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Home My WebLink AboutRDA Packet 2000/06/13 Notice is hereby given that the Chair of the Chula Vista Housing Authority has called and will convene a special meeting of the Housing Authority, Tuesday, June 13, 2000 at 6:00 p.m., immediately following the City Council meeting in the Council Chambers, located in the Public Services Building, 276 Fourth Avenue, Chula Vista, California to consider, deliberate and oct upon the following: &/1~ 7/JIrnk , Shirley Horton, Choir CllY OF CHUlA VISfA TUUDAY, JUNI 13, 2000 6:00 P.M- (IMMIDIATELY FDLLDWlNG rHI CITY COUNCIL MinING) COUNCIL CHAMalRS Puauc SIRVlCU BUILDING JOINT ADJOURNED MEETING OF THE REDEVELOPMENT AGENCY / CITY COUNCIL OF THE CITY OF CHULA VISTA SPECIAL MEETING OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA CALL TO ORDER ROLL CALL Agency/Council/Authority Members Davis, Moot, Padilla, Salas, and Chair/Mayor Horton CONSENT ITEMS (Items I through 2) The stoff recommendations regarding the following item(s) listed under the Consent Calendar will be enacted by the Agency/City Council/Housing Authority by one motion without discussion unless an Agency/Counci/fAuthority member. 0 member of the public or City stoff requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak Form" available in the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Action Items. Items pulled by the public will be the first items of business. AGENDA 1. a. AGENCY RESOLUTION COUNCIL RESOLUTION b. AGENCY RESOLUTION 2. HOUSING AUTHORITY RESOLUTION .2. JUNE 13, 2000 ACCEPTING BIDS AND AWARDING CONTRACT TO DBX INC., FOR THE "PARK WAY STREET LIGHT REPLACEMENT BETWEEN THIRD AND FOURTH AVENUES IN THE CITY OF CHULA VISTA, CA (RD-230)" PROJECT AND APPROPRIATING UNANTICIPATED REVENUES FROM THE BAYFRONT/TOWN CENTRE I REDEVELOPMENT FUND IN THE AMOUNT OF $97,619 AND RETURNING $57,003 IN APPROPRIATED COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS FROM THIS PROJECT TO THE CDBG FUND BALANCE-On 4/26/00, the Director of Public Works received sealed bids from five electrical contractors for the "Park Way Street Light Replacement between Third and Fourth Avenues (RD-230)" project. A low bid of $84,116 was received from DBX Inc., Temecula, CA. [Director of Public Works] 415'115 Vote R..aulr..d REGARDING THE AGENCY'S INTENTION TO ISSUE TAX EXEMPT OBLIGATIONS TO FINANCE THE "PARK WAY STREET LIGHT REPLACEMENT" PROGRAM (RD-230) STAFF RECOMMENDATION: Agency/Council adopt the resolutions. AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTI-FAMILY HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR APARTMENTS), SERIES 2000 A, AND THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTIFAMILY HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR APARTMENTS) SERIES 2000B, IN A COMBINED PRINCIPAL AMOUNT NOT TO EXCEED $5,500,000; AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH BONDS AND OTHER RELATED DOCUMENTS AND APPROVING OTHER RELATED ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS- The Pear Tree Manor Apartment complex, located in the western portion of the City, consists of 119 unils. Chelsea Investment Corporation plans to acquire and substantially rehabilitate the interior and exterior of the buildings. On 4/26/2000, the California Debt Limit Allocation Committee (CDLAC) awarded Chelsea over $5.2 million in Multi-Family Housing Mortgage Revenue Bonds for this project. On 5/23/2000, the Agency approved financial assistance and related loan agreements with St. Regis Park, LP in an amount not-to-exceed $1,387,152 for the acquisilion and rehabilitation of Pear Tree Manor Apartments. With the approval of the loan agreements and the CDLAC allocation in place, the next step in the process is for lhe Authority 10 approve the issuance of the bonds and the related bond documents. [Community Development Director] STAFF RECOMMENDATION: Housing Authority adopt the resolution. , AGENDA -3- JUNE 13,2000 ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency, City Councilor Housing Authority on any subject matter within either's jurisdiction that is not an item on this agenda. (State fow, however, generally prohibits the Redevelopment Agency, City Councilor Housing Authority from taking action on any issues not included on the posted agenda.) If you wish to address the Agency, Council or Authority on such a subject, please complete the "Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your name and address for record purposes and follow up action. PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES The following items have been advertised and/or posted as public hearings as required by law. If you wish to speak to any item, please fiJl out the "Request to Speak Form" available in the lobby and submit it to the Redevelopment Agency or the City Clerk prior to the meeting. 3. PUBLIC HEARING: TO CONSIDER GRANTING A SPECIAL USE PERMIT FOR THE DEVELOPMENT OF A MIXED-USE PROJECT THAT INCLUDES 15,000 SQ. FT. OF COMMERCIAL SPACE AND 106 AFFORDABLE HOUSING UNITS AT THE NORTHEAST CORNER OF MAIN AND BROADWAY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA AND GRANTING A TWENTY FOUR PERCENT (24%) DENSITY BONUS AND OTHER ADDITIONAL INCENTIVES PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 65915-The applicant, Avalon Communities, LLC, is requesting approval of a Special Use Permit for the construction of a mix.ed-use development that includes 106 affordable housing units and 15,000 sq. ft. of relail cammerciol space an 4.54 acres located an the northeast carner of Main Street and Broadway within lhe Southwest Redevelopment Project Area and the Montgomery Specific Plan area. The project is known as Main Plaza and is to be owned and operated by Avalon Communities. [Community Development Director] Q. AGENCY RESOLUTION COUNCIL RESOLUTION (A) ADOPTING NEGATIVE DECLARATION 15-00-47; (B) GRANTING SPECIAL USE PERMIT SUPS 00-09; (C) APPROVING AN OWNER PARTICIPATION AGREEMENT WITH AVALON COMMUNITIES FOR THE DEVELOPMENT OF A MIXED USE PROJECT THAT INCLUDES 15,000 SQ. FT. OF COMMERCIAL SPACE AND 106 AFFORDABLE HOUSING UNITS LOCATED AT THE NORTHEAST CORNER OF MAIN AND BROADWAY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA; AND (D) GRANTING A TWENTY FOUR PERCENT (24%) DENSITY BONUS, A REDUCTION IN THE REQUIRED PARKING FOR THE RESIDENTIAL UNITS AND THE COMMERCIAL USE, A REDUCTION IN OPEN SPACE FOR THE RESIDENTIAL UNITS, AN INCREASE IN THE NUMBER OF COMPACT SPACES ALLOWED FOR THE RESIDENTIAL UNITS AND A REDUCTION IN THE REQUIRED LANDSCAPE BUFFER TO FACILITATE THE CONSTRUCTION OF THE PROJECT AGENDA b. AGENCY RESOLUTION ACTION ITEMS -4- JUNE 13,2000 CONDITIONALLY APPROVING FINANCIAL ASSISTANCE NOT-TO- EXCEED $1,060,000 TO AVALON COMMUNITIES FOR THE DEVELOPMENT OF A MIXED USE PROJECT, INCLUDING 106 AFFORDABLE UNITS STAFF RECOMMENDATION: Agency/Council odopt the resolutions. The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by the Agency, staff, or members of the general public. The items will be considered individually by the Agency and stoff recommendations may in certain cases be presented in the alternative. Those who wish to speak, please fill out a Request to Speak form available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. 4. AGENCY RESOLUTION APPROVING OWNER PARTICIPATION AGREEMENT WITH FSRV, LLC FOR THE DEVELOPMENT OF A BEST BUY CONSUMER ELECTRONICS SUPERSTORE AT 75 NORTH BROADWAY; AUTHORIZING EXPENDITURE OF AND APPROPRIATING FUNDS FROM THE TOWN CENTRE II PROJECT AREA FUND FOR THE PURCHASE OF THE OPERATING COVENANT; AND AUTHORIZING CHAIR TO EXECUTE SAID AGREEMENT-FSRV, LLC is proposing to develop 0 Best Buy consumer electronics superslore in the Broadway Plaza Shopping Center, adjacent to the existing Wal*Mart Store. The new store would occupy a 45,000 sq. fl. pad and represent the second anchor lenant in lhis North Chula Vista shopping facilily. The site includes parking for 261 cars and conforms to the Cily's General Plan and Zoning designations for the site. The proposed store is within the Town Centre II Redevelopment Project Area. [Communily Development Director] 4/5fhs Vo,," Re.,u;r"d STAFF RECOMMENDATION: Adopt the resolution. OTHER BUSINESS 5. DIRECTOR'S REPORT(S) 6. CHAIR'S REPORT(S) 7. AGENCY COMMENTS ADJOURNMENT The meeting will adjourn to the regularly scheduled meeting of the Redevelopment Agency and an adjourned meeting of the Housing Authorily on June 20, 2000 al 6:00 p.m., immediately following the Cily Council meeting, in lhe Cily Council Chambers. , JOINT REDEVELOPMENT AGENCY AND CITY COUNCIL AGENDA STATEMENT Item I Meeting Date 6/13/00 ITEM TITLE: Resolution Accepting Bids and Awarding Contract to DBX Inc., for the "Park Way Street Light Replacement between Third and Fourth Avenues in the City ofChula Vista, CA (RD-230)" Project and Appropriating Unanticipated Revenues from the Bayfront/Town Centre I Redevelopment Fund in the Amount of $97,619 and Returning $57,003 in Appropriated Community Development Block Grant (CDBG) Funds from this Project to the CDBG Fund Balance Resolution Regarding the Agency's Intention to Issue Tax Exempt Obligations to Finance the "Park Way Street Light Replacement" Project (RD-230) ~ SUBMITTED BY: Director of Public Works City Manager Gf;l~ (4/Sths Vote: Yes..K...No-l REVIEWED BY: On Apri126, 2000, 2:00 p.m. in Conference Room 3, the Director of Public Works received sealed bids from five (5) electrical contractors for the "Park Way Street Light Replacement between Third and Fourth Avenues (RD-230)" Project. A low bid of $84,116.00 was received from DBX Inc., Temecula, CA. RECOMMENDATION: That Council approve the resolutions, accepting bids, and awarding the contract to DBX Inc., for the "Park Way Street Light Replacement between Third and Fourth Avenues (RD- 230)" Project; and appropriate unanticipated revenues from the Bayfront/Town Centre I Redevelopment Fund in the amount of $97,619 and returning $57,003 in appropriated Community Development Block Grant (CDBG) funds from this project to the CDBG Fund Balance; and that the Agency approve the resolution expressing the Agency's intention to issue tax exempt obligations to finance the Project. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: This project is approved and funded in the City's 1999-00 Capital Improvement Program budget. The project initially included the replacement of six existing street lights located along the north side of Park Way between Third and Fourth Avenues adjacent to Memorial Park and one on the south side 300 feet east of Fourth A venue, and the installation of four new double street lights within the median islands in the center of the street. A field investigation by the Civil Engineer from the City's Traffic Engineering Section and the Traffic Devices Technician Supervisor from the City's Street Light and Traffic Signal Section determined that a modification to the project scope was needed. The presence of existing trees and I-I Page 2, Item Meeting Date 6/13/00 the width of the median would limit the light distribution on Park Way if the four new double street lights were installed in the median, still leaving some parts of the area dark. Therefore, the four double street lights within the median were replaced with other types of lighting on Park Way in order to improve the lighting. The scope of the project was revised to install an additional double light on the north side of Park Way and two double lights on the south side of Park Way, replace two luminaires on the south side of Park Way and install a new street light on the east side of Fourth Avenue approximately 200' north of Park Way. The street light improvements will supply sufficient lighting to the Memorial Park area and along Park Way, provide appropriate traffic safety lighting and provide a level of safety lighting for crime prevention in the adjacent community park area. As a result of this modification, an additional amount of $40,616.00 to the previously budgeted amount of $57,500.00 is requested. Staff recommends appropriating $40,616 from unanticipated revenues in the BayfrontfI'own Centre I Redevelopment Project Fund. In addition, in order to free up needed Community Development Block Grant (CDBG) funds for the proposed FY2000-0l CIP budget, staff recommends appropriating an additional $57,003 in redevelopment funds and returning the appropriated CDBG funds to the CDBG Fund balance. The bids received were as follows: Contractor Amount I. DBX Inc., Temecula, CA $84,116.00 2. T. & M. Electric, El Cajon, CA $86,785.00 3. Sierra Electric, EI Cajon, CA $89,797.00 4. Maverick Electric Co., Downey, CA $92,990.00 5. Trasig Corp., Chula Vista, CA $95,812.50 The low bid of $84,116.00 by DBX Inc. is above the Engineer's estimate of $70,740.00 by $13,376.00 approximately 18.9%. The Engineer's estimate was based on average bid prices from previously awarded City traffic signal and street lighting projects. Disadvanta~ed Business EnteIl'rise Goal The bid documents set forth participation requirements per Federal Regulation for meeting the disadvantaged and women-owned business goals. Judith Atwood, Community Development Specialist, has reviewed the bid documents submitted by the three lowest bidders. Her conclusion is that the lowest bidder, Portillo Concrete meets the Minority and Women Business Enterprise (MBE/WBE) goals (See Exhibit A). 1-,;1... ~ Page 3, Item Meeting Date 6/13/00 Staff also reviewed DBX Inc., eligibility status with regard to federal procurement programs and the status of the State contractor's licenses. DBX Inc. is not listed as excluded from Federal Procurement Programs (list of parties excluded from Federal procurement or non-procurement programs as of April 5, 1998). The low bidder has satisfactorily met all the requirements. Staff, therefore, recommends awarding the contract to DBX Inc, Temecula, CA. Environmental Status The City's Environmental Review Coordinator has reviewed the work involved in this project and determined that the project is exempt for CEQA both under CEQA Guidelines, Section 15061 (b) (3) and Section 15303, Class 3 (new construction or conversion of small structures). Disclosure Statement A copy of the Contractor's disclosure statement is attached as Exhibit B. Prevailing Wage Statement The source of funding for this project is the Community Development Block Grant (CDBG) Funds. Prevailing wage scales are those determined by the Federal Department of Labor. Bond Resolution It is expected that the Agency's contribution to the Project may be financed with bond proceeds from the tax allocation bond issuance expected to occur in October. The Notice of Intention to Issue bonds resolution included with this item is a legal requirement that allows the use of bond proceeds to reimburse costs incurred prior to such issuance. FISCAL IMPACT: I FUNDS REQUIRED FOR CONSTRUCTION I A. Contract Amount (DBX, INC.) $84,116.00 B. Contingencies (Approximately 5%) $4,000.00 C. Design, Inspection & Administration $10,000.00 TOTAL $98,116.00 1-.3 Page 4, Item Meeting Date 6/13/00 FUNDS A V AILABLE FOR CONSTRUCTION A. Community Development Block Grant, RD-230 $57,500.00 B. Appropriate Bayfront/Town Centre I Redev Funds $97,619.00 C. Return unspent CDBG funds in RD-230 to Fund ($57,003.00) TOTAL $98,116.00 The above action of awarding of the contract will authorize a total expenditure of $97,619 from the appropriation of redevelopment funds and of $57,500 less $57,003 ofCDBG funds in the budgeted CIP project. The $57,003 will be returned to the CDBG Fund balance for expenditure in the proposed FY2000-01 CIP budget. If the Agency funding of the Project is financed through the future issuance of tax allocation bonds, the approximate additional financing costs over the 28 year term of the bonds will be $116,819. Attachments: Exhibit "A" -- Memo from Community Development Exhibit "B" -- Contractors Disclosure Statement BVB H:\HOME\ENGINEER\AGENDA\RD230A.WPD /- 4 RESOLUTION NO. JOINT RESOLUTION OF THE CITY COUNCIL AND REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING CONTRACT TO DBX INC., FOR THE "PARK WAY STREET LIGHT REPLACEMENT BETWEEN THIRD AND FOURTH AVENUES IN THE CITY OF CHULA VISTA, CA. (RD-230)" PROJECT AND APPROPRIATING UNANTICIPATED REVENUES FROM THE BAYFRONT/TOWN CENTRE I REDEVELOPMENT FUND IN THE AMOUNT OF $97,619 AND RETURNING $57,003 IN APPROPRIATED COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS FROM THIS PROJECT TO THE CDBG FUND BALANCE WHEREAS, 3, the Director of bids from five (5) Light Replacement Project: on April 26, 2000, 2:00 p.m. in Conference Room Public Works received the following five sealed electrical contractors for the "Park Way Street between Third and Fourth Avenues (RD-230)" Contractor Amount 1. DBX Inc., Temecula, CA $84,116.00 2. T. & M. Electric, El Cajon, CA $86,785.00 3. Sierra Electric, El Cajon, CA $89,797.00 4. Maverick Electric Co., Downey, CA $92,990.00 5. Trasig Corp., Chula Vista, CA $95,812.50 WHEREAS, the low bid of $84,116.00 by DBX Inc. is above the Engineer'S estimate of $70,740.00 by $13,376.00 approximately 18.9% which estimate was based on average bid prices from previously awarded City traffic signal and street lighting projects; and WHEREAS, the bid documents set forth participation requirements per Federal Regulation for meeting the disadvantaged and women-owned business goals and staff has reviewed the bid documents submitted by the three lowest bidders and concluded that the lowest bidder, Portillo Concrete meets the Minority and Women /- S" Business Enterprise (MBE/WBE) goals; and WHEREAS, the low bidder has satisfactorily met all the requirements and staff, therefore, recommends awarding the contract to DBX Inc, Temecula, CA.; and WHEREAS, the City's Environmental Review Coordinator has reviewed the work involved in this project and determined that the proj ect is exempt for CEQA both under CEQA Guidelines, Section 15061 (b) (3) and section 15303, Class 3 (new construction or conversion of small structures). NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby accept the bids and award the contract to DBX Inc., for the "Park Way Street Light Replacement between Third and Fourth Avenues in the City of Chula Vista, Ca. (RD-230)" Project ("Project") in the amount of $84,116.00. BE IT FURTHER RESOLVED that the Mayor of the city of Chula vista is hereby authorized and directed to execute said contract on behalf of the City of Chula vista. BE IT FURTHER RESOLVED that the does hereby appropriate unanticipated Bayfront/Town Centre I Redevelopment Fund in to fund the Project. Redevelopment Agency revenues from the the amount of $97,619 BE IT FURTHER RESOLVED that the City Council does hereby return $57,003 in appropriated Community Development Block Grant (CDBG) funds from this Project to the CDBG Fund Balance. BE IT FURTHER RESOLVED that the Redevelopment Agency does hereby find and determine that (a) the Project is consistent with the Bayfront/Town Centre I Redevelopment Plans; (b) the Project will assist with the elimination of blight; and (c) no other reasonable means exist to finance the Project. Presented by Approved as John P. Lippitt Director of Public Works 2 1- (. RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA REGARDING THE AGENCY'S INTENTION TO ISSUE TAX EXEMPT OBLIGATIONS TO FINANCE THE PARK WAY STREET LIGHT REPLACEMENT PROGRAM (RD-230) WHEREAS, the Redevelopment Agency of the City of Chula (the "Issuer") desires to finance the costs of constructing certain public facilities and improvements, as provided in Exhibit A attached hereto and incorporated herein (the "Project"); and WHEREAS, the Issuer intends to finance the Project or portions of the Project with the proceeds of the sale of obligations the interest upon which is excluded from gross income for federal income tax purposes (the "Obligations"); and WHEREAS, prior to the issuance of the Obligations the Issuer desires to incur certain expenditures with respect to the Project from available monies of the Issuer which expenditures are desired to be reimbursed by the Issuer from a portion of the proceeds of the sale of the Obligations. NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA DOES HEREBY RESOLVE, ORDER AND DETERMINE AS FOLLOWS: SECTION 1. The Issuer hereby states its intention and reasonably expects to reimburse Project costs incurred prior to the issuance of the Obligations with proceeds of the Obligations. Exhibit A describes either the general character, type, purpose, and function of the Project, or the fund or account from which Project costs are to be paid and the general functional purpose of the fund or account. SECTION 2. The reasonably expected maximum principal amount of the Obligations is $14,005,000. The total Project cost is estimated to be approximately $214,438, including approximately $116,819 in financing costs (interest and fees). SECTION 3. This resolution is being adopted on or prior to the date (the "Expenditures Date or Dates") that the Issuer will expend monies for the portion of the Project cots to be reimbursed from proceeds of the Obligations. SECTION 4. Except as described below, the expected date of issue of the Obligations will be within eighteen months of the later of the Expenditure Date or Dates and the date the Project is placed in service; provided, the reimbursement may not be made more than three years after the original expenditure is paid. For Obligations subject to the small issuer exception of Section 148(fl(4)(D) of the Internal Revenue Code, the "eighteen-month limit" of the previous sentence is changed to "three years" and the limitation of the previous sentence beginning with" ;provided,...." is not applicable. SECTION 5. Proceeds of the Obligations to be used to reimburse for Project costs are not expected to be used, within one year of reimbursement, directly or indirectly to pay debt service with respect to any obligation (other than to pay current debt service coming due within the next succeeding one year period on any tax-exempt obligation of the Issuer (other than the Obligations)) or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the Issuer or any entity related in any manner to the Issuer. or to reimburse any expenditure that was originally paid with the proceeds of any obligation, or to replace funds that are or will be used in such manner. 1-7 SECTION 6. This resolution is consistent with the budgetary and financial circumstances of the Issuer, as of the date hereof. No monies from sources other than the obligation issue are, or are reasonably expected to be reserved, or otherwise set aside by the Issuer (or any related partyl pursuant to their budget or financial policies with respect to the Project costs on a long-term basis. To the best of our knowledge, this City Council is not aware of the previous adoption of official intents by the Issuer that have been made as a matter of course for the purpose of reimbursing expenditures and for which tax-exempt obligations have not been issued. SECTION 7. The limitations described in Section 3 and Section 4 do not apply to (al costs of issuance of the Obligations, (bl an amount not in excess of the lesser of $100,000 or five percent (5%1 of the proceeds of the Obligations, or (cl any preliminary expenditures, such as architectural, engineering, surveying, soil testing, and similar costs other than land acquisition, site preparation, and similar costs incident to commencement of construction, not in excess of twenty percent (20%1 of the aggregate issue price of the Obligations that finances the Project for which the preliminary expenditures were incurred. SECTION 8. This resolution is adopted as official action of the Issuer in order to comply with Treasury Regulations 9 1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement of Issuer expenditures incurred prior to the date of issue of the Obligations, is part of the Issuer's official proceedings, and will be available for inspection by the general public at the main administrative office of the Issuer. SECTION 9. Staff is further directed to return with a detailed financing plan with respect to the Obligations and the Project. SECTION 10. All the recitals in this Resolution are true and correct and this Redevelopment Agency so finds, determines and represents. Presented by Approved as to form by John P. Lippitt Director of Public Works H:\home\attorney\reso\Park Way Agency Financing 2 /_8' r EXHIBIT A Description of Project The Park Way Street Lighting Project is part of the FY 1999-00 Capital Improvements Program. The street light improvements is located on Park Way between Third and Fourth Avenues adjacent to Memorial Park. The improvements include the replacement of six existing street lights located along the north side of Park Way, and one on the south side, the installation of one new double light on the north side of Park way, two double lights on the south side of Park Way, the replacement of two luminaries on the south side of Park Way and the installation ofa new street light on the east side of Fourth Avenue. The plans for the improvements (RD-230) are on file with the City Engineer. The street light improvements will supply sufficient lighting to the Memorial Park area and along Park Way, provide appropriate traffic safety lighting and provide a level of safety lighting for crime prevention in the adjacent community park area. The Director of Public Works received bids for the project on April 26, 2000 and the low bidder was DBX Inc. The contract amount bid was $84,116.00. h:shared\comdev\rd230. wpd 1-9 i EXHIBIT A COMMUNITY DEVELOPMENT DEPARTMENT HOUSING DIVISION Memo From: Jim Holmes, Civil Engineer, Design Section Judith Atwood, Community Development Specialist II j.~' 5/17100 To: Date: Re: DBE Review of RD 230 1 have reviewed the lowest bid estimate from DBX Inc. and noticed that DBX Inc. is not utilizing subcontractors and therefore does not need to be reviewed further for DBE. The intent of the DBE program is to have prime contractors use local DBE subcontractors. If you should have any questions regarding this memorandum, please call me at extension 5036. ! Page 1 /-10 THE CITY OF CHULA VISTA DISCLOSURE STATEMENT EXHIBIT B You are required to file a Swement of Disclosure of certain ownership or financial interests, payments, or campaign contributions, on all - '\IlerS which will require discreliot1lllY action on the part of the City Council, Planning Commission, and all other official bodies. The .Iowing information must be disclosed: 1. List the names of all persons having a financial intereSt in the property which is the subject of the application or the Contract, e.g., owner, appliClUlt, .Contractor, subcontractor,lIIaterial supplier. a:;'Ij ~. , 2. If any person* identified pursuant to (1) above is a corponIlion or pannership, list the names of a1J individuals owning more than 10"10 of the shares in the corporation or owning any partnership interest in the partnership. ;S i M Perry 3. . . If any person* identified pursuant to (1) above is non-profit organization or a trust, .list the names of any person serving as director of the non-profitorgan;7>ltion or as trustee or beneficiary or trustor of the trust. "- 4. Have you had more than $2S0 worth of business transacted with any member of the City staff, Boards, Commissions, Committees, and Council within the past twelve month? Yes _ No~fyes, please indicate person(s): S. . Please.identify each and every person, including any agents, employees, consultants, or independent Contractors who you have assigned to represent you before the City in this matter. 'J"f'-I (.4:;fry -J o.Mer C. Perry 6. Have you and/or your officers or agents: ~the aggregate. ' contn"buted more than $1,000 to a Council member in the CUITCl1t or preceding e1ec:tion period? Yes _ No pfyes, stale which Council members(s): * * · (NOTE: Attached add' Signature of Contractor/ App1icant 011'-\ ~r("'~Sjd~ Print or type IllIIDC f actor/Applicant Date: , - &llJ1IJ is tk:/iMd as: -Any inditNJwJJ,Jirm, co-ptU"fMrship,joinr W'MII't, ......,....;....:...... IOCioJ dMb,. frattmtli orgll1fizlltiOtl, corporarion. utate, muf, receiyer, ryndicau. rhis and any otMr COWIIy. city or r:oontry. city ".",;cipGIiIy. distria. or otMr political nd>t/MsiOll. or any otMr ,rtNIp or COIPIbiN>rion .ering ... .w. 46 I-II HOUSING AUTHORITY AGENDA STATEMENT ITEM NO.: MEETING DATE: ~ 06/13/00 ITEM TITLE: RESOLUTION AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTIFAMILY HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR APARTMENTS), SERIES 2000A, AND THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTIFAMILY HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR APARTMENTS) SERIES 2000B, IN A COMBINED PRINCIPAL AMOUNT NOT TO EXCEED $5,500,000; AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH BONDS AND OTHER RELATED DOCUMENTS AND APPROVING OTHER RELATED ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS SUBMITTED BY: COMMUNITY DEVELOP^'}ENT DIRECTOR LB-..f" C.s REVIEWED BY: EXECUTIVE DIRECTOR! 4/5THS VOTE: YES D NO ~ BACKGROUND On December 7, 1999 the City Council and Housing Authority held a public hearing regording the Housing Authority's intent to issue tax-exempt obligations for the Pear Tree Manor Apartment acquisition and rehabilitation project. The public hearing was held in accordance with Section 147(f) of the Internal Revenue Code which required the proposed project and financing be approved by the governmental unit having jurisdiction over the area for which the project was to be financed. On February 18, 2000, the Redevelopment Agency conditionally approved providing finoncial assistance in the amount of $1,387,152 for the Pear Tree project. At the meeting of April 25, 2000, the California Debt Limit Allocation Committee (CDLAC) awarded Chelsea Investment Corporation $5,250,000 in tax-exempt bond financing for Pear Tree Manor. On May 23, 2000, the Redevelopment Agency opproved financiol assistance and related loan agreements with St. Regis Park, LP (formed by Chelsea Investment Corporotion) in an amount not to exceed $1,387,152 for the acquisition and rehabilitation of Pear Tree Manor Apartments. With the approval of the loan agreements and the CDLAC ollocation in place, the next step in the process is for the Housing Authority of the City of Chula Vista to approve the issuance of the bonds and the related bond documents. :;. -/ PAGE 2, ITEM NO.: MEETING DATE: ~ 06/13/00 BOARDS/COMMISSIONS RECOMMENDATION At the meeting of May 24, 2000, the Housing Advisory Commission approved financing the Pear Tree Manor Apartments and the issuonce of the bonds by the Housing Authority of the City of Chula Vista. DISCUSSION The Proposed Proiect The Pear Tree Manor Apartment complex is located in the western portion of the City consisting of 119 units and is a project in need of rehabilitation. Chelseo, a highly regarded and experienced development company, plans to substantially upgrode the interior and exterior of the buildings. The proposed Pear Tree Manor Apartment project offers one pool, increased open space, a recreation area, a classroom for residents, storage areas, laundry rooms, and garages. The proposed unit mix and sizes are as follows: five (5) One Bedroom units measuring 650 square feet; One Hundred Nine (109) Two Bedroom units measuring 850 square feet; and five (5) Three Bedroom units measuring 1040 square feet. Rehabilitation Efforts Chelsea has provided a preliminary estimate for the level of interior rehabilitation to be up to $15,000 per unit. This amount falls within the industry standard for rehabilitation projects of this size. The scope of work is considered to be extensive rehabilitation and will include interior painting, new carpeting, new cabinets, new appliances, blinds, sinks, vinyl flooring, and bathroom renovation. The exterior of the building will be painted, repair fascia boards, replace exterior window border, repair existing roof, and replace gutters and downspouts. The landscaping, tot lots and pool area will be upgraded. Although the City has been successful in helping to produce affordable housing through new construction in the eastern portion of the City, this project represents an opportunity for acquisition and rehabilitation of a lorge multi-family rental project on the western side of the City. Proposed financina of the Proiect On May 23, 2000, the Redevelopment Agency approved financing the acquisition and rehabilitation of Pear Tree Manor Apartments. financing and development of this project will be a joint private/public portnership. It is currently estimated that the proposed total project cost will be approximately $10.2 million. Sources of funding for the project will include approximately $5.2 million in bond proceeds, $2.9 million in tax credit equity from private investors, and $2.1 million from other sources including a $1.3 million loan from the Redevelopment Agency. Bond Structure The use of the City's tax-exempt status to issue bonds for multi-family acquisition and rehabilitation represents a financing tool for the City's Affordable Housing Program. Such bonds are a form of public-private partnership which gains importance as federal housing pragrams ';Z - :2- ~ PAGE 3, ITEM NO.: c;l MEETING DATE: 06/13/00 diminish and development costs make low-income housing development problematic. In the City's Housing Element of the General Plan, the Affordable Housing Program declares that, "where practical, the City shall consider the use of tax-exempt revenue bonds for the purpose of underwriting a portion of the cost of providing low-income housing." Used appropriately in pursuit of public good, tax-exempt multi-family bonds represent such underwriting. The Housing Authority is being asked to authorize the issuance of two series of bonds to finance the construction project. The California Debt Limit Allocation Committee (CDLAC) awarded Chelsea Investment Corporation $5,250,000 in tax-exempt bonds which represents 100 percent of their request. Chelsea has taken the initiative to place a self-imposed "taxable tail" to the project in an opproximate amount of $220,228. This taxable tail necessitates the issuance of two series bonds for this project. The first series would total $5,250,000 in tax-exempt financing, which is equal to the bond allocation oworded by CDLAC. The second series bonds in the amount of approximately $220,228 represents Chelsea's "taxable tail" 1 Issuer Fee As issuer of the bonds, the Housing Authority will receive issuer fees related to the costs of issuance of the bonds and ongoing monitoring of the project for compliance with the Regulatory Agreement. This standard origination fee and annual administrative fee represents 0.0013 percent of the bond proceeds. Based upon negotiations with the Developer, staff is recommending an origination fee of 12 basis points, estimated at $6,575, and an annual administrative fee of $6,575. The proposed fee structure is reasonable for this type of bond issuance. The Developer has, in turn, agreed to maintain the affordability of the low-income units for a period of not less than 52 years, exceeding the 30-year term of the bonds. Bond Documents At this time, the Housing Authority is being asked to approve in substantially final form the bond documents attached as Exhibit A. The Indenture of Trust for both series of bonds is a document which specifies the terms and conditions for the issuance and selling of the bonds ond the use of bond proceeds. Article 34 Reauirement Article XXXIV of the California Constitution (Article 34) requires that voter approval be obtained before any "state public body" develops, constructs or acquires a "low rent housing project". A redevelopment agency is a "state public body" for purposes of Article 34, and as a result, if a redevelopment agency participates in development of a "low rent housing project" and that porticipation rises to the level of development, construction, or acquisition of the project by the agency, approval by the electorate pursuant to Article 34 is required for the project. 1 Due to the limited availabiiity of bond financing from CDLAC and the large number of applications compeling for an allocation, CDLAC may impose a "taxable tail" to the bond allocation. This taxable tail is the portion of the bond allocation that will be taxable. However. in this instance. Chelsea has voluntariiy attached a "taxable tail" to the project in order to leverage the bond allocation to secure additional financing. ;2-3 PAGE 4, ITEM NO.: .;t MEETING DATE: 06/13/00 On April 11, 1978 under Proposition C, the voters of Chula Vista authorized the development, construction, or acquisition of 400 units of "low rent housing" by the Agency. Of the 400 allowable credits, Chula Vista has utilized 282 units and has a balance of 118 units remaining. The Pear Tree project will not have on impact on the remaining 118 units. Not 011 low and moderate income housing qualifies as a "low rent housing project". Statutory and case law permit development of many kinds of low and moderate income housing that will not be choracterized as a "low rent housing project" and not requiring Article 34 voter authorization. Pear Tree Manor is exempt from Article 34 based on on exemption outlined in the Health and Safety Code Section 37000 et seq. of the Public Housing Election Implementation Law. This exemption states that rehabilitation, reconstruction, or replacement of an existing low rent housing project, or a project previously or currently occupied by lower-income households will not trigger Article 34. Pear Tree Manor is currently occupied by 108 lower income households and will continue to be occupied by 108 lower income households after completion of the acquisition and rehabilitation. Although Pear Tree Manor is exempt from the provisions of Article 34, the agency loan agreements may time the disbursement of funds to occur after the 60-day period has elapsed to challenge a project, thereby providing an additional layer of protection to the Agency. The agency loon agreements also provide that if the Developer requests an earlier disbursement date and the Developer is prepared to indemnify the Agency from an Article 34 challenge, staff may consider an earlier disbursement date. In recent discussions with the Developer, a clear indication has been given that it is expected the bonds will close prior to expiration of Article 34. When the Redevelopment Agency approved the final loon agreements and related covenants at the meeting of May 23, 2000, this began the 60- day window of opportunity for a challenge under Article 34. As stipulated in the loan documents, the Developer will be responsible for providing an indemnification of the Agency for an Article 34 challenge. The Developer is in the process of preparing this document for City Attorney review. Cifv Risks and Mitiaation Measures There are two oreas of risk which the Housing Authority, City and Agency need to be cognizant. Listed below are these risks and measures staff has incorporated into the transaction to reduce these risks: Risk One - Default under Bonds: While repayment of the bonds will not constitute 0 liability or obligation to the City or the Housing Authority, should the Developer or 0 subsequent owner be unable to perform under the conditions of the Bond Indenture, the City's and the Housing Authority's financial rating and/or stature in the marketplace could be negatively impacted. Mitigation: The Developer and its joint venture portners have significant experience and an excellent track record with this type of development project. An ').-1 -r PAGE 5, ITEM NO.: MEETING DATE: .:L 06/13/00 affiliate of the Developer recently completed construction of T eresina at Lomas Verdes, a 440-unit apartment development with 88 affordable housing units and Villa Serena, a 132 unit apartment development with 100 percent of the units affordable in Chula Vista. Other projects include the Paul Mirable Center at St. Vincent de Paul's in Son Diego, and Alejandro Rivera Apartments (104 units) in Calexio. Additionally, the Bonds are being privately ploced with the Bank of America and may subsequently be transferred only to "accredited investors" who will deliver an investor letter to the Housing Authority. The Bonds are not rated by any rating agency. Risk Two - Subordination of Aaencv Loan: The Agency Loan will be subordinate to the Housing Authority bonds to be issued. Should the developer or a subsequent owner be unable to perform under the conditions of the Indenture of Trust, the Loan Agreement, or the Regulatory Agreement, the Agency may need to cure any loan defaults or lose the affordability restrictions on the project. Mitigation: The presence of other major financiol commitments, such os the tax credit investments, means that other stakeholders depend on the short and lang-term success of the project. By its nature, affordable housing presents some, but very limited morket risk because of the deeply discounted rents. FISCAL IMPACT All casts related to the issuance of the Bonds will be paid for from bond proceeds or equity contributed by the Developer's limited partner. The Bonds will be secured by the project and will not constitute 0 liability or obligation of the City or Housing Authority. Some staff time costs will be associated with monitoring compliance with the Regulatory Agreement and the Housing Cooperation Agreement. Those costs will be reimbursed from an origination fee of 12 basis points of the bond proceeds, estimated at $6,575, and an annual administrative fee for 52 years of $6,575 to be paid semi-annually by the Developer to the Authority. These funds will be placed in the Low and Moderate Income Housing Fund. With the Housing Authority becoming much more active in issuing tax-exempt bonds, a Housing Authority budget will be created in order to effectively track bond-related revenues. The Redevelopment Agency loan in the amount of $1,387,152 will be repaid from any remaining residual receipts. It is expected that repayment of interest will begin year eight (8) through year twenty-six (26) and repayment of principal and accrued unpaid interest will begin year eleven (11) through year twenty-six (26). This payment schedule reflects the entire Redevelopment Agency loan to be repaid by year twenty-six (26). ATTACHMENTS EXHIBIT A - Regulatory Agreement EXHIBIT B -Indenture of Trust ;1,-5 "T HOUSING AUTHORITY OF THE CITY OF CHULA VISTA RESOLUTION NO. RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MUL TIF AMIL Y HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR PROJECT), SERIES 2000A, AND THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MUL TIF AMIL Y HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR PROJECT), SERIES 2000B, IN A COMBINED PRINCIPAL AMOUNT NOT TO EXCEED $5,500,000, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH BONDS AND OTHER RELATED DOCUMENTS, AND APPROVING OTHER RELATED ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS WHEREAS, Chapter I of Part 2 of Division 24 of the Health and Safety Code of the State of California (the "Act") authorizes housing authorities to finance the acquisition, construction and development of multifamily rental housing for persons and families meeting the income (imitations contained in the Act; and WHEREAS, the Board of Commissioners (the "Board") of the Housing Authority of the City ofChula Vista (the "Authority") hereby finds and declares that it is necessary, essential and a public purpose for the Authority to finance multifamily rental housing pursuant to the Act, in order to increase the supply of such housing in the City of Chula Vista (the "City") available to persons and families within the income limitations established by the Act; and WHEREAS, the Authority has a program to finance multifamily rental housing pursuant to the Act (the "Program"), and desires at this time to provide for the borrowing of money for such purpose through the issuance of multifamily housing revenue bonds as authorized by the Act; and WHEREAS, the City has conducted a public hearing, as required by Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), for the purpose of determining whether to approve the issuance by the Authority of multifamily housing revenue bonds to be designated "Housing Authority of the City of Chula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project), Series 2000A" (the "Series 2000A Bonds") and "Housing Authority of the City ofChula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project), Series 2000B" (the "Series 2000B Bonds" and, together with the Series 2000A Bonds, the "Bonds") in an aggregate principal amount not to exceed $5,500,000 in order to finance the acquisition and construction of a ll9-unit multifamily housing project (the "Project") located in the City; and WHEREAS, all acts, conditions and things required by the Act, and by all other laws of the State of California, to exist, to have happened and to have been performed precedent to and in connection with the issuance of the Bonds and the implementation of the Program as contemplated by this Resolution and the documents referred to herein exist, have happened, and have been performed in regular and due time, form and manner as required by the laws of the State of DOCSOc\736017v2\24036.0009 ~-(p California, including the Act, and the Authority is now duly authorized and empowered, pursuant to each and every requirement of law, to issue the Bonds for the purpose, in the manner and upon the terms herein provided; and WHEREAS, this Board hereby finds and declares that this Resolution is being adopted pursuant to the powers granted by the Act; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing Authority of the City ofChula Vista, as follows: Section 1. The above recitals, and each of them, are true and correct. Section 2. Pursuant to the Act, the Bonds are hereby authorized to be issued pursuant to the provisions ofthe Indenture of Trust (the "Indenture"), between the Authority and the trustee appointed below (the "Trustee"). The forms of the Bonds as set forth in the Indenture are hereby approved in substantially the forms presented, with such additions thereto or changes therein as are recommended or approved by the Executive Director of the Authority, the City Attorney or Bond Counsel and approved by the officer or officers executing the Bonds, to be evidenced conclusively by the execution and delivery of the Bonds. Each of the Chairperson and the Executive Director of the Authority, or their designees, is hereby authorized to execute the Bonds by manual or facsimile signature and the Secretary of the Authority is hereby authorized to attest such signature by manual or facsimile signature and to affix the facsimile seal of the Authority to the Bonds. The proceeds of the Series 2000A Bonds shall be used to make a mortgage loan to St. Regis Park, L.P., a California limited partnership (the "Borrower"), and the proceeds of the Series 2000B Bonds shall be used to make a second mortgage loan to the Borrower. Section 3. State Street Bank and Trust Company of California, N.A. is hereby appointed as Trustee under the Indenture for the Authority and the owners ofthe Bonds, with the powers and duties of Trustee as set forth in the Indenture. Section 4. The proposed form of the Indenture presented to this meeting is hereby approved. Each of the Chairperson, the Executive Director, the Deputy Executive Director and the Secretary of the Authority, or the designee of any of them, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Indenture in substantially the form presented, with such additions thereto or changes therein as are recommended or approved by the Executive Director, the City Attorney or Bond Counsel and approved by the officer or officers executing the Indenture, with the approval of such officer or officers to be evidenced conclusively by the execution and delivery of such document, provided that such additions or changes shall not authorize a combined aggregate principal amount of Bonds in excess of $5,500,000. Section 5. The proposed form of the Loan Agreement related to the Bonds (the "Loan Agreement") among the Authority, the Borrower and Bank of America, N.A. presented to this meeting is hereby approved. Each of the Chairperson, the Executive Director, the Deputy Executive Director and the Secretary of the Authority, or the designee of any of them, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver a Loan Agreement in substantially the form presented, with such additions thereto or changes therein as are recommended or approved by the Executive Director, City Attorney or Bond Counsel and approved by the officer or officers executing such documents, the approval of such officer or officers to be evidenced conclusively by the execution and delivery of such documents. DOCSOC\ 7360 17v2\24036.0009 2 ,;-1 "' Section 6. The proposed form of Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement"), among the Authority, the Trustee and the Borrower presented to this meeting is hereby approved. Each of the Chairperson, the Executive Director, the Deputy Executive Director and the Secretary of the Authority, or the designee of any of them, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver a Regulatory Agreement in substantially said form, with such additions thereto or changes therein as are recommended or approved by the Executive Director, the City Attorney or Bond Counsel and approved by the officer or officers executing the Regulatory Agreement, the approval of such officer or officers to be evidenced conclusively by the execution and delivery of such document. Section 7. All actions heretofore taken by the officers and agents of the Authority with respect to the establishment of the Program and the sale and issuance of the Bonds are hereby approved, confirmed and ratified. Upon approval of the Executive Director with the advice of the City Attorney, the officers of the Authority are hereby authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents (including an assignment to the Trustee of the Authority's interest in the loans made to the Borrower, a construction deed of trust for the Bonds, an assignment of such deed of trust to the Trustee and instructions the Trustee to authenticate the Bonds and to pay the costs of issuing the Bonds in accordance with the provisions of the Indenture) which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with this Resolution and in order to carry out and administer the Program. Should the Chairperson be unavailable to execute any of the documents specified above, then any other available member of the Board is hereby authorized to sign such documents on behalf of the Authority in the place of such officer. Any document authorized to be signed by the Secretary may be signed by a duly appointed deputy secretary. All documents signed by the facsimile signature of any member of the Board shall be deemed to constitute an original of such document. Section 8. 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 provisions of this Resolution. Section 9. This Resolution shall take effect immediately upon its adoption. PRESENTED BY &,~ S;~~ Chris Salomone Director of Community Development APPROVED AS TO FORM BY ~f~ /WR r City Attorney H:\HOME\COMMDEV\RESOS\RESOLUTlON OF ISSUANCE FOR CHULA VISTA (PEAR TREE).DOC DOCSOC\736017v2\24036.0009 3 ,;{-? EXHIBIT A RECORDING REQUESTED BY AND ) WHEN RECORDED RETURN TO: ) ) ROBERT J. WHALEN, ESQ. ) STRADLING YOCCA CARLSON & RAUTH ) P. O. Box 7680 ) Newport Beach, California 92660 ) [Space above for Recorder's use.] REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS By and Among HOUSING AUTHORITY OF THE CITY OF CHULA VISTA, CALIFORNIA and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee and ST. REGIS PARK, LP, as Borrower Dated as ofJuly 1,2000 Relating to $5,250,000 HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTIFAMILY HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR PROJECT) SERIES 2000A and $ HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTIFAMILY HOUSING MORTGAGE REVENUE BONDS (PEAR TREE MANOR PROJECT) SERIES 2000B 1 DOCSOC\735962v4\24036.0009 /).-9 Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section II. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. Section 22. Section 23. Section 24. EXHIBIT A EXHIBIT B EXHIBIT C TABLE OF CONTENTS Page Definitions and Interpretation.......... ........................ ..................................................... 2 Acquisition, Rehabilitation, Equipping and Completion of the Project........................6 Residential Rental Property.................................. ................................................. ........ 6 Low Income Tenants.......................................... ................................................. .......... 8 Tax Status of the Bonds ..............................................................................................11 Modification of Special Tax Covenants...................................................................... II Indemnification ................................................. .............................. .............. .............. 12 Consideration ....................... ........................ ..................................... .......................... 13 Reliance....... ...................... ... ................... ..................... ....................... ........................ 14 Sale or Transfer of the Project; Syndication ...............................................................14 Term.......... ................... ............................................................................................... 15 Covenants to Run With the Land................................................................................ 15 Burden and Benefit .....................................................................................................16 Uniformity; Common Plan.......... ............................... ......................................... ........ 16 Enforcement ........... ........................ ..... ..................... .......................................... ......... 16 Recording and Filing...................................................................................................17 Payment of Fees .......................................................................................................... 17 Governing Law.... ................................................ ............................ ............................ 17 Amendments...... ............................................... ............................... ........................... 18 Trustee Acting Solely in Such Capacity .....................................................................18 Monitoring Compliance by Borrower.........................................................................18 Notice .............. ..................... ................... .................................................................... 18 Severability..... ............... ........................................................................................ ..... 19 Multiple Counterparts.... ........................................................ ............................... ...... 19 PROJECT SITE CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE INCOME COMPUTATION AND CERTIFICATION A-I B-1 C-I DOCSOC\735962v4\24036.0009 J. -10 .,. REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (the "Regulatory Agreement"), made and entered into as of June 1,2000, 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 (together with any successor to its rights, duties and obligations, the "Issuer"), STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee (the "Trustee"), and ST. REGIS PARK, LP, a California limited partnership (the "Borrower"), WITNESSETH: WHEREAS, the Legislature of the State of California enacted Chapter 1 of Part 2 of Division 24 of the Health and Safety Code (the "Act") to authorize cities and counties to issue bonds to finance the acquisition, construction, rehabilitation and development of multifamily rental housing for families and individuals of low or moderate income; and WHEREAS, the Issuer is a political subdivision (within the meaning of that term in the Regulations of the Department of Treasury and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the "Code")); and WHEREAS, on June 13,2000, the Board of Commissioners of the Issuer adopted a resolution (the "Resolution"), authorizing the issuance of revenue bonds by the Issuer in connection with financing the acquisition and rehabilitation of a 119-unit multifamily rental housing project located in the City of Chula Vista (the "Project"); and WHEREAS, in furtherance of the purposes of the Act and the Resolution and as a part of the Issuer's plan of financing residential rental housing, the Issuer proposes to issue $5,250,000 aggregate principal amount of its revenue bonds designated "City of Chula Vista, California, Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project), Series 2000A" and $ aggregate principal arnount of its "City ofChula Vista, California, Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000B (collectively, the "Bonds"), the proceeds of which will be loaned to the Borrower which will use the proceeds of the Bonds to finance the acquisition and rehabilitation of the Project for the public purpose of providing decent, safe and sanitary housing for families and individuals ofIow and moderate incorne; and WHEREAS, the Issuer, Bank of America, N.A. and the Borrower have entered into a Loan Agreement, dated the date hereof, providing the terms and conditions under which the Issuer will make the Loan to the Borrower to finance the acquisition and rehabilitation of the Project; and WHEREAS, all things necessary to make the Bonds, when issued as provided in the Indenture, the valid, binding, and limited obligations of the Issuer according to the import thereof, and to constitute the Indenture a valid assignment of the amounts pledged to the payrnent of the principal of, and premium, if any, and interest on the Bonds have been done and performed, and the ~-I/ DOCSOC\ 735962v4\24036.0009 creation, execution, and delivery of the Indenture (as defined herein) and the execution and issuance of the Bonds, subject to the terms thereof, in all respects have been duly authorized; and WHEREAS, the Issuer has obtained an allocation for the Project ofa portion of the State of California's private activity bond volume cap, within the meaning of Section 146 of the Code, in accordance with the procedures established by the California Debt Limit Allocation Committee; and WHEREAS, the Code and the regulations and rulings promulgated with respect thereto and the Act prescribe that the use and operation of the Project be restricted in certain respects and in order to ensure that the Project will be owned and operated in accordance with the Code and the Act, the Issuer, the Trustee and the Borrower have determined to enter into this Regulatory Agreement in order to set forth certain terms and conditions relating to the acquisition, rehabilitation, equipping and operation of the Project; NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Issuer, the Trustee and the Borrower hereby agree as follows: Section 1. Definitions and Interpretation. The following terms shall have the respective meanings assigned to them in this Section I unless the context in which they are used clearly requires otherwise: Any of the capitalized terms not defined herein shall have the meaning set forth in the Indenture. "Adjusted Income" - The adjusted income of a person (together with the adjusted incorne of all persons the age of 18 years or older who intend to reside with such person in one residential unit) as calculated in the manner prescribed in Regulation Section 1.103-8. "Administration Agreement" - The administration agreernent to be entered into among the Issuer, the Borrower and any entity other than the Issuer which is acting as the Program Administrator. "Affiliated Party" - (I) a Person whose relationship with the Borrower would result in a disallowance ofIosses under Section 267 or 707(b) of the Code, (2) a Person who together with the Borrower are members of the sarne controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears therein), (3) a partnership and each of its partners (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code or (4) an S Corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code. "Area" - The San Diego County, California Primary Metropolitan Statistical Area. "Bank" - Bank of America, N.A., a national banking association, or its successors and assIgns. "Bond Closing" - The date on which there is delivery by the Issuer of, and payment for, the Bonds. "Bondowner Representative" - Shall have the meaning set forth in the Indenture. 2 ;J. - I?.. DOcSOC\ 735962v4\24036.0009 "Bonds" - Housing Authority of the City ofChula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project), Series 2000A, and the Housing Authority of the City of Chula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project), Series 2000B. "Borrower's Tax Certificate" - The certificate of the Borrower, dated as ofthe Bond Closing, with respect to certain Project Costs and other matters delivered to the Issuer by the Borrower. "Certificate of Continuing Program Compliance" - The certificate with respect to the Project to be filed by the Borrower with the Program Administrator, which shall be substantially in the form attached hereto as Exhibit B. "City" - The City ofChula Vista, California. "Code" or "Internal Revenue Code" - The Internal Revenue Code of 1986, as amended, and, with respect to a specific section thereof, such reference shall be deerned to include (a) the regulations promulgated by the United States Department of the Treasury under such section, (b) any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code and (d) the regulations promulgated under the provisions described in (b) and (c). "Income Certification" - The Income Computation and Certification Form in substantially the form attached hereto as Exhibit C. "Indenture" - The Indenture of Trust, dated as of the date hereof, between the Issuer and the Trustee, pursuant to which the Bonds have been issued, as amended or supplemented from time to time. "Loan" - The loan of the proceeds of the Bonds by the Issuer to the Borrower described in the Loan Agreement. "Loan Agreement" - The Loan Agreement dated as of June 1,2000 by and among the Issuer, the Borrower and Bank of America, N.A. "Loan Documents" - The Loan Agreement, the Notes, the Mortgage, the Security Agreement, the assignments by the Borrower of the Construction Contract, the Architectural Contract and the Plans and Specifications, the consents by the contracting parties to such assignrnents and the Regulatory Agreement. "Low Income Tenants" - Individuals or families with an Adjusted Income which does not exceed 50 percent of the Median Income for the Area as adjusted for household size as set forth below. In no event, however, will the occupants of a residential unit be considered to be Low Income Tenants ifall the occupants are students, as defined in Section 151(c)(4) of the Code, as such may be amended, no one of which is entitled to file ajoint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional DOCSOC\735962v4\24036.0009 3 .;?-/3 on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. Household Size Adjustment to 50% of Median Income for the Area I 2 3 4 5 6 7 8 70% 80% 90% 100% 108% 116% 124% 132% "Low Income Units" - The dwelling units in the Project designated for occupancy by Low Income Tenants pursuant to Section 4(a) of this Regulatory Agreement. "Median Income for the Area" - The median gross income for the Area as most recently determined by the Secretary of Treasury pursuant to Section 142(d)(2)(B) of the Code. "Mortgage" - The Construction Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing of even date herewith, frorn the Borrower as trustor to Equitable Deed Company as deed of trust trustee and the Issuer as beneficiary with respect to the Project, as the same may from tirne to time be replaced, amended or supplemented as provided therein and in this Indenture. "Person" - Any natural person, firm, partnership, association, limited liability company, corporation, company or public body. "Program Administrator" - The Issuer, or such other entity as is appointed by the Issuer from time to time to act in such capacity hereunder. "Program Administrator's Fee" - The administrative fee of the Prograrn Adrninistrator as set forth in the Administration Agreement. "Project" - The Project Facilities and the Project Site. "Project Costs" - To the extent authorized by the Code, the Regulations and the Act, any and all costs incurred by the Borrower with respect to the acquisition and rehabilitation of the Project, whether paid or incurred prior to or after the sixtieth day preceding the Bond Closing, including, without limitation, costs for site preparation, the planning of housing and related facilities and irnprovements, the acquisition of property, the rehabilitation of housing and related facilities and irnprovements, and all other work in connection therewith, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement to any rnunicipality, county or entity for expenditures made for the Project), any and all fees owed to partners of the DOCSOC\735962v4\24036.0009 4 :J.. - /'f Borrower pursuant to the Amended and Restated Limited Partnership Agreement of the Borrower, dated as of , 1999, and all other costs approved by Bond Counsel. "Project Facilities" - The buildings, structures and other improvements on the Project Site, and all fixtures and other property owned by the Borrower and located on, or used in connection with, such buildings, structures and other improvernents constituting the Project. "Project Site" - The parcel or parcels ofreal property described in Exhibit "A", which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining. "Qualified Project Costs" - The Project Costs (yxcluding Costs ofIssuance) incurred after the sixtieth day preceding the Bond Closing which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts within the meaning of Regulation Section 1.1 03-8(a)( 1 lei); and provided further that interest shall not be a Qualified Project Cost; and provided still further that if any portion of the Project is being constructed by (or acquired from) an Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Project Costs" shall include only the actual out-of-pocket capital costs incurred after the sixtieth day preceding the Bond Closing by such Affiliated Party with respect to the Project (or any portion thereof) within the meaning of Section 147(a)(2) of the Code, as provided in the Tax Certificate. "Qualified Project Period" - The period beginning on the Bond Closing and ending on the latest of the following dates: (a) the date which is 15 years after the Bond Closing, (b) the first day on which no tax exernpt bonds with respect to the Project are Outstanding, (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, or (d) May 1,2051. "Series A Bonds" - The Housing Authority ofthe City of Chula Vista, California Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project), Series 2000A. "Series B Bonds" - The Housing Authority of the City ofChula Vista, California Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project), Series 2000B. Such terms as are not defined herein shall have the meanings assigned to them in the Indenture. Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter 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. The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all defined terms shall be determined by reference to this Section I notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this DOcSOC\ 735962v4\24036.0009 5 ~-/5 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. Section 2. ACQuisition. Rehabilitation. EQuipping and Completion of the Proiect. The Borrower hereby represents, as of the date hereof, and covenants, warrants and agrees as follows: (a) The Borrower has incurred a substantial binding obligation to acquire, construct and equip the Project, pursuant to which the Borrower is obligated to expend at least five percent of the net sale proceeds of the Series A Bonds. (b) The Borrower's reasonable expectations respecting the total cost of the acquisition, rehabilitation and equipping of the Project and the disbursement of Bond proceeds are accurately set forth in the Borrower's Tax Certificate attached to the Tax Certificate which has been delivered to the Issuer. (c) The Borrower will proceed with due diligence to complete the acquisition, rehabilitation and equipping of the Project and expects to expend the full amount of the proceeds of the Loan for Project Costs prior to June 1,2002. (d) The statements made in the various certificates delivered by the Borrower to the Issuer or the Trustee are true and correct. (e) Money on deposit in any fund or account in connection with the Bonds, whether or not such money was derived frorn other sources, shall not be used by or under the direction of the Borrower, in a manner which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and the Borrower specifically agrees that the investment of money in any such fund shall be restricted as may be necessary to prevent the Bonds from being "arbitrage bonds" under the Code. (f) The Borrower (and any person related to it within the meaning of Section 147(a)(2) of the Code) will not take or omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture, the Loan Agreement or this Regulatory Agreement. Section 3. Residential Rental Property. The Borrower shall own, manage and operate the Project as a "qualified residential rental project" (within the meaning of Section 142(d) of the Code) until the expiration of the Qualified Project Period. To that end, and for the term of this Regulatory Agreement, the Borrower hereby represents, as of the date hereof, and covenants, warrants and agrees as follows: (a) The Project is being acquired, rehabilitated and equipped for the purpose of providing multifamily residential rental property, and the Borrower shall own, manage and operate the Project as a project to provide rnuItifamily 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 applicable provisions of Section 142( d) of the Code and Section 1.1 03-8(b) of the Regulations, and the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time. DOCSOC\ 735962v4\24036.0009 6 ?"-J/P (b) All of the dwelling units in the Project will be similarly constructed units, and, to the extent required by the Code and the Regulations, each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, 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; provided that any Low Income Tenant rnay, but shall not be obligated to, provide a refrigerator for the unit to be occupied. (c) None of the dwelling units in the Project will at any time be utilized on a transient basis, or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home, retirement house or trailer court or park. (d) No part of the Project will at any time be owned or used as a condominium or by a cooperative housing corporation. Other than obtaining a final subdivision map on the Project and a Final Subdivision Public Report from the California Department of Real Estate, the Borrower shall not take any steps in connection with a conversion of the Project to a condominium or cooperative ownership except with the prior written approving opinion of Bond Counsel that the interest on the Bonds will not becorne taxable thereby under Section 103 of the Code. (e) All of the dwelling units will be available for rental on a continuous basis to members of the general public and the Borrower 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 to Low Income Tenants and to holders of Section 8 certificates or vouchers. (f) The Project Site consists of a parcel or parcels that are contiguous except for the interposition ofa road, street or stream, and all of the Project Facilities will 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 any building or structure in the Project which contains fewer than five units shall be occupied by the Borrower or by persons related to or affiliated with the Borrower. (h) Should involuntary noncompliance with the provisions of Section 1.l03-8(b) of the Regulations be caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Bond Closing which prevents the Issuer from enforcing the requirements of the Regulations, or condemnation or similar event, the Borrower covenants that, within a "reasonable period" determined in accordance with the Regulations, it will either prepay the Mortgage Note or apply any proceeds received as a result of any of the preceding events to reconstruct the Project to meet the requirements of Section 142(d) of the Code and the Regulations. (i) The Borrower shall not discriminate on the basis of race, religion, creed, color, ethnic group identification, sex, source of income (e.g. AFDC, SSI), mental or physical disability, age, national origin or marital status in the rental, lease, use or occupancy of the Project or in connection with the ernployment or application for employment of persons for the operation and management of the Project. DOCSOC\ 735962v4\24036.0009 7 ~ -/7 (j) Following the expiration or termination of the Qualified Project Period, Low Income Units shall remain available to the Low Income Tenants then occupying such units at the date of expiration or termination of the Qualified Project Period at a rent not greater than the rent determined pursuant to Section 4(a)(ii) below until the earliest of any of the following occurs: (i) The household's income exceeds 140 percent of the income at which such household would qualify as a Low Income Tenant. (ii) The household voluntarily moves or is evicted for "good cause." For these purposes, "good cause" rneans the nonpayment of rent or allegation of facts necessary to prove major, or repeated minor, violations of material provisions of the lease agreement which detrimentally affect the health and safety of other persons or the structure, the fiscal integrity of the Project, or the purposes or special programs of the Project. (iii) Period. Fifty-two (52) years after the comrnencement of the Qualified Project (iv) The Borrower pays relocation assistance and benefits to such tenant as provided in Government Code Section 7264(b). (k) During the three-year period prior to the expiration of the Qualified Project Period, the Borrower shall continue to make available to Low Income Tenants Low Income Units that have been vacated to the same extent that other units in the Project are made available to the general public. (I) The Issuer may but shall not be required to monitor the Borrower's compliance with the provisions of subparagraph (j) above. Section 4. Low Income Tenants. Pursuant to the requirements of Section 142(d) of the Code and applicable provisions of the Act, the Borrower hereby represents, as of the date hereof, and warrants, covenants and agrees as follows: (a) During the Qualified Project Period: (i) not less than twenty percent (20%) of the completed units in the Project shall be designated as Low Income Units and shall be continuously occupied by or made available for occupancy by Low Income Tenants. Such Low Income Units shall be of comparable quality and offer a range of sizes and number of bedroorns comparable to those units which are available to other tenants and shall be distributed throughout the Project. (ii) the monthly rent charged for all the Low Incorne Units shall not exceed one-twelfth of the amount obtained by multiplying 30% times 50% of the Median Income for the Area, as adjusted for household size utilizing the percentages set forth above under the definition of Low Income Tenant and assuming the following unit sizes and household sizes: DOcSOc\ 735962v4\24036.0009 8 ?