any person other than the federal government by entering into any investment
arrangement with respect to the Gross Proceeds of the portion of the Funding Loan evidenced by the
Tax-Exempt Governmental Lender Notes which is not purchased at Fair Market Value or includes
terms that the Borrower would not have included if such portion of the Funding Loan were not
subject to Section 148(f) of the Code.
(vi) Modification of Requirements. If at any time during the term of this
Borrower Loan Agreement, the Governmental Lender, the Funding Lender or the Borrower desires to
take any action which would otherwise be prohibited by the terms of this Section 5.35, such Person
shall be permitted to take such action if it shall first obtain and provide to the other Persons named
herein a Tax Counsel No Adverse Effect Opinion (as defined in the Funding Loan Agreement) with
respect to such action.
(b) Rebate Fund. The Borrower acknowledges that the Fiscal Agent shall
Agreement and deposit or transfer to the credit of the Rebate Fund each amount delivered to the
Fiscal Agent by the Borrower for deposit thereto and each amount directed by the Borrower to be
transferred thereto, as further described in Section 7.8 of the Funding Loan Agreement.
Section 5.36 Covenants under Funding Loan Agreement. The Borrower will fully and
faithfully perform all the duties and obligations which the Governmental Lender has covenanted and
agreed in the Funding Loan Agreement to cause the Borrower to perform and any duties and
obligations which the Borrower is required in the Funding Loan Agreement to perform. The
foregoing will not apply to any duty or undertaking of the Governmental Lender that by its nature
cannot be delegated or assigned.
Section 5.37 Continuing Disclosure Agreement. The Borrower and the Funding Lender
shall enter into the Continuing Disclosure Agreement to provide for the continuing disclosure of
information about the Funding Loan, the Borrower and other matters as specifically provided for in
such agreement.
ARTICLE VI
NEGATIVE COVENANTS
Borrower hereby covenants and agrees as follows, which covenants shall remain in effect so
long as any Borrower Payment Obligation or other obligation of Borrower under any of the other
Borrower Loan Documents or the Funding Loan Documents remains outstanding or unperformed.
Borrower covenants and agrees that it will not, directly or indirectly:
Section 6.1 Management Agreement
prior Written Consent, enter into the Management Agreement, and thereafter the Borrower shall not,
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e unreasonably
withheld) and subject to the Regulatory Agreement: (i) surrender, terminate or cancel the
Management Agreement or otherwise replace the Manager or enter into any other management
agreement; (ii) reduce or consent to the reduction of the term of the Management Agreement;
(iii) increase or consent to the increase of the amount of any charges under the Management
Agreement; (iv) otherwise modify, change, supplement, alter or amend in any material respect, or
waive or release in any material respect any of its rights and remedies under, the Management
Agreement; or (v) suffer or permit the occurrence and continuance of a default beyond any applicable
cure period under the Management Agreement (or any successor management agreement) if such
default permits the Manager to terminate the Management Agreement (or such successor
management agreement).
Section 6.2 Dissolution. Dissolve or liquidate, in whole or in part, merge with or
consolidate into another Person.
Section 6.3 Change in Business or Operation of Property. Enter into any line of
business other than the ownership and operation of the Project, or make any material change in the
scope or nature of its business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business and activities incidental or related thereto
or otherwise cease to operate the Project as a multi-family property or terminate such business for
any reason whatsoever (other than temporary cessation in connection with construction or
rehabilitation, as appropriate, of the Project).
Section 6.4 Debt Cancellation. Cancel or otherwise forgive or release any claim or debt
owed to the Borrower by a Person, except for adequate consideration or in the ordinary course of the
reasonable judgment.
Section 6.5 Assets. Purchase or own any real property or personal property incidental
thereto other than the Project.
Section 6.6 Transfers. Make, suffer or permit the occurrence of any Transfer other than
a transfer permitted under the Security Instrument and Section 10 of the Regulatory Agreement, nor
transfer any material License required for the operation of the Project.
Section 6.7 Debt. Other than as expressly approved in writing by the Funding Lender,
create, incur or assume any indebtedness for borrowed money (including subordinate debt) whether
unsecured or secured by all or any portion of the Project or interest therein or in the Borrower or any
partner thereof (including subordinate debt) other than (i) the Borrower Payment Obligations, (ii) the
Subordinate Debt, (iii) secured indebtedness incurred pursuant to or permitted by the Borrower Loan
Documents and the Funding Loan Documents, (iv) trade payables incurred in the ordinary course of
business and (v) deferred developer fees.
Section 6.8 Assignment of Rights. Without
Loan Document in contravention of any Borrower Loan Document or Funding Loan Document.
Section 6.9 Principal Place of Business. Change its principal place of business without
providing 30
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Section 6.10 Partnership Agreement
Consent (which consent shall not be unreasonably withheld) surrender, terminate, cancel, modify,
change, supplement, alter or amend in any material respect, or waive or release in any material
respect (except as allowed by the Security Instrument), any of its rights or remedies under the
Partnership Agreement; provided, however, the consent of Funding Lender is not required for an
partnership interests of Borrower as defined in and permitted by the Security Instrument.
Section 6.11 ERISA. Maintain, sponsor, contribute to or become obligated to contribute
to, or suffer or permit any ERISA Affiliate of the Borrower to, maintain, sponsor, contribute to or
become obligated to contribute to, any Plan, or permit the assets of the Bor
Section 6.12 No Hedging Arrangements. Without the prior Written Consent of the
Funding Lender or unless otherwise required by this Borrower Loan Agreement, the Borrower will
not enter into or guarantee, provide security for or otherwise undertake any form of contractual
obligation with respect to any interest rate swap, interest rate cap or other arrangement that has the
effect of an interest rate swap or interest rate cap or that otherwise (directly or indirectly, derivatively
or synthetically) hedges interest rate risk associated with being a debtor of variable rate debt or any
agreement or other arrangement to enter into any of the above on a future date or after the occurrence
of one or more events in the future.
Section 6.13 Loans and Investments; Distributions; Related Party Payments.
(a) Without the prior Written Consent of Funding Lender in each instance,
Borrower shall not (i) lend money, make investments, or extend credit, other than in the ordinary
course of its business as presently conducted; or (ii) repurchase, redeem or otherwise acquire any
interest in Borrower, any Borrower Affiliate or any other Person owning an interest, directly or
indirectly, in Borrower, or make any distribution, in cash or in kind, in respect of interests in
Borrower, any Borrower Affiliate or any other Person owning an interest, directly or indirectly, in
Borrower (except to the extent permitted by the Security Instrument and subject to the limitations set
forth in Section 5.27 hereof).
(b) Disbursements for fees and expenses of any Borrower Affiliate and developer
fees (however characterized) will only be paid to the extent that such fee or expense bears a
proportionate relationship to the percentage of completion of the construction or rehabilitation, as the
case may be, of the Improvements, as determined by the Construction Consultant, and only after
deducting the applicable Retainage. Except as otherwise permitted hereunder or by the Funding
Lender
prior to the Conversion Date other than in accordance with the Approved Developer Fee Schedule.
Section 6.14 . Without the prior Written
Consent of Funding Lender in each instance, except as provided herein or in the Construction
Funding Agreement, Borrower shall not enter into or consent to any amendment, termination,
modification, or other alteration of any of the Related Documents or any of
Partnership Agreement, which is covered by Section 6.10), or any assignment, transfer, pledge or
hypothecation of any of its rights thereunder, if any.
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Section 6.15 Personal Property. Borrower shall not install materials, personal property,
equipment or fixtures subject to any security agreement or other agreement or contract wherein the
right is reserved to any Person other than Borrower to remove or repossess any such materials,
equipment or fixtures, or whereby title to any of the same is not completely vested in Borrower at the
time of installation, wi
Section 6.15 shall not apply to laundry equipment or other equipment that is owned by a third-party
vendor and commercial tenants.
Section 6.16 Fiscal Yearsent, which shall not be
unreasonably withheld, neither Borrower nor General Partner shall change the times of
commencement or termination of its fiscal year or other accounting periods, or change its methods of
accounting, other than to conform to GAAP.
Section 6.17 Publicity. Neither Borrower nor General Partner shall issue any publicity
release or other communication to any print, broadcast or on-line media, post any sign or in any other
way identify Funding Lender or any of its Affiliates as the source of the financing provided for
herein, without the prior written approval of Funding Lender in each instance (provided that nothing
herein shall prevent Borrower or General Partner from identifying Funding Lender or its Affiliates as
the source of such financing to the extent that Borrower or General Partner are required to do so by
disclosure requirements applicable to publicly held companies). With the exception of Equity
Investor signage posted on the Project, Borrower and General Partner agree that no sign shall be
posted on the Project in connection with the construction or rehabilitation of the Improvements
unless such sign identifies Citigroup and its affiliates as the source of the financing provided for
herein or Funding Lender consents to not being identified on any such sign.
Section 6.18 Subordinate Loan Documents
consent, Borrower will not surrender, terminate, cancel, modify, change, supplement, alter, amend,
waive, release, assign, transfer, pledge or hypothecate any of its rights or remedies under the
Subordinate Loan Documents.
ARTICLE VII
RESERVED
ARTICLE VIII
DEFAULTS
Section 8.1 Events of Default
(a) failure by the Borrower to pay any Borrower Loan Payment in the manner
and on the date such payment is due in accordance with the terms and provisions of the Borrower
Notes, or the failure by the Borrower to pay any Additional Borrower Payment on the date such
payment is due in accordance with the terms and provisions of the Borrower Notes, the Security
Instrument, this Borrower Loan Agreement or any other Borrower Loan Document;
(b) failure by or on behalf of the Borrower to pay when due any amount (other
than as provided in subsection (a) above or elsewhere in this Section 8.1) required to be paid by the
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Borrower under this Borrower Loan Agreement, the Borrower Notes, the Security Instrument or any
of the other Borrower Loan Documents or Funding Loan Documents, including a failure to repay any
amounts that have been previously paid but are recovered, attached or enjoined pursuant to any
insolvency, receivership, liquidation or similar proceedings, which default remains uncured for a
period of five (5) days after Written Notice thereof shall have been given to the Borrower;
(c) an Event of Default, as defined in the Borrower Notes, the Security
not defined in any other Borrower Loan Document, any default or breach by the Borrower or any
Guarantor of its obligations, covenants, representations or warranties under such Borrower Loan
Document occurs and any applicable notice and/or cure period has expired);
(d) any representation or warranty made by any of the Borrower, the Guarantor
or the General Partner in any Borrower Loan Document or Funding Loan Document to which it is a
party, or in any report, certificate, financial statement or other instrument, agreement or document
furnished by the Borrower, the Guarantor or the General Partner in connection with any Borrower
Loan Document or Funding Loan Document, shall be false or misleading in any material respect as
of the Closing Date;
(e) the Borrower shall make a general assignment for the benefit of creditors, or
shall generally not be paying its debts as they become due;
(f) the Borrower Controlling Entity shall make a general assignment for the
benefit of creditors, shall generally not be paying its debts as they become due, or an Act of
Bankruptcy with respect to the Borrower Controlling Entity shall occur, unless in all cases the
Borrower Controlling Entity is replaced with a substitute Borrower Controlling Entity that satisfies
the requirements of Section 21 of the Security Instrument; which, in the case of a nonprofit Borrower
Controlling Entity, may be replaced within sixty (60) days of such event with another nonprofit
Borrower Controlling Entity acceptable to the Funding Lender, in which case no Event of Default
shall be deemed to have occurred;
(g) any portion of Borrower Deferred Equity to be made by Equity Investor and
required for (i) completion of the construction or rehabilitation, as the case may be, of the
Improvements, (ii) the satisfaction of the Conditions of Conversion or (iii) the operation of the
Improvements, is not received in accordance with the Partnership Agreement (and subject to the
terms and conditions as set forth therein) after the expiration of all applicable notice and cure
periods;
(h) the failure by Borrower or any ERISA Affiliate of Borrower to comply in all
respects with ERISA, or the occurrence of any other event (with respect to the failure of Borrower or
any ERISA Affiliate to pay any amount required to be paid under ERISA or with respect to the
termination of, or withdrawal of Borrower or any ERISA Affiliate from, any employee benefit or
welfare plan subject to ERISA) the effect of which is to impose upon Borrower (after giving effect to
the tax consequences thereof) for the payment of any amount in excess of Fifty Thousand Dollars
($50,000);
(i) a Bankruptcy Event shall occur with respect to Borrower, any General Partner
or Guarantor, or there shall be a change in the assets, liabilities or financial position of any such
s
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obligations under this Borrower Loan Agreement, any other Borrower Loan Document or any
Related Document, provided that any such Bankruptcy Event with respect to a Guarantor shall not
constitute an Event of Default: (i) if such Bankruptcy Event occurs on or after the date upon which
the Guaranty terminates in accordance with its terms (or the date upon which all of the Guaranties
have terminated in accordance with their terms, if more than one Guaranty was executed by such
Guarantor), or (ii) if such Bankruptcy Event occurs prior to the date upon which the Guaranty
terminates in accordance with its terms (or the date upon which all of the Guaranties have terminated
in accordance with their terms, if more than one Guaranty was executed by such Guarantor) and the
credit standards for principals and acceptable to the Funding Lender in its sole and absolute
discretion within thirty (30) days after notice thereof from the Funding Lender, and provided further
that any such Bankruptcy Event with respect to the Managing General Partner shall not constitute an
Event of Default if the Managing General Partner is replaced with a substitute non-profit managing
general partner that satisfies the requirements of Section 21 of the Security Instrument and is
acceptable to Funding Lender in its sole and absolute discretion within thirty (30) days after notice
thereof from Funding Lender;
(j) all or any part of the property of Borrower is attached, levied upon or
otherwise seized by legal process, and such attachment, levy or seizure is not quashed, stayed or
released: (i) prior to completion of the construction or rehabilitation, as the case may be, of the
Improvements, within ten (10) days of the date thereof or (ii) after completion of the construction or
rehabilitation, as the case may be, of the Improvements, within thirty (30) days of the date thereof;
(k) subject to Section 10.16 hereof, Borrower fails to pay when due any monetary
obligation (other than pursuant to this Borrower Loan Agreement) to any Person in excess of
$100,000, and such failure continues beyond the expiration of any applicable cure or grace periods;
(l) any material litigation or proceeding is commenced before any Governmental
Authority against or affecting Borrower, any General Partner or Guarantor, or property of Borrower,
any General Partner or Guarantor, or any part thereof, and such litigation or proceeding is not
defended diligently and in good faith by Borrower, any General Partner or Guarantor, as applicable,
provided that any such material litigation or proceeding against a Guarantor shall not constitute an
Event of Default: (i) if such material litigation is commenced on or after the date upon which the
Guaranty terminates in accordance with its terms (or the date upon which all of the Guaranties have
terminated in accordance with their terms, if more than one Guaranty was executed by such
Guarantor), or (ii) if such material litigation or proceeding is commenced prior to the date upon
which the Guaranty terminates in accordance with its terms (or the date upon which all of the
Guaranties have terminated in accordance with their terms, if more than one Guaranty was executed
by such Guarantor) and the Borrower replaces such Guarantor with a person or entity satisfying the
its sole and absolute discretion within thirty (30) days after notice thereof from the Funding Lender,
and provided further that any such material litigation or proceeding against the Managing General
Partner shall not constitute an Event of Default if the Managing General Partner is replaced with a
substitute non-profit managing general partner that satisfies the requirements of Section 21 of the
Security Instrument and is acceptable to Funding Lender in its sole and absolute discretion within
thirty (30) days after notice thereof from Funding Lender;
(m) a final judgment or decree for monetary damages in excess of $50,000 or a
monetary fine or penalty (not subject to appeal or as to which the time for appeal has expired) is
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entered against Borrower, any General Partner or Guarantor by any Governmental Authority, and
such judgment, decree, fine or penalty is not paid and discharged or stayed (i) prior to completion of
the construction or rehabilitation, as the case may be, of the Improvements, within ten (10) days after
entry thereof or (ii) after completion of the construction or rehabilitation, as the case may be, of the
Improvements, within thirty (30) days after entry thereof (or such longer period as may be permitted
for payment by the terms of such judgment, fine or penalty) , provided that any such judgment,
decree, fine or penalty against a Guarantor shall not constitute an Event of Default: (i) if such
judgment, decree, fine or penalty is entered on or after the date upon which the Guaranty terminates
in accordance with its terms (or the date upon which all of the Guaranties have terminated in
accordance with their terms, if more than one Guaranty was executed by such Guarantor), or (ii) if
such judgment, decree, fine or penalty is entered prior to the date upon which the Guaranty
terminates in accordance with its terms (or the date upon which all of the Guaranties have terminated
in accordance with their terms, if more than one Guaranty was executed by such Guarantor) and the
credit standards for principals and acceptable to the Funding Lender in its sole and absolute
discretion within thirty (30) days after notice thereof from the Funding Lender, and provided further
that any such judgment, decree, fine or penalty against the managing general partner shall not
constitute an Event of Default if the managing general partner is replaced with a substitute non-profit
managing general partner that satisfies the requirements of Section 21 of the Security Instrument and
is acceptable to Funding Lender in its sole and absolute discretion within thirty (30) days after notice
thereof from Funding Lender;
(n) a final, un-appealable and uninsured money judgment or judgments, in favor
of any Person other than a Governmental Authority, in the aggregate sum of $50,000 or more shall be
rendered against Borrower, any General Partner or Guarantor, or against any of their respective
assets, that is not paid, superseded or stayed (i) prior to completion of the construction or
rehabilitation, as the case may be, of the Improvements, within ten (10) days after entry thereof or
(ii) after completion of the construction or rehabilitation, as the case may be, of the Improvements,
within thirty (30) days after entry thereof (or such longer period as may be permitted for payment by
the terms of such judgment); or any levy of execution, writ or warrant of attachment, or similar
process, is entered or filed against Borrower, any General Partner or Guarantor, or against any of
their respective assets (that is likely to have a material adverse effect upon the ability of Borrower,
any General Partner or Guarantor to perform their respective obligations under this Borrower Loan
Agreement, any other Borrower Loan Document or any Related Document), and such judgment,
writ, warrant or process shall remain unsatisfied, unsettled, unvacated, unhanded and unstayed
(i) prior to completion of the construction or rehabilitation, as the case may be, of the Improvements,
for a period of ten (10) days or (ii) after completion of the construction or rehabilitation, as the case
may be, of the Improvements, for a period of thirty (30) days, or in any event later than five (5)
Business Days prior to the date of any proposed sale thereunder, provided that any such judgment,
levy, writ, warrant, attachment or similar process against a Guarantor shall not constitute an Event of
Default: (i) if such judgment, levy, writ, warrant, attachment or similar process is entered on or after
the date upon which the Guaranty terminates in accordance with its terms (or the date upon which all
of the Guaranties have terminated in accordance with their terms, if more than one Guaranty was
executed by such Guarantor), or (ii) if such judgment, levy, writ, warrant, attachment or similar
process is entered prior to the date upon which the Guaranty terminates in accordance with its terms
(or the date upon which all of the Guaranties have terminated in accordance with their terms, if more
than one Guaranty was executed by such Guarantor) and the Borrower replaces such Guarantor with
a p
acceptable to the Funding Lender in its sole and absolute discretion within thirty (30) days after
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notice thereof from the Funding Lender, and provided further that any such judgment, levy, writ,
warrant, attachment or similar process against the managing general partner shall not constitute an
Event of Default if the managing general partner is replaced with a substitute non-profit managing
general partner that satisfies the requirements of Section 21 of the Security Instrument and is
acceptable to Funding Lender in its sole and absolute discretion within thirty (30) days after notice
thereof from Funding Lender;
(o) the inability of Borrower to satisfy any condition for the receipt of a
Disbursement hereunder (other than an Event of Default specifically addressed in this Section 8.1)
and failure to resolve the situation to the satisfaction of Funding Lender for a period in excess of
thirty (30) days after Written Notice from Funding Lender unless (i) such inability shall have been
caused by conditions beyond the control of Borrower, including, without limitation, acts of God or
the elements, fire, strikes and disruption of shipping; (ii) Borrower shall have made adequate
provision, acceptable to Funding Lender, for the protection of materials stored on-site or off-site and
for the protection of the Improvements to the extent then constructed against deterioration and
against other loss or damage or theft; (iii) Borrower shall furnish to Funding Lender satisfactory
evidence that such cessation of construction or rehabilitation will not adversely affect or interfere
with the rights of Borrower under labor and materials contracts or subcontracts relating to the
construction or operation of the Improvements; and (iv) Borrower shall furnish to Funding Lender
satisfactory evidence that the completion of the construction or rehabilitation of the Improvements
can be accomplished by the Completion Date;
(p) the construction or rehabilitation of the Improvements is abandoned or halted
prior to completion for any period of thirty (30) consecutive days;
(q) Borrower shall fail to keep in force and effect any material permit, license,
consent or approval required under this Borrower Loan Agreement, or any Governmental Authority
with jurisdiction over the Mortgaged Property or the Project orders or requires that construction or
rehabilitation of the Improvements be stopped, in whole or in part, or that any required approval,
license or permit be withdrawn or suspended, and the order, requirement, withdrawal or suspension
remains in effect for a period of thirty (30) days;
(r) failure by the Borrower to Substantially Complete the construction or
rehabilitation, as the case may be, of the Improvements in accordance with this Borrower Loan
Agreement on or prior to the Substantial Completion Date;
(s) failure by Borrower to complete the construction or rehabilitation, as the case
may be, of the Improvements in accordance with this Borrower Loan Agreement on or prior to the
Completion Date;
(t) failure by Borrower to satisfy the Conditions to Conversion on or before the
Outside Conversion Date or the Extended Outside Conversion Date, if applicable;
(u) failure by any Subordinate Lender to disburse the proceeds of its Subordinate
Loan in approximately such amounts and at approximately such times as set forth in the Cost
Breakdown and in the Subordinate Loan Documents;
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(v)
shall occur under any of the Subordinate Loan Documents, after the expiration of all applicable
notice and cure periods; or
(w) Borrower fails to obtain all grading, foundation, building and all other
construction permits, licenses and authorizations from all applicable Governmental Authorities or
third parties necessary for the completion of the construction or rehabilitation, as the case may be, of
the Improvements, and the operation of, and access to, the Project, prior to the commencement of any
work for which such permit, license or authorization is required; or
(x) any failure by the Borrower to perform or comply with any of its obligations
under this Borrower Loan Agreement (other than those specified in this Section 8.1), as and when
required, that continues for a period of thirty (30) days after written notice of such failure by Funding
Lender or the Servicer on its behalf to the Borrower (with a copy to the limited partner of the
Borrower); provided, however, if such failure is susceptible of cure but cannot reasonably be cured
within such thirty (30) day period, and the Borrower shall have commenced to cure such failure
within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30) day period shall be extended for an additional period of time as is reasonably
necessary for the Borrower in the exercise of due diligence to cure such failure, such additional
period not to exceed sixty (60) days. However, no such notice or grace period shall apply to the
extent such failure could,
Funding Lender of a right or remedy under this Borrower Loan Agreement, result in harm to the
Funding Lender, impairment of the Borrower Notes or this Borrower Loan Agreement or any
security given under any other Borrower Loan Document.
Additionally, except with respect to any payment due on the Borrower Note and Additional
Borrower Payments, (a) any Default or Event of Default that occurs by reason of acts or omissions of
a general partner of Borrower shall be deemed cured if such general partner of Borrower is replaced,
within thirty (30) days after notice to Borrower and the Equity Investor of such Default or Event of
Default by Funding Lender, by a substitute general partner approved by Funding Lender in its sole
discretion, except if such replacement is an affiliate of the Equity Investor, no such approval by
Funding Lender shall be required, provided in either case such replacement is approved by the
Governmental Lender in the manner and to the extent provided in the Regulatory Agreement and
such substitute general partner timely cures such Default or Event of Default; and (b) any Default or
Event of Default that occurs which can be cured by replacement of any guarantor of the Borrower
Loan shall be deemed cured if such guarantor is replaced by a substitute guarantor approved by
Funding Lender in its sole discretion, which substitute guarantor executes such guaranty agreements
requested by Funding Lender within thirty (30) days after notice to Borrower of such Default or
Event of Default by Funding Lender.
Section 8.2 Remedies.
Section 8.2.1 Acceleration. Upon the occurrence of an Event of Default (other
than an Event of Default described in paragraph (e), (f) or (i) of Section 8.1) and at any time and
from time to time thereafter, as long as such Event of Default continues to exist, in addition to any
other rights or remedies available to the Governmental Lender pursuant to the Borrower Loan
Documents or at law or in equity, the Funding Lender may, take such action (whether directly or by
directing the actions of the Fiscal Agent), without notice or demand, as the Funding Lender deems
advisable to protect and enforce its rights against the Borrower and in and to the Project, including
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declaring the Borrower Payment Obligations to be immediately due and payable (including, without
limitation, the principal of, Prepayment Premium, if any, and interest on and all other amounts due
on the Borrower Notes to be immediately due and payable), without notice or demand, and apply
such payment of the Borrower Payment Obligations in any manner and in any order determined by
described in paragraph (e), (f) or (i) of Section 8.1, the Borrower Payment Obligations shall become
immediately due and payable, without notice or demand, and the Borrower hereby expressly waives
any such notice or demand, anything contained in any Borrower Loan Document to the contrary
notwithstanding. Notwithstanding anything herein to the contrary, enforcement of remedies
hereunder and under the Funding Loan Agreement shall be controlled by the Funding Lender.
Section 8.2.2 Remedies Cumulative. Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers, privileges and other remedies available to the
Funding Lender against the Borrower under the Borrower Loan Documents or at law or in equity
may be exercised by the Funding Lender or the Fiscal Agent, at any time and from time to time,
whether or not all or any of the Borrower Payment Obligations shall be declared due and payable,
and whether or not the Funding Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Borrower Loan Documents.
Any such actions taken by the Funding Lender shall be cumulative and concurrent and may be
pursued independently, singly, successively, together or otherwise, at such time and in such order as
the Funding Lender may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of the Funding Lender
permitted by law, equity or contract or as set forth in the Borrower Loan Documents. Without
limiting the generality of the foregoing, the Borrower agrees that if an Event of Default is continuing,
all Liens and other rights, remedies or privileges provided to the Funding Lender shall remain in full
force and effect until they have exhausted all of its remedies, the Security Instrument has been
foreclosed, the Project has been sold and/or otherwise realized upon satisfaction of the Borrower
Payment Obligations or the Borrower Payment Obligations has been paid in full. To the extent
permitted by applicable law, nothing contained in any Borrower Loan Document shall be construed
as requiring the Funding Lender to resort to any portion of the Project for the satisfaction of any of
the Borrower Payment Obligations in preference or priority to any other portion, and the Funding
Lender may seek satisfaction out of the entire Project or any part thereof, in its absolute discretion.
Notwithstanding any provision herein to the contrary, the Governmental Lender, the
Fiscal Agent and the Funding Lender agree that any cure of any default made or tendered by the
Equity Investor under the Borrower Loan Documents or the Funding Loan Documents shall be
deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made
or tendered by the Borrower.
Section 8.2.3 Delay. No delay or omission to exercise any remedy, right, power
accruing upon an Event of Default, or the granting of any indulgence or compromise by the Funding
Lender or the Fiscal Agent shall impair any such remedy, right or power hereunder or be construed
as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as
often as may be deemed expedient. A waiver of one Potential Default or Event of Default shall not
be construed to be a waiver of any subsequent Potential Default or Event of Default or to impair any
remedy, right or power consequent thereon. Notwithstanding any other provision of this Borrower
Loan Agreement, the Funding Lender and the Fiscal Agent reserve the right to seek a deficiency
judgment or preserve a deficiency claim, in connection with the foreclosure of the Security
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Instrument to the extent necessary to foreclose on the Project, the Rents, the funds or any other
collateral.
Section 8.2.4 Set Off; Waiver of Set Off. Upon the occurrence of an Event of
Default, Funding Lender may, at any time and from time to time, without notice to Borrower or any
other Person (any such notice being expressly waived), set off and appropriate and apply (against and
on account of any obligations and liabilities of the Borrower to the Funding Lender or the Fiscal
Agent arising under or connected with this Borrower Loan Agreement and the other Borrower Loan
Documents and the Funding Loan Documents, irrespective of whether or not the Funding Lender
shall have made any demand therefor, and although such obligations and liabilities may be
contingent or unmatured), and the Borrower hereby grants to the Funding Lender, as security for the
Borrower Payment Obligations, a security interest in, any and all deposits (general or special,
including but not limited to Debt evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Debt at any time held or owing by the Funding
Lender to or for the credit or the account of the Borrower.
Section 8.2.5 Assumption of Obligations. In the event that the Funding Lender
or its assignee or designee shall become the legal or beneficial owner of the Project by foreclosure or
deed in lieu of foreclosure, such party shall succeed to the rights and the obligations of the Borrower
under this Borrower Loan Agreement, the Borrower Notes, the Regulatory Agreement, and any other
Borrower Loan Documents and Funding Loan Documents to which the Borrower is a party. Such
assumption shall be effective from and after the effective date of such acquisition and shall be made
with the benefit of the limitations of liability set forth therein and without any liability for the prior
acts of the Borrower.
Section 8.2.6 Accounts Receivable. Upon the occurrence of an Event of Default,
Funding Lender shall have the right, to the extent permitted by law, to impound and take possession
and other claims for payment of money, arising in connection with the Project, and to make direct
collections on such accounts, accounts receivable and claims for the benefit of Funding Lender.
Section 8.2.7 Defaults under Other Documents. Funding Lender shall have the
right to cure any default under any of the Related Documents and the Subordinate Loan Documents,
but shall have no obligation to do so.
Section 8.2.8 Abatement of Disbursements. Notwithstanding any provision to
the contrary herein or any of the other Borrower Loan Documents or the Funding Loan Documents,
further Disbursements shall abate (i) during the continuance of
any Potential Default, (ii) after any disclosure to Funding Lender of any fact or circumstance that,
absent such disclosure, would cause any representation or warranty of Borrower to fail to be true and
correct in all material respects, unless and until Funding Lender elects to permit further
Disbursements notwithstanding such event or circumstance; and (iii) upon the occurrence of any
Event of Default.
Section 8.2.9 Completion of Improvements. Upon the occurrence of any Event
of Default, Funding Lender shall have the right to cause an independent contractor selected by
Funding Lender to enter into possession of the Project and to perform any and all work and labor
necessary for the completion of the Project substantially in accordance with the Plans and
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All sums expended by Funding Lender for such purposes shall be deemed to have been disbursed to
and borrowed by Borrower and shall be secured by the Security Documents.
Section 8.2.10 Right to Directly Enforce. Notwithstanding any other provision
hereof to the contrary, the Funding Lender shall have the right to directly enforce all rights and
remedies hereunder with or without involvement of the Governmental Lender or the Fiscal Agent,
provided that only the Governmental Lender may enforce the Unassigned Rights. In the event that
any of the provisions set forth in this Section 8.2.10 are inconsistent with the covenants, terms and
conditions of the Security Instrument, the covenants, terms and conditions of the Security Instrument
shall prevail.
Section 8.2.11 Power of Attorney. Effective upon the occurrence of an Event of
Default, and continuing until and unless such Event of Default is cured or waived, Borrower hereby
constitutes and appoints Funding Lender, or an independent contractor selected by Funding Lender,
as its true and lawful attorney-in-fact with full power of substitution, for the purposes of completion
of the Project and perfo
the name of Borrower, and hereby empowers said attorney-in-fact to do any or all of the following
upon the occurrence and continuation of an Event of Default (it being understood and agreed that
said power of attorney shall be deemed to be a power coupled with an interest which cannot be
revoked until full payment and performance of all obligations under this Borrower Loan Agreement
and the other Borrower Loan Documents and the Funding Loan Documents):
(a) to use any of the funds of Borrower or General Partner, including any balance
of the Borrower Loan, as applicable, and any funds which may be held by Funding Lender for
Borrower (including all funds in all deposit accounts in which Borrower has granted to Funding
Lender a security interest), for the purpose of effecting completion of the construction or
rehabilitation, as the case may be, of the Improvements, in the manner called for by the Plans and
Specifications;
(b) to make such additions, changes and corrections in the Plans and
Specifications as shall be necessary or desirable to complete the Project in substantially the manner
contemplated by the Plans and Specifications;
(c) to employ any contractors, subcontractors, agents, architects and inspectors
required for said purposes;
(d) to employ attorneys to defend against attempts to interfere with the exercise
of power granted hereby;
(e) to pay, settle or compromise all existing bills and claims which are or may be
liens against the Project or the Improvements, or may be necessary or desirable for the completion of
the construction or rehabilitation, as the case may be, of the Improvements, or clearance of objections
to or encumbrances on title;
(f) to execute all applications and certificates in the name of Borrower, which
may be required by any other construction contract;
(g) to prosecute and defend all actions or proceedings in connection with the
Project and to take such action, require such performance and do any and every other act as is
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deemed necessary with respect to the completion of the construction or rehabilitation, as the case
may be, of the Improvements, which Borrower might do on its own behalf;
(h) to let new or additional contracts to the extent not prohibited by their existing
contracts;
(i) to employ watchmen and erect security fences to protect the Project from
injury; and
(j) to take such action and require such performance as it deems necessary under
any of the bonds or insurance policies to be furnished hereunder, to make settlements and
compromises with the sureties or insurers thereunder, and in connection therewith to execute
instruments of release and satisfaction.
It is the intention of the parties hereto that upon the occurrence and continuance of an Event
of Default, rights and remedies may be pursued pursuant to the terms of the Borrower Loan
Documents and the Funding Loan Documents. The parties hereto acknowledge that, among the
possible outcomes to the pursuit of such remedies, is the situation where the Funding Lender
assignees or designees become the owner of the Project and assume the obligations identified above,
and the Borrower Notes, the Borrower Loan and the other Borrower Loan Documents and Funding
Loan Documents remain outstanding.
ARTICLE IX
SPECIAL PROVISIONS
Section 9.1 Sale of Note and Secondary Market Transaction.
