HomeMy WebLinkAboutRDA Packet 1997/01/07
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Tuesday, J auuary 7, 1997
4:00 p.m.
(immediately following the City Council meeting)
I.
Couucil Chambers
Public Services Building
Joint Meeting of the Redevelooment Agencv/Council of the Citv of Chula Vista
L ROLL CALL:
2. APPROVAL OF MINUTES:
CALL TO ORDER
Agency Members Moot _, Padilla_,
Rindone _, Salas _, aud Chair Horton_
December 10, 1996 (Special Joint Meeting)
PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES
The following items have been advertised and/or posted as public hearings as required by law. If you wish to
speak to any item, please fill out the "Request to Speak Form" available in the lobby and submit it to the
Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. (Complete the green form to speak
in favor of the staff recommendation; complete the pink form to speak in opposition to the staff recommendation.)
Comments are limited to five minutes per individual.
3,
JOINT PUBLIC HEARING:
a) AGENCY
RESOLUTION 1526
TO DISCUSS CITY AND AGENCY ASSISTANCE FOR A 40
UNIT AFFORDABLE HOUSING PROJECT ON 2.97 ACRES
LOCATED IN RANCHO DEL REY SPA Ill..On 3/7/95, the City
aud Agency entered into au Affordable Housing Agreement with
Raucho del Rey Investors to satisfy their affordable housing
requirement for Raucho del Rey SPA III as maudated by the City's
Housing Element. Associated Agreements were also approved by the
Council aud Agency with Raucho Del Rey aud Orauge Housing
Development Corporation. The joint venture was unsuccessful in
obtaining State aud Federal Affordable Housing tax credits, The
previously approved agreements with Raucho del Rey Investors aud
Orauge Housing Development Corporation are no longer applicable.
A new proposal was submitted by South Bay Commuuity Services to
act as the sole developer with the contents of the new agreements being
similar to previously approved forms of these agreements, while the
DDA is new. Staff recommends approval of the resolutions. 4/5ths
vote reauired for Items a and b onlv (Community Development
Director) Continued from the meeting of 12/10/96.
APPROVING A FOUR HUNDRED SEVENTY EIGHT THOUSAND
TWO HUNDRED AND EIGHTY DOLLAR ($478,280) COMMITMENT
FROM THE LOW AND MODERATE INCOME HOUSING FUND FOR
A FORTY (40) UNIT AFFORDABLE HOUSING RENTAL PROJECT
PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA III .
4/5ths vote reqnired.
Agenda
b) COUNCIL
RESOLUTION 18545
c) COUNCIL
RESOLUTION 18546
d) COUNCIL
RESOLUTION 18547
e) JOINT
COUNCIL
RESOLUTION 18548
AGENCY
RESOLUTION 1527
-2-
Jauuary 7, 1997
APPROVING A FIVE HUNDRED TEN THOUSAND DOLLAR
($510,000) COMMITMENT FROM THE HOME PROGRAM FOR THE
DEVELOPMENT OF A FORTY (40) UNIT AFFORDABLE HOUSING
RENTAL PROJECT PROPOSED TO BE DEVELOPED IN RANCHO
DEL REY SPA III - 4/5th vote required.
APPROVING A 2.97 ACRE LAND DONATION FOR A FORTY (40)
UNIT AFFORDABLE HOUSING PROJECT PROPOSED TO BE
DEVELOPED IN RANCHO DEL REY SPA III AND RELATED
DOCUMENTS INCLUDING (1) THE CONVEYANCE AGREEMENT
AND ESCROW INSTRUCTIONS WITH RANCHO DEL REY
INVESTORS; (2) THE ASSIGNMENT OF CONVEYANCE
AGREEMENT AND ESCROW INSTRUCTIONS WITH SOUTH BAY
COMMUNITY SERVICES AND (3) THE LOW INCOME HOUSING
AGREEMENT BETWEEN RANCHO DEL REY INVESTORS AND
SOUTH BAY COMMUNITY SERVICES ALL WITH RESPECT TO 2.97
ACRES OF PROPERTY WITHIN SPA III PROPOSED FOR
DEVELOPMENT INTO A FORTY (40) UNIT AFFORDABLE HOUSING
COMPLEX
APPROVING THE SECOND AMENDED AND RESTATED
AFFORDABLE HOUSING AGREEMENT WITH RANCHO DEL REY
INVESTORS, L.P.
APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT
& HOME PARTICIPATION AGREEMENT WITH SOUTH BAY
COMMUNITY SERVICES FOR THE DEVELOPMENT OF A FORTY
(40) UNIT AFFORDABLE HOUSING RENTAL PROJECT PROPOSED
TO BE DEVELOPED IN RANCHO DEL REY SPA III
ORAL COMMUNICATIONS
This is an opportunity for the general public to address the Redevelopment Agency on any subject maUer within
the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the
Redevelopment Agency from taking action on any issues not included on the posted agenda.) If you wish to
address the Council on such a subject, please complete the yellow "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. Your time is limited to three minutes per speaker.
Agenda
-3-
Jauuary 7, 1997
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 the City Clerk prior to the meeting. Public comments are limited to five minutes.
4.
REPORT
PROPOSED CHANGES TO THE OWNER PARTICIPATION
AGREEMENT WITH SCRIPPS HEALTH FOR THE EXPANSION OF
HOSPITAL FACILITIES--On 11/1/91, the Agency approved au OPA with
Scripps for expausion of their hospital located at the northeast corner of 5th
Avenue aud H Street within the Town Centre II Redevelopment Project Area,
In February 1996, Scripps submitted proposed revisions to the OP A which
would result in substautial downsizing of their expausion plaus. Staff requests
the Agency review the finaucial impacts of the proposed chauges aud direct
staff to bring back a proposal. (Community Development Director)
OTHER BUSINESS
5. DIRECTOR'S/CITY MANAGER'S REPORHS)
6. CHAIR'SIMAYOR'S REPORT(Sl
7. AGENCY/COUNCIL MEMBER COMMENTS
ADJOURNMENT
The meeting will adjourn to the Regular Redevelopment Agency Meeting on Jauuary 21, 1997 at 6:00 p,m.,
immediately following the City Council meeting, in the City Couucil Chambers.
[M' \HOME\COMMDEVIAGENDAS\Ol.{J7 -97 ,AGD]
MINUTES OF A SPECIAL JOINT MEETING OF THE
REDEVELOPMENT AGENCY/COUNCIL OF THE CITY OF CHULA VISTA
Tuesday, December 10, 1996
11:35 p.m.
Couucil Chambers
Public Services Building
L ROLL CALL: Agency/Councilmembers John S. Moot, Stephen C. Padilla, Jerry R. Rindone, Mary
Salas, aud ChairlMayor Shirley A. Horton.
ALSO PRESENT: John Goss, City Mauager; John Kaheny, City Attorney; Patricia Schwenke, Deputy City
Clerk; aud Carla Griffin, Administrative Secretary.
2. APPROVAL OF MINUTES: September 17, 1996 (Joint Meeting); November 19, 1996 (Joint Meeting);
November 26, 1996 (Special Joint Meeting.
MSC (RindonelHorton) to approve the minutes of 9/17/96,11/19/96 and 11/26/96, approved 4-0-0-1; Padilla
abstained on the minutes of 9/17/96, and Salas abstained on all minutes.
BUSINESS
3. PUBLIC HEARING: TO DISCUSS THE AFFORDABLE HOUSING PROPOSAL FOR THE RANCHO
DEL REY SPA Ill-Staff requests that this item be continued to the Redevelopment Agency meeting on
December 17, 1996. (Community Development Director)
MSC (RindonelHorton) to continue to the meeting of 1/7/97, approved 4-0-0-1 with Moot abstaiuing.
4. PUBLIC HEARING: SUPS-96-08 - REQUEST TO ESTABLISH, OPERATE AND MAINTAIN AN OPEN
AIR MARKET AT 690 L STREET IN THE IL AND IL-P ZONES - APPLICANT: VICTOR JOSEPH--The
applicaut is requesting permission to establish, operate and maintain an open air market at 690 L Street in the
Limited Industrial and Limited Industrial - Precise Plan zones for a period of 12 to 18 months. The project site
is described as approximately 144,000 sq. ft. in size. Approximately 100,000 sq. ft. will be used for the market
area aud 44,000 sq. ft. for parking. No permauent buildings will be built as part of the project. Several temporary
buildings will be placed on-site. Staff recommends approval of the resolution denying the application. (Director
of Community Development)
AGENCY RESOLUTION 1523 DENYING A REQUEST FOR A SPECIAL USE PERMIT FOR AN OPEN
AIR MARKET PROPOSED TO BE LOCATED AT 690 L STREET
Lyle Haynes, Principal Community Development Specialist, stated the Community Development Department feels
this project does not meet the requirements of the goals aud objectives of the Southwest Redevelopment PIau. Staff
is concerned with the project's visibility from the freeway and feels the economic benefits associated with it do not
outweigh the zoning and land use concerns. With regard to the three options available, staffs recommends option
No. L If Council approves the project, staff requests Council consider option No, 3, which would add the
necessary conditions to mitigate concerns with the project.
Martin Miller, Assistaut Planner, stated the bours of operation would be from 5:00 a.m. to 5:00 p.m., with the
public allowed in tbe open air market from 7:00 a.m. to 3:00 p.m; this would reduce any traffic problems. He
referenced condition 10 on page 4-28 of option No.3 and indicated staff recommended deleting the second
paragraph, because an arbitrator wouldn't be needed if there was a disagreement between the proponent of the
0~1
Minutes
December 10, 1996
Page 2
project aud the zoning administrator. Staff continues to recommend an 8-foot sidewalk, conditions 4C and 4D, aud
condition 24. There is also a condition of approval requiring the applicaut to cooperate with the Conservation
Coordinator to handle trash and recyclables; it would require a litter abatement recycling and trash disposal program
to eliminate litter from leaving the facility or exceeding the 50, percent source reduction re-use and recycling
diversion goals maudated by the State of California.
Mayor Horton indicated people do not always use the bins and requested an enforcement mechanism be in place.
A concern from many of the nearby residents is the impact of parking for this project.
Mr. Miller replied that staff reviewed the Couuty of Sau Diego's parking staudard for swap meets, aud this project
exceeds the Couuty's ratio.
Couucilmember Rindone stated the area is currently zoned as industriaL In his opinion, this area is not a gateway
to the City, and a gateway would be the public parks or commercial areas. He suggested chauging the zoning to
commercial, approving the project for a temporary use, aud not penalizing the applicaut by demauding unrealistic
requirements such as sidewalks or paving.
Motion (Rindone) to approve the project, require the indemuification for a maximum of up to 18 months,
not requiring a sidewalk or pavement, requiring assurance there is a litter campaign, and direct staff to
return with steps to institute commercial zoning once the conditional use pennit is completed.
Councilmember Salas commented this area may not be a gateway as defined uuder the General Piau, but a lot of
the arguments by staff as to why the open air market shouldn't be there are valid aud should be considered. One
of the things we are trying to accomplish is to enhauce the image of that area, aud it caunot be done by establishing
an open air market. There have been common complaints from residents in the area of the increased number of
yard sales, aud this project will draw more customers of that type into the neighborhood. She did not think it was
fair for the residents in that community who do not want to be imposed with the yard sales for the City to
exacerbate the problem with au open air market, aud she would not support this project.
Mayor Horton stated the project would only be for a temporary use. It was her understauding the project wouldn't
look like a regular open air market, as there would be some beautification along the sidewalk to make it more
amenable to pedestrians aud the neighborhood.
Councilmember Rindone added that the image of the west side needs improvement, and this project would improve
the area.
Councilmember Padilla expressed that although the area is not an official gateway to Chula Vista, it is a first
impression. He felt the focus should be to develop the area into something worthwhile, aud he is opposed to the
project.
This being the time aud place as advertised, the public hearing was declared open.
. Rod Davis, 233 Fourth Avenue, Chula Vista, CA, Chamber of Commerce, commented that for eight years this
laud sat empty aud was au eyesore, and the applicant wauts to bring a business to Chula Vista, has already spent
a large amount of money to clean up the property, aud the use will only be for 18 months. He also mentioned the
project would provide revenue to the City. He stated the Chamber supports the project aud endorses option No.2.
. Denise Mirabile, 1290 Nacion Avenue, Chula Vista, owner of A&B Auto Electric, supports the project because
it will bring exposure to her business, as well as revenue to the City. From an aesthetic viewpoint, any project for
this property is au improvement over the current situation. She added that she would supplement her income by
being a vendor at the open air market.
c2 .~ d-
Minutes
December 10, 1996
Page 3
. Cheryl Cox, 647 Windsor Place, Chula Vista, CA, supports the project, and stated it will improve the area and
bring people to Chula Vista. She presented photographs showing the improvements made by the applicaut to the
property .
. Walt Fisher, Post Office Box 3666, Chula Vista, CA, did not support or oppose the project, but pointed out the
City should treat all businesses equally and apply the same restrictions and requirements on the applicant as done
to Kobey's.
Mr. Miller replied that a number of the conditions were taken from the Kobey's resolution of approval; however,
the circumstauces surrouuding the approval for Kobey's was substautially different: Kobey's has over double the
number of vendors, it is to the west of the MCA amphitheater, and there are differences with the operation profile
and ingress and egress purposes.
There being no further speakers, the public hearing was declared closed.
VOTE ON MOTION: Passed and approved 3-2, with Padilla and Salas opposed.
5. JOINT COUNCIL RESOLUTION 18503 AND AGENCY RESOLUTION 1522 APPROVING A
CONTRACT WITH THE LA W OmCE OF BOB WILSON FOR LEGISLATIVE REPRESENTATION FOR
THE 1997-98 LEGISLATIVE SESSION, AND AUTHORIZING THE MAYOR (CHAm) TO EXECUTE
SAID AGREEMENT ON BEHALF OF THE CITY OF CHULA VISTA (REDEVELOPMENT AGENCY)-On
12/31/96, the current agreement with Advocation, Inc. expires. That agreement provided for two 2-year extensions
to coincide with the State legislative sessions, both of which were grauted. In auticipation of the year-end expiration
of that contract, the City issued a Request for Proposals on 9/20/96 for qualified firms for legislative representation
for the period 1/1/97 to 12/31/98, with the resulting recommendation forwarded on 11/26/96 to execute a new
contract with Advocation. At that meeting, Council instead directed staff to negotiate a contract with Bob Wilson.
Staff recommends approval of the resolutions. (Community Development Director)
Gerald Young, Senior Mauagement Assistaut, reported that staff negotiated a contract with the Law Office of Bob
Wilson and looked at the conflict of interest issue, specifically regarding the contract with National City. Under
the proposed amendments, the City retains its right to primacy in its coverage by Bob Wilson; however, the City
will have the option to negotiate in the event of a conflict. If the negotiated compromise is unacceptable to Council,
the City will continue to have recourse to terminate the contract, receive liquidated damages, and contract with
auother firm. Staff aud Bob Wilson concur with the recommended chauges.
Couucilmember Padilla asked if the additional lauguage adequately addressed the issue of other municipal
jurisdictions in the County who contract with Bob Wilson.
John Kaheny, City Attorney, advised this issue Was addressed in the proposed amendments, aud the mauner in
which the contract is written is designed to protect the City's best interest.
Councilmember Salas expressed concern with regard to what is happening at the federal level with the block grants
being awarded to the State aud those funds funneling down to the local jurisdictions. While the risk of competing
for those separate grauts may have been remote in the past, with the current way funding is dispersed to local
jurisdictions, it might create more problems than in the past. Her opinion was if the City dealt for years with an
organization like Advocation aud the only potential conflict was with their client (Boswell), it is quite different than
a conflict arising with another municipality. She reminded Couucil that when protecting the best interest of the City,
they should set aside their sentimentalities and fondness for a person and really look at the firm aud how it cau best
represent the City.
;;2~3
Minutes
December 10, 1996
Page 4
Mr. Kaheny clarified that the lauguage drafted in the contract would protect the City's interest if a conflict were
to arise, aud the City would have the protection for liquidated damages aud be able to protect its interest by hiring
another consulting firm.
COUNCIL RESOLUTION 18503 AND AGENCY RESOLUTION 1522 OFFERED BY MAYOR (CHAm)
HORTON, reading of the text was waived, titles read, passed and approved unanimously.
Councilmember Rindone commented that while a conflict is unlikely to occur, the liquidated damages' provision
would adequately provide the necessary resources to represent the City on an issue between two potential contracts
with Bob Wilson's firm. He added that efforts to secure the $12 million for the Chula Vista Veteraus Home is
ongoing, aud Senator Wadie Deddeh will continue working towards that effort.
ORAL COMMUNICATIONS: None.
OTHER BUSINESS
6. DmECTOR'S/CITY MANAGER'S REPORHS): None.
7. CHAIR'SIMAYOR'S REPORTfS): None.
8, AGENCYICOUNCIL MEMBER COMMENTS: None.
ADJOURNMENT
The meeting adjourned at 12:33 a.m. [12/11/96].
Respectfully submitted,
BEVERLY A. AUTHELET, CMC/AAE, City Clerk
by:
'f)djU~, ti '5.r h u by-, b
Patricia Schwenke, Deputy City Clerk.
;) /(,(
JOINT REDEVELOPMENT AGENCY/COUNCil AGENDA STATEMENT
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
BACKGROUND:
Item .2-
Meeting Date 1/7/97
a)
Joint Public Hearing: To discuss City and Agency Assistance for a 40 unit
affordable housing project on 2.97 acres located in Rancho Del Rey SPA III
Agency Resolution /5,;) to Approving a Four Hundred Seventy Eight
Thousand Two Hundred and Eighty Dollar ($478,280) Commitment from
the low and Moderate Income Housing Fund for a Forty (40) unit
Affordable Housing Rental Project Proposed to be Developed in Rancho del
Rey SPA III
Council Resolution /~ S 4::lApproving a Five Hundred Ten Thousand
Dollar ($510,000) Commitment from the HOME Program for the
development of a Forty (40) Unit Affordable Housing Rental Project
Proposed to be developed in Rancho del Rey SPA III
Council Resolution I ~:S4 Co Approving a 2.97 acre land Donation for a
Forty (40) Unit Affordable Housing Project Proposed to be Developed in
Rancho del Rey SPA III and related documents including (1) the Conveyance
Agreement and Escrow Instructions with Rancho del Rey Investors; (2) the
Assignment of Conveyance Agreement and Escrow Instructions with South
Bay Community Services and (3) the low Income Housing Agreement
between Rancho del Rey Investors and South Bay Community Services all
with respect to 2,97 acres of property within SPA III proposed for
development into a forty (40) unit affordable housing complex.
Council Resolution / 'i? :;,-<11 Approving the Second Amended and Restated
Affordable Housing Agreement with Rancho del Rey Investors, L.P.
Council Resolution I f?S4'/?
Agency Resolution / S ~ 7 Approving a Disposition and Development
Agreement & HOME Participation Agreement with South Bay Community
Services for the development of a Forty (40) Unit Affordable Housing Rental
Project Proposed to be Developed in Rancho del Rey SPA III
Community Development Dire~r. L S.
Executive DirectouC-1 ~"i~;;-iV' (c~/~ths Vote: Yes.lL for Items A & B
-\ Ir~ ~__.;J No.lL for Items C, 0 and E)
b)
c)
d)
e)
On March 7, 1995 Rancho del Rey Investors entered into an Affordable Housing Agreement with
the City and Agency to satisfy their affordable housing requirement for Rancho del Rey SPA III as
mandated by the City's Housing Element, The original and first amended agreement identified as
one possible method to satisfy the SPA III housing obligation, the potential development of a forty
(40) unit affordable apartment complex, Cordova Village, by a joint venture development team
c3 -!
Page 2, Item ..L
Meeting Date 01/07/97
consisting of Sares-Regis as the for profit developer/contractor, Orange Housing Development
Corporation (non-profit) and South Bay Community Services (non-profit). Associated agreements
were also approved by the Council and the Agency with Rancho del Rey and Orange Housing
Development Corporation. The joint venture applied for State and Federal Affordable Housing tax
credits in July 1995, December 1995, and again in May 1996 as their primary equity source,
However, they were unsuccessful each time in obtaining tax credit awards given the extremely
competitive pool of applicants.
Subsequently, the proposed Cordova Village development has changed in a few key ways. First,
there is no longer a joint venture development team, rather South Bay Community Services (SBCS)
is the sole developer. Sares-Regis and Orange Housing Development Corporation lost interest in
the project after its third denial by the Tax Credit Allocation Committee for funding. Staff is
confident that SBCS is well capable of implementing this project because 1) the Community
Development Director of SBCS has development experience in new construction of affordable
housing and 2) the Community Development Associate underwent a year long training specifically
for developing new construction multifamily rental housing, 3) SBCS has extensive experience in
acquisition and rehab in Chula Vista and Imperial Beach and 4) the selected property management
firm, Cuatro Properties Inc., has received the first place award from the San Diego County
Apartment Association for their management of Mercado Apartments, an affordable housing
complex in San Diego, for the Apartment Community of the Year Award. Also the Director of
Cuatro Properties, Gail Scott, has received the Presidential Award for her excellence in property
management, Cuatro Properties has specialized in management of affordable housing projects.
Second, the proposed permanent financing source has also changed. Instead of competing for
State and Federal Affordable Housing tax credits, SBCS plans to utilize California Housing Finance
Agency (CHFA) bond financing coupled with four percent (4%) tax credits from the Tax Credit
Allocation Committee (TCAC). CHFA secures the bonds and lends the money to applicants that
meet the required thresholds in the form of a tax-exempt mortgage. Once SBCS obtains a
commitment from CHFA, assuming the thresholds are met, TCAC will award the four percent (4%)
tax credits. The project appears to meet CHFA and TCAC thresholds. Approximately two million
dollars ($2,000,000) will be requested from CHFA and one million dollars ($1,000,000) from
TCAC.
Third, this new proposal requires more public subsidy money to make it financially feasible.
Previously, four hundred seventy eight thousand two hundred and eighty dollars ($478,280) of
Low and Moderate Income Housing Funds were committed along with one hundred sixty thousand
dollars ($160,000) of HOME funds for this project. An additional three hundred fifty thousand
dollars ($350,000) of HOME funds are now needed.
The action before the Council and the Agency is to approve the amount and form of City/Agency
financing for the Cordova Village project and the related property transfer, financing, development
and regulatory agreements. The Conveyance Agreements with Rancho del Rey are very similar
to forms of these agreements previously approved by the City Council/Agency, while the
Disposition and Development Agreement with SBCS is new.
-J-d...
Page 3, Item ~
Meeting Date 01/07/97
RECOMMENDATION:
That the Agency adopt the resolutions:
1 ' Approving a Four Hundred Seventy Eight Thousand Two Hundred and Eighty Dollars
($478,280) Commitment from the Low and Moderate Income Housing Fund.
That the Council adopt the resolutions:
1. Approving a Five Hundred Ten Thousand Dollar ($510,000) commitment from the HOME
Fund.
2. Approving a land donation and related documents including (1) approving the Conveyance
Agreement and Escrow Instructions with Rancho del Rey Investors; (2) approving the
Assignment of Conveyance Agreement and Escrow Instructions with South Bay
Community Services; and (3) approving the Low Income Housing Agreement between
Rancho del Rey Investors and South Bay Community Services;
3. Approving the Rancho del Rey SPA III Affordable Housing Agreement.
That the Council and Agency jointly adopt the resolution:
1. Approving a Disposition and Development Agreement & HOME Participation Agreement
with South Bay Community Services.
BOARDS/COMMISSIONS RECOMMENDATION: At the Housing Advisory Commission meeting of
February 22, 1995, the Commission voted unanimously to support the then proposed Cordova
project. On December 4, 1996 this project was presented again to the Housing Advisory
Commission (HAC) to update them on the changes being proposed. HAC voted unanimously to
approve the proposal.
DISCUSSION:
This report will discuss the following: Rancho del Rey's Affordable Housing Obligation, Description
of the Cordova Village Project, City/Agency Obligations, City/Agency Risks, City/Agency Risk
Mitigation Measures and Neighborhood Concerns.
Rancho del Rey's Affordable Housing Obligation
The City's State-mandated Housing Element requires affordable housing development to be
distributed throughout the City's jurisdiction. The City's strategy to implement this mandate, the
"Affordable Housing Program," is to require ten percent (10%) of any new subdivision in excess
of fifty (50) units to be made affordable for low and moderate income families (5% low and 5%
moderate) and to balance affordable housing development throughout the City. The provision of
affordable housing to meet the needs of continuing growth is one of the biggest challenges facing
Chula Vista and other cities in the region. The City's Housing Element establishes policies to
mandate the provision of affordable housing, which strives to avoid an over concentration of
housing product types in neighborhoods throughout the city. It also encourages a balance
between employment and housing opportunities in new development areas.
._3 - 3
Page 4, Item -L
Meeting Date 01/07/97
In 1992, to complete the low income housing obligation for SPA I and II, Rancho del Rey Investors
gave one hundred thousand dollars ($100,000) to the Agency to be used for affordable housing
anywhere in the City's jurisdiction. To satisfy its affordable housing requirement for SPA III,
Rancho del Rey must provide for twenty three (23) affordable housing units. The existing
agreement set forth a variety of ways Rancho del Rey could satisfy its SPA III obligation. One way
would be to donate the land necessary to build the proposed 40 unit Cordova Village project. In
order to offset Rancho del Rey Investor's cost in making this 17 unit "excess" contribution, the
existing agreement provides that upon its donation of the Cordova project property Rancho del Rey
Investors would receive seventeen (17) "Affordable Housing Credits" that could be sold to other
developers with similar affordable housing obligations.
It was previously agreed that the Agency will receive the first eight thousand one hundred thirty
four dollars ($8,134) per sale of each Affordable Housing Credit totaling one hundred thirty eight
thousand two hundred seventy eight dollars ($138,278). This was calculated based on the fact
the per unit City/Agency contribution was previously estimated to be thirteen thousand four
hundred and fifty-seven dollars ($13,457) and City policy at the time was to limit its per unit
contribution to ten thousand dollars ($10,000). The three thousand four hundred and fifty-seven
dollars ($3,457) "excess" City contribution was to be paid back on each unit. (Thus the $3,457
multiplied by 40 units equals $138,280 divided by 17 credits resulted in $8,134.) On May 21,
1996, the City decided to contribute the $100,000 remaining from RDR's SPA I and SPA II
affordable housing obligation to the Cordova Village project. At that timed, the affordable housing
agreement was amended to increase the City's share of the proceeds of the sale of the Affordable
Housing Credits by that one hundred thousand dollars ($100,000) amount. With the one hundred
thousand dollars ($100,000) enhancement, the payment to the Agency from the sale of credits
will equal fourteen thousand dollars ($14,000) each. (This is the $100,000 divided by 17 units
equaling $5,882, plus the $8,134 previously committed to, Combined this is rounded to $14,000
per unit),
The only change to the City's existing affordable housing with RDR proposed by this action is an
update of the description of the Cordova Project. Notably, City staff is not proposing that the
City/Agency reimbursement of its "excess contribution" out of the sale of the 17 "Affordable
Housing Credits" be increased by the additional $350,000 of funding that the City/Agency is
providing. City staff believes that requiring the extra reimbursement from sales proceeds of the
Affordable Housing Credits is not appropriate in this case in light of the special funding needs of
the project, RDR's concerted efforts and cooperation in attempting to obtain public funding of the
project without the need for additional City/Agency funds, the fact that the City/Agency has a
good chance of having its "excess" contribution to the project repaid out of the project's residual
receipts.
Description of Cordova Village Project
The provision of affordable housing units within a larger market-rate housing development, as
Rancho del Rey Investors is proposing, is a high priority in the City's Housing Element and
Comprehensive Affordable Housing Strategy. This project is an ideal way to accomplish the
remaining affordable housing requirement in Rancho del Rey.
This proposal is to build forty (40) affordable family units in SPA III south of J Street (Site Map
is Attachment A). Rents on thirty two (32) units will be affordable to families at or below sixty
percent (60%) of the area median income and rents on eight (8) units will be affordable to families
3-rj
Page 5, Item ..L
Meeting Date 01/07/97
at or below fifty (50%) of the area median income. Affordability covenants would be in place for
a minimum of fifty-five (55) years.
Rancho del Rey Investors will donate the land for Cordova Village to South Bay Community
Services pursuant to a conveyance agreement with the City. The land is valued at nine hundred
and sixty thousand dollars ($960,000). South Bay Community Services will develop and manage
the project. Construction financing will be provided through a loan from the Bank of America
Community Development Bank for an expected term of about twelve (12) months. Permanent
financing will be provided through a combination of CHFA bond financing, TCAC tax credit equity
contribution, City/Agency "residual receipts" loans, and Local Initiative Support Corporation (L1SC)
guarantees. The total cost of the project is estimated at five million four hundred ten thousand
and five hundred and twenty four dollars ($5,410,524). Per unit cost is estimated at one hundred
thirty five thousand and two hundred and sixty three dollars ($135,263). The proposed
City/Agency loan totals twenty four thousand seven hundred and seven dollars ($24,707) per unit.
During previous Council meetings, Council members requested the staff research the feasibility of
altering the Cordova Village proposal to accommodate owner occupied units and to research the
feasibility of altering the Cordova Village proposal to accommodate a cooperative structure. Staff
has found that neither homeownership nor a coop are financially feasible nor are they acceptable
to available financing resources. However, South Bay Community Services has incorporated
cooperative like elements into this project to encourage tenant participation. In addition to creating
a resident association and other appropriate tenant committees, SBCS plans to establish a Board
of Directors comprised of two tenants and three SBCS representatives. This Board will be
responsible for overseeing the property manager, Cuatro Properties Inc., overseeing some
management issues like landscaping, and providing resident training. Thus Cordova Village will
have some elements similar to a cooperative structure.
CITY/AGENCY OBLIGATIONS UNDER PROPOSED DISPOSITION AND DEVELOPMENT LOAN
AGREEMENT
The proposed Disposition and Development Loan Agreement between the City, Agency and SBCS
would obligate the City of Chula Vista to lend five hundred and ten thousand dollars ($510,000)
of HOME funds to South Bay Community Services for a period of fifty-five (55) years at three
percent (3%) interest. It also obligates the Redevelopment Agency of Chula Vista to lend four
hundred seventy eight thousand two hundred and eighty dollars ($478,280) to South Bay
Community Services for a period of fifty-five years at three percent (3%) interest. The loans will
be non-recourse. The loans will be secured by the property but will be subordinated to the
construction loan and permanent project financing. Of this total nine hundred eighty eight
thousand two hundred and eighty dollars ($988,280). ninety-seven thousand dollars ($97,000)
is for predevelopment expenses, the remaining eight hundred ninety-one thousand two hundred
and eighty dollars ($891,280) is for development fees and other costs. (Sources and Uses is
Attachment B, Uses of City/Agency Loans is Attachment C, Predevelopment Budget is Attachment
D, and Development Budget is Attachment E) Funding predevelopment expenses would be a
precedent setting action on the part of the City/Agency. This is the first time the City/Agency
would be authorizing the distribution of funds before the construction loan closes for a project.
To minimize the risks involved in lending predevelopment dollars, staff has recommended several
measures to take, listed below under Risk Mitigation Measures.
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Page 6, Item --L
Meeting Date 01/07/97
Originally, SBCS requested one hundred and ninety thousand dollars ($190,000) from the
City/Agency for predeveJopment funds. Upon staff's request to reduce this amount, SBCS has
committed itself to secure another sixty thousand dollars ($60,000) of predevelopment funds and
SBCS was able to defer thirty thousand dollars ($30,000) of predevelopment costs until
construction closing. This decreased the City/Agency predevelopment loan to ninety seven
thousand dollars ($97,000). The City and Agency loans combined bring the total per unit
contribution to twenty four thousand seven hundred and seven dollars ($24,707).
. $510,000 Home Loan
. $478,280 RDA Loan
. $988,280 Total Loans
. $97,000 Predevelopment Period
. $891.280 Construction Period
. $988,280 Total Loans
. $24,707 Per Unit Loan Cost
This per unit City/Agency contribution is about average when compared to other local jurisdiction's
contributions in this region for similar projects. Staff acknowledges this per unit contribution is
higher than the City of Chula Vista has made before, but feels it reflects the fact that this
development is made up of a majority of large units: sixteen two bedroom units of 745 square
feet, sixteen three bedroom units of 1,140 square feet and eight four bedroom units of 1,260
square feet. Within a three mile radius there are one thousand three hundred and thirty-four
(1,334) market rate rentals of which one hundred and ten (110) are three bedrooms and zero (0)
are four bedrooms, Thus only 8,2% of the market rate rentals are three bedrooms. More than
half of Cordova Village is three and four bedroom units. No one bedroom units will be included.
Smaller units are less costly to build, but larger units are meeting a priority need declared to be a
priority by SANDAG and the City's Housing Element. Twenty four (24) of the units are four plex
townhomes designed to blend into the surrounding Rancho del Rey community. Plus, the three
and four bedroom units will accommodate families, mixing well into the surrounding neighborhoods
predominately made up of families. The private market is not providing this kind of opportunity
for low income families.
'It is important to note that private market multi-family developments are generally not less than
one hundred (100) units. The more units developed, the more economies of scale are achieved
resulting in a lower per unit cost. As alluded to above, for profit multi family rentals are largely
made up of one and two bedroom units with few three bedroom units and no four bedroom units.
Per unit costs on three and four bedroom units are higher. In addition, six thousand and six
hundred dollars ($6,600) of the Cordova Village total per unit cost is because this is a tax credit
project. Tax credit projects require fees and deposits that are not found in a normal private sector
project.
The twenty four thousand seven hundred and seven dollars ($24,707) per unit requested of the
City and Agency will be leveraged by bringing in approximately twenty seven thousand nine
hundred and eight-five dollars ($27,985) per unit in tax credits, twenty four thousand dollars
($24,000) per unit from Rancho del Rey Investors for the land, and fifty-two thousand one
hundred fifty-nine dollars ($52,159) per unit from CHFA.
.3-~
Page 7, Item ~
Meeting Date 01/07/97
When comparing the per unit total development cost of Cordova Village, subtracting the land cost
and permit fees, to ten other affordable housing developments in San Diego and Riverside County
not including their land cost and permit fees, Cordova Village's per unit development costs of
ninety one thousand two hundred and sixty three dollars ($91,263) is the sixth lowest and its per
bedroom cost of thirty-two thousand five hundred and fifty-one dollars ($32,551) is the fourth
lowest. (Project Costs Comparison Attachment F) Staff feels it is worth the cost to the
City/Agency to ensure superior quality over the next fifty five (55) years of its affordability
covenant.
Cordova Village
Total Per Unit Costs
Less Per Unit Land Cost
Less Per Unit Permit Fees
Net Per Unit Costs
Total Per Bedroom Costs
Less Per Bedroom Land Cost
Less Per Bedroom Permit Fees
Net Per Bedroom Costs
$135,263
$ 24,000
$ 20,000
$ 91,263
$ 48,245
$ 8,560
$ 7,134
$ 32,551
These cost figures for Cordova Village are estimates, but SBCS feels confident they will be able
to build the apartments within this projected budget. They received the initial construction bids
from four general contractors which indicate that Cordova Village can be built within budget.
These bids are based on schematic drawings. It was recently discovered that there are some
unexpected costs for widening the driveway and moving a street light. SBCS does not anticipate
at this time the need to request additional funds from the City/Agency to cover this expense.
CITY/AGENCY RISKS UNDER THE PROPOSED DISPOSITION AND DEVELOPMENT LOAN
AGREEMENT
There are four areas of risk of which the Council needs to be cognizant.
. First, the predevelopment funds of ninety seven thousand dollars ($97,000) needs to be
released before the CHFA application and TCAC application receive final approval. If the
project does not get funded or is otherwise determined to be infeasible, the
predevelopment funds may not be recoverable.
. Second, if the land is donated by Rancho del Rey Investors to South Bay Community
Services and the project does not get built, RDR will have met their affordable housing
obligation without any affordable housing having been built.
. Third, the City and Agency loans will be subordinate to the Bank of America Community
Development Bank construction loan and then to the CHFA permanent financing loan. If
the project gets funded, but is interrupted by unexpected difficulties and SBCS must
abandon the project, the City is left with the task completing the project. The City may
need to cure any loan defaults and assume SBCS's loan obligations in order to achieve this
result.
. Fourth, it is anticipated that the City and Agency loans will be paid back with seventy-five
percent (75%) of the residual receipts, which is the amount left over after all expenses are
3 -7
Page 8. Item ..L
Meeting Date 01/07/97
deducted from the income. It is possible the City and Agency will not receive the total
payment presented in the attached cash flow (Attachment C). In addition, TCAC regulates
that residual receipts are to pay the developer's fee within a reasonable period, generally
interpreted as meaning within the first three to five years. It is expected to take six years
to pay the developer's fee, thus the City/Agency will not begin to receive payment until
approximately year seven. (Cash Flow is Attachment G)
Listed below are measures staff recommends to reduce these risks.
RISK MITIGATION MEASURES UNDER THE PROPOSED DISPOSITION AND DEVELOPMENT LOAN
AGREEMENT
RISK ONE - Earlv Release of Predevelopment Funds
. The bulk of the predevelopment dollars are coming from non City/Agency sources. Forty
five thousand dollars ($45,000) has already been secured through L1SC and sixty thousand
dollars ($60,000) will be secured from Lise or another source. Before any Agency
predevelopment dollars are spent, L1SC's forty five thousand dollars ($45,000) shall be
used and a written commitment for the additional sixty thousand dollars ($60,000) shall
be given to the City as well as a written commitment for the Bank of America Community
Development Bank's construction loan. SBCS estimates the need for City/Agency
predevelopment dollars beginning in February 1997, At that point SBCS should be able to
give staff proof of the expenditure of L1SC funds and staff will be able to obtained a status
report of the CHFA application. Only if both of these reports are favorable will the
City/Agency release any predevelopment funds, No other source is available to lend
predevelopment funds to SBCS for this project.
. A fund control will be put in place to regulate City and Agency disbursements of
predevelopment funds on a reimbursement basis only.
. City staff has copies of funding commitments from the Bank of America Community
Development Bank and from L1SC.
. SBCS received the initial construction bids from four general contractors which indicate
that Cordova Village can be built within budget. These bids were based on schematic
drawings,
. The City/Agency predevelopment dollars will be used for architect/engineering fees,
soil/environmental fees, and government fees. If these dollars are spent and the CHFA and
TCAC funding is not approved, SBCS will assign the City/Agency their rights to the
architect's plans, which are valued at one hundred and forty thousand dollars ($140,000).
RISK TWO - Land Donation with No Development
. The City won't transfer land until SBCS has construction financing in place, the general
contractor for the project has posted a performance bond naming the City and Agency as
beneficiaries, and the City has received a commitment from CHFA and a preliminary
commitment from TCAC.
..3-'?
Page 9. Item 2..
Meeting Date 01/07/97
. SBCS's performance under the DDA will be secured by a second priority deed of trust on
the property.
RISK THREE -Subordination of Loans
. As a condition to subordinating its debt or its affordability covenants, the City shall obtain
special notice and cure rights, and the option to purchase and/or assume SBCS's loans in
order to continue the project.
. A performance bond will be required from the project's general contractor with both the
City and Agency listed as named beneficiaries.
RISK FOUR - Reoavment of Loans from Residual Receiots
. Once the developer's fee is paid, the City/Agency is entitled to receive seventy-five percent
(75%) of the residual receipts with the other twenty-five percent (25%) going back into
the project. TCAC allows the developer (SBCS) to be paid fifteen percent (15%) of total
development costs. SBCS will collect only five and a half percent (5.5%) of the total
development costs for their developer's fee. SBCS is making every attempt to reduce
costs and ensure repayment.
. Property management fee is not to exceed eight percent (8%) of all other such operating
expenses and if the property management fee is to be paid to the developer it shall be
restricted to an amount not to exceed what is customary and standard for affordable
housing projects similar in size and scope to the Project.
The likelihood of repayment is high given there is a high demand for these units and the
vacancy rate is expected to be low. The revenue base should be very reliable. The Capital
Replacement Reserve and the Operating Reserve are required by CHFA to be maintained
above conventional rate rentals. TCAC and CHFA requirements on rental income are strict
to assure steady cash flow. The operating costs are standard. The City has given approval
of the property management firm, Cuatro Properties Inc., and if a problem occurs the City
will be involved to assure proper handling. The funding sources have strict management
requirements which will only will be met by a highly qualified firm.
OTHER RISK MITIGATION MEASURES UNDER THE PROPOSED DISPOSITION AND
DEVELOPMENT AGREEMENT
. Before the City/Agency will fund the Non-Predevelopment Loan Dollars, the developer shall
close escrow simultaneously with the Bank of America Community Development Bank, and
shall have obtained a preliminary allocation of low-income housing tax credits from TCAC,
and have met all the conditions contained in the Conveyance Agreement and Assignment
of Conveyance Agreement.
. As a condition to close of escrow, the developer shall submit to the City a certified copy
of the construction contract between developer and general contractor for all of the
improvements required to be constructed by the developer. The general contractor shall
be approved by City/Agency.
..3 - q
Page 10, Item..L
Meeting Date 01/07/97
. If at any time during the course of the development of the Project, the developer exhausts
fifty percent (50%) or more of the contingency amounts set forth in the Project Budget,
City/Agency shall have the right, but not the obligation, to approve any additional cost
overruns, which approval shall not be unreasonably withheld.
. In the event of "Gross Mismanagement" of the Project, Agency and City shall have the
authority to require that such Gross Mismanagement cease immediately, and further to
require the immediate replacement of the Property Manager. Agency or City shall provide
written notice to Developer of an event of Gross Mismanagement and Developer shall have
fifteen (15) days to cure such problem (or for such events of Gross Mismanagement that
cannot be cured within 15 days, that Developer has commenced such cure within the 15
day period.
. RDR is "direct deeding" the property to SBCS thereby keeping the City/Agency out of the
chain of title. Basic infrastructure improvements serving the property will have been
completed by RDR prior to transfer.
. SBCS is required to maintain comprehensive general liability insurance on the project which
names City/Agency as additional insureds. SBCS must also indemnify and hold harmless
the City/Agency against any and all project liabilities.
The following agreements are attached as Attachments H, I, J, K and L. Attachment H is the
Conveyance Agreement and Escrow Instructions with Rancho del Rey Investors; Attachment I is
the Assignment of Conveyance Agreement and Escrow Instructions with South Bay Community
Services; Attachment J is the Low Income Housing Agreement between Rancho del Rey Investors
and South Bay Community Services; Attachment K is the Disposition and Development Agreement
and the HOME Participation Agreement. Attachment L is the Second Amended and Restated
Rancho Del Rey SPA III Affordable Housing Agreement,
The Conveyance Agreement, the Assignment of Conveyance Agreement and the Low Income
Housing Agreement collectively govern how Rancho del Rey Investors is to prepare and directly
transfer property to South Bay Community Services and details how South Bay Community
Services is to fulfill their obligation to Rancho del Rey Investors to develop the land according to
certain standards. The Disposition and Development Agreement and HOME Participation
Agreement details the deal points between the City/Agency and South Bay Community Services.
Neighborhood Concerns
On November 14, 1996, City staff, SBCS and Rancho del Rey Investors held a meeting with the
residents who live in proximity to the proposed site. Few residents attended. Their concerns
focused on management issues, the compatibility of design to the rest of the development, and
the screening process to be used for incoming tenants. Staff and the other professionals
representing the development of this project explained that as a result of the TCAC and CHFA
financing the requirements for property management set stricter standards than those placed on
market rate rentals. This includes a strict screening process to be implemented. The residents
were also given the assurance that the design will blend with the rest of the development.
,3-(()
Page 11, Item ...1....
Meeting Date 01/07/97
The residents' seemed impressed with the project by the end of the meeting and requested SBCS
to present this proposal to their Homeowners' Association of Bonita Terrace at their annual
meeting held on November 19, 1996. At this meeting several questions were answered, but the
main area of focused concern dealt with the fear that property values of the neighboring properties
would fall due to this being an affordable housing development. SBCS explained that there have
been studies nationwide that show affordable housing developments do not decrease property
values, SBCS further explained that given the quality construction and architectural design of the
proposed Cordova Village development a decline in value of neighboring properties is unlikely to
happen. This affordable housing development will be built to the same standards as the rest of
the Rancho del Rey development and will not be discernably different.
Previously, on November 9, 1995, City staff held a meeting with residents who live in proximity
to the proposed site. The residents expressed concerns regarding the proposed development
related to its potential impact on property values, compatibility with the neighborhood, quality of
construction and concerns over land use changes. Also a public hearing was held before Council
on December 12, 1995 where some of these same concerns were revisited. On May 21, 1996
a public hearing was held before Council to allow public input regarding this project, however, no
residents attended. (At both meetings the Council/Agency voted to approve financing for
Cordova.)
Staff and SBCS have made a concerted effort to respond to all concerns raised and has assured
the residents that they would have an opportunity to review and comment on the proposed project
design since the site plan and the architectural design will be subject to noticed public hearing.
Staff has assured the residents that they would be kept informed on all developments pertaining
to the proposed project. Accordingly, a notice has been sent to all property owners within one
thousand (1,000) feet of the proposed project and all attendees of all neighborhood forums
regarding this item each time staff has held a meeting in the community or has conducted a public
hearing.
FISCAL IMPACT: On March 7, 1995 the City Council and Agency approved the commitment of
HOME funds in the amount of one hundred and sixty thousand dollars ($160,000) and approved
the commitment of Redevelopment Agency Low and Moderate Income Housing Funds in the
amount of three hundred seventy eight thousand and two hundred and eighty dollars ($378,280)
for the Cordova project as then proposed. On May 21, 1996 the Agency approved the
commitment of additional Low and Moderate Income Housing Funds in the amount of one hundred
thousand dollars ($100,000). Currently, staff is asking Council and Agency to reapprove these
amounts, which have been in reserve for this project, plus an additional three hundred and fifty
thousand dollars ($350,000) of HOME funds.
The proposed amendments to the Affordable Housing Agreements will increase the Agency and
City's prior conditional commitment to fund the proposed housing project by three hundred fifty
thousand dollars ($350,000) of HOME funds. HOME funds can only be used for these type of
projects. The City needs to commit their 1995 allocation of seven hundred fifty thousand dollars
($750,000) of HOME by the end of this fiscal year, thus staff feels it is appropriate to use the
1995 allocation of HOME funds for this project. Other competing interests for these funds are not
ready for commitments and it is projected these competing requests can be met through a
combination of sources.
~ - ((
Page 12. Item ~
Meeting Date 01/07/97
These actions would bring the total City investment for the Cordova Village development to four
hundred seventy eight thousand two hundred and eighty dollars ($478,280) of Low and Moderate
Income Housing Funds and five hundred and ten thousand dollars ($510,000) of HOME funds.
Both of these are loans will accrue interest at 3% per annum and are projected to be paid back
out of the project's "residual receipts" or refinance proceeds. The current project pro forma
projects that this will occur in approximately 40 years.
The City/Agency may receive back portions of its contribution to the project from the sale by RDR
of the 17 Affordable Housing Credits that it receives under its agreement with the City. This
would occur at the rate of $14,000 per credit for a total potential reimbursement of $238,000.
The City's receipt of these funds is contingent on whether or not a market for these credits exists.
Also the City will receive eight hundred thousand dollars ($800,000) from the developer for
payment of the permits and fees.
As described above, there are risks involved in lending the funds. In summary, there are two
worst case scenarios. First, if the development stops before construction loan closing the only
means of recovering City/Agency ninety-seven thousand dollars ($97,000) of predevelopment
funds is in the form of securing the rights of the architect plans, valued at one hundred and forty
thousand dollars.
Second, if the land has transferred to SBCS, construction has started, predevelopment dollars have
all been spent and for some reason the development is stopped due to a breach of contract or
some kind of default. In that case, Rancho del Rey Investors have met their affordable housing
obligation by donating the land, and the City/Agency has cure rights enabling the City/Agency to
hire someone else to complete the project. A performance bond on the general contractor would
have been secured by this point which guarantees the completion ofthe general contractor's work.
A new developer, preferably a non profit because of the special financing terms designed to match
the current non profit status, would need to be brought into replace SBCS, Repayment of the
loans will not have been further jeopardized at this point given the project gets completed.
However, at worst, if the City is not be able to payoff the debt necessary to cure the loans,
the City may lose the amount of monies advanced at the time. This would be left to the City's
discretion at the time of such an event which allows the City a choice as to their course of action.
Despite these risks, staff feels the best possible security measures are put in place in the
Agreements to offset the likelihood of any problems. The mitigation measures described within
this report are carefully structured to minimize any negative fiscal impact to the City/Agency.
(55) M:\HOME\CQMMOEV\STAFF.REP\12,17-96\CQRV1296 [December 19,1996 (3:52pm)]
..3 .. I d-..
