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HomeMy WebLinkAboutRDA Packet 2000/05/23 ~~f? ~..- ~-- :: CIlY OF CHULA VISTA TUESDAY, It' AY 23, 2000 COUNCIL CHAMBERS 6:00 P.M. PUBLIC SERVICU BUILDING (I_IDIATELY FOLLOWING THE CITY COUNCIL MEnlNG) ADJOURNED MEETING OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA CALL TO ORDER ROLL CALL Agency Mambers Davis, Moot, Padilla, Solos, and Choir Horton ORAL C'MMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction that is not an item an this agenda. (State law, however, generally prohibits the Redevelopment Agency fram taking action on any issues not included on the posted agenda.) If you wish to address the Agency 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 ~EARINGS 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 fill 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. 1. PU~LlC TO CONSIDER ADOPTION OF A DISPOSITION AND DEVELOPMENT HEARING: AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND GATEWAY CHULA VISTA LLC FOR THE PURPOSE OF DEVELOPING A 304,000 SQUARE FOOT MIXED OFFICE AND RETAIL DEVELOPMENT AND 1,015 SPACE PARKING STRUCTURE, ENTITLED THE GATEWAY CHULA VISTA PROJECT, ON A 16 PARCEL SITE AT THE NORTHWEST CORNER OF THIRD AVENUE AND "H" STREETS IN DOWNTOWN CHULA VISTA WITHIN THE TOWN CENTRE I REDEVELOPMENT PROJECT AREA [Continued from the meeting of May 16, 2000] STAFF RECOMMENDATION: Staff requests the public hearing be continued to the meeting of June 6, 2000. ." Tr - AGENDA -2- MAY 23 2000 ACTION ¡ITEMS 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 staff 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. 2. AGeNCY [A] APPROVING A LOAN AGREEMENT AND RELATED RESTRICTIVE RESj)LUTION COVENANTS; THE AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY AND ST. REGIS PARK, LP (FORMED BY CHELSEA INVESTMENT CORPORATION) AND AUTHORIZING THE CHAIRMAN OF THE REDEVELOPMENT AGENCY TO EXECUTE SAID AGREEMENTS; AND [B] APPROPRIATING $1,387,152 FROM THE UNAPPROPRIATED BALANCE IN THE LOW AND MODERATE INCOME HOUSING FUND FOR FINANCIAL ASSISTANCE TO ST. REGIS PARK, LP FOR THE ACQUISITION AND REHABILITATION OF PEAR TREE MANOR APARTMENTS--The Pear Tree Manor Apartment complex, located in the western portion of the City, consists of 119 units. Chelsea Investment Corporation plans to acquire and substantially rehabilitate the interior and exterior of the buildings. Financing and development of this project will be a joint private/public partnership. The total estimated cost of the proiect is approximately $10.2 million. On 1/18/2000, the Agency conditionally approved financial assistance to Chelsea in an amount not-to-exceed $1,387,152. 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. Additional sources of funding from private investors and other sources are $3.7 million Staff has evaluated the pro forma submitted by Chelsea which indicates a financing gap in the amount of $1,387,152. 4/5THS VOTE REOUIRED STAFF RECOMMENDATION: Adopt the resolution. OTHER ~USINESS 3. DIRE TOR'S REPORT(S) , 4. CHAI~'S REPORT(S) 5. AGE~CY COMMENTS ADJOURrMENT The meetin~ will adjourn to the regularly scheduled Redevelopment Agency meeting on June 6, 2000 at 4:00 p.m., immediately following the City Council meeting, in the City Council Chambers. ." rr - JOINT REDEVELOPMENT AGENCY / CITY COUNCIL AGENDA STATEMENT ITEM NO.: / MEETING DATE: OS/23/00 ITEM IIILE: PUBLIC HEARING TO CONSIDER ADOPTION OF A DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND GATEWAY CHULA VISTA LLC FOR THE PURPOSE OF DEVELOPING A 304,000 SQUARE FOOT MIXED OFFICE AND RETAIL DEVELOPMENT AND 1,015 SPACE PARKING STRUCTURE, ENTITLED THE GATEWAY CHULA VISTA PROJECT, ON A 16 PARCEL SITE AT THE NORTHWEST CORNER OF THIRD AVENUE AND "H" STREETS IN DOWNTOWN CHULA VISTA WITHIN THE TOWN CENTRE I REDEVELOPMENT PROJECT AREA SUBMITTED BY: COMMUNITY DEVELOPMENT DIRECTOR REVIEWED BY: CITY MANAGER Staff requj3sts that the public hearing be continued to June 6, 2000. ." Tr - REDEVELOPMENT AGENCY AGENDA STATEMENT ITEM NO.: d- MEETING DATE: OS/23/00 ITEM ,IIILE: AGENCY RESOLUTION [A] APPROVING A LOAN AGREEMENT AND RELATED RESTRICTIVE COVENANTS; THE AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY AND ST. REGIS PARK, LP (FORMED BY CHELSEA INVESTMENT CORPORATION) AND AUTHORIZING THE CHAIRMAN OF THE REDEVELOPMENT AGENCY TO EXECUTE SAID AGREEMENTS; AND [B] APPROPRIATING $1,387,152 FROM THE UNAPPROPRIATED BALANCE IN THE LOW AND MODERATE INCOME HOUSING FUND FOR FINANCIAL ASSISTANCE TO ST. REGIS PARK, LP FOR THE ACQUISITION AND REHABILITATION OF PEAR TREE MANOR APARTMENTS SUBMIIrTED BY: COMMUNITY DEVELOPMENT DIRECTOR ~ C"S REVIE""ED BY: EXECUTIVE DIRECTOR ~'(f:.r9í'-'" 4/5THS VOTE: YES0NOD BACKG,OUND On Jonudry 18, 2000, the Redevelopment Agency conditionally approved financial assistance to Chelsea I~vestment Corporation in on amount not to exceed $1,387,152 for the acquisition and rehobilitolion of a 119 unit complex known as Pear Tree Manor Apartments located at 1025 Broodwoy~ On April 46, 2000, the California Debt Limit Allocation Committee (CDLAC) awarded Chelsea over $5.2 millitn in Multi-family Housing Mortgage Revenue Bonds for the Pear Tree Apartment project. In order tc¡> make this acquisition and rehabilitation project feasible, stoff is recommending that the Redeveloplment Agency approve financial assistance in the amount of $1,387,152. REC°Mf'ENDATION That the ~edevelopment Agency of the City of Chulo Vista [0] approve a loon agreement and related r¡'strictive covenants; the affordable housing agreement by and between the Redevelo~ment Agency and St. Regis Park, LP (formed by Chelsea Investment Corporation) and outhorizinp the Chairman of the Redevelopment Agency to execute said agreement; and [b] appropriating $1,387,152 from the unappropriated balance in the Low and Moderate Income Housing F:und for financial assistance to St. Regis Pork, LP for the acquisition and rehabilitation of Pear Tree Manor Apartments. d -( .". 'n - PAGE 2, ITEM NO.: MEETING DATE: OS/23/00 BOARDF/COMMISSIONS RECOMMENDATION The Pear Tree proiect has been presented to the Housing Advisory Commission on two separate occasions, each time receiving overwhelming support and acknowledging the need for a project of this colliber. Pear Tree has been scheduled for the Housing Advisory Commission meeting on May 24, 2000 for formal approval. Due to timing issues for financing the project, it is being presented, to the Agency prior to final consideration by Housing Advisory Commission. Stoff wonted to ensure the Pear Tree proiect would receive on allocation of Multi-family Revenue Bonds frClm CDLAC prior to taking this item for formal Commission approval. The CDLAC meeting was held on April 26, 2000, the some day as the Housing Advisory Commission meeting. When this item was token forward for conditional approval in January, the Commission fully supported financing the project and did not have any concerns as to its viability. However, this item has a requirement under Article 34 of the California Constitution (discussed in more de10il on page 7 of the staff report) to provide a 60-day waiting period upon RedeveloRment Agency approval of financial assistance. With the CDLAC approval on April 26, 2000, Chelsea has 110 days to get all the financing in place to close on the bonds. With the Article 34, requirement and the accelerated schedule of events, it is necessary for this item to receive financial approval at the May 23, 2000 meeting in order for the Article 34 waiting period to expire In time to close on the bonds. Therefore, stoff is presenting this project to the Agency prior to firpol consideration by the Housing Advisory Commission. DISCUSflON I The City'~ State-mandated Housing Element requires the provision of housing for all economic groups °1d to distribute affordable housing developments throughout the City's jurisdiction. The City's stralegy to implement this mandate, the "Affordable Housing Program", is to require 10 percent (110%) of any new subdivision in excess of fifty (50) units to be mode affordable for low and mod$rate income families (5% low and 5% moderate) and to balance affordable housing developm~nt throughout the City in the form of new development and rehabilitation of the existing hq>using stock. I The Prop~sed Project The Pear 1 ree Manor Apartment complex is located in the western portion of the City consisting of 119 units land is a praject in need of rehabilitation. Chelsea, a highly regarded and experienced developm¡.nt company, plans to substantially upgrade the interior and exterior of the buildings. The prop9sed 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 IHundred Nine (109) Two Bedroom units measuring 850 square feet; and Five (5) Three Bedroom (¡nits measuring 1040 square feet. d-d- ." IT PAGE 3, ITEM NO.: MEETING DATE: OS/23/00 Rehabiljt<iJtion Efforts I Chelsea ~as 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 pointing, i new carpeting, new cabinets, new appliances, blinds, sinks, vinyl flooring, and bothroonn renovation. The exterior of the building will be painted, repair fascia boards, replace exterior \tIindow border, repair existing roof, and replace gutters and downspouts. The londscopihg, tot lots and pool area will be upgraded. I 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 on opportunity for ocquisitio~ and rehabilitation of a large multi-family rental project on the western side of the City. While the! units are being rehabilitated, the Crime Free Multi-Housing Program developed by the Chulo Vista Police Deportment will be implemented. A main component of the Crime Free Multi- Housing Program will be to obtain cooperation of Chelsea to make recommended improvements to the complex in on effort to reduce the rate of break-ins and to establish a friendly association with the police officers and apartment residents in creating a safe living environment for the Pear Tree Monpr Apartment residents. Relocatior Issues I The reha~ilitotion of Pear Tree Manor will involve significant repair work in and outside the units. In discussions with the current management stoff and tenants, the residents are looking forward to the rerlovotion and are prepared for the temporary disruptions that will occur. The project budget hQs $60,000 available for the costs of any expenditures related to temporarily relocating tenants. ;Chelseo has indicated that the rehabilitation effort will be phased and will make every effort no! to disrupt the families. In the event a particular unit will require substantial rehobilitojion, the tenant will be provided lodging or financial assistance for lodging on a temporarj( basis. Proposed, Financina of the Project Financing' and development of this project will be a joint private/public partnership. It is currently estimated: that the proposed total project cost will be approximately $10.2 million. Sources of funding fQr 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 loGIn from the Redevelopment Agency. Stoff has ~voluoted the most recent pro forma submitted by Chelsea indicating a financing gap in the amount of $1,387,152 which represents a financing gap of $11,656 per unit (and does not include thie $300,000 deferred developer fee). Stoff recommends providing a Redevelopment Agency lorn to fill the financing gap. Financial assistance will be subject to the approval of the Loon Agr~ement by the Redevelopment Agency. ,;2-3 ." Tr - PAGE 4, ITEM NO.: MEETING DATE: OS/23/00 Table 1 i~entifies the financing resources and total project cost per unit for Pear Tree Manor Aportmerlts. Table 1 Financing Resources $23,348 $2,521 $44,194 $1,851 $11,656 $2,109 $85,679 Staff is refommending that the Redevelopment Agency provide financial assistance in the form of a residua receipt loon in on amount not to exceed $1,387,152. This amount is reasonable given the debt ~ervice coverage ratio of the project and a maximum tax credit allocation amount. The Agency's pssistonce equates to $11,656 per unit and amounts to a leveraging of $7.35 to $1 of Agency f~mds. This leveraging ratio is calculated by dividing the total proiect cost of $10,195,892 by the amount of the Redevelopment Agency loon of $1,387,152. Proiect Dj3velopment Costs Developn-\ent costs are one of the key variables determining the need for subsidies. It is importon~ that those costs be reasonable. At a total project cost of approximately $10.2 million including land, the overage unit cost of approximately $86,000 is consistent with typicol offordobl", multi-family rehabilitation within the County. The Pear Tree Manor Apartments is a family complex, which is a larger and older building requiring substantial upgrades to meet current b~ilding code standards. The rehabilitation of existing housing stock is an important and necessary, component of the City's affordable housing strategy of increasing affordable housing opportuni ies and revitalizing neighborhoods throughout the City. Table 2 delineates the entire development project costs associated with the Pear Tree Manor Apartments. 'Due to the limited availability of bond financing from COlAC and the large number of applications competing tor an allocation, COlAC may impose a "taxable tail" '0 the bond allocation. This taxable tail is the portion of the bond allocation that will be taxable. However, in this instance. Chelsea has voluntarily attached a "taxable tail" to the project in order to leverage the bond allocation to secure additional tinancing. c2-cf ." rr - PAGE 5, ITEM NO.: MEETING DATE: OS/23/00 Table 2 Development Costs Use Amount landfAcquisition Costs $6,267,000 Rehabilitation Costs $1,745,809 Soft Costs $50,000 Developer Fee $623,952 Construction InteresUFees $412,213 Construction Contingency $251,151 Other Costs (Fees) $205,506 Permanent Financing Costs $224,710 Reserves $245,051 AppraisalflegalfArchitectural $170,500 Total $10,195,892 Income and Rent Restrictions All the units will be affordable to low income households. It is the intent that these low-income units will ~otisfy the requirements of the City's program for the provision of affordable housing for multi-family rental units on the western side of the City. Of the 119 units, 20% (24 units) will be rent restricted to households whose income is at or below 50% of the Area Median Income (AMI) as determined by HUD and 70% (84 units) will be rent restricted for households earning 60% of AMI. Of ~he remaining 10 units, one unit will be reserved to house the apartment manager and 9 units will be available to households at or below 120% of AMI. This mix of units is based on on informal $urvey of the current residents of Pear Tree. Of the 119 units, 24 will be affordable to households at 50% of the median income, which is currently $26,250 for a household size of four; 84 units will be affordable to households at 60% of median income, which is currently $31,500 for a household size of four; and the remaining 10 units will be affordable to households at or below 120% of median income, which is currently $64,400. It is proposed that the rents on the 5 - 1 bedroom units will range from $492 to $591/month. Rents on the 109 - 2 bedroom units will range from $591 to $709/month and rents on the 5 - 3 bedroom units will range from $682 to $819/month. Income and rent restrictions for Pear Tree Manor Apartments will be maintained for a period of no less than 52 years; exceeding the 33-yeor term of the bond. Although Chelsea surveyed the income stream of the residents through their due diligence process, there may be a small number of household with incomes exceeding the income requirement. Those households will be phased out through attrition. ¿)-::J ." n _. PAGE 6, ITEM NO.: MEETING DATE: OS/23/00 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 $623,952 or approximately 6% of total project costs and consists of profit and overhead for developing the project. Chelsea has agreed to defer $300,000 of their developer fee over a seven-year period in order to make up the remaining financing gap in financing the project. A review of acquisition rehabilitation projects throughout the County which have been financed by the some method hod developer fees ranging from 5% to 8% of total project costs. This puts Chelsea's proposal within a reasonable developer fee range, which is supported by an industry standard. Rental Income Analysis According to the current proforma provided by Chelsea, Pear Tree Manor Apartments expect to accumulate approximately $916,195 in year one in gross receipts. After all operating expenses of $352,910 and debt service payments of $445,297 have been paid, it is anticipated that there will be approximately $82,531 available in residual receipts. Of this amount, approximately $29,750 will be set-aside in a replacement reserve account; $5,000 will be paid to Edison Capitol for asset management; and $12,000 will be used to provide the social service component at the complex. This will leave approximately $35,781 for repayment of the deferred developer fee. Table 3 on the following page represents the Redevelopment Agency loon repayment schedule. Table 3 Projected Loan Repayment Year 1 through Year 7 Repayment of Deferred Developer Fee Year 8 through Year 26 Payment of Interest @ 6% Year 11 through Year 26 Payment of Principal and Accrued Unpaid Interest Year 26 Redevelo ment loan and Interest Re aid in Full Article 34 Compliance 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 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 Chulo Vista authorized the development, construction, or acquisition of 400 units of "low rent housing" by the Agency. Of the 400 d- ~ ." " - PAGE 7, ITEM NO.: MEETING DATE: OS/23/00 allowable credits, Chulo Vista has utilized 282 units and has a balance of 118 units remaining. The Pear Tree project will not have an impact on the remaining 118 units. Not all low and moderate income housing qualifies as a "low rent housing project". Statutory and case low permit development of many kinds of low and moderate income housing that will not be characterized 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 Low. This exemption states that rehabilitation, reconstruction, or replacement of on 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 agreements time the disbursement of funds to occur after the 60-doy period has elapsed to challenge a project, thereby providing on additional layer of protection to the Agency. The agreement also provides that if the developer requests on earlier disbursement dote and the developer is prepared to indemnify the Agency from on Article 34 challenge, staff may consider on earlier disbursement dote. City Risks and Mitiootion Measures There are two areas of risk which the Agency needs to be cognizant. On the following page these risks and measures have been identified which stoff has incorporated into the transaction to reduce these risks: Risk One - No Repayment of Aoency Loon. The Agency will be providing $1,387,152 in the form of a 6 percent simple interest loon to the developer to assist with the development costs of the project. Repayment of the loon will be mode from ninety percent (90%) of the residual receipts, which is the amount left over after all expenses are deducted from the income received. Mitigation: The Developer and its joint venture partners have significant experience and on excellent track record with this type of development project. The most recent proforma indicates the Agency will begin to see payment of interest in year 8 through year 26 and the repayment of the principal and accrued and unpaid interest year 11 through year 26. Risk Two - Subordination of Aaency Loon: It is anticipated that the Agency Loon will be subordinate to the Housing Authority bonds anticipated to be issued. Should the developer or a subsequent owner be unable to perform under the conditions of the Bond Indenture, or the Agreement, Regulatory Agreement, the Agency may need to be cure any loon defaults or lose the offordobility restrictions on the project. ~- Î ." " - PAGE 8, ITEM NO.: MEETING DATE: OS/23/00 Mitigation: 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 subordinate financing, it helps to make the bonds finoncioble. Redevelopment Aaencv Loan Terms and Conditions The Agency loon of $1,387,152 will be made on the following terms: 1. The loon repayment will be secured by a Deed of T rust recorded against the property. 2. The term of the loon sholl be fifty two (52) years. 3. The outstanding balance sholl accrue with simple interest at 6% per annum. 4. Payment of principal and interest on the Agency loon sholl be mode, on on annual basis, out of a fund equal to ninety percent (90%) of the "Residual Receipts", rental income from the project minus debt service and reasonable operating expenses. 5. Developer will be required to operate the project consistent with the Affordable Housing Agreement covenants imposed by the Agreement. 6. Chelsea will provide 20% of the units (24 units) to households earning at or under 50% AMI; 70% of the units (84 units) to households earning at or below 60% AMI; and 10% of the units (11 units) to households earning at or below 120% of AMI. 7. In the event a current tenant does not meet the income requirement, that tenant will be phased out of the complex through attrition. Summary It is staff's recommendation that the Agency [0] adopt the resolution approving a loon agreement and related restrictive covenants; the affordable housing agreement by and between the Redevelopment Agency and St. Regis Pork, LP (formed by Chelsea Investment Corporation) and authorizing the Chairman of the Redevelopment Agency to execute said agreements [b] appropriate $1,387,152 from the unappropriated balance in the Low and Moderate Income Housing Fund to provide financial assistance to St. Regis Pork, LP for the acquisition and rehabilitation of Pear Tree Manor Apartments for the following reasons: . 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. . The proposal's development and operating feasibility, financing sources and the role of the City and the Agency in providing financial assistance or incentives. d~'i! ... 11' _. PAGE 9, ITEM NO.: MEETING DATE: OS/23/00 . 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. The Pear Tree acquisition project as proposed by Chelsea, 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 offordobility support the Agency housing goals. FISCAL IMPACT If approved, the loon amount of $1,387,152 will be appropriated from the unappropriated balance in the Low/Moderate fund which has a current balance of $4.3 million. Funds for stoff services are budgeted in the stoff services portion of the Housing Division budget. ATTACHMENTS Loon Agreement and Related Restricted Covenants with Exhibits A through H (Atwood]H,\HOME\COMMDEV\STAFF.REP\O5-23-00\Pem Tree Finonciol Appmvol.doc ~ -9 ... " - RESOLUTION NO. AGENCY RESOLUTION [AI APPROVING A LOAN AGREEMENT AND RELATED RESTRICTIVE COVENANTS; THE AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY AND ST. REGIS PARK, LP (FORMED BY CHELSEA INVESTMENT CORPORATION) AND AUTHORIZING THE CHAIRMAN OF THE REDEVELOPMENT AGENCY TO EXECUTE SAID AGREEMENTS; AND [B] APPROPRIATING $1,387,152 FROM THE UNAPPROPRIATED BALANCE IN THE LOW AND MODERATE INCOME HOUSING FUND FOR FINANCIAL ASSISTANCE TO ST. REGIS PARK, LP, FOR THE ACQUISITION AND REHABILITATION OF PEAR TREE MANOR APARTMENTS WHEREAS, California Health and Safety Code Sections 33334.2 and 33334.6 authorize and direct the Redevelopment Agency of the City ofChu1a 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 oflow and moderate income housing available at affordable housing cost to persons and families oflow- 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 Section 33413(b), the Agency is required to ensure that at least IS 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, S1. Regis Park, LP, a limited partnership fonned by CIC Pear Tree Services Company, LLC, an affiliate of Chelsea Investment Corporation, as general partner (the "Developer"), has proposed to rehabilitate a 119 unit apartment building located at 1025 Broadway in the City of Chula Vista (the "Project"); and WHEREAS, in order to carry out and implement the Redevelopment Plan for the Agency's redevelopment projects and the affordable housing requirements thereof, the Agency proposes to enter into a Loan Agreement and Related Restricted Covenants (the "Loan Agreement") with the Developer, together with an "Affordable Housing Agreement" which would be recorded as an encumbrance to the Project, pursuant to which the Agency would make a loan to the Developer (the "Agency Loan"), and the Developer would agree to rehabilitate the Project in accordance with I DOCSOC\ 734565v2\24036.00 11 cJ-(O ." ". - the requirements of the Loan Agreement, restrict occupancy of 108 of the apartment units in the Project to very low and lower income households, and 10 of the apartment units to moderate income households, and rent those units at an affordable housing cost; and WHEREAS, the Loan Agreement will leverage the investment of the Agency by requiring the Developer to obtain additional financing for the construction and operation of the Project through a combination of a loan obtained from the proceeds of multifamily mortgage revenue bond financing to be issued by the Housing Authority of the City of Chula Vista, and an equity contribution by a limited partner investor in consideration for the "4% Tax Credits" to be generated by the Project; and WHEREAS, the Project is located outside of the Agency's redevelopment project areas, but the acquisition, rehabilitation and operation of the Project pursuant to the Loan Agreement would benefit the Agency's redevelopment project areas by providing affordable housing for persons who currently live and work within those redevelopment project areas; 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 rehabilitation of rental housing units through Agency assistance; and WHEREAS, the Loan Agreement 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 Legislature declares in Health and Safety Code Section 36000, et seq., that new fonTIS of cooperation with the private sector, such as leased housing, disposition of real property acquired through redevelopment, development approvals, and other fonTIS of housing assistance may involve close participation with the private sector in meeting housing needs, without amounting to development, construction or acquisition of low rent housing projects as contemplated under Article XXXIV of the State Constitution; and WHEREAS, Health and Safety Code Section 37001 provides that a low rent housing project under Article XXXIV of the State Constitution does not include a development which consists of the rehabilitation, reconstruction, improvement or addition to, or replacement of, a project previously or currently occupied by lower income households; and WHEREAS, the Developer has conducted an income survey of the current residents of the Project which demonstrates that the residents of 108 of the apartments in the Project are of very low and lower income; and WHEREAS, the work required pursuant to the Loan Agreement will consist of the Developer's rehabilitation, reconstruction, improvement and replacement of a housing project previously and currently occupied by lower income households; and WHEREAS, Health and Safety Code Section 37001.5 provides that a public body does not develop, construct or acquire a low rent housing project under Article XXXIV of the State Constitution when the public body provides assistance to a low rent housing project and monitors construction or rehabilitation of the project to the extent of carrying out routine governmental 2 DOCSOC\734565v2\24036.0011 d -I ( ." rr - functions, performing conventional activities of a lender, and imposing constitutionally mandated or statutorily authorized conditions accepted by a grantee of assistance; and WHEREAS, the Loan Agreement provides for assistance by the Agency to the Project, and the Agency's monitoring of construction of the Project to the extent of carrying out routine governmental functions, performing conventional activities of a lender, and imposing constitutionally mandated or statutorily authorized conditions accepted by a grantee of assistance; and WHEREAS, the Agency has duly considered all terms and conditions of the proposed Loan Agreement and Affordable Housing Agreement and believes that the Loan Agreement and Affordable Housing Agreement are in the best interests of the Agency and the City and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable State and local law requirements; NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA DOES RESOLVE AS FOLLOWS: Section 1. The Agency hereby finds that the use of funds from the Agency's Low and Moderate Income Housing Fund pursuant to the Loan Agreement, for the acquisition, rehabilitation and operation of real property which is outside of the Agency's redevelopment project areas, will be of benefit to the Agency's redevelopment project areas for the reasons set forth above. Section 2. The Agency hereby determines that the Project is not a "low rent housing project" within the meaning of Article XXXIV of the State Constitution, and that the assistance to be provided pursuant to the Loan Agreement does not constitute development, construction or acquisition of a low-rent housing project within the meaning of Article XXXIV of the State Constitution. This Resolution is hereby deemed to constitute a final approval of a proposal which may result in housing assistance benefiting persons of low income, within the meaning of Health and Safety Code Section 36005 . Section 3. The Agency hereby [A]approves the Loan Agreement and Related Restrictive Covenants and Affordable Housing Agreement in substantially the form presented to the Agency, subject to such revisions as may be made by the Agency Executive Director or his designee subject to the review and approval ofthe Agency Attorney. The Chairman of the Agency is hereby authorized to execute the Loan Agreement and Affordable Housing Agreement on behalf of the Agency and [B] appropriate $1,387,152 from the unappropriated balance in the Low and Moderate Income Housing Fund for financial assistance to St. Regis Park, LP (formed by Chelsea Investment Corporation) for the acquisition and rehabilitation of Pear Tree Manor Apartments. A copy of the Loan Agreement and Affordable Housing Agreement when executed by the Agency shall be placed on file in the office of the Secretary of the Agency. Section 4. The Executive Director of the Agency (or his designee) is hereby authorized, on behalf of the Agency, to make revisions to the Loan Agreement and Affordable Housing Agreement which do not materially or substantially increase the Agency's obligations thereunder or materially or substantially change the uses or development permitted on the Site, to sign all documents, to make all approvals and take all actions necessary or appropriate to carry out and implement the Loan Agreement and Affordable Housing Agreement and to administer the Agency's obligations, responsibilities and duties to be performed under the Loan Agreement, Affordable 3 DOCSOC\734565v2\24036.00 11 c2 -( rJ- y .. - Housing Agreement and related documents. Any such revisions or modifications to the Loan Agreement or the Affordable Housing Agreement are subject to the review and approval of the Agency Attorney. PRESENTED BY APPROVED AS TO FORM BY ~ ~~ .1/;/ ¿~"¡I /, .. 1£" ,.&: ¡!t¿""...:{./({ ""1 . ',cO //., Chris Salomone JoM M. Kaheny ,. I / Director of Community Development Agency Attorney H:\HOME\COMMDEV\RESOS\Most Recent Resolution for Pear Tree.doc 4 DOCSOC\734565v2\24036.0011 cJ -( 3 ." ~ - LOAN AGREEMENT AND RELATED RESTRICTED COVENANTS THIS LOAN AGREEMENT AND RELATED RESTRICTED COVENANTS (the "Agreement") is entered into as of May 23, 2000, between the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic ("Agency"), and ST. REGIS PARK, LP, a California limited partnership ("Borrower"), and/or its successors or assignees. ARTICLE 1 Recitals 1.1 Authoritv. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000, et seq.) and is authorized to enter into binding agreements for the purpose of protecting public health, safety, and welfare. 1.2 Available Funds. Agency has available funds from the Agency's Low and Moderate-Income Housing Fund which can be used for the purposes offunding the obligations of the Agency under this Agreement in accordance with the Community Redevelopment Law of the State of California. 1.3 The Propertv. Borrower is or will become the legal owner of the fee title to the real property located at 1025 Broadway in the City ofChula Vista, as described in the attached Exhibit "A", which is incorporated herein (the "Property"). The Property is currently improved with an existing 119 unit apartment building. 1.4 Project. Borrower proposes to rehabilitate the 119 apartment units located on the Property (the "Project"), with 24 units affordable to very low income households at or below 50 percent of the Area Median Income ("AMI"), 84 units affordable to lower-income households at or below 60 percent of AMI, and 10 units affordable to low and moderate income households at or below 120 percent of AMI. One apartment unit shall be available for the Property manager and shall not be subject to maximum income or rent restrictions hereunder. Up to three of the affordable apartment units may also be occupied by operating and maintenance staff of the Property, subject to the foregoing maximum income and rent restrictions. The Project will be subject to certain affordable housing obligations pursuant to the Regulatory Agreement and Declaration of Restrictive Covenants by and among the Borrower, the Housing Authority of the City ofChula Vista and State Street Bank and Trust Company of Cali fomi a, N.A. (the "Regulatory Agreement"). 1 A-( DOCSOc\734476V3\24036.0011 ? ff - 1.5 Agencv Financial Assistance to Borrower. Through the acquisition, rehabilitation and operation of the Project, Agency and Borrower desire to provide very low, lower and low and moderate income households with affordable housing opportunities within the City in accordance with the Community Redevelopment Law and the Agency's redevelopment plans. In order to accomplish this goal, the Agency desires to make a loan from its Low and Moderate Income Housing Fund to Borrower for a portion of the costs of the acquisition and rehabilitation of the Project, subject to certain conditions designed to assure the implementation of the Project in accordance with the redevelopment plans, state and federal law, and as otherwise provided herein. 1.6 Interests of the Agencv and the Public. The acquisition, rehabilitation and operation of the Project pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the Agency and the welfare of the residents of the City ofChula Vista, and in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements. 