Section 9.1.1 Cooperation. Subject to the restrictions of Section 2.4 of the
required to be provided by the Borrower under this Borrower Loan Agreement), the Borrower shall
use reasonable efforts to satisfy the market standards to which the Funding Lender or the Servicer
customarily adheres or which may be reasonably required in the marketplace or by the Funding
Lender or the Servicer in connection with one or more sales or assignments of all or a portion of the
Governmental Lender Notes or participations therein or securitizations of single or multi-class
e
party or other out-of-pocket costs and expenses in connection with a Secondary Market Transaction,
including the costs associated with the delivery of any Provided Information or any opinion required
in connection therewith, and all such costs shall be paid by the Funding Lender or the Servicer, and
shall not ma
foregoing, the Borrower shall, so long as the Borrower Loan is still outstanding:
(a) (i) provide such financial and other information with respect to the Borrower
Loan, and with respect to the Project, the Borrower, the Manager, the contractor of the Project or the
Borrower Controlling Entity, (ii) provide financial statements, audited, if available, relating to the
Project with customary disclaimers for any forward looking statements or lack of audit, and (iii), at
the expense of the Funding Lender or the Servicer, perform or permit or cause to be performed or
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permitted such site inspection, appraisals, surveys, market studies, environmental reviews and reports
of the Project, as may be reasonably requested from time to time by the Funding Lender or the
Servicer or the Rating Agencies or as may be necessary or appropriate in connection with a
Secondary Market Transaction or Exchange Act requirements (the items provided to the Funding
Lender or the Servicer pursuant to this paragraph
together, if customary, with appropriate verification of and/or consents to the Provided Information
through letters of auditors or opinions of counsel of independent attorneys acceptable to the Funding
Lender or the Servicer and the Rating Agencies;
(b) make such representations and warranties as of the closing date of any
Secondary Market Transaction with respect to the Project, the Borrower, the Borrower Loan
Documents and the Funding Loan Documents reasonably acceptable to the Funding Lender or the
Servicer, consistent with the facts covered by such representations and warranties as they exist on the
date thereof; and
(c) execute such amendments to the Borrower Loan Documents and the Funding
Loan Documents to accommodate such Secondary Market Transaction so long as such amendment
does not affect the material economic terms of the Borrower Loan Documents and the Funding Loan
Documents and is not otherwise adverse to the Borrower in its reasonable discretion.
Section 9.1.2 Use of Information. The Borrower understands that certain of the
Provided Information and the required records may be included in disclosure documents in
connection with a Secondary Market Transaction, including a prospectus or private placement
investors or prospective investors in the Securities, the Rating Agencies and service providers or
other parties relating to the Secondary Market Transaction. In the event that the Secondary Market
Disclosure Document is required to be revised, the Borrower shall cooperate, subject to
Section 9.1.1(c) hereof, with the Funding Lender and the Servicer in updating the Provided
Information or required records for inclusion or summary in the Secondary Market Disclosure
Document or for other use reasonably required in connection with a Secondary Market Transaction
by providing all current information pertaining to the Borrower and the Project necessary to keep the
Secondary Market Disclosure Document accurate and complete in all material respects with respect
to such matters. The Borrower hereby consents to any and all such disclosures of such information.
The Borrower and the Funding Lender agree and acknowledge that the Governmental
Lender undertakes no obligation hereunder or in the Funding Loan Agreement to participate in the
preparation of, or to approve, any Secondary Market Disclosure Document.
Section 9.1.3 Borrower Obligations Regarding Secondary Market Disclosure
Documents. In connection with a Secondary Market Disclosure Document, the Borrower shall
provide, or in the case of a Borrower-engaged third party such as the Manager, cause it to provide,
information reasonably requested by the Funding Lender pertaining to the Borrower, the Project or
such third party (and portions of any other sections reasonably requested by the Funding Lender
pertaining to the Borrower, the Project or the third party). The Borrower shall, if requested by the
Funding Lender and the Servicer, certify in writing that the Borrower has carefully examined those
portions of such Secondary Market Disclosure Document, pertaining to the Borrower, the Project or
the Manager, and such portions (and portions of any other sections reasonably requested and
pertaining to the Borrower, the Project or the Manager) do not contain any untrue statement of a
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material fact or omit to state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading; provided that the Borrower
shall not be required to make any representations or warranties regarding any Provided Information
obtained from a third party except with respect to information it provided to such parties.
Furthermore, the Borrower hereby indemnifies the Funding Lender and the Servicer for any
Liabilities to which any such parties may become subject to the extent such Liabilities arise out of or
are based upon the use of the Provided Information in a Secondary Market Disclosure Document.
Section 9.1.4 Borrower Indemnity Regarding Filings. In connection with
filings under the Exchange Act or the Securities Act, the Borrower shall (i) indemnify Funding
which Funding Lender, the Servicer or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission or alleged omission to state in the Provided
Information of a material fact required to be stated in the Provided Information in order to make the
statements in the Provided Information, in the light of the circumstances under which they were
made not misleading and (ii) reimburse the Funding Lender, the Servicer, the Underwriter Group and
other indemnified parties listed above for any legal or other expenses reasonably incurred by the
Funding Lender, the Servicer or the Underwriter Group in connection with defending or investigating
the Liabilities; provided that the Borrower shall not provide any indemnification regarding any
Provided Information obtained from unrelated third parties except with respect to information it
provided to such parties.
Section 9.1.5 Indemnification Procedure. Promptly after receipt by an
indemnified party under Sections 9.1.3 and 9.1.4 hereof of notice of the commencement of any action
for which a claim for indemnification is to be made against the Borrower, such indemnified party
shall notify the Borrower in writing of such commencement, but the omission to so notify the
Borrower will not relieve the Borrower from any liability that it may have to any indemnified party
hereunder except to the extent that failure to notify causes prejudice to the Borrower. In the event
that any action is brought against any indemnified party, and it notifies the Borrower of the
commencement thereof, the Borrower will be entitled, jointly with any other indemnifying party, to
participate therein and, to the extent that it (or they) may elect by Written Notice delivered to the
indemnified party promptly after receiving the aforesaid notice of commencement, to assume the
defense thereof with counsel selected by the Borrower and reasonably satisfactory to such
indemnified party in its sole discretion. After notice from the Borrower to such indemnified party
under this Section 9.1.5, the Borrower shall not be responsible for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnified party shall settle or compromise any claim for
which the Borrower may be liable hereunder without the prior Written Consent of the Borrower.
Section 9.1.6 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in Section 9.1.4 hereof
is for any reason held to be unenforceable by an indemnified party in respect of any Liabilities (or
action in respect thereof) referred to therein which would otherwise be indemnifiable under
Section 9.1.4 hereof, the Borrower shall contribute to the amount paid or payable by the indemnified
party as a result of such Liabilities (or action in respect thereof); provided, however, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are entitled, the following
factors shall be considered: (i)
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access to information concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. The parties hereto hereby agree that it may not be
equitable if the amount of such contribution were determined by pro rata or per capita allocation.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices, consents, approvals and requests required or permitted
shall be deemed to be given and made when delivered by hand, recognized overnight delivery
service, confirmed facsimile transmission (provided any telecopy or other electronic transmission
received by any party after 4:00 p.m., local time, as evidenced by the time shown on such
transmission, shall be deemed to have been received the following Business Day), or five
(5) calendar days after deposited in the United States mail, registered or certified, postage prepaid,
with return receipt requested, addressed as follows:
If to the Fiscal Agent: U.S. Bank National Association
Global Corporate Trust Services
633 West 5th Street
Los Angeles, California 90071
Attention: Ismael Diaz
Telephone: (213) 615-6063
If to the Governmental Lender: Chula Vista Housing Authority
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
Phone: (619) 691-5263
If to the Borrower: St. Regis Park CIC, LP
6339 Paseo del Lago
Carlsbad, California 92011
Telephone: (760) 456-6000
Facsimile: (760) 456-6001
Attn: Project Manager
c/o Chelsea Investment Corporation
6993 Paseo del Lago
Carlsbad, California 92011
Attn: Project Manager
with a copy to: Cox, Castle & Nicholson LLP
50 California Street, Suite 3200
San Fransisco, CA 94111
Attention: Ofer Elitzur, Esq.
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If to the Equity Investor: Raymond James California Housing Opportunities
Fund VI L.L.C.
c/o Raymond James Tax Credit Funds, Inc.
880 Carillion Parkway
St. Petersburg, FL 33716
Attn: Steven J. Kropf, President
with a copy to: Bocarsly, Emden, Cowan, Esmail & Arndt, LLP
633 West Fifth Street, 64th Floor
Los Angeles, California 90071
Attention: Kyle Arndt
Telephone: (213) 239-8048
If to the Funding Lender: Citibank, N.A.
388 Greenwich Street, 8th Floor
New York, New York 10013
Attention: Transaction Management Group
Re: St. Regis Park Apartments
Deal ID No. __________
Facsimile: (212) 723-8209
and to: Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Re: St. Regis Park Apartments
Deal ID No. __________
Facsimile: (805) 557-0924
prior to the Conversion Date, with a copy to:
Citibank, N.A.
388 Greenwich Street, 8th Floor
New York, New York 10013
Attention: Account Specialist
Re: St. Regis Park Apartments
Deal ID No. __________
Facsimile: (212) 723-8209
following the Conversion Date with a copy to:
Citibank, N.A.
c/o Berkadia Commercial Servicing Department
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Client Relations Manager
Re: St. Regis Park Apartments
Deal ID No. __________
Facsimile: (215) 328-0305
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and a copy of any notices of default sent to:
Citibank, N.A.
388 Greenwich Street, 17th Floor
New York, New York 10013
Re: St. Regis Park Apartments
Deal ID No. __________
Facsimile: (212) 723-8939
Borrower Loan Agreement by providing written notice of such change of address to the other parties
by written notice as provided herein.
Section 10.2 Brokers and Financial Advisors. The Borrower hereby represents that it
has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in
connection with the Borrower Loan, other than those disclosed to the Funding Lender and whose fees
shall be paid by the Borrower pursuant to separate agreements. The Borrower and the Funding
Lender shall indemnify and hold the other harmless from and against any and all claims, liabilities,
costs and expenses of any kind in any way relating to or arising from a claim by any Person that such
Person acted on behalf of the indemnifying party in connection with the transactions contemplated
herein. The provisions of this Section 10.2 shall survive the expiration and termination of this
Borrower Loan Agreement and the repayment of the Borrower Payment Obligations.
Section 10.3 Survival. This Borrower Loan Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by the Governmental Lender of the Borrower Loan and the execution and
delivery to the Governmental Lender of the Borrower Notes and the assignment of the Borrower
Notes to the Funding Lender, and shall continue in full force and effect so long as all or any of the
Borrower Loan Agreement shall inure to the benefit of the respective legal representatives,
successors and assigns of the Governmental Lender, the Fiscal Agent, the Funding Lender and the
Servicer.
Section 10.4 Preferences. The Governmental Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by the Borrower to any portion
of the Borrower Payment Obligations. To the extent the Borrower makes a payment to the
Governmental Lender or the Servicer, or the Governmental Lender or the Servicer receives proceeds
of any collateral, which is in whole or part subsequently invalidated, declared to be fraudulent or
preferential, set aside 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 cause, then, to the extent of such
payment or proceeds received, the Borrower Payment Obligations or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not
been received by the Governmental Lender or the Servicer.
Section 10.5 Waiver of Notice. The Borrower shall not be entitled to any notices of any
nature whatsoever from the Funding Lender, the Fiscal Agent or the Servicer except with respect to
matters for which this Borrower Loan Agreement or any other Borrower Loan Document specifically
and expressly provides for the giving of notice by the Funding Lender, the Fiscal Agent or the
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Servicer, as the case may be, to the Borrower and except with respect to matters for which the
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice.
The Borrower hereby expressly waives the right to receive any notice from the Funding Lender, the
Fiscal Agent or the Servicer, as the case may be, with respect to any matter for which no Borrower
Loan Document specifically and expressly provides for the giving of notice by the Funding Lender,
the Fiscal Agent or the Servicer to the Borrower.
Section 10.6 Offsets, Counterclaims and Defenses. The Borrower hereby waives the
right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding
brought against it by the Funding Lender or the Servicer with respect to a Borrower Loan Payment.
Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses that are
unrelated to the Borrower Loan Documents or the Funding Loan Documents which the Borrower
may otherwise have against any assignor of such documents, and no such unrelated offset,
counterclaim or defense shall be interposed or asserted by the Borrower in any action or proceeding
brought by any such assignee upon such documents, and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly
waived by the Borrower.
Section 10.7 Publicity. The Funding Lender and the Servicer (and any Affiliates of either
party) shall have the right to issue press releases, advertisements and other promotional materials
Lender or the Servicer or one of its or their Affiliates. All news releases, publicity or advertising by
the Borrower or Borrower Affiliates through any media intended to reach the general public, which
refers to the Borrower Loan Documents or the Funding Loan Documents, the Borrower Loan, the
Funding Lender or the Servicer in a Secondary Market Transaction, shall be subject to the prior
Written Consent of the Funding Lender or the Servicer, as applicable.
Section 10.8 Construction of Documents. The parties hereto acknowledge that they were
represented by counsel in connection with the negotiation and drafting of the Borrower Loan
Documents and the Funding Loan Documents and that the Borrower Loan Documents and the
Funding Loan Documents shall not be subject to the principle of construing their meaning against the
party that drafted them.
Section 10.9 No Third Party Beneficiaries. The Borrower Loan Documents and the
Funding Loan Documents are solely for the benefit of the Governmental Lender, the Funding
Lender, the Servicer, the Fiscal Agent and the Borrower and, with respect to Sections 9.1.3 and 9.1.4
hereof, the Underwriter Group, and nothing contained in any Borrower Loan Document shall be
deemed to confer upon anyone other than the Governmental Lender, the Funding Lender, the Fiscal
Agent, the Servicer, and the Borrower any right to insist upon or to enforce the performance or
observance of any of the obligations contained therein.
Section 10.10 Assignment. The Borrower Loan, the Security Instrument, the Borrower
rights, title, obligations and interests therein may be assigned by the Funding Lender or the Fiscal
Agent, as appropriate, at any time in its sole discretion, whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise, subject in any event to the provisions of
Section 2.4 of the Funding Loan Agreement. Upon such assignment, all references to Funding
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Lender or the Fiscal Agent, as appropriate, in this Borrower Loan Agreement and in any Borrower
Loan Document shall be deemed to refer to such assignee or successor in interest and such assignee
or successor in interest shall thereafter stand in the place of the Funding Lender or the Fiscal Agent,
as appropriate. The Borrower shall accord full recognition to any such assignment, and all rights and
remedies of Funding Lender in connection with the interest so assigned shall be as fully enforceable
by such assignee as they were by Funding Lender before such assignment. In connection with any
proposed assignment, Funding Lender may disclose to the proposed assignee any information that
the Borrower has delivered, or caused to be delivered, to Funding Lender with reference to the
Borrower, General Partner, Guarantor or any Borrower Affiliate, or the Project, including
information that the Borrower is required to deliver to Funding Lender pursuant to this Borrower
Loan Agreement, provided that such proposed assignee agrees to treat such information as
confidential. The Borrower may not assign its rights, interests or obligations under this Borrower
Loan Agreement or under any of the Borrower Loan Documents or Funding Loan Documents, or the
expressly permitted hereby.
Section 10.11 \[Reserved\].
Section 10.12 Governmental Lender, Funding Lender and Servicer Not in Control; No
Partnership. None of the covenants or other provisions contained in this Borrower Loan Agreement
shall, or shall be deemed to, give the Governmental Lender, the Funding Lender, the Fiscal Agent or
the Servicer the right or power to exercise control over the affairs or management of the Borrower,
the power of the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer being
limited to the rights to exercise the remedies referred to in the Borrower Loan Documents and the
Funding Loan Documents. The relationship between the Borrower and the Governmental Lender,
the Funding Lender, the Fiscal Agent and the Servicer is, and at all times shall remain, solely that of
debtor and creditor. No covenant or provision of the Borrower Loan Documents or the Funding
Loan Documents is intended, nor shall it be deemed or construed, to create a partnership, joint
venture, agency or common interest in profits or income between the Borrower and the
Governmental Lender, the Funding Lender, the Fiscal Agent or the Servicer or to create an equity
interest in the Project in the Governmental Lender, the Funding Lender, the Fiscal Agent or the
Servicer. Neither the Governmental Lender, the Funding Lender, the Fiscal Agent nor the Servicer
undertakes or assumes any responsibility or duty to the Borrower or to any other person with respect
to the Project or the Borrower Loan, except as expressly provided in the Borrower Loan Documents
or the Funding Loan Documents; and notwithstanding any other provision of the Borrower Loan
Documents and the Funding Loan Documents: (1) the Governmental Lender, the Funding Lender,
the Fiscal Agent and the Servicer are not, and shall not be construed as, a partner, joint venturer, alter
ego, manager, controlling person or other business associate or participant of any kind of the
Borrower or its stockholders, members, or partners and the Governmental Lender, the Funding
Lender, the Fiscal Agent and the Servicer do not intend to ever assume such status; (2) the
Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer shall in no event be
liable for any the Borrower Payment Obligations, expenses or losses incurred or sustained by the
Borrower; and (3) the Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer
shall not be deemed responsible for or a participant in any acts, omissions or decisions of the
Borrower, the Borrower Controlling Entities or its stockholders, members, or partners. The
Governmental Lender, the Funding Lender, the Fiscal Agent and the Servicer and the Borrower
disclaim any intention to create any partnership, joint venture, agency or common interest in profits
or income between the Governmental Lender, the Funding Lender, the Servicer, the Fiscal Agent and
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the Borrower, or to create an equity interest in the Project in the Governmental Lender, the Funding
Lender, the Fiscal Agent or the Servicer, or any sharing of liabilities, losses, costs or expenses.
Section 10.13 Release. The Borrower hereby acknowledges that it is executing this
Borrower Loan Agreement and each of the Borrower Loan Documents and the Funding Loan
Documents to which it is a party as its own voluntary act free from duress and undue influence.
Section 10.14 Term of Borrower Loan Agreement. This Borrower Loan Agreement shall
be in full force and effect until all payment obligations of the Borrower hereunder have been paid in
full and the Borrower Loan and the Funding Loan have been retired or the payment thereof has been
provided for; except that on and after payment in full of the Borrower Notes, this Borrower Loan
Agreement shall be terminated, without further action by the parties hereto; provided, however, that
the obligations of the Borrower under Sections 5.11, 5.14, 5.15, 9.1.3, 9.1.4, 9.1.5, 9.1.6 and 10.15
hereof, as well as under Section 5.7 of the Construction Funding Agreement, shall survive the
termination of this Borrower Loan Agreement.
Section 10.15 Reimbursement of Expenses. If, upon or after the occurrence of any Event
of Default or Potential Default, the Governmental Lender, the Funding Lender, the Fiscal Agent or
the Servicer shall employ attorneys or incur other expenses for the enforcement of performance or
observance of any obligation or agreement on the part of the Borrower contained herein, the
Borrower will on demand therefor reimburse the Governmental Lender, the Funding Lender, the
Fiscal Agent and the Servicer for fees of such attorneys and such other expenses so incurred.
ion 10.15
shall be subordinate to its obligations to make payments under the Borrower Notes.
Section 10.16 Permitted Contests. Notwithstanding anything to the contrary contained in
this Borrower Loan Agreement, Borrower shall have the right to contest or object in good faith to
any claim, demand, levy or assessment (other than in respect of Debt or Contractual Obligations of
Borrower under any Borrower Loan Document or Related Document) by appropriate legal
, but this shall not be deemed or
construed as in any way relieving, modifying or providing any extension of time with respect to
Borrower shall have given prior
contest or object thereto, and unless (i)
reasonable basis for such contest, (ii) Borrower pays when due any portion of the claim, demand,
levy or assessment to which Borrower does not object, (iii) Borrower demonstrates to Funding
prior to final determination of such proceedings, (iv) Borrower furnishes such bond, surety,
undertaking or other security in connection therewith as required by law, or as requested by and
satisfactory to Funding Lender, to stay such proceeding, which bond, surety, undertaking or other
security shall be issued by a bonding company, insurer or surety company reasonably satisfactory to
Funding Lender and shall be sufficient to cause the claim, demand, levy or assessment to be insured
against by the Title Company or removed as a lien against the Project, (v) Borrower at all times
prosecutes the contest with due diligence, and (vi) Borrower pays, promptly following a
determination of the amount of such claim, demand, levy or assessment due and owing by Borrower,
the amount so determined to be due and owing by Borrower. In the event that Borrower does not
make, promptly following a determination of the amount of such claim, demand, levy or assessment
due and owing by Borrower, any payment required to be made pursuant to clause (vi) of the
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preceding sentence, an Event of Default shall have occurred, and Funding Lender may draw or
realize upon any bond or other security delivered to Funding Lender in connection with the contest
by Borrower, in order to make such payment.
Section 10.17 Funding Lender Approval of Instruments and Parties. All proceedings
taken in accordance with transactions provided for herein, and all surveys, appraisals and documents
required or contemplated by this Borrower Loan Agreement and the persons responsible for the
execution and preparation thereof, shall be satisfactory to and subject to approval by Funding Lender.
of protecting the security and rights of Funding Lender. No such approval shall result in a waiver of
kind with regard to the matter being approved.
Section 10.18 Funding Lender Determination of Facts. Funding Lender shall at all times
be free to establish independently, to its reasonable satisfaction, the existence or nonexistence of any
fact or facts, the existence or nonexistence of which is a condition of this Borrower Loan Agreement.
Section 10.19 Calendar Months. With respect to any payment or obligation that is due or
required to be performed within a specified number of Calendar Months after a specified date, such
payment or obligation shall become due on the day in the last of such specified number of Calendar
Months that corresponds numerically to the date so specified; provided, however, that with respect to
any obligation as to which such specified date is the 29th, 30th or 31st day of any Calendar Month:
if the Calendar Month in which such payment or obligation would otherwise become due does not
have a numerically corresponding date, such obligation shall become due on the first day of the next
succeeding Calendar Month.
Section 10.20 Determinations by Lender. Except to the extent expressly set forth in this
Borrower Loan Agreement to the contrary, in any instance where the consent or approval of the
Governmental Lender and the Funding Lender may be given or is required, or where any
determination, judgment or decision is to be rendered by the Governmental Lender and the Funding
Lender under this Borrower Loan Agreement, the granting, withholding or denial of such consent or
approval and the rendering of such determination, judgment or decision shall be made or exercised
by the Governmental Lender and the Funding Lender, as applicable (or its designated representative)
at its sole and exclusive option and in its sole and absolute discretion.
Section 10.21 Governing Law. This Borrower Loan Agreement shall be governed by and
enforced in accordance with the laws of the State, without giving effect to the choice of law
principles of the State that would require the application of the laws of a jurisdiction other than the
State.
Section 10.22 Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Borrower Loan Agreement shall be litigated exclusively in the
State. The state and federal courts and authorities with jurisdiction in the State shall have exclusive
jurisdiction over all controversies which shall arise under or in relation to this Borrower Loan
Agreement. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by virtue of domicile,
right to bring any suit, action or proceeding relating to matters arising under this Borrower Loan
Agreement against Borrower or an
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Section 10.23 Successors and Assigns. This Borrower Loan Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors, successors-in-interest and assigns, as appropriate. The terms used to
designate any of the parties herein shall be deemed to include the heirs, legal representatives,
successors, successors-in-interest and assigns, as appropriate, of such parties. References to a
Section 10.24 Severability. The invalidity, illegality or unenforceability of any provision
of this Borrower Loan Agreement shall not affect the validity, legality or enforceability of any other
provision, and all other provisions shall remain in full force and effect.
Section 10.25 Entire Agreement; Amendment and Waiver. This Borrower Loan
Agreement contains the complete and entire understanding of the parties with respect to the matters
covered. This Borrower Loan Agreement may not be amended, modified or changed, nor shall any
waiver of any provision hereof be effective, except by a written instrument signed by the party
against whom enforcement of the waiver, amendment, change, or modification is sought, and then
only to the extent set forth in that instrument. No specific waiver of any of the terms of this
Borrower Loan Agreement shall be considered as a general waiver. Without limiting the generality
of the foregoing, no Disbursement shall constitute a waiver of any conditions to the Governmental
Borrower is unable to satisfy any such conditions, shall any such waiver have the effect of precluding
the Governmental Lender or the Funding Lender from thereafter declaring such inability to constitute
a Potential Default or Event of Default under this Borrower Loan Agreement.
Section 10.26 Counterparts. This Borrower Loan Agreement may be executed in multiple
counterparts, each of which shall constitute an original document and all of which together shall
constitute one agreement.
Section 10.27 Captions. The captions of the sections of this Borrower Loan Agreement are
for convenience only and shall be disregarded in construing this Borrower Loan Agreement.
Section 10.28 Servicer. Borrower hereby acknowledges and agrees that, pursuant to the
terms of Section 39 of the Security Instrument: (a) from time to time, the Governmental Lender or
the Funding Lender may appoint a servicer to collect payments, escrows and deposits, to give and to
receive notices under the Borrower Notes, this Borrower Loan Agreement or the other Borrower
Loan Documents, and to otherwise service the Borrower Loan and (b) unless Borrower receives
Written Notice from the Governmental Lender or the Funding Lender to the contrary, any action or
right which shall or may be taken or exercised by the Governmental Lender or the Funding Lender
may be taken or exercised by such servicer with the same force and effect.
Section 10.29 Beneficiary Parties as Third Party Beneficiary. Each of the Beneficiary
Parties shall be a third party beneficiary of this Borrower Loan Agreement for all purposes.
Section 10.30 Waiver of Trial by Jury. TO THE MAXIMUM EXTENT PERMITTED
UNDER APPLICABLE LAW, EACH OF BORROWER AND THE BENEFICIARY PARTIES
(A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS BORROWER LOAN AGREEMENT OR THE
RELATIONSHIP BETWEEN THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND
(B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE
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EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
IF FOR ANY REASON THIS WAIVER IS DETERMINED TO BE UNENFORCEABLE,
ALL DISPUTES WILL BE RESOLVED BY JUDICIAL REFERENCE PURSUANT TO THE
PROCEDURES SET FORTH IN THE SECURITY INSTRUMENT.
Section 10.31 Time of the Essence. Time is of the essence with respect to this Borrower
Loan Agreement.
Section 10.32 \[Reserved\].
Section 10.33 Reference Date. This Borrower Loan Agreement is dated for reference
purposes only as of the first day of June 2019, and will not be effective and binding on the parties
hereto unless and until the Closing Date (as defined herein) occurs.
ARTICLE XI
LIMITATIONS ON LIABILITY
Section 11.1 Limitation on Liability. Notwithstanding anything to the contrary herein,
the liability of the Borrower hereunder and under the other Borrower Loan Documents and the
Funding Loan Documents shall be limited to the extent set forth in the Borrower Notes.
Section 11.2 Limitation on Liability of Governmental Lender. The Governmental
Lender shall not be obligated to pay the principal (or prepayment price) of or interest on the Funding
Loan, except from moneys and assets received by the Fiscal Agent or the Funding Lender on behalf
of the Governmental Lender pursuant to this Borrower Loan Agreement. Neither the faith and credit
nor the taxing power of the State, or any political subdivision thereof, nor the faith and credit of the
Governmental Lender is pledged to the payment of the principal (or prepayment price) of or interest
on the Funding Loan. The Governmental Lender shall not be liable for any costs, expenses, losses,
damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of
or in connection with this Borrower Loan Agreement or the Funding Loan Agreement, except only to
the extent amounts are received for the payment thereof from the Borrower under this Borrower Loan
Agreement.
to repay the Funding Loan will be provided by the payments made by the Borrower pursuant to this
Borrower Loan Agreement, together with investment income on certain funds and accounts held by
the Fiscal Agent under the Funding Loan Agreement, and hereby agrees that if the payments to be
made hereunder shall ever prove insufficient to pay all principal (or prepayment price) of and interest
on the Funding Loan as the same shall become due (whether by maturity, redemption, acceleration or
otherwise), then upon notice from the Fiscal Agent, the Funding Lender or the Servicer, the
Borrower shall pay such amounts as are required from time to time to prevent any deficiency or
default in the payment of such principal (or prepayment price) of or interest on the Funding Loan,
including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance
on the part of the Fiscal Agent, the Funding Lender, the Borrower, the Governmental Lender or any
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third party, subject to any right of reimbursement from the Fiscal Agent, the Funding Lender, the
Governmental Lender or any such third party, as the case may be, therefor.
Section 11.3 Waiver of Personal Liability. No commissioner, member, officer, agent or
employee of the Governmental Lender shall be individually or personally liable for the payment of
any principal (or prepayment price) of or interest on the Funding Loan or any other sum hereunder or
be subject to any personal liability or accountability by reason of the execution and delivery of this
Borrower Loan Agreement; but nothing herein contained shall relieve any such member, director,
officer, agent or employee from the performance of any official duty provided by law or by this
Borrower Loan Agreement.
Section 11.4
Commissioners, Officers, Employees, Etc.
(a) Borrower assumes all risks of the acts or omissions of the Governmental
Lender and the Funding Lender, provided, however, this assumption is not intended to, and shall not,
preclude the Borrower from pursuing such rights and remedies as it may have against the
Governmental Lender and the Funding Lender at law or under any other agreement. None of
Governmental Lender, the Fiscal Agent and the Funding Lender, nor the other Beneficiary Parties or
their respective commissioners, officers, directors, employees or agents shall be liable or responsible
for (i) for any acts or omissions of the Governmental Lender and the Funding Lender; or (ii) the
validity, sufficiency or genuineness of any documents, or endorsements, even if such documents
should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged. In
furtherance and not in limitation of the foregoing, the Governmental Lender and the Funding Lender
may accept documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, unless acceptance in light of
such notice or information constitutes gross negligence or willful misconduct on the part of the
Funding Lender, or willful misconduct of the Governmental Lender.
(b) None of the Governmental Lender, the Fiscal Agent, the Funding Lender, the
other Beneficiary Parties or any of their respective commissioners, officers, directors, employees or
agents shall be liable to any contractor, subcontractor, supplier, laborer, architect, engineer or any
other party for services performed or materials supplied in connection with the Project. The
Governmental Lender and the Funding Lender shall not be liable for any debts or claims accruing in
favor of any such parties against the Borrower or others or against the Project. Borrower is not and
shall not be an agent of the Governmental Lender and the Funding Lender for any purpose. Neither
the Governmental Lender nor the Funding Lender is a joint venture partner with Borrower in any
manner whatsoever. Prior to default by Borrower under this Borrower Loan Agreement and the
exercise of remedies granted herein, the Governmental Lender and the Funding Lender shall not be
deemed to be in privity of contract with any contractor or provider of services to the Project, nor shall
any payment of funds directly to a contractor, subcontractor or provider of services be deemed to
create any third party beneficiary status or recognition of same by the Governmental Lender and the
Funding Lender. Approvals granted by the Governmental Lender and the Funding Lender for any
matters covered under this Borrower Loan Agreement shall be narrowly construed to cover only the
parties and facts identified in any written approval or, if not in writing, such approvals shall be solely
for the benefit of Borrower.
(c) Any obligation or liability whatsoever of the Governmental Lender and the
Funding Lender that may arise at any time under this Borrower Loan Agreement or any other
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such obligation or liability shall be personally binding upon, nor shall resort for the enforcement
shareholders (if any), directors, officers, employees or agents, regardless of whether such obligation
or liability is in the nature of contract, tort or otherwise.
Section 11.5 Delivery of Reports, Etc. The delivery of reports, information and
documents to the Governmental Lender and the Funding Lender as provided herein is for
informational purposes only an
such shall not constitute constructive knowledge of any information contained therein or
determinable from information contained therein. The Governmental Lender and the Funding
Lender shall have no duties or responsibilities except those that are specifically set forth herein, and
no other duties or obligations shall be implied in this Borrower Loan Agreement against the
Governmental Lender and the Funding Lender.
\[Remainder of Page Intentionally Left Blank\]
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Borrower
Loan Agreement by their respective authorized representative, as of the date first set forth above.
BORROWER:
St. Regis Park CIC, LP,
a California limited partnership
By: Pacific Southwest Community Development Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By:________________________________
Robert Laing
President and Executive Director
By: CIC St. Regis Park, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation, its Manager
By:___________________________
Cheri Hoffman, President
(signatures follow on subsequent page)
\[Signature Page to Borrower Loan Agreement St. Regis Park Apartments\]
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GOVERNMENTAL LENDER:
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
Agreed to and Acknowledged by:
FUNDING LENDER:
CITIBANK, N.A.
By:
Authorized Signatory
\[Signature Page to Borrower Loan Agreement St. Regis Park Apartments\]
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Stradling Yocca Carlson & Rauth
Draft dated May 8, 2019
Recording Requested By and
When Recorded Mail To:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Bradley R. Neal, Esq.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
By and Between
CHULA VISTA HOUSING AUTHORITY
and
ST. REGIS PARK CIC, LP
a California limited partnership
_________________________
Dated as of June 1, 2019
_________________________
Relating to:
$______________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE NOTE
(ST. REGIS PARK APARTMENTS) 2019 SERIES B-1
$______________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE NOTE
(ST. REGIS PARK APARTMENTS) 2019 SERIES B-2
$______________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(ST. REGIS PARK APARTMENTS) SUBORDINATE 2019 SERIES B-4
2019-06-11 Agenda PacketPage 798 of 891
TABLE OF CONTENTS
Section 1. Definitions and Interpretation ....................................................................................... 2
Section 2. Representations, Covenants and Warranties of the Owner ........................................... 6
Section 3. Qualified Residential Rental Project ............................................................................. 6
Section 4. Low Income Tenants and Very Low Income Tenants; Reporting Requirements ......... 7
Section 5. Tax-Exempt Status of Tax-Exempt Obligations ........................................................... 9
Section 6. Requirements of the Housing Law.............................................................................. 10
Section 7. Requirements of the Governmental Lender ................................................................ 11
Section 8. Modification of Covenants.......................................................................................... 12
Section 9. Indemnification; Other Payments ............................................................................... 12
Section 10. Consideration .............................................................................................................. 14
Section 11. Reliance ....................................................................................................................... 14
Section 12. Transfer of the Project ................................................................................................ 14
Section 13. Term ............................................................................................................................ 16
Section 14. Covenants to Run With the Land ................................................................................ 16
Section 15. Burden and Benefit ..................................................................................................... 16
Section 16. Uniformity; Common Plan ......................................................................................... 17
Section 17. Default; Enforcement .................................................................................................. 17
Section 18. Recording and Filing ................................................................................................... 18
Section 19. Payment of Fees .......................................................................................................... 18
Section 20. Governing Law; Venue ............................................................................................... 19
Section 21. Amendments; Waivers ................................................................................................ 19
Section 22. Notices ........................................................................................................................ 19
Section 23. Severability ................................................................................................................. 20
Section 24. Multiple Counterparts ................................................................................................. 20
Section 25. Limitation on Liability ................................................................................................ 20
Section 26. Third-Party Beneficiary .............................................................................................. 21
Section 27. Property Management ................................................................................................. 21
Section 28. Requirements of CDLAC ........................................................................................... 22
EXHIBIT A DESCRIPTION OF REAL PROPERTY
EXHIBIT B FORM OF INCOME CERTIFICATION
EXHIBIT C FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
EXHIBIT D CDLAC RESOLUTION
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REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
made and entered into as of June 1, 2019, by and between the CHULA VISTA HOUSING
AUTHORITY, a public body, corporate and politic, duly organized and existing under the laws of
the State of California (together with any successor to its rights, duties and obligations, the
organized, validly existing and in good standing under the laws of the State of California (together
with any successor to its rights, duties and obligations hereunder and as owner of the Project
.