RESOLUTION NO. /5;LG,
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA APPROVING A FOUR HUNDRED SEVENTY EIGHT
THOUSAND TWO HUNDRED AND EIGHTY DOLLAR (478,280)
COMMITMENT FROM THE LOW AND MODERATE INCOME
HOUSING FUND FOR A 40 UNIT AFFORDABLE HOUSING RENTAL
PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY
SPA III
WHEREAS, the City and Redevelopment Agency has previously approved the
commitment of HOME and Low and Moderate Income Housing funds to develop a 40 unit
affordable housing project ("Cordova Village Project" or "Project") to be located on 2.97 acres in
Rancho Del Rey SPA III;
WHEREAS, all prior agreements and resolutions made by the Agency for the
Cordova Village Project are no longer applicable because of the passage of time and the fact that
funding sources for the Project have changed significantly; and
WHEREAS, Rancho del Rey Investors ("RDR") must provide twenty three (23)
affordable housing units to be built in SPA III to satisfy their five percent low-income unit
requirements and RDR is proposing to donate the necessary land for the Project towards
satisfaction of this obligation;
WHEREAS, City staff has presented for City Council approval a Conveyance
Agreement, an Assignment of Conveyance Agreement, a Low Income Housing Development
Agreement and a Second Amendment and Restatement of the SPA III Affordable Housing
Agreement which, collectively, implement RDR's SPA III affordable housing obligation and the
donation of the Project property;
WHEREAS, South Bay Community Services, the Project developer ("SBCS"), has
obtained a commitment for Project predevelopment financing from L1SC and Project construction
financing from Bank of America;
WHEREAS, SBCS is applying for permanent financing for the Project from the
California Housing Finance Agency (CHFA) and for four percent (4%) tax credits from the Tax
Credit Allocation Committee (TCAC);
WHEREAS, additional financing is necessary in order to make the Project feasible;
WHEREAS, the provision of affordable housing units like the Project is consistent
with and called for by the City's General Plan Housing Element, the Comprehensive Housing
Affordability Strategy, the federal HOME program, and California Health and Safety Code;
WHEREAS, the City/Agency wishes to provide South Bay Community Services with
loans from federal HOME funds and Low/Mod Housing funds in order to partially finance the
development of the Project;
WHEREAS, the City/Agency provision of funds to the Project will directly improve
the City's supply of very low, low and moderate income housing;
..3 -13
WHEREAS, in accordance with California Health and Safety Code Section
33334. 14(a)(4) the Agency has agreed to subordinate its affordability covenants to construction
and permanent financing for the Project based upon the Agency's finding and determination that
no economically feasible alternative method of financing, refinancing or assisting the Projects is
reasonably available, and the Agency's subordination agreement shall include written commitments
from the lenders protecting the Agency's right to cure a Developer default under the superior loans
and to assume or purchase such loans;
WHEREAS, in accordance with California Health and Safety Code Section
33334.2Ig] the Agency finds and determines that even though the Project is to be located outside
the City's redevelopment project areas, those areas will benefit through the creation of jobs in the
project area and elsewhere in the City, and through the policies served by dispersing affordable
housing throughout the jurisdiction rather than clustering it all in one area;
WHEREAS, the City/Agency has previously adopted Addendum EIR 89-1 OA for the
Project and found that the Addendum was prepared in full compliance with CEOA and the
Guidelines promulgated thereunder; therefore, no further CEOA analysis is required for the Project;
WHEREAS, the proposed use of HOME Program funds requires compliance with the
National Environmental Policy Act (NEPA) and staff has commenced the compliance process by
filing required notices and preparing the required Environmental Assessment document.
NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of
Chula Vista does hereby resolve as follows:
1. Recitals True and Correct.
The Agency finds and determines the recitals set forth above are true and correct
to the best of its knowledge.
2. AQencv Contribution to the Project.
The Agency hereby appropriates Four Hundred Seventy Eight Thousand Two
Hundred and Eighty Dollars ($478,280) of Low and Moderate Income Housing Fund monies to be
loaned to sacs for the development of Project in accordance with the terms and conditions of the
Disposition and Development Agreement between the City, Agency and sacs being approved
concurrently herewith.
3. Directions to Staff.
Agency staff is hereby authorized and directed to take any appropriate action
consistent with the purposes of this Resolution.
Presented by
Approved as to form by
~,~.
Chris Salomone
Director of Community Development
[N:\SHAAED\A TTORNEY\SBCS478. WPDj
-3 -Icf
COUNCIL RESOLUTION NO.
/ ? s'-l-!:;;-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING A FIVE HUNDRED AND TEN
THOUSAND DOLLAR ($510,000) COMMITMENT FROM
HOME PROGRAM FUNDS FOR THE DEVELOPMENT OF A
FORTY (40) UNIT AFFORDABLE HOUSING RENTAL
PROJECT PROPOSED TO BE DEVELOPED IN RANCHO
DEL REY SPA III
WHEREAS, the City and Redevelopment Agency has previously approved the
commitment of HOME and Low and Moderate Income Housing funds to develop a 40 unit
affordable housing project ("Cordova Village Project" or "Project") to be located on 2.97 acres
in Rancho Del Rey SPA III;
WHEREAS, all prior agreements and resolutions made by the Agency for the
Cordova Village Project are no longer applicable because of the passage of time and the fact
that funding sources for the Project have changed significantly; and
WHEREAS, Rancho del Rey Investors ("RDR") must provide twenty three (23)
affordable housing units to be built in SPA III to satisfy their five percent low-income unit
requirements and RDR is proposing to donate the necessary land for the Project towards
satisfaction of this obligation;
WHEREAS, City staff has presented for City Council approval a Conveyance
Agreement, an Assignment of Conveyance Agreement, a Low Income Housing Development
Agreement and a Second Amendment and Restatement of the SPA III Affordable Housing
Agreement which, collectively, implement RDR's SPA III affordable housing obligation and
the donation of the Project property;
WHEREAS, South Bay Community Services, the Project developer ("SBCS"),
has obtained a commitment for Project predevelopment financing from LISC and Project
construction financing from Bank of America;
WHEREAS, SBCS is applying for permanent financing for the Project from the
California Housing Finance Agency (CHFA) and for four percent (4%) tax credits from the
Tax Credit Allocation Committee (TCAC);
WHEREAS, additional financing is necessary in order to make the Project
feasible;
WHEREAS, the provlSlon of affordable housing units like the Project is
consistent with and called for by the City's General Plan Housing Element, the Comprehensive
c3 -/~-
Housing Affordability Strategy, the federal HOME program, and California Health and Safety
Code;
WHEREAS, the City/Agency wishes to provide South Bay Community
Services with loans from federal HOME funds and Low/Mod Housing funds in order to
partially finance the development of the Project;
WHEREAS, the City/Agency provision of funds to the Project will directly
improve the City's supply of very low, low and moderate income housing;
WHEREAS, in accordance with California Health and Safety Code Section
33334.14(a)(4) the Agency has agreed to subordinate its affordability covenants to construction
and permanent financing for the Project based upon the Agency's finding and determination
that no economically feasible alternative method of financing, refinancing or assisting the
Projects is reasonably available, and the Agency's subordination agreement shall include
written commitments from the lenders protecting the Agency's right to cure a Developer
default under the superior loans and to assume or purchase such loans;
WHEREAS, in accordance with California Health and Safety Code Section
33334.2[g] the Agency finds and determines that even though the Project is to be located
outside the City's redevelopment project areas, those areas will benefit through the creation of
jobs in the project area and elsewhere in the City, and through the policies served by dispersing
affordable housing throughout the jurisdiction rather than clustering it all in one area;
WHEREAS, the City/Agency has previously adopted Addendum ErR 89-10A
for the Project and found that the Addendum was prepared in full compliance with CEQA and
the Guidelines promulgated thereunder; therefore, no further CEQA analysis is required for the
Proj ect;
WHEREAS, the proposed use of HOME Program funds requires compliance
with the National Environmental Policy Act (NEP A) and staff has commenced the compliance
process by filing required notices and preparing the required Environmental Assessment
document.
NOW, THEREFORE, the City Council of the City of Chula Vista does hereby
resolve as follows:
1. Recitals True and Correct.
The City finds and determines the recitals set forth above are true and correct
to the best of its knowledge.
2, Citv Contribution to the Project.
The City hereby appropriates Five Hundred and Ten Thousand Dollars
($510,000) of HOME Program funds to be loaned to South Bay Community Services for the
development of Project in accordance with all terms and conditions of Disposition and
.3 -I Go,
Development Agreement between the City, Agency and SBCS being approved concurrently
herewith.
3. Directions to Staff.
City/Agency staff is hereby authorized and directed to take any appropriate action
consistent with the purposes of this Resolution.
Presented by
Approved as to form by
~t~,
-
Chris Salomone
Director of Community Development
(N:\SHARED\ATTORNEY\SBSC510WPD)
3
J -/7
COUNCIL RESOLUTION NO. /? S cf Go
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A
2.97 ACRE LAND DONATION FOR A FORTY (40) UNIT AFFORDABLE HOUSING
PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA III AND RELATED
DOCUMENTS INCLUDING (1) THE CONVEYANCE AGREEMENT AND ESCROW
INSTRUCTIONS WITH RANCHO DEL REY INVESTORS; (2) THE ASSIGNMENT OF
CONVEYANCE AGREEMENT AND ESCROW INSTRUCTIONS WITH SOUTH BAY
COMMUNITY SERVICES; AND (3) THE LOW INCOME HOUSING AGREEMENT
BETWEEN RANCHO DEL REY INVESTORS AND SOUTH BAY COMMUNITY SERVICES,
ALL WITH RESPECT TO 2.97 ACRES OF PROPERTY WITHIN SPA III PROPOSED FOR
DEVELOPMENT INTO A FORTY (40) UNIT AFFORDABLE HOUSING COMPLEX.
WHEREAS. the City and Redevelopment Agency has previously approved the
commitment of HOME and Low and Moderate Income Housing funds to develop a 40 unit
affordable housing project ("Cordova Village Project" or "Project") to be located on 2.97 acres
in Rancho Del Rey SPA III;
WHEREAS. all prior agreements and resolutions made by the Agency for the Cordova
Village Project are no longer applicable because of the passage of time and the fact that
funding sources for the Project have changed significantly; and
WHEREAS. Rancho del Rey Investors ("RDR") must provide twenty three (23)
affordable housing units to be built in SPA III to satisfy their five percent low-income unit
requirements and RDR is proposing to donate the necessary land for the Project towards
satisfaction of this obligation;
WHEREAS. City staff has presented for City Council approval a Conveyance
Agreement, an Assignment of Conveyance Agreement, a Low Income Housing Development
Agreement and a Second Amendment and Restatement of the SPA III Affordable Housing
Agreement which, collectively, implement RDWs SPA III affordable housing obligation and the
donation of the Project property;
WHEREAS. South Bay Community Services, the Project developer ("SBCS"). has
obtained a commitment for Project predevelopment financing from L1SC and Project
construction financing from Bank of America;
WHEREAS. SBCS is applying for permanent financing for the Project from the California
Housing Finance Agency (CHFA) and for four percent (4%) tax credits from the Tax Credit
Allocation Committee (TCAC);
WHEREAS, additional financing is necessary in order to make the Project feasible;
WHEREAS. the provision of affordable housing units like the Project is consistent with
and called for by the City's General Plan Housing Element, the Comprehensive Housing
Affordability Strategy, the federal HOME program, and California Health and Safety Code;
1
..3 _If
WHEREAS, the City/Agency wishes to provide South Bay Community Services with
loans from federal HOME funds and Low/Mod Housing funds in order to partially finance the
development of the Project;
WHEREAS, the City/Agency provision of funds to the Project will directly improve the
City's supply of very low, low and moderate income housing;
WHEREAS, in accordance with California Health and Safety Code Section
33334.14(a)(4) the Agency has agreed to subordinate its affordability covenants to
construction and permanent financing for the Project based upon the Agency's finding and
determination that no economically feasible alternative method of financing, refinancing or
assisting the Projects is reasonably available, and the Agency's subordination agreement shall
include written commitments from the lenders protecting the Agency's right to cure a
Developer default under the superior loans and to assume or purchase such loans;
WHEREAS, in accordance with California Health and Safety Code Section 33334.2[g]
the Agency finds and determines that even though the Project is to be located outside the
City's redevelopment project areas, those areas will benefit through the creation of jobs in the
project area and elsewhere in the City, and through the policies served by dispersing
affordable housing throughout the jurisdiction rather than clustering it all in one area;
WHEREAS, the City/Agency has previously adopted Addendum EIR 89-10A for the
Project and found that the Addendum was prepared in full compliance with CEOA and the
Guidelines promulgated thereunder; therefore, no further CEOA analysis is required for the
Project;
WHEREAS, the proposed use of HOME Program funds requires compliance with the
National Environmental Policy Act (NEPA) and staff has commenced the compliance process
by filing required notices and preparing the required Environmental Assessment document.
NOW, THEREFORE, the City Council of the City of Chula Vista does hereby resolve as
follows:
1. Recitals True and Correct.
The City finds and determines the recitals set forth above are true and correct to the
best of its knowledge.
2. Citv ADDroval of AQreements
The City hereby approves the Land Donation and the related documents in the forms
presented which include (1) the Conveyance Agreement and Escrow Instructions with Rancho
del Rey Investors, (2) the Assignment of Conveyance Agreement and Escrow Instructions with
South Bay Community Services, and (3) the Low Income Housing Agreement Between Rancho
del Rey Investors and South Bay Community Services and authorizes and directs the Mayor
to execute same in final forms approved by the City Attorney. Final forms will be kept on file
with the City Clerk as document No.
2
.3-/9
3. Directions to Staff.
City staff is hereby authorized and directed to take any appropriate action consistent
with the purposes of this Resolution.
Presented by
Approved as to form by
(V~~
Chris Salomone
~irector of Community Development
N:\SHARED/A TTORNEY/SBCSDOCS. WPDI
3
....3 -d-O
.
RESOLUTION NO.
/ f? s-t./ 1
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA
VISTA APPROVING THE SECOND AMENDED AND RESTATED
AFFORDABLE HOUSING AGREEMENT WITH RANCHO DEL REY
INVESTORS, L.P.
WHEREAS, pursuant to that certain Agreement Concerning Rancho Del Reyand Low-
Moderate Income Housing, dated August 7,1990, Rancho Del Rey Investors, L.P., a California
limited partnership ("RDR"), as successor in interest to Rancho Del Rey Partnership, a
California general partnership, is obligated to provide 23 low income housing units to the City
in connection with its development of SPA III of the Rancho Del Rey master planned
community (the "SPA III Affordable Housing Obligation"); and,
WHEREAS, RDR and the City previously entered into an agreement (the "SPA III
Affordable Housing Agreement") which sets forth (1) the terms and conditions pursuant to
which RDR may fulfill its SPA III Affordable Housing Obligation; (2) the security being provided
to the City in order to secure such obligation; and (3) other terms and conditions relating to
the continued development of SPA III and the potential creation and allocation of surplus
"affordable housing credits" in the event RDR performs certain duties under such agreement;
and,
WHEREAS, one of the methods for RDR satisfying its SPA III Affordable Housing
Obligation contemplated by the SPA III Affordable Housing Agreement is the donation, subject
to certain terms and conditions, by RDR to South Bay Community Services of certain real
property within SPA III, owned by RDR, comprised of an approximately 2.97 acre parcel,
("Site"). and the development of the Site by third parties into an affordable housing project
(the "Project"); and,
WHEREAS, RDR and the City desire to amend the SPA III Affordable Housing
Agreement in order to conform its terms to the changes in the Project being approved by the
City and Redevelopment Agency concurrently herewith.
NOW, THEREFORE, the City Council of the City of Chula Vista hereby resolves as
follows:
1. Recitals True and Correct.
The City finds and determines the recitals set forth above are true and correct to the
best of its knowledge.
2. Aooroval of SPA III Affordable Housina Aareement.
The City hereby (a) approves the SPA III, second Amended and Restated Affordable
Housing Agreement in substantially the form presented, with such minor modifications
as may be required or approved by the City Attorney; and (b) authorizes the Mayor to
..dJ -c'J.. (
.
Resolution No.
Page 2
execute same, the final form of such agreement to be kept on file with the City Clerk
as document No.
3. Directions to Staff.
City staff is hereby authorized and directed to take any appropriate action consistent
with the purposes of this Resolution.
Presented by
Approved as to form by
rLL S;~
Chris Salomone
Director of Community Development
[SS:\N:\SHARED\A TTORNEY\SBCSAHA.WPDl
J - O(~
,
/ ~ ~-4'i
JOINT COUNCILIAGENCV RESOLUTION /S rJ. 7
RESOLUTION OF THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY OF
THE CITY OF CHULA VISTA APPROVING A DISPOSITION AND DEVELOPMENT
AGREEMENT AND HOME PARTICIPATION AGREEMENT WITH SOUTH BAY
COMMUNITY SERVICES FOR THE DEVELOPMENT 01= A I=ORTV (40) UNIT
AFFORDABLE HOUSING RENTAL PROJECT PROPOSED TO BE DEVELOPED IN
RANCHO DEL REV SPA III.
WHEREAS, the City and Redevelopment Agency has previously approved the
commitment of HOME and Low and Moderate Income Housing funds to develop a 40 unit
affordable housing project ("Cordova Village Project" or "Project") to be located on 2.97 acres
in Rancho Del Rey SPA III;
WHEREAS, all prior agreements and resolutions made by the Agency for the Cordova
Village Project are no longer applicable because of the passage of time and the fact that
funding sources for the Project have changed significantly; and
WHEREAS, Rancho del Rey Investors ("RDR") must provide twenty three (23)
affordable housing units to be built in SPA III to satisfy their five percent low-income unit
requirements and RDR is proposing to donate the necessary land for the Project towards
satisfaction of this obligation;
WHEREAS, City staff has presented for City Council approval a Conveyance
Agreement, an Assignment of Conveyance Agreement, a Low Income Housing Development
Agreement and a Second Amendment and Restatement of the SPA III Affordable Housing
Agreement which, collectively, implement RDR's SPA III affordable housing obligation and the
donation of the Project property;
WHEREAS, South Bay Community Services, the Project developer ("SBCS"), has
obtained a commitment for Project predevelopment financing from L1SC and Project
construction financing from Bank of America;
WHEREAS, SBCS is applying for permanent financing for the Project from the California
Housing Finance Agency (CHFA) and for four percent (4%) tax credits from the Tax Credit
Allocation Committee (TCAC);
WHEREAS, additional financing is necessary in order to make the Project feasible;
WHEREAS, the provision of affordable housing units like the Project is consistent with
and called for by the City's General Plan Housing Element, the Comprehensive Housing
Affordability Strategy, the federal HOME program, and California Health and Safety Code;
WHEREAS, the City/Agency wishes to provide South Bay Community Services with
loans from federal HOME funds and Low/Mod Housing funds in order to partially finance the
development of the Project;
WHEREAS, the City/Agency provision of funds to the Project will directly improve the
City's supply of very low, low and moderate income housing;
..J -,;< 3
WHEREAS, in accordance with California Health and Safety Code Section
33334.14(a)(4) the Agency has agreed to subordinate its affordability covenants to
construction and permanent financing for the Project based upon the Agency's finding and
determination that no economically feasible alternative method of financing, refinancing or
assisting the Projects is reasonably available, and the Agency's subordination agreement shall
include written commitments from the lenders protecting the Agency's right to cure a
Developer default under the superior loans and to <Issume or purchase such loans;
WHEREAS, in accordance with California Health and Safety Code Section 33334.2[g]
the Agency finds and determines that even though the Project is to be located outside the
City's redevelopment project areas, those areas will benefit through the creation of jobs in the
project area and elsewhere in the City, and through the policies served by dispersing
affordable housing throughout the jurisdiction rather than clustering it all in one area;
WHEREAS, the City/Agency has previously adopted Addendum EIR 89-10A for the
Project and found that the Addendum was prepared in full compliance with CEQA and the
Guidelines promulgated thereunder; therefore, no further CEQA analysis is required for the
Project;
WHEREAS, the proposed use of HOME Program funds requires compliance with the
National Environmental Policy Act (NEPAl and staff has commenced the compliance process
by filing required notices and preparing the required Environmental Assessment document;
WHEREAS, City/Agency staff has negotiated with SBCS the terms and conditions of
a Disposition and Development/HOME Participation Agreement ("Development Agreement")
which established the terms for the City/Agency loans to the Project, SBCS's obligations to
develop and operate the Project, and which imposes affordability covenants on the Project
property.
NOW, THEREFORE, the City Council and Redevelopment Agency of the City of Chula
Vista do hereby resolve as follows:
1. Recitals True and Correct.
The Agency finds and determines the recitals set forth above are true and correct to
the best of its knowledge.
2. AODroval of Aareement.
The City and Redevelopment Agency hereby approve the Development Agreement in
the form presented, with such minor changes as may be approved or required by the City
Attorney, and hereby authorize and direct the Mayor/Chairman to execute same. A final form
of the Agreement shall be kept on file, the City Clerk as document No.
3. Directions to Staff.
Agency staff is hereby authorized and directed to take any appropriate action
consistent with the purposes of this Resolution.
..J -J '-i
Presented by
p~, ):~
Chris Salomone
Director of Community Development
(N:ISHAREOIA TTORNEY\SBCSOOA)
Approved as to form by
.3 - c2 s:-
NOTICE OF CITY COUNCIL
PUBLIC HEARING
REGARDING THE
AFFORDABLE HOUSING
PROPOSAL FOR THE
RANCHO DEL REV SPA II
NOTICE IS HEREBY G~
VEN - THAT AT THE CITY
COUNCil. MEETING ON
DECEMBER to, 1996, AT
6:00 PM A PUBLIC HEAR.
,ING Will. BE OPENED TO
DISCUSS THE AFFORDA-
BLE HOUSING PROPO-
SAl FOR THE RANCHO
DR Rev SPA III.
The Cily's Housing Ele-
ment requires that all de.
velopmMIS Involving 50 or
more dwelling unils provide
5% of their project's unilS for
Iow~ncome hOuseholds and
5% of l!1eir projllCl's units for
mederale-income house.
holds. Rancl10 Del Rey, like
all other major de.
velopments such as East-
Lake, Sunbow..Sa\! Creek
and the Olay HaIlCll, is re-
quired tI comply,
Rancho Del Ray investors
entered inti IlIl Affordable
Housil1q Agreement wilI1the
City prIOr 10 1hG first Final
Map approval within Rancho
del Rey SPA III Ihat de-
IineatllS tla ~mQ frame and
specific delails conceming
their Affonlable Housing
ProQram rll<luiremanl 10
pnlVlde a minimum of 23 af-
fordable housing unils. "'
part of Ihis Agreement Ran-
cho Del Ray Investors pr0-
poses 10 provkle land 10 a
nonprom developer, South
Bay Ccmmunity Ser\ices,
who propows to build 40 af-
fordable famlty units within
SPA III.
South ~ Community
Servloee will be requesting
from !he City of chula VISta
Council Q DisP'1Silion and
Development Agreement
"' part of Ihis agreement
the City slaffwm recommend
contributing a lolal of
$478,280 from 1I1e City's
Redevelopmenl Agency's
Low and Medera1e Income
Housing Funds and
$510,000 from !he City..
HOME Funds lOWllIds this
developmant. The Council
win be rvques\ed 10 approve
the follOWing: 1) land dona-
tion, 2) tfie Conveyance
Agreement and Escrow in.
structions with Rancho Del
Ray Investors, 3) !he As-
signment of Conveyance
Agreement and Escrow In.
stroolions with South Bay
Community SeMoos, 4) the
Low Income Housing
_Anrallltftot\' '""'=tMAn..AAnclIci'______
hours in advance for meet-
ings and five days lor sche-
duled SlIrvices and aclM!ies.
Please contacl (Sheri
Sdlott), a1 (619) SSS-5722
for specific information, or
Telecommunications De-
V~ lor 1118 Deaf (TOO)
(619) 585-5647. Cal~omia
Relay Selvica is &V8llable
for 1110 h9aring impaired.
CV08573 1113006
..3-cJ.c,
688 P02
\WI
.
NOV 26 '96 21:56
Low lnc~ Hallolng 689 P02 NOV 26 '96 22:01
-J Agreement en Rancho J;
del R'g, lnVestOfS IIIld Sooth
Bay mmunlty SerIices.
and 5) Disposition and De-
velopen1ent Agreement all
with respect to the 2.97
acres of proflllrl'f within SPA ~~v
III proposed for development
inID a 40 unit affordable
housing complex.
If you have ~ questions
.. , regaroitljlhis matter prior to
.,. "', .. the flU Ie heerin~ please
., ,...,..
" . ..'!:'.-'1, call Sheri Sc oU at
.. .. 691-5263.
. The Circ Council mootins
will be he d at: CIty CouIlC
'. Chambers, Public Sel'
vices BUlldln8' 276 Fourth
Avenue, Chu a Vista, CA
91910, December 10,1996,
6:00 pm:
COMPUANCE WITH
MlERICANS WITH
DlSABILmeS ACT
The City of Chula VISta, in
complying with the Ameri-
canS With Disabilities Ad
(ADA). r~~t individuals
who require specie! so::om-
modation 10 access, auend
.' IIIldlOf panicipale in a City
meeting, activity or s9IVice
, , to request s\Jch accom-
modation at least forty-eight
.':'
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1 CORDOVA Village
2 Development Budget
3
4 Project Costs
5 35,391
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Estimated
Cost Item Proiect Cost CPU
Total Land Costs Incl Demolition 960,000 24.000
Total Acquisition Costs 960,000 24.000
Construction
Site Work
On-Site Improvements 269.722 6,743
On-Site Landscape 85,000 2.125
Structures 1,764,327 44.108
General Requirements 33,905 848
Bond Premium (2%) 42.381 1,060
Contractor Overhead 0 0
Contractor Profit 211,905 5,298
Off-site improvements 0 0
Construction Contingency (5%) 118,243 2,956
Total New Construction Costs 2.525.483 63,137
Taxes During Construction 30,617 765
Insurance during loan 15,000 375
Loan Fee: SofA 25.092 627
CHFA: Perm, 52,875 1,322
Construction Loan Interest 141,027 3.526
Bridge Loan Interest 0 0
Goverenment Fees (Permits, Bonds) 800,000 20,000
Engi neer/Soi Is/En vi ronmental 7,500 188
Bank Expenses: Appraisal 10,000 250
Legal Fees 15.000 375
Construction/Env, Revi 7,500 188
Title and Recording & Escrow 12,500 313
ArchitecUEngineering 144,500 3,613
L1SC Interest (Both Loans) 5.000 125
Lender Legal Fees Pd By SBCS 35,000 875
Promotion and Advertising 7,000 175
Developer Fees 300,000 7,500
Organizational Expenses 0 0
Construction Estimate 0 0
Legal Fees DDA 15,268 382
Soft Costs @ 3% 40,151 1,004
Operating Reserves 30,869 772
CHFA Deposit: Due on Approval 52,875 1.322
TCAC Fees 16.095 402
Loan Application Fee (CHFA) 500 13
Construction Manager 40,000 1,000
Cost Audit 7,500 188
Personal Property 11,000 275
Rent DeposiUGuarantee 46,303 1,158
Tax Credit Consultant 25,000 625
Marketing DeposiUGuarantee 30,869 772
Total Soft Costs 1,925,041 48,126
Total Development Costs 5.410,524 135,263
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RANCHO DEL REY SPA-III
CONVEYANCE AGREEMENT AND
ESCROW INSTRUCTIONS
RANCHO DEL REY INVESTORS, L.P.,
a California limited partnership
"RDR"
THE CITY OF CHULA VISTA,
a California municipal corporation
"CITY"
RDRlChul1f Vis'.
12/9/96
~-3S--1-1
TABLE OF CONTENTS
PAGE
Definitions
....................................... 1
2
3
ARTICLE 1
ARTICLE 2
ARTICLE 3
ARTICLE 4
ARTICLE 5
ARTICLE 6
ARTICLE 7
ARTICLE 8
ARTICLE 9
ARTICLE 10
Recitals
Conveyance of the Property .............................
Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Improvements by RDR ................................. 5
City's Deliveries to Escrow Holder and RDR .................. 5
6
6
RDR's Deliveries to Escrow Holder. . . . . . . . . . . . . . . . . . . . . ' . . .
Condition of Title
................................... .
ARTICLE 11 Close of Escrow or Termination of Agreement . . . . . . . . . . . . . . . . .
Prorations. Fees, Costs and Reimbursements. . . . . . . . . . . . ' . . . .. 7
7
8
Distribution of Funds and Documents . . . . . ' . . . . . . . . . . . . . . . . .
ARTICLE 12 Escrow Holder's General Provisions ........................ 9
ARTICLE 13 "As Is" Conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9
ARTICLE 14 Hazardous Materials .........................,....... 10
ARTICLE 1 5 Assignment ...................................... 11
ARTICLE 16 General Provisions . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . .. 12
EXHIBITS
"A" Property Description
"8" Grant Deed
"C" RDR's Improvements
"D" Notice of Declaration of Annexation
"E" Escrow Holder's General Provisions
RDR/Chul/J Vist.
12/9/96
.3 - 3.(", -;--1
CONVEYANCE AGREEMENT AND ESCROW INSTRUCTIONS
THIS CONVEYANCE AGREEMENT AND ESCROW INSTRUCTIONS ("Agreement") is
entered into as of December 17,1996, between RANCHO DEL REY INVESTORS, L.P" a
California limited partnership ("RDR"), and THE CITY OF CHULA VISTA, a California municipal
corporation, ("City") and constitutes (i) a contract of conveyance, and (ii) escrow instructions
to FIRST AMERICAN TITLE INSURANCE COMPANY ("Escrow Holder"), whose consent appears
at the end of this Agreement.
ARTICLE 1
Recitals
1.1 The Property. RDR owns that certain real property in the City of Chula Vista,
County of San Diego, State of California, known as Neighborhood 3341 of Rancho del Rey
SPA III more particularly described on Exhibit "A" attached (the "Property"). The Property
is part of the master planned community known as "Rancho del Rey."
1.2 The SPA III Affordable Housing Obligation. Pursuant to that certain "Agreement
Concerning Rancho del Rey and Low-Moderate Income Housing" dated August 7, 1990, RDR,
as successor in interest to Rancho del Rey Partnership, is obligated to provide 2310w income
housing units in connection with its development of SPA III of Rancho del Rey (the "SPA III
Affordable Housing Obligation"). RDR desires to grant the Property to City, and City agrees
to receive the grant of the Property, in full satisfaction of the SPA III Affordable Housing
Obligation, subject to and in accordance with the terms of this Agreement.
1.3 SPA III Affordable Housing Agreement. RDR and City entered into that certain
Second Amended and Restated Rancho del Rey SPA III Affordable Housing Agreement dated
as of December 17, 1996 (the "SPA III Affordable Housing Agreement"), which describes
certain options for and other matters relating to the satisfaction of the SPA III Affordable
Housing Obligation, including the transactions contemplated by this Agreement.
1.4 South Bay Community Services. South Bay Community Services ("SBCS") is
a California 501 (c)(3) non-profit corporation. The mission of SBCS includes the development,
ownership and operation of multi-family residential projects providing affordable housing to
low income persons.
1.5 The Proposed Project. SBCS (or a limited partnership in which SBCS is a general
partner) intends to acquire the Property for the purposes of improving it with a multi-family
residential project consisting of forty units and providing affordable housing for low income
persons (the "Proposed Project").
1.6 Assignment Agreement. Concurrently herewith, City and SBCS have entered
into that certain Assignment of Conveyance Agreement and Escrow Instructions ("Assignment
Agreement") pursuant to which City agrees to assign to SBCS, and SBCS agrees to assume
RDRlChul. Vista
12/9/96
1
...3-37 -fI
from City, City's rights and obligations under this Agreement, subject to and in accordance
with the terms of the Assignment Agreement.
1.7 Housing Agreement. RDR and SBCS have or will enter into a Low Income
Housing Agreement (the "Housing Agreement") pursuant to which, among other things, RDR
and SBCS agree as to their respective obligations with respect to the Property.
1.8 Disposition and Development Agreement. City. SBCS and the Redevelopment
Agency of the City of Chula Vista ("Agency") intend to enter into a Disposition and
Development Agreement and in which City and Agency would agree to make loans to SBCS
for the development of the Property with the Proposed Project.
ARTICLE 2
Definitions
Unless the context otherwise indicates. the following shall have the meanings as set
forth in this Article:
2.1 "Acceptance Date" means the date of signature of City or RDR, whichever is
the last to sign this Agreement.
2.2 "Agency" means the Redevelopment Agency of the City of Chula Vista.
2.3 "Appraised Value of the Property" means $960,000.00, as established by that
certain appraisal by D.F. Davis Real Estate, Inc., MAl, dated March 3, 1995.
2.4 "Assignment Agreement" means the agreement described in Section 1.6.
2.5 "Cash" means (i) currency, Oi) if acceptable to Escrow Holder, a check or checks
currently dated, payable to Escrow Holder or order and honored upon presentation for payment,
or (iii) funds wire-transferred or otherwise deposited into Escrow Holder's account at Escrow
Holder's direction.
2.6 "Closing Date" means the date scheduled for Close of Escrow, and unless
otherwise agreed to in writing by RDR and City or as otherwise set forth herein, the Closing
Date shall be December 31, 1997.
2.7 "Close of Escrow" means the date the RDR's Grant Deed (a copy of which is
attached as Exhibit "B" hereto) and other documents are filed for record.
2.8 "City" means the City of Chula Vista.
2.9 "County" means the County of San Diego, State of California.
2.10 "Disposition and Development Agreement" means the agreement between City,
Agency and SBCS described in Section 1.8.
RDR/Chul. Vist.
12/9/96
23-3?-H
2.11 "Escrow Holder" means FIRST AMERICAN TITLE INSURANCE COMPANY, whose
address is 411 Ivy Street, San Diego, California 92101.
2.12 "General and special real estate taxes" means all charges evidenced by the
secured tax bill issued by the Tax Collector of the County, including, but not limited to, amounts
allocated to (i) County or City general governmental purposes, (ii) bonded indebtedness of
the County or City, (iii) bonded or other indebtedness and operating expenses of any school,
college, sewer, water, irrigation, hospital, library, utility, county service, community facilities
district or other district, and (iv) any other lawful purpose.
2.13 "Housing Agreement" means the agreement described in Section 1.7.
2.14 "Opening of Escrow" means the date of, and act of. Escrow Holder signing
the "Consent of Escrow Holder" attached to this Agreement.
2.15 "Parcel Map" means Parcel Map 17675, filed in the Office ofthe County Recorder
of the County of San Diego, California, as File No. 1996-0143111, on March 22, 1996.
2.16 "Phase I Investigation" means the Preliminary Site Assessment for RDR SPA III
prepared by Law-Crandall, Inc., dated September 9, 1994, Portions of Rancho del Rey SPAs
II and III, northeast of Rancho del Rey Parkway and south of East "H" Street, Chula Vista,
California.
2.17 "Proposed Project" means the project described in Section 1.5.
2.18 "SPA III Affordable Housing Agreement" means the agreement between RDR
and City described in Section 1.3.
2.19 "Title Insurer" means FIRST AMERICAN TITLE INSURANCE COMPANY, with
offices at 411 Ivy Street, San Diego, California 92101.
ARTICLE 3
Conveyance of the Property
3.1 Conveyance of the Property. RDR agrees to grant the Property to City, and
City agrees to accept the grant of the Property, on the terms of this Agreement.
3.2 Consideration for Property. RDR and City agree that the fair market value of
the Property is the Appraised Value. As consideration for receiving title to the Property, and
in lieu of City paying RDR cash for the Property in the amount of the Appraised Value, City
agrees:
(a) that upon transfer of title to the Property subject to the terms and
conditions of the SPA III Affordable Housing Agreement, RDR shall have satisfied in full the
SPA III Affordable Housing Obligation; and
RDRlChul. Vis-r.
12/9/96
3
..3-39-1-1
(b) RDR shall receive credit for the excess contribution made pursuant this
Agreement in the form of Low Income Housing Credits according to the terms and conditions
of the SPA III Affordable Housing Agreement.
ARTICLE 4
Conditions Precedent
4.1 Conditions Precedent. This Agreement, the consummation of the transaction
herein contemplated, the respective rights and obligations of the parties hereto, and the Close
of Escrow are subject to and contingent upon the good faith satisfaction and completion of
each of the following conditions precedent which are deemed to be for the mutual benefit
of the parties, or the written waiver thereof by the parties, which are more particularly set
forth below. The time for the approval and satisfaction of each of the conditions precedent
are specified in the paragraphs below.
(a) Disposition and Development Agreement. City, Agency and SBCS, by
January 15, 1997, shall have entered into a Disposition and Development Agreement relating
to the development of the Property with the Proposed Project and providing for loans to SBCS
for the Proposed Project (i) from Agency in an amount not less than $478,200.00 and (ii)
from City in an amount not less than $510,000.00, or such lesser amounts as are acceptable
to SBCS in SBCS' sole discretion (provided, that a lesser amount shall be conclusively deemed
acceptable to SBCS if SBCS enters into the Disposition and Development Agreement), and
all conditions in the Disposition and Development Agreement have been satisfied.
(b) Tax Credits. SBCS shall have received a preliminary allocation of low
income housing tax credits from the California Tax Credit Allocation Committee by March
30, 1997 in an amount not less than $1,577,786 for Federal tax credits, or such lesser amount
as is acceptable to SBCS in SBCS' sole discretion.
(c) California Housing Finance Agency Loan Commitment. SBCS shall have
received an initial commitment of a permanent loan from the California Housing Finance Agency
by March 30, 1997 in an amount not less than $2.440,258 or such lesser amount as is
acceptable to SBCS in SBCS' sole discretion.
(d)
Investigation and
Investigation.
Hazardous Materials. City shall have reviewed and approved the Phase I
any follow-up investigation or testing recommended by the Phase I
4.2 Satisfaction, Waiver and Failure of Conditions; Termination. The waiver of a
condition will be effective only if the same is (i) in writing, (ii) signed by the parties and (iii)
delivered to Escrow Holder and the other parties before termination of the Agreement. Failure
of a condition to be satisfied or waived within the time provided for satisfying or waiving
the condition shall allow any party not then in default to terminate this Agreement. If any
conditions remain not satisfied (and are not waived) by January 1, 1998, then any party may
terminate this Agreement at any time before all conditions are satisfied or waived.
RDRlChul. Vista
1219/96
4
..3-40-H
4.3 Performance By The Other Party. Each party's obligation to perform under this
Agreement is subjectto material performance of any prior or concurrent obligation of the other
party.
ARTICLE 5
Improvements by RDR
5.1 ,Improvements; Condition of the Property. RDR shall have no obligation to
complete any improvements to or for the benefit of the Property except as follows. RDR
agrees, at its expense, to cause RDR's Improvements described on Exhibit "c" to be completed
by December 15, 1997, subject to delays outside of RDR's reasonable control. Until Close
of Escrow, RDR shall keep the Property in good condition and free from weeds and erosion
and properly maintain any siltation basins affecting the Property.
5.2 Additional Improvements. SBCS, and not RDR, shall be responsible for any
additional improvements to the Property necessary or appropriate for SBCS' Proposed Project.
SBCS, and not RDR, shall be responsible for any and all fees, bonds. agreements, licenses
and permits required or appropriate for SBCS' Proposed Project. Without limiting the generality
of the foregoing, SBCS shall not receive any credits against fees for amounts paid or
improvements constructed or to be constructed by RDR.
5.3 Risk of Loss. All risk of loss for changes in the physical condition of the Property
shall remain on RDR with respect to the Property until Close of Escrow. However, material
damage to the Property prior to Close of Escrow by reason of earthquake shall give each SBCS
and RDR the right to terminate this Agreement.
ARTICLE 6
City's and sacs' Deliveries to Escrow Holder and RDR
6.1 City's Information. Within five (5) days of a request to produce, City shall furnish
such information as is required by Title Insurer. In addition. City shall, within two (2) days
of a request by RDR, furnish evidence of City's legal capacity and a designation of individuals
authorized to bind City.
6.2 Reconveyances. At least two (2) days before the Closing Date, City shall
execute, acknowledge and deliver to Escrow Holder for recording at Close of Escrow full
reconveyances of any deed(s) oftrustsecuring RDR's obligations under the SPA III Affordable
Housing Agreement. This obligation shall not be delegable.
6.3 Signature/Acknowledgment of Grant Deed. At least two (2) days before the
Closing Date, City shall execute and acknowledge the Addendum to the Grant Deed for the
Property .
6.4 Deed of Trust. At least two (2) days before the Closing Date, SBCS shall
execute, acknowledge and deliver to Escrow Holder for recording at Close of Escrow any
deed of trust required by the Disposition and Development Agreement to secure SBCS'
obligations under the Disposition and Development Agreement.
RDRlChul1l Vi.:Jtll
12/9/96
5
~-4(-1-!
ARTICLE 7
RDR's Deliveries to Escrow Holder
7.1 Grant Deed. RDR shall deliver to Escrow Holder, at least one (1) day before
Close of Escrow for the Property, a fully executed and acknowledged Grant Deed in form
attached as Exhibit "8" to this Agreement, with Schedule 1 (listing Permitted Exceptions
determined pursuant to the Housing Agreement) and the Addendum to Grant Deed attached.
If required by the Disposition and Development Agreement, the Grant Deed may contain a
power of termination in favor of City pursuant to California Civil Code Section 885.010 et
seq to secure SBCS' obligations under the Disposition and Development Agreement.
7.2 Annexation To Master Declaration. RDR shall deliver to Escrow Holder, at least
one (1) day before Close of Escrow, a fully executed Notice of Declaration of Annexation,
Imposition of Additional Restrictions And Covenants and Notice of Designation of Architectural
Review Committee ("Notice of Annexation"). A copy ofthe Notice of Annexation is attached
hereto as Exhibit "0". Escrow Holder shall record the Notice of Annexation prior to Close
of Escrow,
7.3 ROR's Charges. At least one (1) day prior to Close of Escrow, RDR shall deliver
to Escrow Holder those amounts required by Article 9 below.
ARTICLE 8
Condition of Title
8.1 Title. RDR agrees, at Close of Escrow, to convey title to the Property to City,
subject only to:
(a) All standard exceptions and exclusions from coverage typically set forth
in a standard CLTA Owner's title policy.
(b) All "Permitted Exceptions" approved by SBCS during the "Feasibility
Period" under the Housing Agreement.
(c) General and special real estate taxes and assessments (including, but
not limited to, any applicable assessment or community facilities districts) which are, as of
the close of this escrow, not delinquent and supplemental taxes, if any, assessed pursuant
to California Revenue and Taxation Code Section 75 and following.
(d) Easements dedicated on the Parcel Map, any other final map of the
Property or reserved in the grant deeds or otherwise required for development of the Property.
(e) The reservation of water rights and any power of termination set forth
on the Grant Deed, and the provisions set forth on the Addendum to Grant Deed.
(f) The covenants. conditions and restrictions established pursuant to the
Master Declaration and the Notice of Annexation.
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(g) Any lien or other encumbrance voluntarily imposed by City or its
successors or assigns.
ARTICLE 9
Prorations, Fees, Costs and Reimbursements
9.1 Taxes. Escrow Holder will prorate (that is, apportion) between the parties, in
cash, to Close of Escrow, on the basis of a thirty (30) day month, general and special real
estate taxes and assessments, based on the regular tax bill for the fiscal year in which the
escrow closes. If such tax bill has not been issued as of the Closing Date, such proration
shall be based on the regular tax bill for the fiscal year preceding that in which this escrow
closes. The proration of taxes and assessments shall be without regard to any supplemental
assessments levied pursuant to California REVENUE AND TAXATION CODE Sections 75 and
following unless such supplemental taxes have been levied and shown on a tax bill.
9.2 RDR's Charges. RDR shall pay (i) Escrow Holder's fee for the escrow for the
conveyance from RDR to City; (ii) the County Documentary Transfer Tax, if any; and (iii) usual
document.drafting and recording charges.
9.3 Documentary Transfer Tax. City shall take the steps necessary to effectuate
an exemption from the Documentary Transfer Tax, if applicable.
9.4 Deposits. In the event RDR has made deposits with any governmental entity
or utility, and any such deposit exceeds actual costs of the project, RDR shall be entitled to
seek the return of the excess of such deposit over costs. Should said excess deposit be
returned to City, City shall immediately reimburse RDR for same.
ARTICLE 10
Distribution of Funds and Documents
10.1 Retention of Cash. All Cash received by Escrow Holder will be, until Close of
Escrow, or unless otherwise provided herein, kept on deposit with other escrow funds in
Escrow Holder's general escrow account(s), in any state or national bank, and may be
transferred to any other such general escrow account(s). Escrow Holder will not have any
obligation to pay interest on cash received.
10.2 Disbursements. All disbursements by Escrow Holder will be made by checks,
unless RDR unilaterally instructs Escrow Holder, prior to Close of Escrow, to wire transfer
the proceeds of this escrow to which RDR is entitled to a bank account designated by RDR,
in which case, Escrow Holder will disburse RDR's proceeds from this escrow pursuant to such
unilateral instruction.
10.3 Payment of Encumbrances. Escrow Holder will, at the close of this escrow,
pay, from funds to which RDR will be entitled and from funds, if any, deposited by RDR with
Escrow Holder, to the appropriate obligees, all existing deeds of trust and mortgages, provided
that RDR has approved the beneficiary demands, which approval shall not be unreasonably
withheld.
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10.4 Return After Recording. Escrow Holder will cause the County Recorder to mail
RDR's grant deed (and each other instrument which is herein expressed to be, or by general
usage is, recorded) after recordation, to the grantee, beneficiary or person (i) acquiring rights
under said document, or (ii) for whose benefit the instrument was acquired.
10.5 Delivery of Instruments. Escrow Holder will, atthe close of this escrow, deliver
by United States mail (or will hold for personal pickup, if requested) each nonrecorded
instrument received by Escrow Holder to the payee or person (i) acquiring rights under the
instrument, or (ii) for whose benefit the instrument was acquired.
10.6 Delivery of Cash. Escrow Holder will, at the close of this escrow, deliver by
United States mail (or will hold for personal pickup, if requested) (i) to RDR, or order, any
excess funds delivered to Escrow Holder by RDR, and (ii) to City, or order, any excess funds
delivered to Escrow Holder by City.
10.7 Delivery of Copy of Instruments. Escrow Holder will, at Close of Escrow, deliver
to RDR a copy of RDR's grant deed and each document recorded to place title in the condition
required by this Agreement.
ARTICLE 11
Close of Escrow or Termination of Agreement
11.1 Close of Escrow. Escrow Holder will close escrow for the Property by recording
the grant deed at Close of Escrow. Escrow shall close no later than the Closing Date. Each
party further covenants that it will diligently use its best efforts to cause escrow to close
for the Property. If Escrow Holder cannot close escrow on or before the Closing Date, it will,
nevertheless close this escrow when all conditions have been satisfied or waived unless, after
the Closing Date and prior to the close of this escrow, Escrow Holder receives a written notice
to terminate this escrow from a party who, at the time the notice is delivered, is not in default
under this Agreement. Nothing herein stated shall be deemed, however, to imply that time
is not of the essence of this Agreement.
11.2 Termination of Escrow. Escrow Holder will have no liability or responsibility
for determining whether or not a party giving a notice of termination is in default under this
Agreement. Within three (3) working days after receipt of a termination notice from one party,
Escrow Holder will deliver one copy of the notice to the other party. Unless written objection
to termination of this escrow is received by Escrow Holder within ten (10) days after Escrow
Holder delivers the notice to the other party, Escrow Holder will promptly terminate this escrow
and return all funds and documents held by it to the party depositing the same, except that
Escrow Holder may retain such funds and documents usually retained by escrow agents in
accordance with standard escrow termination procedures. Escrow Holder may (i) retain any
passbooks or certificates on deposit with Escrow Holder until such time as its escrow fees
are paid in full, or (ii) deduct from any funds held by Escrow Holder a sufficient amount to
pay its escrow fees in full. If written objection to the termination of this escrow is delivered
to Escrow Holder within the ten (10) day period, Escrow Holder is authorized to hold all funds
and documents delivered to it in connection with this escrow and Escrow Holder may, in
Escrow Holder's sole discretion, take no further action until otherwise directed, either by the
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parties' mutual written instructions or by a final order of judgment of a court of competent
jurisdiction.
11.3 Legal Remedies of Parties Not Affected. The (i) exercise of the right of
termination, lij) delay in the exercise of such right. or (iii) the return of funds and documents
will not affect the right of the party giving the notice of termination to recover damages or
pursue other applicable legal remedies for the other party's breach of this Agreement. Nor
will (A) the delivery of the notice, (8) any failure to object to termination of this escrow, or
(CI the return of funds and documents affect the right of the other party to recover damages
for the breach of the party who gives the notice of termination. The procedure set forth in
Section 11.2 is intended to evidence termination to Escrow Holder. It is not intended to
condition any right a party may have to terminate on the other party not objecting to such
termination.
11.4 Breach. Time is expressly stated to be of the essence of each and every provision
of this Agreement wherein time for performance is set forth. In all other respects, the parties
hereto covenant to perform their obligations in an expeditious manner. Failure to comply with
this provision shall be a material breach of this Agreement. In the event that City or RDR
fails to perform pursuant to this Agreement, the other party shall have the right to terminate
this Agreement and seek any available remedies.