1.7 Housing Objectives and Goals. The Project accommodates several of the City's Comprehensive Housing Plan Objectives, which are expressly noted in the Housing Element as priorities for the City. The objectives this Project serves are: (1) Achievement of a balanced residential community through integration of low and moderate income housing throughout the City, and the adequate dispersal of such housing to preclude establishment of specific low-income enclaves. (2) The provision of adequate rental housing opportunities and assistance to households with low and very low incomes, including those with special needs such as the elderly, handicapped, single- headed households, large families and those "at-risk" ofhomelessness. WHEREFORE, based upon the foregoing recitals and in consideration of their mutual and prospective promises and subject to the terms and conditions hereinafter set forth, the parties do hereby agree as follows: ARTICLE 2 Definitions The following terms as used in this Agreement shall have the meanings given unless expressly provided to the contrary: 2.1 "Affordable Housing Agreement" means that certain agreement, in substantially the form set forth in Exhibit D attached hereto and incorporated herein, which sets forth Borrower's obligations to maintain the Project as an affordable multifamily housing project for very low, lower and low and moderate income households, and other obligations related to the operation and management ofthe Project, which shall be recorded in the order of priority set forth in this Agreement. 2.2 "Agency" means the Redevelopment Agency of the City of Chula Vista, a public body, corporate and politic, having its offices at 276 Fourth Avenue, Chula Vista, California 91910. The term "Agency" as used herein also includes any assignee of, or successor to, the rights, 2 /1-- d- DOCSOC\734476vJ\24036.001] - - powers, and responsibilities of the Redevelopment Agency of the City ofChula Vista. 2.3 "Agency Loan" means the loan for an amount of One Million Three Hundred Eighty-Seven Thousand One Hundred Fifty-Two Dollars ($1,387,152) by the Agency to Borrower, which loan is the subject of this Agreement. 2.4 "Agency Note" shall mean the promissory note, in substantially the form set forth in Exhibit B attached hereto and incorporated herein, in the principal amount of One Million Three Hundred Eighty-Seven Thousand One Hundred Fifty-Two Dollars ($1,387,152), evidencing the Agency Loan. 2.5 "Agency Trust Deed" shall mean that certain deed of trust, in substantially the form set forth in Exhibit C attached hereto and incorporated herein, which secures Borrower's obligations pursuant to the Agency Note, which shall be recorded in the order of priority set forth in this Agreement. 2.6 "Agreement" means this Loan Agreement and Related Restricted Covenants. 2.7 "Bonds" means multifamily mortgage revenue bonds issued by the Housing Authority of the City ofChula Vista in the approximate aggregate amount of $5,479,352, as set forth in Section 3.1 of this Agreement. 2.8 "Borrower" means St. Regis Park, LP, a California limited partnership. The term "Borrower" includes any legally permissible assignee or successor to the rights, powers, and responsibilities of Borrower hereunder, following such assignment and succession, in accordance with Section 11.10 of this Agreement. 2.9 "Certificate of Completion" shall have the meaning ascribed in Section 9.8 of this Agreement. The form of the Certificate of Completion shall be as set forth in Exhibit G to this Agreement, which is incorporated herein. 2.10 "City" shall mean the City of Chula Vista, a municipal corporation, organized under the laws of the State of California and having its offices at 276 Fourth Avenue, Chula Vista, California 91910. 2.11 "Development Fee" and "Deferred Development Fee" shall have the meaning ascribed in Section 8.1. 2.12 "Effective Date" means the date first appearing in this Agreement above. 2.13 "Gross Revenue" shall have the meaning ascribed in Section 4.5. 2.14 "Housing Manager" means the Housing Manager of the Community Development Department of the City. 2.15 "Permanent Lender" means the Housing Authority of the City of Chula Vista. 2.16 "Permanent Loan" means the loan to be made by the Permanent Lender to the Borrower with the proceeds of the Bonds. 3 /l -3 DOCSOC\7J4476vJ\24036.0011 ~ ~ - 2.17 "Permanent Loan Documents" means the Loan Agreement of even date herewith by and among the Permanent Lender, Bank of America, FSB and the Borrower, and the promissory note, deed of trust and other documents entered into pursuant to such Loan Agreement. 2.18 "Project" shall have the meaning ascribed in Section 1.4 of this Agreement. 2.19 "Project Budget" means that certain budget referred to in Section 4.11 of this Agreement and attached hereto as Exhibit F, which is incorporated herein by this reference, which budget may not be materially changed without the prior approval of the Housing Manager, which approval shall not be unreasonably withheld (a material change is a change that causes the total Project cost to increase or decrease by three percent (3%) or more from what is shown in Exhibit F). 2.20 "Project Pro Forma" means that certain Project Pro Forma referred to in Section 4.11 of this Agreement and attached hereto as Exhibit G, which is incorporated herein by this reference, which pro forma Borrower represents to be a good faith projection of the information set forth therein. 2.21 "Property" means that certain real property legally described in Exhibit "A" which is attached hereto and incorporated herein. 2.22 "Property Manager" means the property management company managing the Project, whether or not the Project is managed by Borrower. The term Property Manager shall not mean the on- site property manager. 2.23 "Reasonable Operating Expenses" shall have the meaning ascribed in Section 4.5. 2.24 "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants by and among the Borrower, the Housing Authority of the City ofChula Vista and State Street Bank and Trust Company of California, N.A. 2.25 "Residual Receipts" shall have the meaning ascribed in Section 4.5. 2.26 "Restricted Units" means the residential units in the Project whose rent levels and occupancy are to be restricted as set forth in Section 10.2 of this Agreement. 2.27 "Schedule of Performance" means that certain Schedule of Performance attached hereto as Exhibit J and incorporated herein, as the same may be modified or extended pursuant to Sections 9.4 and 13.3 hereof. 2.28 'Title Insurer" means Chicago Title Insurance Company, with offices at 925 B Street, San Diego, California 92101. ARTICLE 3 Financing of the Project 3.1 Summary of Financing. Borrower's current sources and uses of funds summary for the Project is attached hereto as Exhibit D, which is incorporated herein. Borrower contemplates a total project budget of approximately $10,233,000. Borrower shall obtain construction and permanent loan financing funded by two series 4 /I-c/ DOCSOC\7J4476v3\24036.001 1 . n - of multifamily mortgage revenue bonds issued by the Housing Authority of the City ofChula Vista in the approximate aggregate amount of $5,479,352 (the "Bonds"). Agency shall loan to Borrower the amount of $1,387,152 (approximately $11,656 for each housing unit in the Project), secured by the Agency Trust Deed, which shall be subordinate to the Permanent Loan funded by the Bonds. Borrower shall also apply for an allocation of "4%" tax credits for the Project from the California Tax Credit Allocation Committee ("TCAC") which will support an equity investment in Borrower by an investor limited partner in the amount of approximately $2,906,227. Agency acknowledges that the foregoing amounts (other than the amount of the Agency Loan) are approximations and may change. ARTICLE 4 Agency Loan 4.1 Amount. Subject to the terms and conditions set forth herein, the Agency hereby commits to loan to Borrower the total sum of$I,387,152 (the "Agency Loan") to be applied solely for payment of a portion of the costs of the acquisition and rehabilitation of the Property. 4.2 Interest. The outstanding principal amount of the Agency Loan shall accrue simple interest at the rate of six (6%) percent per annum. 4.3 Borrower's Obligations. The following conditions must be fully satisfied as reasonably determined by the Agency in order to obligate the Agency to make the Agency Loan: a. Borrower shall have submitted a complete application for a preliminary allocation of "4%" low-income housing tax credits from the California Tax Credit Allocation Committee in the amount set forth in the Sources and Uses attached hereto as Exhibit E, or such greater or lesser amount as may be mutually agreed to by the parties. b. Borrower shall have acquired fee title to the Property, or shall be acquiring fee title to the Property concurrently with the disbursement of the Agency Loan. c. Borrower shall have received a firm commitment for an equity contribution from an investor limited partner in Borrower of not less than $2,865,882, which number is subject to adjustment pursuant to the Funding Agreement between Borrower and Borrower's limited partner investor, or such lesser amount as may be mutually agreed to by the parties. The Agency shall not unreasonably withhold or delay its consent to Borrower's request to approve such a lower amount. d. Borrower shall have obtained a firm commitment for the Permanent Loan in an amount equal to the net proceeds of the Bonds or such greater or lesser amount as may be mutually agreed to by the parties, and the Permanent Loan shall have closed or be ready to close concurrently with the Agency Loan. e. Borrower shall have duly executed (and acknowledged, if applicable) the Agency Note, the Agency Trust Deed and the Affordable Housing Agreement, and shall have submitted the 5 OOC50C\734476v3\24036.0011 /l-:S- ." n - same into the escrow established for the BolTower's acquisition of the Property, and the Agency Trust Deed and Affordable Housing Agreement shall be ready to be recorded conculTently with the recording of the grant deed conveying title to the Property to the BolTower as an encumbrance to the Property, subordinate only to the liens securing the Bonds, the Regulatory Agreement and other nonmonetary encumbrances approved by the Agency. f. BolTower shall have submitted to the Agency, and Agency shall have reviewed and approved, in its reasonable discretion, any and all loan documents, regulatory agreements or grant contracts to be executed by or otherwise to be binding upon Agency or BolTower in connection with its acquisition of the Property, its rehabilitation and operation of the Project and/or its financing thereof, including without limitation the Permanent Loan Documents, the regulatory agreement to be executed and recorded in favor of the TCAC (the "TCAC Regulatory Agreement"), and the partnership agreement of the BolTower and documents executed pursuant thereto, such as guaranties and funding agreements. g. BolTower shall have provided the Agency with satisfactory evidence that BolTower's general and limited partners have approved this Agreement and the related Agency Loan documents and authorizing BolTower's signatories to execute this Agreement and the related Agency Loan documents on its behalf. h. The Title Insurer or another title insurance company reasonably acceptable to the Agency shall have unconditionally committed to issue the Lender's Policy to the Agency in accordance with Section 4.9 hereof. 1. BolTower shall have submitted to the Agency a copy of an executed property management agreement for the Project with Chelsea Investment Corporation, a California corporation, or another experienced property manager which is reasonably acceptable to the parties, in accordance with Section 10.8 hereof. J. At least 60 days shall have passed since the Agency's final approval of this Agreement. Alternatively, the BolTower shall have provided to the Agency (i) an opinion oflegal counsel, in a form and from legal counsel which is reasonably satisfactory to the Agency, that the Project is not a "low rent housing project" subject to the requirements of Article XXXIV of the California Constitution, or (b) an agreement in a form and from a party which is reasonably satisfactory to the Agency, in which the party agrees to indemnify, defend and hold harmless the Agency from any losses or liability arising from a legal claim that the Agency Loan violates the provisions of Article XXXIV of the California Constitution. k. BolTower shall have satisfied all other obligations under this Agreement required to be performed prior to the closing on the Agency Loan, and shall not be in default in any of its obligations under the terms of this Agreement. All representations and walTanties of BolTower contained herein shall be true and colTect in all material respects on and as of the date of the disbursement of the Agency Loan as though made at that time. 4.4 Source of Agency Loan. The source of the Agency Loan is the Agency's Low and Moderate-Income Housing Fund. Pursuant to California Community Redevelopment Law the Project must meet all of the California 6 DOCSOC\734476v3\240Jó.OOll n-fo .. Tr - Community Redevelopment Law requirements for the tenn of the affordability restrictions on the units set forth herein. 4.5 Repayment. Payments under the Agency Loan shall be made as follows: a. Repayment of the Agency Loan shall be deferred during construction of the Project. Commencing on the Initial Payment Date (defined below), payment of principal and interest on the Agency Note shall be made, on an annual basis, in an amount equal to ninety percent (90%) of the "Residual Receipts" (defined below) derived from the Property and/or the operation of the Project. Such amounts shall be paid on a priority basis to all other debt service on the Property, except for the Pennanent Loan funded with the proceeds of the Bonds and the Deferred Development Fee (as defined below), if any. Residual Receipts shall be calculated by Borrower each and every year commencing with the first anniversary of the issuance of the Certificate of Completion by the Agency. The ninety percent (90%) Residual Receipts payments, if any, shall be made on or before thirty (30) days after the later of (i) the first year anniversary of the issuance of the Certificate of Completion by the Agency or (ii) the first year anniversary of the date on which the Deferred Development Fee, if any, has been paid in full (the "Initial Payment Date"), and on or before 30 days after each subsequent yearly anniversary of the Initial Payment Date. b. "Residual Receipts" is specifically defined as the "Gross Revenue" (as defined below) from the Project minus the "Reasonable Operating Expenses" (as defined below) for the same period. (i) "Gross Revenue" shall mean all revenue, income, receipts, and other consideration actually received from operation and leasing of the Project. Gross Revenue shall include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, all cancellation fees, price index adjustments, and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance to the extent not applied to the Pennanent Loan; the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project or applied to the Pennanent Loan; and condemnation awards for a taking of part or all of the Project for a temporary period to the extent not applied to the Pennanent Loan or used to repair or restore the Project. Gross Revenue shall also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Project. Gross Revenue shall not include tenants' security deposits, loan proceeds, capital contributions or similar advances or payments from reserve funds. (ii) "Reasonable Operating Expenses" shall include any and all reasonable and actually incurred costs associated with the ownership, operation, use or maintenance of the Property, calculated in accordance with generally accepted accounting principles. Such expenses may include, without limitation, property and other taxes and assessments imposed on the Project; premiums for property damage and liability insurance; utilities not directly paid for by the tenants including water, sewer, trash collection, gas and electricity, maintenance and repairs including pest control, landscaping and grounds maintenance, painting and decorating, cleaning, general repairs, and supplies; tenant relocation costs and expenses; license fees or certificate of occupancy fees required for operation of the Project; general administrative expenses directly attributable to the Property including advertising and marketing, security services and systems, and professional fees for legal, 7 DOCSOC\734476v3\24036 001 1 /1-7 ~ ~ - audit and accounting; property management fees and reimbursements including on-site manager and assistance manager expenses; asset management fees payable to the investor limited partner of the Borrower in an amount which does not exceed the amount set forth therefor in the Sources and Uses, Project Budget and Pro Forma attached hereto; a property management fee in an amount which does not exceed the amount set forth in the Sources and Uses, Project Budget and Pro Forma attached hereto, cash deposited into a reserve for capital replacements of the Project improvements and an operating reserve (and such other reserve accounts required with respect to the Bonds and the Permanent Loan Documents) in such amounts as are required by the Permanent Lender and as may be reasonably required by Project equity investors; tenant services costs; debt service payments (excluding debt service due to Agency from Residual Receipts of the Project) on financing for the Project; supplemental management fees in an amount which does not exceed the amount set forth in the Sources and Uses, Project Budget and Pro Forma attached hereto; and payment of the Deferred Development Fee. In no event shall expenditures, including attorneys' fees or litigation costs, normally required to be paid out of the Replacement Reserve, be treated as Reasonable Operating Expenses unless specifically approved in writing by the Agency. For purposes of the foregoing definition of "Reasonable Operating Expenses," any property management fee or partnership management fee which is paid to Borrower shall at no time exceed an amount as is customary and standard for affordable housing projects similar in size, scope and character to the Project. Notwithstanding the foregoing, for purposes of this calculation, Reasonable Operating Expenses shall not include the following: expenses of social services, principal and interest payments on any debt subordinate to the Agency Note, depreciation, amortization, depletion or other non-cash expenses, incentive partnership asset management fees payable to the Borrower or its affiliate (other than the supplemental management fee described above), or any amount expended from a reserve account. c. The ten percent (10%) of Residual Receipts remaining after the annual Residual Receipts payments on the Agency Note may be retained and used by Borrower in Borrower's sole discretion. d. Except as otherwise expressly provided hereunder, Borrower's obligation to repay the Agency Loan shall be limited to Borrower's annual payment, until the Agency Loan is repaid in full, of ninety percent (90%) of the Residual Receipts as described above for a period from the completion of the Project until the date which is fifty two (52) years following the date of the Agency's issuance of the final Certificate of Completion for the Project (but in no event later than fifty-four (54) years from the date of execution of the Agency Note) (the "Conditional Maturity Date"). Upon the Conditional Maturity Date, Agency shall have the option, at any time, in its sole discretion, but after good faith discussions with Borrower as to available options, upon ninety (90) days' written notice to Borrower, to (a) declare the remaining balance of all amounts owed under the Agency Note immediately due and payable, or (b) to require installment payments under the Agency Note based upon (i) a restated principal balance comprised, in the aggregate, of any and all outstanding principal and interest under the Agency Note existing as of the date of Agency election, (ii) a prospective fixed interest rate per annum equal to the prime rate then in effect for Bank of America, San Diego office, or such other rate mutually agreed to by the Agency and Borrower, and (iii) monthly installments of principal and interest paid over the course of an amortization schedule to be determined by the Agency in its sole discretion, not to be less than ten (10) years. In the event that Agency elects repayment approach (b), Borrower agrees to execute an amendment to the Note in favor of Agency reflecting the amended repayment terms described above. e. Notwithstanding the foregoing, in the event that Borrower, or any successors thereto, materially breaches the terms of this Agreement, the Agency Note, the Agency Trust Deed, or the 8 DOCSOC\734476v3\24036.0011 /I-g' ~ " - Affordable Housing Agreement, or triggers a due on sale, transfer or encumbrance provision set forth in the Agency Note or Agency Trust Deed, the Agency shall have the right in its sole discretion, to declare immediately due and payable all outstanding principal, interest and other sums due under the Agency Note, or to pursue any and all other remedies provided herein, under the Agency Note, Agency Trust Deed, or the Affordable Housing Agreement, or as otherwise provided at law or in equity. 4.6 Prepayment. Borrower may prepay the principal and any interest due the Agency under the Agency Note prior to or in advance of the time for payment thereof as provided in the Agency Note, without penalty; provided, however, that Borrower acknowledges that certain provisions hereof and the provisions of the Affordable Housing Agreement and the Regulatory Agreement will be applicable to the Project in accordance with their respective tenus even though Borrower may have prepaid the Agency Note. 4.7 Assumption. In the event the Project is sold or transferred as approved by the Agency or otherwise pennitted pursuant to Section 11.10 hereof, the Agency Loan shall be fully assumable by the approved or pennitted transferee. The Agency Loan shall not be assumable by any other transferee. 4.8 Use of Loan Proceeds. Borrower shall use Agency Loan proceeds only to pay for a portion of the cost of the acquisition of the Property, and to pay for the cost of the Lender's Policy (as defined below). 4.9 Lien Prioritv, Title Insurance. As a condition to the obligations of Agency to fund the Agency Loan, there shall be no liens or encumbrances upon the Property having priority over the Agency Trust Deed, other than: (a) the deed of trust securing the Pennanent Loan; (b) the Affordable Housing Agreement, (c) the Regulatory Agreement, and (d) those existing non-monetary encumbrances which are disclosed in title reports delivered to Agency and which have not been objected to by the Agency in writing. Such priority shall be evidenced by an ALTA lender's insurance policy, including title endorsements reasonably requested by the Agency with liability equal to the amount of the Agency Loan, or such other amount as may be mutually agreed to by the parties (the "Lender's Policy") to be issued to Agency by Chicago Title Company at the close of escrow for the Borrower's acquisition of the Property. Borrower shall be responsible for the cost of the Lender's Policy, which may be paid for £Tom the proceeds of the Agency Loan. 4.10 Subordination; Refinancing. Agency agrees to take such actions as may be necessary to subordinate the Agency Trust Deed to the Pennanent Loan or any future refinancings thereof; provided, however, that any such subordination to the Pennanent Loan shall be evidenced by a recorded subordination agreement containing such notice, cure, loan purchase or assumption and Project purchase rights as may be reasonably required by the Agency in a fonn to be approved by the Agency's attorney, which approval shall not be unreasonably withheld. 9 /l- 9 DOCSOC\734476v3\24036.0011 ~. ". - 4.11 Borrower's Evidence of Financial Capability. The anticipated sources and uses of funds for acquisition of the Property and rehabilitation of the Project are set forth in the Project Budget (Exhibit F). The financial projections for the Project are set forth in the Project Pro Forma (Exhibit G). The Agency acknowledges that the numbers in the foregoing exhibits may change, subject to reasonable Agency approval of such changes. Upon request but in no event later than the disbursement of the Agency Loan proceeds, Borrower shall submit to the Agency Housing Manager evidence reasonably satisfactory to the Agency Housing Manager that Borrower has the financial capability necessary for the acquisition of the Property and the rehabilitation of the Project thereon in accordance with this Agreement, the Project Budget, and the Project Pro Forma. Such evidence of financial capability shall include the following: a. a copy of the partnership agreement, funding agreement, and other documents evidencing commitments for equity financing. b. a copy of the construction contract between Borrower and its general contractor for all of the improvements required to be constructed by Borrower hereunder, which shall be deemed to be certified by Borrower to be a true and correct copy thereof. c. a copy of the regulatory agreement to be required by TCAC, and other verifiable documentation that Borrower will receive an allocation of"4%" low income housing tax credits with respect to the Project. 4.12 Reports and Accounting of Residual Receipts. a. In connection with the annual repayment of the Agency Loan, commencing upon the Initial Payment Date, the Borrower shall furnish the Agency with an audited statement duly certified by an independent firm of certified public accountants approved by the Agency, setting forth in reasonable detail the computation and amount of Residual Receipts during the preceding calendar year. b. The Borrower shall keep and maintain in accordance with Section 13.4 hereof full, complete and appropriate books, records and accounts necessary or prudent to evidence and substantiate in full detail Borrower's calculation of Residual Receipts. All such books, records, and accounts shall be open to and available for inspection by the Agency, its auditors or other authorized representatives in accordance with Section 13.4 hereof. ARTICLE 5 Agency Note and Deed of Trust 5.1 Securitv for Loan. Borrower's obligations to pay the Agency Loan shall be evidenced by the Agency Note, and shall be subject to the terms and conditions contained therein. The Agency Note shall provide for simple interest at the rate of six percent (6%) per annum. Among other things, the Agency Note shall further provide that the Agency Note is non-recourse and that payments of principal and interest shall be made only from ninety percent (90%) of the Residual Receipts (as defined in Article 4 hereof). 10 /I-fa DOCSOC\734476d\24036'OOII ." rr The Agency Note shall be secured by the Agency Trust Deed encumbering the Property as a second priority deed of trust. The Agency Trust Deed shall further provide that the occurrence of any material breach or default under this Agreement shall constitute a "default" or "event of default" under the Agency Trust Deed. Prior to the close of escrow for the Borrower's acquisition of the Property, Borrower shall execute and deliver to Agency the Agency Note and the Agency Trust Deed. The Agency Trust Deed shall be recorded with the Office of the San Diego County Recorder in accordance with Agency's instructions to escrow. Borrower shall be responsible for any and all of Agency's escrow, title and recording costs arising in connection with the Agency Loan, such costs to be paid by Borrower through escrow. 5.2 Nonrecourse Obligation. Nothing herein contained shall be deemed to cause Borrower (or any of its partners, or any of their respective directors, officers, employees, partners, principals or members) personally to be liable to payor perfonn any of its obligations evidenced hereby, and the Agency shall not seek any personal or deficiency judgment on such obligations, and the sole remedy of the Agency with respect to the repayment of the Agency Loan shall be against the Property; provided, however, that the foregoing shall not in any way affect any rights the Agency may have (as a secured party or otherwise) hereunder or under the Agency Note or Agency Trust Deed, or any other rights the Agency may have to: (a) recover directly from the Borrower any funds, damages or costs (including, without limitation, reasonable attorneys' fees and costs) incurred by the Agency as a result of fraud, intentional misrepresentation or intentional waste by Borrower; or (b) recover directly from the Borrower any condemnation or insurance proceeds, or other similar funds or payments attributable to the Property which under the tenns of the Agency Trust Deed should have been paid to the Agency and any costs and expenses incurred by the Agency in connection therewith (including, without limitation, reasonable attorneys' fees and costs). ARTICLE 6 Disbursement of Agency Rehabilitation Loan 6.1 Disbursement. The Agency Loan Proceeds shall be disbursed on behalf of Borrower in the escrow established for Borrower's acquisition of the Property. ARTICLE 7 California Community Redevelopment Law Requirements 7.1 Requirements. Because the source of the Agency Loan is the Agency's Low and Moderate-Income Housing Fund, Borrower is required to acquire, rehabilitate and operate the Project in compliance with all requirements of California Community Redevelopment Law (Health and Safety Code, Division 24), as said code may be amended or suspended from time to time. Not by way of limitation of the foregoing, in compliance with Health and Safety Code, Division 24, from the Effective Date of this Agreement through the end of the tenn that the units are required to 11 DOCSOC\734476v3\24036.0011 !l-r( T " - remain affordable pursuant to the California Community Redevelopment Law, Borrower, as the operating entity, shal1 comply with al1 of the fol1owing requirements: a. Use of the Agencv Low and Moderate Income Housing Funds. Low and Moderate Income Housing Funds shal1 be used only for eligible costs (see, e.g., Health and Safety Code Section 33334.3) in accordance with the Project Budget and Project Pro Fonna; all acquisition and rehabilitation activities shall be completed within the times referenced in the Schedule of Perfonnance attached hereto, as said times may be extended in accordance with Sections 9.4 and 13.3 hereof. b. Affordabilitv. The units shall meet the affordability requirements set forth in Section 10.2 herein. c. Housing Standards. Borrower shall maintain units in compliance with local housing code requirements or the provisions of this Agreement, whichever requirements are more restrictive. d. Records and Reports. In addition to the other provisions of this Agreement, including without limitation Section 4.12(b) hereof, Borrower shal1 provide to Agency al1 records and reports relating to the Project that may be reasonably requested by Agency in order to enable it to perfonn its recordkeeping and reporting obligations pursuant to Health and Safety Code Sections 33080.1 and 33418. e. Enforcement of Agreement. In addition to the other provisions set forth herein, Agency shall have the authority to enforce Borrower's obligation to comply with the California Community Redevelopment Law as set forth in this Agreement. f. Duration of Covenants. In accordance with Health and Safety Code Section 33334.3, the covenants in this Section 7.1 relating to Borrower's compliance with the California Community Redevelopment Law shall remain in effect for the longest feasible time but not less than a period of at least fifty-two (52) years from the date of the Agency's issuance of the final Certificate of Completion for the Project. g. Monitoring. Not less than once every two years during the period covered by this Section 7.1, Agency may review Borrower's activities and operations under this Agreement and Borrower's compliance with the requirements of the California Community Redevelopment Law, including, but not limited to, Borrower's compliance with the requirements of this Section 7.1. Such review may include an on-site inspection of the Project (including unit interiors, subject, however, to the rights of tenants in possession). If such an on-site inspection of the Project is to be undertaken, Agency shall coordinate such inspection with Borrower and/or the Property Manager. 12 DOCSOC\734476v3\24036.0011 11- Icd- T' " - ARTICLE 8 Development Fee 8.1 Development Fee. Frontier Financial Services, LLC, a California limited liability company ("Developer"), shall be entitled to a development fee, which includes general overhead and profit, in the amount which does not exceed the amount set forth therefor in the Sources and Uses, Project Budget and Pro Forma attached hereto, and in no event greater than the maximum amount permitted pursuant to the Low Income Housing Tax Credit statutes and regulations (the "Development Fee"). It is anticipated that a portion of the Development Fee shall be paid by Borrower from the proceeds of the financing for the acquisition and rehabilitation of the Project upon the close of such financing, with the balance of the Development Fee (the "Deferred Development Fee") to be paid from Gross Revenue of the Project and equity contributions to Borrower made after the closing. The Borrower's obligation to pay the Deferred Development Fee shall be evidenced by a promissory note (the "Deferred Development Fee Note"). In the event there are any cost savings realized in the construction of the Project, all available funds attributable to such cost savings shall also be applied to the Deferred Development Fee. Regular payments on the Deferred Development Fee Note shall be made on an annual basis out of the Gross Revenues of the Project. Such amounts shall be paid to Developer on a priority basis to all other debt service on the Property except for the Permanent Loan. Developer shall specifically be entitled to payment of the Deferred Development Fee before payment of the amounts due to Agency pursuant to the Agency Note. The Deferred Development Fee Note shall not be secured by any liens upon the Property. ARTICLE 9 Rehabilitation of the Project 9.1 Work to be Performed. Borrower agrees to rehabilitate the Property so that it consists of a multi-family residential project consisting of 119 units, and to operate the Project for occupancy by very low, lower and low and moderate income households, subject to the terms of this Agreement, the Scope of Work attached hereto as Exhibit I and incorporated herein, the Permanent Loan Documents, the Affordable Housing Agreement, and the Regulatory Agreement (the "Project"). The Project shall consist of 5 one- bedroom units, 109 two-bedroom units and 5 three-bedroom units, a pool, open space, a recreation area, a classroom, storage areas, laundry rooms, garages and other common area facilities in accordance with the plans approved by the City in connection with issuance of the building permit(s), and with the terms of and conditions of all land use permits and approvals required by the City to the extent such permits and approvals are required by applicable law. The Project's units and occupancy shall be restricted in accordance with the terms of this Agreement. If Borrower desires to make any change in any rehabilitation or building plans after the same have been approved, Borrower shall submit the proposed change to the appropriate body for approval, if and to the extent required by applicable law. Borrower shall be responsible for all construction and installation and for obtaining all the necessary permits. 