-I [{ Unit Size Household Size Studio One Bedroom Two Bedrooms Three Bedroorns One Person Two Persons Three Persons Four Persons A unit occupied by a Low Incorne Tenant who at the commencement of the occupancy is a Low Income Tenant shall be treated as occupied by a Low Income Tenant until a recertification of such tenant's income in accordance with Section 4( c) below demonstrates that such tenant no longer qualifies as a Low Income Tenant and thereafter any residential unit of comparable or smaller size in the Project is occupied by a new resident other than a Low Income Tenant. Moreover, a unit previously occupied by a Low Income Tenant and then vacated shall be considered occupied by a Low Income Tenant until reoccupied, other than for a ternporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (31) days. (b) Immediately prior to a Low Income Tenant's occupancy ofa Low Incorne Unit, the Borrower will obtain and maintain on file an Income Certification from each Low Income Tenant occupying a Low Income Unit, dated immediately prior to the initial occupancy of such Low Income Tenant in the Project (or prior to the Bond Closing in the case of existing Low Income Tenants). In addition, the Borrower will provide such further information as rnay be required in the future by the State of California, the Issuer, the Program Administrator, or in such other form and manner as may be required to maintain the tax-exempt status of interest on the Bonds under all applicable rules, rulings, policies, procedures 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 obligations issued under Section 142(d) of the Code. The Borrower shall verify that the income provided by an applicant is accurate by taking one of the following steps as a part of the verification process: (I) obtain a federal income tax return for the most recent tax year, (2) obtain a written verification of income and employment from applicant's current employer, (3) ifan applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income satisfactory to the Program Administrator or (4) such other information as may be reasonably requested by the Program Administrator. Copies of the rnost recent Income Certifications for Low Income Tenants commencing or continuing occupancy of a Low Income Unit shall be attached to the quarterly report to be filed with the Program Administrator within 10 days of the last day of each quarter during the Qualified Project Period. (c) Irnmediately prior to the first anniversary date of the occupancy of a Low Income Unit by one or more Low Income Tenants, and on each anniversary date thereafter, the Borrower shall recertify the income of the occupants of such Low Incorne Unit by obtaining a completed Income Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household's income exceeds the income at which such household would qualify as Low Income Tenants, such household will no longer qualify as a Low Income Tenant and the Borrower will rent the next available unit of comparable or smaller size to one or more Low Income Tenants. DOCSOC\735962v4\24036.0009 9 ~-/'I (d) Not later than ten (10) days after the commencement of the Qualified Project Period, and within ten days of the last day of each quarter thereafter during the term of this Regulatory Agreement, the Borrower shall advise the Program Administrator of the status of the occupancy of the Project by delivering to such parties a Certificate of Continuing Program Compliance. (e) The Borrower will maintain complete and accurate records pertaining to the Low Income Units, and will permit any duly authorized representative of the Issuer, the Program Adrninistrator, the Trustee, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the Project, including those records pertaining to the occupancy of the Low Income Units. (f) The Borrower shall submit to the Secretary of the Treasury annually on the anniversary date of the start of the Qualified Project Period, or such other date as is required by the Secretary, a certification that the Project continues to meet the requirements of Section 142(d) of the Code, and shall provide a copy of such certification to the Program Administrator. (g) Prior to renting any Low Income Units, the Borrower shall prepare and present to the City a marketing plan for the Low Income Units. The Borrower rnay begin leasing the Low Income Units following the City Manager's approval of the marketing plan, which consent shall not be unreasonably withheld. The Borrower shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The Borrower agrees to contact the San Diego County Housing Authority for a list of persons who are recipients of, or who are applying for, Section 8 certificates or vouchers whenever a Low Income Unit becomes available but not more frequently than every four weeks. The Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective tenants. (h) The Low Income Units shall be ofa comparable quality and offer a range of sizes and number of bedrooms comparable to the units that are available to other tenants. (i) The Borrower shall not collect any additional fees or payments from a Low Income Tenant except security deposits or other deposits required of all tenants or for services or items requested by a tenant. The Borrower shall not collect security deposits or other deposits from Section 8 certificate or voucher holders in excess of those allowed under the Section 8 Program. The Borrower shall not discriminate against Low Incorne Tenant applicants on the basis of source of income (i.e., APDC or SSI), and the Borrower shall consider a prospective tenant's previous rent history of at least one year as evidence of the ability to pay the applicable rent. (j) Each lease pertaining to a Low Income Unit shall contain a provision to the effect that the Borrower has relied on the income certification and supporting information supplied by the Low Incorne Tenant in determining qualification for occupancy of the Low Incorne Unit, and that any material rnisstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. Each lease will also contain a provision that failure to cooperate with the annual recertification process reasonably instituted by the Borrower pursuant to Section 4( c) above rnay at the option of the Borrower disqualify the unit as a Low Income Unit or provide grounds for termination of the lease. DOCSOC\ 735962v4\24036.0009 10 ~-~O "' (k) The Borrower will execute and deliver to the Issuer an Administration Agreement applicable to the Project upon request of the Issuer. (I) Prior to the Bond Closing, the Borrower agrees to provide to the Program Administrator a copy of the form of application and lease to be provided to prospective Low Income Tenants. The term of the lease shall be not less than thirty (30) days. (rn) The Borrower shall notifY the Prograrn Administrator of any change in leasing agents or managers for the Project. Section 5. Tax Status of the Bonds. The Borrower and the Issuer each represents, as of the date hereof, and warrants, covenants and agrees that: (al It 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 exclusion from gross income for federal income tax purposes of the Series A Bonds or the exemption frorn California personal incorne taxation of the interest on the Bonds and, if it 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) It will take such action or actions as may be necessary, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, to comply fully with the Act and aU applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 142( d) of the Code to the extent necessary to maintain the exclusion from gross income for federal incorne tax purposes of interest on the Series A Bonds; and (c) The Borrower, at the Borrower's expense, will file of record such documents and take such other steps as are necessary, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, 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, the execution and recordation of this Regulatory Agreement in the real property records of the County of San Diego. The Borrower hereby covenants to notify any subsequent owner of the Project of 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 such restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of this Regulatory Agreement. Section 6. Modification of Special Tax Covenants. The Borrower, the Trustee and the Issuer hereby agree as follows; (a) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, impose requirements upon the ownership or operation of the Project more restrictive than those imposed by this Regulatory Agreement which must be complied with in order to maintain the exclusion from gross income for federal income tax purposes of interest on the Series A Bonds, this Regulatory Agreement DOcSOC\735962v4\24036.0009 II ~-:2..1 shall be deemed to be automatically amended to impose such additional or more restrictive requirements. (b) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, impose requirements upon the ownership or operation of the Project less restrictive than imposed by this Regulatory Agreement, this Regulatory Agreement may be amended to conform in whole or in part to such changed requirements should the Issuer, in its sole discretion, determine that such requirements should be made applicable to the Project. (c) The Borrower, the Issuer and, if applicable, the Trustee shall execute, deliver and, if applicable, file of record any and all documents and instruments, necessary to effectuate the intent of this Section 6, and each of the Borrower and the Issuer hereby appoints the Trustee as its true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf of the Borrower or the Issuer, as is applicable, any such document or instrument (in such form as may be approved in writing by Bond Counsel) if either the Borrower or the Issuer defaults in the performance of its obligations under this subsection (c); provided, however, that the Trustee shall take no action under this subsection (c) without first notifying the Borrower or the Issuer, or both of them, as is applicable, unless directed in writing by the Issuer or the Borrower and without first providing the Borrower or the Issuer, or both, as is applicable, an opportunity to comply with the requirements of this Section 6. Section 7. Indemnification. The Borrower hereby releases the Issuer, the Trustee and the Program Administrator and their officers and employees from, and covenants and agrees to indemnify, hold harmless and defend the Issuer, the Trustee and the Program Administrator and their respective officers, members, directors, officials, agents and employees and each of them (each, an "indemnified party") from and against any and all claims, losses, costs, damages, demands, expenses, taxes, suits, judgments, actions and liabilities of whatever nature, joint and several (including, without limitation, costs of investigation, attorneys' fees, litigation and court costs, amounts paid in settlernent, and amounts paid to discharge judgments), directly or indirectly (a) by or on behalf of any person arising from any cause whatsoever in connection with transactions contemplated hereby or otherwise in connection with the Project, the Bonds, or the execution or amendment of any document relating thereto; (b) arising frorn any act or omission of the Borrower or any of its agents, servants, employees or licensees, in connection with the Loan or the Project; (c) arising in connection with the issuance and sale, resale or reissuance of any Bonds or any certifications or representations made by any person other than the Issuer or the party seeking indemnification in connection therewith and the carrying out by the Borrower of any of the transactions contemplated by the Bonds, the Indenture, the Loan Agreement and this Regulatory Agreement; (d) arising in connection with the operation of the Project, or the conditions, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or rehabilitation of, the Project or any part thereof; and (e) arising out of or in connection with the Trustee's acceptance or administration of the trusts created by the Indenture and the exercise of its powers or duties thereunder or under the Loan Agreement, this Regulatory Agreernent or any other agreements in connection therewith to which it is a party; except (I) in the case of the foregoing indemnification of the Trustee, the Program Administrator or any of their respective officers, members, directors, agents and employees, to the extent such damages are caused by the negligence or willful rnisconduct of such person, and (2) in the case of the foregoing indemnification of the Issuer or any of its officers, members, directors, officials, agents and employees, to the extent such damages are caused by the willful misconduct of such person. In the event that any action or DOCSOc\735962v4\24036.0009 12 ~-:22 "T 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, shall assume the investigation and defense thereof, including the employment of counsel selected (i) by the Borrower and reasonably approved by the indemnified party, when the indemnified party is other than the Issuer, and (ii) by the Issuer when the indemnified party is the Issuer or any of its officers, members, directors, officials, agents and employees; and the Borrower 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 an affected indemnified party shall have the right to review and approve or disapprove any such compromise or settlement. Each indemnified party shall have the right if such indemnified party shall conclude in good faith that a conflict of interest exists to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel. The Borrower also shall pay and discharge and shall indemnify and hold harmless the Trustee, the Issuer and the Program Administrator frorn (i) any lien or charge upon payments by the Borrower to the Trustee, the Issuer or the Prograrn Administrator hereunder and (ii) any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim is asserted, or any such lien or charge upon payments, or any such taxes, assessments, irnpositions or other charges, are sought to be imposed, the Issuer or the Program Administrator shall give prompt notice to the Borrower and the Borrower shall have the sole right and duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion. Notwithstanding any transfer of the Project to another owner in accordance with the provisions of the Loan Agreement, the Mortgage and this Regulatory Agreement, the transferor shall remain obligated to indemnify each indemnified party pursuant to this Section for all matters arising prior to the date of transfer, unless the Issuer consents at the time of transfer to indemnification under this Section 7 from such subsequent owner. In no event, however, shall any such consent by any indemnified party hereunder be deemed to constitute the consent of any other indemnified party. In addition thereto, subject to Section 17 hereof, the Borrower will pay upon demand all of the fees and expenses paid or incurred by the Trustee, the Issuer or the Program Administrator in enforcing the provisions hereof. The provisions of this Section 7 shall survive the term of the Bonds and this Regulatory Agreement and the resignation or removal of the Trustee. The obligations of the Borrower under this Section are independent of any other contractual obligation of the Borrower to provide indemnity to the parties named herein or otherwise, and the obligation of the Borrower to provide indemnity hereunder shall not be interpreted, construed or lirnited in light of any other separate indemnification obligation of the Borrower. Any indemnified party shall be entitled simultaneously to seek indemnity under this Section and any other provision under which it is entitled to indemnity. Section 8. Consideration. The Issuer has issued the Bonds to make the Loan to finance the Project, all for the purpose, among others, of inducing the Borrower to acquire, rehabilitate, equip and operate the Project. In consideration of the issuance of the Bonds by the Issuer, the Borrower has entered into this Regulatory Agreement and has agreed to restrict the uses to which the Project can be put on the terms and conditions set forth herein. DOCSOC\735962v4\24036.0009 13 ~-;2..3 , Section 9. Reliance. The Issuer and the Borrower hereby recognize and agree that the representations, warranties, covenants and agreements set forth herein may be relied upon by all persons interested in the legality and validity of the Bonds, and in the exclusion from gross incorne for federal income tax purposes of interest on the Series A Bonds and the exemption from California personal income taxes of the interest on the Bonds. In performing their duties and obligations hereunder, the Issuer, the Trustee and the Program Administrator rnay rely upon statements and certificates of the Borrower and Low Income Tenants, and upon audits of the books and records of the Borrower pertaining to the Project. In addition, the Issuer, the Program Administrator and the Trustee may consult with counsel, and the opinion of such counsel shall be full and cornplete authorization and protection in respect of any action taken or suffered by the Issuer, the Program Administrator or the Trustee under this Regulatory Agreement in good faith and in conformity with such opinion; provided, however, if there are conflicting opinions among the counsel selected by such parties, the opinion of Bond Counsel shall govern the interpretation and enforcement of this Regulatory Agreement. In determining whether any default or lack of compliance by the Borrower exists under this Regulatory Agreement, the Trustee shall not be required to conduct any investigation into or review of the operations or records of the Borrower and may rely solely on any notice or certificate delivered to the Trustee by the Borrower, the Issuer or the Program Administrator with respect to the occurrence or absence of a default. Section 10. Sale or Transfer of the Project; Syndication. The Borrower intends to hold the Project for its own account, has no current plans to sell, transfer or otherwise dispose of the Project, and hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated hereunder and replacement of personal property), without obtaining the prior written consent of the Issuer, which consent shall be given upon receipt by the Issuer of (i) such certifications from the Borrower or the Trustee as are reasonably deerned necessary by the Issuer to establish that the Borrower shall not be in default under this Regulatory Agreement or under the Loan Agreement or, if any such defaults exist, the purchaser or assignee undertakes to cure such defaults to the satisfaction of the Issuer; (ii) a written instrument by which the Borrower's purchaser or transferee has assumed in writing and in full the Borrower's duties and obligations under this Regulatory Agreement, the Administration Agreement and the other Loan Documents, (iii) an opinion of counsel for the transferee that the transferee has duly assumed the obligations of the Borrower under this Regulatory Agreernent, the Administration Agreement and the other Loan Documents are binding on the transferee, (iv) documentation from the transferee reflecting the transferee's experience with owning and/or operating multifamily housing projects such as the Project and with use and occupancy restrictions similar to those contained in this Regulatory Agreement, and (v) an opinion of Bond Counsel addressed to the Issuer to the effect that such transfer will not cause interest on the Series A Bonds to become includable in the gross income of the recipients thereof for federal incorne tax purposes. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of this Section 10 shall be null, void and without effect, shall cause a reversion of title to the Borrower, and shall be ineffective to relieve the Borrower of its obligations under this Regulatory Agreement. Not less than 20 days prior to consurnmating any sale, transfer or disposition of any interest in the Project, the Borrower shall deliver to the Issuer and the Trustee a notice in writing explaining the nature of the proposed transfer. The Borrower shall not syndicate the Project unless, prior to such syndication, an opinion of counsel acceptable to the Issuer is delivered to the Issuer to the effect that (i) the terms and conditions of the syndication do not reduce or lirnit any of the requirements of the Act or regulations adopted or documents executed pursuant to the Act, (ii) no requirements of the Issuer shall be subordinated to the syndication agreement and (iii) the DOCSOC\735962v4\24036.0009 14 '),-~ 'I ~ syndication shall not result in the provision of fewer assisted units, or the reduction of any benefits or services, than were in existence prior to the syndication agreement. Notwithstanding the foregoing, no sale, transfer or other disposition of all or any part of the Project by foreclosure of the Mortgage (or by deed in lieu of such foreclosure) shall require the consent of the Issuer under, or constitute a default or breach under, this Regulatory Agreement; provided, however, that unless in connection with such event this Regulatory Agreement terminates pursuant to Section II hereof, the entity taking title to the Project must assume the obligations of the Borrower hereunder in connection with such transfer. Section 11. Term. Except as provided in Section 3(j), (k) and (I) above, and in the second paragraph of this Section II, 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 during the Qualified Project Period, it being expressly agreed and understood that the provisions hereof are intended to survive the retirement of the Bonds and expiration of the Indenture, the Loan Agreement, the Mortgage Note and the Mortgage and remain in effect until the end of the Qualified Project Period. Notwithstanding any other provisions of this Regulatory Agreement to the contrary, this entire Regulatory Agreement, or any of the provisions or sections hereof, may be terminated upon agreement by the Issuer, the Trustee and the Borrower only if there shall have been received by the Issuer an opinion of Bond Counsel that such termination will not adversely affect the exclusion frorn gross income for federal income tax purposes of interest on the Series A Bonds or the exemption from State personal income taxes of the interest on the Bonds. The terms of this Regulatory Agreement to the contrary notwithstanding, this Regulatory Agreement, and each and all of the terms hereof, shall terminate and be of no further force and effect in the event of an involuntary noncompliance with the provisions of this Regulatory Agreement caused by foreclosure on the Project or delivery of a deed in lieu of foreclosure, or caused by a fire, seizure, requisition, change in a federal law or an action of a federal agency after the Bond Closing which prevents the Issuer and the Trustee from enforcing the provisions of this Regulatory Agreement or condemnation or a similar event, but only if within a reasonable period thereafter the Bonds are paid in full and retired or amounts received as a consequence of such event are used to provide a project that meets the requirements of the Code set forth in this Regulatory Agreement; 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 on the Project or the delivery of a deed in lieu of foreclosure or a similar event, the Borrower or any Affiliated Party obtains an ownership interest in the Project 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 12. Covenants to Run With the Land. The Borrower hereby subjects the Project (including the Project Site) to the covenants, reservations and restrictions set forth in this Regulatory Agreement. The Issuer, the Trustee and the Borrower hereby declare their express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon the Borrower's 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 instrurnent hereafter executed DOCSOC\ 735962v4\24036.0009 15 ? -.;l5 "T 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 13. Burden and Benefit. The Issuer, the Trustee and the Borrower hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Borrower's legal interest in the Project is rendered less valuable thereby. The Issuer, the Trustee and the Borrower hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes for which the Bonds were issued. Section 14. Uniformitv; 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, development and improvement of the Project Site. Section 15. Enforcement. If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement, and if such default remains uncured for a period of 30 days after written notice thereof shall have been given by the Issuer or the Trustee to the Borrower (or such longer period if the Borrower provides the Issuer with an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds), then the Trustee, subject to the provisions of Section 9 hereof and acting on its own behalf or on behalf of the Issuer, or the Issuer shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take anyone or more of the following steps: (i) by mandamus or other suit, action or proceeding at law or in equity, require the Borrower to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee hereunder; (ii) have access to and inspect, examine and make copies of all of the books and records of the Borrower 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 Borrower hereunder. The Trustee shall have the right, in accordance with this Section 15 and the provisions of the Indenture, upon notice to but without the consent or approval of the Issuer, to exercise any or all of the rights or remedies oftne Issuer hereunder. All fees, costs and expenses of the Trustee (including, without limitation, reasonable attorneys fees) incurred in taking any action pursuant to this Section 15 shall be the sole responsibility of the Borrower. After the Indenture has been discharged, or if the Trustee fails to act under this Section 15, the Issuer may act on its own behalf to declare an "Event of Default" to have occurred and to take anyone or more of the steps specified hereinabove to the same extent and with the same effect as if taken by the Trustee. After the date on which no Bonds remain outstanding as provided in the DOCSOC\ 735962v4\24036.0009 16 -;;z -.;2. (,. Indenture, the Trustee shall no longer have any duties or obligations under this Regulatory Agreernent, and all references to the Trustee herein shall be deerned references to the Issuer. Notwithstanding anything contained in this Regulatory Agreement and the Indenture to the contrary, the occurrence of an event of default under this Regulatory Agreement shall not be deemed, under any circumstances whatsoever, to constitute a default under the other Loan Docurnents, except as may be otherwise specified in such other Loan Documents. The parties hereto agree that the maturity date of the Loan may be accelerated solely by the Bondowner Representative upon the occurrence of a default on the part of the Borrower under the Loan Documents and that no person other than the Bondowner Representative shall have the right to (i) declare the principal balance of the Notes to be immediately due and payable, or (ii) commence foreclosure or other like action without express written authorization from the Bondowner Representative. The rights of the Trustee under this Section are in addition to all rights conferred upon the Trustee under the Indenture and in no way limit those rights. All monetary obligations of the Borrower that may arise under this Regulatory Agreement shall be subject and subordinate to the repayment of amounts owed by the Borrower under the other Loan Documents. Section 16. Recording and Filing. The Borrower 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 of San Diego and in such other places as the Issuer or the Trustee may reasonably request. The Borrower shall pay all fees and charges incurred in connection with any such recording. Section 17. Payment of Fees. It is anticipated that moneys on deposit in the funds established under the Indenture will be sufficient to pay the Trustee's and Issuer's costs and expenses (which includes a payment of$6,575 to the Issuer at closing for its first annual fee). However, to the extent that there are unforeseen and unusual costs and expenses and the moneys in said funds are insufficient therefor, the Borrower hereby agrees to pay all reasonable costs and expenses of the Trustee and the Issuer in connection with the Bonds and the financing of the Project as such costs and expenses become due and payable. Notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Indenture, throughout the term specified in clauses (a), (b) and (c) of the Qualified Project Period, the Borrower shall continue to pay to the Issuer an annual fee of $6,575 in equal semiannual installments on each June I and December 1, and to the Trustee reasonable compensation for any services rendered by it hereunder and reimbursement for all expenses reasonably incurred by either of them in connection therewith. The foregoing provisions of this Section 17 shall in no way limit amounts payable by the Borrower under Section 7 hereof, or arising after an Event of Default in connection with the Issuer's or the Trustee's enforcement of the provisions of this Regulatory Agreement. Section 18. Governing Law. This Regulatory Agreernent shall be governed by the laws of the State of California. Except as expressly provided herein and in the Agreement, the Trustee's rights, duties and obligations hereunder are governed in their entirety by the terms and provisions of the Indenture. DOcSOC\735962v4\24036.0009 17 ~-;).7 Section 19. Amendments. This Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title (and any third party beneficiaries of this Agreement), and duly recorded in the real property records of the County. The parties hereto acknowledge that, for so long as the Bonds are outstanding, the owners of the Bonds are third party beneficiaries to this Regulatory Agreement. Section 20. Trustee Acting Solely in Such Capacity. In accepting its obligations hereunder, the Trustee acts solely as trustee for the benefit of the owners of the Bonds, and not in its individual capacity; and the duties, powers, rights and liabilities of the Trustee in acting hereunder shall be subject to the provisions of the Indenture, including, without limitation, Article 9 of the Indenture. Section 21. Monitoring Compliance bv Borrower. Unless it acts as the Program Administrator, the Trustee shall not be responsible for monitoring or verifying compliance by the Borrower with its obligations under this Regulatory Agreernent. The Program Administrator shall assume responsibility for monitoring compliance hereunder under the terms of the Administration Agreement. Section 22. Notice. All notices, certificates or other communications shall be sufficiently given and (except for notices to the Trustee, which shall be deerned given only when actually received by the Trustee) shall be deemed given on the date personally delivered or on the second day following the date on which the same have been mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: Issuer: Housing Authority of the City ofChula Vista 430 Davidson Street, Suite B Chula Vista, California 91910 Attention: Executive Director Program Housing Authority of the City ofChula Vista Administrator: 276 Fourth Avenue Chula Vista, California 91910 Attention: Executive Director Trustee: Borrower: DOCSOC\735962v4\24036.0009 State Street Bank and Trust Company of California, N.A. 633 West 5th Street, 12th Floor Los Angeles, California 90071 Attention: Corporate Trust Department St. Regis Park, LP c/o St. Regis Park, LP 215 South Hwy 101, Suite 200 Solana Beach, CA 92075 Attention: Wallace C. Dieckmann Telephone: (619) (619) 259-2624 Fax: (619) 259-2644 18 ;),-;1. 'if "T with copies to: Edison Capital Housing Investments 18101 Von Karman Avenue, Suite 1700 Irvine, CA 92612-1046 Attention: Asset Manager - Pear Tree Manor and: Cox, Castle & Nicholson, LLP 505 Montgomery Street, Suite 1550 San Francisco, CA 94111 Attention: Gary P. Downs, Esq. Bank: Bank of America, N.A. 450 "B" Street, Suite 450 San Diego, California 92101 Attention: Loan Administrative Manager Telephone: (619) 515-5829 Pax: (619) 515-5973 Any of the foregoing parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, documents or other communications shall be sent. 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 Counteroarts. This Regulatory Agreement may be 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. DOCSOC\ 735962v4\24036.0009 19 ~-;Lq or IN WITNESS WHEREOF, the Issuer, the Trustee and the Borrower have executed this Regulatory Agreement by duly authorized representatives, all as of the date first written hereinabove. HOUSING AUTHORITY OF THE CITY OF CHULA VISTA, CALIFORNIA By: Its: Executive Director [SEAL] ATTEST: Secretary STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee By: Its: Authorized Officer DOcSOC\735962v4\24036.0009 1 ~-3o "' DOCSOC\ 735962v4\24036.0009 [SIGNATURE PAGE CONTINUED] ST. REGIS PARK, LP, a California limited partnership By: CIC Pear Tree Services Company, LLC, a California limited liability company, its General Partner By: James J. Schmid, Managing Member 2 ;2-3 I .,. STATE OF CALIFORNIA COUNTY OF ) ) ss ) On date field before me, , Notary Public, personally appeared , personally known to me (or 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. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOcSOc\ 735962v4\24036.0009 1 ~ - 3.2. .., STATE OF CALIFORNIA COUNTY OF ) ) ss ) On date field before me, , Notary Public, personally appeared , personally known to me (or 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 rne that he/she/they executed the same in hislher/their authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person( s) acted, executed the instrument. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOcSOc\735962v4\24036.0009 2 ~-33 "T STATE OF CALIFORNIA COUNTY OF ) ) ss ) On date field before me, , Notary Public, personally appeared , personally known to me (or 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 rne that he/she/they executed the sarne in hislher/their authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person( s) acted, executed the instrument. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOCSOC\735962v4\24036.0009 1 ). -34 ~ EXHIBIT A PROJECT SITE The land referred to in this policy is situated in the State of California, County of San Diego and is described as follows: DOCSOC\ 735962v4\24036.0009 A-I ;? - 35" "" EXHIBIT B CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE The undersigned, , being duly authorized to execute this certificate on behalf of ST. REGIS PARK, LP (the "Borrower"), hereby represents and warrants that: 1. The undersigned has read and is thoroughly familiar with the provisions of the Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") dated as of June 1,2000 among the Borrower, the Issuer and State Street Bank and Trust Company of California, N.A., associated with the Borrower's participation in the City ofChula Vista, California Multifamily Housing Mortgage Revenue Bonds, Series 2000A (Pear Tree Manor Project), and Series 2000B. 2. As of the date of this certificate, the following percentages of residential units in the Project (i) are occupied by Low-Income Tenants (as such term is defined in the Regulatory Agreernent) or (ii) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Low-Income Tenant vacated such unit; as indicated: I Bedroorn 2 Bedroom Total Occupied by Low-Income _% Unit Nos.: Tenants: Held vacant for occupancy continuously sine last occupied by a Low-Income Tenant: _% Unit Nos.: 3. The Borrower hereby certifies that the Borrower 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, LP, A CALIFORNIA LIMITED PARTNERSHIP By: Its: General Partner By: Name: Its: DOCSOC\ 735962v4\24036.0009 B-1 ~-3" "T EXHIBIT C INCOME COMPUTATION AND CERTIFICATION NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development ("HUD") Regulations (24 CFR 5.609). You should make certain that this form is at all times up to date with the HUD Regulations. All capitalized terms used herein shall have the meaning set forth in the Regulatory Agreement. Re: [Address of Apartment Building] I/W e, the undersigned state that Vwe have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the above apartment project. Listed below are the names of all persons who intend to reside in the unit: 1 Name of Members of the Household 2 Relationship to Head of Household 3 4 5 Social Security Number Age Place of Ernployment HEAD SPOUSE DOCSOC\ 735962v4\24036.0009 C-l ~-37 Income Computation 6. The total anticipated income, calculated in accordance with this paragraph 6, of all persons (except children under 18 years) listed above for the 12-month period beginning the earlier of the date that I/we plan to move into a unit or sign a lease for a unit is $ Included in the total anticipated income listed above are: (a) The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services; (b) The net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family; (c) Interest, dividends, and other net income of any kind from real or personal property. Expenditures for arnortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation is permitted only as authorized in paragraph (6)(b) of this section. Any withdrawal of cash or assets from an investment will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested by the family. Where the family has net family assets in excess of$5,000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook savings rate, as determined by the Department of Housing and Urban Development; (d) The full amount of periodic arnounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump-sum amount or prospective monthly amounts for the delayed start of a periodic amount except deferred periodic amounts frorn supplemental security income and social security benefits that are received in a lump sum amount or in prospective monthly amounts; (e) Payments in lieu of earnings, such as unemployment and disability cornpensation, worker's compensation and severance pay except lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses (excluding payments in lieu of earnings, such as unemployment and disability compensation, worker's cornpensation and severance pay); (I) Welfare assistance. If the welfare assistance payment includes an amount specifically designated for shelter and utilities that is subject to adjustment by the DOCSOC\735962v4\24036.0009 C-2 ~-38 or welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of: (1) The amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities; plus (2) The maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities. If the farnily's welfare assistance is ratably reduced form the standard of need by applying a percentage, the amount calculated under this paragraph shall be the amount resulting from one application of the percentage; (g) Periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from organizations or from persons not residing in the dwelling; (h) All regular pay, special pay and allowances of a member of the Armed Forces except the special pay to a family member serving in the Armed Forces who is exposed to hostile fire. Excluded from such anticipated income are: (a) Income from employment of children (including foster children) under the age of 18 years; (b) Payments received for the care of foster children or foster adults (usually persons with disabilities, umelated to the tenant family, who are unable to live alone); (c) Lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses except payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; (d) Amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for any family member; (e) Income of a live-in aide, as defined by 24 CFR 95.403; (I) The full amount of student financial assistance paid directly to the student or to the educational institution; (g) The special pay to a farnily member serving in the Armed Forces who is exposed to hostile fire; (h) (1) Amounts received under training programs funded by the Department of Housing and Urban Development; (2) Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and DOCSOC\ 735962v4\24036.0009 C-3 -:(-3q benefits because they are set aside for use under a Plan to Attain Self- Sufficiency (PASS): (3) Amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program; (4) Amounts received under a resident service stipend. A resident service stipend is a modest amount (not to exceed $200 per month) received by a. resident for performing a service for the Public Housing Authority or owner, on a part- time basis, that enhances the quality oflife in the development. Such services may include, but are not limited to, fire patrol, hall monitoring, lawn maintenance, and resident initiatives coordination. No resident may receive more than one such stipend during the same period of time; (5) Incremental earnings and benefits resulting to any family member from participation in qualifying State or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives, and are excluded only for the period during which the family member participates in the employment training program; (1) Temporary, nonrecurring or sporadic income (including gifts); (j) Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era; (k) Earnings in excess of $480 for each full-time student 18 years old or older (excluding the head of household and spouse); (I) Adoption assistance payments in excess of $480 per adopted child; (m) Deferred periodic amounts from supplemental security income and social security benefits that are received in a lump sum amount or in prospective monthly amounts. (n) Amounts received by the family in the form of refunds or rebates under State or local law for property taxes paid on the dwelling unit; (0) Amounts paid by a State agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home; or (p) Amounts specifically excluded by any other Federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in 24 CFR ~5.609(c) apply. DOCSOC\ 735962v4\24036.0009 C-4 'J.-'fO "' 7. Do the persons whose income or contributions are included in item 6 above (a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land)? Yes No; or (b) have they disposed of any assets (other than at a foreclosure or bankruptcy sale) during the last two years at less than fair market value? Yes No (c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? Yes No (d) If the answer to (c) above is yes, state: (1) the combined total value of all such assets: $ (2) the amount of income expected to be derived from such assets in the l2-month period beginning on the date of initial occupancy in the unit that you propose to rent: $ , and (3) the amount of such income, if any, that was included in item 6 above: $- 8. (a) Are all of the individuals who propose to reside in the unit full-time students*? Yes No * A full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional on farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a) is yes, is at least 2 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return? Yes No 9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner of the rental housing project in which the unit is located (hereinafter the "Borrower"), has any family relationship to the Borrower; or owns directly or indirectly any interest in the DOCSOC\ 735962v4\24036.0009 C-5 ').-41 , Borrower. For purposes of this paragraph, indirect ownership by an individual shall mean ownership by a family member, ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trustee held by the individual or a family member; and ownership, direct or indirect, by a partner of the individual. 10. This certificate is made with the knowledge that it will be relied upon by the Borrower to determine maximum income for eligibility to occupy the unit; and I1we declare that all information set forth herein is true, correct and complete and based upon information I1we deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11. I/we will assist the Borrower in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s) or copies offederal tax returns for the immediately preceding calendar year. 12. I1we acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Borrower to lease the unit and will entitle the Borrower to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings. I1we declare under penalty of perjury that the foregoing is true and correct. Executed this _ day of in the County of San Diego, California. Applicant Applicant [Signature of all persons (except children under the age of 18 years) listed in number 2 above required] DOCSOC\ 735962v4\24036.0009 C-6 ;).-'7:L "T FOR COMPLETION BY BORROWER ONLY: 1. Calculation of eligible income: a. Enter amount entered for entire household in 6 above: $ b. (I) If the answer to 7(c) above is yes, enter the total amount entered in 7(d)(2), subtract from that figure the amount entered in 7(d)(3) and enter the remaining balance ($ ); (2) Multiply the amount entered in 7(d)(1) times the current passbook savings rate as determined by HUD to determine what the total annual earnings on the amount in 7(d)(I) would be if invested in passbook savings ($ ), subtract from that figure the amount entered in 7(d)(3) and enter the remaining balance ($ ); (3) Enter at right the greater of the amount calculated under (1) or (2) above: $ c. TOTAL ELIGIBLE INCOME (Line l.a plus line l.b(3)): $ 2. The amount entered in l.c: Qualifies the applicant(s) as a Low Income Tenant(s) Does not qualify the applicant( s) as a Low Income Tenant(s). 3. Number of apartment unit assigned: Bedroom Size: Rent: $ 4. This apartment unit [was/was not] last occupied for a period of 31 or more consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the apartment unit qualified them as Low Income Tenants. 5. Method used to verify applicant(s) income: Employer income verification. Copies of tax returns. Other ( ) Manager DOCSOC\ 735962v4\24036.0009 C-7 ?-.-43 "T INCOME VERIFICATION (for emploved persons) The undersigned employee has applied for a rental unit located in a project financed under the City of Chula Vista Multifamily Housing Revenue Bond Program for persons of lower income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Overtime Bonuses Commissions Other Income Total current income I hereby certify that the statements above are true and complete to the best of my knowledge. Signature Date Title I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under the City of Chula Vista Multifamily Housing Revenue Bond Program. Signature Date Please send to: DOCSOC\735962v4\24036.0009 C-8 -;.-4'f "' INCOME VERIFICATION (for self-emploved persons) I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Signature Date DOCSOC\735962v4\24036.0009 C-9 ~-tff) .,. - TABLE OF CONTENTS EXHIBIT B Page ARTICLE I DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS Section 1.1. Definitions............... ........................................................................... .............. ..... ...... 3 Section 1.2. Rules of Interpretation. .............................................................................................16 ARTICLE II THE BONDS Section 2.1. Authorized Amount and Form of Bonds................................................................... 17 Section 2.2. Issuance of Bonds .....................................................................................................18 Section 2.3. Execution ..................................................................................................................19 Section 2.4. Authentication........................................................................................................... I 9 Section 2.5. Conditions Precedent to the Delivery ofBonds........................................................20 Section 2.6. [Reserved]................................................................................................................. 21 Section 2.7. Mutilated, Lost or Destroyed Bonds.........................................................................2l Section 2.8 . [Reserved]................................................................................................................. 21 Section 2.9. Ownership of Bonds .................................................................................................21 Section 2.10. [Reserved]. ..............................................................................................................21 Section 2.11. Registration, Transfer and Exchange of Registered Bonds. ...................................21 Section 2.12. Nonpresentment of Bonds..... ......................... ......................................................... 22 Section 2.13. [Reserved]. ....... .................................................... ...................................... .............23 Section 2.14. Destruction of Bonds ..............................................................................................23 Section 2.15. Restrictions on Transfer ..........................................................................................23 ARTICLE III REDEMPTION AND PURCHASE OF BONDS BEFORE MATURITY Section 3.1. Redemption and Purchase .........................................................................................23 Section 3.2. Notice of Redemption or Purchase. ..........................................................................24 Section 3.3. Cance llation .............................................................................................................. 25 Section 3.4. Method of Redemption. .... ................................. ....................................................... 25 ARTICLE IV GENERAL COVENANTS Section 4.1. Payment of Principal, Premium and Interest ............................................................26 Section 4.2. Performance of Covenants. .......................................................................................26 Section 4.3. Instruments of Further Assurance .............................................................................26 Section 4.4. Recording and Filing.................................................................................................27 Section 4.5. Books and Records....................................................................................................27 Section 4.6. Bondholders' Access to Bond Register ....................................................................27 Section 4.7. Rights Under Loan Agreement .................................................................................27 Section 4.8. Rights Under Mortgage.............................................................................................28 DOCSOC\ 736492v3\24036.0009 ;< -'-I t. "' TABLE OF CONTENTS (continued) Page ARTICLE V FUNDS AND ACCOUNTS Section 5.1. Trust Funds Pledged and Assigned to the Trustee....................................................28 Section 5.2. Project Fund; Disbursement of Project Funds. .........................................................28 Section 5.3. Revenue Fund........................................................................................................... 29 Section 5.4. Bond Fund.................................................................................................................31 Section 5.5. Reserved.................................................................................................................... 32 Section 5.6. Deposit of Funds With Paying Agent. ......................................................................32 Section 5.7. Rebate Fund. ............................................................................................................. 3 2 Section 5.8. Mortgage Recovery Fund..........................................................................................33 Section 5.9. Servicing Fund. .........................................................................................................34 Section 5. I O. Costs of Issuance Fund ...........................................................................................36 Section 5. I I. [Reserved]. ..............................................................................................................36 Section 5.12. Interest Earned on Funds.........................................................................................36 Section 5.13. Final Balances .........................................................................................................36 ARTICLE VI INVESTMENTS Section 6. I. Investments by Trustee. ............................................................................................37 Section 6.2. Computation of Balances in Funds ...........................................................................37 Section 6.3. Downgrade of Investments .......................................................................................37 ARTICLE VII DISCHARGE OF LIEN Section 7.1. Payment of Bonds; Satisfaction, Defeasance and Discharge of Bonds and Obligation to Bondholders 38 Section 7.2. Cancellation of Surrendered Bonds ..........................................................................39 Section 7.3. Payment of Bonds .....................................................................................................39 Section 7.4. Application of Deposited Money..............................................................................40 Section 7.5. Survival of Certain Provisions ..................................................................................40 ARTICLE VIII DEF AUL T PROVISIONS AND REMEDIES Section 8.1. Events of Default ......................................................................................................40 Section 8.2. Acceleration.............................................................................................................. 40 Section 8.3. Remedies................................................................................................................... 41 Section 8.4. Direction of Proceedings by Bondowner Representative .........................................41 Section 8.5. Waiver of Stay or Extension Laws ...........................................................................41 Section 8.6. Priority of Payment and Application of Moneys ......................................................41 Section 8.7. Remedies Vested in Trustee......................................................................................43 ii DOCSOC\ 736492v3\24036.0009 -;). -J/7 "T TABLE OF CONTENTS (continued) Page Section 8.8. Rights and Remedies of Holders............................................................................... 44 Section 8.9. Termination of Proceedings ......................................................................................44 Section 8.10. Waiver of an Event of Default ................................................................................44 Section 8. I I. Notice to Investor Limited Partner..........................................................................45 ARTICLE IX THE TRUSTEE Section 9.1. Acceptance of the Trustee.........................................................................................45 Section 9.2. Trustee's Fees, Charges and Expenses. ....................................................................48 Section 9.3. Notice to Holders of Default.....................................................................................48 Section 904. Intervention by Trustee .............................................................................................48 Section 9.5. Successor Trustee...................................................................................................... 48 Section 9.6. Resignation by Trustee..............................................................................................48 Section 9.7. Removal of Trustee .......................... ......................................... .................. ..............49 Section 9.8. Appointment of Successor Trustee ...........................................................................49 Section 9.9. Acceptance by Successor Trustees ...........................................................................49 Section 9.10. Right of Trustee To Pay Taxes and Other Charges.................................................49 Section 9.11. Trustee Protected in Relying Upon Resolutions .....................................................50 Section 9.12. Successor Trustee as Custodian of Funds and Paying Agent .................................50 Section 9.13 . Co-Trustee. ........ ............ ....................... ....................................... ............................ 50 Section 9.14. Obligations as to Reporting..................................................................................... 5 I Section 9.15. Appointment of Bond Registrar and Paying Agent ................................................51 Section 9.16. Successor Paying Agent or Bond Registrar ............................................................52 Section 9.17. Confirmation of the Trustee....................................................................................52 Section 9.18. Certain Representations of Trustee .........................................................................52 ARTICLE X SUPPLEMENTAL INDENTURES Section 10.1. Supplemental Indentures Not Requiring Consent of Bondholders......................... 52 Section 10.2. Supplemental Indentures Requiring Consent of Bondholders................................53 Section 10.3. Rights of Trustee...... .................... ............................................ ............................... 54 Section lOA. Opinion of Bond Counsel.......................................................................................54 ARTICLE XI AMENDMENTS TO LOAN DOCUMENTS Section 11.1. Amendments Not Requiring Bondholder Consent ................................................. 54 Section 11.2. Amendments Requiring Bondholder Consent ........................................................55 Section 11.3. Opinion of Bond Counsel .......................................................................................55 Section 1104. Rights of Trustee .....................................................................................................55 iii DOCSOC\ 736492v3\24036.0009 ).~ if 8 "' TABLE OF CONTENTS (continued) Page ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.1. Consent of Holders............................................................................. ..................... 56 Section 12.2. Rights Under Indenture...........................................................................................56 Section 12.3. Severability............................................................................................................. 5 6 Section 1204 . Notices.................................................................................................................... 5 6 Section 12.5. Required Approvals ................................................................................................58 Section 12.6. Counterparts ....................................... .............................................. ....................... 58 Section 12.7. Limitation of Liability oflssuer and Its Officers, Employees and Agents. ............58 Section 12.8. Reserved......................... ........ ..................... ...................... ......................... ............. 59 Section 12.9. Complete Agreement ..............................................................................................59 EXHIBIT A EXHIBIT B FORM OF REQUISITION CERTIFICATE (PROJECT FUND) FORM OF REQUISITION CERTIFICATE (MORTGAGE RECOVERY FUND) FORM OF SERIES A BOND FORM OF SERIES B BOND INVESTOR'S LETTER SINKING FUND PAYMENT SCHEDULE EXHIBIT C-I EXHIBIT C-2 EXHIBIT D EXHIBIT E iv DOCSOC\ 736492v3\24036.0009 :l-lf'l HOUSING AUTHORITY OF THE CITY OF CHULA VISTA as ISSUER and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A. as TRUSTEE INDENTURE OF TRUST Dated as of June 1,2000 Relating to $ Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000A and $ Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000B ')..-50 DOCSOC\ 736492v3\24036.0009 "T INDENTURE OF TRUST THIS INDENTURE OF TRUST (the "Indenture") dated as of June I, 2000 by and between the Housing Authority of the City of Chula Vista, a public body corporate and politic organized and existing under the laws of the State of California (the "Issuer"), and State Street Bank and Trust Company of California, N.A., a national banking association duly established, existing and authorized to accept and execute trusts of the character herein set out, with its principal corporate trust office in Los Angeles, as trustee (the "Trustee"): WITNESSETH: WHEREAS, the Issuer is authorized by Chapter 1 of Part 2 of Division 24 ofthe Health and Safety Code (the "Act") and Resolution No. HA-_ adopted by the governing body of the Issuer on June 13,2000 (the "Resolution") to issue revenue bonds and apply the net proceeds thereof to make mortgage loans and to provide financial assistance to developers of housing for the purpose of financing the construction, development, rehabilitation or purchase of residential housing for persons oflow and moderate income; and WHEREAS, the Issuer deems it desirable and in keeping with its purposes to issue its Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) in two series designated, respectively, Series 2000A (the "Series A Bonds") and Series 2000B (the "Series B Bonds") (the Series A Bonds and the Series B Bonds being referred to collectively as the "Bonds") to fund a loan (the "Loan") to St. Regis Park, LP, a California limited partnership (the "Borrower"), to acquire, construct and equip 119 apartments to be known as the "Pear Tree Manor Apartments" (the "Project"); WHEREAS, under the terms of a Loan Agreement dated as of June I, 2000, the Issuer has agreed to make the Loan to the Borrower; and the Borrower has agreed to the repayment of the sums borrowed pursuant thereto and has executed or caused to be executed the Mortgage and the Loan Documents (as such terms are hereinafter defined) with respect to the Project to secure, among other things, its payment and other obligations under the Loan Agreement; and WHEREAS, the execution and delivery of this Indenture and the issuance of the Bonds have been in all respects duly and validly authorized by the Issuer; and WHEREAS, terms not otherwise defined in the recitals or granting clauses hereof shall have the meanings as hereinafter defined; and WHEREAS, all things necessary to make the Bonds, when issued as provided in this Indenture and authenticated by the Trustee, valid, binding and legal limited obligations of the Issuer according to the import thereof, and to constitute this Indenture a valid contract for the security ofthe Bonds, have been done and performed; and the execution and delivery of this Indenture, and the execution, delivery and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized: NOW THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS INDENTURE WITNESSETH: ;2-5/ DOCSOC\ 736492v3\24036.0009 "T GRANTING CLAUSES 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 Bonds by the Holders thereof, in order to secure the payment of the principal and premium, if any, of and interest on the 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 Bonds, does hereby grant, assign, transfer in trust, and pledge to the Trustee, and to its successors in trust, and to them and their assigns, the following: GRANTING CLAUSE FIRST All right, title and interest of the Issuer (excluding Unassigned Rights) in and to the Loan Agreement and the Notes, including, but not limited to, all sums (including Project Revenues) which the Issuer is entitled to receive from the Borrower pursuant to the Loan Agreement and the Notes (but excluding Unassigned Rights), all moneys and investments held in Funds and accounts held by the Trustee under this Indenture (excluding moneys and investments held in the Rebate Fund and rebatable arbitrage required to be deposited in the Rebate Fund), and all other sums required to be deposited in the Funds and accounts in accordance with Article 5 of this Indenture; GRANTING CLAUSE SECOND All the Issuer's right, title and interest in all property mortgaged, pledged and assigned under the Mortgage and the Loan Documents to secure the Bonds and any and all other property of every name and nature which may from time to time hereafter by delivery or by writing of any kind be subjected to the lien hereof by the Issuer or by anyone on its behalf or with its written consent, and the Trustee is hereby authorized to receive any and all such property at any and all times and to hold and apply the same as additional security hereunder subject to the terms hereof; and GRANTING CLAUSE THIRD The earnings derived from the investment of any of the foregoing sums (excluding moneys and investments held in the Rebate Fund and rebatable arbitrage required to be deposited in the Rebate Fund) as provided herein. TO HAVE AND TO HOLD all the same (herein called the "Trust Estate") with all privileges and appurtenances hereby granted and assigned, or agreed or intended so to be, to the Trustee and its successors in 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 from time to time of the Bonds issued under and secured by this Indenture, without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any of the others except as otherwise provided herein, all for the uses and purposes and upon the terms, agreements and conditions set forth herein; PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, or provide fully for payment as herein provided of the principal of the Bonds and the interest due or to become due thereon (together with premium, if any), at the time and in the manner set forth in the Bonds according to the true intent and meaning thereof, and shall make the payments into the Bond Fund as required hereby or shall provide, as permitted hereby, for the DOCSOC\ 736492v3\24036.0009 2 ~-5:z... payment thereof by depositing with the Trustee sums sufficient for payment of the entire amount due or to become due thereon as herein provided, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then this Indenture and the rights hereby granted shall cease and terminate, except as otherwise provided herein. THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered and all payments, revenues, income and funds hereby pledged and assigned, are subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective holders and owners of the Bonds, as follows: ARTICLE I DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS Section 1.1. Definitions. In this Indenture the following terms have the following meanings unless the context hereof clearly requires otherwise, and any other terms defined in the Loan Documents shall have the same meanings when used herein as assigned them in the Loan Documents unless the context or use thereof indicates another or different meaning or intent: "Act" means Chapter I of Part 2 of Division 24 of the Health and Safety Code of the State of California. "Act of Bankruptcy" means any of the following events: (a) The Borrower or the Issuer shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of the Borrower or the Issuer or of all or a substantial part of the property ofthe Borrower or the Issuer, (ii) commence a voluntary case under the Bankruptcy Code (as now or hereafter in effect) or (iii) file a petition with respect to itself seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts; or (b) A proceeding or case shall be commenced without the application or consent of the Borrower or the Issuer, as the case may be, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding-up or the composition or adjustment of debts of the Borrower or the Issuer, (ii) the appointment of a trustee, receiver, custodian or liquidator of the Borrower or the Issuer or of all or any substantial part of the assets of the Borrower or the Issuer, or (iii) similar relief in respect of the Borrower or the Issuer under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts and such proceeding or case shall not be dismissed within 60 days of such filing. For purposes of this Indenture and the Loan Agreement, an Act of Bankruptcy shall be deemed dismissed only if (i) the petition is dismissed by order of a court of competent jurisdiction and no further rights exist from such order and (ii) the Borrower or the Issuer, as the case may be, notifies the Trustee that such a dismissal has occurred. DOCSOC\736492v3\24036.0009 3 ~-53 "T "Additional Charges" means payments required to be paid by the Borrower pursuant to Section 4.3 of the Loan Agreement. "Affiliated Party" means (1) a person whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code, (2) a person who together with the Borrower are members of the same controlled group of corporations (as defined in Section l563(a) of the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears therein), (3) a partnership and each of its partners (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code or (4) an S Corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code. "Arbitrage Consultant" or "Rebate Consultant" means any accountant, law firm or consultant experienced in the calculation of arbitrage rebate selected by the Borrower and approved by the Issuer. "Architect" means or any other architect for the Project selected by the Borrower and approved by the Bondowner Representative. "Architectural Contract" means that certain contract executed between the Architect and the Borrower and dated as of , 2000 and as it may be amended from time to time after receipt of the written consent of the Bondowner Representative. "Bank" means Bank of America, FSB, a federal savings bank or its successors and assigns. "Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978, as amended, or any similar or succeeding federal bankruptcy law. "Basic Payments" means the payments required to be made by the Borrower pursuant to Section 4.2 of the Loan Agreement. "Bond Closing" means the date on which there is delivery by the Issuer of, and payment for, the Bonds. "Bond Counsef' means any bond counsel firm experienced in tax exempt private activity bond financing selected by the Issuer. "Bond Documents" means this Indenture, the Loan Agreement, the Regulatory Agreement and the Tax Certificates. "Bond Funcf' means the Fund created by Section 504 of this Indenture. "Bondholder" or "Holder" means the person in whose name a Bond is registered in the Bond Register. "Bondowner Representative" means (i) an officer of the Bank or any affiliate of BankAmerica Corporation (or any successor to BankAmerica Corporation, whether by merger, acquisition of assets or otherwise), so long as the Bank or such affiliate owns any of the Bonds; (ii) if neither the Bank nor any affiliate of BankAmerica Corporation (or any such successor) owns any of DOCSOC\ 736492v3\24036.0009 4 'J.