11.5 Certain Rights of RDR if Agreement Terminated. Should this Agreement be
terminated for any reason other than a material default by RDR, City agrees to reasonably
cooperate with RDR in the transition to RDR of the development of the Property by assigning
to RDR at its request any development permits or entitlements and similar item obtained by
City for the Property and by informing RDR of the status of any pending permits or entitlements
for the Property.
ARTICLE 12
Escrow Holder's General Provisions
Escrow Holder's General Provisions, attached hereto as Exhibit "E", are hereby made
a part of this Agreement.
ARTICLE 13
"As Is" Conveyance
13.1 limit on Escrow Holder's Responsibility. Escrow Holder shall have no concern
with, nor liability nor responsibility for, this Article.
13.2 "As Is" Conveyance. Except as otherwise set forth in this Agreement, RDR
is making absolutely no representations or warranties with respect to the Property, and City
will accept the Property, and the matters relating to the Property listed below, in their present
"as is" condition. The matters are:
(a) Soils. Toooaraohv. Etc. Soils and geological condition; topography, area
and configuration; archeological, prehistoric and historic artifacts, remains and relics;
contamination by Hazardous Materials; endangered species and wetlands.
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(b) Utilities. Schools. Etc. Availability of utilities. schools, public access,
and fire and police protection.
(c) Districts. The status, special taxes and assessments of any and all
Mello-Roos Community Facility Districts and assessment districts.
(d) Plannino and Zonino. Applicable planning, zoning and subdivision statutes,
ordinances, regulations and permits, the SPA Plan and the Financing Plan.
(e) DeveloDment Fees. The character and amount of any fee or charge which
must be paid by City to develop the Property.
(f) Easements and Encroachments. Any easement, license or encroachment
which is not a matter of public record, whether or not visible upon inspection of the Property;
RDR warrants to City that RDR knows of no such easement, license or encroachment.
(g) Other Matters. Any other matter relating to the Property or to the
development of the Property, including, but not limited to, value, feasibility, cost, governmental
permissions, marketing and investment return, except as otherwise expressly provided in this
Agreement.
(h) Hazardous Materials. Law-Crandall. Inc. has conducted the Phase I
Investigation of whether any Hazardous Materials (as defined in Section 14.1 below) have
been released on or beneath any of the Property which would be in violation of any applicable
federal, state or local law, ordinance or regulation relating to Hazardous Materials. RDR
represents that the Phase I Investigation sets forth all of RDR's actual knowledge regarding
the existence of Hazardous Materials on the Property.
13.3 No Brokerage Commission or Finder's Fee. Each party warrants to the other
that the warranting party has incurred no obligation. by reason of this Agreement or the
transaction contemplated hereby, for a real estate brokerage commission or finder's fee for
which the other party would be liable. Each party will hold the other party free and harmless
from and against any damage or expense the other party may incur by reason of the untruth
as to the warranting party of the foregoing warranty. including expenses for attorney's fees
and court costs.
ARTICLE 14
Hazardous Materials
14.1 Hazardous Materials. The term "Hazardous Materials" means any material or
substance which is (i) defined as a "hazardous waste", extremely hazardous waste", "restricted
hazardous waste", "hazardous material", "hazardous substance", or any similar formation
under or pursuant to any California statute or common law rule; (ill petroleum and natural
gas liquids as those terms are used in ~ 1 09( 14) of the Comprehensive Environmental Response,
Compensation & Liability Act, 42 U.S.C. ~ 6901, et seq. (41 U.S.C. ~6903); (iii) asbestos;
(iv) polychlorinated biphenyls; (v) designated as a "hazardous substance" pursuant to ~311
of the Clean Water Act, 33 U.S.C., ~ 1251, et seq. (33 U.S.C. ~ 1321) or listed pursuant
to ~307 of the Clean Water Act (33 U.S.C. ~ 1317); (vi) defined as a "hazardous waste"
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pursuant to ~ 1004 of the Resource Conservation & Recovery Act, 42 U.S.C. ~6901, et seq.
(42 U.S.C. ~6903l; or (vii) defined as a "hazardous substance" pursuant to Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ~9601, et seq. (41 U.S.C.
~9601 ).
14.2 Indemnity of City. As a material inducement to City, without which City would
not have agreed to the terms set forth herein, RDR, for itself and its successors and assigns,
hereby agrees to indemnify, defend and hold harmless City and each of City's employees,
agents, attorneys, successors and assigns of City ("Indemnified Parties"), from and against
any and all present and future liability, losses, damages (including foreseeable or unforeseeable
consequential damages), penalties, fines, forfeitures, response costs and expenses (including
out-of-pocket litigation costs and reasonable attorneys' fees) directly or indirectly arising out
of (il any contamination of the Property by Hazardous Materials actually known to RDR but
not disclosed in the Phase I investigation and (ii) the use, generation, storage, transportation,
release, discharge or disposal of Hazardous Materials on or in the Property by RDR or the
partners of RDR or their respective employees, contractors, subcontractors or agents, including,
without limitation, the cost of any required or necessary repair, cleanup or detoxification and
the preparation of any closure or other required plans; excluding, however, from RDR's
indemnity any such liability, losses, damages (including foreseeable or unforeseeable
consequential damages). penalties, fines, forfeitures, response costs and expenses (including
out-of-pocket litigation costs and reasonable attorneys' fees) directly or indirectly arising out
of the actions of City, Agency or their respective employees, contractors, subcontractors
or agents. The indemnity obligation of this Section 14.2 is not assignable.
ARTICLE 15
Assignment
15.1 Limit on Escrow Holder's Responsibility. Escrow Holder shall have no concern
with, nor liability nor responsibility for, this Article.
15.2 Assignment Must be Approved by ROR. Neither City, nor any person or entity
constituting City, nor any assignee of City's or any such person's or entity's rights hereunder,
will have the right or power to assign its or their rights hereunder without first having obtained
ROR's written approval of any such assignment. Approval of anyone assignment will not
constitute a waiver of ROR's right to approve or disapprove any subsequent proposed
assignment. Except as stated in the next sentence, RDR shall have absolute discretion to
withhold its consent to any such assignment. Notwithstanding the first sentence of this
Section, ROR shall approve an assignment of City's rights (except for such rights as are
designated as not assignable and such obligations as are designated as not delegable within
this Agreement) to SBCS and subsequently to a limited partnership of which SBCS is a general
partner; any such assignee must assume City's obligation under this Agreement.
15.3 Effect of Approved Assignment. Except as otherwise provided in this Agreement,
in the event of any such approved assignment, the assignee will be and become (i) the grantee
of RDR's Grant Deed; and (ij) the person(s) having the right or obligation to (a) deliver
statements, (bl deliver documents, (c) give approvals, (d) waive conditions, or (e) make
demands, all as may be permitted or required by this Agreement and not then already
accomplished by City or another approved assignee,
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15.4 Assignor's Obligations. No assignment pursuant to this Article will relieve the
assignor of any of its obligations under this Agreement.
15.5 Right of First Refusal. If City enters into any agreement ("Resale Agreement")
to sell the Property or any portion of the Property within five years after Close of Escrow other
than the transfers of the Property contemplated by this Agreement, the Assignment Agreement,
the SPA 111 Affordable Housing Agreement or otherwise for the purposes of developing low
income housing units on the Property in accordance with City standards, RDR shall first be
given the right to repurchase the property to be resold at the price and terms set forth in the
Resale Agreement. RDR shall have such right and option for thirty (30) days, after which,
if not exercised, such right and option shall terminate; provided, however, RDR's right of first
refusal shall be renewed for an additional thirty (30) days should City enter into any amendment
to a Resale Agreement or should City enter into any additional Resale Agreement. Any Resale
Agreement shall be subject to ROR's right and option set forth herein. City shall give RDR
written notice of any such Resale Agreement or amendment to a Resale Agreement, together
with a copy of the same certified by City as being true and correct. The thirty (30) day period
will commence upon RDR's receipt of such notice and copy. No agreement or reversionary
interest by which SBCS' lenders, partners or the City may take over the Property for the sole
and express purpose of developing the Proposed Project shall be considered a Resale Agreement
subject to this Section. This right and option shall not defeat or render invalid the lien of any
deed of trust given by City for the acquisition of the Property or construction of the Project;
however, the buyer at any foreclosure sale (or the grantee of any deed in lieu of foreclosure)
shall take title subject to this right and option.
This right of first refusal shall be binding upon any and all successors and permitted assigns
of City's rights under this Agreement.
ARTICLE 16
General Provisions
16.1 Gender, Number. Whenever the context requires, the use herein of (i) the neuter
gender includes the masculine and the feminine, and (ii) the singular number includes the plural.
16.2 Business Days. If the (i) stated Closing Date, or (ij) last day for performance
of an act falls upon a day during which Escrow Holder is not open for business, the Closing
Date or such last day, as the case may be, will be the next following regular business day
of Escrow Holder.
16.3 Survival of Provisions. The representations, warranties, agreements and
indemnities set forth in this Agreement will remain operative, will be deemed made at the
close of this escrow, and will survive the closing and the execution and delivery of ROR's
grant deed and will not be merged in ROR's grant deed.
16.4 Authority of Signatories. Each individual signing this Agreement on behalf of
the City warrants that (i) he or she is duly authorized to sign and deliver this Agreement on
behalf of the City in accordance with a duly adopted resolution of the City Council of the
City and (ii) this Agreement is binding upon the City in accordance with its terms. Each
individual signing this Agreement on behalf of a corporation warrants that (i) he or she is duly
authorized to sign and deliver this Agreement on behalf of the corporation, in accordance
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with a duly adopted resolution of the board of directors of the corporation or in accordance
with the bylaws of the corporation, and (ii) this Agreement is binding upon the corporation
in accordance with its terms. McMillin Project Services, Inc. represents that it has the authority
to execute this Agreement on behalf of RDR and this Agreement is binding upon RDR in
accordance with its terms.
16.5 Joint and Several Liability. If either party consists of more than one person,
the liability of each person signing this Agreement will be joint and several.
16.6 Reservation of Discretion. RDR acknowledges and agrees that nothing contained
in this Agreement is intended to, nor shall have the effect of, reducing the City's legal authority,
discretion or obligation to consider approval or disapproval of future agreements and other
discretionary actions with respect to the property or the Proposed Project. RDR agrees to
waive any and all claims against City, Agency, and their respective agents, employees and
representatives arising form the City's election within the scope of its authority and discretion
to disapprove any such agreements or other discretionary actions with respect to the property
or the Proposed Project. RDR acknowledges and agrees that any such election by City shall
not constitute a breach of this Agreement.
16.7 RDR's Certification Re Non-Foreign Status. RDR understands that Section 1445
of the Internal Revenue Code provides that a transferee of a United States real property interest
must withhold tax if the transferor is a foreign person. To inform City that withholding of
tax is not required upon the disposition by RDR of the Property pursuant to this Agreement,
RDR hereby certifies the following and understands that this certification may be disclosed
to the Internal Revenue Service by City:
(a) RDR is not a foreign corporation, foreign partnership, foreign trust or
foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax
Regulations).
(b) RDR's United States Employer Identification Number is 33-0584676.
(c) RDR's office address is 2727 Hoover Avenue, National City, California
91950.
16.8 Captions. Captions in this agreement are inserted for convenience of reference
only and do not define, describe or limit the scope or the intent of this Agreement.
16.9 Entire Agreement. This Agreement, the Assignment Agreement, the Housing
Agreement and the SPA III Affordable Housing Agreement contain the entire agreement
between the parties relating to the transaction contemplated hereby and all prior or
contemporaneous agreements, understandings, representations and statements, oral or written,
are merged herein.
16.10 Exhibits. All exhibits referred to in this Agreement are attached, and are a part
of, this Agreement.
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16.11 Modifications. No modification, waiver or discharge of this Agreement will be
valid unless the same is in writing and signed by the party against which the enforcement
of such modification, waiver or discharge is or may be sought.
16.12 Attorney's Fees and Costs. If either party commences litigation for the judicial
interpretation. reformation. enforcement or rescission hereof, the prevailing party will be entitled
to a judgment against the other for an amount equal to reasonable attorney's fees and court
and other costs incurred.
16.13 Successors. All terms of this Agreement will be binding upon and inure to the
benefit of the parties and their respective administrators or executors, successors and assigns;
nothing contained in this Paragraph will affect Article 15.
16.14 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original, but all of which together will constitute one
instrument.
16.15 Applicable Law. This Agreement will be construed and enforced in accordance
with the laws of the State of California.
16.16 Time of Essence. Time is of the essence of each and every provision of this
Agreement in which time is an element.
16.17 Notices. Unless otherwise provided herein, all notices, demands or other
communications given hereunder will be in writing and will be deemed to have been duly
delivered upon personal delivery, or on receipt of a telecopy, or on the second business day
after deposit with Federal Express or other overnight courier service, or as of the second
business day after mailing by United States registered or certified mail. return receipt requested,
postage prepaid, addressed as follows:
If to RDR:
Rancho Del Rey Investors, L.P.
c/o McMillin Project Services, Inc.
2727 Hoover Avenue
National City, California 91950
Attn: Kenneth Baumgartner
Telephone: (619)477-4117
Telecopier: (619) 336-1587
With a CODV To:
Hecht, Solberg, Robinson & Goldberg LLP
600 West Broadway, Eighth Floor
San Diego, California 92101
Attn: R. Martin Bohl. Esq.
Telephone: (619) 239-3444
Telecopier: (619) 232-6828
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If to Citv:
Community Development Director
City of Chula Vista
276 Fourth Avenue
Chula Vista. California 91910
Attn: Juan Arroyo
Telephone: (619) 691-5047
Telecopier: (619) 691-5214
With a CODY To:
City Attorney
City of Chula Vista
276 Fourth Avenue
Chula Vista. California 91910
Attn: Glen Googins. Esq.
Telephone: (619) 691-5047
Telecopier: (619) 691-5214
If to Escrow Holder:
First American Title Insurance Company
41 1 Ivy Street
San Diego. California 92101
Attn: Escrow Department
Telephone: (619) 238-1776
Telecopier: (619) 231-4696
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This Agreement has been executed as of the date set forth at the beginning hereof.
"RDR"
Date:
RANCHO DEL REY INVESTORS, l.P., a California limited
partnership
BY: McMilLIN PROJECT SERVICES, INC., a California
corporation, its Attorney-in-Fact under a recorded
durable power of attorney dated June 2, 1993
By
Title
By
Title
"City"
Date:
THE CITY OF CHUlA VISTA,
a California municipal corporation
ATTEST
City Clerk
By
Mayor of the City of Chula Vista
Approved as to form by:
City Attorney
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CONSENT OF ESCROW HOLDER
The undersigned Escrow Holder hereby agrees to (i) accept the foregoing Agreement.
(ii) be escrow agent under said Agreement. and (iii) be bound by said Agreement in the
performance of its duties as escrow agent; provided, however, the undersigned shall have
no obligations. liability or responsibility under (a) this Consent or otherwise. unless and until
said Agreement. fully signed by the parties. has been delivered to the undersigned. or (b) any
amendment to said Agreement unless and until the same is accepted by the undersigned in
writing.
Dated:
FIRST AMERICAN TITLE INSURANCE COMPANY
By
Escrow Officer
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EXHIBIT "A"
Prooertv Descriotion
Parcel 2 of Chula Vista Tract No. 90-02, Rancho del Rey SPA
III, according to Parcel Map 17675, filed in the Office of the
County Recorder of the County of San Diego, California, as File
No. 1996-0143111, on March 22, 1996.
..3-54-1-7
EXHIBIT "B"
Grant Deed
Recording Requested By
and
When Recorded Mail To:
CITY OF CHULA VISTA
Attn:
Mail Tax Statement To:
CITY OF CHULA VISTA
Attn:
GRANT DEED
The undersigned declares that the documentary transfer tax is $ -0- [EXEMPT] and is
o computed on the full value of the interest or property conveyed, or is
o computed on the full value less the value of liens or encumbrances remaining thereon at the time of sale.
The land, tenements or realty is located in 0 unincorporated area . City of Chula Vista and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, RANCHO
DEL REY INVESTORS, loP., a California limited partnership ("Grantor"), hereby grants to CITY
OF CHULA VISTA, a California municipal corporation ("Grantee"), the real property in the
City of Chula Vista, County of San Diego, State of California, described as:
Parcel 2 of Chula Vista Tract No. 90-02, Rancho del Rey SPA
III, according to Parcel Map 17675, filed in the Office of the
County Recorder of the County of San Diego, California, as File
No. 1996-0143111, on March 22, 1996.
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MAIL TAX STATEMENTS AS DIRECTED ABOVE
J -SS - H
RESERVING UNTO GRANTOR, its successors, assigns and persons named below, together
with the right to grant and transfer all or a portion of the following rights and easements:
The right and power to use or utilize on any other property owned or leased by Grantor any
and all water rights or interests in water rights no matter how acquired by Grantor, and all
water rights or interests in water rights that may be within. under or on the land hereinabove
described. whether such water rights shall be riparian. overlying. appropriative, percolating
or prescriptive; provided, however, that the reservation made herein shall not reserve to or
for the benefit of Grantor any right to enter upon the surface of such land in the exercise of
such rights. Nothing herein stated is intended to reserve to Grantor the right to water provided
by Otay Water District or any other supplier of public water.
This conveyance is subject to: (i) the provisions set forth on the Addendum to Grant Deed
attached hereto and incorporated herein by reference. and (ii) the covenants and restrictions
set forth in that certain Master Declaration of Restrictions for Rancho Del Rey, filed for record
in the Office of the County Recorder of the County of San Diego. on August 29, 1989, as
File/Page No. 89-463940. as the same may have been or may be amended from time to time;
(iii) those additional restrictions set forth in or attached to that certain document partially
entitled "Notice of Annexation", filed for record in the Office of the County Recorder of the
County of San Diego, on ,19 , as File/Page No. , as the
same may have been or may be amended from time to time; and (iv) all of the "Permitted
Exceptions" set forth on Schedule 1 attached.
IN WITNESS WHEREOF. this instrument has been executed this _ day of
19 .
RANCHO DEL REY INVESTORS. L.P., a California limited
partnership
BY: McMILLIN PROJECT SERVICES, INC.. a California
corporation. its Attorney-in.Fact under a recorded
durable power of attorney dated June 2, 1993
By
Title
By
Title
RDRlChuJII Visra
12/9/96
Exhibit "8" , /
Page 2 ..3 _ ::;,-1:::, -1/
RDR/Chul. ViS-f.
12/9/96
Schedule 1
to
EXHIBIT "B"
Permitted ExceDtions
Note: This Schedule 1 does not include all permitted exceptions
to title. Certain additional permitted exceptions are set forth in
that certain Conveyance Agreement between Grantor and Grantee
dated as of December 17, 1996.
Exhibit "B"
Page 3 3 - S 7 - H
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On
personally appeared
, before me,
, Notary Public.
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument, the person (s). or the entity upon behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
(Seal)
,.
RDR/Chula Vista
12/9/96
Exhibit "8"
Page 4
J -,j-? -f-/
ADDENDUM TO GRANT DEED
COVENANTS, CONDITIONS AND RESTRICTIONS
FOR POST-CLOSING OBLIGATIONS
AND NOTICE OF RIGHT OF FIRST REFUSAL TO PURCHASE PROPERTY
(Provisions Pursuant To California Civil Code Section 1468)
BY THE DELIVERY AND ACCEPTANCE OF THIS GRANT DEED, Grantor and Grantee
agree as follows:
1. Grantor is the owner of certain land (the "Benefitted Land") in the City of Chula
Vista, County of San Diego, State of California, more particularly described as follows:
Lot 10 of CITY OF CHULA VISTA TRACT NO. 88-1 RANCHO
DEL REY PHASE 2, in the City of Chula Vista, County of San
Diego, State of California, according to Map thereof No. 12341
filed in the Office of the County Recorder of San Diego County
on March 28, 1989.
2. This deed has been delivered pursuant to a certain Conveyance Agreement and
Escrow Instructions (the "Conveyance Agreement") dated as of December 17, 1996 between
Grantor and City, Grantee's predecessor in interest.
3. NOTICE IS HEREBY GIVEN THAT SECTION 15.5 OF THE CONVEYANCE
AGREEMENT GRANTS TO GRANTOR THE RIGHT OF FIRST REFUSAL TO RE-PURCHASE
THE PROPERTY.
4. Grantee, for and on behalf of itself, and on behalf of each successive owner,
during its, his, her or their ownership of any portion of the Property and each person having
any interest in the Property derived through any such owner (which Grantee, owner and person
are collectively referred to herein as "Grantee"), covenants and agrees as follows:
(a) Walls. Grantee shall, at its sole expense, construct in accordance with
plans approved by Grantor, maintain in good condition, free of graffiti, repair and replace as
necessary a solid five foot (5') masonry wall on the westerly and southerly boundaries of
the Property. If a party other than Grantee (such as Grantor or the owner of, or the buyer
under a purchase agreement for, the adjoining property to the southwest of the Property
commonly known as Rancho del Rey Site 3340) builds or has built such masonry wall, Grantee
shall reimburse such party, within thirty (30) days of such party's demand, for such party's
actual costs of building the masonry wall. Grantee agrees to not modify without Grantor's
written consent any perimeter fencing or walls installed on the Property by Grantor.
(b) Construction. Grantee shall use its best efforts to commence construction
of Grantee's Proposed Project within one hundred eighty (180) days after Close of Escrow.
Grantee shall thereafter diligently pursue completion of construction in accordance with plans
approved by Grantor.
RDR/Chul. Vist..
12/9/96
Exhibit "B"
Page 5
J - .5-9 -1-1
(c) Scheduling Conflicts. In the event that scheduling conflicts arise with
regard to work to be done pursuant to the Housing Agreement, Grantee and Grantor shall
work together to reasonably coordinate such work.
(d) Rezones, Permit Amendment, Resubdivision. Grantee shall not apply
for or obtain any change of zone classification of the Property or any amendment to the SPA
Plan or Financing Plan or resubdivide the Property without Grantor's prior written consent,
which consent may be withheld for any reason.
(e) Grantor's Approval of Improvements. Grantee may construct or place
on the Property only those improvements (including, but not limited to, residential structures)
approved by Grantor. Any changes from such plans which materially affect the physical
appearance of the improvements when viewed from a dedicated street are subject to Grantor's
approval. Grantee shall submit the following items for Grantor's reasonable approval, and
shall thereafter use only those documents, plans and materials as have been approved
hereunder: all site plans, elevation plans, landscaping plans, and all materials and colors of
all exterior surfaces of all improvements (including, but not limited to, residential structures)
and all other materials required to be submitted pursuant to the Residential Design Guidelines
for Rancho del Rey SPA III.
(f) Clean Up of Debris. Grantee shall, during the period of ownership of
any portion of the Property by Grantee, keep the Property and adjacent land in a neat and
clean condition, free and clear of debris, trash and other unsightly materials, except for
materials on the Property which are reasonably necessary for the construction of dwelling
units on the Property. In the event any debris, trash or other unsightly materials are not cleaned
up and removed within seventy.two (72) hours following receipt of written notification from
Grantor, Grantor shall be entitled to perform the remedial work and Grantee shall, upon demand,
reimburse Grantorthe cost of the remedial work (on a time and material basis) plus ten percent
(10%).
5. Injunctive Relief. Grantee and Grantor hereby declare that monetary damages
for the breach of the provisions contained in Sections 4.(a) through 4.(f) is inadequate and
that Grantee may be enjoined by any court of competent jurisdiction from commencing or
proceeding with construction, development or other activity which is not substantially in
compliance with those Sections.
6. Grantee shall abide by all requirements of the City of Chula Vista, including,
but not limited to, the Design Guidelines applicable to the Property.
7. Grantee, and not Grantor, shall be responsible for any damages which result
directly or indirectly from any changes Grantee may make to grading or soils conditions of
the Property, and Grantee holds Grantor harmless (including, but not limited to, its reasonably
incurred attorneys' fees) from any damages which result directly or indirectly from any such
change.
8. Grantor will, upon the completion by Grantee of all Grantee's obligations under
the paragraphs set forth in Section 4 above, at the request of Grantee, sign and deliver to
Grantee a recordable notice describing the Property and stating that the purpose thereof is
RDR/Chulll Vi3rao
12/9/96
Exhibit "8"
Page 6
.3 - ~O -1-/
.
to evidence compliance with said provisions. If any lender of Grantee requests or requires
Grantor to do so, Grantor shall, within seven (7) days after such request, certify that improve-
ments on the Property are being or have been constructed in conformity with the plans
approved by Grantor, or Grantor will specify with reasonably specificity why such construction
does not conform with such plans.
9. Grantor will not be liable in damages to any third person by reason of Grantor's
mistaken judgment, negligence or nonfeasance arising out of or in connection with the approval
or disapproval orfailure to approve or disapprove any plans submitted by Grantee or by reason
of any defect in any structure constructed in conformity with the plans. Grantor will have
the right, but not the duty, to determine whether improvements are constructed in compliance
with the plans and other materials approved by Grantor.
10. Each successive owner, during its, his, her or their ownership of any portion
of the Property, and each person having any interest in the Property derived through any such
owner, will be bound hereby for the benefit of Grantor and the Benefitted Land; provided,
however, the benefits of these provisions pursuant to California CIVIL CODE Section 1468
shall not accrue to subsequent owners of the Benefitted Land unless Grantor expressly assigns
such benefits by means of a recorded instrument.
11. Any violation of the provisions herein contained will be deemed to be a continuing
violation hereof and no delay in the delivery of any notice of any violation hereof or in the
enforcement of any rights or the seeking of any remedies provided hereunder will constitute,
or be deemed to constitute, a waiver of the right to give such notice, enforce such right or
seek such remedy at any time after the occurrence of such violation.
12. In the event any owner(s) of the Property or the Benefitted Land commences
litigation for the judicial interpretation, enforcement or rescission hereof. the prevailing party
will be entitled to a judgment against the other for an amount equal to reasonable attorneys'
fees and other costs incurred.
13. No breach of any of the provisions of this Addendum to Grant Deed will defeat
or render invalid the lien of any mortgage or deed of trust made in good faith and for value.
14. These provisions may be modified by an instrument in writing signed,
acknowledged and recorded by Grantor and Grantee. These provisions may be extinguished
by an instrument in writing signed. acknowledged and recorded by Grantor.
1 5. These provisions will be and become automatically extinguished as to the Property
upon the twenty-fifth (25th) anniversary of the date of recording of these provisions.
16. If any provision herein contained is held to be invalid, void or otherwise
unenforceable by any court of competent jurisdiction, the invalidity of any such provision
will in no way affect the validity of any other provision herein contained.
17. The provisions herein contained are covenants and are for the benefit of the
Benefitted Land and have been made with the intent of satisfying the requirements of Section
1468 of the California CIVIL CODE.
RDRlChultJ Vist.
1219196
Exhibit "B"
Page 7
J-br-H
Dated:
RDRlChuls Vists
12/9/96
19
"Grantor"
RANCHO DEL REY INVESTORS, L.P., a California limited
partnership
BY: McMILLIN PROJECT SERVICES, INC., a California
corporation, its Attorney-in-Fact under a recorded
durable power of attorney dated June 2, 1993
By
Title
By
Title
"Grantee"
By
Title
By
Title
Exhibit "B"
Page 8
J-("d.-H
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On
personally appeared
, before me,
, Notary Public.
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument. the person(s), or the entity upon behalf of which
the person(s) acted. executed the instrument.
WITNESS my hand and official seal.
Signature
(Seal)
STATE OF CALIFORNIA
)
) ss.
)
COUNTY OF SAN DIEGO
On
personally appeared
. before me.
. Notary Public.
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies). and that by
his/her/their signature(s) on the instrument. the person (s). or the entity upon behalf of which
the person(s) acted. executed the instrument.
WITNESS my hand and official seal.
Signature
(Seal)
RDRlChu/s Vist.
12/9/96
Exhibit "B"
Page 9
J - 03 -H
EXHIBIT "e"
RDA's Imorovements
Graded Condition. The Property shall be rough graded in substantial conformance with the
City approved grading plans and the City's Grading Ordinance; provided, however, that flat
pads and slopes of five feet (5') or less (i.e., change in vertical elevation of five feet (5') or
less) need not be hydro-seeded unless and until required by City. The lot shall be substantially
free from weeds as required by Section 6.2 of the Purchase Agreement.
Monumentation. The final monumentation shown on the Parcel Map shall have been set in
the field by the surveyor. Monuments destroyed by the SBCS' construction operations shall
be re-set by the SBCS at SBCS' cost. Building layout stakes and other construction stakes
required for SBCS' improvements are not included in the finished lot.
Utilities. Water. sewer, gas, electric. telephone and cable television transmission lines within
the public streets and easements shall have been constructed in substantial conformance
with the City and Agency approved improvement and utility plans. Water and sewer services
shall be stubbed to the lot lines. On-site services, distribution lines, meters and utilities are
not included in the finished lot.
Street Imorovements. Monolithic curb, gutter and sidewalk and full depth street paving shall
have been completed in substantial conformance with the City approved improvement plans.
Driveway approaches shall be constructed to the right-of-way. SBCS improvements within
the right-of-way are not included in the finished lot.
Landscaoino and Fencino. Erosion control landscaping and irrigation as required by the City
Grading Ordinance and shown on the City approved erosion control landscaping plans, or
as modified by the City Landscape Architect, and accepted by the City, shall have been
installed. Perimeter walls, as shown on the City approved "Walls, Fences and Minor
Monuments" plans shall have been constructed. On-site walls and fencing which may be
required by the City, or as a condition of sale by the RDR, is not included in a finished lot.
Landscaping within the street right-of-way which may be required by the City and other SBCS
landscaping is not included in the finished lot.
RDRlChul. v,.st.
12/9/96
J-rc.L/-H
EXHIBIT "D"
Notice of Declaration of Annexation
Recording Requested By
and
When Recorded Return To:
HECHT, SOLBERG, ROBINSON & GOLDBERG
Mr. A. John Hecht
600 West Broadway, Eighth Floor
San Diego, California 92101
NOTICE OF
DECLARATION OF ANNEXATION,
IMPOSITION OF ADDITIONAL RESTRICTIONS AND COVENANTS,
AND NOTICE OF
DESIGNATION OF ARCHITECTURAL REVIEW COMMITTEE
at Rancho Del Rey
THIS NOTICE OF DECLARATION OF ANNEXATION, IMPOSITION OF ADDITIONAL
RESTRICTIONS AND COVENANTS AND NOTICE OF DESIGNATION OF ARCHITECTURAL
REVIEW COMMITTEE ("Notice") is made as of this day of , 199.., by RANCHO
DEL REV INVESTORS, L.P., a California limited partnership ("Declarant") with reference to
the following:
RECITALS:
A. Declarant is the successive Declarant under that certain Master Declaration
of Restrictions for Rancho Del Rey ("Master Declaration") which was recorded on the 29th
day of August, 1989 with the Office of the County Recorder of San Diego County, California,
as File/Page No. 89-463940, initially covering all of that real property located in the City of
Chula Vista, County of San Diego, State of California, described as:
Lots 2, 3, 4 and 5 of CHULA VISTA TRACT NO. 88-1, RANCHO
DEL REV PHASE 2, in the City of Chula Vista, County of San
Diego, State of California, according to Map thereof No. 12341,
RDRlChul. Vi.llta
12/9/96
Exhibit "D"
Page 1 .3 _ (;, S - H
filed in the Office of the County Recorder of San Diego County
on March 28, 1989.
B. The Master Declaration provides that Declarant may annex additional property
as described in the Master Declaration to the Lots described in the Master Declaration and
thereby make such additional property subject to the Master Declaration.
C. Declarant is the owner of the real property located in the City of Chula Vista,
County of San Diego, California described as:
Parcel 2 of CHULA VISTA TRACT NO. 90-02. Rancho del Rey
SPA III, according to Parcel Map 17675. filed in the Office of the
County Recorder of the County of San Diego, California, as File
No. 1996-0143111, on March 22. 1996.
which property (referred to herein as "the Property") is a part of the Properties described in
the Master Declaration which may be annexed to the Lots.
D. Declarant now wishes to annex the Property described in Recital C above to
the property covered by the Master Declaration and to impose on the Property the additional
covenants and restrictions set forth below.
NOW, THEREFORE, Declarant declares as follows:
1. Annexation. Pursuant to the terms of the Master Declaration. Declarant declares
that the Property is hereby annexed to and made a part of the Lots as defined in the Master _
Declaration. All ofthe Property shall be held, sold, leased, transferred, occupied and conveyed
subject to (i) the terms, provisions, covenants, conditions. restrictions and easements of the
Master Declaration as it may have been or hereafter become amended from time to time,
and (ii) those Supplemental Covenants and Restrictions set forth below.
2. Notice of Architectural Review Committee (ARC) Designation. Pursuantto Section
2 of ARTICLE III of the Master Declaration, Declarant hereby declares that the Property is
within the "Cordova at Rancho Del Rey Architectural Review Committee." Cordova at Rancho
Del Rey Architectural Review Committee is a Non-Subassociation ARC as such term is used
in the Master Declaration.
3. Supplemental Covenants and Restrictions. In addition to the terms, provisions,
covenants, conditions, restrictions and easements of the Master Declaration, the covenants
and restrictions set forth on Exhibit" 1" attached hereto and incorporated herein shall apply
to Cordova at Rancho Del Rey. [To be included at Rancho del Rey's option]
RDRlChul. Vhrt.
12/9/96
Exhibit "D"
Page 2 J - 0 0 - f-{
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the day
and year first hereinabove written.
RANCHO DEL REY INVESTORS, l.P., a California
limited partnership
BY: McMilLIN PROJECT SERVICES, INC., a
California corporation, its Attorney-in-Fact
under a recorded durable power of attorney dated
June 2, 1 993
By
Title
By
Title
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On
Public, personally appeared
, before me,
, Notary
personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument, the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
WITNESS my hand and official seal.
Signature
(Seal)
RDRlChula Vista
1219196
Exhibit "0"
Page 3
3- C:,7 ~;-f
EXHIBIT" 1"
TO
EXHIBIT "0"
Supplemental Covenants and Restrictions
rto be attached]
RDR;Chul. Vist.
12/9/96
Exhibit "0"
Page 4
-.3 - fc, g - (-f
EXHIBIT "E"
Escrow Holder's General Provisions
[to be attached}
RDRlChula Vi.nil
12/9/96
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ASSIGNMENT OF CONVEYANCE AGREEMENT
AND ESCROW INSTRUCTIONS
THE CITY OF CHULA VISTA,
a California municipal corporation
"CITY"
SOUTH BAY COMMUNITY SERVICES,
a California 501 (c)(3) non-profit corporation
"SBCS"
Chul. VilltwSBCS
1219/96
~-70-r
ARTICLE 1
ARTICLE 2
ARTICLE 3
ARTICLE 4
ARTICLE 5
ARTICLE 6
ARTICLE 7
EXHIBITS
TABLE OF CONTENTS
PAGE
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . 2
Assignment ....................................... 3
Nature of Assignment .......,......................... 3
"As Is" Transfer ..................................... 4
Assignment ....................................... 5
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
"A" Property Description
Chul. Vista/SBes 3 - 7! - ...L.....
12/9/96
ASSIGNMENT OF CONVEYANCE AGREEMENT AND ESCROW INSTRUCTIONS
THIS ASSIGNMENT OF CONVEYANCE AGREEMENT AND ESCROW INSTRUCTIONS
("Agreement") is entered into as of December 17, 1996 between THE CITY OF CHULA VISTA,
a California municipal corporation ("City"), and SOUTH BAY COMMUNITY SERVICES, a
California 501(c)(3) non-profit corporation ("SBCS").
ARTICLE 1
Recitals
1.1 The Property. Rancho del Rey Investors, L.P., a California limited partnership
("RDR") is the owner of certain real property in the City of Chula Vista, County of San Diego,
State of California, more particularly described on Exhibit "A" (the "Property"). The Property
is part of the master planned community known as "Rancho del Rey."
1.2 The SPA III Affordable Housing Obligation. Pursuant to that certain "Agreement
Concerning Rancho del Rey and Low-Moderate Income Housing" dated August 7, 1990, RDR,
as successor in interest to Rancho del Rey Partnership, is obligated to provide 2310w income
housing units in connection with its development of SPA III of Rancho del Rey (the "SPA III
Affordable Housing Obligation").
1.3 Conveyance Agreement. Concurrently herewith, RDR and City have entered
into that certain Conveyance Agreement and Escrow Instructions (" Conveyance Agreement")
pursuant to which RDR agrees to grant the Property to City, and City agrees to receive the
grant of the Property, subject to and in accordance with the terms of the Conveyance
Agreement. The grant to City will be made in full satisfaction of the SPA III Affordable Housing
Obligation.
1.4 South Bay Community Services. The mission of SBCS includes the development,
ownership and operation of multi-family residential projects providing affordable housing to
low income persons.
1.5 The Proposed Project. SBCS (or a limited partnership in which sacs is a general
partner) intends to acquire the Property for the purposes of improving it with a multi-family
residential project consisting of forty units and providing housing affordable for low income
persons (the "Proposed Project").
1 .6 Assignment. City desires to transfer and assign to Assignee all of its right, title
and interest in and to the Conveyance Agreement, including, without limitation, the right to
acquire the Property, and Assignee desires to receive such transfer and assignment, in
accordance with the terms of this Agreement. It is the intention of City that the right to acquire
the Property be given to Assignee as a subsidy.
1.7 Housing Agreement. RDR and SBCS have or will enter into a Low Income
Housing Agreement (the "Housing Agreement") pursuant to which, among other things, RDR
Chul. Vista/SBCS
12/9/96
,.3- 7 d. -I
and sacs agree as to their respective obligations with respect to the Property. City shall
have the right, but no obligation, to cure any material breach of the Housing Agreement by
SBCS and thereby succeed to SBCS' rights and obligations thereunder.
1.8 Disposition and Development Agreement, City, sacs and the Redevelopment
Agency of the City of Chula Vista ("Agency") intend to enter into a Disposition and
Development Agreement and in which City and Agency would agree to make loans to sacs
for the development of the Property with the Proposed Project.
ARTICLE 2
Definitions
Unless the context otherwise indicates, the following shall have the meanings as set
forth in this Article:
2.1 "Agency" means the Redevelopment Agency of the City of Chula Vista.
2.2 "Appraised Value of the Property" means $960,000.00, as established by that
certain appraisal by D.F. Davis Real Estate, Inc., MAl, dated March 3, 1995.
2.3 "City" means the City of Chula Vista.
2.4 "County" means the County of San Diego, State of California.
2.5 "Disposition and Development Agreement" means the agreement described
in Section 1.8.
2.6 "Escrow Holder" means FIRST AMERICAN TITLE INSURANCE COMPANY, whose
address is 411 Ivy Street, San Diego, California 92101.
2.7 "Housing Agreement" means the agreement described in Section 1.7.
2.8 "Master Declaration" means the Master Declaration of Restrictions for Rancho
Del Rey, recorded in the Office of the County Recorder of the County of San Diego, on
August 29, 1989, as File/Page No. 89-463940, as the same may have been or may be
amended from time to time.
2.9 "Parcel Map" means Parcel Map 17675, filed in the Office of the County Recorder
of the County of San Diego, California, as File No. 1996-0143111, on March 22, 1996.
2.10 "Notice of Annexation" means the Notice of Declaration of Annexation, Imposition
of Additional Restrictions And Covenants and Notice of Designation of Architectural Review
Committee to be recorded by RDR Investors, L.P., in connection with the acquisition of the
Property by City.
2.11 "Opening of Escrow" means the date of, and act of, Escrow Holder signing
the "Consent of Escrow Holder" attached to this Agreement.
Chul." Vista/SHCS
12/9/96
2
3-73-I
2.12 "Proposed Project" means the project described in Section 1.5.
2.13 "Title Insurer" means FIRST AMERICAN TITLE INSURANCE COMPANY, with
offices at 411 Ivy Street, San Diego, California 92101.
ARTICLE 3
Assignment
3.1 Assignment. City hereby assigns and transfers to SBCS, and SBCS hereby
accepts the assignment of, all of City's right, title and interest in and to the Conveyance
Agreement including, without limitation, the right to acquire the Property subject to and in
accordance with the terms thereof. City and SBCS acknowledge and agree that the fair market
value of the Property is the Appraised Value. City and SBCS further agree that City's
assignment to SBCS and SBCS' acquisition of the Property shall constitute a subsidy from
City, and no cash consideration will be required therefor.
3.2 Obligations Not Delegated by Assignment. City shall retain the following
obligations, subject to the terms and conditions of the Conveyance Agreement:
(a) Reconveyance of any deed(s) of trust securing RDR's obligations under
the SPA III Affordable Housing Agreement (pursuant to Section 6.3 of the Conveyance
Agreement).
ARTICLE 4
Nature of Assignment
4.1 Nature of Assignment. This Agreement, the consummation of the transaction
herein contemplated. the respective rights and obligations of the parties hereto. and the Close
of Escrow under the Conveyance Agreement are subject to and contingent upon the good
faith satisfaction and completion of the following condition precedent which is deemed to
be for the mutual benefit of the parties, or the written waiver thereof:
(a) Convevance Aareement. All conditions precedent set forth in Article 4
of the Conveyance Agreement shall have been satisfied.
4.2 Satisfaction, Waiver and Failure af Condition; Terminatian. The waiver of this
condition will be effective only if the same is (i) in writing, (ii) signed by the parties, and (iii)
delivered to the other parties before termination of the Agreement. Failure of a condition
to be satisfied or waived within the time provided for satisfying or waiving the condition shall
allow any party not then in default to terminate this Agreement. If any conditions remain
not satisfied (and are not waived) by January 1, 1998, then any party may terminate this
Agreement at any time before all conditions are satisfied or waived.
4.3 Performance By The Other Party. Each party's obligation to perform underthis
Agreement is subject to material performance of any prior or concurrent obligation of the other
party.
ARTICLE 5
Chu/s Vista/SBCS
12/9/96
3
J-7y-r
"As Is" Transfer
5.1 Basis of Assignment. City is making absolutely no representations or warranties,
express or implied, with respect to the Property. Except as set forth in this Agreement, SBCS
acknowledges that it is acquiring the Property in reliance solely on (i) SBCS' inspection of
the Property, (ii) SBCS' independent verification of the truth and accuracy of any documents
delivered by City or RDR to SBCS and statements made by City or RDR to SBCS concerning
the Property and its development, (iii) the opinions and advice concerning the Property and
their development of consultants engaged by SBCS and (iv) the covenants, representations
and warranties set forth in this Agreement. SBCS, for itself and on behalf of its successors
and assigns, waives any and all claims against the City relating to the physical condition of
the Property upon transfer except for any breach of City's express obligations under this
Agreement. SBCS, for itself and its successors and assigns, hereby agrees to indemnify,
defend and hold harmless City and each of City's employees, agents, attorneys, successors
and assigns of City ("Indemnified Parties"), from and against any and all present and future
liability, losses, damages (including foreseeable or unforeseeable consequential damages),
penalties, fines, forfeitures, response costs and expenses (including out-of-pocket litigation
costs and reasonable attorneys' fees) directly or indirectly arising out of the use, generation,
storage, transportation, release, discharge or disposal of Hazardous Materials (as defined below
in Section 5.2) on or in the Property by SBCS or the partners of SBCS or their respective
employees, contractors, subcontractors or agents, including, without limitation, the cost of
any required or necessary repair, cleanup or detoxification and the preparation of any closure
or other required plans.
5.2 Hazardous Materials. The term "Hazardous Materials" means any material or
substance which is (i) defined as a "hazardous waste", extremely hazardous waste", "restricted
hazardous waste", "hazardous material", "hazardous substance", or any similar formation
under or pursuant to any California statute or common law rule; (ii) petroleum and natural
gas liquids as those terms are used in ~ 1 09( 14) of the Comprehensive Environmental Response,
Compensation & Liability Act, 42 U.S.C. ~ 6901, et seq. (41 U,S.C. ~6903); (iii) asbestos;
(iv) polychlorinated biphenyls; (v) designated as a "hazardous substance" pursuant to ~ 311
of the Clean Water Act, 33 U.S.C., ~ 1251, et seq. (33 U.S.C. ~ 1321) or listed pursuant
to ~307 of the Clean Water Act (33 U.S.C. ~1317); (vi) defined as a "hazardous waste"
pursuant to ~ 1 004 of the Resource Conservation & Recovery Act, 42 U.S.C. ~6901, et seq.
(42 U.S.C. ~6903); or (vii) defined as a "hazardous substance" pursuant to Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ~9601, et seq. (41 U.S.C.
~9601).
5.3 "As Is" Transfer. Except as otherwise set forth in this Agreement, SBCS will
accept each the Property, and the matters relating to the Property listed below, in their present
"as is" condition. The matters are:
(a) Soils. TODoaraohv. Etc. Soils and geological condition; topography, area
and configuration; archeological, prehistoric and historic artifacts, remains and relics;
contamination by Hazardous Materials; endangered species and wetlands.
(b) Utilities. Schools. Etc. Availability of utilities, schools, public access,
and fire and police protection.
ChuJ. Viaf';SBCS
12/9/96
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(c) Districts. The status, special taxes and assessments of any and all
Mello-Roos Community Facility Districts and assessment districts.
(d) Plannina and Zonina. Applicable planning, zoning and subdivision statutes,
ordinances, regulations and permits, the SPA Plan and the Financing Plan.
(e) DeveloDment Fees. The character and amount of any fee or charge which
must be paid by SBCS to develop the Property.
(f) Easements and Encroachments. Any easement, license or encroachment
which is not a matter of public record, whether or not visible upon inspection of the Property;
City warrants to SBCS that City knows of no such easement, license or encroachment.
(g) Other Matters. Any other matter relating to the Property or to the
development of the Property, including, but not limited to, value, feasibility, cost, governmental
permissions, marketing and investment return, except as otherwise expressly provided in this
Agreement.
5.4 No Brokerage Commission or Finder's Fee. Each party warrants to the other
that the warranting party has incurred no obligation, by reason of this Agreement or the
transaction contemplated hereby, for a real estate brokerage commission or finder's fee for
which the other party would be liable. Each party will hold the other party free and harmless
from and against any damage or expense the other party may incur by reason of the untruth
as to the warranting party of the foregoing warranty, including expenses for attorney's fees
and court costs.
ARTICLE 6
Assignment
6.1 Assignment by SBCS Must be Approved by City. Neither SBCS, nor any person
or entity constituting SBCS, nor any assignee of SBCS' or any such person's or entity's rights
hereunder, will have the right or power to assign its or their rights hereunder without first
having obtained City's written approval of any such assignment. Approval of anyone
assignment will not constitute a waiver of City's right to approve or disapprove any subsequent
proposed assignment. Except as stated in the next sentence, City shall have absolute discretion
to withhold its consent to any such assignment. Notwithstanding the first sentence of this
Section, City shall approve an assignment of SBCS' rights to a limited partnership of which
SBCS is a general partner; any such assignee must assume SBCS' obligation under this
Agreement.
6.2 Assignment by City Must be Approved by SBCS. Neither City, nor any person
or entity constituting City, nor any assignee of City's or any such person's or entity's rights
hereunder, will have the right or power to assign its or their rights hereunder without first
having obtained SBCS' written approval of any such assignment. Approval of anyone
assignment will not constitute a waiver of SBCS' right to approve or disapprove any subsequent
proposed assignment. SBCS shall have absolute discretion to withhold its consent to any
such assignment.
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12/9/96
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6.3 Effect of Approved Assignment. In the event of any such approved assignment,
except as provided in Section 3.2 above, the assignee will be and become (i) the grantor or
grantee, as appropriate, in the Grant Deed; and (ii) the person(s) having the right or obligation
to (a) deliver statements, (b) deliver documents. (c) give approvals, (d) waive conditions, or
(e) make demands, all as may be permitted or required by this Agreement and not then already
accomplished by the assignor or another approved assignee.
6.4 Assignor's Obligations. No assignment pursuant to this Article will relieve the
assignor of any of its obligations under this Agreement.
ARTICLE 7
General Provisions
7.1 Gender, Number. Whenever the context requires, the use herein of (i) the neuter
gender includes the masculine and the feminine, and (ii) the singular number includes the plural.
7.2 Business Days. If the (i) stated Closing Date, or (ii) last day for performance
of an act falls upon a day during which Escrow Holder is not open for business. the Closing
Date or such last day, as the case may be, will be the next following regular business day
of Escrow Holder.
7.3 Survival of Provisions. The representations, warranties, agreements and
indemnities set forth in this Agreement will remain operative, will be deemed made at the
close of this escrow, and will survive the closing and the execution and delivery of City's
grant deed and will not be merged in City's grant deed.
7.4 Authority of Signatories. Each individual signing this Agreement on behalf of
the City warrants that (i) he or she is duly authorized to sign and deliver this Agreement on
behalf of the City in accordance with a duly adopted resolution of the City Council of the
City and (ii) this Agreement is binding upon the City in accordance with its terms. Each
individual signing this Agreement on behalf of a corporation warrants that (i) he or she is duly
authorized to sign and deliver this Agreement on behalf of the corporation, in accordance
with a duly adopted resolution of the board of directors of the corporation or in accordance
with the bylaws of the corporation, and (ii) this Agreement is binding upon the corporation
in accordance with its terms.