9.2 Compliance with Permits and Laws. Borrower and its contractors shall carry out the rehabilitation of the Project and operation of the Project in conformity with all applicable laws, regulations, and rules of the governmental agencies 13 DOCSOC\734476v3\240J6.0011 /J -13 ? ~ - having jurisdiction, including without limitation all legally applicable conditions and requirements of California Community Redevelopment Law (Health and Safety Code, Division 24); all legally applicable prevailing wage requirements, if any, the applicability of which is for Borrower to determine, pursuant to federal and state law, including California Labor Code § 1770 et seq.; all legally applicable conditions and requirements imposed by the Low Income Housing Tax Credit Program; all legally applicable labor standards; the legally applicable provisions of the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all legally applicable disabled and handicapped access requirements, which may include, without limitation, the Americans With Disabilities Act, 42 US.c. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California Building Standards Code, Health and Safety Code Section 18900, et seq., and Agency policies adopted pursuant to said federal standard regulations and requirements. Borrower shall not take any action which would cause the Project to be construed as a low rent housing project under Article XXXIV of the California Constitution or otherwise be in violation of Article XXXIV of the California Constitution. The work shall proceed only after procurement of each permit, license, or other authorization that may be required under applicable law by any governmental agency having jurisdiction, and the Borrower shall be responsible to the Agency for procurement and maintenance thereof, as may be required of the Borrower and all entities engaged in work on the Project. 9.3 Costs of Rehabilitation. Subject to the terms and conditions of this Agreement, Borrower shall be responsible for all costs of developing the Project, including but not limited to predevelopment costs incurred for items such as planning, design, engineering, and environmental remediation; all development and building fees; the cost incurred to demolish and clear any and all existing improvements, furnishings, fixtures, and equipment from the Property; costs for insurance and bonds (as required); costs for financing; preparation of the Property for construction; and all on-site construction costs. This Agreement does not require Borrower to construct any off-site improvements. Borrower shall be responsible for verifying the adequacy and availability of all utilities. If at any time during the course of the rehabilitation of the Project, Borrower exhausts fifty percent (50%) or more of the contingency amounts set forth in the Project Budget, Agency shall have the right, but not the obligation, to approve any additional cost overruns (unless such approval has been obtained from the Permanent Lender), which approval shall not be unreasonably withheld. 9.4 Schedule of Performance: Progress Reports. Subject to Section 13.3, Borrower shall begin and complete all rehabilitation within the times specified in the Schedule of Performance, subject to any extension granted by Agency, which extension shall not unreasonably be withheld upon the written request of the Borrower. Once rehabilitation is commenced, it shall be continuously and diligently pursued to completion, and shall not be abandoned for more than fifteen (15) consecutive business days, except when due to causes beyond the control and without the fault of Borrower, as set forth in Section 13.3 of this Agreement. The parties understand and acknowledge that due to the nature of rehabilitation work, certain unforeseen conditions may arise which necessitate changes in the scope and schedule of the rehabilitation, and the Agency shall reasonably consider and shall not unreasonably withhold its 14 DOCSOC\734476v3\24036.001 1 /l -(~ ." n - consent to changes to the Scope of Work and the Schedule ofPerfonnance which are proposed by the Borrower. During the course of the rehabilitation, and prior to the completion of the Project, Borrower shall keep Agency infonned of the progress of the rehabilitation of the Property and, if requested, shall provide Agency with monthly written progress reports and meet with Agency staff as appropriate. If requested, Borrower shall furnish a rehabilitation schedule to Agency indicating completion dates for each portion of work showing progress toward completion of the Project. After completion of construction of the Project and within the time set forth in the Schedule of Perfonnance (as it may be revised as provided above), Borrower shall provide the Agency Housing Manager a true and correct copy of the final cost certification submitted to TCAC concerning the construction of the Project on the Property. Borrower shall provide additional cost infonnation as may be reasonably requested by the Agency Housing Manager to pennit the Agency Housing Manager to make such detenninations as is reasonably required for Agency to verify Borrower's confonnance to this Agreement and the Scope of Work, as it may be revised by mutual agreement of the parties from time to time during the course of the rehabilitation. 9.5 Anti-discrimination. Borrower, for itself and its successors and assigns, agrees that Borrower will not discriminate against any employee or applicant for employment because of race, color, creed, religion, sex, marital status, ancestry, or national origin in connection with activities undertaken pursuant to this Agreement. 9.6 Right of Access. For the purpose of assuring compliance with this Agreement, representatives of Agency upon reasonable prior notice shall have the reasonable right of access to the Property, without charges or fees, at nonnal construction hours during the period of construction for the purposes of this Agreement, including but not limited to the inspection of the work being perfonned by Borrower in rehabilitating the Project. Such representatives of Agency shall be those who are so identified in writing by the Housing Manager. Agency shall indemnify, defend, and hold hannless Borrower and Borrower's officers, employees, and agents from any damage caused or liability arising out of the sole negligence or willful misconduct of Agency or its officers, officials, employees, volunteers, agents, or representatives in their exercise of this right of access; provided that it is understood that Agency does not by this Section 9.6 assume any responsibility or liability for a negligent inspection or failure to inspect. Any inspection by Agency pursuant to this section shall be conducted so as not to interfere or impede the rehabilitation or operations of the Project. 9.7 Mechanics Liens, Stop Notices, and Notices of Completion. a. Subject to Borrower's right to contest set forth in Section 11.4 of this Agreement, if any claim or lien is filed against the Project or a stop notice affecting the Agency Loan is served on the Agency or any other lender or other third party in connection with the Project, then the Borrower shall, within thirty (30) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the Agency a surety bond in sufficient fonn and amount, or provide the Agency with other assurance satisfactory to the Agency that the claim of lien or stop notice will be paid or discharged. 15 DOCSOC\7J4476v3\240J6.001] A-/S ." n - b. If Borrower fails to discharge any lien, encumbrance, charge, or claim in the manner required in Section 9.7 (a), then in addition to any other right or remedy, the Agency may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Borrower's expense. Alternately, the Agency may require the Borrower to immediately deposit with the Agency the amount necessary to satisfy such lien or claim and any costs pending resolution thereof. The Agency shall use such deposit to satisfy any claim or lien that is adversely detennined against the Borrower. c. The Borrower shan file a valid notice of cessation or notice of completion upon cessation of construction on the Project for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims of lien against the Project. The Borrower authorizes the Agency, but without any obligation, to record any notices of completion or cessation of labor, or any other appropriate notice that the Agency deems necessary or desirable to protect its respective interest in the Project. 9.8 Certificate of Completion. Upon Borrower's satisfactory completion of construction of the Project, Agency shall furnish Borrower with a Certificate of Completion upon written request therefor by Borrower. Such Certificate of Completion shall be in a fonn so as to pennit recordation in the Office of the Recorder of the County of San Diego as set forth in Exhibit G which is incorporated herein. The Certificate of Completion shall be, and shall so state, a conclusive detennination of satisfactory completion of the construction of the Project and offull compliance with the tenus of this Agreement relating to such construction. After the date of the issuance of the Certificate of Completion, and notwithstanding any other provisions of this Agreement to the contrary, any party then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Property shall not (because of such ownership, purchase, lease, or acquisition) incur any obligation or liability under this Agreement for the construction of the Project. Agency shall not unreasonably withhold the Certificate of Completion. If Agency refuses or fails to furnish the Certificate of Completion after written request from Borrower, Agency shall, within fifteen (15) days after such written request, provide Borrower with a written statement of the reasons Agency refused or failed to furnish such Certificate of Completion. The statement shall also contain Agency's opinion ofthe action Borrower must take to obtain such Certificate of Completion. If the reason for such refusal is confined to the immediate availability of specific items or materials for landscaping, Agency shall issue its Certificate of Completion upon the posting of cash deposit or an irrevocable letter of credit in favor of Agency in an amount representing the fair value of the work not yet completed and in a fonn reasonably acceptable to Agency's attorney. A Certificate of Completion is not a notice of completion as referred to in California Civil Code Section 3093. 9.9 Estoppels. At the request of Borrower or any holder of a mortgage or deed of trust, Agency shall, from time to time and upon the request of such holder, timely execute and deliver to Borrower or such holder a written statement of Agency that no default or breach exists (or would exist with the passage of time, or giving of notice, or both) by Borrower under this Agreement, the Agency Note, the Agency Trust Deed and/or the Affordable Housing Agreement, if such be the case, and certifying as to whether or not Borrower has at the date of such certification complied with any obligation of Borrower 16 DOCSOC\734476v3\24036.001] /1-(b ." 'c - hereunder or under such of those documents as to which such holder may inquire. The form of any estoppel letter shall be prepared by the holder or Borrower. 9.10 Relocation. The rehabilitation of the Project shall be conducted in phases of approximately 1O apartment units, and in such a manner as to completely prevent or minimize, to the maximum extent feasible, any displacement of existing tenants, in accordance with applicable law, such that no relocation benefits will need to be provided. In the event that any displacement of tenants is necessary to undertake the rehabilitation of the Project, it is intended that the rehabilitation shall be conducted in a manner which meets the definition of a "Qualified Affordable Housing Preservation Project" pursuant to Government Code Section 7260, such that the residents of the Property are not deemed to be displaced persons as a result of the Rehabilitation. The tenants of the Property shall be provided all rights, benefits and services which are required pursuant to Government Code Section 7262.5 and any other applicable laws or regulations in order to qualify as a Qualified Affordable Housing Preservation Project. In the event that any displacement of tenants occurs, the Agency shall at Borrower's sole cost and expense provide relocation assistance and benefits in accordance with Government Code Section 7260, et seq., and the implementing regulations adopted pursuant thereto by the State of California, the City and the Agency (collectively, the "Relocation Laws"), to each tenant household required to temporarily or permanently vacate a unit within the Property for purposes of completing the rehabilitation. In the event of displacement of existing tenants due to the implementation of this Agreement, despite Borrower's efforts to prevent such displacement as provided above, the Borrower shall be fully responsible for administering determinations of eligibility for assistance, benefits and payments pursuant to the Relocation Laws. The cost of such permanent or temporary relocation, including, without limitation, relocation benefits paid to eligible persons, consultant fees, attorneys' fees and court costs arising or in any way connected with claims for relocation assistance or benefits as may be asserted by any resident of the Property ("Relocation Cost"), shall be borne by Borrower. The Borrower shall establish an operating reserve fund for relocation expenses prior to the commencement of the rehabilitation of the Project containing not less than $60,000, which shall be used solely for Relocation Costs to the extent required by applicable law. 17 /1-17 DOCSOC\734476v3\24036.00l1 T " - ARTICLE 10 Uses Of The Property 10.1 Summary. Borrower covenants and agrees for itself and its successors and assigns to its interest in the Property that Borrower and such successors and assigns shall devote the Property to uses consistent with California Community Redevelopment Law, the PenTIanent Loan Documents, the Regulatory Agreement, the Affordable Housing Agreement, the Agency Trust Deed, and this Agreement, whichever is most restrictive, for a period ending fifty-two (52) years from the date of the Agency's issuance of the final Certificate of Completion for the Project. Agency shall be a third-party beneficiary under the Regulatory Agreement and shall have full authority to enforce any breach or default by Borrower under such agreement in the same manner as though it were a breach or default hereunder. Without Agency's prior written consent, which consent may be withheld in Agency's sole and absolute discretion, Borrower shall not consent to any amendment of or modification to the TCAC Regulatory Agreement or Regulatory Agreement which (i) shortens the tenTI of the affordability restrictions on the units in the Project to a tenTI ofless than fifty-two (52) years after the date of the Agency's issuance of the final Certificate of Completion for the Project or (ii) modifies the number of units required to be rented at affordable housing costs to persons of specified incomes. 10.2 Affordable Housing. Borrower covenants and agrees for itself and its successors and assigns to its interest in the Property that commencing upon the completion of the Project and continuing thereafter for a period of fifty- two (52) years from the date of the Agency's issuance of the final Certificate of Completion for the Project, Borrower and such successors and assigns shall devote one hundred eighteen (118) of the one hundred nineteen (119) of the residential units on the Property (hereinafter the "Restricted Units") to its continuous use as affordable rental housing for very low, lower and low and moderate income households in accordance with the tenTIS of this Agreement [(the remaining unit may be occupied by the on-site property manager)], subject to the occupancy restrictions contained in this Section 10.2. 24 Restricted Units shall be made available to very low income households at or below 50 percent of the Area Median Income ("AMI"), 84 Restricted Units shall be made available to lower-income households at or below 60 percent of AMI, and 10 Restricted Units shall be made available to low and moderate income households at or below 120 percent of AMI, all at an affordable rent. Up to three of the Restricted Units may be rented or provided at an affordable rent to operational or maintenance employees of the Property Manager who otherwise meet the income requirements hereof which are applicable to their Restricted Units. In detenTIining income eligibility for a particular Restricted Unit, Borrower shall be entitled to rely upon the documentation provided by the prospective tenant as required pursuant to the TCAC Regulatory Agreement, Affordable Housing Agreement and Regulatory Agreement. Borrower shall not be required to perfonTI further investigations into the household income other than those which are required pursuant to such agreements. Throughout this Agreement, wherever it is stated that Borrower must comply with the affordability requirements and/or verify such compliance, Borrower shall be entitled to rely upon the tenant documentation discussed in this paragraph. In addition to the foregoing, the lease agreement for each Restricted Unit in the Project shall restrict occupancy of the Restricted Unit to a total of three (3) persons for one bedroom apartment units, five (5) persons for two bedroom units, and seven (7) persons for three bedroom units. Any violation of 18 /9- rf' DOCSOC\734476v3\240J6.001 I - " - such restrictions shall constitute a default by the tenant, unless such occupancy restriction is found invalid by a court of competent jurisdiction in a final non-appealable judgment in a lawsuit in which the Project's occupancy restriction is at-issue, or in an applicable and binding published appellate opinion, or by statute, regulation or other binding court order. Notwithstanding the maximum income requirements of this Agreement, no tenants whose tenancy commenced prior to the date of Borrower's acquisition of the Property shall be required to vacate their units solely because their income exceeds the maximum income levels required hereunder. Upon vacation of any apartment initially occupied by an ineligible household, that unit shall be rented to an eligible household at the rents required hereunder. 10.3 Reports. Borrower, at its expense, shall submit, or cause the Property Manager to submit, to the appropriate entities any and all reports required to be submitted pursuant to California Community Redevelopment Law. 10.4 Subordination of Affordability Covenants. In the event that the Agency finds that an economically feasible method of financing for the construction and operation of the Project, without the subordination of the affordable housing covenants as may be set forth in this Agreement, is not reasonably available, the Agency shall make the affordable housing covenants set forth in this Agreement junior and subordinate to the deeds of trust and other documents required in connection with the construction and pennanent financing for the Project approved pursuant to this Agreement, and the TCAC Regulatory Agreement. Any subordination agreement entered into by the Agency shall contain written commitments which the Agency finds are reasonably designed to protect Agency's investment in the event of default, such as any of the following: (a) a right of Agency to cure a default on the loan prior to foreclosure, (b) a right of Agency to negotiate with the lender after notice of default from the lender and prior to foreclosure, (c) an agreement that if prior to foreclosure of the loan, Agency takes title to the property and cures the default on the loan, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to Agency, and (d) a right of Agency to reacquire the Property from the Borrower at any time after a material default on the loan. 10.5 Condition of the Property. a. Borrower hereby represents that to the best of its knowledge, except as otherwise disclosed to the Agency in writing, it is not aware of and has not received any notice or communication from any government agency having jurisdiction over the Property notifying Borrower of the presence of surface or subsurface zone Hazardous Materials in, on, or under the Property, or any portion thereof. "Best knowledge," as used herein, shall mean the actual knowledge of the Borrower and its officers, directors, employees, agents and representatives, as based upon the documents and materials in the possession of Borrower, and its officers, employees, agents and representatives, including the site investigation report or study referred to in Section ID.5(b) herein. b. In addition to the foregoing, the Borrower has, at its sole cost and expense, engaged its own environmental consultant to conduct a Phase I investigation of the Property and produce a report thereof, a copy of which has been provided to the Agency by Borrower. Such report concludes that no Hazardous Materials have been detected on the Property. 19 DOCSOC\734476vJ\240J6.0011 fl--!9 T " - c. Borrower shaH take aH necessary precautions to prevent the release into the environment of any Hazardous Materials which may be located in, on or under the Property. Such precautions shaH include compliance with aH Governmental Requirements with respect to Hazardous Materials. In addition, Borrower shaH instaH and utilize such equipment and implement and adhere to such procedures as are consistent with commerciaHy reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. d. Borrower shaH indemnify, defend and hold Agency hannless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys' fees), resulting from, arising out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property, no matter when such claim, action, suit or proceeding is first asserted or begun and no matter how the Hazardous Materials came to be released, used, generated, discharged, stored or disposed of on, under, in or about, to or from the Property, or by whom or how they are discovered, or (ii) the violation, or aHeged violation, of any statute, ordinance, order, rule, regulation, pennit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Property. This indemnity shaH include, without limitation, any damage, liability, fine, penalty, paraHel indemnity after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spin, release or other adverse effect on the environment. e. For purposes of this Agreement, "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, San Diego County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25130 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article II of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 u.S.c. § 1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.c. §6901, et seq. (42 U.S.c. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601, et seq. 10.6 Marketing Plan. Borrower shaH submit for the approval of the Agency, which approval shaH not unreasonably be 20 ¡1-eJ--O DOCSOC\734476V3\240J60011 " '" - withheld, a plan for marketing the rental of the apartment units in compliance with federal and state fair housing law. Such marketing plan shall include a plan for publicizing the availability of the apartment units within the City, such as notices in any City sponsored newsletter, newspaper advertising in local newspapers and notices in City offices. The marketing plan shall require Borrower to obtain from the Agency the names of low- and moderate-income households who have been displaced by the Agency's redevelopment projects, and to notify persons on such list of the availability of units in the Project prior to undertaking other forms of marketing. The marketing plan shall provide that the persons on such list of displaced persons be given not fewer than ten (10) days after receipt of such notice to respond by completing application forms for rental of apartment units, as applicable. 10.7 Maintenance of Propertv. Borrower agrees for itself and its successors in interest to all or any portion of the Property, to maintain the improvements on the Property in conformity with applicable provisions of the City Municipal Code, and shall keep the Property free from any accumulation of debris or waste materials. During such period, the Borrower shall also maintain the landscaping planted on the Property in a healthy condition. If at any time Borrower fails to maintain the Property and such condition is not corrected within five days after written notice from Agency with respect to graffiti, debris, waste material, and general maintenance, or thirty days after written notice from Agency with respect to landscaping and building improvements, then Agency, in addition to whatever remedy it may have at law or at equity, but subject to the rights of the Permanent Lender, shall have the right to enter upon the applicable portion of the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien upon the Property, or to assess the Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall be promptly paid by Borrower to Agency upon demand. 10.8 Propertv Management. The parties acknowledge that the Agency is interested in the long term management and operation of the Property and in the qualifications of any person or entity retained by the Borrower for that purpose (the "Property Manager"). Therefore, during the period of the effectiveness of the affordability covenants set forth herein, the Agency may from time to time review and evaluate the identity and performance of the Property Manager as it deems appropriate. Ifthe Agency determines that the performance of the Property Manager is materially deficient based upon the standards and requirements set forth in this Section 10.8 and the approved Management Plan (as defined below), the Agency shall provide notice to the Borrower of such deficiencies and the Borrower shall use its best efforts to correct such deficiencies within a reasonable period of time. Upon the failure of the Property Manager to cure such deficiencies within the time set forth herein, the Agency shall have the right to require the Borrower to immediately remove and replace the Property Manager with another property manager or property management company who is reasonably acceptable to the Agency, who is not related to or affiliated with the Borrower, and who has not less than five (5) years experience in property management, including experience managing multifamily residential developments of the size, quality and scope of the Property. In addition, the Borrower shall submit for the reasonable approval of the Agency a detailed "Management Plan" which sets forth in reasonable detail the duties of the Property Manager, 21 /!-c2( DOCSOC\734476v3\240360011 T " - the tenant selection process, a security system and crime prevention program, the procedures for the collection of rent, the procedures for monitoring of occupancy levels, the procedures for eviction of tenants, the rules and regulations of the Property and manner of enforcement, a standard lease fonn, and other matters relevant to the management of the Property. The management plan shall require the Property Manager to adhere to a fair lease and grievance procedure and provide a plan for tenant participation in management decisions. The management of the Property shall be in compliance with the Management Plan which is approved by the Agency, subject, however, to any requirements of the Pennanent Lender pursuant to the Pennanent Loan Documents. The Management Plan may be revised from time to time upon the approval of the Agency and the Borrower. 10.9 Affordable Housing Agreement. Certain requirements with respect to the affordable housing obligations and other operational and maintenance obligations of the Project are set forth in the Affordable Housing Agreement. The execution and recordation of the Affordable Housing Agreement is a condition precedent to the disbursement of the Agency Loan, as set forth in Section 4.3 hereof. ARTICLE 11 Continuing Obligations of Borrower 11.1 Applicabilitv. For the entire tenn of the requirements set forth in Section 10.1 hereof, the Borrower shall comply with the provisions of this Article 11. 11.2 Insurance. Within ten (10) days after the Borrower's acquisition of the Property, Borrower shall furnish to the Agency duplicate originals or appropriate certificates of insurance coverage evidencing that Borrower has obtained, or cause to be obtained, insurance coverage with respect to the Property and Project in type, amount and from insurers with Best's ratings as are reasonably acceptable to Agency (or have been approved by the Pennanent Lender), naming the Agency and its officers, agents, employees, representatives and their respective successors, as named or additional insureds by appropriate endorsements. Such policy shall include, without limitation "all risk" property casualty insurance and comprehensive general liability insurance. Without limiting the generality of the foregoing, such policy shall also include coverage to insure Borrower's indemnity obligations provided herein. Borrower covenants and agrees for itself and its successors and assigns that Borrower and such successors and assigns shall keep such liability policy in full force and effect until the date that is fifty-two (52) years from the date of the Agency's issuance of the final Certificate of Completion for the Project. In addition to any other remedy which Agency may have hereunder for Borrower's failure to procure, maintain, and/or pay for the insurance required herein, Agency may (but without any obligation to do so, and subject to the rights of the Pennanent Lender under the Pennanent Loan Documents) at any time or from time to time, after thirty (30) days written notice to Borrower, procure such insurance and pay the premiums therefor, in which event Borrower shall immediately repay Agency all sums so paid by Agency together with interest thereon at the rate of ten percent (10%) per annum or the maximum legal rate, whichever is less. 22 A-c:2~ DOCSOC\734476v3\24036.0011 ~ " - 11.3 Proceeds ofInsurance. Should the Project be totally or partially destroyed or rendered wholly or partly uninhabitable by tire or other casualty required to be insured against by Borrower, Borrower shall promptly proceed to obtain insurance proceeds and take all steps necessary to promptly and diligently commence the repair or replacement of the Project to substantially the same condition as the Project is required to be maintained in pursuant to this Agreement if (i) the Borrower agrees in writing within ninety (90) days after payment of the proceeds that such repair or rebuilding is economically feasible, and (ii) the Permanent Lender permits such repair or rebuilding, provided that the extent of Borrower's obligation to restore the Project shall be limited to the amount of the insurance proceeds actually received by the Borrower. If the Borrower is unable or is not permitted to repair, replace, or restore the Project, Borrower must give notice to Agency (in which event Borrower will be entitled to all insurance proceeds, subject to any outstanding lien obligations, but Borrower shall be required to remove all debris from the Property) and Borrower may construct such other improvements on the Property as are consistent with applicable land use regulations and approved by the Agency and the other governmental agency or agencies with jurisdiction. 11.4 Taxes, Assessments, Encumbrances, and Liens. Borrower shall pay prior to delinquency all real estate taxes and assessments properly assessed and levied on the Property. Until the payment in full of all amounts owing under the Agency Note, Borrower shall not place or allow to be placed thereon any mortgage, trust deed, encumbrance, or lien (except mechanic's liens prior to suit to foreclose the same being filed) not authorized by this Agreement. Borrower shall remove or have removed any levy or attachment made on the Property, or assure the satisfaction thereof, within a reasonable time, but in any event prior to a sale thereunder. Nothing herein contained shall be deemed to prohibit Borrower from contesting the validity or amounts of any tax, assessment, encumbrance, or lien, nor to limit the remedies available to Borrower in respect thereto. 11.5 Hold Harmless. Borrower agrees to indemnify, protect, defend and hold harmless Agency, and Agency's officers, agents, employees, representatives and successors, ITom and against any and all claims, damages, actions, costs, demands, expenses or liability, including without limitation, reasonable attorneys' fees and court costs, which may arise from the direct or indirect actions or inactions of the Borrower or those of its contractors, sub-contractors, agents, employees or other persons acting on Borrowers' behalf which relate to the Property or Project. This hold harmless agreement applies, without limitation, to all damages and claims for damages suffered or alleged to have been suffered by reasons of the operations referred to in this paragraph, regardless of whether or not the Agency prepared, supplied or approved plans or specifications, or both, for the Property or Project. This indemnity by Borrower, and all other indemnities set forth herein shall survive any foreclosure of the Property by the Agency pursuant to the terms of the Agency Trust Deed. 23 00CSOC\734476v3\24036.001] /1~,;¿ 3 ? " 11.6 Further Indemnification of Agencv. It is understood and agreed that the parties hereto have entered this Agreement as a method of providing necessary assistance to Borrower in connection with the rehabilitation oflow and moderate income housing and rehabilitation of the Property pursuant to all applicable laws and that by contributing public funds to assist in the accomplishment of such rehabilitation, or by otherwise contributing or assisting with the accomplishment of such rehabilitation, the Agency assumes no responsibility for insuring that the same is adequately undertaken (including, without limitation, the existence and/or remediation of any hazardous or toxic substances on the Property) and as a material consideration to Agency for entering into this Agreement (and not by way of limiting the generality of Section 11.5 above) Borrower agrees to indemnify, protect, defend and hold hannless Agency and all Agency's representatives, officers, employees and their respective successors from and against any and all claims, damages, actions, demands, liabilities, obligations, expenses, losses or costs, including without limitation, reasonable attorneys' fees and court costs, which may arise or in any manner connected with the rehabilitation of the Project pursuant to this Agreement; excluding, however, from Borrower's indemnity any such liability, losses, damages (including foreseeable or unforeseeable consequential damages), penalties, fines, expenses (including out-of-pocket litigation costs and reasonable attomeys' fees) directly or indirectly arising out of the actions of Agency or its employees, contractors, subcontractors or agents. 