W I T N E S S E T H:
WHEREAS, pursuant to Chapter 1 of Part 2 of Division 24 of the California Health and
Agreement, the Governmental Lender has agreed to execute and deliver its Chula Vista Housing
Authority Multifamily Housing Revenue Note (St. Regis Park Apartments) 2019 Series B-1 (the
-
Regis Park Apartments) 2019 Series B--ogether with the Series B-1
Tax-Exempt
of $___________________;
WHEREAS, the Notes will be executed and delivered pursuant to a Funding Loan
Agreement, dated as of June 1,
Association, as fiscal agent;
WHEREAS, the proceeds of the Notes will be used to fund loans (collectively,
rehabilitation and equipping of the multifamily rental housing project known as St. Regis Park
Apartments, located on the real property site described in Exhibit A hereto (as further described
WHEREAS, in addition to the Notes, pursuant to and in accordance with the Act, the
Governmental Lender has authorized and undertaken to issue revenue bonds to be designated the
Chula Vista Housing Authority Multifamily Housing Revenue Bonds (St. Regis Park Apartments),
Subordinate 2019 Series B-4, in the original aggregate principal amount of $_________________
, and, together with the Tax-Exempt Governmental Lender Notes, the
-) pursuant to a Subordinate Indenture of Trust, by and between the
Governmental Lender and U.S. Bank National Association,
in order to provide a additional funds
necessary to finance the Project;
WHEREAS, in connection with the issuance of the Subordinate Bonds, the Governmental
Lender has entered into a Subordinate Loan Agreement dated as of June 1, 2019
2019-06-11 Agenda PacketPage 800 of 891
which the Governmental Lender will issue the Subordinate Bonds and use the proceeds of the sale
thereof to make a subordinate loan in the original aggregate principal amount of
$_________________ additional financing of the
Project;
WHEREAS, in order to assure the Governmental Lender and the owners of the Tax-Exempt
Obligations that interest on the Tax-Exempt Obligations will be excluded from gross income for
federal income tax purposes under Section
and to satisfy the public purposes for which the Tax-Exempt Obligations are authorized to be
executed and delivered or issued, as the case may be, under the Housing Law, and to satisfy the
purposes of the Governmental Lender in determining to execute and deliver or issue, as the case may
be, the Tax-Exempt Obligations, certain limits on the occupancy of units in the Project need to be
established and certain other requirements need to be met;
NOW, THEREFORE, in consideration of the execution and delivery or issuance, as the case
may be, of the Tax-Exempt Obligations by the Governmental Lender and the mutual covenants and
undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Governmental Lender and the Owner hereby agree as
follows:
Section 1. Definitions and Interpretation. Unless the context otherwise requires, the
capitalized terms used herein shall have the respective meanings assigned to them in the recitals
hereto, in this Section 1, or in the Funding Loan Agreement.
Administrator means the Governmental Lender or any administrator or program monitor
appointed by the Governmental Lender to administer this Regulatory Agreement, and any successor
administrator appointed by the Governmental Lender.
Area means the Metropolitan Statistical Area or County, as applicable, in which the Project
is located, as defined by the United States Department of Housing and Urban Development.
Available Units means residential units in the Project that are actually occupied and
residential units in the Project that are vacant and have been occupied at least once after becoming
available for occupancy, provided that (a) a residential unit that is vacant on the later of (i) the date
the Project is acquired or (ii) the Closing Date is not an Available Unit and does not become an
Available Unit until it has been occupied for the first time after such date, and (b) a residential unit
that is not available for occupancy due to renovations is not an Available Unit and does not become
an Available Unit until it has been occupied for the first time after the renovations are completed.
CDLAC means the California Debt Limit Allocation Committee or its successors.
CDLAC Conditions has the meaning given such term in Section 28(a).
CDLAC Resolution means CDLAC Resolution No. 19-029 attached hereto as Exhibit D,
adopted on March 20, 2019 and relating to the Project, as such resolution may be modified or
amended from time to time.
Certificate of Continuing Program Compliance means the Certificate to be filed by the
Owner with the Administrator, on behalf of the Governmental Lender, pursuant to Section 4(f)
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hereof, which shall be substantially in the form attached as Exhibit C hereto or in such other
comparable form as may be provided by the Governmental Lender to the Owner, or as otherwise
approved by the Governmental Lender.
City means the City of Chula Vista, California.
Closing Date means the date the Tax-Exempt Obligations are originally executed and
delivered or issued, as the case may be.
Compliance Period means the period beginning on the first day of the Qualified Project
Period and ending on the later of the end of the Qualified Project Period or such later date as set forth
in Section 28(c) of this Regulatory Agreement.
County means the County of San Diego, California.
as the same may be modified, amended or supplemented from time to time.
Gross Income means the gross income of a person (together with the gross income of all
persons who intend to reside with such person in one residential unit) as calculated in the manner
prescribed in under Section 8 of the Housing Act.
Housing Act means the United States Housing Act of 1937, as amended, or its successor.
Housing Law means Chapter 1 of Part 2 of Division 24 of the California Health and Safety
Code, as amended.
Income Certification means a Tenant Income Certification and a Tenant Income
Certification Questionnaire in the form attached as Exhibit B hereto or in such other comparable
form as may be provided by the Governmental Lender to the Owner, or as otherwise approved by the
Governmental Lender.
means Raymond James California Housing Opportunities Fund
VI L.L.C., or any other successor entity or assignee in such entitys capacity as an equity investor in
the Owner.
Loan Agreement means the Borrower Loan Agreement as defined in the Funding Loan
Agreement, as the same may be modified, amended or supplemented from time to time.
Low Income Tenant means a tenant occupying a Low Income Unit.
Low Income Unit means any Available Unit if the aggregate Gross Income of all tenants
therein does not exceed limits determined in a manner consistent with determinations of low-income
families under Section 8 of the Housing Act, provided that the percentage of median gross income
that qualifies as low income hereunder shall be sixty percent (60%) of median gross income for the
Area, with adjustments for family size. A unit occupied by one or more students shall only constitute
a Low Income Unit if such students meet the requirements of Section 142(d)(2)(C) of the Code. The
commencement of each lease term with respect to such unit, and annually thereafter, on the basis of
an Income Certification executed by each tenant.
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Manager means a property manager meeting the requirements of Section 27 hereof. CIC
Management, Inc., a California corporation, is hereby approved as the initial Manager.
Representative or means during any period in which the Notes
are outstanding, the under and as such term is defined in the Funding Loan Agreement.
If at any time the Notes are not outstanding then there is no Noteowner Representative and references
herein to the Noteowner Representative are void and inapplicable and shall be disregarded.
18-unit multifamily rental housing development
located in the City of Chula Vista, San Diego County on the real property site described in Exhibit A
hereto, consisting of those facilities, including real property, structures, buildings, fixtures or
equipment situated thereon, as it may at any time exist, the acquisition, rehabilitation and equipping
of which facilities are to be financed, in whole or in part, from the proceeds of the sale of the Tax-
Exempt Obligations or the proceeds of any payment by the Owner pursuant to the Loan Agreement
or Subordinate Loan Agreement, and any real property, structures, buildings, fixtures or equipment
acquired in substitution for, as a renewal or replacement of, or a modification or improvement to, all
or any part of the facilities described in the Loan Agreement and Subordinate Loan Agreement.
later of (a) the date which is 55 years after the date on which fifty percent (50%) of the dwelling units
in the Project are occupied, (b) the first day on which no Tax-Exempt obligations with respect to the
Project are Outstanding, or (c) the date on which any assistance provided with respect to the Project
under Section 8 of the United States Housing Act of 1937 terminates.
Regulations means the Income Tax Regulations of the Department of the Treasury
applicable under the Code from time to time.
Regulatory Agreement means this Regulatory Agreement and Declaration of Restrictive
Covenants, as it may be supplemented and amended from time to time.
Rental Payments means the rental payments paid by the occupant of a unit, excluding any
supplemental rental assistance to the occupant from the State, the federal government, or any other
public agency, but including any mandatory fees or charges imposed on the occupant by the Owner
as a condition of occupancy of the unit.
Representative or means during any
period in which the Subordinate Bonds are outstanding, the Subordinate Bondholder
Representative under and as such term is defined in the Subordinate Indenture. If at any time the
Subordinate Bonds are not outstanding then there is no Subordinate Bondholder Representative and
references herein to the Subordinate Bondholder Representative are void and inapplicable and shall
be disregarded.
Chula Vista Housing Authority Multifamily Housing
Revenue Bonds (St. Regis Park Apartments), Subordinate 2019 Series B-4, in the original aggregate
principal amount of $________________.
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Subordinate Indenture of Trust, by and between the
Governmental Lender and the Subordinate Trustee, dated as of June 1, 2019, as the same may be
modified, amended or supplemented from time to time.
Governmental Lender, Subordinate Trustee, and Owner, dated as of June 1, 2019, as the same may
be modified, amended or supplemented from time to time.
trustee under the Subordinate Indenture.
Tax-Exempt means with respect to interest on any obligations of a state or local
government, including the Tax-Exempt Obligations, that such interest is excluded from gross income
for federal income tax purposes; provided, however, that such interest may be includable as an item
of tax preference or otherwise includable directly or indirectly for purposes of calculating other tax
liabilities, including any alternative minimum tax or environmental tax, under the Code.
-, the Notes and the Subordinate Bonds.
Tax Certificate means the Tax Certificate as defined in the Funding Loan Agreement.
Transfer means the conveyance, assignment, sale or other disposition of all or any portion
of the Project; and shall also include, without limitation to the foregoing, the following: (1) an
installment sales agreement wherein Owner agrees to sell the Project or any part thereof for a price to
be paid in installments; and (2) an agreement by the Owner leasing all or a substantial part of the
Project to one or more persons or entities pursuant to a single or related transactions.
tenants therein does not exceed limits determined in a manner consistent with determinations of
- 8 of the Housing Act, provided that the percentage of
median gross income that qualifies as very low income hereunder shall be fifty percent (50%) of
median gross income for the Area, with adjustments for family size. A unit occupied by one or more
students shall only constitute a Very Low Income Unit if such students meet the requirements of
Section 142(d)(2)(C) of the Code. The determination of an Available Unit's status as a Very Low
Income Unit shall be made by the Owner upon commencement of each lease term with respect to
such unit, and annually thereafter, on the basis of an Income Certification executed by each tenant.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of
any gender shall be construed to include each other gender when appropriate and words of the
singular number shall be construed to include the plural number, and vice versa, when appropriate.
This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate
the purposes set forth herein and to sustain the validity hereof.
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The titles and headings of the sections of this Regulatory Agreement have been inserted for
convenience of reference only, and are not to be considered a part hereof and shall not in any way
modify or restrict any of the terms or provisions hereof or be considered or given any effect in
construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any
question of intent shall arise.
The parties to this Regulatory Agreement acknowledge that each party and their respective
counsel have participated in the drafting and revision of this Regulatory Agreement. Accordingly, the
parties agree that any rule of construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Regulatory Agreement or any supplement or
exhibit hereto.
Section 2. Representations, Covenants and Warranties of the Owner.
(a) The Owner hereby incorporates herein, as if set forth in full herein, each of the
representations, covenants and warranties of the Owner contained in the Tax Certificate and the Loan
Agreement relating to the Project.
(b) The Owner hereby represents and warrants that the Project is located entirely within
the City.
(c) The Owner acknowledges, represents and warrants that it understands the nature and
structure of the transactions contemplated by this Regulatory Agreement; that it is familiar with the
provisions of all of the documents and instruments relating to the Tax-Exempt Obligations to which
it is a party or of which it is a beneficiary; that it understands the financial and legal risks inherent in
such transactions; and that it has not relied on the Governmental Lender for any guidance or
expertise in analyzing the financial or other consequences of such financing transactions or otherwise
relied on the Governmental Lender in any manner except to execute and deliver or issue, as the case
may be, the Tax-Exempt Obligations in order to provide funds to assist the Owner in rehabilitating
and developing the Project.
Section 3. Qualified Residential Rental Project. The Owner hereby acknowledges and
agrees that the Project is to be owned, managed and operated as a residential rental project (within
the meaning of Section 142(d) of the Code) for a term equal to the Compliance Period. To that end,
and for the term of this Regulatory Agreement, the Owner hereby represents, covenants, warrants and
agrees as follows:
(a) The Project will be rehabilitated, developed and operated for the purpose of providing
multifamily residential rental property. The Owner will own, manage and operate the Project as a
project to provide multifamily residential rental property comprised of a building or structure or
several interrelated buildings or structures, together with any functionally related and subordinate
facilities, and no other facilities, in accordance with Section 142(d) of the Code, Section 1.103-8(b)
of the Regulations and the provisions of the Housing Law, and in accordance with such requirements
as may be imposed thereby on the Project from time to time.
(b) All of the dwelling units in the Project (except for not more than one unit set aside for
a resident manager or other administrative use) will be similarly constructed units, and each dwelling
unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating,
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cooking and sanitation for a single person or a family, including a sleeping area, bathing and
sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized on a transient
basis or rented for a period of less than 30 consecutive days, or will ever be used as a hotel, motel,
dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest
home or trailer court or park; provided that the use of certain units for tenant guests on an
intermittent basis shall not be considered transient use for purposes of this Regulatory Agreement.
(d) No part of the Project will at any time during the Compliance Period be owned by a
cooperative housing corporation, nor shall the Owner take any steps in connection with a conversion
to such ownership or use, and the Owner will not take any steps in connection with a conversion of
the Project to condominium ownership during the Compliance Period (except that the Owner may
obtain final map approval and the Final Subdivision Public Report from the California Department of
Real Estate and may file a condominium plan with the City).
(e) All of the Available Units in the Project will be available for rental during the period
beginning on the date hereof and ending on the termination of the Compliance Period on a
continuous, first-come, first-served basis to members of the general public; which for purposes of
this Regulatory Agreement means the general population, and the Owner will not give preference to
any particular class or group in renting the dwelling units in the Project, except to the extent that
dwelling units are required to be leased or rented in such a manner that they constitute Low Income
Units or Very Low Income Units.
(f) The Project consists of a parcel or parcels that are contiguous except for the
interposition of a road, street or stream, and all of the facilities of the Project comprise a single
geographically and functionally integrated project for residential rental property, as evidenced by the
ownership, management, accounting and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Owner; provided, however,
that if the Project contains five or more dwelling units, this provision shall not be construed to
prohibit occupancy of not more than one dwelling unit by a resident manager or maintenance
personnel, any of whom may be the Owner.
Section 4. Low Income Tenants and Very Low Income Tenants; Reporting
Requirements. Pursuant to the requirements of the Code, the Owner hereby represents, warrants and
covenants as follows:
(a) During the Compliance Period, no less than 94 of the total number of completed units
in the Project shall at all times be Low Income Units and 24 of the total number of completed units in
the Project shall at all times be Very Low Income Units. For the purposes of this paragraph (a), a
vacant unit that was most recently a Low Income Unit or Very Low Income Unit is treated as a Low
Income Unit or Very Low Income Unit, respectively, until reoccupied, other than for a temporary
period of not more than 31 days, at which time the character of such unit shall be redetermined.
(b) No tenant qualifying as a Low Income Tenant or Very Low Income Tenant upon
initial occupancy shall be denied continued occupancy of a unit in the Project because, after
admission, the aggregate Gross Income of all tenants in the unit occupied by such Low Income
Tenant or Very Low Income Tenant, respectively, increases to exceed the qualifying limit for a Low
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Income Unit or Very Low Income Unit, respectively. However, should the aggregate Gross Income
of tenants in a Low Income Unit or Very Low Income Unit as of the most recent determination
thereof, exceed one hundred forty percent (140%) of the applicable income limit for a Low Income
Unit or Very Low Income Unit, respectively, occupied by the same number of tenants, the next
available unit of comparable or smaller size must be rented to (or held vacant and available for
immediate occupancy by) Low Income Tenant(s) or Very Low Income Tenant(s), respectively. The
unit occupied by such tenants whose aggregate Gross Income exceeds such applicable income limit
shall continue to be treated as a Low Income Unit or Very Low Income Unit for purposes of the
requirements of Section 4(a) hereof unless and until an Available Unit of comparable or smaller size
is rented to persons other than Low Income Tenants or Very Low Income Tenants, respectively.
(c) For the Compliance Period, the Owner will obtain, complete and maintain on file
Income Certifications for each Low Income Tenant and Very Low Income Tenant, including (i) an
Income Certification dated immediately prior to the initial occupancy of such Low Income Tenant or
Very Low Income Tenant in the unit and a second Income Certification dated one year after the Low
-in date, and (ii) thereafter, an annual
Income Certification with respect to each Low Income Tenant and Very Low Income Tenant. In lieu
of obtaining the annual Income Certifications required by clause (ii) of the preceding sentence, the
Owner may, with respect to any particular twelve-month period ending November 1, deliver to the
Administrator no later than fifteen days after such date a certification that as of November 1, no
residential unit in the Project was occupied within the preceding twelve months by a new resident
whose income exceeded the limit applicable to Low Income Tenants or Very Low Income upon
admission to the Project. The Administrator may at any time and in its sole and absolute discretion
notify the Owner in writing that it will no longer accept certifications of the Owner made pursuant to
the preceding sentence and that the Owner will thereafter be required to obtain annual Income
Certifications for tenants. The Owner will also provide such additional information as may be
required in the future by the Code, the State or the Governmental Lender, as the same may be
amended from time to time, or in such other form and manner as may be required by applicable rules,
rulings, policies, procedures, Regulations or other official statements now or hereafter promulgated,
proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to
Tax-Exempt obligations. Upon request of the Administrator or the Governmental Lender, copies of
Income Certifications for Low Income Tenants and Very Low Income Tenants commencing or
continuing occupation of a Low Income Unit or Very Low Income Unit, respectively, shall be
submitted to the Administrator or the Governmental Lender, as requested.
(d) The Owner shall make a good faith effort to verify that the income information
provided by an applicant in an Income Certification is accurate by taking one or more of the
following steps as a part of the verification process: (1) obtain pay stubs for the three most recent
pay periods, (2) obtain an income tax return for the most recent tax year, (3) obtain a credit report or
conduct a similar type credit search, (4)
employer, (5) obtain an income verification from the Social Security Administration and/or the
California Department of Social Services if the applicant receives assistance from either of such
agencies, or (6) if the applicant is unemployed and does not have an income tax return, obtain
another form of independent verification reasonably acceptable to the Governmental Lender.
(e) The Owner will maintain complete and accurate records pertaining to the Low
Income Units and Very Low Income Units, and will permit any duly authorized representative of the
Governmental Lender, the Department of the Treasury or the Internal Revenue Service to inspect the
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books and records of the Owner pertaining to the Project, including those records pertaining to the
occupancy of the Low Income Units and Very Low Income Units.
(f) The Owner will prepare and submit to the Administrator, on behalf of the
Governmental Lender, not less than annually, commencing not less than one year after the Closing
Date, a Certificate of Continuing Program Compliance executed by the Owner in substantially the
form attached hereto as Exhibit C. During the Compliance Period, the Owner shall submit a
completed Internal Revenue Code Form 8703 or such other annual certification as required by the
Code with respect to the Project, to the Secretary of the Treasury on or before March 31 of each year
(or such other date as may be required by the Code).
(g) For the Compliance Period, all tenant leases or rental agreements shall be subordinate
to this Regulatory Agreement and the Deed of Trust. All leases pertaining to Low Income Units or
Very Low Income Units shall contain clauses, among others, wherein each tenant who occupies a
Low Income Unit or Very Low Income Unit: (i) certifies the accuracy of the statements made by
such tenant in the Income Certification; (ii) agrees that the family income and other eligibility
requirements shall be deemed substantial and material obligations of the tenancy of such tenant, that
such tenant will comply promptly with all requests for information with respect thereto from the
Owner, the Governmental Lender or the Administrator on behalf of the Governmental Lender, and
that the failure to provide accurate information in the Income Certification or refusal to comply with
a request for information with respect thereto shall be deemed a violation of a substantial obligation
of the tenancy of such tenant; (iii) acknowledges that the Owner has relied on the statements made by
such tenant in the Income Certification and supporting information supplied by the Low Income
Tenant or Very Low Income Tenant in determining qualification for occupancy of a Low Income
Unit or Very Low Income Unit, respectively, and that any material misstatement in such certification
(whether or not intentional) will be cause for immediate termination of such lease or rental
agreement; and (iv) ication in accordance
with Section 4(c) and that if upon any such certification the aggregate Gross Income of tenants in
such unit exceeds the applicable income limit under Section 4(b), the unit occupied by such tenant
may cease to qualify as a Low Income Unit or Very Low Income Tenant, respectively, and such
For purposes of this Section 4, no unit occupied by a residential manager shall be treated as a
rental unit during the time of such occupation.
Section 5. Tax-Exempt Status of Tax-Exempt Obligations. The Owner and the
Governmental Lender, as applicable, each hereby represents, warrants and agrees as follows:
(a) The Owner and the Governmental Lender will not knowingly take or permit, or omit
to take or cause to be taken, as is appropriate, any action that would adversely affect the Tax-Exempt
nature of the interest on the Tax-Exempt Obligations and, if either of them should take or permit, or
omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind
or correct such actions or omissions promptly upon obtaining knowledge thereof.
(b) The Owner and the Governmental Lender will file of record such documents and take
such other steps as are necessary, in the written opinion of Tax Counsel filed with the Governmental
Lender (with a copy to the Owner), in order to insure that the requirements and restrictions of this
Regulatory Agreement will be binding upon all owners of the Project, including, but not limited to,
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the execution and recordation of this Regulatory Agreement in the real property records of the
County.
Section 6. Requirements of the Housing Law. In addition to the other requirements set
forth herein, the Owner hereby agrees that it shall comply with each of the requirements of
Section 52080 of the Housing Law, including the following:
(a) Not less than 94 of the total number of units in the Project shall be Low Income Units
and not less than 24 of the total number of units in the Project shall be Very Low Income Units. The
units made available to meet these requirements shall be of comparable quality and offer a range of
sizes and numbers of bedrooms comparable to the units that are available to other tenants in the
Project.
(b) The Rental Payments for the Low Income Units paid by the tenants thereof
(excluding any supplemental rental assistance from the State, the federal government or any other
public agency to those tenants or on behalf of those units) shall not exceed 30% of an amount equal
to 60% of the median adjusted gross income for the Area. The Rental Payments for the Very Low
Income Units paid by the tenants thereof (excluding any supplemental rental assistance from the
State, the federal government or any other public agency to those tenants or on behalf of those units)
shall not exceed 30% of an amount equal to 50% of the median adjusted gross income for the Area.
(c) The Owner shall accept as tenants, on the same basis as all other prospective tenants,
low-income persons who are recipients of federal certificates or vouchers for rent subsidies pursuant
to the existing program under Section 8 of the Housing Act. The Owner shall not permit any
selection criteria to be applied to Section 8 certificate or voucher holders that is more burdensome
than the criteria applied to all other prospective tenants.
(d) The units reserved for occupancy as required by Section 4(a) shall remain available
on a priority basis for occupancy at all times on and after the Closing Date and continuing through
the Compliance Period.
(e) During the three (3) years prior to the expiration of the Compliance Period, the
Owner shall continue to make available, to eligible households, Low Income Units and Very Low
Income Units that have been vacated to the same extent that nonreserved units are made available to
noneligible households.
(f) Following the expiration or termination of the Compliance Period, except in the event
of foreclosure and payoff of the Tax-Exempt Obligations, deed in lieu of foreclosure, eminent
domain, or action of a federal agency preventing enforcement, units reserved for occupancy as
required by subsection (a) of this Section shall remain available to any eligible tenant occupying a
reserved unit at the date of such expiration or termination, at the rent determined by subsection (b) of
this Section, until the earliest of (1)
income specified above, (2) the household voluntarily moves or is evicted for good cause (as defined
in the Housing Law), (3) 60 years after the date of the commencement of the Compliance Period, or
(4) the Owner pays the relocation assistance and benefits to households as provided in Section
7264(b) of the California Government Code.
(g) Except as set forth in Section 13 hereof, the covenants and conditions of this
Regulatory Agreement shall be binding upon successors in interest of the Owner.
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(h) This Regulatory Agreement shall be recorded in the office of the County recorder,
and shall be recorded in the grantor-grantee index under the name of the Owner as grantor and under
the name of the Governmental Lender as grantee.
Section 7. Requirements of the Governmental Lender. In addition to other requirements
set forth herein and to the extent not prohibited by the requirements set forth in Sections 4 through 6
hereof, the Owner hereby agrees to comply with each of the requirements of the Governmental
Lender set forth in this Section 7, as follows:
(a) For the duration of the Compliance Period, notwithstanding any retirement of the
Tax-Exempt Obligations or termination of the Loan Agreement or Subordinate Loan Agreement, the
Owner will pay to the Governmental Lender all of the amounts required to be paid by the Owner
under the Loan Agreement and Section 19 hereof and will indemnify the Governmental Lender as
provided in Section 9 of this Regulatory Agreement.
(b) All tenant lists, applications and waiting lists relating to the Project shall at all times
be kept separate and identifiable from any other business of the Owner and shall be maintained as
required by the Governmental Lender, in a reasonable condition for proper audit and subject to
examination during business hours by representatives of the Governmental Lender upon reasonable
advance notice to the Owner.
(c) The Owner acknowledges that the Governmental Lender has appointed the
Administrator to administer this Regulatory Agreement and to monitor performance by the Owner of
the terms, provisions and requirements hereof. The Owner shall comply with any reasonable request
made by the Administrator or the Governmental Lender to deliver to any such Administrator, in
addition to or instead of the Governmental Lender, any reports, notices or other documents required
to be delivered pursuant hereto, and to make the Project and the books and records with respect
thereto available for inspection by the Administrator as an agent of the Governmental Lender. The
fees and expenses of the Administrator shall be paid by the Governmental Lender.
(d) For purposes of Section 6(b), the base rents shall be adjusted for household size,
based upon the following unit sizes and household sizes:
Unit Size Household Size
One Bedroom One Persons
Two Bedrooms Two Persons
Three Bedrooms Three Persons
(e) Notwithstanding any other provisions of this Regulatory Agreement, in no event shall
all of the rent, including the portion paid by the Low Income Tenant and any other person or entity,
in this Regulatory Agreement. Total Rent includes all payments made by the Low Income Tenant
and all subsidies received by Owner. In the case of Low Income Tenants receiving Section 8
benefits, Owner acknowledges that it shall not accept any subsidy or payment that would cause the
Total Rent received for any Low Income Unit to exceed the maximum rents allowed by this
Regulatory Agreement for such Low Income Unit. Should Owner receive Total Rent in excess of the
allowable maximum rent set forth in this Regulatory Agreement for a Low Income Unit, Owner
agrees to immediately notify the Governmental Lender and reimburse the Governmental Lender for
any such overpayment.
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Any of the foregoing requirements of the Governmental Lender contained in this Section 7
may be expressly waived by the Governmental Lender, in its sole discretion, in writing, but (i) no
waiver by the Governmental Lender of any requirement of this Section 7 shall, or shall be deemed to,
extend to or affect any other provision of this Regulatory Agreement except to the extent the
Governmental Lender has received an opinion of Tax Counsel that any such provision is not required
by the Housing Law and may be waived without adversely affecting the exclusion from gross income
of interest on the Tax-Exempt Obligations for federal income tax purposes; and (ii) any requirement
of this Section 7 shall be void and of no force and effect if the Governmental Lender and the Owner
receive a written opinion of Tax Counsel to the effect that compliance with any such requirement
would cause interest on the Tax-Exempt Obligations to cease to be Tax-Exempt or to the effect that
compliance with such requirement would be in conflict with the Housing Law or any other state or
federal law.
Section 8. Modification of Covenants. The Owner and the Governmental Lender hereby
agree as follows:
(a) To the extent any amendments to the Housing Law, the Regulations or the Code
shall, in the written opinion of Tax Counsel filed with the Governmental Lender and the Owner,
retroactively impose requirements upon the ownership or operation of the Project more restrictive
than those imposed by this Regulatory Agreement, and if such requirements are applicable to the
Project and compliance therewith is necessary to maintain the validity of, or the Tax-Exempt status
of interest on the Tax-Exempt Obligations, this Regulatory Agreement shall be deemed to be
automatically amended to impose such additional or more restrictive requirements.
(b) To the extent that the Housing Law, the Regulations or the Code, or any amendments
thereto, shall, in the written opinion of Tax Counsel filed with the Governmental Lender and the
Owner, impose requirements upon the ownership or operation of the Project less restrictive than
imposed by this Regulatory Agreement, this Regulatory Agreement may be amended or modified to
provide such less restrictive requirements but only by written amendment signed by the
Governmental Lender, at its sole discretion, and the Owner, with the consent of the Noteowner
Representative and Subordinate Bondholder Representative, and only upon receipt by the
Governmental Lender of the written opinion of Tax Counsel to the effect that such amendment will
not affect the Tax-Exempt status of interest on the Tax-Exempt Obligations or violate the
requirements of the Housing Law, and otherwise in accordance with Section 21 hereof.
(c) The Owner and the Governmental Lender shall execute, deliver and, if applicable,
file of record any and all documents and instruments necessary to effectuate the intent of this
Section 8.
Section 9. Indemnification; Other Payments. To the fullest extent permitted by law, the
Owner agrees to indemnify, hold harmless and defend the Governmental Lender and each of its
officers, governing members, directors, officials, employees, attorneys, agents, and program
participants (collectively, the Indemnified Parties), against any and all losses, damages, claims,
actions, liabilities, costs and expenses of any conceivable nature, kind or character (including,
and expenses, litigation and court costs, amounts paid
in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of
them, may become subject under or any statutory law (including federal or state securities laws) or at
common law or otherwise, arising out of or based upon or in any way relating to:
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(i) the Tax-Exempt Obligations, the Funding Loan Agreement, the Loan
Agreement, the Subordinate Indenture, the Subordinate Loan Agreement, this Regulatory
Agreement, or the Tax Certificate and all documents related thereto, or the execution or
amendment hereof or thereof or in connection with transactions contemplated hereby or
thereby, including, as applicable, the execution and delivery or transfer of interests in the
Tax-Exempt Obligations;
(ii) any act or omission of the Owner or any of its agents, contractors, servants,
employees or licensees in connection with the Loan or the Project, the operation of the
Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or
management of work done in or about, or from the planning, design, acquisition, installation,
construction or rehabilitation of, the Project or any part thereof;
(iii) any lien or charge upon payments by the Owner to the Governmental Lender
or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments,
impositions and other charges imposed on the Governmental Lender in respect of any portion
of the Project;
(iv) any violation of any environmental law, rule or regulation with respect to, or
the release of any toxic substance from, the Project or any part thereof;
(v) the defeasance and/or redemption, in whole or in part, of the Tax-Exempt
Obligations;
(vi) any untrue statement or misleading statement or alleged untrue statement or
alleged misleading statement of a material fact contained in any offering statement or
disclosure document for the Tax-Exempt Obligations or any of the documents relating to the
Tax-Exempt Obligations, or any omission or alleged omission from any offering statement or
disclosure document for the Tax-Exempt Obligations of any material fact necessary to be
stated therein in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; or
(vii) any declaration of taxability of interest on the Tax-Exempt Obligations, or
allegations (or regulatory inquiry) that interest on the Tax-Exempt Obligations is taxable for
federal tax purposes;
except to the extent such damages are caused by the willful misconduct or gross negligence of such
Indemnified Party. In the event that any action or proceeding is brought against any Indemnified
Party with respect to which indemnity may be sought hereunder, the Owner, upon written notice
from the Indemnified Party, shall assume the investigation and defense thereof, including the
employment of counsel selected by the Indemnified Party, and shall assume the payment of all
expenses related thereto, with full power to litigate, compromise or settle the same in its sole
discretion; provided that the Indemnified Party shall have the right to review and approve or
disapprove any such compromise or settlement. Each Indemnified Party shall have the right to
employ separate counsel in any such action or proceeding and participate in the investigation and
defense thereof, and the Owner shall pay the reasonable fees and expenses of such separate counsel;
provided, however, that such Indemnified Party may only employ separate counsel at the expense of
the Owner if in the judgment of such Indemnified Party a conflict of interest exists by reason of
common representation or if all parties commonly represented do not agree as to the action (or
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inaction) of counsel. In addition to the foregoing, the Owner shall pay upon demand all of the fees
and expenses paid or incurred by the Governmental Lender in enforcing the provisions hereof.
In addition thereto, the Owner will pay upon demand all of the fees and expenses paid or
incurred by the Governmental Lender in enforcing the provisions hereof, as more fully set forth in
the Loan Agreement.
The provisions of this Section 9 shall survive the final payment or defeasance of the Tax-
Exempt Obligations and the term of this Regulatory Agreement.
Section 10. Consideration. The Governmental Lender has agreed to execute and deliver
the Tax-Exempt Obligations to provide funds to lend to the Owner to finance the Project, all for the
purpose, among others, of inducing the Owner to acquire, construct, develop and operate the Project.
In consideration of the execution and delivery of the Tax-Exempt Obligations by the Governmental
Lender, the Owner has entered into this Regulatory Agreement and has agreed to restrict the uses to
which this Project can be put on the terms and conditions set forth herein.
Section 11. Reliance. The Governmental Lender and the Owner hereby recognize and
agree that the representations and covenants set forth herein may be relied upon by all persons,
including but not limited to the Administrator, interested in the legality and validity of the Tax-
Exempt Obligations, in the exemption from California personal income taxation of interest on the
Tax-Exempt Obligations and in the Tax-Exempt status of the interest on the Tax-Exempt
Obligations. In performing their duties and obligations hereunder, the Governmental Lender, the
Administrator may rely upon statements and certificates of the Low Income Tenants, and upon audits
of the books and records of the Owner pertaining to the Project. In addition, the Governmental
Lender may consult with counsel, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by the Governmental Lender
hereunder in good faith and in conformity with such opinion.
Section 12. Transfer of the Project. For the Compliance Period, the Owner shall not
Transfer the Project, in whole or in part, without the prior written consent of the Governmental
Lender, which consent shall not be unreasonably withheld or delayed if the following conditions are
satisfied: (A) the receipt by the Governmental Lender of evidence acceptable to the Governmental
Lender that (1) the Owner shall not be in default hereunder or under the Loan Agreement, if in effect
(which may be evidenced by a Certificate of Continuing Program Compliance), or the transferee
undertakes to cure any defaults of the Owner to the reasonable satisfaction of the Governmental
Lender; (2) the continued operation of the Project shall comply with the provisions of this Regulatory
Agreement; (3) either (a)
experience in the ownership, operation and management of rental housing projects containing below-
market-rate units, without any record of material violations of discrimination restrictions or other
state or federal laws or regulations or local governmental requirements applicable to such projects, or
(b) the transferee agrees to retain a Manager with the experience and record described in subclause
(a) above, or (c) the transferring Owner or its management company will continue to manage the
Project, or another management company reasonably acceptable to the Governmental Lender will
manage, for at least one year following such Transfer and, if applicable, during such period the
transferring Owner or its management company will provide training to the transferee and its
manager in the responsibilities relating to the Low Income Units; and (4) the person or entity that is
to acquire the Project does not have pending against it, and does not have a history of significant and
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material building code violations or complaints concerning the maintenance, upkeep, operation, and
regulatory agreement compliance of any of its projects as identified by any local, state or federal
regulatory agencies; (B) the execution by the transferee of any document reasonably requested by the
Governmental Lender w
Regulatory Agreement and the Loan Agreement (if then in effect), including without limitation an
instrument of assumption hereof and thereof, and delivery to the Governmental Lender of an opinion
valid, binding and enforceable obligations of such transferee, subject to bankruptcy and other
) receipt by the Governmental Lender of an opinion
of Tax Counsel to the effect that any such Transfer will not adversely affect the Tax-Exempt status of
interest on the Tax-Exempt Obligations; (D) receipt by the Governmental Lender of all fees and/or
expenses then currently due and payable to the Governmental Lender by the Owner; and (E) receipt
by the Governmental Lender of evidence of satisfaction of compliance with the provisions of
Section 28(d)(i) related to notice to CDLAC of transfer of the Project.