7.5 Joint and Several Liability. If either party consists of more than one person,
the liability of each person signing this Agreement will be joint and several.
7.6 Reservation of Discretion. SBCS acknowledges and agrees that nothing contained
in this Agreement is intended to, nor shall have the effect of, reducing the City's legal authority,
discretion or obligation to consider approval or disapproval of future agreements and other
discretionary actions with respect to the property or the Proposed Project. SBCS agrees to
waive any and all claims against City, Agency, and their respective agents, employees and
representatives arising from the City's election within the scope of its authority and discretion
to disapprove any such agreements or other discretionary actions with respectto the property
or the Proposed Project. SBCS acknowledges and agrees that any such election by City shall
not constitute a breach of this Agreement.
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7.7 Captions. Captions in this agreement are inserted for convenience of reference
only and do not define, describe or limit the scope or the intent of this Agreement.
7.8 Exhibits. All exhibits referred to in this Agreement are attached, and are a part
of, this Agreement.
7.9 Entire Agreement. This Agreement, the Conveyance Agreement, the Housing
Agreement and the SPA III Affordable Housing Agreement contain the entire agreement
between the parties relating to the transaction contemplated hereby and all prior or
contemporaneous agreements, understandings, representations and statements, oral or written,
are merged herein.
7.10 Modifications. No modification, waiver or discharge of this Agreement will be
valid unless the same is in writing and signed by the party against which the enforcement
of such modification, waiver or discharge is or may be sought.
7.11 Attorney's Fees and Costs. If either party commences litigation for the judicial
interpretation, reformation, enforcement or rescission hereof, the prevailing party will be entitled
to a judgment against the other for an amount equal to reasonable attorney's fees and court
and other costs incurred.
7.12 Successors. All terms of this Agreement will be binding upon and inure to the
benefit of the parties and their respective administrators or executors, successors and assigns;
nothing contained in this Paragraph will affect Article 6.
7.13 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original, but all of which together will constitute one
instrument.
7.14 Applicable Law. This Agreement will be construed and enforced in accordance
with the laws of the State of California.
7.15 Time of Essence. Time is of the essence of each and every provision of this
Agreement in which time is an element.
7.16 Notices. Unless otherwise provided herein, all notices, demands or other
communications given hereunder will be in writing and will be deemed to have been duly
delivered upon personal delivery, or on receipt of a telecopy, or on the second business day
after deposit with Federal Express or other overnight courier service, or as of the second
business day after mailing by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
Chula Visu,/SBCS
12/9/96
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If to Citv:
Community Development Director
City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attn: Juan Arroyo
Telephone: (619) 691-5047
Telecopier: (619) 691-5214
With CODies To:
and
If to SBCS:
Rancho Del Rey Investors, L.P.
clo McMillin Project Services, Inc.
2727 Hoover Avenue
National City, California 91950
Attn: Kenneth Baumgartner
Telephone: (619) 477-4117
Telecopier: (619) 336-1587
Hecht, Solberg, Robinson & Goldberg LLP
600 West Broadway, Eighth Floor
San Diego, California 92101
Attn: R. Martin Bohl, Esq.
Telephone: (619) 239-3444
Telecopier: (619) 232-6828
South Bay Community Services
315 4th Avenue, Suite E
Chula Vista, CA 91910
Attn: Kathryn Lembo, Executive Director
Telephone: (619) 420-3620
Telecopier: (619) 420-8722
With Cooies To:
Chu/a Vista/SBCS
12/9/96
Gattis & Kuncz
2729 Fourth Avenue, Suite 2
San Diego, California 92103
Attn: Timothy A. Kuncz, Esq.
Telephone: (619) 233-4500
Telecopier: (619) 294-9425
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and
South Bay Community Services
315 4th Avenue, Suite E
Chula Vista, CA 91910
Attn: Ken Sauder, Community Development Director
Telephone: (619) 420-3620
Telecopier: (619) 420-8722
If to Escrow Holder:
First American Title Insurance Company
411 Ivy Street
San Diego, California 92101
Attn: Escrow Department
Telephone: (619) 238-1776
Telecopier: (619) 231-4696
This Agreement has been executed as of the date set forth at the beginning hereof.
"City"
Date:
THE CITY OF CHUlA VISTA,
a California municipal corporation
ATTEST
City Clerk
By
Mayor of the City of Chula Vista
Approved as to form by:
City Attorney
Chul. Vista/SBCS
12/9/96
9
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Date:
Chul. Vi/;r8/SBCS
12/9/96
"SBCS"
SOUTH BAY COMMUNITY SERVICES,
a California 501 (c)(3) non-profit corporation
By
Kathryn Lembo, Executive Director
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Chulll Vista/secs
12/9196
EXHIBIT "A"
Prooertv Descriotion
Parcel 2 of Chula Vista Tract No. 90-02. Rancho del Rey SPA III,
according to Parcel Map 17675, filed in the Office of the County
Recorder of the County of San Diego, California. as File No. 1996-
0143111, on March 22,1996.
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RANCHO DEL REV SPA-III
LOW INCOME HOUSING AGREEMENT
RANCHO DEL REY INVESTORS, L.P.,
a California limited partnership
"RDR"
SOUTH BAY COMMUNITY SERVICES,
a California 501 (c)(3) non-profit corporation
"SBCS"
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RDR/SBCS
12/9/96
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ARTICLE 1
ARTICLE 2
ARTICLE 3
ARTICLE 4
ARTICLE 5
ARTICLE 6
ARTICLE 7
ARTICLE 8
ARTICLE 9
TABLE OF CONTENTS
PAGE
Recitals
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2
4
Definitions
...................................... .
SBCS to Obtain Approvals for and Develop the Proposed Project . . . .
Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6
7
Right to Enter
..................................... .
Improvements by RDR .................................
Title Policy
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Prorations, Fees Costs and Reimbursements ................. 10
10
Default
..................................... .
ARTICLE 10 Assessment Districts ................................. 11
ARTICLE 11
ARTICLE 12
SPA Plan; Financing Plan .............................. 11
Representations. Warranties and Further Disclosures
and Agreements ............................... 12
15
14
16
ARTICLE 13 Assignment
..................................... .
ARTICLE 14 Hazardous Materials
................................ .
ARTICLE 15 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS
"A" Property Description
"B" RDR's Improvements
"c" Items Received By SBCS
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LOW INCOME HOUSING AGREEMENT
THIS LOW INCOME HOUSING AGREEMENT ("Agreement") is entered into as of
December 17, 1996 between RANCHO DEL REY INVESTORS, LP., a California limited partner-
ship ("RDR"), and SOUTH BAY COMMUNITY SERVICES, a California 501 (c)(3) non-profit
corporation ("SBCS").
ARTICLE 1
Recitals
1.1 The Property. RDR owns that certain real property in the City of Chula Vista,
County of San Diego, State of California, commonly known as Neighborhood 3341 of Rancho
del Rey SPA III and more particularly described on Exhibit "A" attached (the "Property").
1.2 Development Plan. The Property, as well as other real property owned by RDR
adjacent thereto, has been and will be subjected to and developed in accordance with City
zoning and use regulations designed to produce a planned community for the entire project
known as "Rancho Del Rey". The Property and other portions of Rancho Del Rey will be
encumbered by a Master Declaration of Restrictions ("Master Declaration"). The Master
Declaration does not provide for a master homeowners association.
1.3 The SPA III Affordable Housing Obligation. Pursuant to that certain "Agreement
Concerning Rancho del Rey and Low-Moderate Income Housing" between Rancho del Rey
Partnership and the City of Chula Vista ("City") dated August 7, 1990, RDR, as successor
in interest to Rancho del Rey Partnership, is obligated to provide 23 low income housing units
in connection with its development of SPA III of Rancho del Rey (the "SPA III Affordable
Housing Obligation").
1.4 Conveyance Agreement. Concurrently herewith, RDR and City have entered
into that certain Conveyance Agreementand Escrow Instructions (" Conveyance Agreement")
pursuant to which RDR agrees to dedicate and grant the Property to City, and City agrees
to receive the dedication and grant of the Property, subject to and in accordance with the
terms of the Conveyance Agreement. The dedication and grant to City will be made in full
satisfaction of the SPA III Affordable Housing Obligation.
1.5 SPA III Affordable Housing Agreement. RDR and City have entered into that
certain Second Amended and Restated Rancho del Rey SPA III Affordable Housing Agreement
dated as of December 17, 1996 (the "SPA III Affordable Housing Agreement"), which describes
certain options for and other matters relating to the satisfaction of the SPA III Affordable
Housing Obligation, including the transactions contemplated by this Agreement.
1.6 South Bay Community Services. The mission of sacs includes the development,
ownership and operation of multi-family residential projects providing affordable housing to
low income persons.
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12/9/96
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1.7 Proposed Project. SBCS (or a limited partnership in which SBCS is a general
partner) intends to acquire the Property for the purposes of improving it with a multi-family
residential project consisting of forty units and providing affordable housing for low income
persons (the "Proposed Project").
1.8 Assignment Agreement. Concurrently herewith, City and SBCS have entered
into that certain Assignment Agreement (" Assignment Agreement") pursuant to which City
agrees to assign to SBCS, and SBCS agrees to assume from City, City's rights and obligations
under the Conveyance Agreement, subject to and in accordance with the terms of the
Assignment Agreement.
1.9 Disposition and Development Agreement. City, SBCS and the Redevelopment
Agency of the City of Chula Vista ("Agency") intend to enter into a Disposition and
Development Agreement and in which City and Agency would agree to make loans to SBCS
for the development of the Property with the Proposed Project.
ARTICLE 2
Definitions
Unless the context otherwise indicates, the following shall have the meanings as set
forth in this Article:
2.1 "Acceptance Date" means the date of signature of RDR or SBCS, whichever
is the last to sign this Agreement.
2.2 "Agency" means the Redevelopment Agency of the City of Chula Vista.
2.3 " Appraised Value of the Property" means $ 9 60 ,000.00, as esta blished by that
certain appraisal by D.F. Davis Real Estate, Inc., MAl, dated March 3, 1995.
2.4 "Assignment Agreement" means the agreement described in Section 1.8.
2.5 "Cash" means (i) currency, (ii) if acceptable to Escrow Holder, a check or checks
currently dated, payable to Escrow Holder or order and honored upon presentation for payment,
or Oii) funds wire-transferred or otherwise duly deposited into Escrow Holder's account at
Escrow Holder's direction.
2.6 "Closing Date" means the date scheduled for Close of Escrow, and unless
otherwise agreed to in writing by RDR and SBCS or as otherwise set forth herein, the Closing
Date shall be December 31,1997.
2.7 "Close of Escrow" means the date the Grant Deed to SBCS (pursuant to the
Conveyance Agreement) and other documents are filed for record.
2.8 "City" means the City of Chula Vista.
2.9 "Conveyance Agreement" means the agreement described in Section 1.4 above.
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2.10 "County" means the County of San Diego, State of California.
2.11 "Disposition and Development Agreement" means the agreement between City,
Agency and sacs described in Section 1.9.
2.12 "Escrow Holder" means FIRST AMERICAN TITLE INSURANCE COMPANY, whose
address is 411 Ivy Street, San Diego, California 92101.
2.13 "Feasibility Condition" means the condition precedent to SBCS' obligations set
forth in Section 4.2.
2.14 "Feasibility Period" means the period for satisfaction or waiver ofthe Feasibility
Condition described in Section 4.2(a).
2.15 "General and special real estate taxes" means all charges evidenced by the
secured tax bill issued by the Tax Collector of the County, including, but not limited to, amounts
allocated to (j) County or City general governmental purposes, (ii) bonded indebtedness of
the County or City, (iii) bonded or other indebtedness and operating expenses of any school,
college, sewer, water, irrigation, hospital, library, utility, county service, community facilities
district or other district, and (iv) any other lawful purpose.
2.16 "Master Declaration" means the Master Declaration of Restrictions for Rancho
Del Rey, recorded in the Office of the County Recorder of the County of San Diego, on
August 29, 1989, as File/Page No. 89-463940, as the same may have been or may be
amended from time to time.
2.17 "Parcel Map" means Parcel Map 17675, filed in the Office ofthe County Recorder
of the County of San Diego, California, as File No.1 996-0143111, on March 22, 1996.
2.18 "Notice of Annexation" means the Notice of Declaration of Annexation, Imposition
of Additional Restrictions and Covenants and Notice of Designation of Architectural Review
Committee to be recorded by RDR Investors, L.P., in connection with the acquisition of the
Property by City.
2.19 "Opening of Escrow" means the date of, and act of, Escrow Holder signing
the "Consent of Escrow Holder" attached to this Agreement.
2.20 "Phase I Investigation" means the Preliminary Site Assessment for RDR SPA "'
prepared by Law-Crandall, Inc., dated September 9, 1994, Portions of Rancho del Rey SPAs
II and III, northeast of Rancho del Rey Parkway and south of East "H" Street, Chula Vista,
California. (Items ?, ? and? of Exhibit "C"). SBCS acknowledges having received copies of
the Phase I Investigation.
2.21 "Proposed Project" means the project proposed to be developed by SBCS
described in Section 1.7 above.
2.22 "SPA III Affordable Housing Agreement" means the agreement between RDR
and City described in Section 1.5.
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12/9/96
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2.23 "Title Insurer" means FIRST AMERICAN TITLE INSURANCE COMPANY, with
offices at 411 Ivy Street, San Diego, California 92101.
ARTICLE 3
SBCS to Obtain Approvals for and Develop the Proposed Project
3.1 SBCS agrees to use good faith efforts and due diligence to obtain all required
approvals, tax credit allocations, loans, and do all things reasonably required to satisfy all
conditions to this Agreement, the Conveyance Agreement and the Assignment Agreement
and otherwise obtain approval of the Proposed Project and cause escrow for the Property
to close, and once construction has commenced for the Proposed Project, to diligently pursue
the completion of the Proposed Project.
3.2 RDR and sacs agree to use good faith efforts to satisfy the conditions precedent
to this Agreement and to cause escrow to close under the Conveyance Agreement. Nothing
contained in this Section 3.2 shall limit sacs' rights to terminate this Agreement during the
Feasibility Period.
ARTICLE 4
Conditions Precedent
4.1 Conditions Precedent. This Agreement, the consummation of the transaction
herein contemplated, the respective rights and obligations of the parties hereto, and the Close
of Escrow are subject to and contingent upon the good faith satisfaction and completion of
each of the following conditions precedent which are deemed to be for the mutual benefit
of the parties, or the written waiver thereof by the parties, which are more particularly set
forth below. The time for the approval and satisfaction of each of the conditions precedent
are specified in the paragraphs below.
4.2 Feasibility Condition. SBCS' obligation to purchase the Property is subject to
sacs approving its feasibility study of constructing the Proposed Project on the Property.
Such condition is referred to herein as the "Feasibility Condition".
(a) The Feasibilitv Period and sacs' Indeoendent Investiaation. Unless this
Agreement is earlier terminated, sacs shall have until 5 p.m. California time on the earlier
of: (j) the later of: (A) sixty (60) calendar days after the receipt by sacs of a letter from the
California Tax Credit Allocation Committee ("TCAC") confirming a preliminary award of low
income housing tax credits, and (B) sixty (60) calendar days after the receipt by sacs of
an initial commitment of a permanent loan from the California Housing Finance Agency; and
(ii) May 30, 1997 (the "Feasibility Period") to conduct and approve all of its investigations
and studies, including, but not limited to, investigating the economic feasibility of building
sacs' Proposed Project; the condition of title to the Property, including the items set forth
in the Preliminary Title Report described in Article 7 below; the physical status of the Property;
proposed grading and other planned physical changes; tentative map conditions; use permits;
the City's Financing Plan; the City's SPA Plan; the City's Planned Community District Regula-
tions; the City's Residential Design Guidelines; the availability of water and other utilities;
the environmental condition of the Property and the surrounding properties; federal, state,
County and City fees, policies and regulations; the environmental impact report approved
RDRlSBCS
12/9/96
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by the City; City thresholds for development; the likelihood of the City's approval of the
Proposed Project and whether SBCS will be permitted to build the same; whether occupancy
permits are likely to be issued; proposed and existing assessment districts; Mello Roos
Community Facilities Districts; planning, zoning and other land use considerations and
requirements; agreements; economic feasibility studies and all related matters. '
(b) Satisfaction or Waiver. Satisfaction or waiver of the Feasibility Condition
shall be evidenced by SBCS so notifying Escrow Holder and RDR in writing prior to expiration
of the Feasibility Period.
(c) Failure of Satisfaction or Waiver. Failure of the Feasibility Condition to
be satisfied or waived by SBCS within the Feasibility Period shall entitle SBCS or RDR to
terminate this Agreement. SBCS shall communicate any failure of the Feasibility Condition
in writing to RDR on or before the expiration of the Feasibility Period. Should the Feasibility
Condition fail, SBCS and RDR shall each execute escrow cancellation instructions whereby
SBCS and RDR terminate this Agreement, the Conveyance Agreement and the Assignment
Agreement, and release one another, the City, the Property and Escrow Holder from any
obligations under this Agreement, the Conveyance Agreement and the Assignment Agreement,
with respect to the Property.
(d) Time Is of The Essence. TIME IS OF THE ESSENCE AND UNLESS THIS
AGREEMENT IS SOONER TERMINATED, THE FEASIBILITY PERIOD IS TO BE STRICTLY
CONSTRUED AS EXPIRING ON THE DATE STATED IN THIS ARTICLE.
SBCS' Initials
4.3 Other Conditions Precedent. Close of Escrow IS subject to the following
conditions:
(a) Other Agreements. RDR, City and SBCS, as appropriate, in their sole
discretion, shall have entered into the SPA III Affordable Housing Agreement, the Conveyance
Agreement, the Assignment Agreement, and the Housing Agreement. It is intended that this
condition be satisfied before, and will be recognized as satisfied when, SBCS makes its
application for a preliminary allocation of low income housing tax credits from the California
Tax Credit Allocation Committee.
(b) Tax Credits. SBCS shall have received a preliminary allocation of low
income housing tax credits from the California Tax Credit Allocation Committee by March 31,
1997 in an amount not less than $1,577,789 for Federal tax credits, or such lesser amount
for each category as is acceptable to SBCS in SBCS' sole discretion.
(c) California Housing Finance Agency Loan Commitment. SBCS shall have
received an initial commitment of a permanent loan from the California Housing Finance Agency
by March 30, 1997 in an amount not less than $2.440,258 or such lesser amount as is
acceptable to SBCS in SBCS' sole discretion.
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(d) Disposition and Development Agreement. City, Agency and SBCS, by
January 15, 1997, shall have entered into a Disposition and Development Agreement relating
to the development of the Property with the Proposed Project and providing for loans to SBCS
for the Proposed Project (j) from Agency in an amount not less than $478,200.00 and (ii)
from City in an amount not less than $510,000.00, or such lesser amounts as are acceptable
to SBCS in SBCS' sole discretion (provided, that a lesser amount shall be conclusively deemed
acceptable to SBCS if SBCS enters into the Disposition and Development Agreement), and
all conditions in the Disposition and Development Agreement have been satisfied.
4.4 Satisfaction, Waiver and Failure of Conditions; Termination. The satisfaction
or waiver of a condition will be effective only if the same is (i) in writing, (ii) signed by the
parties and (iii) delivered to Escrow Holder and the other parties before termination of the
Agreement. Failure of a condition to be satisfied or waived within the time provided for
satisfying or waiving the condition shall allow any party not then in default under this
Agreement to terminate this Agreement. If any conditions remain not satisfied (and are not
waived) by January 1,1998, then any party may terminate this Agreementatanytime before
all conditions are satisfied or waived.
4.5 Performance By The Other Party. Each party's obligation to perform under this
Agreement is subject to material performance of any prior or concurrent obligation of the other
party.
ARTICLE 5
Right to Enter
5.1 Right to Enter the Property. SBCS, its employees, agents and independent
contractors may prior to the Closing Date (as defined in Section 6.1 below) reasonably go
upon the Property to inspect, survey and test the Property and to design SBCS' planned
improvements and the like. SBCS will hold RDR and the Property harmless from any claim,
cost, lien, action or judgment (including, without limitation, RDWs attorney's fees and defense
costs) (j) incurred by or through SBCS for the services of surveyors, engineers, architects
and others, or (ii) incurred by reason of any personal injury or property damage resulting from
any accident, hazardous waste spill or other event resulting from such entries by SBCS or
its agents, employees or independent contractors. SBCS will not be liable or responsible for
temporary damage to the Property which is reasonably necessary to the investigation of its
physical characteristics, including soils tests and surveying; provided, however, that SBCS
shall promptly cause any test pits and borings to be back-filled and properly compacted.
Termination of this Agreement will notterminate SBCS' obligations hereunder. Should SBCS'
right to purchase the Property terminate, SBCS will, immediately after such termination, at
SBCS' sole cost, return the Property to its physical condition immediately before such damage
or as close thereto as reasonably possible. RDR will give possession of the Property to SBCS
at Close of Escrow.
SBCS agrees to give RDR at least two weeks prior written notice before entering the
Property when the purpose of such entry is to conduct an environmental or hazardous materials
surveyor study.
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5.2 Insurance. As a condition of the right of entry granted in Section 5.1, SBCS
shall secure and maintain, at SBCS' sole cost. the following policies of insurance, in which
SBCS shall be a named insured and shall include coverage of SBCS' and its agents'
contractors', subcontractors' and employees' activities on or in any way relating to the
Property: (a) Broad Form comprehensive or commercial public liability insurance, including
direct contractual and contingent liability coverages. with limits of not less than $1,000,000
per occurrence for bOdily injury, property damage or personal injury, and $2,000,000 general
policy aggregate (or alternatively $1,000,000 on a per project basis); (b) comprehensive
automobile liability insurance with limits of not less than $500,000 for personal injury to,
or death of, anyone person, $1,000,000 for bOdily injury to, or death of, from anyone accident
or occurrence (alternatively $1,000,000 combined single limit for anyone accident or
occurrence), and $500,000 for property damage in anyone accident; (c) workers' compensa-
tion in accordance with the provisions of California law; and (d) employer's liability insurance
of not less than $1,000,000. The policies of insurance described in clauses (a) and (b) above
will each name RDR and McMillin Project Services, Inc. as additional insured parties pursuant
to a Form B or similar endorsement and contain a provision that such policy may not be
terminated without thirty (30) days' written notice of the proposed termination to RDR (except
that only ten (10) days' written notice of termination shall be required for nonpayment of
premium). Certificates of insurance evidencing the insurance policies described in this
paragraph will be delivered by SBCS to RDR before entry onto the Property by SBCS or its
agents or contractors. Claims made coverage is unacceptable. The insurance coverage required
by this Section 5.2 may be provided under a "blanket" policy or policies of insurance also
covering other locations, so long as the requirements of this Section are met. Before
undertaking any activity on the Property which requires a permit from the appropriate
governmental agency, SBCS will obtain such permit and pay any fee or expense required to
obtain or carry out said permit. Any contractor, surveyor, engineer or similar provider of
materials or services who enters the Property on behalf of SBCS must also obtain similar
insurance if RDR requests they do so.
ARTICLE 6
Improvements by RDR
6.1 Improvements; Condition of the Property. RDR shall have no obligation to
complete any improvements to or for the benefit of the Property except as follows. RDR
agrees, at its expense, to cause RDR's Improvements described on Exhibit "B" to be completed
by December 15,1997, subject in both cases to delays outside of RDR's reasonable control.
RDR shall keep the Property in good condition and free from weeds and erosion and properly
maintain any siltation basins affecting the Property until Close of Escrow.
6.2 Walk Through. On or before December 15, 1997, SBCS and RDR shall walk
through and inspect the Property. Should the Property not materially conform to the
requirements of Section 6.1 above for the condition of the Property, RDR agrees, at its expense,
to promptly repair the Property so that it is in conformance with the requirements of
Section 6.1. RDR shall complete such repairs as soon as reasonably possible after the walk
through (subject to delays outside of RDR's reasonable control). Minor "punch-list" items
may be completed after Close of Escrow,
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6.3 Additional Improvements. sacs, and not RDR, shall be responsible for any
additional improvements to the Property necessary or appropriate for SBCS' Proposed Project.
SBCS, and not RDR, shall be responsible for any and all fees, bonds, agreements, licenses
and permits required or appropriate for sacs' Proposed Project. Without limiting the generality
of the foregoing, sacs shall not receive any credits against fees for amounts paid or
improvements constructed or to be constructed by RDR.
6.4 Risk of Loss. All risk of loss for changes in the physical condition of the Property
shall remain on RDR with respect to the Property until Close of Escrow. However, material
damage to the Property prior to Close of Escrow by reason of earthquake shall give each SBCS
and RDR the right to terminate this Agreement.
ARTICLE 7
Title Policy
7.1 Title Policy. RDR shall, at Close of Escrow, pay for an AL TA Standard Owners
Policy of Title Insurance, with Western Regional Exceptions (the "Title Policy") from Title
Insurer, with liability in the amount of the Appraised Value of the Property, insuring that fee
title to the Property vests in SBCS subject only to:
Title Policy.
(a) All standard exceptions and exclusions from coverage set forth in the
(b) General and special real estate taxes and assessments (including, but
not limited to, the districts referred to in Article 10 below) which are, as of the close of this
escrow, not delinquent and supplemental taxes, if any, assessed pursuant to California Revenue
and Taxation Code Section 75 and following.
(c) Easements dedicated on the Parcel Map, any other final map of the
Property or reserved in the grant deeds or otherwise required for development of the Property.
(d) The reservation of water rights and any power of termination set forth
on the grant deed pursuant to the Conveyance Agreement.
(e) The Addendum to Grant Deed pursuant to the Conveyance Agreement.
(f) The covenants, conditions and restrictions established pursuant to the
Master Declaration and the Notice of Annexation (including any supplemental restrictions
pursuant to the Conveyance Agreement).
(g) Any lien or other encumbrance voluntarily imposed by sacs.
(h) All "Permitted Exceptions" determined pursuant to Section 7.4 below.
7.2 ALTA Extended Policy. sacs may, at SBCS' option, direct Escrow Holder to
procure an AL T A owner's policy of title insurance from Title Insurer which eliminates certain
or all of the Western Regional Exceptions or includes indorsements which expand coverage,
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provided Close of Escrow would not be thereby delayed beyond the Closing Date. sacs,
and not ROR, shall be responsible to pay any added premium or other costs of such additional
coverage. sacs, and not RDR, shall be responsible to provide and pay the costs of any survey
required for the AL T A policy or such indorsements. sacs shall have no right to condition
its obligations under this Agreement on its approval of a survey.
7.3 Preliminary Report. RDR will cause Title Insurer to issue a Preliminary Report
as soon as possible and promptly deliver to the parties a copy thereof, together with a copy
of each recorded document referred to in the Preliminary Report and a composite plan prepared
by Title Insurer showing the locations of easements. sacs shall have until the end of the
Feasibility Period in which to review the Preliminary Report and related documents.
7.4 Permitted Exceptions. Unless sacs delivers to ROR before the end of the
Feasibility Period, written notice of disapproval of the state of title to the Property, all
exceptions (other than mortgages, deeds of trust or mechanic's liens) listed in the Preliminary
Report will be deemed to be "Permitted Exceptions". In lieu of simple approval or disapproval
of the state of title, sacs may at its option deliver to ROR, on or before the end of the
Feasibility Period, sacs' conditional approval thereof accompanied by a written statement
of the exceptions listed therein that are objected to by sacs ("Title Objections") and which
must be removed by RDR in order for sacs' approval to become unconditional; provided,
however, that sacs shall have no right to object to matters set forth in Sections 7.1 (a), 7.1 (b),
7.1 (d), or 7.1 (g), inclusive, above and such matters shall not be considered Title Objections.
In the event sacs does provide such conditional approval and list of Title Objections, ROR
will, within five (5) days after receipt of sacs' Title Objections, respond in a writing delivered
to sacs and to Escrow Holder in which RDR, as to each exception objected to by sacs,
either (i) agrees to remove (or cause to be removed) the exception at or before the Close of
Escrow, or (ii) states ROR's unwillingness or inability to remove the exception in question.
RDR's failure to respond timely to sacs' conditional approval and list of Title Objections will
be deemed conclusively to be ROR's unwillingness to remove any of the Title Objections.
If ROR does agree to remove all the Title Objections, then only those exceptions listed in the
Preliminary Report not objected to by sacs will be Permitted Exceptions. If RDR does not
agree to remove all the Title Objections, then sacs will, within five (5) days after receipt
of RDR's notice stating unwillingness or inability to remove any Title Objection, in a writing
delivered to ROR and to Escrow Holder, at sacs' sole option either (a) terminate this Agree-
ment, or (b) waive those Title Objections not agreed to be removed by RDR, in which case
all exceptions listed in the Preliminary Report, other than the Title Objections agreed to be
removed by RDR. will be Permitted Exceptions. sacs' failure to respond, timely, to ROR's
written response to sacs' conditional approval and list of Title Objections will be deemed
conclusively to be sacs' election to waive the Title Objections not agreed to be removed
by ROR. Notwithstanding anything in the foregoing to the contrary, in no event will any
mortgage, deed of trust or mechanic's lien be deemed to be a Permitted Exception.
Nothing in this Section 7.4 shall limit or otherwise affect sacs' right in its sole
and absolute discretion to disapprove the suitability of the Property pursuant to Section 4.2.
RDR and sacs shall instruct Escrow Holder to attach a list of the Permitted
Exceptions as Schedule 1 to the Grant Deed under the Conveyance Agreement.
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ARTICLE 8
Prorations, Fees, Costs and Reimbursements
8.1 Supplemental Taxes. Should any supplemental taxes with respect to the Property
be levied and billed after Close of Escrow pursuant to California Revenue and Taxation Code
Sections 75 and following such taxes shall be the obligation of sacs except for supplemental
taxes levied by reason of improvements to the Property or transfer of the Property before
Close of Escrow, which portion, if any, will be the obligation of RDR. RDR shall pay
supplemental taxes, if any, for which RDR is responsible within thirty (30) days after sacs
provides RDR with a demand for payment accompanied with reasonable documentation from
the County that such sum is payable by RDR pursuant to this Section.
8.2 Fees. sacs, and not RDR, shall be responsible for any and all fees, assessments
and charges relating to the development of Property, and the construction and the operation
of sacs' Proposed Project.
8.3 Deposits. In the event RDR has made deposits with any governmental entity
or utility, and any such deposit exceeds actual costs of the project, RDR shall be entitled to
the return of the excess of such deposit over costs. Should said excess deposit be returned
to sacs, sacs shall immediately reimburse RDR for same.
ARTICLE 9
Default
9.1 Breach. A material breach of the Assignment Agreement or the Disposition
and Development Agreement by sacs shall be considered a material breach of this Agreement
by sacs. A material breach of the Conveyance Agreement by RDR shall be considered a
material breach of this Agreement by RDR. Time is expressly stated to be of the essence
of each and every provision of this Agreement wherein time for performance is set forth.
In all other respects, the parties hereto covenant to perform their obligations in an expeditious
manner. Failure to comply with this provision shall be a material breach of this Agreement.
In the event that sacs or RDR fails to perform pursuant to this Agreement, the other party
shall have the right to terminate this Agreement and seek any available remedies. City shall
have the right, but no obligation, to cure any material breach of this Agreement by sacs
and thereby succeed to sacs' rights and obligations hereunder.
9.2 Certain Rights of RDR if Agreement Terminated. Should this Agreement be
terminated for any reason other than a material default by RDR, sacs agrees to do the
following at no cost to RDR:
(a) Transfer of Plans. To transfer to RDR the non-exclusive right to use the
working drawings for sacs' Proposed Project: provided, however, sacs' obligation to transfer
such rights to RDR is subject to the obtaining of any consent required by the preparer of the
plans. sacs will use its reasonable efforts to obtain such consent, but sacs shall have no
obligation to incur any out-of-pocket expenses to obtain such consent. Such assignment
shall be made without any warranties, expressed or implied.
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lb) Coooeration. To reasonably cooperate with RDR in the transition to RDR
of the development of the Property by assigning to RDR at its request any development permits
or entitlements and similar item obtained by sacs for the Property (excluding any low income
tax credits or loan commitments obtained by SaCS) and by informing RDR of the status of
any pending permits or entitlements for the Property.
ARTICLE 10
Assessment Districts
10.1 Disclosure. RDR discloses to sacs that the following assessment districts
encumber the Property and represents that RDR has no actual knowledge of any other
assessment district(s) encumbering the Property:
(a) Community Facilities District No.3 Chula Vista School District, established
pursuant to an agreement entered into between Chula Vista City School District and RDR.
This is a so-called "Mello-Roos" district.
(b) Community Facilities District No.3 - Sweetwater Union High School
District, established pursuant to an agreement entered into between RDR and the Sweetwater
Union High School District. This is also a Mello-Roos district.
(c) Assessment District No. 87-1, established for the widening and other
improvements to H Street.
(d) Otay Water District Improvement District ID-27 established for regional
water storage and improvements, to be owned by Otay Municipal Water District. The formation
of this district does not reduce or eliminate hook-up charges or capacity fees.
(e) Open Space Maintenance District No. 20, established to maintain
designated open space areas within Rancho Del Rey. RDR is informed that the Property will
be "detached" from Open Space Maintenance District No. 1 and will be "attached" to Open
Space Maintenance District No. 20 before Close of Escrow.
10.2 SBCS'lnvestigation. sacs acknowledges that will conduct its own investigation
of each district and any proposed assessment district and became familiar with each of the
same during the Feasibility Period.
ARTICLE 11
SPA Plan; Financing Plan
11.1 Disclosure. sacs acknowledges that RDR disclosed to sacs that, in addition
to other governmental laws, regulations and policies, the Property is subject to (i) the SPA
Plan, and (ii) the Financing Plan. Among other requirements, these documents require
compliance with Design Guidelines and require a design review process which is applicable
to plans and specifications to be submitted by sacs to the City for sacs' Proposed Project.
The conditions of approval of the tentative map for CHULA VISTA TRACT 90-02 and the
Financing Plan, among other matters, impose a public facility phasing plan which conditions
the right to improve and occupy improvements to the Property. Included among these
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requirements, as set forth in the Financing Plan, are a Development Phasing Plan, a Public
Facility Phasing Plan and Regional Transportation Facility Phasing. These requirements are,
however, subject to change by the City.
11.2 Regional Transportation Facility Phasing. RDR has no obligation to sacs to
cause any of the Regional Transportation Facilities requirements (set forth on pages 51 through
53 of the Financing Plan) to be satisfied. sacs acknowledges its understanding that (i) these
requirements relate to Cumulative Regional Development from Rancho Del Rey and other areas
within the region and that the level of such development could impact the ability to develop
the Property, (ii) completion of the Regional Transportation Facilities is not within RDR's control,
and (iii) the Regional Transportation Facilities requirements are not the only "thresholds"
imposed by the City.
ARTICLE 12
Representations, Warranties
and Further Disclosures and Agreements
12.1 Basis of Purchase. Except as set forth in this Agreement, sacs aCknowledges
that it is purchasing the Property in reliance SOlely on (i) sacs' inspection of the Property,
(ii) sacs' independent verification of the truth and accuracy of any documents delivered by
RDR to sacs and statements made by RDR to sacs concerning the Property and its
development, (iii) the opinions and advice concerning the Property and their development of
consultants engaged by sacs and (iv) the covenants, representations and warranties set forth
in this Agreement.
12.2 "As Is" Purchase. Except as provided in Sections 6.1 and 6.2 above and as
otherwise set forth in this Agreement, sacs will accept each the Property, and the matters
relating to the Property listed below, in the present "as is" condition. The matters are:
(a) Soils. Topoaraphv. Etc. Soils and geological condition; topography, area
and configuration; archeological, prehistoric and historic artifacts, remains and relics;
contamination by Hazardous Materials; endangered species and wetlands.
(b) Utilities, Schools. Etc. Availability of utilities, schools, public access,
and fire and police protection.
(c) Districts. The status, special taxes and assessments of any and all
Mello-Roos Community Facility Districts and assessment districts.
(d) Plannina and Zonina. Applicable planning, zoning and subdivision statutes,
ordinances, regulations and permits, the SPA Plan and the Financing Plan,
(e) Development Fees. The character and amount of any fee or charge which
must be paid by sacs to develop the Property. sacs, and not RDR, shall be responsible
for any and all fees, assessments and charges relating to the development of Property, and
the construction and the operation of sacs' Proposed Project.
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(f) Easements and Encroachments. Any easement, license or encroachment
which is not a matter of public record, whether or not visible upon inspection of the Property;
RDR warrants to sacs that RDR knows of no such easement, license or encroachment.
19) Other Matters. Any other matter relating to the Property or to the
development of the Property, including, but not limited to, value, feasibility, cost, governmental
permissions, marketing and investment return, except as otherwise expressly provided in this
Agreement.
12.3 No Brokerage Commission or Finder's Fee. Each party warrants to the other
that the warranting party has incurred no obligation, by reason of this Agreement or the
transaction contemplated hereby, for a real estate brokerage commission or finder's fee for
which the other party would be liable. Each party will hold the other party free and harmless
from and against any damage or expense the other party may incur by reason of the untruth
as to the warranting party of the foregoing warranty, including expenses for attorney's fees
and court costs.
12.4 Tentative Tract Map Conditions. sacs acknowledges that it shall review the
Resolution of Approval for the Tract which covers the Property. sacs agrees to fulfill those
conditions specified therein which are applicable to the Property and not otherwise required
to be satisfied by RDR pursuant to this Agreement.
12.5 Master Declaration and Notice of Annexation. sacs acknowledges that it has
received and shall review a copy of the Master Declaration and the Notice of Annexation which
will impose supplemental restrictions on the Property.
12.6 No VA Approval. sacs acknowledges that the Master Declaration has not been
submitted to the Veterans Administration for approval and acknowledges that RDR has made
no representation regarding the availability of Veterans Administration financing for the pro-
posed development of the Property.
12.7 Acknowledgment of Receipt. sacs acknowledges receiving copies of each
of the items described on Exhibit "e" attached hereto. RDR represents that it has no actual
knowledge of any information material to development of the Proposed Project on the Property
not previously disclosed to sacs.
12.8 Notice of Special Tax. sacs acknowledges having received from RDR a Notice
of Special Tax pertaining to the two Mello Roos Community Facilities Districts to which the
Property is subject. sacs shall prior to execution of this Agreement sign and deliver to RDR
a copy of the Notice of Special Tax.
12.9 Other Warranties and Representations. Each party warrants to the other that
it is authorized to enter into this Agreement. Each person signing this Agreement on behalf
of a party warrants to the other party that he or she is authorized to sign this Agreement on
behalf of such party. RDR warrants and represents to sacs as follows:
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la) No Possessorv Riahts. RDR knows of no unrecorded agreement or
instrument which creates third party possessory rights to the Property and RDR covenants
to give possession of the Property to sacs at Close of Escrow.
(b) No Mechanics' Liens. RDR warrants to SBCS that the Property will be
conveyed to sacs at Close of Escrow free of any mechanics' or materialmen's liens or rights
of lien caused by RDR's activities.
(c) RDR's Authoritv. RDR is the owner in fee simple absolute of the Property
and has the full right, capacity, power and authority to enter into and carry out the terms
of this Agreement.
(d) Hazardous Materials. Law-Crandall, Inc. has conducted the Phase I
Investigation of whether any Hazardous Materials (as defined in Section 13.1 below) have
been released on or beneath any of the Property which would be in violation of any applicable
federal, state or local law, ordinance or regulation relating to Hazardous Materials. SBCS
acknowledges having received the Phase 1 Investigation reports (Items?, ? and? of Exhibit
"C"). RDR represents that the Phase I Investigation sets forth all of RDR's actual knowledge
regarding the existence of Hazardous Materials on the Property.
(e) Eminent Domain. RDR has no actual knowledge of any eminent domain
actions or proposed road widening adversely affecting the Property not previously disclosed
to SBCS.
(f) Fees. RDR has no actual knowledge of any proposed new governmental
fees not previously disclosed to sacs.
(g) Utilities. RDR represents that on the Closing Date, all public utilities
required to serve the Proposed Project will be delivered to the property line of the Property.
All of the representations and warranties made by RDR in this Section 12.9 which
are limited to the actual knowledge of RDR are based upon the actual knowledge of Denny
Cuccarese, Kenneth Baumgartner, Virgil Elliott and Kenneth Scretton only, and are further
based upon the actual knowledge of such individuals as of the Acceptance Date (and, upon
SBCS' request, shall be made again as of Close of Escrow) without any duty of investigation
or inquiry. Such individuals are making such representations and warranties on behalf of RDR
and not in their individual capacities. As a result, RDR shall be liable (and not such individuals)
in the event any such representations or warranties are breached. If SBCS closes escrow
with actual knowledge of the material breach or inaccuracy of any such representations and
warranties, sacs shall be deemed to have waived any and all claims it may have against
RDR for any such breach or inaccuracy.
ARTICLE 13
Hazardous Materials
13.1 Hazardous Materials. The term "Hazardous Materials" means any material or
substance which is (i) defined as a "hazardous waste", extremely hazardous waste", "restricted
hazardous waste", "hazardous material", "hazardous substance", or any similar formation
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under or pursuant to any California statute or common law rule; (ii) petroleum and natural
gas liquids as those terms are used in ~ 1 09( 14) of the Comprehensive Environmental Response,
Compensation & Liability Act, 42 U.S.C. ~ 6901, etseq. (41 U.S.C. ~6903); (iii) asbestos;
(iv) pOlychlorinated biphenyls; (v) designated as a "hazardous substance" pursuant to ~311
of the Clean Water Act, 33 U.s. C., ~ 1251, et seq. (33 U.S.C. ~ 1321) or listed pursuant
to ~307 of the Clean Water Act (33 U.S.C. ~ 1317): (vi) defined as a "hazardous waste"
pursuant to ~ 1004 of the Resource Conservation & Recovery Act, 42 U.S.C. ~6901, et seq.
(42 U.S.C. ~6903); or (vii) defined as a "hazardous substance" pursuant to Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ~9601, et seq. (41 U.S.C.
~9601 ).
13.2 Indemnity of RDR. As a material inducement to RDR, without which RDR would
not have agreed to the terms set forth herein, SBCS, for itself and its successors and assigns,
hereby agrees to indemnify, defend and hold harmless RDR and each of RDR's partners, and
the employees, agents, attorneys, shareholders, members, managers, successors and assigns
of RDR and RDR's partners ("Indemnified Parties"), from and against any and all present and
future liability, losses, damages (including foreseeable or unforeseeable consequential damages),
penalties, fines, forfeitures, response costs and expenses (including out-of-pocket litigation
costs and reasonable attorneys' fees) directly or indirectly arising out of the use, generation,
storage, transportation, release, discharge or disposal of Hazardous Materials on or in the
Property by sacs, its joint venture partners, successors, assigns or their respective employees,
contractors, subcontractors or agents, including, without limitation, the cost of any required
or necessary repair, cleanup or detoxification and the preparation of any closure or other
required plans.
13.3 Indemnity of sacs. As a material inducement to sacs, without which sacs
would not have agreed to the terms set forth herein, RDR, for itself and its successors and
assigns, hereby agrees to indemnify, defend and hold harmless sacs and each of sacs'
partners, and the employees, agents, attorneys, shareholders, members, managers, successors
and assigns of SBCS and sacs' partners ("Indemnified Parties"), from and against any and
all present and future liability, losses, damages (including foreseeable or unforeseeable
consequential damages), penalties, fines, forfeitures, response costs and expenses (including
out-of-pocket litigation costs and reasonable attorneys' fees) directly or indirectly arising out
of the use, generation, storage, transportation, release, discharge or disposal of Hazardous
Materials on, in or around the Property by RDR or its employees, contractors, subcontractors
or agents, including, without limitation, the cost of any required or necessary repair, cleanup
or detoxification and the preparation of any closure or other required plans.
ARTICLE 14
Assignment
14.1 RDR's Right to Assign. RDR shall have absolute right to transfer the Property
(subject to the Conveyance Agreement and this Agreement) and to assign its rights under
this Agreement. Upon any such transfer and assignment, RDR shall be released from a 1.1
obligations under this Agreement after the date of such transfer and assignment.
14.2 Assignment by sacs.
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(a) Assignment Must be Approved by RDR. Neither SBCS, nor any person
or entity constituting SBCS, nor any assignee of SBCS' or any such person's or entity's rights
hereunder, will have the right or power to assign its or their rights hereunder without first
having obtained RDR's written approval of any such assignment. Approval of anyone
assignment will not constitute a waiver of RDR's right to approve or disapprove any subsequent
proposed assignment. Except as stated in the next sentence, RDR shall have absolute
discretion to withhold its consent to any such assignment. Notwithstanding the first sentence
of this Section, RDR shall approve an assignment of SBCS' rights to a limited partnership
of which sacs is a general partner; any such assignee must assume sacs' obligation under
this Agreement.
(b) Effect of Approved Assignment, In the event of any such approved
assignment, the assignee will be and become the person(s) having the right or obligation to
(a) deliver statements, (b) deliver documents, (c) give approvals, (d) waive conditions, or (e)
make demands, all as may be permitted or required by this Agreement and not then already
accomplished by SBCS or another approved assignee.
(c) SBCS' Obligations. No assignment pursuant to this Article will relieve
SBCS of any of its obligations under this Agreement.
ARTICLE 15
General Provisions
15,1 Gender, Number. Whenever the context requires, the use herein of (i) the neuter
gender includes the masculine and the feminine, and (ii) the singular number includes the plural.
15.2 Business Days. If the (i) stated Closing Date, or (ii) last day for performance
of an act falls upon a day during which Escrow Holder is not open for business, the Closing
Date or such last day, as the case may be, will be the next following regular business day
of Escrow Holder.
15.3 Survival of Provisions. The representations, warranties, agreements and
indemnities set forth in this Agreement will remain operative, will be deemed made at the
Close of Escrow, and will survive Close of Escrow.
15.4 Authority of Signatories. Each individual signing this Agreement on behalf of
a corporation warrants that (i) he or she is duly authorized to sign and deliver this Agreement
on behalf of the corporation, in accordance with a duly adopted resolution of the board of
directors of the corporation or in accordance with the bylaws of the corporation, and (ii) this
Agreement is binding upon the corporation in accordance with its terms. McMillin Project
Services, Inc. represents that it has the authority to execute this Agreement on behalf of RDR
and that this Agreement is binding on RDR in accordance with its terms.
15.5 Joint and Several Liability. If either party consists of more than one person,
the liability of each person signing this Agreement will be joint and several.
15.6 Captions. Captions in this agreement are inserted for convenience of reference
only and do not define, describe or limit the scope or the intent of this Agreement.
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15.7 Exhibits. All exhibits referred to in this Agreement are attached, and are a part
of, this Agreement.
15.8 Entire Agreement. This Agreement, the Conveyance Agreement, the Assignment
Agreement and the SPA III Affordable Housing Agreement contain the entire agreement
between the parties relating to the transaction contemplated hereby and all prior or
contemporaneous agreements, understandings, representations and statements, oral or written,
are merged herein.
15.9 Modifications. No modification, waiver or discharge of this Agreement will be
valid unless the same is in writing and signed by the party against which the enforcement
of such modification, waiver or discharge is or may be sought.
15.10 Attorney's Fees and Costs. If either party commences litigation for the judicial
interpretation, reformation. enforcement or rescission hereof, the prevailing party will be entitled
to a judgment against the other for an amount equal to reasonable attorney's fees and court
and other costs incurred.
15.11 Successors. All terms of this Agreement will be binding upon and inure to the
benefit of the parties and their respective administrators or executors, successors and assigns;
nothing contained in this Section will affect Article 14.
15,12 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original, but all of which together will constitute one
instrument.
15.13 Applicable Law. This Agreement will be construed and enforced in accordance
with the laws of the State of California.
15.14 Time of Essence. Time is of the essence of each and every provision of this
Agreement in which time is an element.
15.15 Notices. Unless otherwise provided herein, all notices, demands or other
communications given hereunder will be in writing and will be deemed to have been duly
delivered upon personal delivery, or on receipt of a telecopy, or on the second business day
after deposit with Federal Express or other overnight courier service, or as of the second
business day after mailing by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to RDR:
Rancho Del Rey Investors, L.P.
c/o McMillin Project Services, Inc.
2727 Hoover Avenue
National City, California 91950
Attn: Kenneth Baumgartner
Telephone: (619) 477-4117
Telecopier: (619) 336-1587
RDRlSBCS
12/9/96
17
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With a Coov To:
Hecht, Solberg, Robinson & Goldberg LLP
600 West Broadway, Eighth Floor
San Diego, California 92101
Attn: R. Martin Bohl, Esq.
Telephone: (619) 239-3444
Telecopier: (619) 232-6828
If to SBCS:
South Bay Community Services
315 4th Avenue, Suite E
Chula Vista, CA 91910
Attn: Kathryn Lembo, Executive Director
Telephone: (619) 420-3620
Telecopier: (619) 420-8722
With Conies To:
Gattis & Kuncz
2729 Fourth Avenue, Suite 2
San Diego, California 92103
Attn: Timothy A. Kuncz, Esq.