11.7 Obligation to Refrain from Discrimination. There shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the enjoyment of the Property, nor shall Borrower itself, or any person claiming under or through it, establish or pennit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sub lessees, or vendees of the Property or any portion thereof. Borrower shall further comply with all the requirements of the Americans with Disabilities Act. 11.8 Fonn of Nondiscrimination and Nonsegregation Clauses. Borrower shall retrain from restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national origin of any person and shall comply with all the requirements for the ADA. All such deeds, leases or contracts, shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: 'The grantee herein covenants by and for himself or herself, his or her 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, religion, sex, marital status, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the grantee himself, or any persons claiming under Or through him, establish or pennit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed and further covenants that all such individuals and entities shall comply with all requirements of the Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 D.S.C. § 12101, et seq.). The foregoing covenants shall run with the land." 24 Il -;2 c¡ DOCSOC\734476vJ\240J6.00l1 ~. ~ - b. In leases: "The lessee herein covenants by and for himself or herself, his or her 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, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein lease and the lease shall be carried out in compliance with all requirements of the Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 U.S.c. § 12101, et seq.).'" c. In contracts: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the transferee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sub1essees, or vendees of land and all such activities shall be conducted in compliance with all the requirements of the Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 U.S.c. § 12101, et seq.)." 11.9. Effect of Covenants. a. Unless sooner terminated by Agency as provided for herein, all covenants contained herein shall run with the land and shall be extinguished and of no further force and effect upon the fifty-second anniversary of the issuance of the Certificate of Completion for the Project by the Agency, with the exception of the non-discrimination and non-segregation covenants which shall run in perpetuity. The covenants established herein shall, without regard to technical classification and designation, be binding on the part of Borrower and any successors and assigns to the Property or any part thereof, and the tenants, lessees, sublessees and occupants of the Property, for the benefit of and in favor of the Property and the Agency, its successors and assigns and any successor in interest thereto. Agency is deemed the beneficiary of such covenants for and in its own right and for the purposes of protecting the interest of the community and other parties, public or private, in whose favor and for whose benefit of such covenants running with the land have been provided, without regard to whether Agency has been, remained, or are owners of any particular land or interest therein. Agency shall have the right to unilaterally terminate the covenants at any time (subject to the TCAC Regulatory Agreement) or, if such covenants are breached (subject to any cure rights provided herein) to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and the covenants may be entitled, including specific performance (it being recognized that the breach of such covenants cannot be adequately compensated by monetary damages), and any and all remedies provided in the Agency Trust Deed and the Agency Note including, without limitation, foreclosure proceedings against the Property. b. Without limiting the generality of the foregoing, in the event that there is a breach of the terms of this Agreement or any covenants provided herein, the Agency shall have the right, but not the obligation, to take any and all actions the Agency deems necessary, to cure such breach, including, without limitation, taking possession of the Property for management and/or repair 25 /1 - c2S DOCSOC\7J4476V3\240J60011 ." n - purposes, and to obtain reimbursement from Borrower for any reasonable costs incurred by the Agency in the exercise of such remedy. Furthennore, Borrower hereby covenants by and for itself, its successors and assigns and every person acquiring an interest in the Property, or any part thereof, that Agency and other public agencies at their sole risk and expense, and subject to the rights of tenants in possession, shall have the right to enter the Property or any part thereof at all reasonable times and with as little interference as possible for the purposes of construction, reconstruction, maintenance, repair or service of any public improvements or public facilities located on the Property and to ensure compliance with the restrictions and covenants contained herein. Any such entry shall be made only after reasonable notice to Borrower (provided, however, that entry to ensure compliance with any restrictions may be without notice to Borrower) and, any damage or injury to the Property resulting from such entry shall be promptly repaired at the sole expense of the public agency responsible for the entry except to the extent any such damage or injury arises as a result of the negligence or willful misconduct of the Borrower or its officers, employees, agents, invitees or contractors. c. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument; provided, however, that any successor of Borrower to the Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. Failure to comply with the covenants, conditions, restrictions, provisions or the limitation contained in this Agreement within the time period required by Section 12.1 shall constitute a material default hereunder pennitting the Agency to exercise any of its rights or obligations provided hereunder, including, without limitation, those provided under the Agency Note, or the Agency Trust Deed, or otherwise provided at law or in eqUIty. 11.10 Prohibition Against Assignment and Transfer. The qualifications and identity of Borrower are of particular concern to Agency. It is because of those qualifications and identity that Agency has entered into this Agreement with Borrower. Accordingly, for a period commencing upon the date of this Agreement and ending on the date which is fifty-two (52) years from the date of the Agency's issuance of the final Certificate of Completion for the Project, Borrower, without Agency's prior written approval, shall not, whether voluntarily, involuntarily, or by operation of law, and except as pennitted in this Section 11.10, (1) undergo any significant change in ownership (including the sale or conveyance of any of the general partnership interests in the Borrower), or (2) assign all or any part of this Agreement or any rights hereunder, or (3) sell, lease, assign or otherwise convey all or any part of the Property or Project, whether voluntarily, involuntarily, or by operation oflaw. Notwithstanding the foregoing, the following shall not be considered a significant change in ownership or an assignment or transfer and shall not require Agency approval for purposes of this Section 11.10: (i) Transfers to any entity or entities wholly owned and controlled by Borrower or all of its partners. 26 A -e2ro DOCSOC\734476v3\240360011 T rr - (ii) The conveyance or dedication of portions of the Property to the Agency or other appropriate governmental agency for the fonnation of an assessment district, or the granting of easements or pennits to facilitate the rehabilitation of the Property. (iii) A sale or transfer of some or all of the limited partnership interests in the Borrower. (iv) The leasing of all or any apartment units to tenants in the ordinary course of business. (v) The leasing of furniture, fixtures or equipment in the ordinary course of business, including, without limitation, laundry equipment and facilities, cable television equipment and facilities, and vending machine equipment and facilities. (vi) Transfers of property management responsibilities in accordance with Section 10.8 hereof, provided, however, that Borrower shall provide Agency thirty (30) days prior written notice of any such management change, and that this exception shall be limited to transfers to property managers with significant experience in managing projects similar to the Project. Any such assignee shall be subject to all tenns and conditions of this Agreement, including, without limitation, all affordability restrictions concerning the occupancy of the Property. Borrower shall deliver written notice to Agency requesting approval of any assignment or transfer requiring Agency approval hereunder. Such notice shall be given prior to Borrower entering into a fonnal written agreement with the proposed assignee. In considering whether it will grant approval to any assignment by Borrower of its interest in the Property or any portion thereof, which assignment requires Agency approval, Agency shall consider factors such as (i) the financial strength and capability of the proposed assignee to perfonn Borrower's obligations hereunder and (ii) the proposed assignee's experience and expertise in the planning, financing, rehabilitation, development, and operation of similar projects. No assignment, including assignments which do not require Agency approval hereunder, but excluding assignments for financing purposes, shall be effective unless and until the proposed assignee executes and delivers to Agency an agreement, in fonn satisfactory to the Agency's attorney, assuming the obligations of the assignor which have been assigned. Thereafter, the assignor shall be relieved of all responsibility to Agency for perfonnance of the obligations assumed by the assignee. No lender approved by Agency pursuant to Section 4 shall be required to execute an assumption agreement and such lender's rights and obligations hereunder shall be as set forth in Section 4. 11.10 Secured Financing; Right of Holders. a. Pennitted Encumbrances. Mortgages, deeds oftmst, conveyances, and leases-back or any other fonn of conveyance required for any financing pennitted and/or approved by the Agency pursuant to Section 4 hereof are pennitted before Agency's issuance of the Certificate of Completion. 27 /f-cJ7 DOCSOCI734476v3\24036.0011 T ~ - b. Holder Not Obligated to Construct Improvements. The holder of any mortgage or deed oftrust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the improvements or to guarantee such construction or completion; provided, however, that nothing in this Agreement shall be deemed or construed to pennit or authorize any such holder (with the exception of the holder of any deed of tru'st securing the loan made from the proceeds of the Bonds) to devote the Property or any part thereof to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. c. Notice of Default to Mortgage, Deed of Trust or Other Secured Instrument Holders; Right to Cure. Whenever Agency shall deliver any notice or demand to Borrower with respect to any breach or default by Borrower hereof, Agency shall at the same time deliver a copy of such notice or demand to each approved holder of record of any mortgage, deed of trust, or other security instrument which has previously requested such notice in writing. Each such holder shall (insofar as the rights of Agency are concerned) have the right, at its option within ninety (90) days after the receipt for the notice, to commence and thereafter to diligently proceed to cure or remedy such default and add the cost thereof to the security interest debt and the lien on its security interest. d. Right of Agencv to Cure Mortgage, Deed of Trust, or Other Security Instrument Default. In the event of a default or breach by Borrower of a mortgage, deed of trust, or other security instrument or lease-back or conveyance for financing prior to the issuance by City of the Certificate of Completion for the Project, Agency may cure the default prior to completion of any foreclosure. In such event, Agency shall be entitled to reimbursement from Borrower of all costs and expenses reasonably incurred by Agency in curing the default, which right ofreimbursement shall be secured by a lien upon the Property to the extent of such costs and disbursements. Any such lien shall be subject to: (i) Any mortgage, deed of trust, or other security instrument or sale and lease- back or other conveyance for financing pennitted by this Agreement; or (ii) Any rights or interests provided in this Agreement for the protection of the holders of such mortgages, deed of trust, or other security instruments, the lessor under a sale and lease-back, or the grantee under such other conveyance for financing; provided that nothing herein shall be deemed to impose upon Agency any affinnative obligations (by the payment of money, construction, or otherwise) with respect to the Property in the event of its enforcement of its lien. 11.11 Right of Agencv to Satisfv Liens. Prior to the issuance by Agency of the Certificate of Completion for the Project, and after Borrower has had a reasonable time to challenge, cure, or satisfy any liens or encumbrances on the Property, Agency, after sixty (60) days prior written notice to Borrower, shall have the right, but not the obligation, to satisfy any liens or encumbrances on the Property; provided, however, that nothing in this Agreement shall require Borrower to payor make provision for the payment of any tax, assessment, lien, or charge so long as Borrower in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Property to forfeiture or sale. 28 /l~c2f DOCSOC\734476v3\240J6.001 I ~ .. ARTICLE 12 Defaults, Remedies, And Termination 12.1 Defaults - General. Subject to all of the extensions of time available in Section 13.3, failure or delay by any party to perform any term or provision of this Agreement constitutes a default under this Agreement; however, the party shall not be deemed to be in default if (i) such party cures, corrects, or remedies such default within thirty (30) days after receipt of a notice specifying such failure or delay, or (ii) for such defaults that cannot reasonably be cured, corrected, or remedied within thirty (30) days, if such party commences to cure, correct, or remedy such failure or delay within thirty (30) days after receipt of a notice specifying such failure or delay, and diligently prosecutes such cure, correction or remedy to completion. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Copies of any notice of default given to Borrower shall also be delivered to the Permanent Lender and any other permitted lender requesting such notice. Except as provided in Section 12.3 herein or as required to protect against further damages, the injured party may not institute proceedings against the party in default until thirty (30) days after giving such notice. Except as otherwise expressly provided in this Agreement, any failure or delay in giving such notice or in asserting any of its rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive either party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 12.2 Termination. 12.2.1 Termination by Agency. Notwithstanding any other provision of this Agreement to the contrary, in the event that the Agency is not in default under this Agreement, Agency shall have the right to terminate this Agreement prior to disbursement of the Agency Loan upon written notice to the other parties if: (i) Borrower commits a material default hereunder and fails to cure said default within the time specified in Section 12.1 hereof; or (ii) Borrower fails to obtain the necessary approvals from the Tax Credit Allocation Committee for an allocation of "4%" Low Income Housing Tax Credits under terms that will restrict the residential units in the Project to the requirements set forth herein; or (iii) Escrow has not closed on the conveyance of the Property to Borrower on or before August 14, 2000, as such date may be extended by agreement of all the parties hereto in their sole and absolute discretion; or (iv) Subject to extensions of time made pursuant to Section 13.3 hereof, Borrower shall have failed to commence rehabilitation of the Project pursuant to a valid building permit or permits and is not diligently proceeding with such rehabilitation on or before the time required in the Schedule of Performance and does not timely cure such default. In addition, in the event of Borrower's uncured material default under this Agreement at the time Agency exercises its right under this Section 12.2 to terminate the Agreement, nothing in this Section 12.2 is intended or shall be interpreted as a limitation of any other legal or equitable rights to which Agency may be entitled. 29 A-2C¡ DOCSOC\734476v3\24036.0011 T ~ - 12.2.2 Tennination bv Borrower. Notwithstanding any other provision of this Agreement to the contrary, provided that Borrower is not in default under this Agreement, Borrower shall have the right to tenninate this Agreement prior to disbursement of the Agency Loan, upon written notice to Agency, if: (i) Agency commits a material default hereunder and fails to cure said default within the time specified in Section 12.1; or (ii) Escrow has not closed on the conveyance of the Property to Borrower on or before August 14,2000, as such date may be extended by agreement of all the parties hereto, in their sole and absolute discretion; or (iii) City fails to approve, after best efforts by Borrower to obtain such approval, such pennits as are required to commence and complete rehabilitation of the Project on the Property. In addition, in the event of Agency's uncured material default under this Agreement at the time Borrower exercises its right under this Section 12.2 to tenninate the Agreement, nothing in this Section 12.2 is intended or shall be interpreted as a limitation of any other legal or equitable rights to which Borrower may be entitled. 12.3 Legal Actions. 12.3.1 Institution of Legal Actions. In addition to any other rights or remedies, either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted and maintained in the Superior Court of the County of San Diego, State of California, or in any other appropriate court in that county. 12.3.2 Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 12.3.3 Acceptance of Service of Process. In the event that any legal action is commenced by Borrower against Agency, service of process on Agency shall be made by personal service upon the Agency Housing Manager or City Clerk, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Borrower, service of process on Borrower shall be made in such manner as may be provided by law, and shall be valid whether made within or without the State of California. 12.3.4 Action for Specific Perfonnance. If either the Borrower or Agency defaults with regard to any of the provisions of this Agreement, the non-defaulting party shall serve written notice of such default upon the defaulting party. If the default does not commence to be cured by the defaulting party within thirty (30) days after service of the notice of default, the non-defaulting party at its option may thereafter commence an action for specific perfonnance of the tenns of this Agreement pertaining to such default, subject to the provisions of Sections 12.1 and 13.3 hereof. 30 ,A-3tJ DOCSOC\734476v3\24036.00l1 T ~ - 12.3.5 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. ARTICLE 13 General Provisions 13.1 Notices, Demands, and Communications Between the Parties. Formal notices, demands, and communications between Agency and Borrower shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, to the address of the party as set forth below, or at any other address as that party may later designate by notice: To Agencv: Redevelopment Agency of the City ofChula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: Housing Manager With a copy to: Redevelopment Agency of the City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: Agency Attorney Community Development Department City ofChula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: Housing Manager To Borrower: St. Regis Park, LP c/o Chelsea Investment Corporation 215 South Hwy 101, Suite 200 Solana Beach CA 92075 Attn: Wallace Dieckmann Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed shall be deemed effective on the second business day following deposit in the United States mail. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as either party may from time to time designate by mail. 13.2 Nonliability of Agencv Officials and Emplovees: Conflicts ofInterest. No member, official, employee, or contractor of Agency shall be personally liable to Borrower in the event of any default or breach by Agency or for any amount which may become due to Borrower or on any obligations under the terms of this Agreement. 31 ¡!.3f DOCSOC\734476v3\24036.001 I T 1'1' - No member, official, employee, or agent of Agency shall have any direct or indirect interest in this Agreement nor participate in any decision relating to this Agreement which is prohibited by law. 13.3 Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, and except as expressly set forth in Section 12.2 and this Section 13.3, performance by either party hereunder shall not be deemed to be in default and such party shall be entitled to an extension of time to perform its obligations hereunder where delays in performance are due to causes beyond the control and without the fault of such party, including as applicable: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; supernatural causes; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplies; acts of the other party; acts or the failure to act of Agency or any other public or governmental agency or entity (except that any act or failure to act of or by Agency shall not excuse timely performance by Agency). In addition, nothing in this Section 13.3 is intended or shall be interpreted to entitle Borrower to an extension of time to close the escrow for acquisition of the Property or to delay commencement of construction of the Project. An extension of time for any cause permitted under this Section 13.3 shall be limited to the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of knowledge of the commencement of the cause, or if no written notice is sent within thirty (30) days, from the date written notice is sent by the other party. Times of performance under this Agreement may be extended by mutual written agreement of Agency and Borrower. 13.4 Inspection of Books and Records. The Borrower shall keep and maintain at the Project, or elsewhere within the County of San Diego, full, complete and appropriate books, records and accounts relating to the Project, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail Borrower's calculation of Residual Receipts and compliance with the affordable housing requirements herein. Books, records and accounts relating to Borrower's compliance with the terms, provisions, covenants, and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements ofthis Agreement. All such books, records, and accounts shall be open to and available for inspection by the Agency, its auditors or other authorized representatives at reasonable intervals during normal business hours upon reasonable prior notice to Borrower. Copies of all tax returns and other reports that Borrower may be required to furnish any governmental agency shall at all reasonable times, upon reasonable prior notice to Borrower, be open for inspection by the Agency at the place that the books, records, accounts of the Borrower are kept. The Borrower shall preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) years after such statement is rendered. Agency shall have the right at all reasonable times to inspect the books and records of Borrower pertaining to the Property and the Project as pertinent to the purposes of this Agreement. Borrower shall provide its books and records to Agency without reasonable delay upon no less than five (5) days prior written request by Agency. Agency shall not request inspection for Borrower's books and records more than once in any twelve (12) month 32 DOCSOC1734476v3\240J6.0011 /1-3 ~ ... Tr - period, unless Agency is required to obtain infonnation in order to comply with reporting or other requirements oflaw herein. Borrower shall have the right at all reasonable times to inspect the books and records of Agency pertaining to the Property and the Project as pertinent to the purposes of this Agreement. 13.5 Interpretation. The tenus of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against any party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. The section headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Agreement. 13.6 Entire Agreement. Waivers and Amendments. This Agreement integrates all of the tenus and conditions mentioned herein, or incidental hereto, and supersedes all negotiations and previous agreements between the parties with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of Agency and Borrower. 13.7 Consent/Reasonableness. Except when this Agreement specifically authorizes a party to withhold its approval or consent in its sole and absolute discretion, when either Agency or Borrower shall require the consent or approval of another party in fulfilling any agreement, covenant, provision, or condition contained in this Agreement, such consent or approval shall not be unreasonably withheld, conditioned, or delayed by the party from whom such consent or approval is sought. 13.8 Severability. If any tenn, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perfonn taking into consideration the purposes of this Agreement. In the event that all or any portion of this Agreement is found to be unenforceable, this Agreement or that portion which is found to be unenforceable shall be deemed to be a statement of intention by the parties; and the parties further agree that in such event, and to the maximum extent pennitted by law, they shall take all steps reasonably necessary to comply with such procedures or requirements as may be reasonably necessary in order to make valid this Agreement or that portion which is found to be unenforceable. 13.9 Third Partv Beneficiaries. Notwithstanding any other provision of this Agreement to the contrary nothing herein is intended to create any third party beneficiaries to this Agreement, and no person or entity other than Agency and Borrower, and the pennitted successors and assigns of each of them, shall be authorized to enforce the provisions of this Agreement. 33 A-33 DOCSOC\734476v3\24036.00l1 T' ~ - 13.10 Representations and Warranties. Borrower and each partner of Borrower executing this Agreement on behalf of Borrower represents and warrants that: (i) Borrower is a limited partnership organized and existing under the laws of the State of California, in good standing, and authorized to do business and doing business in the County of San Diego; (ii) Borrower has all requisite power and authority to carry out its business as now and whenever conducted and to enter into and perfonn its obligations under this Agreement; (iii) by proper action of Borrower, Borrower's signatories have been duly authorized to execute and deliver this Agreement; (iv) the execution of this Agreement by Borrower does not violate any provision of any other agreement to which Borrower is a party; (v) except as may be specifically set forth in this Agreement, and except for the approval of Borrower's investor limited partner, no approvals or consents not heretofore obtained by Borrower are necessary in connection with the execution of this Agreement by Borrower or with the perfonnance by Borrower of its obligations hereunder, and (vi) no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization, receivership or other proceedings are pending or threatened against the Borrower, or any partners of Borrower, nor are any of such proceedings contemplated by Borrower or any partners of Borrower. 13 .11 Execution. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. 13.12 Relationship of Parties. It is understood that the contractual relationship between the Agency and Borrower is such that Borrower is an independent entity and not an agent or partner of Agency. Nothing in this Agreement shall constitute Borrower as the agent or partner or representative of Agency for any purpose whatsoever. 13.13 Attomev's Fees. If either party to this Agreement is required to initiate or defend litigation in any way connected with this Agreement, the prevailing party in such litigation, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to its actual and reasonable attorney's fees. If either party to this Agreement is required to initiate or defend litigation with a third party because of the violation of any tenn or provision of this Agreement by the other party, then the party so litigating shall be entitled to its actual and reasonable attorney's fees from the other party to this Agreement. Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, retaining expert witnesses, taking depositions and discovery, and all other necessary costs incurred in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. The parties hereto acknowledge and agree that each such party shall bear its own legal costs incurred in connection with the negotiation, approval, and execution of this Agreement. [NEXT PAGE IS SIGNATURE PAGE] 34 /J -3 cj DOCSOC\734476v3\240360011 or' " - S.nt b,'Charles . CIC ",,-18-0002'31PM frOM 8587932487>5855698 pa9. 4/ 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date specified herein. "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic By: Its: Chair ATTEST; Agency Secretary "BORROWER" ST. REGIS PARK, LP, a California limited partnership By: CIC Pear Tree Services ComPaJ1Y. LLC, a California limited liability company, its General Partner By: 1 DOCSOC\734476v3\24036.0011 A-3f ." rr - EXHIBIT A LEGAL DESCRIPTION 1 DOCSOC\734476v3\24036.0011 T ~ - s.nS~TBŸ:.cles @ CIC M.>-17-.. .7'<8.n fron 85u'"'H1ll.>5855698 --- --- --_.'0. ~-1'I- U; lU'ù.' 3/ 5 F.Xlunrr"A" -- TIlE LAND REl'ERRED TO IS smJA IN 11m COUNTY 01' SAN ml!C10, STAT!! 0'1' CALIFORNIA AND IS ù1!SCIUB!!D AS FOU ,OWS: PARCI!L 1: LOT 1 OF QUARTf,R S!!CIJON 145 f ClM^ VISTA, RANCHO OJ! LA NAClON. COUNTY OF SAN DIEGO, STAn OJ' CALIFORNIA, ACCOIU>IN ' TO MAP -¡-lmUOF NO, 505, JI!LI\t) IN 'I1m OFFICI! OF urn COUNTY RECORDER Of Sl\N DIEGO C<JUNTY. CR 13,1838. EXCEPTIN'O WI'. I'.ASTERI,Y 132,00 ET; AUO EXCEPTING -n1E WESTERLY 132.00 PEET; ALSO I!XCI!I'TINO TIm EAS1'8RLY 300.00 FEET OF THf. BYERLY 431.00 FEET 01' TIm NOR11ŒRLY 166,00 FEE'!' OF 8M\} LOT J; ALSO F,XClìPTJ}oIG THAT PORTION ¡I T1'IE NORTH 166,00 JlBli'l' OF SAID LOT I, LYING B¡¡TWEEN THE W1JS'IERLY LINE 01' '1HIi ÞAs'r 148. I'EF.T 011 SAID LoT I, AND nfl'. RAS'I1!RI. y LINE OF Till! WEST 432.00 F.I!J!1'OF SAID LOT I, PARCEL 2: THAT PORTION OF LOT I, QUART!! SBC'110N 145 OF CHU!.A VISTJ\ RANCHO D¡¡ LA NACION, couNTY 0'1' SAN D11iGO. STA'!'1I OF CAI..ll'O1tNtA ACCORDING TO MAP ruEREOF NO. 505, FILED IN THE OI'FlCF. OF 'I1lE COUNTY IU!COllDl:ffi. OF Sl\N DIEGO OUNTY, MARCH 13, IB&!!, onSClWIli!D AS FOLLOWS: cOMMJ',NCING AT 'I1m SOIJ'l'HW 'I'I!RLY COI\NEP.OF LOT 1; THENCI! RUNNING IN AN EAS1'8RLY 01lrnCTlON ALONG THE gOUTHB Y UN!! OF SAID LOT. A DISTANCI! 01' 132.00 FEET; rliENCE IN A NORTHERLY DI1tF.CTION AND PAIl. wml'rH1! W1ISTERLY LlNJ', OF SAID L01', 65. 00 f1!l!T; THENCE WI!STERl Y AND f'ARALLEl wIre SOt,1TI'IElU. Y UNIi OF S^UJ LOT, t ~1I'DET; THJ<NCE SOImiEltl.Y AND /\LONG THE WF$I1!lU.Y T,INE OF SA 0 LOT. 65 FI!I!TTO'l1ffiPOJNl' OFBBOINNING. pARCEl. 3: AU. 0'1' THE~OllTH¡:¡RLY HALF OF OT g IN QUARTl\R SBCTlON 145 OF CIlULA VIS-fA, IN TilE COUN'ry OF SAN lJWOO, STATE OF CALIFORN ,^ceORDINO '\'0 MAP '11mR1!Of NO, 505, I'lLI'D IN'I'Hß oflo'IC¡; OF TIlE COVNTY II.F.CORDER OF SAN DIE COUN'ry, Mhl!.C11 I~. 18S8. PARCI!L4: ALL Of THI! SOUTI4KRL Y HA(,lI OF l.Or 8 IN QUARTHRSECTlON 14$ OF el£ULA VISTA, IN Tim CO'UNTY OF SAN DIBGO, STATE OF CALJI'O , AL'CORDlNO TO MAl' TßF.R.BOF NO. 505, FILED IN TIn; OFFICE OF THE COUNTY 1lECORD1!R. OF SAN D coUNTY, MARCH 13, 1888. ALSO EXCEPTING nmRJ!l1ROM 1 rARCEL5: AN EASl!MENT ANlJ lUaUI' OF W A FOR. ROAD i\ND fJ'J"ILITV PURI'OS¡i.S OVP.R., UNDRIl. ALONG AND -- ACROSSTEESOUTRERLY20.00 1¡¡ TOF nlEWI!STERLV 150.00. FIffiTOF tOT 81N QUARTF.RSl!CTJON 145 OF CHULA VISTA, IN 11IB COUNTY OF SAN DŒOO, STATE OF CAI..JPORNI¡\. ACCORDING TO MAl' 'rH1!IU!OF NO. 505, I'ILED IN 'I'H1i o.FICE OF THE oUNTY IUit;OJU)13ROf SAN DIEOO COUNTY, MARCH D, laiR. /1 -~~ T' TT - EXHIBIT B PROMISSORY NOTE 1 DOCSOC\734476V3\24036'OOll . ~ - EXHIBIT B PROMISSORY NOTE Secured by a Deed of Trust $1,387,152 Date: ,2000 Chula Vista, CA 1. Borrower's Promise to Pay. For value received, the undersigned ST. REGIS PARK, LP, a California limited partnership ("Borrower"), promises to pay to the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic (the "Agency"), or order, at 276 Fourth Avenue, Chula Vista, California 91910, or such other place as the Agency may designate in writing, the principal sum of One Million Three Hundred Eighty-Seven Thousand One Hundred Fifty-Two Dollars ($1,387,152) (the "principal"), plus interest as set forth in Section 4 below. (a) Use Of Funds. Borrower is acquiring and rehabilitating certain real property in the City of Chula Vista, as legally described in the Loan Agreement (the "Property") that is improved with a multi-family residential project consisting of 119 units, subject to the terms of the Permanent Loan Documents, the Regulatory Agreement and Declaration of Restrictive Covenants, the Affordable Housing Agreement and the TCAC Regulatory Agreement, as those terms are defined in the Loan Agreement (the "Project"). This Note evidences the loan made by the Agency to assist Borrower in acquiring and improving the Property for occupation by very low, lower and low and moderate income households, as more particularly set forth in that certain Loan Agreement and Related Restricted Covenants between the Borrower and the Agency dated as of May 23,2000 (the "Loan Agreement"). 2. Definitions. The term set forth in this Section shall have the following meaning in this Note: (a) "Transfer" shall mean any sale, assignment or transfer, voluntary or involuntary, of any interest in the Property. Any transfer without satisfaction of Section 7 of this Note is prohibited. Capitalized terms used herein not otherwise defined shall have the meanings set forth in the Loan Agreement. 3. Security. This Note is secured by the Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing of the same date as this Note (the "Deed of Trust"), executed by Borrower, as trustor, in favor of the Agency, as beneficiary, and encumbering the real property described in the Deed of Trust. The Agency will be entitled to the benefits of the security provided by the Deed of Trust and will have the right to enforce the covenants and agreements of Borrower specified within the Deed of Trust. 4. Interest. Simple interest will accrue on the principal balance remaining unpaid from time to time at the rate of six percent (6%) per annum. 5. Payments. Payments of principal and interest due under this Note shall be made in accordance with the payment terms set forth in Section 4.5 of the Loan Agreement, which such terms are incorporated herein by this reference. All payments on this Note shall be applied first to payment of accrued but unpaid interest, and after all such interest has been paid, any remainder shall be applied to reduction of the principal balance. Unless the Loan Agreement is extended pursuant to the 1 ;4-37 DOCSOCl734573VJ\24036.0011 . " - terms of the Loan Agreement, all principal and interest shall be due and payable on the date that is fifty-two (52) years from the date of the Agency's issuance of the Certificate of Completion (as defined in the Loan Agreement). 