It is hereby expressly stipulated and agreed that any Transfer of the Project in violation of
this Section 12 shall be null, void and without effect, shall cause a reversion of title to the Owner,
and shall be ineffective to relieve the Owner of its obligations under this Regulatory Agreement. The
written consent of the Governmental Lender to any Transfer of the Project shall constitute conclusive
evidence that the Transfer is not in violation of this Section 12. Nothing in this Section shall affect
any provision of any other document or instrument between the Owner and any other party which
requires the Owner to satisfy certain conditions or obtain the prior written consent of such other party
in order to Transfer the Project. Upon any Transfer that complies with this Regulatory Agreement,
the Owner shall be fully released from its obligations hereunder to the extent such obligations have
been fully assumed in writing by the transferee of the Project.
The foregoing notwithstanding, the Project may be transferred pursuant to a foreclosure,
exercise of power of sale or deed in lieu of foreclosure or comparable conversion under the Deed of
Trust without the consent of the Governmental Lender or compliance with the provisions of this
Section 12. The Governmental Lender hereby approves the transfer of limited partnership interests
in the Owner, including, without limitation, the transfer of limited partnership interests in the Owner
from the Investor Limited Partner and the transfer of interests in the limited partner of Owner. The
Governmental Lender
partnership agreement shall not require the consent of Governmental Lender.
For the Compliance Period, the Owner shall not: (1) encumber any of the Project or grant
commercial leases of any part thereof, or permit the conveyance, transfer or encumbrance of any part
of the Project, except for (A) encumbrances permitted under the Deed of Trust, or (B) a Transfer in
accordance with the terms of this Regulatory Agreement, in each case upon receipt by the
Governmental Lender of an opinion of Tax Counsel to the effect that such action will not adversely
affect the Tax-Exempt status of interest on the Tax-Exempt Obligations (provided that such opinion
will not be required with respect to any encumbrance, lease or transfer relating to a commercial
operation or ancillary facility that will be available for tenant use and is customary to the operation of
multifamily housing developments similar to the Project); (2) demolish any part of the Project or
substantially subtract from any real or personal property of the Project, except to the extent that what
is demolished or removed is replaced with comparable property or such demolition or removal is
otherwise permitted by the Loan Agreement or the Deed of Trust; or (3) permit the use of the
dwelling accommodations of the Project for any purpose except rental residences.
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2019-06-11 Agenda PacketPage 814 of 891
Section 13. Term. This Regulatory Agreement and all and several of the terms hereof
shall become effective upon its execution and delivery, and shall remain in full force and effect for
the period provided herein and shall terminate as to any provision not otherwise provided with a
specific termination date and shall terminate in its entirety at the end of the Compliance Period, it
being expressly agreed and understood that the provisions hereof are intended to survive the
retirement of the Tax-Exempt Obligations and discharge of the Funding Loan Agreement, the Loan
Agreement, the Subordinate Indenture and the Subordinate Loan Agreement.
The terms of this Regulatory Agreement to the contrary notwithstanding, the requirements of
this Regulatory Agreement shall terminate and be of no further force and effect in the event of
involuntary noncompliance with the provisions of this Regulatory Agreement caused by fire or other
casualty, seizure, requisition, foreclosure or transfer of title by deed in lieu of foreclosure, change in
a federal law or an action of a federal agency after the Closing Date, which prevents the
Governmental Lender from enforcing such provisions, or condemnation or a similar event, but only
if, within a reasonable period, either the Tax-Exempt Obligations are retired or amounts received as a
consequence of such event are used to provide a project that meets the requirements hereof;
provided, however, that the preceding provisions of this sentence shall cease to apply and the
restrictions contained herein shall be reinstated if, at any time subsequent to the termination of such
provisions as the result of the foreclosure or the delivery of a deed in lieu of foreclosure or a similar
event, the Owner or any related person (within the meaning of Section 1.103-10(e) of the
Regulations) obtains an ownership interest in the Project for federal income tax purposes. The
Owner hereby agrees that, following any foreclosure, transfer of title by deed in lieu of foreclosure or
similar event, neither the Owner nor any such related person as described above will obtain an
ownership interest in the Project for federal tax purposes.
Notwithstanding any other provision of this Regulatory Agreement, this Regulatory
Agreement may be terminated upon agreement by the Governmental Lender and the Owner, with the
consent of CDLAC, upon receipt by the Governmental Lender of an opinion of Tax Counsel to the
effect that such termination will not adversely affect the exclusion from gross income of interest on
the Tax-Exempt Obligations for federal income tax purposes. Upon the termination of the terms of
this Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate
instruments of release and discharge of the terms hereof; provided, however, that the execution and
delivery of such instruments shall not be necessary or a prerequisite to the termination of this
Regulatory Agreement in accordance with its terms.
Section 14. Covenants to Run With the Land. Notwithstanding Section 1461 of the
California Civil Code, the Owner hereby subjects the Project to the covenants, reservations and
restrictions set forth in this Regulatory Agreement. The Governmental Lender and the Owner hereby
declare their express intent that the covenants, reservations and restrictions set forth herein shall be
deemed covenants running with the land and shall p
successors in title to the Project; provided, however, that on the termination of this Regulatory
Agreement said covenants, reservations and restrictions shall expire. Each and every contract, deed
or other instrument hereafter executed covering or conveying the Project or any portion thereof shall
conclusively be held to have been executed, delivered and accepted subject to such covenants,
reservations and restrictions, regardless of whether such covenants, reservations and restrictions are
set forth in such contract, deed or other instruments.
Section 15. Burden and Benefit. The Governmental Lender and the Owner hereby
declare their understanding and intent that the burdens of the covenants set forth herein touch and
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2019-06-11 Agenda PacketPage 815 of 891
concern thProject is rendered less valuable thereby.
The Governmental Lender and the Owner hereby further declare their understanding and intent that
the benefits of such covenants touch and concern the land by enhancing and increasing the enjoyment
and use of the Project by Low Income Tenants and Very Low Income Tenants, the intended
beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes
for which the Tax-Exempt Obligations were executed and delivered or issued, as the case may be.
Section 16. Uniformity; Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan
for the use of the site on which the Project is located.
Section 17. Default; Enforcement. If the Owner defaults in the performance or
observance of any covenant, agreement or obligation of the Owner set forth in this Regulatory
Agreement, and if such default remains uncured for a period of 60 days after written notice thereof
shall have been given by the Governmental Lender or the Noteowner Representative or the
Subordinate Bondholder Representative to the Owner, or for a period of 60 days from the date the
Owner should, with reasonable diligence, have discovered such default, then the Governmental
Lender shall declare an Event of Default to have occurred hereunder; provided, however, that if the
default is of such a nature that it cannot be corrected within 60 days, such default shall not constitute
an Event of Default hereunder so long as (i) the Owner institutes corrective action within said 60
days and diligently pursues such action until the default is corrected, and (ii) in the opinion of Tax
Counsel, the failure to cure said default within 60 days will not adversely affect the Tax-Exempt
status of interest on the Tax-Exempt Obligations. The Governmental Lender shall have the right to
enforce the obligations of the Owner under this Regulatory Agreement within shorter periods of time
than are otherwise provided herein if necessary to insure compliance with the Housing Law or the
Code. Any cure of any default made or tendered by the Investor Limited Partner shall be deemed to
be a cure by Owner and shall be accepted or rejected on the same basis as if made or tendered by
Owner.
Following the declaration of an Event of Default hereunder, the Governmental Lender,
subject to the terms of the Funding Loan Agreement, may take any one or more of the following
steps, in addition to all other remedies provided by law or equity:
(i) by mandamus or other suit, action or proceeding at law or in equity, including
injunctive relief, require the Owner to perform its obligations and covenants hereunder or
enjoin any acts or things that may be unlawful or in violation of the rights of the
Governmental Lender hereunder;
(ii) have access to and inspect, examine and make copies of all of the books and
records of the Owner pertaining to the Project;
(iii) take such other action at law or in equity as may appear necessary or
desirable to enforce the obligations, covenants and agreements of the Owner hereunder; and
(iv) with the consent of the Noteowner Representative, which consent shall not be
unreasonably withheld, declare a default under the Funding Loan Agreement or Loan
Agreement, as applicable, and proceed with any remedies provided therein.
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2019-06-11 Agenda PacketPage 816 of 891
herein is the only means by which the Governmental Lender may fully obtain the benefits of this
Regulatory Agreement made by the Owner herein, and the Owner therefore agrees to the imposition
of the remedy of specific performance against it in the case of any Event of Default by the Owner
hereunder.
The Governmental Lender hereby agrees that cure of any Event of Default made or tendered
by any partner of the Owner shall be deemed to be a cure by the Owner and shall be accepted or
rejected on the same basis as if made or tendered by the Owner.
and expenses)
the Governmental Lender incurred in taking any action pursuant to this Section shall be the sole
responsibility of the Owner.
Section 18. Recording and Filing. (a) The Owner shall cause this Regulatory Agreement
and all amendments and supplements hereto and thereto, to be recorded and filed in the real property
records of the County, and in such other places as the Governmental Lender may reasonably request.
The Owner shall pay all fees and charges incurred in connection with any such recording.
(b) The Owner and the Governmental Lender will file of record such other documents
and take such other steps as are reasonably necessary, in the opinion of Tax Counsel, in order to
insure that the requirements and restrictions of this Regulatory Agreement will be binding upon all
owners of the Project.
(c) The Owner hereby covenants to include or reference the requirements and restrictions
contained in this Regulatory Agreement in any documents transferring any interest in the Project to
another person to the end that such transferee has notice of, and is bound by, such restrictions, and,
except in the case of a foreclosure or comparable involuntary conversion of the Deed of Trust,
whereby the Funding Lender becomes the owner of the Project, to obtain the agreement from any
transferee to abide by all requirements and restrictions of this Regulatory Agreement.
Section 19. Payment of Fees. Notwithstanding any prepayment of the Loan and
discharge of the Funding Loan Agreement, the Owner shall continue to pay (or, to the extent allowed
under the Code, shall prepay the present value at such time of) the fees of the Governmental Lender
as provided in this Section 19, unless such prepayment is made in connection with a refunding of the
Tax-Exempt Obligations.
The Owner agrees to pay to the Governmental Lender (i) an initial issuance fee of
$___________, which shall be paid on or before the Closing Date, (ii) the Governmental Lender
$_________________, and shall be payable commencing on the Closing Date and annually on each
___________ 1 thereafter, and continuing throughout the Compliance Period, and (iii) within 30 days
after receipt of request for payment thereof, all reasonable out-of-pocket expenses of the
Governmental Lender (not including salaries and wages of Governmental Lender employees) related
to the Tax-Exempt Obligations, the Project and the financing thereof, including, without limitation,
legal fees and expenses incurred in connection with the interpretation, performance, enforcement or
amendment of any documents relating to the Project or the Tax-Exempt Obligations, including
without limitation any legal fees and expenses incurred in connection with any audit of the Tax-
Exempt Obligations by the Internal Revenue Service.
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2019-06-11 Agenda PacketPage 817 of 891
In the event that the Tax-Exempt Obligations are prepaid in part or in full prior to the
expiration of the Qualified Project Period (other than Notes prepaid on the Conversion Date), the
Annual Administration Fee for the remainder of the Compliance Period, at the option of the
Governmental Lender, shall be paid by the Owner at the time of such redemption of the Tax-Exempt
Obligations and shall be a lump sum amount equal to the present value of the Annual Administration
Fee for the remainder of the Compliance Period discounted at a rate equal to the then current market
rate for U.S. Treasury obligations of a maturity equal to the remaining term of the Compliance
Period.
If the Owner fails to make payment of the Annual Administration Fee for a period of two
consecutive years or more, the Governmental Lender may, in its sole discretion, declare the total
amount of the Annual Administration Fee through the end of the Compliance Period immediately
due and payable, such amount to be discounted at a rate equal to the then current market rate for U.S.
Treasury obligations of a maturity equal to the remaining term of the Compliance Period.
Section 20. Governing Law; Venue. This Regulatory Agreement shall be construed in
accordance with and governed by the laws of the State of California applicable to contracts made and
performed in the State of California. This Regulatory Agreement shall be enforceable in the State of
California, and any action arising hereunder shall (unless waived by the Governmental Lender in
writing) be filed and maintained in the Superior Court of California, County of San Diego.
Section 21. Amendments; Waivers. (a) Except as provided in Sections 8(a) and 28(e)
hereof, this Regulatory Agreement may be amended only by a written instrument executed by the
parties hereto or their successors in title, and duly recorded in the real property records of the County
of San Diego, California, and only upon (i) receipt by the Governmental Lender of an opinion from
Tax Counsel that such amendment will not adversely affect the Tax-Exempt status of interest on the
Tax-Exempt Obligations and is not contrary to the provisions of the Housing Law and (ii) the written
consent of the Noteowner Representative and Subordinate Bondholder Representative, who shall
receive a copy of any such amendment.
(b) Anything to the contrary contained herein notwithstanding, the Governmental Lender
and the Owner hereby agree to amend this Regulatory Agreement to the extent required, in the
opinion of Tax Counsel, in order that interest on the Tax-Exempt Obligations remains Tax-Exempt.
The parties requesting such amendment shall notify the other parties to this Regulatory Agreement of
the proposed amendment, with a copy of such proposed amendment to Tax Counsel and a request
that Tax Counsel render to the Governmental Lender an opinion as to the effect of such proposed
amendment upon the Tax-Exempt status of interest on the Tax-Exempt Obligations. This provision
shall not be subject to any provision of any other agreement requiring any party hereto to obtain the
consent of any other person in order to amend this Regulatory Agreement.
(c) Any waiver of, or consent to, any condition under this Regulatory Agreement must be
expressly made in writing.
Section 22. Notices. Any notice required to be given hereunder shall be made in writing
and shall be given by personal delivery, overnight delivery, certified or registered mail, postage
prepaid, return receipt requested, or by telecopy, in each case at the respective addresses specified in
the Funding Loan Agreement, or at such other addresses as may be specified in writing by the parties
hereto. Unless otherwise specified by the Administrator, the address of the Administrator is:
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2019-06-11 Agenda PacketPage 818 of 891
Chula Vista Housing Authority
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
Unless otherwise specified by CDLAC, the address of CDLAC is:
California Debt Limit Allocation Committee
915 Capitol Mall, Room 311
Sacramento, CA 95814
Attention: Executive Director
The Governmental Lender, the Administrator, CDLAC and the Owner may, by notice given
hereunder, designate any further or different addresses to which subsequent notices, certificates or
other communications shall be sent. Notice shall be deemed given on the date evidenced by the
postal or courier receipt or other written evidence of delivery or electronic transmission; provided
that any telecopy or other electronic transmission received by any party after 4:00 p.m., local time of
the receiving party, as evidenced by the time shown on such transmission, shall be deemed to have
been received the following Business Day. A copy of each notice of default provided to the Owner
hereunder shall also be provided to the Investor and the Noteowner Representative at the addresses
set forth in the Funding Loan Agreement. A copy of each notice of default provided to the Owner
hereunder shall also be provided to the Subordinate Bondholder Representative at the addresses set
forth in the Subordinate Indenture.
A copy of each notice sent by or to the Owner shall also be sent to the Manager at the address
of the Manager provided by the Owner to the Administrator; but such copies shall not constitute
notice to the Owner, nor shall any failure to send such copies constitute a breach of this Regulatory
Agreement or a failure of or defect in notice to the Owner.
The Owner shall notify the Governmental Lender and the Administrator in writing of any
change to the name of the Project or any change of name or address for the Owner or the Manager.
The Owner shall further notify CDLAC in writing of any event provided in Section 28(d) hereof.
Section 23. Severability. If any provision of this Regulatory Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof
shall not in any way be affected or impaired thereby.
Section 24. Multiple Counterparts. This Regulatory Agreement may be simultaneously
executed in multiple counterparts, all of which shall constitute one and the same instrument, and each
of which shall be deemed to be an original.
Section 25. Limitation on Liability. Notwithstanding the foregoing or any other provision
or obligation to the contrary contained in this Regulatory Agreement, (i) the liability of the Owner
under this Regulatory Agreement to any person or entity, including, but not limited to, the
Noteowner Representative, the Subordinate Bondholder Representative or the Governmental Lender
Project, the Pledged
Revenues and the amounts held in the funds and accounts created under the Funding Loan
Agreement, or any rights of the Owner under any guarantees relating to the Project, and such persons
and entities shall look exclusively thereto, or to such other security as may from time to time be
20
2019-06-11 Agenda PacketPage 819 of 891
given for the payment of obligations arising out of this Regulatory Agreement or any other
agreement securing the obligations of the Owner under this Regulatory Agreement; and (ii) from and
after the date of this Regulatory Agreement, no deficiency or other personal judgment, nor any order
or decree of specific performance (other than pertaining to this Regulatory Agreement, any
agreement pertaining to any Project
this Regulatory Agreement), shall be rendered against the Owner, the assets of the Owner (other than
Project, this Regulatory Agreement, amounts held in the funds and
accounts created under the Funding Loan Agreement or Subordinate Bond Documents, any rights of
the Owner under the Funding Loan Agreement, Subordinate Bond Documents or any other
documents relating to the Tax-Exempt Obligations or any rights of the Owner under any guarantees
relating to the Project), its partners, members, successors, transferees or assigns and each of their
respective officers, directors, employees, partners, agents, heirs and personal representatives, as the
case may be, in any action or proceeding arising out of this Regulatory Agreement and the Funding
Loan Agreement or any agreement securing the obligations of the Owner under this Regulatory
Agreement, or any judgment, order or decree rendered pursuant to any such action or proceeding,
except to the extent provided in the Loan Agreement.
Section 26. Third-Party Beneficiary. The City and CDLAC are intended to be and shall
each be a third-party beneficiary of this Regulatory Agreement. The City shall have the right (but
not the obligation) to enforce, separately or jointly with the Governmental Lender or to cause the
Governmental Lender to enforce, the terms of this Regulatory Agreement and to pursue an action for
specific performance or other available remedy at law or in equity in accordance with Section 17
hereof. CDLAC shall have the right (but not the obligation) to enforce the CDLAC Conditions and
to pursue an action for specific performance or other available remedy at law or in equity in
accordance with Section 17 hereof, provided that any such action or remedy shall not materially
adversely affect the interests and rights of the Noteowners and Subordinate Bondholders.
Section 27. Property Management. The Owner agrees that at all times the Project shall be
managed by a property manager (i) approved by the Governmental Lender in its reasonable
discretion and (ii)
ownership, operation and management of rental housing projects containing below-market-rate units,
without any record of material violations of discrimination restrictions or other state or federal laws
or regulations or local governmental requirements applicable to such projects (the Manager). The
Owner shall submit to the Governmental Lender from time to time such information about the
background, experience and financial condition of any existing or proposed Manager as the
Governmental Lender may reasonably require to determine whether such Manager meets the
requirements for a Manager set forth herein. The Governmental Lender reserves the right to conduct
periodic reviews of the management practices and of the Manager to determine if the Project is being
operated and managed in accordance with the requirements and standards of this Agreement. The
Owner agrees to cooperate with the Governmental Lender in such reviews.
Replacement of Manager. If the Governmental Lender determines in its reasonable judgment
that the Project is not being operated and managed in accordance with one or more of the material
requirements or standards of this Agreement, the Governmental Lender may deliver notice to the
Owner and the Noteowner Representative requesting replacement of the Manager, which notice shall
state clearly the reasons for such request. The Owner agrees that, upon receipt of such notice, it shall
within 60 days submit to the Governmental Lender, with copies to the Noteowner Representative, a
proposal to engage a new Manager meeting the requirements of this Section 27. Each of the
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2019-06-11 Agenda PacketPage 820 of 891
Governmental Lender and the Noteowner Representative shall each respond within 30 days to such
proposal or such approval shall be deemed given. Upon receipt of such consent or deemed consent,
the Owner shall within 60 days terminate the exi
Manager. If such proposal is denied by either the Governmental Lender or the Noteowner
Representative, the Owner agrees that upon receipt of notice of such denial, it shall within 60 days
submit to the Governmental Lender, with copies to the Noteowner Representative, a proposal to
engage another new Manager meeting the requirements of this Section 27, subject to the
Governmental LenderNoteowner Representative
terms hereof.
Notwithstanding any other provision of this Section 27 to the contrary, the Noteowner
Representative may at any time by written instruction to the Governmental Lender and the Owner
deny the Governmental Lenderer and direct that the existing
Manager be retained.
Section 28. Requirements of CDLAC. In addition to other requirements set forth herein
and to the extent not prohibited by the requirements set forth in Sections 4 through 6 hereof, the
Owner hereby agrees to comply with each of the requirements of CDLAC set forth in this Section 28,
as follows:
(a) The Owner shall comply with the CDLAC Resolution attached hereto as Exhibit E
and the CDLAC Conditions set forth in Exhibit A thereto (collectively, the CDLAC Conditions),
which conditions are incorporated herein by reference and made a part hereof. The Owner will
prepare and submit to the Governmental Lender, not later than February 1 of each year, until the
Project is completed, and on February 1 every three years thereafter until the end of the Compliance
Period, a Certificate of Compliance II for Qualified Residential Rental Projects, in substantially the
form required or otherwise provided by CDLAC from time to time, executed by an authorized
representative of the Owner. Such Certificate of Compliance II for Qualified Residential Rental
Projects shall be shall be prepared pursuant to the terms of the CDLAC Conditions. Additionally, the
Owner will prepare and submit to the Governmental Lender, a Certificate of Completion, in
substantially the form required or otherwise provided by CDLAC from time to time, executed by an
authorized representative of the Owner certifying among other things to the substantial completion of
the Project. Compliance with the terms of the CDLAC Conditions not contained within this
Regulatory Agreement, but referred to in the CDLAC Conditions are the responsibility of the Owner
to report to the Governmental Lender.
(b) The Owner acknowledges that the Governmental Lender and the Administrator shall
acknowledges that the Governmental Lender will prepare and submit to CDLAC, not later than
March 1 of each year, until the Project is completed, and on March 1 every three years thereafter
until the end of the Compliance Period, a Self-Certification Certificate in the form provided by
CDLAC. The Owner will cooperate fully with the Governmental Lender in connection with such
monitoring and reporting requirements.
(c) Except as otherwise provided in Section 13 of this Regulatory Agreement, this
Regulatory Agreement shall terminate on the date 55 years after the date on which at least fifty
percent (50%) of the units in the Project are first occupied or otherwise after the commencement of
the Qualified Project Period.
22
2019-06-11 Agenda PacketPage 821 of 891
(d) The Owner shall notify CDLAC in writing of: (i) any change in ownership of the
Project, (ii) any change in the Governmental Lender, (iii) any change in the name of the Project or
the Manager; (iv) any material default under the Funding Loan Agreement, the Loan Agreement or
this Regulatory Agreement, including, but not limited to, such defaults associated with the Tax-
Exempt status of the Tax-Exempt Obligations, and the income and rental requirements as provided in
Sections 4 and 6 hereof and the CDLAC Conditions; or (v) termination of this Regulatory
Agreement.
(e) CDLAC shall have the right, but not the obligation, to deliver revised CDLAC
Conditions to the Owner after the Closing Date, at any time; that are not more restrictive than the
original CDLAC Conditions; provided however, that, with the prior written consent of the
Noteowner Representative, which will not be unreasonably withheld: (i) any changes in the terms
and conditions of the CDLAC Conditions prior to the recordation against the Project in the real
property records of the County of a regulatory agreement between Owner and TCAC (TCAC
Regulatory Agreement) shall be limited to such changes as are necessary to correct any factual
errors or to otherwise conform the CDLAC Conditions to any change in facts or circumstances
applicable to the Owner or the Project; and (ii) after recordation of the TCAC Regulatory Agreement,
any changes in the terms and conditions of the CDLAC Conditions shall be limited to such changes
as are necessary to conform Items 1, 6, 7, 10, 11, 12, 14, 15, 16, 18, 19, 20, 21, 22, 23, 24, 25 and/or
26 of Exhibit A to the CDLAC Conditions to any change in terms and conditions requested by
Owner and approved by CDLAC. The Owner shall record or cause to be recorded in the real
property records of the County an amendment to this Regulatory Agreement containing such revised
CDLAC Conditions, executed by the parties hereto or their successor in title and pay any expenses in
connection therewith. The Owner shall provide CDLAC with a copy of that recorded amendment
reflecting the revised CDLAC Conditions.
Any of the foregoing requirements of the CDLAC contained in this Section 28 may be
expressly waived by CDLAC, in its sole discretion, in writing, but (i) no waiver by CDLAC of any
requirement of this Section 28 shall, or shall be deemed to, extend to or affect any other provision of
this Regulatory Agreement except to the extent the Governmental Lender has received an opinion of
Tax Counsel that any such provision is not required by the Housing Law and may be waived without
adversely affecting the exclusion from gross income of interest on the Tax-Exempt Obligations for
federal income tax purposes; and (ii) any requirement of this Section 28 shall be void and of no force
and effect if the Governmental Lender and the Owner receive a written opinion of Tax Counsel to the
effect that compliance with any such requirement would cause interest on the Tax-Exempt
Obligations to cease to be Tax-Exempt or to the effect that compliance with such requirement would
be in conflict with the Housing Law or any other state or federal law.
23
2019-06-11 Agenda PacketPage 822 of 891
IN WITNESS WHEREOF, the Governmental Lender and the Owner have executed this
Regulatory Agreement by duly authorized representatives, all as of the date first above written.
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
\[Execution Page to Regulatory Agreement and Declaration of Restrictive
Covenants Dated as of __________ 1, 2019\]
2019-06-11 Agenda PacketPage 823 of 891
ST. REGIS PARK CIC, LP,
a California limited partnership
By: Pacific Southwest Community Development
Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By:________________________________
Robert Laing
President and Executive Director
By: CIC St. Regis Park, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation, its Manager
By:___________________________
Cheri Hoffman, President
\[Execution Page to Regulatory Agreement and Declaration of Restrictive
Covenants Dated as of __________ 1, 2019\]
2019-06-11 Agenda PacketPage 824 of 891
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
Real property in the City of Chula Vista, County of San Diego, State of California, described
as follows:
A-1
2019-06-11 Agenda PacketPage 825 of 891
EXHIBIT B
FORM OF INCOME CERTIFICATION
B-1
2019-06-11 Agenda PacketPage 826 of 891
EXHIBIT C
FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
The undersigned, ____________________, being duly authorized to execute this certificate
on behalf of ST. REGIS PARK CIC, LP
1. The undersigned has read and is thoroughly familiar with the provisions of the
Chula Vista Housing
AuthorityGovernmental LenderNotes (St. Regis Park
Apartments), Series 2019 Series B-1 and B-2,
Revenue Bonds Subordinate Series B-4, such documents including:
(a) the Regulatory Agreement and Declaration of Restrictive Covenants (the
June 1, 2019 between the Owner and the Governmental
Lender;
(b) the Notes executed and delivered from the Owner to the Governmental
Lender representi, and the Subordinate Note executed
and delivered from the Owner to the Governmental Lender
repay the Subordinate Loan.
2. As of the date of this certificate, the following percentages of residential units in the
Project (i) are occupied by Very Low Income Tenants and Low Income Tenants (as such terms are
defined in the Regulatory Agreement) or (ii) are currently vacant and being held available for such
occupancy and have been so held continuously since the date a Very Low Income Tenant and Low
Income Tenant vacated such unit; as indicated:
1 2 3
Studio Bedroom Bedrooms Bedrooms Total
Occupied by Very Low
Income Tenants: ___ % Unit Nos.: _____ ____ ____ ____ ____
Held vacant for
occupancy continuously
since last occupied by a
Very Low Income
Tenant: ___ % Unit Nos.: _____ ____ ____ ____ ____
1 2 3
Studio Bedroom Bedrooms Bedrooms Total
Occupied by Low Income
Tenants: ___ % Unit Nos.: _____ ____ ____ ____ ____
Held vacant for
occupancy continuously
since last occupied by a
Low Income Tenant: ___ % Unit Nos.: _____ ____ ____ ____ ____
C-1
2019-06-11 Agenda PacketPage 827 of 891
3. The Owner hereby certifies that the Owner is not in default under any of the terms of
the above documents and no event has occurred which, with the passage of time, would constitute an
event of default thereunder, with the exception of the following \[state actions being taken to remedy
default\].
ST. REGIS PARK CIC, LP,
a California limited partnership
By:
Its:
C-2
2019-06-11 Agenda PacketPage 828 of 891
EXHIBIT D
CDLAC RESOLUTION
THE CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE
RESOLUTION NO. 19-___
D-1
2019-06-11 Agenda PacketPage 829 of 891
Stradling Yocca Carlson & Rauth
Draft dated June __, 2019
SUBORDINATE INDENTURE OF TRUST
between
CHULA VISTA HOUSING AUTHORITY,
as Issuer
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
Relating to
$_________________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(ST. REGIS PARK APARTMENTS)
SUBORDINATE 2019 SERIES B-4
Dated as of June 1, 2019
2019-06-11 Agenda PacketPage 830 of 891
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Definitions ................................................................................................................. 4
Section 1.02 Interpretation............................................................................................................ 11
ARTICLE II
THE SUBORDINATE BONDS
Section 2.01 The Subordinate Bonds ............................................................................................ 11
Section 2.02 Limited Obligations ................................................................................................. 12
Section 2.03 Indenture Constitutes Contract ................................................................................ 13
Section 2.04 Form and Execution ................................................................................................. 13
Section 2.05 Authentication.......................................................................................................... 14
Section 2.06 Mutilated, Lost, Stolen or Destroyed Subordinate Bonds ....................................... 14
Section 2.07 Transfer and Exchange of Subordinate Bonds; Persons Treated as Owners;
Restrictions on Transfer ........................................................................................... 14
Section 2.08 Delivery of Subordinate Bonds ............................................................................... 15
Section 2.09 Establishment of Subordinate Loan Fund; Application of Bond Proceeds
and Other Money; Assignment of Subordinate Loan to Trustee ............................. 16
Section 2.10 Subordination ........................................................................................................... 16
ARTICLE III
REDEMPTION OF SUBORDINATE BONDS PRIOR TO MATURITY
Section 3.01 Redemption of Subordinate Bonds Prior to Maturity .............................................. 17
Section 3.02 Notice of Redemption .............................................................................................. 18
Section 3.03 Effect of Notice of Redemption ............................................................................... 19
ARTICLE IV
REVENUES AND FUNDS
Section 4.01 Pledge of Revenues and Assets; Establishment of Funds........................................ 19
Section 4.02 Subordinate Loan Fund ............................................................................................ 20
Section 4.03 Application of Revenues .......................................................................................... 20
Section 4.04 Application of Subordinate Bond Fund ................................................................... 21
Section 4.05 Investment of Funds ................................................................................................ 21
Section 4.06 Money Held for Particular Subordinate Bonds; Funds Held in Trust ..................... 21
Section 4.07 Accounting Records ................................................................................................. 22
Section 4.08 Amounts Remaining in Funds ................................................................................. 22
ARTICLE V
GENERAL COVENANTS AND REPRESENTATIONS
Section 5.01 Payment of Principal and Interest ............................................................................ 22
Section 5.02 Performance of Covenants ....................................................................................... 22
Section 5.03 Representations and Warranties of the Issuer .......................................................... 22
Section 5.04 Inspection of Project Books ..................................................................................... 23
Section 5.05 Damage, Destruction or Condemnation................................................................... 23
Section 5.06 Tax Covenants ......................................................................................................... 23
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TABLE OF CONTENTS
(continued)
ARTICLE VI
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND SUBORDINATE
BONDHOLDERS
Section 6.01 Events of Default ..................................................................................................... 24
Section 6.02 Acceleration; Other Remedies Upon Event of Default ........................................... 25
Section 6.03 Rights of Subordinate Bondholders ......................................................................... 26
Section 6.04 Waiver by Issuer ...................................................................................................... 27
Section 6.05 Application of Money After Default ....................................................................... 27
Section 6.06 Remedies Vested in Trustee .................................................................................... 28
Section 6.07 Remedies of Subordinate Bondholders ................................................................... 28
Section 6.08 Termination of Proceedings ..................................................................................... 28
Section 6.09 Waivers of Events of Default .................................................................................. 29
Section 6.10 Notice to Subordinate Bondholders if Default Occurs ............................................ 29
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01 Standard of Care ...................................................................................................... 29
Section 7.02 Reliance Upon Documents ...................................................................................... 30
Section 7.03 Use of Proceeds ....................................................................................................... 33
Section 7.04 Trustee May Hold Subordinate Bonds .................................................................... 33
Section 7.05 Trust Imposed .......................................................................................................... 33
Section 7.06 Compensation of Trustee ......................................................................................... 33
Section 7.07 Qualifications of Trustee ......................................................................................... 34
Section 7.08 Merger of Trustee .................................................................................................... 34
Section 7.09 Resignation by the Trustee ...................................................................................... 34
Section 7.10 Removal of the Trustee ............................................................................................ 35
Section 7.11 Appointment of Successor Trustee .......................................................................... 35
Section 7.12 Concerning Any Successor Trustee ......................................................................... 35
Section 7.13 Successor Trustee as Trustee, Paying Agent and Subordinate Bond
Registrar ................................................................................................................... 36
Section 7.14 Appointment of Co-Trustee or Separate Trustee ..................................................... 36
Section 7.15 Notice of Certain Events .......................................................................................... 38
Section 7.16 Filing of Financing Statements ................................................................................ 38
ARTICLE VIII
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF CERTAIN DOCUMENTS
Section 8.01 Supplemental Indentures Not Requiring Consent of Subordinate
Bondholders ............................................................................................................. 38
Section 8.02 Supplemental Indentures Requiring Consent of Subordinate Bondholders ............ 39
Section 8.03 Amendments to Subordinate Loan Agreement Not Requiring Consent of
Subordinate Bondholders ......................................................................................... 40
Section 8.04 Amendments to Subordinate Loan Agreement Requiring Consent of
Subordinate Bondholders ......................................................................................... 40
Section 8.05 Consent of Senior Funding Lender .......................................................................... 41
Section 8.06 Opinion of Bond Counsel Required ........................................................................ 41
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TABLE OF CONTENTS
(continued)
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.01 Discharge of Lien .................................................................................................... 41
Section 9.02 Discharge of Liability on Subordinate Bonds.......................................................... 42
Section 9.03 Payment of Subordinate Bonds After Discharge of Indenture ................................ 43
Section 9.04 Deposit of Money or Securities With Trustee ......................................................... 43
ARTICLE X
MISCELLANEOUS
Section 10.01 Consents and Other Instruments of Subordinate Bondholders ................................ 43
Section 10.02 Limitation of Rights ................................................................................................. 44
Section 10.03 Severability .............................................................................................................. 44
Section 10.04 Notices ..................................................................................................................... 44
Section 10.05 Trustee as Paying Agent and Subordinate Bond Registrar ...................................... 46
Section 10.06 Payments Due on Non-Business Days .................................................................... 46
Section 10.07 Counterparts ............................................................................................................. 46
Section 10.08 Laws Governing Indenture and Administration of Trust ......................................... 46
Section 10.09 No Recourse............................................................................................................. 46
EXHIBIT A FORM OF SUBORDINATE BOND .................................................................... A-1
EXHIBIT B .................................................................. B-1
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SUBORDINATE INDENTURE OF TRUST
and dated as of June 1, 2019, by and between the CHULA VISTA HOUSING AUTHORITY
(together with any suc
corporate and politic is duly organized and existing under the Constitution and the laws of the State
of California U.S. Bank National Association, a national banking association
organized and existing under and by virtue of the laws of the United States of America, qualified to
accept and administer the trusts hereby created (together with any successor trustee hereunder and
their respective successors and assigns
W I T N E S S E T H:
WHEREAS, the Issuer is authorized by Chapter 1 of Part 2 of Division 24 of the Health and
revenue bonds and loan the proceeds thereof to finance, among other things, the construction and
equipping of multifamily rental housing for persons and families of low or moderate income; and
WHEREAS, pursuant to the Act and this Subordinate Indenture, the Issuer proposes to
finance the acquisition, rehabilitation and equipping of an 118-unit
multifamily rental housing development to be located within the City of Chula Vista, California
St. Regis Park
WHEREAS, in order to provide a portion of the funds necessary to finance the Project,
pursuant to and in accordance with the Act, the Issuer has entered into a Funding Loan Agreement,
by and among the Issuer, Citibank, N.A., as fund
advance
funds (t apply the proceeds of
rrower Loan Agreement, by and
between the Issuer and St
and
WHEREAS, pursuant to the Senior Funding Loan Agreement, the Issuer executed and
delivered a Governmental Lender Multifamily Note dated June __, 2019 in the aggregate principal
amount of $________ and a Governmental Lender Multifamily Note dated June __, 2019 in the
pursuant to the Senior Borrower Loan Agreement, the Borrower executed and delivered a Borrower
Multifamily Note dated June __, 2019 in the aggregate principal amount of $__________ and a
Borrower Multifamily Note dated June __, 2019 in the aggregate principal amount of $__________
the Senior Borrower Loan Agreement, the Senior Governmental Notes and the Regulatory
2019-06-11 Agenda PacketPage 834 of 891
WHEREAS, pursuant to and in accordance with the Act, the Issuer has authorized and
undertaken to issue revenue bonds to be designated the Chula Vista Housing Authority Multifamily
Housing Revenue Bonds (St. Regis Park Apartments), Subordinate 2019 Series B-4, in the original
aggregate principal amount of $_________________ this
Subordinate Indenture in order to provide a portion of the funds necessary to finance the Project; act
WHEREAS, the Issuer has duly entered into a Subordinate Loan Agreement of even date
d the Trustee specifying the
terms and conditions under which it will issue the Subordinate Bonds and use the proceeds of the sale
thereof to make a mortgage loan in the original aggregate principal amount of $_________________
o the Borrower for the financing of the Project, evidenced by a
pursuant to this Subordinate Indenture;
WHEREASrdinate Note, the Borrower
will execute and deliver to the Issuer a Subordinate Multifamily Deed of Trust, Assignment of Rents,
with respect to the Project, which Subordinate Mortgage will be assigned to the Trustee; and
WHEREAS, to provide for the authentication and delivery of the Subordinate Bonds, to
establish and declare the terms and conditions upon which the Subordinate Bonds are to be issued
and secured and to secure the payment of the principal thereof and of the interest thereon, the Issuer
has authorized the execution and delivery of this Subordinate Indenture;
WHEREAS, the Issuer has determined that all acts and proceedings required by law
necessary to make the Subordinate Bonds, when executed by the Issuer, authenticated and delivered
by the Trustee and duly issued, the valid, binding and legal limited obligations of the Issuer, and to
constitute this Subordinate Indenture a valid and binding agreement for the uses and purposes herein
set forth, in accordance with its terms, have been done and taken, and the execution and delivery of
this Subordinate Indenture have been in all respects duly authorized; and
WHEREAS, the Trustee has trust powers and the power and authority to enter into this
Subordinate Indenture, to accept trusts generally and to accept and execute the trust created by this
Subordinate Indenture; the Trustee has accepted the trust so created and, to evidence such
acceptance, has joined in the execution of this Subordinate Indenture.