Telephone: (619) 233-4500
Telecopier: (619) 294-9425
and
South Bay Community Services
315 4th Avenue, Suite E
Chula Vista, CA 91910
Attn: Ken Sauder, Community Development Director
Telephone: (619) 420-3620
Telecopier: (619) 420-8722
15.16 National Pollution Discharge Elimination System. RDR or its predecessor in title
has filed a Notice of Intent (NO/) indicating its intention to be regulated under the provision
of the General Permit No. CAS000002, issued by the State Water Resources Control Board.
RDR has prepared and implemented a Storm Water Pollution Prevention Plan (SWPPP) in
accordance with Section A of the Permit. Copies of the NOI and SWPPP have been received
by SBCS.
In accordance with Section C: 18: Transfers, RDR hereby informs SBCS that the General
Permit is not transferable. A new owner of an ongoing construction activity must submit
an NOI in accordance with the requirements of the General Permit to be authorized to discharge
under the General Permit. An owner who sells property covered by the General Permit shall
RDRlSBCS
12/9/96
18
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inform to the extent required by applicable law the new owner of the duty to file an NOI and
shall provide the new owner with a copy of the General Permit. RDR has delivered to SBCS
a copy of the General Permit.
RDR intends to revoke (cancel) coverage of the Property on Close of Escrow by
submitting to the State Water Resources Control Board certification that the ownership of
the property has been transferred. Unless an exemption applies, SBCS agrees (i) to comply
with the provisions of Section A(2)(c) and B(3)(b) of the General Permit, which provisions
require SBCS to accept, implement, maintain and amend the existing SWPPP; and (ii) to file
a NOI for the Property at Close of Escrow.
SBCS shall accept maintenance responsibility for the slopes, irrigation, landscaping,
permanent monuments, utilities, storm drain systems, streets, sidewalks and all other
improvements within the Property immediately upon Close of Escrow. From and after the
Close of Escrow, SBCS shall comply with all applicable laws, including without limitation City
ordinances and regulations, regulating erosion and sediment discharge and shall implement
all measures necessary to prevent the discharge of sediment and other pollutants from the
Property .
15.17 Third Party Beneficiary. The City is a third party benefiCiary of this Agreement.
No other party is a third party beneficiary of this Agreement.
This Agreement has been executed as of the date set forth at the beginning hereof.
"RDR"
Date:
RANCHO DEL REY INVESTORS, L.P., a California limited
partnership
BY: McMILLIN PROJECT SERVICES, INC., a California
corporation, its Attorney-in-Fact under a recorded
durable power of attorney dated June 2, 1993
By
Title
By
Title
RDR/SBCS
12/9/96
19
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Date:
RDRlSBCS
12/9/96
"sacs"
SOUTH BAY COMMUNITY SERVICES,
a California 501 (c)(3) non-profit corporation
ay
Kathryn Lembo, Executive Director
.,
20
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RDRlSBCS
12/9/96
EXHIBIT "A"
Property Description
Parcel 2 of Chula Vista Tract No. 90-02, Rancho del Rey SPA III,
according to Parcel Map 17675, filed in the Office of the County
Recorder of the County of San Diego, California, as File No. 1996-
0143111, on March 22,1996.
3 ~ I () s- - s
EXHIBIT "B"
RDR's Improvements
Graded Condition. The Property shall be rough graded in substantial conformance with the
City approved grading plans and the City's Grading Ordinance; provided, however, that flat
pads and slopes of five feet (5') or less (i.e., change in vertical elevation of five feet (5') or
less) need not be hydro-seeded unless and until required by City. The lot shall be substantially
free from weeds as required by Section 6.2 of the Purchase Agreement.
Monumentation. The final monumentation shown on the Parcel Map shall have been set in
the field by the surveyor. Monuments destroyed by SBCS' construction operations shall be
re-set by SBCS at SBCS' cost. Building layout stakes and other construction stakes required
for SBCS' improvements are not included in the finished lot.
Utilities. Water, sewer, gas, electric, telephone and cable television transmission lines within
the public streets and easements shall have been constructed in substantial conformance
with the City and Agency approved improvement and utility plans. Water and sewer services
shall be stubbed to the lot lines. On-site services, distribution lines, meters and utilities are
not included in the finished lot.
Street ImDrovements. Monolithic curb, gutter and sidewalk and full depth street paving shall
have been completed in substantial conformance with the City approved improvement plans.
Driveway approaches shall be constructed to the right-of-way. SBCS improvements within
the right-of-way are not included in the finished lot.
LandscaDina and Fencina. Erosion control landscaping and irrigation as required by the City
Grading Ordinance and shown on the City approved erosion control landscaping plans, or
as modified by the City Landscape Architect, and accepted by the City, shall have been
installed. Perimeter walls, as shown on the City approved "Walls, Fences and Minor
Monuments" plans shall have been constructed. On-site walls and fencing which may be
required by the City, or as a condition of sale by RDR, is not included in a finished lot.
Landscaping within the street right-of-way which may be required by the City and other SBCS
landscaping is not included in the finished lot.
RDRlSBCS
12/9/96
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EXHIBIT "C"
Items Received bv SBCS
Rancho del Rey SPA III, Phase 3, Unit 2, Site 3341
1. City of Chula Vista Resolution No. 16222 approving Tentative Map for Tract 90-02.
2. Copy of Chula Vista Tract No. 90-02, RDR SPA III Master Final map No. 13176.
3. Parcel Map 17655.
4. City of Chula Vista Grow Management Oversight Commission 1995 report, dated April
1996.
5. Council Agenda Statement (7/9/96) - Review of Draft Proposed Amendments to the
City's Growth Management Program and Ordinance regarding development phasing
and monitoring.
6. Final EIR - SPA III (EIR 89-10).
7. City of Chula Vista Resolution No. 16218, Recertifying Final EIR 89-10.
8. City of Chula Vista Resolution No. 16244, Amending the Mitigation Monitoring Program.
9. City of Chula Vista Resolution No.1 7990, Ordering Changes and Modifications to
Engineer's Report in Reassessment District of 1995.
10. City of Chula Vista Ordinance Numbers 2448 and 2486, Growth Management Ordinance
of 1991.
11. Supplemental Subdivision Agreement, dated July 5, 1995.
12. Affordable Housing Agreement, dated May 22, 1996.
13, Intentionally left blank.
14. Master CCR's for Rancho del Rey.
15. Guest Builder Prospectus.
16. Marketing Manual.
17. Signage Audit Manual.
18. Notice of Special Tax (sent under separate cover) - Note: MUST BE SIGNED AND
RETURNED TO SELLER PRIOR TO ESCROW OPENING.
19. First American Title Insurance Company Preliminary Title Report, dated October 28,
1996.
20. City of Chula Vista Grading Plans, Improvement Plans, Wall Plans and Slope Erosion
Control Plans.
21. Updated Soil and Geologic Investigation for RDR SPA III, prepared by Geocon, Inc.,
July 1991, File No. 04228-23-03 with addendum letters dated September 27,1991
and October 7, 1991.
22. Report of Phase I Environmental Site Assessment, prepared by Law-Crandall, Inc., dated
September 9, 1994, Portions of Rancho del Rey SPAs II and III, Northeast of Rancho
del Rey Parkway and South of East "H" Street, Chula Vista, California.
23. "Final Report of Testing and Observation Services during site grading, Rancho Del Rey-
SPA III, Phase 3, Lot Nos. 7, 10, 11, 12 and 13, Chula Vista, California," prepared
by Geocon, Inc., Project No. 05300-52-03, dated June 27, 1996.
24. Completed City of Chula Vista Form PW-E 106A (Request for Issuance of Building
Permit).
25, Storm Water Pollution Prevention Plan and Notice of Intent, dated August 17, 1994.
26. SPA Plan and PC Regulations (included in SPA Plan binder).
RDRlSBCS
12/9/96
Exhibit "C"
Page 1 ..3 - / () 7 ~ 0
27. Public Facilities Finance Plan, dated November 24,1992 (included in SPA Plan binder).
28. SPA III Residential Design Guidelines (included in SPA Plan binder).
29. Rancho Del Rey SPA II and SPA III Water Conservation Plan, dated July 16, 1996
(included in SPA Plan binder).
30. Rancho del Rey SPA II and SPA III Air Quality Improvement Plan, dated July 16, 1996
(included in SPA Plan binder).
31. Secured Property Tax Bill, 1996-1997.
RDR/SBCS
12/9/96
Exhibit "C"
Page 2 ..3 _ log - r
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WHEN RECORDED MAIL TO:
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)
CORDOVA VILLAGE
DISPOSITION AND DEVELOPMENT AGREEMENT/
HOME PROGRAM PARTICIPATION AGREEMENT
by and among
THE CITY OF CHULA VISTA,
a Municipal Corporation,
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA,
a Public Body, Corporate and Politic,
and
SOUTH BAY COMMUNITY SERVICES,
a Non-Profit Public Benefit Corporation
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TABLE OF CONTENTS
Paae
RECITALS
1
ARTICLE 1
DEFINITIONS
3
ARTICLE 2
DISPOSITION OF THE PROPERTY AND FINANCING OF THE PROJECT 6
2.1 Disposition of Property. . 6
2.2 City Loan Commitment 6
2.3 City Note and Deed of Trust 7
2.4 Funding of City Loan 8
2.5 Source of City Loan 8
2.6 HOME Requirements. 9
a. Use of the HOME Funds 10
b. Affordability. 10
c. Project Requirement. 10
d. Housing Quality Standard 10
e. Affirmative Marketing . . 10
f. Records and Reports. . . 10
g. Enforcement of Agreement 10
h. Duration of Covenants Re HOME-Assisted Units 10
i. Monitoring . . . . 11
2.7 Agency Loan Commitment 11
2.8 Predevelopment Loan Proceeds 11
2.8.1 LISC Recoverable Grant 11
2.8.2 Additional Third Party
Predevelopment Loan 12
2.8.3 Agency Predevelopment Loan
Proceeds/Funding . . . . . 12
2.9 Agency Non-Predevelopment Loan Proceeds 13
2.9.1 Conditions. . . . . . . . . . . 13
2.9.2 Funding of Agency Non-Predevelopment
Loan Proceeds . . . . . . . . . . 14
2.10 Agency Loan Documents. . . . . . . . . . 14
2.10.1 Agency Predevelopment Promissory
Note and Security Agreement . . . 14
2.10.2 Agency Note and Deed of Trust. . 15
2.11 Sources of Agency Loan . . . . . . . . . 15
2.12 CHFA Permanent Loan/CHFA Restricted Units 16
2.13 Repayment of the LISC Loan . . . . . . 16
2.14 City/Agency Loan Repayment Obligations 16
2.15 Lien Priority, Title Insurance 18
2.16 Subordination; Refinancing . . . . . . 18
2.17 Developer's Evidence of Financial Capability 20
2.18 Low Income Housing Tax Credit Program 22
2.19 predevelopment Funds 23
2.20 Developer Fee.. . . . . 24
2.21 Inter-Creditor Agreement 25
i
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ARTICLE 3
ESCROW
3.1
3.2
3.3
3.4
3.5
3.6
3.7
TABLE OF CONTENTS (Continued)
Opening of Escrow
Close of Escrow .
Recordation . . .
Delivery of Documents Required From
Developer and City/Agency .
a. Developer's Obligations
b. Agency's Obligations
c. City's Obligations
Escrow Agent Duties . . . .
Conditions Precedent to Closing: Termination
3.6.1 Conditions Precedent to
Developer's Obligations
3.6.2 Failure of Developer's
Conditions: Termination
3.6.3 Conditions Precedent to
City/Agency's Obligations
3.6.4 Failure of City/Agency's
Conditions: Termination
Physical and Environmental Condition of the
Property: Preliminary Work by Developer
3.7.1 Limit on Escrow Agent's Responsibility
3.7.2 "As Is" Conveyance. . . . .
a. Soils, Topography, Etc.
b. Utilities, Schools, Etc.
c. Districts . . . . .
d. Planning and Zoning
e. Development Fees. .
f. Easements and Encroachments
g. Other Matters
3.7.3 Hazardous Materials
3.7.4 Indemnity of City/Agency
ARTICLE 4
DEVELOPMENT OF THE PROJECT .......
4.1 Work to be Performed . . . . . .
4.2 Development Project/Architectural Plans
4.3 Final Construction Drawings
4.4 Other City and Governmental Agency
Permits and Approvals . . . . . . .
Selection of General Contractor . .
Hold Harmless . . . . . . . . . . .
Further Indemnification of City/Agency
Cost of Development . . . . . . .
Schedule of Performance: Progress Reports
Grant of Easements
Compliance with Permits and Laws . . . .
4.5
4.6
4.7
4.8
4.9
4.10
4.11
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Paqe
25
25
26
26
26
26
27
27
27
28
28
28
29
30
30
30
30
30
30
31
31
31
31
31
31
31
32
32
32
33
33
34
34
35
35
36
36
36
TABLE OF CONTENTS (Continued)
Paqe
4.12 Anti-discrimination During Construction.
4.13 Right of Access.
4.14 Prohibition Against Assignment and Transfer
4.15 Taxes, Assessments, Encumbrances, and Liens
4.16 Secured Financing; Right of Holders
4.16.1 Permitted Encumbrances
4.16.2 Holder Not Obligated to
Construct Improvements
4.16.3 Notice of Default to Mortgage,
Deed of Trust or Other Security
Interest Holders; Right to Cure
4.16.4 Right of CitylAgency to Cure
Mortgage, Deed of Trust, or
Other Security Instrument Default
4.17 Right of CitylAgency to Satisfy Liens
4.18 Estoppels.
4.19 Certificate of Completion.
37
37
37
39
40
40
41
. 41
41
42
42
42
ARTICLE 5
USES OF THE PROPERTY 43
5.1 Use of the Property 43
5.1.1 General 43
5.1.2 Affordable Housing 43
5.1.3 Annual Report 46
5.1.4 Insurance 46
5.1.5 Repair of Damage 47
a. Obligation to Repair and Restore Damage
Due to Casualty Covered by Insurance. 47
b. Continued Operations . 47
c. Damage or Destruction Due to Cause Not
Required to be Covered by Insurance 48
5.2 Marketing and Leasing of Units 48
5.2.1 Lease Preference and Marketing Plan 48
a. Publicity Campaign Prior to Opening 49
b. Preference List For Initial Leasing
and for Ongoing Leasing 49
c. Required Noticing of Vacant Units 49
5.2.2 Rental Agreement. 50
5.2.3 Remedy for Excessive Rental Charges 50
5.3 Maintenance of the Property 50
5.4 Property Management. 51
5.4.1 Management Plan 51
5.4.2 Gross Mismanagement 52
5.4.3 Fees Paid to Developer 52
5.5 Capital Replacement Reserve. 53
5.6 Obligation to Refrain from Discrimination 53
5.7 Form of Nondiscrimination and
Nonsegregation Clauses 54
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5.8
5.9
ARTICLE 6
DEFAULTS,
6.1
6.2
6.3
6.4
6.5
6.6
6.7
TABLE OF CONTENTS (Continued)
Paae
Effect of Covenants . . .
Recordation of Covenants
55
56
REMEDIES, AND TERMINATION
Defaults - General
Termination . . . . .
6.2.1 Termination by City or Agency
6.2.2 Termination by Developer. .
Legal Actions . . . . . . . .
6.3.1 Institution of Legal Actions
6.3.2 Applicable Law. . . . .
6.3.3 Acceptable of Service of Process
Action for Specific Performance . .
Rights and Remedies are Cumulative
Attorney's Fees. . . . . . .
Plans, Drawings and Documents
To Be Assigned to City
57
57
57
57
58
59
59
59
59
59
60
60
60
ARTICLE 7
GENERAL PROVISIONS
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
61
Notices, Demands, and Communications
Between the Parties . . . . . . . . .
Nonliability of City and Agency Officials
and Employees: Conflicts of Interest
Enforced Delay; Extension of
Times of Performance ....
Inspection of Books and Records
Interpretation . . . . .
Entire Agreement, Waivers and Amendments
Consent/Reasonableness
Severability . . . . .. .....
Third Party Beneficiaries .....
Authority of Signa tors to Bind Principals
Representations and Warranties
Execution . . . . . . .
Relationship of Parties . . . .
61
62
62
63
63
63
64
64
64
64
65
65
65
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DISPOSITION AND DEVELOPMENT AGREEMENT/HOME PROGRAM
PARTICIPATION AGREEMENT
THIS DISPOSITION AND DEVELOPMENT AGREEMENT/HOME PROGRAM
PARTICIPATION AGREEMENT (the "Agreement") is entered into as of
December 17, 1996, by and among the CITY OF CHULA VISTA, a
municipal corporation ("City"); the REDEVELOPMENT AGENCY OF CHULA
VISTA, a public body, corporate and politic ("Agency"), and SOUTH
BAY COMMUNITY SERVICES, a California non-profit public benefit
corporation ("Developer"), and all permitted successors and assigns
pursuant to Section 4.14 herein. From time to time herein, the
City and the Agency shall be collectively referred to as
"City/Agency". All attachments hereto are incorporated herein by
this reference.
RECITALS
A. City is a municipal corporation, organized and existing
under the laws of the State of California.
B. 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 ~.).
C. Developer is a California non-profit public benefit
corporation organized and existing under Section 501(c) (3) of the
Internal Revenue Code.
D. City has been allocated funds from the United States
Department of Housing and Urban Development ("HUD") pursuant to the
federal government's HOME Investment Partnerships Program (42
U.S.C. ~ 1274, et sea.) which can be used, subject to final HUD
approval, for the purposes of funding certain City obligations
under this Agreement in accordance with HOME Regulations (24 C.F.R.
~ 92 et ~.).
E. Rancho Del Rey Investors, L.P., a California limited
partnership ("RDR") owns a 2.9 (2.2 net) acre site in the City of
Chula Vista, County of San Diego, described as: PARCEL 2 OF LOT 10
OF CHULA VISTA TRACT NO. 90-02, RANCHO DEL REY SPA III, ACCORDING
TO PARCEL MAP 17675, FILED IN THE OFFICE OF THE COUNTY RECORDER OF
THE COUNTY OF SAN DIEGO, CALIFORNIA, AS FILE NO. 1996-0143111, ON
MARCH 22, 1996 (the "Property"), as is more particularly described
on Attachment 1. The property is part of the master planned
community known as "Rancho Del Rey." Rancho Del Rey is divided
into three planning areas: SPA I, SPA II and SPA III.
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F. The City General Plan and adopted Specific Plan for
Rancho Del Rey have certain goals and the City has imposed on
Rancho Del Rey certain requirements relating to the provision of
low and moderate income housing.
G. Pursuant to that certain "Agreement Concerning Rancho Del
Rey and Low-Moderate Income Housing" dated August 7, 1990 between
RDR and the City, RDR, as successor in interest to Rancho Del Rey
Partnership, is obligated to provide 23 low-income housing units in
connection with its development of Spa III of Rancho Del Rey (the
" SPA III Affordable Housing Obligation"). For purposes of
implementing the SPA III Affordable Housing Obligation RDR and City
have entered into a series of agreements, all of which are
superseded by the most recent of such agreements, that certain
Second Amended and Restated Rancho Del Rey SPA III Affordable
Housing Agreement dated December 17, 1996 and approved concurrently
herewith (the "City/RDR Affordable Housing Agreement") .
H. In furtherance of the City/RDR Affordable Housing
Agreement, RDR and the City have entered into that certain
Conveyance Agreement and Escrow Instructions dated December 17,
1996 ("Conveyance Agreement") pursuant to which RDR agrees to grant
the Property to the City, and City agrees to receive the grant of
the Property, subject to and in accordance with the terms of the
Conveyance Agreement.
I. City and Developer have entered into an Assignment of
Conveyance Agreement and Escrow Instructions dated December 17,
1996 ("Assignment of Conveyance") pursuant to which City agrees to
assign to Developer as a land grant all of City's right, title and
interest in and to the Conveyance Agreement, including, without
limitation, the right to acquire the Property, and Developer agrees
to receive such transfer and assignment in accordance with the
terms of the Assignment of Conveyance.
J. Developer and RDR have entered into a Low Income Housing
Agreement dated December 17, 1996 ("Housing Agreement") pursuant
to which, among other things, RDR and Developer have agreed as to
their respective obligations with respect to the Property.
K. Developer intends to acquire the Property for the
purposes of improving it with a multi-family residential project
consisting of 40 units and providing housing affordable for low-
income persons (the "Project"), as more particularly described in
Section 4.1 below.
L. Through the development and operation of the Project,
City/Agency and Developer desire to provide low-income persons with
affordable housing opportunities within the City in accordance with
the housing element of the City General Plan and the Specific Plan
for Rancho Del Rey. In order to accomplish this goal, the City
desires to make a loan of HOME Program funds to Developer and
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Agency desires to make a loan to Developer from its Low and
Moderate Income Housing Fund (the "Low/Mod Fund") such monies to be
used for the acquisition and development of the Project, subject to
certain conditions designed to assure the implementation of the
Project in accordance with the General Plan, state and federal law,
HOME program regulations, and as otherwise provided herein.
M. The development 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 City and the welfare of
its residents, and in accordance with the public purposes and
provisions of applicable federal, state, and local laws and
requirements.
N. City has received from HUD a written or oral release of
the HOME Program funds to be used for the Project.
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 1
DEFINITIONS
The following terms as used in this Agreement shall have the
meanings given unless expressly provided to the contrary:
1.1 "ADA" means Americans with Disabilities Act of 1990, as
the same may be amended from time to time (42 D.S.C. ~ 12101, et
seer.) .
1.2 "Agency" means the Redevelopment Agency 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, powers, and responsibilities of the Redevelopment Agency of
Chula Vista.
1.3 "Agency Loan" shall have the meaning ascribed in Section
2.7.
1.4 "Agency Note" means the promissory note to be executed by
Developer in the form set forth in Attachment No.4.
1.5 "Agency Trust Deed" means that certain deed of trust in
the form set forth as Attachment No.5, which secures Developer's
obligations pursuant to the Agency Note, which shall be recorded in
the order of priority set forth in this Agreement.
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1.6 "Assignment of Conveyance Agreement" means that certain
Assignment of Conveyance Agreement and Escrow Instructions dated
December 17, 1996 entered into between the City and Developer.
1.7 "Certificate of
ascribed in Section 4.19
Certificate of Completion
9 to this Agreement.
Completion" shall have the meaning
of this Agreement. The form of the
shall be as set forth in Attachment No.
1.8 "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.
1.9 "City Loan" shall have the meaning ascribed in Section
2.2.
1.10 "City Note" shall mean the promissory note to be executed
by Developer in the form set forth in Attachment No.2.
1.11 "City Trust Deed" shall mean that certain performance
deed of trust, in the form attached hereto as Attachment No. 3
which secures Developer's obligations pursuant to the City Note,
which shall be recorded in the order of priority set forth in this
Agreement.
1.12 "Conveyance Agreement" means that certain Conveyance
Agreement and Escrow Instructions dated December 17, 1996 entered
into between City and Rancho Del Rey Investors, L.P., a California
limited partnership ("RDR").
1 . 13 "CPI" means the Consumer Price Index published by the
United States Department of Labor, Bureau of Labor Statistics, for
Urban Wage Earners and Clerical Workers, Los Angeles-Long Beach-
Anaheim Average, All Items (1984=100), or if said Index is
discontinued, such official index as may then be in existence and
which is most nearly equivalent to said Index.
1.14 "Developer" means South Bay Community Services, a
California nonprofit public benefit corporation organized and
existing under Section 501 (c) (3) of the Internal Revenue Code. The
term "Developer" includes any legally permissible assignee or
successor to the rights, powers, and responsibilities of Developer
hereunder, in accordance with Section 4.14 of this Agreement.
1.15 "Developer Fee" shall have the meaning ascribed in
Section 2.20.
1.16 "Effective Date" means December 17, 1996, subject to the
execution of this Agreement by all parties hereto and approval by
Agency and City at public meetings.
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1.17 "Effective Gross Rental Income" means all gross rental
income paid by tenants for occupancy of units of the Project and
all rental subsidy payments for the Project made by governmental
entities and private charitable entities; provided, however, that
Effective Gross Rental Income shall not include charitable
contributions that do not subsidize or assist an occupant's rental
payment for a unit.
1.18 "Grant Deed" means the instrument pursuant to which title
to the Property is to be conveyed to Developer by RDR in accordance
wi th the terms and conditions of the Conveyance Agreement, the
Assignment of Conveyance Agreement and the Housing Agreement.
1.19 "Housing Agreement" means that certain Low Income Housing
Agreement dated December 17, 1996 entered into between Developer
and RDR.
1.20 "Low Income Housing Tax Credit Program" shall have the
meaning ascribed in Section 2.18 of this Agreement.
1.21 "Predevelopment Funds" shall have the meaning ascribed in
Section 2.19.
1.22 "Project" shall have the meaning ascribed in Section 4.1
of this Agreement.
1.23 "Proj ect Budget" means that certain budget referred to in
Section 2.17 of this Agreement and attached hereto as Attachment
No.6, which is incorporated herein by this reference, which budget
may not be materially changed without prior approval of the
Agency's Executive Director, which approval shall not be
unreasonably withheld (a material change is a change that causes
the total Project cost to increase or decrease by two percent (2%)
or more from what is shown in Attachment No.6) .
1.24 "Project Pro Forma" means that certain Project Pro Forma
referred to in Section 2.17 of this Agreement and attached hereto
as Attachment No.7 which is incorporated herein by this reference,
which pro forma is a good faith projection.
1.25 "Property" means the 2.9 (2.2 net) acre site in the City
of Chula Vista, County of San Diego, described as: PARCEL 2 OF
CHULA VISTA TRACT NO. 90-02, RANCHO DEL REY SPA III, ACCORDING TO
PARCEL MAP 17675, FILED IN THE OFFICE OF THE COUNTY RECORDER OF THE
COUNTY OF SAN DIEGO, CALIFORNIA, AS FILE NO. 1996-0143111, ON MARCH
22, 1996, as more particularly described on Attachment NO.1.
1.26 "Property Manager" means the property management company
managing the proj ect, whether or not the proj ect is managed by
Developer. The term Property Manager shall not mean the on-site
property manager.
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1.27 "RDR" shall refer to Rancho Del Rey Investors, L.P., a
California limited partnership, and any assignee or successor
thereof.
1.28 "Residual Receipts" shall have the meaning ascribed in
Section 2.14(b).
1.29 "Restricted Units" means to the residential units in the
Project whose rent levels and occupancy are to be restricted as set
forth in Sections 5.1.2 and 5.2.1 of this Agreement.
1.30 "Schedule of Performance" means that certain Schedule of
Performance attached hereto as Attachment No.8.
ARTICLE 2
DISPOSITION OF THE PROPERTY AND FINANCING OF THE PROJECT
2.1 Disposition of Property.
Subject to the terms and conditions of this Agreement, the
Conveyance Agreement, and the Assignment of Conveyance Agreement,
the City shall convey to Developer all of its right, title and
interest in and to the Conveyance Agreement, including, without
limitation, the right to acquire the Property. Developer shall
concurrently acquire the Property in accordance with the terms and
conditions of the Conveyance Agreement and the Assignment of
Conveyance Agreement. Conveyance of the Property to Developer
pursuant to the terms and conditions of the Conveyance Agreement
and the Assignment of Conveyance Agreement shall constitute a land
grant from the City to Developer in the amount of Nine Hundred
Sixty Thousand Dollars ($960,000)
2.2 City Loan Commitment.
Subject to the terms and conditions set forth herein, City
hereby commits to loan to Developer the sum of $510,000 (the "City
Loan") to be applied solely towards the development of the
Property into the Project. Interest shall accrue on the City Loan
at the rate of three (3%) percent per annum. The following
conditions must be fully satisfied as reasonably determined by the
City in order to obligate the City to make the City Loan:
a.
Developer shall have recei ved a preliminary
allocation of low-income housing tax credits from
the California Tax Credit Allocation Committee in
an amount not less than $1,577,784, or such lesser
amount as may be mutually agreed to by the parties.
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b. Developer shall have obtained a firm commitment for
a construction loan from the Bank of America
Community Development Bank in an amount not less
than $2,440,258 ("BACDB Construction Loan") or such
lesser amount as may be mutually agreed to by the
parties.
c. Developer shall duly execute (and acknowledge, if
applicable) the City Note and the City Trust Deed,
described below, and deliver the same to City or
its designated agents;
d. Developer shall duly execute and acknowledge the
Covenants Agreement described in Section 5.9, and
deliver the same to Agency or its designated agent;
e. All conditions contained in the Conveyance
Agreement and Assignment of Conveyance Agreement
governing Developer's acquisition of the Property
shall be fully satisfied or waived in accordance
with the provisions thereof;
f. City shall have reviewed and approved, in its sole
discretion, any and all loan documents, regulatory
agreements or grant contracts to be executed by or
otherwise to be binding upon City or Developer in
connection with its acquisition of the Property,
its development and operation of the Project and/or
its financing thereof;
g. Developer shall provide the City a resolution of
its board of directors approving this Agreement and
the related City Loan documents and authorizing
Developer's executive director to execute this
Agreement and the related City Loan documents on
its behalf; and
h. Developer shall satisfy all other obligations under
this Agreement required to be performed prior to
the closing on the City Loan.
2.3 Citv Note and Deed of Trust.
The Developer's obligations to repay the City Loan shall be
evidenced by a promissory note (the "City Note") in substantially
the form of Attachment No.2, except as otherwise approved by the
City/Agency attorney, and shall be subject to the terms and
conditions contained therein. Among other things, the City Note
shall provide that the City Note is non-recourse and that payments
of principal and interest shall be made only from seventy-five
(75%) percent of the Residual Receipts (as defined below) on a pro
rata basis with payments on the Agency Note (as defined below)
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after payment in full of the Deferred Development Fee (as defined
below). The City Note and Developer's other obligations under this
Agreement shall be secured by a Deed of Trust (the "City Trust
Deed") encumbering the Property as a third priority Deed of Trust
in the form of Attachment No.3, The City Trust Deed shall provide
that the occurrence of any material breach or default under this
Agreement shall constitute a "default" or "event of default" under
the City Trust Deed. Prior to Close of Escrow, the Developer
shall execute and deliver the City Note and the City Trust Deed.
The City Trust Deed shall be recorded with the Office of the County
Recorder in accordance with City's instructions to Escrow.
Developer shall be responsible for any and all of City's escrow,
title and recording costs arising in connection with the City Loan,
such costs to be paid by Developer through escrow.
2.4 Fundinq of City Loan.
The City Loan proceeds shall be retained by the City to be
distributed to Developer upon Developer's application to the City
for distributions of portions thereof attributable to amounts owed
for obligations incurred by Developer in connection with the
development of the Project as of the date of such application. As
a condition to City's obligation to make any distribution of City
Loan proceeds, Developer shall, if so requested, provide the
Housing Coordinator of the Community Development Department, or
such other individual as may be designated by the City, with (i) an
invoice reflecting such obligation and specifying the amount owed
in connection therewith; (ii) appropriate mechanic's lien releases
in a form acceptable to the City if deemed necessary thereby; and
(iii) any other reasonable information, documentation or
certifications requested by City to assure that the obligation has
been incurred.
2.5 Source of City Loan.
The source of the City Loan is funds to be obtained by City
from HUD pursuant to the federal government's HOME Investment
Partnerships Program (42 D.S.C. ~ 12741 et seq.). Pursuant to the
HOME Investment Partnerships Program requirements, out of the total
of forty (40) units in the Project, three (3) three-bedroom units
and three (3) two-bedroom units are being assisted with HOME
Investment Partnerships Program funds (the "HOME-assisted units")
and must meet all of the HOME Investment Partnerships Program
requirements for the term of the affordability restrictions on the
units. The specific units to be designated HOME-assisted units may
change from time to time in Developer's sole discretion, provided
that the aggregate number and category of said units remains the
same.
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Due to the requirements of the HOME Investment Partnerships
Program (42 U.S.C. ~ 12741 et sea.) it is possible that City may
not have received funding from HUD at the time City is required to
fund the City Loan. In such event, Agency shall loan to City an
amount equal to the City Loan (the "Agency-City Loan"). If Agency
does make the Agency-City Loan, City shall treat the Agency-City
Loan funds in the manner required pursuant to this section as if it
were the City Loan. Immediately upon receipt by City of the HOME
Program funds in the amount of the City Loan, City shall reimburse
Agency the Agency-City Loan amount. If the Agency-City Loan is
made, the terms of the Agency-City Loan and City's repayment
thereof shall be set forth in a promissory note and any related
documents mutually agreed upon by City and Agency at the time the
Agency-Ci ty Loan is to be made. In no event shall Agency be
required to lend City the Agency-City Loan amount until such
promissory note and such other required documents are fully
executed. By approval of this Agreement, the City Council and
Agency Board each agree to the Agency-City Loan should such become
necessary and, respectively, delegate to the City Manager and
Agency's Executive Director the authority to execute such documents
on behalf of, respectively, City and Agency, to effect the Agency-
City Loan.
2.6 HOME Reauirements.
Because the source of the City Loan is funds City has received
from HUD pursuant to the federal government's HOME Program,
Developer is required to construct and operate the Project in
compliance with all requirements of the HOME Program and the HOME
Regulations (24 C.F.R. ~ 92 et sea.), as said regulations may be
amended or superseded from time to time.
Not by way of limitation of the foregoing, in compliance with
24 C.F.R. ~ 92.504(c), from the Effective Date of this Agreement
through the end of the term that the HOME-assisted units are
required to remain affordable pursuant to the HOME Regulations,
Developer, as the operating entity, shall comply with all of the
following requirements:
a.
Use of the HOME Funds. HOME funds shall be used
only for eligible costs (see, e.g., 24 C.F.R. ~~
92.206, 92.214) in accordance with the Project
Budget and Project Pro Forma; all pre-construction
and construction activities shall be completed
within the times referenced in the Schedule of
Performance attached hereto as said times may be
extended in accordance with Section 4.9.
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b.
c.
d.
Affordabilitv. The HOME-assisted units shall
the affordability requirements of the
Regulations (24 C.F.R. ~ 92.252), the
Regulatory Agreement (as defined below) or
Agreement, whichever is more restrictive, as
particularly set forth in Section 2.6 herein.
meet
HOME
TCAC
this
more
proiect Reauirements. Developer shall comply with
all project requirements set forth in Sections
92.250-92.258 of the HOME Regulations, as
applicable in accordance with the type of project
assisted, or with the provisions of this Agreement,
whichever requirements are more restrictive.
Housina Oualitv Standard. Developer shall maintain
HOME-assisted units to be maintained in compliance
with applicable Housing Quality Standards and local
housing code requirements or the provisions of
Section 5.3 of this Agreement, whichever are more
restrictive.
e.
Affirmati ve Marketina. Developer shall perform
those affirmative marketing responsibilities set
forth in 24 C.F.R, ~ 92.351 or in the marketing
plan described in Sections 5.2.1 and 5.4.1 of this
Agreement, whichever are more restrictive.
f.
Records and Reports. In addition to the other
provisions of this Agreement, including without
limitation Section 5.1.3 hereof, Developer shall
provide to City all records and reports relating to
the Project that may be reasonably requested by
City in order to enable it to perform its record
keeping and reporting obligations pursuant to
Sections 92.508 and 92.509 of the HOME Regulations.
g.
Enforcement of Aareement. In addition to the other
provisions set forth herein, City shall have the
authority to enforce Developer's obligation to
comply with the HOME Investment Partnerships
Program and the HOME Regulations as set forth in
this Agreement.
h.
Duration of Covenants Re HOME-Assisted Units. In
accordance with 24 C.F.R. Sections 92.252(e) and
92.504 (c) (3) (ix), the covenants in this Section 2.6
relating to Developer's compliance with the HOME
Investment Partnerships Program and the HOME
Regulations shall remain in effect for a period of
at least twenty (20) years after project
completion.
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i. Monitorinq. Not less than once per year during the
period covered by this Section 2.6, City and/or
Agency may review Developer's activities and
operations under this Agreement and Developer's
compliance with the requirements of the HOME
Investment Partnerships Program and the HOME
Regulations, including, but not limited to,
Developer's compliance with the requirements of
this Section 2.6. Such review may include an on-
site inspection of the Project (including unit
interiors). If such an on-site inspection of the
Project is to be undertaken, City shall coordinate
such inspection with Developer and/or the Property
Manager. The monitoring required pursuant to this
paragraph shall be in compliance with the
requirements of 24 C.F.R. ~ 92.504(d).
2.7 Aqencv Loan Commitment.
Subject to the terms and conditions set forth herein,
Agency hereby commits to loan to Developer the total sum of
$478,200 (the "Agency Loan") to assist Developer in financing the
acquisition and development of the Property. Interest shall accrue
on the Agency Loan at the rate of three (3%) percent per annum.
The Agency Loan shall be funded in two phases as follows: (i)
$97,000 shall be made available to Developer for predevelopment
costs (the "Agency Predevelopment Loan Proceeds") upon the
Effective Date of this Agreement in accordance with the
disbursement procedures set forth in Section 2.8.3 below; (ii) The
remaining $381,200 balance of the Agency Loan proceeds (the "Agency
Non-Predevelopment Loan Proceeds") shall be made available to
Developer upon closing of the BACDB Construction Loan (defined
below), in accordance with the disbursement procedures set forth in
Section 2.9.2 below.
2.8 predevelooment Loan Proceeds.
2.8.1 LISC Recoverable Grant.
Developer has procured a non-interest bearing $45,000
recoverable grant from Local Initiative Support Corporation
("LISC") for predevelopment costs ("the LISC Recoverable Grant") .
The LISC Recoverable Grant shall be converted into a $45,000 loan
(the "LISC Loan") upon closing of the BACDB Construction Loan. The
LISC Loan shall bear interest at the rate of six (6%) percent per
annum and shall be evidenced by a promissory note (the "LISC Note")
and, if required by LISC, secured by a deed of trust (the "LISC
Trust Deed"). The LISC Loan shall be paid in full upon funding of
take-out financing for the Project.
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2.8.2 Additional Third Part v predevelooment Loan.
In addition to the LISC Recoverable Grant, Developer shall
procure an additional third party loan in the minimum amount of
$60,000 to fund Predevelopment Costs (the "Additional Third Party
Predevelopment Loan"). The Additional Third Party Predevelopment
Loan shall be repaid in full upon funding of the BACD Construction
Loan.
2.8.3 Aqencv Predevelooment Loan Proceeds/Fundino.
Upon the Effective Date of this Agreement, the entire $97,000
in Agency Predevelopment Loan Proceeds shall be retained by
Agency, but shall be disbursed to Developer in accordance with the
terms of this Section. Developer agrees that no Agency
Predevelopment Funds shall be utilized until such time as all
proceeds of the LISC Recoverable Grant have been exhausted by
Developer for predevelopment costs. Developer shall use the
proceeds of the LISC Recoverable Grant and the Additional Third
Party Predevelopment Loan for Predevelopment Costs as identified in
Section 2.19. The use of the Agency Predevelopment Loan Proceeds
by Developer shall be restricted to payments for architectural
work, engineering, soils engineering, environmental studies, and
governmental fees and permits (the "Agency Allowable Predevelopment
Costs") .
The following conditions must be fully satisfied as reasonably
determined by the City/Agency in order to obligate the Agency to
release the Agency Predevelopment Loan Proceeds to Developer:
a. Developer shall have procured a written commitment
for the issuance of the LISC Recoverable Grant in the amount of
$45,000 in a form of commitment acceptable to the City/Agency in
accordance with the provisions of Section 2.17; and
b. Developer shall have procured a written commitment
for the Additional Third Party Predevelopment Loan in the amount of
$60,000 in a form of commitment acceptable to the City/Agency in
accordance with the provisions of Section 2.17.
c. Developer shall have procured a written commitment
for the BACDB Construction Loan in an amount not less than
$2,440,258 or such lesser amount as may be mutually agreed to by
the parties, in a form of commitment acceptable to the City/Agency
in accordance with the provisions of Section 2.17.
d. Developer shall have duly executed and delivered to
the Agency the Agency Predevelopment Note and Agency Predevelopment
Security Agreement described in Section 2.10.1 below.
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The Agency Predevelopment Loan Proceeds shall be retained by
the Agency to be distributed to Developer upon Developer's
application to the Agency for distributions of portions thereof
attributable to obligations incurred for Agency Allowable
Predevelopment Costs. As a condition to Agency's obligation to
make any distribution of Agency Predevelopment Loan Proceeds,
Developer shall, if so requested, provide the Housing Coordinator
of the Community Development Department, or such other individual
as may be designated by the Agency, with (i) an invoice reflecting
the Agency Allowable Predevelopment Costs describing the nature of
the obligation and specifying the amount owed in connection
therewith; and (ii) any other reasonable information, documentation
or certifications requested by Agency to assure that the obligation
has been incurred.
2.9 Aqencv Non-Predevelopment Loan Proceeds.
2.9.1 Conditions.
The following conditions must be fully satisfied as reasonably
determined by the Agency, in order to obligate the Agency to fund
the Agency Non-Predevelopment Loan Proceeds:
a. Developer shall have received a preliminary
allocation of low-income housing tax credits from the
California Tax Credit Allocation Committee in an amount
not less than $1,577,789 or such lesser amount as is
mutually acceptable to Agency and Developer;
b. Developer shall have obtained a firm commitment
for the BACDB Construction Loan in an amount not less
than $2,440,258 or such lesser amount as may be mutually
agreed to by the parties;
c. Developer shall duly execute (and acknowledge,
if applicable) the Agency Note, the Agency Trust Deed
described below, and deliver the same to Agency or its
designated agents;
d. Developer shall duly execute and acknowledge
the Covenants Agreement described in Section 5.9 and
deliver the same to Agency or its designated agents;
e. All conditions contained in the Conveyance
Agreement and Assignment of Conveyance Agreement
governing Developer's acquisition of the Property shall
be fully satisfied or waived in accordance with the
provisions thereof;
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f. Agency shall have reviewed and approved, in its
sole discretion, any and all loan documents, regulatory
agreements or grant contracts to be executed by or
otherwise to be binding upon Agency or Developer in
connection with its acquisition of the Property, its
development and operation of the Project and/or its
financing thereof;
g. Developer shall satisfy all other obligations
under this Agreement required to be performed prior to
the closing on the Agency Loan.
2.9.2 Fundinq of Aqencv Non-Predevelooment Loan
Proceeds.
The Agency Non-Predevelopment Loan Proceeds shall be retained
by the Agency to be distributed to Developer upon Developer's
application to the Agency for distributions of portions thereof
attributable to obligations incurred by Developer in connection
with the Project as of the date of such application. The use of
Agency Non-Predevelopment Loan Proceeds by Developer shall be
restricted to payments for governmental fees and permits. As a
condition to Agency's obligation to make any distribution of Agency
Non-Predevelopment Loan Proceeds, Agency shall, if so requested,
provide the Agency Executive Director, or such other individual as
may be designated by the Agency, with (i) an invoice reflecting
such obligation and specifying the amount owed in connection
therewith; (ii) appropriate mechanic's lien releases in a form
acceptable to the Agency if deemed necessary by the Agency's
Attorney, and (iii) any other reasonable information, documentation
or certifications requested by City to assure that the obligation
has been incurred.
2.10 Aqency Loan Documents.
2.10.1 Aqency predevelooment Note and Security
Aqreement.
The Developer'S obligation to repay the Agency Predevelopment
Loan Proceeds shall be evidenced by a promissory note (the "Agency
Predevelopment Note") in the form of Attachment No. 11 and shall be
subject to the terms and conditions contained therein. Among other
things, the Agency Predevelopment Note shall provide that the
Agency Predevelopment Note is non-recourse and that payments of the
principal and interest shall be made only from a fund consisting of
seventy-five (75%) percent of the Residual Receipts (as defined
below) on a pro rata basis with payments on the City Note after
payment in full of the Deferred Developer Fee (as defined below) .
The Agency Predevelopment Note shall be secured by a security
agreement executed by Developer (the "Agency Predevelopment
Security Agreement") granting Agency a security interest in: (i)
all right, title and interest of Developer in any architect's
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agreement entered into with an architect for construction of the
Project and any amendments thereto and any and all plans and
specifications pertaining thereto; (ii) all right, title and
interest of Developer in any construction contract entered into
with a contractor or contractors for construction of the Project;
and (iii) all permits, licenses, management contracts, and other
contracts and agreements which Developer may have or hereinafter
have an interest arising out of acquisition or ownership of the
Property or the Project. The Predevelopment Security Agreement
shall provide that Developer does not covenant to convey the
copyright or other ownership rights of third parties in the event
of default. Upon the Closing Date (as described below) the Agency
Predevelopment Note and the Agency Predevelopment Security
Agreement shall be extinguished and of no further effect, and all
existing obligations of Developer to Agency relating to the Agency
Predevelopment Loan Proceeds shall be incorporated in the Agency
Note described below.
2.10.2 Aqencv Note and Deed of Trust.
The Developer's obligation to repay the Agency Loan shall be
evidenced by a promissory note (the "Agency Note") in substantially
the form of Attachment No.4, except as otherwise approved by the
City/Agency attorney, and shall be subject to the terms and
conditions contained therein. Among other things, the Agency Note
shall provide that the Agency Note is non-recourse and that
payments of principal and interest shall be made only from a fund
consisting of seventy-five (75%) percent of the Residual Receipts
(as defined below) on a pro rata basis with payments on the City
Note after payment in full of the Deferred Development Fee (as
defined below). The Agency Note and Developer's other obligations
under this Agreement shall be secured by a Deed of Trust (the
"Agency Trust Deed") encumbering the Property as a second priority
deed of trust in the form of Attachment No.5. The Agency Trust
Deed shall 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 Close of
Escrow, the Developer shall execute and deliver the Agency Note and
the Agency Trust Deed.
2.11 Sources of Aqencv Loan.
It is understood that the source of the proceeds for the
Agency Loan are derived from the Agency's Low/Mod Fund, or as
otherwise determined in Agency's sole discretion. To the extent
that the Agency Loan is funded by the Low/Mod Fund, Developer
agrees to comply with any and all state law requirements relating
thereto, and to execute and record any and all documents necessary
to implement same.
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2.12 CHFA Permanent Loan/CHFA Restricted Units.
Developer anticipates that take-out financing for the BACDB
Construction Loan will consist, in part, of a $2,115,000 permanent
loan from the California Housing Financing Agency (the "CHFA
Permanent Loan"). As a condition to the CHFA Permanent Loan, the
California Housing Financing Agency ("CHFA") requires that twenty
(20%) percent of each unit type in the Project be rented to
households earning no more than fifty (50%) percent of area medium
income as defined by HUD, based on one and one-half person per
bedroom occupancy. Pursuant to said requirements, three (3) two-
bedroom units, three (3) three-bedroom units, and two (2) four-
bedroom unit shall be designated as CHFA restricted units as
reflected on the Restricted Unit Mix attached hereto as Attachment
"10", and must meet all of the CHFA affordability restrictions (the
"CHFA restricted units"). The CHFA restricted units shall include
the HOME-assisted units.
2.13 Repavment of the LISC Loan.
Developer shall repay the LISC Loan in full upon closing of
the CHFA Permanent Loan.