-st "T the Bonds, then (a) if and so long as one Bondholder holds a majority in principal amount of all Outstanding Bonds, such Bondholder or a person appointed to be the Bondowner's Representative by such Bondholder; and (b) if and so long as no one Bondholder owns a majority in principal amount of all Outstanding Bonds, the Bondholder who holds the greatest principal amount of all Outstanding Bonds, all as evidenced by a signature certificate delivered to the Trustee. "Bond Register" means the bond register maintained by the Bond Registrar pursuant to Section 2.11 of this Indenture. "Bond Registrar" means the Trustee, and any successor thereto appointed, qualified and then acting as such under the provisions of this Indenture. "Bonds" means the Series A Bonds and the Series B Bonds. "Bond Year" means the one-year period beginning on June I and ending on the next succeeding May 31, provided that the first Bond Year shall begin on the date of the Bond Closing and end on May 31, 2000. "Borrower" means St. Regis Park, LP, a California limited partnership, authorized to do business in the State, its successors and assigns, and any surviving, resulting or transferee entity which may assume its obligations under the Loan Documents. "Borrower Representative" means any person at any time designated to act on behalf of the Issuer, as evidenced by a written certificate furnished to the Trustee containing the specimen signature of such person and signed by the General Partner, or a duly authorized officer of the General Partner. "Borrower's Tax Certificate" means the certificate of the Borrower executed on the Bond Closing with respect to certain matters related to the tax-exempt status of the Series A Bonds. "Business Day" means any day other than a Saturday, Sunday, legal holiday or a day on which banking institutions in the city, where the principal corporate trust office of the Trustee and the Bond Registrar are located, are authorized by law or executive order to close. "Certificate as to Arbitrage" means the Tax Certificate dated as of the date of issuance of the Bonds and executed by the Issuer. "Code" or "Internal Revenue Code" means the Internal Revenue Code of I 986, as amended, and, with respect to a specific section thereof, such reference shall be deemed to include (a) the regulations promulgated by the United States Department of the Treasury under such section, (b) any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code and (d) the regulations promulgated under the provisions described in (b) and (c). "Completion Date" means the date shown as the Completion Date in Schedule E to the Loan Agreement, or such later date as the Bondowner Representative approves. "Computation Year" means each one year period ending on May 31, 200 I and each anniversary thereof, provided that the first Computation Year shall commence on the Bond Closing. DOCSOC\ 736492v3\24036.0009 5 ;1-55 "' "Condemnation" or the phrase "eminent domain" as used herein shall include the taking or requisition by Governmental Authority or by a person, firm or corporation acting under governmental authority and a conveyance made under threat of such taking or requisition, and "Condemnation Award" shall mean payment for property condemned or conveyed under threat of Condemnation. "Conditions to Conversion" mean the conditions set forth on Schedule I of the Loan Agreement. "Construction Contract" means that certain construction contract executed between TSI Tenant Space, Inc. and Borrower and dated as of , 2000, as that contract may be amended from time to time with the consent of the Bondowner Representative. "Conversion Date" means "Costs of Funds Rate" means the fixed rate of interest quoted by the Federal Home Loan Bank for FHLB Community Investment Program matched maturity advances to its members with a specified maturity equal to the remaining term of the Bonds as of the date of determination. "Costs of Issuance" means, with respect to any Bonds, all expenses incurred in connection with the authorization, sale, issuance and delivery of the Bonds, including, without limitation, counsel fees (including Bond Counsel, Trustee's Counsel, Issuer's counsel and Bondowner Representative's counsel, as well as any other specialized counsel fees incurred in connection with the issuance of the Bonds), Issuer's costs, financial advisory fees and accountant fees related to issuance of the Bonds, initial Trustee, Registrar, Paying Agent and Bondowner Representative fees and expenses, title insurance fees, survey fees and recording and filing fees, including any applicable documentary stamp taxes, intangible tax and the mortgage registration tax. "Costs of Issuance Fund" means the fund created by Section 5.10 of this Indenture. "Current Expenses" means all operating expenses of the Borrower which are not otherwise specifically described in Section 5.9(2) of this Indenture, including administrative expenses and property management fees with respect to the Project incurred in its ordinary operations. "Dated Date" means the date upon which the Bond Closing occurs. "Debt Service on the Bonds" means the interest amounts and principal amounts payable by the Borrower pursuant to Section 4.2 of the Loan Agreement sufficient to pay all principal of (including Sinking Fund Installments), and interest as and when due on, the Bonds. "Debt Service Coverage Ratio" or "DSCR" means the ratio of NO I, as calculated on any date of determination for a given period, to Debt Service on the Bonds, as calculated on the same date of determination for the same period. "Default Rate" means the interest rate equal to four percent (4.0%) in excess of the Reference Rate; provided, however, such rate shall not exceed the maximum interest rate permitted by applicable law. "Defeasance Collateral" shall have the meaning set forth in Section 7.1 of this Indenture. DOCSOC\ 736492v3\24036.0009 6 :;:l-S," "T "Determination of Taxability" means a final judgment or order of a court of original jurisdiction, a final order of any other court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service, in any such case to the effect that the interest on any of the Series A Bonds (other than interest on any Series A Bond for a period during which such Series A Bond is held by a "substantial user" of any facility financed with the proceeds of the Series A Bonds or a "related person," as such terms are used in Section I 47(a) of the Code) is not excludable from the gross income of the owners thereoffor federal income tax purposes. With respect to the foregoing, a judgment or order of a court or a ruling or decision of the Internal Revenue Service shall be considered final only if no appeal or action for judicial review has been filed and the time for filing such appeal or action has expired. "Discharge Date" means the date on which all Outstanding Bonds are discharged under Article 7 of this Indenture. "Event of Default" means any of the events set forth in Section 8.1 of this Indenture. "Extraordinary Fees and Expenses" means all fees and expenses charged or incurred by the Trustee under this Indenture or Section 4.3 of the Loan Agreement, other than Ordinary Fees and Expenses. "Extraordinary Revenues" means Proceeds, but such term shall not include use and business interruption insurance proceeds and rental loss insurance proceeds. "Facility" means the buildings and improvements located on the Project Premises as they may now or from time to time exist. "FHLB-CIP Advance Index Rate" means the rate at which the Federal Home Loan Bank advances funds to its members for its Community Investment Program with a stated maturity date nearest in time to the month (or to the nearest month thereafter if unavailable) in which the Maturity Date for the Series A Bonds occurs. If such rate ceases to exist or is no longer available or quoted by the Federal Home Loan Bank, then the "FHLB-CIP Advance Index Rate" shall be the rate announced from time to time by the source most comparable to the Federal Home Loan Bank Community Investment Program rate, as published in a periodic publication of general circulation, and as determined by the Bondowner Representative. "Funds" means, collectively, the Revenue Fund, the Bond Fund, the Project Fund, the Rebate Fund, the Mortgage Recovery Fund, the Servicing Fund and the Costs ofIssuance Fund. "General Partner" means, collectively, , a California nonprofit public benefit corporation, and CIC Sunbow Service Company, LLC, a California limited liability company. "Governmental Authority" means any government, municipality or political subdivision thereof; any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body; any court, administrative tribunal or public utility; or any central bank or comparable authority. "Hazardous Substances" has the meaning set forth for that term in Section 9.1 of the Loan Agreement. DOCSOC\ 736492v3\24036.0009 7 ?-57 "T "Holder" or "Bondholder" means the person in whose name a Bond is registered in the Bond Register. "Indenture" means this Indenture of Trust by and between the Issuer and the Trustee, as the same may from time to time be amended or supplemented as herein provided. "Independent Accountant" means a certified public accountant or firm of certified public accountants registered and qualified to practice as such under the laws of the State, and not employed by the Issuer or the Borrower, except to perform independent audits of the books and records of either or both of them or other similar periodic reviews and to perform other independent services. "Independent Counsef' means any attorney acceptable to the Trustee, duly admitted to practice law before the highest court of any state or of the District of Columbia, who may be counsel to the Issuer but who may not be an officer or an employee of the Issuer. "Investor Limited Partner" means Edison Capital Housing Investments, Inc., a California corporation. "Investor's Letter" means a letter in the form of Exhibit D to this Indenture executed by the initial Bondowner and any subsequent transferee of any of the Bonds pursuant to Sections 2.11 and 2.15 of this Indenture. "Issuer" means the Housing Authority of the City ofChula Vista, a public body corporate and politic duly organized and existing under the laws of the State, and its successors and assigns. "Loan" means the loan of sale proceeds of the Bonds by the Issuer to the Borrower described in the Loan Agreement. "Loan Agreement" means the Loan Agreement dated as of June I, 2000 among the Issuer, Bank of America, FSB and the Borrower, as the same may from time to time be amended or supplemented as provided therein and in this Indenture. "Loan Documents" means the Loan Agreement, the Notes, the Mortgage, the Security Agreement, the assignments by the Borrower of the Construction Contract, the Architecture Contract and the Plans and Specifications, the consents by the contracting parties to such assignments and the Regulatory Agreement. "Maturity Date" means Series B Bonds. _, _ for the Series A Bonds and for the "Money Market" means one or more wholesale funding markets available to the Bank, including domestic negotiable certificates of deposit, eurodollar deposits, bank deposit notes or other appropriate money market instruments selected by the Bank. "Mortgage" means the Construction Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing of even date herewith, from the Borrower as trustor to Equitable Deed Company as deed of trust trustee and the Issuer as beneficiary with respect to the Project, as the same may from time to time be replaced, amended or supplemented as provided therein and in this Indenture. DOCSOC\ 736492v3\24036.0009 8 ;;2 - 58 . - "Mortgaged Property" means the properties, real, personal or mixed, described in the granting clauses of the Mortgage, as they may at any time exist. "Mortgagee" means, collectively, the Trustee and any co-trustee or successor trustee appointed, qualified and acting as such under this Indenture, as beneficiaries under the Mortgage. "Mortgage Recovery Fund" means the Fund created by Section 5.8 of this Indenture. "Net Proceeds" shall have the meaning set forth in the Mortgage. "Nor means the following: (1) the Project Revenues received from the Project Premises during the period in question; minus (2) the sum of (a) operating expenses incurred by the Borrower for the Project Premises during the period in question, including any fees owed to any partner of the Borrower pursuant to the Partnership Agreement (provided that property management fees for the Project will be deemed to be equal to the greater of the management fee actually paid or five percent (5%) of the actual Project Revenues, with an appropriate adjustment to include in such period an allocable share of property taxes (if any), utility costs, insurance premiums and recurring maintenance expenses which cover a period of time greater than the period in question (except to the extent such items are funded from the Replacement Reserve Sub-Account)), plus (b) the amounts required to be deposited into the Replacement Reserve Sub-Account pursuant to the fifth subparagraph of Section 5.3(2)(B) of this Indenture. "Notes" means the Promissory Notes executed by the Borrower in favor of the Issuer. "Operating Reserve Sub-Account" means the Operating Reserve Sub-Account of the Reserve Account of the Servicing Fund established by Section 5.9 of this Indenture. "Ordinary Fees and Expenses" means the fees and expenses charged or incurred by the Trustee in the fulfillment of its obligations hereunder which are reimbursable to the Trustee from the Trust Estate in an aggregate annual amount equal to $ per year. "Outstanding Bonds" or "Bonds Outstanding" means, as ofthe date of determination, all Bonds theretofore issued and delivered under this Indenture except: (A) Bonds theretofore canceled by the Trustee or Paying Agent or delivered to the Trustee or Paying Agent for cancellation; (B) Bonds for which payment or redemption moneys or securities (as provided in Article 7) shall have been theretofore deposited with the Trustee or Paying Agent in trust for the Holders of such Bonds; provided, however, that if such Bonds are to be redeemed, notice of such redemption shall have been duly given pursuant to this Indenture or irrevocable action shall have been taken to call such Bonds for redemption at a stated redemption date; and (C) Bonds in exchange for or in lieu of which other Bonds shall have been issued and delivered pursuant to Section 2.7 or other provisions of this Indenture; DOCSOC\ 736492v3\24036.0009 9 ;)'-s<1 "' provided, however, that in determining whether the Holders ofthe requisite principal amount of Outstanding Bonds have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Bonds owned by the Borrower shall be disregarded and shall not be considered as Outstanding Bonds (unless the Borrower owns all the Bonds otherwise Outstanding, in which case such Bonds shall be deemed Outstanding), except that in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Trustee knows to be so owned shall be disregarded. "Partnership Agreement" means that certain Amended and Restated Agreement of Limited Partnership of Borrower executed as of , 2000 by General Partner and Investor Limited Partner, as it may be amended from time to time. "Paying Agent" means the Bond Registrar, the Trustee or any other entity designated pursuant to this Indenture as the agent of the Issuer to receive and disburse the principal of and premium, if any, and interest on the Bonds. "Payment Date" means the first Business Day of each month, commencing August I, 2000 to and including , 2000 and thereafter each March I and September 1, commencing March 1, 2001. "Permitted Encumbrances" means the Permitted Encumbrances defined in the Loan Agreement. "Permitted Investments" means: (a) to the extent permitted by applicable law, any of the following investments, provided that, except for investment agreements, investments permitted under Article 7 hereof and investments approved by the Bondowner Representative, none shall have a term in excess of one year: (i) certificates or interest-bearing notes or obligations of the United States, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest; (ii) investments in any of the following obligations, provided such obligations are backed by the full faith and credit of the United States: (a) direct obligations or fully guaranteed certificates of beneficial interest of the Export-Import Bank of the United States, (b) debentures of the Federal Housing Administration, (c) guaranteed mortgage-backed bonds of the Government National Mortgage Association, (d) certificates of beneficial interest of the Farmers Home Administration, (e) obligations of the Federal Financing Bank, (t) project notes and local authority bonds of the United States Department of Housing and Urban Development, (g) obligations of the Private Export Funding Corp.; (iii) investments in (a) senior obligations of the Federal Home Loan Bank System, (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation, (c) mortgage-backed securities and senior debt obligations (excluding stripped mortgage securities that are valued greater than par on DOCSOC\ 736492v3\24036.0009 10 ~-~O .,. - the portion of the unpaid principal) of the Federal National Mortgage Association or (d) senior debt obligations of the Student Loan Marketing Association; (iv) repurchase agreements with primary dealers and/or banks rated "A" or better by the Rating Agency collateralized with the obligations described in (i) or (ii) above held by a third-party custodian, at levels set forth in Section (b) below; (v) money market mutual funds that invest primarily in direct obligations issued by the U.S. Treasury and repurchase agreements backed by those obligations, including funds for which the Trustee or an affiliate of the Trustee acts as an advisor, and rated in the highest category by the Rating Agency; (vi) certificates of deposit of any bank (including the Trustee), trust company or savings and loan association whose short-term obligations are rated "A-I" or better by the Rating Agency provided that such certificates of deposit are fully secured by the obligations described in (i) or (ii) above, at the levels set forth in Section (b) below, the Trustee has a perfected first security interest in the obligations securing the certificates and the Trustee holds (or shall have the option to appoint a bank, trust company or savings and loan association as its agent to hold) the obligations securing the certificates; (vii) certificates of deposit or deposit accounts of any bank (including the Trustee), trust company or savings and loan association which certificates or deposit accounts are fully insured by the Federal Deposit Insurance Corporation or with a bank whose short-term obligations are rated "A-I" or better by the Rating Agency; (viii) commercial paper rated "A-I +" or better by the Rating Agency; (Ix) obligations of, or obligations fully guaranteed by, any state of the United States of America or any political subdivision thereof which obligations are rated by the Rating Agency in the highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise and without regard to credit enhancement) assigned by such rating agency to obligations of that nature; and (x) investment agreements approved in writing by the Bondowner Representative. DOCSOC\ 736492v3\24036.0009 11 .;<-~ I - (b) Collateral Percentage Levels of United States Government Securities for Repurchase Agreements and Bank Certificates of Deposit. Remaining Maturity Frequency of I year 5 years 10 years 15 years 30 years Valuation or less or less or less or less or less Daily 102 105 106 107 113 Weekly 103 110 III 113 118 Monthly 106 116 119 123 130 Quarterly 106 118 128 130 135 Further Requirements: (i) on each valuation date, the market value of the collateral shall be in an amount equal to the indicated collateral percentage of the obligation (including unpaid accrued interest) that is being secured; (ii) in the event the collateral level is below its required collateral percentage on a valuation date, such percentage shall be restored within the following restoration periods: one Business Day for daily valuations, two Business Days for weekly valuations and one month for monthly and quarterly valuations. The use of different restoration periods affects the requisite collateral percentage; (iii) the Trustee is hereby required to terminate the repurchase agreement upon a failure to maintain the requisite collateral percentage after the restoration period and, if not paid by the counterparty in federal funds against transfer of the repurchase agreement, to liquidate the collateral; and (iv) collateral for all repurchase agreements must be held by third parties. "Plans and Specifications" means the plans and specifications for the Facility approved in writing by Bondowner Representative, together with such amendments thereto as are made from time to time in accordance with Section 5.12 of the Loan Agreement. "Prepayment Premium" shall have the meaning set forth in Section 10.1 of the Loan Agreement. "Proceeds" means the proceeds of any insurance recovery or condemnation award (or payment in lieu of condemnation) less amounts reimbursed to the Trustee and the Issuer for expenses incurred in connection therewith. "Proforma Schedule" means the Proforma Schedule attached to the Loan Agreement as Schedule E, together with such amendments to that Schedule as are made from time to time in accordance with Article 8 of the Loan Agreement. "Project" means the Project Premises, the Facility and any and all Project Equipment located on or used in connection with the Project Premises. 12 ;;. -b~ DOCSOC\ 736492v3\24036.0009 ~ "Project Costs" means, to the extent authorized by the Code, the Treasury Regulations and the Act, any and all costs incurred by the Borrower with respect to the acquisition and rehabilitation of the Project, whether paid or incurred prior to or after the sixtieth day preceding the Bond Closing, including, without limitation, costs for site preparation, the planning of housing and related facilities and improvements, the acquisition of property, the rehabilitation of housing and related facilities and improvements, and all other work in connection therewith, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement to any municipality, county or entity for expenditures made for the Project), any and all fees owed to partners of the Borrower pursuant to the Partnership Agreement, and all other costs approved by Bond Counsel. "Project Debt Service" means all scheduled debt service on the Bonds during the period in question, including all interest and scheduled principal payments (including Sinking Fund Installments). "Project Engineer" means an engineer retained by the Bondowner Representative to provide consulting services to the Bondowner Representative with respect to the Project. "Project Equipment" means the property described as "Personal Property" in the Mortgage. "Project Fund' means the fund created under Section 5.2 of this Indenture. "Project Insurance Premiums" means the aggregate amount of the annual (or other periodic installments) premiums payable in respect of the policies of insurance required to be maintained pursuant to Section 5.5 of the Loan Agreement. "Project Premises" means the real property described in Schedule A to the Loan Agreement, together with the other property and interests in real property described in the Mortgage as the "Real Property." "Project Revenues" means all gross revenues and receipts derived by the Borrower from the operation of the Project during the period in question, including tenant rents and all other moneys as may be paid to or on behalf of the Borrower or to which the Borrower may be entitled with respect to the Project, excluding securities deposits but including earnings on the foregoing. Such term shall not include Extraordinary Revenues. "Purchase Date" means the date on which any Outstanding Bonds are purchased pursuant to Article V of this Indenture. "Qualified Project Costs" means the Project Costs (excluding Costs ofIssuance) incurred after the sixtieth day preceding the Bond Closing which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts within the meaning of Regulation Section 1.103-8(a)(I)(i); and provided further that interest shall not be a Qualified Project Cost; and provided still further that if any portion of the Project is being constructed by (or acquired from) an Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Project Costs" shall include DOCSOC\ 736492v3\24036.0009 13 )-&>3 only the actual out-of-pocket capital costs incurred after the sixtieth day preceding the Bond Closing by such Affiliated Party with respect to the Project (or any portion thereof) within the meaning of Section l47(d)(2) of the Code, as provided in the Borrower Tax Certificate. "Qualified Project Period' shall have the meaning set forth in the Regulatory Agreement. "Rating Agency" means Standard & Poor's Rating's Group. "Rebate Fund' means the fund so designated in Section 5.7 of this Indenture. "Rebate Requirement" or "Rebate Amount" shall mean the amount of rebatable arbitrage computed for payment as of the last day of every fifth Computation Year pursuant to Treasury Regulation Section 1.148-2 or any successor regulation as may be applicable thereto; provided, however, that an opinion of Bond Counsel to the effect that no money held under this Indenture is subject to rebate shall be accepted by the Issuer and the Trustee as a substitute for such calculation. "Record Date" means with respect to any Payment Date, (a) the fifteenth day of the month (whether or not a Business Day) next preceding such Payment Date or (b) if there is a default in payment of interest due on such Payment Date, a special Record Date for the payment of such defaulted interest shall be established by the Trustee by notice mailed by the Trustee (such notice shall be mailed not less than 15 days preceding the applicable special Record Date to the Holder as set for on the Registrar at the close of business on the fifth Business Day preceding the date of mailing). "Reference Rate" means the rate of interest publicly announced from time to time by the Bank of America National Trust and Savings Association, or any successor to Bank of America National Trust and Savings Association, whether by merger, acquisition of assets or otherwise ("BofA") at San Francisco, California, as its Reference Rate. The Reference Rate is set by BofA based on various factors, including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing loans. BofA may price loans at, above or below the Reference Rate. Any change in the Reference Rate shall take effect on the day specified in the public announcement of such change. If for any reason BofA no longer announces a Reference Rate, then the Reference Rate shall mean the average "prime lending rate" of large commercial banks as listed in the Wall Street Journal. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of June 1, 2000 among the Borrower, the Issuer and the Trustee, together with any amendments and supplements thereto. Code. "Related Person" means a "related person" within the meaning of Section I 47(a)(2) of the "Representative" means any officer of the Issuer, or any other person at any time designated to act on behalf of the Issuer, as evidenced by a written certificate furnished to the Trustee containing the specimen signature of such person and signed for the Issuer by its Executive Director, or his written designee. "Replacement Reserve Sub-Account" means the Replacement Reserve Sub-Account of the Reserve Account of the Servicing Fund established by Section 5.9 of this Indenture. DOCSOC\ 736492v3\24036.0009 14 ;?-1..1 .,. "Requirements" shall have the meaning set forth in the Loan Agreement. "Reserve Account" means the Reserve Account of the Servicing Fund, established pursuant to Section 5.9(2)(b) of this Indenture. "Reserve Deposit Requirement" means the amounts specified as the Reserve Deposit Requirement in Schedule F of the Loan Agreement. "Resolution" means Resolution No. HA-_ adopted by the Board of the Issuer on June 13, 2000 authorizing the issuance of the Bonds. "Responsible Agent" means any person duly authorized and designated by the Trustee, the Bond Registrar and the Paying Agent to act on its behalf in carrying out the applicable duties and powers of such entity as set forth in this Indenture; any action required by the Trustee, the Bond Registrar and the Paying Agent under this Indenture may be taken by a Responsible Agent. "Revenue Fund' means the fund created by Section 5.3 of this Indenture. "Security Agreement" means that certain Security Agreement (Assignment of Partnership Interests) executed by Borrower, General Partner and Investor Limited Partner in favor of Trustee and dated as of even date herewith. "Series A Bonds" means the Issuer's Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000A issued pursuant to this Indenture. "Series A Fixed Rate" means six and seventy-three hundredths percent <-%) per annum calculated on the basis of a 360-day year of twelve 30-day months. "Series A Variable Rate" means a floating rate of interest per annum equal to eighty-one percent (81%) of the sum of (a) Reference Rate in effect from time to time, plus (b) one percent (1.00%) (calculated on the basis of a 360-day year and actual days elapsed). "Series B Bonds" means the Issuer's Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000B issued pursuant to this Indenture. "Series B Fixed Rate" means seven and ninety-nine hundredths percent <-%) per annum calculated on the basis of a 360-day year of twelve 30-day months. "Series B Variable Rate" means a floating rate of interest per annum equal to the Reference Rate in effect from time to time plus one percent (1.00%) (calculated on the basis ofa 360-day year and actual days elapsed). "Servicing Fund' means the Servicing Fund created by Section 5.9 of this Indenture. "Sinking Fund Installment" means the amount designated for a particular due date in Schedule E and Section 3.1(3) of this Indenture for the redemption of Bonds. "State" means the State of California. DOCSOC\ 736492v3\24036.0009 15 ;). - 1&,5 "Tax Certificates" means the Issuer's Certificate as to Arbitrage and the Borrower's Tax Certificate, delivered in connection with the Bonds. "Tax Credits" means the low income housing tax credits allocated to the Project pursuant to Section 42 of the Code. "Term Loan Phase" means the period of time during which the Notes remain unpaid following the Conversion Date. "Title Company" means Chicago Title Company and its successors and assigns. "Title Policy" means the title insurance policy required pursuant to Section 3.5 and Schedule A-I of the Loan Agreement. "Treasury" means the United States Department ofthe Treasury, and any successor to its functions. "Treasury Rate" means the interest yield that the Bank determines could be obtained by investing in United States Treasury Bonds or Notes with a specified maturity as set forth in the applicable provision of this Indenture which calls for application of the Treasury Rate; the Bank's determination of such rate will be based on information from the Telerate or Reuters Information Services, The Wall Street Journal or other information sources that Bank deems appropriate. "Treasury Regulations" means all proposed, temporary or final federal income tax regulations issued or amended with respect to the Code by the Treasury or Internal Revenue Service. "Trustee" means State Street Bank and Trust Company of California, N.A., and any co- trustee or successor trustee appointed, qualified and then acting as such under the provisions of this Indenture. "Trust Estate" means the Trust Estate as defined and set forth in the Granting Clauses hereof. "Unassigned Rights" means the Issuer's rights to enforce and receive payments of money directly and for its own purposes under Sections 4.3(2), 704 and 11.5 (as it relates to the Issuer) of the Loan Agreement, the Issuer's rights to indemnification, to receive notices and reports and its rights to consent as set forth in the Loan Agreement, and the Issuer's rights under and relating to the enforcement of the Regulatory Agreement and the tax credit extended use agreement relating to the Project. Section 1.2. Rules of Interpretation. (1) This Indenture shall be governed by and construed in accordance with the laws and judicial decisions of the State, except as they may be preempted by Federal rules, regulations and laws applicable to the Issuer. (2) The words "herein" and "hereof' and "hereunder" and words of similar import, without reference to any particular section or subdivision, refer to this Indenture as a whole rather than to any particular section or subdivision of this Indenture. DOCSOC\ 736492v3\24036.0009 16 ).-(,.(,. ~ "' (3) References in this Indenture to any particular article, section or subdivision hereof are to the designated article, section or subdivision of this Indenture as originally executed. (4) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and all computations provided for herein shall be made in accordance with generally accepted accounting principles consistently applied and applied on the same basis as in prior years. (5) The Table of Contents and titles of articles and sections herein are for convenience of reference only and are not a part of this Indenture and shall not deny or limit the provisions hereof. (6) Unless the context hereof clearly requires otherwise, the singular shall include the plural and vice versa and the masculine shall include the feminine and vice versa. (7) Articles, sections, subsections and clauses mentioned by number only are those so numbered which are contained in this Indenture. (8) Any opinion of counsel called for herein shall be a written opinion of such counsel. (9) References to the Series A Bonds as "tax-exempt" or to the "tax-exempt status of the Series A Bonds" are to the exclusion of interest on the Series A Bonds from gross income for federal income tax purposes pursuant to Section 103(a) of the Code. ARTICLE II THE BONDS Section 2.]. Authorized Amount and Form of Bonds. Bonds secured by this Indenture shall be issued in fully registered form without coupons and in substantially the form set forth herein with such appropriate variations, omissions and insertions as are permitted or required by this Indenture, and in accordance with the further provisions of this Article 2. The aggregate principal amount of Bonds that shall be issued hereunder shall be $ , with the aggregate principal amount of the Series A Bonds being $5,250,000 and the aggregate principal amount of the Series B Bonds being $ , unless duplicate Bonds are issued as provided in Section 2.7. The Bondowner shall fund the purchase price of the Bonds from time to time to provide funds for deposit in the Project Fund for the payment of requisitions therefrom. Each time that a portion of the purchase price is funded, the Bondowner Representative shall specify to the Trustee, in writing, what portion of the purchase price is for the Series A Bonds and what portion is for the Series B Bonds. Amounts funded in such manner shall be noted by the Trustee on a principal log to be maintained by the Trustee, which shall specify the outstanding principal amount of the Series A Bonds and the Series B Bonds. Such amounts shall begin to accrue interest upon deposit by the Bondowner. Notwithstanding anything herein to the contrary, the aggregate purchase price of the Series A Bonds funded by the Bondowner may not exceed $ and the aggregate principal amount of the Series B Bonds may not exceed $ , and no additional amounts may be funded after August 31, 2000. The outstanding aggregate principal amount of the Bonds as of any given date shall be (i) the total amount paid by the Bondowner Representative to the Trustee as the purchase price of the Bonds and deposited in the Project Fund as the principal amount of the Loan, less (ii) any payments DOCSOC\ 736492v3\24036.0009 17 ~-'7 "' of principal previously received by the Bondholders on the Bonds. The Bonds, together with the Certificate of Authentication, the form of Assignment and the registration information thereon, shall be in substantially the forms set forth in Exhibit C. Section 2.2. Issuance of Bonds. The Bonds shall: (1) be dated as ofthe date of original delivery of the Bonds (the "Dated Date"); (2) be issued and delivered as fully registered bonds without coupons, in minimum denominations of $100,000 or any integral multiples of $1 ,000 in excess of $100,000; except that one Series A Bond may be in an integral multiple of $500 in excess of $1 00,000 and that a Bond may be exchanged after redemption or purchase for a Bond in the denomination of less than $100,000 to the extent necessary to represent the unredeemed or unpurchased portion of such Bond; (3) be initially issued in two series designated as the Series 2000A Bonds and the Series 2000B Bonds; (4) be numbered from] upwards in chronological order of delivery for each respective series of Bonds with such number being preceded by such designation as the Trustee shall determine; (5) mature on the dates set forth below; Series Maturitv Date Principal Amount A B September I, 2030 June I, 2009 $ $ (6) bear interest at the Series A Variable Rate, in the case of the Series A Bonds, and at the Series B Variable Rate, in the case of the Series B Bonds, from the Dated Date to and until the Conversion Date, and bear interest at the Series A Fixed Rate, in the case of the Series A Bonds, and at the Series B Fixed Rate, in the case of the Series B Bonds, from and after the Conversion Date, payable monthly on the first Business Day of each month from the Dated Date to and including (i.e., final monthly interest payment due on ), and thereafter (i.e., commencing March 1,2001) payable semiannually on each March I and September 1, and in the case of the Series B Bonds _,such interest to accrue from the Dated Date, or, in the case of transfer or exchange, from the most recent Payment Date to which interest has been paid or provided for under this Indenture; if a payment of defaulted interest is to be made, the Trustee shall establish the time of such payment and shall establish the associated special Record Date therefor as provided in the definition of "Record Date"; (7) be payable in such lawful money of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the principal corporate trust office ofthe Trustee or Paying Agent, except that interest on the Bonds will be payable by check mailed by the Trustee to the Holders of such Bonds on the applicable Record Date at the last addresses thereof as shown in the Bond Register on the applicable Record Date, and principal of and any premium on any Bonds shall be payable at the principal corporate trust office of the Trustee; and (8) be subject to redemption upon the terms and conditions and at the redemption prices specified in Article 3 hereof. DOCSOC\ 736492v3\24036.0009 18 "'- 4> 8' .,. "T Notwithstanding anything contained herein to the contrary, during any period of time that the Notes bear interest at the Default Rate, the Series A Bonds and the Series B Bonds shall also bear interest at the Default Rate. During any period of time that the Series A Note bears interest at the after-tax equivalent rate described in Section 7.16 of the Loan Agreement, the Series A Bonds shall also bear interest at such after-tax equivalent rate. Notwithstanding the foregoing, if the date for payment of the principal of, premium, if any, or interest on the Bonds shall be a day which is not a Business Day, then the date for such payment shall be the next succeeding day which is a Business Day, and payment on such later date shall have the same force and effect as if made on the nominal date of payment. Notwithstanding the foregoing, any Holder of at least $1,000,000 principal amount of any Bonds (or a lesser amount of such Bonds if such Bonds constitute all the Outstanding Bonds at the time), upon payment by the Holder of the cost ofa wire transfer as an Ordinary Fee or Expense, may file with the Trustee an instrument satisfactory to the Trustee requesting the amounts payable by the Trustee to such Holder be paid by transferring by wire transfer in immediately available funds, on the day such payment is due, the amount to be distributed to such Holder to a designated account maintained by such Holder at any bank in the United States. The Trustee shall pay all amounts payable by the Trustee hereunder to such Holder by transfer directly to said designated bank in accordance with the provisions of any such instrument, provided that if such amount represents a payment of the principal of any Bond, such Bond shall have been presented to the Trustee. All payments so made shall be valid and effective to satisfy and discharge the liability upon such Bonds. Notwithstanding the foregoing, all payments of principal of and interest on the Bonds payable on any Maturity Date, a Purchase Date or any date of redemption shall only be payable upon presentation of the Bonds maturing, being purchased or being redeemed at the principal corporate trust office of the Trustee. Section 2.3. Execution. Bonds shall be executed with the manual or facsimile signature of, the Chairman of the Issuer and attested by the facsimile or manual signature of the Secretary of the Issuer. In case any officer of the Issuer whose signature or whose facsimile signature shall appear on any Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until such delivery, and also any Bond may be signed by such persons as at the actual time of execution of such Bond shall be the proper officers to sign such Bond although at the date of delivery of such Bond such persons may not have been such officers. Section 204. Authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Indenture unless a certificate of authentication on such Bond, substantially in the form set forth in Exhibit C hereto, shall have been manually executed by a Responsible Agent of the Bond Registrar. Certificates of authentication on different Bonds need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the Issuer on each Bond by execution of the certificate of authentication on the Bond; and the certificate of authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Indenture. DOCSOC\ 736492v3\24036.0009 19 ~~t.9 .,. "' Section 2.5. Conditions Precedent to the Delivery of Bonds. Upon the execution and delivery of this Indenture, the Issuer shall execute and deliver to the Bond Registrar, and the Bond Registrar shall authenticate, the Bonds and shall deliver the Bonds to or upon the order of the initial purchaser thereof at such time or times as may be directed by the Issuer after the Trustee has received the following: (I) original executed counterparts of the Loan Agreement and this Indenture; (2) original executed counterparts of the Mortgage, the Regulatory Agreement and UCC financing statements; (3) [Reserved.] (4) copies of original executed counterparts of all Loan Documents not specifically referred to in paragraphs (I) and (2) above; (5) a copy of the resolutions adopted by the governing body of the Issuer, authorizing the execution and delivery of this Indenture and the Loan Agreement and issuance of the Bonds; (6) a request and authorization to the Trustee on behalf of the Issuer, signed by its Representative, to deliver the Bonds to the purchaser identified upon payment to the Trustee for the account of the Issuer of a specified sum; (7) the opinion of counsel to the Borrower in the form required by the Issuer and counsel to the Bondowner Representative, addressed to the Issuer, the Trustee and the Bondowner Representative; (8) the opinion of counsel to the Issuer, in the form required by the Issuer, addressed to the Issuer, the Trustee and the Bondowner Representative; (9) the opinion of Bond Counsel, addressed to the Issuer with a reliance letter addressed to the Trustee and the Bondowner Representative, to the effect that (a) the Bonds are valid obligations of the Issuer, and (b) interest on the Series A Bonds is excludable from gross income of the owner thereof for federal income tax purposes and interest on the Bonds is exempt from personal income taxes of the State; (10) a commitment by the Title Company, in form and content approved by the Bondowner Representative, to issue the Title Policy specified in the Loan Agreement; (11) a copy of the instruction letter delivered to and accepted by the Title Company in connection with the closing of the Bonds by the Borrower and consented to by the Bondowner Representative; (12) an original of an Investor's Letter executed by the Bondowner Representative and addressed to the Trustee and the Issuer in the form of Exhibit D; (13) confirmation by the Bondowner Representative of its receipt of payment ofa fee in the amount of One Hundred One Thousand Nine Hundred Five Dollars ($101,905); and DOCSOC\ 736492v3\24036.0009 20 :< - 70 - "' (14) any other documents or opinions which the Trustee, the Issuer or Bond Counsel may reasonably require. Section 2.6. {ReservedJ. Section 2.7. Mutilated, Lost or Destroyed Bonds. In case any Bond issued hereunder shall become mutilated or be destroyed or lost, the Issuer shall, if not then prohibited by law, cause to be executed, and the Bond Registrar shall authenticate and deliver, a new Bond of like amount, series, Maturity Date and tenor, but bearing a number not contemporaneously Outstanding, in exchange and substitution for and upon cancellation of any such mutilated Bond, or in lieu of and in substitution for any such Bond destroyed or lost, upon the Holder's paying the reasonable expenses and charges of the Bond Registrar and the Issuer and, in the case of a Bond destroyed or lost, the Holder's filing with the Bond Registrar of evidence satisfactory to the Bond Registrar and the Trustee that such Bond was destroyed or lost, and of the Holder's ownership thereof, and furnishing the Issuer, the Trustee and the Bond Registrar with indemnity satisfactory to them. Ifthe mutilated, destroyed or lost Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. Section 2.8. {ReservedJ. Section 2.9. Ownership of Bonds. The Issuer, the Trustee, the Bond Registrar and Paying Agent may deem and treat the Holder of any Bond, whether or not such Bond shall be overdue, as the absolute owner of such Bond for the purpose of receiving payment thereof and for all other purposes whatsoever, and the Issuer (or any agent thereof), the Trustee, the Bond Registrar and the Paying Agent shall not be affected by any notice to the contrary. Section 2.10. (ReservedJ. Section 2.11. Registration, Transfer and Exchange of Registered Bonds. (I) The Trustee shall, at the expense of the Borrower, prepare, execute and authenticate fully registered Bonds, shall cause to be kept at the principal corporate trust office of the Bond Registrar a Bond Register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Trustee shall provide for the registration of Bonds and the registration of transfers of Bonds. The Bond Register shall contain a record of every Bond, including bond number and principal amount at any time authenticated hereunder, together with the name and address of the Holder thereof, the date of authentication, the date of transfer or payment, and such other matters as are appropriate for the Bond Register in the estimation of the Bond Registrar and the Trustee. (2) The transfer of each Bond is subject to registration by the Holder thereof only upon compliance with the conditions for registration of transfer imposed on the Holder under this Section 2.11 and under Section 2.15 hereof. Upon surrender of any Bond at the principal corporate trust office of the Bond Registrar, the Issuer shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, in the name of the designated transferee or transferees (but not registered in blank or to "bearer" or a similar designation), one or more new Bonds of any authorized denomination or denominations of a like aggregate principal amount and series, having the same stated maturity, tenor and interest rate. DOCSOC\ 736492v3\24036.0009 21 :l.-'7 { ~ (3) At the option of the Holder, Bonds may be exchanged for other Bonds of any authorized denomination or denominations of a like aggregate principal amount, tenor, series and stated maturity, upon surrender of the Bonds to be exchanged at the principal corporate trust office of the Bond Registrar, and upon payment, if the Issuer shall so require, ofthe taxes, if any, hereinafter referred to. Whenever any Bonds are so surrendered for exchange, the Issuer shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, the Bonds which the Holder making the exchange is entitled to receive. (4) All Bonds delivered in exchange for or upon transfer of Bonds shall be valid special obligations of the Issuer evidencing the same debt, and entitled to the same benefits under this Indenture, as the Bonds surrendered for such exchange or transfer. (5) Registration of the transfer of a Bond may be made on the Bond Register by the Holder in person or by the Holder's attorney duly authorized in writing. Every Bond presented or surrendered for registration of transfer or exchange shall (i) be accompanied by evidence of compliance with the provisions of Section 2.15 of this Indenture, (ii) be duly endorsed or be accompanied by a written instrument or instruments of transfer, in the form printed on the Bond or in another form satisfactory to the Bond Registrar, duly executed and with guaranty of signature of the Holder thereof or his, her or its attorney duly authorized in writing, and (iii) include written instructions as to the details of the transfer of the Bond. (6) No service charge shall be made to the Holder for any registration, transfer or exchange, but the Bond Registrar and Issuer may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds, other than exchanges expressly provided in this Indenture to be made without expense or without charge to Bondholders, and any legal or unusual costs of transfers and lost bonds. (7) Subject to the provisions of subsection (8) below, the Bond Registrar shall endeavor to comply with rules applicable to transfer agents registered with the Securities and Exchange Commission as to the 72-hour "turnaround" standard established for the transfer of registered corporate securities. . (8) The Bond Registrar shall not be required (a) to transfer or exchange any Bond during a period beginning at the opening of business 15 days before the day ofthe mailing of a notice of redemption of Bonds under this Indenture and ending at the close of business on the day of such publication or mailing or (b) to transfer or exchange any Bond so selected for redemption in whole or in part. Section 2.] 2. Nonpresentment of Bonds. In the event any Bond shall not be presented for payment when the principal hereof becomes due, iffunds sufficient to pay such Bonds shall have been paid to the Trustee (or the Paying Agent (if any)) for the benefit of the registered owner thereof, all liability of the Issuer to the registered owner thereof for the payment of such Bond shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee or other Paying Agent to hold such fund or funds, without liability for interest thereon, for the benefit of the Holder of such Bond, who shall thereafter be restricted exclusively to such fund or funds, for any claim of whatever nature on his part under this Indenture or on, or with respect to, said Bond. Any moneys still held by the Trustee (or other Paying Agent, if any) after three years from the date on which the Bond with respect to such amount was paid to the Trustee or other Paying Agent, shall, if and to the extent permitted by law, be paid to the Issuer and shall be discharged from the trust and all DOCSOC\ 736492v3l24036.0009 22 ~ -7:J- "T liability of the Paying Agent or Trustee with respect to such funds shall cease; and the owner of such Bond shall thereafter be entitled to look only to the Issuer for payment, and the Issuer shall not be liable for any interest thereon. Section 2.13. [Reserved]. Section 2.14. Destruction of Bonds. Whenever any Outstanding Bond shall be delivered to the Bond Registrar or the Trustee for cancellation pursuant to this Indenture, upon payment of the principal amount and interest represented thereby or for replacement pursuant to Section 2.7 or transfer pursuant to Section 2.] I, such Bond shall be canceled and destroyed by the Bond Registrar or the Trustee, as the case may be, and counterparts of a certificate of cancellation evidencing such cancellation shall be furnished by the Bond Registrar, or the Trustee, as the case may be, to the Issuer, the Bond Registrar and, if appropriate, the Trustee. Section 2.15. Restrictions on Transfer. Except for the transfer of Bonds, in whole or in part, to any subsidiary of BankAmerica Corporation (or any successor to BankAmerica Corporation, whether by merger, acquisition of assets or otherwise), Bonds may be transferred, as a whole or in part, to one or more Bondholders (but in no event to more than 35 Bondholders) only upon receipt by the Bond Registrar, the Issuer and the Trustee of evidence that such Bonds are being transferred to an "accredited investor" (as defined in Rule 50l(a)(1), (2), (3), (4), (7) or (8) of Regulation D promulgated under the Securities Act of 1933). The Bond Registrar shall not register any transfer or exchange of any Bonds unless such Bondholder's prospective transferee delivers to the Trustee an Investor's Letter substantially in the form set forth in Exhibit D to this Indenture, whose signature is guaranteed by an eligible guarantor institution. The Trustee shall be entitled to rely, without any further inquiry, on any Investor's Letter delivered to it and shall be fully protected in registering any transfer or exchange of any Bonds in reliance on any such Investor's Letter which appears on its face to be correct and of which the Trustee has no actual knowledge otherwise. Any such Holder desiring to effect such transfer shall agree to indemnify the Issuer and Trustee from and against any and all liability, cost or expense (including attorneys' fees) that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. Nothing herein shall prohibit a Bondholder from transferring an interest in a Bond which remains registered in the name of the Bondholder to any subsidiary of BankAmerica Corporation (or any successor to BankAmerica Corporation, whether by merger, acquisition of assets or otherwise) or to any other individual or entity which is an "accredited investor" as described above. ARTICLE III REDEMPTION AND PURCHASE OF BONDS BEFORE MATURITY Section 3.1. Redemption and Purchase. Subject to the provisions of Sections 3.2 and 304, the Bonds are subject to purchase or redemption as follows: (1) Extraordinary Redemption. (a) The Bonds are subject to mandatory redemption, in whole or in part, on any Business Day, in the event of damage to or destruction or Condemnation of the Project or any part thereof as provided in Section 5.8 hereof, the Loan Agreement and the Mortgage, at a redemption price equal to the principal amount thereof plus DOCSOC\ 736492v3\24036.0009 23 ),-7:3 .,. "T accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (b) The Bonds are subject to mandatory redemption in part on 20_ from Bond proceeds remaining on deposit in the Project Fund on , 20_ and, with respect to the Prepayment Premium, from Borrower moneys, at a redemption price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (c) The Bonds are subject to mandatory redemption on ,20 (or such later date as the Bondowner Representative approves in writing) in whole, from Borrower moneys, if the first disbursement from the Project Fund in excess of Dollars ($ ) has not been made on or before July 31, 2000, at a purchase price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (2) Optional Redemption. The Bonds are subject to redemption at the option of the Borrower, in whole or in part on any Business Day on or prior to the Conversion Date and on any Business Day after the Prepayment Lockout End Date, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (3) Mandatory Sinking Fund Redemption. The Bonds shall be subject to mandatory sinking fund redemption, on each March 1 and September I, commencing March 1, 20_, at a redemption price equal to the principal amount thereof, without premium, plus accrued interest thereon to such redemption date, on the dates and in the principal amounts set forth in Exhibit "E" to this Indenture. (4) Mandatory Redemption Upon Loan Agreement or Mortgage Default. The Bonds are subject to mandatory redemption in whole on any Business Day upon the occurrence of an event of default under the Loan Agreement or any other Loan Document at the direction of the Bondowner Representative at a redemption price equal to the principal amount of the Bonds then Outstanding, plus accrued interest and plus a Prepayment Premium as provided in Section 10.1 of the Loan Agreement. Any provision in this Indenture to the contrary notwithstanding, all funds to be applied to redeem Bonds shall be applied first to redeem the Series B Bonds until all Series B Bonds have been redeemed and second to redeem Series A Bonds. Section 3.2. Notice of Redemption or Purchase. (1) To effect the redemption of the Bonds under Section 3.1, the Trustee shall promptly give notice within the time, in the manner and with the effect provided by this Section 3.2. Notice of redemption shall be mailed by first class mail not less than 30 days prior to the redemption date by the Trustee to the Paying Agent and the Holders of Bonds to be redeemed. No defect in or failure to give notice shall affect the validity of the proceedings for redemption of any Bond not affected by such defect. Such notice, which shall be prepared by the Trustee at the expense of the Borrower, shall state the subsection under Section 3.1 pursuant to which the Bonds are being called DOCSOC\ 736492v3\24036.0009 24 ~-1'f .,. "' for redemption, and unless all Outstanding Bonds are to be redeemed, each such notice shall refer to the Bonds to be redeemed by their numbers and maturities and the date on which and the place where they shall be presented for redemption. Except as specifically provided in this Indenture and provided sufficient funds are on deposit with the Trustee with respect to such redemption, the Bonds thus called for redemption shall cease to bear interest from and after the specified redemption date and the Holder of such Bonds shall have no further rights with respect to the Bonds or under this Indenture except to receive the redemption price of such Bonds. (2) Not less than forty (40) days prior to each redemption date, the Bond Registrar shall furnish the names and addresses of the Holders of the Bonds as of the Record Date immediately preceding such redemption date to the Trustee. (3) Not less than one (I) day prior to each redemption date, the Bondowner Representative may deliver a notice to the Trustee electing to purchase any Bonds in lieu of redemption, in which case such Bonds will be purchased in lieu of redemption on the redemption date and will remain Outstanding in the name of the Holder. Section 3.3. Cancellation. Subject to the provisions of Section 2.12, all Bonds which have been redeemed shall be canceled by the Trustee as provided in Section 2. I 4 and shall not be reissued. Section 304. Method of Redemption. (1) The Trustee shall redeem Bonds under subsection (4) of Section 3.1 only if it has received written notice and instructions from the Bondowner Representative to so redeem at least forty (40) days before the redemption date. (2) [Reserved]. (3) To effect the partial redemption of Bonds under Section 3.1, the Trustee for the purposes of selection, prior to giving notice of redemption, shall deem each Bond then outstanding to be comprised of $1 ,000 portions, and any such portion may be separately redeemed. The Trustee shall then select such Bonds for redemption as instructed by the Bondowner Representative. If the Bondowner Representative fails to instruct the Trustee with regard to the selection of Bonds for redemption, the Trustee shall select first, Series B Bonds for redemption by lot, using such method of selection as it shall deem proper in its discretion, from the numbers so assigned to such Bonds, as many $1,000 portions as shall equal the principal amount of such Bonds to be redeemed until no Series B Bonds are Outstanding. The Trustee shall then follow the same procedures for selecting Series A Bonds for redemption. If a Bond is redeemed only in part, it shall be surrendered to the Trustee (with, if the Issuer or Trustee so requires, a written instrument of transfer in form satisfactory to the Issuer and Trustee duly executed by the Holder thereof or his, her or its attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds of the same series and tenor, of any authorized denomination or denominations, as requested by such Holder, having the same stated maturity and interest rate in aggregate principal amount equal to and in exchange for the unredeemed or unpurchased portion of the principal of the Bond so surrendered. DOCSOC\ 736492v3\24036.0009 25 ~-'75 "' ARTICLE IV GENERAL COVENANTS Section 4.1. Payment of Principal, Premium and Interest. Solely from the moneys derived from the Loan Agreement (other than to the extent payable from proceeds of the Bonds, temporary investments, or amounts recovered by the Trustee under any provision of the Mortgage), the Issuer will duly and punctually pay the principal of, premium, if any, and interest on the Bonds in accordance with the terms of the Bonds and this Indenture. Moneys derived from the Loan Agreement include all moneys derived from the Granting Clauses set forth herein, including, but not limited to, the Project Revenues and trust funds deposited in the Funds (excluding funds held in Rebate Fund and rebatable arbitrage whether or not deposited in the Rebate Fund) to the extent hereof and in the manner provided in Article 5 hereof. Nothing in the Bonds or in this Indenture shall be considered as assigning or pledging funds or assets of the Issuer other than those covered by the Granting Clauses set forth herein. Section 4.2. Performance of Covenants. (1) The Issuer covenants that it will faithfully perform at all times any and all of its covenants, undertakings, stipulations and provisions contained in this Indenture, in any and every Bond executed, authenticated and delivered hereunder and in all proceedings of its governing body pertaining thereto; that it is duly authorized under the Constitution and laws of the State, including particularly and without limitation the Act, to issue the Bonds authorized hereby, to execute this Indenture, to loan the proceeds of the Bonds to the Borrower and to assign and pledge the payments from the Loan Agreement in the manner and to the extent herein set forth; that all action on its part for the issuance of the Bonds and the execution and delivery of this Indenture has been duly and effectively taken; and that the Bonds in the hands of the Holders thereof are and will be valid and enforceable obligations of the Issuer according to the terms thereof. (2) The Trustee covenants that it will faithfully perform at all times any and all of its covenants, undertakings, stipulations and provisions contained in this Indenture, and in every Bond executed, authenticated and delivered hereunder; that it is duly organized, validly existing, in good standing and possesses all licenses and authorizations necessary to enter into this Indenture; that it has full power and authority to enter into this Indenture and the transactions contemplated thereby; that the Indenture has been duly executed and delivered by it; that this Indenture constitutes a legal, valid, binding and enforceable obligation of the Trustee (subject to bankruptcy, insolvency or creditor rights laws generally and principles of equity generally) without offset, defense or counterclaim, that the execution, delivery and performance of this Indenture by the Trustee will not cause or constitute, including due notice or lapse of time or both, a default under or conflict with organizational documents or other agreements or otherwise materially or adversely affect performance of duties; that the execution of this Indenture by the Trustee will not violate any law, regulation, order or decree of any governmental authority; that all consents, approvals, authorizations, orders or filings of or with any court or governmental agency or body, if any, required for the execution, delivery and performance of this Indenture by the Trustee have been obtained or made; and that there is no pending action, suit, proceeding, arbitration or governmental investigation challenging the authority of the Trustee to perform its obligations under this Indenture. Section 4.3. Instruments of Further Assurance. The Issuer covenants that it has not made, done, executed or suffered, and will not make, do, execute or suffer, any act or thing whereby DOCSOC\ 736492v3\24036.0009 26 ~~7/P "T its interest in the Loan Agreement or any part thereof is now or at any time hereafter will be impaired, changed or encumbered in any manner whatsoever, except as may be expressly permitted herein or in the Loan Agreement or as required by law; and that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such instruments supplemental hereto and such further acts, instruments and transfers as the Trustee may be reasonably required for the better assuring, transferring, pledging, assigning and confirming unto the Trustee all and singular the sums assigned and pledged hereby to the payment of the principal of, premium, if any, and interest on the Bonds. Section 404. Recording and Filing. (I) Reserved. (2) On or before March 1 of each fifth calendar year, commencing on March I, 2005, the Borrower has covenanted in the Loan Agreement to take such action with respect to the execution and filing of any financing statements and continuation statements as are necessary to perfect and maintain the perfection of the liens granted thereunder and to preserve and protect fully the security of the Holders of the Bonds and the rights of the Trustee hereunder and under any of the other aforesaid instruments for the next five-year period. Section 4.5. Books and Records. The Trustee covenants that so long as any Outstanding Bonds issued hereunder and secured by this Indenture shall be unpaid, the Trustee will keep proper books or records and accounts, in which full, true and correct entries will be made of all its financial dealings or transactions in relation to the Project and the payments derived from the Loan Agreement, this Indenture and the Mortgage. At reasonable times and under reasonable regulations established by the Trustee, such books shall be open to the inspection ofthe Holders or the Issuer, and such accountants or other agencies as the Holders or the Issuer may from time to time designate in writing to the Trustee. Section 4.6. Bondholders' Access to Bond Register. At reasonable times and under reasonable regulations established by the Bond Registrar, the Bond Register or a copy thereof may be inspected and copied by the Issuer, the Trustee or the Holders (or a designated representative thereof) often percent (10%) or more in principal amount of the then Outstanding Bonds, such authority of any such designated representative to be evidenced to the reasonable satisfaction of the Bond Registrar. Except as otherwise may be provided by law, the Bond Register shall not be deemed a public record and shall not be made available for inspection by the public, unless and until notice to the contrary is given to the Bond Registrar by the Issuer. Section 4.7. Rights Under Loan Agreement. The Loan Agreement sets forth covenants and obligations of the Borrower, and reference is hereby made to the same for a detailed statement of said covenants and obligations. The Issuer agrees to cooperate in the enforcement of all covenants and obligations of the Borrower under the Loan Agreement and agrees that the Trustee and the Bondowner Representative may enforce all rights of the Issuer (other than Unassigned Rights) and all obligations of the Borrower under and pursuant to the Loan Agreement in their respective names and on behalf of the Holders, whether or not the Issuer has undertaken to enforce such rights and obligations. DOCSOC\ 736492v3\24036.0009 27 ? -77 .,. "T Section 4.8. Rights Under Mortgage. (1) The Issuer acknowledges that it has assigned its interest in and to the Mortgage to the Trustee under this Indenture and that such instrument further secures payment of the Loan, interest thereon and amounts due under certain other Loan Documents, and reference is hereby made to the same for a detailed statement of the obligations of the parties thereto. (2) Subject to the terms of this Indenture and of the Mortgage and the Regulatory Agreement, until the occurrence of an Event of Default hereunder, the Borrower shall be permitted to possess, use and enjoy the Mortgaged Property and to receive and use the issues and profits of the Mortgaged Property. ARTICLE V FUNDS AND ACCOUNTS Section 5.1. Trust Funds Pledged and Assigned to the Trustee. All payments, revenues and income receivable by the Issuer under the Loan Agreement and pledged and assigned by this Indenture to the Trustee, together with the balance of the Trust Estate, are to be paid directly to the Trustee and, subject to the provisions of Section 8.6, deposited by it in the Funds and Accounts described in this Article 5 and held in trust for the purposes set forth herein. Moneys on deposit in the Funds and Accounts described in this Article 5 shall be held by the Trustee in trust, and pending application in accordance with the provisions of this Article 5 shall be subject to a lien and charge in favor of the Bondholders until applied as hereinafter provided. The Trustee shall at all times maintain accurate records of deposits into such funds and the sources and timing of such deposits. Each Fund shall constitute a segregated trust account or accounts maintained with the corporate trust department of the Trustee, shall be established in the name of the Trustee, bearing the designation provided below with a qualifier indicating such fund is held with respect to the Bonds. The Trustee shall not deposit into such Funds any moneys other than as provided in this Indenture or the Loan Agreement. Section 5.2. Project Fund; Disbursement of Project Funds. (I) A special trust fund is hereby created and designated the Project Fund. The proceeds of the Series A Bonds in the amount of $ and the Series B Bonds in the amount of $ shall be deposited with the Trustee on the date of Bond Closing, with such Series A Bond proceeds being credited to the Series A Account of the Project Fund and such Series B Bond proceeds being credited to the Series B Account of the Project Fund. There shall also be deposited to the Project Fund on the date of the Bond Closing $ received from the Investor Limited Partner of the Borrower. As the purchase price of the Bonds is paid to the Trustee by the Bondholder from time to time, the Trustee shall deposit the proceeds of the Series A Bonds in the Series A Account of the Project Fund and the proceeds of the Series B Bonds in the Series B Account of the Project Fund. Additional amounts required to be deposited by the Borrower pursuant to the Loan Agreement may be delivered to Trustee from time to time for deposit in the Series B Account of the Project Fund. (2) No moneys shall be disbursed from the Project Fund until the Trustee shall have received evidence of the recordation of the Mortgage and the Regulatory Agreement in the DOCSOC\ 736492v3\24036.0009 28 2~7~ "T Official Records of San Diego County, California. The Trustee may conclusively rely upon telephonic notice from the Title Company responsible for recording the Mortgage as evidence of such recordation. (3) Upon satisfaction ofthe requirements of this Section 5.2 and receipt from the Borrower of (a) a written requisition in the form of Exhibit A hereto signed by an authorized Borrower Representative, which requisition shall include Borrower's certification that not less than ninety-five percent (95%) of the funds requisitioned from the Series A Bonds will be expended for Qualified Project Costs which have not previously been paid or reimbursed and (b) written consent to such disbursement by the Bondowner Representative, the Trustee shall immediately disburse all amounts requested in such requisition first from amounts deposited by the Borrower, second from funds in the Series A Account of the Project Fund and third from funds in the Series B Account of the Project Fund to the Borrower or the persons designated by the Borrower, or to the Interest Account of the Bond Fund unless otherwise specified in the requisition, in which case amounts shall be disbursed from the Series A Account or the Series B Account of the Project Fund as specified in the requisition. (4) Neither the Trustee nor the Issuer shall be responsible for the application by the Borrower of moneys disbursed to the Borrower or its designees (if any money is disbursed thereto) in accordance with this Section 5.2. (5) All requisitions in the form provided by this Indenture and all other statements, orders, certifications and approvals received by the Trustee, as required by this Article as conditions of payment from the Project Fund, may be conclusively relied upon by the Trustee, and shall be retained by the Trustee, subject at all reasonable times to examination by the Borrower (so long as the Loan Agreement shall remain in force and effect), the Issuer, the Bondowner Representative and the agents and representatives thereof. (6) All costs incurred in connection with the requisition and disbursement of funds from the Project Fund, including but not limited to the cost of the Project Engineer and updates to the Title Policy, shall be paid by the Borrower. (7) Any amounts remaining in the Project Fund on , 20 shall be transferred to the Redemption Account to be used to redeem Bonds pursuant to Section 3.l(I)(b). Upon such transfer, the Project Fund shall be closed. Section 5.3. Revenue Fund. A special trust fund is hereby created and designated the Revenue Fund. (I) Deposits to the Revenue Fund. All Basic Payments under the provisions of the Loan Agreement and the Notes are assigned by the Issuer to the Trustee pursuant to the Indenture for monthly deposit to the Revenue Fund. (2) Uses of Revenue Fund. Provided no Event of Default has occurred and is continuing, funds on deposit in the Revenue Fund shall be distributed at least monthly by the Trustee as follows: DOCSOC\ 736492v3\24036.0009 29 ~~?q "T (a) Prior to the Conversion Date: FIRST: to the Bond Fund for deposit into the Principal Account and the Interest Account, an amount equal to the principal of and interest to become due on the Bonds on the next Payment Date; SECOND: to the Trustee, the amount of its Ordinary Fees and Expenses then due, if any and then to the Arbitrage Consultant, the reasonable fees and expenses, if any, as billed and due to it for services hereunder; THIRD: to the Rebate Fund, the amount set forth in a written request from a Borrower Representative specifying the amount calculated as arbitrage rebate due to the United States Department of the Treasury with respect to a particular Bond Year by the Arbitrage Consultant; (b) After the Conversion Date: FIRST: to the Bond Fund for deposit into the Principal Account and the Interest Account, an amount equal to one-sixth of the principal of and interest, including Sinking Fund Installments, to become due on the Bonds on the next Payment Date; provided that in the month preceding each Payment Date, sufficient amounts shall be transferred to the Bond Fund pursuant to Section 504 hereof on the Business Day preceding such Payment Date so that the aggregate amount on deposit in the Principal Account and the Interest Account is equal to, but not in excess of, the next required payment of principal of and interest, including Sinking Fund Installments, on the Bonds; and provided, further, that when the amount in the Principal Account and the Interest Account of the Bond Fund is equal to the next required payment of principal of and interest, including Sinking Fund Installments, on the Bonds no further transfers shall be required until the monthly distribution date following the next Payment Date; SECOND: to the Trustee, the amount of its Ordinary Fees and Expenses then due, if any and then to the Arbitrage Consultant, the reasonable fees and expenses, if any, as billed and due to it for services hereunder; THIRD: to the Rebate Fund, the amount, if any, set forth in a written request from a Borrower Representative specifying the amount calculated as arbitrage rebate due to the United States Department of the Treasury with respect to a particular Bond Year by the Arbitrage Consultant; FOURTH: to the Real Estate Tax and Insurance Account of the Servicing Fund, 11l2th of the amount (as set forth in a written request ofa Borrower Representative stating the amount) budgeted by the Borrower for annual premiums for insurance required to be maintained pursuant to the Loan Agreement and for annual real estate taxes (or payments in lieu of taxes) or other charges for governmental services for the current year (except for utility charges) which shall be disbursed by the Trustee from time to time upon instructions from the Bondowner Representative to pay such premiums and taxes when due or reimburse the Borrower upon receipt of satisfactory evidence of payment thereof; provided, however, that the calculation and certification to the Trustee by the Bondowner Representative of the amount of the distribution by the Trustee to the Real Estate Tax and Insurance Subaccount in DOCSOC\ 736492v3\24036.0009 30 ~-80 "T respect of the first date or dates on which premiums for insurance and taxes or other payments described above are payable shall be made in amounts equal to the respective quotients obtained by dividing (i) the amount of such premiums and (ii) the amount of such taxes or other charges by the respective number of months, including the month of computation, to and including the month prior to the month in which such premiums or taxes are payable; and FIFTH: to the Replacement Reserve Sub-Account of the Servicing Fund, the Reserve Deposit Requirement; and SIXTH: to the Operating Reserve Sub-Account of the Reserve Account that amount specified for deposit therein in a written certification from a Bondowner Representative. On April 30 of each year and provided that sufficient amounts have been deposited in the Revenue Fund to enable the Trustee to make all deposits (or arrears in deposits) required above for the current Bond Year, amounts on deposit in the Revenue Fund shall be disbursed by the Trustee to the Borrower or at the Borrower's request may be retained by the Trustee and be used as a credit against its payment obligations under the Notes. Section 504. Bond Fund. A special trust fund is hereby created and designated the Bond Fund, which shall contain (i) the Interest Account, (ii) the Principal Account, and (iii) the Redemption or Purchase Account. (1) Interest Account. The Trustee shall deposit to the Interest Account moneys transferred from the Revenue Fund as provided in Section 5.3 of this Indenture. Moneys in the Interest Account shall be used to pay interest on the Bonds when due. In the event that such moneys shall not be sufficient for such purpose, the Trustee shall apply such moneys first to pay interest then due on Series B Bonds and second to pay interest then due on Series A Bonds. The Trustee shall also deposit to the Interest Account the proceeds, if any, from the Bonds to be used for capitalized interest. (2) Principal Account. The Trustee shall deposit to the Principal Account moneys transferred from the Revenue Fund as provided in Section 5.3 of this Indenture. Moneys in the Principal Account shall be used to pay principal of and Sinking Fund Installments on the Bonds when due. In the event that such moneys shall not be sufficient for such purpose, the Trustee shall apply such moneys first to pay principal and Sinking Fund Installments then due on the Series B Bonds and second to pay principal and Sinking Fund Installments then due on Series A Bonds. (3) Redemption Account. The Trustee shall deposit to the Redemption Account any amounts to be transferred from (i) the Mortgage Recovery Fund pursuant to Section 5.8 hereof, (ii) the Servicing Fund and (iii) any amounts of funds transferred or deposited to effect a redemption or purchase of Bonds pursuant to Article 3 hereof (including any prepayment premium). Moneys on deposit in the Redemption or Purchase Account shall be used for redemption or purchase (other than a mandatory redemption from Sinking Fund Installments) of Bonds pursuant to the provisions of Article 3 hereof. DOCSOC\ 736492v3\24036.0009 31 ;;lA?