6. Borrower's Right To Repay. Borrower has the right to pay, without penalty or premium, all or any portion of the outstanding amount of this Note prior to the maturity date. 7. No Assumptions of Note. Borrower acknowledges that this Note is given in connection with the development of the Project as part of a program of the Agency to assist with the provision of housing for very low, low and moderate income households. Consequently, this Note is not assumable by transferees of the Property, but is immediately due and payable in full on the date of the Transfer of the Property, whether voluntary or involuntary, unless such Transfer is permitted by the Loan Agreement or by the Agency in writing in the Agency's sole and absolute discretion. In order to implement this provision, the Loan Agreement contains a "DUE ON SALE" provision. 8. Maintenance; Taxes; Insurance. Borrower shall maintain the Property in good, clean and orderly condition. Borrower shall promptly pay all property taxes due on the Property prior to any delinquency and shall comply with the insurance requirements set forth in the Loan Agreement. 9. Default. The occurrence of anyone or more of the following events shall constitute an "Event of Default": (a) Default under any agreement or other writing executed in favor of the Agency in connection with this Note, including but not limited to the Loan Agreement or the Deed of Trust, beyond all applicable cure periods; (b) Default in the payment when due of any installment or amount of principal or interest due on this Note, beyond the applicable cure period contained in Section 12.1 of the Loan Agreement; (c) The making by Borrower of any assignment for the benefit of creditors or the voluntary appointment (at the request or with the consent of Borrower) of a receiver, custodian, liquidator or trustee in bankruptcy of any of Borrower's property, or the filing by Borrower of a petition in bankruptcy or other similar proceeding under any law for relief of debtors; (d) The filing against Borrower (by anyone other than the Agency) of a petition in bankruptcy or other similar proceeding under any law for relief of debtors, or the involuntary appointment (by anyone other than the Agency) of a receiver, custodian, liquidator or trustee in bankruptcy of the property of Borrower, if such petition or appointment is not vacated or discharged within sixty (60) calendar days after the filing or making thereof; or ( e) The occurrence of a default under any note or deed of trust to which the Deed of Trust is junior and subordinate, beyond the applicable cure period. Upon the occurrence of an Event of Default, the Agency may, at its option, declare the entire unpaid principal balance and accrued interest to be immediately due and payable in full pursuant to Section 10 hereof or pursue any and all other remedies provided at law or in equity. Upon the occurrence of an Event of Default of the type described in clause (b) above, the entire unpaid principal balance and unpaid interest accrued thereon shall bear interest, from the date of the Event of Default until such default is cured, at a rate of nine percent (9%) compounded monthly ("Default Rate"). 10. Acceleration. Upon the occurrence of an Event of Default, the Agency shall have the right to declare the full amount of the principal, interest and other amounts owing under this Note immediately due and payable. Any failure by the Agency to pursue its legal and equitable remedies upon an Event of Default shall not constitute a waiver of the Agency's right to declare an Event of Default and exercise all of its rights under this Note, the Deed of Trust or the Loan Agreement. Nor shall acceptance by the Agency of any payment provided for in the Note constitute a waiver of the Agency's right to require prompt payment of any remaining amounts owed. 2 /7-3 f DOCSOC\734573v3\24036.QOll T .". - 11. No Offset. Borrower hereby waives any rights of offset it now has or may later have against the Agency, its successors and assigns, and agrees to make the payments called for in this Note in accordance with the terms of this Note. 12. Waivers. Borrower and any endorsers or guarantors of this Note, for themselves, their heirs, legal representatives, successors and assigns, respectively, severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor and non-payment of this Note, and expressly waive any rights to be released by reasons of any extension of time or change in terms of payment, or change, alteration or release of any security given for the payments hereof, and expressly waive the right to plead any and all statutes oflimitations as a defense to any demand on this Note or agreement to pay the same, and jointly and severally agree to pay all costs of collection when incurred, including reasonable attorney fees. If an action is instituted on this Note, the Borrower promises to pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge reasonable as attorneys' fees in such action. 13. No Waiver by the Agency. No previous waiver, failure, or delay by the Agency in acting with respect to the terms of this Note, the Deed of Trust, or any other loan documents in favor of the Agency executed by Borrower in connection with this Note will constitute a waiver of any breach, default or failure of conditions under this Note, Deed of Trust, or such other associated documents. A waiver of any terms must be made in writing. 14. Non Recourse Obligation. Nothing herein contained shall be deemed to cause Borrower (or any of its partners, or any of their respective directors, officers, employees, partners, principals or members) personally to be liable to payor perform any of its obligations evidenced hereby, and Agency shall not seek any personal or deficiency judgment on such obligations, and the sole remedy of Agency shall be against the Property and the collateral under the Deed of Trust; provided, however, that the foregoing shall not in any way affect any rights Agency may have (as a secured party or otherwise) hereunder or under the Deed of Trust or Loan Agreement, or any other rights Agency may have to: (a) recover directly from Borrower any funds, damages or costs (including, without limitation, reasonable attorneys' fees and costs) incurred by Agency as a result of fraud, intentional misrepresentation or intentional waste by Borrower; or (b) recover directly from Borrower any condemnation or insurance proceeds, or other similar funds or payments attributable to the Property which under the terms of the Loan Agreement should have been paid to Agency and any costs and expenses incurred by Agency in connection therewith (including, without limitation, reasonable attorneys' fees and costs). 15. Late Fees. Borrower 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 Agency 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 Agency by reason of such extra administrative expenses and loss of use of funds would be impracticable or extremely difficult to ascertain, Borrower agrees that five percent (5%) of the amount of the delinquent payment shall be the amount of damages to which the Agency is entitled, upon such breach, in compensation therefor. Therefore, Borrower shall, in such event, without further notice, pay to the Agency as the Agency'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 Borrower to make timely payments 3 /y -3 9 DOCSOC\734573V3\24036'OOll .. ..,. - hereunder. Nothing in this Note shall be construed as an expressed or implied agreement by the Agency to forbear in the collection of any delinquent payment, or be construed as in any way giving Borrower the right, expressed 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, are without prejudice to the right of such holder to collect such delinquent payments and other amounts provided to be paid hereunder or under any security for this Note or to declare a default hereunder or under any security for this Note. 16. Giving Of Notices. Fonnal notices, demands, and communications between Agency and Borrower shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, to the address of the party as set forth below, or at any other address as that party may later designate by notice: Borrower: Sf. Regis Park, LP c/o Chelsea Investment Corporation 215 South Hwy 101, Suite 200 Solana Beach CA 92075 Attn: Wallace Dieckmann Agencv: Redevelopment Agency of the City ofChula Vista 276 Fourth Avenue Chula Vista CA 91910 Attn: Housing Coordinator With copies to: Executive Director and Agency Attorney The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section. 17. No Partnership or Joint Venture. The relationship of Borrower and the Agency under this Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the Deed of Trust will in no manner make the Agency the partner or joint venturer of Borrower. 18. Joint and Several Obligations. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. 19. Attorney's Fees. In the event of any conflict or dispute concerning any tenn or provision of this Note or otherwise arising out of this Note, the prevailing party shall be entitled to recover from the other party any and all reasonable costs and expenses incurred in connection therewith, including, but not limited to, attorney's fees and court costs, whether or not a legal action is commenced. 20. Controlling Law. This Note shall be construed in accordance with and be governed by the laws of the State of California. 21. Invalid Provisions. If any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions 4 /l - 40 DOCSOC\73457Jv3\240J60011 T rr - shall be deemed severable from the remaining provisions contained in this Note, and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Note. 22. Amendments. Any amendment, alteration or interpretation of this Note must be in writing signed and signed by a duly authorized officer of the Agency and Borrower. If there are any inconsistencies between the terms of this Note and the terms of any of the other loan documents, the terms of the Loan Agreement will prevail. [NEXT PAGE IS SIGNATURE PAGE] 5 /I-4( DOCSOC\734573v3\24036 001 1 T Tr - Sen< b,'Charles . C1C Ma,-18-00 02'31pn fron 8587932487>5855698 page 5/ 5 IN WITNESS WHEREOF the Borrower has caused this Promissory Note to be executed as of the day and year first written above. ST. REGIS PARK, LP, a California limited partnership By: CIC Pear Tree Services Company, LLC, a California limited liability coropany, its General Partner By: 6 DOCSOC\739390'¡ \29999.0000 ¡1-1;}- T TT - EXHIBIT C AGENCY DEED OF TRUST 1 DOCSOC\734476vJ\24036.00l1 T ~ - EXHIBIT C RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City ofChula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: City Clerk DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING THE PARTIES TO THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made as of ,2000, are ST. REGIS PARK, LP, a California limited partnership ("Trustor"), CHICAGO TITLE COMPANY, a California corporation ("Trustee"), and the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic ("Beneficiary"). ARTICLE 1. GRANT IN TRUST 1.1 GRANT. For the purposes of and upon the tenus and conditions in this Deed of Trust, Trustor irrevocably grants, conveys and assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all of that real property located in the City ofChula Vista, County of San Diego, State of California, described on Exhibit A attached hereto, together with all development rights or credits, air rights, water, water rights and water stock related to the real property, and all minerals, oil and gas, and other hydrocarbon substances in, on or under the real property, and all appurtenances, easements, rights and rights of way appurtenant or related thereto; all buildings, other improvements and fixtures now or hereafter located on the real property, including, but not limited to, all apparatus, equipment, and appliances used in the operation or occupancy of the real property, it being intended by the parties that all such items shall be conclusively considered to be a part of the real property, whether or not attached or affixed to the real property (the "Improvements"); all interest or estate which Trustor may hereafter acquire in the property described above, and all additions and accretions thereto, and the proceeds of any of the foregoing; (all of the foregoing being collectively referred to as the "Subject Property"). The listing of specific rights or property shall not be interpreted as a limit of general tenus. 1.2 ADDRESS. The address of the Subject Property is 1025 Broadway, Chula Vista, California. However, neither the failure to designate an address nor any inaccuracy in the address designated shall affect the validity or priority of the lien of this Deed of Trust on the Subject Property as described on Exhibit A. -1- /1- 43 DOCSOC\7J4578v3\24036.00 II .,. Tr - ARTICLE 2. OBLIGATIONS SECURED 2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the purpose of securing the following obligations ("Secured Obligations"): (a) Payment to Beneficiary of all sums at any time owing under that certain Promissory Note of even date herewith executed by Trustor in favor of Beneficiary in the principal amount of One Million Three Hundred Eighty-Seven Thousand One Hundred Fifty-Two Dollars ($1,387,152), and the perfonnance of all covenants and obligations of Trustor under the Promissory Note and the Loan Agreement and Related Restricted Covenants of even date herewith between Trustor and Beneficiary ("Loan Agreement"); and (b) Payment and perfonnance of all covenants and obligations of Trustor under this Deed of Trust; and (c) All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced, including, without limitation: (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, defeITing or accelerating payment dates wholly or partly; or (ii) modifications of the required debt service payments. 2.2 INCORPORATION. All tenus of the Secured Obligations and the documents evidencing such obligations are incorporated herein by this reference. All persons who may have or acquire an interest in the Subject Property shall be deemed to have notice of the tenus of the Secured Obligations. ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS 3.1 ASSIGNMENT. Subject to the rights ofthe beneficiary under the Senior Deed of Trust (as defined below), Trustor hereby iITevocably assigns to Beneficiary all of Trustor's right, title and interest in, to and under: (a) all leases of the Subject Property or any portion thereof, all licenses and agreements relating to the management, leasing or operation of the Subject Property or any portion thereof, and all other agreements of any kind relating to the use or occupancy of the Subject Property or any portion thereof, whether now existing or entered into after the date hereof ("Leases"); and (b) the rents, issues, deposits and profits of the Subject Property, including, without limitation, all amounts payable and all rights and benefits accruing to Trustor under the Leases ("Payments"). The tenn "Leases" shall also include all guarantees of and security for the lessees' perfonnance thereunder, and all amendments, extensions, renewals or modifications thereto which are pennitted hereunder. This is a present and absolute assignment, not an assignment for security purposes only, and Beneficiary's right to the Leases and Payments is not contingent upon, and may be exercised without possession of, the Subject Property. 3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License") to collect and retain the Payments as they become due and payable, until the OCCUITence of a Default (as hereinafter defined). Upon a Default, the License shall be automatically -2- 1l-4cf DOCSOC\734578v3\24036.001 1 T ,.,. - revoked and Subject to the rights of the beneficiary under the Senior Deed of Trust, Beneficiary may collect and apply the Payments pursuant to Section 6.4 without notice and without taking possession of the Subject Property. Trustor hereby iITevocably authorizes and directs the lessees under the Leases to rely upon and comply with any notice or demand by Beneficiary for the payment to Beneficiary of any rental or other sums which may at any time become due under the Leases, or for the perfonnance of any of the lessees' undertakings under the Leases, and the lessees shall have no right or duty to inquire as to whether any Default has actually occulTed or is then existing hereunder. Trustor hereby relieves the lessees from any liability to Trustor by reason of relying upon and complying with any such notice or demand by Beneficiary. 3.3 EFFECT OF ASSIGNMENT. The foregoing iITevocable Assignment shall not cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care, management or repair of the Subject Property or for perfonning any of the tenus, agreements, undertakings, obligations, representations, waITanties, covenants and conditions ofthe Leases; or (c) responsible or liable for any waste committed on the Subject Property by the lessees under any of the Leases or any other parties; for any dangerous or defective condition ofthe Subject Property; or for any negligence in the management, upkeep, repair or control of the Subject Property resulting in loss or injury or death to any lessee, licensee, employee, invitee or other person, unless caused by the gross negligence or wilful misconduct of Beneficiary or its agents. Beneficiary shall not directly or indirectly be liable to Trustor or any other person as a consequence of: (i) the exercise or failure to exercise any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perfonn or discharge any obligation, duty or liability of Trustor arising under the Leases. 3.4 REPRESENTATIONS AND WARRANTIES. [Deleted] 3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to: (a) perfonn the obligations oflessor contained in the Leases and unless otherwise detennined by Trustor in the reasonable exercise of its business judgment, enforce by all available remedies perfonnance by the lessees of the obligations of the lessees contained in the Leases; (b) give Beneficiary prompt written notice of any material default which occurs with respect to any of the Leases, whether the default be that of the lessee or of the lessor; (c) exercise commercially reasonable efforts to keep all portions of the Subject Property that are cuITently subject to Leases leased at all times at rentals not less than the fair market rental value, subject to the rent limitations of the Loan Agreement and the Affordable Housing Agreement entered into pursuant thereto, and unless otherwise detennined by Trustor in the reasonable exercise of its business judgment; (d) deliver to Beneficiary fully executed, counterpart original(s) of each and every Lease ifrequested to do so; and ( e) execute and record such additional assignments of any Lease or specific subordinations of any Lease to the Deed of Trust, in fonn and substance acceptable to Beneficiary, as Beneficiary may request. Except as required or pennitted by the Senior Deed of Trust, or its beneficiary, or by the loan agreement secured thereby, Trustor shall not, without Beneficiary's prior written consent or as otherwise pennitted by any provision of the Loan Agreement: (i) execute any other assignment relating to any of the Leases; (ii) collect any rent or other sums due under the Leases in advance, other than to -3- /1 - Lis- DOCSOC\734578vJ\240J6.0011 .,. Tr - collect rent one (1) month in advance of the time when it becomes due; or (iii) subordinate or agree to subordinate any of the Leases to any other deed of trust or encumbrance. Any such attempted action in violation of the provisions of this Section 3.5 shall be null and void. 3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by Beneficiary estoppel certificates executed by Trustor and by each ofthe lessees, in recordable fonn, certifying (if such be the case): (a) that the foregoing assignment and the Leases are in full force and effect; (b) the date of each lessee's most recent payment ofrent; (c) that there are no defenses or offsets outstanding, or stating those claimed by Trustor or lessees under the foregoing assignment or the Leases, as the case may be; and (d) any other infonnation reasonably requested by Beneficiary. ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING 4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary as ofthe date hereof ("Effective Date") a security interest, to secure payment and perfonnance of all of the Secured Obligations, in all of the following described personal property in which Trustor now or at any time hereafter has any interest (collectively, the "Collateral"): All goods, building and other materials, supplies, work in process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal property, wherever situated, which are or are to be incorporated into, used in connection with, or appropriated for the use and operation of Subject Property (to the extent the same are not effectively made a part of the real property pursuant to Section 1.1 above) together with all rents, issues, deposits and profits of the Subject Property (to the extent, if any, they are not subject to Article 3); all inventory, accounts, cash receipts, deposit accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes, drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, any other rights to the payment of money, trade names, trademarks and service marks arising from or related to the Subject Property or any business now or hereafter conducted thereon by Trustor; all pennits consents, approvals, licenses, authorizations and other rights granted by, given by or obtained from, any governmental entity with respect to the Subject Property; all deposits or other security now or hereafter made with or given to utility companies by Trustor with respect to the Subject Property; all advance payments of insurance premiums made by Trustor with respect to the Subject Property; all plans, drawings and specifications relating to the Subject Property; all funds deposited with Beneficiary pursuant to any loan agreement; all reserves, deferred payments, deposits, accounts, refunds, cost savings and payments of any kind related to the Subject Property or any portion thereof; together with all replacements and proceeds of, and additions and accessions to, any of the foregoing; together with all books, records and files relating to any of the foregoing. -4- /7 -1 b DOCSOC\7J4578v3\240J6.0011 T ~ - As to all of the above described personal property which is or which hereafter becomes a "fixture" under applicable law, this Deed of Trust constitutes and is filed as a fixture filing under Sections 9313 and 9402(6) of the California Unifonn Commercial Code, as amended or recodified from time to time, and covers goods which are or are to become fixtures. 4.2 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that: (a) Trustor has, or will have, good title to the Collateral (except for items that are leased by Trustor); and (b) Trustor's principal place of business is located at the address shown in Section 7.9. 4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a "Secured Party" under the California Unifonn Commercial Code, as amended or recodified from time to time ("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice and at the expense of Trustor: (a) give notice to any person of Beneficiary' s rights hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any rights or interests of Beneficiary therein; and (c) inspect the Collateral. Notwithstanding the above, in no event shall Beneficiary be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written election of said remedy under UCC §9505, or other applicable law. 4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the occurrence and during the continuance of a Default (hereinafter defined) under this Deed of Trust, then in addition to all of Beneficiary's rights as a "Secured Party" under the UCC or otherwise at law: (a) Beneficiary may (i) upon written notice, require Trustor to assemble any or all of the Collateral and make it available to Beneficiary at a place designated by Beneficiary; (ii) without prior notice, enter upon the Subject Property or other place where any of the Collateral may be located and take possession of, collect, sell, and dispose of any or all of the Collateral, and store the same at locations acceptable to Beneficiary at Trustor's expense; (iii) sell, assign and deliver at any place or in any lawful manner all or any part of the Collateral and bid and become purchaser at any such sales; and (b) Beneficiary may, for the account of Trustor and at Trustor's expense: (i) operate, use, consume, sell or dispose ofthe Collateral as Beneficiary deems appropriate for the purpose ofperfonning any or all of the Secured Obligations; (ii) enter into any agreement, compromise, or settlement, including insurance claims, which Beneficiary may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or hereafter owing to Trustor in connection with or on account of any or all of the Collateral. Notwithstanding any other provision hereof, Beneficiary shall not be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Trustor shall make an express written election of said remedy under UCC §9505, or other applicable law. -5- /)-47 00CSOC\734578v3\24036 0011 T ~ - 4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appoints Beneficiary as Trustor's attorney-in-fact (such agency being coupled with an interest), and as such attorney-in-fact Beneficiary may, upon the occurrence and during the continuance of a Default, without the obligation to do so, in Beneficiary's name, or in the name of Trustor, prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve any of Beneficiary's security interests and rights in or to any of the Collateral, and, upon the occurrence and during the continuance of a Default hereunder, take any other action required of Trustor; provided, however, that Beneficiary as such attorney-in-fact shall be accountable only for such funds as are actually received by Beneficiary. 4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this Section, so long as no Default exists under this Deed of Trust, Trustor may possess, use, move, transfer or dispose of any of the Collateral in the ordinary course of Trustor's business. ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES 5.1 Intentionally omitted. 5.2 TAXES AND ASSESSMENTS. Subject to Trustor's rights to contest payment of taxes, Trustor shall pay prior to delinquency all taxes, assessments, levies and charges imposed by any public or quasi-public authority or utility company which are or which may become a lien upon or cause a loss in value of the Subject Property or any interest therein. Trustor shall also pay prior to delinquency all taxes, assessments, levies and charges imposed by any public authority upon Beneficiary by reason of its interest in any Secured Obligation or in the Subject Property, or by reason of any payment made to Beneficiary pursuant to any Secured Obligation; provided, however, Trustor shall have no obligation to pay taxes which may be imposed from time to time upon Beneficiary and which are measured by and imposed upon Beneficiary's net income. 5.3 Intentionally omitted. 5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay and perfonn each Secured Obligation when due. 5.5 LIENS, ENCUMBRANCES AND CHARGES. This Deed of Trust shall constitute a second priority security interest, junior and subordinate only to a [Construction Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing], dated concurrently herewith, made by Trustor, as trustor, for the benefit of Bank of America, FSB, as beneficiary, securing a note made with the proceeds of multifamily revenue bonds in the amount of [Five Million Four Hundred Seventy-Nine Thousand Three Hundred Fifty-Two Dollars ($5,479,352)] (the "Senior Deed of Trust"), and the refinancing or conversion thereof. Trustor shall immediately discharge any other lien not approved by Beneficiary in writing that has or may attain priority over this Deed of Trust. Trustor shall pay when due all obligations secured by or reducible to liens which shall now or hereafter encumber or appear to encumber all or any part of the Subject Property -6- /1- 4<;/ DOCSOC\7J4578vJ\240J60011 ' ' T1' or any interest therein, whether senior or subordinate hereto; provided, however, Trustor shall have the right to contest in good faith any claims and liens for labor done and materials and services furnished in connection with the construction of any Improvements and any such claim or lien so contested may remain unpaid during the period of such contest and any appeal therefrom. [Note: Verify title of document and final loan amount] 5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS. Proceeds of casualty insurance policies and condemnation awards shall be disposed of in accordance with and subject to the conditions contained in the Loan Agreement. 5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY. Trustor covenants: (a) to insure the Subject Property against such risks as are required under the Loan Agreement and, at Beneficiary's request, to provide evidence of such insurance to Beneficiary, and to comply with the requirements of any insurance companies insuring the Subject Property; (b) to keep the Subject Property in good condition and repair; (c) except as permitted by the Senior Deed of Trust, or its beneficiary, or the loan agreement secured thereby, not to remove or demolish the Subject Property or any part thereof, not to materially alter, restore or add to the Subject Property and not to initiate or acquiesce in any change in any zoning or other land classification which affects the Subject Property without Beneficiary's prior written consent; (d) to complete or restore promptly and in good and workmanlike manner the Subject Property, or any part thereof which may be damaged or destroyed; (e) to comply with all laws, ordinances, regulations and standards, and all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character which affect the Subject Property and pertain to acts committed or conditions existing thereon, including, without limitation, any work, alteration, improvement or demolition mandated by such laws, covenants or requirements; (f) not to commit or permit waste of the Subject Property; and (g) to do all other acts which from the character or use of the Subject Property may be reasonably necessary to maintain and preserve its value. 5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's sole expense, Trustor shall protect, preserve and defend the Subject Property and title to and right of possession of the Subject Property, the security hereof and the rights and powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the occurrence of any damage to the Subject Property and of any condemnation offer or action. 5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee accepts this trust when this Deed of Trust is recorded. From time to time upon written request of Beneficiary and presentation of this Deed of Trust or a certified copy thereof for endorsement, and without affecting the personal liability of any person for payment of any indebtedness or performance of any obligations secured hereby, Trustee may, without liability therefor and without notice: (a) reconvey all or any part of the Subject Property; (b) consent to the making of any map or plat thereof; and (c) join in any grant -7- /J ~ r/9 DOCSOC\734578v3\24036.0011 T' Tr - of easement thereon, any declaration of covenants and restrictions, or any extension agreement or any agreement subordinating the lien or charge of this Deed of Trust. Except as may be required by applicable law, Trustee or Beneficiary may from time to time apply to any court of competent jurisdiction for aid and direction in the execution of the trust hereunder and the enforcement of the rights and remedies available hereunder, and may obtain orders or decrees directing or confiTI11ing or approving acts in the execution of said trust and the enforcement of said remedies. Trustee has no obligation to notify any party of any pending sale or any action or proceeding, including, without limitation, actions in which Trustor, Beneficiary or Trustee shall be a party unless held or commenced and maintained by Trustee under this Deed of Trust. Trustee shall not be obligated to perfoTI11 any act required of it hereunder unless the perfoTI11ance of the act is requested in writing and Trustee is reasonably indemnified and held hannless against loss, cost, liability or expense. 5.10 EXCULPATION; INDEMNIFICATION. (a) Beneficiary shall not directly or indirectly be liable to Trustor or any other person as a consequence of (i) the exercise of the rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii) the failure or refusal of Beneficiary to perfoTI11 or discharge any obligation or liability of Trustor under any agreement related to the Subject Property or under this Deed of Trust; or (iii) any loss sustained by Trustor or any third party resulting from Beneficiary's failure to lease the Subject Property after a Default (hereinafter defined) or from any other act or omission of Beneficiary in managing the Subject Property after a Default unless the loss is caused by the gross negligence or willful misconduct of Beneficiary and no such liability shall be asserted against or imposed upon Beneficiary or its agents, and all such liability is hereby expressly waived and released by Trustor. (b) Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and Beneficiary haTI11less from, all losses, damages, liabilities, claims, causes of action, judgments, court costs, attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which either may suffer or incur: (i) by reason of this Deed of Trust; (ii) by reason of the execution of this trust or in perfoTI11ance of any act required or peTI11itted hereunder or by law; (iii) as a result of any failure of Trustor to perfoTI11 Trustor's obligations; or (iv) by reason of any alleged obligation or undertaking on Beneficiary's part to perfoTI11 or discharge any ofthe representations, warranties, conditions, covenants or other obligations contained in any other document related to the Subject Property; provided, however, such indemnity does not include matters caused by the gross negligence or willful misconduct of Beneficiary or its agents. The above obligation of Trustor to indemnify and hold haTI111ess Trustee and Beneficiary shall survive the release and cancellation of the Secured Obligations and the release and reconveyance or partial release and reconveyance of this Deed of Trust. (c) Trustor shall pay all amounts and indebtedness arising under this Section 5.10 -8- /I-so DOCSOC\734578v3\240360011 T " - immediately upon written demand by Trustee or Beneficiary together with interest thereon from the date of such demand at the rate often percent (10%) per annum. 5.11 SUBSTITUTION OF TRUSTEES. From time to time, by a writing, signed and acknowledged by Beneficiary and recorded in the Office of the Recorder of the County in which the Subject Property is situated, Beneficiary may appoint another trustee to act in the place and stead of Trustee or any successor. Such writing shall set forth any infonuation required by law. The recordation of such instrument of substitution shall discharge Trustee herein named and shall appoint the new trustee as the trustee hereunder with the same effect as if originally named Trustee herein. A writing recorded pursuant to the provisions of this Section 5.11 shall be conclusive proof of the proper substitution of such new Trustee. 