2.14 citv/Aqencv Loan Repavment Obliqations
a. Payment of principal and interest on the City Note
and the Agency Note (hereinafter sometimes collectively referred to
as the "City/Agency Notes") shall be made, on an annual basis, out
of a fund equal to seventy-five (75%) percent of the "Residual
Receipts" (defined below) derived from the Property and/or the
operation of the Project. Payments on the City/Agency Notes from
said fund shall be made on a pro rata basis in accordance with the
proportion the City Loan and the Agency Loan bear to the total
amount loaned to Developer by the City and the Agency. Such
amounts shall be paid on a priority basis to all other debt service
on the property except for the CHFA Permanent Loan, the LISC Loan
and the Deferred Developer Fee (as defined below). Residual
Receipts shall be calculated by Developer each and every year
commencing with the first year anniversary of the issuance of the
certificate of occupancy by the City. The seventy-five (75%)
percent Residual Receipts payments, if any, shall be made on or
before thirty (30) days after the first year anniversary of the
date on which the Deferred Development Fee (as defined below), has
been paid in full, and on or before 30 days after each subsequent
yearly anniversary of said date thereafter.
b. "Residual Receipts" is specifically defined as the
rental income from the Project minus the reasonable "asset
oriented" operating expenses for the same period. For purposes of
this calculation, reasonable "asset oriented" operating expenses
shall include any and all costs associated with operating the
Property including, without limitation, debt service on the CHFA
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Permanent Loan, a property management fee not to exceed eight (8%)
percent of all other such operating expenses, a partnership
management fee, salaries and benefits of an on-site manager,
utilities, maintenance, insurance, property and other taxes,
repairs, approved alterations, trash collection, reasonable legal
fees, maintenance supplies, administrative overhead directly
attributable to the Property, replenishment of capital reserves
accounts included in Developer's approved budgets, such amount to
be held in trust exclusively for use for capital improvements to
the Property, and reasonable "asset oriented" operational reserves
not to exceed at any time an amount equal to 5% of the upcoming
year's Effective Gross Income, such amounts to be held in trust
exclusively for use for the maintenance and preservation of the
Property. For purposes of the foregoing definition of "Residual
Receipts," any property management fee or partnership management
fee which is paid to Developer shall at no time exceed an amount as
is customary and standard for affordable housing projects similar
in size and scope to the Project. Notwithstanding the foregoing,
for purposes of this calculation, reasonable operating expenses
shall not include: (i) programmatic or other similar service
oriented operating expenses, or (ii) principal and interest
payments on any debt subordinate to the City Note or the Agency
Note.
c. The twenty-five (25%) percent of Residual Receipts
remaining after the annual payments on the City/Agency Notes shall
be used by Developer only for costs and improvements related to the
Property or services provided directly to the occupants of the
Restricted Units by Developer.
d. Except as otherwise expressly provided hereunder,
Developer's obligation to repay the City/Agency Loan shall be
limited to Developer's annual payment of seventy-five (75%) percent
of the Residual Receipts as described above for a period of fifty-
five (55) years following execution of the City/Agency Note (the
"Conditional Maturity Date"). Upon the Conditional Maturity Date,
City/Agency shall have the option, at any time, in its sole
discretion, but after good faith discussions with Developer as to
available options, upon ninety (90) days' written notice to
Developer, to (a) declare all amounts owed under the City/Agency
Notes immediately due and payable, or (b) to require installment
payments under the City/Agency Notes based upon (i) a restated
principal balance comprised, in the aggregate, of any and all
outstanding principal and interest under the City/Agency Notes
existing as of the date of City/Agency election, (ii) a prospective
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 City/Agency and Developer, and (iii) monthly
installments of principal and interest paid over the course of an
amortization schedule to be determined by the City/Agency in their
sole discretion, not to be less than ten (10) years. In the event
that City/Agency elects repayment approach (b), Developer agrees to
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execute an endorsement to the Note in favor of City/Agency, and/or
other appropriate loan document amendments, reflecting the amended
repayment terms described above.
e. Notwithstanding the foregoing, in the event that
Developer, or any successors thereto, materially breaches the terms
of this Agreement, the City/Agency Notes, or the City/Agency Trust
Deeds, or triggers a due on sale, transfer or encumbrance provision
set forth in the City/Agency Note or City/Agency Trust Deeds, the
City/Agency shall have the right in its sole discretion, to declare
immediately due and payable all outstanding principal and interest
due under the Note, or to pursue any and all other remedies
provided, herein, under the Note or Trust Deed, or as otherwise
provided at law or in equity.
2.15 Lien Prioritv, Title Insurance.
As a condition to the obligations of City/Agency to fund the
City Loan and the Agency Non-predevelopment Loan Proceeds, there
shall be no liens or encumbrances upon the Property having priority
over the City/Agency Trust Deeds or the Covenants Agreement
(described below), other than (a) the deed of trust securing the
BACDB Construction Loan and (b) those existing non-monetary
encumbrances which are disclosed in title reports to be hereafter
delivered by Developer to City/Agency and which have been expressly
consented to by the City/Agency's attorneys in writing. Such
consent shall not be unreasonably withheld, subject to
City/Agency's right to attach reasonable conditions thereto. Such
priority shall be evidenced by an ALTA lender's insurance policy,
including title endorsements reasonably requested by the
City/Agency ("Title Policy") issued to City/Agency by a title
company acceptable to the City/Agency's attorneys (at Developer's
expense), concurrently with the closing of the City Loan and the
funding of the Agency Non-Predevelopment Loan Proceeds, with
combined liability equal to the amount of $982,200.
2.16 Subordination: Refinancino.
City/Agency agrees to subordinate the City Trust Deed, the
Agency Trust Deed and the Covenants Agreement to any construction
and permanent financing obtained by Developer to develop the
Project thereon in an amount not to exceed the amounts listed in
the Project Budget attached hereto as Attachment No.6, as well as
any refinancing of said amount; provided, however, that
a.
any such subordination shall be
recorded subordination agreement
notice, cure, loan purchase or
Project purchase rights as may
required by the City/Agency in
approved by the City Attorney, which
not be unreasonably withheld; and
evidenced by a
containing such
assumption and
be reasonably
a form to be
approval shall
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b.
during the period commencing on the Effective Date
of this Agreement and ending on the earlier of (a)
the date after which Developer or its successor has
repurchased the tax credit limited partners'
interests in the partnership created for tax credit
purposes, or (b) eighteen (18) years after the date
the City issues the certificate of occupancy for
the proj ect, if any such refinance during such
period results in an increase in the amount owing
over the principal balance due at the time of
refinancing, or otherwise a distribution of
refinance proceeds, then an amount equal to the
greater of the difference between the amount of the
principal balance due at the time of the
refinancing and the new principal balance upon the
refinancing or such refinance proceeds ("Refinance
Proceeds") shall, within six (6) months after such
refinance, be used only to benefit the Project and
prior to using the Refinance Proceeds for such
permitted purpose Developer shall notify Agency's
Executive Director of such refinance, the amount of
the Refinance Proceeds, and the proposed use of the
Refinance Proceeds to benefit the Project; and
c.
Upon the repurchase of the tax credit partners'
interests in the partnership Developer agrees to
exercise good faith efforts to explore the
feasibility of refinancing the project in order to
provide proceeds to pay down any outstanding
amounts owed under the City loan and the Agency
loan. If such a refinance proves to be feasible on
terms favorable to the proj ect, Developer shall
exercise good faith efforts to proceed to close on
such a refinance. If not feasible, developer shall
prepare a written report explaining such
infeasibility to the City/Agency and Developer
shall have no further obligations under this
Section 2.16.c.
d.
during the period following the conclusion of the
period described in subparagraph (i) immediately
above, any such refinance that results in an
increase in the amount owing over the principal
balance due at the time of refinancing, or
otherwise a distribution of refinance proceeds,
shall be approved in advance by the Agency's
Executive Director and an amount equal to the
greater of the difference between the amount of the
principal balance due at the time of the
refinancing and the new principal balance upon the
refinancing or such refinance proceeds shall be
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paid to City/Agency to
principal and accrued
City/Agency Notes.
reduce the outstanding
interest due on the
2.17 Developer's Evidence of Financial Capability.
The anticipated sources and uses of funds for acquisition of
the Property and development of the Project are set forth in the
Project Budget (Attachment No.6). The financial projections for
the Project are set forth in the Project Pro Forma (Attachment No.
7) .
Upon request, but in no event later than Close of Escrow, as
a condition precedent to Close of Escrow, Developer shall submit to
the City Manager or Agency's Executive Director evidence reasonably
satisfactory to the City Manager or Agency's Executive Director
that Developer has the financial capability necessary for the
acquisition of the Property and the development of the Project
thereon pursuant to this Agreement, the Project Budget, and the
Project Pro Forma. Such evidence of financial capability shall
include the following:
b.
c.
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a.
a copy of the commitment or commitments obtained by
Developer for each of the sources of funds listed
in the Project Budget to assist in financing the
acquisition of the Property and the construction of
the Project, including both construction and take-
out financing and the preliminary tax-credit
reservations obtained by Developer. Within the
time set forth in the Schedule of Performance,
Developer shall obtain the construction loan for
the Project in an amount not less than that shown
in the Project Budget and, upon request, provide
evidence to Agency's Executive Director that the
construction loan is available for use in
accordance with its terms. All copies of
commitments submitted by Developer to City and/or
Agency shall be deemed to be certified by Developer
to be true and correct copies thereof. Each
commitment for financing shall be in such form and
content acceptable to the City Manager and Agency's
Executive Director as reasonably evidences a firm
and executed, standard commitment, with only those
conditions which are standard or typical for the
lender involved for similar projects.
evidence that Developer has received the entire
$45,000 in proceeds of the LISC Recoverable Grant
for predevelopment costs for the Project.
evidence that the entire $60,000 in proceeds of the
Additional Third Party Predevelopment Loan are
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.
available to Developer or have been disbursed to or
on behalf of Developer.
d. if the total cost set forth in the Project budget
exceed the amount of financing commitments received
pursuant to sub-paragraph (a) above, such
documentation reasonably satisfactory to the City
Manager or Agency's Executive Director sufficient
to demonstrate that Developer, from any source
whatsoever, has adequate funds available and
committed to cover such difference.
e. a copy of the construction contract between
Developer and its general contractor for all of the
improvements required to be constructed by
Developer hereunder, certified by Developer to be a
true and correct copy thereof.
f. a corporate surety bond. or bonds or other security
instrument issued by a surety company with a Best's
A-V rating or better, approved as to form, content,
and company by the City Manager or Agency's
Executive Director and the City's or Agency's legal
counsel with Developer's contractor or contractors
as principal(s), in a penal sum not less than one
hundred percent (100%) of the amount of the cost of
constructing the Project guaranteeing completion of
construction and the payment of wages for services
engaged and bills contracted for materials,
supplies, and equipment used in the performance of
the work, and protecting Developer, City, and
Agency from any liability, losses, or damages
arising therefrom. Said bond(s) shall
specifically name City/Agency as named
beneficiaries.
g. a true and correct copy of the TCAC Preliminary
Reservation Letter and other verifiable
documentation that Developer has received. If the
Tax Credit Equity increases above the amount
indicated by the Project Budget, that additional
Tax Credit Equity shall be applied first to
Property improvements directly related to the
Project, and second to funding eligible Project
costs. One-half of any remaining additional Tax
Credit Equity shall be applied to the reduction of
the Deferred Development Fee with the other one-
half to be applied to the reduction of the
City/Agency Notes on a pro rata basis.
If the City Manager or Agency Executive Director shall
disapprove any such evidence of financing, he or she shall do so by
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written notice to Developer stating the reasons for such
disapproval. In such event, Developer shall promptly resubmit its
evidence of financial capability not less than thirty (30) days
after receipt of the City Manager's or Agency Executive Director's
disapproval, the City Manager or Agency Executive Director shall
reconsider such resubmittal and the deadlines in the Schedule of
Performance shall be extended accordingly.
2.18 Low Income Housinq Tax Credit Proqram.
Developer has applied for a preliminary reservation of tax
credits from the low-income housing tax credit program authorized
pursuant to Internal Revenue Code Section 42, California Health and
Safety Code Sections 50199.6-50199.19, Revenue and Taxation Code
Sections 17057.5, 17058, 23610.4, and 23620.5, and applicable
federal and State regulations such as 4 California Administrative
Code Sections 10300-10340 (collectively, the "Low Income Housing
Tax Credit Program"). Developer's qualification for and
participation in the Low Income Housing Tax Credit Program in
accordance with the terms set forth in this Agreement is a
condition to the performance of this Agreement by City and Agency,
including without limitation the provision of the City/Agency Loan.
Neither City nor Agency shall have any responsibilities with
respect to Developer's performance of its obligations under the Low
Income Housing Tax Credit Program, nor shall City or Agency do
anything or fail to do anything it is required by law or this
Agreement to do which will adversely affect Developer's performance
of its Low Income Housing Tax Credit Program obligations. In order
to assist City and Agency in performing their obligations and
enforcing their rights under this Agreement (with respect to
reviewing Developer's evidence of financing, insuring the continued
affordability and maintenance of the Project units, and obtaining
payments due under the Note), Developer agrees that upon
City/Agency's request, Developer shall promptly submit, or make
available to City/Agency, all of the following documents at such
time as the same are submitted by Developer to the Tax Credit
Allocation Committee or other applicable body or when such
documents are received by Developer, as applicable (any documents
submitted prior to the Effective Date of this Agreement shall also
have been submitted by Developer to Agency and City and reviewed by
Agency and City if so requested prior to the Effective Date of this
Agreement)
(i)
Complete copies of Developer's applications to
the Tax Credit Allocation Committee for the
preliminary reservation, final reservation,
carryover allocation (if applicable), and
placed-in-service credit award, and any
amendments or modifications thereto (4
California Administrative Code ~~ 10325(b)-(e)
and 10345) .
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(ii)
(iii)
(iv)
(v)
Complete copies of any correspondence or
transmittals by the Tax Credit Allocation
Committee to Developer notifying Developer
regarding the action(s) taken with respect to
any of the applications referred to in clause
(i) .
A complete copy of the regulatory agreement
between the Tax Credit Allocation Committee
(the "TCAC Regulatory Agreement") and
Developer (4 California Administrative Code ~
10340(c)). (As more fully discussed in
Section 5.1.2, should Agency or City be
prevented by a final order of a court of
competent jurisdiction, applicable and binding
appellate opinion, or regulatory body with
jurisdiction from enforcing, for any reason,
the affordability restrictions set forth in
this Agreement, City and Agency shall be
third-party beneficiaries under said agreement
and shall have full authority to enforce any
breach or default by Developer thereunder in
the same manner as though it were a breach or
default under this Agreement.)
Complete copies of all progress reports
submitted by Developer to the Tax Credit
Allocation Committee prior to the issuance of
tax credit allocations (4 California
Administrative Code ~ 10340(d)) and the annual
certifications and Project Status Reports
submitted by Developer to the Tax Credit
Allocation Committee subsequent to the
issuance of tax credit allocations (4
California Administrative Code ~ 10340(e)).
Complete copies of all correspondence or
transmittals from the Tax Allocation Credit
Committee or other jurisdiction (such as the
Internal Revenue Service) containing any
notification regarding the Project's
noncompliance with applicable provisions of
the Low Income Housing Tax Credit Program.
2.19 Predevelopment Funds.
Developer shall advance to the Project all amounts necessary
for predevelopment costs of the Project (the "Predevelopment
Costs"), which Predevelopment Costs are estimated to be $202,000.
The source of payment for the Predevelopment Costs is the $45,000
LISC Recoverable Grant, the Additional Third Party predevelopment
Loan, and the $97,000 in Agency Predevelopment Loan Proceeds (the
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"Predevelopment Funds"), subj ect to the provisions of Section 2.8.2
hereof, governing Developer's expenditure of Agency Predevelopment
Loan Proceeds. Developer shall use the Predevelopment Funds for
eligible predevelopment costs including architectural work,
environmental studies, engineering, planning fees, legal expenses,
tax credit fees, appraisal, market study costs, and related "soft
costs" described in the Project Budget.
2.20 Developer Fee.
Developer shall be entitled to a developer fee, which includes
general overhead and profit, in the amount of $300,000 (the
"Developer Fee"). It is anticipated that a total of $168,394 of
the Developer Fee shall be paid to Developer as follows: $30,000
shall be paid to Developer upon closing of the BACDB Construction
Loan; $30,000 shall be paid to Developer 270 calendar days after
closing of the BACDB Construction Loan; and $108,394 shall be paid
to Developer upon the issuance by the City of the certificate of
occupancy. It is expressly understood that the foregoing payment
amounts are subject to adjustments based upon availability of
funds. Any unpaid balance of the Developer Fee (the "Deferred
Development Fee") remaining after the issuance of the certificate
of occupancy shall be evidenced by a promissory note executed in
favor of Developer (the "Deferred Developer Fee Note"). Developer
shall not be entitled to any interest on the Deferred Developer
Fee. In the event there are any cost savings realized in the
construction of the Project, all available funds attributable to
such cost savings shall be applied to the Deferred Developer Fee
upon closing of the CHFA Permanent Loan. Regular payments on the
Deferred Developer Fee Note shall be made on an annual basis, out
of one hundred (100%) percent of the Residual Receipts as defined
and calculated in Section 2.14. Such amounts shall be paid to
Developer on a priority basis to all other debt service on the
Property except for the BACDB Construction Loan, the CHFA Permanent
Loan and the LISC Loan. Developer shall specifically be entitled
to payment of the Deferred Developer Fee from one hundred (100%)
percent of Residual Receipts, if any, before payment of the
installment amounts due to City and Agency pursuant to the City
Note and Agency Note. The Residual Receipts payments, if any,
shall be paid to Developer on or before 30 days after the first
year anniversary of the date on which the City issues the
certificate of occupancy, and on or before 30 days after each
subsequent yearly anniversary of said date thereafter until the
Deferred Developer Fee has been paid in full. Developer may record
a deed of trust securing the Developer Fee Note, but such deed of
trust shall be subordinate to the City Trust Deed, the Agency Trust
Deed, the Covenants Agreement, the TCAC Regulatory Agreement, any
deed of trust securing the repayment of the LISC Loan, and any
deeds of trust securing the construction and permanent financing.
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2.21 Inter-Creditor Aqreement.
City and Agency agree to timely execute an inter-creditor
agreement consistent with the terms and conditions of this
Agreement, as may be reasonably required by Developer's
construction lender or permanent lender. The form of any such
inter-creditor agreement shall be subject to the approval by the
City Attorney, which approval shall not be unreasonably withheld.
ARTICLE 3
ESCROW
3.1 Openinq of Escrow.
Pursuant to the terms of the Conveyance Agreement, the
Assignment of Conveyance Agreement, and the Low Income Housing
Agreement, City, RDR and Developer have or will cause to be opened
an escrow (the "Escrow") with First American Title Insurance
Company (the "Escrow Agent") for the conveyance of the Property by
RDR to Developer. If required by the Escrow Agent, or if it is
deemed necessary and expedient by the parties to this Agreement,
City, Agency and Developer shall enter into a sub-escrow with
Escrow Agent in order to facilitate the transactions contemplated
by this Agreement. The opening of the Escrow (the "Opening Date")
means the date of and act of Escrow Agent signing the "Consent of
Escrow Holder" attached to the Conveyance Agreement. The Escrow
Agent shall notify City, Agency and Developer in writing of the
Opening Date promptly following the opening of Escrow.
This Agreement, together with the Conveyance Agreement and the
Assignment of Conveyance Agreement, once deposited in the Escrow,
shall constitute the joint escrow instructions of City/Agency and
Developer. City/Agency and Developer shall provide such additional
escrow instructions as shall be necessary for an consistent with
this Agreement. Additionally, if the Escrow Agent so requires,
City/Agency and Developer agree to execute the form of escrow
instructions that Escrow Agent customarily requires in real
property transactions of the type contemplated by this Agreement.
The Escrow Agent is hereby empowered to act under this Agreement,
and upon indicating its acceptance of this Section 3.1 in a writing
delivered to City/Agency and Developer within five (5) business
days after the Opening Date, or as soon thereafter as may be
practical, shall carry out its duty as Escrow Agent hereunder. In
the event of any conflict or inconsistency between the additional
escrow instructions required by the Escrow Agent and the provisions
of this Agreement, the provisions of this Agreement shall supersede
and control. Any amendment of the escrow instructions set forth or
described herein shall be in writing and signed by City, Agency and
Developer. At the time of any authorized amendment to the escrow
instructions, the Escrow Agent shall agree, by signing below an
appropriate statement on such an amendment, to carry out its duties
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as Escrow Agent under such an amendment. All communications from
the Escrow Agent to City, Agency or Developer concerning the Escrow
shall be in writing and directed to the addresses and in the manner
established in Section 7.1 of this Agreement for notices, demands,
and communications between City/Agency and Developer.
3.2 Close of Escrow.
Escrow Agent will close escrow on the City Loan and the Agency
Loan concurrently with the close of escrow on the conveyance of the
Property to Developer from RDR (the "Closing Date") pursuant to the
terms and conditions of the Conveyance Agreement and the Assignment
of Conveyance Agreement. All proceeds of the City Loan and the
Agency Loan shall be paid outside of Escrow. If Escrow Agent
cannot close escrow on or before the closing date set forth in the
Conveyance Agreement and the Assignment of Conveyance Agreement, it
will nevertheless close escrow when all conditions have been
satisfied or waived unless, after said closing date, and prior to
the close of escrow, Escrow Agent receives a written notice to
terminate the Escrow from a party who, at the time that the notice
is delivered, is not in default under this Agreement.
3.3 Recordation.
Escrow Agent is directed, on the Closing Date, to record the
following documents in the following order of priority: (1) the
Grant Deed conveying the Property from RDR to Developer; (2) the
Agency Trust Deed; (3) the City Trust Deed; (4) the Covenants
Agreement (defined below); (5) the deed of trust (if any) securing
repayment of the LISC Recoverable Grant; (6) the deed of trust (if
any) securing the Developer Fee Note, and (7) all other documents
(including without limitation any deeds of reconveyance) necessary
for title to the Property to be conveyed to Developer. The
foregoing order of priority is expressly subject to the
subordination provisions of Section 2.16 in the event the BACDB
Construction Loan closes concurrently with the Escrow and the
Escrow. Said recordation, and other applicable actions specified
in this Agreement, shall occur when title to the Property can be
vested in Developer pursuant to the Conveyance Agreement and
Assignment of Conveyance Agreement and all other conditions
precedent to closing set forth in this Article 3 have been complied
with or waived.
3.4 Deliverv of Documents Reauired From Develooer and
Citv/Aaencv.
a. Develooer's Obliaations.
Developer shall pay all escrow fees relating to the Escrow,
the cost of any title insurance relating to the City/Agency Loan,
and all other transfer taxes, documentation and recording fees and
charges. On or before 12:00 Noon of the last business day prior to
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the Closing Date, Developer shall deposit or cause to be deposited
with the Escrow Agent each of the following:
(i) an executed and acknowledged (by Developer)
Agency Trust Deed and City Trust Deed;
(ii) executed Agency Note and City Note;
(iii) executed and acknowledged Covenants Agreement;
(iv) any and all additional funds, instruments, or
other documents required from Developer
(executed and acknowledged if appropriate), as
may be necessary in order for the Escrow Agent
to comply with the terms of this Agreement;
and
(v) the following costs: (a) the Escrow Agent' s
fee; (b) recording and notary fees; and (c)
any state, county, or city documentary stamps
or transfer tax.
b. Aqencv's Obliqations.
Agency shall not be responsible for any escrow, title
insurance or closing costs. On or before 12:00 Noon on the last
business day prior to the Closing Date, Agency shall deposit into
Escrow and any and all instruments, or other documents required
from Agency (executed and acknowledged if appropriate), as may be
necessary in order for the Escrow Agent to comply with the terms of
this Agreement.
c. Citv's Obliqations.
City shall not be responsible for any escrow, title insurance
or closing costs. On or before 12:00 Noon on the last business day
prior to the Closing Date, City shall deposit any and all
instruments or documents required from City (executed and
acknowledged if appropriate), as may be necessary in order for the
Escrow Agent to comply with the terms of this Agreement.
3.5 Escrow Aqent Duties.
The Escrow Agent's duties hereunder shall be limited to
implementation of Sections 3.1 to 3.6 of this Agreement, inclusive.
In addition to any other actions the Escrow Agent is authorized or
required to undertake pursuant to the provisions of this Agreement,
the Escrow Agent is authorized to and shall:
a. record the documents described in Section 3.3 in
the order of priority set forth in Section 3.3;
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b. buy, affix, and cancel any documentary stamps
required by law, and pay any transfer tax required
by law, as provided herein;
c. pay and charge Developer for any fees, charges, and
costs payable under the Escrow;
d. deliver the documents to the parties entitled
thereto when the conditions for this Escrow have
been fulfilled by City/Agency and Developer; and
e. at close of escrow, deliver to City/Agency and
Developer a copy of each document recorded.
3.6 Conditions Precedent to Closinq: Termination.
3.6.1 Conditions Precedent to Developer's Obliqations.
Developer's obligations to close the Escrow shall be subject
to Developer's satisfaction or written and signed waiver of each of
the following conditions precedent:
a. The Property shall be conveyed to Developer by RDR
pursuant to the terms and conditions of the
Conveyance Agreement and Assignment of Conveyance
Agreement;
b.
Escrow Agent holds and will deliver
the instruments and funds, if any,
Developer pursuant to this Agreement;
to Developer
accruing to
and
c. all representations and warranties by City/Agency
in this Agreement shall be true on and as of the
Closing Date as though made at that time and all
covenants of City/Agency which are required to be
performed prior to the Closing Date shall have been
performed by such date.
3.6.2 Failure of Developer's Conditions: Termination.
The failure of any of Developer's conditions set forth in
Section 3.6.1 shall not be a bar to the close of Escrow nor an
excuse for Developer's complete performance under this Agreement if
the failure of the condition is due in whole or in part to the
fault of Developer. Developer shall cooperate with City/Agency and
the Escrow Agent to attempt to satisfy each and every condition
precedent to Developer's obligations hereunder. In the event,
however, that Developer has fully performed its obligations under
this Agreement but any of Developer's conditions is not satisfied
or waived in a writing signed by Developer prior to the expiration
of the applicable period for satisfaction or waiver, Developer may,
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in addition to asserting or claiming any other right or remedy
Developer may have hereunder for City's or Agency's breach or
default hereunder, cancel the Escrow (if applicable) and terminate
this Agreement. In the event Developer elects to cancel the Escrow
and/or terminate this Agreement as provided herein, all documents
and funds, if any, delivered by one party to the other party, or to
the Escrow Agent, shall be returned to the party making delivery.
3.6.3 Conditions Precedent to Citv!Aqencv' s Obliqations.
City/Agency's obligations to close the Escrow shall be subject
to City/Agency's satisfaction or written and signed waiver, of each
of the following conditions precedent ("City/Agency's Conditions
Precedent") :
a.
b.
c.
d.
e.
Z/1SIJUA
The Property shall be conveyed to Developer by
pursuant to the terms and conditions of
Conveyance Agreement and the Assignment
Conveyance Agreement.
RDR
the
of
At the Closing Date, a title company acceptable to
City/Agency shall be irrevocably committed to issue
an ALTA lenders insurance policy, including title
endorsements reasonably requested by the
City/Agency, evidencing the lien priority of the
City Trust Deed and the Agency Trust Deed as set
forth in Section 2.15.
Escrow Agent holds and will deliver to City/Agency
the instruments and funds, if any, accruing to
Agency pursuant to this Agreement;
Developer shall have submitted to City and Agency
the evidence of financial capability to develop the
Project on the Property as required by Section 2.17
of this Agreement, and obtained the City Manager's
or Agency Executive Director's approval of same;
All conditions to close escrow on the BACDB
construction Loan shall have been satisfied in
order to allow for the concurrent close of same.
f.
all representations and warranties by Developer in
this Agreement shall be true on and as of the
Closing Date as though made at that time and all
covenants of Developer which are required to be
performed prior to the Closing Date shall have been
performed by such date.
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3.6.4 Failure of City/AGency's Conditions: Termination.
The failure of any of City/Agency's conditions set forth in
Section 3.6.3 shall not be a bar to the close of the Escrow nor an
excuse for City/Agency's complete performance under this Agreement
if the failure of the condition is due solely to the fault of
City/Agency. City/Agency shall cooperate with Developer and the
Escrow Agent to attempt to satisfy each and every condition
precedent to City/Agency's obligations hereunder. In the event,
however, that City/Agency has fully performed its obligations under
this Agreement but any of City/Agency's conditions are not
satisfied or waived in a writing signed by City/Agency prior to the
expiration of the applicable period for satisfaction or waiver,
City/Agency may, in addition to asserting or claiming any other
right or remedy City/Agency may have hereunder for Developer's
breach or default hereunder, cancel the Escrow (if applicable) and
terminate this Agreement. In the event Agency elects to cancel the
Escrow and/or terminate this Agreement as provided herein, all
documents and funds, if any, delivered by one party to the other
party, or to the Escrow Agent, shall be returned to the party
making delivery.
3.7 Physical and Environmental Condition of the Property:
Preliminary Work by Developer.
3.7.1 Limit on Escrow AGent's Responsibility.
Escrow agent shall have no concern with, nor liability, nor
responsibility for, the provisions of this Section 3.7, or any
subsection thereof.
3.7.2 "As Is" Conveyance.
City and Agency have made and are making absolutely no
representations or warranties with respect to the Property, either
express or implied. Buyer waives the right to any warranty implied
by law. Buyer is acquiring the Property solely in reliance on
representations and warranties made by third parties and/or Buyer's
own investigation, and Developer will accept the Property, and the
matters relating to the Property listed below, in their present "as
is" condition. The matters are:
condition;
prehistoric
contamination
wetlands.
a. Soils, TOPoGraphy, Etc. Soils and geological
topography, area and configuration; archeological,
and historic artifacts, remains and relics;
by Hazardous Materials; endangered species and
b. Utilities, Schools, Etc. Availability of utilities,
schools, public access, and fire and police protection.
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c.
assessments of
and assessment
Districts.
any and all
districts.
The status, special taxes and
Mello-Roos Community Facility Districts
d. Planninq and Zoninq.
and subdivision statutes, ordinances,
Applicable planning, zoning
regulations and permits.
e. Development Fees. The character and amount of any
fee or charge which must be paid by City to develop the Property.
f. Easements and Encroachments. Any easement, license
or encroachment which is not a matter of public record, whether or
not visible upon inspection of the Property.
g. Other Matters. Any other matter relating to the
Property or to the development of the Property, including, but not
limited to, value, feasibility, cost, governmental permissions,
marketing and investment return, except as otherwise expressly
provided in this Agreement.
3.7.3 Hazardous Materials.
The term "Hazardous Materials" means any material or substance
which is (i) defined as a "hazardous waste", "extremely hazardous
waste", "restricted hazardous waste", "hazardous material",
"hazardous substance", or any similar formation under or pursuant
to any California statute or common law rule; (ii) petroleum and
natural gas liquids as those terms are used in ~ 109(14) of the
Comprehensive Environmental Response, Compensation & Liability Act,
42 D.S.C. ~ 6901, et seq. (41 D.S.C. ~ 6903); (iii) asbestos; (iv)
polychlorinated biphenyls; (v) designated as a "hazardous
substance" pursuant to ~311 of the Clean Water Act, 33 D.S.C., ~
1251, et seq. (33 D.S.C. ~ 1321) or listed pursuant to ~ 307 of the
Clean Water Act (33 D.S.C. ~ 1317); (vi) defined as a "hazardous
substance" pursuant to Comprehensive Environmental Response,
Compensation and Liability Act, 42 D.S.C. ~ 9601, et seq. (41
D.S.C. ~ 9601).
3.7.4 Indemnitvof City/Aqency.
As a material inducement to City/Agency, without which
City/Agency would not have agreed to the terms set forth herein,
Developer, for itself and its successors and assigns, hereby agrees
to indemnify, defend and hold harmless City/Agency and each of the
employees, agents, attorneys, successors and assigns of City/Agency
("Indemnified Parties"), from and against any and all present and
future liability, losses, damages (including foreseeable or
unforeseeable consequential damages) , penalties, fines,
forfeitures, response costs and expenses (including out-of-pocket
litigation costs and reasonable attorneys' fees) directly or
indirectly arising out of (i) the use, generation, storage,
transportation, release, discharge or disposal of Hazardous
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Materials on or in the Property by Developer or the partners of
Developer or its respective employees, contractors, subcontractors
or agents, including, without limitation, the cost of any required
or necessary repair, cleanup or detoxification and the preparation
of any closure or other required plans; excluding, however, from
Developer's indemnity any such liability, losses, damages
(including foreseeable or unforeseeable consequential damages)
penalties, fines, forfeitures, response costs and expenses
(including out-of-pocket litigation costs and reasonable attorneys'
fees) directly or indirectly arising out of the sole negligence or
willful misconduct of City, Agency or their respective employees,
contractors, subcontractors or agents. The indemnity obligation of
this Section 3.7.4 is not assignable.
ARTICLE 4
DEVELOPMENT OF THE PROJECT
4.1 Work to be Performed
Developer agrees to improve the Property with a multi-family
residential project consisting of 40 units and operate the Project
for occupation by low-income persons, subject to the terms of this
Agreement, the Conveyance Agreement, the Assignment of Conveyance
Agreement, the Housing Agreement and the TCAC Regulatory Agreement.
The Project shall consist of sixteen two-bedroom/one bath units,
sixteen three-bedroom/2 bath units, and eight four-bedroom/two bath
units, a community building and other common area facilities in
accordance with the Development Project/Architectural Plans (as
defined below). In general, the Project shall be designed and
constructed in a manner so as to be architecturally compatible with
the existing neighborhood as well as functionally efficient in the
areas of access, parking, and security. The Project's units and
occupancy shall be restricted in accordance with the terms of this
Agreement. Developer shall develop the Project in strict
conformity with the permits and approvals referenced in Sections
4.2 through 4.4 of this Agreement. If Developer desires to make
any change in any development or building plans after the same have
been approved, Developer shall submit the proposed change to the
appropriate body for approval; provided, however, subject to the
necessity of approvals under City ordinances and policies at the
time, that Developer may make minor, de minimis changes without
City/Agency consent. Developer shall be responsible for all
construction and installation and for obtaining all the necessary
permits. To the extent required by the City/Agency, all such work
shall be completed in accordance with acquisition, development and
management plans submitted to and approved by the City/Agency.
4.2 Development Proiect/Architectural Plans.
Within the times set forth in the Schedule of Performance,
Developer shall prepare and submit to the City Design Review
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Committee for review and approval all development project and
architectural plans and any related documents for the Project
("Development Project/Architectural Plans"), and Developer shall
exercise reasonable diligence to obtain approval of same. The
Development Project/Architectural Plans shall include the sizes,
heights, and locations of all buildings; building elevations;
construction materials; construction colors; site plan
configuration/dimensions; parking; conceptual landscape plan;
conceptual sprinkler plan; and lighting concept.
4.3 Final Construction Drawinqs.
Within the times set forth in the Schedule of Performance,
Developer shall submit to City for review and approval a complete
set of final construction drawings for the Project in strict
conformity with the previously approved Development
Project/Architectural plans (the "Final Construction Drawings"),
and Developer shall exercise reasonable diligence to obtain such
approval. The Final Construction Drawings shall contain all
information required to obtain all necessary building permits
required for the Project. In the event City requires modifications
or changes to the Final Construction Drawings, Developer shall make
the necessary changes with reasonable diligence and resubmit to
City.
4.4 Other Ci tv and Governmental Aqencv Permits and Approvals.
Before commencement of construction of the Project, but not a
condition to close of escrow, Developer, using the Predevelopment
Funds, shall secure or cause to be secured any and all permits
which may be required by City or any other governmental agency
having jurisdiction over the Property and the Project. Agency
staff, at their discretion, shall provide reasonable assistance to
Developer in securing these permits, at no cost to Agency;
provided, however, the Agency does not represent or warrant that
any such approvals shall be granted.
Notwithstanding any other provisions of this Agreement, City
and Agency's obligations hereunder shall be contingent and
conditional upon Developer submitting and processing and City
approving, as necessary, all documentation and information required
to comply with the California Environmental Quality Act (Division
13 commencing with Section 2100 of the California Public Resources
Code) and the National Environmental Policy Act (42 D.S.C. ~ 4321,
et seq.). Developer shall comply with all environmental mitigation
measures imposed as conditions of approval of the Project. Nothing
herein is intended, nor shall be construed, as a precommitment or
prejudgment by City regarding the matters required to be considered
as part of the environmental review for the Project.
The parties acknowledge and agree that nothing
Agreement is intended to, nor shall have the effect of,
in this
reducing
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the City's or Agency's legal authority and obligation to consider
approval or disapproval of any future agreements and other
discretionary actions contemplated hereby in its sole and
unfettered discretion. Developer agrees to waive any and all
claims against the City, the Agency, and their respective agents,
employees and representatives arising from the City's or Agency's
election not to approve such contemplated agreements or actions and
acknowledges and agrees any such election by the City or Agency
shall not constitute a breach of this Agreement.
4.5 Selection of General Contractor.
The parties acknowledge and agree that a general contractor
for construction of the Project shall be selected by Developer
pursuant to a negotiated bidding process, whereby Developer will
identify and present requests for qualifications to three to five
general contractors. said general contractors identified by
Developer will be provided with copies of the plans and schematics
relating to the Project which have been presented to the City
Design Review Committee and shall be requested to bid on the
Project. The general contractor for the Project shall be selected
based upon the bids submitted to Developer, the experience of the
general contractors in constructing affordable housing proj ects
similar in size and scope to the Project, and such other criteria
as Developer shall deem appropriate. The general contractor shall
be approved by City/Agency, which approval shall not be
unreasonably withheld.
4.6 Hold Harmless.
Developer agrees to indemnify, protect, defend and hold
harmless City/Agency, and City/Agency's officers, agents,
employees, representatives and their respective successors, from
and against any and all claims, damages, actions, costs, demands,
expenses or liability, including without limitation, attorneys'
fees and court costs, which may arise from the direct or indirect
actions or inactions of the Developer or those of its contractors,
sub-contractors, agents, employees or other persons acting on
Developers' behalf which relate to the development, maintenance or
operation of 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 City prepared, supplied or approved plans or
specifications, or both, for the Property or proj ect. This
indemnity by Developer, and all other indemnities set forth herein
shall survive any foreclosure of the Property by the City/Agency
pursuant to the terms of the City Trust Deed or the Agency Trust
Deed.
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4.7 Further Indemnification of Citv/Aqencv.
It is understood and agreed that the parties hereto have
entered this Agreement as a method of providing necessary
assistance to Developer in connection with the development of low-
income housing and development of the Property pursuant to all
applicable laws and that by contributing public funds to assist in
the accomplishment of such development, or by otherwise
contributing or assisting with the accomplishment of such
development, the City/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 City/Agency for entering into this Agreement (and not by way of
limiting the generality of Section 4.6 above) Developer agrees to
indemnify, protect, defend and hold harmless City/Agency and all
City/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, attorneys' fees and court
costs, which may arise or in any manner connected with the
development of the Project pursuant to this Agreement, excluding,
however, from Developer's indemnity any such liability, losses,
damages (including foreseeable and unforeseeable consequential
damages), penalties, fines, expenses (including out-of-pocket
litigation costs and reasonable attorneys' fees, directly or
indirectly arising out of the sole negligence or willful misconduct
of the City, Agency or their respective employees, contractors,
subcontractors or agents) .
4.8 Costs of Development.
Subject to the terms and conditions of this Agreement and the
Housing Agreement, Developer 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
Developer to construct any off-site improvements. Developer shall
be responsible for verifying the adequacy and availability of all
utilities. If at any time during the course of the development of
the Project, Developer exhausts fifty (50%) percent or more of the
contingency amounts set forth in the Project Budget, City/Agency
shall have the right, but not the obligation, to approve any
additional cost overruns, which approval shall not be unreasonably
withheld.
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4.9 Schedule of Performance: Proqress Reports.
Subject to Section 7.3, Developer shall begin and complete all
construction and development within the times specified in the
Schedule of Performance. Once construction 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 Developer, as set forth in Section 7.3 of this Agreement.
During the course of construction, and prior to City's
issuance of its certification of occupancy for the Project,
Developer shall keep City informed of the progress of construction
on the Property and shall provide Agency with monthly written
progress reports and, if requested, meet with City/Agency staff as
appropriate. Developer shall furnish a construction 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 Performance, Developer shall
provide the Agency's Executive Director with a true and correct
copy of the final cost certification submitted to TCAC concerning
the construction of the Project on the Property. Developer shall
provide additional cost information as may be reasonably requested
by Agency's Executive Director to permit Agency's Executive
Director to make such determinations as is reasonably required for
Agency to verify Developer's conformance to this Agreement and
approved project plans.
4.10 Grant of Easements.
Developer shall grant to Agency and City all necessary and
appropriate easements for development of public improvements and
facilities which are consistent with the Project, including but not
limi ted to easements for streets, rights of vehicular access,
sidewalks, sewers, storm drains, water, and other utilities and
improvements. Agency, City, and the appropriate utility companies
shall be permitted to obtain any necessary temporary easements as
reasonably required by them.
4.11 Compliance with Permits and Laws.
Developer and its contractors shall carry out the development
of the Project and operation of the Project in conformity with all
applicable laws, regulations, and rules of the governmental
agencies having jurisdiction, including without limitation all
conditions and requirements of the HOME Investment Partnerships
Program and HOME Regulations referred to in Section 2.6; all
conditions and requirements imposed by California law governing the
use of Low/Mod Fund monies as set forth in California Community
Redevelopment Law, Health & Safety Code ~~ 33000, et seq., and all
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regulations promulgated thereunder; prevailing wage requirements,
if any, the applicability of which is for Developer to determine,
pursuant to federal and state law, including California Labor Code
Section 1770 et seo.; all conditions and requirements imposed by
the Low Income Housing Tax Credit Program; applicable labor
standards; ADA requirements; applicable MBE/WBE regulations and
City policies adopted pursuant to said federal standard regulations
and requirements.
4.12 Anti-discrimination Durinq Construction.
Developer, for itself and its successors and assigns, agrees
that Developer 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.
4.13 Riqht of Access.
For the purpose of assuring compliance with this Agreement,
representatives of Agency and City shall have the reasonable right
of access to the Property, without charges or fees, at normal
construction hours during the period of construction for the
purposes of this Agreement, including but not limited to the
inspection of the work being performed by Developer in constructing
the proj ect. Such representatives of Agency and City shall be
those who are so identified in writing by the Executive Director of
Agency and City Manager of City, respectively. Agency and City
shall each indemnify, defend, and hold harmless Developer and
Developer's officers, employees, and agents from any damage caused
or liability arising out of the sole negligence of, as applicable,
Agency or City or their officers, officials, employees, volunteers,
agents, or representatives in their exercise of this right of
access; provided that it is understood that Agency and City do not
by this Section 4.13 assume any responsibility or liability for a
negligent inspection or failure to inspect. Any inspection by
Agency or City pursuant to this section shall be conducted so as
not to interfere or impede the construction or operations of the
Project.
4.14 Prohibition Aqainst Assiqnment and Transfer.
The qualifications and identity of Developer are of particular
concern to City and Agency. It is because of those qualifications
and identity that City and Agency have entered into this Agreement
with Developer. Accordingly, for a period of fifty-five (55) years
from the Effective Date, (1) Developer, without City's or Agency's
prior written approval, shall not, whether voluntarily,
involuntarily, or by operation of law, and except as permitted in
this Section 4.14, undergo any significant change in ownership or
assign all or any part of this Agreement or any rights hereunder,
and (2) Developer without City's or Agency's prior written
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approval, shall not, whether voluntarily, involuntarily,
operation of law, and except as permitted in this Section
assign all or any part of the Property or Project.
or by
4.14,
Notwithstanding the foregoing, the following shall not be
considered a significant change in ownership or an assignment or
transfer and shall not require City or Agency approval for purposes
of this Section 4.14:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
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Transfers to any entity or entities owned or
controlled by Developer.
Transfers to a non-profit public benefit
corporation sponsored by Developer whose board
of directors shall be comprised of five
members, three (3) of which shall be
designated by Developer and two (2) of which
shall be designated by a tenant association to
be organized by the occupants of the Project.
Pending formation of the tenant association,
Developer shall designate all directors, two
(2) of which shall, if possible, be tenants of
the Project.
Transfers to any partnership formed by
Developer pursuant to which Developer retains
operational and managerial control (Agency
acknowledges that Developer intends to assign
this Agreement to a limited partnership, the
managing general partner of which shall be
Developer) and sale of such partnership
interests to the general partners at the
conclusion of the 15-year tax credit period.
The conveyance or dedication of portions of
the Property to the City or other appropriate
governmental agency for the formation of an
assessment district, or the granting of
easement or permits to facilitate the
development of the Property.
A sale or transfer of some or all of
Developer's interest in the Property to
investors or syndicators or a sale or transfer
of some or all of the investor's interest in
the limited partnership by the investors or
syndicators, or to a limited partnership of
which Developer is a partner.
The leasing of all or any part or parts of a
building or structure.
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(vii)
Transfer of property management
responsibilities, provided, however, that
Developer shall provide City/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 terms and conditions
of this Agreement, including, without limitation, all affordability
restrictions concerning the occupancy of the Property.
Developer shall deliver written notice to City or Agency
requesting approval of any assignment or transfer requiring City or
Agency approval hereunder. Such notice shall be given prior to
Developer entering into a formal written agreement with the
proposed assignee.
In considering whether it will grant approval to any
assignment by Developer of its interest in the Property or any
portion thereof, which assignment requires City or Agency approval,
City or Agency, as applicable, shall consider factors such as (i)
the financial strength and capability of the proposed assignee to
perform Developer's obligations hereunder and (ii) the proposed
assignee's experience and expertise in the planning, financing,
development, and operation of similar projects.
No assignment, including assignments which do not require City
or Agency approval hereunder, but excluding assignments for
financing purposes, shall be effective unless and until the
proposed assignee executes and delivers to Agency and City an
agreement, in form satisfactory to City's or Agency's attorney,
assuming the obligations of the assignor which have been assigned.
Thereafter, the assignor shall be relieved of all responsibility to
City and Agency for performance of the obligations assumed by the
assignee.
No lender approved by Agency or City pursuant to Section 4.16
shall be required to execute an assumption agreement and such
lender'S rights and obligations hereunder shall be as set forth in
Section 4.16.
4.15 Taxes, Assessments, Encumbrances, and Liens.
Developer shall pay prior to delinquency all real estate taxes
and assessments properly assessed and levied on the Property.
Until the date Developer is entitled to issuance by Agency of
the Certificate of Completion for the Project, Developer shall not
place or allow to be placed thereon any mortgage, trust deed,
encumbrance, or lien (except mechanic's liens prior to suit to
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foreclose the same being filed) not authorized by this Agreement.
Developer 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 Developer
from contesting the validity or amounts of any tax, assessment,
encumbrance, or lien, nor to limit the remedies available to
Developer in respect thereto.
4.16 Secured Financinq; Riqht of Holders.
4.16.1 Permitted Encumbrances.
Mortgages, deeds of trust, conveyances, and leases-back or any
other form of conveyance required for any reasonable method of
financing are permitted before Agency's issuance of the Certificate
of Completion, but only for the purpose of securing loans of funds
to be used for the acquisition and development of the Property
(including both construction and permanent financing and the LISC
Loan), and any other expenditures necessary and appropriate to
develop or lease the Property in accordance with this Agreement.
Prior to Agency's issuance of the Certificate of Completion for the
Project, Developer shall not enter into any such conveyance for
financing purposes without the prior written consent of the City
Manager or Agency's Executive Director, which consent shall be
given if such conveyance (i) is for the purposes permitted herein
and (ii) is given to a financial or lending institution or other
acceptable person or entity capable of performing or causing to be
performed Developer's obligations under this Agreement, including
without limitation entities owned or controlled by Developer, a
pension fund, insurance company, or real estate investment trust.
Any disapproval shall be in writing and state the reasons therefor.
Failure of City or Agency to disapprove of such lender within
thirty (30) days after notice to City or Agency, as applicable,
shall be deemed approval of that specific request for consent. If,
after and despite Developer's exercise of reasonable diligence to
obtain Agency's or City's approval, the City Manager or Agency
Executive Director, as applicable, disapproves the identity of
Developer's proposed lender or the terms and conditions of the
loan, Developer'S time for commencement and completion of
construction on the Project or such portion thereof which was to
have been financed by such lender shall be extended under the
Schedule of Performance for that period of time (not to exceed one
hundred twenty (120) days) during which Developer is diligently
proceeding to procure acceptable alternative financing and submit
evidence of such financing to the City Manager or Agency Executive
Director, as applicable. City and Agency further agree to amend
the terms of this Agreement if requested by an approved lender,
provided that City's and Agency's rights and remedies are not
adversely affected; provided, however, that the foregoing is not
intended to restrict or limit City's or Agency's legislative
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discretion.
4.16.2 Holder Not Oblioated to Construct Improvements.
The holder of any mortgage or deed of trust 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; nor
shall any covenant or any provision in the Grant Deed be construed
to so obligate such holder; provided, however, that nothing in this
Agreement shall be deemed or construed to permit or authorize any
such holder (with the exception of the holder of any deed of trust
securing the BACDB Construction Loan) 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.
4.16.3 Notice of Default to Mortoaoe, Deed of Trust or
Other Secured Instrument Holders; Rioht to Cure.
Whenever City or Agency shall deliver any notice or demand to
Developer with respect to any breach or default by Developer in
completion of construction of the improvements, City and/or Agency,
as applicable, 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 City and/or 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.
4.16.4 Rioht of City/Aoency to Cure Mortoaoe, Deed of
Trust, or Other Security Instrument Default.
In the event of a default or breach by Developer of a
mortgage, deed of trust, or other security instrument or lease-back
or conveyance for financing prior to the issuance by Agency of the
Certificate of Completion for the Project, City or Agency may cure
the default prior to completion of any foreclosure. In such event,
City or Agency, as applicable, shall be entitled to reimbursement
from Developer of all costs and expenses reasonably incurred by
City or Agency in curing the default, which right of reimbursement
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 permitted by this
Agreement; or
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(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
City or Agency any affirmative obligations (by
the payment of money, construction, or
otherwise) with respect to the Property in the
event of its enforcement of its lien.
4.17 Riqht of Citv/Aqencv to Satisfv Liens.
Prior to the issuance by Agency of the Certificate of
Completion for the Project, and after Developer has had a
reasonable time to challenge, cure, or satisfy any liens or
encumbrances on the Property, City and/or Agency, after sixty (60)
days prior written notice to Developer, 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 Developer to payor make provision for the payment of any
tax, assessment, lien, or charge so long as Developer 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.
4.18 Estoppels.
At the request of Developer or any holder of a mortgage or
deed of trust, City and Agency shall, from time to time and upon
the request of such holder, timely execute and deliver to Developer
or such holder a written statement of City and Agency that no
default or breach exists (or would exist with the passage of time,
or giving of notice, or both) by Developer under this Agreement, if
such be the case, and certifying as to whether or not Developer has
at the date of such certification complied with any obligation of
Developer hereunder as to which such holder may inquire. The form
of any estoppel letter shall be prepared by the holder or
Developer.