NOW, THEREFORE, the Issuer, in consideration of the premises and the acceptance by the
Trustee of the trusts hereby created and of the purchase and acceptance of the Subordinate Bonds by
the holders and owners thereof, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, to secure the payment of the principal of, and interest on the Subordinate
Bonds according to their tenor and effect, and the performance and observance by the Issuer of all
the covenants expressed or implied herein and in the Subordinate Bonds, does hereby grant, bargain,
sell, convey, pledge and assign a security interest, unto the Trustee, and its successors in trust and its
and their assigns in and to
GRANTING CLAUSE FIRST
All right, title and interest of the Issuer in and to all Revenues.
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GRANTING CLAUSE SECOND
All right, title and interest of the Issuer in and to the Subordinate Loan Agreement, the
Subordinate Note and the Subordinate Mortgage (other than the Unassigned Rights), including all
extensions and renewals of the terms thereof, if any, including, but without limiting the generality of
the foregoing, the present and continuing right to receive, receipt for, collect or make claim for any
of the money, income, revenues, issues, profits and other amounts payable or receivable thereunder
(including all casualty insurance benefits or condemnation awards subject to the interests of the
holders of the Senior Obligations (as defined herein)), whether payable under the above-referenced
documents or otherwise, to bring actions and proceedings thereunder or for the enforcement thereof,
and to do any and all things which the Issuer or any other Person is or may become entitled to do
under said documents.
GRANTING CLAUSE THIRD
All funds, money and securities and any and all other rights and interests in property whether
tangible or intangible from time to time hereafter by delivery or by writing of any kind, conveyed,
mortgaged, pledged, assigned or transferred as and for additional security hereunder for the
Subordinate Bonds by the Issuer or by anyone on its behalf or with its written consent to the Trustee,
which is hereby authorized to receive any and all such property at any and all times and to hold and
apply the same subject to the terms hereof.
TO HAVE AND TO HOLD, all the same with all privileges and appurtenances hereby
conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trust
and to them and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and
proportionate benefit, security and protection of all Holders of the Subordinate Bonds issued under
and secured by this Subordinate Indenture without privilege, priority or distinction as to lien or
otherwise of any of the Subordinate Bonds over any of the other Subordinate Bonds, except as set
forth in this Subordinate Indenture;
PROVIDED, HOWEVER, that if the Issuer or its successors or assigns shall pay or cause to
be paid to the Holders of the Subordinate Bonds the principal, interest and, to become due thereon at
the times and in the manner provided in Article IX hereof, and if the Issuer shall keep, perform and
observe, or cause to be kept, performed and observed, all of its covenants, warranties and agreements
contained herein, then these presents and the estate and rights hereby granted shall, at the option of
the Issuer, cease, terminate and be void, and thereupon the Trustee shall cancel and discharge the lien
of this Subordinate Indenture and execute and deliver to the Issuer such instruments in writing as
shall be requisite to satisfy the lien hereof, and, subject to the provisions of Sections 4.06 and 4.08
hereof and Article IX hereof, reconvey to the Issuer the estate hereby conveyed, and assign and
deliver to the Issuer any property at the time subject to the lien of this Subordinate Indenture which
may then be in its possession; otherwise this Subordinate Indenture to be and remain in full force and
effect and upon the trusts and subject to the covenants and conditions hereinafter set forth.
AND IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto,
that the terms and provisions upon which the Subordinate Bonds are to be issued, executed,
authenticated, delivered and secured, and the trusts and conditions upon which the Subordinate Trust
Estate is to be held and disposed of, which said trusts and conditions the said Trustee hereby accepts
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and agrees to discharge, are as follows (except that in the performance of the agreements of the
Issuer herein contained, any obligation it may thereby incur for the payment of money shall not be a
general obligation of the Issuer nor a debt or pledge of the faith and credit of the Issuer or the State,
but shall be payable solely from the revenues and funds pledged for its payment in accordance with
this Subordinate Indenture):
Definitions. Terms used herein and not otherwise defined shall have the
meaning provided in the Senior Loan Documents. The terms used in this Subordinate Indenture
(except as herein otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Subordinate Indenture and of any indenture supplemental hereto shall have the
respective meanings specified below:
Act
California, as amended, as now in effect and as it may from time to time hereafter be amended and
supplemented.
Authorized Amount$_________________, the principal amount of Subordinate
Bonds authorized to be issued under this Subordinate Indenture.
Authorized Officer when used with respect to the Issuer, its Chairperson, Vice
Chairperson, Executive Director or Treasurer, and any other officer or employee of the Issuer
designated by certificate of any of the foregoing as authorized by the Issuer, acting alone, to perform
a specified act, sign a specified document or otherwise take action with respect to the Subordinate
Bonds, (b) when used with respect to the Borrower, any general partner of the Borrower and such
additional Person or Persons, if any, duly designated by the Borrower in writing to act on its behalf,
and (c) when used with respect to the Trustee, any authorized signatory of the Trustee, or any Person
who is authorized in writing to take the action in question on behalf of the Trustee.
Bond Counsel on the Closing Date, the law firm delivering the approving
opinion(s) with respect to the Subordinate Bonds, or (ii) any other firm of attorneys selected by the
Issuer that is experienced in matters relating to the issuance of obligations by states and their political
Bond Resolution means the resolution adopted by the Issuer authorizing the issuance of the
Subordinate Bonds.
BorrowerSt. Regis Park CIC, LP, a limited partnership duly organized and existing
under the laws of the State of California, or any of its permitted successors or assigns, as owner of
the Project.
Business Day a Sunday, (c) a day on which
the Federal Reserve Bank of New York is authorized or obligated by law or executive order to
remain closed, (d) a day on which the Principal Office of the Subordinate Bondholder Representative
is closed, or (e) a day on which (i) banking institutions in the City of New York or in the city in
which the Principal Office of the Trustee or the Subordinate Bondholder Representative is located
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are authorized or obligated by law or executive order to be closed or (ii) the New York Stock
Exchange is closed.
Cash Flowfiscal year of the Borrower (or portion thereof), Gross
Revenues for such period less the sum of (i) Expenses of the Project for such period, (ii) without
duplication, all amounts due on the Senior Obligations for such period, and (iii) the Deferred
Developer Fee.
Certificate of the IssuerRequest of the Issuer
certificate or request signed in the name of the Issuer by an Authorized Officer of the Issuer or such
other Person as may be designated and authorized to sign for the Issuer. Any such instrument and
supporting opinions or representations, if any, may, but need not, be combined in a single instrument
with any other instrument, opinion or representation, and the two or more so combined shall be read
and construed as a single instrument.
Closing DateJune __, 2019, the date of issuance of the Subordinate Bonds.
Code
thereunder.
Default Raterate per annum equal to the lesser of (i) the maximum interest
rate that may be paid on the Bonds under State law or (ii) the Base Rate plus five (5) percentage
points, and shall compound monthly.
Deferred Development Feet Fee (as defined in the
Partnership Agreement) together with any interest thereon not paid by the Completion Date (as
defined in the Partnership Agreement) and payable out of Cash Flow in accordance with the terms of
the Partnership Agreement.
Determination of Taxability shall mean, (a) a determination by the Commissioner or any
District Director of the Internal Revenue Service, (b) a private ruling or Technical Advice
Memorandum issued by the National Office of the Internal Revenue Service in which Issuer and
Borrower were afforded the opportunity to participate, (c) a determination by any court of competent
jurisdiction, (d) the enactment of legislation or (e) receipt by Trustee or Subordinate Bondholder
Representative, at the request of Issuer, Borrower, Trustee or Subordinate Bondholder
Representative, of an opinion of Bond Counsel, in each case to the effect that the interest on the
Subordinate Bonds is includable in gross income for federal income tax purposes of any bondholder
or any former bondhold
147(a) of the Code); provided, however, that
no such Determination of Taxability under clause (a) or (c) shall be deemed to have occurred if the
Issuer (at the sole expense of the Borrower) or the Borrower is contesting such determination, has
elected to contest such determination in good faith and is proceeding with all applicable dispatch to
prosecute such contest until the earliest of (i) a final determination from which no appeal may be
taken with respect to such determination, (ii) abandonment of such appeal by the Issuer or the
Borrower, as the case may be, or (iii) unless otherwise agreed to by the Subordinate Bondholder
Representative in its sole and reasonable discretion, one year from the date of initial determination.
Electronic Notice
Format (PDF) by electronic mail to the electronic mail addresses listed in Section 10.04 hereof;
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provided, that if a sender receives notice that the electronic mail is undeliverable, notice must be sent
as otherwise required by Section 10.04 hereof.
Enforcement Action shall have the meaning given to that term in the Subordination
Agreement.
Event of Defaultevent of default
by the applicable provisions of Article VI hereof to constitute an event of default.
Expenses of the Project
incurred incidental to the ownership and operation of the Project, including, without limitation, taxes,
capital improvements reasonably deemed necessary by the Borrowe
funded out of capital contributions or any reserves for such, mortgage and bond insurance premiums,
if any, and the cost of operations (including a property management fee (however characterized) not
to exceed 5% of Gross Revenues), debt service, maintenance and repairs, and the funding of any
reserves required to be maintained under the Senior Loan Documents or pursuant to the Partnership
Agreement. Expenses of the Project shall not include any payments, however characterized, on
account of the Subordinate Loan or any other subordinate financing in respect of the Project or other
partners, allowance for depreciation, amortization or other non-cash items, gains and losses or
prepaid expenses not customarily prepaid..
Extraordinary Services
and things carried out and all expenses incurred by the Trustee in respect of or to prevent default
under this Subordinate Indenture or the Subordinate Loan Documents, including any reasonable
under the terms of the Subordinate Loan Agreement, and other actions taken and carried out by the
Trustee which are not expressly set forth in this Subordinate Indenture or the Subordinate Loan
Documents.
Government Obligations means investments meeting the requirements of clauses (a) or (b)
Permitted Investments
Gross Revenues
period, all rental revenue, laundry income, parking revenue, and other incidental revenues which are
received by the Borrower on a cash basis during such period and arise from normal operations of the
than business or rental interruption insurance), but excluding loan proceeds, equity or capital
contributions, or tenant security deposits being held by Borrower in accordance with the applicable
law. In addition, any amount released without restriction from any escrow account in a fiscal year
shall be considered a cash receipt of the Borrower for such fiscal year.
Indentureas the same may be amended,
modified or supplemented from time to time.
Investor Limited Partner
VI
the Borrower.
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IssuerChula Vista Housing Authority, a public body corporate and politic is
duly organized and existing under the Constitution and the laws of the State of California, and its
successors and assigns.
Maturity DateJune __, 2064.
Net Proceeds, when used with respect to any insurance proceeds or condemnation award
with respect to the Project, shall mean the amount remaining (i) after deducting from the gross
or award and (ii) after applying such amounts as set forth in the Senior Loan Documents.
Outstanding
delivered by the Trustee under this Subordinate Indenture, except:
(a) Subordinate Bonds surrendered and replaced upon exchange or transfer, or
cancelled because of payment or redemption, at or prior to such date;
(b) Subordinate Bonds for the payment, redemption or purchase for cancellation
of which sufficient money has been deposited prior to such date with the Trustee (whether upon or
prior to the maturity, amortization or redemption date of any such Subordinate Bonds), or which are
deemed to have been paid and discharged pursuant to the provisions of Section 9.01 hereof; provided
that if such Subordinate Bonds are to be redeemed prior to the maturity thereof, other than by
scheduled amortization, notice of such redemption shall have been given or arrangements satisfactory
to the Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the
Trustee shall have been filed with the Trustee; and
(c) Subordinate Bonds in lieu of which others have been authenticated (or
payment, when due, of which is made without replacement) under Section 2.05 hereof.
Partnership Agreement First Amended and Restated Limited Partnership
Agreement of the Borrower, dated as of June __, 2019.
Permitted InvestmentsFunding Loan
Agreement.
Personership, an association, a joint stock
company, a joint venture, a trust, an unincorporated association, a limited liability company or a
government or any agency or political subdivision thereof, or any other organization or entity
(whether governmental or private).
Pledged Revenues means the amounts pledged under the Senior Loan Documents.
Principal Office of the Trustee
Section 10.04(a) hereof, or such other office or offices as the Trustee may designate in writing from
time to time, or the office of any successor Trustee where it principally conducts its business of
serving as trustee under indentures pursuant to which municipal or governmental obligations are
issued.
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Projectd and residential rental apartment units, and related
fixtures, equipment, furnishings and site improvements known as St. Regis Park Apartments located
in Chula Vista, California, including the real estate described in the Subordinate Mortgage.
Record Date
Subordinate Bond Payment Date falls.
Regulatory Agreement
Covenants dated as of June 1, 2019, by and between the Issuer and the Borrower with respect to the
Project.
Responsible Officer
regular responsibility in connection with the corporate trust department of the Trustee and the trusts
created hereunder.
Revenue Fund
Section 4.01 hereof.
Revenues
Senior Fiscal Agent
Senior Funding Loan Agreement.
Senior Funding Lender
Agreement.
Senior Funding Loan
Funding Loan Agreement.
Senior Funding Loan Agreementin Funding Loan Agreement, by and
among the Issuer, the Senior Fiscal Agent and the Senior Funding Lender, dated as of June 1, 2019,
as amended and supplemented from time to time.
Senior Governmental Notes-1 Governmental Note
and the Senior Series B-2 Governmental Note.
Senior Loan Documents
Senior Borrower Loan Agreement, the Senior Governmental Notes, the Senior Borrower Notes and
the Regulatory Agreement.
Senior Mortgage
Agreement.
Senior Obligations
Borrower Notes.
Senior Borrower Loanthe Borrower pursuant to the
Senior Borrower Loan Agreement.
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Senior Borrower Loan Agreement
between the Issuer and the Borrower, dated as of June 1, 2019, as amended and supplemented from
time to time.
Senior Borrower Notes-1 Borrower Note and the
Senior Series B-2 Borrower Note.
Senior Series B-1 Borrower Note
__, 2019 in the aggregate principal amount of $______________, executed and delivered by the
Borrower pursuant to the Senior Borrower Loan Agreement.
Senior Series B-2 Borrower Note
__, 2019 in the aggregate principal amount of $______________, executed and delivered by the
Borrower pursuant to the Senior Borrower Loan Agreement..
ServicerFunding Loan Agreement.
Sophisticated Investor ed in Rule 144A
Securities Act; (3) an entity that is directly or indirectly wholly owned or controlled by or under
common control with the holder of the Subordinate Bonds; (4) an entity all of the investors in which
are described in (1), (2) or (3) above; or (5) a custodian or trustee for a party described in (1), (2) or
(3) above.
Subordinate Bond Documents) the Subordinate Loan Documents, (b) this
Subordinate Indenture, (c) the Regulatory Agreement, (d) the Tax Certificate, (e) the Subordinate
Bond Purchase Agreement, (f) UCC financing statements, (g) such assignments of management
agreements, contracts and other rights as may be reasonably required, (h) all other documents
evidencing, securing, governing or otherwise pertaining to the Subordinate Bonds or any other
Subordinate Bond Documents, and (i) all amendments, modifications, renewals and substitutions of
any of the foregoing.
Subordinate Bond Fund
pursuant to Section 4.01 hereof.
Subordinate Bond Payment Datemeans, from and after the Subordinate Bond Conversion
Date, (i) the first Business Day of each month until the Maturity Date, (ii) any date on which the
Subordinate Bonds are subject to mandatory redemption pursuant to the provisions hereof, and (iii)
the Maturity Date.
Subordinate Bond Purchase Agreement
Agreement by and among the Issuer, the Subordinate Bondholder Representative and the Borrower
executed in connection with the Subordinate Bonds.
Subordinate Bond Rate the lesser of (i) ______% per annum, or (ii) the maximum interest
rate allowable on the Subordinate Bonds under State law, from the Closing Date to the Maturity
Date.
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Subordinate Bond Register
Subordinate Bond Registrar setting forth the registered Holders from time to time of the Subordinate
Bonds.
Subordinate Bond Registrar
appointed pursuant to this Subordinate Indenture.
Subordinate BondholderHolderOwner
registered owner of any Outstanding Subordinate Bond or Subordinate Bonds.
Subordinate Bondholder Representative
written instrument signed by 100% of the Holders of the Outstanding Subordinate Bonds. If there is
no appointed Subordinate Bondholder Representative, the Holder of a majority or plurality of the
Outstanding Subordinate Bonds shall be deemed to be the Subordinate Bondholder Representative.
The initial Subordinate Bondholder Representative is ________________________.
Subordinate BondsChula Vista Housing Authority Multifamily Housing
Revenue Bonds (St. Regis Park Apartments), Subordinate 2019 Series B-4 issued pursuant to the
provisions of this Subordinate Indenture.
Subordinate Bonds Conversion Date
set forth in the Senior Funding Loan Agreement.
Subordinate Loano the Borrower in the original
principal amount of $_________________ pursuant to the Subordinate Loan Agreement.
Subordinate Loan Agreement
hereof among the Borrower, the Issuer and the Trustee, as such Subordinate Loan Agreement may
from time to time be amended or supplemented.
Subordinate Loan Documents means, collectively, this Subordinate Indenture, the
Subordinate Loan Agreement, the Subordinate Note, the Subordinate Mortgage, the Subordinate
Bond Purchase Agreement, and all other documents securing the Subordinate Loan.
Subordinate Mortgage
Rents, Security Agreement and Fixture Filing dated as of the date hereof, together with all riders and
addenda thereto, granting a second priority mortgage and security interest in the Project to the Issuer
to secure the repayment of the Subordinate Loan which Subordinate Mortgage has been assigned by
the Issuer to the Trustee as the same may be amended, supplemented or restated.
Subordinate Note
Subordinate Loan, as the same may be amended, supplemented or restated from time to time, which
Subordinate Promissory Note will be delivered to the Issuer and endorsed by the Issuer to the
Trustee.
Subordinate Trust Estateng
Clauses.
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\[Subordination AgreementJune 1, 2019,
by and between the Trustee and the Funding Lender.\]
State
Tax Certificateng Date, executed and
delivered by the Issuer and the Borrower.
TrusteeU.S. Bank National Association and its successors in trust hereunder.
Unassigned Rights
commissioners, elected officials, attorneys, accountants, employees, agents and consultants to be
held harmless and indemnified, to be paid its fees and expenses, to give or withhold consent to
amendments, changes, modifications and alterations, to receive notices and the right to enforce such
rights.
Interpretation
of similar import refer to this Subordinate Indenture as a whole and not to any particular Article,
Section or other subdivision. Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders. Words importing the singular number
shall include the plural number and vice versa unless the context shall otherwise indicate. All
accounting terms not otherwise defined herein have the meanings assigned to them in accordance
with generally accepted accounting principles as in effect from time to time. References to Articles,
Sections, and other subdivisions of this Subordinate Indenture are to the designated Articles, Sections
and other subdivisions of this Subordinate Indenture as originally executed. The headings of this
Subordinate Indenture are for convenience only and shall not define or limit the provisions hereof.
The Subordinate Bonds.
(a) The Subordinate Bonds are hereby authorized to be issued hereunder as
revenue bonds of the Issuer in accordance with the Bond Resolution. The Subordinate Bonds are
Chula Vista Housing Authority Multifamily Housing Revenue
Bonds (St. Regis Park Apartments), Subordinate 2019 Series B-4
amount of $_________________. The Subordinate Bonds shall be fully registered as to principal
and interest, without coupons, and shall be numbered by series, if any, in the manner and with any
additional designation as the Trustee, as Subordinate Bond Registrar, deems necessary for the
purpose of identification. All of the Subordinate Bonds are equally and ratably secured. Subordinate
Bonds issued on the Closing Date shall be dated such date; Subordinate Bonds issued after the
Closing Date shall be dated the date they are authenticated by the Trustee. The Subordinate Bonds
shall be due and payable in full on the Maturity Date.
(b) The Subordinate Bonds shall be issued as one bond in the principal amount of
$_________________ and shall bear interest only at the Subordinate Bond Rate. Interest shall
accrue on the Subordinate Bonds at the Subordinate Bonds Rate, but no payments on the Subordinate
Bonds shall be made prior to the Subordinate Bonds Conversion Date. On the first Business Day of
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each month following the Subordinate Bonds Conversion Date until the earlier of the Maturity Date
or the date on which no principal of or interest on the Subordinate Bonds remains outstanding,
payment of interest shall be payable on each on each Subordinate Bond Payment Date, solely from
available Revenues received by the Trustee pursuant to the provisions of the Subordinate Note and
the Subordinate Loan Agreement. The Subordinate Bonds shall also be subject to mandatory
redemption on each Subordinate Bond Payment Date, solely from available Revenues received by
the Trustee pursuant to the provisions of the Subordinate Note and the Subordinate Loan Agreement
which remain after the payment of interest on the Subordinate Bonds on such Subordinate Bond
Payment Date. Unpaid interest on the Subordinate Bonds, and other unpaid amounts under this
Subordinate Indenture, shall accrue interest at the Subordinate Bond Rate.
(i) Interest on the Subordinate Bonds shall be computed on the basis of a
360-day year of twelve months. Interest on the Subordinate Bonds shall be payable on each
Subordinate Bond Payment Date, in each case from the Subordinate Bond Payment Date next
preceding the date of authentication thereof to which interest has been paid or duly provided for,
unless the date of authentication is an Subordinate Bond Payment Date to which interest has been
paid or duly provided for, in which case from the date of authentication of the Subordinate Bond, or
unless no interest has been paid or duly provided for on the Subordinate Bonds, in which case from
the Closing Date, until payment of the principal of the Subordinate Bond has been made or duly
provided for. Notwithstanding the foregoing, if a Subordinate Bond is authenticated after a Record
Date and before the following Subordinate Bond Payment Date, such Subordinate Bond shall bear
interest from such Subordinate Bond Payment Date; provided, however, that if there shall be a
default in the payment of interest due on such Subordinate Bond Payment Date, then the Subordinate
Bonds shall bear interest from the next preceding Subordinate Bond Payment Date to which interest
has been paid or duly provided for, or, if no interest has been paid or duly provided for on the
Subordinate Bonds, from the Closing Date.
(c) The Person in whose name any Subordinate Bond is registered on the Record
Date with respect to an Subordinate Bond Payment Date shall be entitled to receive the interest paid
on such Subordinate Bond Payment Date (unless such Subordinate Bond has been called for
redemption on a redemption date which is prior to such Subordinate Bond Payment Date)
notwithstanding the cancellation of such Subordinate Bond upon any registration of transfer or
exchange thereof subsequent to such Record Date and prior to such Subordinate Bond Payment Date.
(d) No Subordinate Bonds may be issued under the provisions of this Subordinate
Indenture except in accordance with this Article. The total principal amount of Subordinate Bonds
that may be issued hereunder, or in substitution for other Subordinate Bonds pursuant to Section 2.06
hereof, is expressly limited to $_________________.
Limited Obligations. The Subordinate Bonds are limited obligations of the
Issuer, payable solely from the Revenues and other funds and money pledged and assigned
thereof (except the Issuer, to the limited extent set forth herein) nor any public agency shall in any
event be liable for the payment of the principal of, or interest on the Subordinate Bonds or for the
performance of any pledge, obligation or agreement of any kind whatsoever except as set forth
herein, and n
construed to constitute an indebtedness of or a pledge of the faith and credit of or a loan of the credit
of or a moral obligation of any of the foregoing within the meaning of any constitutional or statutory
provision whatsoever. The Issuer has no taxing power.
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No recourse shall be had for the payment of the principal of, or interest on any Subordinate
Bond or for any claim based thereon or upon any obligation, covenant or agreement in this
Subordinate Indenture contained, against, the Issuer, any past, present or future member of its
governing body, its officers, attorneys, accountants, financial advisors, agents or staff or the officers,
attorneys, accountants, financial advisors, agents or staff of any successor public entity, as such,
either directly or through the Issuer or any successor public entity, under any rule of law or penalty or
otherwise, and all such liability of the Issuer, any member of its governing body and its officers,
attorneys, accountants, financial advisors, agents and staff is hereby, and by the acceptance of the
Subordinate Bonds, expressly waived and released as a condition of, and in consideration for, the
execution of this Subordinate Indenture and the issuance of the Subordinate Bonds.
It is recognized that notwithstanding any other provision of this Subordinate Indenture,
neither the Borrower, the Trustee nor any Subordinate Bondholder shall look to the Issuer for
damages suffered by the Borrower, the Trustee or such Subordinate Bondholder as a result of the
failure of the Issuer to perform any covenant, undertaking or obligation under this Subordinate
Indenture, the Subordinate Loan Agreement, the Subordinate Bonds or any of the other documents
referred to herein, or as a result of the incorrectness of any representation made by the Issuer in any
of such documents, nor for any other reason. Although this Subordinate Indenture recognizes that
such documents shall not give rise to any pecuniary liability of the Issuer, nothing contained in this
Subordinate Indenture shall be construed to preclude in any way any action or proceeding (other than
that element of any action or proceeding involving a claim for monetary damages against the Issuer)
in any court or before any governmental body, agency or instrumentality or otherwise against the
Issuer or any of its officers or employees to enforce the provisions of any of such documents which
the Issuer is obligated to perform and the performance of which the Issuer has not assigned to the
Trustee or any other person; provided, however, that as a condition precedent to the Issuer
proceeding pursuant to this Section 2.02, the Issuer shall have received satisfactory indemnification.
Indenture Constitutes Contract. In consideration of the purchase and
acceptance of the Subordinate Bonds issued hereunder by those who shall hold them from time to
time, the provisions of this Subordinate Indenture shall be part of the contract of the Issuer with the
Holders of the Subordinate Bonds and shall be deemed to be a contract between the Issuer and the
Holders of the Subordinate Bonds from time to time.
Form and Execution. The Subordinate Bonds shall be in substantially the
form attached as Exhibit A, with necessary and appropriate variations, omissions and insertions as
are customary, permitted or required by this Subordinate Indenture. The Subordinate Bonds shall be
executed on behalf of the manual or facsimile signature of the Authorized Officer of the Issuer, and
attested by the manual or facsimile signature of the Deputy Secretary of the Issuer. Any facsimile
signatures shall have the same force and effect as if said officers had manually signed the
Subordinate Bonds. Any reproduction of the official seal of the Issuer on the Subordinate Bonds
shall have the same force and effect as if the official seal of the Issuer had been impressed on the
Subordinate Bonds.
In case any officer of the Issuer whose manual or facsimile signature shall appear on any
Subordinate Bond shall cease to be such officer before the delivery of such Subordinate Bond such
signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if
he or she had remained in office until delivery, and also any Subordinate Bond may bear the
facsimile signatures of, or may be signed by, such Persons as at the actual time of the execution of
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such Subordinate Bond shall be the proper officers to sign such Subordinate Bond although at the
date of such Subordinate Bond such Persons may not have been such officers.
Authentication. No Subordinate Bond shall be valid or obligatory for any
purpose or entitled to any security or benefit under this Subordinate Indenture unless a certificate of
authentication on such Subordinate Bond, substantially in the form set forth in Exhibit A, shall have
been duly executed by an Authorized Officer of the Trustee; and such executed certificate of
authentication upon any such Subordinate Bond shall be conclusive evidence that such Subordinate
Bond has been duly executed, registered, authenticated and delivered under this Subordinate
Indenture. It shall not be necessary that the same Person sign the certificate of authentication on all
of the Subordinate Bonds.
Mutilated, Lost, Stolen or Destroyed Subordinate Bonds. In the event any
Subordinate Bond is mutilated, lost, stolen or destroyed, the Issuer shall execute and the Trustee shall
authenticate a new Subordinate Bond of like interest rate, series, maturity and tenor in exchange and
substitution for and upon cancellation of such mutilated Subordinate Bond or in lieu of and in
substitution for such lost, stolen or destroyed Subordinate Bond, upon payment by the Owner thereof
of any applicable tax or governmental charge and the reasonable expenses and charges of the Issuer
and the Trustee in connection therewith, and in the case of a Subordinate Bond lost, stolen or
destroyed, the filing with the Trustee of evidence satisfactory to it that such Subordinate Bond was
lost, stolen or destroyed, and of the ownership thereof, and furnishing the Issuer and the Trustee with
indemnity satisfactory to each of them. In the event any such Subordinate Bond shall have matured,
instead of issuing a duplicate Subordinate Bond or Subordinate Bonds the Issuer may pay the same
without surrender thereof.
Transfer and Exchange of Subordinate Bonds; Persons Treated as
Owners; Restrictions on Transfer. The Trustee as Subordinate Bond Registrar shall cause a
Subordinate Bond Register to be kept for the registration of transfers of Subordinate Bonds. Any
Subordinate Bond may be transferred only upon an assignment duly executed by the registered
satisfactory to the Subordinate Bond Registrar and upon surrender of such Subordinate Bond to the
Trustee for cancellation. Whenever any Subordinate Bond or Subordinate Bonds shall be
surrendered for transfer, the Issuer shall execute and the Trustee shall authenticate and deliver to the
transferee a replacement fully registered Subordinate Bond for the amount of such Subordinate Bond
so surrendered.
In all cases in which Subordinate Bonds shall be transferred or exchanged hereunder, the
Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental charge
required to be paid with respect to such transfer or exchange. The cost of printing Subordinate
Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer
or exchange shall be paid by the Borrower.
The Person in whose name any Subordinate Bond shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes and payment of or on account of the principal
of and interest on any such Subordinate Bond shall be made only to or upon the order of the
the Trustee shall be affected by any notice to the contrary. All such payments shall be valid and
effectual to satisfy and discharge the liability upon such Subordinate Bond to the extent of the sum or
sums to be paid.
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Neither the Issuer nor the Trustee shall be required to make any such exchange, registration
or transfer of Subordinate Bonds during the period of fifteen (15) days immediately preceding an
Subordinate Bond Payment Date or, in the case of any proposed redemption of Subordinate Bonds,
during the period of fifteen (15) days immediately preceding the selection of Subordinate Bonds for
such redemption and after the giving of notice of redemption, the Trustee is not required to transfer
or exchange any Subordinate Bond or portion thereof which has been called for redemption.