5.12 NONRECOURSE OBLIGATION. Nothing herein contained shall be deemed to cause Trustor (or any of its partners, or any of their respective directors, officers, employees, partners, principals or members) personally to be liable to payor perfonu any of its obligations secured hereby, and Beneficiary shall not seek any personal or deficiency judgment on such obligations, and the sole remedy of Beneficiary shall be against the Subject Property and the Collateral; provided, however, that the foregoing shall not in any way affect any rights Beneficiary may have (as a secured party or otherwise) hereunder or under the Promissory Note or Loan Agreement, or any other rights Beneficiary may have to: (a) recover directly from Trustor any funds, damages or costs (including, without limitation, reasonable attorneys' fees and costs) incurred by Beneficiary as a result of fraud, intentional misrepresentation or intentional waste; or (b) recover directly from Trustor any condemnation or insurance proceeds, or other similar funds or payments attributable to the Property which under the tenus of this Deed of Trust should have been paid to Beneficiary and any costs and expenses incurred by Beneficiary in connection therewith (including, without limitation, reasonable attorneys' fees and costs). 5.13 RELEASES, EXTENSIONS. MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to or the consent, approval or agreement of any persons or entities having any interest at any time in the Subject Property or in any manner obligated under the Secured Obligations ("Interested Parties"), Beneficiary may, from time to time, release any person or entity from liability for the payment or perfonuance of any Secured Obligation, take any action or make any agreement extending the maturity or otherwise altering the tenus or increasing the amount of any Secured Obligation, or accept additional security or release all or a portion of the Subject Property and other security for the Secured Obligations. None of the foregoing actions (other than a duly executed written release) shall release or reduce the liability of any of said Interested Parties, to the extent such liability exists, or release or impair the priority of the lien of this Deed of Trust upon the Subject Property. 5.14 RECONVEYANCE. Upon Beneficiary's written request, and upon surrender to Trustee for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument, or instruments setting forth all obligations secured hereby, Trustee shall reconvey, without warranty, the Subject Property or that portion thereof then he1d hereunder. To -9- /i-Sf DOCSOCl734578V3\240360011 .. T1' - the extent pennitted by law, the reconveyance may describe the grantee as "the person or persons legally entitled thereto" and the recitals of any matters or facts in any reconveyance executed hereunder shall be conclusive proof of the truthfulness thereof. Neither Beneficiary nor Trustee shall have any duty to detennine the rights of persons claiming to be rightful grantees of any reconveyance. When the Subject Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all future rents, issues and profits of the Subject Property to the person or persons legally entitled thereto. 5.15 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances, whether released ofrecord or not, paid in whole or in part by Beneficiary pursuant to this Deed of Trust or by the proceeds of any loan secured by this Deed of Trust. 5.16 RIGHT OF INSPECTION. Subject to the rights of tenants or occupants ofthe Subject Property, Beneficiary, its agents and employees, may enter the Subject Property at any reasonable time upon twenty-four (24) hours' notice (except in cases of emergency where no notice is required) for the purpose of inspecting the Subject Property and ascertaining Trustor's compliance with the tenus hereof. 5.17 HAZARDOUS MATERIALS. Without in any way limiting the other representations and warranties set forth in this Deed of Trust, and except as otherwise disclosed in written reports and surveys previously delivered to Beneficiary, Trustor hereby specifically represents and warrants to the best of Trustor's actual knowledge, without inquiry, as of the date of this Deed of Trust as follows: (a) The Subject Property is not and has not been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or presence of any oil, flammable explosives, asbestos, urea fonnaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are "hazardous substances," "hazardous wastes," "hazardous materials" or "toxic substances" under the Hazardous Materials Laws, as described below, and/or other applicable environmental laws, ordinances and regulations (collectively, the "Hazardous Materials"). "Hazardous Materials" shall not include commercially reasonable amounts of such materials used (i) in laboratories for educational purposes, (ii) in business offices and schools ofthe type and nature currently operated by Trustor, (iii) in the ordinary course of construction of the Subject Property, and (iv) by occupants of residential units for nonnal household activities, and by Trustor for nonnal maintenance and operations ofthe Subject Property, all of which materials set forth in (i)-(iv) above are used and stored in accordance with all applicable environmental laws, ordinances and regulations. (b) The Subject Property is in compliance with all laws, ordinances and regulations relating to Hazardous Materials ("Hazardous Materials Laws"), including, without limitation: the Clean Air Act, as amended, 42 u.S.c. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 u.S.c. Section 1251 et seq.; -10- A -s;z DOCSOC\734578v3\24036 001 1 T " the Resource Conservation and Recovery Act of 1976, as amended, 42 US.C. Section 6901 et seq.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, "CERCLA"), 42 U.S.c. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 D.S.c. Section 651, the Emergency Planning and Community Right-to-Know Act of 1986, 42 US.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 US.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 D.S.c. Section 300f et seq.; and all comparable state and local laws, laws of other jurisdictions or orders and regulations. (c) There are no claims or actions ("Hazardous Materials Claims") pending or threatened against Trustor or the Subject Property by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws. (d) The Subject Property has not been designated as Border Zone Property under the provisions of California Health and Safety Code, Sections 25220 et seq. and there has been no occurrence or condition on any real property adjoining or in the vicinity of the Subject Property that could cause the Subject Property or any part thereof to be designated as Border Zone Property. 5.18 HAZARDOUS MATERIALS COVENANTS. Trustor agrees as follows: (a) Trustor shall not cause or permit the Subject Property to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge, disposal, transportation or presence of any Hazardous Materials (other than as provided in Section 5. 17(a)(i)-(iii) above). (b) Trustor shall comply and cause the Subject Property to comply with all Hazardous Materials Laws. (c) Trustor shall immediately notify Beneficiary in writing of: (i) the discovery of any Hazardous Materials (other than those set forth in Section 5. 17(a)(i)-(iv) above) on or under the Subject Property; (ii) any knowledge by Trustor that the Subject Property does not comply with any Hazardous Materials Laws; (iii) any Hazardous Materials Claims; and (iv) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Subject Property that could cause the Subject Property or any part thereof to be designated as Border Zone Property. (d) In response to the presence of any Hazardous Materials on or under the Subject Property, Trustor shall immediately take, at Trustor's sole expense, in a commercially reasonable manner, all remedial action required by any Hazardous Materials Laws or any judgment, consent decree, settlement or compromise in respect to any Hazardous Materials Claims. -11- /I - ,53 DOCSOC\7J4578vJ\240J6.0011 T' 'f - 5.19 INSPECTION BY BENEFICIARY. At any reasonable time, upon twenty-four (24) hours' notice (except in cases of emergency where no notice is required) to Trustor, but subject to the rights of tenants and occupants of the Subject Property, Beneficiary, its employees and agents, may trom time to time (whether before or after the commencement of a nonjudicial or judicial foreclosure proceeding) enter and inspect the Subject Property for the purpose of detennining the existence, location, nature and magnitude of any past or present release or threatened release of any hazardous substance into, onto, beneath or from the Subject Property. 5.20 HAZARDOUS MATERIALS INDEMNITY. Trustor hereby agrees to defend, indemnify and hold hannless Beneficiary, its directors, officers, employees, agents, successors and assigns trom and against any and all losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses (including, without limitation, reasonable attorneys' fees and expenses) which Beneficiary may incur as a direct or indirect consequence of the use, generation, manufacture, storage, disposal, threatened disposal, transportation or presence of Hazardous Materials in, on or under the Subject Property. Trustor shall immediately pay to Beneficiary upon written demand any amounts owing under this indemnity, together with interest from the date of demand therefor until paid at the rate often percent (10%) per annum. TRUSTOR'S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS BENEFICIARY SHALL SURVIVE THE TERMINATION OF THE LOAN AGREEMENT AND THE RELEASE, RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE DEED OF TRUST. 5.21 LEGAL EFFECT. Trustor and Beneficiary agree that: (a) Sections 5.17 through 5.20 are intended as Beneficiary's written request for infonnation (and Trustor's response) concerning the environmental condition of the real property security as required by California Code of Civil Procedure §726.5; and (b) each provision in such sections (together with any indemnity applicable to a breach of any such provision) with respect to the environmental condition of the real property security is intended by Beneficiary and Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure §736, and as such it is expressly understood that Trustor's duty to indemnify Beneficiary hereunder shall survive: (a) any judicial or non-judicial foreclosure under the Deed of Trust, or transfer of the Subject Property in lieu thereof, and (b) the release and reconveyance or cancellation of the Deed ofTrus!. ARTICLE 6. DEFAULT PROVISIONS 6.1 DEFAULT. For all purposes hereof, the tenn "Default" shall mean (a) the occurrence of an "event of default" as defined in the Promissory Note or the Loan Agreement beyond all applicable cure periods provided therein; (b) the failure of Trustor to make any payment of any amount due hereunder when the same is due and payable, where such failure has continued for ten (10) days after notice (c) Trustor's failure to observe and perfonn any other covenant, condition or agreement on its part to be observed or perfonned under this Deed of Trust for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied is given to Trustor by Beneficiary; provided, however, if the failure stated in the notice is correctable but cannot -12- /Î -~-Z/ DOCSOC\734578v3\24036 001 ] 'P' Tr - be corrected within such thirty (30) day period, Trustor shall have such additional time as reasonably necessary to effect such cure, provided that such corrective action is instituted by Trustor within such thirty (30) day period and diligently pursued until the default is corrected, (d) at the option of Beneficiary, the occurrence of a breach or default (beyond any applicable cure period) under any other deed of trust to Trustee executed by Trustor for the benefit of Beneficiary of even date herewith or hereafter executed (the "Other Deeds of Trust") which secures (i) payment to Beneficiary of sums owing under the Loan Agreement and/or (ii) the perfonnance of the covenants and obligations of Trustor under the Loan Agreement, or (e) the failure (in any material respect) of any of the representations and warranties of Trustor herein to be true and correct when made. 6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee shall each have all the following rights and remedies; provided, however, Beneficiary and Trustee may not exercise the rights and remedies under subsections (c), (f) and (g) below until there has been a Default: (a) With or without notice, to declare all Secured Obligations immediately due and payable; (b) With or without notice, and without releasing Trustor from any Secured Obligation, and without becoming a mortgagee in possession, to cure any breach or Default of Trustor and, in connection therewith, to enter upon the Subject Property and do such acts and things as Beneficiary or Trustee deem necessary or desirable to protect the security hereof, including, without limitation: (i) to appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or may be senior in priority to this Deed of Trust, the judgment of Beneficiary or Trustee being conclusive as between the parties hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with respect to insurance required to be carried under this Deed of Trust; or (v) to employ counsel, accountants, contractors and other appropriate persons. (c) To commence and maintain an action or actions in any court of competent jurisdiction to foreclose this instrument as a mortgage or to obtain specific enforcement ofthe covenants of Trustor hereunder, and Trustor agrees that such covenants shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purposes of any suit brought under this subparagraph, Trustor waives the defense oflaches and any applicable statute of limitations; (d) To apply to a court of competent jurisdiction for and obtain appointment of a receiver of the Subject Property as a matter of strict right and without regard to the adequacy of the security for the repayment of the Secured Obligations, the existence of a declaration that the Secured Obligations are immediately due and payable, or the filing of a notice of default, and Trustor hereby consents to such -13- /y-ss- DOCSOC\734578vJ\24036.00l1 ~ ~ - appointment; (e) To enter upon, possess, manage and operate the Subject Property or any part thereof, to take and possess all documents, books, records, papers and accounts of Trustor or the then owner of the Subject Property, to make, tenninate, enforce or modify Leases of the Subject Property upon such tenus and conditions as Beneficiary deems proper, to make repairs, alterations and improvements to the Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to protect or enhance the security hereof; (I) To execute a written notice of such Default and of its election to cause the Subject Property to be sold to satisfy the Secured Obligations. As a condition precedent to any such sale, Trustee shall give and record such notice as the law then requires. When the minimum period of time required by law after such notice has elapsed, Trustee, without notice to or demand upon Trustor except as required by law, shall sell the Subject Property at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as Beneficiary in its sole discretion may detennine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at time of sale. Neither Trustor nor any other person or entity other than Beneficiary shall have the right to direct the order in which the Subject Property is sold. Subject to requirements and limits imposed by law, Trustee may ITom time to time postpone sale of all or any portion of the Subject Property by public announcement at such time and place of sale. Trustee shall deliver to the purchaser at such sale a deed conveying the Subject Property or portion thereof so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustee, Trustor or Beneficiary may purchase at the sale; (g) To resort to and realize upon the security hereunder and any other security now or later held by Beneficiary concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non-judicial proceedings, or both, and to apply the proceeds received upon the Secured Obligations all in such order and manner as Trustee and Beneficiary, or either of them, detennine in their sole discretion; (h) Upon sale of the Subject Property at any judicial or non-judicial foreclosure, Beneficiary may credit bid (as detennined by Beneficiary in its sole and absolute discretion) all or any portion of the Secured Obligations. In detennining such credit bid, Beneficiary may, but is not obligated to, take into account all or any of the following: (i) appraisals of the Subject Property as such appraisals may be discounted or adjusted by Beneficiary in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Beneficiary with respect to the Subject Property prior to foreclosure; (iii) expenses and costs which Beneficiary anticipates will be incurred with respect to the Subject Property after foreclosure, but prior to resale, including, without limitation, costs of structural reports and -14- ;l - S-(, DOCSOC\7J4578v3\24036.0011 ~ ~ - other due diligence, costs to carry the Subject Property prior to resale, costs of resale (e.g., commissions, attorneys' fees, and taxes), costs of any hazardous materials clean-up and monitoring, costs of deferred maintenance, repair, refurbishment and retrofit, costs of defending or settling litigation affecting the Subject Property, and lost opportunity costs (if any), including the time value of money during any anticipated holding period by Beneficiary; (iv) declining trends in real property values generally and with respect to properties similar to the Subject Property; (v) anticipated discounts upon resale of the Subject Property as a distressed or foreclosed property; (vi) the fact of additional collateral (if any), for the Secured Obligations; and (vii) such other factors or matters that Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to the above, Trustor acknowledges and agrees that: (w) Beneficiary is not required to use any or all of the foregoing factors to detennine the amount of its credit bid; (x) this Section does not impose upon Beneficiary any additional obligations that are not imposed by law at the time the credit bid is made; (y) the amount of Beneficiary's credit bid need not have any relation to any loan-to-value ratios previously discussed between Trustor and Beneficiary; and (z) Beneficiary's credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower than any appraised value of the Subject Property. 6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all costs, fees and expenses of Trustee, and of this trust, including, without limitation, cost of evidence of title and attorneys' fees in connection with sale and costs and expenses of sale and of any judicial proceeding wherein such sale may be made, Trustee shall apply all proceeds of any foreclosure sale: (a) to payment of all sums expended by Beneficiary under the tenus hereof and not then re-paid, with accrued interest; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto. 6.4 APPLICATION OF OTHER SUMS. All sums received by Beneficiary under Section 6.2 or Section 3.2, less all costs and expenses incurred by Beneficiary or any receiver under Section 6.2 or Section 3.2, including, without limitation, attorneys' fees, shall be applied in payment of the Secured Obligations in such order as Beneficiary shall detennine in its sole discretion; provided, however, Beneficiary shall have no liability for funds not actually received by Beneficiary. 6.5 NO CURE OR WAIVER. Neither Beneficiary's nor Trustee's nor any receiver's entry upon and taking possession of all or any part of the Subject Property, nor any collection of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Secured Obligation, nor the exercise or failure to exercise of any other right or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach, Default or notice of default under this Deed of Trust, or nullify the effect of any notice of default or sale (unless all Secured Obligations then due have been paid and perfonned and Trustor has cured all other defaults), or impair the status of the security, or prejudice Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an affinnation by Beneficiary of any tenancy, lease or option or a subordination of the lien -15- /l -51 DOCSOC\7J4578v3\24036.0011 T ~ - of this Deed of Trust. 6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES. Trustor agrees to pay to Beneficiary immediately and without demand all reasonable costs and reasonable expenses incuITed by Trustee and Beneficiary pursuant to Section 6.2 (including, without limitation, court costs and attorneys' fees, whether incuITed in litigation or not) with interest from the date of expenditure until said sums have been paid at the rate of interest then applicable to the principal balance of the indebtedness as specified in the Loan Agreement. In addition, Trustor shall pay to Trustee all Trustee's fees hereunder and shall reimburse Trustee for all expenses incuITed in the administration of this trust, including, without limitation, any attorneys' fees. 6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby iITevocably appoints Beneficiary and its successors and assigns, as its attorney-in-fact, which agency is coupled with an interest, upon the OCCUITence and during the continuance of a Default, (a) to execute and/or record any notices of completion, cessation oflabor, or any other notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute all instruments of assignment or further assurance with respect to the Leases and Payments in favor of the grantee of any such deed, as may be necessary or desirable for such purpose, (c) to prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve Beneficiary's security interests and rights in or to any of the Collateral, and (d) to perfonn any obligation of Trustor hereunder; provided, however, that: (i) Beneficiary as such attorney-in-fact shall only be accountable for such funds as are actually received by Beneficiary; and (ii) Beneficiary shall not be liable to Trustor or any other person or entity for any failure to act under this Section. ARTICLE 7. MISCELLANEOUS PROVISIONS 7.1 MERGER. No merger shall occur as a result of Beneficiary's acquiring any other estate in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in writing. 7.2 OBLIGATIONS OF TRUSTOR. JOINT AND SEVERAL. If more than one person has executed this Deed of Trust as "Trustor", the obligations of all such persons hereunder shall be joint and several. 7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties claiming through or under Trustor, and for all parties who may acquire a lien on or interest in the Subject Property, hereby waives all rights to have the Subject Property and/or any other property, including, without limitation, the Collateral, which is now or later may be security for any Secured Obligation ("Other Property") marshaled upon any foreclosure of this Deed of Trust or on a foreclosure of any other security for any of the Secured Obligations. Beneficiary shall have the right to sell, and any court in which foreclosure proceedings may be brought shall have the right to order a sale of, the Subject -16- /l - ,51? DOCSOC\7J4578v3\24036.0011 T rr - Property and any or all ofthe Collateral or Other Property as a whole or in separate parcels, in any order that Beneficiary may designate. 7.4 RULES OF CONSTRUCTION. Wben the identity of the parties or other circumstances make it appropriate the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. The tenu "Subject Property" means all and any part of the Subject Property and any interest in the Subject Property. 7.5 SUCCESSORS IN INTEREST. The tenus, covenants, and conditions herein contained shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties here-to; provided, however, that this Section 7.5 does not waive or modify the provisions of Section 5.12. 7.6 EXECUTION IN COUNTERPARTS. This Deed of Trust maybe executed in any number of counterparts, each of which, when executed and delivered to Beneficiary, will be deemed to be an original and all of which, taken together, will be deemed to be one and the same instrument. 7.7 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the laws of the State of California, except to the extent that Federal laws preempt the laws of the State of California. 7.8 INCORPORATION. Exhibit A, as attached, is incorporated into this Deed of Trust by this reference. 7.9 NOTICES. All notices or other communications required or penuitted to be given pursuant to the provisions of this Deed of Trust shall be in writing and shall be considered as properly given if delivered personally or sent by first class u.S. mail, postage prepaid, except that notice of a Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt at the addresses set forth below. For purposes of notice, the addresses of the parties shall be: -17- /1- 57 DOCSOC\734578v3\24036.001 1 T' ~ - Trustor: St. Regis Park, LP c/o Chelsea Investment Corporation 215 South Hwy 101, Suite 200 Solana Beach, CA 92075 Attention: Wallace Dieckman Trustee: Chicago Title Company 925 B Street San Diego, California 92101 Beneficiary: Redevelopment Agency of the City ofChula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: Executive Director With a copy to Agency Attorney and Housing Coordinator Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days notice to the other party in the manner set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or other communications delivered to the Subject Property or to Trustor naming Beneficiary, as addressee, or which could reasonably be deemed to affect the ability of Trustor to perfonn its obligations to Beneficiary under the Loan Agreement. 7.10 LOAN AGREEMENT AND PROMISSORY NOTE CONTROL. In the event of conflict between the tenus of this Deed of Trust and the Loan Agreement or the Promissory Note, the tenns of the Loan Agreement and Promissory Note shall prevail, except that the provisions of 6.2 of this Deed of Trust shall control with respect to rights and remedies of Beneficiary and Trustee hereunder. 7.11 NONDISCRIMINATION. Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through it that there shall be no discrimination against or segregation of, any person or group of persons On account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Subject Property, nor shall the grantee of any person claiming under or through it, establish or pennit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Subject Property. [Signature on next page] -18- Ii -~ 0 DOCSOC\734578v3\24036.0011 .... ". - Sene b,'Ch.rles @ CIC M.,-18-"" "2'31.n fron 8587932487>5855698 ..ge 3 IN WITNESS WHEREOF, Trustor has executed this Deed of Tmst as of tile day and year set forth above. "TRUSTOR" ST. REGIS PARK, LP, a California Jimited partnership By: CIC Pe8r Tree Services Company, LLC, a California limited liability company, its General Partner By: ---- (ALL SIGNATURES MUST BE ACKNOWLEDGED) S-1 DOÇSOC\13938SY1\29999.0000 /I-ref T ff - SCHEDULE 1 DESCRIPTION OF SUBJECT PROPERTY Exhibit A to Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing executed by ST. REGIS PARK, LP, a California limited partnership, as Trustor to Chicago Title Company, a California corporation, as Trustee for the benefit of the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic, as Beneficiary, dated as of ,2000. All the certain real property located in the City of Chula Vista, County of San Diego, State of California, described as follows: Page 1 of Schedule A -bd- DOCSOC\734578vJ\240J6.001 I T' .,. - senSENTBtarles . CIC Ma"-17-00 07'45aM frOM 85O¡X":H1~>5855698 --- --- --_e<9< ~-l'I- 0; 10'0<' 3/ 5 'FJUUUIT"A" -- .tHE LAND RE1'ERRED TO IS SITUA IN 11IB COUNTY O~ SAN 1)11!(10, STATE OF CALIFORNIA AND IS ¡)r,,~CRlBnD AS FQU .oWS: p"RCl!L 1: LOT 1 OF QUARTf,R Siler/ON 14S l' (,HULA VISTA, RANCI-IO DE I.A NAClON, COUNTY OF SAN DIEGO, STATE 01' CALIFORNIA, "CCOWIN . TO MAP TIID:REOF NO. 505, ~n.¡¡D IN 'I1m OFF [en OF Tiffi COUNTY RECORDER Of SAN DIEGO COUNTY, œ 13. 1888. EXCEPTING WI', F..ASTER\,Y 132.00 ET; A'LSO EXCEPTING 'nlE WES'mRLY 132.00 FEET; ALSO IIXCEI'TINO TlIJJ EASTBIlL Y 300.00 FEET OF THJ'. STERLY 432.00 FEET oHIIE No~11IERLY 166.00 FEE'!' OF SMO LOT I; ALSO EXcm>TING 'I11AT POR110N l' mE NORTH 166,00 I1lmT OF SAID LOT I, LYING BßTWEEN T!ffi WlJSTISRL Y .LII'Œ 01' THE EAST 148. !'ERT Of SAID LOT 1, t.ND 11fF. F.AS1'I!RLY LINE OF THn WEST 432.00 FJill'T OF SAID LOT I. PARCELl: THAT PORTION OF LOT I, QUARTß SEC11ON 14S 01' CHULA VISTA, RANCHO Dli LA NACION, COUNT'{ OF SAN DIHGO. STATI! OF CALlrORNIA ACCORDINO TO MAP l1IEREOF NO. 50S, FILED IN TKE OI'F!Œ OF THE COUNTY Rl!CORDliR OF SAN DIEGO OUNTY, MARCH 13, 188~, onsCRlllIID AS FOLLOWS: cOMMF-NCING AT 'I1IB SOU'IHW 1'ERLY CORNER OF LOT 1; 'rHENCß RUNNING IN AN EASl'BIlLY OIIŒCTI.ON ALONG THE soUTHE y UNE OF SAm LOT, ^ DISTANC OF 132.00 FEET; T1iENCI! IN A NORTHERLY DIRF.cTION AND PAR L W/Tll'I1IR WlJSTERLY LlI'ffi OF SAID LOT, 65.00 FIJI!T; THENCli WI!STERL Y AND PARALLEL wnu SOtTl1-1BRL Y LIN¡¡ OF SAID .LOT, 132 I'IJET; THRNCli smmiERI.Y AND /\LONG THE WF~<;TERL Y LINE OF SA D LOT, 6S fl!I!T TO 'llm POJNT OF BF.()INNING. PARCE!. 3: ÀU.. OF THE NORTHERLY ~LF OF OT 8 IN QUARTBR SECTION 145 OF ClIULA VI!UA, IN THE COUN'IT OF - SAN OIIJOO, STATE OF CALIFORN ,ACCORDING TO MAP '!"ImP-EOI' NO. 505. FlUID IN 11'¡¡; on-ICE OF THE COUNTY lU!CORDER OF SAN DIE COmfIT, MNtCIT 1:1.1888. ßXCEP';I'1NG, TH ¡ WfìRTERL Y 150.00 EET 'l'mREO~'. PARCEl>4: AI.L OF 1'HH SOUT}llIn Y HALF OF LOT 8 IN QUARTI!R SECTION 145 OF CIfULA VISTA, IN Tfm COUN"/Y OF SAN DŒOO, STATE OF CALIFO , A<..'CORDINO TO MAl' THEREOF NO. 50S, FILED IN Tl-Œ OFFICE OF TIlE COUN"/Y 1ŒCORDER OF SAN D coUNTY. MARCH 13, 1888. ALSO EXCEPTING THEIŒPROM 1 rARCELS: AN EASl!MENT ANlJ RIGHT OF W A FOR. ROAD AND UTILITY I'URI'0SI!S OV1'.R, UNDRR. ALONG AND -~. ACROSS TEE sOUT!ŒR.L.Y2n.onI'IJ TOF 111E WHSTERLY 150.00. FE¡¡TOF !.OT8IN QUARTER snCTJON 145 OF CHULA VlSTA.IN TIm COUNTY OF SAN DIEOO,STATI'. OF CA¡.I~ORNIA, AcçORDING TO MAP 'IHF.1U!OF NO 50S, FILED IN THE OI'FlCE OF 'l1iB oUNTY R¡¡t,;O1lD¡¡ROf SAN DiEGO COlJNTY, MARCH 13, 188S. Il - {,3 T' " - STATE OF CALIFORNIA COUNTY OF 55. On this day of , 19_, before me a Notary Public in and for the State of Cali fomi a, personally appeared personaJly known to me (or proved 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 hislher/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 mstrument. WITNESS my hand and official seal Signature My commission expires 00C50C\734578v3\24036.0011 lY~bcj T' 1'T - EXIDBIT D AFFORDABLE HOUSING AGREEMENT 1 DOCSOC\734476v3\24036.001] T ~ - EXHIBIT 0 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City ofChula Vista 276 Fourth Avenue Chula Vista CA 91910 Attn: (Space above for Reco,der's Use) AFFORDABLE HOUSING AGREEMENT THIS AFFORDABLE HOUSING AGREEMENT (the "Agreement") is entered into as of , 2000, between the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic ("Agency"), and ST. REGIS PARK, LP., a California limited partnership ("Property Owner") and/or its successors or assignees. ARTICLE 1- Recitals 1.1 Authority. Agency is authorized to enter into binding agreements for the purpose of protecting public health, safety, and welfare. 1.2 Property Owner. Property Owner is the legal owner of the fee title to the real property located at 1025 Broadway in the City of Chula Vista, which is described in the attached Exhibit "A," which is hereby incorporated herein ("the Real Property"). The Real Property is currently improved with an existing 119 unit apartment building. 1.3 Loan Agreement. Property Owner and Agency have entered into a Loan Agreement and Related Restricted Covenants dated as of May 23, 2000 (the "Loan Agreement"), whereby the Agency has agreed to make a loan to the Property Owner, and the Owner has agreed to acquire, rehabilitate and operate the Real Property as an affordable housing project. The execution and recording of this Affordable Housing Agreement is a requirement of the Loan Agreement. 1.4 Proiect. Property Owner proposes to rehabilitate the 119 apartment units located on the Real Property (the "Project"), and to make available 24 units affordable to very low income households at or below 50 percent of the Area Median Income ("AMI"), 84 units affordable to lower-income households at or below 60 percent of AMI, and 10 units affordable to low and moderate income households at or below 120 percent of AMI. One apartment unit shall be available for the Property manager. Up to three of the affordable apartment units may also be occupied by operating and maintenance staff of the Property, subject to the foregoing maximum income and rent restrictions. The Project is intended to be a "qualified affordable housing preservation project" within the meaning of Government Code Section 7262.5. AGENCY AND PROPERTY OWNER HEREBY AGREE AS FOLLOWS: ARTICLE 2- Low Income HousiDl~ 2.1 Definitions. For the purposes of this article, the following definitions apply: 1 DOCSOC\736917v3\24036.0011 /1- GS"' T Tr - 2.1.1 "Area Median Income" means the latest median income from time to time determined by the United States Department of Housing and Urban Development (pursuant to Section 8 of the United States Housing Act of 1937) for the San Diego Standard Metropolitan Statistical Area. 2.1.2 "Low Income Tenants" means individuals or families with an income which does not exceed 60 percent of the Area Median Income, as adjusted for household size and as most recently determined by the u.S. Department of Housing and Urban Development. 2.1.3 "Moderate Income Tenants" means families with an income which does not exceed 120 percent of the Area Median Income, as adjusted for household size and as most recently determined by the u.S. Department of Housing and Urban Development. 2.1.4 "Very Low Income Tenants" means individuals or families with an income which does not exceed 50 percent of the Area Median Income, as adjusted for household size and as most recently determined by the U.S. Department of Housing and Urban Development. 2.1.5 "Very Low Income Apartment" means any of the twenty-four (24) apartment units on the Real Property which shall be continuously occupied only by and affordable to a Very Low Income Tenant. 2.1.6 "Low Income Apartment" means any of the eighty-four (84) apartment units on the Real Property which shall be continuously occupied only by and affordable to a Low Income Tenant. 2.1.7 "Moderate Income Apartment" means any of the ten (10) apartment units on the Real Property which shall continuously be occupied only by and affordable to a Moderate Income Tenant. 2.1.8 "Affordable Apartment" means anyone of the apartments defined in Paragraph 2.1.5 through 2.1. 7; "Affordable Apartments" means all of such apartments collectively. 2.1.9 "Manager's Unit" means that unit on the real property occupied by a resident property manager which may be exempt from occupancy restrictions. 