4.19 Certificate of Completion.
Upon Developer's satisfactory completion of construction of
the Project, Agency shall furnish Developer with a Certificate of
Completion upon written request therefor by Developer. Such
Certificate of Completion shall be in a form so as to permit
recordation in the Office of the Recorder of the County of San
Diego as set forth in Attachment No.9.
The Certificate of Completion shall be, and shall so state, a
conclusive determination of satisfactory completion of the
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construction of the Project and of full compliance with the terms
of this Agreement relating to such construction. After the date
Developer is entitled to 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 which such Certificate of Completion is issued, except that
such party shall be bound by the covenants contained in Sections
5.1 through 5.5 herein, inclusive, in accordance therewith. Agency
shall not unreasonably withhold the Certificate of Completion. If
Agency refuses or fails to furnish the Certificate of Completion
after written request from Developer, Agency shall, within fifteen
(15) days after such written request, provide Developer 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 of the action Developer 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 form 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.
ARTICLE 5
USES OF THE PROPERTY
5.1 Use of the Propertv.
5.1.1 General.
Developer covenants and agrees for itself and its successors
and assigns to its interest in the Property that Developer and such
successors and assigns shall devote the Property to uses consistent
with the HOME Investment Partnerships Program and HOME Regulations
referred to in Section 2.6, the TCAC Regulatory Agreement, the
City/Agency Covenants Agreement, whichever is most restrictive, for
a period of fifty five (55) years from the effective date of the
TCAC Regulatory Agreement.
5.1.2 Affordable Housinq.
Developer covenants and agrees for itself and its successors
and assigns to its interest in the Property that commencing upon
the Developer's acquisition of the Property and continuing
thereafter for a period of fifty-five (55) years from the effective
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date of the TCAC Regulatory Agreement, Developer and such
successors and assigns shall devote thirty-nine (39) of the forty
(40) residential units on the Property (hereinafter the "Restricted
Units") to use as affordable rental housing in accordance with the
terms of this Agreement (the remaining unit to be occupied by the
on-site property manager), subject to the occupancy restrictions
contained in this Section 5.1.2; provided, however, that three (3)
of the three-bedroom units and three (3) of the two-bedroom units
shall also be subject to restrictions provided under the HOME
Investment Partnerships Program and HOME Regulations discussed in
Section 2.6, as well as the CHFA restrictions discussed in Section
2.12, whichever are more restrictive. An additional two (2) four-
bedroom units shall be subject to the affordability restrictions
imposed by CHFA discussed in Section 2.12.
During the period of time set forth in the preceding
paragraph, occupancy and rental of the Restricted Units shall be
restricted in accordance with the Restricted Unit Mix attached
hereto as Attachment No. 10 and otherwise in accordance with the
provisions of Section 33334.3 [f] of the California Health and
Safety Code such that the Restricted Units shall remain available
at affordable housing costs to persons and families of very low,
low, or moderate incomes.
In determining income eligibility for a particular Restricted
Unit, Developer shall be entitled to rely upon the documentation
provided by the prospective tenant as required pursuant to the HOME
Investment Partnerships Program procedures and the Low Income
Housing Tax Credit Program procedures for determining household
income eligibility and the verification and monitoring program
required pursuant to Section 5.1.3. Developer shall not be
required to do further investigations into the household income
than are required pursuant to the HOME Investment Partnerships
Program requirements, the Low Income Housing Tax Credit Program
requirements, and the verification and monitoring program required
pursuant to Section 5.1.3. Throughout this Agreement, wherever it
is stated that Developer must comply with the affordability
requirements and/or verify such compliance, Developer 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 one and one-half (1 1/2) persons per
bedroom. Any violation of 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.
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Finally, with respect to the HOME-assisted units in the
Project, for the period commencing upon completion of the Project
and continuing thereafter for a period of at least twenty (20)
years, the HOME-assisted units shall meet the affordability
requirements set forth in Section 92.252 of the HOME Regulations
(24 C.F.R. 1!l 92.252).
If, after renting a Restricted Unit, the household income
increases above the income level permitted for the particular
Restricted Unit, the household shall continue to be permitted to
reside in such unit and the rent shall be adjusted as follows:
(i) Except as provided in (ii) below, the
household shall continue to be permitted to
reside in such Restricted Unit at the same
rent. If, however, subsequent to such a
household income increase, another unit in the
complex designated for a higher household
income level becomes vacant and the household
whose income level has increased meets the
income requirements for such more expensive
uni t, the rent level designation for such
household shall increase to this new level and
the vacant unit shall be redesignated as a
unit to be rented to households of the income
level which was previously met by the
household whose income has increased.
(ii) In no event, during the period covered by this
Section 5.1.2, shall the rent for any
Restricted Unit in the Project exceed the
"fair market rent" for comparable units in the
area, as defined by the County of San Diego
Housing Authority.
In addition to the foregoing, Developer agrees to perform all
of its obligations under the Regulatory Agreement between the Tax
Credit Allocation Committee and Developer (4 California Code of
Regulations 1!l 10340(c)). Should Agency or City be prevented by a
final, non-appealable order of a court of competent jurisdiction in
a lawsuit involving the Project, or by an applicable and binding
published appellate opinion, or by a final, non-appealable order of
a regulatory body having jurisdiction from enforcing, for any
reason, the affordability restrictions set forth in this Agreement,
then in such event Agency and City shall be third-party
beneficiaries under the TCAC Regulatory Agreement and shall have
full authority to enforce any breach or default by Developer under
the TCAC Regulatory Agreement in the same manner as though it were
a breach or default hereunder. without City's and Agency's prior
written consent, which consent may be withheld in City's or
Agency's sole and absolute discretion, Developer shall not consent
to any amendment of or modification to the TCAC Regulatory
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Agreement which (i) shortens the term of the affordability
restrictions on the units in the Project to a term of less than
fifty-five (55) years or (ii) releases Developer from the
requirement that the units be rented at affordable housing costs in
accordance with the Residential Unit Mix.
5.1.3 Annual Report.
In addition to requirements of the HOME Investment Partnership
Program, HOME Regulations and the TCAC Regulatory Agreement, during
the period of time covered by the affordable housing requirements
of Section 5.1.2 and within the times required in the Schedule of
Performance, Developer, at no cost to Agency or City, shall submit
to Agency, or shall cause the Property Manager to submit, the
annual reports required pursuant to Health and Safety Code 33418,
as the same may be amended from time to time, with such report to
be in the form prescribed by Agency. Said annual report shall also
include a financial statement of the income, operating expenses,
and Residual Receipts, if any, for the Property. The annual report
shall be submitted to the Agency's Executive Director within 30
days of the end of the applicable twelve month period. Developer,
at its expense, shall further submit, or cause the Property Manager
to submit, to the appropriate entities any and all reports required
to be submitted pursuant to the HOME Investment Partnership Program
and HOME Regulations.
5.1.4 Insurance.
Within ten (10) days after the Developer's acquisition of the
Property, Developer shall furnish to the City/Agency duplicate
originals or appropriate certificates of insurance coverage
evidencing that Developer 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 A-V ratings or better as
are reasonably acceptable to City/Agency, naming the City/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
Developer's indemnity obligations provided herein. Developer
covenants and agrees for itself and its successors and assigns that
Developer and such successors and assigns shall keep such policy in
full force and effect until the date that is fifty five (55) years
after the Effective Date.
In addition to any other remedy which City and Agency may have
hereunder for Developer's failure to procure, maintain, and/or pay
for the insurance required herein, City or Agency may (but without
any obligation to do so) at any time or from time to time, after
thirty (30) days written notice to Developer, procure such
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insurance and pay the premiums therefor, in which event Developer
shall immediately repay City or Agency all sums so paid by City or
Agency together with interest thereon at the rate of ten percent
(10%) per annum or the maximum legal rate, whichever is less.
5.1.5 Repair of Damaqe.
a. Obliqation to Repair and Restore Damaqe Due to
Casual tv Covered bv Insurance.
Subject to subparagraph (c) below, if the Project shall be
totally or partially destroyed or rendered wholly or partly
uninhabitable by fire or other casualty required to be insured
against by Developer, Developer 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, whether or not the
insurance proceeds are sufficient to cover the actual cost of
repair, replacement, or restoration, and Developer shall complete
the same as soon as possible thereafter so that the Project can
continue to be operated and occupied as an affordable housing
project in accordance with this Agreement. Subject to Section 7.3,
in no event shall the repair, replacement, or restoration period
exceed one (1) year from the date Developer obtains insurance
proceeds unless the City Manager or Agency Executive Director, in
his or her sole and absolute discretion, approves a longer period
of time. City and Agency shall cooperate with Developer, at no
expense to City and/or Agency, in obtaining any governmental
permits required for the repair, replacement, or restoration. If,
however, the then-existing laws of any other governmental agencies
wi th jurisdiction over the Property do not permit the repair,
replacement, or restoration, Developer may elect not to repair,
replace, or restore the Project by giving notice to Agency or City
(in which event Developer will be entitled to all insurance
proceeds, subject to any outstanding lien obligations, but
Developer shall be required to remove all debris from the Property
and thereafter shall convey all right, title and interest in and to
the Property to City) or Developer may reconstruct such other
improvements on the Property as are consistent with applicable land
use regulations and approved by the City, Agency, and the other
governmental agency or agencies with jurisdiction.
b. Continued Operations.
During any period of repair, Developer shall continue, or
cause the continuation of, the operation of the housing complex on
the Property to the extent reasonably practicable from the
standpoint of prudent business management.
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c. Damaqe or Destruction Due to Cause Not Required to
be Covered bv Insurance.
If the improvements comprising the Project are completely
destroyed or substantially damaged by a casualty for which
Developer is not required to insure against (and has not insured
against), then Developer shall not be required to repair, replace,
or restore such improvements and may elect not to do so by
providing Agency or City with written notice of election not to
repair, replace, or restore within ninety (90) days after such
substantial damage or destruction. In such an event, Developer
shall remove all debris from the Property and thereafter convey all
right, title and interest in and to the Property to the City. As
used in this subparagraph (c), "substantial damage" caused by a
casualty not required to be (and not) covered by insurance shall
mean damage or destruction which is fifty percent (50%) or more of
the replacement cost of the improvements comprising the Project.
In the event Developer does not timely elect not to repair,
replace, or restore the improvements as set forth in the first
sentence of this subparagraph (c), Developer shall be conclusively
deemed to have waived its right not to repair, replace, or restore
the improvements and thereafter Developer shall promptly commence
and complete the repair, replacement, or restoration of the damaged
or destroyed improvements in accordance with subparagraphs (a)
above and continue operation of the housing complex during the
period of repair (if practicable) in accordance with subparagraph
(b) above.
5.2 Marketinq and Leasinq of Units.
5.2.1 Lease Preference and Marketinq Plan.
The leasing preference provisions set forth in
5.2.1 shall apply only in the event, and to the
provisions are not in conflict with applicable HUD
Internal Revenue Code provisions, IRS Regulations,
Income Tax Credit Program.
this Section
extent, such
Regulations,
or the Low
Commencing upon the effective date of the TCAC Regulatory
Agreement and continuing thereafter for a period of fifty-five (55)
years, the Restricted Units shall be rented to eligible tenants in
accordance with the following terms:
Within the time set forth in the Schedule of Performance,
Developer shall prepare and submit to the Housing Coordinator of
the Community Development Department for approval, which approval
shall not be unreasonably withheld, a marketing plan (the
"Marketing Plan") for the leasing of the units. The Marketing Plan
shall, to the extent permitted by law, include a program which
requires that reasonable efforts be employed in providing a
preference in the leasing of the units to individuals residing or
working in the City of Chula Vista who meet the eligibility
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requirements.
To encourage the greatest possible opportunity for such
residents of, or persons working in Chula Vista to lease the units
Developer and Agency shall cooperate to communicate the
availability of the units to the population of residents or persons
working in Chula Vista who would be interested in leasing such
units. To accomplish this goal, Developer and Agency shall each
undertake the following activities:
a. Publicitv Camoaiqn Prior to Qoeninq.
The Marketing Plan to be submitted to Agency's Executive
Director shall include and set forth a publicity campaign including
but not limited to newspaper advertising and press releases. The
publicity campaign may want to consider notices in appropriate
foreign languages to reach the broadest section of the community.
Developer shall execute the approved plan in a timely fashion to
insure the greatest possible participation in the Project amongst
persons residing in the City of Chula Vista.
b. Preference List For Initial Leasinq and for Onqoinq
Leasinq.
Developer, for both initial leasing of the units and
thereafter for ongoing leasing, shall create and maintain a system
to establish a list of eligible potential tenants, including those
responding to Developer's Marketing Plan/publicity campaign and
those identified by Agency as eligible for preference pursuant to
Health & Safety Code Section 33411.3. Developer shall contact
those individuals on the list in the manner established by Agency
and shall offer available units in the Project to such individuals
in accordance with this Agreement.
c. ReQUired Noticinq of Vacant Units.
Developer shall notify all of the following entities of any
units which remain vacant for more than 30 days:
i. Chula Vista Redevelopment Agency
276 Fourth Avenue
Chula Vista, CA 91910
ii. San Diego County Housing Authority
3989 Ruffin Road
San Diego, CA
iii. and any other housing authority with
jurisdiction in the City.
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5.2.2 Rental Aqreement.
The initial form rental agreement, and any changes to such
form rental agreement, to be used by Developer shall be in
compliance with all conditions imposed by the TCAC Regulatory
Agreement and shall be approved by the Agency's Executive Director,
which approval shall not be unreasonably withheld, prior to the
initial use for the lease form and, each time the form is changed,
prior to the first use of the changed form. Agency's Executive
Director shall approve or disapprove the rental agreement (or
changes thereto, as applicable) within thirty (30) days of
Developer's submittal.
The rental agreement shall provide that tenants may not have
or keep on premises any pets (excluding fish, birds in cages, or
other animals deemed by Developer to not disturb the other tenants
or adjacent properties) .
5.2.3 Remedy for Excessive Rental Charqes.
In the event the actual rent collected by Developer for a
Restricted Unit is in excess of the maximum rent allowed for such
Restricted Unit in violation of this Agreement, the amount by which
any actual rent collected for such Restricted Unit exceeds such
maximum rent for such Restricted Unit shall be immediately remitted
to City/Agency by Developer. Such amounts shall constitute
liquidated damages to City/Agency as a result of Developer's breach
of its covenants set forth in this Article 5, it being understood
that, because of the nature of the effect of such breach, the
actual damages to City/Agency as a result thereof would be
impracticable or extremely difficult to ascertain. It is
understood and agreed that the right of City/Agency to collect, or
the actual collection by City/Agency of, such above-described
amounts shall be in addition to any other remedies City/Agency may
have against Developer as a result of the breach of such covenants,
including, without limitation, rights of specific performance and
the right to prove actual damages.
5.3 Maintenance of the Property.
Developer agrees to maintain all the improvements on the
Property shown on the approved plans referenced in Sections 4.2
(including without limitation any landscape and signage plans), as
the same may be amended from time to time, in the condition as
existing as of the date of the certificate of occupancy (not
including any temporary certificate of occupancy) issued by City
for the Project, ordinary wear and tear excepted, and in accordance
with the approved plans and permits and in compliance with all
applicable laws, rules, ordinances, order, and regulations of all
federal, state, county, municipal, and other governmental agencies
and bodies having or claiming jurisdiction and all their respective
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departments, bureaus, and officials. The City and Agency place
prime importance on quality maintenance to protect their investment
and to ensure that all City and Agency subsidized affordable
housing projects are not allowed to deteriorate due to below-
average maintenance. In addition, Developer shall keep the
Property free from any accumulation of debris or waste material.
The maintenance covenant contained in this Section 5.3 shall remain
in effect for the term of the affordability restrictions set forth
herein.
In the event that Developer breaches any of the covenants
contained in this Section 5.3 and such default continues for a
period of five (5) days after written notice from City or Agency
(with respect to landscaping [except as may be caused by a
government-imposed watering moratorium], graffiti, debris, waste
material, and general maintenance) or thirty (30) days after
written notice from City or Agency (with respect to building
improvements), then City or Agency, in addition to whatever other
remedy it may have at law or in equity, shall have the right to
enter upon the Property and/or the open space area and perform or
cause to be performed all such acts and work necessary to cure the
default. Pursuant to such right of entry, City or Agency shall be
permitted (but are not required) to enter upon 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 on 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 City or Agency and/or
costs of such cure, which amount shall be promptly paid by
Developer to City or Agency, as applicable, upon demand.
5.4 Propertv Manaqement.
5.4.1 Manaqement Plan.
Within the time set forth in the Schedule of Performance,
Developer shall obtain approval from the Housing Coordinator of the
Community Development Department, which approval shall not be
unreasonably withheld, of the Property Manager initially engaged by
Developer to manage the Property.
Within the time set forth in the Schedule of Performance,
Developer or its Property Manager shall submit approval of the
Housing Coordination of the Community Development Department, which
approval shall not be unreasonably withheld, a management plan
which ensures that the Property Manager will comply with the terms
and intent of this Agreement in its operation of the Project. The
Property Manager shall be required to retain an on-site manager for
the Project at all times covered by this Agreement. Any amendments
or modifications to such plan shall be approved in advance by the
Agency's Executive Director or City Manager, which approval shall
not be unreasonably withheld.
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5.4.2 Gross Mismanaqement.
In the event of "Gross Mismanagement" (as that term is defined
below) of the Project, Agency and City shall have the authority to
require that such Gross Mismanagement cease immediately, and
further to require the immediate replacement of the Property
Manager. Agency or City shall provide written notice to Developer
of an event of Gross Mismanagement and Developer shall have fifteen
(15) days to cure such problem (or for such events of Gross
Mismanagement that cannot be cured within 15 days, that Developer
has commenced such cure within the 15-day period) .
For purposes of this Agreement, the term "Gross Mismanagement"
shall mean management of the Project in a manner which violates the
terms and/or intention of this Agreement to operate an affordable
housing complex of the highest standard, and shall include, but is
not limited to, the following:
(i) Knowingly and willfully leasing Restricted
Units to tenants that exceed the prescribed
income levels;
(ii) Allowing the tenants in any of the Restricted
Units to exceed the prescribed occupancy
levels without taking immediate action to stop
such overcrowding;
(iii)
Under-funding the prescribed
Replacement Reserve (Section 5.5);
Capital
(iv)
Failure
Property
5.3;
to maintain the Project and the
in the manner prescribed in Section
(v) Failure to submit timely and/or adequate
annual Section 33418 reports and/or HOME
Investment Partnerships Program reports as
required in Section 5.1.3 and/or any reports
required in the TCAC Regulatory Agreement;
(vi) Fraud or embezzlement of Project monies; and
(viii) Failure to fully cooperate with the Chula
Vista Police Department in maintaining a crime
free environment on the Property.
5.4.3 Fees Paid to Developer.
Any property management fee or partnership management fee
which is paid to Developer shall at no time exceed an amount as is
customary and standard for affordable housing projects similar in
size and scope to the Project.
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5.5 Capital Replacement Reserve.
Developer, shall, or shall cause the Property Manager to,
annually set aside a minimum of four (4%) percent of the Effective
Gross Rental Income, as estimated on the Project Pro Forma attached
hereto as Attachment No.7, into a separate interest-bearing trust
account (the "Capital Replacement Reserve"). Funds in the Capital
Replacement Reserve shall be used for capital replacements to the
Project's fixtures and equipment which are normally capitalized
under generally accepted accounting principles.
Once the total amount of the Capital Replacement Reserve
exceeds One Hundred Ninety Thousand Dollars ($190,000), which
minimum capital reserve shall be increased annually from the date
City issues its certificate of occupancy for the Project by the cpr
(the "Capital Replacement Reserve Minimum"), and is maintained at
that level, Developer shall have no further obligation to fund the
Capital Replacement Reserve in excess of the Capital Replacement
Reserve Minimum.
Funds in the Capital Replacement Reserve account may be
distributed to Developer (or others) only after full payment of
loan amounts due or only upon the prior written approval of the
Agency Executive Director, which approval may be given or withheld
in the Executive Director's sole discretion.
The non-availability of funds in the Capital Replacement
Reserve does not in any manner relieve Developer of the obligation
to undertake necessary capital repairs and improvements and to
continue to maintain the Property in the manner prescribed in
Section 5.3.
5.6 ObliGation to Refrain from Discrimination.
Subject to the tenancy/occupation restrictions permitted by
federal law as embodied in this Agreement, which may modify the
following nondiscrimination clause, 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 enj oyment of the
Property, nor shall Developer itself, or any person claiming under
or through it, establish or permit any such practice or practices
of discrimination or segregation with reference to the selection,
location, number, use, or occupancy of tenants, lessees,
subtenants, sublessees, or vendees of the Property or any portion
thereof. Developer shall further comply with all the requirements
of the ADA.
5.7 Form of Nondiscrimination and NonseGreGation Clauses.
Subject to the tenancy/occupancy restrictions permitted by
federal law as embodied in this Agreement, which may modify the
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following nondiscrimination clauses, the following shall apply:
Developer shall refrain 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, including the Grant Deed conveying
title to the Property to Developer, 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 copy 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. !l 12101, et sea.). 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 D.S.C. !l 12101, et sea.) .'"
c. In contracts: "There shall be no discrimination
against or segregation of any persons or group of persons on
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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 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. !!i 12101, et sea.) "
5.8 Effect of Covenants.
a. Unless sooner terminated by City/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-fifth (55) anniversary of the issuance of the certificate
of occupancy by the City, 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 Developer 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 City/Agency, its successors and assigns and any successor in
interest thereto. City/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
City/Agency has been, remained, or are owners of any particular
land or interest therein. City/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 City/Agency Trust Deeds and the
City/Agency Notes 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 City/Agency shall have the
right, but not the obligation, to take any and all actions the
City/Agency deems necessary, to cure such breach, including,
without limitation, taking possession of the Property for
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management and/or repair purposes, and to obtain reimbursement from
Developer for any reasonable costs incurred by the City/Agency in
the exercise of such remedy. Furthermore, Developer hereby
covenants by and for itself, its successors and assigns and every
person acquiring an interest in the Property, or any part thereof,
that City/Agency and other public agencies at their sole risk and
expense, 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 Developer (provided,
however, that entry to ensure compliance with any restrictions may
be without notice to Developer) 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 Developer 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
Developer 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 shall constitute a
material default hereunder permitting the City/Agency to exercise
any of its rights or obligations provided hereunder, including,
without limitation, those provided under the Agency/City Notes, or
the Agency/City Trust Deeds, or otherwise provided at law or in
equity.
5.9 Recordation of Covenants.
As an additional condition precedent to the closing of the
City Loan and the funding of the Agency Non-Predevelopment Loan
Proceeds, Developer shall execute and deliver into escrow a
recordable instrument (the "Covenants Agreement"), in form and
content acceptable to the City's and Agency's attorneys, which
shall evidence Developer's (and its successors, including any
successors to Developer in the property) obligations under this
Article 5, which Covenants Agreements shall be recorded against the
Property concurrently with the recordation of the City Trust Deed
and the Agency Trust Deed. City and Agency shall execute and
acknowledge an agreement, in form and content acceptable to both to
the City's and Agency's attorneys and the lender of any
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construction and permanent
subordinate the Covenants
permanent financing.
financing,
Agreement
whereby City/Agency shall
to the construction and
ARTICLE 6
DEFAULTS, REMEDIES, AND TERMINATION
6.1 Defaults - General.
Subject to all of the extensions of time available in Section
7.3, 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 Developer
shall also be delivered to any permitted lender requesting such
notice. Except as provided in Section 5.3 above 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.
6.2 Termination.
6.2.1 Termination bv Citv or Aqencv.
Notwithstanding any other provision of this Agreement to the
contrary, in the event that City is not in default under this
Agreement, City shall have the right to terminate this Agreement
and, in the event that Agency is not in default under this
Agreement, Agency shall have the right to terminate this Agreement,
upon written notice to the other parties if: (1) Developer commits
a material default hereunder and fails to cure said default within
the time specified in Section 6.1; or (ii) Developer fails to
obtain the necessary approvals from the Tax Credit Allocation
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Committee for participation in the Low Income Housing Tax Credit
Program under terms that will restrict 39 of the residential units
in the Project for a minimum of fifty-five (55) years to occupancy
by low income households at affordable rents, as reflected in the
Restricted Unit Mix depicted on Attachment No. 10; or (iii) Escrow
has not closed on the conveyance of the Property to Developer on or
before December 31, 1997, as such date may be extended by agreement
of all the parties hereto in their sole and absolute discretion; or
(iv) Developer shall have failed to commence construction of the
Project pursuant to a valid building permit or permits and is not
diligently proceeding with such construction on or before the time
required in the Schedule of Performance and does not timely cure
such default.
In addition, in the event that Developer is guilty of an
uncured material default under this Agreement at the time City or
Agency exercises its right under this Section 6.2 to terminate the
Agreement, nothing in this Section 6.2 is intended or shall be
interpreted as a limitation of any other legal or equitable rights
to which City or Agency may be entitled.
Upon the exercise of any right of termination pursuant to this
Section 6.2.1, any obligation of Developer relating to the Agency
Predevelopment Loan Proceeds shall be forgiven by City/Agency.
6.2.2 Termination bv Developer.
Notwithstanding any other provision of this Agreement to the
contrary, in the event that Developer is not in default under this
Agreement, Developer shall have the right to terminate this
Agreement, upon written notice to City and Agency if:
a. City or Agency commits a material default hereunder
and fails to cure said default within the time specified in Section
6.1; or
b. Developer fails to obtain a preliminary allocation
of low-income housing tax credits in an amount not less than
$1,577,784, or such lesser amount as may be mutually agreed to by
the parties, from the California Tax Credit Allocation Committee by
March 31, 1997, as such date may be extended by mutual agreement of
the parties; or
c. Escrow has not closed on the conveyance of the
Property to Developer on or before December 31, 1997, as such date
may be extended by agreement of all the parties hereto in their
sole and absolute discretion; or
d.
by Developer
commence and
City or Agency fails to approve, after best efforts
to obtain such approval, such permits as required to
complete construction of the Project on the site.
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In addition, in the event that City and/or Agency is/are
guilty of an uncured material default under this Agreement at the
time Developer exercises its right under this Section 6.2 to
terminate the Agreement, nothing in this Section 6.2 is intended or
shall be interpreted as a limitation of any other legal or
equitable rights to which Developer may be entitled.
6.3 Leqal Actions.
6.3.1 Institution of Leqal 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.
6.3.2 Applicable Law.
The laws of the State of California shall govern the
interpretation and enforcement of this Agreement.
6.3.3 Acceptance of Service of Process.
In the event that any legal action is commenced by Developer
or Agency against City, service of process on City shall be made by
personal service upon the City Manager or City Clerk, or in such
other manner as may be provided by law.
In the event any legal action is commenced by Developer or
City against Agency, service of process on Agency shall be made by
personal service upon Agency's Executive Director or Secretary, or
in such other manner as may be provided by law.
In the event that any legal action is commenced by City or
Agency against Developer, service of process on Developer shall be
made by personal service upon Developer or in such other manner as
may be provided by law, and shall be valid whether made within or
without the State of California.
6.4 Action for Specific Performance.
If either the Developer or City/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 performance of the terms
of this Agreement pertaining to such default, subj ect to the
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provisions of Section 7.3 hereof.
6.5 Riohts 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.
6.6 Attornev'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 term
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.
6.7 Plans, Drawinos and Documents To Be Assioned to City.
If this Agreement is terminated for any reason other than an
uncured material default by City or Agency hereunder, Developer
covenants to immediately assign and release to City/Agency any
ownership rights and interest that Developer may have in any and
all of the plans, drawings, and permits as have been prepared for
the development of any portion of the Property prior to the
termination; provided, however, that Developer does not covenant to
convey the copyright or other ownership rights of third parties.
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ARTICLE 7
GENERAL PROVISIONS
7.1 Notices, Demands, and Communications Between the Parties.
Formal notices, demands, and communications between City,
Agency, and Developer shall be gi ven either by (i) personal
serv~ce, (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, addressed to:
To City:
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: City Manager
To Agency:
Chula Vista Redevelopment Agency
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Executive Director
With a copy to:
City Attorney
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Glen Googins, Esq.
Community Development Department
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Housing Coordinator
To Developer: South Bay Community Services
315 Fourth Avenue, Suite E
Chula Vista, CA 91910
Attn: Kathryn Lembo
With copies to:
Timothy A. Kuncz, Esq.
GATTIS & KUNCZ, APC
2729 Fourth Avenue, Suite 3
San Diego, CA 92103
South Bay Community Services
315 Fourth Avenue, Suite E
Chula Vista, CA 91910
Attn: Ken Sauder
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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.
7.2 Nonliabilitv of Citv and Aqencv Officials and Emplovees:
Conflicts of Interest.
No member, official, employee, or contractor of City or Agency
shall be personally liable to Developer in the event of any default
or breach by City or Agency or for any amount which may become due
to Developer or on any obligations under the terms of this
Agreement.
No member, official, employee, or agent of City or 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.
7.3 Enforced Delav; Extension of Times of Performance.
In addition to specific provisions of this Agreement, and
except as expressly set forth in Section 6.2 and this Section 7.3,
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 City or Agency or any
other public or governmental agency or entity (except that any act
or failure to act of or by City shall not excuse performance by
City and any act or failure to act of or by Agency shall not excuse
performance by Agency). Notwithstanding the foregoing, an
extension of time under this Section 7.3 due to Developer's
inability to secure satisfactory financing, interest rates, and
market and economic conditions shall entitle Developer to an
extension of time to perform not to exceed a cumulative total of
six (6) months; provided, however that the six (6) month limit
shall not apply to Developer's inability to sell the low income
housing tax credits at an amount sufficient to yield approximately
the Tax Credit Equity as shown on the Project Budget. In addition,
nothing in this Section 7.3 is intended or shall be interpreted to
entitle Developer to an extension of time to close the escrow for
acquisition of the Property or to delay commencement of
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construction of the Project.
An extension of time for any cause permitted under this
Section 7.3 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 to the other
party.
Times of performance under this Agreement may be extended by
mutual written agreement of City, Agency, and Developer.
7.4 Insoection of Books and Records.
City and Agency shall have the right at all reasonable times
to inspect the books and records of Developer pertaining to the
Property and the Project as pertinent to the purposes of this
Agreement. Developer shall provide its books and records to Agency
or City, as applicable, without reasonable delay upon no less than
two (2) days prior written request by Agency or City. Developer
shall maintain its books and records within the County of San
Diego. City/Agency shall not request inspection for Developer's
books and records more than once in any twelve (12) month period,
unless Agency or City is required to obtain information in order to
comply with reporting or other requirements of law, including but
not limited to verifying the information set forth in Developer's
annual report filed with the Agency pursuant to Health & Safety
Code Section 33418 and Section 5.1.3 herein, or City is required to
verify information pursuant to the HOME Regulations and Section
5.1.3 herein.
Developer shall have the right at all reasonable times to
inspect the books and records of City and Agency pertaining to the
Property and the Project as pertinent to the purposes of the
Agreement.
7.5 Interoretation.
The terms 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.
7.6 Entire Aqreement, Waivers and Amendments.
This Agreement
mentioned herein,
integrates all of the
or incidental hereto,
terms
and
and conditions
supersedes all
Z/15WA
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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 City, Agency,
and Developer.
7.7 Consent/Reasonableness.
Except when this Agreement specifically authorizes a party to
withhold its approval or consent in its sole and absolute
discretion, when either City, Agency, or Developer 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.
7.8 Severabilitv.
If any term, 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 perform 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 permitted by law, they shall take all steps necessary to
comply with such procedures or requirements as may be necessary in
order to make valid this Agreement or that portion which is found
to be unenforceable.
7.9 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
City, Agency, and Developer, and the permitted successors and
assigns of each of them, shall be authorized to enforce the
provisions of this Agreement.
7.10 Authoritv of Siqnators to Bind Princioals.
The persons executing this Agreement on behalf of their
respective principals represent that they have been authorized to
do so and that they thereby bind the principals to the terms and
conditions of this Agreement.
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7.11 Representations and Warranties.
Developer and each person executing this Agreement on behalf
of Developer represents and warrants that: (i) Developer is a non-
profit public benefit corporation organized and existing under
Section 501(c) (3) of the Internal Revenue Code, in good standing,
and authorized to do business and doing business in the County of
San Diego; (ii) Developer has all requisite power and authority to
carry out its business as now and whenever conducted and to enter
into and perform its obligations under this Agreement; (iii) by
proper action of Developer, Developer's signatories have been duly
authorized to execute and deliver this Agreement; (iv) the
execution of this Agreement by Developer does not violate any
provision of any other agreement to which Developer is a party; and
(v) except as may be specifically set forth in this Agreement, no
approvals or consents not heretofore obtained by Developer are
necessary in connection with the execution of this Agreement by
Developer or with the performance by Developer of its obligations
hereunder.
7.12 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.
7.13 Relationship of Parties.
It is understood that the contractual relationship between the
City/Agency and Developer is such that Developer is an independent
entity and not an agent of City/Agency. Nothing in this Agreement
shall constitute Developer as the agent/partner or representative
of City/Agency for any purpose whatsoever.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date specified herein.
"CITY"
CITY OF CHULA VISTA, a municipal
corporation
By:
Mayor
ATTEST:
City Clerk
[SIGNATURES CONTINUED ON NEXT PAGE]
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ATTEST:
"AGENCY"
CHULA VISTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
By:
Chairman
Secretary
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"DEVELOPER"
SOUTH BAY COMMUNITY SERVICES, a
non-profit public benefit corporation
By:
Executive Director
[END OF SIGNATURES]
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DDA
Exhibit 1
PROMISSORY NOTE
SECURED BY DEED OF TRUST
...................
$510,000
, 1997
This Promissory Note ("Note") is executed pursuant to that
certain Cordova Village Disposition and Development Agreement/Home
Participation Agreement Including Affordability Covenants (the
"Agreement") dated as of December 17, 1996, by and among SOUTH BAY
COMMUNITY SERVICES, a California non-profit public benefit
corporation ("Debtor"), the city of Chula Vista, a municipal
corporation ("City") and the REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA, a public body, corporate and politic ("Agency").
(capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement) .
1. For value received, Debtor promises to pay to city the
maximum principal sum of FIVE HUNDRED TEN THOUSAND DOLLARS
($510,000), or such amount as may be advanced from time to time,
together with interest on the principal balance from time to time
remaining unpaid from the date of disbursement until paid at the
rate of three (3) percent per annum. Interest shall be calculated
on the basis of a 360 day year and actual days elapsed, and shall
be compounded monthly.
2. Payment of principal and interest under this Note
shall be made in accordance with the payment terms set forth in the
Agreement, including Sections 2.3, and 2.14, which ~uch terms are
incorporated herein by this reference.
3. All payments on this Note shall be applied first to
the 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.
4. 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 City in connection with this Note, including but not
limited to the Agreement or the Deed of Trust; (b) default in the
payment when due of any installment or amount of principal or
interest due on this Note; (c) the making by Debtor of any
assignment for the benefit of creditors or the voluntary
appointment (at the request or with the consent of Debtor) of a
receiver, custodian, liquidator or trustee in bankruptcy of any of
Debtor's property, or the filing by Debtor of a petition in
bankruptcy or other similar proceeding under any law for relief of
Debtors; (d) the filing against Debtor of a petition in bankruptcy
or other similar proceeding under any law for relief of debtors, or
the involuntary appointment of a receiver, custodian, liquidator or
1
.,,3-I??;:J.-K
trustee in bankruptcy of the property of Debtor, 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 deed of trust to which the Deed
or Trust is junior and subordinate. Upon the occurrence of an
Event of Default, City may, at its option, declare the entire
unpaid principal balance and accrued interest to be immediately due
and payable in full or pursue any and all other remedies provided
herein, under the Note or Deed of Trust, or as otherwise provided
at law or in equity. Upon the occurrence of an Event of Default,
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 (9%) percent,
compounded monthly ("Default Rate").
5. This Note is secured by (a) that certain Deed of
Trust, Assignment of Rents and Fixture Filing ("Deed of Trust") of
even date herewith, executed by Debtor, as trustor, in favor of
City, as beneficiary, covering certain real property located in the
County of San Diego, State of California (the "Property") as more
particularly described therein, and (b) all other existing and
future agreements or writings, executed in favor of City securing
this Note.
6. Debtor hereby agrees and acknowledges that the Deed of
Trust contains a "DUE ON SALE" provision whereby the City may
declare all sums secured hereby to be immediately due and payable,
without notice to Debtor or its successor on any sale, further
encumbrance or other transfer, whether voluntary or involuntary, of
the Property unless expressly authorized by City in writing in
city's sole discretion. Consent to one such transaction shall not
be deemed a waiver of the right to require consent to each
subsequent transaction.
7. Debtor acknowledges that if any payment required under
this Note is not paid within fifteen (15) days after the date when
the same .becomes due and payable, the holder hereof will incur
extra administrative expenses (i.e., in addition to expenses
incident to receipt of timely payment) and the loss of the use of
funds in connection with the delinquency in payment. Because, from
the nature of the case, the actual damages suffered by the holder
hereof by reason of such extra administrative expenses and loss of
use of funds would be impracticable or extremely difficult to
ascertain, Debtor agrees that five percent (5%) of the amount of
the delinquent payment shall be the amount of damages to which such
holder is entitled, upon such breach, in compensation therefor.
Therefore, Debtor shall, in such event, without further notice, pay
to the holder hereof as such holder's sole monetary recovery to
cover such extra administrative expenses and loss of use of funds,
liquidated damages in the amount of five percent (5%) of the amount
of such delinquent payment. The provisions of this paragraph are
intended to govern only the determination of damages in the event
2
~ (213-K
of a breach in the performance of the obligation of Debtor to make
timely payments hereunder. Nothing in this Note shall be construed
as an express or implied agreement by the holder hereof to forbear
in the collection of any delinquent payment, or be construed as in
any way giving Debtor the right, express or implied, to fail to
make timely payments hereunder, whether upon payment of such
damages or otherwise. The right of the holder hereof to receive
payment of such liquidated and actual damages, and receipt thereof,
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.
8. Accrued but unpaid interest not paid when due shall
bear interest as principal. All payments of this Note shall be
made in lawful money of the United states of America and in
immediately available funds at City'S office, the address for which
is specified in the Agreement, or at such other place as the holder
hereof may form time to time direct by written notice to Debtor.
9. Debtor waives any right of offset it now has or may
hereafter have against the holder hereof and its successors and
assigns. Debtor waives presentment, demand, protest, notice of
protect, notice of nonpayment or dishonor and all other notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note (other than notices expressly required by
the terms of the Agreement). Notwithstanding any provision herein
or in any instrument now or hereafter securing this Note the total
liability for payments in nature of interest shall not exceed the
limits imposed by the applicable usuary laws.
10. Debtor expressly agrees to any extension or delay in
the time for payment or enforcement of the Note, to renewal of this
Note and to any substitution or release of any of the Property, all
without any way affecting the liability of Debtor hereunder. Any
delay on city's part in exercising any right hereunder shall not
operate as a waiver. City'S acceptance of partial or delinquent
payments or the failure of city to exercise any rights shall not
waive any obligation of Debtor or any right of City, or modify this
Note, or waive any other similar default.
11. Debtor agrees to pay all costs of collection when
incurred and all costs incurred by the holder hereof in exercising
or preserving any rights or remedies in connection with the
enforcement and administration of this Note or following a default
by Debtor, including but not limited to reasonable attorney' fees.
If any suit or action is instituted to enforce this Note, Debtor
promises to pay, in addi tion to the costs and disbursements
otherwise allowed by law, such sum as the court may adjudge
reasonable attorney's fees in such suit or action.
12. This Note shall be governed by and construed
3
~ (<i?4-~
according to the laws of the state of California.
13. Time is of the essence for each and every obligation
under this Note.
14. Debtor represents and warrants that: (al it has full
legal right, power and authority to execute and fully perform its
obligations under the Note and the Deed of Trust; and (bl the
persons executing this Note on. behalf of Debtor are the duly
designated agents of Debtor and are authorized to do so and (cl
that the execution of this Note and the Deed of Trust have been
authorized by a duly adopted resolution of its Board of Directors.
15. The city waives any personal liability of Debtor and
agrees to look solely to the security under the Deed of Trust for
payment of the Note except as otherwise provided in the Agreement.
"Debtor":
SOUTH BAY COMMUNITY SERVICES,
a California non-profit
public benefit corporation
By
Kathryn Lembo
Its: Executive Director
M:\HOME\ATTORNEY\cordoval.NOT
4
J f'i?S-f(
Order No.
Escrow No.
Loan No.
DDA
Exhibit 2
WHEN RECORDED MAIL TO:
City Clerk
City of Chula Vista
276 Fourth Avenue
Chula Vista, Ca. 91910
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST WITH ASSIGNMENT OF RENTS
(This Deed of Trust contains an acceleration clause)
This DEED OF TRUST, made
SOUTH BAY COMMUNITY SERVICES, a California non-profit public benefit
, between
corporation
,llerein called TRUSTOR,
whose address is 315 Fourth Avenue, Suite E, Chula Vista, California 91910
(Number and Street) (City)
(State)
FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, herein called TRUSTEE, and
THE CITY OF CHULA VISTA, a municipal corporation
, herein called BENEFICIARY,
WITNESSETH: That Trustor grants to Trustee in Trust, with Power of Sale, that property in the City of Chula Vista
County of San Diego
, State of California, described as:
That certain real property described on Exhibit A attached hereto
and incorporated herein by this reference.
*Trustor's obligations pursuant to that certain Cordova Village Disposition and Development
Agreement/Home Participation Agreement between Trustor, Beneficiary and the Redevelopment
Agency, dated December 17, 1996
together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and
conferred upon Beneficiary to collect and apply such rents, issues and profits, for the purpose of securing (1) payment of the
sum of $ 510,000.00 with interest thereon according to the terms of a promissory note or
notes of even 1ate herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the
performance of each agreement of Trustor incorporated by reference or contained herein and (3) payment of additional sums
and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory
note or notes reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly makes each
and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set
forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the
fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and
--3 - I?? ~ -K
(continued on reverse side)
1192 (1194)
(Paoe , of 4\
at the page of Official Records in the office of the county recorder of the county where said property is located, noted below
opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los Angeles T.3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585
Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
EI Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 lOB
Fresno 5052 623 Madoc 191 93 San Mateo 4778 175 Tuolumne 177 160
Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions
contained in said subdivisions A and B, (identical in all counties, and printed on pages 3 and 4 hereof) are by the within
reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length
herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does
not exceed the maximum allowed by law.
If the trustor shall sell, conveyor alienate said property, or any part thereof, or any interest therein, or shall be divested of his
title or any interest therein In any manner or way, whether voluntarily or involuntarily, without the written consent of the
beneficiary being first had and obtained, beneficiary shall have the right, at its option, except as prohibited by law, to declare
any indebtedness or obligations secured hereby, irrespective of the maturity date specified in any note evidencing the same.
immediately due and payable.
The undersigned Trustor, requests that a copy of any notice of defaull and any notice of sale hereunder be mailed to him at his address
hereinbefore set forth.
!
t
t
f
STATE OF CALIFORNIA
COUNTY OF
On
}
}ss.
}
Signature of Trustor
before me,
personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s) or the entity upon behalf of which the person{s) acted, executed
the instrument.
WITNESS my hand and official seal.
Signature
(This area for offiCial. notarial seal)
..3 ~. / \? 7 -K
(continued on next page)
1192 (1194)
(Page 2 of 4)
DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing
Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
(1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly
and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims
for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or
improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in
violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may
be reasonably necessary, the specific enumerations herein not excluding the general.
(2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount
collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order
as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor.
Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such
notice.
(3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary
or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action
or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
(4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on
appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear
to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so
to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same
in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized
to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or
the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment
of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay
his reasonable fees.
(5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure
at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding
the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said
statement is demanded.
B. It is mutually agreed:
(1) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof
is hereby assigned and shall be paid to Beneficiary who may apply or release such monies received by him in the same manner and with
the same effect as above provided for disposition of proceeds of fire or other insurance.
(2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require
prompt payment when due of all other sums so secured or to declare default for failure so to pay.
(3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and
presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the
indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in
granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof.
(4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed
and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment
of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters
or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons
legally entitled thereto."
(5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the
continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by
Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents,
issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person,
by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured,
enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and
profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable
attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking
possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive
any default or notice of default hereunder or invalidate any act done pursuant to such notice.
(6) That upon default by Trustor in payment of any indebtedness secured hereby or in' performance of any agreement hereunder,
Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and
demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be
filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having
..3-/~&" -K
(continued on reverse side)
1192 (1/94)
(Page 3 of 4)
been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice
of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in
lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public
announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any
covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale,
Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest
at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or
persons legally entitled thereto.
(?) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing,
substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and
duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive
proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed
to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary
hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee.
(8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby,
whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine
and/or neuter, and the singular number includes the plural.
(9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law.
Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
DO NOT RECORP
TO FIRST AMERICAN TITLE INSURANCE COMPANY, TRUSTEE:
REQUEST FOR FULL RECONVEYANCE
The undersigned is the legal owner and holder of the note or notes, and of aU other indebtedness secured by the foregoing Deed of Trust. Said note or
notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied: and you are hereby requested and directed,
on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, and all other evidences
of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties
designated by the terms of said Deed of Trust, all the estate now held by you under the same.
Dated
Please mail Deed of Trust,
Note and Reconveyance to
Do not lose or destrol' this Deed of Trust OR mE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made.
....
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1192 (1/94)
(Page 4 of 4)
DDA
Exhibit 3
PROMISSORY NOTE
I
SECURED BY DEED OF TRUST AND OTHER SECURI'
$478,200
""'"'---........,.;."
~~>.i.._..;.,~
December 17, 1997
This Promissory Note ("Note") is executed pursuant to that
certain Cordova Village Disposition and Development Agreement/Home
Participation Agreement Including Affordability Covenants (the
"Agreement") dated as of December 17, 1997, by and among SOUTH BAY
COMMUNITY SERVICES, a California non-profit public benefit
corporation ("Debtor"), the City of Chula Vista, a municipal
corporation ("city") and the REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA, a public body corporate and politic ("Agency").
(Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement).
1. For value received, Debtor promises to pay to Agency
the principal sum of FOUR HUNDRED SEVENTY EIGHT THOUSAND AND TWO
HUNDRED DOLLARS ($478,200), or such amount as may be advanced from
time to time, together with interest on the principal balance from
time to tim remaining unpaid from the date of disbursement until
paid at the rate of three (3) percent per annum. Interest shall be
calculated on the basis of a 360 day year and actual days elapsed,
and shall be compounded monthly.
2. Payment of principal and interest under this Note
shall be made in accordance with the payment terms set forth in the
Agreement, including Sections 2.7,2.10.2 and 2.14, which such
terms are incorporated herein by this reference.
3. All payments on this Note shall be applied first to
the 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.
4. 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 Agency in connection with this Note, including but not
limited to the Agreement, the Deed of Trust or the Security
Agreement; (b) default in the payment when due of any installment
or amount of principal or interest due on this Note; (c) the making
by Debtor of any assignment for the benefit of creditors or the
voluntary appointment (at the request or with the consent of
Debtor) of a receiver, custodian, liquidator or trustee in
bankruptcy of any of Debtor's property, or the filing by Debtor of
a petition in bankruptcy or other similar proceeding under any law
for relief of Debtors; (d) the filing against Debtor of a petition
in bankruptcy or other similar proceeding under any law for relief
of debtors, or the involuntary appointment of a receiver,
1
J - I q 0 -I(
custodian, liquidator or trustee in bankruptcy of the property of
Debtor, 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 deed
of trust to which the Deed or Trust is junior and subordinate.
Upon the occurrence of an Event of Default, City (and/or Agency)
may, at its option, declare the entire unpaid principal balance and
accrued interest to be immediately due and payable in full or
pursue any and all other remedies provided herein, under the Note
or Deed of Trust, or as otherwise provided at law or in equity.
Upon the occurrence of an Event of Default, 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 (9%) percent, compounded monthly
("Default Rate").
5. Debtor's obligation to repay the "Agency
Predevelopment Loan Proceeds" (as that term is defined in section
2.7 of the Agreement) in the principal amount of $97,000 shall be
initially secured by the "Agency Predevelopment Security Agreement"
(as that term is defined in Section 2.10.2 of the Agreement) with
respect to certain personal property ("Security") as more
particularly described therein.
6. Upon the transfer of the Property to the Debtor, this
Note shall also be secured by (a) that certain Deed of Trust,
Assignment of Rents and Fixture Filing ("Deed of Trust") of even
date with the Property transfer herewith, executed by Debtor, as
trustor, in favor of Agency, as beneficiary, covering certain real
property located in the County of San Diego, State of California
(the "Property") as more particularly described therein, and (b)
all other existing and future agreements or writings, executed in
favor of Agency securing this Note.