Restrictions on Transfer. The following shall apply to all sales and transfers of the
Subordinate Bonds after the applicable initial sale and delivery of the Subordinate Bonds:
(a) The Subordinate Bonds, including participation interests therein, in the form
attached hereto as Exhibit A, shall be physical certificated instruments, and shall not be held in a
book-entry only system unless approved in advance by the Issuer;
(b) The Subordinate Bonds shall be sold in whole only;
(c) The Trustee shall not authenticate or register a Subordinate Bond unless it has
received a certificate from the Issuer stating that the conditions of this Section 2.07 have been
satisfied and there shall have been delivered to the Trustee an Investor Letter executed by the
transferee of the Subordinate Bonds;
Delivery of Subordinate Bonds. Upon the execution and delivery of this
Subordinate Indenture, the Issuer shall execute and deliver to the Trustee, and the Trustee shall
authenticate the Subordinate Bonds and deliver them to or upon the order of the Issuer upon receipt
by the Trustee of the following:
(a) executed counterparts of this Subordinate Indenture, the Subordinate Loan
Agreement, the Regulatory Agreement, and the Tax Certificate;
(b) an opinion of Bond Counsel to the effect that the Subordinate Bonds are valid
and binding special obligations of the Issuer;
(c) evidence satisfactory to the Trustee of the Subordinate Loan and Subordinate
Note (representing the purchase price of the Subordinate Bonds);
(d) a copy of the Subordinate Mortgage;
(e) an opinion of counsel to the Borrower to the effect that the Borrower is duly
organized and validly existing and in good standing under the laws of the state in which it has been
organized and in good standing under the laws of each other state in which the Borrower transacts
business and has full power and authority to enter into the agreements described herein to which it is
a party, that its execution and delivery of and performance of its covenants in such agreements do not
contravene law or any provision of any other agreement to which it is a party or by which it or such
property is bound or affected, and that all such agreements have been duly authorized, executed and
delivered by the Borrower, and are legal, valid and binding agreements of the Borrower enforceable
against the Borrower in accordance with their respective terms;
(f) an opinion of Bond Counsel to the effect that the interest on the Subordinate
Bonds, under laws in effect on the date of such opinion, is excluded from gross income for federal
income tax purposes and, where applicable, for State income tax purposes;
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(g) a certified copy of the Bond Resolution;
(h) the written request and authorization to the Trustee by the Issuer to
authenticate and deliver the Subordinate Bonds in accordance with the provisions of this Subordinate
Indenture.
Establishment of Subordinate Loan Fund; Application of Bond Proceeds
and Other Money; Assignment of Subordinate Loan to Trustee.
(a) The Trustee shall establish, maintain and hold in trust and there is hereby
established with the Trustee a Subordinate Loan Fund. No amount shall be charged against the
Subordinate Loan Fund except as expressly provided in this Section 2.09 and Section 4.02.
(b) On the Closing Date, $__________ of the principal amount of the proceeds of
the Bonds shall be deposited in the Subordinate Loan Fund. Amounts in the Subordinate Loan Fund
shall be disbursed as provided in Section 4.02, subject to the conditions set forth in Section 3.1 of the
Subordinate Loan Agreement. Upon the disbursement of all amounts in the Subordinate Loan Fund,
the Trustee shall close the Subordinate Loan Fund.
(c) Upon the deposit of money to the credit of the Subordinate Loan Fund, the
Issuer shall originate the Subordinate Loan pursuant to the Subordinate Loan Agreement and the
Trustee shall make disbursements of amounts in the Subordinate Loan Fund to the Borrower or
otherwise as provided in Section 4.02.
Subordination. This Subordinate Indenture and the Subordinate Loan
Agreement are and at all times shall be subject and subordinate in all respects to the terms,
provisions, conditions, covenants, liens and security interests of the Senior Loan Documents.
Correspondingly, payment of the indebtedness evidenced by the Subordinate Bonds is and shall be
subject and subordinate in all respects to the prior payment in full of all amounts due and payable in
respect of the Senior Obligations and the Senior Loan Documents, and otherwise under the Senior
Loan Documents. Accordingly, the Subordinate Bondholders expressly subject and subordinate all
of their right, title and interest in and to the Subordinate Bonds in all respects to (i) the payment in
full of the Senior Obligations, (ii) the payment in full of the Senior Loan, (iii) the lien of the Pledged
Revenues under the Senior Funding Loan Agreement and of the Senior Mortgage and (iv) the
payment in full of all amounts owed to the Funding Lender under the Senior Loan Documents. In
addition, notwithstanding anything contained in this Subordinate Indenture, the Subordinate Loan
Agreement, the Subordinate Note or the Subordinate Mortgage to the contrary, the Issuer and the
Trustee agree, and the Subordinate Bondholders by their acceptance of the Subordinate Bonds agree,
that:
(a) the sole source of funds available to the Issuer for the purpose of paying the
principal of, and interest on, the Subordinate Bonds shall be the Revenues, if and to the extent
available;
(b) the Subordinate Note is payable solely from, and only to the extent of, the
Revenues, if and to the extent available;
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(c) payments of the principal of, and interest on, the Subordinate Note shall be
made only after all current and past due Senior Obligations have been paid in full and shall be subject
to the terms and conditions of the Subordination Agreement;
(d) the security for the Subordinate Loan and the Subordinate Note shall be the
Subordinate Mortgage, which shall be wholly subordinate to the Senior Mortgage encumbering the
same Project;
(e) the obligation of the Borrower to repay the Subordinate Loan is and shall be
subject and subordinate in all respects to the obligations of the Borrower to pay all amounts due in
respect of the Senior Obligations, whether under the Senior Loan Documents or otherwise;
(f) so long as any amounts are currently due and owing in respect of the Senior
Obligations, whether under the Senior Loan Documents or otherwise, the Trustee shall not be
entitled to foreclose on the Subordinate Mortgage notwithstanding (1) any arrearages in the payments
of any amounts due and owing under or with respect to the Subordinate Bonds or (2) any default in
respect of the Subordinate Bonds, the Subordinate Note, the Subordinate Mortgage or the
Subordinate Loan except as consented to in writing by the Senior Funding Lender\[; or (3) take any
other action except as expressly permitted under the Subordination Agreement;\]
(g) unpaid interest on the Subordinate Bonds resulting from insufficient
Revenues will accrue and shall be payable solely from, and only to the extent of, Revenues, provided
further that payment of interest is and shall remain subject and subordinate to the Senior Obligations;
and
(h) principal on the Subordinate Bonds shall be payable at maturity, subject to
mandatory redemption, and shall remain subject and subordinate to the Senior Obligations.
Failure to make any payment in respect of the Subordinate Bonds or otherwise under this
Subordinate Indenture shall not constitute an Event of Default under (and as defined in) this
Subordinate Indenture. The Trustee shall not, after the Trustee receives a notice of default or
otherwise acquires knowledge of a default or an Event of Default by the Borrower with respect to the
Senior Obligations, the Senior Loan or under any Senior Loan Document, make any payments in
respect of the Subordinate Bonds unless and until such default or Event of Default or potential
default has been cured or waived by the Subordinate Bondholder Representative.
The parties to this Subordinate Indenture acknowledge that the terms of this Subordinate
Indenture are in all respects subject to the Senior Loan Documents.
Redemption of Subordinate Bonds Prior to Maturity. The Subordinate
Bonds are subject to redemption upon the circumstances, on the dates and at the prices set forth as
follows:
(a) The Subordinate Bonds shall be subject to mandatory redemption in whole or
in part, after satisfaction of all requirements of the Senior Loan Documents, on the next Subordinate
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Bond Payment Date for which notice of redemption can timely be given, at a redemption price equal
to the principal amount of Subordinate Bonds to be redeemed plus interest accrued thereon to the
date fixed for redemption upon prepayment of the Subordinate Loan in whole or in part following a
casualty to or condemnation of the Project (unless the Borrower has elected to repair and restore the
Project in accordance with the terms of the Subordinate Bond Documents); such mandatory
redemption shall be in an amount as nearly equal as possible to, but not exceeding, the amount of any
Net Proceeds of insurance or condemnation awards not used to repair or replace the Project.
(b) The Subordinate Bonds shall be subject to mandatory redemption in whole on
the next date for which notice of redemption can timely be given at a redemption price equal to the
principal amount of the Subordinate Bonds to be redeemed plus interest accrued thereon to the date
fixed for redemption upon acceleration of the Subordinate Loan in whole following an Event of
Default under Article VII of the Subordinate Loan Agreement, except as otherwise provided in
Article VI of this Indenture.
(c) Except as otherwise provided in this Article III, including but not limited to
Section 3.01(f) hereof, the Subordinate Bonds are subject to optional redemption in whole or in part
on any Business Day for which notice of redemption can timely be given, in the event and to the
extent that the Subordinate Loan is prepaid pursuant to the Subordinate Note as set forth in
Section 4.3 of the Subordinate Loan Agreement, at a redemption price equal to the principal amount
of Subordinate Bonds to be redeemed, plus accrued interest to the date fixed for redemption. Any
optional redemption of the Subordinate Bonds are subject to the approval rights of (i) the Investor
Limited Partner as set forth in the Partnership Agreement, and (ii) the Senior Funding Lender as set
forth in the Senior Loan Documents.
(d) The Subordinate Bonds are subject to mandatory redemption in whole or in
part on any Business Day for which notice of redemption can timely be given, in the event and to the
extent the Subordinate Bondholder Representative notifies the Trustee in writing that, subject to and
in accordance with the terms and conditions of the Partnership Agreement, there are net proceeds
available from (i) a sale or exchange of any assets of the Borrower, (ii) any financing or refinancing
of the Project, (iii) the liquidation of the Borrower, or (iv) any other transaction where the proceeds
are deemed attributable to capital under generally accepted accounting principles.
(e) The Subordinate Bonds are subject to mandatory redemption upon in whole
or part on each Subordinate Bond Payment Date, without notice, solely from available Revenues
received by the Trustee pursuant to the provisions of the Subordinate Note and the Subordinate Loan
Agreement which remain after the payment of interest on the Subordinate Bonds on such
Subordinate Bond Payment Date.
(f) The Subordinate Bonds shall be subject to optional redemption in whole or in
part on any Business Day for which notice of redemption can timely be given, at a redemption price
equal to the principal amount of the Subordinate Bonds to be redeemed plus interest accrued thereon
to the date fixed for redemption, subject to the consent of the Senior Funding Lender, so long as the
Senior Obligations are outstanding.
Notice of Redemption. Notice of the intended redemption of each
Subordinate Bond shall be given by the Trustee by first class mail, postage prepaid, or by facsimile
transmission, to the registered Owner at the address of such Owner shown on the Subordinate Bond
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Register. All such redemption notices shall be given not less than ten (10) days prior to the date
fixed for redemption. The Trustee may provide a conditional notice of redemption.
Notices of redemption shall state the redemption date and the redemption price, the place or
places where amounts due upon such redemption will be payable, and, if less than all of the then
Outstanding Subordinate Bonds are called for redemption, shall state (i) the numbers of the
Subordinate Bonds to be redeemed by giving the individual certificate number of each Subordinate
Bond to be redeemed or shall state that all Subordinate Bonds between two stated certificate
numbers, both inclusive, are to be redeemed or that all of the Subordinate Bonds of one or more
maturities have been called for redemption only if bonds cease to be book entry-bonds; (ii) the
Maturity Date of each Subordinate Bond being redeemed; (iii) the conditions, if any, which must be
satisfied in order for the redemption to take place on the scheduled date of redemption, and (iv) any
other descriptive information needed to identify accurately the Subordinate Bonds being redeemed.
Failure to give notice by mailing to the registered Owner of any Subordinate Bond designated
for redemption or to any depository or information service shall not affect the validity of the
proceedings for the redemption of any other Subordinate Bond if notice of such redemption shall
have been mailed as herein provided.
Effect of Notice of Redemption. If a conditional notice of redemption has
been provided pursuant to the terms of this Subordinate Indenture and the conditions are not
satisfied, such notice of redemption shall be of no force and effect and the Subordinate Bondholders
shall be restored to their former positions as though no such notice of redemption had been delivered.
Notice of redemption having been given in the manner provided in this Article III and if either there
were no conditions to such redemption or the conditions have been satisfied (or in the event no such
notice is required under Section 3.02), and money for the redemption being held by the Trustee for
that purpose, thereupon the Subordinate Bonds so called for redemption shall become due and
payable on the redemption date, and interest thereon shall cease to accrue on such date; and such
Subordinate Bonds shall thereafter no longer be entitled to any security or benefit under this
Subordinate Indenture except to receive payment of the redemption price thereof.
Pledge of Revenues and Assets; Establishment of Funds. The pledge and
assignment of and the security interest granted in the Subordinate Trust Estate pursuant to the
Granting Clauses hereof shall attach, be perfected and be valid and binding from and after the time of
the delivery of the Subordinate Bonds by the Trustee or by any Person authorized by the Trustee to
deliver the Subordinate Bonds. The Subordinate Trust Estate so pledged and then or thereafter
received by the Trustee shall immediately be subject to the lien of such pledge and security interest
without any physical delivery thereof or further act, and the lien of such pledge and security interest
shall be valid and binding and prior to the claims of any and all parties having claims of any kind in
tort, contract or otherwise against the Issuer irrespective of whether such parties have notice thereof.
In addition to the Subordinate Loan Fund established therein pursuant to Section 2.09 hereof,
the Trustee shall establish, maintain and hold in trust the following funds and accounts, each of
which is hereby established and each of which shall be disbursed and applied only as herein
authorized:
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(a) Revenue Fund; and
(b) Subordinate Bond Fund.
The funds and accounts established pursuant to this Section 4.01 shall be maintained in the
corporate trust department of the Trustee as segregated trust accounts, separate and identifiable from
all other funds held by the Trustee. The funds and accounts established hereunder shall bear a
designation clearly indicating that the funds deposited therein are held for the benefit of the Holders
of the Subordinate Bonds, respecting the Revenue Fund and the Subordinate Bond Fund. The
Trustee shall, at the written direction of an Authorized Officer of the Issuer, and may, in its
discretion, establish such additional accounts within any Fund, and subaccounts within any of the
accounts, as the Issuer or the Trustee may deem necessary or useful for the purpose of identifying
more precisely the sources of payments into and disbursements from that Fund and its accounts, or
for the purpose of complying with the requirements of the Code relating to arbitrage, but the
establishment of any such account or subaccount shall not alter or modify any of the requirements of
this Subordinate Indenture with respect to a deposit or use of money in the funds established
hereunder, or result in commingling of funds not permitted hereunder.
Subordinate Loan Fund. The Trustee shall deposit the proceeds of the
Bonds as provided in Section 2.09 and disburse amounts deposited in the Subordinate Loan Fund
immediately upon receipt to the Borrower in funding of the Subordinate Loan. No amounts shall be
invested or retained in the Subordinate Loan Fund.
Application of Revenues.
(a) All Revenues, if any, shall be deposited by the Trustee, promptly upon receipt
thereof, to the Revenue Fund, except (i) with respect to investment earnings to the extent required
under the terms hereof to be retained in the funds and accounts to which they are attributable; and
(ii) with respect to amounts required to be transferred between funds and accounts as provided in this
Article IV.
(b) There are no Subordinate Bond Payment Dates prior to the first Business Day
of the month proceeding the Subordinate Bonds Conversion Date. On each Subordinate Bond
Payment Date or any other date on which payment of principal of or interest on the Subordinate
Bonds becomes due and payable, the Trustee shall credit from the Revenue Fund to the Subordinate
Bond Fund an amount equal to the principal of and interest payable from Revenues to such period on
the Subordinate Bonds on such date.
(c) Promptly upon receipt, the Trustee shall deposit directly to the Subordinate
Bond Fund (i) Net Proceeds representing casualty insurance proceeds or condemnation awards paid
as a prepayment of the Subordinate Loan, after reimbursement of any and all amounts owed to the
right to repair and restore the
Property as set forth in the Subordinate Loan Documents) and (ii) amounts paid to the Trustee to be
applied to the redemption of all or a portion of the Subordinate Bonds pursuant to Article III hereof.
(d) Should the amount in the Subordinate Bond Fund be insufficient to pay the
amount due on the Subordinate Bonds on any given Subordinate Bond Payment Date or other
payment date, the Trustee shall credit to the Subordinate Bond Fund the amount of such deficiency
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by charging the Revenue Fund; provided, however, in no event shall the amount due on the
Subordinate Bonds exceed the Revenues, if any, for such applicable period.
Application of Subordinate Bond Fund. The Trustee shall charge the
Subordinate Bond Fund, on each Subordinate Bond Payment Date, an amount equal to available
Revenues, if any, for such period, which shall be applied to interest due on the Subordinate Bonds on
such Subordinate Bond Payment Date, and shall cause the same to be applied to the payment of such
interest when due.
Income realized from the investment or deposit of money in the Subordinate Bond Fund shall
be deposited by the Trustee upon receipt thereof in the Revenue Fund.
No amount shall be charged against the Subordinate Bond Fund except as expressly provided
in this Article IV and in Section 6.05.
Investment of Funds. The money held by the Trustee shall constitute trust
funds for the purposes hereof. Any money attributable to each of the funds and accounts hereunder
shall be, except as otherwise expressly provided herein, invested by the Trustee, at the written
direction of the Borrower in Permitted Investments. The Trustee may purchase from or sell to itself
or an affiliate, as principal or agent, securities herein authorized. The Trustee shall be entitled to
assume, absent receipt by the Trustee of written notice to the contrary, that any investment which at
the time of purchase in a Permitted Investment remains a Permitted Investment thereafter.
Permitted Investments representing an investment of money attributable to any fund or
account shall be deemed at all times to be a part of said fund or account, and, except as otherwise
may be provided expressly in other Sections hereof, the interest thereon and any profit arising on the
sale thereof shall be credited to the Revenue Fund, and any loss resulting on the sale thereof shall be
charged against the Revenue Fund. Such investments shall be sold at the best price obtainable (at
least par) whenever it shall be necessary so to do in order to provide money to make any transfer,
withdrawal, payment or disbursement from said fund or account. In the case of any required transfer
of money to another such fund or account, such investments may be transferred to that fund or
account in lieu of the required money if permitted hereby as an investment of money in that fund or
account. The Trustee shall not be liable or responsible for any loss resulting from any investment
made in accordance herewith.
The Issuer acknowledges that to the extent that regulations of the Comptroller of the
Currency or other applicable regulatory agency grant the Issuer the right to receive brokerage
confirmations of the security transactions as they occur. To the extent permitted by law, the Issuer
specifically waives compliance with 12 C.F.R. 12 and hereby notifies the Trustee hereunder, that no
brokerage confirmations need be sent relating to the security transactions as they occur.
Money Held for Particular Subordinate Bonds; Funds Held in Trust.
The amounts held by the Trustee for the payment of the interest, principal or redemption price due on
any date with respect to particular Subordinate Bonds pending such payment, shall be set aside and
held in trust by it for the Holders of the Subordinate Bonds entitled thereto, and for the purposes
hereof such interest, principal or redemption price, after the due date thereof, shall no longer be
considered to be unpaid.
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All money held by the Trustee for such purpose at any time pursuant to the terms of this
Subordinate Indenture shall be and hereby are assigned, transferred and set over unto the Trustee in
trust for the purposes and under the terms and conditions of this Subordinate Indenture.
Accounting Records. The Trustee shall maintain accurate books and records
for all funds and accounts established hereunder and provide monthly statements (or other electronic
access as agreed to by the parties) of such funds and accounts to the Issuer and the Borrower upon
request.
Amounts Remaining in Funds. After full payment of the Subordinate
Bonds (or provision for payment thereof having been made in accordance with Section 9.01 hereof)
and full payment of the fees, charges and expenses of the Issuer and the Trustee and other amounts
required to be paid hereunder or under any Subordinate Loan Document, any amounts remaining in
any fund or account hereunder shall be paid to the Borrower.
Payment of Principal and Interest. The Issuer covenants that it will
promptly pay or cause to be paid, but only from the sources identified herein, sufficient amounts to
provide for the payment of the principal of, and interest on the Subordinate Bonds at the place, on the
dates and in the manner provided herein and in the Subordinate Bonds, according to the true intent
and meaning thereof.
Performance of Covenants. The Issuer covenants that it will faithfully
perform at all times any and all of its covenants, undertakings, stipulations and provisions contained
in this Subordinate Indenture, in any and every Subordinate Bond executed, authenticated and
delivered hereunder and in all proceedings pertaining thereto.
Representations and Warranties of the Issuer. The Issuer hereby
represents and warrants as follows:
(a) The Issuer is a public instrumentality and political subdivision of the State of
California.
(b) The Issuer has all necessary power and authority to issue the Subordinate
Bonds and to execute and deliver this Subordinate Indenture, the Subordinate Loan Agreement and
the other Subordinate Bond Documents to which it is a party, and to perform its duties and discharge
its obligations hereunder and thereunder.
(c) The revenues and assets pledged for the repayment of the Subordinate Bonds
are and will be free and clear of any pledge, lien or encumbrance prior to, or equal with, the pledge
created by this Subordinate Indenture, and all action on the part of the Issuer to that end has been
duly and validly taken.
(d) The Subordinate Bond Documents to which the Issuer is a party have been
validly authorized, executed and delivered by the Issuer, and assuming due authorization, execution
and delivery by the other parties thereto, constitute valid and binding obligations of the Issuer,
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enforceable against the Issuer in accordance with their respective terms, except as enforceability may
and the application of equitable principles.
Inspection of Project Books. The Issuer covenants and agrees that all books
and documents in its possession relating to the Project shall, upon reasonable prior notice, during
normal business hours, be open to inspection and copying by such accountants or other agents as the
Trustee or the Subordinate Bondholder Representative may from time to time reasonably designate.
Damage, Destruction or Condemnation. Net Proceeds resulting from
casualty to or condemnation of the Project shall be applied, after satisfaction of all payment
requirements under the Senior Loan Documents, as provided in the Subordinate Loan Documents.
Tax Covenants.
(a) . The Issuer covenants to and for the benefit of the
Holders of the Subordinate Bonds that it will:
(i) neither make or use nor cause to be made or used any investment or
other use of the proceeds of the Subordinate Bonds or the money and investments held in the funds
and accounts in any manner which would cause the Subordinate Bonds to be arbitrage bonds under
Section 148 of the Code and the Regulations issued under Section 148 of the Code (the
ch would otherwise cause the interest payable on the Subordinate Bonds to be
includable in gross income for federal income tax purposes;
(ii) enforce or cause to be enforced all obligations of the Borrower under
the Regulatory Agreement in accordance with its terms and seek to cause the Borrower to correct any
violation of the Regulatory Agreement within a reasonable period after it first discovers or becomes
aware of any such violation;
(iii) not take or cause to be taken any other action or actions, or fail to take
any action or actions, if the same would cause the interest payable on the Subordinate Bonds to be
includable in gross income for federal income tax purposes;
(iv) at all times do and perform all acts and things permitted by law and
necessary or desirable in order to assure that interest paid by the Issuer on the Subordinate Bonds will
be excluded from the gross income for federal income tax purposes, of the Subordinate Bondholders
pursuant to the Code, except in the event where any such owner of Subordinate Bonds is a
the meaning of the Code; and
(v) not take any action or permit or suffer any action to be taken if the
result of the same would be to cause the Subord
meaning of Section 149(b) of the Code and the Regulations.
In furtherance of the covenants in this Section 5.06, the Issuer and the Borrower shall
execute, deliver and comply with the provisions of the Tax Certificate, which is by this reference
incorporated into this Subordinate Indenture and made a part of this Subordinate Indenture as if set
forth in this Subordinate Indenture in full, and by its acceptance of this Subordinate Indenture the
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Trustee acknowledges receipt of the Tax Certificate and acknowledges its incorporation into this
Subordinate Indenture by this reference and agrees to comply with the terms specifically applicable
to it. In the event of a conflict between the terms of this Subordinate Indenture and the Tax
Certificate, the terms of the Tax Certificate shall control.
(b) . The Trustee agrees that it will invest funds held under
this Subordinate Indenture in accordance with the covenants and terms of this Subordinate Indenture
and the Tax Certificate (this covenant shall extend through the term of the Subordinate Bonds, to all
funds and accounts created under this Subordinate Indenture and all money on deposit to the credit of
any such fund or account). The Trustee covenants to and for the benefit of the Subordinate
Bondholders that, notwithstanding any other provisions of this Subordinate Indenture or of any other
Loan Document, it will not knowingly make or cause to be made any investment or other use of the
money in the funds or accounts created hereunder which would cause the Subordinate Bonds to be
cause the interest on the Subordinate Bonds to be includable in gross income for federal income tax
purposes; provided that the Trustee shall be deemed to have complied with such requirements and
shall have no liability to the extent it reasonably follows the written directions of the Borrower or the
Issuer. This covenant shall extend, throughout the term of the Subordinate Bonds, to all funds
created under this Subordinate Indenture and all money on deposit to the credit of any such fund.
Pursuant to this covenant, with respect to the investments of the funds and accounts under this
Subordinate Indenture, the Trustee obligates itself to comply throughout the term of the issue of the
Subordinate Bonds with the requirements of Sections 103(b) and 148 of the Code; provided that the
Trustee shall be deemed to have complied with such requirements and shall have no liability to the
extent it reasonably follows the written directions of the Borrower or the Issuer. The Trustee further
covenants that should the Issuer or the Borrower file with the Trustee (it being understood that
neither the Issuer nor the Borrower has an obligation to so file), or should the Trustee receive, an
opinion of Bond Counsel to the effect that any proposed investment or other use of proceeds of the
Trustee will comply with any written instructions of the Issuer, the Borrower or Bond Counsel
regarding such investment (which shall, in any event, be a Permitted Investment) or use so as to
liability to the Issuer, the Borrower or the Subordinate Bondholders for investments made in
accordance with such instructions.
Events of Default. Each of the following shall be an event of default with
respect to the Subordinate
(a) failure to pay the principal of, or interest on any Subordinate Bond when due,
to the extent sufficient Revenues are available therefor;
(b) failure by the Issuer or the Trustee to perform or observe any other of the
covenants, agreements or conditions on its part in this Subordinate Indenture or in the Subordinate
Bonds contained, and the continuation of such failure for a period of thirty (30) days after written
notice thereof, specifying such default and requiring the same to be remedied, shall have been given
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to the Issuer or the Trustee by the Borrower, the Trustee or the Issuer, as applicable, or by the holders
of not less than a majority in aggregate principal amount of the Subordinate Bonds at the time
Outstanding; or if the breach is not reasonably capable of being cured, the Issuer or the Trustee does
not commence to cure, correct or remedy such breach within thirty (30) days after receipt of a written
notice specifying such breach and does not thereafter prosecute such cure, correction or remedy with
diligence to completion; or
(c) the occurrence of any Event of Default under the Subordinate Loan
Agreement upon written notice thereof, specifying such default and requiring the same to be
remedied, delivered to the Issuer or the Trustee by the Borrower, the Trustee or the Issuer, as
applicable, or by the holders of not less than a majority in aggregate principal amount of the
Subordinate Bonds at the time Outstanding.
Prior to the Maturity Date, the Trustee and the Issuer agree that a failure to pay any amounts
required to be paid under this Subordinate Indenture as a result of a deficiency of available Revenues
shall not constitute an Event of Default hereunder.
Notwithstanding anything to the co
Partner shall have the right, but not the obligation, to cure an Event of Default hereunder.
Acceleration; Other Remedies Upon Event of Default.
(a) Upon the occurrence of an Event of Default under Section 6.01(b) hereof, the
Trustee shall, upon the written direction of the Subordinate Bondholder Representative, and the
consent of the Senior Funding Lender, if required, and receipt of indemnity satisfactory to it, by
notice in writing delivered to the Issuer, declare the principal of all Subordinate Bonds then
Outstanding and the interest accrued thereon immediately due and payable, and interest shall
continue to accrue thereon until such amounts are paid.
(b) Upon the occurrence of an Event of Default (other than an Event of Default
under Section 6.01(b) hereof), the Trustee shall, but only upon the written direction of the
Subordinate Bondholder Representative, by notice in writing delivered to the Issuer, declare the
principal of all Subordinate Bonds then Outstanding and the interest accrued thereon immediately
due and payable and interest on the Subordinate Bonds shall cease to accrue, anything contained in
this Subordinate Indenture or in the Subordinate Bonds to the contrary notwithstanding.
If at any time after the Subordinate Bonds shall have been so declared due and
payable, and before any judgment or decree for the payment of the money due shall have been
obtained or entered, the Issuer or the Borrower shall pay to or deposit with the Trustee a sum
sufficient to pay all principal of the Subordinate Bonds then due (other than solely by reason of such
declaration) and all unpaid installments of interest (if any) upon all the Subordinate Bonds then due,
with interest at the rate borne by the Subordinate Bonds on such overdue principal and (to the extent
legally enforceable) on such overdue installments of interest, and the reasonable fees and expenses of
the Trustee (including its counsel) shall have been made good or cured or adequate provision shall
defaults hereunder shall have been made good or cured or waived in writing by the Subordinate
Bondholder Representative, then and in every case, the Trustee on behalf of the Holders of all the
Outstanding Subordinate Bonds shall rescind and annul such declaration and its consequences; but no
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such rescission and annulment shall extend to or shall affect any subsequent default, nor shall it
impair or exhaust any right or power consequent thereon.
Upon the occurrence and during the continuance of an Event of Default, the Trustee
in its own name and as trustee of an express trust, on behalf and for the benefit and protection of the
Holders of all Subordinate Bonds with respect to which such an Event of Default has occurred (if no
Event of Default has occurred and is continuing under Section 6.01(b)), may also proceed to protect
and enforce any rights of the Trustee and, to the full extent that the Holders of such Subordinate
Bonds themselves might do, the rights of such Subordinate Bondholders under the laws of the State
or under this Subordinate Indenture by such of the following remedies as the Trustee shall deem most
effectual to protect and enforce such rights:
(i) by mandamus or other suit, action or proceeding at law or in equity,
to enforce the payment of the principal of or interest on the Subordinate Bonds then Outstanding and
to require the Issuer to carry out any covenants or agreements with or for the benefit of the
Subordinate Bondholders and to perform its duties under the Act, this Subordinate Indenture, the
Subordinate Loan Agreement or the Regulatory Agreement to the extent permitted under the
applicable provisions thereof;
(ii) by pursuing any available remedies under the Subordinate Loan
Agreement or any Subordinate Loan Document or the Regulatory Agreement;
(iii) by realizing or causing to be realized through sale or otherwise upon
the security pledged hereunder; and
(iv) by action or suit in equity enjoin any acts or things that may be
unlawful or in violation of the rights of the Holders of the Subordinate Bonds and execute any other
papers and documents and do and perform any and all such acts and things as may be necessary or
advisable in the opinion of the Trustee in order to have the respective claims of the Subordinate
Bondholders against the Issuer allowed in any bankruptcy or other proceeding.
No remedy by the terms of this Subordinate Indenture conferred upon or reserved to the
Trustee or to the Subordinate Bondholders is intended to be exclusive of any other remedy, but each
and every such remedy shall be cumulative and shall be in addition to any other remedy given to the
Trustee, the Subordinate Bondholders hereunder or under the Subordinate Loan Agreement or any
other Subordinate Loan Document or the Regulatory Agreement, as applicable, or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or acquiescence therein, and every such right and power may be
exercised from time to time and as often as may be deemed expedient. No waiver of any Event of
Default hereunder, whether by the Trustee or the Subordinate Bondholders, shall extend to or shall
affect any subsequent default or event of default or shall impair any rights or remedies consequent
thereto.
Rights of Subordinate Bondholders. If an Event of Default under
Section 6.01(b) hereof shall have occurred and is then continuing, and if requested in writing so to do
by the Holder of 100% of the aggregate principal amount of the Subordinate Bonds then Outstanding
with respect to which there is a default, and if indemnified to its satisfaction, the Trustee shall
exercise one or more of the rights and powers conferred by this Article as the Trustee, being advised
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by counsel or a committee of Responsible Officers, shall deem to be in the best interest of the
affected Subordinate Bondholders. If an Event of Default under Section 6.01(b) hereof shall have
occurred and is then continuing, the Holder of 100% of the aggregate principal amount of the
Subordinate Bonds then Outstanding with respect to which an Event of Default has occurred shall
have the right at any time, subject to the provisions of Section 6.07 hereof, by an instrument in
writing executed and delivered to the Trustee, to direct the time, method and place of conducting all
proceedings to be taken in connection with the enforcement of the terms and conditions of this
Subordinate Indenture, or for the appointment of a receiver or any other proceedings hereunder, in
accordance with the provisions of law and of this Subordinate Indenture.
Waiver by Issuer. Upon the occurrence of an Event of Default, to the extent
that such right may then lawfully be waived, neither the Issuer nor anyone claiming through or under
it shall set up, claim or seek to take advantage of any appraisal, valuation, stay, extension or
redemption laws now or hereinafter in force, in order to prevent or hinder the enforcement of this
Subordinate Indenture; and the Issuer, for itself and all who may claim through or under it, hereby
waives, to the extent that it lawfully may do so, the benefit of all such laws and all right of
appraisement and redemption to which it may be entitled under the laws of the State and the
United States.
Application of Money After Default. All money collected by the Trustee at
any time pursuant to this Article VI shall, except to the extent, if any, otherwise directed by a court of
competent jurisdiction, be credited by the Trustee to the Revenue Fund. Such money so credited to
the Revenue Fund and all other money from time to time credited to the Revenue Fund shall at all
times be held, transferred, withdrawn and applied as prescribed by the provisions of Article IV hereof
and this Section 6.05.
In the event that at any time the money credited to the Revenue Fund and the Subordinate
Bond Fund available for the payment of interest or principal then due with respect to the Subordinate
Bonds shall be insufficient for such payment, such money (other than money held for the payment or
redemption of particular Subordinate Bonds as provided in Section 4.08 hereof) shall be applied as
follows and in the following order of priority:
(a) For payment of all amounts due to the Trustee incurred in performance of its
duties under this Subordinate Indenture, including, without limitation, the payment of all reasonable
fees and expenses of the Trustee incurred in exercising any remedies under this Subordinate
Indenture;
(b) Unless the principal of all Subordinate Bonds shall have become or have been
declared due and payable:
FIRST: to the payment to the Persons entitled thereto of all installments of interest
then due in the order of the maturity of such installments, and, if the amount available is not
sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts
due on such installment, to the Persons entitled thereto, without any discrimination or preference; and
SECOND: to the payment to the Persons entitled thereto of the unpaid principal of
and, on any Subordinate Bonds which shall have become due, whether at maturity or by call for
redemption, in the order in which they became due and payable, and, if the amount available is not
sufficient to pay in full all the principal of and, on the Subordinate Bonds so due on any date, then to
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the payment of principal ratably, according to the amounts due on such date, to the Persons entitled
thereto, without any discrimination or preference, and then to the payment of any premium due on
the Subordinate Bonds, ratably, according to the amounts due on such date, to the Persons entitled
thereto, without any discrimination or preference.
(c) If the principal of all of the Subordinate Bonds shall have become or have
been declared due and payable, to the payment of the principal of, and interest then due and unpaid
upon the Subordinate Bonds without preference or priority of principal over interest or of interest
over principal, or of any installment of interest over any other installment of interest, or of any
Subordinate Bond over any other Subordinate Bond, ratably, according to the amounts due,
respectively, for principal and interest, to the Persons entitled thereto without any discrimination or
preference except as to any differences in the respective rates of interest specified in the Subordinate
Bonds.