/ .,. "T Section 5.5. Reserved. Section 5.6. Deposit of Funds With Paying Agent. (1) If the Trustee is not the Paying Agent, the Trustee shall transfer and remit sums from the Bond Fund to the Paying Agent on or before the Business Day prior to each Payment Date, from the balance then on hand in the Bond Fund, sufficient to pay all principal, interest and redemption premiums then due on the Bonds. The Paying Agent shall hold in trust for the Holders of such Bonds all sums so transferred to it until paid to such Holders or otherwise disposed of as herein provided. (2) The Trustee will cause any Paying Agent which is not the Trustee to execute and deliver to it an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 5.6, that such Paying Agent will: (a) hold all sums held by it for the payment of principal of (and premium, if any) or interest on Bonds in trust for the benefit of the Holders of such Bonds until such sums shall be paid to such Holders or otherwise disposed of as herein provided; and (b) at any time during the continuance of any default in the making of any such payment of principal (and premium, ifany) or interest, upon the written request of the Trustee forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Trustee, acting as Paying Agent, shall also be bound by the terms of the foregoing requirements. Section 5.7. Rebate Fund. (1) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder, designated as the Rebate Fund. There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein upon the written direction of the Arbitrage Consultant. Subject to the transfer provisions provided in subsection (3) below, all amounts on deposit in the Rebate Fund shall be held by the Trustee in trust, to the extent required to pay rebatable arbitrage to the United States of America, and neither the Issuer, the Borrower nor the Holders of any Bonds shall have any rights in or claim to such money. All amounts held in the Rebate Fund shall be governed by this Section and by the Tax Certificates (which are incorporated herein by reference). (2) The Trustee shall unconditionally be entitled to accept and rely upon the recommendations, advice, calculations and opinions of the Arbitrage Consultant as to actions required or not required to be taken by the Trustee to comply with the provisions of Section l48(f) of the Code. The Trustee agrees to act in accordance with the written recommendations, advice and opinions of the Arbitrage Consultant for the purpose of complying with any applicable provision of Section I 48(t) of the Code. The Trustee shall be deemed conclusively to have complied with its obligations under this Section and with respect to rebatable arbitrage if it follows the written instructions of the Arbitrage Consultant. (3) Pursuant to the Tax Certificates and upon written direction of the Rebate Consultant, the Trustee shall remit all rebate installments and a final rebate payment to the United DOCSOC\ 736492v3\24036.0009 32 ). - 8' ;;L "T States of America pursuant to the final report of the Arbitrage Consultant. The Trustee shall have no obligation to pay any amounts required to be rebated pursuant to this Section and the Tax Certificates, other than from moneys held in the Funds created under this Indenture or from other moneys provided to it by the Borrower. Any moneys remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any rebatable arbitrage shall be withdrawn and remitted to the Borrower. (4) Notwithstanding any other provision of this Indenture, including in particular Article 7 hereof, the obligation to pay rebatable arbitrage to the United States of America and to comply with all other requirements of this Section and the Tax Certificates shall survive the defeasance or payment in full of the Bonds. Section 5.8. Mortgage Recovery Fund. (1) The Trustee shall establish and maintain a special trust fund separate from any other fund established and maintained hereunder designated as the Mortgage Recovery Fund. (2) In the event there is damage, destruction or Condemnation of the Project, the Proceeds shall be deposited in the Mortgage Recovery Fund and shall be disbursed in the following order of priority to (a) payor reimburse the Borrower forthe costs of repairing orreplacing the Project subject to the requirements provided in paragraph (6) below; (b) the extent required or permitted by the Loan Agreement, or if the Borrower fails to comply with the requirements of paragraph (6) below, redeem Bonds in whole or in part, or to pay the principal of and interest on the Bonds upon the acceleration of the maturity thereof; (c) make payments of principal and interest on the Bonds; and (d) pay Additional Charges and Prepayment Premium. The Trustee's use of Proceeds is further subject to the provisions of paragraph (4) below. (3) In the event of a foreclosure of the Mortgage, the Net Proceeds realized from the foreclosure sale shall be deposited in the Mortgage Recovery Fund and shall be disbursed by the Trustee in the following order of priority to (a) redeem Bonds, in whole; (b) make payments of principal and interest on the Bonds or other amounts due under the Loan Documents; or (c) pay Additional Charges and Prepayment Premium. The Trustee's use of Net Proceeds pursuant to clause (c) is subject to the provisions of paragraph (4) below. (4) Moneys in the Mortgage Recovery Fund shall be transferred by the Trustee to the Bond Fund to pay principal of and interest on the Bonds when due to the extent funds are not otherwise available to make payment on the Bonds when due. (5) In the event moneys are deposited in the Mortgage Recovery Fund pursuant to the Mortgage, such moneys shall be disbursed in the manner set forth in paragraph (3) above. (6) (a) Amounts in the Mortgage Recovery Fund shall be applied to payor reimburse the Borrower for the costs of repairing or replacing the Project only if the following conditions are satisfied: (i) The Trustee shall have been furnished a written confirmation from the Bondowner Representative that the conditions contained in Section 604 of the Loan Agreement have been satisfied; DOCSOC\ 736492v3\24036.0009 33 ;;l~~3 "T (ii) The Borrower shall have provided a construction statement itemizing the full cost of the repair or restoration (the "Construction Statement"); (iii) The Proceeds to be deposited in the Mortgage Recovery Fund to pay for such repair or restoration must be sufficient to complete such repair or restoration, or the Borrower must deposit in the Mortgage Recovery Fund the net difference prior to commencing repair or restoration; (iv) Disbursements from the Mortgage Recovery Fund to pay the cost of such repair or restoration shall be made not more frequently than twice a month for restoration work completed and in place pursuant to the construction lending procedures and conditions contained in Sections 604 and 6.5 of the Loan Agreement; (v) The Borrower submits a written requisition in the form of Exhibit B hereto and the Bondowner Representative gives its written approval of such requisition. (b) All requisitions in the form attached as Exhibit B to this Indenture and all other statements, orders, certifications and approvals received by the Trustee, as required by this Article as conditions of payment from the Mortgage Recovery Fund, may be conclusively relied upon by the Trustee, and shall be retained by the Trustee, subject at all reasonable times to examination by the Borrower (so long as the Loan Agreement shall remain in force and effect), the Issuer and the agents and representatives of each of them. (c) In the event that the Trustee receives notice from the Bondowner Representative the Borrower has not completed the repair or replacement of the Project in accordance with the terms and schedule set forth above, the Trustee shall, after 30 days' written notice from the Trustee to the Borrower of such failure and continuance of such failure at the end of such period, either disburse moneys in the Mortgage Recovery Fund, including retainage forthe payment of costs of repairing or replacing the Project or disburse moneys in the Mortgage Recovery Fund for any other purpose described in paragraph (2) above in the priority set forth in paragraph (2) above. (d) Upon the completion of the repair or replacement of the Project (as evidenced by a certificate of a Project Engineer), the accumulated retainage shall be disbursed to the Borrower and the balance in the Mortgage Recovery Fund shall be deposited by the Trustee into the Replacement Reserve Sub-Account of the Servicing Fund or if directed by the Borrower, to the redemption of Bonds pursuant to Section 3.1(1). Section 5.9. Servicing Fund. (1) The Trustee shall establish and maintain a special trust fund separate from any other fund established and maintained hereunder designated as the Servicing Fund. DOCSOC\ 736492v3\24036.0009 34 ;) -&If "' (2) The Trustee shall deposit amounts provided in Section 5.3 hereof into the Servicing Fund. The following accounts shall be established and maintained in the Servicing Fund: (a) The Real Estate Tax and Insurance Account. In accordance with instructions from the Bondowner Representative, the Trustee shall transfer from the Revenue Fund amounts required by Section 5.3 hereof for deposit to the Real Estate Tax and Insurance Account (the "Real Estate Tax and Insurance Account") and shall maintain separate accounting of payments applicable to each ofreal estate taxes (if any) and assessments and insurance premiums. Interest accrued on this account shall become a part of this account and may be utilized for the purposes of this account. The Trustee shall pay all of the real estate taxes (if any) and assessments with respect to the Project, in accordance with instructions from the Bondowner Representative, solely from funds earmarked for real estate taxes and assessments and accounted for as part of the Real Estate Tax and Insurance Account not more than 15 days in advance of and in all events not later than when due. The Trustee shall pay all of the insurance premiums due with respect to the Project, in accordance with instructions from the Bondowner Representative, solely from funds earmarked for insurance premiums and accounted for as part of the Real Estate Tax and Insurance Escrow Account not more than 15 days in advance of and in all events not later than when due. In the event insurance for the Project is provided through a blanket policy of insurance covering additional properties other than the Project, the Trustee shall pay such portion of the premiums therefor as may be properly allocated to the Project, in accordance with instructions from the Bondowner Representative. When making each such payment, the Trustee shall request from the Borrower evidence of payment of the full amount of the premium then due. Except as provided in the preceding sentence, the Trustee shall not be responsible for payment of real estate taxes and assessments and insurance premiums in the event there are insufficient funds in the Real Estate Tax and Insurance Account to pay the real estate taxes and assessments and insurance premiums when due. In such event, the Borrower shall, on demand of the Trustee, deposit with the Trustee any amount necessary to make up the deficiency. Amounts in the Real Estate Tax and Insurance Account in excess of the requirements therefor shall be credited against future required transfers from the Revenue Fund. DOCSOC\ 736492v3\24036.0009 (b) The Reserve Account. The Trustee shall transfer from the Revenue Fund amounts required by Section 5.3 for deposit to the Replacement Reserve Sub- Account of the Reserve Account and shall maintain separate accounting thereof. The Trustee shall disburse amounts from such funds accounted for as the Replacement Reserve Sub-Account to payor reimburse the Borrower for the payment of capital expenditures and replacements to the Project, exclusive of ordinary or routine maintenance, upon receipt by the Trustee of a written request of a Borrower Representative the Borrower has incurred capital expenditures, repairs or replacements, together with invoices therefor indicating payment to be made. The Trustee shall also require written certification of the Borrower of lien-free completion of such work and consent of the Bondowner Representative. The Bondowner Representative or an agent thereof shall monitor the Borrower's requests to ensure no duplication of disbursements. Interest accrued on the Reserve Account shall become a part of this account and may be utilized for the purposes of this account. In no event shall the Trustee be obligated to consider requests for more than one 35 ;J - 85" , ~ , disbursement from the Replacement Reserve Sub-Account of the Reserve Account each calendar month. Moneys in the Replacement Reserve Sub-Account of the Reserve Account shall be transferred by the Trustee to the Bond Fund to pay principal of and interest on the Bonds when due to the extent funds are not otherwise available to make payment on the Bonds when due. (c) The Operating Reserve Sub-Account. The Trustee shall transfer from the Revenue Fund amounts required by Section 5.3 for deposit to the Operating Reserve Sub-Account of the Reserve Account and shall maintain separate accounting thereof (the "Operating Reserve Sub-Account"). The Trustee shall disburse amounts from such funds accounted for as the Operating Reserve Sub-Account to payor reimburse the Borrower for the payment of any operating deficit upon receipt by the Trustee of the written request of the Borrower (bearing Bondowner's signature evidencing Bondowner's consent to such disbursement). Section 5.10. Costs of Issuance Fund. A special trust fund is hereby created and designated the Costs of Issuance Fund. There shall be deposited to the credit of the Costs of Issuance Fund $ from the Borrower representing an equity contribution by the Borrower. The Trustee shall disburse amounts in such Fund upon written request of the Issuer and receipt of written approval by the Bondowner Representative to pay Costs of Issuance or to reimburse the Borrower for Costs of Issuance. Any amounts in the Costs of Issuance Fund on the ninetieth day following the Bond Closing shall be transferred to the Project Fund. Upon such transfer, the Costs ofIssuance Fund shall be closed. Section 5.11. [Reserved]. Section 5.12. Interest Earned on Funds. (I) The interest earned from the investment of money held by the Trustee in each of the Funds and Accounts created under this Article 5 (other than the Rebate Fund) shall inure to the benefit of the Borrower and, except as provided in paragraph (2) below, shall be retained in such separate Fund or Account and applied as a credit against the payment next due into such separate Fund or Account. (2) During the continuance of an event of default or an event which, with notice or lapse of time or both, would become an event of default under the Loan Agreement or any other Loan Document, interest earned from the investment of money in the Funds created under this Article 5 shall be held in each such Fund and shall not be credited against the payments next due to or from such separate Funds. Section 5.13. Final Balances. Upon the deposit with the Trustee of moneys sufficient to pay all principal of, premium, if any, and interest on the Bonds, and upon satisfaction of all claims against the Issuer hereunder and under the Loan Documents, including any rebate obligation, all fees, charges and expenses of the Trustee, the Bond Registrar, the Issuer and any Paying Agent which are properly due and payable hereunder, or upon the making of adequate provisions for the payment of such amounts as permitted hereby, all moneys remaining in all Funds, except: (I) moneys necessary to pay principal of, premium, if any, and interest on the Bonds, which moneys shall be held by the Trustee to be paid to the Bondholders; (2) any Additional Payments then due; and (3) moneys, if any, set aside pursuant to Section 5.7 hereof, shall be remitted to the Borrower. DOCSOC\ 736492v3\24036.0009 36 d.-If., ARTICLE VI INVESTMENTS Section 6.1. Investments by Trustee. (1) Moneys held hereunder by the Trustee in the Funds, if permitted by law, shall, as nearly as may be practicable, be invested by the Trustee: (a) unless an event of default has occurred and is continuing under the Loan Agreement or other Loan Documents, upon direction of the Borrower given or confirmed in writing (which direction shall specify the amount thereof to be so invested), in Permitted Investments maturing on or before the Business Day prior to the day such amounts are required and in the amounts required, to enable the Trustee to make payments due hereunder on the Bonds or otherwise, but in no event longer than 180 days (unless approved by the Bondowner Representative), and, in the absence of written direction, the Trustee shall invest amounts available for investment in Permitted Investments described in clause (a)(v) of the definition thereof, or (b) if an event of default has occurred and is continuing under the Loan Agreement or the other Loan Documents, the Trustee shall hold money in the Funds in Permitted Investments of the type described in clause (a)(v) of the definition of Permitted Investments. (2) The Trustee shall sell and reduce to cash a sufficient portion of investments under the provisions of this Section whenever the cash balance in the Fund for which the investment was made is insufficient for its current requirements. Securities so purchased as an investment of money shall be held by the Trustee, shall be registered in the name of the Trustee or its nominee if registration is required, and shall be deemed at all times a part of the applicable Fund, and the interest accruing thereon and any profit realized from such investments shall be credited to the Fund from which the investment was made, subject to any transfer to another Fund as herein provided. Any loss resulting from such investment shall be charged to the Fund from which the investment was made, and in the event such loss reduces the amount held in such Fund below the amount required to be deposited in such Fund, the Trustee shall request the Borrower to transfer to the Trustee for deposit into such Fund the amount required to restore amounts in such Fund to the required amount. The Trustee shall not be liable for any loss incurred from the purchase or sale of any investment (except for any such loss resulting from the gross negligence or willful misconduct of the Trustee or its employees). (3) The Trustee may purchase from or sell to itself, or through any affiliated company, as principal or agent, securities herein authorized so long as such purchase or sale is at fair market value. Section 6.2. Computation of Balances in Funds. In computing the assets of any Fund established hereunder, investments and accrued but unpaid interest thereon shall be deemed a part thereof, and, except as otherwise provided in the Tax Certificates, such investments shall be valued at par value, or at the redemption price thereof, ifthen redeemable at the option of the obligor, whichever is lower. Section 6.3. Downgrade of Investments. If any rating of a Permitted Investment during the term of this Indenture falls below such rating that is required pursuant to the definition of "Permitted Investments" then the Trustee shall within two Business Days after receiving actual knowledge of the downgrade of the rating of an investment notify in writing the Borrower of such downgrade. The Borrower shall within five Business Days of the receipt of the downgrade notice DOCSOC\ 736492v3\24036.0009 37 ~.81 ~ from the Trustee, direct the Trustee to reinvest such downgraded investment in other Permitted Investments. ARTICLE VII DISCHARGE OF LIEN Section 7.1. Payment of Bonds; Satisfaction, Defeasance and Discharge of Bonds and Obligation to Bondholders. Whenever the conditions specified in either clause (A) or clause (B) of the following subsection (I) and the conditions specified in the following subsections (2), (3), (4) and (5) to the extent applicable, shall exist, namely: (I) either: (a) all Bonds have become due and payable and all principal and premium, if any, and interest on the Bonds shall have been paid in full, or all Bonds have been canceled by the Trustee or delivered to the Trustee for cancellation, except for: (i) Bonds for which funds have theretofore been deposited in trust or segregated and held in trust by the Paying Agent or Trustee and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 2.12; and (ii) Bonds alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 2.7, and (I) which, prior to the satisfaction and discharge of this Indenture as hereinafter provided, have not been presented to the Paying Agent or Trustee with a claim of ownership and enforceability by the Holder hereof, or (2) whose enforceability by the Holder thereof has been determined adversely to the Holder by a court of competent jurisdiction or other competent tribunal; or (b) the Issuer or the Borrower has deposited or caused to be deposited, as trust funds, with the Trustee cash and/or Permitted Investments of the type described in clause (a)(i) of the definition of that term which do not permit the redemption thereof at the option of the issuer thereof, the principal of, premium, if any, and interest on which when due (or upon the redemption thereof at the option of the holder), will, without reinvestment, provide cash which together with the cash, if any, deposited with the Trustee at the same time, shall be sufficient, to pay and discharge the entire indebtedness on Bonds not theretofore canceled by the Trustee or delivered to the Trustee for cancellation by the payment of interest on and principal (and premium, if any) of the Bonds which have become due and payable or which shall become due at their stated maturity or redemption date, as the case may be (the "Defeasance Collateral"), and which are to be discharged under the provisions hereof, and has made arrangements satisfactory to the Trustee for the giving of notice of redemption, if any, by the Trustee in the name, and at the expense, ofthe Borrower in the same manner as is provided by Section 3.2; DOCSOC\ 736492v3\24036.0009 38 ;)-~8 "T (2) the Issuer or Borrower has paid, caused to be paid or made arrangements satisfactory to the Trustee for the payment of all other sums due and payable hereunder, including any rebate obligation, and under the Loan Documents; (3) the Borrower has delivered to the Trustee and the Issuer a report of an Independent Accountant stating that the payments to be made on any securities, together with the cash, ifany, deposited pursuant to clause (B) of subsection (I) above will be sufficient to pay when due the principal of, premium, if any, and interest on the Bonds to be defeased; (4) if discharge is to be effected under clause (B) of subsection (I), an opinion of Bond Counsel is delivered to the Trustee and the Issuer stating in effect that such discharge will not impair the exclusion of interest on the Bonds from gross income for federal income tax purposes; (5) the Borrower has delivered to the Trustee and the Issuer an opinion of Independent Counsel to the effect that (i) the Defeasance Collateral has been duly and validly assigned and delivered to the Trustee, (ii) the security interest of the Trustee for the ratable benefit of the Bondholders, with respect to Defeasance Collateral, is a first priority perfected security interest as security for payment of the Bonds, which opinion may contain, and be subject to, conditions, exceptions or qualifications as are then customarily included in such opinions, (iii) making the payment which accompanies such opinion would not constitute an avoidable preference under Section 547 of the Bankruptcy Code or under applicable state law in the event of a filing of a petition for relief under the Bankruptcy Code or such applicable state law by or against the Borrower and (iv) the Defeasance Collateral would not be part of the bankrupt estate under Section 541 of the Bankruptcy Code or be subject to the automatic stay under Section 362 of the Bankruptcy Code in the event of a filing of a petition for relief under the Bankruptcy Code by or against the Borrower; then, except as otherwise provided in Section 7.5, the rights of the Bondholders shall be limited to the cash or cash and securities deposited as provided in clause (I)(A) or (I )(B) above, and upon the Borrower's request the rights and interest hereby granted or granted by the Loan Documents to or for the benefit of the Trustee or the Bondholders shall cease and terminate, and the Issuer and the Trustee shall, at the expense of the Borrower, execute and deliver such instruments of satisfaction and transfer as may be necessary, and forthwith the estate, right, title and interest of the Trustee in and to all of the Project and in and to all rights under this Indenture and the Loan Documents (except the moneys or securities or both deposited as required above, rebatable arbitrage and except as may otherwise be provided in Section 7.5) shall thereupon be discharged and satisfied; except that in any event the obligations of the Borrower under Sections 4.3 and 704 of the Loan Agreement shall survive. Section 7.2. Cancellation of Surrendered Bonds. The Issuer or the Borrower may at any time surrender to the Trustee for cancellation by the Trustee any Bonds previously authenticated and delivered hereunder which the Issuer or Borrower acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. Section 7.3. Payment of Bonds. Any Bonds shall be deemed paid if the conditions set forth in Section 7.1 hereof have been satisfied with respect thereto, even though other Bonds may remain Outstanding. DOCSOC\ 736492v3\24036.0009 39 ~-f?'f , "' Section 704. Application of Deposited Money. All money, securities and income thereon deposited with the Trustee pursuant to Section 7.1 for the purpose of paying the principal, premium, if any, and interest on Bonds shall be applied by the Trustee solely for such purpose. Section 7.5. Survival of Certain Provisions. Notwithstanding satisfaction of the conditions set forth in Section 7.1(B) hereof, the provisions contained in Sections 4.7, 4.8 and 5.7 shall survive the discharge of the Indenture pursuant to Section 7.1(B). ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES Section 8.1. Events of Default. Subject to the provisions of Section 8.10, each of the following events is hereby defined as and declared to be and to constitute an Event of Default (whatever the reason for such an Event of Default 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 body): (I) date thereof; or Failure to make payment of any interest on any Outstanding Bond on the due (2) Failure to make payment of the principal of any Outstanding Bond, on the stated maturity thereof, on the date fixed for redemption or purchase thereof or upon acceleration, or failure to timely pay any redemption premium, if any on the Bonds, or (3) Failure to pay any other moneys required to be paid to the Trustee under the provisions of this Indenture and such default shall have continued for a period of five days after written notice thereof, specifying such default, shall have been given by the Trustee to the Issuer and the Borrower, or to the Issuer, the Borrower and the Trustee by the Holders of not less than 25% in aggregate principal amount of the Bonds then Outstanding; or (4) Failure by Issuer to perform or observe of any other of the covenants, agreements or conditions on the part of the Issuer contained in this Indenture or in the Bonds, and such default shall have continued for a period of 30 days after written notice thereof given in the manner provided in clause (3) above. The Trustee shall provide Bondholders, the Borrower and the Issuer notice of any Event of Default as provided in Section 9.3 hereof. Section 8.2. Acceleration. The Trustee shall upon written direction of the Bondowner Representative, following the occurrence of an Event of Default, and by notice in writing delivered to the Issuer and the Borrower, declare the principal of all of the Bonds Outstanding and the interest accrued thereon immediately due and payable. The Trustee shall give notice of acceleration to Bondholders in the same manner as notice of redemption is given under Section 3.2 (except as to the timing thereof) stating the accelerated date upon which the Bonds are due and payable, provided that the Trustee shall not be required to delay the effective date of acceleration until such notice is given. DOCSOC\ 736492v3\24036.0009 40 {)~ q 0 " "T Section 8.3. Remedies. (1) Upon the occurrence of an Event of Default or an event which, with notice or lapse of time or both, would become an Event of Default, the Trustee shall take such actions as the Bondowner Representative shall direct (subject to receipt of indemnity acceptable to it pursuant to Section 9.1 hereol) to enforce any and all rights available to the Issuer or Bondholders under this Indenture, the Loan Agreement, the Regulatory Agreement and the Mortgage or otherwise, and, in this regard, is specifically authorized to transfer funds from any Fund created pursuant to Article 5 (except rebatable arbitrage whether or not deposited in the Rebate Fund and moneys held in trust for the payment of Bonds or interest thereon which have matured or otherwise become payable prior to such Event of Default) to the Bond Fund for its use in paying principal and interest on the Bonds. (2) No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or the 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 (i) given to the Trustee or to the Holders hereunder or (ii) now or hereafter existing at law or in equity or by statute. (3) 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. (4) No waiver of any Event of Default hereunder, whether by the Trustee or the Holders, shall extend to or shall affect any subsequent Event of Default or impair any rights or remedies consequent thereon. Section 804. Direction of Proceedings by Bondowner Representative. Anything in this Indenture to the contrary notwithstanding but subject to the Issuer's Unassigned Rights, the Bondowner Representative shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee and subject to receipt by the Trustee and the Issuer of indemnity acceptable to it pursuant to Section 9.1 hereof, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture, the Loan Agreement, the Regulatory Agreement and the Mortgage or for the appointment of a receiver or any other proceedings hereunder, provided that such direction shall not be otherwise than in accordance with the provisions oflaw and of this Indenture, the Loan Agreement, the Regulatory Agreement and the Mortgage; and provided further that the Trustee may decline to follow any instruction that would unfairly discriminate against any Bond Owner. Section 8.5. Waiver of Stay or Extension Laws. Upon the occurrence of an Event of Default, to the extent that such rights may then lawfully be waived, neither the Issuer nor anyone claiming through it or under it shall or will set up, claim, or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement of this Indenture, but 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. Section 8.6. Priority of Payment and Application of Moneys. All Bonds issued hereunder and secured hereby shall be equally and ratably secured by and payable from the Bond Fund, without priority of one Bond over any other, except as otherwise expressly provided herein. Upon the DOCSOC\ 736492v3\24036.0009 41 ;;. JII "' occurrence of an Event of Default, all moneys collected pursuant to action taken under the Loan Agreement, the Regulatory Agreement or the Mortgage (other than sums payable directly to the Issuer in connection with its Unassigned Rights), after payment of the costs and expenses (including court costs and reasonable attorneys' fees) of the proceedings resulting in the collection of such moneys (including any such costs and expenses incurred by the Issuer or the Trustee) and of the expenses, liabilities and advances (provided that the Trustee shall not be required to make any advances, as set forth in Section 9.1(13) hereof) incurred or made by the Trustee, and any amounts needed to be deposited into the Rebate Fund, and after any other prior application of such moneys has been made as is required by law, or required or permitted by the Loan Documents, shall be deposited in such fund or funds described in Article 5 of this Indenture as the Trustee deems appropriate; and all moneys in the Bond Fund and, at the discretion of the Trustee except when otherwise required hereunder, any other Fund described in Article 5 (excluding, however, rebatable arbitrage, whether or not deposited in the Rebate Fund and any moneys held in trust for the payment of Bonds or premium or interest thereon which have matured or otherwise become payable prior to such Event of Default) shall be applied as follows: (I) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied: FIRST: To the payment to the persons entitled thereto of firs! all installments of interest then due on the Series B Bonds, in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or privilege, second unpaid principal on the Series B Bonds then due, and third redemption premium, if any, on the Series B Bonds which shall have become due (other than Series B Bonds which have matured or have otherwise become payable prior to such Event of Default and moneys for the payment of which are held in trust pursuant to the provisions of this Indenture) in the order of their due dates and, if the amount available shall not be sufficient to pay in full the unpaid principal and redemption premium, if any, on such Series B Bonds due on any particular due date, then to the payment ratably, according to the amount of principal and premium, if any, due on such date, to the persons entitled thereto; SECOND: To the payment to the persons entitled thereto of, first, all installments of interest then due on the Series A Bonds, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or privilege, second, unpaid principal on Series A Bonds then due, and third, redemption premium, if any, on the Series A Bonds which shall have become due (other than Series A Bonds which have matured or have otherwise become payable prior to such Event of Default and moneys for the payment of which are held in trust pursuant to the provisions of this Indenture) in the order of their due dates and, if the amount available shall not be sufficient to pay in full the unpaid principal and redemption premium, if any, on such Series A Bonds due on any particular due date, then to the payment ratably, according to the amount of principal and premium, if any, due on such date, to the persons entitled thereto; DOCSOC\ 736492v3\24036.0009 42 ;2- 9J- T - THIRD: To reimburse and/or pay to the Issuer in full for costs, expenses or fees (including without limitation, all amounts payable as Additional Charges pursuant to the Loan Agreement) not described in the first unnumbered paragraph of this Section 8.6; and FOURTH: To reimburse and/or pay to the Trustee in full for costs, expenses or fees (including, without limitation, all amounts payable as Additional Charges pursuant to the Loan Agreement) not described in the first unnumbered paragraph of this Section 8.6. (2) If the principal of all Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied first to the payment of the principal and interest then due and unpaid and any redemption premium on the Series B Bonds, then principal, interest and redemption premium on the Series A 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 Bond over any other Bond of the same Series, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto, without any discrimination or privilege; second, to reimburse the Issuer for any costs and expenses not described in the first unnumbered paragraph of this Section 8.6; and third, to reimburse and/or pay to the Trustee in full for costs, expenses or fees (including, without limitation, all amounts payable as Additional Charges pursuant to the Agreement) not described in the first unnumbered paragraph of this Section 8.6. (3) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (2) of this Section in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (1) of this Section. Whenever moneys are to be applied by the Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall (i) fix the date (which shall be a Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue and (ii) on or before such date set aside the moneys necessary to effect such application. The Trustee, at the expense of the Borrower, shall give to the Bondholders mailed notice of the deposit with it of any such moneys and of the fixing of any such date. Neither the Trustee nor any Paying Agent shall be required to make payment of principal or redemption premium to the Holder of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Whenever all Bonds and premium and interest thereon have been paid or provided for under the provisions of this Section 8.6, all expenses and charges of the Trustee and the Issuer have been paid and rebatable arbitrage has been paid or provided for, any balance remaining shall be paid to the person entitled to receive the same pursuant to Section 5.13. Section 8.7. Remedies Vested in Trustee. All rights of action (including the right to file proof of claims) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings DOCSOC\ 736492v3\24036.0009 43 ~-9.3 T . "T 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 Bonds, and any recovery or judgment shall be for the equal benefit ofthe Holders ofthe Outstanding Bonds to the extent and in the manner provided herein. The Issuer and Trustee hereby agree, without in any way limiting the effect and scope thereof, that the pledge and assignment hereunder to the Trustee of all rights included within the Trust Estate shall constitute an agency appointment coupled with an interest on the part of the Trustee which, for all purposes of this Indenture, shall be irrevocable and shall survive and continue in full force and effect notwithstanding the bankruptcy or insolvency of the Issuer or its default hereunder or on the Bonds. Section 8.8. Rights and Remedies of Holders. No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or any Loan Document or for the execution of any trust hereof or any remedy hereunder or thereunder or for the appointment of a receiver, unless (i) a default thereunder shall have become an Event of Default and the Bondowner Representative shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereunder granted or to institute such action, suit or proceeding in its own name; (ii) the Bondowner Representative shall have offered to indemnify the Trustee as provided in Section 9.] and to indemnify the Issuer in a manner satisfactory to the Issuer; and (iii) the Trustee shall thereafter fail or refuse to exercise within a reasonable period of time the remedies hereunder granted, or to institute such action, suit or proceeding in its own name. Such notification, request and offer of indemnity are hereby declared in every such case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture or any Loan Document, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Holders shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture or any Loan Document, by its, his, her or their action or to enforce any right thereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the Holders of all Bonds then Outstanding; provided, however, that nothing herein shall be construed to preclude any Bondholder from enforcing, or impair the right of any Bondholder to enforce, the payment by the Trustee of principal of, and interest and premium, if any, on any Bond of such Bondholder at or after its date of maturity, if and to the extent that such payment is required to be made to such Bondholder by the Trustee from available funds in accordance with the terms hereof. Section 8.9. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture or any Loan Document by the appointment of a receiver, by entry and possession or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and Trustee shall be restored to their former positions and rights hereunder with respect to the property herein conveyed, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. Section 8.10. Waiver of an Event of Default. The Trustee shall waive any Event of Default hereunder and its consequences and rescind any declaration of acceleration of maturity or principal, upon written request of the Bondowner Representative, unless such waiver and rescission would in Trustee's reasonable judgment unduly prejudice the other Bondowners. DOCSOC\ 736492v3\24036.0009 44 ).-q'f "T Section 8.11. Notice to Investor Limited Partner. The Trustee and the Issuer agree that a copy of any written notice of default under the applicable Bond Documents given to the Borrower will be mailed concurrently to the Investor Limited Partner at the following address: Edison Capital Housing Investments, 18101 Von Karman Avenue, Suite 800, Irvine, California 92612-1046, Attention: Asset Manager - Pear Tree Manor. Notwithstanding anything to the contrary contained in any of the Loan Documents or the Bond Documents, the Investor Limited Partner shall have the right, but not the obligation, to cure defaults of the Borrower under the applicable Loan Documents and Bond Documents, and the Trustee and the Issuer agree to accept cures tendered by the Investor Limited Partner. The Investor Limited Partner shall have the period as is permitted under the Loan Documents and Bond Documents to cure such default. ARTICLE IX THE TRUSTEE Section 9.1. Acceptance of the Trustee. The Trustee, prior to the occurrence of an Event of Default, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture; and no implied covenants or obligations should be read into this Indenture against the Trustee. In case an Event of Default has occurred, the Trustee agrees to perform such trusts as an ordinarily prudent man, but in any event, only upon and subject to the following express terms and conditions: (I) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees, and shall not be liable for any misconduct or negligence on the part of any agent or attorney appointed with due care, and shall be entitled to advice of counsel concerning all matters of trusts hereof and duties hereunder, and may in all cases pay such reasonable compensation to any attorney, agent, receiver or employee retained or employed by it in connection herewith and shall be entitled to reimbursement from the Borrower for such payment. The Trustee may act upon the written opinion or written advice of any attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care or, if selected or retained by the Issuer, acceptable to the Trustee in the exercise of such care, provided that the only legal advice or opinion that the Trustee may rely upon for purposes of securing advice or an opinion relating to the tax exempt status of the Series A Bonds is given by Bond Counsel. The Trustee shall not be responsible for any loss or damage resulting from any action or in good faith in reliance upon such opinion or advice. (2) The Trustee shall not be responsible for any recital herein, or in the Bonds or for the investment of moneys as herein provided (except as provided in Section 6.1 or 6.2), or for collecting any property insurance proceeds, or for the validity of the execution by the Issuer of this Indenture, or of any supplemental indentures or instruments of further assurance, or for the sufficiency of any security for the Bonds, or for the value of title of the property herein conveyed, if any, or otherwise as to the maintenance of the security hereof; except as otherwise provided in Section 4.4 and except that in the event the Trustee enters into possession of a part or all of the property conveyed pursuant to any provisions of this Indenture or the Mortgage, it shall use due diligence in preserving such property. The Trustee may, but shall be under no duty to, require of the Borrower full information and advice as to the performance of the covenants, conditions and agreements in the Agreement, the Regulatory Agreement and the Mortgage as to the condition of any DOCSOC\ 736492v3\24036.0009 45 ~-qS" -r" "T Mortgaged Property and the performance of all other obligations thereunder and shall use reasonable efforts, but without any obligation, to advise the Issuer and the Borrower of any impending Event of Default actually known to the Trustee. (3) The Trustee shall not be accountable for the use or application of any of the Bonds or the proceeds thereof (except as herein expressly provided) or for the use or application of any money paid over by the Trustee in accordance with the provisions of this Indenture or for the use and application of money received by any Paying Agent. The Trustee may become the owner of Bonds secured hereby with the same rights it would have if not Trustee. (4) The Trustee shall be protected in acting in accordance with the standard of care otherwise required hereunder upon any written notice, order, requisition, request, consent, certificate, opinion (including an opinion ofIndependent Counselor Bond Counsel), affidavit, letter, telegram or other paper or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and the Trustee shall be under no duty to make an investigation or inquiry into any statement contained therein. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Holder of any Bond, shall be conclusive and binding upon all future Holders of the same Bond and upon Bonds issued in exchange therefor, upon transfer thereof, or in place thereof. (5) As to the existence or non-existence of any fact or as to the sufficiency or authenticity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate of the Issuer signed by its Representative as sufficient evidence of the facts stated therein as the same appear from the books and records under the Secretary's or Assistant Secretary's custody or control or are otherwise known to such officer. The Trustee may accept a certificate of the Secretary or Assistant Secretary of the Issuer to the effect that a motion, resolution or ordinance in the form therein set forth has been adopted by the governing body of the Issuer as conclusive evidence that such motion or resolution has been duly adopted, and is in full force and effect, and may accept such motion, resolution or ordinance as sufficient evidence of the facts stated therein and the necessity or expediency of any particular dealing, transaction or action authorized or approved thereby, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. (6) The Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged, or for salaries or nonfulfillment of contracts during any period in which it may be in possession of or managing the real and tangible personal property as in this Indenture provided. (7) Upon the occurrence and continuance of an Event of Default at any and all reasonable times, the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all of the property comprising the Mortgaged Property, including all books, papers and records of the Issuer pertaining to the Mortgaged Property and the Bonds, and to take such memoranda from and with regard thereto as may be desired. (8) The Trustee shall not be required to give any bond or surety with respect to the execution of said trusts and powers or otherwise with respect to the premises. DOCSOC\ 736492v3\24036.0009 46 ;). -Cj~ ,. "T (9) Notwithstanding anything contained elsewhere in this Indenture, the Trustee shall have the right, but shall not be required, to demand, with respect to the authentication of any Bonds, the withdrawal of any cash except for withdrawals required by the express terms of this Indenture, the release of any property or any action whatsoever within the purview of this Indenture, any showings, certificates, opinions (including opinions ofIndependent Counsel), appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Trustee, deemed desirable for the purpose of establishing the right of the Issuer to the authentication of any Bonds, the withdrawal of any cash, the release of any property, or the taking of any other action by the Trustee. (10) The Issuer shall not be liable for the payment of such sums or for providing for the indemnification of the Trustee. (II) Notwithstanding any provision of this Indenture to the contrary, before taking any action hereunder, the Trustee may require that it be furnished indemnity satisfactory to it for the reimbursement of all expenses to which it may be put and to protect it against all liability (except liability which is adjudicated to have resulted from the negligence or willful misconduct of the Trustee) by reason of any action so taken by the Trustee. (12) No provision of this Indenture or any loan document shall require the Trustee to expend or risk its own funds, make advances or otherwise incur any financial liability in the performance of any of its duties, or the exercise of its rights and powers hereunder. (13) Notwithstanding anything to the contrary contained in this Indenture, in the event the Trustee is entitled or required to commence an action or otherwise exercise remedies to acquire control or possession of any or all ofthe Project under, but not limited to, the provisions of the Mortgage, the Trustee shall not be required to commence any such action or exercise any such remedy if the Trustee has determined in good faith that it may incur liability under an Environmental Law (as defined below) as the result of the presence at, or release on or from the Project of any Hazardous Substances unless the Trustee has received security or indemnity, from a person, in an amount and in a form all satisfactory to the Trustee in its sole discretion, protecting the Trustee from all such liability. The term "Environmental Laws" shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives offederal, state and local governmental agencies and authorities with respect thereto. (14) The Trustee is under no obligation to monitor the receipt of rents by the Borrower. (15) The Trustee shall not be deemed to have notice of any Event of Default under Section 8.1(4) unless the Trustee shall be specifically notified in writing of such Event of Default by the Issuer, the Bondowner Representative, the Borrower or the Holders of at least fifty-one percent (51 %) in aggregate principal amount of Bonds Outstanding, and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the principal corporate trust office of the Trustee, and, in the absence of such notice so delivered, the Trustee may conclusively assume there is no such Event of Default, except as aforesaid. DOCSOC\ 736492v3\24036.0009 47 J-9? Section 9.2. Trustee's Fees, Charges and Expenses. (I) The Trustee and any Paying Agent shall be entitled to payment and/or reimbursement for Ordinary Fees and Expenses and, following the occurrence of an Event of Default, all advances, counsel fees and other expenses reasonably made or incurred by the Trustee in and about the execution of the trusts created by this Indenture in connection with the Event of Default and in and about the exercise and performance of the powers and duties of the Trustee hereunder in connection with the Event of Default and for the reasonable and necessary costs and expenses incurred in defending any liability in the premises of any character whatsoever (unless such liability is adjudicated to have resulted from the negligence or willful misconduct of the Trustee) in connection with ~he Event of Default. In this regard provisions have been made in Section 4.3 of the Loan Agreement for the payment of said fees, advances, counsel fees, costs and expenses, and reference is hereby made to the Loan Agreement for the provisions so made; and the Issuer shall not otherwise be liable for the payment of such sums. (2) The compensation of the Trustee shall not be limited by any provision oflaw which limits the compensation of a trustee of an express trust. Section 9.3. Notice to Holders of Default. The Trustee shall give to the Bondholders and the Issuer written notice of all Events of Default known to the Trustee, within five (5) days after the Trustee has actual knowledge or receives written notice of such Event of Default. Section 904. Intervention by Trustee. In any judicial proceeding to which the Issuer is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Bondholders, the Trustee may intervene on behalf of Holders and shall do so if requested in writing by the Bondowner Representative. The rights and obligations of the Trustee under this Section are subject to the approval of a court of competent jurisdiction in the premises. Section 9.5. Successor Trustee. Any corporation, association or agency 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 trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, shall, with the consent of the Issuer and the Bondowner Representative, be and become successor trustee and paying agent under this Indenture and vested with all of the title to the 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 instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. If the Issuer's and Bondowner Representative's consent is not obtained, the Trustee shall be deemed to have been removed as set forth in Section 9.7 hereof. Section 9.6. Resignation by Trustee. The Trustee and any successor trustee may at any time resign from the trusts hereby created by giving 30 days' written notice to the Issuer, the Bondowner Representative and the Borrower and by first-class mail to each Bondholder as shown on the Bond Register, and such resignation shall take effect upon the appointment of a successor trustee as provided in Section 9.8. Such notice to the Issuer, the Bondowner Representative or the Borrower may be served personally or sent by registered or certified mail, or overnight courier. DOCSOC\ 736492v3\24036.0009 48 ~-9 fI ~ "T Section 9.7. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee, which are signed by the Borrower with the consent of the Issuer and the Bondowner Representative. Section 9.8. Appointment of Successor Trustee. In case the Trustee hereunder 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 in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the Borrower, with the consent of the Issuer and the Bondowner Representative, by an instrument or concurrent instruments in writing signed by the Issuer. Every such Trustee appointed pursuant to the provisions of this Section 9.8 must be a trust company or bank having (or if such trust company or bank is a member of a bank holding company system, its bank holding company has) trust powers and having a reported capital and surplus not less than $50,000,000. Section 9.9. Acceptance by Successor Trustees. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor, to the Borrower and also to the Issuer, an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors as Trustee and Paying Agent; but such predecessor shall, nevertheless, on the written request of the Issuer, or of its successor Trustee, execute and deliver an instrument transferring to such successor Trustee all the estates, properties, rights, powers and trusts of such predecessor hereunder, and every predecessor Trustee shall deliver all securities and moneys held by it as Trustee hereunder to its successor. Should any instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such successor the estates, rights, powers and duties hereby vested or intended to be vested in the predecessor trustee, 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 forthwith filed or recorded or both by the successor Trustee in each recording office where this Indenture or the Mortgage shall have been filed or recorded or both. Section 9.10. Right of Trustee To Pay Taxes and Other Charges. In case any tax, assessment or governmental or other charge upon any part of the Project is not paid, to the extent, if any, that the same is legally payable, the Trustee may, but shall be under no duty to, pay such tax, assessment or governmental or other charge, without prejudice, however, to any rights of the Trustee or Bondholders hereunder arising as a consequence of such failure; and any amount at any time so paid under this Section, Section 5.3 of the Loan Agreement, or under the Mortgage, with interest thereon as provided in Section 5.3 of the Loan Agreement at the Default Rate, shall be repaid to the Trustee upon demand out of Additional Charges under the Loan Agreement, and shall become so much additional indebtedness secured by the Indenture, and the same shall be given a preference in payment over any of the Bonds, except with respect to the payment of any principal, interest or premium on the Bonds which is then due but not paid, but the Trustee shall be under no obligation to make such payment of taxes, assessments or governmental charges unless it shall have been requested to do so by the Bondowner Representative and shall have been provided with adequate indemnity for the purpose of such payment. Any such payment shall be made upon five days' prior written notice to the Borrower unless the delay occasioned by any such written notice could result in the forfeiture or termination of any right. DOCSOC\ 736492v3\24036.0009 49 7.-99 ". "' Section 9.11. Trustee Protected in Relying Upon Resolutions. The resolutions, orders, requisitions, opinions, certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Trustee. Section 9.12. Successor Trustee as Custodian of Funds and Paying Agent. In the event of a change in the office of the Trustee the predecessor Trustee which has resigned or been removed shall cease to be custodian of the Funds described in Article 5 and shall cease to act as a Paying Agent for principal and interest on the Bonds, and the successor Trustee shall be and become such custodian and a Paying Agent. Section 9.13. Co- Trustee. (I) At any time or times upon the consent of the Issuer and the Bondowner Representative, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Estate may at the time be located, the Trustee shall have the power to appoint one or more persons either to act as co-trustee or co-trustees, jointly with the Trustee, of all or any part of the Trust Estate, or to act as separate trustee or separate trustees of all or any part of the Trust Estate, and to vest in such person or persons, in such capacity, such right to the Trust Estate or any part thereof, and such rights, powers, duties, trusts or obligations as the Trustee may consider necessary or desirable, subject to the remaining provisions of this Section 9.13. Every such co-trustee or separate trustee appointed pursuant to the provisions of this Section 9.13 must be a trust company or bank having trust powers and having a reported capital and surplus not less than $50,000,000, if there be such an institution willing, qualified and able to accept the trust upon reasonable or customary terms. (2) Reserved. (3) 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) All rights, powers, trusts, duties and obligations conferred by this Indenture upon the Trustee with respect to the custody, control or management of moneys, 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 trustees shall be conferred or imposed upon and exercised or performed by the Trustee, or by the Trustee and such co-trustee or co-trustees or separate trustee or separate trustees jointly, as shall be provided in the instrument appointing such co- trustee or co-trustees or separate trustee or separate trustees; provided, however, the Trustee shall remain responsible for exercising all rights and powers, maintaining all trusts and performing all duties and obligations conferred or imposed upon the trustees, 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 co-trustees or separate trustee or separate trustees. DOCSOC\ 736492v3\24036.0009 50 9--/00 'r" "T (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 may 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, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 9.13. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 9.13. (f) No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. (g) Any demand, request, direction, appointment, removal, notice, consent, waiver or other action in writing delivered to the Trustee shall be deemed to have been delivered to each co-trustee or separate trustee. (h) Any moneys, 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. (4) Upon the acceptance in writing of such appointment by any such co-trustee or separate trustee, such co-trustee or separate trustee shall be vested with such interest in and to the Trust Estate or any part thereof, and with such rights, powers, duties or obligations, as shall be specified in the instrument of appointment jointly with the Trustee (except insofar as local law makes it necessary for any such co-trustee or separate trustee to act alone) subject to all the terms of this Indenture. Every such acceptance shall be filed with the Trustee. Any co-trustee or separate trustee may, at any time by an instrument in writing, constitute the Trustee its or his or her attorney-in-fact and agent, with full power and authority to do all acts and things and to exercise all discretion on its or his or her behalf and in its or his or her name. (5) In case any co-trustee or separate trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Estate and all rights, powers, trusts, duties and obligations of said co-trustee or separate trustee shall, so far as permitted by law, vest in and be exercised by the Trustee unless and until a successor co-trustee or separate trustee shall be appointed in the manner herein provided. Section 9.14. Obligations as to Reporting. The Trustee shall provide to the Issuer, upon request monthly reports of the balances in the Funds held under Article 5; provided that the Trustee shall not be obligated to provide an accounting for any fund or account that (a) has a balance of $0.00 and (b) has not had any activity since the last reporting date. Section 9.15. Appointment of Bond Registrar and Paying Agent. The Issuer hereby appoints the Trustee as Bond Registrar and Paying Agent under this Indenture. DOCSOC\ 736492v3\24036.0009 51 0;;.-101 ~ "T Section 9.16. Successor Paying Agent or Bond Registrar. The provisions of Sections 9.5 through 9.9 with respect to removal, resignation and appointment of a successor trustee shall be equally applicable to the removal, resignation and appointment of a successor to the Paying Agent and the Bond Registrar. If permissible under applicable law, the Trustee shall be eligible for appointment as successor to the Paying Agent if the Trustee is not then already serving in such capacity. Section 9.17. Confirmation of the Trustee. (I) At any time while Bonds remain outstanding under this Indenture, if the Trustee reasonably questions whether it has proper authority to take action hereunder, the Trustee may, and upon request of the Issuer, the Borrower or the Holders of25% or more of the aggregate principal amount of Outstanding Bonds shall, proceed in accordance with an opinion of Bond Counsel. (2) In construing and interpreting this Indenture and any other Loan Document, the objective shall always be to ascertain and effectuate the intention of the parties. (3) The Trustee or successor Trustee shall not be answerable for actions taken in compliance with any final order of the court. The Trustee or successor Trustee shall not be entitled to require an indemnity bond pursuant to Section 9.1, Subdivision (II), prior to taking any action directed by final order of the court. Section 9.18. Certain Representations of Trustee. The Trustee represents that the Trustee will take possession of the Notes in accordance with the terms of the Indenture in the ordinary course of its business and without knowledge that the Notes are subject to a security interest (except the security interest of the Trustee under the Indenture). ARTICLE X SUPPLEMENTAL INDENTURES Section 10.]. Supplemental Indentures Not Requiring Consent of Bondholders. The Issuer and Trustee may, from time to time and at any time with the prior written consent of the Bondowner Representative, but without the consent of, or notice to, any of the other Holders, and when so required by this Indenture shall, enter into an indenture or indentures supplemental to this Indenture as shall not be inconsistent with the terms and provisions hereof (which supplemental indenture or indentures shall thereafter form a part hereof), so as to thereby (I) cure any ambiguity or formal defect or omission in this Indenture or in any supplemental indenture, (2) grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Holders or Trustee, (3) more precisely identify the Trust Estate, or any other property which may become a part of the Trust Estate, (4) subject to the lien and pledge of this Indenture additional revenues, properties or collateral, (5) evidence the appointment of a separate trustee or a co-trustee or the succession of a new Trustee or Paying Agent or both hereunder, (6) modify, eliminate and/or add to the provisions of this Indenture to such extent as shall be necessary to prevent any interest on the Series A Bonds from becoming includable in gross income for federal income tax purposes or to effect the qualification of this Indenture under the Trust Indenture Act of 1939, as then amended, or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly DOCSOC\ 736492v3\24036.0009 52 ;).-10 ')..... ~ permitted by said Trust Indenture Act of 1939, excluding however the provisions referred to in Section 316(a)(2) of said Trust Indenture Act of 1939, (7) make any other change which is required by any provision of this Indenture or which is deemed by the Trustee necessary to reconcile the Indenture with the Loan Documents, or any amendments thereto, or (8) make any other change which in the judgment of the Trustee is necessary or desirable and will not materially prejudice any non-consenting Bondholder. Section 10.2. Supplemental Indentures Requiring Consent of Bondholders. Exclusive of supplemental indentures covered by Section 10.1 and subject to the terms and provisions contained in this Section, and not otherwise, the Trustee, upon receipt of an instrument evidencing the consent to the below-mentioned supplemental indenture by the Bondowner Representative or the Holders of not less than 51 % of the aggregate principal amount of Bonds Outstanding, shall join with the Issuer in the execution of such other indenture or indentures supplemental hereto as shall be deemed necessary and desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental indenture; provided, however, that nothing herein contained shall permit or be construed as permitting (I) an extension of the maturity of the principal or of the interest on any Bond, (2) a reduction in the principal amount of any Bond or the rate of interest thereon, (3) a privilege or priority of any Bond or Bonds over any other Bond or Bonds except as may be otherwise expressly provided herein, (4) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental indenture or (5) the modification of any of the provisions of this Section without the consent of the Holders of 100% of the principal amount of all Bonds adversely affected thereby ("100% Bondholders' Consent"). 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 by first class mail, postage prepaid, to the Bondholders at the addresses shown on the Bond Register. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the principal office of the Trustee for inspection by all Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice to any particular Bondholder if notice was generally mailed to Bondholders, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided in this Section. If the Bondowner Representative or the Holders of not less than the applicable percentage (as referenced above) in aggregate principal amount of the Bonds then outstanding at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no Bondholder shall have any right to object to any of the terms and provisions contained herein or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or 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 permitted and provided, this Indenture shall be and is deemed to be modified and amended in accordance herewith. Anything herein to the contrary notwithstanding, a supplemental indenture under this Article 10 which adversely affects the right of the Borrower under this Indenture, the Agreement, the Notes, the Regulatory Agreement or the Mortgage shall not become effective unless and until the Borrower shall have consented (either in writing or by inaction as provided below) to the execution and delivery of such supplemental indenture. In this regard, the Trustee shall cause notice of the DOCSOC\ 736492v3\24036.0009 53 :;{-103 ". i proposed execution and delivery of any such supplemental indenture, together with a copy of the proposed supplemental indenture, to be mailed by certified or registered mail to the Borrower at least ] 5 days prior to the proposed date of execution and delivery of any such supplemental indenture. The Borrower shall be deemed to have consented to the execution and delivery of any such supplemental indenture if the Trustee does not receive a letter signed by a Representative of the Borrower of protest or objection thereto on or before 5:30 p.m., Eastern Standard or Eastern Daylight time, whichever is then in effect in New York, New York, of the fifteenth day after the mailing of said notice and a copy of the proposed supplemental indenture to the Borrower unless such fifteenth day falls on a day which is not a Business Day, in which event the letter of objection must be received not later than the next succeeding Business Day. Section 10.3. Rights of Trustee. The Trustee shall not be required to consent to any supplemental indenture referred to in this Article unless it has first received an opinion of Independent Counsel that such supplemental indenture is allowed by this Indenture. Section 1004. Opinion of Bond Counsel. Any supplemental indentures governed by this Article shall be accompanied by an opinion of Bond Counsel that such supplemental indentures does not impair the exclusion of interest on the Series A Bonds from gross income for federal income tax purposes. ARTICLE XI AMENDMENTS TO LOAN DOCUMENTS Section 11.1. Amendments Not Requiring Bondholder Consent. The Issuer or the Trustee or both may, with the prior written consent of the Bondowner Representative, but without the consent of or notice to the Bondholders, consent to any amendment, change or modification of any of the Loan Documents: (1) which may be required or permitted with the consent of the Bondowner Representative, but without Bondholder consent by the provisions of the Loan Documents or this Indenture; (2) for the purpose of curing any ambiguity or formal defect or omission; (3) in connection with additional land, equipment or improvements which may be acquired and which constitute a part of the Mortgaged Property, so as to (A) more precisely identify the same, (B) substitute or add additional land or additional equipment or (C) sell or remove such land or equipment, all as provided in the Mortgage; provided, however, that any such amendment, change or modification of any of the Loan Documents as provided in this Section 11.1 (3) shall not be effective until notice of such action is given to the Holders of the Bonds; (4) to reconcile any Loan Documents with any amendment or supplement to this Indenture; or (5) to effect any other change in a Loan Document which, in the judgment of the Trustee, will not materially prejudice any nonconsenting Bondholder. DOCSOC\ 736492v3\24036.0009 54 ;;;~ /0'1 ~ "' Section 11.2. Amendments Requiring Bondholder Consent. Except for (I) amendments, changes or modifications as provided in Section 11.1 and (2) amendments, changes or modifications permitted by any Loan Document, neither the Issuer nor Trustee shall consent to any other amendment, change or modification of any Loan Document without the giving of notice and the written approval or consent of the Bondowner Representative or the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding given and procured as provided in this Section; provided that in no event shall such amendment, change or modification relieve the Borrower of the obligation under any Loan Documents to make when and as due any payments required for the payment of principal, interest and any premium due or to become due on the Bonds unless the consent of the Holders of all Bonds adversely affected thereby is first secured. 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 any Loan Documents to which the Issuer is a party or the Borrower shall request consent of the Trustee to any such proposed amendment, change or modification of any other Loan Document to which the Issuer is not a party, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided in Section 10.2 with respect to supplemental indentures. 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 all Holders. The Trustee shall not, however, be subject to any liability to any Holder by reason of its failure to mail such notice to any particular Bondholder if notice was generally mailed to Bondholders, and any such failure shall not affect the validity of such amendment, change or modification when consented as provided in this Section. If the Bondowner Representative or the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding at the time of the execution of any such amendment shall consent to the execution thereof as herein provided, no Holder of any 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 Issuer from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such amendment, the applicable Loan Document thereby amended shall be deemed to be modified and amended in accordance therewith. Nothing in this Section contained shall permit or be construed as permitting any reduction in the payments required to be made by Sections 4.2 or 4.3 of the Loan Agreement or a reduction or change in the stated maturity of the Bonds. If the requisite Bondholder consents are obtained, if the Borrower consents and if arrangements satisfactory to the Issuer are made for the payment of all costs of the Issuer in connection therewith, Issuer will not object to such supplemental indentures and modifications to the Loan Documents as may be required in order to provide for credit enhancement of the Bonds, availability of variable and term interest rate modes, a demand purchase of Bonds while in the variable rate mode, and other related changes. Section 11.3. Opinion of Bond Counsel. Any amendment governed by this Article shall be accompanied by an opinion of Bond Counsel that such amendment does not adversely affect the exclusion of interest on the Series A Bonds from gross income for federal income tax purposes. Section 1104. Rights of Trustee. The Trustee shall not be required to consent to any amendment referred to in this Article unless it has first received an opinion of Independent Counsel that such amendment is allowed by this Indenture. DOCSOC\ 736492v3\24036.0009 55 ~ ~ 10S ~ " "' ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.1. Consent of Holders. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by the Holders may be in any number of concurrent writings of similar tenor and must be signed or executed by such Holders in person or by agent appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken by it under such request or other instrument, namely: (I) The fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof, or by an affidavit of any witness to such execution; and (2) The fact of the ownership by any person of Bonds and the amounts and numbers of such Bonds, and the date of the holding of the same, may be proved only by reference to the Bond Register. Section 12.2. Rights Under Indenture. Nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give any person or company other than the parties hereto, and the Bondholders, any legal or equitable right, remedy, or claim under or with respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the Holders of the Bonds hereby secured as herein provided. Section 12.3. Severability. If any provision of this 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 provisions of any constitution or statute or rule of 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 provisions herein contained invalid, inoperative or unenforceable to any extent whatever. Section 1204. Notices. All notices, certificates or other communications hereunder shall be given to all parties identified below, shall be in writing (except as otherwise expressly provided herein) and shall be sufficiently given and shall be deemed given when delivered by hand delivery, telegram or facsimile or served by depositing the same with the United States Postal Service, or any official successor thereto, designated as Registered or Certified Mail, Return Receipt Requested, bearing adequate postage, or delivery by reputable private courier such as Federal Express, Airborne, DHL or similar overnight delivery service, and addressed as hereinafter provided. Notices, except to the Trustee, shall be deemed given when mailed as provided herein. Notices to the Trustee shall be deemed given only when received by the Trustee. All parties identified below may, by written notice given by each to the others, designate any address or addresses to which notices, certificates or other communications to them shall be sent when required as contemplated by this Indenture. Any notice, DOCSOC\ 736492v3\24036.0009 56 ~- /Olp ~ "T certificate, report, financial statement or other communication properly provided by legal counsel on behalf of any party hereunder shall be deemed properly provided by the party represented by such counsel. Until otherwise provided by the respective parties, all notices, certificates and communications to each of them shall be addressed as follows: To the Issuer: Housing Authority of the City ofChula Vista c/o Community Development Department 276 Fourth Avenue Chula Vista, CA 91910 Attention: Executive Director To the Borrower: Sun bow Serena, LP c/o Chelsea Investment Corporation 215 South Hwy 101, Suite 200 Solana Beach, CA 92075 To the Trustee: State Street Bank and Trust Company of California, N.A. 633 West 5th Street, 12th Floor Los Angeles, California 90071 Attention: Corporate Trust Department To the Bond Registrar and Paying Agent: State Street Bank and Trust Company of California, N.A. 633 West 5th Street, 12th Floor Los Angeles, California 90071 Attention: Corporate Trust Department to the initial Bondowner Representative: Bank of America, FSB 450 "B" Street, Suite 450 San Diego, California 92101 Attention: Loan Administrative Manager DOCSOC\ 736492v3\24036.0009 57 :;. -107 with a copy to: Bank of America, FSB 450 "B" Street, Suite 450 San Diego, California 92101 Attention: Ms. Deborah Ruane Section 12.5. Required Approvals. Consents and approvals required by this Indenture to be obtained from the Borrower, the Issuer or the Trustee shall be in writing and shall not be unreasonably withheld or delayed. Section 12.6. Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 12.7. Limitation of Liability of Issuer and Its Officers, Employees and Agents. (1) No covenant, agreement or obligation contained herein shall be deemed to be a covenant, agreement or obligation of any present or future member, officer, employee or agent of the Issuer in his individual capacity, and neither the members of the Issuer nor any officer thereof executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. No member, officer, employee or agent of the Issuer shall incur any personal liability with respect to any other action taken by him pursuant to this Indenture or the Act, provided such member, officer, employee or agent acts in good faith. (2) No agreements or provisions contained in this Indenture nor any agreement, covenant or undertaking by the Issuer contained in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall give rise to any pecuniary liability of the Issuer or a charge against its general credit, or shall obligate the Issuer financially in any way except as may be payable from the repayments by the Borrower under the Loan Agreement and the proceeds of the Bonds. No failure of the Issuer to comply with any term, condition, covenant or agreement herein or in any document executed by the Issuer in connection with the issuance and sale of the Bonds shall subject the Issuer to liability for any claim for damages, costs or other financial or pecuniary charge except to the extent that the same can be paid or recovered from the repayments by the Borrower under the Loan Agreement or proceeds of the Bonds. Nothing herein shall preclude a proper party in interest from seeking and obtaining, to the extent permitted by law, specific performance against the Issuer for any failure to comply with any term, condition, covenant or agreement herein, provided that no costs, expenses or other monetary relief shall be recoverable from the Issuer except as may be payable from the repayments by the trust estate or from the proceeds of the Bonds. (3) No recourse shall be had for the payment of the principal of or premium or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in this Indenture against any past, present or future officer, director, member, employee or agent of the Issuer, or of any successor public corporation, as such, either directly or through the Issuer or any successor public corporation, 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 officers, directors, members, employees or agents, as such, is hereby expressly waived and 58 -;).. 108" DOCSOC\ 736492v3\24036.0009 .,.. "'l' released as a condition of, and consideration for, the execution of this Indenture and the issuance of such Bonds. (4) Anything in this Indenture to the contrary notwithstanding, it is expressly understood and agreed by the parties hereto 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 Trustee or the Borrower as to the existence of any fact or state of affairs required hereunder to be noticed by the Issuer; (b) the Issuer shall not be under any obligation hereunder to perform any record keeping or to provide any legal services; and (c) none of the provisions of this Indenture shall require the Issuer to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder, unless it shall first have been adequately indemnified to its satisfaction against the cost, expenses, and liability which may be incurred thereby. (5) Neither the members of the Issuer nor any person executing the Bonds shall be liable personally on the Bonds by reason of the issuance thereof. The Bonds are issued pursuant to the Act, and the Bonds shall so state on their face, and shall state that the Bonds shall not be a debt of the Issuer or the State, or any political subdivision thereof; and neither the Issuer nor the State or political subdivision thereof, shall be liable thereon; nor in any event shall such Bonds or obligations be payable out of any funds or properties other than those of the Issuer. Section 12.8. Reserved. Section ]2.9. Complete Agreement. The Issuer and the Trustee understand that oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt, including promises to extend or renew such debt, are not enforceable. To protect the Issuer and the Trustee from misunderstandings, any agreements the Issuer and the Trustee reach covering such matters are contained in this Indenture, which is the complete and exclusive statement of the agreement between the Issuer and the Trustee, except as the Issuer and the Trustee may later agree in writing to modify this Indenture as more particularly provided herein. DOCSOC\ 736492v3\24036.0009 59 ~ - I D,/ "T IN WITNESS WHEREOF, the Issuer has caused this Indenture to be signed in its name and behalf and attested by its duly authorized officers, and to evidence its acceptance of the trusts hereby created, the Trustee has caused this Indenture to be signed in its name and behalf by its duly authorized officer, all as of the date first above written. HOUSING AUTHORITY OF THE CITY OF CHULA VISTA By: Its: Executive Director ATTEST: Secretary STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A. By: Its: Authorized Officer /)-110 DOCSOC\ 736492v3\24036.0009 T _ EXHIBIT A (FORM OF REQUISITION CERTIFICATE) Project Fund Date: REQUISITION CERTIFICATE TO: STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE UNDER THE INDENTURE OF TRUST DATED AS OF JUNE I, 2000 BETWEEN THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA AND THE TRUSTEE. St. Regis Park, LP, a California limited partnership (the "Borrower"), hereby requests that the following amounts be paid from the Project Fund to the following payees for the following purposes: Amount Payee and Address Purpose $ Less 10% Retainage $ The Borrower hereby certifies that: (1) obligations in the stated amounts have been incurred and performed at the Project and are presently due and payable and that each item thereof is a proper charge against the Project Fund and has not been the subject of a previous withdrawal from the Project Fund, (2) to the best of the undersigned's knowledge there has not been filed with or served upon the Issuer or the Borrower notice of any lien, right or attachment upon, or claim affecting the right of any such persons, firms or corporations to receive payment of, the respective amounts stated in such requisition which has not been released or will not be released simultaneously with the payment of such obligation, (3) (A) obligations as stated on the requisition have been properly incurred, (B) such work was actually performed or such materials or supplies were actually furnished or installed in or about the Project, (C) if contested, bond has been made by the Borrower and (D) either such materials or supplies are not subject to any lien or security interest or any such lien or security interest will be released or discharged upon payment of the requisition, (4) all rights, title and interest to any and all personal property acquired with the proceeds of the requisition is vested in the Borrower. (5) the Borrower is in compliance with all of the Borrower's covenants contained in the Loan Agreement, DOCSOC\ 736492v3\24036.0009 A-I ;2-//1 "1l' "T (6) such disbursement when added to all other disbursements made to date results in at least ninety-five (95%) of the proceeds ofthe Series A Bonds, including investment earnings, having been used for Qualified Project Costs, and (7) all representations and warranties of the Borrower contained in the Loan Agreement are on the date hereof true and accurate. Requested this day of ST. REGIS PARK, LP By: Borrower Representative Approved this _ day of Approved this _ day of "Bondowner Representative" By: Title: A-2 ~ _ / / ;).,. DOCSOC\ 736492v3\24036.0009 T "T EXHIBIT B (FORM OF REQUISITION CERTIFICATE) MORTGAGE RECOVERY FUND Requisition No. Date: REOUISITION CERTIFICATE TO: STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE UNDER THE INDENTURE OF TRUST DATED AS OF JUNE 1, 2000 BETWEEN THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA AND THE TRUSTEE. St. Regis Park, LP, a California limited partnership (the "Borrower"), hereby requests that the following amounts be paid from the Mortgage Recovery Fund to the following payees for the following purposes: Amount Payee and Address Purpose $ Less 10% Retainage $ The Borrower hereby certifies that: (1) obligations in the stated amounts have been incurred and performed at the Project and are presently due and payable and that each item thereof is a proper charge against the Mortgage Recovery Fund and has not been the subject of a previous withdrawal from the Mortgage Recovery Fund, (2) to the best of the undersigned's knowledge there has not been filed with or served upon the Issuer or the Borrower notice of any lien, right or attachment upon, or claim affecting the right of any such persons, firms or corporations to receive payment of, the respective amounts stated in such requisition which has not been released or will not be released simultaneously with the payment of such obligation, (3) (A) obligations as stated on the requisition have been properly incurred, (B) such work was actually performed or such materials or supplies were actually furnished or installed in or about the Project, (C) if contested, bond has been made by the Borrower and (D) either such materials or supplies are not subject to any lien or security interest or any such lien or security interest will be released or discharged upon payment of the requisition, B-1 J. -//3 DOCSOC\ 736492v3\24036.0009 .".- . r (4) all rights, title and interest to any and all personal property acquired with the proceeds of the requisition is vested in the Borrower, (5) the Borrower is in compliance with all of the Borrower's covenants contained in the Loan Agreement, (6) such disbursement when added to all other disbursements made to date results in at least ninety-five (95%) of the proceeds of the Series A Bonds, including investment earnings, having been used for Qualified Project Costs, and (7) all representations and warranties of the Borrower contained in the Loan Agreement are on the date hereof true and accurate. Requested this day of '-' By: Borrower Representative Approved this _ day of Approved this _ day of "Bondowner Representative" By: Title: B-2 ;;~ //'1 DOCSOC\ 736492v3\24036.0009 ,... ...,. EXHIBIT C-l (FORM OF SERIES A BOND) No. $ EXCEPT AS OTHERWISE EXPRESSLY PERMITTED IN SECTION 2.15 OF THE INDENTURE DESCRIBED BELOW, THIS BOND M4Y BE OWNED ONLY BY AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501 OF REGULATION D OF THE SECURITIES ACT OF 1933, AS AMENDED) AND THE HOLDER HEREOF REPRESENTS THAT IT IS SUCH AN ACCREDITED INVESTOR. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SAN DIEGO HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTIFAMILY HOUSING MORTGAGE REVENUE BOND (PEAR TREE MANOR PROJECT) SERIES 2000A THIS BOND AND THE ISSUE OF WHICH IT FORMS APART ARE NOT GENERAL OBLIGATIONS OF THE ISSUER BUT ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE MONEYS AND PROPERTY PLEDGED UNDER THE INDENTURE OF TRUST FOR PAYMENT THEREOF. INTEREST RATE DATED DATE MATURITY DATE Variable REGISTERED OWNER: BANK OF AMERICA, FSB PRINCIPAL AMOUNT: DOLLARS The HOUSING AUTHORITY OF THE CITY OF CHULA VISTA (the "Issuer"), a public body corporate and politic duly organized and existing under the laws of the State of California (the "State"), for value received, promises to pay, subject to the provisions hereof and of the Indenture, to the Registered Owner named above on the Maturity Date specified above, or upon earlier redemption as described herein, the portion of the principal amount hereof that is outstanding as determined in accordance with Section 2.1 of the Indenture (as defined herein) (the "Outstanding Principal Amount") and to pay interest on the Outstanding Principal Amount at the interest rate determined in accordance with the Indenture until payment of the principal or redemption price hereof has been made. Interest on this Bond is payable monthly on the first Business Day of each month from the Dated Date to and including , 20 (the "Conversion Date") and after the Conversion Date on each March I and September I, commencing , 20 ~ (each such date being hereinafter referred to as an "Interest Payment Date") and on any other date on which payment of principal of this Bond is due. Interest hereon will be computed prior to the Conversion Date on the basis of a J. -1/5 DOCSOC\ 736492v3\24036.0009 T" . r 360-day year and actual days elapsed and after the Conversion Date on the basis of a 360-day year of twelve 30-day months. This Bond shall bear interest at the Series A Variable Rate from the Dated Date to the Conversion Date and at the Series A Fixed Rate on and after the Conversion Date. This Bond is payable in lawful money of the United States of America. Interest on this Bond will be paid by check mailed on each Interest Payment Date by State Street Bank and Trust Company of California, N.A. (together with its successors and assigns in such capacity, the 'Trustee") to the Registered Owner of this Bond as of the Record Date at such Owner's address as it appears on the registration books maintained by or on behalf of the Issuer or at such other address as is furnished to the Trustee in writing by such Registered Owner prior to such Record Date. At the option of a Registered Owner of Bonds, as hereinafter defined, in an aggregate principal amount of at least $1,000,000 (or, if such requirement is not met, the Registered Owner of the principal amount of all Bonds then Outstanding), interest on this Bond may be transmitted by wire transfer on the Interest Payment Date to such Registered Owner to the bank account number at a bank located within the United States on file with the Trustee as ofthe Record Date. The principal of and premium, if any, on this Bond is payable at the principal corporate trust office of the Trustee, upon presentation and surrender of this Bond. This Bond is one of a duly authorized issue of revenue bonds of the Issuer, aggregating $ in principal amount, designated as "Housing Authority of the City of Chula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000A" (the "Bonds"). Simultaneously with the issuance of the Bonds, the Issuer is issuing another series of bonds in the aggregate principal amount of $ , issued on a parity basis to the Bonds, all as more fully set forth in the Indenture. The Bonds are issued under and pursuant to the laws of the State, particularly Chapter I of Part 2 of Division 24 of the California Health and Safety Code, as amended (the "Act"), and an Indenture of Trust dated as of June 1, 2000 (as amended and supplemented from time to time, the "Indenture"), between the Issuer and the Trustee. Reference is hereby made to the Indenture for a description of the rights, duties and obligations of the Issuer, the Trustee and the owners of the Bonds, the terms upon which the Bonds are issued, a description of the property and interests pledged for the payment of the Bonds, the claim of the Bonds against such property and interests, the terms upon which such property and interest are pledged and the terms and conditions upon which the Bonds will be deemed to be paid, at or. prior to maturity or redemption of the Bonds, if any, upon the making of provision for the payment thereof in the manner set forth in the Indenture. The terms and provisions contained in the Indenture are hereby incorporated herein by reference and the owner of this Bond, by purchase hereof, assents to all of such terms and provisions. All capitalized, undefined terms used herein will have the meanings ascribed to them in the Indenture. In the event of any inconsistency between the provisions of this Bond and the provisions of the Indenture, the provisions of the Indenture shall control. The Bonds are being issued for the purpose of providing financing for the acquisition of a rental housing development currently known as the "Pear Tree Manor Apartments" (the "Project"). The proceeds of the Bonds are being used by the Issuer to make a loan (the "Loan") to St. Regis Park, LP, a California limited partnership (the "Borrower"), pursuant to a Loan Agreement dated as of June 1,2000 (as amended and supplemented from time to time, the "Loan Agreement") between the Issuer, the Borrower and Bank of America, FSB. Pursuant to the Loan Agreement, the Borrower is obligated to make payments sufficient to pay principal of, premium, if any, and interest on the Bonds. The liability of the Borrower under the Loan Agreement is limited as provided therein. DOCSOC\ 736492v3\24036.0009 2 J.~/I b ~ 'i Under the Indenture, the Issuer has pledged all amounts on deposit in the funds and accounts (except for the Rebate Fund) established with respect to the Bonds to the payment of the Bonds. The Bonds are subject to purchase or redemption as follows: (I) Extraordinary Redemption. (a) The Bonds are subject to mandatory redemption, in whole or in part, on any Business Day, in the event of damage to or destruction or Condemnation of the Project or any part thereof as provided in Section 5.8 of the Indenture, the Loan Agreement and the Mortgage, at a redemption price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (b) The Bonds are subject to mandatory redemption in part on March I, 200 I from Bond proceeds remaining on deposit in the Project Fund on January I, 200 I and, with respect to the Prepayment Premium, from Borrower moneys, at a redemption price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (c) The Bonds are subject to mandatory redemption on August 31, 2000 (or such later date as the Bondowner Representative approves) in whole, from Borrower moneys, if the first disbursement from the Project Fund in excess of Six Hundred Sixty-Three Thousand Dollars ($663,000) has not been made on or before July 3 I, 2000, at a purchase price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (2) Optional Redemption. The Bonds are subject to redemption at the option of the Borrower, in whole or in part on any Business Day on or prior to the Conversion Date and on any Business Day after the Prepayment Lockout End Date, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (3) Mandatory Sinking Fund Redemption. The Bonds shall be subject to mandatory sinking fund redemption, on each March I and September I, commencing on the earlier to occur of (a) the first March 1 or September I after the repayment of the Series B Note (as defined in the Indenture), or (b) September 1,2009, at a redemption price equal to the principal amount thereof, without premium, plus accrued interest thereon to such redemption date, on the dates and in the principal amounts set forth in the Indenture. (4) Mandatory Redemption Upon Loan Agreement or Mortgage Default. The Bonds are subject to mandatory redemption in whole on any Business Day upon the occurrence of an event of default under the Loan Agreement or any other Loan Document at the direction of the Bondowner Representative at a redemption price equal to the principal amount of the Bonds then Outstanding, plus accrued interest and plus a Prepayment Premium as provided in Section 10.1 of the Loan Agreement. Not less than one (1) day prior to each redemPtion date, the Bondowner Representative may deliver a notice to the Trustee electing to purchase any Bonds in lieu of redemption, in which case DOCSOC\ 736492v3\24036.0009 3 ~~117 1:' "' such Bonds will be purchased in lieu of redemption on the redemption date and will remain Outstanding in the name of the Holder. Notice of redemption shall be mailed by first class mail not less than 30 days prior to the redemption date by the Trustee to the Paying Agent and the Holders of Bonds to be redeemed. No defect in or failure to give notice shall affect the validity of the proceedings for redemption of any Bond not affected by such defect. Such notice, which shall be prepared by the Trustee at the expense of the Borrower, shall state the subsection under the Indenture pursuant to which the Bonds are being called for redemption, and unless all Outstanding Bonds are to be redeemed, each such notice shall refer to the Bonds to be redeemed by their numbers and maturities and the date on which and the place where they shall be presented for redemption. Except as specifically provided in the Indenture and provided sufficient funds are on deposit with the Trustee with respect to such redemption, the Bonds thus called for redemption shall cease to bear interest from and after the specified redemption date and the Holder of such Bonds shall have no further rights with respect to such Bonds or under the Indenture except to receive the redemption price of such Bonds. The Bonds are issuable in the form of registered Bonds in Denominations of $1 00,000 or any integral multiples of $1,000 in excess of $100,000, except that one Bond may be in an integral multiple of $500 in excess of $1 00,000. The transfer of each Bond is subject to registration by the Holder thereof only upon compliance with the conditions for registration of transfer imposed on the Holder under the Indenture. Upon surrender of any Bond at the principal corporate trust office of the Bond Registrar, the Issuer shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, in the name of the designated transferee or transferees (but not registered in blank or to "bearer" or a similar designation), one or more new Bonds of any authorized denomination or denominations of a like aggregate principal amount and series, having the same stated maturity, tenor and interest rate. At the option of the Holder, Bonds may be exchanged for other Bonds of any authorized denomination or denominations of a like aggregate principal amount, tenor, series and stated maturity, upon surrender of the Bonds to be exchanged at the principal corporate trust office of the Bond Registrar, and upon payment, if the Issuer shall so require, of the taxes, ifany, referred to in the Indenture. Whenever any Bonds are so surrendered for exchange, the Issuer shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, the Bonds which the Holder making the exchange is entitled to receive. Registration of the transfer of a Bond may be made on the Bond Register by the Holder in person or by the Holder's attorney duly authorized in writing. Every Bond presented or surrendered for registration of transfer or exchange shall (i) be accompanied by evidence of compliance with the provisions of Section 2.15 of the Indenture, (ii) be duly endorsed or be accompanied by a written instrument or instruments of transfer, in the form printed on the Bond or in another form satisfactory to the Bond Registrar, duly executed and with guaranty of signature of the Holder thereof or his, her or its attorney duly authorized in writing, and (iii) include written instructions as to the details of the transfer of the Bond. The Bond Registrar shall not be required (a) to transfer or exchange any Bond during a period beginning at the opening of business 15 days before the day of the mailing ofa notice of redemption of Bonds under this Indenture and ending at the close of business on the day of such 4 ~-//3 DOCSOC\ 736492v3\24036.0009 ~ "' publication or mailing or (b) to transfer or exchange any Bond so selected for redemption in whole or in part. Except for the transfer of Bonds, in whole or in part, to any subsidiary of BankAmerica Corporation (or any successor to BankAmerica Corporation, whether by merger, acquisition of assets or otherwise), Bonds may be transferred, as a whole or in part, to one or more Bondholders (but in no event to more than 35 Bondholders) only upon receipt by the Bond Registrar, the Issuer and the Trustee of evidence that such Bonds are being transferred to an "accredited investor" (as defined in Rule 501(a)(l), (2), (3), (4), (7) or (8) of Regulation D promulgated under the Securities Act of 1933). The Bond Registrar shall not register any transfer or exchange of any Bonds unless such Bondholder's prospective transferee delivers to the Trustee an Investor's Letter substantially in the form set forth in Exhibit D to the Indenture. The Trustee shall be entitled to rely, without any further inquiry, on any Investor's Letter delivered to it and shall be fully protected in registering any transfer or exchange of any Bonds in reliance on any such Investor's Letter which appears on its face to be correct and of which the Trustee has no actual knowledge otherwise. Any such Holder desiring to effect such transfer shall agree to indemnify the Issuer and Trustee from and against any and all liability, cost or expense (including attorneys' fees) that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. The Issuer and the Trustee may deem and treat the person in whose name this Bond is registered on the registration books of the Issuer maintained by the Trustee as the absolute owner hereof for all purposes, whether or not this Bond is overdue; and neither the Issuer nor the Trustee will be affected by any notice to the contrary. The stated maturity of this Bond and the stated dates for the payment of interest may be accelerated upon the occurrence of certain "Events of Default" as defined in the Indenture. The Registered Owner of this Bond has no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. If the date for making any payment hereunder or under the Indenture or the last date for performance of any act or the exercising of any right, as provided in the Indenture, is not a Business Day, such payment may, unless otherwise provided in the Indenture, be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided herein or in the Indenture, and no interest will accrue for the period after such nominal date. Neither the members of the Issuer nor any person executing this Bond shall be personally liable on this Bond or be subject to any personal liability or accountability by reason ofthe issuance of this Bond. This Bond will not be entitled to any security or benefit under the Indenture, or be valid or become obligatory for any purpose, until the Trustee has authenticated this Bond by the execution of the Certificate of Authentication inscribed hereon. IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Executive Director of the Issuer, and has caused 5 ;;-//9 DOCSOC\ 736492v3\24036.0009 ,.. "T its seal or a facsimile thereof to be reproduced hereon and attested by the manual or facsimile signature of the Secretary of the Issuer. HOUSING AUTHORITY OF THE CITY OF CHULA VISTA [SEAL] By: Executive Director ATTEST: Secretary (FORM OF CERTIFICATE OF AUTHENTICATION) This Bond is one of the Bonds described in the Indenture referred to herein. Date of Authentication: ,2000 STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee By: Its: Authorized Officer DOCSOC\ 736492v3l24036.0009 6 J.. - / ;uJ ,. "T (FORM OF LEGAL OPINION) The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. Secretary of the Housing Authority of the City of Chula Vista (FORM OF ASSIGNMENT) For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the bond register of the Trustee with full power of substitution in the premIses. Dated: Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Signature Guaranteed: Note: Signature(s) must be guaranteed by an eligible guarantor institution. DOCSOC\ 736492v3\24036.0009 7 ;J-/:t./ T "T EXHIBIT C-2 (FORM OF SERIES B BOND) No. $ EXCEPT AS OTHERWISE EXPRESSLY PERMITTED IN SECTION 2. IS OF THE INDENTURE DESCRIBED BELOW, THIS BOND M4Y BE OWNED ONLY BY AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501 OF REGULATION D OF THE SECURITIES ACT OF 1933, AS AMENDED) AND THE HOLDER HEREOF REPRESENTS THAT IT IS SUCH AN ACCREDITED INVESTOR. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SAN DIEGO HOUSING AUTHORITY OF THE CITY OF CHULA VISTA MULTIFAMILY HOUSING MORTGAGE REVENUE BOND (PEAR TREE MANOR PROJECT) SERIES 2000B THIS BOND AND THE ISSUE OF WHICH IT FORMS APART ARE NOT GENERAL OBLIGATIONS OF THE ISSUER BUT ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE MONEYS AND PROPERTY PLEDGED UNDER THE INDENTURE OF TRUST FOR PAYMENT THEREOF. INTEREST RATE DATED DATE MATURITY DATE Variable REGISTERED OWNER: BANK OF AMERICA, FSB PRINCIPAL AMOUNT: DOLLARS The HOUSING AUTHORITY OF THE CITY OF CHULA VISTA (the "Issuer"), a public body corporate and politic duly organized and existing under the laws of the State of California (the "State"), for value received, promises to pay, subject to the provisions hereof and of the Indenture, to the Registered Owner named above on the Maturity Date specified above, or upon earlier redemption as described herein, the portion of the principal amount hereof that is outstanding as determined in accordance with Section 2.1 of the Indenture (as defined herein) (the "Outstanding Principal Amount") and to pay interest on the Outstanding Principal Amount at the interest rate determined in accordance with the Indenture until payment of the principal or redemption price hereof has been made. Interest on this Bond is payable monthly on the first Business Day of each month from the Dated Date to and including September 1, 2000 (the "Conversion Date") and after the Conversion Date on each March I and September 1, commencing March 1, 2001 (each such date being hereinafter referred to as an "Interest Payment Date") and on any other date on which payment of ~-I;J.~ DOCSOC\ 736492v3\24036.0009 "T principal of this Bond is due. Interest hereon will be computed prior to the Conversion Date on the basis of a 360-day year and actual days elapsed and after the Conversion Date on the basis of a 360- day year of twelve 30-day months. This Bond shall bear interest at the Series B Variable Rate from the Dated Date to the Conversion Date and at the Series B Fixed Rate on and after the Conversion Date. This Bond is payable in lawful money ofthe United States of America. Interest on this Bond will be paid by check mailed on each Interest Payment Date by State Street Bank and Trust Company of California, N.A. (together with its successors and assigns in such capacity, the "Trustee") to the Registered Owner of this Bond as of the Record Date at such Owner's address as it appears on the registration books maintained by or on behalf of the Issuer or at such other address as is furnished to the Trustee in writing by such Registered Owner prior to such Record Date. At the option of a Registered Owner of Bonds, as hereinafter defined, in an aggregate principal amount of at least $1 ,000,000 (or, if such requirement is not met, the Registered Owner of the principal amount of all Bonds then Outstanding), interest on this Bond may be transmitted by wire transfer on the Interest Payment Date to such Registered Owner to the bank account number at a bank located within the United States on file with the Trustee as of the Record Date. The principal of and premium, if any, on this Bond is payable at the principal corporate trust office of the Trustee, upon presentation and surrender of this Bond. This Bond is one of a duly authorized issue of revenue bonds of the Issuer, aggregating $ in principal amount, designated as "Housing Authority of the City of Chula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000B" (the "Bonds"). Simultaneously with the issuance of the Bonds, the Issuer is issuing another series of bonds in the aggregate principal amount of $ , issued on a parity basis to the Bonds, all as more fully set forth in the Indenture. The Bonds are issued under and pursuant to the laws of the State, particularly Chapter ] of Part 2 of Division 24 of the California Health and Safety Code, as amended (the "Act"), and an Indenture of Trust dated as of June I, 2000 (as amended and supplemented from time to time, the "Indenture"), between the Issuer and the Trustee. Reference is hereby made to the Indenture for a description of the rights, duties and obligations of the Issuer, the Trustee and the owners of the Bonds, the terms upon which the Bonds are issued, a description of the property and interests pledged for the payment of the Bonds, the claim of the Bonds against such property and interests, the terms upon which such property and interest are pledged and the terms and conditions upon which the Bonds will be deemed to be paid, at or prior to maturity or redemption of the Bonds, if any, upon the making of provision for the payment thereof in the manner set forth in the Indenture. The terms and provisions contained in the Indenture are hereby incorporated herein by reference and the owner of this Bond, by purchase hereof, assents to all of such terms and provisions. All capitalized, undefined terms used herein will have the meanings ascribed to them in the Indenture. In the event of any inconsistency between the provisions of this Bond and the provisions of the Indenture, the provisions of the Indenture shall control. The Bonds are being issued for the purpose of providing financing for the acquisition of a rental housing development currently known as the "Pear Tree Manor Apartments" (the "Project"). The proceeds of the Bonds are being used by the Issuer to make a loan (the "Loan") to Serena Sunbow, LP, a California limited partnership (the "Borrower"), pursuant to a Loan Agreement dated as of June I, 2000 (as amended and supplemented from time to time, the "Loan Agreement") between the Issuer, the Borrower and Bank of America, FSB. Pursuant to the Loan Agreement, the Borrower is obligated to make payments sufficient to pay principal of, premium, if any, and interest DOCSOC\ 736492v3\24036.0009 2 ~ ~ / ;23 . "T on the Bonds. The liability of the Borrower under the Loan Agreement is limited as provided therein. Under the Indenture, the Issuer has pledged all amounts on deposit in the funds and accounts (except for the Rebate Fund) established with respect to the Bonds to the payment of the Bonds. The Bonds are subject to purchase or redemption as follows: (I) Extraordinary Redemption. (a) The Bonds are subject to mandatory redemption, in whole or in part, on any Business Day, in the event of damage to or destruction or Condemnation of the Project or any part thereof as provided in Section 5.8 of the Indenture, the Loan Agreement and the Mortgage, at a redemption price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (b) The Bonds are subject to mandatory redemption in part on March 1,2001 from Bond proceeds remaining on deposit in the Project Fund on January 1, 200 I and, with respect to the Prepayment Premium, from Borrower moneys, at a redemption price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (c) The Bonds are subject to mandatory redemption on August 31, 2000 (or such later date as the Bondowner Representative approves) in whole, from Borrower moneys, if the first disbursement from the Project Fund in excess of Six Hundred Sixty-Three Thousand Dollars ($663,000) has not been made on or before July 31, 2000, at a purchase price equal to the principal amount thereof plus accrued interest and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (2) Optional Redemption. The Bonds are subject to redemption at the option of the Borrower, in whole or in part on any Business Day on or prior to the Conversion Date and on any Business Day after the Prepayment Lockout End Date, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date and plus any Prepayment Premium as provided in Section 10.1 of the Loan Agreement. (3) Mandatory Sinking Fund Redemption. The Bonds shall be subject to mandatory sinking fund redemption, on each March I and September 1, commencing March 1,2001, at a redemption price equal to the principal amount thereof, without premium, plus accrued interest thereon to such redemption date, on the dates and in the principal amounts set forth in the Indenture. (4) Mandatory Redemption Upon Loan Agreement or Mortgage Default. The Bonds are subject to mandatory redemption in whole on any Business Day upon the occurrence of an event of default under the Loan Agreement or any other Loan Document at the direction of the Bondowner Representative at a redemption price equal to the principal amount of the Bonds then Outstanding, plus accrued interest and plus a Prepayment Premium as provided in Section 10.1 of the Loan Agreement. Not less than one (1) day prior to each redemption date, the Bondowner Representative may deliver a notice to the Trustee electing to purchase any Bonds In lieu of redemption, In which case such Bonds will be purchased In lieu of redemption on the redemption date and will remain Outstanding In the name of the Holder. DOCSOC\ 736492v3\24036.0009 3 ~ -I ~i ~ "T Notice of redemption shall be mailed by first class mail not less than 30 days prior to the redemption date by the Trustee to the Paying Agent and the Holders of Bonds to be redeemed. No defect in or failure to give notice shall affect the validity of the proceedings for redemption of any Bond not affected by such defect. Such notice, which shall be prepared by the Trustee at the expense of the Borrower, shall state the subsection under the Indenture pursuant to which the Bonds are being called for redemption, and unless all Outstanding Bonds are to be redeemed, each such notice shall refer to the Bonds to be redeemed by their numbers and maturities and the date on which and the place where they shall be presented for redemption. Except as specifically provided in the Indenture and provided sufficient funds are on deposit with the Trustee with respect to such redemption, the Bonds thus called for redemption shall cease to bear interest from and after the specified redemption date and the Holder of such Bonds shall have no further rights with respect to such Bonds or under the Indenture except to receive the redemption price of such Bonds. The Bonds are issuable in the form of registered Bonds in Denominations of $100,000 or any integral multiples of$I,OOO in excess of $100,000. The transfer of each Bond is subject to registration by the Holder thereof only upon compliance with the conditions for registration of transfer imposed on the Holder under the Indenture. Upon surrender of any Bond at the principal corporate trust office of the Bond Registrar, the Issuer shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, in the name of the designated transferee or transferees (but not registered in blank or to "bearer" or a similar designation), one or more new Bonds of any authorized denomination or denominations of a like aggregate principal amount and series, having the same stated maturity, tenor and interest rate. At the option of the Holder, Bonds may be exchanged for other Bonds of any authorized denomination or denominations of a like aggregate principal amount, tenor, series and stated maturity, upon surrender of the Bonds to be exchanged at the principal corporate trust office ofthe Bond Registrar, and upon payment, if the Issuer shall so require, ofthe taxes, if any, referred to in the Indenture. Whenever any Bonds are so surrendered for exchange, the Issuer shall execute (if necessary), and the Bond Registrar shall authenticate and deliver, the Bonds which the Holder making the exchange is entitled to receive. Registration of the transfer of a Bond may be made on the Bond Register by the Holder in person or by the Holder's attorney duly authorized in writing. Every Bond presented or surrendered for registration of transfer or exchange shall (i) be accompanied by evidence of compliance with the provisions of Section 2.15 of the Indenture, (ii) be duly endorsed or be accompanied by a written instrument or instruments of transfer, in the form printed on the Bond or in another form satisfactory to the Bond Registrar, duly executed and with guaranty of signature of the Holder thereof or his, her or its attorney duly authorized in writing, and (iii) include written instructions as to the details of the transfer of the Bond. The Bond Registrar shall not be required (a) to transfer or exchange any Bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Bonds under this Indenture and ending at the close of business on the day of such publication or mailing or (b) to transfer or exchange any Bond so selected for redemption in whole or in part. Except for the transfer of Bonds, in whole or in part, to any subsidiary of BankAmerica Corporation (or any successor to BankAmerica Corporation, whether by merger, acquisition of assets DOCSOC\ 736492v3\24036.0009 4 ~~1;;"5 T "T or otherwise), Bonds may be transferred, as a whole or in part, to one or more Bondholders (but in no event to more than 35 Bondholders) only upon receipt by the Bond Registrar, the Issuer and the Trustee of evidence that such Bonds are being transferred to an "accredited investor" (as defined in Rule 501(a)(I), (2), (3), (4), (7) or (8) of Regulation D promulgated under the Securities Act of 1933). The Bond Registrar shall not register any transfer or exchange of any Bonds unless such Bondholder's prospective transferee delivers to the Trustee an Investor's Letter substantially in the form set forth in Exhibit D to the Indenture. The Trustee shall be entitled to rely, without any further inquiry, on any Investor's Letter delivered to it and shall be fully protected in registering any transfer or exchange of any Bonds in reliance on any such Investor's Letter which appears on its face to be correct and of which the Trustee has no actual knowledge otherwise. Any such Holder desiring to effect such transfer shall agree to indemnify the Issuer and Trustee from and against any and all liability, cost or expense (including attorneys' fees) that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. The Issuer and the Trustee may deem and treat the person in whose name this Bond is registered on the registration books of the Issuer maintained by the Trustee as the absolute owner hereof for all purposes, whether or not this Bond is overdue; and neither the Issuer nor the Trustee will be affected by any notice to the contrary. The stated maturity of this Bond and the stated dates for the payment of interest may be accelerated upon the occurrence of certain "Events of Default" as defined in the Indenture. The Registered Owner of this Bond has no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. If the date for making any payment hereunder or under the Indenture or the last date for performance of any act or the exercising of any right, as provided in the Indenture, is not a Business Day, such payment may, unless otherwise provided in the Indenture, be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided herein or in the Indenture, and no interest will accrue for the period after such nominal date. Neither the members of the Issuer nor any person executing this Bond shall be personally liable on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond. This Bond will not be entitled to any security or benefit under the Indenture, or be valid or become obligatory for any purpose, until the Trustee has authenticated this Bond by the execution of the Certificate of Authentication inscribed hereon. DOCSOC\ 736492v3\24036.0009 5 ~ J I ~/p 'r i IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Executive Director of the Issuer, and has caused its seal or a facsimile thereof to be reproduced hereon and attested by the manual or facsimile signature of the Secretary of the Issuer. HOUSING AUTHORITY OF THE CITY OF CHULA VISTA [SEAL] By: Executive Director ATTEST: Secretary (FORM OF CERTIFICATE OF AUTHENTICATION) This Bond is one of the Bonds described in the Indenture referred to herein. Date of Authentication: ,2000 STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee By: Its: Authorized Officer DOCSOC\ 736492v3\24036.0009 6 ;;'-/~7 T "T (FORM OF LEGAL OPINION) The following is a true copy ofthe opinion rendered by Stradling Y occa Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. Secretary of the Housing Authority of the City of Chula Vista (FORM OF ASSIGNMENT) For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the bond register of the Trustee with full power of substitution in the premIses. Dated: Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Signature Guaranteed: Note: Signature(s) must be guaranteed by an eligible guarantor institution. DOCSOC\ 736492v3\24036.0009 7 ;'-IJ.~ ,. -, EXHIBIT D INVESTOR'S LETTER [Issuer's Address] Housing Authority of the City ofChula Vista c/o Community Development Department 276 Fourth Avenue Chula Vista, CA 91910 [Trustee's Address] RE: Housing Authority of the City ofChula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000A and Series 2000B Ladies and Gentlemen: The undersigned representative of , (the "Purchaser"), being the purchaser of$ of the aggregate principal amount of the Housing Authority of the City of Chula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000A and $ of the aggregate principal amount of the Housing Authority of the City of Chula Vista Multifamily Housing Mortgage Revenue Bonds (Pear Tree Manor Project) Series 2000B, dated as of June 1,2000 (the "Bonds") does hereby certify, represent and warrant for the benefit of the Housing Authority of the City ofChula Vista (the "Issuer") and State Street Bank and Trust Company of California, N.A. (the ''Trustee'') that: (a) The Purchaser understands that the Bonds are special limited obligation of the Issuer payable solely from the sources pledged, and to the extent provided, in the Resolution of the Issuer adopted on June 13,2000, authorizing the execution of the Indenture, as defined herein (the "Resolution"). The Purchaser further understands that: (I) the execution of the Indenture of Trust by and between the Issuer and the Trustee dated as of June I, 2000 (the "Indenture") which authorizes the issuance of the Bonds is not, and shall not be deemed to constitute, an indebtedness of the Issuer, any county or municipality of the State of California (the "State") or the State, within the meaning of any constitutional or statutory limitation, (2) the Bonds do not constitute a general or moral obligation of the Issuer, the State or any county or municipality thereof, (3) the full faith and credit of neither the State nor any county or municipality thereof is pledged to the payment of or any security for the Bonds, and (4) the Issuer has no general taxing power. (b) The Purchaser has received, read and reviewed such documents, instruments and information related to the issuance of the Bonds as the Purchaser has requested in order to evaluate the merits and risks of purchasing the Bonds, including, without limitation, a copy of the Resolution, the Indenture and the Loan Agreement by and among the Issuer, Bank of America, FSB and St. Regis Park, LP, a California limited partnership (the "Borrower") dated as of June 1,2000 (the DOCSOC\ 736492v3\24036.0009 D-] ~ -I :;.9 T "T "Agreement"), and the Purchaser understands the risks of, and other considerations relating to, the purchase of the Bonds (collectively, the "Offering Information"). (c) The Purchaser has been provided an opportunity to ask questions of, and the Purchaser has received answers from, representatives of the Issuer and the Borrower regarding the terms and conditions of the Bonds, and the Purchaser has obtained all additional information requested by it in connection with the Bonds. (d) The Purchaser has such knowledge and experience in financial and business matters in general, and investments in particular, that it is capable of evaluating and has evaluated the merits and risks of purchasing the Bonds and the Purchaser is capable and prepared to bear the risks of any investment in the Bonds. (e) Neither the Borrower, the Bond Counsel to the Issuer, the Issuer, its governing body, or any of its employees or agents will have any responsibility to the Purchaser for the accuracy or completeness of information obtained by the Purchaser from any source regarding the Project, the Issuer, the Borrower or their financial conditions or regarding the Bonds, the provisions for payment thereof, or the sufficiency of any security therefor, including, without limitation, any information specifically provided by any of such parties contained in the Offering Information. The Purchaser acknowledges that, as between Purchaser and all of such parties: (i) the Purchaser has assumed responsibility for obtaining such information and making such review as the Purchaser has deemed necessary or desirable in connection with its decision to purchase the Bonds, (ii) the Offering Information and any additional information specifically requested from the Issuer or the Borrower and provided to the Purchaser prior to closing constitute all the information and review, with the investigation made by Purchaser (including specifically the Purchaser's investigation of the Issuer, the Project and the Borrower) prior to its purchase of the Bonds, that Purchaser has deemed necessary or desirable in connection with its decision to purchase the Bonds. (t) The Purchaser is either a bank, savings and loan association, registered investment company, insurance company or other "accredited investor" as defined in Rule 50 I (a)(I), (2), (3), (4), (7) or (8) of Regulation D of the Securities Act of 1933, as amended. Purchaser is duly and validly organized under the laws of its jurisdiction of incorporation or organization, and it can bear the economic risk of the purchase of the Bonds and has such knowledge and experience in business and financial matters, including the analysis of a participation in the purchase of similar investments, as to be capable of evaluating the merits and risks of an investment in the Bonds on the basis of the information and review described in section (b) and (c) above. (g) The Purchaser has purchased the Bonds for its own account for investment, provided, however, the Purchaser may dispose of the Bonds or any portion thereof or interest therein if such disposition can be made without violating federal or state securities laws, and more specifically, and without limiting the generality of the foregoing, it is to be understood that the Purchaser may not dispose of the Bonds or any portion thereof or interest therein except to a person or entity that Purchaser has reasonable grounds to believe is an "accredited investor" as defined in Rule 50 I (a)(l), (2), (3), (4), (7) or (8) of Regulation D of the Securities Act of 1933, as amended. (h) If Purchaser intends to sell, transfer or otherwise dispose of the Bonds to an "accredited investor", Purchaser must first obtain and deliver to the Trustee, pursuant to Section 2.15 of the Indenture, an executed copy of an investor's letter addressed to the Issuer and the Trustee substantially in the form of this investor's letter. DOCSOC\ 736492v3\24036.0009 D-2 ?-_/30 T "T (1) To the extent permitted by law, Purchaser agrees to indemnify and hold harmless the Trustee and the Issuer, each member, officer, director, partner or employee of the Trustee or the Issuer and each person who controls the Trustee, or the Issuer 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 (collectively called the "Indemnified Parties"), against any and all losses, claims, damages, liabilities or expenses (including any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions) whatsoever caused by any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in the Offering Information or caused by any omission or alleged omission from the Offering Information of any material fact the statements made therein, in the light of the circumstances under which they were made, not misleading insofar as such losses, claims, damages, liabilities or expenses are caused by any such untrue or misleading statement or omission or alleged untrue or misleading statement or omission in the information contained in the Offering Information; provided, however, that the Purchaser shall not be liable to an Indemnified Party in any such case to the extent that any such loss, claim, damage liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to it by the Trustee or the Issuer specifically for use therein. No Indemnified Parties shall be indemnified hereunder for any losses, claims, damages or liabilities resulting from the negligence of such Indemnified Parties. (j) The Purchaser understands that (i) the Bonds have not been registered with any federal or state securities agency or commission, and (ii) no credit rating has been sought or obtained with respect to the Bonds, and the Purchaser acknowledges that the Bonds are a speculative investment and that there is a high decree of risk in such investment. (k) The Purchaser is legally authorized to purchase the Bonds as a lawful investment of the Purchaser. (I) The undersigned is a duly appointed, qualified and acting officer of the Purchaser and authorized to make the certifications, represents and warranties contained herein. IN WITNESS WHEREOF, I have hereunto set my hand the day of (NAME OF PURCHASER] By: Name: Title: DOCSOC\ 736492v3\24036.0009 D-3 ~ -/3/ T "' Payment Date Total DOCSOC\ 736492v3\24036.0009 EXHIBIT E SINKING FUND PAYMENT SCHEDULE Series A Principal Payments Series B Principal Payments L_ .{tQ E-I ~ ~ /3:L T "' JOINT REDEVELOPMENT AGENCY I CITY COUNCIL AGENDA STATEMENT ITEM NO.: .3 MElliNG DATE: 06/13/00 ITEM TITLE: PUBLIC HEARING: TO CONSIDER GRANTING A SPECIAL USE PERMIT FOR THE DEVELOPMENT OF A MIXED-USE PROJECT THAT INCLUDES 15,000 SQUARE FEET OF COMMERCIAL SPACE AND 106 AFFORDABLE HOUSINGS UNITS AT THE NORTHEAST CORNER OF MAIN AND BROADWAY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA AND GRANTING A TWENTY-FOUR PERCENT (24%) DENSITY BONUS AND OTHER ADDITIONAL INCENTIVES PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 65915. CITY COUNCIL AND AGENCY RESOLUTION (A) ADOPTING NEGATIVE DECLARATION IS 00-47; (B) GRANTING SPECIAL USE PERMIT SUPS 00-09; (C) APPROVING AN OWNER PARTICIPATION AGREEMENT WITH AVALON COMMUNITIES FOR THE DEVELOPMENT OF A MIXED- USE PROJECT THAT INCLUDES 15,000 SQUARE FEET OF RETAIL COMMERCIAL SPACE AND 106 AFFORDABLE HOUSING UNITS LOCATED AT THE NORTH EAST CORNER OF MAIN STREET AND BROADWAY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA; AND (D) GRANTING A TWENTY FOUR PERCENT (24%) DENSITY BONUS, A REDUCTION IN THE REQUIRED PARKING FOR THE RESIDENTIAL UNITS AND THE COMMERCIAL USE, A REDUCTION IN OPEN SPACE FOR THE RESIDENTIAL UNITS, AN INCREASE IN THE NUMBER OF COMPACT SPACES ALLOWED FOR THE RESIDENTIAL UNITS, AND A REDUCTION IN THE REQUIRED LANDSCAPE BUFFER TO FACILITATE THE CONSTRUCTION OF THE PROJECT AGENCY RESOLUTION CONDITIONALLY APPROVING FINANCIAL ASSISTANCE NOT TO EXCEED $1,060,000 TO AVALON COMMUNITIES FOR THE DEVELOPMENT OF A MIXED USE PROJECT, INCLUDING 106 AFFORDABLE UNITS SUBMITTED BY: COMMUNITY DEVELOPMENT DIRECTOR ~~ REVIEWED BY: CITY MANAGER U't:,w::V 4/5THS VOTE: YES D NO 0 oJ-I "T PAGE 2, ITEM NO.: .3 MEETING DATE: 06/13/00 BACKGROUND The applicant, Avalon Communities, LLC, is requesting approval of 0 Special Use Permit for the construction of a mixed-use development that includes 106 affordable housing units and 15,000 square foot of retail commercial space on 4.54 acres located on the northeast corner of Main Street and Broadway within the Southwest Redevelopment Project Area and the Montgomery Specific Plan area. The project is known as Main Plaza and is to be owned and operated by Avalon Communities. The project also involves a request for a twenty four percent (24%) density bonus and modifications of certain development standards pursuant to California Government Code Section 65915. Specifically, the applicant is requesting a redudion in the required parking for the residential units and commercial use, a reduction in open space for the residential units, an increase in the number of parking spaces allowed as compact for the residential units, and a reduction in the required landscape buffer to facilitate the development of this project. Such development incentives are contemplated under the provisions found in the California Government Code Section 65915 and the Chula Vista Housing Element. The requests, if approved, would facilitate the construction of 106 affordable residential units for low and moderate- income households. The developer is in the process of preparing an application to the State Tax Credit Allocation Committee (TCAC) for funding of the project. The application process is a very competitive one, which needs to demonstrate readiness to complete the project and strong support from the community. The tax credit allocation will be used to substantially finance the estimated $13.1 million project. To facilitate the development of Main Plaza, the Agency has received a request from the developer for financial assistance from the Low and Moderate Income Housing Fund of $1,272,000 to support the development of the 106 units of rental housing of the mixed use project and to pravide adequate local funding leverage for the TCAC application. Staff is recommended financial assistance in the maximum amount of $1 .06 million. Based on an Initial Study, the Environmental Review Coordinator has determined that there would be no significant environmentol effects and, therefore, recommends that the Negative Declaration (Attachment 6) issued on IS 00-47 be adopted. Since the proposed project is within the Southwest Redevelopment Project Area, the environmental document and the Owner Participation Agreement (which includes the design plans and a list of conditions) are being presented to the Redevelopment Agency for consideration and approval (see Attachment 7). The requested density bonus and modifications to stondards is presented for consideration and approval by the City Council. RECOMMENDATION It is recommended that the Redevelopment Agency and City Council hold the required public hearing, take public testimony, if any, and take the following actions: 1. That the Agency odopt the Negative Declaration, grant the Special Use Permit, approve the Owner Participation Agreement for the development of a mixed use development at the northeast corner of Main Street and Broadway, and the City Council grant the twenty-four percent density bonus and other additional incentives pursuant to California Government Code Section 65195. J-~ T "T PAGE 3, ITEM NO.: 3 MEETING DATE: 06/13/00 2. That the Agency canditionolly apprave financial assistance nat to exceed $1,060,000 to Avolon Communities for the development of 0 mixed use project, including 106 offordoble units. BOARDS/COMMISSIONS RECOMMENDATION On Morch 22, 2000, the Housing Advisory Commission voted to recommend the Planning Commission waive the required front setback for the commercial building and consider tandem, other porking alternatives or reductions in parking for the residential component of the project. On June 7, 2000, the Housing Advisory Commission recommended to the Redevelopment Agency and City Council approval of the project. The proposal was presented to the Design Review Cammittee (DRC) for 0 preliminary review on May 15, 2000. On June 5, 2000, the DRC formally considered and approved with conditions the mixed-use project (see Attachment 2 and 2, minutes of DRC). The proposal was also presented to the Resource Conservation Commission (RCC) for review on June 5, 2000. The RCC determined that the Initiol Study is adequate and recommended that the Negative Declaration be adopted. The proposed project was presented to the Planning Commission for review on June 7, 2000. The Planning Commission voted 5-0, with two members absent, to recommend approval of the proposed project subject to the conditions listed in the Joint Agency/Council resolution. DISCUSSION Site Characteristics The applicant is proposing the development of a mixed-use project at the property located at the northeast corner of Main Street and Broadway within the Southwest Redevelopment Project Area (see Exhibit C of OPAl. The property is currently developed with a 50-space troiler park, a used cor sales lot, and a car stereo installation building. The general area is charocterized by light industrial or retail commercial uses. Site North South Eost West General Plan, Zonina. and land Use General Plan Retail Commercial Retail Commercial light Industriol Light Industrial Retail Commercial Zonina CCP CTP IlP IlP CTP land Use Mobile Home Trailer Park Shopping Center Salvage Center Distribution Center Shopping Center The General Plan land Use Designation for the property is Commercial Retail. The Montgomery Specific Plan designates the property as mercantile and office commercial. The zoning is CCP, or Central Commercial with a Precise Plan modifying district, that allows for mixed-use developments with the issuonce of a Special Use Permit approved by the Redevelopment Agency. The site is served by public transportation. Although the nearest MTDB trolley station is neorly 1 mile away (Palomar Station), bus service is provided along Broadway and Anita Street. Shopping is located near the project with neighborhood shops across the street and the Palomar Trolley Center approximately % of a mile away. An elementary school and middle school is approximately one to one and a half miles away ond a recreational facility is one mile away from the project. J..-J ~ PAGE 4, ITEM NO.: MEETING DATE: .3 06/13/00 Proposed Proiect The proposed project will include 106 offordable housing units and 15,000 square feet of retail commercial space with 180 residential and 73 commercial porking spaces (see Exhibit A of OPAl. All 106 units will be affordable to ond occupied by low and moderote-income households, with 51 of the units offordoble to very low-income households ot 45% of the Areo Median Income (AMI). The mixed-use building will contain 15,000 square feet of ground-level commercial space, with residential gorages in the bock ond 2-levels of residential above the garages. There are seven exclusively residential buildings throughout the site. There are 106-total housing units, consisting of 60 two-bedroom units, 30 three-bedroom units, and 16 four-bedroom units. The proposed project will also offer a swimming pool, community room, garages, and social services provided by a local social service agency, Coso Familiar. Proiect Issues In order to provide a number of units that will moke the project financially feasible and due to site constraints, the project will require an increose in the allowable density and modifications of City standards pursuant to California Government Code Section 65915. The project does not provide the required parking, open space, front landscape buffer. Additionally, the applicant is requesting on estimated $1,272,000 in financial assistance from the Redevelopment Agency to facilitate the development of this project. 