2.1.10 "Rent" means the total of monthly payments for all of the following: (a) use and occupancy of the apartment unit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by the lessor which are required of all tenants, other than security deposits, and (c) a reasonable allowance for utilities not included in the above costs, excluding telephone service, which takes into consideration an adequate level of service. 2.1.11 "Housing Manager" means the Housing Manager of the Agency. 2.2 Qualification of Ten ants. As to the Affordable Apartments, the following will apply: 2.2.1 1 BR Verv Low Income Apartments. Each one bedroom Very Low Income Apartment will be leased to a household of up to three persons which is a Very Low Income Tenant. 2 OOCSOC\736917v3\24036.0011 ;7- r::, ~ T' T1' - 2.2.2 2 BR Very Low Income Apartments. Each two bedroom Very Low Income Apartment will be leased to a household of up to five persons which is a Very Low Income Tenant. 2.2.3 3 BR Very Low Income Apartments. Each three bedroom Very Low Income Apartment will be leased to a household of up to seven persons which is a Very Low Income Tenant. 2.2.4 I BR Low Income Apartments. Each one bedroom Lower Income Apartment will be leased to a household of up to three persons which is a Lower Income Tenant. 2.2.5 2 BR Lower Income Apartments. Each two bedroom Lower Income Apartment will be leased to a household of up to five persons which is a Lower Income Tenant. 2.2.6 3 BR Lower Income Apartments. Each three bedroom Lower Income Apartment will be leased to a household of up to seven persons which is a Lower Income Tenant. 2.2.7 1 BR Moderate Income Apartments. Each one bedroom Moderate Income Apartment will be leased to a household of up to three persons which is a Moderate Income Tenant. 2.2.8 2 BR Moderate Income Apartments. Each two bedroom Moderate Income Apartment will be leased to a household of up to five persons which is a Moderate Income Tenant. 2.2.9 3 BR Moderate Income Apartments. Each three bedroom Moderate Income Apartment will be leased to a household of up to seven persons which is a Moderate Income Tenant. 2.3 Monthly Rent. As to the Affordable Apartments, the following will apply: 2.3.1 Very Low Income Apartments. The monthly rent charged for all the Very Low Income Apartments shall not exceed one-twelfth of the amount obtained by multiplying 30 percent times 50 percent of the Area Median Income, as adjusted for household size and assuming the following unit sizes and household sizes: Unit Size Household Size One Bedroom Two Persons Two Bedroom Three Persons Three Four Persons Bedroom 2.3.2 Lower Income Apartments. The monthly rent charged for all the Low Income Apartments shall not exceed one-twelfth of the amount obtained by multiplying 30 percent times 60 percent of the Area Median Income, as adjusted for household size and assuming the following unit sizes and household sizes: Unit Size Household Size One Bedroom Two Persons Two Bedroom Three Persons 3 DOCSOC\736917v3\24036.0011 Il -(; 7 T 'M' - Three Four Persons Bedroom 2.3.3 Moderate Income Apartments. The monthly rent charged for all the Moderate Income Apartments shall not exceed one-twelfth of the amount obtained by multiplying 30 percent times 110 percent of the Area Median Income, as adjusted for household size and assuming the following unit sizes and household sizes: Unit Size Household Size One Bedroom Two Persons Two Bedroom Three Persons Three Four Persons Bedroom 2.4 Proof of Oualification. Property Owner will obtain from each person(s) to whom Property Owner rents an Affordable Apartment a "Supplemental Rental Application" ("the Application ") in the form of Exhibit B attached hereto and incorporated herein (or such other form as Agency may ITom time to time adopt and of which Agency notifies Property Owner in writing). Property Owner will be entitled to rely on the Application and the supporting documents thereto in determining the eligibility of such person(s) to rent such Affordable Apartment. Property Owner will retain the Application and supporting documents for a period of at least three years after the applicant thereof ceases to occupy such Affordable Apartment. Copies of the most recent Supplemental Rental Application for Very Low, Lower and Moderate Income Tenants commencing or continuing occupancy of an Affordable Apartment shall be attached to the semi-annual report to be filed with the Agency in compliance with Section 2.6 of this Agreement. An Affordable Apartment occupied by a qualified tenant who at the commencement of the occupancy qualifies as a very low income, low income or moderate income household shall be treated as occupied by a Very Low, Low Income Tenant or Moderate Income Tenant (as applicable) until a recertification of such tenant's income in accordance with Section 2.4.1 below demonstrates that such tenant no longer qualifies as a Very Low, Low or Moderate Income Tenant in accordance with the standards set forth in this Article 2. Notwithstanding the maximum income requirements of this Agreement, no tenants whose tenancy commenced prior to the date of Property Owner's acquisition of the Property shall be required to vacate their units solely because their income exceeds the maximum income levels required hereunder. Upon vacation of any apartment initially occupied by an ineligible household, that unit shall be rented to an eligible household at the rents required hereunder. 2.4.1 Recertification of Income. Immediately prior to the first anniversary date of the occupancy of an Affordable Apartment by a qualified tenant, and on each anniversary date thereafter, the Property Owner shall recertify the income of the occupants of each Affordable Apartment by obtaining a completed Supplemental Rental Application based upon the current income of each occupant of the Affordable Apartment. In the event the recertification demonstrates that such household's income exceeds the income at which such household would qualify, such household will no longer qualify as a Very Low Income Tenant, Low Income Tenant or Moderate Income Tenant, 4 DOCSOC\736917v3\24036.0011 I1-Gf: T rr - and the Property Owner will rent the next available unit of comparable or smaller size to one or more Very Low Income Tenant, Low Income Tenants or Moderate Income Tenants. 2.5 Waiver. Property Owner may apply in writing to the Housing Manager for a waiver, as to a specifically designated Affordable Apartment. Each such application will be accompanied by written data or other evidence relied upon by Property Owner to show that, for the near future, there will be no reasonable demand for such Affordable Apartments(s). Within 30 days after receipt of any such application, the Housing Manager will, in writing, either grant or disapprove the requested waiver; the failure of the Housing Manager to act within said period will be deemed to be approval of such requested waiver. If such waiver is granted, Property Owner may lease the Affordable Apartment(s) affected by the granted waiver to such person(s) and at such rental as Property Owner detennines, subject to each of the following: 2.5.1 Month-to-Month Tenancv. Anything in Paragraph 2.5 to the contrary notwithstanding, the lease or rental agreement will create only a month-to-month tenancy. 2.5.2 Tennination of Waiver. At any time after granting any such waiver, the Housing Manager may, by writing delivered to Property Owner, tenninate such grant. Within five days after such delivery, Property Owner will appropriately notify the tenant (s) and occupant (s) (of the Affordable Apartment (s) for which the grant of waiver has been tenninated) that the month-to-month tenancy thereof will be and become tenninated one month after delivery of such notification by Property Owner. Property Owner will take reasonable steps to effectuate such tennination, including diligent commencement and prosecution of an unlawful detainer action. 2.6 Records, Audits. Property Owner will submit to Agency semi-annual certified rent rolls, disclosing with respect to each Affordable Apartment (i) monthly rent rate, (ii) number of occupants for which the Affordable Apartment is rented, and (iii) the income of such occupant(s) and in the fonn of Exhibit C attached hereto and incorporated herein (or such other fonn as Agency may from time to time adopt and of which Agency notifies Property Owner in writing). If Agency reasonably believes that violations of the rent, occupancy and/or income requirements of this Agreement have occurred, and that an audit is necessary to verify a submitted rent roll, it will so notify Property Owner in writing thereof. Within ten days after delivery of said notice, Property Owner will deliver to Agency the names of three certified public accountants doing business in the metropolitan San Diego area. Agency will promptly deliver to Property Owner the fonner's approval of one or more of said names. The audit will be completed by an approved certified public accountant, at Property Owner's cost, within 60 days after the delivery to Property Owner of Agency's said approval. The certified public accountant will promptly deliver a copy of the written audit to Agency. 2.7 Tenn. The tenn during which this Article 2 applies commences on the date hereof. Said tenn ends on the date which is fifty-two (52) years after the date of issuance of a final certificate of completion for the Project. 2.8 Reports. Property Owner, at its expense, shall submit, or cause the Property Manager to submit, to the appropriate entities any and all reports required to be submitted pursuant to California Community Redevelopment Law. 2.9 Subordination of Affordabilitv Covenants. In the event that the Agency finds that an economically feasible method of financing for the rehabilitation and operation of the Project, without 5 DOCSOC\736917v3\24036.0011 /I-GC( T ". the subordination of the affordable housing covenants as may be set forth in this Agreement, is not reasonably available, the Agency shall make the affordable housing covenants set forth in this Agreement junior and subordinate to the deeds of trust and other documents required in connection with the construction and permanent financing for the Project approved pursuant to the Loan Agreement, and the TCAC Regulatory Agreement. Any subordination agreement entered into by the Agency shall contain written commitments which the Agency finds are reasonably designed to protect Agency's investment in the event of default, such as any of the following: (a) a right of Agency to cure a default on the loan prior to foreclosure, (b) a right of Agency to negotiate with the lender after notice of default from the lender and prior to foreclosure, (c) an agreement that if prior to foreclosure of the loan, Agency takes title to the property and cures the default on the loan, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to Agency, and (d) a right of Agency to reacquire the Real Property from the Property Owner at any time after a material default on the loan. ARTICLE 3 Uses Of The Real Property 3.1 Condition of the Real Propertv. a. Property Owner shall take all necessary precautions to prevent the release into the environment of any Hazardous Materials which may be located in, on or under the Real Property. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Property Owner shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. b. Property Owner shall indemnify, defend and hold Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys' fees), resulting from, arising out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Real Property, no matter when such claim, action, suit or proceeding is first asserted or begun and no matter how the Hazardous Materials came to be released, used, generated, discharged, stored or disposed of on, under, in or about, to or from the Real Property, or by whom or how they are discovered, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Real Property. This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. c. For purposes of this Agreement, "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, San Diego 6 DOCSOC\736917v3\24036.0011 /l~7() '" " County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25130 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law», (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article II of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 u.S.c. § 1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.c. §6901, et seq. (42 U.S.c. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 u.S.c. §9601, et seq. d. For purposes of this Agreement, "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the County of San Diego, the City, or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Borrower or the Property. 3.2 Marketing Plan. Property Owner shall submit for the approval of the Agency, which approval shall not unreasonably be withheld, a plan for marketing the rental of the apartment units in compliance with federal and state fair housing law. Such marketing plan shall include a plan for publicizing the availability of the apartment units within the City, such as notices in any City sponsored newsletter, newspaper advertising in local newspapers and notices in City offices. The marketing plan shall require Property Owner to obtain ITom the Agency the names of low- and moderate-income households who have been displaced by the Agency's redevelopment projects, and to notify persons on such list of the availability of units in the Project prior to undertaking other forms of marketing. The marketing plan shall provide that the persons on such list of displaced persons be given not fewer than ten (10) days after receipt of such notice to respond by completing application forms for rental of apartment units, as applicable. 3.3 Maintenance of Real Propertv. Property Owner agrees for itself and its successors in interest to all or any portion of the Real Property, to maintain the improvements on the Real Property in conformity with applicable provisions of the City Municipal Code, and shall keep the Real Property free ITom any accumulation of debris or waste materials. During such period, the Property Owner shall also maintain the landscaping planted on the Real Property in a healthy condition. If at any time Property Owner fails to maintain the Real Property and such condition is not corrected within five days after written notice from Agency with respect to graffiti, debris, waste material, and general maintenance, or thirty days after written notice from Agency with respect to landscaping and building improvements, then Agency, in addition to whatever remedy it may have at law or at equity, but subject to the rights of the Permanent Lender, shall have the right to enter upon the applicable portion of the Real Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Real Property, and to attach a lien upon the 7 DOCSOC\736917v3\24036.0011 A - 7( T " - Real Property, or to assess the Real Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall be promptly paid by Property Owner to Agency upon demand. 3.4 Property Management. The parties acknowledge that the Agency is interested in the long tenn management and operation of the Real Property and in the qualifications of any person or entity retained by the Property Owner for that purpose (the "Property Manager"). Therefore, during the period of the effectiveness of the affordability covenants set forth herein, the Agency may from time to time review and evaluate the identity and perfonnance of the Property Manager as it deems appropriate. ¡fthe Agency detennines that the perfonnance of the Property Manager is materially deficient based upon the standards and requirements set forth in this Section 3.4 and the approved Management Plan (as defined below), the Agency shall provide notice to the Property Owner of such deficiencies and the Property Owner shall use its best efforts to correct such deficiencies within a reasonable period of time. Upon the failure of the Property Manager to cure such deficiencies within the time set forth herein, the Agency shall have the right to require the Property Owner to immediately remove and replace the Property Manager with another property manager or property management company who is reasonably acceptable to the Agency, who (if required in the reasonable discretion of the Agency) is not related to or affiliated with the Property Owner, and who has not less than five (5) years experience in property management, including experience managing multifamily residential developments of the size, quality and scope of the Real Property. In addition, the Property Owner shall submit for the reasonable approval of the Agency a detailed "Management Plan" which sets forth in reasonable detail the duties ofthe Property Manager, the tenant selection process, a security system and crime prevention program, the procedures for the collection of rent, the procedures for monitoring of occupancy levels, the procedures for eviction of tenants, the rules and regulations of the Real Property and manner of enforcement, a standard lease fonn, and other matters relevant to the management of the Real Property. The management plan shall require the Property Manager to adhere to a fair lease and grievance procedure and provide a plan for tenant participation in management decisions. The management of the Real Property shall be in compliance with the Management Plan which is approved by the Agency, subject, however, to any requirements of the Pennanent Lender pursuant to the Pennanent Loan Documents. The Management Plan may be revised from time to time upon the reasonable approval of the Agency and the Property Owner. 3.5 Insurance. Within ten (10) days after the Property Owner's acquisition of the Real Property, Property Owner shall furnish to the Agency duplicate originals or appropriate certificates of insurance coverage evidencing that Property Owner has obtained, or cause to be obtained, insurance coverage with respect to the Real Property and Project in type, amount and from insurers with Best's ratings as are reasonably acceptable to Agency (or have been approved by the Pennanent Lender), naming the Agency and its officers, agents, employees, representatives and their respective successors, as named or additional insureds by appropriate endorsements. Such policy shall include, without limitation "all risk" property casualty insurance and comprehensive general liability insurance. Without limiting the generality of the foregoing, such policy shall also include coverage to insure Property Owner's indemnity obligations provided herein; unless Property Owner can demonstrate to the Agency's reasonable satisfaction that such coverage is not available, or is not available at a commercially reasonable cost consistent with the Project Budget. Property Owner covenants and agrees for itself 8 DOCSOC\736917v3\24036.0011 A- ìd-- T " - and its successors and assigns that Property Owner and such successors and assigns shall keep such liability policy in full force and effect until the date that is fifty-two (52) years from the date of the City's issuance of the final certificate of completion for the Project. In addition to any other remedy which Agency may have hereunder for Property Owner's failure to procure, maintain, and/or pay for the insurance required herein, Agency may (but without any obligation to do so, and subject to the rights of the Pennanent Lender under the Pennanent Loan Documents) at any time or from time to time, after thirty (30) days written notice to Property Owner, procure such insurance and pay the premiums therefor, in which event Property Owner shall immediately repay Agency all sums so paid by Agency together with interest thereon at the rate of ten percent (10%) per annum or the maximum legal rate, whichever is less. 3.6 Proceeds of Insurance. Should the Project be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Property Owner, Property Owner shall promptly proceed to obtain insurance proceeds and take all steps necessary to promptly and diligently commence the repair or replacement of the Project to substantially the same condition as the Project is required to be maintained in pursuant to this Agreement if (i) the Property Owner agrees in writing within ninety (90) days after payment of the proceeds that such repair or rebuilding is economically feasible, and (ii) the Pennanent Lender penn its such repair or rebuilding, provided that the extent of Property Owner's obligation to restore the Project shall be limited to the amount of the insurance proceeds actually received by the Property Owner. If the P~operty Owner is unable or is not pennitted to repair, replace, or restore the Project, Property Owner must give notice to Agency (in which event Property Owner will be entitled to all insurance proceeds, subject to any outstanding lien obligations, but Property Owner shall be required to remove all debris from the Real Property) and Property Owner may construct such other improvements on the Real Property as are consistent with applicable land use regulations and approved by the Agency and the other governmental agency or agencies with jurisdiction. 3.7 Taxes, Assessments, Encumbrances, and Liens. Property Owner shall pay prior to delinquency all real estate taxes and assessments properly assessed and levied on the Real Property. Until the payment in full of all amounts owing under the Agency Note, Property Owner shall not place or allow to be placed thereon any mortgage, trust deed, encumbrance, or lien (except mechanic's liens prior to suit to foreclose the same being filed) not authorized by the Loan Agreement. Property Owner shall remove or have removed any levy or attachment made on the Real Property, or assure the satisfaction thereof, within a reasonable time, but in any event prior to a sale thereunder. Nothing herein contained shall be deemed to prohibit Property Owner from contesting the validity or amounts of any tax, assessment, encumbrance, or lien, nor to limit the remedies available to Property Owner in respect thereto. 9 DOCSOC\736917v3\24036.0011 /1- 73 T ". - 3.8 Hold Hannless. Property Owner agrees to indemnify, protect, defend and hold hannless Agency, and Agency's officers, agents, employees, representatives and successors, from and against any and all claims, damages, actions, costs, demands, expenses or liability, including without limitation, reasonable attorneys' fees and court costs, which may arise from the direct or indirect actions or inactions of the Property Owner or those of its contractors, subcontractors, agents, employees or other persons acting on Property Owners' behalf which relate to the Real Property or Project. This hold hannless agreement applies, without limitation, to all damages and claims for damages suffered or alleged to have been suffered by reasons of the operations referred to in this paragraph, regardless of whether or not the Agency prepared, supplied or approved plans or specifications, or both, for the Property or Project. This indemnity by Property Owner, and all other indemnities set forth herein shall survive any foreclosure of the Real Property by the Agency pursuant to the tenns of the Agency Trust Deed. 3.9 Further Indemnification of Agency. It is understood and agreed that the parties hereto have entered the Loan Agreement as a method of providing necessary assistance to Property Owner in connection with the rehabilitation of very low, lower and low and moderate income housing and rehabilitation of the Real Property pursuant to all applicable laws and that by contributing public funds to assist in the accomplishment of such rehabilitation, or by otherwise contributing or assisting with the accomplishment of such rehabilitation, the Agency assumes no responsibility for insuring that the same is adequately undertaken (including, without limitation, the existence and/or remediation of any hazardous or toxic substances on the Real Property) and as a material consideration to Agency for entering into the Loan Agreement (and not by way of limiting the generality of Section 3.8 above) Property Owner agrees to indemnify, protect, defend and hold hann1ess Agency and all Agency's representatives, officers, employees and their respective successors from and against any and all claims, damages, actions, demands, liabilities, obligations, expenses, losses or costs, including without limitation, reasonable attorneys' fees and court costs, which may arise or in any manner connected with the rehabilitation of the Project pursuant to the Loan Agreement; excluding, however, from Property Owner's indemnity any such liability, losses, damages (including foreseeable or unforeseeable consequential dama~es), penalties, fines, expenses (including out-of-pocket litigation costs and reasonable attorneys' fees) arising out of the sole negligence of Agency or its employees, contractors, subcontractors or agents. 3.10 Obligation to Refrain from Discrimination. There shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the enjoyment of the Real Property, nor shall Property Owner itself, or any person claiming under or through it, establish or pennit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Real Property or any portion thereof. Property Owner shall further comply with all the requirements of the Americans with Disabilities Act. 3.11 Fonn of Nondiscrimination and Nonsegregation Clauses. Property Owner shall refrain from restricting the rental, sale, or lease of any portion of the Real Property, or contracts relating to the Real Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national origin of any person and shall comply with all the requirements 10 DOCSOC\736917v3\24036.0011 A -74 T ~ - for the ADA. All such deeds, leases or contracts, shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for himself or herself, his or her 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, religion, sex, marital status, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the grantee himself, or any persons claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed and further covenants that all such individuals and entities shall comply with all requirements of the Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 u.S.c. § 12101, et seq.). The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for himself or herself, his or her 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, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein lease and the lease shall be carried out in compliance with all requirements of the Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 U.S.c. §121O1, et seq.).'" c. In contracts: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the transferee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees ofland and all such activities shall be conducted in compliance with all the requirements of the Americans with Disabilities Act of 1990, as the same may be amended ITom time to time (42 u.S.c. §12101, et seq.)." ARTICLE 4 - Breach 4.1 Breach bv Agencv. If Agency breaches any of its covenants contained in this Agreement, Property Owner will have available to it all legal and equitable remedies afforded by the laws of the State ofCalifomia. 4.2 Breach bv Property Owner. If, with respect to any Affordable Apartment, Property Owner breaches this Agreement by charging higher rent than that herein permitted, Property Owner will, immediately upon Agency's demand, (i) reduce the rent to that permitted herein and (ii) refund to any tenants who theretofore paid such higher rent the amount of the excess, together with interest 11 00C50C\736917v3\24036.0011 /1- 7S- T ~ hereon at the rate of 10 percent per annum, computed from the date(s) of payment of the excess by said tenants to the date of said refund. The provisions of this paragraph constitute a third-party beneficiary contract in favor of such tenants. Further, Agency is hereby granted the power (but not the duty) to act as attorney-in-fact of such tenants in enforcing this paragraph. 4.3 Breach bv Property Owner. If, with respect to any Affordable Apartment, Property Owner breaches this Agreement by leasing to tenants who are not, pursuant to paragraph 2.2, qualified, Property Owner will, immediately upon Agency's written demand, and at Property Owner's sole cost, take all lawful steps to tenninate such leasing. 4.4 Remedies Not Exclusive. The remedies set forth in Paragraphs 4.2 and 4.3 are not exclusive, but are in addition to all legal or equitable remedies otherwise available to Agency. ARTICLE 5 - General Provisions 5.1 Assignment. The rights and obligations of Property Owner under this Agreement may be transferred or assigned, provided such transfer or assignment is made as a part of the conveyance of the fee of all or a portion of the Real Property. Any such transfer or assignment will be subject to the provisions of this Agreement. During the tenn of this Agreement, any such assignee or transferee will observe and perfonn all of the duties and obligations of Property Owner contained in this Agreement as such duties and obligations pertain to the portion of said real property so conveyed. 5.2 Amendment or Cancellation of Agreement. This Agreement may be amended from time-to- time or cancelled by the mutual consent of the parties hereto but only in the same manner as its adoption. The tenn "this Agreement" includes any such amendment properly approved and executed. 5.3 Enforcement. Unless amended or cancelled as provided in Section 5.2, this Agreement is enforceable by any party to it despite a change in the applicable general or specific plans, zoning, subdivision or building regulations adopted by City which alter or amend the rules, regulations or policies governing pennitted uses of the land, density and design. 5.4 Binding Effect of Agreement. The burdens of this Agreement bind and the benefits of the Agreement inure to the parties' successors or assignees in interest. 5.5 Relationship of Parties. It is understood that the contractual relationship between Agency and Property Owner is such that Property Owner is an independent contractor and not an agent of Agency. 5.6 Notices. All notices, demands or requests provided for or pennitted to be given pursuant to this Agreement must be in writing. All notices, demands or requests to be sent to any party shall be deemed to have been properly given or served if personally served or deposited in the United States mail, addressed to such party, postage prepaid, registered or certified, with return receipt requested, at the addresses identified herein as the places of business for each of the designated parties. Agency; 12 00C50C\73691 7v3\24036.001 1 A -7b .,.. " Redevelopment Agency of the City ofChula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: Community Development Director Propertv Owner: St. Regis Park, LP c/o Chelsea Investment Corporation 215 South Hwy 101 Suite 200 Solana Beach CA 92075 Attn: Wallace Dieckmann A party may change its address by giving notice in writing to the other party. Thereafter, notices, demands and requests shall be addressed and transmitted to the new address. ARTICLE 6 - Conflicts of Law 6.1 Conflict of Citv and State or Federal Laws. In the event that state or federal laws or regulations enacted after this Agreement has been entered into prevent or preclude compliance with one or more provisions of this Agreement, or require changes in plans, maps or pennits approved by the City, the parties will: 6.1.1 Notice and Copies: Provide the other party with written notice of such state or federal restriction, provide a copy of such regulation or policy and statement of conflict with the provisions of this Agreement. 6.1.2 Modification Conferences: The parties will, within 30 days, meet and confer in good faith in a reasonable attempt to modify this Agreement to comply with such federal or state law or regulation. 6.2 Agencv Board Hearings. Thereafter, regardless of whether the parties reach an agreement on the effect of such federal or state law or regulation upon this Agreement, the matter will be scheduled for consideration by the governing board of the Agency. The Agency, at such meeting, will detennine the exact modification or suspension which shall be necessitated by such federal or state law or regulation. Property Owner, at the meeting, will have the right to offer oral and written testimony. Any modification or suspension will be taken by the affinnative vote of not less than a majority of the authorized voting members of the governing board of the Agency. 6.3 Cooperation in Securing Pennits. The Agency shall cooperate with the Property Owner in the securing of any pennits which may be required as a result of such modifications or suspensions. ARTICLE 7 - Miscellaneous Provisions 7.1 Rules of Construction. The singular includes the plural and the neuter gender includes the masculine and the feminine. Any tenns used herein which are not defined herein shall have the meaning given to such tenns in the Loan Agreement. 7.2 Severabilitv. The parties hereto agree that the provisions are severable. If any provision of this Agreement is held invalid, the remainder of this Agreement will be effective and will remain in full force and effect unless amended or modified by mutual consent of the parties. 13 DOCSOC\736917v3\24036.0011 /1-77 .. 'Tr - 7.3 Entire Agreement. Waivers and Amendments; Regulatory Agreement to Control. Except for the Regulatory Agreement, this Agreement, together with any other written document referred to or contemplated herein, embody the entire Agreement and understanding between the parties relating to the subject matter hereof. Notwithstanding any provision in this Agreement to the contrary, so long as the Regulatory Agreement is in effect, the terms of the Regulatory Agreement shall control with respect to the Very Low Income Apartments. Neither this Agreement nor any provision hereof may be amended, modified, waived, or discharged except by an instrument in writing executed by the party against which enforcement or such amendment, waiver, or discharge is sought. 7.4 Capacities of Parties. Each signatory and party hereto hereby warrants and represents to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions or other actions have been taken so as to enable it to enter into this Agreement. 7.5 Governing LawNenue. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action arising under or relating to this Agreement shall be brought only in the Federal or State courts located in San Diego County, State of California, and if applicable, the City of Chula Vista, or as close thereto as possible. Venue for this Agreement, and performance hereunder, shall be the City ofChula Vista. [NEXT PAGE IS SIGNATURE PAGE] 14 DOCSOC\736917v3\24036.0011 /1- 7? T 'Tr Sent b>'Oh,,'es. 010 Mo>-IB-OO 02'30.n fron BS81932.B!>"8".9B ."e 2 IN WITNESS WHEREOF the parties hereto have caused this agreement to be executed as ofthe day and year first written above. ST. REGIS PARK., LP, a California limited partnership By: CIC PH RTREE PEAR TREE SERVICES COMPANY, LLC, a California limited tíability company, General Partner By: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic Chair ATTEST: Agency Secretary APPROVED AS TO FORM: John M. Kaheny, City Attorney 1 DOC60C\ 739385vl 129999.COOO A-11 ." ., STATE OF CALIFORNIA ) ) ss COUNTY OF SAN DIEGO ) On 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\736917v3\24036.0011 fI-;?