Remedies Vested in Trustee. All rights of action, including the right to file
proof of claims, under this Subordinate Indenture or under any of the Subordinate Bonds may be
enforced by the Trustee without the possession of any of the Subordinate Bonds or the production
thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by
the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or
defendants any Holders of the Subordinate Bonds, and any recovery or judgment shall be for the
mutual benefit as provided herein of all of the Holders of the Outstanding Subordinate Bonds.
Remedies of Subordinate Bondholders. No Holder of any Subordinate
Bond shall have any right to institute any suit, action or proceeding in equity or at law for the
enforcement of this Subordinate Indenture or for the execution of any trust hereunder or for the
appointment of a receiver or any other remedy hereunder, unless (a) a default shall have occurred of
which the Trustee shall have been notified as provided herein; (b) such default shall have become an
Event of Default under Section 6.01(b) hereof; (c) the Holder of 100% of the aggregate principal
amount of the Subordinate Bonds then Outstanding with respect to which there is such an Event of
Default shall have made written request to the Trustee and shall have offered reasonable opportunity
to the Trustee either to proceed to exercise the powers hereinbefore granted or to institute such
action, suit or proceeding in its own name; (d) such Holders shall have offered to the Trustee
indemnity as provided in this Subordinate Indenture; and (e) the Trustee shall within sixty (60) days
thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or
proceeding; it being understood and intended that no one or more Holders of the Subordinate Bonds
shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this
Subordinate Indenture or the rights of any other Holders of Subordinate Bonds or to obtain priority or
preference over any other Holders or to enforce any right under this Subordinate Indenture, except in
the manner herein provided with respect to the equal and ratable benefit of all Holders of Subordinate
Bonds with respect to which there is a default. Nothing contained in this Subordinate Indenture shall,
however, affect or impair the right of any Subordinate Bondholder to enforce the payment of the
principal of and interest on any Subordinate Bond at the maturity thereof or the obligation of the
Issuer to pay the principal of, and interest on the Subordinate Bonds issued hereunder to the
respective holders thereof, at the time, in the place, from the sources and in the manner expressed
herein and in said Subordinate Bonds.
Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Subordinate Indenture by the appointment of a receiver, by entry or
otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall
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have been determined adversely, then and in every such case the Issuer, the Trustee, the Subordinate
Bondholder Representative, the Borrower and the Subordinate Bondholders shall be restored to their
former positions and rights hereunder with respect to the Subordinate Trust Estate herein conveyed,
and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been
taken.
Waivers of Events of Default. So long as no Event of Default has occurred
and is then continuing under Section 6.01(b) or Section 6.01(c) hereof, the Trustee shall waive any
Event of Default hereunder and its consequences and rescind any declaration of maturity of principal
of, and interest on the Subordinate Bonds only upon the written direction of the Subordinate
Bondholder Representative. If there shall have occurred and is then continuing an Event of Default
under Section 6.01(b) or Section 6.01(c) hereof, the Trustee shall waive any Event of Default
hereunder and its consequences and rescind any declaration of maturity of principal of, and interest
on the Subordinate Bonds upon the written request of the Holders of 100% of the Subordinate Bonds
then Outstanding with respect to which there is a default; provided, however, that there shall not be
waived (a) any Event of Default in the payment of the principal of any Subordinate Bonds at the date
of maturity specified therein, or upon proceedings for mandatory redemption of any Subordinate
Bonds, (b) any default in the payment when due of the interest on any such Subordinate Bonds,
unless prior to such waiver or rescission all arrears of interest, with interest (to the extent permitted
by law) at the rate borne by the Subordinate Bonds in respect of which such default shall have
occurred on overdue installments of interest or all arrears of payments of principal or when due
(whether at the stated maturity thereof or upon proceedings for mandatory redemption) as the case
may be, and all expenses of the Trustee in connection with such default shall have been paid or
provided for, and in case of any such waiver or rescission, or in case any proceeding taken by the
Trustee on account of any such default shall have been discontinued or abandoned or determined
adversely, then and in every such case the Issuer, the Trustee, and the Subordinate Bondholders shall
be restored to their former positions and rights hereunder, respectively, but no such waiver or
rescission shall extend to any subsequent or other default, or impair any right consequent thereto.
Notice to Subordinate Bondholders if Default Occurs. Upon the
occurrence of an Event of Default, or if an event occurs which could lead to an Event of Default with
the passage of time and of which the Trustee is required to take notice pursuant to Section 7.02(k)
hereof, the Trustee shall, within thirty (30) days, give written notice thereof by first class mail to the
registered Owners of all Subordinate Bonds then Outstanding. Notwithstanding the foregoing,
except in the case of an Event of Default with respect to the payment of principal of or and interest
on the Subordinate Bonds, the Trustee shall be protected in withholding such notice if and so long as
the board of directors of the Trustee, the executive committee, or a trust committee of directors or
officers of the Trustee in good faith determines that the withholding of such notice is in the best
interests of the Holders of the Subordinate Bonds.
Standard of Care. The Trustee, prior to an Event of Default as defined in
Section 6.01 and after the curing or waiver of all such events which may have occurred, shall
perform such duties and only such duties as are specifically set forth in this Subordinate Indenture.
The Trustee, during the existence of any such Event of Default (which shall not have been cured or
waived), shall exercise such rights and powers vested in it by this Subordinate Indenture and use the
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same degree of care and skill in its exercise as a prudent Person would exercise or use under similar
No provision of this Subordinate Indenture shall be construed to relieve the Trustee from
liability for its breach of trust, own negligence or willful misconduct, except that:
(a) prior to an Event of Default hereunder, and after the curing or waiver of all
such Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Subordinate Indenture, and the Trustee shall not be liable except with
regard to the performance of such duties and obligations as are specifically set forth in this
Subordinate Indenture; and
(ii) in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificate or opinion furnished to the Trustee by the Person or Persons authorized
to furnish the same;
(b) at all times, regardless of whether or not any such Event of Default shall
exist:
(i) the Trustee shall not be liable for any error of judgment made in good
faith by an officer or employee of the Trustee except for willful misconduct or negligence by the
officer or employee of the Trustee as the case may be; and
(ii) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the Subordinate
Bondholder Representative or the Holder of 100% of the aggregate principal amount of the
Subordinate Bonds then Outstanding (or such lesser or greater percentage as is specifically required
or permitted by this Subordinate Indenture) relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee under this Subordinate Indenture.
Reliance Upon Documents. Except as otherwise provided in Section 7.01:
(a) the Trustee may rely upon the authenticity or truth of the statements and the
correctness of the opinions expressed in, and shall be protected in acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, notarial seal, stamp, acknowledgment,
verification, request, consent, order, bond, or other paper or document of the proper party or parties,
including any facsimile transmission as permitted hereunder or under the Subordinate Loan
Agreement;
(b) any notice, request, direction, election, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an instrument signed in the name of the Issuer by
an Authorized Officer of the Issuer (unless other evidence in respect thereof be herein specifically
prescribed), and any resolution of the Issuer may be evidenced to the Trustee by a copy of such
resolution duly certified by an Authorized Officer of the Issuer;
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(c) any notice, request, certificate, statement, requisition, direction, election,
order or demand of the Borrower mentioned herein shall be sufficiently evidenced by an instrument
purporting to be signed in the name of the Borrower by any Authorized Officer of the Borrower
(unless other evidence in respect thereof be herein specifically prescribed), and any resolution or
certification of the Borrower may be evidenced to the Trustee by a copy of such resolution duly
certified by a secretary or other authorized representative of the Borrower;
(d) any notice, request, direction, election, order or demand of the Subordinate
Bondholder Representative mentioned herein shall be sufficiently evidenced by an instrument
purporting to be signed in the name of the Subordinate Bondholder Representative by any
Authorized Officer of the Subordinate Bondholder Representative (unless other evidence in respect
thereof be herein specifically prescribed);
(e) in the administration of the trusts of this Subordinate Indenture, the Trustee
may execute any of the trusts or powers hereby granted directly or through its agents, receivers or
attorneys, and the Trustee may consult with counsel and the opinion or advice of such counsel shall
be full and complete authorization and protection in respect of any action taken or permitted by it
hereunder in good faith and in accordance with the opinion of such counsel;
(f) whenever in the administration of the trusts of this Subordinate Indenture, the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or
permitting any action hereunder, such matters (unless other evidence in respect thereof be herein
specifically prescribed), may in the absence of negligence or willful misconduct on the part of the
Trustee, be deemed to be conclusively proved and established by a certificate of an officer or
authorized agent of the Issuer or the Borrower and such certificate shall in the absence of bad faith on
the part of the Trustee be full warrant to the Trustee for any action taken or permitted by it under the
provisions of this Subordinate Indenture, but in its discretion the Trustee may in lieu thereof accept
other evidence of such matter or may require such further or additional evidence as it may deem
reasonable;
(g)
certificate of authentication thereon) shall be taken as the statements of the Issuer and the Borrower
and shall not be considered as made by or imposing any obligation or liability upon the Trustee. The
Trustee makes no representations as to the value or condition of the Subordinate Trust Estate or any
part thereof, or as to the title of the Issuer or the Borrower to the Subordinate Trust Estate, or as to
the security of this Subordinate Indenture, or of the Subordinate Bonds issued hereunder, and the
Trustee shall incur no liability or responsibility in respect of any of such matters;
(h) the Trustee shall not be personally liable for debts contracted or liability for
damages incurred in the management or operation of the Subordinate Trust Estate except for its own
willful misconduct or negligence; and every provision of this Subordinate Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 7.02(h);
(i) the Trustee shall not be required to ascertain or inquire as to the performance
or observance of any of the covenants or agreements (except to the extent they obligate the Trustee)
herein or in any contracts or securities assigned or conveyed to or pledged with the Trustee
hereunder, except Events of Default that are evident under Section 6.01(a) or Section 6.01(b) hereof.
The Trustee shall not be required to take notice or be deemed to have notice or actual knowledge of
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any default or Event of Default specified in Section 6.01 hereof (except defaults under
Section 6.01(a) or Section 6.01(b) hereof) unless the Trustee shall receive from the Issuer, the
Subordinate Bondholder Representative or the Holder of 100% of the aggregate principal amount of
the Subordinate Bonds then Outstanding written notice stating that a default or Event of Default has
occurred and specifying the same, and in the absence of such notice the Trustee may conclusively
assume that there is not such default. Every provision contained in this Subordinate Indenture or
related instruments or in any such contract or security wherein the duty of the Trustee depends on the
occurrence and continuance of such default shall be subject to the provisions of this Section 7.02(k);
(j) the Trustee shall be under no duty to confirm or verify any financial or other
statements or reports or certificates furnished pursuant to any provisions hereof, except to the extent
such statement or reports are furnished by or under the direction of the Trustee, and shall be under no
other duty in respect of the same except to retain the same in its files and permit the inspection of the
same at reasonable times by the Holder of any Subordinate Bond; and
(k) the Trustee shall be under no obligation to exercise those rights or powers
vested in it by this Subordinate Indenture, other than such rights and powers which it shall be obliged
to exercise in the ordinary course of its trusteeship under the terms and provisions of this Subordinate
Indenture and as required by law, at the request or direction of any of the Subordinate Bondholders
pursuant to Sections 6.03 and 6.07 of this Subordinate Indenture, unless such Subordinate
Bondholders shall have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in the compliance with such request or
direction.
None of the provisions contained in this Subordinate Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers.
The Trustee is authorized and directed to execute in its capacity as Trustee the Subordinate
Loan Agreement, the Subordination Agreement and the Regulatory Agreement and shall have no
responsibility or liability with respect to any information, statement or recital in any offering
memorandum or other disclosure material prepared or distributed with respect to the issuance of the
Subordinate Bonds.
The Trustee or any of its affiliates may act as advisor or sponsor with respect to any
Permitted Investments.
The Trustee agrees to accept and act upon facsimile transmission or Electronic Notice of
written instructions and/or directions pursuant to this Subordinate Indenture provided, however, that:
(a) subsequent to such facsimile transmission or Electronic Notice of written instructions and/or
directions the Trustee shall forthwith receive the originally executed instructions and/or directions,
(b) such originally executed instructions and/or directions shall be signed by such Person as may be
designated and authorized to sign for the party signing such instructions and/or directions, and (c) the
Trustee shall have received a current incumbency certificate containing the specimen signature of
such designated Person.
Any resolution, certification, notice, request, direction, election, order or demand delivered to
the Trustee pursuant to this Section 7.02 shall remain in effect until the Trustee receives written
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notice to the contrary from the party that delivered such instrument accompanied by revised
information for such party.
The Trustee shall have no responsibility for the value of any collateral or with respect to the
perfection or priority of any security interest in any collateral except as otherwise provided in
Section 7.16 hereof.
Use of Proceeds. The Trustee shall not be accountable for the use or
application of any of the Subordinate Bonds authenticated or delivered hereunder or of the proceeds
of the Subordinate Bonds except as provided herein.
Trustee May Hold Subordinate Bonds. The Trustee and its officers and
directors may acquire and hold, or become pledgees of Subordinate Bonds and otherwise may deal
with the Issuer and the Borrower in the same manner and to the same extent and with like effect as
though it were not Trustee hereunder.
Trust Imposed. All money received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they were received.
Compensation of Trustee. The Trustee shall be entitled to its acceptance fee
and its annual administration fee, payable by the Borrower pursuant to the Subordinate Loan
Agreement, in connection with the services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties of the Trustee
hereunder. The Trustee shall be entitled to extraordinary fees and expenses in connection with any
Extraordinary Services performed consistent with the duties hereunder or under any of the
Subordinate Loan Documents; provided the Trustee shall not incur any extraordinary fees and
expenses without the consent of the Subordinate Bondholder Representative (except that no consent
shall be required if an Event of Default under 6.01(b) has occurred and is continuing). If any
property, other than cash, shall at any time be held by the Trustee subject to this Subordinate
Indenture, or any supplemental indenture, as security for the Subordinate Bonds, the Trustee, if and
to the extent authorized by a receivership, bankruptcy, or other court of competent jurisdiction or by
the instrument subjecting such property to the provisions of this Subordinate Indenture as such
security for the Subordinate Bonds, shall be entitled to make advances for the purpose of preserving
such property or of discharging tax liens or other liens or encumbrances thereon. Payment to the
Trustee for its services and reimbursement to the Trustee for its expenses, disbursements, liabilities
and advances, shall be limited to the sources described in the Subordinate Loan Agreement and in
Sections 4.08 and 6.05 hereof. The Issuer shall have no liability
Subject to the provisions of Section 7.09 hereof, the Trustee agrees that it shall continue to perform
its duties hereunder (including, but not limited to, its duties as Paying Agent and Subordinate Bond
Registrar) and under the Subordinate Loan Documents even in the event that money designated for
payment of its fees shall be insufficient for such purposes or in the event that the Borrower fails to
an Agreement.
The Borrower shall indemnify and hold harmless the Trustee and its officers, directors,
officials, employees, agents, receivers, attorneys, accountants, advisors, consultants and servants,
past, present or future, from and against (a) any and all claims by or on behalf of any Person arising
from any cause whatsoever in connection with this Subordinate Indenture or transactions
contemplated hereby, the Project, or the issuance of the Subordinate Bonds; (b) any and all claims
arising from any act or omission of the Borrower or any of its agents, contractors, servants,
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employees or licensees in connection with the Project, or the issuance of the Subordinate Bonds; and
(c) all costs, counsel fees, expenses or liabilities incurred in connection with any such claim or
proceeding brought thereon; except that the Borrower shall not be required to indemnify any Person
for damages caused by the negligence, willful misconduct or unlawful acts of such Person or which
arise from events occurring after the Borrower ceases to own the Project. In the event that any action
or proceeding is brought or claim made against the Trustee, or any of its officers, directors, officials,
employees, agents, receivers, attorneys, accountants, advisors, consultants or servants, with respect to
which indemnity may be sought hereunder, the Borrower, upon written notice thereof from the
indemnified party, shall assume the investigation and defense thereof, including the employment of
counsel and the payment of all expenses. The indemnified party shall have the right to approve a
settlement to which it is a party and to employ separate counsel in any such action or proceedings
and to participate in the investigation and defense thereof, and the Borrower shall pay the reasonable
fees and expenses of such separate counsel. The provisions of this Section shall survive the
termination of this Subordinate Indenture.
Qualifications of Trustee. There shall at all times be a Trustee hereunder
which shall be an association or a corporation organized and doing business under the laws of the
United States of America or any state thereof, authorized under such laws to exercise corporate trust
powers. Any successor Trustee shall have a combined capital and surplus of at least $50,000,000 (or
shall be a wholly owned subsidiary of an association or corporation that has such combined capital
and surplus), and be subject to supervision or examination by federal or state authority, or shall have
been appointed by a court of competent jurisdiction pursuant to Section 7.09. If such association or
corporation publishes reports of condition at least annually, pursuant to law or to the requirements of
any supervising or examining authority referred to above, then for the purposes of this Section, the
combined capital and surplus of such association or corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this Section and another
association or corporation is eligible, the Trustee shall resign immediately in the manner and with the
effect specified in Section 7.09.
Merger of Trustee. Any association or corporation into which the Trustee
may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer
its corporate trust business and assets as a whole or substantially as a whole, or any association or
corporation resulting from any such conversion, sale, merger, consolidation or transfer to which it is
a party shall, ipso facto, be and become successor Trustee hereunder and vested with all the title to
the whole property or Subordinate Trust Estate and all the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution or filing of any
instruments or any further act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding, and shall also be and become successor Trustee in respect of
the beneficial interest of the Trustee in the Subordinate Loan.
Resignation by the Trustee. The Trustee may at any time resign from the
trusts hereby created by giving written notice to the Issuer, the Borrower and the Subordinate
Bondholder Representative, and by giving notice by certified mail or overnight delivery service to
each Holder of the Subordinate Bonds then Outstanding. Such notice to the Issuer, the Borrower and
the Subordinate Bondholder Representative may be served personally or sent by certified mail or
overnight delivery service. The resignation of the Trustee shall not be effective until a successor
Trustee has been appointed as provided herein and such successor Trustee shall have agreed in
writing to be bound by the duties and obligations of the Trustee hereunder.
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Removal of the Trustee. The Trustee may be removed at any time, either
with or without cause, with the consent of the Subordinate Bondholder Representative (which
consent of the Subordinate Bondholder Representative shall not be unreasonably withheld and which
approval shall be deemed given after fifteen (15) days if the Subordinate Bondholder Representative
has not responded to a written request for such approval) by a written instrument signed by the Issuer
and delivered to the Trustee and the Borrower, and if an Event of Default shall have occurred and be
continuing, other than an Event of Default under Section 6.01(b), by a written instrument signed by
the Subordinate Bondholder Representative and delivered to the Trustee, the Issuer and the
Borrower. The Trustee may also be removed, if an Event of Default under Section 6.01(b) shall have
occurred and be continuing, by a written instrument or concurrent instruments signed by the Holder
of 100% of the aggregate principal amount of the Subordinate Bonds then Outstanding and delivered
to the Trustee, the Issuer, the Borrower and the Subordinate Bondholder Representative. The Trustee
may also be removed by the Subordinate Bondholder Representative following notice to the Issuer
and after a thirty (30) day period during which the Issuer may attempt to cause the Trustee to
discharge its duties in a manner acceptable to Subordinate Bondholder Representative, and in each
case written notice of such removal shall be given to the Servicer, the Borrower and to each
registered Owner of Subordinate Bonds then Outstanding as shown on the Subordinate Bond
Registrar. Any such removal shall take effect on the day specified in such written instrument(s), but
the Trustee shall not be discharged from the trusts hereby created until a successor Trustee has been
appointed and has accepted such appointment and has agreed in writing to be bound by the duties and
obligations of the Trustee hereunder.
Appointment of Successor Trustee.
(a) In case at any time the Trustee shall resign or be removed, or be dissolved, or
shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or
shall be adjudged a bankrupt or insolvent, or if a receiver of the Trustee or of its property shall be
appointed, or if a public supervisory office shall take charge or control of the Trustee or of its
property or affairs, a vacancy shall forthwith and ipso facto be created in the office of such Trustee
hereunder, and the Issuer, with the written consent of the Subordinate Bondholder Representative
(which consent shall not be unreasonably withheld and which consent shall be deemed given after
fifteen (15) days if the applicable party has not responded to a written request from the Issuer for
such consent), shall promptly appoint a successor Trustee. Any such appointment shall be made by a
written instrument executed by an Authorized Officer of the Issuer.
(b) If, in a proper case, no appointment of a successor Trustee shall be made
pursuant to subsection (a) of this Section 7.11 within sixty (60) days following delivery of all
required notices of resignation given pursuant to Section 7.09 or of removal of the Trustee pursuant
to Section 7.10, the retiring Trustee may apply to any court of competent jurisdiction to appoint a
successor Trustee. The court may thereupon, after such notice, if any, as such court may deem
proper and prescribe, appoint a successor Trustee.
Concerning Any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer a written
instrument accepting such appointment hereunder, accepting assignment of the beneficial interest in
the Subordinate Mortgage, and thereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the Subordinate Trust Estate and the rights, powers,
trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the
written request of the Issuer, the Borrower or the Subordinate Bondholder Representative, or of its
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successor, and upon payment of all amounts due such predecessor, including but not limited to fees
and expenses of counsel, execute and deliver such instruments as may be appropriate to transfer to
such successor Trustee all the Subordinate Trust Estate and the rights, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all securities and money held by
it as Trustee hereunder to its successor. Should any instrument in writing from the Issuer be required
by a successor Trustee for more fully and certainly vesting in such successor the Subordinate Trust
Estate and all rights, powers and duties hereby vested or intended to be vested in the predecessor, any
and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the
Issuer. The resignation of any Trustee and the instrument or instruments removing any Trustee and
appointing a successor hereunder, together with all other instruments provided for in this Article,
shall be filed and/or recorded by the successor Trustee in each recording office where this
Subordinate Indenture shall have been filed and/or recorded. Each successor Trustee shall mail
notice by first class mail, postage prepaid, at least once within 30 days of such appointment, to the
Owners of all Subordinate Bonds Outstanding at their addresses on the Subordinate Bond Register.
Successor Trustee as Trustee, Paying Agent and Subordinate Bond
Registrar. In the event of a change in the office of Trustee, the predecessor Trustee which shall
have resigned or shall have been removed shall cease to be trustee and paying agent on the
Subordinate Bonds and Subordinate Bond Registrar, and the successor Trustee shall become such
Trustee, Paying Agent and Subordinate Bond Registrar.
Appointment of Co-Trustee or Separate Trustee. It is the intent of the
Issuer and the Trustee that there shall be no violation of any law of any jurisdiction (including
particularly the laws of the State) denying or restricting the right of banking corporations or
associations to transact business as Trustee in such jurisdiction. It is recognized that in case of
litigation under or connected with this Subordinate Indenture, the Subordinate Loan Agreement or
any of the other Subordinate Loan Documents, and, in particular, in case of the enforcement of any
remedies on default, or in case the Trustee deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the powers, rights or remedies herein or therein granted to the
Trustee or hold title to the properties in trust, as herein granted, or take any other action which may
be desirable or necessary in connection therewith, it may be necessary that the Trustee, with the
consent of the Issuer, appoint an additional individual or institution as a co-trustee or separate trustee.
In the event that the Trustee appoints an additional individual or institution as a co-trustee or
separate trustee, in the event of the incapacity or lack of authority of the Trustee, by reason of any
present or future law of any jurisdiction, to exercise any of the rights, powers, trusts and remedies
granted to the Trustee herein or to hold title to the Subordinate Trust Estate or to take any other
action that may be necessary or desirable in connection therewith, each and every remedy, power,
right, obligation, claim, demand, cause of action, immunity, estate, title, interest and lien expressed
or intended by this Subordinate Indenture to be imposed upon, exercised by or vested in or conveyed
to the Trustee with respect thereto shall be imposed upon, exercisable by and vest in such separate
trustee or co-trustee, but only to the extent necessary to enable such co-trustee or separate trustee to
exercise such powers, rights, trusts and remedies, and every covenant and obligation necessary to the
exercise thereof by such co-trustee or separate trustee shall run to and be enforceable by either of
them, subject to the remaining provisions of this Section 7.14. Such co-trustee or separate trustee
shall deliver an instrument in writing acknowledging and accepting its appointment hereunder to the
Issuer and the Trustee.
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Should any instrument in writing from the Issuer be required by the co-trustee or separate
trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it
such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing
shall, on request, be executed, acknowledged and delivered by the Issuer, the Trustee and the
Borrower. If the Issuer shall fail to deliver the same within thirty (30) days of such request, the
Trustee is hereby appointed attorney-in-fact for the Issuer to execute, acknowledge and deliver such
-trustee or separate trustee, or a successor
to either, shall die, become incapable of acting, resign or be removed, all the estates, properties,
rights, powers, trusts, duties and obligations of such co-trustee or separate trustee, so far as permitted
by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or
successor to such co-trustee or separate trustee.
Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent
only, be appointed subject to the following terms, namely:
(a) The Subordinate Bonds shall be authenticated and delivered, and all rights,
powers, trusts, duties and obligations by this Subordinate Indenture conferred upon the Trustee in
respect of the custody, control or management of money, papers, securities and other personal
property shall be exercised solely by the Trustee;
(b) all rights, powers, trusts, duties and obligations conferred or imposed upon
the Trustee shall be conferred or imposed upon or exercised or performed by the Trustee, or by the
Trustee and such co-trustee, or separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that under the law of any
jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such act or acts shall be performed by such
co-trustee or separate trustee;
(c) any request in writing by the Trustee to any co-trustee or separate trustee to
take or to refrain from taking any action hereunder shall be sufficient warrant for the taking or the
refraining from taking of such action by such co-trustee or separate trustee;
(d) any co-trustee or separate trustee to the extent permitted by law shall delegate
to the Trustee the exercise of any right, power, trust, duty or obligation, discretionary or otherwise;
(e) the Trustee at any time by an instrument in writing with the concurrence of
the Issuer evidenced by a certified resolution may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section and in case an Event of Default shall have occurred
and be continuing, the Trustee shall have power to accept the resignation of or remove any such co-
trustee or separate trustee without the concurrence of the Issuer, and upon the request of the Trustee,
the Issuer shall join with the Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-
trustee or separate trustee so resigned or removed may be appointed in the manner provided in this
Section;
(f) no Trustee or co-trustee hereunder shall be personally liable by reason of any
act or omission of any other Trustee hereunder;
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(g) any demand, request, direction, appointment, removal, notice, consent, waiver
or other action in writing executed by the Subordinate Bondholders and delivered to the Trustee shall
be deemed to have been delivered to each such co-trustee or separate trustee; and
(h) any money, papers, securities or other items of personal property received by
any such co-trustee or separate trustee hereunder shall forthwith, so far as may be permitted by law,
be turned over to the Trustee.
The total compensation of the Trustee and co-trustee or separate trustee shall be as, and may
not exceed the amount, provided in Section 7.06 hereof.
Notice of Certain Events. The Trustee shall give written notice to the Issuer,
the Servicer and the Subordinate Bondholder Representative of any failure by the Borrower to
comply with the terms of the Regulatory Agreement of which a Responsible Officer has actual
knowledge.
Filing of Financing Statements. The Trustee shall, at the expense of the
Borrower, file or record or cause to be filed or recorded all UCC continuation statements for the
purpose of continuing without lapse the effectiveness of those financing statements which have been
filed on or approximately on the Closing Date in connection with the security for the Subordinate
Bonds pursuant to the authority of the UCC. Upon the filing of any such continuation statement the
Trustee shall immediately notify the Issuer, the Borrower, the Subordinate Bondholder
Representative and the Servicer that the same has been done. If direction is given by the Servicer or
the Subordinate Bondholder Representative, the Trustee shall file all continuation statements in
accordance with such directions.
Supplemental Indentures Not Requiring Consent of Subordinate
Bondholders. The Issuer and the Trustee may from time to time and at any time, without the
consent of, or notice to, any of the Subordinate Bondholders, but with the prior written consent of the
Subordinate Bondholder Representative, enter into an indenture or indentures supplemental to this
Subordinate Indenture for any one or more of the following purposes:
(a) to cure any formal defect, omission, inconsistency or ambiguity herein in a
manner not materially adverse to the Holder of any Subordinate Bond to be Outstanding after the
effective date of the change;
(b) to grant to or confer upon the Trustee for the benefit of the Holders of the
Subordinate Bonds any additional rights, remedies, powers or authority that may lawfully be granted
or conferred and that are not contrary to or inconsistent with this Subordinate Indenture or the rights
of the Trustee hereunder as theretofore in effect;
(c) to subject to the lien and pledge of this Subordinate Indenture additional
revenues, properties or collateral;
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(d) to modify, amend or supplement this Subordinate Indenture or any indenture
supplemental hereto in such manner as to permit the qualification hereof and thereof under the Trust
Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect or to permit the
qualification of the Subordinate Bonds for sale under any state blue sky laws;
(e) to make such additions, deletions or modifications as may be, in the opinion
of Bond Counsel delivered to the Issuer and the Trustee, necessary to maintain the exclusion from
gross income for federal income tax purposes of interest on the Subordinate Bonds; or
(f) to modify, amend or supplement this Subordinate Indenture in any other
respect which is not materially adverse to the Holders of the Subordinate Bonds to be Outstanding
after the effective date of the change and which does not involve a change described in Section 8.02.
Supplemental Indentures Requiring Consent of Subordinate
Bondholders. With the prior written consent of the Subordinate Bondholder Representative, the
Holders of 100% of the aggregate principal amount of the Subordinate Bonds then Outstanding shall
have the right, from time to time, to consent to and approve the execution by the Issuer and the
Trustee of such indenture or indentures supplemental hereto as shall be deemed necessary and
desirable by the Issuer for the purpose of modifying, altering, amending, adding to or rescinding, in
any particular, any of the terms or provisions contained in this Subordinate Indenture; provided,
however, that nothing in this Section contained shall permit, or be construed as permitting, (a) an
extension of the time for payment of, or an extension of the stated maturity or reduction in the
principal amount or reduction in the rate of interest on or extension of the time of payment, of
interest on, or reduction of any premium payable on the redemption of, any Subordinate Bonds, or a
of all of the Subordinate Bonds then Outstanding, (b) the creation of any lien prior to or on a parity
with the lien of this Subordinate Indenture, (c) a reduction in the aforesaid percentage of the principal
amount of Subordinate Bonds which is required in connection with the giving of consent to any such
supplemental indenture, without the consent of the Holders of all of the Subordinate Bonds then
Outstanding, (d) the modification of the rights, duties or immunities of the Trustee, without the
written consent of the Trustee, (e) a privilege or priority of any Subordinate Bond over any other
Subordinate Bonds, or (f) any action that results in the interest on the Subordinate Bonds becoming
included in gross income for federal income tax purposes.
If at any time the Issuer shall request the Trustee to enter into any such supplemental
indenture for any of the purposes of this Section, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of the proposed execution of such supplemental
indenture to be mailed, postage prepaid, to all registered Subordinate Bondholders and to the
Subordinate Bondholder Representative. Such notice shall briefly set forth the nature of the
proposed supplemental indenture and shall state that copies thereof are on file at the corporate trust
office of the Trustee for inspection by all Subordinate Bondholders.
Thirty (30) days after the date of the mailing of such notice, the Issuer and the Trustee may
enter into such supplemental indenture substantially in the form described in such notice, but only if
there shall have first been or is simultaneously delivered to the Trustee the required consents, in
writing, of the Subordinate Bondholder Representative and the Holders of not less than the
percentage of Subordinate Bonds required by this Section 8.02. If the Holders of not less than the
percentage of Subordinate Bonds required by this Section 8.02 shall have consented to and approved
the execution and delivery of a supplemental indenture as provided herein, no Holder of any
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Subordinate Bond shall have any right to object to any of the terms and provisions contained therein,
or the operation thereof, or in any manner to question the propriety of the execution thereof, or to
enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action
pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this
Section 8.02 permitted and provided, this Subordinate Indenture shall be and be deemed to be
modified and amended in accordance therewith. The Trustee may rely upon an opinion of counsel as
conclusive evidence that execution and delivery of a supplemental indenture has been effected in
compliance with the provisions of this Article VIII.
Anything in this Article VIII to the contrary notwithstanding, unless the Borrower shall then
be in default of any of its obligations under the Subordinate Loan Agreement, the Regulatory
Agreement, the Subordinate Note or the Subordinate Mortgage, a supplemental indenture under this
Article VIII which affects any rights of the Borrower shall not become effective unless and until the
Borrower shall have expressly consented in writing to the execution and delivery of such
supplemental indenture. In this regard, the Trustee shall cause notice of the proposed execution and
delivery of any such supplemental indenture to be mailed by certified or registered mail to the
days prior to the proposed date of execution
and delivery of any supplemental indenture.
Notwithstanding any other provision of this Subordinate Indenture, the Issuer and the Trustee
may consent to any supplemental indenture upon receipt of the consent of the Subordinate
Bondholder Representative, the Holders of all Subordinate Bonds then Outstanding and, as
applicable, the Borrower.
Amendments to Subordinate Loan Agreement Not Requiring Consent of
Subordinate Bondholders. The Trustee shall, without the consent of, or notice to, the Subordinate
Bondholders, but with the consent of the Borrower and the Subordinate Bondholder Representative,
consent to any amendment, change or modification of the Subordinate Loan Agreement as follows:
(a) as may be required by the provisions of Subordinate Loan Agreement or this
Subordinate Indenture;
(b) to cure any formal defect, omission, inconsistency or ambiguity in the
Subordinate Loan Agreement in a manner not materially adverse to the Holder of any Subordinate
Bond to be Outstanding after the effective date of the change;
(c) to make such additions, deletions or modifications as may be necessary, in the
opinion of Bond Counsel delivered to the Issuer and the Trustee, to maintain the exclusion from
gross income for federal income tax purposes of interest on the Subordinate Bonds; or
(d) to modify, amend or supplement the Subordinate Loan Agreement in any
other respect which is not materially adverse to the Trustee or Holders of the Subordinate Bonds to
be Outstanding after the effective date of the change and which does not involve a change described
in Section 8.04.
Amendments to Subordinate Loan Agreement Requiring Consent of
Subordinate Bondholders. Except for the amendments, changes or modifications of the
Subordinate Loan Agreement as provided in Section 8.03 hereof, neither the Issuer nor the Trustee
shall consent to any other amendment, change or modification of the Subordinate Loan Agreement
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without the consent of the Subordinate Bondholder Representative, and the Borrower and without the
giving of notice and the written approval or consent of the Holder of 100% of the aggregate principal
amount of the Subordinate Bonds then Outstanding given and procured in accordance with the
procedure set forth in Section 8.02 hereof; provided, however, that nothing contained in this
Section 8.04 shall permit, or be construed as permitting, any amendment, change or modification of
he payments required under the Subordinate Loan Agreement
without the consent of the Holders of all of the Subordinate Bonds then Outstanding. If at any time
the Issuer and the Borrower shall request the consent of the Trustee to any such proposed
amendment, change or modification of the Subordinate Loan Agreement, the Trustee shall cause
notice of such proposed amendment, change or modification to be given in the same manner as
provided in Section 8.02 hereof. Such notice shall briefly set forth the nature of such proposed
amendment, change or modification and shall state that copies of the instrument embodying the same
are on file at the Principal Office of the Trustee for inspection by Subordinate Bondholders.