1. Density Bonus As specified in Section 65195 (b) of the California Government Code, the City shall grant a minimum 25 percent increase over the otherwise maximum residential density, unless a lesser percentage is elected by the developer and at least one additional concession or incentive to a developer of housing agreeing or proposing to construct at leost: 1) 20 percent of the total units for low income households; 2) 10 percent of the total units for very low income households; or 3) 50 percent of the total units for seniors. In addition, the City must grant at least one additional incentive or concession as defined in Section 65195(h) or make a written finding that the additional incentive or concession is not required to provide the affordable housing. Such incentives include one of the following: 1) Reduction or modification of Development Standards, Zoning Codes or Architectural Design Requirements, 2) Permit mixed use zoning within the housing development; or 3) Allow other regulatory incentives or concessions. As an alternative, the City could provide financial incentives of on equivalent value. The applicant is requesting 0 24 percent density bonus to increose the allowable project density from 86 to 106 (20 additional units) dwelling units. The request also includes a reduction in the required parking for the residential units and commercial uses, a reduction in open space for the residential units, an increase in the number of porking spaces allowed as compact for the residential units, a reduction in the required front landscape buffer, and an estimated $1,272,000 in requested financial assistance from the Redevelopment Agency. Fifty-one of the units will be restricted for occuponcy by very low-income households with an income at 45% or below the Area Median Income (AMI). The remaining 55 units will be restricted for occupancy by moderate-income households, defined as households with an income at 120 percent or below of the AMI. Rent and occuponcy restrictions will be maintained for a period of no less than 55 years. ..3 - c/ T "T PAGE 5, ITEM NO.: MEETING DATE: .3 06/13/00 Family housing for lower income households is a high priority need identified in the City's Housing Element of the General Plan. This project supports the City's Housing Element, which calls for the provision of adequate rental housing opportunities for low and very low-income households. The project complies with a top priority set out in the City's Consolidated Plan for Housing and Community Development. This priority is to implement the City's Affordoble Housing Program so that more newly constructed rental and for sale units are made available to low and moderate income households, with priority given to very low and low-income families. This project exceeds the requirements of State law to provide 20 percent of the total units for low-income households. The proposed project also exceeds the required 30 years of affordability. In order for the applicant to provide such affordability for the 55-year term, the requested density bonus and reductions or modifications to standards are required. lastly, the applicant will be required to enter into a Housing Cooperation Agreement that will specify the offordability and occupancy restrictions in compliance with the requirements of State law. The Housing Cooperation Agreement will be recorded against the property and its restridive covenants will run with the land. The Agreement articulates the rent restrictions, income qualification of residents, the 55-year term of affordability, and mechanisms for monitoring compliance. It is anticipated that the Agreement will be brought forward for Council's consideration at such time the Council considers final action on the financial assistance (no later than September 2000). 2. Alternative to Density Bonus and Other Additional Incentives As set forth in California Government Code Section 65915 (b), as an alternative to granting a density bonus or a density bonus and on additional incentive, the City may provide other incentives of equivalent financial value based upon the land cost per dwelling unit, including direct financial assistance. Although staff has not calculated the land cost per dwelling, should the Agency approve financial assistance at the proposed level, it is likely that the Agency will provide adequate financial assistance to significantly contribute to the economic feasibility of the project. Should the City not provide a density bonus and the requested reductions in parking, the project size would be reduced and consequently, project funding from the other sources may be reduced or jeopardized. 3. Parking The Chula Vista Zoning Ordinance requires one parking space for every 200 square foot of retail commercial floor space and two parking spaces per residential unit. Based upon these standards, the commercial use is required to provide 75 parking spaces, while the residential component of the project must provide 212 parking spaces. As summarized in the table below, the project is providing 73 parking spaces for the commerciol use ond 180 residential parking spaces. PARKING REQUIRED PROPOSED DESCRIPTION: STANDARD PARKING PARKING DIFFERENCE 15,000 square feet retail: 1:200 75 73 -2 106 units: 2 per unit 212 180 -32 Compact parking: 1 every 1 0 18 23 5 ...IPS' ". "T PAGE 6, ITEM NO.: MEETING DATE: .3 06/13/00 Of the 180 residentiol parking standards, 85 are in garages and 95 are uncovered surface parking spaces, of which 72 are standard parking spaces (9' x 19') and 23 are compact (7' x 15'). Currently, the proposal is short two spaces for the commercial use and thirty-two spaces for the residential units. Additionally, the proposed plans show that twenty-three of the residential parking spaces are shown as compact spaces, while only eighteen spaces are allowed os compact in compliance with the Zoning Ordinance. There may be further reductions in the number of parking spaces provided due to the City's requirement to provide additional trash enclosures throughout the site and in order to provide additional landscope buffers/relief. As indicated above, other City requirements (trash enclosures, landscaping buffers, etc.) may further reduce the number of residential parking spaces being provided. Pursuant to State Density Bonus law, the applicant is requesting a reduction in the required number of parking spaces for both the commerciol and residential uses and an increase in the number of compact spaces. Staff is recommending that the number of parking spaces per residential unit will not be reduced to less than 1.5 spaces per unit. As currently proposed, residential parking is provided at 1.7 spaces per unit. The requested reduction in parking standards from two spaces per dwelling unit to no less than 1.5 spaces per dwelling unit is substantiated by the reduced need for parking within mixed use developments and affordable housing for low and moderate-income households. To evaluate the appropriateness of the request to reduce the parking requirements, staff conducted three surveys. Staff surveyed twelve other cities within San Diego County to compare parking standards for multifamily residential developments and allowed reductions in such standards (see Attachment 3). Staff conducted a field survey of four existing affordable housing developments to determine the utilization of on-site parking (Attachment 4). Lastly, staff solicited comments from the mangers of these affordable housing developments for their opinions regarding the adequacy of the ovailable on-site parking (Attachment 4). In comparing the parking requirements of Chula Vista, Chula Vista's appear to fall somewhat in the middle. Six jurisdictions provide reduced parking standards for mixed-use developments, affordable housing, and senior housing and other cities indicated they have the flexibility to consider lower parking ratios. Reduced standards range from 1 space per dwelling unit to 1.5 spaces per unit. Existing mixed use and affordable housing developments completed by the applicant's architect further supports the reduction in the required parking spaces per unit. The architect designed similar projects with a parking ratio of 1.5 spaces per unit. According to the architect, such parking is adequate to meet the parking needs of the residents. Staff has made direct observations during various hours of the day of on site parking available at Cordova Village, Park Village Apartments, T rolley Terrace T own homes, Dorothy Street Manor, and Kingswood Manor. Of the five developments, four were developed with the required parking spaces and one (Park Village) was developed with reduced parking. Parking was primarily observed when residents would most likely be home. During the field observations, of those developments built at or in excess of the required two spaces per dwelling unit, the average percent of spaces actually utilized was 54 percent. For Park Village, which was built with 1.5 parking spaces per dwelling unit, parking was much more utilized with an average of 79 percent of the spaces actually utilized. Attachment 4 also includes comments from the managers of these apartment communities on the usage of their parking areas. .3 -, ~ " l' PAGE 7, ITEM NO.: MEETING DATE: .3 06/13/00 Staff supports the proposed reduction of the residential parking requirements from 2.0 to no less than 1.5 parking spaces per unit and an increase of compact spaces from 18 to 23 spaces. All units are to be occupied by low and moderate-income households. It is highly anticipated that some tenants are persons or families that do not drive. Staff's survey of allowed parking reductions by other jurisdictions for mixed use developments and affordable housing developments and the architect's personal experience with such developments support a reduction in required parking to 1.5 parking spaces per unit. Field observations of existing affordable housing developments within Chulo Vista reveal that onsite parking is currently underutilized. Based upon the current use of the parking facilities at these developments, it is envisioned that the majority of these households will not have two or more vehicles. The site is located along Broadway and Main with direct access to public transportation, lessening the need to own a vehicle. Should the City require compliance with the parking standards of two parking spaces for each unit and no more than one compact parking space for each ten spaces, the project would not be feasible. The property's size would not be able to accommodate more than the 106 residential units and 180 parking spaces, the recreation building, and 15,000 square foot of retail commercial and the 73 parking spaces. While the parking requirements could be met off-site, there is no parking available within close proximity of this project. The reduction of the parking requirements and increase in allowed compact spaces is required to facilitate the construction of the proposed project. 4. Open Space Section 19.28.090 of the Municipal Code requires a minimum of 400 sq. feet of open space per 2- bedroom dwelling unit, 480 square feet for the 3-bedroom unit, and 560 square feet for the 4-bedroom unit. The open space may be provided in the form of common usable open space areas, private patios, balconies, or common recreational facilities. According to the open space exhibit provided by the architect, the project will provide a total of 50,347 square feet of open space (includes balcony and patio areas) or approximately 474 square feet per unit. Based upon the applicant's open space calculations, the proposed plan appears to provide the required open space. However, some of the open space areas included within the applicant's calculations do not meet the criteria for usable open space and therefore, should not be counted towards the total open space requirements. The only large, meaningful public open space provided is the courtyard area and the recreation center area across a main driveway. Each of the housing units contains a balcony or a patio area averaging 60 square feet which constitutes private usable open space. Pursuant to State Density Bonus law, the applicant is requesting modifications to the open space requirements to accommodate the project. S. Front Setback/Landscaping Buffer The front building setback is 25 feet along Main and Broadway (front and exterior side yards) per the CCP zone requirements. In addition, a 15-foot landscape buffer is required per the Montgomery Specific Plan. The applicant is requesting a reduction from a 15-foot landscape buffer along Main and Broadway to 10 feet. The front setback/landscape buffer and entire landscape concept plan will be addressed through the conditions of approval. The landscape buffer along Main Street and Broadway will be reduced from 15-1t. to 10-1t upon meeting the condition to provide illustrative sections showing that a landscape berm will be utilized to screen the undesirable view of the front-loaded commercial parking spaces along Main Street ..J... 7 PAGE 8, ITEM NO.: .3 MEETING DATE: 06/13/00 and Broadway. The landscape buffer must include a pedestrian/public access into the site from the Main Street and Broadway intersection. The revised landscape concept plan shall provide a planting proposal for trees and shrubs that corresponds with the surrounding developments, such as an extension of the palm species found within the landscape buffer already located along Broadway, a relationship to the existing landscaping along the west and north property perimeter, and how the tree species specified throughout the complex will compliment the scale of the open spaces and provide privacy within the layout of the residential buildings. A fencing program will be provided that includes wall details of the proposed slump stone block and/or pilasters with wrought-iron elements, such as gates, and show in conjunction with the off-site information to be provided on a site utilization plan detailing the adjacent landscaping and median improvements to Broadway and Main Street. The applicant will comply with all of the Landscape Planner's comments regarding screening, tree species, etc. 6. Financial Assistance Financing and development of this project will be a joint private/public partnership. The developer is proposing to use low income housing tax credit financing and a permanent bank loan to support the estimated $13,125,000 cost of constructing the project. However, there remains a financing gap for the project of approximately $1,660,000. The applicant has requested financial assistance of approximately $1,272,000 or $12,000 per unit from the Redevelopment Agency of the City to meet this financing gap. Staff is recommending financial assistance not to exceed $1,060,000 or $10,000 per unit. The remaining gap will be filled by the deferral of the developer fee. Prooosed Financina of the Proiect It is currently estimated that the proposed total project cost will be approximately $13.1 million. Sources of funding for the project will include approximately $5 million in tax credit equity from private investors, and $7 million from other sources. Staff has evaluated the current proforma submitted by Avalon Communities indicating a financing gap in the amount of $1,660,000 for the project. Staff supports providing a Redevelopment Agency loan to fill the financing gap directly related to the residential units. financial assistance for the residential units will be subject to negotiation of satisfactory terms of the Regulatory Agreement and Loan Agreement and the approval of such terms and documents by the Agency at a later date. ..I-V PAGE 9, ITEM NO.: MEETING DATE: .3 06/13/00 PROFORMA SUBSIDY ANALYSIS Project Cost: Sources of Funds: :Ii Cost Funds 13,120,UUU $ 5,045,600 $ 6,419,400 $ 11,465,000 $ 600,000 $ 1,060,000 $ 1,660,000 13,120,UUU :Ii 13, 120,UUU Financing Gap Tax Credit Financing Permanent Loan Subtotal $ 1,660,000 Developer Agency Subsidy (Redev Low/Mod Fund) Subtotal IOIAL :Ii :Ii Agency Subsidy per Unit (106 Units) Agency Leverage $ 10,000 $13: $1 Staff is recommending that the Redevelopment Agency provide financial assistance for the residential units in the form of a residual receipt loan in an amount not to exceed $1,060,000. This amount is reasonable given the debt service coverage ratio of the project and a maximum tax credit allocation amount. leveraaina of Aaencv Funds The degree of leveraging of Agency Low Income housing funds is an important factor which staff takes into account in the evaluation of affordable housing proposals. Over the past year staff has developed a proposal evaluation criteria which includes a review of the developer's trock record, success in securing public and private financing, ability to complete projects on time and on budget and demonstrated ability to highly leverage Agency funds. In most cases staff has been using a minimum of 5 to 1 ratio as a general leveraging standard of Agency funds which encourages developers to be more competitive and creative. The result is that this criteria increases the opportunity for the Agency to significantly leverage its financial resources. The proposed Agency's assistance to this project equates to $10,000 per unit and amounts to a very high leveraging of $13 to $1 of Agency funds. This leveraging ratio is calculated by dividing the total project cost of $13,100,000 by the amount of the Redevelopment Agency loan of $1,060,000. Proiect Develooment Costs Development costs are one of the key variables determining the need for subsidies. It is important that those costs be reasonable. At a total project cost of approximately $13.1 million including land, the average residential unit cost of approximately $107,000 is consistent with typical affordable new construction multi-family developments. Attachment 5, Development Budget, delineates the entire development project costs associated with the project. Income and Rent Restrictions All the units will be affordable to low and moderate-income households. It is the intent that these units will satisfy the requirements of the City's program for the provision of affordable rental housing opportunities throughout the City and the revitalization of the western side of the City. Of the 106 units, 51 will be ~...9 ...,. , PAGE 10, ITEM NO.: MEETING DATE: J 06/13/00 restricted to households at 45% of the median income, which is currently $24,175 for a family of four. The remaining 55 units will be restricted for occupancy by moderate-income households, defined as households with an income at 120 percent or below of the AMI. It is proposed that the rents on the 1 BR units will range from approximately $544 to $604/month. Rents on the 2BR units will range from approximately $628 to $698/month and rents on the 3 BR units will range from $701 to $779/month. The restricted rents will be based upon HUD income limits established for the current fiscal year. Rent and occupancy restrictions will be maintained for a period of no less than 55 years and will bind all subsequent owners, so that the commitment remains in force regardless of ownership. The income and rent restrictions outlined above are to be incorporated into the Regulatory and Loan Agreements, which will be recorded against the Property. Such agreements will be presented to the Agency and Council at a later date. Compliance with these restrictions will be subject annually to regulatory audit and annual tax credit certification. The developer has successfully managed low-income housing units for 12 years. Compliance with strict property management policies and procedures will ensure that income and rent restrictions will be maintained for the full 55-year compliance period. Undue Gain It is important that any financial assistance provided has the effect of making the units more affordable and not creating undue gain for any party. The developer will receive a "Developer Fee" estimated at $1,141,400 or approximately 9% of total project costs and consists of profit and overhead for developing the project. Avalon has agreed to defer $600,000 of their developer fee in order to make up the remaining financing gap in financing the proiect. Payments of the deferred developer fee will be paid out of the project's cash flow alter debt service and operating expenses. Due to the minimal residual cash flow to be realized from this project, it is anticipated that it will take a minimum of ten years to realize payment on the deferred developer fee. Staff has confirmed that the developer fee is within acceptable standards adopted by the State Tax Credit Allocation Committee and the Federal Home Loan Bank's Affordable Housing Program for a project of this size and affordability. Form of Assistance Agency assistance will be provided strictly for the development of the residential units and will be in the form of a residual receipts loan secured by a note and deed of trust. Repayment of the loan will be deferred during construction. Once the City has issued a certificate of occupancy for all the units, the outstanding principal and interest on the loan will be amortized over fifty-five years. The outstanding balance shall accrue with simple interest at 6 percent per annum. Payment of principal and interest on the Agency loan shall be made on an annual basis, out of a fund equal to ninety (90%) percent of the "Residual Receipts", rental income from the Project minus debt service on bonds, payment of deferred developer fee, and reasonable operating expenses. More specific terms of the loan will be further negotiated. The required loan agreement and associated documents will be negotiated and presented to the Agency for approval at such time final approval of the issuance of the bonds and the related bond documents is requested. Risks In its role as lender to the project, the Agency is exposed to three risks inherent to real estate development. These risks generally include: 1) predevelopment (project does not get to co'nstruction), 2) construction (proiect cannot be completed, cost overruns, contractor problems), and 3) operation (revenues do not cover .,8../0 T ,. PAGE 11, ITEM NO.: .,j MEETING DATE: 06/13/00 expenses). Adding to these risks, the Agency's financial assistance will be subordinated to conventional financing. A number of factors mitigate these risks. First, the development team has a track record with similar affordable housing projects. The presence of other major financial commitments, such as the tax credit investments, means that other stakeholders depend on the short and long-term success of the project. By its nature, affordable housing presents some, but very limited market risk because of the deeply discounted rents. Finally, while the Agency is vulnerable due to its subordinated financing, it helps to attract the necessary private financing. Assuming all financial commitments are secured, construction is expected to begin November 2000 with completion of the project estimated by late 2001. Relocation Issues This project will involve the relocation of fifty residents of the existing mobilehome park. In 1992, the City approved the closure of this mobilehome park and the associated mobilehome assistance plan. At that time the owner purchased all the trailer units and provided relocation assistance to the tenants. However, due to the downturn in the economy, the owner's plan to develop the property did not materialize. Instead the owner leased the acquired units on a month to month basis with plans to develop the property in the future. Based upon staff's review of the leases and waivers of relocation assistance, it is estimated that not more than forty residents will require some form of relocation assistance. Additionally, relocation assistance will be provided to those displaced commercial tenants. As a condition of this project, Avalon will provide a relocation plan for those eligible residents and commercial tenants and such expenses will be the sole responsibility of the developer. The project budget has $50,000 available for the costs of any expenditure related to temporary and permanent relocating of residents. In addition, the developer is proposing to contract with Casa Familiar, an established social service agency in San Diego, to assist with the social needs of the tenants during the development process. The developer has executed an Indemnification Agreement indemnifying the City and Agency from any responsibility for the relocation of residents and tenants. Article 34 Compliance Article XXXIV of the California Constitution (Article 34) requires that voter approval be obtained before any J'state public body" develops, constructs or acquires a "low rent housing project". A redevelopment agency is a "state public body" for purposes of Article 34, and as a result, if a redevelopment agency participates in development of a "low rent housing project" and that participation rises to the level of development, construction, or acquisition of the project by the agency, approval by the electorate pursuant to Article 34 is required for the project. On April 11, 1978 under Proposition C, the voters of Chula Vista authorized the development, construction, or acquisition of 400 units of "low rent housing" by the Agency. Of the 400 allowable credits, Chula Vista has utilized 293 units and has a balance of 107 units remaining. This project will not have an impact on the remaining 118 units. Therefore, it is proposed that the City and the Agency limit its J-I! '1!' , PAGE 12, ITEM NO.: MEETING DATE: .J 06/13/00 low-income restrictions to 49 percent of the total units in the project. Projects which are less than 50 percent restricted are not considered "public housing" for purposes of Article XXXIV. Although Main Plaza is exempt from the provisions of Article 34, the agreement will time the disbursement of funds to occur after the 60-day period has elapsed to challenge a project, thereby providing an additional layer of protection to the Agency. The agreement will also provide that if the developer requests an earlier disbursement date and the developer is prepared to indemnify the Agency from an Article 34 challenge, staff may consider an earlier disbursement date. Chula Vista Crime Free Multi-Housina Proaram This project will participate in the City of Chula Vista's Crime Free Multi-Housing Program. This Program was designed to help tenants, owners and managers of rental property keep drugs and other illegal activity off their property. Managers attend an eight-hour seminar presented by the police department and rental experts. The City inspects the property and certifies whether or not the rental property has meet the program's requirements for the tenant's safety, such as locks, lighting, windows, peep holes, applicant screening, and general appearance. Lastly, a tenant crime prevention meeting is held. It is anticipated that the project's participation in this Program will facilitate strong property management, screening of applicants, and maintenance of the property. CONCLUSION Based on the foregoing, staff recommends approval of the Joint Agency/City Council resolution adopting the Negative Declaration prepared for IS 00-47, approving Special Use Permit 00-09, approving the Owner Participation Agreement for the proiect and granting of the requested density bonus, and reductions from City Code requirements regarding parking, landscape buffer, and open space (as authorized by California Code Section 65915). In addition, staff recommends approval of the Agency resolution conditionally approving financial assistance in the maximum amount of $1,060,000 for the Agency's Low/Moderate Income Housing fund and appropriating those funds. Staff's recommendation is based upon the following: . The proposal's effectiveness in serving the City's housing needs and priorities as expressed in the Housing Element of the General Plan and the HUD Consolidated Plan. o The proposal's development and operating feasibility, financing sources and the role of the City and the Agency in providing financial assistance or incentives. o It is the intent of the City to attempt to provide affordable housing opportunities to households earning at or below 50% of AMI in order to receive future credits as outlined in the Housing Element of the General Plan. o The proposal's effectiveness in fostering revitalization of the community consistent with the Southwest Redevelopment Implementation Plan. The Main Plaza mixed use development as proposed by Avalon Communities, is financially sound. The recommended Agency assistance meets the Agency's underwriting goals of reasonable project costs and leveraging of Agency resources. The project's unit mix and affordability support the Agency housing goals. J-/~ ~ PAGE 13, ITEM NO.: :; MEETING DATE: 06/13/00 FISCAL IMPACT If approved, the loan amount of $1,060,000 will be appropriated from the unappropriated balance in the Low/Moderate fund which has a current balance of $4.2 million. Funds for staff services are budgeted in the staff services portion of the Housing Division budget. The total estimated project valuation is $13,125,000. The project's residential component, however, will be taken out of the tax rolls because it will be a non-profit operation that will not generate tax increment. The commercial component which will generate tax increment revenues of approximately $15,320, which will be distributed as follows: Twenty percent ($3,064) for the Housing Set-Aside fund; of the remaining $12,256, fifty three percent ($6,496) will be allocated to other taxing entities as part of the tax sharing pass thru agreements; the rent ($5,760) will accrue to the Southwest Redevelopment Project Area fund. ATTACHMENTS 1. Minutes of DRC of 5/15/00 2. Minutes of DRC of 6/5/00 3. Parking Requirements by Jurisdiction 4. Parking Utilization of Chula Vista Affordable Apartments 5. Project Development Budget 6. Negative Declaration IS-00-47 7. Owner Participation Agreement with the following: Exhibit A - Design Plans Exhibit B - Design Review and Agency Conditions of Approval Exhibit C - Locator Map H:\HOME\COMMDEV\STAFF.REP\06-13-00\Broadway and Main Proiect.doc J -1..3 ,. ..,. AGENCY RESOLUTION NO. AND (COUNCil RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY AND THE CITY COUNCIL OF THE CITY OF CHULA VISTA (A) ADOPTING NEGATIVE DECLARATION IS 00-47; (B) GRANTING SPECIAL USE PERMIT SUPS 00-09; (C) APPROVING AN OWNER PARTICIPATION AGREEMENT WITH AVALON COMMUNITIES FOR THE DEVELOPMENT OF A MIXED-USE PROJECT THAT INCLUDES 15,000 SQUARE FEET OF RETAil COMMERCIAL SPACE AND 106 AFFORDABLE HOUSING UNITS LOCATED AT THE NORTH EAST CORNER OF MAIN STREET AND BROADWAY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA; AND (D) GRANTING A TWENTY FOUR PERCENT (24%) DENSITY BONUS, A REDUCTION IN THE REQUIRED PARKING FOR THE RESIDENTIAL UNITS AND THE COMMERCIAL USE, A REDUCTION IN OPEN SPACE FOR THE RESIDENTIAL UNITS, AN INCREASE IN THE NUMBER OF COMPACT SPACES ALLOWED FOR THE RESIDENTIAL UNITS, AND A REDUCTION IN THE REQUIRED LANDSCAPE BUFFER TO FACILITATE THE CONSTRUCTION OF THE PROJECT I. RECITALS A. Project Site WHEREAS, the parcel, which is the subject matter of this resolution, is diagrammatically represented in Exhibit A attached hereto and incorporated herein by this reference, and for the purpose of general description herein consists of approximately 4.54 acres of land located at the northeast corner of Main Street and Broadway ("Project Site"). B. Project; Application for Discretionary Approval WHEREAS, on April 25, 2000, a duly verified application for a Special Use Permit (SUPS 00-09) with request to the Project Site was filed by Avalon Communities ("Applicant") with the Chula Vista Planning and Building Department; and WHEREAS, the application also requests a twenty four percent (24%) density bonus and other additional incentives/concessions; and C. Project Description WHEREAS, said application requests permission to construct a mixed-use development that includes 106 affordable housing units and 15,000 square feet of retail commercial space and a twenty four percent (24%) density bonus, a reduction in the required parking for the residential units and the commercial use, a reduction in open space for the residential units, an increase in the number of compact oJ.'Y Resolution No. Page 2 spaces allowed for the residential units, and a reduction in the required landscaping buffer along Main Street and Broadway to facilitate the construction of a mixed use project, known as Main Plaza, ("Project"); and D. Environmental Determination WHEREAS, in accordance with the requirements of CEQA, the Environmental Review Coordinator has determined that the Project requires the preparation of an Initial Study, such study (IS 00-47) was prepared, and based on such study a Negative Declaration was prepared and circulated for public review; and E. Planning Commission and Design Review Committee Record on Application WHEREAS, the Planning Commission held an advertised public hearing on the Project on June 7, 2000 and voted 5 to 0, with 2 absent, to adopt Resolution No. SUPS 00-09 recommending that the Redevelopment Agency adopt Negative Declaration IS-00-47, approve Special Use Permit SUPS 00-09, approve an Owner Participation Agreement between the Agency and the Applicant for a mixed-use development that includes 106 affordable housing units and 15,000 square feet of retail commercial space based on the findings and subject to the conditions contained therein, and the City Council grant a twenty four percent (24%) density bonus, a reduction in the required parking for the residential units and the commercial use, a reduction in open space for the residential units, an increase in the number of compact spaces allowed for the residential units, and a reduction in the required landscaping buffer along Main Street and Broadway to facilitate the construction of the project, pursuant to California Government Code Section 65195(b). WHEREAS, from the facts presented to the Planning Commission, the Commission has determined that the Project is consistent with the City of Chula Vista General Plan and that the public necessity, convenience and general welfare and good zoning practice support the Project, and implements portions of State related density bonus and that the approval of Special Use Permit SUPS 00-09 and granting of said density bonus, a reduction in residential and commercial parking, a reduction in open space for the residential units, an increase in compact parking, and a reduction in the landscape buffer does not adversely affect the order, amenity, or stability of adjacent land uses; and WHEREAS, the Design Review Committee reviewed the proposed project on June 5, 2000 and recommended that the Redevelopment Agency approve the proposed Project subject to the conditions listed in Exhibit B of the Owner Participation Agreement; and, F. City Council/Redevelopment Agency Record of Application WHEREAS, a duly called and noticed public hearing on the Project was held before the City Council and Redevelopment Agency of the City of Chula Vista on June 13, J./~- T .,. Resolution No. Page 3 2000 to consider the recommendation of the RCC, Planning Commission, and Design Review Committee regarding the Negative Declaration, Special Use Permit, Owner Participation Agreement; and requested density bonus and additional incentives/concessions for the Project and to hear public testimony with regard to the same. WHEREAS, the Redevelopment Agency of the City of Chula Vista has been presented an Owner Participation Agreement, said agreement being on file in the Office of the Secretary to the Redevelopment Agency and known as document RACO 00-07, approving the construction of the mixed-use project, which includes 106 units of affordable housing units and 15,000 square feet of retail commercial space located at the northeast corner of Broadway and Main Street, depicted in Exhibit A and subject to conditions listed in Exhibits B of said agreement. NOW THEREFORE BE IT RESOLVED that the City Council and Redevelopment Agency do hereby find, determine and ordain as follows: II. PLANNING COMMISSION RECORD The proceedings and all evidence on the Project introduced before the Planning Commission at their meeting on this project held on June 7, 2000 and the minutes and resolution resulting there from, are hereby incorporated into the record of this proceeding. III. CERTIFICATION OF COMPLIANCE WITH CEQA The Redevelopment Agency does hereby find that the Negative Declaration on IS 00-47 has been prepared in accordance with the requirements of the California Environmental Quality Act, the State EIR guidelines and the Environmental Review Procedures of the City of Chula Vista. IV. INDEPENDENT JUDGEMENT OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA The Redevelopment Agency finds that Negative Declaration on IS 00-47 reflects the independent judgment of the Agency of the City of Chula Vista. V. SPECIAL USE PERMIT FINDINGS The Redevelopment Agency of the City of Chula Vista does hereby make the findings required by the Agency's rules and regulations for the issuance of Special Use Permits, as herein below set forth and sets forth, thereunder, the evidentiary basis, in addition to all other evidence in the record that permits the stated findings to be made. A. That the proposed use at the location is necessary or desirable to provide a service or facility which will contribute to the general well being of the neighborhood or the community. J -/(, T -r Resolution No. Page 4 The proposed project is desirable at this location in that it provides a mixed-use of new retail commercial and improved affordable residential housing to a redevelopment project area, contributing to the general well being of the neighborhood or the community. B. That such use will not under the circumstances of the particular case, be detrimental to the health, safety, or general welfare of persons residing or working in the vicinity or injurious to property or improvements in the vicinity. The proposed project is compatible with surrounding industrial, commercial, and residential land uses. There is adequate infrastructure in place to support the project. The conditions of approval will ensure that the project will not be detrimental to the health, safety, or general welfare of persons residing or working in the vicinity or injurious to property or improvements in the vicinity. C. That the proposed use will comply with the regulations and conditions specified in the Code for such use. The proposed project is consistent with the regulations and conditions of the City/Agency specified in the Code with the exception of those modifications requested by the applicant pursuant to California Government Code Section 65915: 1. A reduction in the required number of residential parking spaces from 2 to no less than 1.5 per unit of housing. The proposed site plan would required a reduction of parking from two hundred and twelve (212) parking spaces to one hundred and eighty (180) spaces (Chula Vista Municipal Code 19.62.050). 2. An increase in the number of compact parking spaces allowed from one space for every ten parking spaces to one space for every eight spaces (Chula Vista Municipal Code 19.62.050). 3. A reduction in the required number of parking spaces for the commercial use from seventy-five parking spaces to seventy-three spaces [Chula Vista Municipal Code 19.62.050 (26)]. 4. A reduction in the required open space of the residentiall!nits (Chula Vista Municipal Code Section 19.28.090). 5. A reduction in the required landscape buffer along Broadway and Main Street from fifteen feet to ten feet (Montgomery Specific Plan, Part III, and page 8). Upon approval by the City Council of those requested modifications, the proposed use shall be consistent with the City's/Agency's regulations and conditions specified in the Code. ..1",/1 ~ . '"T Resolution No. Page 5 D. That the granting of this Special Use Permit will not adversely affect the General Plan of the City or the adopted plan of any government agency. The Project is in substantial conformance with the Housing Element of the City of Chula Vista General Plan, which supports a wide variety of residential products including mixed-use developments and housing for very low-income large families. VI. CITY COUNCIL/REVELOPMENT AGENCY FINDINGS The City Council and Agency hereby find that the Project is consistent with the City of Chula Vista General Plan and that the public necessity, convenience and general welfare and good zoning practice support the Project, and implements portions of State related density bonus and that the granting of said density bonus, a reduction in residential and commercial parking, an increase in compact parking, a reduction in open space for the residential units, and a reduction in the landscape buffer does not adversely affect the order, amenity, or stability of adjacent land uses. BE IT FURTHER RESOLVED that the City Council does hereby grant, in accordance with California Government Code Section 65915, the requested increase in density of twenty four percent (24%), a reduction in the required parking for the residential units and the commercial use, an increase in the number of compact spaces allowed for the residential units, a reduction in open space for the residential units, and a reduction in the required landscape buffer along Main Street and Broadway to facilitate the construction of the project located at the north east corner of Main Street and Broadway in the City of Chula to balance the financial feasibility of the mixed use project with 106 units of affordable housing with the usual amenities found in a development of this type, subject to the following terms and conditions set forth below: A. Terms of grant of density bonus and additional incentives i. Ensure that the proposal complies with the use outlined in the application and materials submitted therewith except as modified below: a. Comply with all conditions of this resolution dated June 13, 2000. B. The applicant is to enter into a written agreement with the City of Chula Vista specifying among other things the tenancy requirements and terms of commitment for the density bonus and additional incentives in accordance with California Government Code Section 65915, and said agreement will be brought before the Council for consideration by September 2000. City Council retains its unfettered discretion in the review and consideration of said agreement. C. Construct the Project as submitted to and approved by the Agency, except as modified herein and/or required by the Municipal Code, and as detailed in the Project description. 3..1" ~ Resolution No. Page 6 D. Fifty-one (51) units shall be maintained for a period not less than fifty-five years as affordable housing for very low-income households. E. Fifty-five (55) units shall be maintained for a period not less than fifty-five years as affordable housing for moderate-income households. F. Participate in the City of Chula Vista Crime Free Multi-Housing Program or any other such program that may be adopted by the City of Chula Vista, with program certification of the property completed by issuance of the building permit(s) for the project. BE IT FURTHER RESOLVED THAT THE REDEVELOPMENT AGENCY DOES HEREBY FIND, ORDER, DETERMINE, AND RESOLVES AS FOllOWS: 1 . The proposed project will not have a significant impact on the environment; accordingly Negative Declaration IS-00-47 was prepared and is hereby adopted in accordance with CEQA. 2. The proposed project is consistent with the Southwest Redevelopment Plan and shall implement the purpose thereof; the project shall assist with the elimination of blight in the Project Area. 3. The Redevelopment Agency of the City of Chula Vista hereby approves the Owner Participation Agreement with the Avalon Communities, llC for the construction of a mixed-use project, which includes 106 affordable housing units and 15,000 square feet of retail commercial space at the southeast corner of Broadway and Main Street, in the form presented and in accordance with plans attached thereto as Exhibit A and subject to conditions listed below and in Exhibits B of said agreement. 4. The Chairman of the Redevelopment Agency is hereby authorized to execute the subject Owner Participation Agreement between the Redevelopment Agency and the Avalon Communities, llC. 5. The Secretary of the Redevelopment Agency is authorized and directed to record said Owner Participation Agreement in the Office of the County Recorder of San Diego, California. VII. TERMS OF GRANT OF PERMIT The Redevelopment Agency hereby grant Special Use Permit SUPS 00-09 and approve the project subject to the following conditions whereby the Applicant shall: A. Ensure that the proposal complies with the use outlined in the application and material submitted therewith except as modified below: 1. The site shall be developed and maintained in accordance with the character sketches of typical mixed-use commercial/residential building provided along with the conceptual plans which include site plans, architectural elevations, exterior ~ "I' ~ . .,. Resolution No. Page 7 materials and colors, and landscaping on file in the Planning Division, the conditions contained herein, and Title 19 of the City of Chula Vista Municipal Code. 2. Prior to any use of the project site or business activity being commenced thereon, all Conditions of Approval shall be completed and implemented to the satisfaction of the Director of Building and Planning. 3. Revised site plans and building elevations incorporating all Condition of Approval shall be submitted for Director of Building and Planning review and approval prior to the issuance of building permits. 4. Approval of this request shall not waive compliance with all sections of Title 19 of the Municipal Code; all other applicable City Ordinances in effect at the time of building permit issuance. 5. All ground-mounted utility appurtenances such as transformers, AC condensers, etc., as well as trash enclosure facilities, shall be located out of public view or adequately screened through the use of a combination of concrete or masonry walls, berming, and/or landscaping to the satisfaction of the Director of Building and Planning. 6. All roof appurtenances, including air conditioners and other roof mounted equipment and/or projections shall be shielded from view and the sound buffered from adjacent properties and streets as well as from on-site resident views above or across the site as required by the Director of Building and Planning. Such screening shall be architecturally integrated with the building design and constructed to the satisfaction of the Director of Building and Planning. Details shall be on building plans. 7. All gutters, downspouts and vents must be integrated into the roof and wall systems, to ensure that there will be no unattractive appendages to the elevations presented for review and approval by the Director of Building and Planning. 8. A graffiti resistant treatment shall be specified for all wall and building surfaces. This shall be noted on any building and wall plans and shall be reviewed and approved by the Director of Building and Planning prior to issuance of building permits. Additionally, the project shall conform to Sections 9.20.055 and 9.20.035 of the municipal Code regarding graffiti control. 9. The conceptual landscape plans shall be revised to include planting and irrigation plans and resubmitted for review and approval by the City Landscape Planner. Landscape and irrigation plans shall be reviewed and approved by the City Landscape Planner prior to the issuance of building permits. 10. The landscape buffer along Main Street and Broadway has been reduced from 15- ft. to 10-ft. Illustrative sections must be provided and shall indicate a landscape berm which will be utilized to screen the front-loaded commercial parking along ..3 ",;J..() T . l' Resolution No. Page 8 Main Street and Broadway. The landscape buffer must include a pedestrian/public access into the site from the Main Street and Broadway intersection. 11. The revised landscape concept plan provided shall include a planting proposal for trees and shrubs corresponds with the surrounding developments, such as an extension of the palm species found within the landscape buffer already located along Broadway, a relationship to the existing landscaping along the west and north property perimeter, and how the tree species specified throughout the complex will compliment the scale of the open spaces and provide privacy within the layout of the residential buildings, in compliance with the City Landscape Manual. 12. A fencing program must be provided that includes wall details of the slump stone block and/or pilasters with wrought-iron elements, such as gates; this must be shown in conjunction with the off-site information which shall be provided on a site utilization plan noting the adjacent landscaping and median improvements to Broadway and Main Street. Comply with all of the landscape concept comments regarding screening, tree species, etc. 13. Additional renderings will be provided to show how the courtyard and recreational area facilities, including the triangular property being acquired, shall be developed. Additional details of the proposed improvements, including proposed seating, tables, special paving, landscape and water features, etc., shall be provided. 14. The parking layout shall be modified due to the increase in trash enclosure locations and the orientation of proposed trash enclosures being changed to meet trash- hauler accessibility requirements as well as pedestrian/resident safety. The number of parking spaces shall not be reduced to below a ratio of 1.5 parking spaces per residential housing unit without modification to the Special Use Permit. 15. The building permit plans shall comply with 1998 Building (UBC), Plumbing (UPC), Mechanical (UMC), and 1996 Electrical (NEC). Plans shall also comply with Title 24 California Code of Regulations energy and disabled access requirements. Show dimensions of separation between buildings and show assumed property lines on building plans. A separate building permit shall be required for sign age and lighting. 16. The applicant shall satisfy the Fire Department's requirement of 20-ft. wide driveway access and fire hydrants throughout the vehicular circulation system. The housing units shall utilize fire sprinklers per NFPA 13. The housing units shall contain a fire alarm system per NFPA 72. 17. In lieu of a complete circulation, hammerhead or cul-de-sac for roads over 150-ft. in length, provide a turnaround and back-up as shown on the revised site plan exhibit at the southeast corner of the courtyard portion of the site plan. 18. Applicant shall pay fees for sewer capacity (based on the new/additional plumbing fixtures), development impact, and traffic signal (based on additional development) prior to the issuance of building permits. ..I,~I ~ .,. Resolution No. Page 9 19. Driveways shall be restricted to ri9ht-turn in and right-turn out on Main Street and Broadway because of existing raised medians. Driveway approaches must be 8-ft. minimum from the PCR and constructed per Chula Vista Standards CVCS-1. A construction permit will be required to perform any work in the City's right-of-way. 20. A grading permit will be required prior to the issuance of a building permit. 21. The Crime Prevention Unit of the Police Department requires the utilization of components that will address access control, surveillance detection, and pOlice response. In addition, participation in the Crime Free Multi-Family Housing program shall be required. Please contact the Multi-Housing Coordinator, at 691-5127. 22. Commercial and residential properties shall have trash enclosures, including bins, or carts that meet design specifications. The locations and orientation of storage bins and dumpsters must be pre-approved by the City franchise trash hauling company. Provide sufficient space for designated recyclables. A shared paper/cardboard bin, along with food and beverage container cart with other stores may be permitted. A commercial trash enclosure large enough for solid waste, mixed paper, and a cart for food and beverage containers must be provided to meet the minimum 50 percent recycling requirement. This condition shall be completed to the satisfaction of the Director of Building and Planning. 23. There shall be no less than seven (7) residential and one (1) commercial bin enclosure with sufficient capacity and design to handle the solid waste, mixed paper and rigid container collection streams, to limit the number of trash-hauler visits to no more than two (2) per week for the residential complex and five (5) trips per week for the commercial complex, unless otherwise approved by the City Conservation Coordinator. This condition shall be completed to the satisfaction of the Director of Building and Planning. 24. This development shall consisting of 60 two-bedroom, 30 three-bedroom and 16 four-bedroom units dwellings shall provide a minimum of one 4-yard trash bin for every 10-units and one 4-yard mixed paper bin for every 10-units. This condition shall be completed to the satisfaction of the Director of Building and Planning. 25. At least one 4 to 6-yard bin for green waste shall be provided in the complex to be serviced bi-weekly or monthly and a location designated for seasonal services such as bulky item, Christmas tree and household hazardous waste collection. For convenience to the residents the enclosures should be geographically distributed throughout the complex, with an enclosure adjacent to each building. This condition shall be completed to the satisfaction of the Director of Building and Planning. 26. Residential trash enclosures should be adequate to service a 4-yard mixed paper bin, a 4 to 6-yard trash bin and at least two 90-gallon carts for rigid containers. The commercial enclosure should have room for two 4 to 6-yard trash bins and two 4 yard mixed paper bins. The trash bin and one mixed paper bin for the commercial facility can be replaced with a compactor for cardboard and or mixed paper, and a J..~~ ,.. . I Resolution No. Page 10 compactor for trash. The manufacture and design of compactors must be pre- approved by the City or Pacific Waste in writing prior to purchase or installation. The commercial enclosure should be adequate to temporarily store other items such as rendering collection bins, pallets, discarded displays and other items as applicable. The applicant shall contact the Recycling Coordinator to ensure that provisions are made (691-5122). This condition shall be completed to the satisfaction of the Director of Building and Planning. 27. The applicant shall contact the local water district to determine the additional demand and alteration to the existing water systems for domestic and/or fire protection purposes. In addition, irrigation plans may need to be designed to reclaimed water standards and specifications. All fees and deposits shall be provided at the building permit stage. 28. Standard school fees for residential and commercial developments shall be paid prior to the issuance of building permits. Contact the Sweetwater Union High School District and the Chula Vista Elementary School District. 29. This permit shall be subject to any and all new, modified or deleted conditions imposed after approval of this permit to advance a legitimate governmental interest related to health, safety or welfare which the City shall impose after advance written notice to the Permittee and after the City has given to the Permittee the right to be heard with regard thereto. However, the City, in exercising this reserved right/condition, may not impose a substantial expense or deprive Permittee of a substantial revenue source that the Permittee cannot, in the normal operation of the use permitted, be expected to economically recover. 30. This permit shall become void and ineffective if not utilized within one year from the effective date thereof, in accordance with Section 19.14.260 of the Municipal Code. Failure to comply with any conditions of approval shall cause this permit to be reviewed by the City for additional conditions or revocation. VIII. DENSITY BONUS The City Council hereby grants the requested increase in density of twenty four percent (24%) to allow the construction of a maximum of one hundred and six (106) dwelling units for the residential component of the project located at the northeast corner of Main Street and Broadway in the City of Chula Vista. The City Council further approves the following incentives to the Applicant in order to balance the financial feasibility of the affordable housing with the usual amenities found in a development of this type consistent with the Special Use Permit, SUPS 00-47, for the Project: 1. The City implemented alternative parking standards of no less than one and a half (1.5) parking spaces for each dwelling unit and one space for every eight spaces of the total residential parking spaces provided at compact size; ...3 . ;1.3 T . -r Resolution No. Page 11 2. The City implemented alternative parking standards of seventy-three parking spaces for the 15,000 square feet of retail commercial, a reduction of two spaces from the required seventy-five; 3. The City allowed a reduction in open space for the residential units in accordance with the approved development plans submitted for the project. 4. The City allowed a reduction in the required landscaping buffer along Main Street and Broadway from 15 feet from the property line to 10 feet. 5. The City allowed a possible reduction in the required open space for each unit of housing. IX. EXECUTION AND RECORDATION OF RESOLUTION OF APPROVAL The property owner and the applicant shall execute this document by signing the lines provided below, said execution indicating that the property owner and applicant have each read, understood, and agreed to the conditions contained herein. Upon execution, this document shall be recorded with the Recorder's Office of the County of San Diego, at the sole expense of the property owner and/or applicant, and a signed, stamped copy of this recorded document within ten days of recordation to the Secretary to the Redevelopment Agency shall indicate the property owners/applicant's desire that the project, and the corresponding application for building permits and/or a business license, be held in abeyance without approval. Said document will also be on file in the Redevelopment Agency and known as document no. RACO-00-07. Signature of Property Owner Date Signature of Representative of Avalon Communities Date X. INDEMINIFICATION/HOLD HARMLESS Applicant/operator shall and does hereby agree to indemnify, protect, defend, and hold harmless the City/Agency, its members, officers, employees, agents and representatives, from and against any and all liabilities, losses, damages, demands, claims, costs, including court costs and attorney's fees (collectively, "liabilities") incurred by the City/Agency arising, directly or indirectly, from (a) City's/Agency's approval and issuance of this Special Use Permit, (b) City's/Agency's approval or issuance of any other permit or action, whether discretionary or non-discretionary, in connection with the use contemplated herein, and (c) Applicant's installation and operation of the facility permitted hereby. Applicant/operator shall acknowledge their agreement to this provision by executing the Agreement of this Special Use Permit where indicated. Applicant's/operator's compliance with this provision is an express condition of this Special Use Permit and this provision shall be binding on any and all Applicant's/operator's successors and assigns. j ...2. t/ ~ ~ Resolution No. Page 12 XI. NOTICE OF DETERMINATION The Redevelopment Agency directs the Environmental Revjew Coordinator to post a Notice of Determination and file the same with the City Clerk. XII. INVALIDITY; AUTOMATIC REVOCATION It is the intention of the Redevelopment Agency that its adoption of this Resolution is dependent upon the enforceability of each and every term, provision, and condition herein stated; and that in the event that anyone or more terms, provisions, or conditions are determined by a Court of competent jurisdiction to be invalid, illegal, or unenforceable, this resolution and the permit shall be deemed to be automatically revoked and of no further force and effect ab initio. Presented by ~h~ Chris Salomone Community Development Director Approved as to form by c4 jj J~~ C y Attorney /)dR.I.et., tI H:\SHARED\PLANNING\Main Plaza\CC-Reso Main Plaza. doc j .,.z.S' . ' .,. RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA CONDITIONALLY APPROVING FINANCIAL ASSISTANCE NOT TO EXCEED $1,060,000 TO AVALON COMMUNITIES FOR THE DEVELOPMENT OF A MIXED USE PROJECT, INCLUDING 106 AFFORDABLE UNITS WHEREAS, California Health and Safety Code Sections 33334.2 and 33334.6 authorize and direct the Redevelopment Agency of the City of Chula Vista (the "Agency") to expend a certain percentage of all taxes which are allocated to the Agency pursuant to Section 33670 for the purposes of increasing, improving and preserving the community's supply of low and moderate income housing available at affordable housing cost to persons and families of low- and moderate-income, lower income, and very low income; and WHEREAS, pursuant to applicable law the Agency has established a Low and Moderate Income Housing Fund (the "Housing Fund"); and WHEREAS, pursuant to Health and Safety Code Section 33334.2(e), in carrying out its affordable housing activities, the Agency is authorized to provide subsidies to or for the benefit of very low income and lower income households, or persons and families of low or moderate income, to the extent those households cannot obtain housing at affordable costs on the open market, and to provide financial assistance for the construction and rehabilitation of housing which will be made available at an affordable housing cost to such persons; and WHEREAS, pursuant to Health and Safety Code Section 33413(b), the Agency is required to ensure that at least 15 percent of all new and substantially rehabilitated dwelling units developed within a project area under the jurisdiction of the Agency by private or public entities or persons other than the Agency shall be available at affordable housing cost to persons and families of low or moderate income; and WHEREAS, the Avalon Communities ("Developer") proposes to construct a mixed use project of 15,000 square feet of commercial retail and 106 apartment units, with 51 units affordable to very low households at 45 percent of the Area Median Income (AMI) and 55 units affordable to moderate-income households at or below 120 percent of AMI, at the north east corner of Broadway and Main Street in the City of Chula ("Project"); and WHEREAS, Developer is applying for nine percent (9%) tax credits from the Tax Credit Allocation Committee (TCAC); and WHEREAS, additional financing is necessary in order to make the residential use of the Project feasible; and WHEREAS, the provision of affordable housing units like the Project is consistent with and called for by the City's General Plan Housing Element, Consolidated Plan, and California Health and Safety Code; and WHEREAS, the Agency wishes to provide Developer with a development loan of one million sixty thousand dollars ($1,060,000) to assist with the financing gap for the construction of the J.~~ T ~ Resolution Page 2 of 3 residential units of the Project; and WHEREAS, the Agency's provision of funds to the residential use of the Project will directly improve the City's supply of very low and moderate-income housing; and WHEREAS, in accordance with California Health and Safety Code Section 33334.2 (g), staff is recommending that the Agency find and determine that even though the Project is to be located outside the City's redevelopment project areas, those areas will benefit through the creation of jobs in the project area and elsewhere in the City, and through the policies served by dispersing affordable housing throughout the jurisdiction rather than clustering it all in one area; and WHEREAS, the Agency has adopted an Implementation Plan pursuant to Health and Safety Code Section 33490, which sets forth the objective of providing housing to satisfy the needs and desires of various age, income and ethnic groups of the community, and which specifically provides for the construction of new affordable rental housing units through Agency assistance; and WHEREAS, the residential use of the Project furthers the goals of the Agency set forth in the Implementation Plan as it will facilitate the creation of affordable housing which will serve the residents of the neighborhood and the City; and WHEREAS, the City's Housing Advisory Commission did, on the 7th day of June, 2000, hold a public meeting to consider said request for financial assistance; and WHEREAS, the Housing Advisory Commission, upon hearing and considering all testimony, if any, of all persons desiring to be heard, and considering all factors relating to the request for financial assistance, has recommended to the Redevelopment Agency that the appropriation be approved because the Commission believes that the Agency's financial participation in the development of the Project will be a sound investment based upon Developer's ability to effectively serve the City's housing needs and priorities as expressed in the Housing Element and the Consolidated Plan and the cost effectiveness of the Agency's financial assistance based upon the leveraging of such resources; and WHEREAS, in accordance with the requirements of CEQA, the Environmental Review Coordinator has determined that the Project requires the preparation of an Initial Study, such study (IS 00-47) was prepared, and based on such study a Negative Declaration was adopted in connection with the Special Use Permit for the Project at said hearing for this request for financial assistance. NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula Vista does hereby conditionally approve a loan in the maximum amount of $1 ,060,000 from the Agency's Low and Moderate Income Housing Set-Aside fund to Developer for the construction of the residential units of the Project subject to the following terms and conditions: 1. Funds shall be used only for those costs directly related to the residential units of the Project. 2. The loan repayment will be secured by a Deed of Trust recorded against the Project property. 2. The term of the loan shall be fifty-five (55) years. ..J ..;J. 7 ,. "T Resolution Page 3 of 3 3. The outstanding balance shall accrue with simple interest at 6 percent per annum. 4. Payment of principal and interest on the Agency loan shall be made, on an annual basis, out of a fund equal to ninety percent (90%) of the "Residual Receipts", rental income from the Project minus debt service on the bonds, payment of the deferred developer fee, and reasonable operating expenses. 5, Developer will be required to operate the Project consistent with the Regulatory Agreement required by the Project's tax credit financing, the convenants imposed by the Agreement, and the requirements of the Special Use Permit for the Project. 6. Developer shall enter into a loan agreement with the Agency consistent with the terms set forth above and with such other terms as shall be required or approved by the Agency Attorney. 7. This conditional approval remains subject to final approval by the Agency in its sole discretion. BE IT FURTHER RESOLVED in accordance with California Health and Safety Code Section 33334.2 (g), the Agency finds and determines that even though the Project is to be located outside the City's redevelopment project areas, those areas will benefit through the creation of jobs in the project area and elsewhere in the City, and through the policies served by dispersing affordable housing throughout the jurisdiction rather than clustering it all in one area. Presented by Approved as to form by _&r ~/ Chris Salomone Director of Community Development ...3 ' -,-V ,.. -r ATTACHMENT 1 MINUTES OF A REGULAR MEETING OF THE DESIGN REVIEW COMMITTEE Chula Vista, CA Monday, May 15,2000 4:43 p.m. Public Services Building Conference Rooms 2&3 A. ROLL CALL: Chair Patricia Aguilar, Vice-Chair Peter Morlon, Member Alfredo Araiza ABSENT: Member Cheryl Mester (excused) Member Jose Alberdi (excused) STAFF PRESENT: Jim Sandoval, Assistant Planning Director Beverly Blessent, Senior Planner Harold Phelps, Associate Planner Juan Arroyo, Housing Coordinator Miguel Tapia, Sr. Community Development Specialist Brian Hunter, Planning & Environmental Manager Byron Estes, Redevelopment Manager OTHERS PRESENT: Leo Puig, Avalon Communities, LLC Tom Davis, Avalon Communities, LLC Ruben Iscas, Avalon Communities, LLC Carlos Rodriguez, Rodriguez + Simon Design Associates, Inc. Marty Keithley, Knott's Soak City USA B. INTRODUCTORY REMARKS: Chair Aguilar made an opening statement explaining the design review process and the Committee's responsibilities. She asked that all speakers sign in and identify themselves verbally for the tape. C. APPROVAL OF MINUTES: February 21 and March 6, 2000 The minutes of February 21, 2000 were continued for lack of quorum from that meeting. MSC (Morlon/Araiza) to approve the minutes of March 6, 2000. Vote: (3-0-0-2) with Mestler and Alberdi absent. D. ORAL COMMUNICATIONS: None. E. PRELIMINARY ITEM: I. DRC-00-62 Avalon Communities 1689 Broadway Construction of a mixed-use project consisting of a 15,000 square foot commercial building and 106 affordable housing units ...1.,2.9 ~.. "'l' Design Review Committee Minutes - 2- May 15, 2000 Staff Presentation Mr. Miguel Tapia (Senior Community Development Specialist) indicated that this project is low- and moderate-income housing. The applicant will be submitting an application for tax credits for financing of the project by June 15, 2000. The Community Development staff has been working with the applicant and the Planning Department staff. The project site consists of three parcels located at the northeast comer of Broadway and Main Street. The Twin Palms Trailer Park, a used car lot and a car stereo installation facility currently occupy the site. The property is surrounded by a variety of mixed uses. Some of the issues staff is working on with the applicant include fire access and parking for the residential component. Mr. Tapia had indicated in his memo to the DRC that there are 67 parking spaces, which does not meet the requirement for the commercial component. The new site plan shows 75 parking spaces making the commercial parking component comply with the Zoning Ordinance. The residential component is short on parking by 31 parking spaces. The other issue is the 15- foot landscape strip that is required on the frontage of the project along Main Street and Broadway. The applicant is showing a 5-foot landscape strip on their site plan, but the Montgomery Specific Plan requires a 15-foot strip. This project will be brought back to the DRC on June 5, 2000. Applicant Presentation Mr. Ruben Islas (Avalon Communities, LLe. 854 W Adams Boulevard, Los Angeles, CA 90007) presented the DRC with photographs of the existing property. The current owner closed the park in 1992. Apparently the project he had planned there did not work out. In order to close the trailer park, City Council made him buy all of the units. He did that and has since leased to new tenants. The applicant has all the relocation in place and a budget allocated for that. Mr. Carlos Rodriguez (Rodriguez + Simon Design Associates, Inc., 2359 Fourth Avenue, Suite 200, San Diego, CA 92101) presented slides of projects that his firm had designed in the past. He described the site plan in detail. Originally, the commercial component was planned for closer to the street, but there is a set back requirement of 25 feet along the frontage; a building set back not a parking set back. A pedestrian experience was created along the commerCial edge with an arcade. Apartments will be over the commercial area. At this density, three-story apartment buildings are being proposed with tucked under parking. The first thing you would see driving into the apartment area would be the recreation center, the large green court yard area and the front fayade of each building. One hundred six apartment units are being proposed. They would be a combination of2-, 3- and 4- bedroom units. J.S<J ~ Design Review Committee Minutes - 3 - Mav 15, 2000 At this time, Mr. Rodriguez passed around the color board and described the architecture. With the commercial, he wanted to create a village feel with the facades, so each one was expressed a little bit differently with the use of colors and individual architecture. Doors will have a variety of colors. Different massing would add to variety and interest to the project. There would also be a varied sign program using different sign treatments on the fayade. He would like to propose a whole variety of signage that would be allowable in this commercial development. Above the commercial are apartments that would overlook the commercial area. They would also overlook the interior of the residential area. He would be trying to express each of the individual units with color and architectural massing and the treatment of windows. This is our typical 3-story building. The roof is varied. Each of the architectural masses would have a different roof element. The recreation building has a tower element, which would go at the entrance to the project. The tower element is going to be a very prominent element on the site. A variety of roof elements have been brought in. There is the tower roof element and then a flat roof element showing that it will be expressed as a collection of roofs and spaces and will help break up the architectural fayade. A wide variety is being provided with the architecture and how it is approached to give it a village concept. He is looking at two stories on the recreation, and three stories on the residential and using a lot of architectural techniques to help express the individual buildings and break up the architectural massmg. Committee DiscussionlRecommendations Member Araiza asked that the pedestrian relationship between the apartments and the commercial and the adjacent properties be explained? Mr. Rodriguez indicated the pedestrian links using the site plan. The public sidewalk ties into the adjacent spaces as well. Member Araiza asked if there were security gates. Mr. Rodriguez responded in the negative. The whole area would be fenced, and there would be a control point that would lead into the commercial. Chair Aguilar asked what the rationale was for the 25-foot set back along Main Street. Mr. Jim Sandoval (Assistant Planning Director) did not think it was 25 feet but 15 feet. He thought the architect was trying to create some kind of visual enhancement at the corner. There are a couple areas that staff is still working on. One of them is the buffer, and staff is trying to see if there is a way to get more of a buffer or someway to screen the parking. There is also a shortage of parking. The applicant is asking for a density bonus. Under State Law, if someone comes in for a density bonus for affordable housing, the City is obligated to provide a ..J -.31 "!l' r Design Review Committee Minutes -4- May 15,2000 couple of incentives, which can be minimization of regulatory requirements. One of them, that he thought the applicant would be asking for, is the lesser number of parking spaces. That will be going to the Planning Commission, but one of the concerns staff has is to make sure it works. Ifit does, then staff would support the reduction in the number of parking spaces. Early on, Planning staff had some concerns about the idea of having that mixed-use project closer to the street. Now staff thinks maybe this works just because the setting is somewhat unique. If this were more downtown, staff would want that upon the front ofthe street. Chair Aguilar thought this is a terrific project. She just wished Mr. Rodriguez did all the projects in Chula Vista. Mr. Rodriguez indicated that he had been talking to the developers about the possibility of adding loft spaces to the units above the commercial area. He wanted to run that past the DRC and see what their thoughts were about it. It would be associated with the very top floor units. He would stay within the height limit and did not think the elevation would change substantially other than there might be some dormer elements that would show up. Each of the DRC members indicated that they had no problem with the loft spaces. Member Araiza complimented Mr. Rodriguez for a very nice presentation and terrific design. It was too bad that it was not on Third A venue. Mr. Sandoval asked Mr. Rodriguez if he had worked out how far those off sets are and the different wall planes. Mr. Rodriguez indicated that they vary from 24 inches to 4 feet, but there are some that have a foot difference. Member Araiza thought the color variation helps, also. Chair Aguilar indicated that this project is going to be coming back to DRC on June 5, 2000 for public hearing and formal approval. She inquired as to when it was going to Planning Commission. Mr. Sandoval indicated that it would be going to the Planning Commission on June 7, 2000. Member Araiza brought up the issue of parking spaces again. He did not know if all the apartments would require two cars. The ratio might be different for low- and moderate-income housing. Chair Aguilar asked if it would be helpful for the DRC to give unsolicited advise to the Planning Commission that, at least in our opinion, we could find to reduce the number of parking spaces. Mr. Sandoval indicated that staff could put that in the minutes. .3-3~ T 'i Design Review Committee Minutes - 5 - May 15,2000 Vice-Chair Morlon asked about the white building in front of the project. Mr. Rodriguez indicated that it is a car stereo installation shop that will be demolished and will become a greenscape. Chair Aguilar congratulated Mr. Rodriguez on a great presentation and great project. Mr. Islas referred to the mustard colored commercial center across the street on the northwest corner. He has committed to Councilwoman Salas that he will engage whatever it takes to improve both sides. Whatever he can do in partnership with the owners so that the whole corridor is changed. That will really make an impact. F. INFORMATION ITEM: 2. Knott's Soak City Staff Presentation Ms. Beverly Blessent (Senior Planner) indicated that a representative from Knott's Soak City was going to brief the DRC on the new design theme. Originally, it was a Wild West theme; now it is a surf theme. Chair Aguilar asked if there was anything the DRC needed to do. Mr. Sandoval responded in the negative. The reason being that, when you review other projects that come through, you would gauge against that western theme and you may see new rides and things you could look at and this way you know what the concept IS. Applicant Presentation Mr. Marty Keithley (Knott's Soak City USA) introduced himself as the Park Director at the new and improved Knott's Soak City in Chula Vista. It consists of 33 acres of developed land with parking that is shared with the amphitheater based on events. Next to the property is 33 acres of undeveloped land that Knott's Soak City also owns. There are no plans at the moment for that, but he would love to be able to come back and do a presentation at another time on some dreams down the road. For a water park, Knott's wanted excitement and to bring out a more thrilling or up beat element that would be more kid friendly as well as family friendly. Knott's wanted to bring out the 50's and 60's beach theme atmosphere and bring out bright color and signage to really spruce the park up. Knott's is going to be bringing in some sponsors like Ortega Foods to help with ..J -.33 '! ..,. ATTACHMENT 2 Design Review Committee Minutes DRAFT - 5 - June 5, 2000 2. DRC-00-62 Main Plaza Northeast comer of Broadway and Main Street Site plan and architectural elevations for a mixed-use project consisting of 15,000 square feet ofretail commercial and 106 units of 2-, 3- and 4-bedroom affordable housing Staff Presentation ). ~f:',.,_ Mr. Harold Phelps (Associate Planner) indicated that,-_.sinc,e the preliminary . ;~t review, the architect has presented new elevlltions of t\!e 10- and 20-unit affordable housing units. The City Landscapel'laniler has reviewed the , -.