Ò Y' .. - STATE OF CALIFORNIA ) ) ss COUNTY OF SAN DIEGO ) On 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 3 DDCSOC\736917v3\24036.0011 II-fIr or " EXIDBIT A PROPERTY LEGAL DESCRIPTION 4 DOCSOC\736917v3\24036.0011 /J-f¡) .. ff senSENr B'tar les . C I C Ma,-17-0. .7'48aM frOM 85'U,9H1U!5855698 --- _u ___eage ~-n- U i lU',,¿, 3/ 5 F.XluDrr"A" -- TtIE LA.ND REFERRED TO IS Sln!A D IN 11m COUNTY OJ! SAN DIiKiO, STAT!! OF CALIFORNIA AND IS ùR,<¡CRlIInO AS FOTJ .oWS: P...RCI!L I' LOT I OF QUARTf,R SnerlON 145 F ClruL^ VISTA, RANCHO DE I.A NAClON, COUNTY OF SAN DIEGO, STATI! 01' CALIFORNIA, ACCOKDIt! , TO MAP TIIDREOF NO. 505, 1'ILnn IN 'fIIE OFFlCIJ OF urn COUNTY RECORDER Of SAN DIEGO COU¡'¡TY, CR t!I, 1888. £XCEl"J1NO THE EASTERI,Y 132.00 -BT; ALSO ExcnPTlNÓ mE wES'1'I!RL Y 132.00 FEET; ALSO I!XCUTING Tan BAS1'm Y 300-00 FEET OF Tlif. STBRL Y 432.00 FI!ET o~ TIlE NORTIŒRL Y 166,00 FEE'!' OF SMa LOT I; ALSO FXCliPTING THAT PORTION ~ mE NORm 166,00 FlinT OF SAID LOT I, LYING BI>TWEEN 'œ1i W!JS113RLY LINt=. 01' 'CHIi 'EAST 148. I'EF.T 01' SAID LOT I, AND 11m FASTI!RL y LINE OF THn WEST 432.00 FJillT OF SAID LOT I. PARCELl: THAT PORTION 01' LOT I, QUAJHß SEC'nON 14S OF CHULA VISTA, RANCHO DE LA NACION, couNTY OF SAN DlliGO. STAT!) OF CAUrORNIA ACCORDING TO MAP THEREOF NO. 50S, FILED IN THE OI'l'TC".F. OF 'l1!E COUNTY R1!COIlDJ!,R OF SAN DIEGO OUNTY, MARCH 13, 181U!, OnsClUIIlID AS FOLLOWS: cOMMJ!NCING AT 'I1m SOUTHW rERLY CORNEF-OF LOT t; 1HENCB RUNNING IN AN EASl'ßRLY DlllDCTlON ALONG THE SOUTHE Y UNE OF SAID LOT, A DISTANCI! OF 132.00 FEET; TIlENC'I! IN A NORTIIERLY DIRECTION AND PAIl. WITll 'CHF. WI!STERLY LINF. OF SAID LOT, 65. 00 Fl!1J1'; THENCE WnSTERLY ANIHAAALLF.t wnn SOt.TI'HERLY LINE OF SMD LOT, 1321'I!ET; THJ1NCE smmiEIU,V AND /\LONG 'THE WF$IERL Y LINE OF SA D LOT, 65 I'I!ETTO '11m POlloi'!' OF BF,OINNJNG. PARCE!, 3: ÀU. OF THE ~ORTIt¡;RLY HALF OF OT 8 IN QUARTER SECTION 145 OF CtiULA VISTA, IN TIlE COUNtY OF SAN lJWOO, stATE OF <;ALIFORN ,ACCOWINQ TO M'AP "TIEREO.' NO. 50S, FILFD IN 11-IB OFFICE OF THE COUNT\' ¡u:,CORDI!R OF SAN DIE comrIY, MAllCH 1~.1188. BXCEP:rum, 'THE WF.RTERL Y 150.00 EET llIEREot'. PARCI!1A: AI,L OF THI! SOUTIŒRLY HALF OF LOT SIN QUAllTI!R SECTION 145 OF clfULA VISTA, IN TIll! COtiNTY OF SAN DIEOO, S'l'ATE OF CALJFO . A(,'CORDINO TO MAl' THF-RI!OF NO. 50S, FILED IN TlŒ OFFICE OF TIlE COtiNTY JU!(,'ORDER OF SAN D coUNTY, MARCH 13, 1888. ALSO EXCEPTING THERlWROM 1 PARCELS: '- AN BASEMENT ANlJ luaUT OF W A FOR ROAD AND U'J11,ITY I'URI'0SI!S OV1'.R, UNDRR. ALONG AND ACROSS TEE SOUTIŒRLYlO.OO FE T OF 11IE WI!STERLY 150.00. FEnTOp tOT 81N QUARTER SECTION 145 OF CHUL.A VISTA, IN TIll! COUNTY OF SAN DIEOO, STAll'. OF CALIPORNIA. AGÇOJl"DING TO MAl' 'rHRRl!OFNO. 50S, mHD IN 1'HE O~FICE OF 'mE oUNTY R j(;OIU)13ROf SAN DlEGO COUNTY, MARCH n, 1888. /Î -f; 3 ~. ~ - EXIDBIT B SUPPLEMENTAL RENTAL APPLICA nON The rental unit for which you are applying has received governmental assistance under programs to encourage more affordable housing. As a result, the unit carries a rent level restriction and is restricted to occupancy by very low, low and moderate income households. The infonnation required on this fonn is necessary to detennine you income eligibility to occupy the unit. You must report all household income. Infonnation provided will be confidential and not subject to public disclosure pursuant to State Government Code Section 6254(h). 1. Rental Unit Address 2. Applicant Name 3. Other Household Members 4. Total Current Annual Household Income from all Sources: TOTAL $ Detail: Household Member Income Source 5. Tota] Gross Annual Household Income shown on most recent Federal Tax return (attach copies of most recent Federal Tax returns for all household members receiving income. Include other verification of income not appearing on tax fonns.) TOTAL $ APPLICANT'S STATEMENT I certify, under penalty ofpetjury, that the foregoing infonnation is true and correct to the best of my knowledge. I understand that any misrepresentation of the infonnation contained herein may be cause for eviction. Signature Date Applicant 5 DOCSOC\736917v3\24036.0011 /1 - gtj T TT - OWNER'S STATEMENT Based on the foregoing infonnation, I certify, under penalty of peJjury, that the applicant is eligible to occupy this restricted affordable unit. Eligibility is based on finding that the applicant household's current annual income is $ and does not exceed the CUITent maximum household income of$ allowed under the tenus of a Affordable housing agreement with the City ofChu1a Vista regarding this residential development. Name Title Signature Date 6 DOCSOC\736917v3\24036.0011 ¡l. gs- T .~ - >< :¡ ~ ¡¡ 0 ê f;¡;¡ ° '" u >;;¡ u >< .... '" I- U =~ - -~ç ~ ~ ~i~ ~ ~ ~Et w ° U ...J <C I- t;.¡,§ ~ ~~'= I- ~"'~ ~ ° =.S 0 "'°= c.. ë ... ~ ~ w ,Q) ¡:¡..... f;¡;¡ g:: ~ ;;; " ~ ø ~ 2 '" Z ..D..c:: = Q - E"gë O':~ ~ 1! - 0 I =::.. 0 ",.~ :iE '" ~Ç",.. 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"'+ 0:: Q) .se~ ~ Ê eO;" - Q) 'JJ Z (,) 0 Q) :!: 0 ,..,:s! '" C) ]~~ š z = = '" = iñ 0 E-<~êi$ ::J ""=- 0 ~ ~ - w '" ...J .... = ca =" < . '" c == 0:: Z ¡j 0 0 LL. LL. < .... ci! ] ::J ~ Z = Z = < :: . = :¡¡¡ ... w e U) ~ ô C") Q) .!:>'" § ; = ...., = ... ~~ 0 e .. ~ .. N '" .....- '" ~'JJ ~ ~ Qj ~ E ~ ò ~ C'O.2:I Z ~ = I ~ ';; :; a¡ :;:- ~ g .~ a OJ e '" <:> ..... N '" .... 0/) g 0... « ¡1~q3 0/) 0/) 0/) 0/) 0/) 0/) 0 T ". - Owner's Certification I am the owner or owner's representative for an affordable housing development in the City of Chula Vista, which is bound by a Affordable Housing Agreement with the Redevelopment Agency of the City ofChula Vista. I certify under penalty or perjury that the attached rent roll for affordable units at my project is true and correct to the best of my knowledge and complies with the tenus and conditions stipulated in the Affordable Housing Agreement, or any agreement that implements the same, with the Redevelopment Agency of the City ofChula Vista. Name Title Signature Date 16 DOCSOC\736917v3\24036.0011 jl - 9cj - . - - EXHIBIT E SOURCES AND USES 1 DOCSOC\734476v3\24036 00]] T' '" - EXHIBIT E Peart,ee Apartments Chula Vista. CA 119 units 20%@SO%AMI Low-Income Housing Tax Credits 4% 80%@ 60% AMI PROJECTED SOURCES AND USES OF FUNDS 12-May-00 7:30 AM Closin9 Quarter 1 Quarter 2 Quarter 3 Lease Up Subtotal SOURCES OF FUNDS Deferred Fees - Developer 75.000 75.000 75,000 75.000 300,000 LlH Tax Credits 1,111,382 972,459 416.768 277,846 2,778.455 Redevelopment Loan 1.387.152 1.387.152 Activity Bonds Used 5.259.124 5.259,124 Taxable Tail 220,228 220.228 Net Income from Operations durin9 Construction 59.071 59.071 59.071 73.720 250,933 Total Sources at Funds 8.052.886 134.071 1.106.530 550.839 351.566 10.195.891 USES OF FUNDS Site Acquisition. Land 1,000.000 1.000.000 Site Acquisition 5.200.000 5.200,000 Brokerage Commission@ 1% 62.000 62.000 Title/Recording & Escrow 5.000 5,000 Subtotal Site Acquisition 6.267,000 6.267,000 Structures @1ft 510.470 510,470 510,470 0 1.531.411 $12,869/unit Contractor OH. Profit & Gen. Reo'ts 0 71.466 71,466 71,466 214,398 14% Contingency % of Hard Costs 0 87,290 87.290 76.571 0 251.151 15% Contingency. Soft Costs 12,500 12,500 12.500 12.500 50.000 Development Fee 124,790 124,790 124,790 124.790 124,790 623.952 Pennit Fees & Plan Check 17.850 17.850 $150/unit Architects & En9ineerin9 25.000 29.000 11.000 10.000 75.000 Architectural Supervision 6.000 4,500 4,500 15.000 Pre-<:onstruction - Appraisals 7.500 7,500 Market Study 13.000 13.000 Bond Premium/Contractor 17,458 17,458 Real Estate Taxes 18.650 20.251 21.851 60.752 Le9al Fees 10.000 7.500 7,500 10,000 35,000 Other - Accounting/Finance 10.000 5.000 5.000 5.000 25.000 Liability/COC Insurance 25.000 0 25.000 Subtotal Improvements 235.640 895.125 854.768 847.148 129.790 2.962,472 Other LoanfTCAC Costs 61.904 61.904 Construction Loan Fees / Origination Fees @ 41.095 41,095 0.75% Forward Rate Lock 16.730 16.730 Construction Interest 103.977 103.977 103.977 311,930 SubtotallnteresUFees 119,729 103.977 103.977 103.977 0 431.659 Marketing 5.000 5.000 Relocation Expenses 60,000 60.000 Replacement Reserve 29.750 29.750 Operating Deficit Reserve 111.324 111.324 Construction Services 15.975 15.975 Penn Loan Fees / Origination Fees @ 54.794 54.794 1.0% Legal & Documentation 35.000 35.000 Cash Flow Verification Consultant & Audit 4.000 4.000 Non Pennanent Loan Oper Interest 103.977 103.977 Trustee 10.000 10.000 CDLAC/CDIAC 3.000 3.000 Bond Counsei 31.250 31.250 Miscellaneous 39.116 39.116 Borrowe(s Counsel 25.000 25.000 Issuer Fee - City ofChula Vista 12 bps 6.575 6.575 Total Uses of Funds 6.792,286 1.059.102 958,744 951,125 434.635 10,195.891 3.998,524 0 0 0 0 Net Source & Use 1.260.600 (925.031) 147.786 (400,286) (83.069 0 Distributions 0 Balance of Funds 1.260.600 335.569 483.355 83.069 0 0 Total Project Costs $ 10.195.891 /y - c¡.s- ."""',,,'" PH%." ." " Soft Costs Totals 223.140 213.399 277.018 280.118 129.790 1.123.465 Construction Loan (Draw) - Per Quarter 5.259.124 0 0 0 0 Interest 98.609 98.609 98,609 98.609 98.609 Loan Balance Interest Rate@ 5,259,124 5,259.124 5,259,124 5.259.124 5.259,124 7.50% 5.259.124 Taxable Tail 220.228 220.228 220.228 220.228 220.228 Interest 5.368 5.368 5.368 5.368 5.368 Payments (5,368) (5,368) (5.368) (5.368) (5.368) Loan Balance Interest Rate@ 220.228 220,228 220,228 220,228 220.228 9.75% TCAC & Other Related Costs: Initial Fiiing Fee: 2,000 Reservation Fee, as % Of Federal Credit Amount 4.0% 11.114 TCAC Monitoring Fee: $410 48,790 FilinglPreparation ;1- q~ ~".,,""" eo".. T Tr - EXIDBIT F PROJECT BUDGET 1 DOCSOC\734476v3\240J6.0011 T ~ - EXHIBIT F Peartree Apartments Chula Vista, CA . - DEVELOPMENT BUDGET & CALCULATION OF TAX CREDIT EQUITY 17-May-00 09'16AM ACTUAL OR EST. 70% 30% DESCRIPTION OF COSTS OF COSTS ELIGIBLE BASIS ELIGIBLE BASIS LAND COSTS: LAND COSTS $1 000,000 XXXXXXXXXXXXX XXXXXXXXXXXXX LEGAL\ BROKERS FEES\TITLE $67,000 XXXXXXXXXXXXX XXXXXXXXXXXXX OFF-SITE IMPROVEMENTS $0 XXXXXXXXXXXXX XXXXXXXXXXXXX DEMOLITION EXPENSE $0 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL LAND COSTS $1,067,000 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL ACQUISITION COST 5.200,000 XXXXXXXXXXXXX $5.200,000 NEW CONSTRUCT/ON SITE WORK $0 STRUCTURES $0 GENERAL REQUIREMENTS $0 CONTRACTOR OVERHEAD $0 CONTRACTOR PROFIT $0 TOTAL CONSTRUCTION $0 $0 REHABILITATION SITE WORK $0 $0 STRUCTURES $1,531.411 $1531,411 GENERAL REQUIREMENTS $89,332 $89,332 CONTRACTOR OVERHEAD $35,733 $35,733 CONTRACTOR PROFIT $89,332 $89,332 TOXIC MITIGATION EXPENSE $0 $0 TOTAL REHABILITATION COSTS $1,745.809 $1,745.809 ARCH/TECTURAL FEES DESIGN $52.500 $52,500 SUPERVISION $15.000 $15.000 TOTAL ARCHITECTURAL COSTS $67,500 $67.500 TOTAL SURVEY & ENGINEERING $22.500 $22.500 CONSTRUCT/ON /NTERESTIFEES CONSTRUCTION LOAN INTEREST $311,930 $30,000 LEGAL COUNSEL FEE $0 $0 ORIGINATION FEE $41.095 $41.095 LETTER OF CREDIT $16,730 $16.730 BOND PREMIUM $17,458 $17,458 TAXES $0 $0 INSURANCE $25.000 $25,000 TITLE & RECORDING $0 $0 TOTAL CONST.INTEREST/FEES $412.213 $130.283 TOTAL CONSTRUCTION CONTINGENCY $251,151 $251,151 PERMANENT FINANCING PERM LOAN FEES & COSTS $186,710 XXXXXXXXXXXXX XXXXXXXXXXXXX APPLICATION FEE $0 XXXXXXXXXXXXX XXXXXXXXXXXXX TITLE & RECORDING XXXXXXXXXXXXX XXXXXXXXXXXXX OTHER: LEGAL, MISC. $38.000 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL PERM FINANCING COSTS $224,710 XXXXXXXXXXXXX XXXXXXXXXXXXX /1- '17 T" ". - DEVELOPMENT BUDGET & CALCULATION OF TAX CREDIT EQUITY (Can't) Ò. PAGE 2 ACTUAL OR EST. 70% 30% DESCRIPTION OF COSTS OF COSTS ELIGIBLE BASIS ELIGIBLE BASIS LEGAL FEES LENDER LEGAL $35,000 $35,000 OTHER (fncludina CPA ODin ions & Aceta.) $25,000 $25.000 TOTAL LEGAL (NOT INC. SYNDICATION) $60.000 $60.000 MARKET/APPRAISAL MARKET STUDY $13000 $13,000 APPRAISAL $7,500 $7500 TOTAL MARKET/APPRAISAL $20.500 $20,500 RESERVES RENT RESERVES $141,074 XXXXXXXXXXXxx XXXXXXXXXXXxx OTHER $103,977 XXXXXXXXXXXxx XXXXXXXXXXXxx TOTAL RESERVE COSTS $245.051 XXXXXXXXXXXxx XXXXXXXXXXxxx OTHER EXPENSES TCACAPP/ALLOCATION FEE $61,904 XXXXXXXXXXXxx XXXXXXXXXXxxx ENVIRONMENTAL IIncl. Asbts. & Ld. Bsd Pnt.) $0 $0 PHYSICAL NEEDS SURVEY $0 $0 ASBESTOS & LEAD BASED PAINT $0 $0 SEISMIC STUDY ..... $0 $0 OTHER SURVEYS (ACCESS REPORT) . $0 LOCAL PERMIT FEES $17,850 $17.850 MARKETING / RELOCATON $65,000 XXXXXXXXXXxxx XXXXXXXXXXxxx REAL ESTATE TAXES $60,752 $60.752 SCHOOL FEES $0 $0 CONTINGENCY (SOFT COSTS $50,000 $50000 OTHER: SYNDICATION COSTS $0 XXXXXXXXXXxxx XXXXXXXXXXxxx TOTAL OTHER COSTS $255,506 $128,602 SUBTOTAL REStDENTIAL COSTS $9,571,939 $7,626.345 DEVELOPER COSTS DEVELOPER OVERHEAD/PROFIT $623.952 $623,952 CONSULTANTS $0 $0 PROJECT ADMINISTRATION "'. $0 $0 OTHER $0 $0 TOTAL DEVELOPER FEE $623,952 $623.952 TOTAL RESIDENTIAL COSTS $10.195,891 $8.250.297 II TOTAL COMMERCtAL COSTS $0 $0 Treshold Basi, II TOTAL PROJECT AND BASIS COSTS $10,195,891 I I $8,250.297 $11.574.916 $85.679.76/unit $100.60/sa ft 1r130% DIFFICULT DEVELOPMENT FACTOR? Tract#: Not Avail. v $9.165.386 TX CREDITS Tx Credit Rt %LI Eli ible 3:57% 100.00% $327,204 MAXIMUM TAX CREDITS $0 IITX CREDITS OVER TEN YEARS $3.272.043 II TX CREDIT EQ'Y $/Credit % Investment $0.8500 99.90% $2.778,455 /Î -qq - T ~ EXHIBIT G PROJECT PRO FORMA 1 DOCSOC\734476v3\24036.0011 y ~ - EXHIBIT G Peartree Apartments Chula Vista, CA 119 units 20% @ 50% AMI Low-Income Housing Tax Credits 4% 80% @ 60% AMI PROJECTED SOURCES AND USES OF FUNDS 12-May-00 7:30 AM Closing Quarter 1 Ouarte' 2 Quarter 3 Lease Up I I Subtotal SOURCES OF FUNDS Oeferred Fees - Developer 75.000 75,000 75,000 75.000 300,000 lIH Tax Credits 1,111,382 972,459 416.768 277,846 2,778,455 Redevelopment Loan 1.387.152 1.387.152 Activity Bonds Used 5.259.124 5,259.124 Taxable Tail 220.228 220.228 Net Income from Operations during Construction 59.071 59,071 59.071 73.720 250.933 Total Sources of Funds 8.052.886 134,071 1,106,530 550.839 351,566 10,195,89' USES OF FUNDS Site Acquisition - Land 1.000.000 1.000.000 Site Acquisition 5.200.000 5.200,000 Brokerage Commission @ 1 % 62,000 62.000 Title/Recording & Escrow 5.000 5.000 Subtotal Site Acquisition 6.267.000 6.267.000 Structures @/ft 510,470 510,470 510,470 0 1.531.411 0 71,466 71,466 71,466 214.398 14% 0 87.290 87.290 76.571 0 251.151 15% Contingency. 12.500 12.500 12.500 12.500 50.000 Development Fee 124.790 124.790 124.790 124.790 124.790 623.952 Permit Fees & Plan Check 17.850 17.850 $150/unit Architects & En9ineerin9 25.000 29.000 11.000 10.000 75.000 Architectural Supervision 6.000 4.500 4,500 15.000 Pre-construction - Appraisals 7.500 7,500 Market Study 13.000 13.000 Bond Premium/Conll'actor 17,458 17.458 Real Estate Taxes 18.650 20.251 21.851 60.752 Le9al Fees 10,000 7.500 7.500 10,000 35.000 Other - Accountin9/Finance 10.000 5.000 5.000 5.000 25.000 Liability/COC Insurance 25,000 0 25.000 Subtotal Improvements 235.640 895.125 854.768 847.148 129.790 2.962,472 Other LoanITCAC Costs 61.904 61.904 Construction Loan Fees / Ori9ination Fees @ 41.095 41.095 0.75% Forward Rate Lock 16.730 16.730 Construction Interest 103.977 103.977 103.977 311.930 SubtotallnteresUFees 119.729 103.977 103.977 103,977 0 431.659 Marketin9 5.000 5.000 Relocation Expenses 60.000 60,000 Replacement Reserve 29.750 29,750 Operatin9 Deficit Reserve 111.324 111.324 Construction Services 15.975 15.975 Perm Loan Fees / Ori9ination Fees @ 54.794 54.794 1.0% Legal & Oocumentation 35.000 35.000 Cash Flow Verification Consultant & Audit 4.000 4.000 Non Permanent Loan Oper Interest 103.977 103.977 Trustee 10.000 10.000 CDLAC/CDIAC 3.000 3,000 Bond Counsel 31.250 31.250 Miscellaneous 39.116 39.116 Borrowe~s Counsel 25.000 25.000 Issuer Fee - City of Chula Vista 12 bps 6.575 6.575 Total Uses of Funds 6.792.286 1.059.102 958.744 951.125 434,635 10.195.891 3.998.524 0 0 0 0 Net Source & Use 1.260.600 (925.031) 147.786 (400.286) (83,069) 0 Distributions 0 Balance of Funds 1.260.600 335.569 483.355 83.069 0 0 Total Project Costs $ 10.195.891 17- 99 """""'AM "...'" . ff - Soft Costs Totals 223.140 213.399 277.018 280.118 129.790 1.123.465 Construction Loan (Draw) - Pe, Quarter 5.259.124 0 0 0 0 Interest 98.609 98,609 98.609 98.609 98.609 Loan Balance Interest Rate@ 5,259.124 5,259.124 5,259.124 5.259,124 5.259,124 7.50% 5.259.124 Taxable Tail 220.228 220.228 220.228 220.228 220.228 Interest 5.368 5.368 5,368 5,368 5.368 Payments (5.368) (5,368) (5,368) (5.368) (5.368) Interest Rate@ 220,228 220,228 220,228 220.228 220.228 9.75% TCAC & Other Related Costs: Initial Filing Fee: 2,000 ReselVation Fee, as % 01 Federal Credit Amount 4.0% 11.114 TCAC Monitoring Fee: $410 48.790 Filing/Preparation 61.904 Il- (0 0 """" "AM PH"'. T' " - Peartree Apartments Chula Vista, CA . - DEVELOPMENT BUDGET & CALCULATION OF TAX CREDIT EQUITY 17-May-00 09'16AM ACTUAL OR EST. 70% 30% DESCRIPTION OF COSTS OF COSTS ELIGIBLE BASIS ELIGIBLE BASIS LAND COSTS: LAND COSTS $1,000000 XXXXXXXXXXXXX XXXXXXXXXXXXX LEGAL\ BROKERS FEES\TITLE $67,000 XXXXXXXXXXXXX XXXXXXXXXXXXX OFF-SITE IMPROVEMENTS $0 XXXXXXXXXXXXX XXXXXXXXXXXXX DEMOLITION EXPENSE $0 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL LAND COSTS $1,067.000 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL ACQUISITION COST 5,200,000 XXXXXXXXXXXXX $5,200,000 NEW CONSTRUCTION SITE WORK $0 STRUCTURES $0 GENERAL REQUIREMENTS $0 CONTRACTOR OVERHEAD $0 CONTRACTOR PROFIT $0 TOTAL CONSTRUCTION $0 $0 REHABILITATION SITE WORK $0 $0 STRUCTURES $1531,411 $1,531,411 GENERAL REQUIREMENTS $89,332 $89.332 CONTRACTOR OVERHEAD $35.733 $35,733 CONTRACTOR PROFIT $89332 $89.332 TOXIC MITIGATION EXPENSE $0 $0 TOTAL REHABILITATION COSTS $1,745,809 $1.745,809 ARCHITECTURAL FEES DESIGN $52,500 $52,500 SUPERVISION $15000 $15,000 TOTAL ARCHITECTURAL COSTS $67.500 $67.500 TOTAL SURVEY & ENGINEERING $22.500 $22,500 CONSTRUCTION INTEREST/FEES CONSTRUCTION LOAN INTEREST $311,930 $30.000 LEGAL COUNSEL FEE $0 $0 ORIGINATION FEE $41.095 $41,095 LETTER OF CREDIT $16,730 $16,730 BOND PREMIUM $17,458 $17,458 TAXES $0 $0 INSURANCE $25,000 $25000 TITLE & RECORDING $0 $0 TOTAL CONST.INTEREST/FEES $412,213 $130.283 TOTAL CONSTRUCTION CONTINGENCY $251.151 $251.151 PERMANENT FtNANCING PERM LOAN FEES & COSTS $186710 XXXXXXXXXXXXX XXXXXXXXXXXXX APPLICATION FEE $0 XXXXXXXXXXXXX XXXXXXXXXXXXX TITLE & RECORDING XXXXXXXXXXXXX XXXXXXXXXXXXX OTHER: LEGAL, MISC. $38000 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL PERM FINANCING COSTS $224,710 XXXXXXXXXXXXX XXXXXXXXXXXXX /V - (Ò ( or' " - DEVELOPMENT BUDGET & CALCULATION OF TAX CREDIT EQUITY (Con't) Ò, PAGE 2 ACTUAL OR EST. 70% 30% DESCRIPTION OF COSTS OF COSTS ELIGIBLE BASIS ELIGIBLE BASIS LEGAL FEES LENDER LEGAL $35,000 $35,000 OTHER (IncludlnQ CPA Opinions & AcctQ.) $25,000 $25,000 TOTAL LEGAL (NOT INC. SYNDICATION) $60,000 $60.000 MARKET/APPRAISAL MARKET STUDY $13,000 $13,000 APPRAISAL $7,500 $7.500 TOTAL MARKET/APPRAISAL $20.500 $20,500 RESERVES RENT RESERVES $141,074 XXXXXXXXXXXXX XXXXXXXXXXXXX OTHER $103,977 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL RESERVE COSTS $245,051 XXXXXXXXXXXXX XXXXXXXXXXXXX OTHER EXPENSES TCACAPP/ALLOCATION FEE $61.904 XXXXXXXXXXXXX XXXXXXXXXXXXX ENVIRONMENTAL (Incl. Asbts. & Ld. Bsd Pnl) $0 $0 PHYSICAL NEEDS SURVEY $0 $0 ASBESTOS & LEAD BASED PAINT $0 $0 SEISMIC STUDY ,~, $0 $0 OTHER SURVEYS (ACCESS REPORTI $0 LOCAL PERMIT FEES $17,850 $17,850 MARKETING I RELOCATON $65,000 XXXXXXXXXXXXX XXXXXXXXXXXXX REAL ESTATE TAXES $60,752 $60.752 SCHOOL FEES $0 $0 CONTINGENCY (SOFT COSTS $50,000 $50,000 OTHER: SYNDICATION COSTS $0 XXXXXXXXXXXXX XXXXXXXXXXXXX TOTAL OTHER COSTS $255,506 $128.602 SUBTOTAL RESIDENTIAL COSTS $9.571.939 $7,626.345 DEVELOPER COSTS DEVELOPER OVERHEAD/PROFIT $623952 $623,952 CONSULTANTS $0 $0 PROJECT ADMINISTRATION $0 $0 OTHER $0 $0 TOTAL DEVELOPER FEE $623.952 $623.952 TOTAL RESIDENTIAL COSTS $10.195.891 $8,250,297 I TOTAL COMMERCIAL COSTS I $0 I I $0 I Treshold Basi, II TOTAL PROJECT AND BASIS COSTS $10,195,891 $8,250,297 $11,574.916 $85,679.76/unit $1 00.60/so It 1~30% DIFFICULT DEVELOPMENT FACTOR? Tract#: Not A vail. v $9,165,386 TX CREDITS Tx Credll Rt %LlEIi ible 3:57% 100.00% $327,204 MAXIMUM TAX CREDITS $0 IITX CREDITS OVER TEN YEARS $3,272,043 II TX CREDiT EQ'Y $/Credll % Investment $0.8500 99.90% $2,778,455 /V-fOd- - T ~ Peartree Apartments Chula Vista, CA 119 Square Restricted Monthly U¡;¡;ty Monthly Annual Rent: %AMI Units Feet/Unit Sq. Ft. Gross Rent Allowance Net Rent Rent 1 BR/1 BA 50% 1 750 750 503 26 477 5,724 1 BR/1 BA 60% 4 750 3,000 604 26 578 27,744 2BR/1BA 50% 22 850 18,700 603 34 569 150,216 2BR/1BA 60% 85 850 72,250 724 34 690 703,800 2BR/1BA [ 60% 2 950 1,900 724 34 690 16,560 3BR/1 BA 50% 1 950 950 698 41 657 7,884 3BR/1BA 60% 4 950 3,800 837 41 796 38,208 0 0 Total Rents 119 101,350 950,136 Laundry & Vending 10 per Unit / per Month 14,280 Sub-Total 964,416 Less: Vacancies @ 5% 48,221 Total Income $916,195 Operating Expenses Building Maintenance Expense Cleaning 4,200 Carpets 7,200 Painting 7,200 Sub-Total $18,600 Repairs & Maintenance 12,000 Supplies 2,400 Other 300 Total Bid. Maintenance $33,300. Advertising 7,800 Landscape Maintenance 1,200 Pool 4,450 Pest Control 2,400 Licenses, Permits & Dues 1,700 Legal 9,600 Accounting 6,960 Insurance 13,600 Furniture Rental Office Supplies / Administration 5,400 Total Other Costs $53,110 ¡<1-(()3 T' .". - On-Site Management: Expense ManaQers Apartment 8,280 ManaQers Salary 19,200 Assistant ManaQers Salarv 10,800 CleaninQ Salary 8,400 Maintenance Salarv 18,000 Security Salary 10,800 Bonuses 3,000 Pavroll Taxes & Worker's Camp 12,557 Group Insurance 7,200 Total On-Site Manaaement $98,237 Mana ement Fees 4.0% of Total Income Taxes: Property Taxes I $27,8161 Utilities: Gas & Electric 49,200 Telephone 2,400 Water & Sewer 36,000 Trash Removal 16,200 Total Utilities $103,800 $352,910 I - Total Expenses $563,285 29,750 I I Reserves $250 per Unit Net Income Available for Debt Service 533,535 ¡J-/oc/ T' ff - Perm Loan: 5,479,352 Debt Service Covera! 1.15 Interest 7.50% Amortization 30 Bond Cap Allocation 5,259,124 Bond Tax Exempt 5,259,124 Taxable Tail 220,228 Valuation Cap Rate 8.25% 6,467,091 Loan restricted to Lo, 90% .. Value without tax credits 5,820,382 Potential Reduction in Loan (341 ,030) A-reS- ? . ~ - Peartree Apartments 119 Issued Bond Interest Expense Schedule Q1 Q2 Q3 Q4 Bond Amount 5,259,124 0 0 0 5,259,124 0 0 0 0 0 0 0 Operating Income During Construction Quarter 1 Quarter2 Quarter 3 Quarter 4 Income per Quarter $ 241,104 $241,104 $241,104 $ 241,104 Less: vacancy 48,221 48,221 48,221 24,110 192,883 192,883 192,883 216,994 Operating Expenses 95,665 95,665 95,665 95,665 $ 97,218 $ 97,218 $ 97,218 $ 121,329 61% 59,071 59,071 59,071 73,720 250,933 ;1-10(; .. ..,. - ~~ Q ~ ~-~Q ~ ~~~Q~ ~~~~ ~~ ~ ~ ?g~ ~ ~i ~ i ~~i~ ~ ~~~~I ~.i~~!~ ~ ~ R ~~! ~ ~~ ~ ~ ~ro~5 ~ ~~~5C -~£ø;ro~ - g ~ ~m~ ~ ~~ m g R~~~ ro R-~~~ ~~3~a~Þ ~ ~ 0 o$m ~ ~! ~ ! ~ 3 ~ ~ ~ = ~~~m~~~ ~ ~ ~ ~a> - ro~ - ~ > ro - > ~ - om ZQ - ~ ~m~ ~ ~~ ~ ;§ g 3. ~ g ¡¡; ~3~~o 3: cli' ! i :!!O~ - 0 ~ ~ r ,,~o c: ro~.." ro '" - 0>- ~ ;; ,,~g ¡]~~::! 3.~"}~1f:J:ñí ~3 ç ø' ¡] ~ => ~'ß o.o!'è 0 ;rID ~ - 0 - ,,£ ! en s: ~~ c¡g 83 c:;~?;= ro~ 0' 3 ¡¡, "'~ - :r: g"'3-6'" "'!-6"'~ '" roê-.ê-.~' (J) ~ go;!~;;:;;~; ~ g g'" ~ ~:;; 3:~ ~~ 3:~ g @ @ 0 æ ro 0 0 ro 0 ~ ro ~ ~ @ ~ " ~ " " ~ ~ 5 - 5 5 - 5 ~ ~ ~ ~ <0 '" '" -::;: :.., '" '" '" l;¡ -¡;¡ ~ ~ * * 000 ~m a 6 69 ~6 0 w 00 00 mo w o~ mw ~~ ~ ~~ ~ 8~ ~~ ~~ - ~ ~ m w <0 ~'" W ~~'" oow~ m m ~~ m "'m<o ",mm w '" m ~o ~ oo~ rn~N N ~ ~ 000 00 oom wm<o 00 ~ <0 a 00 a 0000 00 °è8 ~ 899 ~~~ mom ~ -~ - - ~ m w <0 "'~ ~ ~~'" <ow~ ~ m w m<o m "'m<o wmm w m <0 o~ 0 ~~~ O~N ro N ~ <om m ",mm oom<o w m a a 00 a 0000 00 o~~ a ~89 ~~~ 00 '" a '" -~ - - ~ ~ m w <0 w~ m ~~'" ow~ 00 ~ m 0000 m "'m<o wmm ~ 00 '" w~ ~ NW~ ~~N rn 0 rn ww ~ mom ~m<o w ~ ~ a 00 a 0000 00 0~3 ~ 8~8 oo~~ ~ m 00 w -~ - ~ ~ ~ m w <0 m~ m ~~'" ~w~ <0 <000 ~m ~ ",m<o ~mm m ~ m rn~ 0 w~~ ro~N W N ro mm '" ~mm ~m<o m ~ ~ a 00 a 0000 00 o~~ ~ 9~8 ~~~ ~ 00 '" ~ ~- - - ~ ~ m ~ 0 m~ ~ ~~'" "'w~ a a m~ ~ "'m<o mmm m ~ roro ~ rnrn~ rn~N W ~ w m~ a o"'m oom<o w ~ a a 00 a 0000 00 0~9 a ~98 "'~~ m w 00 m ~ --~~m ~o oo~ 00 ~-'" ww~ w ~~ 00 "'m<o mmm ~ <0 m NN rn rn~~ rn~N ~ ~ rn ~w ~ w<om <om<o ~ ~ <0 a 00 a 0000 00 0~9 a ~98 ~~~ ~ ~ ~ m ~ ~ -~~~m ~o ~ ~"'~ <0 ~-'" ~w~ '" w m m m"'~ <0 "'m<o ~mm 00 w '" ~ ~g~ ~ ~~~ ~~~ ~ ~ ~ a 00 a 0000 03 <o~~ a ~98 m~~ <0 ~ m ~ ~ - 00 <0-::;: = = -::;:~N ~wt ~ t g '" '" m<o ~ ~w a a "'m<o <omm a <0 <0 mw ~ ro~ ro ~~ rn rn ro~~ W~N 0 00 oow '" ~~ m o~ ~ <o~m ~m<o mom a ~9 '" 900~ ~~ 0000 00 ~38 ~~~ 00 000 00 ~ ~~ 00 0-::;: N N -::;:~N ~wt ~ ~ i '" w ~o 00 <0'" ~ ~ wm<o omm ~ ~ m mrn N rn~ ~ om ~ ~ OW~ ro~N rn ~ N a ~5 ~ ~~09 t~ "'00 N 9~8 ~~~ ~ ~ ~ <0 A -(0 7 ~ -::;: ~~ ~ ~ ('- ~ ~ ~ m ~ ~ ~ ~~ a ~~ '" '" ~-'" œ",~ m œ ~ '" '" oo~ ~ <ow '" '" "'m<o "'mm '" a ~ ~ro rn w~ ~ ~o 0 0 ~rn~ ~~N N ~ N "'00 <0 <0<0 00 oo~ '" '" m"'m mm<o '" 00 a ~ 009 <0 3OOo~ "'9 <000 <0 ~~9 oo~~ '" a '" a T .". - ~~ ~ ~ ~-~~ ~ ~~~~~ ~~~~ ~~ ~ ~ ?g~ ~ "'¡¡¡ 3- "".a.g.~:g ".-ct~cn II>(þ'E.c...ZII>g Z ~!!!. -<ell> ~ !~ þ ~ ~.~~ ~ ~~~~æ a.~R~a~~ a I ~ ~~~ ~ ~~ ~ g ~~~~ ~ ~~~~~ ~~~~~~~ ~ ~ 8 ò~~ gJ g;:¡. ~ a. 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'" - ~ ~ $ Nm ø 0 O~ ~~ 00 ~ 00 ~ ~ ~ ~ 00 ~ ~ ø'm 00 ~~ ~ 0 ~O ~~ 00 ~ 00 ~ ~ ~ ~ ~ ~ '" ~O 0 0 ~$ O~ 00 ~ 00 ~ a N 0 ~ io ~o ~ 0 ~~ 00 ~ 00 N = ~ N ~~ ~ 0 ~~ $§ 00 N 00 * N ~~ ~~ ~ 0 ~* o~ 00 ~ 00 ~ ~ ~ g: ~ ~ ~8 8 0 ~8 §ß 00 ~ 00 ~ ~8 øg: ~N øœ œ 0 ~~ ~~ 00 ø 00 N ~ . ~!- !Ii ¡j 8 ~ ~ 0 io .~ ~ '"00 io 1;:. ": ~ ~ ~ ~ ~ 00 ~ ~~ 00 ~ ~§~ g: ~ /1-((/ T ..,. - EXIDBIT H CERTIFICATE OF COMPLETION 1 DOCSOCI7J4476v3\24036.0011 ~ . ~ EXHIBIT H CERTIFICATE OF COMPLETION THIS CERTIFICATE OF COMPLETION (the "Certificate") is made by the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic (the "Agency"), in favor ofST. REGIS PARK, LP, a California limited partnership (the "Property Owner"), as of ,200_. RECITALS A. The Agency and the Property Owner have entered into that certain Loan Agreement and Related Restricted Covenants (the "Loan Agreement") dated , 2000, concerning the redevelopment of certain real property situated in the City of Chula Vista, California as more fully described in Exhibit "A" attached hereto and made a part hereof. B. As referenced in Section 9.8 of the Loan Agreement, the Agency is required to furnish the Property Owner with a Certificate of Completion upon completion of the rehabilitation of the Project in accordance with the Loan Agreement. This Certificate of Completion is conclusive determination of satisfactory completion of the rehabilitation work required by Article 9 of the Loan Agreement. C. The Agency has conclusively determined that the rehabilitation of the Project has been satisfactorily completed. NOW, THEREFORE, the Agency hereby certifies as follows: The rehabilitation of the Project to be performed by the Property Owner has been fully and satisfactorily completed in conformance with Article 9 of the Loan Agreement. IN WITNESS WHEREOF, the Agency has executed this Certificate of Completion as of the date set forth above. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic By: Its: ATTEST: Agency Secretary DOCSOC\738803vl\24036.0011 /f-/(d-. y . ~ - APPROVED AS TO FORM: Agency Counsel DOCSOC\738803vl\24036.0011 /1-(/3 ? . ~ - EXHIBIT I SCOPE OF WORK 1 DOCSOC\734476V3\240360ûll . - - Sent b,'Charles @ CIC Ma,-17-00 07'48an fron 8587932487>5855690 "ðge 4 / 5 DEC-28-19ØØ 22'23 P.Ø2 ~ EXHIBIT I Pear Tree (IDœ~~1í W_... MuIII-Famlly CoJ1t. "T"-1/eQ¡gnIs/ ll7duWy Ðtpetfs" DESCRIPTION Q,wlilly Unit t~'W;LHC Co,,1 Toldl p", UI111 Co,1 -I .. Work fiR in POol 1 Is $ 9.976.00 $ 9,976.00 $ 83.83 St/iDin(f of Damna lot 1 Is $ 2,000.00 $ 2.000.00 S 16.81 I~r bfÌICk toD 1 Is $ 2,008.50 $ 2,008,50 I $ 16.88 Rem<M! &. ReDIaœ Paving - i~,OOo sf $ 3,61 $ 54,150.00 $ 4SS.04 FerIa! around vraÞ8l'lv 415 It S 15.45 $ 6 .n1.75 L$ 53.88 Slurry coat 68000 sf $ 0.12 $ 8,160.00 $ 68_57 New wheel stops 119 ea S 20.60 $ 2,451.'10 $ 20.60 I~ swa e ¡@hind projRct 8~. . It $ 12.88 $ 1 030.40 $ 8,66 Trash Enclosures 4 ea $ 3 862.00 $ 15448.00 $ 129.82 Mise. Siam 00 site 1 Is $ 2,575.00 $ 2,575.00 $ 21.64 Rbu!lh and Finish Grading 128,000 sf $ 0.35 $ 44,800.00 I S 376.47 Di'êlinage - ,....., n '-œ ~. Is $ 10 000.00 $ 40,000.00 $ 336.13 E¡Itrv Sianallft lHightina 1111 I ~ { I ß Is $ 10,000.00 $ 10000.00 $ 84.03 Plio( Area I.::J uu u 1 u Is $ 20,000.00 $ 20,000.00 S 168.07 H.ndic:aD Ram... . 15 ell $ 500.00 $ 7,500.00 $ 63.03 CnJb OnlY 850 If $ 18.00 $ 15,300.00 $ 128.57 Di!c:omDO5E!d Granite 32,000 "" sf $ 1.50 $ 48,000.00 $ 403.36 IrtiaaUon 35,000 sf $ 0.S5 $ 29 750,00 $ 250.00 Planting 1 Is $ 58,150.00 $ 58,150,00 1$ 488.66 Malnlienanœ 90 Days 35,000 51 $ 0.15 $ 5,250.00 $ +t.12 MIsc. R.e""irs at buikllnas .. 1 I. $ 4,938.85 $ 4,938.85 $ 41.50 ";Irking lot SÏ!lnln9 (Dlsabfed A«1ess) "15 ... s 100,00 S 1500.00 S 12.61 '.- ~..... $ $ . Calla'etê. ""-- -- $ - New Concrelle walks (5' wide) 11,000-- sf $ 3.00 $ 33 000.00 $ 277.31 ~ Dralnaae Pan ... 7SO If $ 3.50 $ 2,625,00 $ 22,06 NRW concrete SWaie 247 If -l 8.25 $ 2.037.75 $ 11.11 New Block Wall ( SQIit Face) 360 sf $ n.50 $ 8,100.00 1$ 68.0 7 New Wrought [ran Fenœ @ Wall -.". 120 If $ 22,00 $ 2,640.00 $ 2.2.18 Wood. .__. An'~h Carpentrv . Labor "380 hr $ 25.75 $ 9,785.00 1$ 82,23 Rnlsh Clrpen\'IY . Materials 1 Is 10.190.82. $ 10,190.82. $ 8~-64 New wood fence @ Ast. Manager 1 Is $ 1,624.31 $ 1,624.31 $ 13.65 UtilitY 0001'5 20 ell $ 283.25 $ 5,665.00 $ 47.61 ¡men"" DOQI'S 60 ea $ 46.35 $ 2,761.00 $ 23.37 Thermal and Molltul't ."'-' RooIin" . Built Uo RtJcIing 1 Is $ 30385.00 $ ;0 385.00 $ 2~U" 5heetmetal 1 Is $ 14099.56 $ 104 099.56 S 118.48 Down smuts ,,-- 1 Is $ 7,704.40 $ 7,704.40 $ 64.74 Fimshes StUIX:O Window treatment "'1 Ii $ 51,148.75 $ 51,148.75 $ 429.82 Stucco R-irs 1 Is 11.981.50 $ 11,981.50 $ 100.68 New SWan at wood areas 1 Is $ 31,998.60 $ 31,998.60 $ 26$.90 Inteflor Finishes -. I'Iew tVunœr Tops It!! ell $ 313.15 $ 37,4:0'1.65 $ 313.15 .. -" Stove 119 $ 361.50 $ 43,018.50 $ 361.5'0 ea .... Refriœrator 119 -......- 374.00 $ +4,506.00 $ 374.00 ea /y-f/cj T 'M' - na"-17-00 07"8aM 'rOM 8'87932'8775855698 pa9. ,/ 5 Sent ""'Charles. CIC P.Ø3 8J DEC-28-1900 22: 23 [IDœ&~V Pear Tree Wennwa MultloF8mny Corp. "71'11! ~ 1tdl/try &p,m" DESCRIPTION QUJntily UnIt MI""""'" Cost I c,t" , Per UIl'I Co,1 '~ SItJ8. Worll: "'-'.~.- -" f------c-..".---.-f-,....--.",...'-,:--..-.,-.- -. ,,_SInkS,S - - I-_H~- -!:!.. $ 230.25 $ 27 399.75 $ 230.25 Garbagll Disposal 50 ea IS 88.75 S 4,431.50 IS 37.29 f---- - Kiu:tU.o'sink vajVes"---I-Ü9 ,,- - eã - I $ 181.95 $ ¿1 652.05 $ 181.95 - . --- ". .--. -. - -room Vanity "-'- __11~._- . -,,~" $ nO.45 , 2~,233.55 $ 220.45 -. Tu ..51!l'T'QIHIds 100 ell $ 689.75 $ 68,975.00 '$ 57'J.6l ~ . ,-..:ia ttJffIiJl~~ n 119 ". - ~ S 183,97 $ 21,892,43 $ 183.97 ...v- I;:' -~ - ea $ 187.75 S 22,342.25 $ 187.i5 I.IIV all Recalrs ..L- Is $ 12 360.00 $ 12.360.00 $ 103.87 .r Vin I ROQrina 1.\ r., 'of' "It D! 1 Is $ 33,594.50 $ 33 594,50 $ 282.31 <.. Carpat (71 unit!;)¡ 1.1P,/¡)J 1 Is $ 9O,778.S'I $ 90,778.51 $ 762.84 Inœriar Paint 60 ea $ 550.00 $ 33,000,00 $ 277.31 Exterior Pai"t 120 ea $ 663.30 $ 79,596.00 $ 668.87 _. '.' Wlndoy¡~ng.- 119 .. ea $ 66,95 $ 7,96;,05 S 66.95 -- ~T~~~_.- ug-- ea $ 77.00 $ 9,163.00 $ 77.00 New Kitchen Cabinets ig- -. . 7" .. ,. $ 2,832.50 $ 53817.50 $ 452.25 ~~ Repairs IX) ËxIstiEII c::abinets:' ¡-".1 .,. __,Is" $ 3.175.00 $ 3,175,00 $ 26.6$ Final Clean of unil.1i l---¡,i9 ~ea $ 100.00 $ 11,900.00 $ 100.00 -c n Demolltl~¡;'- " f----== ~. ----šf $ 0.50 $ 93.55 =-. Demo existl!'!1 Planting. .-..,. ~~5'.- 11.132.50 $ [)@,!,Q"Remove. Eldsl:!ng Play Equí l~ --}- --Is" $ 600.00 $ 600.00 S 5,0'1 '..'" Remove.S!!!!n Link F1mœ .." - 1-: 500...- --"it.- $ 4.00 $ 2,000.00 $ 16.81 Demo ~ tDnaere w~ 10~ ~- sf' I $ 2.65 ' $ 27931.00 $ 134,71 Demo !\ Remave Trash El1closure 1 ~... L,. $ 900.00 $ 900,00 $ 7.56 . Demo 8< R'ëmoval of Spui: Fë"~ . C'.- Is $ 2,000,00 $ 2,000.00 $ 16.81 SIte Im..........menta Ba~ Built i" 3 ell $ 1,000.00 I $ 3000.00 $ ~,21 Picnic Tables .¡ .. ell $ 900,00 $ 3,600.00 $ 30.2$ BenChe5 3 ... ea $ 900.00 $ 2,700.00 $ 22.69 R.emodeI existing Offfce 1 Is $ 2,000.00 $ 2,000.00 S 16.81 Remodel Lilundry Room. 3 liB $ 1,000.00 $ 3,000.00 $ 25.21 Electrical New outlets / swit.che;f GFI 1 ",,- ~ $ 48,204.00 $ 48,204.00 $ <!OS.OS .... New Breezeway IIghls 37 ell $ 113.25 $ 4,190.25 IS 35.21 New unit fixtures AllOWance wi ell $ 50.00 $ 5,950.00 $ 50.00 Pancing Lot Ughting I Electrical 1 Is $ 20,000,00 $ 20 000.00 $ ~8,O7 Sub-Total: $ 1,40~!447,!! SII IIIMliIlion i mo $ 65,000.00 . $ 65,000.00 "'\.¡.. l. 7. 2 Contina8l'lCV 2. % L. 28,108.96 Iz:t G8II_1 Conditions 1 Is $ 6S 250.00 $ 65,250.00 L., '1. ~7. :2~i Total ... '$ 1,563,1106.77 1);2 G-.I Contnlctol'll Fee $ _~87,656.81 I"~~~ ¿. Insurance &0/0 ...--... $ 17,S14.,~ ..~ Gnmd Total! ,,- $ 1,768,978.21 $ 14,865.3~- .. --... --... .--." ..... I .-. - ...- .-.- '--' , ~. "I.,; .4.,aI!>..' /1-((S T' .,. - EXIDBIT J SCHEDULE OF PERFORMANCE 1 DOCSOC\734476v3\240J6.0011 T ~ - EXHIBIT J 05/18/2000 TBU 09:53 FAl 15S 535 1070 WER!lERS IiIIDO2 If ~I ¡¡¡¡ ." ~ ~ Q c: ¡¡; ¡;¡; c ¡; s;¡; §= c: c: ~ c tI! ~ ~ m ~ i ¡ ~ ~ ! J i ! t ~ i i ; i i ~~ ~ ~ ~ ~ s æ ~ ~ ~ ~ ~ ~ ~ ~ ~ f If ~j:I>~~~.b,,""':".IoJ..I..).,,:,al .. ! ~ ~ ~ ~ ~ ~ Õ Q Q ~ ø ã 0 . ~~~~ _I ~ e~ - m Ii. III ?i If Ii [~! ~ ~ i ~ ï R{ ~ m .111 ~ I ~"'Èmoõ( lõooOôôôô¡UlI ~ i !tltttftttttttttt~ " - 1:!C~!t~~1: ~ Illi iii~~~~;.;.giff~fll ~ . 5 $ ~ ~ ~ § s S ~ ~ ~ ~ ~ i ~ ~ ~I z !i i i ~ ~ ~ ~ S g ~ ~ § ~ § ê § ~ § ~ Š ~ J f ... i."".., ~ m 0' I] j' ~ ~:: j' ~ =: :: ~ ~ ~ ... ~." ~:!I Z ;. N~~;:J",~~~~o~u>:!. Jt:: """,,1- 0 ! 3 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~. I ~~~~~g~§S!§B§§§§~â ~ ¡ ~~ ¡ I~: ~ iIJ""""""""""""""-"""""""""""""""'-"""""""" T""""'" t~ I i f ---------. ----1- .:; ~ 111..----.......-.-----.... --- .: ...". ....----"--""",, ,,1-- -' , -((fo , Ob" 8...080,"8>«6¿80800") 0"'0'8Iaa-8T-'"W OD' HT""40"q 1wOS T. " '" 05/1812000 TBU 0.: 54 FAX 858 535 1070 WERllERS ~ 003 11-----------t-_.- .... ......""................."".'." . "."",......"""....._""""......."........."".."""...""..".,,. , . 1 r f . t"""---"""-I-"":~ ~ ...m......m.....m....m.m ................""....""...".""....""".......-.",,.."... m m 111'-"-------'1':~ i tfil ..--..............."."......-..........."...-...."......... """"""""."."""".". lm ! !~ i . ----.---1----- ~:; ì II] ......-.....--.._......_m . """.! ~ J i ! --. ..'. ..--t.------ ~i i f------......-.. ......n'.'.. .........--- 0 ]11 ~......-... ....1. .." --------- -~! ~ iiig ..'"..."""........."............."..................,...".._"...........,,...................""....."........... ..".".,. z: I ;:.. Ñ8 /1-((( . /< ..ed 86.0080,"8>«6¿808 wO.J W"<S' 01 00-81-'-" 010 . .., ."40' "G )u.s ~. ~... - ~18/2000 TBU 09:54 FAX 858 5~5 1070 WERJIEJIS Ii!IOO4 G~ !I f Š~ c'" -g c. U ............. .. -.--... .... ..................." ...................".. ,.....-....... ..................... .............. f 2-' ~j "--"'.--1"-' ;;;'" t:..\ fill ..........""..".. ............................... ......... r:::::" K -... -0 ...", 21" ~ 'I ¡ Î ..".............."..".,. ' """"""""-"'" . ........................ ................"........". "."..".."..".. ~ ;0 ------1-- ~ p-l 0 g;o . ".........."........ 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CJ) N 0 !II - i' 2 - :I: II f !fm .. ...........-............................................. .."., . ........................................-.........".. ~ g 111 § 1Ir- 5!m .....................................,... ,......... .......................... ...""...... i ~; ......... . ...........................-......................."................................... ......... ...."... -0::: l ~::: -!f ..._, ...."......"",.."""...",.... ........ ..- /f-Uf .. .".n . ................. ."... Þ /þ ...d 8690080,"8><£6¿808 WO"> W.£O'.1 BB"8!-'." OD. '.1".40". 14.5 T' ~ -