Consent of Senior Funding Lender. So long as the Senior Obligations
remain outstanding, no supplement or amendment to the Subordinate Loan Agreement or this
Subordinate Indenture, as described in this Article VIII, shall be effective except upon receipt by the
Trustee of the written consent, which consent shall not be unreasonably withheld, conditioned, or
delayed, thereto of the Senior Funding Lender.
Opinion of Bond Counsel Required. No supplement or amendment to the
Subordinate Loan Agreement or this Subordinate Indenture, as described in this Article VIII, shall be
effective until the Issuer, the Trustee and the Subordinate Bondholder Representative shall have
received an opinion of Bond Counsel to the effect that such supplement or amendment is authorized
or permitted by this Subordinate Indenture and, upon execution and delivery thereof, will be valid
and binding upon the Issuer in accordance with its terms and will not cause interest on the
Subordinate Bonds to be includable in gross income of the Holders thereof for federal income tax
purposes. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, the
opinion of any counsel approved by it as conclusive evidence that (i) any proposed supplemental
indenture or amendment permitted by this Article VIII complies with the provisions of this
Subordinate Indenture, (ii) it is proper for the Trustee to join in the execution of that supplemental
indenture or amendment under the provisions of this Article VIII, and (iii) if applicable, such
proposed supplemental indenture or amendment is not materially adverse to the interests of the
Subordinate Bondholders.
Discharge of Lien. If the Issuer shall pay or cause to be paid to the Holders
of the Subordinate Bonds the principal and interest to become due thereon at the times and in the
manner stipulated therein and herein, in any one or more of the following ways:
(a) by the payment of the principal of and interest on all Subordinate Bonds
Outstanding; or
(b) by the deposit or credit to the account of the Trustee, in trust, of money or
securities in the necessary amount (as provided in Section 9.04) to pay the principal, redemption
price and interest to the date established for redemption whether by redemption or otherwise; or
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(c) by the delivery to the Trustee, for cancellation by it, of all Subordinate Bonds
Outstanding;
and shall have paid all amounts due and owing to the Subordinate Bondholder Representative
hereunder, and shall have paid all fees and expenses of and any other amounts due to the Trustee, and
if the Issuer shall keep, perform and observe all and singular the covenants and promises in the
Subordinate Bonds and in this Subordinate Indenture expressed as to be kept, performed and
observed by it or on its part, then these presents and the estates and rights hereby granted shall cease,
determine and be void, and thereupon the Trustee shall cancel and discharge the lien of this
Subordinate Indenture and execute and deliver to the Issuer such instruments in writing as shall be
requisite to satisfy the lien hereof, and reconvey to the Issuer the estate hereby conveyed, and assign
and deliver to the Issuer any interest in property at the time subject to the lien of this Subordinate
Indenture which may then be in its possession, except amounts held by the Trustee for the payment
of principal of, interest, on the Subordinate Bonds.
Any Outstanding Subordinate Bond shall prior to the maturity or redemption date thereof be
deemed to have been paid within the meaning and with the effect expressed in the first paragraph of
this Section 9.01 if, under circumstances which do not cause interest on the Subordinate Bonds to
following conditions shall have been fulfilled: (a) in case such Subordinate Bond is to be redeemed
on any date prior to its maturity, the Trustee shall have given to the Subordinate Bondholder
irrevocable notice of redemption of such Subordinate Bond on said date; (b) there shall be on deposit
with the Trustee, pursuant to Section 9.04 hereof, either money or direct obligations of the
United States of America in an amount, together with anticipated earnings thereon (but not including
any reinvestment of such earnings), which will be sufficient to pay, when due, the principal or
redemption price, if applicable, and interest due and to become due on such Subordinate Bond on the
redemption date or Maturity Date thereof, as the case may be; and (c) in the case of Subordinate
Bonds which do not mature or will not be redeemed within Sixty (60) days of such deposit, the
Trustee shall have received a verification report of a firm of certified public accountants reasonably
acceptable to the Trustee as to the adequacy of the amounts so deposited to fully pay the Subordinate
Bonds deemed to be paid.
The Trustee shall in no event cause the Subordinate Bonds to be optionally redeemed from
money deposited pursuant to this Article IX unless the requirements of Article III have been met with
respect to such redemption.
Discharge of Liability on Subordinate Bonds. Upon the deposit with the
Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in
Section 9.01) to pay or redeem Outstanding Subordinate Bonds (whether upon or prior to their
maturity or the redemption date of such Subordinate Bonds) provided that, if such Subordinate Bonds
are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as
in Article III provided or provision satisfactory to the Trustee shall have been made for the giving of
such notice, all liability of the Issuer in respect of such Subordinate Bonds shall cease, terminate and
be completely discharged, except only that thereafter the holders thereof shall be entitled to payment
by the Issuer, and the Issuer shall remain liable for such payment, but only out of the money or
securities deposited with the Trustee as aforesaid for their payment, subject, however, to the
provisions of Section 9.04.
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Payment of Subordinate Bonds After Discharge of Indenture.
Notwithstanding any provisions of this Subordinate Indenture, and subject to applicable unclaimed
property laws of the State, any money deposited with the Trustee or any paying agent in trust for the
payment of the principal of, interest on the Subordinate Bonds remaining unclaimed for two (2) years
after the payment thereof, to the extent permitted by applicable law, shall be paid to the Borrower,
whereupon all liability of the Issuer and the Trustee with respect to such money shall cease, and the
holders of the Subordinate Bonds shall thereafter look solely to the Borrower for payment of any
amounts then due. All money held by the Trustee and subject to this Section 9.04 shall be held
uninvested and without liability for interest thereon.
Deposit of Money or Securities With Trustee. Whenever in this
Subordinate Indenture it is provided or permitted that there be deposited with or credited to the
account of or held in trust by the Trustee money or securities in the necessary amount to pay or
redeem any Subordinate Bonds, the money or securities so to be deposited or held shall consist of:
(a) lawful money of the United States of America in an amount equal to the
principal amount of such Subordinate Bonds and all unpaid interest thereon to maturity, except that,
in the case of Subordinate Bonds which are to be redeemed prior to maturity and in respect of which
there shall have been furnished to the Trustee proof satisfactory to it that notice of such redemption
on a specified redemption date has been duly given or provision satisfactory to the Trustee shall be
made for such notice, the amount so to be deposited or held shall be the principal amount of such
Subordinate Bonds and interest thereon to the redemption date; or
(b) noncallable and nonprepayable direct obligations of the United States of
America or noncallable and nonprepayable obligations which as to principal and interest constitute
full faith and credit obligations of the United States of America, in such amounts and maturing at
such times that the proceeds of said obligations received upon their respective maturities and interest
payment dates, without further reinvestment, will provide funds sufficient, in the opinion of a
nationally recognized firm of certified public accountants, to pay the principal, and interest to
maturity, or to the redemption date, as the case may be, with respect to all of the Subordinate Bonds
to be paid or redeemed, as such principal, and interest become due; provided that the Trustee shall
have been irrevocably instructed by the Issuer to apply the proceeds of said obligations to the
payment of said principal, and interest with respect to such Subordinate Bonds.
Consents and Other Instruments of Subordinate Bondholders. Any
consent, request, direction, approval, waiver, objection, appointment or other instrument required by
this Subordinate Indenture to be signed and executed by the Subordinate Bondholders may be signed
and executed in any number of concurrent writings of similar tenor and may be signed or executed by
such Subordinate Bondholders in person or by agent appointed in writing. Proof of the execution of
any such instrument, if made in the following manner, shall be sufficient for any of the purposes of
this Subordinate Indenture, and shall be conclusive in favor of the Trustee with regard to any action
taken under such instrument, namely:
(a) the fact and date of the execution by any Person of any such instrument may
be proved by the affidavit of a witness of such execution or by the certificate of any notary public or
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other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds,
certifying that the Person signing such instrument acknowledged the execution thereof. Where such
execution is by an officer of a corporation or association or a member of a partnership on behalf of
such corporation, association or partnership, such affidavit or certificate shall also constitute
sufficient proof of such authority;
(b) the ownership of registered Subordinate Bonds shall be proved by the
Subordinate Bond Register; and
(c) any request, consent or vote of the Holder of any Subordinate Bond shall bind
every future Holder of the same Subordinate Bond and the Holder of every Subordinate Bond issued
in exchange therefor or in lieu thereof, in respect of anything done or permitted to be done by the
Trustee or the Issuer in pursuance of such request, consent or vote.
Limitation of Rights. With the exception of rights herein expressly
conferred, nothing expressed or to be implied from this Subordinate Indenture or the Subordinate
Bonds is intended or shall be construed to give to any Person other than the Parties hereto, the
Subordinate Bondholder Representative, the Borrower and the Holders of the Subordinate Bonds,
any legal or equitable right, remedy or claim under or in respect to this Subordinate Indenture or any
covenants, conditions and provisions hereof.
Severability. If any provision of this Subordinate Indenture shall be held or
deemed to be, or shall in fact be inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other
provision or provisions hereof or any constitution, statute, rule of law or public policy, or for any
other reason, such circumstances shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or of rendering any other provision
or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or sections in this Subordinate
Indenture contained, shall not affect the remaining portions of this Subordinate Indenture, or any part
thereof.
Notices.
(a) Any provision of this Subordinate Indenture relating to the mailing of notice
or other communication to Subordinate Bondholders shall be deemed fully complied with if such
notice or other communication is mailed, by first class mail, postage prepaid, to each registered
Owner of any Subordinate Bonds then Outstanding at the address of such registered Owner as it
appears on the Subordinate Bond Register. Whenever in this Subordinate Indenture the giving of
notice by mail or otherwise is required, the giving of such notice may be waived in writing by the
Person entitled to receive such notice and in any such case the giving or receipt of such notice shall
not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Any notice, request, complaint, demand, communication or other paper required or
permitted to be delivered to the Issuer, the Trustee, the Subordinate Bondholder Representative, or
the Borrower shall be sufficiently given and shall be deemed given (unless another form of notice
shall be specifically set forth herein) on the Business Day following the date on which such notice or
other communication shall have been delivered to a national overnight delivery service (receipt of
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2019-06-11 Agenda PacketPage 877 of 891
which to be evidenced by a signed receipt from such overnight delivery service) addressed to the
appropriate party at the addresses set forth below or as may be required or permitted by this
Subordinate Indenture by Electronic Notice or by a facsimile transmission for which a confirmation
of receipt has been delivered. The Issuer, the Trustee, the Subordinate Bondholder Representative,
or the Borrower may, by notice given as provided in this paragraph, designate any further or different
address to which subsequent notices or other communication shall be sent.
Issuer: Chula Vista Housing Authority
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
Telephone: (619) 691-5263
Trustee: U.S. Bank National Association
Global Corporate Trust
633 West 5th Street, 24th Floor
Los Angeles, California 90071
Attention: Ismael Diaz
Ref: CV MF (St. Regis Park Apartments) 2019
Telephone: (213) 615-6063
Facsimile: (213) 615-6197
Reference: Chula Vista Housing Authority Multifamily Housing
Revenue Bonds (St. Regis Park Apartments),
Subordinate 2019 Series B-4
Borrower: St. Regis Park CIC, LP
6339 Paseo del Lago
Carlsbad, CA 92011
Telephone: (760) 456-6000
Facsimile: (760) 456-6001
Attn: Project Manager
c/o Chelsea Investment Corporation
6339 Paseo del Lago
Carlsbad, CA 92011
Attn: Project Manager
with a copy to: Cox, Castle & Nicholson LLP
50 California Street, Suite 3200
San Fransisco, CA 94111
Attention: Ofer Elitzur, Esq.
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Subordinate Bondholder Representative:
_________________________
_________________________
_________________________
Attention: _________________________
Telephone: _________________________
Facsimile: _________________________
The Trustee agrees to accept and act upon facsimile transmission of written
instructions and/or directions pursuant to this Subordinate Indenture, provided, however, that
subsequent to such facsimile transmission of written instructions, the originally executed instructions
and/or directions shall be provided to the Trustee in a timely manner.
(b) The Trustee shall provide to the Subordinate Bondholder Representative
(i) prompt notice of the occurrence of any Event of Default pursuant to Section 6.01 hereof and
(ii) any written information or other written communication received by the Trustee hereunder within
ten (10) Business Days of receiving a written request from the Subordinate Bondholder
Representative for any such information or other communication.
Trustee as Paying Agent and Subordinate Bond Registrar. The Trustee is
hereby designated and agrees to act as Paying Agent and Subordinate Bond Registrar for and in
respect to the Subordinate Bonds. When acting in either such capacity, the Trustee will receive the
same rights, protections and indemnifications afforded to the Trustee hereunder.
Payments Due on Non-Business Days. In any case where a date of payment
with respect to any Subordinate Bonds shall be a day other than a Business Day, then such payment
need not be made on such date but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no interest shall accrue for the period from and after
such date providing that payment is made on such next succeeding Business Day.
Counterparts. This Subordinate Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
Laws Governing Indenture and Administration of Trust. The effect and
meanings of this Subordinate Indenture and the rights of all parties hereunder shall be governed by,
and construed according to, the laws of the State without regard to conflicts of laws principles.
No Recourse. No recourse under or upon any obligation, covenant or
agreement contained in this Subordinate Indenture or in any Subordinate Bond shall be had against
any member, officer, commissioner, director or employee (past, present or future) of the Issuer, either
directly or through the Issuer or its governing body or otherwise, for the payment for or to the Issuer
or any receiver thereof, or for or to the Holder of any Subordinate Bond issued hereunder, or
otherwise, of any sum that may be due and unpaid by the Issuer or its governing body upon any such
Subordinate Bond. Any and all personal liability of every nature whether at common law or in
equity or by statute or by constitution or otherwise of any such member, officer, commissioner,
director or employee, as such, to respond by reason of any act of omission on his/her part or
otherwise, for the payment for or to the Holder of any Subordinate Bond issued hereunder or
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otherwise of any sum that may remain due and unpaid upon any Subordinate Bond hereby secured is,
by the acceptance hereof, expressly waived and released as a condition of and in consideration for the
execution of this Subordinate Indenture and the issuance of the Subordinate Bonds.
\[Signature Pages Follow\]
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Subordinate
Indenture to be executed and delivered by duly authorized officers thereof as of the day and year first
written above.
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
U.S. BANK NATIONAL ASSOCIATION, as
Subordinate Trustee
By:
Authorized Signatory
\[Signature page Subordinate Indenture of Trust St. Regis Park Apartments\]
2019-06-11 Agenda PacketPage 881 of 891
EXHIBIT A
FORM OF SUBORDINATE BOND
$_________________
$_________________
CHULA VISTA HOUSING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(ST. REGIS PARK APARTMENTS)
SUBORDINATE 2019 SERIES B-4
THIS SUBORDINATE BOND MAY ONLY BE TRANSFERRED IN WHOLE UPON
SATISFACTION OF THE REQUIREMENTS IN THE INDENTURE, INCLUDING THE
DELIVERY TO THE TRUSTEE OF THE DOCUMENTS REQUIRED THEREIN IN
CONNECTION WITH ANY TRANSFER OF THIS SUBORDINATE BOND. ANY
TRANSFER OF THIS SUBORDINATE BOND IN VIOLATION OF THE TRANSFER
RESTRICTIONS CONTAINED IN THE INDENTURE SHALL BE VOID AND OF NO
EFFECT.
MATURITY DATE DATED DATE INTEREST RATE
Subordinate Bond Rate
Registered Owner:
Principal Amount:
The Chula Vista Housing Authority, a public body corporate and politic is duly organized
received, hereby promises to pay (but only out of Revenues as hereinafter provided) to the registered
owner identified above or registered assigns, on the Maturity Date set forth above, the principal sum
set forth above and to pay (but only out of Revenues as hereinafter provided) interest on the balance
of said principal amount from time to time remaining unpaid from and including the date hereof until
payment of said principal amount has been made or duly provided for, at the rates and on the dates
determined as described herein and in the Indenture (as hereinafter defined). The principal of and,
interest on this Subordinate Bond are payable at final maturity, acceleration or redemption in lawful
money of the United States of America upon surrender hereof at the principal corporate trust office
of U.S. Bank National Association
the interest on any Subordinate Bond shall be made on each Subordinate Bond Payment Date (as
hereinafter defined) to the Person appearing on the bond registration books of the Subordinate Bond
Registrar as the Owner thereof on the Record Date, such interest to be paid by the Paying Agent (i) to
address as it appears on the registration books or at such other address as has been furnished to the
Subordinate Bond Registrar as provided below, in writing by such Owner not later than the Record
Date or (ii) upon written request, at least three Business Days prior to the applicable Record Date, to
the Owner of Subordinate Bonds aggregating not less than $1,000,000 in principal amount, by wire
transfer in immediately available funds at an account maintained in the United States at such wire
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address as such Owner shall specify in its written notice; except, in each case, that, if and to the
extent that there shall be a default in the payment of the interest due on such Subordinate Bond
Payment Date, such defaulted interest shall be paid to the Owner in whose name any such
Subordinate Bonds are registered at the close of business on the fifth to last Business Day next
preceding the date of payment of such defaulted interest.
The Subordinate Bonds are authorized to be issued pursuant to Act and are designated as the
Chula Vista Housing Authority Multifamily Housing Revenue Bonds (St. Regis Park Apartments),
Subordinate 2019 Series B-4$_________________. The
Subordinate Bonds are limited obligations of the Issuer and, as and to the extent set forth in the
Indenture, are payable solely from, and secured by a pledge of and lien on, the Revenues. Proceeds
from the sale of the Subordinate Bonds will be loaned by the Issuer to St. Regis Park CIC, LP, a
of a Subordinate Loan Agreement,
dated as of June 1, 2019
Subordinate Bonds are all issued under and secured by and entitled to the benefits of a Subordinate
Indenture of Trust, dated as of June 1, 2019
holder of this Subordinate Bond shall ever have the right to compel the exercise of the taxing power
the State or any political subdivision of the State to pay the principal of this Subordinate Bond or the
interest on it or any other cost incident to this Subordinate Bond, or to enforce payment of this
Subordinate Bond against any property of the Issuer, the Governing Body of the Issuer, the State or
any political subdivision of the State. The Issuer has no taxing power.
Reference is hereby made to the Indenture and all indentures supplemental thereto for a
description of the rights thereunder of the registered owners of the Subordinate Bonds, of the nature
and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and
obligations of the Issuer thereunder, to all of the provisions of the Indenture and of the Subordinate
Loan Agreement the holder of this Subordinate Bond, by acceptance hereof, assents and agrees.
Senior
Obligations (as defined in the Indenture). As set forth in the Indenture, the Subordinate Bonds are
subordinate in all respects to the Senior Obligations.
All terms not herein defined shall have the meanings ascribed to them in the Indenture.
The Subordinate Bonds are issuable as one fully registered bond. Subject to the limitations
and upon payment of the charges, if any, provided in the Indenture, Subordinate Bonds may be
exchanged in whole at the Principal Corporate Trust Office of the Trustee and the Subordinate Bond
Registrar.
The Subordinate Bonds may only be held by, or transferred to, Sophisticated Investors (as
defined in the Indenture) whic
in Section 147(a) of the Code, with such Sophisticated Investors executing and delivering an
Investor Letter in the form attached as Exhibit B to the Indenture as Exhibit B.
This Subordinate Bond is transferable by the registered owner hereof, in person, or by its
attorney duly authorized in writing, at the Principal Corporate Trust Office of the Trustee and the
Subordinate Bond Registrar, but only in the manner, subject to the limitations and upon payment of
the charges provided in the Indenture, and upon surrender and cancellation of this Subordinate Bond.
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Upon such transfer a new fully registered Subordinate Bond, for the same aggregate principal
amount, will be issued to the transferee in exchange therefor. The Issuer, the Trustee and the
Subordinate Bond Registrar may treat the registered owner hereof as the absolute owner hereof for
all purposes, and the Issuer, the Trustee and the Subordinate Bond Registrar shall not be affected by
any notice to the contrary.
Interest on the Subordinate Bonds
Subordinate Bond Payment Date has the meaning set forth in the Indenture.
Interest on the Subordinate Bonds is due on each Subordinate Bonds Payment Date, to the
extent there are available Revenues therefor, as set forth in the Indenture.
Record Date means the 15th day of the month prior to a Subordinate Bond Payment Date.
Redemption of Subordinate Bonds
The Subordinate Bonds are subject to optional, mandatory and extraordinary redemption as
set forth in the Indenture.
General Matters
The holder of this Subordinate Bond shall have no right to institute any suit, action or
proceeding at law or in equity, for any remedy under or upon the Indenture, except as provided in the
Indenture.
No recourse shall be had for the payment of the principal of, or interest on any of the
Subordinate Bonds or for any claim based thereon or upon any obligation, covenant or agreement in
the Indenture contained, against any past, present or future member, director, officer, employee or
agent of the Issuer, or through the Issuer, or any successor to the Issuer, under any rule of law or
equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and
all such liability of any such member, director, officer, employee or agent as such is hereby expressly
waived and released as a condition of and in consideration for the execution of the Indenture and the
issuance of any of the Subordinate Bonds.
Except as otherwise provided in the Subordinate Promissory Note, no recourse shall be had
for the payment of the principal of, or interest on any of the Subordinate Bonds or for any claim
based thereon or upon any obligation, covenant or agreement in the Indenture contained, against any
past, present or future partner, member, director, officer, employee or agent of the Borrower, or
through the Borrower, or any successor to the Borrower under any rule of law or equity, statute or
constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of
any such partner, member, director, officer, employee or agent as such is hereby expressly waived
and released as a condition of and in consideration for the execution of the Indenture and the issuance
of any of the Subordinate Bonds.
Amendments Permitted
The Indenture contains provisions permitting the Issuer and the Trustee to execute
supplemental indentures with the written consent of the Subordinate Bondholder Representative and
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the Owners of 100% in aggregate principal amount of Subordinate Bonds at the time Outstanding,
subject to certain conditions as set forth in the Indenture.
The Indenture also contains provisions permitting the Issuer and the Trustee to execute
supplemental indentures without consent of the Owners of the Subordinate Bonds, subject to certain
conditions as set forth in the Indenture.
The Indenture prescribes the manner in which it may be discharged and after which the
Subordinate Bonds shall no longer be secured by or entitled to the benefits of the Indenture, except
for the purposes of transfer and exchange of Subordinate Bonds and of payment of the principal of
and interest on the Subordinate Bonds as the same become due and payable, including a provision
that under certain circumstances the Subordinate Bonds shall be deemed to be paid if certain
securities, as defined therein, maturing as to principal and interest in such amounts and at such times
as to ensure the availability of sufficient moneys to pay the principal of, and interest on the
Subordinate Bonds and all necessary and proper fees, compensation and expenses of the Trustee shall
have been deposited with the Trustee.
No member or officer of the Issuer, nor any Person executing this Subordinate Bond, shall in
any event be subject to any personal liability or accountability by reason of the issuance of the
Subordinate Bonds.
It is hereby certified that all of the conditions, things and acts required to exist, to have
happened and to have been performed precedent to and in the issuance of this Subordinate Bond do
exist, have happened and have been performed in due time, form and manner as required by the
Constitution and statutes of the State of California.
This Subordinate Bond shall not be entitled to any benefit under the Indenture, or become
valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have
been signed by the Subordinate Bond Registrar.
In the event of any inconsistency between the provisions of this Subordinate Bond and the
provisions of the Indenture, the provisions of the Indenture shall control.
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IN WITNESS WHEREOF, the Chula Vista Housing Authority has caused this Bond to be
executed in its name by the manual or facsimile signature of its Executive Director and attested by
the manual or facsimile signature of its Deputy Secretary.
CHULA VISTA HOUSING AUTHORITY
By:
Executive Director
ATTEST:
Deputy Secretary
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CERTIFICATE OF AUTHENTICATION
This Subordinate Bond is one of the Subordinate Bonds issued under the provisions of and
described in the within-mentioned Indenture.
Date of Authentication: _______________
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By
Authorized Officer
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Please insert Social Security Number or other identifying number of assignee)
(Please Print or Typewrite Name and Address of Assignee)
the within bond and all rights thereunder, and hereby irrevocably constitutes and
appoints_____________________ attorney to transfer the within Subordinate Bond on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ________________.
Signature Guaranteed
NOTICE: Signature(s) must be guaranteed by an Signature
eligible guaranty institution.
NOTICE: The Signature to this assignment must
correspond with the name as it appears upon the
face of the within Subordinate Bond in every
particular, without alteration or enlargement or
any change whatever.
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2019-06-11 Agenda PacketPage 887 of 891
EXHIBIT B
LETTER
\[To be prepared on letterhead of Purchaser\]
\[Date\]
Chula Vista Housing Authority
U.S. Bank National Association
Re: Chula Vista Housing Authority
Multifamily Housing Revenue Bonds
(St. Regis Park Apartments), Subordinate 2019 Series B-4
Ladies and Gentlemen:
\[transferee\], from the previous owner thereof, of the above-
unt of
$_________________, constituting all of the Subordinate Bonds currently outstanding. The
Subordinate Bonds have been checked, inspected and approved by the Purchaser.
The undersigned acknowledges that the Subordinate Bonds were issued for the purpose of
making a loan to assist in financing a multifamily rental housing development known as St. Regis
Park Apartments located in the City of Chula Vista
described in that certain Subordinate Loan Agreement dated as of June 1, 2019, as may be amended
Chula
Vista St. Regis Park CIC, LP, a limited partnership duly organized
and existing undU.S. Bank National
secured by a certain Subordinate Indenture of Trust dated as of June 1, 2019, as amended and
in loan repayments made pursuant to the Subordinate Loan Agreement for the benefit of the holders
and Owners of the Subordinate Bonds, and by a Subordinate Multifamily Deed of Trust, Assignment
provided therein. Terms not otherwise defined herein shall have the meanings assigned thereto in the
Indenture.
In connection with the sale of the Subordinate Bonds to the Purchaser, the Purchaser hereby
makes the following representations upon which you may rely:
1. The Purchaser hereby certifies that it is (a) a bank as defined in Section 3(a)(2) of the
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bank holding company, or a savings and loan association or other institution as defined in
Section 3(a)(5)(a) of that act whether acting in its individual or fiduciary capacity; or (b) a broker or
dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or (c) an insurance
company as defined in Section 2(13) of that act; or (d) an investment company registered under the
Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48)
of that act; or (e) a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or (f) a
plan established and maintained by a state, its political subdivisions, or any agency or instrumentality
of a state or its political subdivision for the benefit of its employees, if investment decisions are made
by a plan fiduciary which is a bank, savings and loan association, insurance company, or registered
investment advisor and the plan establishes fiduciary principles the same as or similar to those
contained in Sections 404-407 of Title I of the Employee Retirement Income Security Act of 1974;
or (g) an employee benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 if investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such act,
which is either a bank, savings and loan association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets in excess of $100,000,000, or, if a self-
directed plan, with investment decisions made solely by Persons that are accredited investors or
(h) 501 of Regulation D of the Act, as amended.
2. The Subordinate Bonds are being acquired by the Purchaser for its own account and
for investment and not with a view to, or for resale in connection with, any public distribution of the
Subordinate Bonds. The Purchaser understands that it may need to bear the risks of this investment
for an indefinite time, since any sale prior to maturity may not be possible due to unmarketability of
the Subordinate Bonds; provided, however, the Purchaser acknowledges and agrees that it may
transfer the Subordinate Bonds in whole only and in accordance with the Indenture and this letter.
3. The Purchaser understands that the Subordinate Bonds have not been registered under
the Act.
4. The Purchaser acknowledges that it is familiar with the conditions, financial and
otherwise, of the Borrower and understands that the Borrower has no significant assets other than the
Project. To the extent deemed appropriate in making its investment decision, the Purchaser has
activities with the Borrower. The Purchaser further acknowledges that it has such knowledge and
experience in business matters that it is fully capable of evaluating the merits and risks of this
investment and it is able to bear the economic risk of the investment. The Subordinate Bonds are a
security of the kind the Purchaser wishes to purchase and hold for investment, and the nature and
Purchaser has been furnished such information and such documents as the Purchaser deems
necessary to make a decision to purchase the Subordinate Bonds, including copies or forms of the
Indenture, the Subordinate Loan Agreement, the Subordinate Mortgage and the Regulatory
Agreement (as defined in the Indenture), and certain other documents relating to the Subordinate
Bonds and the Project, all of which documents the Purchaser has reviewed. Specifically, but without
limitation, the Purchaser has reviewed information about the Project, project cashflow and the
property manager for the Project, if any, as well as information about the investment risks relating to
the Subordinate Bonds, and the Purchaser understands that the Subordinate Bonds involve a high
degree of risk. SPECIFICALLY, AND WITHOUT IN ANY MANNER LIMITING THE
FOREGOING, THE PURCHASER UNDERSTANDS AND ACKNOWLEDGES THAT, AMONG
OTHER RISKS, THE SUBORDINATE BONDS ARE INTEREST ONLY AND PAYABLE
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SOLELY FROM REVENUES (AS DEFINED IN THE INDENTURE) DERIVED FROM THE
PROJECT, THAT THE SUBORDINATE BONDS ARE NOT ENTITLED TO THE BENEFIT OF
ANY CREDIT FACILITY, THAT THE SUBORDINATE BONDS ARE NOT RATED BY ANY
RATING AGENCY AND THAT. THE PURCHASER ALSO UNDERSTANDS THAT (A) THE
SUBORDINATE BONDS ARE NOT SECURED BY ANY PLEDGE OF ANY MONEYS
RECEIVED OR TO BE RECEIVED FROM TAXATION BY THE CITY OF CHULA VISTA, THE
STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF AND THAT THE
ISSUER HAS NO TAXING POWER, NOR ARE THE SUBORDINATE BONDS SECURED BY
ANY REVENUES OR FUNDS OF ANY KIND OF THE CHULA VISTA HOUSING
AUTHORITY, THE CITY OF CHULA VISTA, THE STATE OF CALIFORNIA OR ANY
POLITICAL SUBDIVISION THEREOF, (B) THE SUBORDINATE BONDS DO NOT AND WILL
NOT REPRESENT OR CONSTITUTE A GENERAL OBLIGATION OR A PLEDGE OF THE
FAITH AND CREDIT OF THE ISSUER, THE CITY OF CHULA VISTA, THE STATE OF
CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF; AND (C) THE LIABILITY OF
THE ISSUER WITH RESPECT TO THE BONDS IS LIMITED TO THE TRUST ESTATE AS SET
FORTH IN THE INDENTURE. THE PURCHASER UNDERSTANDS THAT THE
SUBORDINATE BONDS ARE NONRECOURSE TO THE BORROWER. The Purchaser has
made such inquiry with respect to all of the foregoing as it believed to be desirable for its purposes.
5. The Purchaser has received from the Issuer no formal or informal offering or
disclosure document relating to the Subordinate Bonds and has concluded that the receipt of one
prior to the purchase of the Subordinate Bonds is not required. It is acknowledged that no written
information has been provided by the Issuer, and that any written information furnished by any other
party to the transaction does not purport to fully disclose all information pertinent to the Subordinate
Bonds.
6. Except as disclosed to the Issuer, the Purchaser is not now and has never been
controlled by, or under common control with, the Borrower. Except as disclosed to the Issuer, the
Borrower has never been and is not now controlled by the Purchaser. THE PURCHASER HAS
ENTERED INTO NO ARRANGEMENTS WITH THE BORROWER OR WITH ANY AFFILIATE
OF THE BORROWER IN CONNECTION WITH THE SUBORDINATE BONDS, OTHER THAN
AS DISCLOSED TO THE ISSUER. The Purchaser hereby agrees to deliver to the Issuer a copy of
any agreement between the Purchaser and the Borrower or any affiliate of the Borrower relating to
the Subordinate Bonds.
7. The Purchaser has authority to purchase the Subordinate Bonds and to execute this
letter and any other instruments and documents required to be executed by the Purchaser in
connection with the purchase of the Subordinate Bonds.
8. In entering into this transaction the Purchaser has not relied upon any representations
or opinions made by the Issuer relating to the legal consequences or other aspects of the transactions,
nor has it looked to, nor expected, the Issuer to undertake or require any credit investigation or due
diligence reviews relating to the Borrower, its financial condition or business operations, the Project
(including the refinancing, operation or management thereof), or any other matter pertaining to the
merits or risks of the transaction, or the adequacy of any collateral pledged to the Trustee to secure
repayment of the Subordinate Bonds.
9. The Purchaser understands that the Subordinate Bonds are not secured by any pledge
of any money received or to be received from taxation by the State of California or any political
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subdivision or taxing district thereof, including, without limitation, the Issuer; that the Subordinate
Bonds will never represent or constitute a general obligation or a pledge of the faith and credit of the
Issuer, the State of California or any political subdivision thereof; that no right will exist to have
taxes levied by the Issuer, the State of California or any political subdivision thereof for the payment
of principal, and interest on the Subordinate Bonds; and that the liability of the Issuer with respect to
the Subordinate Bonds is subject to further limitations as set forth in the Subordinate Bonds and the
Indenture.
10. The Purchaser has been informed that the Subordinate Bonds have not been and will
jurisdiction, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no
rating from any rating service.
11. The Purchaser has obtained, from representatives of the Borrower and others, all
information regarding the Subordinate Bonds that it has deemed relevant. The Purchaser has asked
of the Borrower and all other relevant parties all the questions to which the Purchaser desired
answers, and has had those questions satisfactorily answered. Neither the Borrower nor the Issuer
nor any other relevant party has refused to disclose any information that Purchaser deems necessary
or appropriate to its decision to purchase the Subordinate Bonds.
12. The Purchaser is not and may not become
terms are used in Section 147(a) of the Code.
13. Although the Purchaser does not intend at this time to dispose of the Subordinate
Bonds, the Purchaser acknowledges that it has the right to sell and transfer the Subordinate Bonds,
subject to the following requirements:
(a) The Purchaser may not dispose of the Subordinate Bonds to a Person or entity
other than as described in Section 1 without the prior written consent of the Issuer;
(b) The Purchaser will only sell or otherwise transfer the Subordinate Bonds in
whole, except with the prior written approval of the Issuer;
(c) Prior to any transfer of the Subordinate Bonds, the Purchaser shall deliver to
the Issuer and the Trustee a certificate identifying any and all documents that have been executed by
the Purchaser and the Borrower or any affiliate of the Borrower with respect to the Subordinate
Bonds; and
(d) The Purchaser will not sell or otherwise transfer the Subordinate Bonds
without requiring the transferee to deliver to the Issuer and to the Trustee an
12, with no revisions except as may
be approved in writing by the Issuer.
\[Purchaser\]
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