~;'" conceptual landscape plan and has found that it. is not in compliance with the City's Landscape Manual. TheJ1P~li~ant i~~eq~ired to have more development of :.\ " . '> the landscape buffer along Broadway and Main Street. There are 180 residential "~' /' ".J." ,~ parking spaces. The'se'tould ,be reduced because of trash enclosure and turnaround " -~' '.., " .;,' ~".... .,/ requirements. The totai nUlliber of parking spaces is at a ratio of 1.7 spaces per unit. This is less than the two parking spaces required for multi-family units of two or more bedrooms but can be allowed as part of a Density Bonus Ordinance. The circulation has been altered in the residential area to allow turnaround for fire trucks. Applicant Presentation J - 3c/ 'T'" i Design Review Committee Minutes - 6 - DRAFT June 5, 2000 Mr. Carlos Rodriguez (Rodriguez + Simon Design Associates, Inc., 2359 Fourth Avenue, Suite 200, San Diego, CA 92101) indicated that the applicant took the DRC concerns and made revisions to the plans. He did have a concern about Condition of Approval #24. Currently there are 10 trash enclosures, and the applicant is being required to provide 21 trash enclosures. That can be accommodated, but it would take away parking spaces. Mr. Jim Sandoval (Assistant Planning Director) suggested that maybe a mid-way point could be worked out. " .\ ,,';' Mr. Rodriguez stated that he had discussions with thy Fire Department. They have worked out a 'hammerhead' in the residential area for turnarounds. Member Arai~~' ,as~ed it: the general concept of the project was the same. Mr. ~-;-'~>-:~:::_:'/'-' ;>,">-" Rodriguez:responded in the affirmative. Lofts above the commercial area had ~;o. ',' ,',' ..' -"" been alluded to atthe DRC meeting of May 15, 2000. The applicant has decided to abandon that idea. Mr. Jerry Leaf (Resident) felt that the project was too compact; that the density was terrible. He was concerned that two or more families would reside in the 3- and 4-bedroom units. He pointed out that you could not make a left turn into the J..3S ir' "T Design Review Committee Minutes DRAFT - 7 - June 5, 2000 project from Broadway. You would have to make a U-turn at the intersection of Broadway and Main Street. Chair Aguilar appreciated and thanked Mr. Leaf for his valid comments. She assured him that his comments would be noted in the minutes. .-> ?'~ ,.-. -~ , - Mr. Rodriguez indicated that there would be strict requirements of people moving -\ "". ') into the units. , ~ ;',,> . -::,~..-' Mr. Ruben Islas (Avalon Communities, LLC,. 854 W. Adams Boulevard, Los Angeles, CA 90007) indicated that ov.ercrowding would not be allowed. The applicant would control the density. ,.~' "'" Committee DiscussionlRecommendations '..' ""-)d' "~:-, MSC (Aguilar/Araiza) to approve DRC-00-62 with the Conditions of Approval outlined in the staff report. Staff is to look into the excessive number of trash enclosures that are being proposed for the project. Vote: (4-0-0-1) with Mestler absent. J-3.~ '!l' -r Parking Requirements by Jurisdiction (as of May 2000) ATTACHMENT 3 CItv Parklna Ordinance Reduction Incentfves 1 Bdrm 1.5 spaces per unit A reduction in parking ratio is allowed as an 2+ Bdrms 2 spaces per unit additional incentive to develop lower income Guest 0.5 spaces per unit for up to or senior housing at the discretion of the Cal1sbad 10 units Planning Commission. 0.25 spaces per unit for each unit in excess of 10 units 1+ Bdrms 2 spaces per unit 1 space per Mixed commercial and senior or Coronado Guest No requirement (Inclusive) unit affordable housing 0.5 space Mixed commercial and SRO or per unit boarding house 1 Bdnn 1.5 spaces per una None specified Chula Vista 2+ Bdrms 2 spaces per unit Guest No requirement (Inclusive) 1 Bdrm 1 spaces per unit None specified DelMar 2.3 Bdrms 2 spaces per unit 4+ Bdrms 3 spaces per unit Guest No requirement (Inclusive) 1 Bdrm 2 spaces per unit 1 space per Senior or disabled housing with 2+ Bdnns 2.25 spaces per unit unit approval of specific plan EI Cajon Guest 10% of required spaces 30% Affordable (income restricted) reduction in housing parking SbJdio 1.5 spaces per unit 1 space per Mixed commercial and 1-2 Bdrms 2 spaces per unit unit affordable housing Encinitas 3+ Bdrms 2.5 spaces per unit Guest No requirement (Indusive) Imperial Beach 1+ Bdrms 2 spaces per unit 1.5 space Mixed commercial and Guest No requirement (Indusive) per unit residential La Mesa 1+ Bdrms 2 spaces per unit Reductions may be considered with the Guest 0.4 spaces per unit approval of a specific plan 1+ Bdrms 225 spaces per unit 1 space per Senior housing Lemon Grove unit Guest No requirement (Inclusive) 1 Bdrm 1.3 spaces per unit None specified 2+ Bdrms 1.5 spaces per unit Guest 0.5 spaces per unit for 20 National City units or less 0.25 spaces per unit for each unit in excess of 20 units 1 Bdrm 1.5 spaces per unit None specified 2+ Bdrms 2 spaces per unit Oceanside Guest "1 spaces per unit for 4-1 0 units 20% of total number of units for 10+ units 1 Bdrm 1.5 spaces per unit A reduction in parking ratio may be allowed Poway 2 Bdrms 2.25 spaces per unit as an incentive to develop affordable, lower 3+ Bdrrns 2.75 spaces per unit income housing at the discretion of the Guest No requirement (Inclusive) Planning Commission. 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" o ;: in ~ ~ e o c " '" .!!! :::> >~ Q ro 3 "! ~ ~ 0 C\J ttI "E""" ~ o () ~ " E o .c c ~ OJ!) :::> 1-._ Q ~ 3 ~ ~ cocoC\J ttI t:: ~ Q, .. OJ >- >- ~ e >- 2; c .. ~~ 2 -CLO'" Cf.l=>C'\j~ >-N ~ ~N ~ 2; o 2; J!) c C ~tfl ~ct:~ ==> "t:l:'!:::: Q 8,.- Q 05~~s!;!3~~ o "',~ = co..... ttI :;::~ >N a.. ~ "'t: '" c .. s:: a... ..3-31 ~ 0; o ~ ~ ~ 0_ . . ~ " .,j.!!! > := o > ~ ~ ~e:. "'''' > > c(c( ATTACHMENT 4 OS/26/00 FRI 13:56 FAX 2137473223 PUrchMe Price ctosing Costs Lend Carry/Interest Tobll L.nd Costs Total AcqulllGan Cos" New Construc:tton and/or Reh.lbUltation OffSMWorlt OnSlteWmtr. Structures General Requirements Contractor O~ead Conlrac1orPro1!t Construction ContIngency Total COMtructfon COlta Flnuclng COlts Construction Loanlnferest Construction LDlIrl orLOC Fee ConlltnK1lon lender Com (leg... Etc.) Other ConstructlOfllender Coati Permanent loen Fee Pemumeot lOll.n Co$ts Tal( Credit Fees Le-nder Attorney Fees Other AttornII)' F_ Total Financing Costs SottCosta Architectural EnqineeringlSlJf'Ve)'fng/Environmenta' TelleS During ConstnJctfo11 Insurance Tille & Recording BOfTOWef Attorney Appraisal local Tap, Building Permit, & Imp.ect Fees Maltleting RelocatIon Costs Fumishlngs Accounting Mart<et Study Soft Cod Contingeney Developer Ol/erhead & Profit Consul1snt Fee Totll Soft COflS R..erves Rent Reserves Operating Retlerves Total Relerw Costs Total Project Costs DEVELOPMENT BUDGET Main Plaza - 9% Chula VIsta ReshfentJal Commercial Total 86.57% 13.43% Project Cents $ 2,250,820 . 349,180 $ 2,000.000 . 3,_ . S04 .,500 . - . - . 2.254,111 . J.cS,7S.c . . . . - . . - . - . 519,420 . 80,580 . . .000 . 4,207,302 . 652,698 . ,860, . 283,603 . 43,997 . .600 . 189,009 . 29,331 218.400 . 189,069 $ 29,331 . 21 ,400 . 538,848 . 83,5g4 622.440 . 1,927,309 I 919,531 . ',84&,840 . 259,710 . 40,290 . 300,000 . 69,256 I 10,744 80,000 . 17,314 . 2,686 O. . . - - $ 43,285 . 6,715 50.000 . 10,921 . 1,679 . 12. $ 72,638 . 11,269 .906 . 17,314 . 2,S86 $ 20,000 $ 17,314 . 2,686 . 20,000 . 1507,652 . 78,114 . 58',406 . 190.454 $ 29.546 . 220,000 . 57,309 $ 8,891 $ 6,200 . 12,986 $ 2,015 15,000 . 34,628 . 5,372 40.000 . 10.821 $ 1,679 12,500 . 25,971 . 4,029 $ '0. . 7,500 . . . 7,. . af5~,700 . 134,300 ,000.0 $ 25,000 . .000 . 50,000 . . 50.000 $ 15,000 . - $ 15,00 . 12,500 . .500 $ 5,000 . . .000 . 134,18<1 , 20,817 $ 155,000 . S8S,076 . 153.285 61 . - . - . - I 2,435,129 . 359,J32 I 2,795,061 $ . - . - , 292,200 . - 292.2 . 292,200 . . . 212.200 . 11,411.006 . 1,708,002 . 13,125,007 ..5-.31 ~ ., ATTACHMENT 5 finM!OOO T.xCredlt oth" EIJglble easls B..,. XXXXXXXXXXXX . 2,600,000 XXXXXXXXXXXX . 4.500 XXXXXXXXXXXX . . . 2.604,600 . I XXXXXXXXXXXX . . 519.420 . 519,420 . 4,207.302 . 4,207,302 . 293,603 . 283,603 . 189,069 . 189.06g . 189,069 . 189,069 . 538,846 $ 638,646 . 5,927,309 . 5,'21,]09 . 155,826 . 155,826 . 69,256 $ 69,256 . 17,314 S 17,314 . $ XAAXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX . 40,446 . 17,314 $ 17,314 XXXXXXXx.xXXX XXXXXXXXXXXX . 251,710 I 300.156 . 190,454 I 190.454 . 57,309 . 57,309 I 12,986 . 12,ge6 . 3C,626 . 3C,628 . 10,621 . 10,821 $ 25.971 . 25,971 . 7,500 . 7,500 $ 865,700 . 865 700 XXXXXXXXXXXX XXXXX)l.XXxXXX , 50.000 . SO,OOO . 15,000 . 15,000 . 12,500 . 12,500 . 5,000 . 5,000 . 134,184 . 134,164 . 988,076 . 988.076 . $ I 2,410,129 . 2,.410,129 XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXx.x.xxX XXXXXXXJl:XX.xx XXXXXXXXXXXX . 1,597,148 . 11,242,094 Negative Declaration ATTACHMENT 6 PROJECT NAME: Main Plaza Residential & commercial A Mixed-Use Village Community PROJECT LOCATION: 1667,1689 & 1695 Broadway APN 622-112-13 & 14 & 622-11-38 PROJECT APPLICANT: Avalon Communities, LLC Rodrizguez + Simon Design Associates, Inc CASE NO: IS-00-47 DATE: May 11,2000 A. Proiect Setting The subject site is located at the northeast comer of Broadway Avenue and Main Street. The subject site location and vicinity are presented in Attachment A. The project site includes 3 developed parcels with a total area of approximately 4.54 acres. The parcel located at 1667 Broadway is currently developed with an auto audio business. The most northern parcel is located at 1689 Broadway and is currently developed with a 50 unit trailer park, the Twin Palms Trailer Park. The southern parcel at the comer of Broadway and Main Street is currently being utilized for 2 used auto sales lots. The project is located in a fully urbanized area. Topography at the project site is relatively flat and generally the same elevation as adjacent streets. Surrounding land uses include the following: North: South: East: West: Residential (Mobile Home Park) Commercial (Gas station, motel, and auto sales lot) Commercial (BIMBO distribution center) Commercial (retail center) B. Proiect Description The proposed proj ect is a mixed-use residential commercial facility consisting of 106 affordable housing units and 15,000 commercial square feet. The commercial space will be located on the first floor of a three-story building located near the southwest comer of the site. The second and third floors will have 16 units. The remaining 90 units will be located in 16 buildings distributed throughout the northern portion of the site. The proposal is a redevelopment project that will 1 j_c/O .".. ..,. provide 51 multiple family units affordable to low income families and 55 units affordable to moderate income families. The proposed project integrates high density housing with commercial uses. The project is located near a major transit corridor, affords commercial tenants and employees an opportunity to live in proximity to the work place, and places commercial uses within walking distance to residential uses. The project design, including lighting, landscaping, and parking is subject to review by the City's Design Review Committee. C. Compatibility with Zoning. General Plan. and Sectional Planning Area Plan The subject property is zoned CC-Central Commercial Zone and designated C-Commercial on the City's General Plan. The project is also located in the Southwest Redevelopment Area and the Montgomery Specific Planning Area. The Montgomery Specific Plan designates the site as CMO -Commercial Mercantile & Office Commercial. The project contains an 18% density bonus for an additional 16 units to the 90 units (22dulac) allowed under the current Zoning and General Plan designations. The proposed mixed-used development is consistent with the Zoning, General Plan, Specific Plan, and redevelopment area designations. D. Identification of Environmental Effects As indicated on the attached checklist the proposed project does not result in any potentially significant impacts. E. Mitigation Necessary to Avoid Significant Effects As indicated on the attached checklist no environmental factors were identified as "Potentially Significant Unless Mitigated", therefore mitigation is not required. Consultation 1. Individuals and Organizations City ofChula Vista: Miguel Tapia Community Development Leilani Hines, Housing and Community Development Brian Hunter, Community Development Benjamin Guererro, Community Development Marilyn R.F. Ponseggi, Environmental Planning Ralph Leyva, Traffic Engineering Frank Rivera, Engineering Adv. Ping! Wastewater Harold Phelps, Development Planning Beverly Blessent, Development Planning Doug Perry, Fire Marshall Richard Preuss, Police Crime Prevention 2 tI_tlt - T "T Duane Bazzel, Advance Planning 2. Documents Chula Vista General Plan (1989) Title 19, Chula Vista Municipal Code Geotechnical Engineering Investigation, Technicon Engineering Services, Inc (4/ 26/00) Phase I Environmental Site Assessment, Technicon Engineering Services, Inc (1/26/00) Traffic Impact Analysis, Darnell & Associates, Inc. (5/11100) 3. Initial Study This environmental determination is based on the attached Initial Study, any comments received on the Initial Study and any comments received during the public review period for this Negative Declaration. The report reflects the independent judgement of the City ofChula Vista Further information regarding the environmental review of this project is available from the Chula Vista Plarming and Building Department, 276 Fourth Avenue, Chula Vista, CA 91910. ~~to~~. Environment Review Coordinator Date:'----17l7 Jd.;,..:)MrJ 3 .3.. t./ ;). ~ . ~ II I \\-i H \ U r---- 1--ho... UM"'\ \ t:j ~ ~ --LuJ: I "-'. ,I 'I II/I II - ii!W r- ,\ \ \ \ ,'"- - -f-- t\:I'e EE33 I- EttB EttB I II II 11 I 1\ \ 'Tl . ! I (' I \' I \ ~ '-- L 'I' '~~~III I f--- ~ 0 -; I z ~ h l"J I~- I 'III G \ I I I -'--. I I I I n / 0 1][1 I MAIN STREET '--- ~::!: I C I-- - I I-- r-- ~ I-- f--- ~\ \ - I-- Il IT IT l F '-LVI E STRE L \\ I \\ \ \ 1\ \ ~r-- ......... ~ LOCATOR ~~~: AVALON COMMUNITIES, LLC PROJECT DESCRIPTION: C) INITIAL STUDY PROJECT 1689 Broadway ADDRESS: Request Proposed construction of a 15,000 sq.ft. mixed-use ~, 1/.3 commercial building and 106 affordable housing units SCALE: FILE NUMBER: .. with 181 residential and 75 commercial parking NORTH No Scale IS - 00-47 spaces provided. h :\home\planning\hector\locators\IS004 7. cdr 05/17/00 . ~ Case No.IS-00-47 ENVIRONMENTAL CHECKLIST FORM 1. Name of Proponent: Avalon Communities, LLC Rodrizguez + Simon Design Associates. Inc 2. Lead Agency Name and Address: City of Chula Vista 276 Fourth Avenue Chula Vista. CA 91910 3. Address and Phone Number of Proponent: 854 W. Adams Blvd Los Angeles, CA 90007 4. Name of Proposal: Main Plaza Residential & commercial A Mixed-Use Village Community 1667, 1689 & 1695 Broadway APN 622-112-13 & 14 & 622-11-38 5. Date of Checklist: May 11, 2000 Pote.atiaUy .........uy Signific:ant J........ 5"_ u...... Slp;fiaa' No 1m",,, Mitigated 1m",,, 1m",,, I. LAND USE AND PLANNING. Would the proposal: a) Conflict with general plan designation or 0 0 0 181 zoning? b) Conflict with applicable environmental plans or 0 0 0 181 policies adopted by agencies with jurisdiction over the project? c) Affect agricultural resources or operations 0 0 0 181 (e.g., impacts to soils or fannlands, or impacts from incompatible land uses)? d) Disrupt or divide the physical arrangement of 0 0 181 0 an established community (including a low- income or minority community)? Comments: The proposed mixed-use residential & commercial facility located at the northeast comer of Broadway & Main Street consists of 106 affordable housing units and 15,000 commercial square feet. The subject property is zoned CC-Central Commercial Zone and designated C- Commercial on the City's General Plan. The project is also located in the Southwest Redevelopment Area and the Montgomery Specific Planning Area. The Montgomery Specific Plan designates the site as CMO -Commercial Mercantile & Office Commercial. The project contains an 18% density bonus for an additional 16 units to the 90 units (22du/ac) allowed under the current Zoning and General Plan designations. The proposed mixed-used development is consistent with the Zoning, General Plan. Specific Plan, and redevelopment area designations. .,# .. c1if (H: \home\planning\edalia \lS-{)()47 cklst.doc) 1 T ~ PotadiaUy -.. Im_ .......tla1Iy Sipll'lCUIt VoIea Mltipted s. 1m.." Loa .... S"1plif"a.at 1m.." The project site is currently occupied by the 50-unit Twin Palms Trailer Park at 1689 Broadway, 2 used car sales lots at 1695 Broadway, and an auto audio business located at 1667 Broadway. The proposed project will result in a similar physical arrangement of land uses with a mixed-use residential and commercial building and 106 residential units. The residential/commercial building will be located in the same general vicinity as the used car sales lots and the residential units will be located at the northern portion of the lot where the trailer park exist today. The parcel containing the audio business will be landscaped as part of the recreational area. The proposed residential component of the project will provide sufficient housing opportunities for displaced households of the trailer park. No mitigation is required. II. POPULATION AND HOUSING. Would the proposal: a) Cumulatively exceed official regional or local population projections? b) Induce substantial growth in an area either directly or indirectly (e.g., through projects in an undeveloped area or extension of major infrastructure)? c) Displace existing housing. especially affordable housing? Comments: The project consists of the redevelopment of an approximately 4.54 acre site located at the northeast comer of Broadway and Main Street. The site is developed with a 50 unit Trailer Park (Twin Palms Trailer Park) located at 1689 Broadway, 2 used car lots located at 1695 Broadway, and an audio business located at1667 Broadway. The project will replace the Trailer Park, auto sales lots, and audio business with 106 multiple family residential units and a 15,000 commercial square feet. 51 of the new units will be affordable to low income families and 55 units will be affordable to moderate income families. o o o 1111 o o o 1111 o o 1111 o In compliance with State Redevelopment Law, the developer will provide a relocation assistance plan, which specifies appropriate assistance for the temporary and permanent relocation of all affected households. It is anticipated that 40 or the 50 trailer park households will require some form of relocation assistance. Residents of 10 mobile homes have waived their rights to any relocation assistance. The developer will be responsible for all relocation expenses resulting from the proposed project. No mitigation will be required. m. GEOPHYSICAL. Would the proposal result in or expose people to potential impacts involving: a) Unstable earth conditions or changes in geologic substructures? b) Disruptions, displacements, compaction or overcovering of the soil? c) Change in topography or ground surface relief features? (H: \home\planning\edalia \lS-OO-47 CklsLdoc) J--c1S' 2 o o o 1111 o o o 1111 o o o 1111 f) Changes in deposition or erosion of beach sands, or changes in siltation. deposition or erosion which may modity the channel of a river or stream or the bed of the ocean or any bay inlet or lake? g) Exposure of people or property to geologic hazards such as earthquakes, landslides, mud slides, ground failure, or similar hazards? Comments: Implementation of the proposed project will result in minor disruptions and overcovering of soil during construction of the mixed-use project. These facilities will be constructed in an area currently developed with a trailer park, 2 car sales lots. and an audio business. d) The destruction, covering or modification of any unique geologic or physical features? e) Any increase in wind or water erosion of soils. either on or off the site? Poteatially ......tiaIIy S....lll"... Lao .... S"opilIcuo. v..... S"opilIcuoI N. ....." Mitipted ....." ....." 0 0 0 I8l 0 0 0 I8l 0 0 0 li!I o o o I8l A preliminary Geotechnical Engineering Investigation was conducted for the proposed project by Technicon Engineering Services (April 26, 2000). The referenced geotechnical study covered parcels 622-112-13 & 14. The referenced geotechnical study evaluated the subsurface conditions and provides preliminary geotechnical engineering design parameters and recommendations for use in the project design and preparation of construction specifications. Existing and potential geologic hazards at or near the subject site were also evaluated Based on field and laboratory investigations the referenced geotechnical study concluded that the site is suitable for the proposed construction with regard to support foundations, concrete slabs-on-grade. and pavements provided the recommendations contained in the report are followed. No identified active faults are located on or near the subject site and the subject site is not located in an identified Alquist-Priolo Earthquake Fault Zone. Compliance with the applicable recommendations of the submitted geotechnical report will be required by the Engineering Department as a standard requirement of grading permit approval. No mitigation measures are required. IV. WATER. Would the proposal result in: d) Changes in the amount of surface water in any ...1.. ql:, a) Changes in absorption rates, drainage patterns, or the rate and amount of surface runoff? b) Exposure of people or property to water related hazards such as flooding or tidal waves? c) Discharge into surface waters or other alteration of surface water quality (e.g., temperature, dissolved oxygen or turbidity)? (H: \home\planning\edalia US-OO-4 7 cldst.doc) 3 11' i o o li!I o o o o I8l o o o li!I o o o li!I .........., PotaatiaUy Sip1ficaac Lea.... S"tgnificaDt UnIeu _., No 1m.." Mitigated 1m.." 1m.." water body? e) Changes in currents. or the course of direction 0 0 0 III of water movements, in either marine or fresh waters? f) Change in the quantity of ground waters, either 0 0 0 III through direct additions or withdrawals, or through interception of an aquifer by cuts or excavations? g) Altered direction or rate of flow of 0 0 0 III groundwater? h) Impacts to groundwater quality? 0 0 0 III i) Alterations to the course or flow of flood 0 0 0 III waters? j) Substantial reduction in the amount of water 0 0 0 III otherwise available for public water supplies? Comments: According to the City Engineering Departtnent existing off-site drainage facilities adequately convey water. As a standard condition of approval, the Engineering Departtnent will require the applicant to prepare drainage information that identifies the method to be used to convey on-site surface water. Section 14.20 of the Chula Vista Municipal Code requires the implementation of Best Management Practices to prevent pollution of storm drain facilities. The subject site is not located in a flood plain; therefore, no water related hazards to people or property are anticipated to result from implementation of the proposed project. No adverse impacts to water resources have been identified. No mitigation measures are required. V. AIR QUALITY. Would the proposal: a) Violate any air quality standard or contribute to an existing or projected air quality violation? b) Expose sensitive receptors to pollutants? c) Alter air movement, moisture, or temperature, or cause any change in climate. either locally or regionally? d) Create objectionable odors? o o o III o o o III o o o III o o o III e) Create a substantial increase in stationary or non-stationary sources of air emissions or the deterioration of ambient air quality? o o o III Comments: The mixed-use project integrates high density housing with commercial. The project is located in proximity to mass transit, affords commercial tenants the opportunity to live in proximity .3-cli (H, Ihome\planning\edalia IIS-OO-47 cklst.doc) 4 .". "T PotmtiaDy Poteadally SipiIkaat Less thu SlpUicaDt UDlas Sipifkant No Impact Mitipced Impact Impact to the work place, and places commercial uses within walking distance to residential uses. The proposed project does not result in the violation of any air quality standard or contribute to an existing or projected air quality violation. The majority of the proposed project site is dedicated to residential uses with approximately one- third of the site dedicated to commercial uses. The commercial component of the proposed project is designated for commercial mercantile and office uses. By nature pennilled commercial uses in this Specific Plan designation do not result in the creation of objectionable odors or the exposure of sensitive receptors to pollutants. The residential or commercial uses will not create a substantial increase in stationary or non-stationary sources of air emissions or the deterioration of ambient air quality. No mitigation is required. Grading and construction of the proposed building and parking lot would temporarily create dust and emissions associated with activity from construction equipment and vehicles. These short-term emissions are not considered significant impacts. Standard Engineering conditions of approval for grading and dust control serve to minimize impacts to a level less than significant. No mitigation for short-term emissions is required. e) Hazards or barriers for pedestrians or bicyclists? f) Conflicts with adopted policies supporting alternative transportation (e.g. bus turnouts, bicycle racks)? g) Rail, waterborne or air traffic impacts? h) A "large project" under the Congestion Management Program? (An equivalent of 2400 or more average daily vehicle trips or 200 or more peak-hour vehicle trips.) Comments: A Traffic Study prepared by Darnell & Associates, Inc. (May 11,2(00) indicates that the proposed project will not result in a significant increase in vehicle trips or traffic congestion. The referenced traffic study concludes that the proposed project will generate approximately 1,448 daily trip, with 85 occurring in the morning peak and 139 in the evening peak. Crediting the difference for existing uses as traffic already in the circulation system, the proposed project generates a net increase of approximately 718 daily trips, 46 morning and 63 evening peak hour VI. TRANSPORTATION/CIRCULATION. Would the proposal result in: a) Increased vehicle trips or traffic congestion? b) Hazards to safety from design features (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? c) Inadequate emergency access or access to nearby uses? d) Insufficient parking capacity on-site or off-site? (H: \home\planning\edalia \IS -00-47 cklst.doc) J .. tlf 5 T 'i o o I!II o o o o I!II o o o I!II o o o I!II o o o I!II o o o I!II o o o iii o o o I!II Poteatially Poteatially Sipd.lkant Less t..baa Slpificual UIlIess SipWICbI No Implld Mitipted Impact Impact trips. The daily PM peak hour traffic on Broadway north of Main will operate at LOS A with or without the proposed project. The daily and PM peak hour traffic on Main Street will operate at LOS B or better with or without the proposed project. The City's Traffic Engineer concurs with the referenced report that the highway segments adjacent to the project and the intersection of Broadway and Main Street will operate at acceptable level of operation and that there are no project significant impacts as a result of the proposed project. The City of ChuJa recently improved Broadway and Main Street. These improvements (CIP No. S1'96l, dated March 25, 1998) should be sufficient and additional right of way and improvements are not required. The project is not a "large project" under the Congestion Management Program because it does not result in an equivalent of 2,400 or more ADT or 200 or more peak-hour vehicle trips. The project is consistent with adopted policies supporting alternative transportation. The proposal does not produce hazards or barriers for pedestrians or bicyclists. The project is a mixed-used residential commercial facility designed to reduce the number of automobile trips taken by residents. The project is located within major transit routes. The project is not located in a major flight zone or near a major body of water. The project driveways on Broadway and Main Street operate at acceptable levels of service with a restricted configuration of right-in/out only. Project design will be reviewed by the City's Design Review Committee, which will also address internal circulation and parking. VII. BIOLOGICAL RESOURCES, Would the proposal result in impacts to: a) Endangered, sensitive species, species of 0 0 0 Il!I concern or species that are candidates for listing? b) Locally designated species (e.g., heritage 0 0 0 Il!I trees)? c) Locally designated natural communities (e.g, 0 0 0 Il!I oak forest, coastal habitat, etc.)? d) Wetland habitat (e.g., marsh, riparian and 0 0 0 Il!I vernal pool)? 0 0 0 Il!I e) Wildlife dispersal or migration corridors? f) Affect regional habitat preservation planning 0 0 0 Il!I efforts? Comments: The subject site is located in a fully urbanized area and is currently developed with residential and commercial uses. The site is fully paved with no native habitat and minimal ornamental vegetation. No animal or plant species listed as rare, threatened or endangered by local State or Federal resource conservation and regulatory agencies are known to be present in this area. The project does not result in any adverse impacts to biological resources; therefore no mitigation is required. (H: \home\planning\edalia \IS-OO-47 cklst. doc) J-41 6 ". "T PnceadaUy ....- SipIfica.a.t L<a .... Significut U"""' 'opl/kaD' No ""paa Mitigated ""paa ""paa VIII. ENERGY AND MINERAL RESOURCES, Would the proposal: a) Conflict with adopted energy conservation 0 0 0 iii plans? b) Use non-renewable resources in a wasteful and 0 0 0 iii inefficient manner? c) If the site is designated for mineral resource 0 0 0 iii protection, will this project impact this protection? Comments: No substantial increases in the use of fossil fuels (electricity, oil, natural gas, etc.) or in water consumption is anticipated. The proposed residential units will be constructed in accordance with current Title 24 State Energy regulations and will result in more energy efficient residential units than the existing Trailers and buildings currently on-site. The proposed project site is fuBy developed and does not contain any mineral resources and will not have an impact on mineral resource production. IX. HAZARDS. Would the proposal involve: a) A risk of accidental explosion or release of 0 0 0 iii hazardous substances (including, but not limited to: petroleum products, pesticides, chemicals or radiation)? b) Possible interference with an emergency 0 0 0 iii response plan or emergency evacuation plan? c) The creation of any health hazard or potential 0 0 0 iii health hazard? d) Exposure of people to existing sources of 0 0 0 iii potential health hazards? e) Increased fire hazard in areas with flammable 0 0 0 iii brush, grass, or trees? Comments: The proposed project is a mixed-use commercial residential facility that does not result in a substantial risk of an accidental explosion or release of hazardous substances (including, but not limited to: petroleum products, pesticides, chemicals, or radiation. The proposed uses do not create any health hazard or potential health hazard. A Phase I Environmental Site Assessment was prepared by Technicon Engineering Services (January 26,2000. The referenced study covered parcels 622-112-13 & 14. According to the referenced assessment the subject site was utilized for agricultural purposes (row crops) from at least 1941 to the early 1960's. Based on the length of time since the property was used for agricultural purposes, it is not anticipated that environmentaBy persisteni pesticide residues would be present in the near- surface soils located at the site. (H: \home\planning\edalia \IS-OO-47cklst.doc) J .57> 7 T .,. PoteatiaUy Slplificaal 1m,." ........, Siplfkaa, v..... Midpled Lou .... SipIfkaa, Im_ No 1m,." Building Department records indicate that septic systems were associated with the subject site as late as 1998. City records contain numerous complaints regarding sewer leakage and septic backup at the trailer park. The presence of septic systems is not anticipated to pose an adverse impact to the subject site due to their anticipated use for domestic purposes only. Development of the site will require connection to the Cities sewer system and the existing sewer system is required to be properly abandoned in accordance with the requirements of the City's Building Division and Appendix K (11) of the 1998 California Plumbing Code. The referenced assessment contains a review of the San Diego County Department of Environmental Health records. No records of underground storage tanks, hazardous materials handling, or reported incidents involving hazardous materials spills or leaks are on file for the subject site. Based on a site inspection, no evidence of existing or former underground fuel storage tanks or aboveground fuel storage tanks were observed at the subject site. No evidence of bulk chemical storage was noted at the subject site. No evidence of improper storage, handling, or disposal of hazardous materials was noted at the subject site. Based on Phase I Environmental Site Assessment, the proposed project does not result in the exposure of people to existing sources of potential health hazards. . X. NOISE. Would the proposal result in.' a) Increases in existing noise levels? b) Exposure of people to severe noise levels? o o o IlII o o o IlII Comments: The proposal consists of the redevelopment of a 50 unit trailer park, 2 used car sales lots and an audio business with 106 multiple family units and a 15,000 square foot commercial facility. The proposed land uses do not result in a significant increase in existing noise levels or in the exposure of people to severe noise levels as defined in Chapter 19.68 of the Municipal Code (Performance Standards and Noise Control). XI. PUBLIC SERVICES. Would the proposal have an effect upon, or result in a need for new or altered government services in any of the following areas: a) Fire protection? 0 0 0 IlII b) Police protection? 0 0 0 IlII c) Schools? 0 0 0 IlII d) Maintenance of public facilities, including 0 0 0 IlII roads? e) Other governmental services? 0 0 0 IlII Comments: The project does not generate the need for additional governmental services. The City Fire and Police Departments have indicated that adequate service levels can be maintained. Appropriate school fees will be paid as required by the Chula Vista Elementary School District and the Sweetwater Union High School District. (H: \home\planning\edalia\IS-OO-47cklst.doc) ..3-SI 8 't r PoceatiaUy SipificaDr Im_ PoceatiaDy Siplf""". U""'" Mitipted u.s .... Soplfiaa. 1m.." No Impact As stated in the traffic study prepared by Darnell & Associates, Inc., dated May II, 2000, the City of Chula Vista recently improved Broadway and Main Street. These improvements (CIP No. ST 961 dated March 25, 1998) should be sufficient to accommodate the proposed use. Additional right of way and improvements are not necessary. The City's Traffic Engineer concurs with the findings of the traffic study. No additional mitigation will be required. . o o o IIlI XII. Thresholds. Will the proposal adversely impact the City's Threshold Standards? As described below, the proposed project does not adversely impact any of the seen Threshold Standards. a) Fire/EMS o o o IIlI The Threshold Standards requires that fire and medical units must be able to respond to calls within 7 minutes or less in 85 % of the cases and within 5 minutes or less in 75 % of the cases. The City of Chula Vista has indicated that this threshold standard will be met, since the nearest fire station is I.4 miles away and would be associated with a 3 to 4 minute response time. The proposed project will comply with this Threshold Standard. Comments: According to the Fire Deparnnent, the nearest Fire Station is Station #5, located at Oxford and Fourth Avenue. The approximate response time for service is 3-4 minutes. b) Police o o o IIlI The Threshold Standards require that police units must respond to 84 % of Priority I calls within 7 minutes or less and maintain an average response time to all Priority 1 calls of 4.5 minutes or less. Police units must respond to 62.10% of Priority 2 calls within 7 minutes or less and maintain an average response time to all Priority 2 calls of 7 minutes or less. The proposed project does comply with this Threshold Standard. Comments: The Chula Vista Police Deparnnent indicates that current level of police services can continue to be provided to the project area. c) Traffic o o o IIlI 1. City-wide: Maintain LOS "CO or better as measured by observed average travel speed on all signalized arterial segments except that during peak hours a LOS of "D" can occur for no more than any two hours of the day. 2. West ofI-805: Those signalized intersections which do not meet the standard above may continue to operate at their current 1991 LOS, but shall not worsen. The proposed proiect does comply with this Threshold Standard. Comments: The City's Traffic Engineer concurs with the Traffic Study conducted by Darnell & Associates, Inc. that the intersection of Broadway and Main Street located in western Chula Vista will operate at acceptable level of operation and that there are no project significant impacts as a result of the proposed project. (H: \home\planning\edalia \IS-OO-4 7cklst.doc) J-~-.2.. 9 ~ ..,. ...........,. ....- Sipiftcaat Loa..... SipJ/lcm, u..... SipJ/lcm' No Im_ Micipled 1m.." 1m.." d) Parks/Recreation 0 0 0 Illl The Threshold Standard for Parks and Recreation is 3 acres/l ,000 population east of 1- 805. Comments: The proposal is located west of 1-805. The Parks and Recreation Threshold Standard does not apply to projects west of 1-805. o o o III e) Drainage The Threshold Standards require that storm water flows and volumes not exceed City Engineering Standards. Individual projects will provide necessary improvements consistent with the Drainage Master Plan(s) and City Engineering Standards. The proposed project does comply with this Threshold Standard. Comments: There is an existing 48" reinforced corrugated pipe storm drain under Main street and 4' x 4' reinforced concrete box culvert crossing Main Street at the intersection of Broadway. The Engineering Department has determined that these existing off-site drainage facilities are adequate to serve the proposed project. An adequate storm drainage system shall be incorporated in the project design and will be reviewed by the Engineering Departtnent with the submittal of grading improvement plans. f) Sewer o o o Illl The Threshold Standards require that sewage flows and volumes not exceed City Engineering Standards. Individual projects will provide necessary improvements consistent with Sewer Master Plan(s) and City Engineering Standards. The proposed project does comply with this Threshold Standard. Comments: Based on a sewer study prepared by Walsh Engineering and on the evaluation of sewer system data currently available, the Engineering Department has determined that the proposed development will have a less than significant impact on the existing sewer system adjacent to the proposed development. g) Water o o o Illl The Threshold Standards require that adequate storage, treatment, and transmission facilities are constructed concurrently with planned growth and that water quality standards are not jeopardized during growth and construction. The proposed project does comply with this Threshold Standard. Applicants may also be required to participate in whatever water conservation or fee off- set program the City of Chula Vista has in effect at the time of building permit issuance. Comments: The project proponent is required to submit a will serve letter from the servicing water district. Water quality standards would not be affected by this project .because the site is fully developed and minimal earthwork is required to develop the site. (H: \home\planning\edaIia \15-00-47 cklst.doc) ..3 - 5'..3 10 " PoteatiaUy PoIeodaUy SipUfiant lAD than SipirK:llDt U..... SipilicaDl So 1m,.." Mitigated 1m,.." 1m,.." xm, UTILITIES AND SERVICE SYSTEMS. Would the proposal result in a need for new systems, or substantial alterations to the following utilities: a) Power or natural gas? 0 0 0 III b) Communications systems? 0 0 0 III c) Local or regional water treatment or 0 0 0 III distribution facilities? d) Sewer or septic tanks? 0 0 0 III e) Storm water drainage? 0 0 0 III f) Solid waste disposal? 0 0 0 III Comments: According to the Engineering Department existing sewer system adjacent to this development and off-site drainage systems are adequate to serve the proposed project. The existing land uses currently located on the proposed site are on septic tanks. The proposed project is required to connect to the City's sewer system as an Engineering Department standard condition of approval. An on-site storm drainage system is required to be incorporated in the project design to the satisfaction of the Engineering Department. The design of on-site storm drainage system shall be submitted with grading improvement plans. XIV, AESTHETICS. Would the proposal: a) Obstruct any scenic vista or view open to the 0 0 0 III public or will the proposal result in the creation of an aesthetically offensive site open to public view? b) Cause the destruction or modification of a 0 0 0 III scenic route? c) Have a demonstrable negative aesthetic effect? 0 0 0 III d) Create added light or glare sources that could 0 0 0 III increase the level of sky glow in an area or cause this project to fail to comply with Section 19.66.100 of the Chula Vista Municipal Code, Title 19? e) Reduce an additional amount of spill light? 0 0 0 III Comments: The project is not located on or near a scenic corridor. The proposal is a redevelopment project that results in the elimination of blight. The project design including lighting and landscaping is subject to a discretionary process by the City's Design Review Committee. No mitigation is required. XV. CULTURAL RESOURCES. Would the proposal: a) Will the proposal result in the alteration of or the destruction or a prehistoric or historic (H: \home\planning\eda1ia US..()()-4 7 cklst.doc) o o o III 11 J -~-t/ 11' or archaeological site? b) Will the proposal result in adverse physical or aesthetic effects to a prehistoric or historic building, structure or object? c) Does the proposal have the potential to cause a physical change which would affect unique ethnic cultural values? d) Will the proposal restrict existing religious or sacred uses within the potential impact area? e) Is the area identified on the City's General Plan EIR as an area of high potential for archeological resources? PoceatialJy PoIeatiaUy Slp1fic:aat Loa...... Signifkull v..... SiplIkaal No 1m,.." Mitigated 1m,.." 1m,.." 0 0 0 IllI o o o IllI o o o IllI o o o IllI Comments: The proposed project is located in a fully urbanized area. There are no identified cultural resources within the project area, XVI, PALEONTOLOGICAL RESOURCES. Will the proposal result in the alteration of or the desrruction of paleontological resources? Comments: The proposed project is located in a fully urbanized area. There are no identified paleontological resources within the project area. The project will require minimal grading and is therefore not likely to encounter fossils. o o o IllI XVII. RECREATION. Would the proposal: a) Increase the demand for neighborhood or 0 0 0 IllI regional parks or other recreational facilities? b) Affect existing recreational opportunities? 0 0 0 IllI c) Interfere with parks & recreation plans or 0 0 0 IllI programs? Comments: The project is located in proximity to a new municipal recreational facility, the Otay Recreation Center. The project will be adequately served by the existing recreational facility and does not interfere with existing parks and recreation plans or programs. xvrn. MANDATORY FINDINGS OF SIGNIFICANCE: See Negative Declaration for marulatory findings of significance. If an EIR is needed, this section should be completed. a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to (H: Ihorne\planning\edalia \IS-004 7cldSl.doc) 12 T .,. o o o IllI .I"S~ eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods or California history or prehistory? Comments: The project site is located in an urbanized area and is presently developed with a 50 unit trailer park, 2 auto sales dealerships, and an auto audio business, Neither sensitive plant nor animal resources, nor historical or archaeological resources are present. .........., -.. ......" PuteatiaU,. Sipificaa. U..... Mitipled .....than SipiJicaDt 1m.." No 1m.." b) Does the project have the potential to achieve short-term, to the disadvantage of long-term, environmental goals? o o o 181 Comments: Constructing the mixed-use residential & commercial project will not affect long-term environmental goals of the City of Chula Vista. c) Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects.) Comments: The project site is located in a fully urbanized area and redevelopment of the site will not result in cumulative environmental effects. o o o 181 d) Does the project have environmental effect which will cause substantial adverse effects on human beings, either directly or indirectly? Comments: No adverse effects on human beings are anticipated from redeveloping the site as a mixed-use residential and commercial project. o o o 181 XIX. PROJECT REVISIONS OR MITIGATION MEASURES: The following project revisions or mitigation measures have been incorporated into the project and will be implemented during the design, construction or operation of the project: N/A XX. AGREEMENT TO IMPLEMENT MITIGATION MEASURES By signing the line(s) provided below, the Applicant(s) and/or Operator(s) stipulate that they have each read, understood and have their respective companyOs authority to and do agree to the mitigation measure,s 13 .3 -$'C. (H: \home\planning\eda1ia \15-00-47 cklst.doc) T' contained herein, and will implement same to the satisfaction of the Environmental Review Coordinator. Failure to sign the line(s) provided below prior to posting of this [Mitigated] Negative Declaration with the County Clerk shall indicate the Applicants' and/or Operator's desire that the Project be held in abeyance without approval and that Applicant(s) and/or Operator(s) shall apply for an Environmental Impact Report. Printed Name and Title of Authorized Representative of [properly Owner's Name] Signature of Authorized Representative of [property Owner's Name] Date Printed Name and Title of [Operator if different from Properly Owner] Signature of Authorized Representative of [Operator if different from Properly Owner] Date XXI. ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED: The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" or "Potentially Significant Unless Mitigated," as indicated by the checklist on the following pages. 0 Land Use and Planning o Transportation/Circulation 0 Public Services 0 Population and Housing 0 Biological Resources 0 Utilities and Service Systems 0 Geophysical 0 Energy and Mineral Resources o Aesthetics 0 Water o Hazards 0 Cultural Resources o Air Quality o Noise 0 Recreation o Mandatory Findings of Significance XXII. DETERMINATION: On the basis of this initial evaluation: I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. 181 I fmd that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A MITIGATED NEGATIVE DECLARATION will be prepared. ..8 '" S"? o T ~ I fmd that the proposed project MAY have a significant effect on the environment, and D an ENVIRONMENTAL IMPACT REPORT is required. I find that the proposed project MAY have a significant effect(s) on the environment, but D at least one effect: 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets, if the effect is a "potentially significant impacts" or "potentially significant unless mitigated." An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. I find that although the proposed project could have a significant effect on the D environment, there WILL NOT be a significant effect in this case because all potentially significant effects (a) have been analyzed adequately in an earlier EIR pursuant to applicable standards and (b) have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. An addendum has been prepared to provide a record of this determination. ~i~/L9~. Sl lUre '-172~ 1 Date /.;J , {M(Ji7 , Environmental Review Coordinator City of Chula Vista .J",$'t (H: \home'.111<lnninrr\erl<!' i1 \T"I J)()...4 -; r::kli<:f tine) T"'" ...,. ATTACHMENT 7 Recording Requested By: CHULA VISTA REDEVELOPMENT AGENCY 276 Fourth Avenue Chula Vista, CA 91910 When Recorded Mail To: CHULA VISTA REDEVELOPMENT AGENCY 276 Fourth Avenue Chula Vista, Cft, 91910 Attn: Judi Bell (Space Above This Line For Recorder) APN: 622-112-13 & 14 622-111-38 OWNER PARTICIPATION AGREEMENT Avalon Communities, LLC 1689 Broadway THIS AGREEMENT ("Agreement") is entered into by the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic (hereinafter referred to as "AGENCY"), and Avalon Communities, LLC, a California Limited Liability Company (hereinafter referred to as "DEVELOPER") effective as of June 13, 2000. WHEREAS, the DEVELOPER desires to develop real properly within the SOUTHWEST REDEVELOPMENT PROJECT AREA ("Project Area') which is subject to the jurisdiction and control of the AGENCY; and, WHEREAS, the DEVELOPER has presented plans for development to the Design Review Committee and the Planning Commission for the construction of a Mixed-Use Project that includes 106 affordable housing units and 15,000 square feet of retail commercial space (the "Project"); and, WHEREAS, said plans for development have been recommended for approval by said Committee and Commission; and, WHEREAS, the AGENCY has considered the Design Review Committee's and the Planning Commission's recommendation and has approved the Project and design plans subject to certain terms and conditions; and, WHEREAS, the AGENCY desires that said Project be implemented and completed as soon as it is practicable in accordance with the terms of this Agreement. NOW, THEREFORE, the AGENCY and the DEVELOPER agree as follows: 1. The properly to be developed is described as Assesso~s Parcel Numbers 622-112-13 & 14 and 622.111-38 located at 1689 Broadway, Chula Vista, CA, shown on locator map attached hereto as Exhibit C and by this reference incorporated herein ('Properly'). 2. The DEVELOPER covenants and agrees by and for himself, his heirs, executors, administrators and assigns and all persons claiming under or through them the following: A. DEVELOPER shall develop the Properly with the Project in with the AGENCY approved development proposal attached hereto as Exhibit" A". B. DEVELOPER shall obtain all necessary federal/state and local governmental permits and approvals and abide by all applicable federal, state and local laws, regulations, policies and approvals in connection with the development of the Project. DEVELOPER and AGENCY further agree that this Agreement is contingent upon DEVELOPER securing said permits and ,j- ~-, ". . 'i approvals. DEVELOPER shall pay all applicable development impact and processing fees. AGENCY agrees to reasonably cooperate with DEVELOPER in processing all permits required in connection with the development of the Project. C. DEVELOPER shall obtain building permits within one year from the date of this Agreement and to actually develop the Properly with the Project within two years from the date of issuance of the building permits. In the event DEVELOPER fails to meet these deadlines, the Agency's approval of DEVELOPER's development proposals shall be void and this Agreement shall have no further force or effect. D. In all deeds granting or conveying an interest in the Properly, the following language shall appear: 'The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee himself or any persons claiming under or through him establish or permit any such practice of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenant lessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. ' E. In all leases demising an interest in all or any part of the Properly, the following language shall appear: 'The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of, any person or group of persons, on account of race, color, creed, national origin, or ancestry, in the leasing, subleasing, transferring use, occupancy, tenure, or enjoyment of the premises herein leased, nor shall the lessee himself or any persons claiming under or through him, establish or pennit any such practices of discrimination or segregation with reference to the selection, location, number or use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. . 3. The Properly shall be developed subject to the conditions imposed by the Design Review Committee, the Planning Commission, and the AGENCY as described in Exhibit "8" attached hereto and incorporated herein by this reference. DEVELOPER acknowledges the validity of and agrees to accept such conditions. If any revisions or modifications of plans approved by the AGENCY shall be required by any govemment official, agency, department or bureau having jurisdiction, or any lending institution involved in financing, the OWNER and the AGENCY shall cooperate to process those proposed revisions or modifications in a reasonably timely manner. Agency retains its full authority and discretion as to any proposed revisions or modifications. ..3 - fo () 'r - '-r 4. DEVELOPER shall maintain the premises in FIRST CLASS CONDITION. A. DUTY TO MAINTAIN FIRST CLASS CONDITION. Throughout the term of this Agreement, DEVELOPER shall, at DEVELOPER's sole cost and expense, maintain the Property which includes all improvements thereon in first class condition and repair, and in accordance with all applicable laws, permits, licenses and other govemmental authorizations, rules, ordinances, orders, decrees and regulations now or hereafter enacted, issued or promulgated by federal, state, county, municipal, and other govemmental agencies, bodies and courts having or claiming jurisdiction and all their respective departments, bureaus, and officials. If the DEVELOPER fails to maintain the Property in a 'first class condition", the Redevelopment Agency of the City of Chula Vista or its agents shall have the right to go on the Property and perform the necessary maintenance and the reasonable cost of said maintenance shall become a lien against the Property. The Agency shall have the right to enforce this lien either by foreclosing on the Property or by forwarding the amount to be collected to the Tax Assessor who shall make it part of the tax bill. B. DEVELOPER shall promptly and diligenijy repair, restore, alter, add to, remove, and replace, as required, the Property and all improvements to maintain or comply as above, or to remedy all damage to or destruction of all or any part of the improvements. Any repair, restoration, a~eration, addition, removal, maintenance, replacement and other act of compliance under this Paragraph (hereafter collectively referred to as 'Restoration') shall be completed by DEVELOPER whether or not funds are available from insurance proceeds or subtenant contributions. C. In order to enforce all above maintenance provisions, the parties agree that the Community Development Director is empowered to make reasonable determinations as to whether the Property is in a first class condition. If he determines it is not, he (1) will notify the DEVELOPER in writing and (2) extend a reasonable time to cure. If a cure or substantial progress to cure has not been made within that time, the Director is authorized to effectuate the cure by City forces or otherwise after written notice to Developer that City forces will be making such cure, the cost of which will be prompijy reimbursed by the DEVELOPER. In the event that there is a dispute over whether the Property is in a first class condition or over the amount of work and expense authorized by the Director to cure, the parties agree that the City Manager of the City of Chula Vista ("Manager') or his designee, shall resolve that dispute and both parties shall be bound by the Manager's decision, which shall specify findings of fact. D. FIRST CLASS CONDITION DEFINED. First class condition and repair, means which is necessary to keep the Property an efficient and attractive condition, at least substantially equal in quality to the condition which exists when the Project has been completed, normal wear and tear excepted, in accordance with all applicable laws and conditions. 5. AGENCY and DEVELOPER agree that the covenants of the DEVELOPER expressed herein shall run with the land. DEVELOPER shall have the right, without prior approval of AGENCY, to assign its rights and delegate its duties under this Agreement 6. AGENCY and DEVELOPER agree that the covenants of the DEVELOPER expressed herein are for the express benefit of the AGENCY and for all owners of real property within the boundaries of the PROJECT AREA as the same now exists or may be hereafter amended. AGENCY and DEVELOPER agree that the provisions of this Agreement may be specifically enforced in any court of competent jurisdiction by the AGENCY on its own behalf or on behalf of any owner of real property within the boundaries of the PROJECT AREA. Except for the Agency, however, no owner of real property within ..3-'" ,... "T the boundaries of the Project Area shall have the right to enforce any of the provisions of this Agreement independently. 7. AGENCY and DEVELOPER agree that this Agreement may be recorded by the AGENCY in the Office of the County Recorder of San Diego County, California. 8. DEVELOPER shall and does hereby agree to indemnify, protect, defend and hold harmless AGENCY and the City of Chula Vista, and their respective Council members, officers, employees, agents and representatives, from and against any and all liabilities, losses, damages, demands, claims and costs, including court costs and reasonable attorneys' fees (collectively, "liabilities') incurred by the AGENCY arising, directly or indirectly, from (a) AGENCY's approval of this Agreement, (b) AGENCY's or City's approval or issuance of any other permit or action, whether discretionary or non-discretionary, in connection with the Project contemplated herein, and (c) DEVELOPER's construction and operation of the Project permitted hereby. 9. In the event of any dispute between the parties with respect to the obligations under this AGREEMENT that results in litigation, the prevailing party shall be entitled to recover its reasonable attorney's fees and court costs from the non-prevailing party. 10. Time is of the essence for each and every obligation hereunder. 11. If DEVELOPER fails to fulfill its obligations hereunder after due notice and reasonable opportunity to cure, DEVELOPER shall be in default hereunder, and in addition to any and all other rights and remedies AGENCY may have, at law or in equity, AGENCY shall have the right to terminate its approval of the Project and this Agreement. Signature Page Follows ..J. -, ~ ~ ~ Signature Page IN WITNESS WHEREOF THE PARTIES HAVE ENTERED INTO THIS AGREEMENT EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA "AGENCY" DATED: By: Shirley Horton, Chairman "DEVELOPER" DATED: By: Avalon Communities, LLC, a California limited liability company Lwh/ Leo Puig, Member NOTARY: Please attach acknowledgment carel. APPROVED AS TO FORM BY: John M. Kaheny, Agency Attorney .3 -"..3 ,... "T CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT f~..c<',c.'<',C('-C<'....&:{'~,.(X'..c<'..c<'..c<'..6<'-C<'-C<'..c<'-C<'-C<'-C<'<<&f.'~~..c<'-C<'-C<'..c<'..c<'..c<',(j('.c<'..c<',C<'..c<'..c<'-C<'-C<'-C<'.c<'..6<'..c<'...c<'-C<'.Q,;1 ~, State of California } ~ ~ County of SAN DI8;.O ss. ~ ~ ~ 9 On JlA.1\L 1) "2.Poo b f ,h. s L. ~"'IS g ~ D,t.' eore me, ~'~TrtI'OfDffi'''I''9..J'",D'',Not''YP"bli'.) ~ ~g',". personally appeared ~ 'P""",,,, g~', <'i Name(s) of Signer(s) . ~rsonally known to me I ;Vi~~~~:d to me on the basis of satisfactory ~ ~ to be the person(s) whose name(s) is/are ~ 9 1 - - - - ~ ;;~ tD~ - - r subscribed to the within instrument and ~ ~ 1 ~ r acknowledged to me that he/she/they executed g , Commission 111217863 ~ the same in his/her/their authorized ~ ~, ;$. Notay PubClC - Cofifomla s: 2S ? It SanDiegaCaun1y - capacity(ies), and that by his/her/their g ? ~ MyComm B<pteslolcyl :!Xl31 signature(s) on the instrument the person(s), or g ~ J _ _ _ _ _ _ ..:. _' _ _ .: _ 1 the entity upon behalf of which the person(s) ~ " acted, executed the instrument. ~ P Q o ~ ~ g ~ ~ . ~ ~ Place Notary Seal Above Signature 01 Notary Public ~ ~ OPTIONAL ~ > Though the information below is not required by faw, it may prove valuable to persons relying on the document ~ p and could prevent fraudulent removal and reattachment of this form to another document. ~ Description of Attached Document Title or Type Df Document: (J tN f\LK" p~ '- I p.vho,... .A:J' u ".,...4- I I , Document Date: Number of Pages: 6 ~ 11 ~, Capacity(ies) Claimed by Signer (': Signer's Name: g, 0 Individual 2 Top of thumb here 2 0 Corporate Officer - Title(s): g 2 0 Partner - 0 Limited 0 General t\ 2~,' : 0 Attorney in Fact tj . 0 Trustee ' o Guardian or Conservator ~ 0 Other: @ ~ ~ , ' , , , , " ,,' ,",', I L",'<,;<.;'(.;.y'<;;<..'Qv'Q<.;.'Q<.;.'("X.;;9.;-'9;;;~~'g".'Qv'<;;<..~'<,;N~'g.:.;~<;.'g".'QV'C<;.'9<.,'9..r'C<;.'Q<;.~'g<;.'Q<;.'Q<;.'Q<.;.'Q(,;.'g(.,'~~<;,;~~'g:.:g;;.'Q(..'Q(..'Q(..V...'Q(..'Q<;.'9<;..'Q''>:J @ 1997 National Notary Association' 9350 De SotoAve., P.O. 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EXHIBIT B Conditions of Approval Owner Participation Agreement Avalon Communities, LLC 1689 Broadway Chula Vista, CA DESIGN REVIEW PLANNING COMMISSION CONDITIONS OF APPROVAL 1. The site shall be developed and maintained in accordance with the conceptual plans which include site plans, architectural elevations, exterior materials and colors, and landscaping on file in the Planning Division, the conditions contained herein, and Title 19 (Zoning). 2. Prior to any use of the project site or business activity being commenced thereon, all Conditions of Approval shall be completed and implemented to the satisfaction of the Planning Director. 3. Revised site plans and building elevations incorporating all Condition of Approval shall be submitted for Planning Director review and approval prior to the issuance of building permits. 4. Approval of this project and Special Use Permit SUPS 00-09 shall not waive compliance with all sections of Title 19 of the Municipal Code and all other applicable City Ordinances in effect at the time of building permit issuance. 5. All ground-mounted utility appurtenances such as transformers, AC condensers, etc., as well as trash enclosure facilities, shall be located out of public view or adequately screened through the use of a combination of concrete or masonry walls, berming, and/or landscaping to the satisfaction of the Planning Director. 6. All roof appurtenances, including air conditioners and other roof mounted equipment and/or projections shall be shielded from view and the sound buffered from adjacent properties and streets as well as from on-site resident views above or across the site as required by the Planning Director. Such screening shall be architecturally integrated with the building design and constructed to the satisfaction of the Planning Director. Oetails shall be on building plans. 7. All gutters, downspouts and vents must be integrated into the roof and wall systems, to ensure that there will be no unattractive appendages to the elevations presented for review and approval. 8. A graffiti resistant treatment shall be specified for all wall and building surfaces. This shall be noted on any building and wall plans and shall be reviewed and approved by the Planning Director prior to issuance of building permits. Additionally, the project shall conform to Sections 9.20.055 and 9.20.035 of the municipal Code regarding graffiti control. 9. Based on the review of the conceptual landscape plans by the City Landscape Planner, the planting and irrigation plans shall be revised by the applicant and resubmitted for review and approval. Landscape and irrigation plans shall be reviewed and approved by the City Landscape Planner prior to the issuance of building permits. 10. The landscape buffer along Main Street and Broadway may be reduced from 15-ft. to 1 D-ft.; however, illustrative sections must be provided and shall indicate a landscape berm which will be utilized to screen the undesirable view of the front-loaded commercial parking along Main Street and Broadway. The landscape buffer must inciude a pedestrian/public access into the site from the Main Street and Broadway intersection. 11. The revised landscape concept plan provided shall include a planting proposal for trees and shrubs that corresponds with the surrounding developments, such as an extension of the palm species found within the landscape buffer already located along Broadway, a relationship to the existing landscaping along the west and north property perimeter, and how the tree species specified throughout the complex will compliment the scale of the open spaces and provide privacy within the layout of the residential buildings. 12. A fencing program must be provided that includes wall details of the slump stone block and/or pilasters with wrought-iron elements, such as gates; this must be shown in conjunction with the off-site information which shall be provided on a site J ...1/11 'V r EXHIBIT B Conditions of Approval Owner Participation Agreement Avalon Communities, LlC 1689 Broadway Chula Vista, CA utilization plan noting the adjacent landscaping and median improvements to Broadway and Main Street. Comply with all of the landscape concept comments regarding screening, tree species, etc. 13. Additional rendertngs will be provided to show how the courtyard and recreational area facilities, including the triangular property being acquired, shall be developed. Additional details of the proposed improvements, including proposed seating, tables, special paving, landscape and water features. etc., shall be provided. 14. The parking layout shall be modified due to the increase in trash enclosure locations and the orientation of proposed trash enclosures being changed to meet trash-hauler accessibility requirements as well as pedestrtan/resident safety. The number of parking spaces shall not be reduced to below a ratio of 1.5 parking spaces per residential housing unit without modification to the Special Use Permit. 15. The building permit plans shall comply with 1998 Building (UBC), Plumbing (UPC), Mechanical (UMC), and 1996 Electrical (NEC). Plans shall also comply with Title 24 energy and disabled access requirements. Show dimensions of separation between buildings and show assumed property lines on building plans. A separate building permit shall be required for sign age and lighting. 16. The Fire Department requires 20-ft. wide drtveway access and fire hydrants throughout the vehicular circulation system. The housing units shall utilize fire sprinklers per NFPA 13. The housing units shall contain a fire alarm system per NFPA 72. 17. In lieu of a complete circulation, hammerhead or cul-de-sac for roads over 150-ft. in length, provide a turnaround and back-up as shown on the revised site plan exhibit at the southeast comer of the courtyard portion of the site plan. 18. The Engineertng Department will require fees for sewer capacity (based on the new/additional plumbing fixtures), development impact, and traffic signal (based on additional development) prior to the issuance of building permits. 19. Drtveways shall be restricted to rtght-tum in and rtght-tum out on Main Street and Broadway because of existing raised medians. Drtveway approaches must be B-ft. minimum from the PCR and constructed per Chula Vista Standards CVCS-1. A construction permit will be required to perform any work in the City's right-of-way. 20. The project shall comply with all current Amertcans with Disabilities Act requirements. A grading permit will be required prior to the issuance of a building permit. 21. The Crime Prevention Unit of the Police Department is recommending utilization of components which will address access control, surveillance detection, and police response. In addition, participation in the Crtme Free Multi-Family Housing program shall be required. Please contact the Multi-Housing Coordinator, at 691-5127. 22. Commercial and residential properties must have enclosures, bins, or carts that meet design specifications. The locations and ortentation of storage bins and dumpsters must be pre-approved by the City franchise trash hauling company. Provide sufficient space for designated recyclables. A shared paper/cardboard bin, aiong with food and beverage container cart with other stores may be permitted. A commercial trash enclosure large enough for solid waste, mixed paper, and a cart for food and beverage containers must be provided to meet the minimum 50 percent recycling requirement. 23. There shall be no less than seven (7) residential and one (1) commercial bin enclosure with sufficient capacity and design to handle the solid waste, mixed paper and rtgid container collection streams, to limit the number of trash.hauler visits to no more than two (2) per week for the residential complex and five (5) trips per week for the commercial complex, unless otherwise approved by the City Conservation Coordinator. J.. t:p~ " ~ EXHIBIT B Conditions of Approval Owner Participation Agreement Avalon Communities, LLC 1689 Broadway Chula Vista, CA 24. This development shall consist~ of 60 two-bedroom, 30 three-bedroom and 16 four-bedroom units dwellings shall provide a minimum of one 4-yard trash bin for every 1 O-units and one 4-yard mixed paper bin for every 10-units. 25. At least one 4 to 6-yard bin for green waste shall be provided in tile complex to be serviced bi-weekly or montllly and a location designated for seasonal services such as bulky item, Christmas tree and household hazardous waste collection. For convenience to the residents tile enclosures should be geographically distributed throughout tile complex, with an enclosure adjacent to each buiiding. 26. Residential enciosures should be adequate to service a 4-yard mixed paper bin, a 4 to 6-yard trash bin and at least two 90-gallon carts for rigid containers. The commercial enclosure should have room for two 4 to 6-yard trash bins and two 4 yard mixed paper bins. The trash bin and one mixed paper bin for tile commercial facility can be replaced lvitll a compactor for cardboard and or mixed paper, and a compactor for trash. The manufacture and design of compactors must be pre-approved by tile City or Pacific Waste in writing prior to purchase or installation. The commercial enciosure should be adequate to temporarily store otller items such as rendering collection bins, pallets, discarded displays and otller items as applicable. The applicant shall contact the Recycling Coordinator to ensure that provisions are made (691-5122). 27. The applicant shall contact tile local water district to determine tile additional demand and alteration to tile existing water systems for domestic and/or fire protection purposes. In addition, irrigation plans may need to be designed to reclaimed water standards and specifications. All fees and deposits shall be provided at tile building permit stage. 28. All school fees shall be paid as part of the building permit. Refer to comments received from tile Sweetwater Union High School District and the Chula Vista Elementary School District. 29. This permit shall be subject to any and all new, modified or deleted conditions imposed after approval of tIlis permit to advance a legitimate governmental interest related to health, safety or welfare which tile City shall impose after advance written notice to the Permittee and after tile City has given to the Permittee the right to be heard witll regard tIlereto. However, tile City, in exercising tIlis reserved righUcondition, may not impose a substantial expense or deprive Permittee of a substantial revenue source tIlat the Permittee cannot, in the normal operation of the use permitted, be expected to economically recover. 30. This permit shall become void and ineffective if not utilized within one year from tile effective date tIlereof, in accordance witll Section 19.14.260 of tile Municipal Code. Failure to comply witll any conditions of approval shall cause this permit to be reviewed by tile City for additional conditions or revocation. 1F16_:H:\HOMBCOMMDEVlTAPIAIOPASIMAIN & BROADWAY OPA (June 6, 2000 3:42 PMlJ ..3 ...'1 .a T "T EXHIBIT C II III \\-1 ~ \ U Ij~, \ ) ll);;?)<2\ \ f- II /:- . III I '- ~0t:' "'--....,.,. '"-J...Q:. ~~~ 1/ I '1/ I Irjr'/(r~!I i III/Ir I Bl'BtEB f- \ I I III \ II l-- I- rnTlOIllI-' I \ \\ \ \ 'tPW> E!H3 lllD UIIJ r- . I { ;' I 7_ \ /I , I TI III II t')1111 II I-f- "T-> 111111 T L_ HI':'~ II III G:nrn ill I II <ll ~ @~ t, II II 2 ~ :=j I' III ~I ", ,,+ , I H' I r- H H' H WI III H ri ~ [[ I I MAIN STREET LLW- . I C I-- I-- I-- I-- I-- - I-- - - r- ~\ \ - r- hTiT I F'llilRE STRE L \\ I I I \i \ '--- \ ------- LOCATOR PROJECT AVALON COMMUNITIES, LLC PROJECT DESCRIPTION: C9 APPUCA/re INITIAL STUDY PROJECT 1689 Broadway Request Proposed construction of a 15,000 sq.fl mix~se. ADDRESS: ~ _ '" commercial building and 1 06 affordable housing units SCALE: FILE NUMBER: .... .'1 with 181 residential and 75 commercial parl<ing NORTH No Scale IS - 00-47 spaces provided. h, '\1- .....~_,...\ _1_~~:....,.....\ h"'............~\l~ __J._ __' ,,-,.......... ._ _ _'_ .,.. "T REDEVELOPMENT AGENCY AGENDA STATEMENT ITEM NO.: MEETING DATE: 4 06/13/00 ITEM TITLE: RESOLUTION APPROVING OWNER PARTICIPATION AGREEMENT WITH FSRV, LLC, FOR THE DEVELOPMENT OF A BEST BUY CONSUMER ELECTRONICS SUPERSTORE AT 75 NORTH BROADWAY; AUTHORIZING EXPENDITURE OF AND APPROPRIATING FUNDS FROM THE TOWN CENTRE II PROJECT AREA FUND FOR THE PURCHASE OF THE OPERATING COVENANT; AND AUTHORIZING THE CHAIR TO EXECUTE SAID AGREEMENT SUBMITTED BY: COMMUNITY DEVELOPMENT DIRECTOR Ui}--fn ~S REVIEWED BY: EXECUTIVE DIRECTOR &/', V f' --I' 4/5THS VOTE: YES 0 NO D BACKGROUND FSRV, LLC is proposing to develop a Best Buy consumer electronics superstore in the Broadway Plaza Shopping Center, adjacent to the existing Wal-Mart Store (75 North Broadway.) The new store would occupy a 45,000 square foot pad and would represent the second anchor tenant in this North Chula Vista shopping facility. The site includes parking for 261 cars and conforms to the City's General Plan and Zoning designations for the site. The pad was originally slated to be occupied by Best Products, a firm no longer in operation. The proposed store is within the Town Centre II Redevelopment Project Area. This Owner Participation Agreement is being presented to the Redevelopment Agency for its consideration. The Agreement includes Agency financial participation in the form of assistance with City fees, limited to the Traffic Signal Fee ($35,100) and Public Facilities Development Impact Fee ($45,214.50). Total Agency assistance of $80,314.50 is proposed and would be put into effect through an operating covenant included within the Owner Participation Agreement (OPA) and secured by a subordinate Deed of T rust in effect for ten years. RECOMMENDATION That the Redevelopment Agency adopt the resolution approving the Owner Participation Agreement for the development of a consumer electronics superstore at 75 North Broadway; authorizing expenditure of and appropriating funds from the Town Centre II Project Area fund for the purchase of the operating covenant; and authorizing the Chair to execute said Agreement. 4-1 T ., PAGE 2, ITEM NO.: MEETING DATE: 4 06/13/00 BOARDS/COMMISSIONS RECOMMENDATION The Design Review Committee reviewed the proejct plans on March 20, 2000 and recommended approval of the project. DISCUSSION Proiect Proposal The proposal involves the following: minor grading of the site, construction of a 45,000 square- foot retail building; provision of a 261-space parking lot, and construction of landscape and hardscape improvements. The project completes the master-planned Broadway Plaza shopping center. Site Characteristics The proposed project is approximately 4.26 acres and is located at 75 North Broadway in the Broadway Plaza shopping center in North Chula Vista. The site of the development pad is currently vacant and flat. Existing retail surrounding the site include Sunny's Fashion Plus, Payless Shoes, and the other main anchor store, Wal-Mart. Land Use The site is designated in the General Plan for Retail Commercial and is zoned CC-P. Land in the project's vicinity is also zoned CC-P. There is nearby light industrial parcels zoned I-L. The project is consistent with the Town Centre II Redevelopment Plan and the City Zoning Ordinance. Arch itectu re The building design consists of a concrete tilt-up style building with exterior stucco, consistent with the design of the Broadway Plaza shopping center. The building frontage includes design elements and articulation, as well as signature signage associated with the Best Buy corporate image. Landscape design is also consistent with the master plan for the Broadway Plaza shopping center. Parkina The proposed project includes the provision of a parking lot with a total of 261 parking spaces, inclusive of 8 handicap parking stalls. The project exceeds the CC-P zoning requirements for parking of a retail facility. The parking space count is specific to the Best Buy project and adjoining Broadway Plaza retail uses have their own separate parking space counts, which helps to ensure that there is adequate parking for all retail land uses. Form of Aareement The Owner Participation Agreement is prepared on the Agency's standard form. It includes Developer's obligations to construct the project as proposed, maintain the project in "First Class" 4-.2... T "T PAGE 3, ITEM NO.: MEETING DATE: 4 06/13/00 condition, to indemnify the City/Agency against liabilities, to assist the project with developer fees up to a maximum of $80,314.50 (and to maintain the retail operation for a period of 10 years), and to require standard non-discrimination clauses. The developer's request for assistance is based on the financial feasibility of the project development and the Agency's desire to encourage the appropriate type of retail development in the last remaining large developable pad in an important redevelopment project. Agency assistance will be secured by a Deed of Trust and Operating Covenant running with the land for ten years. The developer has agreed to a pro-rata repayment formula (See Attachment A.) The repayment schedule serves as a means to protect the Agency's participation should the retail site fail and the developer go into default on this Agreement. The Agency participation is subordinate to other financing for the project. Should the properly be foreclosed on, the Agency would be an unsecured creditor. However, given the financial strength of the tenant (Best Buy) and the nature of their lease with the developer (15 years with right to terminate after 10 years) staff believes the pro-rata repayment formula is sufficient security for the proposed participation. Concl usion Staff recommends approval of the Owner Participation Agreement. The project will complete the Broadway Plaza redevelopment effort and contribute to the elimination of blighting influences by providing a new, active commercial building and putting a long-standing vacant parcel to a higher and better use. The project furthers the goals and objectives of the Town Centre II Redevelopment Plan. FISCAL IMPACT The proposed project will generate annual properly tax increment revenues of approximately $35,000 allocated to the Town Centre II Project Area Fund. In addition, the project will generate approximately $330,000 annually in sales tax revenues for the City's General Fund. The Owner Participation Agreement includes provisions for the Agency to provide up to $80,314.50 toward the project's Traffic Signal Fee and Public Facilities Development Impact Fee. These funds are available in the Town Centre II Redevelopment Project Area Fund (Fund No. 9920). The appropriate findings for utilizing these funds are included in the Resolution for approving the Agreement. This action also appropriates the funds for this purpose. The project will include an operating covenant with provisions for repayment of all or part of the fee reductions if the retail facility ceases operation. Please note that with this agreement being subordinate to all other debt, there is a heightened level of risk to the Agency. The pro-rata repayment formula significantly reduces potential risk exposure to the Agency. ATTACHMENTS Attachment A - Owner Participation Agreement and Grant Deed H ,\HOME\COMMDEV\ST AFF. REP\06-06-00\BEST BUY.doc ~. .3 ..,. -r RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING OWNER PARTICIPATION AGREEMENT WITH FSRV, LLC, FOR THE DEVELOPMENT OF A BEST BUY CONSUMER ELECTRONICS SUPERSTORE AT 75 NORTH BROADWAY; AUTHORIZING EXPENDITURE OF AND APPROPRIATING FUNDS FROM THE TOWN CENTRE II PROJECT AREA FUND FOR THE PURCHASE OF THE OPERATING COVENANT; AND AUTHORIZING THE CHAIR TO EXECUTE SAID AGREEMENT WHEREAS, FSRV, LLC, is the owner of the property located at 75 North Broadway, which is the subject matter of this resolution and which is depicted in the Locator Map attached and by this reference made a part hereof; and WHEREAS, Best Buy Inc., has entered into an agreement with FSRV, LLC, to lease said property and develop a consumer electronics superstore; and WHEREAS, FSRV, LLC has presented a development plan for the development of the retail facility and has submitted said plans for appropriate review and approval by City permitting authorities; and WHEREAS, the property consists of a 4.26 acre site which will a accommodate a 45,000 square foot facility and provide 261 parking spaces as required by the Chula Vista Municipal Code Section 19.62; and WHEREAS, the Environmental Projects Manager has reviewed the proposed Project and determined that the project may utilize the existing Final Environmental Impact Report No. 94-02 for the Broadway Plaza Project under CEQA; and WHEREAS, the site for the proposed Project is located within the Town Centre II Redevelopment Project Area under the jurisdiction and control of the Chula Vista Redevelopment Agency; and WHEREAS, the project is consistent with the Implementation Plan of the Agency adopted pursuant to CRL Section 33490; and WHEREAS, the Agency and City Council have considered the Agreement and believe that the redevelopment of the property pursuant thereto is in the best interest of the City of Chula Vista and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements; and WHEREAS, the Agency's financial assistance to the Project is of benefit to the Project Area and the surrounding development and is necessary to effectuate the purposes of the Redevelopment Plan by assisting the Agency in the elimination of blight in the Project Area, increasing economic activity, causing redevelopment and economic improvement of the Property, increasing employment opportunities within the Project Area, generating additional local revenues and taxes with which the community can cause other redevelopment projects and other public benefit; and 4-'1 "T WHEREAS, the Design Review Committee reviewed and recommended that the Redevelopment Agency approve the proposed Project subject to the conditions listed in Exhibit B of the Owner Participation Agreement; and WHEREAS, the Redevelopment Agency of the City of Chula Vista has been presented an Owner Participation Agreement, said agreement being on file in the Office of the Secretary of the Redevelopment Agency and known as document RACa 00-01, approving the development of a retail facility (consumer electronics) located at 75 North Broadway, depicted in Exhibit A and subject to Design Review Committee conditions listed in Exhibit B of said agreement; and WHEREAS, the Owner Participation Agreement includes the purchase by the Agency of an operating covenant secured by a subordinate Deed of Trust; and WHEREAS, purchase of said operating covenant is necessary for the implementation of the project; and WHEREAS, the funds provided by the Agency to purchase the operating covenant shall be applied to City imposed Traffic Signal fee and Public Facilities Development Impact fee, both of which provide public improvements that are necessary as a result of the project and of area wide benefit. NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula Vista does hereby find, order, determine and resolve to; 1. Approve the Owner Participation Agreement with FSRV, LLC, to develop the Best Buy Consumer Electronics Store, subject to the provisions as set forth in the Owner Participation Agreement; 2. Authorize the expenditure and appropriation of $80,314.50 from the Town Centre II Project Area Fund, to be secured by a Deed of Trust and Ten-Year Operating Covenant. 3. Authorize Chair to execute said Agreement. PRESENTED BY APPROVED AS TO FORM BY (R<~ Chris Salomone Director of Community Development 4-S-' T "T ; i , , , i , , , " ~ ~5 P~OPOSED RLTAIL 4$,0005... 225' I PARCELA ~ , ~ d[!E'" - ....=:...:...!.j6 ~ ".-.....---...L...-_-< -----t-- 'I : ::E --"--- - ,; I -+- --"---*-+- i ~ ,', = II I -+- ~' ,', ---I c:::::]~_ , . 7" '~ % I , , , ,-, I -~ , EXISTING WAL-IolART . 0 ",III z"" ....... ;:::';( ;;g !!!::: iL'" ~a: ';" I '.PARCEL Bt / r ~ l@? ~ ., I I I.... ... I-<?-- I ~ 1-:-;-- I I "'I~l::::r::: l=E i=:t:: i-9- I-L- ~--1=1--~~ '~n' ::::i=::::r:::: PAACEL MAP 17504 ---1= =i= . PARKING, :to, ""'0"'0 "'..'N~ u.'I .HLOOOICU'.......C...u.s BEST BUY- CHULA VISTA, CALIFORNIA BROADWAY PLAZA .". ~ EXHIBIT A 4-1. SITEPLAN eD [ ~. 111';-:-= '[;jQ!J,c,' i === '"--=___~ .::,,:.-!::J---- Recording Requested By: CHUlA VISTA REDEVELOPMENT AGENCY 276 Fourth Avenue Chula Vista, CA 91910 When Recorded Mail To: CHULA VISTA REDEVELOPMENT AGENCY 276 Fourth Avenue Chula Vista, CA 91910 Attn: Judi Bell (Space Above This Une For Recorder) APN: 562.324.23 & 2B OWNER PARTICIPATION AGREEMENT [75 North Broadway] FSRV llC, Owner THIS OWNER PARTlCIPA TION AGREEMENT ("AGREEMENT"I is entered into effective as of ,2000 nffective Date"l by the REOEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic Ihereinafter referred to as "AGENCY"), and FSRV LLC, a California limited liability Company ("OEVELOPER") with reference to the following facts: WHEREAS, OEVELOPER owns certain real property which is the subject of this agreement located at 75 North Broadway in Chula Vista, California, identified as Assessor's Parcel Nos. 562.324-23 and 562.324.28, as more particularly described on Exhibit A attached hereto and incorporated herein by this reference ("Property"); and WHEREAS, Best Buy Stores l.P.("Best Buy") has entered into an agreement with OEVELOPER to lease a portion of the Property at 75 North Broadway for the development and operation of a consumer electronics superstore (the "Project"l; and, WHEREAS, the City of Chula Vista I"CITY"I is a new market area for Best Buy, and as such, Best Buy will be a new retailer to the territorial jurisdiction of the community and is not relocating from another community; and WHEREAS. the Redevelopment Plan ("REDEVELOPMENT PLAN"I for the Town Centre II Redevelopment Project Area ("PROJECT AREA") provides for the AGENCY to encourage owners of real property within the Redevelopment Project to participate in the redevelopment of their property. The AGENCY desires to assist the DEVELOPER to develop and lease the Property to a consumer electronics superstore. WHEREAS, the parties desire to enter into this Agreement in order for the AGENCY to assist the DEVELOPER in development of the Property into the Project, and to further provide for the DEVELOPER's sale to the AGENCY of an operating covenant Idefined below) with respect to the operation of a consumer electronics superstore on the Property. WHEREAS, the development of the Project on the Property, and the DEVELOPER's sale of the operating covenant to the AGENCY, as provided for in this Agreement, is in the vital and best interest of the City and the welfare of its residents and is in accordance with the public purposes and provisions of applicable state and local laws. WHEREAS, the funds provided by the AGENCY to purchase the operating covenant shall be applied to the City imposed Traffic Signal Fee and Public Facilities Development Impact Fee, both of which provide public improvements that are necessary as a result of the Project and of area wide benefit. 1 4-8 ". "T WHEREAS, the DEVELOPER desires to develop real property within the PROJECT AREA which is subject to the jurisdiction and control 01 the AGENCY; and, WHEREAS, the DEVELOPER has presented said plans lor development to the Design Review Committee; and. WHEREAS, said plans lor development have been recommended lor approval by said committee; and, WHEREAS, the AGENCY has considered the Design Review Committee's recommendation and has approved the Project and design plans subject to certain terms and conditions; and, WHEREAS, the AGENCY desires that said Project be implemented and completed as soon as it is practicable in accordance with the terms 01 this Agreement. NOW, THEREFORE, the AGENCY and the DEVELOPER agree as lollows: 1. The DEVELOPER covenants and agrees by and solely lor himsell alone, his heirs, executors, administrators and assigns and all persons claiming under or through them the following: A. Use in Accordance with Redevelopment Plan and Agreement. The Developer covenants and agrees to devote, use, operate, and maintain the Property in accordance with the Redevelopment Plan, the Operating Covenant and this Agreement. All uses conducted on the Property, including, without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall conlorm to the Redevelopment Plan, all applicable provisions 01 the City Municipal Code, and the recorded documents pertaining to and running with the Property. B. DEVELOPER shall develop Property with the Project in accordance with the AGENCY approved development proposal attached hereto as Exhibit "A", and incorporated herein by this relerence, subject to the conditions imposed by the Design Review Committee and the AGENCY as described in EXHIBIT "B" attached hereto and incorporated herein by this relerence. DEVELOPER acknowledges the validity 01 and agrees to accept such conditions. C. DEVELOPER shall obtain all necessary lederal/state and local governmental permits and approvals and abide by all applicable lederal, state and local laws, regulations, policies and approvals. DEVELOPER lurther agrees that this Agreement is contingent upon DEVELOPER securing said permits and approvals. DEVELOPER shall payor cause to be paid by Best Buy all applicable development impact and processing lees. D. DEVELOPER shall obtain building permits within one year lrom the date 01 this Agreement and shall actually develop the Property into the Project within one year lrom the date 01 issuance 01 the building permits. In the event DEVELOPER lails to meet these deadlines, approval 01 DEVELOPER's development proposals shall be void and this Agreement shall have no lurther lorce or effect. E. In all deeds granting or conveying an interest in the Property, the lollowing language shall appear: "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee himself or any persons claiming under or through him establish or permit any such practice of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, 2 .;_ , ..,. ~ lessees, subtenant lessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. " F. In all leases demising an interest in all or any part of the Property, the following language shall appear: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of, any person orgroup of persons, on account of race, color, creed. national origin, or ancestry, in the leasing, subleasing, transferring use, occupancy, tenure, or enjoyment of the premises herein leased, nor shall the lessee himself or any persons claiming under or through him, establish or permit any such practices of discrimination or segregation with reference to the selection, location, number or use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. " G. PROJECT ASSISTANCE. In consideration of DEVELOPER'S sale of the Operating Covenant to AGENCY as provided in Section I hereof, and DEVELOPER'S performance of its other obligations undertaken pursuant to this Agreement, AGENCY agrees to loan DEVELOPER financial assistance in an amount equal to the Traffic Signal Fee and tha Public Facilities Development Impact Fee imposed by the City with respect to the development of the Project, up to a maximum of Eighty Thousand Three Hundred Fourteen Dollars and Fifty Cents ($80,314.50) (the "Project Assistance"), on and subject to the terms and conditions as provided herein. The loan of the Project Assistance is subject to repayment in accordance with the terms and conditions of that certain Secured Promissory Note attached hereto as Exhibit _ ("Note"l. In the event that DEVELOPER complies with the terms of the Operating Covenant for the term thereof, the Project Assistance loan shall be forgiven as provided in the Note. The Note shall be secured by the Project in accordance with the terms of that certain Oeed of Trust. H. DEVELOPER shall apply the Project Assistance amount towards the Traffic signal Fee and the Public Facilities Oevelopment Impact Fee imposed upon the Project. I. Sale of Operating Covenant. In consideration of AGENCY'S payment of the Project Assistance, the DEVELOPER hereby agrees to sell to the AGENCY, and the AGENCY hereby agrees to purchase from the DEVELOPER, an operating covenant, which is intended by the parties to constitute a binding real property interest in the Property. For a term commencing upon the issuance of a Certificate of Occupancy for the Project, and ending ten 11 0) years later upon the tenth anniversary thereof, the DEVELOPER hereby covenants and agrees to devote the Property to the continuous operation of a consumer electronics superstore or other comparable retail establishment approved by the AGENCY ("Operating Covenant"). Notwithstanding the foregoing, in the event that Best Buy under this section or any subsequent AGENCY approved operator, discontinues its full retail operations on the Property during the Operating Covenant period, such discontinuance shall not constitute a default under this section, so long as the DEVELOPER uses good faith, commercially reasonable efforts to obtain a comparable replacement retail establishment. The replacement retail establishment must be operating within twelve (12) months of Best 8uy vacating the premises. A failure to use good faith, commercially reasonable efforts or to have an operating replacement retail establishment within twelve (121 months of Best Buy discontinuing operations on the Property shall constitute a default under this Agreement. The foregoing covenants shall run with the land. DEVELOPER shall exercise commercially reasonable efforts to operate the Project on the Property in such a manner as to produce the maximum amount of sales and use tax revenues to be received by the City; provided that the AGENCY acknowledges that certain customer preferences beyond the control of the DEVELOPER, may result in transactions which do not produce sales and use tax revenues for the City. 3 4- I () T ~ 2. DEVELOPER shall maintain the premises in FIRST CLASS CONDITION. A. OUTYTO MAINTAIN FIRSTCLASS CONOITION. Throughoutthe term of this Agreement, DEVELOPER shall, at DEVELOPER's sole cost and expense, maintain the Property which includes all improvements thereon in first class condition and repair, and in accordance with all applicable laws, permits, licenses and other governmental authorizations, rules, ordinances, orders, decrees and regulations now or hereafter enacted, issued or promulgated by federal, state, county, municipal, and other governmental agencies, bodies and courts having or claiming jurisdiction and all their respective departments, bureaus, and officials. If the DEVELOPER fails to maintain the Property in a "first class condition", the Redevelopment Agency of the City of Chula Vista or its agents shall have the right to go on the Property and perform the necessary maintenance and the cost of said maintenance shall become a lien against the Property. The Agency shall have the right to enforce this lien either by foreclosing on the Property or by forwarding the amount to be collected to the Tax Assessor who shall make it part of the tax bill. B. DEVELOPER shall promptly and diligently repair, restore, alter, add to, remove, and replace, as required, the Property and all improvements to maintain or comply as above. or to remedy all damage to or destruction of all or any part of the improvements. Any repair, restoration, alteration, addition, removal, maintenance, replacement and other act of compliance under this Paragraph (hereafter collectively referred to as "Restoration") shall be completed by DEVELOPER whether or not funds are available from insurance proceeds or subtenant contributions. The Restoration shall satisfy the requirements of any sublease then in effect for the Property or improvements with respect thereto or, if no sublease is then in effect, shall be repaired or restored in the building standard shell condition existing immediately prior to the date of such damage or destruction. C. In order to enforce all above maintenance provisions, the parties agree that the Community Oevelopment Oirector is empowered to make reasonable determinations as to whether the Property is in a first class condition. If he determines it is not, he (11 will notify the DEVELOPER in writing and (21 extend a reasonable time to cure. If a cure or substantial progress to cure has not been made within that time, the Oirector is authorized to effectuate the cure by City forces or otherwise, the cost of which will be promptly reimbursed by the DEVELOPER. O. FIRST CLASS CONDITION DEFINED. First class condition and repair, means an efficient and attractive condition, at least substantially equal in quality to the condition which exists when the Project has been completed in accordance with all applicable laws and conditions. 3. AGENCY and DEVELOPER agree that the covenants of the DEVELOPER expressed herein shall run with the land. DEVELOPER shall have the right, without prior approval of AGENCY, to assign its rights and delegate its duties under this Agreement. 4. AGENCY and DEVELOPER agree that the covenants of the DEVELOPER expressed herein are for the express benefit of the AGENCY and for all owners of real property within the boundaries of the PROJECT AREA as the same now exists or may be hereafter amended. AGENCY and DEVELOPER agree that the provisions of this Agreement may be specifically enforced in any court of competent jurisdiction by the AGENCY on its own behalf or on behalf of any owner of real property within the boundaries of the PROJECT AREA. 5. AGENCY and DEVELOPER agree that this Agreement may be recorded by the AGENCY in the Office of the County Recorder of San Diego County, California. 4 4-1 ( .,. .,. 6. DEVELOPER shall and does hereby agree to indemnify, protect, defend and hold harmless AGENCY and the City of Chula Vista, and their respective Council members, officers, employees, agents and representatives, from and against any and all liabilities, losses. damages. demands, claims and costs, including court costs and reasonable attorneys' fees (collectively. "liabilities") incurred by the AGENCY arising. directly or indirectly. from (a) AGENCY's approval of this Agreement, (bl AGENCY's or City's approval or issuance of any other permit or action, whether discretionary or non.discretionary, in connection with the Project contemplated herein, and DEVELOPER's construction and operation of the Project permitted hereby. 7. The Operating Covenant shall be subject and subordinate to the Ground Lease by and between FSRV and Best Buy and to any renewals, modifications, consolidations, replacements and extensions of that ground lease. 8. In the event of any dispute between the parties with respect to the obligations under this AGREEMENT that results in litigation, the prevailing party shall be entitled to recover its reasonable attorney's fees and court costs from the non.prevailing party. 9. This Agreement may be executed in counterparts which together shall constitute one and the same instrument. 10. To the extent DEVELOPER is comprised of more than one person or entity, each such person or entity shall be jointly and generally liable hereunder. 11. Time is of the essence for each and every obligation hereunder. SIGNATURE PAGE FOLLOWS 5 4~/L ,.. -r SIGNATURE PAGE TO OWNER PARTICIPATION AGREEMENT 175 North Broadway) IN WITNESS WHEREOF THE PARTIES HAVE ENTERED INTO THIS AGREEMENT EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA " AGENCY" DATEO: By: Shirley Horton, Chairman "DEVELOPER" FSRV LLC OA TEO: By: Ronald B. Russ, its Managing Member NOTARY: Please attach acknowledgment card. APPROVEO AS TO FORM BY: John M. Kaheny, Agency Attorney 6 4~/3 T "T ; , , , , , , , , '( ./1 . ~I -/ r~-oJ ~~ : II III 1III 'I__~ ~5 PROPOSEDRElA.IL 45.0005.r. 225' I PARCELA I ~~ -I"":"":":" ".-... --!..--.....J----L..- ': I ----0-- I : I ----L- , I -,--- ----L- jI ,: I ----.--- I -: I ---,- ~ E! : --+- .~~,~ I I I I ,_, I -~ I (XISTING WAL-f,lART ~- -- "0 >= :- o z= '" ~::; ~< ~ I lPARCEL Bl :~I '~il Co __ _-1::_,__ __ ~ ~ =t ~ PAK~~;"50' -----r==1=~ PARKJNG; l!!""_.IIQ......C~T>U.$ .~....""'...u..s SITE PLAN eo BEST BUY- CHULA VISTA. CALIFORNIA BROADWAY PLAZA "T 4-1c/ EXHIBIT A I ~. .11';--"-:-== m&""l?' j ,tJ. ::=: - ~~ ..--- ------ "'....-!::J ---.--..-- I. EXHIBIT B Conditions of Approval Owner/Tenant Participation Agreement Best Buy, Inc. 75 North Broadway Chula Vista, CA DESIGN REVIEW CONDITIONS OF APPROVAL SIGNATURE PAGE FOLLOWS 4-/~ "T DESIGN REVIEW COMMITTEE Swnmarv Staff Report CASE NO. DRC-00-52 MEETING DATE: March 20. 2000 AGENDA NO.A PROJECT DESCRIPTION: Site plan, architectural elevations, and signage for a 45,924 sq. ft. commercial building to complete an in- line shopping center. NAME AND LOCATION: Best Buy Store, Broadway Plaza 75 N. Broadway, Chula Vista .. ASSESSOR PARCEL NUMBER: 562-324-20-00 APPLICANT: Ronald B. Russ for FSRV LLC 635 W. 7th Street, Suite 310 Cincinnati, OH 45203 ARCIDTECT: Mark Pike for Herschman Architects , 23625 Commerce Park Cleveland, OH 44122 GENERAL PLAN LAND USE DESIGNATION: Commercial Retail ZONING: CCD-Central Commercial Zone, (Design-control modifying district), & the Town Center II Redevelopment Project Area STAFF CONTACT: Harold Phelps - Associate Planner ENVIRONMENTAL STATUS: The Environmental Projects Manager, Community Development, has determined that this project substantially conforms with the analysis for a similar co-anchor retail project (Best Products) that wa:'_ specifically addressed in the Fillal Environmental Impact Report FEIR 94-02, certified by the City Council on 11/1/94. The applicable mitigation measures will be added as necessary to the conditions of approval. No further environmental review is being required. . RECOMMENDATION: Approve the project, subject to conditions of approval. ISXHIIHT B 4-1'- ".. "T DRC-00-52 -2- March 20, 2000 BACKGROUND: Theproposal was presented to the Design Review Committee for a preliminary review on November 15, 1999, and consists of a- one-story; 45,294-sq. ft. retail commercial buildmg. This is a permitted use in the Central Commercial (CCD) zone with a Design Review Permit. The project is located in the Broadway Plaza (formerly known as the Channel-side Shopping Center). It is the final space available in the in-line set of buildings located along the northern portion of the shopping center. The center has a land-use designation of Commercial Retail in the City's General Plan and is zoned CCD-Central Commercial with a Design-control modifying district. Adjacent zoning and land uses include: NORTH: SOUTH: EAST: WEST: Fl State Highway SR-54, Sweetwater River / Flood Control Channel CCD Primo Hair Salon / Open Space Preserve (Sweetwater Slough) & IL Light Industrial Warehouse / Office Buildings and Equipment Rental CR (Nations.! City) "Retail Commercial" South Bay Marketplace CCD Open Space Preserve (Coastal Salt Marsh Wetland Buffer Area) & CH (National City) "Heavy Commercial" Southland & Regency Industrial Parks The Best Buy building will abut the 5,OOO-sq. ft. Sunny's Fashion Plus building to the west, and the 2,952-sq. ft. Payless ShoeSource building to the east. Also in-line to the east are the 5,794-sq. ft. AirTouch and 2,800-sq. ft. Sally's Beauty Supply buildings before arrival at the 1 55,475-sq. ft. Wal- Mart building. ANALYSIS When the project was presented to .the Design Review Committee for preliminary review, the discussion was centered on the proposed facade and signage. The following analysis addresses those discussion items as well as other design-related issues as outlined in the Chula Vista Commercial Design Guidelines, pp. III-I through III-I 4. SITE PLANNING Grading There is minimal grading associated with the proposal, and there is no significant natural vegetation, vistas, or unique features that will be altered. The site is level and the last remaining piece ofland . to complete the development.oftheshopping center. A soils repQ.rtwas.prpvided,acknowledging a high salt content (adjacent to the Sweetwater Channel and San Diego Bay). The review and response to this information caused some delay in the submittal of this project for design review (from December to February), although there were no aesthetic affects to consider. Compatibility Although there is concern about the projecting roofline, the building falls in-line with the other small and large anchor (Wal-Mart) buildings in the shopping center, and completes the center. The building utilizes the existing parking, circ~la!i.on'.~_d-.?Een spaces pro'li~ed. _ _ _ 4-/7 -,r. "'I' DRC-00-52 -3- March 20, 2000 Building placement The building is completely within the context of the other commercial buildings, and the siting is complimentary to the adjacent structures and the Primo Hair Salon building across the parking lot. There are no setbacks, except for a 25-ft. front setback,-which is aligned with the other smaller buildings to complete the pedestrian sidewalk. Vehicular access and circulation The proposed building will share the same existing driveways utilized by Wal-Mart, Primo Hair Salon, and the other retail buildings mentioned above located in Broadway Plaza. The driveways provide access onto Broadway, Fifth Street, and the South Bay Marketplace in National City. Site entries The driveways eventually lead traffic onto Highland/Fourth Avenue and "C" Streets. Interior two- way travel lanes are found in front of the in-line buildings located near the north property line and in front of the Primo Hair Salon near the south property line. Parking Parking should not be the dominant visual element of the site; however, this is a suburban shopping center. The 'sea' of parking is predominantly located in front for all of the retail buildings. The Best Buy building does provide customers the option of utilizing rear parking where there is an entrance for mobile stereo installations. The plans show that the property lines have been adjusted so that the Best Buy parcel ",ill be inclusive of 259 parking spaces for their specific use in the Shopping Center. Of the 259 parking spaces, 188 are located in front of the building, and 71 are located to the rear of the building. Section 19.62 of the Chula Vista Municipal Code requires retail businesses to provide one parking space per 200-sq. ft. of floor area. Based on this ratio, a total of227 parking spaces are required for the 45,294-sq. ft. of floor area proposed. These spaces already exist as part of the Broadway Plaza _. Shopping Center. - - A total ofl,l77 parking spaces are provided for the entire shopping center, which contains 190,815- sq. ft. of floor area. The parking ratio for the shopping center is one space for every 162-sq. ft. TIlls number exceeds the minimum number of spaces required by the Code by 223 parking spaces. The site plan also indicates that the parking spaces comply with the requirements for standard size (9 x 19) parking stalls. ------------- - ----- - -- -----~~ Pedestrian circulation There is an 18-ft. wide sidewalk: along the entire front (main) entrance. The sidewalk connects to the other walkways in front of the other retail establishments and wraps around the west side of the building and connects with the stereo installation area. Screening An existing landscape buffer is established along the west and north property lines, and additional screening for the ~as]1,loading, .and stereo installation area is incorporated in the landscape plan. ~- - '. " --- .-- -- -.. ~ .,' - - - - -_.-- 4-/~ ~ "T DRC-00-52 -4- March 20, 2000 Loading The loading and service area are located in the rear, minimizing visibility and circulation conflicts. The truckdepot is separated fr~m i11stallation areabya large landscape pl~terarea. Trash The trash area is integrated into the rear portion of the building and is adjacent to the truck depot, where the trash compactor is located. Recycling The trash and recycling enClosure will also be provided in compliance with the standards set forth by the recycling coordinator (attached) for commercial and industrial service pick-up. This will comply with Section 19.58.340 (trash storage) of the Chula Vista Municipal Code. Cart Storage. There are no carts or cart corrals applicable to this proposal. ARCHITECTURE Compatibility While, it may be viewed that the proposal is nof entirely compatible with the existing center, there is no particular architectural "style" proposed for commercial structures. The use of standardized "corporate" architectural styles associated with chain-type facilities is acceptable provided the design complies fully with these guidelines. The designer is expected to employ variations in form, building details and siting in order to create visual interest. In this proposal, the siting is within context, but the form of the building, and the details, such as the color and roofline may be seen as not in keeping with the center. However, these forms, particularly the blue wedge, the yellow tag, and the red allUDinum storefront framing provide variation that 'creates visual interest. The architecture should also consider compatibility with the surrounding character, including harmonious building style, form, size, color, material and roofline. To this end, the architecture includes recessed bays with arched lintels; similar to those located in front of SUIlllY'S Fashion Plus, Payless ShoeSource, and the AirTouch building. The canopy or trellis structure provides relief from the long expanse of wall on the west and east ends of the building facade, imitating similar trellis structures located in front of the Wal-Mart and Primo Hair Salon buildings. - In utilizing a combination of signature corporate styles with elements of the surrounding character, the project should meet or exceed the standards of quality, which have been set by surrounding development. .' .' Scale In commercial centers, "anchor" or major tenant buildings should be used to create balance rather than overwhelm minor tenant structures. In combination with the Wal-Mart building, the massing, facade articulation and architectural detailing does integra~th~BestBuy building with the scale of 4-19 Too' ..,. DRC-00-52 -5- March 20, 2000 the other structures in the center. In completing the center, the Best Buy building does also achieve a sense of balance in the overall symmetry of Broadway Plaza. Vertical architectural elements can be used as focal points to identify major tenants, andm this case it is the blue wedge and the yellow "Best Buy" which accomplished this goal. However, there is some concern that this feature does overwhelm the surrounding smaller tenants and is out of character and scale with the center. With respect to this concern, the building articulation and architectural detailing are particularly important in creating an inviting and human scale at the ground level of structures. To this end, the recessed archways, trellis columns and bearns, storefront entrance framing and overall landscaping have been enhanced. Building, facade and roof articulation The heights and setbacks of the Best Buy building are varied, with wall planes staggered both - - horizontally and vertically in order to provide visual relief from moriotimous~ rminterrupted expanses of wall. The walls are balanced asymmetrically around the readily identifiable building asymmetrical entrance. The recessed bays and trellis elements are provided at a 2: 1 rhythm from the left side to therighf side. The walls and entrance are also recessed and articulated in plan view. - While it may appear as an appendage, the blue wedge projection fading back at different angles breaks up an otherwise flat roof. When viewed from the side and rear, the wedge appears as a non- structural architectural element, but also provides directional interest to the front entrance. The red storefront facade glazing tapers down the iniddle stucco wall area visually leading into the entry doors, f'uru'ler articulating the entrance area. Fenestration - The size of all openings, such as lights, windows and doors and associated structural detailing appear to coordinate and relate to the scale of the elevation on which they appear. Window lights on the side and above the door openings properly frame the entry and exit. The recessed bays are false, but provider~ief fror:ncmo_noto!lous wall space._ . Overheads and awnings The trellis canopies on both sides of the entrance provide overhead relief for pedestrians and visual relief for aesthetic reasons consistent \\1th the architectural style and compatible with the character of the surrounding development. A condition of the landscape plan is that vine pockets be provided around the base of the columns for future shading in the canopy area. The cornice treatment at the roofline properly rises above and below tl1~ bl~e _ wed_g~ The_....ariation)g heigJ:1.t breaks up th~ _ monotony of a long facade. . Materials and colors The blue wedge, the yellow "Best Buy" tag, and the red mullion framing of the glazed storefront is consistent with the "corporate" architectural style associated with a chain-type facilities center, and may be compatible since they are somewhat limited in scope. The tan and brown colors of the stucco and block materials is consistent with the chosen architectural style of the Broadway Plaza shopping center and is compatible with the character of adjacent structures. 4-2.-0 ". "T DRC-00-52 -6- March 20, 2000 Mechanical and utility equipment All mechanical and utility equipment, as shown on the roof plan, will be screened from view with a full parapet. Conditions of approval require that all roof-mounted equipment shall be screened from view by a decorative parapet. Gutters, downspouts and vents The downspouts are not concealed, but are colored to coordinate with the rear (north) elevation. There are no downspouts located on the front or side elevations. Lighting Lighting is provided for security and safety on all on-site areas such as entries, parking, pathways and working areas. In the parking lots there is already existing overhead lighting. On the building, there are. side light fixtures on all four walls that are architecturally compatible with the main structure. The front elevation side lighting are covered by triangular vertical covers. A horizontal cover shields the west, east and north elevation sidelights. All exterior lighting shall confme light within the site and prevent glare onto adjacent properties or streets. Signs The Design Review Committee reviewed the proposed signage preliminarily on 11/15/99, and concerns were raised about the size of the "Best Buy" corporate logo (black and yellow price tag). Similar signs with blue background areas have been utilized by Best Buy at their two other locations in San Diego County. The Oceanside store has a 300-sq. ft. sign with 46-inch high 'Best Buy' letters. The Mission Valley store has a larger sign area of 350-sq. ft. with 53-inch lettering. . Although. individually cut (channel) letter signs are generally preferred for business identification, a cabinet sign is allowed for corporate logos. Three cabinet signs are proposed for the building. A 300-sq. ft. sign with 46-inch high letters is proposed for the front and rear elevations. A 150-sq. ft. corporate logo is proposed for the side elevation facing Broadway. Based on the sign regulations for the CC zone, the sign area allowed is 675-sq. ft. in the front and rear, and 600~sq. ft. for the side elevation. Therefore, the signs are in conformance with regulations for wall and/or marquee signage. In addition, the sign gUidelines for commercial projects indicate that corporate signs are acceptable if they are intended to identify the business and are not to advertise products or display information not part of the name of the business. _The size and _Sl1ape. Qf. the signs are . compatible .with the scale of the building-and-distance from which they are to be read from. The front and rear signs are vehicle-oriented, specifically to be read from across the parking lot in the front, and from SR-54 freeway to the rear. The sign facing Broadway is half the size, but closer to the street. Landscaping The City's Landscape Planner has reviewed the landscape plan and has found that it is adequate and acceptable with conditions. A condition is that vine pockets be provided around the base of the columns for future shading ofthe!rellis{canopy area and shown on a. revised landscape plan. -.- - - - -- --- - --'- -- -- 4-2.1 J ".. "T DRC-00-52 -7- March 20, 2000 Otherwise, it appears that the landscape plan provides proper enhancements to the front elevation, in the form of palm trees and ground shrubs, and additional trees and shrubs along the side and rear elevation planting areas to pro,:,ide aesthetic relief to the circulation drive around the back of the - building. The existing landscape berm (coastal sage) will screen the stereo installation area from freeway (SR-54) view, while the existing landscaping beyond will allow a freeway view of the signage for Best Buy and Wal-Mart. Other Departments Comments from the Building Division, Fire, Engineering, Police, and Community Development Departments, the Recycling Coordinator, the Sweetwater Authority Water District, the Chula Vista Elementary and Sweetwater High School District are attached. The project shall comply with all of the requirements contained therein, and shall be included in the conditions of approval. CONDITIONS OF APPROVAL 1. The site shall be developed and maintained in accordance with the approved plans which include site plans, architectural elevations, exterior materials and colors, landscaping, sign program and grading on file in the Planning Division, the conditions contained herein, and Title 19. 2. Prior to any use of the project site or business activity being commenced thereon, all Conditions of Approval shall be completed to the satisfaction of the Planning Director. 3. Revised site plans and building elevations incorporating all Condition of Approval shall be submitted for Planning Director review and approval prior to the issuance of building permits. 4. Approval of this request shall not waive compliance with all sections of Title 19 of the Municipal Code; all other applicable City Ordinances in effect at the time of building permit issuance. 5. All ground-mounted utility appurtenances such as transformers, AC condensers, etc., shall be located out of public view and adequately screened through the use of a combination of concrete or masonry walls, benning, and/or landscaping to the satisfaction of the Planning Director. 6. All roof appurtenances, including air conditioners and other roof mounted equipment and/or projections shall be shielded from view and the sound buffered from adjacent properties and streets as required by the Planning Director. Such screening shall be architecturally integrated with the building design and constructed to the satisfaction of the Planning Director. Details ~hall be included-in building:plans.---- --~~---- ----.-~----~---~- - --- ~--- 7. A graffiti resistant treatment shall be specified for all wall and building surfaces. This shall be noted on any building and wall plans and shall be reviewed and approved by the Planning Director prior to issuance of building permits. Additionally, the project shall conform to Sections 9.20.055 and 9.20.035 of the municipal Code regarding graffiti control. 8. Landscape and irrigation plans shall be reviewed and approved by the City Landscape Planner prior to certificate of occupancy. Based on the review of the conceptual landscape plans by the 4-.2. 'L- "Ii" "'r DRC-00-52 -8- March 20, 2000 City Landscape Planner, the planting and irrigation plans shall be revised to included vine pockets to be provided around the base of the columns for future shading over the trellis/canopy area. 9. The right-side trellis/canopy may be omitted from the current building permit submittal, in order to comply with UBC requirements for separation of structures between properties. This will be allowed for purposes of commencing construction. In the interim period during construction and prior to the certificate of occupancy, a lot line adjustment with the adjacent property shall be accomplished, in order to allow for the construction of the right-side trellis/canopy. The trellis/canopy structure and landscaping shall be installed prior to certificate of occupancy. 10. The building permit plans shall comply with 1998 Buildiog (UBC), Plumbiog (UPC), Mechanical (UMC), and 1996 Electrical (NEC). Plans shall also comply with Title 24 energy and disabled access requirements. 11. A separate buildiog permit shall be required for approved signage and lightiog. Refer to Attachment A, 12. The Fire Department will require unobstructed access of20-ft. minimum width and 13-1I2-ft. vertical clearance. A Knox box shall be installed at the front entrance. Minimum fire flow shall be 1,500 gallons per minute for a two-hour duration. The Fire Department connection and PIC shall be located in the front, and away from the building. 13. Submit a separate and complete sprinkler and fire alarm plan to the Fire Department for approval prior to installation. Also, the sprinkler system is to be monitored by a central station. Refer to Attachment A. 14. The Engioeeriog Department will require fees for sewer capacity (based on new/additional plumbiog fixtures), development impact, and traffic signal (based on additional development) when the buildiog permit is applied for. Refer to Attachment A. 15. It appears from your plans that a gradiogpermiCwil1 be required prior to the issuance of a buildiog permit. Refer to Attachment A. 16. A lot line adjustment plat approved by the Engineering Department is required io order to complywith_!l.1e landscapiog conditi9ns .to._in~talUhe right-side trellis/canopy. The lot lioe adjustment shall be accomplished along with the iostallation of the trellis/canopy structure and landscaping prior to certificate of occupancy. 17. The Crime Prevention Unit is recommending utilization of components which will address access control, surveillance detection, and police response. In addition, it is recommended that the management and employees receive training io security procedures and crime prevention from the Crime Prevention Unit, at 691-5127. Refer to Attachment A. 4-.2..5 "..- ...,. DRC-00-52 -9- March 20, 2000 18. Provide sufficient space for designated "recyclables." A shared paper/cardboard bin, along with food and beverage container cart with other stores may be permitted. If store is on its own parcel, a trash enclosure large eno\lgh for solid waste, mixed paper, and a l;art for food and beverage containers must be provided. The applicant shall contact the Recycling Coordinator. (691-5122) to ensure that provisions are made to meet the minimum 50 percent recycling requirement. Commercial and Industrial properties must have enclosures, bins, or carts that meet design specifications. The compactor must be pre-approved by the City franchise hauling company. Refer to Attachment A. 19. The applicant shall contact the Sweetwater Authority Water District to determine the additional demand and alteration to the existing water systems for domestic and/or fire protection purposes. In addition, irrigation plans may need to be designed to reclaimed water standards and specifications. All fees and deposits shall be provided at the building permit stage. Refer to - Attachment A. 20. All school fees shall be paid as part of the building permit. Refer to comments received from the Sweetwater Union High School District and the Chula Vista Elementary School District. Refer to Attachment A. 21. This permit shall be subject to any and all new, modified or deleted conditions imposed after approval of this permit to advance a legitimate governmental interest related to health, safety or welfare which the City shall impose after advance written notice to the Permittee and after the City has given to the Permittee the right to be heard with regard thereto. However, the City, in exercising this reserved right/condition, may not impose a substantial expense or deprive Permittee of a substantial revenue source that the Permittee cannot, in the normal operation of the use permitted, be expected to economically recover. 22. This permit shall become void and ineffective if not utilized within one year from the effective date thereof, in accordance with Section 19.14.260 of the Municipal Code. Failure to comply with any conditions of approval shall cause this permit to be reviewed by the City for additional conditions or revocation. ATTACHMENTS 1. Minutes from November 15, 1999 DRC Mtg. 3. Fire Department Comments 5. Police Department Comments .7. . Recycling CoordinatoLComments._ 9. Chula Vista Elementary School Comments 2. Building Division Comments 4. Engineering Comments 6. Community Development Comments 8. Sweetwater Authority Comments 10. Sweetwater High School District Comments \\CITYWIDE\SYS\HOME\PLANNING\HAROLD\DRCOO-52.doc 4-:1-'/ T" ...,.. Design Review Committee Minutes -4- November 15 1999 -_.~-- --- . ~~- "F:-- --PRELfMINf\RYITEM:_ 2. Best Buy Broadway Plaza Staff Presentation Ms. Beverly Blessent (Senior Planner) indicated that the applicant has met with Community Development, Lyle Haynes' and herself on several occasions. The applicant has submitted a site plan and architecture for DRC review. They are proposing to locate a 45,000 square foot building in the Broadway Center west of the existing Wal-Mart, between Sunny Fashion Plus and PayLess Shoe Store. Staff has identified areas where the proposal is consistent with the Design Guidelines and where it is inconsistent. In terms of architecture and scale, staff feels the applicant has been successful at doing that. There were trellis structures on the plan, which have been removed. Staff felt they added quite a bit to the pedestrian orientation, and the lower scale detailing contributed to providing a nicer scale. Staff felt this was inconsistent with the Design Guidelines in terms of compatibility with the existing center. The guidelines state that the use of standardized :'corporate" architectural styles (which staff felt this is) associated with chain-type facilities is acceptable provided the design complies fully with the guidelines. Staff did not think that the project does comply with the guidelines in terms of compatibility with the surrounding center including building style, particularly the form and the color and the roojline. These are major things that make the project incompatible with the existing center. Also, in terms of scale, the guidelines state that vertical architectural elements can be used as focal points to identify major tenants. Staff thinks this is a bit too much, and it is overwhelming to the rest of the center. In terms of signs, staff has some flexibility in what the applicant can do in terms of the square footage. There are signs at the prime . elevation, one on the western elevation and one facing the freeway. Staff is recommending that one of the signs (either the west facing or the south facing) be removed. Mr. Lyle Haynes (Assistant Community Development Director) relayed the 7-year . __histoI)'._of the. Broadway Center. Once-Wal-Mart went in, the City felt that it needed a co-anchor' tenant to secure the long-term economic viability of this project. About a year after Wal-Mart went in, the City had to acquire a portion of the Target parking lot along Fourth Avenue to put in an intersection at Brisbane and Fourth Avenue to adequately handle the traffic. When Ron Russ, the developer, called and said he thought he had a deal with Best Buy, the City could not have been happier. The challenge is to be able to integrate Best Buy into the center to make it work well together, but still allow Best Buy to have its corporate identi~.. Be~~J3uy will pr2~bly brin.,g somewhere_ in..J:he....neighborhood of 4- .LS""" ..... ..,. EXHIBIT B Conditions of Approval Owner/Tenant Participation Agreement FSRV, LLC/Best Buy, Inc. 75 North Broadway Chula Vista, CA DATED: H: IShared\A tto rney\bestbuyopa.doc ~ ~ SIGNATURE PAGE "DEVELOPER" FSRV LLC By: Ronald B. Russ, its Managing Member 4-24 Best Buy Owner Participation Agreement Pro-Rata Repayment Schedule Initial Loan Amount, pursuant to covenant: $80,314.50 (Repayment, by Year following Agreement, if Developer is in default of Agreement. Assumes an 8 percent interest rate as City's cost of borrowing funds plus 2 percent.) Year Amount of Repavment 1 2 3 4 5 6 7 8 9 $78,065.69 $69,391.73 $60,717.76 $52,043.80 $43,369.83 $34,695.86 $26,021.90 $17,347.93 $ 8,673.97 4 -;l.7 ..".. ...,. PROMISSORY NOTE SECURED BY DEED OF TRUST $80,314.50 Chula vista, CA 2000 This Promissory Note ("Note") is executed pursuant to that certain Owner Participation Agreement [75 North Broadway] with FSRV LLC, Owner (the "Agreement") dated as of between FSRV LLC, a California Limited Liability Company, ("Debtor") and the Redevelopment Agency of the City of Chula Vista, a public body corporate and politic ("Agency"). (Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Agreement) . 1. For value received, Debtor promises to pay to Agency, or order, the principal sum of EIGHTY THOUSAND THREE HUNDRED FOURTEEN DOLLARS AND FIFTY CENTS ($80,314.50), or such lesser amount as may have been advanced by the Agency as Project Assistance under the Agreement. Interest shall accrue on the principal balance at a rate of 8% per annum. 2. Principal and interest under this Note shall be due and payable in ten equal annual installments commencing on the one year anniversary of the issuance of a Certificate of Occupancy for the Project. Notwithstanding the foregoing, in the event that Debtor has not been in default during the preceding year with respect to the Operating Covenant, Debtor's repayment obligation under this Note with respect to the then due and payable installment shall be deemed satisfied. In the event Debtor fails to satisfy its obligations by discontinuing retail operations, Debtor's installment payment shall be deemed satisfied for that portion of the preceding year for which the retail establishment was operating. This pro-rata repayment obligation shall be based upon a 365 day year. 3. The occurrence of anyone or more of the following events shall constitute an "Event of Default": (a) default by Debtor under any agreement or other writing executed in favor of Agency in connection with this Note, including but not limited to the Agreement which remains uncured after expiration of any applicable cure period; (b) the making by Debtor of any assignment for the benefit of creditors or the voluntary appointment (at the request or with the consent of Debtor) of a receiver, custodian, liquidator or trustee in bankruptcy of any of Debtor's property, or the filing by Debtor of a petition in bankruptcy or other similar proceeding under any law for relief of debtors; (c) the filing against Debtor of a petition in bankruptcy or other similar proceeding under any law for relief of debtors, or the involuntary appointment of a 1 4- ::Lf .,. "T receiver, custodian, liquidator or trustee in bankruptcy of the property of Debtor, if such petition or appointment is not vacated or discharged within ninety (90) calendar days after the filing or making thereof; or (d) the occurrence of a default by Debtor under any agreement with respect to the development of the Project. Notwithstanding the foregoing, no Event of Default shall have occurred hereunder until City has provided Debtor with written notice of such default and Debtor shall have failed to cure such default on or prior to the date thirty (30) days after such notice or such additional time as is reasonably required provided Debtor promptly commences to cure and diligently proceeds to completion. Upon the occurrence of an Event of Default, City may, at its option, declare the entire unpaid principal balance to be immediately due and payable in full or pursue any and all other remedies provided hereunder, under the Agreement or as otherwise provided at law or in equity. 4. This Note is secured by (a) that certain Deed of Trust, Assignment of Rents and Fixture Filing ("Deed of Trust") of even date herewith, executed by Debtor, as trustor, in favor of City, as beneficiary, covering certain real property located in the County of San Diego, State of California (the "Property") as more particularly described therein, and (b) all other existing and future agreements or writings, executed in favor of City securing this Note. 5. Debtor acknowledges that if any payment required under this Note is not paid within fifteen (15) days after the date when the same becomes due and payable, the holder hereof will incur extra administrative expenses (i.e., in addition to expenses incident to receipt of timely payment) and the loss of the use of funds in connection with the delinquency in payment. Because, from the nature of the case, the actual damages suffered by the holder hereof by reason of such extra administrative expenses and loss of use of funds would be impracticable or extremely difficult to ascertain, Debtor agrees that five percent (5%) of the amount of the delinquent payment shall be the amount of damages to which such holder is entitled, upon such breach, in compensation therefor. Therefore, Debtor shall, in such event, without further notice, pay to the holder hereof as such holder's sole monetary recovery to cover such extra administrative expenses and loss of use of funds, liquidated damages in the amount of five percent (5%) of the amount of such delinquent payment. The provisions of this paragraph are intended to govern only the determination of damages in the event of a breach in the performance of the obligation of Debtor to make timely payments hereunder. Nothing in this Note shall be construed as an express or implied agreement by the holder hereof to forbear in the collection of any delinquent payment, or be construed as in any way giving Debtor the right, express or implied, to fail to make timely payments hereunder, whether upon payment of such damages or otherwise. The right of the holder hereof to receive payment of such liquidated and actual damages, and receipt thereof, 2 4-2-fi T are without delinquent hereunder. prejudice to the right of such holder to collect such payments and other amounts provided to be paid 6. All payments of this Note shall be made in lawful money of the United states of America and in immediately available funds at Agency's office at 276 Fourth Avenue, Chula Vista, California, Attn: Director of Community Development, or at such other place as the holder hereof may from time to time direct by written notice to Debtor. 7. Debtor waives any right of offset it now has or may hereafter have against the holder hereof and its successors and assigns. Debtor waives presentment, demand, protest, notice of protect, notice of nonpayment or dishonor and all other notices in connection with the delivery, acceptance, performance, default or enforcement of this Note (other than notices expressly required by the terms of the Agreement). Notwithstanding any provision herein or in any instrument now or hereafter securing this Note the total liability for payments in nature of interest shall not exceed the limits imposed by the applicable usury laws. 8. Debtor expressly agrees to any extension or delay in the time for payment or enforcement of the Note, to renewal of this Note, all without any way affecting the liability of Debtor hereunder; provided, however, nothing herein shall be deemed or construed to constitute Debtor's waiver of any applicable statute of limitations. Any delay on Agency's part in exercising any right hereunder shall not operate as a waiver. Agency's acceptance of partial or delinquent payments or the failure of Agency to exercise any rights shall not waive any obligation of Debtor or any right of Agency, or modify this Note, or waive any other similar default. 9. Debtor agrees to pay all costs of collection when incurred and all reasonable costs incurred by the holder hereof in exercising or preserving any rights or remedies in connection with the enforcement and administration of this Note or following an Event of Default by Debtor, including but not limited to reasonable attorney' fees. If any suit or action is instituted in connection with this Note, the losing party promises to pay to the prevailing party, in addition to the costs and disbursements otherwise allowed by law, such sum as the court may adjudge reasonable attorney's fees in such suit or action. 10. This Note shall be governed by and construed according to the laws of the state of California. 11. Time is of the essence for each and every obligation under this Note. 12. Debtor represents and warrants that: (a) it has full legal right, power and authority to execute and fully perform its 3 4-.3-0 T "T obligations under the Note and the Agreement; (b) the persons executing this Note on behalf of Debtor are the duly designated agents of Debtor and are authorized to do so; and (c) that the execution of this Note has been fully authorized in accordance with Debtor's corporate policies. "Debtor": FSRV LLC, a California Limited Liability Company By [Print Name and Title] H:\home\lorraine\ag\promnot.fsr 4 4-31 ,. "T Order No. Escrow No. Loan No. WHEN RECORDED MAIL TO: DEED OF TRUST WITH ASSIGNMENT OF RENTS (LONG FORM) This DEED OF TRUST, made , between Herein called TRUSTOR, whose address is (Number and Street) FIRST AMERICAN TITLE INSURANCE COMPANY, herein called TRUSTEE, and (City) (State) a California corporation, , herein called BENEFICIARY, WITNESSETH: That Trustor grants to Trustee in Trust, with Power of Sale, that property in the City of Chula Vista, County of San Diego, State of California, described as: Assessor's Parcel Nos. 562-324-23 and 562-324-28, located at 75 North Broadway, Chula Vista, California together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits, for the purpose of securing (1) payment of the sum of $80,314.50 with interest thereon according to the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the performance of each agreement of Trustor incorporated by reference or contained herein and (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. 1 4- .32- ..,. '"T A. To protect the security of this Deed of Trust, Trustor agrees: (1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. (2) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. (3) To pay at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrances, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 2 4 - .3.3 it . i (4) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. B. It is mutually agreed: (1) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (2) That upon written requests of beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto". (3) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale 3 4-3'1 il 'i of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in 'connection with sale, Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof, not then repaid, with accrued interest at the time amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. (4) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance form the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. (5) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledges, of the note secured hereby, whether or not named as Beneficiary herein, in this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. (6) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of 4 4-.3~ ~ "T pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. (7) That Exhibit A is agreed to and incorporated herein (attached) . The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder by mailed to him at his address hereinbefore set forth. Signature of Trustor Signature of Trustor State of California County of } )ss. On , before me personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person (s) whose name (s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity (ies), and that by his/her/their signature (s) on the instrument the person(s) acted, executed the instrument. WITNESS by hand and official seal. Signature 5 4 -.3.1.- T "T DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO FIRST AMERICAN TITLE INSURANCE COMPANY TRUSTEE: The undersigned is the legal owner and holder of the note or notes, and of all other indebtedness secured by the foregoing Deed of Trust. Said note or notes, togther with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, and all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the same Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated Please mail Deed of Trust, Note and Reconveyance to Byron Estes, Community Development Department, city of Chula Vista, 276 Fourth Avenue, Chula Vista, CA 91910. Do not lose or destroy this Deed of Trust or the note which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. 6 4-37 "T EXHIBIT A Trustor, Trustee and Beneficiary agree that this Deed of Trust and all of the terms, covenants and provisions thereof, and all rights, remedies and options of Trustee or Beneficiary hereunder, are hereby and shall at all times continue to be subject and subordinate in all respects to the terms, covenants and provisions of any mortgage, deed of trust or encumbrance entered into by Trustor to secure financing for the land and improvements comprising the property described in this Deed of Trust and all renewals, modifications, extensions, replacements and consolidations thereof. Trustee and Beneficiary agree to execute such further documents as may be reasonably requested by Trustor or Trustor's lender to evidence or effectuate such subordination. H:\Home\Attorney\TrustDeed 7 4-.3'i' ~ "T