7. Debtor hereby agrees and acknowledges that the Deed
of Trust contains a "DUE ON SALE" provision whereby the Agency may
declare all sums secured hereby to be immediately due and payable,
without notice to Debtor or its successor on any sale, further
encumbrance or other transfer, whether voluntary or involuntary, of
the Property unless expressly authorized by Agency in writing in
Agency's sole discretion. Consent to one such transaction shall
not be deemed a waiver of the right to require consent to each
subsequent transaction.
8. Debtor acknowledges that if any payment required
under this Note is not paid within fifteen (15) days after the date
when the same becomes due and payable, the holder hereof will incur
extra administrative expenses (i.e., in addition to expenses
incident to receipt of timely payment) and the loss of the use of
funds in connection with the delinquency in payment. Because, from
the nature of the case, the actual damages suffered by the holder
hereof by reason of such extra administrative expenses and loss of
2
-.3 - I q ( -I<(
use of funds would be impracticable or extremely difficult to
ascertain, Debtor agrees that five percent (5%) of the amount of
the delinquent payment shall be the amount of damages to which such
holder is entitled, upon such breach, in compensation therefor.
Therefore, Debtor shall, in such event, without further notice, pay
to the holder hereof as such holder's sole monetary recovery to
cover such extra administrative expenses and loss of use of funds,
liquidated damages in the amount of five percent (5%) of the amount
of such delinquent payment. The provisions of this paragraph are
intended to govern only the determination of damages in the event
of a breach in the performance of the obligation of Debtor to make
timely payments hereunder. Nothing in this Note shall be construed
as an express or implied agreement by the holder hereof to forbear
in the collection of any delinquent payment, or be construed as in
any way giving Debtor the right, express or implied, to fail to
make timely payments hereunder, whether upon payment of such
damages or otherwise. The right of the holder hereof to receive
payment of such liquidated and actual damages, and receipt thereof,
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.
9. Accrued but unpaid interest not paid when due shall
bear interest as principal. All payments of this Note shall be
made in lawful money of the united states of America and in
immediately available funds at Agency's office, the address for
which is specified in the Agreement, or at such other place as the
holder hereof may form time to time direct by written notice to
Debtor.
10. .Debtor waives any right of offset it now has or may
hereafter have against the holder hereof and its successors and
assigns. Debtor waives presentment, demand, protest, notice of
protect, notice of nonpayment or dishonor and all other notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note (other than notices expressly required by
the terms of the Agreement). Notwithstanding any provision herein
or in any instrument now or hereafter securing this Note the total
liability for payments in nature of interest shall not exceed the
limits imposed by the applicable usuary laws.
11. Debtor expressly agrees to any extension or delay in
the time for payment or enforcement of the Note, to renewal of this
Note and to any substitution or release of any of the Property, all
without any way affecting the liability of Debtor hereunder. Any
delay on Agency's part in exercising any right hereunder shall not
operate as a waiver. Agency's acceptance of partial or delinquent
payments or the failure of Agency to exercise any rights shall not
waive any obligation of Debtor or any right of Agency, or modify
this Note, or waive any other similar default.
3
J - (9:J- -1<
12. Debtor agrees to pay all costs of collection when
incurred and all costs incurred by the holder hereof in exercising
or preserving any rights or remedies in connection with the
enforcement and administration of this Note or following a default
by Debtor, including but not limited to reasonable attorney' fees.
If any suit or action is instituted to enforce this Note, Debtor
promises to pay, in addition to the costs and disbursements
otherwise allowed by law, such sum as the court may adjudge
reasonable attorney's fees in such suit or action.
13. This Note shall be governed by and construed
according to the laws of the state of California.
14. Time is of the essence for each and every obligation
under this Note.
15. Debtor represents and warrants that: (a) it has full
legal right, power and authority to execute and fully perform its
obligations under the Note and the Deed of Trust; and (b) the
persons executing this Note on behalf of Debtor are the duly
designated agents of Debtor and are authorized to do so and (c)
that the execution of this Note and the Deed of Trust have been
authorized by a duly adopted resolution of its Board of Directors.
16. The Agency waives any personal liability of Debtor
and agrees to look solely to the security under the Agency
Predevelopment Security Agreement and Deed of Trust for payment of
the Note except as otherwise provided in the Agreement.
"Debtor":
SOUTH BAY COMMUNITY SERVICES,
a California non-profit public
benefit corporation
By
Kathryn Lembo
Its: Executive Director
M:\HOME\ATTORNEY\cordova2.NOT
4
...3 -( q3 -I<
Order No.
Escrow No.
Loan No.
DDA
Exhibit 4
WHEN RECORDED MAIL TO:
City Clerk
City of Chula Vista
276 Fourth Avenue
Chula Vista, Ca. 91910
SPACE ABOVE THIS LINE FOR RECOROER'S USE
DEED OF TRUST WITH ASSIGNMENT OF RENTS
(This Deed of Trust contains an acceleration clause)
This DEED OF TRUST, made , between
SOUTH BAY COMMUNITY SERVICES, a California non-profit public benefit corporation
, herein called TRUSTOR,
whose address is 315 Fourth Avenue, Suite E, Chula Vista, California 91910
(Number and Street) (City) (State)
FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, herein called TRUSTEE, and
THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and politic
, herein called BENEFICIARY,
WITNESSETH: That Trustor grants to Trustee in Trust, with Power of Sale, that property in the City of Chula Vista
County of
San Diego
, State of California, described as:
That certain real property described on Exhibit A attached hereto
and incorporated herein by this reference.
*Trustor's obligations pursuant to that certain Cordova Village Disposition and Development
Agreement/Home Participation Agreement between Trustor, Beneficiary and the City of Chula
Vista, dated December 17, 1996
together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and
conferred upon Beneficiary to collect and apply such rents, issues and profits, for the purpose of securing (1) payment of the
sum of $ 478,200.00 with interest thereon according to the terms of a promissory note or
notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the
performance of ~ach agreement of Trustor incorporated by reference or contained herein and (3) payment of additional sums
and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory
note or notes reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly makes each
and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set
forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the
fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and
~-/94-K
(continued on reverse side)
1192 (11941
'r>_~_ . _. "
at the page of Official Records in the office of the county recorder of the county where said property is located, noted below
opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 5S6 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 336 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585
Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
EI Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160
Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions
contained in said subdivisions A and B, (identical in all counties, and printed on pages 3 and 4 hereof) are by the within
reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length
herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does
not exceed the maximum allowed by law.
If the trustor shall sell, conveyor alienate said property, or any part thereof, or any interest therein, or shall be divested of his
title or any interest therein in any manner or way, whether voluntarily or involuntarily, without the written consent of the
beneficiary being first had and obtained, beneficiary shall have the right, at its option, except as prohibited by law, to declare
any indebtedness or obligations secured hereby, irrespective of the maturity date specified in any note evidencing the same,
immediately due and payable.
The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address
hereinbefore set forth.
STATE OF CALIFORNIA
COUNTY OF
On
}
}ss.
}
Signature of Trustor
before me,
personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s) or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
Signature
(This area for official notarial seal)
.3- /9:S-1<
(continued on next page)
1192 (1/94)
(Pape 2 of 4)
DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing
Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
(1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly
and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims
for labor pertormed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or
improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in
violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may
be reasonably necessary, the specific enumerations herein not excluding the general.
(2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount
collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order
as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor.
Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such
notice.
(3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary
or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action
or proceeding in which Beneficiary or Trustee "may appear, and in any suit brought by Beneficiary to foreclose this Deed.
(4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on
appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear
to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so
to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same
in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized
to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or
the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment
of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay
his reasonable fees.
(5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure
at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding
the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said
statement is demanded.
B. It is mutually agreed:
(1) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof
is hereby assigned and shall be paid to Beneficiary who may apply or release such monies received by him in the same manner and with
the same effect as above provided for disposition of proceeds of fire or other insurance.
(2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require
prompt payment when due of all other sums so secured or to declare default for failure so to pay.
(3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and
presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the
indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in
granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof.
(4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed
and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment
of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters
or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons
legally entitled thereto."
(5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the
continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by
Trustor in payment of any indebtedness secured hereby or in pertormance of any agreement hereunder, to collect and retain such rents,
issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person,
by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured,
enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and
profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable
attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking
possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive
any default or notice of default hereunder or invalidate any act done pursuant to such notice.
(6) That upon default by Trustor in payment of any indebtedness secured hereby or in' performance of any agreement hereunder,
Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and
demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be
filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having
J- 11f&, -f<
(continued on reverse side)
1192 (1/94)
(Page 3 of 4)
been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice
of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in
lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public
announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the
lime fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any
covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale,
Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest
at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or
persons legally entitled thereto.
(7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing,
substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and
duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive
proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed
to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary
hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee.
(8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby,
whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine
and/or neuter, and the singular number includes the plural.
(9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law.
Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
DO NOT RECORD
TO FIRST AMERICAN TITLE INSURANCE COMPANY, TRUSTEE:
REQUEST FOR FULL RECONVEYANCE
The undersigned is the legal owner and holder of the note or notes, and of all other indebtedness secured by the foregoing Deed of Trust. Said note or
notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied: and you are hereby requested and directed,
on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, and all other evidences
of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties
designated by the terms of said Deed of Trust, all the estate now held by you under the same.
Dated
Please mail Deed of Trust,
Note and Reconveyance to
Do not lose or destrol' this Deed of Trust OR mE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made.
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SECOND AMENDED AND RESTATED
RANCHO DEL REV SPA III
AFFORDABLE HOUSING AGREEMENT
between
RANCHO DEL REY INVESTORS, L.P.,
a California limited partnership
lIRDR"
and
THE CITY OF CHULA VISTA,
a California municipal corporation
"City"
RDR SPA JII/AffordableHoulSing
10/31/96
~_(q?-L
SECOND AMENDED AND RESTATED
AFFORDABLE HOUSING AGREEMENT
THIS SECOND AMENDED AND RESTATED RANCHO DEL REY SPA III
AFFORDABLE HOUSING AGREEMENT ("Agreement") is made as of December _,1996, by
and between RANCHO DEL REY INVESTORS, L.P., a California limited partnership ("RDR")
and the CITY OF CHULA VISTA, a California municipal corporation ("City"). with reference
to the following facts:
A. RDR is the successor in interest to Rancho del Rey Partnership, a California
general partnership ("Old RDR"),
B. RDR is the owner and developer of a multi-phase, mixed use master planned
community in the City known as "Rancho del Rey," Rancho del Rey is divided into three
planning areas: SPA I. SPA II and SPA III.
C, The City General Plan and adopted Specific Plan for Rancho del Rey have
certain goals and City has imposed on Rancho del Rey certain requirements relating to the
provision of low and moderate income housing,
D. Pursuant to Resolution No. 15751 dated August 7, 1990, City entered into
an agreement with Old RDR specifying the remaining steps required to satisfy Rancho del
Rey's low and moderate income housing requirements (the "Low-Moderate Housing
Agreement"). The Low-Moderate Housing Agreement recognized that:
(i) The moderate income housing requirement for Rancho del Rey has been
satisfied in full through the construction of 322 multi-family units in the Rancho del Rey
Specific Plan area; and
(ii) The low income housing requirement for Rancho del Rey has been
largely satisfied through the construction of 299 (of 322 required) units for low-income
families in the Specific Plan area.
E. Pursuant to the Low-Moderate Housing Agreement, City and Old RDR agreed
that Old RDR shall provide a minimum of 23, and will use reasonable efforts to exceed the
23, low income housing units in Rancho del Rey SPA III ("SPA III"), if a reasonable area for
such units is available. If no reasonable site for low income housing units is available in
SPA III, the low income housing units may be provided at an alternate site within the City,
(This obligation is referred to in this Agreement as the "SPA III Affordable Housing Obliga-
tion.") Old RDR also agreed to contribute a maximum of $100,000 to assist the City's low
income housing goals, payable within 15 days of City's written request, but not before
recordation of first final map in SPA III.
F, Pursuant to Resolution No. 16222, adopted July 30, 1991
("Resolution 16222"). City approved the Tentative Subdivision Map for SPA III. Condition
No. 58 of Resolution 16222 provides that prior to the approval of the first final map in
SPA III, RDR shall provide a schedule for satisfying the SPA III Affordable Housing
Obligation,
RDR SPA IJI/Affordable Housing
10131196
,3-/99-L
1
G. RDR intends through this Agreement to satisfy the requirements of Condition
No. 58 of Resolution 16222. and City accepts this Agreement as satisfying such Condition,
H. RDR and City also intend for this Agreement to describe, among other things,
certain alternatives and one specific proposal by which RDR may satisfy the SPA III
Affordable Housing Obligation.
I. RDR and City are parties to that certain Conveyance Agreement and Escrow
Instructions dated as of December _, 1996 (the "Conveyance Agreement"), which
contemplates the conveyance by RDR to the City of a 2,9 (2,2 net) acre site in the northeast
corner of SPA III, Phase 3, Unit 3, more particularly described as Parcel 2 of Lot 10 of Chula
Vista Tract No. 90-02, Rancho del Rey SPA III. according to Parcel Map 17675. filed in the
Office of the County Recorder of the County of San Diego, California, as File No. 1996-
0143111, on March 22, 1996, This site will be referred to in this Agreement as the "Low
Income Housing Parcel" for convenience only, without limiting RDR's alternatives for
satisfying the SPA III Affordable Housing Obligation,
J. City is a party to an Assignment Agreement and Escrow Instructions with
South Bay Community Services, Inc., a California 501 (c)(3) non-profit corporation
("SBCS"), dated as of December _, 1996 (the "Assignment Agreement"), which contem-
plates the City's assignment of the Conveyance Agreement to SBCS for the development
of forty (40) low income housing units (the "Proposed Project"),
K. Because the Proposed Project would develop forty (40) low income housing
units, RDR's conveyance of the Low Income Housing Parcel to the SBCS pursuant to the
Conveyance Agreement and the Assignment Agreement would exceed RDR's SPA III
Affordable Housing Obligation by seventeen (17) low income housing units. RDR and the
City intend that RDR be reimbursed for such excess contribution and intend with this
Agreement to create and grant to RDR seventeen (17) "Low Income Housing Credits" for
the excess contribution by RDR, to set forth the terms and conditions upon which the Low
Income Housing Credits could be heid, transferred and used, and to establish an agreed
division between City and RDR of proceeds from any sale of the Low Income Housing
Credits, on the terms and conditions set forth below.
L. This Agreement completely supersedes the Amended and Restated Affordable
Housing Agreement dated May 22, 1996 between RDR and the City.
NOW THEREFORE, the parties agree as follows:
1. $100,000 Payment. Pursuant to the Low-Moderate Housing Agreement, RDR
(as successor in interest to Old RDR) has paid City One Hundred Thousand Dollars
($100,000) for the express and sole purpose of assisting the City's low income housing
goals.
2. Schedule. This Section 2 replaces Condition No. 58 of Resolution 16222 in
its entirety. RDR and the City agree to the following scheduie for satisfying the SPA III
Affordable Housing Obligation, Prior to January 1, 1998, RDR shall either:
RDR SPA III/Afford_bill Hou$;ng
10/31/96
..d3-doO-L
2
a. Provide 23 low income housing units in SPA III or at an alternate site
in the City mutually acceptable to RDR and City if no reasonable site for low income housing
units is available in SPA III; or
b. Acquire 23 low income housing credits established by agreement(s)
with the City in which a developer of low income housing earns transferable low income
housing credits for providing low income housing units in the City; or
c. Enter into an Agreement with the City to contribute funds, land or a
combination of the two to a proposed low income housing project at a location in Rancho
del Rey SPA III selected by RDR and approved by City or at such other location in the City
mutually acceptable to City and RDR for the developrnent of low-income housing (the
Conveyance Agreement is an example of such an agreement acceptable to both City and
RDR); or
d. Satisfy the SPA III Affordable Housing Obligation in such other
arrangement as RDR and City may mutually agree, in their sole discretion.
3, Security. As security for the SPA III Affordable Housing Obligation, RDR has
given City a deed of trust on the Low Income Housing Parcel (the "Low Income Housing
Parcel Deed of Trust"). The Low Income Housing Parcel Deed of Trust specifies that it
secures the SPA III Affordable Housing Obligation in an amount not to exceed Eight Hundred
Five Thousand Dollars ($805,000). The Low Income Housing Parcel Deed of Trust is first
in priority on the Low Income Housing Parcel. City shall immediately reconvey the Low
Income Housing Parcel Deed of Trust upon earlier of: (i) satisfaction of the SPA III Affordable
Housing Obligation; and (ii) substitution of mutually acceptable replacement security for the
SPA III Affordable Housing Obligation,
4, Satisfaction of the SPA III Affordable Housing Obligation Through the Proposed
Project. RDR's conveyance of the Low Income Housing Parcel to SBCS (or a City-approved
successor or assign thereof). pursuant to the Conveyance Agreement and the Assignment
Agreement, for the Proposed Project is one way in which the SPA III Affordable Housing
Obligation may be satisfied.
a. Satisfaction of the SPA III Affordable Housino Oblioation. Upon RDR's
transfer of title to the Low Income Housing Parcel to SBCS (or a City-approved successor
or assign thereof) pursuant to the Conveyance Agreement and the Assignment Agreement,
the SPA III Affordable Housing Obligation shall be satisfied in full. In addition, RDR shall be
granted certain low income housing credits, as more particularly described below in
Section 4.b below.
b. Low Income Housino Credits,
i. Creation of Low Income Housino Credits. Subject to the terms
and conditions hereof, RDR's conveyance of the Low Income Housing Parcel to SBCS (or
a City-approved successor or assign thereof) shall create seventeen (17) low income housing
credits (the "Low Income Housing Credits"),
RDR SPA JII/AffordabJ.Houl$ing
10/31196
~ _ ,;)-0 I - L
3
ii. Ownership. Transfer and Use of Credits, RDR shall own and
control the Low Income Housing Credits, which shall be freely transferable, City shall
accept and acknowledge each Low Income Housing Credit as the equivalent of providing one
unit of low income housing in the City, Any person required by the City to provide low
income housing, anywhere in the City, may acquire and use one or more Low Income
Housing Credits. and the City shall honor the Low Income Housing Credits as the complete
equivalent to providing an equal number of units of low income housing in the City. The
transfer of Low Income Housing Credits shall be accomplished by means of one or more
agreements between RDR, City and the transferee of Low Income Housing Credits (a "Credit
Transfer Agreement") which: (i) guarantees City the payment of the City Reimbursement
described in Section 4.b.v below and (ii) provides that the transfer of the Low Income
Housing Credits shall not be effective until City receives the City Reimbursement,
III. No Restrictions or Limitations bv Citv. City shall use good faith
efforts to structure the low income housing obligations of developers in such a manner that
they may use Low Income Housing Credits to satisfy some or all of their low income housing
obligations. City shall inform developers and others with low income housing obligations
of the availability of the Low Income Housing Credits to satisfy low income housing
obligations to the City.
iv. One Class of Low Income Housina Credit, City shall not, without
the consent of RDR, which RDR may withhold in its sole discretion: (i) agree to the creation
of any other class or type of low income housing credit for use in the City other than the
class or type created hereunder for the purposes of satisfying the City's housing element
requirement for the provision of low income housing; or (ii) create low income housing
credits with greater rights or priorities than the Low Income Housing Credits granted to RDR.
v. Proceeds from Sale of Credits. To reimburse City for the City's
excess contribution to the Proposed Project (approximately Two Hundred Thirty Eight
Thousand Dollars ($238,000)), City shall be entitled to the first cash proceeds from the
transfer of each of the seventeen (17) Low Income Housing Credits up to a maximum of
Fourteen Thousand Dollars ($14,000) (the "City Reimbursement") for each Low Income
Housing Credit transferred pursuant to a Credit Transfer Agreement. RDR shall be entitled
to the balance of the proceeds (if any) for each Low Income Housing Credit transferred.
Each Credit Transfer Agreement shall be an "arms length" transaction, and no non-cash
consideration shall be given RDR for the Low Income Housing Credits unless City is paid the
maximum City reimbursement of Fourteen Thousand Dollars ($14,000) for each Low Income
Housing Credit transferred.
5. No Effect On SPA III Affordable Housing Obligation. This Agreement is not
intended to increase or decrease the SPA III Affordable Housing Obligation, but rather it is
intended to set forth alternatives, a schedule and security for performing such obligation,
6, General Provisions.
a, Further Assurances, The parties shall at their own cost and expense
execute and deliver such further documents and instruments and shall take such other
actions as may be reasonably required or appropriate to carry out the intent and purposes
RDR SPA I/I/Affordsbllt Hou6ing
10/31/96
.d3 - dO;) - L
4
of this Agreement. In particular, the parties agree to cooperate in working out the details
of the transfer and use of the Low Income Housing Credits.
b. Authority of Sianatories, Each individual signing this Agreement on
behalf of the City warrants that (i) he or she is duly authorized to sign and deliver this
Agreement on behalf of the City in accordance with a duly adopted resolution of the City
Council of the City and (Ii) this Agreement is binding upon the City in accordance with its
terms. Each individual signing this Agreement on behalf of a corporation warrants that (i)
he or she is duly authorized to sign and deliver this Agreement on behalf of the corporation,
in accordance with a duly adopted resolution of the board of directors of the corporation or
in accordance with the bylaws of the corporation, and (ii) this Agreement is binding upon
the corporation in accordance with its terms, McMillin Project Services. Inc. represents that
it has the authority to execute this Agreement on behalf of RDR,
c. Entire Aareement. This Agreement and the other agreements
referenced in this Agreement contain the entire agreement between the parties relating to
the transaction contemplated hereby and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are merged herein,
d. Attornev's Fees and Costs, If either party commences litigation for the
judicial interpretation, reformation, enforcement or rescission hereof, the prevailing party will
be entitled to a judgment against the other for an amount equal to reasonable attorney's
fees and court and other costs incurred.
e. Successors, All terms of this Agreement will be binding upon and inure
to the benefit of the parties and their respective administrators or executors, successors and
assigns,
f. Counteroarts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which together will
constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the date set forth above.
RANCHO DEL REY INVESTORS, L.P.,
a California limited partnership
By: McMILLIN PROJECT SERVICES, INC.,
a California corporation, as Attorney-in-
Fact under Durable Power of Attorney
By
Its
By
Its
RDR SPA III/Affordable Hou3ing
10/31/96
5
..3-~o3 -L
ATTEST
City Clerk
Approved as to form by:
City Attorney
RDR SPA IJIIAfforcl"ble Housing
1 0/31/96
THE CITY OF CHULA VISTA,
a California municipal corporation
By
Mayor of the City of Chula Vista
6
.3 - ,;;LO 4 - L
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On
personally appeared
. before me,
, Notary Public,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
(Seal)
COUNTY OF SAN DIEGO
)
) ss.
)
STATE OF CALIFORNIA
On
personally appeared
, before me,
, Notary Public,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument,
WITNESS my hand and official seal.
Signature
(Seal)
RDR SPA /JIIAffo,dl!lb/~ Housing
10/31/96
7
..3 - d- 0 ~- - L-
REDEVELOPMENT AGENCY AGENDA STATEMENT
Item --L
Meeting Date 01/07/97
ITEM TITLE:
Report: Proposed changes to the Owner Participation Agreement with
Scripps Health for the Expansion of Hospital Facilities
SUBMITTED BY: Community Development Director
REVIEWED BY: Executive Directo& (415ths Vote: Yes_ No.x..)
BACKGROUND: The Agency approved an Owner Participation Agreement (OPA) with Scripps
Memorial Hospital (now known as Scripps Health) on November 1, 1991 for expansion of their
hospital located on H Street to include additional bed capacity, two new medical office buildings and
a parking garage, The expansion was to take place on an 8.9 acre parcel located at the northeast
corner of Fifth Avenue and H Street, within the Town Centre II Redevelopment Project Area.
Early in 1995, Scripps staff informed City staff that plans for redevelopment of the site would be
altered due to changes in the medical services industry which would result in substantial downsizing
of their expansion plans. Later that year, revised plans were submitted, reviewed by staff and
recommended for approval by the Design Review Committee. In February 1996, Scripps submitted
proposed revisions to the OPA incorporating their new plans. Processing of the new hospital
expansion plans through the State regulatory agencies is awaiting Agency approval of revisions to
the OPA.
City staff has reviewed the revisions to the OPA and met with Scripps consultants to further discuss
the changes in their expansion plans which substantially reduce anticipated revenues to the Agency,
City and Scripps staff have reached mutual agreement on terms for inclusion in an amended OPA
which will best address the financial impact from the downsizing. These terms are presented to the
Agency for review and comment. If deemed acceptable, they will be included in an amendment to
the OPA.
RECOMMENDATION: That the Agency review the financial terms for the proposed changes in the
Scripps Hospital expansion plans and direct staff to bring back an amendment to the OPA which
embodies the terms as described below:
The Agency will collect in lieu payments currently due to the City under the
OPA from Scripps' failure to develop on the site. Scripps will receive credit
for all verified property tax increments paid from land and improvements on
the redevelopment site towards the amount due,
Require continued payment of tax increments accruing from Scripps
purchase of the property for Bpproximately half of the site as contemplated
under the existing OPA in an amount not less than $16,000 annually.
Scripps will make annual in lieu payments totalling $36,000 for the proposed
oncology center if not constructed by June 30, 1999, This payment will
increase by 2% yearly from that date.
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Meeting Date 01/07/97
Scripps will make annual in lieu payments for first medical office building
proposed under the revised plans if not constructed by June 30, 2003 in the
amount of $80,000, This amount will increase by 2% yearly from that date,
The first medical office building will be located per approved site plans on the
corner of H Street and Fifth Avenue, The second medical office building will
be located between the oncology center and hospital expansion. If the
second office building is not constructed by June 30, 2005, Scripps will make
in-lieu payments in the amount of $80,000. This amount will increase by 2%
yearly from that date,
Scripps will guarantee that the redevelopment site will be devoted to medical
services use until 2014.
In lieu payments shall cease upon expiration of the Redevelopment PIBn (2028).
BOARDS/COMMISSIONS RECOMMENDATION: The Redevelopment Agency and City Council,
in a joint meeting on November 1, 1991, approved a Conditional Use Permit and Special Permit for
the original hospital expansion proposal. The Agency and City also authorized the condemnation
of real property Bnd conveyance to Scripps without competitive bidding, Finally, at that same
meeting, the Agency and Council approved Bn OPA with the developer. Because of the size of the
agenda package for this meeting, it has not been included but is available for review at the
Community Development Department.
On July 24, 1995, the Design Review Committee (DRC) reviewed and conditionally approved the
revised expansion plans for the hospital and related facilities. The letter of approval from the DRC
to the developer is attached as Exhibit A. The revised plans will be presented to the Agency for
finBI approval with the revisions to the OPA.
The Town Centre I Project Area Committee which serves as the Project AreB's Committee for the
Town Centre II Project Area does not presently have enough members to make a quorum and,
consequently, has not reviewed this item.
DISCUSSION:
Site Utilization - Comparison of OriQinal and Revised Plans
The original and current site plans for the hospital expansion at the northeast corner of Fifth Avenue
and H Street are attached for comparative purposes as Exhibit B, The original plans included the
expansion of hospital facilities to accommodate 100 additional beds, updated emergency treatment
facilities, two medical office buildings and B parking garage. The original project was to be phased
with one medical office building comprising approximately 63,000 square feet and hospitBI
expansion comprising 120,000 square feet occurring in Phase 1, The medical office building was
to have been completed by mid-1995, The phase I hospital expansion should have been completed
this year.
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Meeting Date 01/07/97
Phase II of the original proposal was to consist of a second medical office building (62,000 square
feet), additional hospital office expansion of approximately 133,000 square feet, and a sizeable
parking garage,
Since approval of the expansion project in 1992, substantial changes have occurred in the medical
services industry, These changes were promulgated by efforts by the Federal government to control
costs, the proliferation and consolidation of health maintenance organizations and the consequential
chBnges in heBlth d~livery systems to become more efficient and cost effective. This has resulted,
in part, in a reduction in the need for in-patient hospital facilities as illustrBted by the number of
hospitals which have recently closed or have been acquired and consolidated, In order to stay
competitive and profitable, Scripps has had to re-think plans for expansion of its ChulB Vista campus
which resulted in the decision to downsize expansion and reoriented priorities.
The revised plans substantially reduce Phase 1 development on the site to a 13,000 square foot
oncology center (not proposed in the original plans) in what was to be the location of the parking
garage and a scaled back, 34,000 square foot (twenty-four bed) hospital expansion which includes
upgrading of emergency room facilities. The remainder of the site in Phase I is devoted to surface
parking and landscaping, with the exception of the Redi-Care and First Interstate Bank (FIB)
buildings which were to be demolished under the original plans, but now remain in place until Phase
II is developed. The former users have been relocated and Scripps has taken over use of the
buildings for additional office space. The oncology center would be developed immediately. Hospital
expansion is subject to State review and would follow in about two years,
The second revised phase includes a 60,000:t square foot medical office building on the present
site of the Redi-Care and FIB buildings to be developed by 2003. If market conditions warrant, an
additional medical office building will be constructed between the oncology center and the expanded
hospital. If the additional office buildings are constructed in Phase II, a parking deck will be added,
A side-by-side comparison of the improvements to be constructed under the original and revised
expansion plans, assumino complete buildout. is presented below.
COMPARISON OF PHASE I SQUARE FEET
ORIGINAL PLAN REVISED PLAN
PHASE I 182,740 TOTAL S,F, 47,000 TOTAL S.F.
Hospital Expansion' 119,560 (99 beds) 34,100 (24 beds)
Medical Office Buildings 63,180 (1 bldg.) --
Oncology Center (not in original plan) 12, 900 s.f.
Parking Onsite 370 spaces 331 spaces
Parking Garage/Deck N/A N/A
'Existing hospital is 105,050 s.l. and 159 beds. There are currently 64 parking spaces attributed to the existing hospnal.
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Meeting Date 01/07/97
COMPARISON OF PHASE II SQUARE FEET
Phase II Original Plan Revised Plan
Additional Development 194,810 s.f, 207,425 s.f.
Hospital Expansion 132,570 82,925
Medical Office Buildings 62,240 124,500 (2 bldgs.)
Oncology Center (not in original plan) --
Parking Onsite 1 03 spaces 283 spaces
Parking Garage/Deck 775 spaces 625 spaces
Financial Benefits from Expansion and In Lieu Pavments
The hospital and related staff office facilities do not produce property tax revenues. However, under
the original plan, it was provided that the proposed medical office buildings (together with the portion
of the parking garage attributable to those buildings) would generate property tax revenue. In order
to ensure this, in the event that these facilities either: i) were not built, ii) were built but were
declared tax exempt by the County Assessor, or iii) were built but were assigned a valuation lower
thBn anticipBted, Scripps is presently required to pay the Agency an "in lieu" tax in an amount equal
to the property tax revenues originally projected to be generated from these facilities (see Exhibit
C - "In-lieu TBX Payment Schedule and Exhibit D - Schedule of Performance),
In accordance with the formula in Schedule C of the OPA, in lieu payments totalling $92,000
annually are to be made by Scripps in the event that the Phase I medical office building was not
constructed by July 1995. If constructed and valuated lower than projected, Scripps would have to
make up the difference. There was no in lieu guarantee for sales tax revenues which were
anticipated from pharmacy/gift shop sales, In lieu payments for the Phase I office building were to
increase by 2% annually from August 1, 1992.
The Agency will also be eligible to receive in lieu payments for failure to construct the Phase II
medical office building and parking garage if these facilities are not completed by the end of July
1998. The vBlues of these facilities were estimated at $9,2 and $5.6 million, respectively, and are
also subject to the 2% annual escalator from August 31, 1992. However, in lieu payments for these
facilities are prorated (see chBrt in Fiscal Impact section on pBge 9).
Staff has recently requested remittance of in lieu fees from Scripps for 1995 and 1996 totalling
$113,193 (Exhibit F). Note that the payment for 1995 is prorated since, pursuant to the formula for
computation, the eligible period for in lieu payments in that year was only two months.
Under terms first submitted by Scripps for the revised plan, the hospital and related office space do
not produce property tax revenues. The oncology center in Phase I and the medical office buildings
and related parking garage in Phase II would be taxable. However, with the exception of the
oncology center Bnd first 62,000 square foot office building, Scripps would not be obligated to make
"in lieu" payments in the event that the tax generating expansion facilities were not built. Further,
the revised plan provides no "in lieu" payments in the event these facilities were built but were
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Page 5, Item -L
Meeting Date 01/07/97
granted a tax exemption by the Assessor or were assigned a lower than anticipated valuation,
Additionally, under Scripps' proposed revisions, the hospital may avoid its "in lieu" obligation with
respect to the medical office building by acquiring the existing medical office building located at 480
Fourth Avenue which is adjacent to, but outside of the redevelopment site, Although this purchase
may increase City property tax revenues, since it is outside of the redevelopment area, the City will
only receive its normal share of taxes through the County. The purchase appears to be going
through at this time and, in staffs opinion, is motivated by the need to consolidate access and
parking for the hospitBI Bnd is not directly related to the amendment of the OPA,
While it is unlikely that Scripps will obtain tax exemptions for all improvements, it is to their
advantage to apply for exemptions under the revised plan.
A side-by-side comparison of the financial benefits to be derived by the Agency and City from the
original and revised expansion plan, assuminQ complete buildoul. as well as the benefits which
would have accrued absent redevelopment, is presented below, Sales tax revenues are considered
as a constant under both hospital expansion plan, since they would be derived from gifllflower shop
and pharmacy sales,
COMPARISON OF TAX REVENUES
ORIGINAL PROJECT REVISED PROJECT
Before Site
Clearance PhBse I Phase II Phase I Phase II
Property tax
increments $1,200' $102,000' $219,300' $36,0005 $210,800.
Sales Tax $39,624 $31,500' $31,500 $31,500 $31,500
Total
Revenue $40,824 $133,500 $250,800 $67,500 $242,300
Under the original plan, the Agency was assured that it would receive these property tax revenues
regardless of whether buildout occurred. However, under the revised terms, Scripps was not
obligated to make "in lieu" payments except with respect to the oncology center and first medicBI
office building. Consequently, under the revised terms, total tax revenues could be as low as
$158,100.. Furthermore, in the event that Scripps acquires the medical office building located at
480 Fourth Avenue, their requirement to construct the 62,000 square foot office building on site is
satisfied, In that event, tax revenues from redevelopment could be as low as $67,500.
2 This area was included in redevelopment in 1988. City still shares in $32,000 base year taxes.
, $92,000 per Section 1(d) of Attachment 12 of the DDA (see Exhibn C) and $10,900 in properly tax increments.
4 Additional 60,000 S.F. office building and parking garage @ 60% of cost. Also includes 2% annual escalator since August
31,1992
5 Oncology Center, $2.6 million (Scripps' estimate) and $10,000 in property tax increments.
6 Two 62,000 S.F. office buildings @$130s.f.; one parking garage @60%; $16,000 _in property tax increment. No escalators.
7 Based on Scripps' estimate for pharmacylflower shop sales.
8 Total of tax revenues from oncology center office building and related sites, and sales tax revenue.
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The graph attached as Exhibit E compares revenues from the site over time to illustrate the impact
of the original and revised plans as well as the benefits which would have occurred absent
redevelopment.
Note that, even assuming full build-out under the revised plans, tax revenues generated from the
site will not begin to approach revenues which the City and Agency would have received under the
originBI plBns until beyond 2005, In the interim period, as a result of the delay and downsizing of
the project, the City and Agency have foregone over $1 Million in tax revenues that they were
otherwise entitled to receive under the terms of the present OPA.
By way of illustration of the shortfall, in accordance with the development schedule approved under
the current OPA, the first medicBI office building should have been completed in July 1995 or "in
lieu" payments would be required to be made to the Agency. Based on the formula, Bnd assuming
two tax years, the Agency is presently owed approximately $113,000 in tax increments (see Exhibit
F). In Bddition, in lieu payments for the second medical office building, if not constructed, are to
begin next year.
Staff/Scripps Revised Proposal Bnd Recommendations
As illustrated on the chart on page 5, combined annual tax increment and sales tax revenues
accruing from this site before Scripps' involvement were estimated at Bpproximately $41,000, Under
the original Phase I, annual revenues of approximately $133,500 were anticipated. The in lieu
payment provisions guaranteed the Agency's receipt of $92,000 (plus land value increments) if the
PhBse I office building was not constructed by 1996, and an additional $92,000 if the Phase II office
building was not constructed by 1998, These amounts each increase yearly by 2% after their first
due dates,
Under revised expansion plans, revenues from Phase I could reach $67,500, but there WBS no
guarantee of increase beyond that.
Total revenues to the Agency are substantially reduced under the revised expBnsion plans. This
site originally contained ten businesses including Ardans, RollerskBteland, Fiesta Twin Cinema,
Captain Kidd's, Farrells Ice Cream Parlor, Wherehouse Records, Redi-Care Clinic and FIB.
Additionally, Arby's and Express Gas remain in operation and will eventually be relocated,
Although the Scripps Hospital expansion project as currently proposed produces less revenue than
originally anticipated, the project will provide many other benefits to the City including support for
our local medical services industry, the provision of skilled and unskilled job opportunities, and drBw
mBny new people to this area. Going forward with the project also insures that the hospital will
remain functional, unlike others in the region which have recently closed or consolidated.
Additionally, Scripps has paid almost all of the costs Bssociated with this project so far, including
acquisition expenses (estimated in excess of $11 million) and the successful relocBtion of the youth
serving businesses (RollerskBteland and Fiesta Twin Cinema) as required by the Agency. These
businesses have been doing very well in their new locations. The only expenses to the Agency thus
far have been legal consulting, staff, a relocation loan guarantee and relocation loan (guaranteed
by Scripps) for $300,000,
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Meeting Date 01/07/97
Changes in the medical services industry which have forced Scripps to rethink their plans are
outside of their control. However, their revised plans, particularly if limited to Phase I, appear to
underutilize the site which has commercial potential, Redevelopment of this site was very
controversial and required the disruption of ten businesses. The Agency supported Scripps' plans
over competing proposals partly in consideration of the anticipated financial benefits which
compared favorably with commercial redevelopment of the site, Unfortunately, circumstances have
changed and the Agency must reconsider the benefits from this project.
In negotiating with Scripps, staff contended that the Agency and City should be guaranteed a
reasonable flow of tBx revenues from redevelopment. Furthermore, since any development under
the revised plBn beyond Phase I is uncertain, the Agency should retain, through its right of
reversion, the ability to take back pBrcels at the northeast corner which have not been redeveloped
within a reasonable period of time, In response, Scripps indicated their willingness to pay in lieu
fees in exchange for a reverter. Scripps also agreed to guarantee continued use of the site for
medical services until 2014, and pay tax increments for the increBsed land value on the site BS
envisioned in the current OPA. Finally, Scripps requested that the Agency credit them for
unanticipated property taxes accruing from the site since they purchased the property in 1993,
The summary of the negotiated deal points appears below.
1. Scripps will pay in-lieu fees which are presently due under the OPA and estimated at
$113,000. However, it is recommended that the Agency allow credit for tax increments
accruing from the site since its purchase by Scripps early in 1993 estimated at
approximately $40,000 per year. Some of this revenue was unanticipated since Scripps
failed to take the property, including improvements which they are currently using for
hospital business, off of the tax roles, In addition, the OPA allows credit for "post closing
possessory tenants" for which Arby's Bnd Express Gas and, arguably, the facilities which
are being used by Scripps would qualify. Credit would be granted to Scripps upon
verification of taxes paid which could exceed the total amount due under the in-lieu payment
formula, It should also be noted that the City has continued to receive sales taxes from
Arby's and Express Gas estimated at $32,000 annually,
2, Under the OPA, the site purchased by Scripps was to be divided into three parcels, The
easterly half of the site was to be devoted to hospital expansion and be exempt from
taxation, The westerly half of the site was to be divided into two approximately equal
pBrcels, The corner of "H" and Fifth Avenue was to be the site of the taxable medical office
buildings, The pBrking structure was to be constructed on the northerly quarter and would
have been ultimately taxed at 60% since 40% of the use of the facility would have been
attributed to the hospital expansion.
Since purchase of the property in 1994, Scripps has not applied for removal of any portion
of the site from the tax roles and the Agency has benefited by collecting an estimBted and
unanticipated $40,000 annually, Under the OPA, the Agency would have continued to
collect approximately $16,000 annually from the taxable portions of the site, It is proposed,
and Scripps agrees, that this provision remain in any revision of the OPA.
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Meeting Date 01/07/97
3, Under Scripps proposal, they would be excused from making in lieu payments for failure to
construct the first medical office building by the end of 2003 if they purchase the medical
office building at 480 Fourth Avenue. This transaction appears to be occurring at this time,
Although revenue from redevelopment of the site was not the prime consideration in
selecting Scripps as redeveloper, it is an important consideration. Under the Scripps
proposal, the Agency would have only been guaranteed tax increments from the oncology
center and related IBnd area (an estimated $36,000). This would not have compared
favorably with the commercial redevelopment proposals submitted for this site. It was
therefore considered reasonable for the Agency to require additional "failure to construct in-
lieu" payments from the site.
Scripps has agreed to make in-lieu payments for the oncology center if not constructed by
June 30, 1999; the first medical office building if not constructed by June 30, 2003; and the
second medical office building if not constructed by June 30, 2005. Each of these in-lieu
pByments will increase by 2% yearly from the dBte they are first due. In this mBnner, the
Agency will be guaranteed minimum tax increments accruing from the site which will
increase with predictability.
4, The northeast corner of Fifth avenue and "H" Street is presumed to have the greatest
potential for commercial redevelopment. Under the current Scripps proposal, this will be the
site of the first new medical office building, if constructed. The second medical office
building is proposed to be constructed between the oncology center and the hospital
expansion to the north of the corner site. This location appears to be B more appropriate
location for the first medical office building since it will provide greater development density
and retain the corner site for possible commercial development if not needed for further
medical use.
Scripps staff has indicBted that their board will be opposed to a reverter for the corner
property since the hospital campus is alreBdy considered undersized for a major medical
facility, Because of the expense and complex nature of the facilities which comprise a
hospital campus, Scripps' planning must be flexible and long range. Any uncertainty
concerning the future availability of the two acres on the corner may adversely impact their
ability to respond to future needs, Furthermore, developing the first medical office building
on this site first will require construction of a parking garage in Phase I (rather than Phase
II) and position the structure on or near the corner. As an alternative, Scripps proposed to
retain the proposed location and phasing of the office buildings, with the first building
constructed on the corner. The Agency would also drop the reverter. In exchange, Scripps
agreed to mBke in lieu payments for the Phase II building as described above and provide
an operating covenant to continue medical services use on the site until the year 2014. If
the structure constructed exceeds that valuation, the Agency will receive greater revenues
(tax increments). If the building is not constructed, or constructed and valued lower, Scripps
will have to make up the difference through the in lieu payments,
5, In lieu payments will be required for the duration of the Town Center II Redevelopment Plan
(2028).
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It is recommended that the Agency favorably consider these business points and provide direction
to staff to prepare Bppropriate revisions to the OPA. Pursuant to State Community Redevelopment
Law, any proposed changes to the OPA will require public notification and hearing before final
consideration by the Agency.
FISCAL IMPACT: Before redevelopment of the northeast corner of Fifth Avenue and H Street,
combined property and sales taxes accruing from the site were estimated at $41,000 annually.
The original plans for expansion of the hospital, construction of two medical office buildings and a
parking garage would have provided an estimated $133,500 annually to the Agency/City in Phase
I, and $250,800 in Phase II based upon construction cost estimates of the new facilities provided
by Scripps, As a result of the Scripps' "in lieu" obligation under the present OPA, receipt of these
estimated amounts by the City/Agency is essentially guaranteed,
Pursuant to the OPA, in lieu payments totalling $92,000 were to be made by Scripps in the event
that the Phase I medical office building was not constructed by July 1995. If constructed and
valuated lower than projected, Scripps would have to make up the difference (see Exhibit C). The
Agency would also receive tax increments from the portion of the site which was to remain on the
tax roles totalling approximately $16,000. Thus, the Agency was guaranteed to receive no less than
$108,000 annually if no Phase I improvements had been completed, There was no in lieu
guarantee for sales tax revenues which were anticipated from pharmacy/gift shop sales. In lieu
payments for the Phase I office building were to increase by 2% annually from August 1, 1992,
The Agency will also be eligible to receive in lieu payments for failure to construct the Phase II
medical office building and parking garage if these facilities are not completed July 1998. The
values of these facilities were estimated Bt $9.2 and $5.6 million, respectively, and are also subject
to the 2% annual escalator from August 31, 1992, However, in lieu payments for these facilities
were prorated as follows:
Medical Office
Building
Parking Garage
July 1998 25% $4,317 15% $1,577
July 1999 50% $52,839 30% $19,298
July 2000 75% $80,845 45% $29,526
July 2001 100% $109,949 60% $40,155
Based on this formula, in lieu payments accruing to the Agency in 1998 would have included
$103,607 for PhBse I, $5,894 for Phase II, and approximately $16,000 for land value; or a grBnd
total of $125,501, This figure would increase to $193,816 in 1999.
Staff has recently requested remittance of in lieu fees from Scripps for 1995 and 1996 totalling
$113,193 (Exhibit F), Note that the payment for 1995 is prorated since, pursuant to the formula for
computation, the eligible period for in lieu payments in that year was only two months.
Proposed revisions by Scripps to the redevelopment plans have reduced Phase I estimates to
$67,500 which is due to the reduced intensity and delay of development proposed for the site, The
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Meeting Date 01/07/97
ultimate buildout of the project could produce as much as $242,300 annually, However, there WBS
no guarantee that development beyond Phase I would occur and, as a result of the substantial
reduction of Scripps' "in lieu" obligation under the proposed OPA revisions, revenues to be derived
from the site under the revised plans may not substantially exceed $67,500.
The Scripps/City staff negotiated proposal would:
1. Offset in lieu payments due by verified tax increments paid to the Agency since 1993;
2. Construction of the first medical office building would be guaranteed by in-lieu payment of
$80,000 if not constructed by June 30, 2003. This payment will be subject to a 2% escalator
each year thereafter;
3. Construction of the second medical office building would be guaranteed by an in-lieu
payment of $80,000 if not constructed by June 30, 2005. This payment will be subject to
a 2% escalator each year thereafter;
4. Scripps will continue to pay tax increments or in lieu pByments of at least $16,000 annually
for land reevaluation;
5. Scripps will guarantee use of the site for medical services until 2014.
6. In lieu payments shall be due for the duration of the redevelopment program (2028).
The chart attached as Exhibit E comparatively illustrates the project income accruing to the Agency
from these different alternatives,
ATTACHMENTS:
Exhibit A:
Exhibit B:
Exhibit C:
Exhibit D:
Exhibit E:
Exhibit F:
Letter of approval from DRC to Developer
Original & Revised Site Plans
In-Lieu Tax Payment Schedule
Schedule of Performance
CompBrBtive Analysis of Annual Tax Revenues
Buser Letter dated 12/5/96
(fk) M:\HOME\COMMDEV\STAFF.REP\11-19-96\scripps.dda (December 23, 1996 (3:50pm)]
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EXHIBIT A
(flY Of
CHULA VISfA
PLANNING DEPARTMENT
, COMMlfN!T\' n",r' ^ ,'-:--__
Dt"'P~');i~:~':,~:: t.~i.f:J
; Ff.B ;~~I
July 26, 1995
Scripps Health
Attn: Tom Gammiere
$35 liB" Street
Chula Vista, CA 91910
I
I
I
,
Subject: DRC-95~46
Dear Applicant:
On July 24, 1995, the Design Review Committee considered the
Remodel and expansion proposal for the Scripps Hospitallocatecj
located at 435 "H" Street within the Town Centre I redevelopmenL
Area, The Committee, after hearing staff's presentation and
applicant's testimony, approved the project by unanimous vote and
is forwarding a positive recommendation to the Redevelopment Agency
suggesting that the following conditions be adopted for this
project:
a. A conditional use permit shall be obtained for all
existing arid/or proposed temporary structures,
b.
Off-site r::arking. facility shall be upgraded
current s~te design standards (landscaping,
zoning Yvoall, parking screeniEg I etc.).
to meet
paving,
c,
An encroachment permit shall be obtained to
first phase encroachment of parking onto
right-of-way,
justify the
the publ i c
d. Deleted
e, Existing roof mounted equipment shall be screened wit"
compatible .maLer'ials and fin'ish treatment.
f. A comprehensive sign program shall be submitted to staf~
for final review and approval.
g,
Additional Idndscape treatment shall be provided along
the easterly edge o~ ~he ~roject site, adjacent to the
apartment complex.
h,
Existing landscaped areas and medians on
be addressed in the formal landscape
plans,
j'H" Street shall
and' irrigation
i, . All exterior landscape nodes within the parking lots
shall have a minimum width dimension of 6 feet.
276 FOURTH AVENUE. CHULA VISTA. CALIFORNIA 91910 . (619) 691-5101
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J, The tree well cutouts at the "H" Street and Fifth Avenue
intersection shall incorporate tree grates.
k, A parking screening solution along "H" Street shall be
incorporated as part of the landscaping program.
1, The site master plan is, approved ~s shown in the plans
submitted by James A. Leary Architecture and Planning
dated June 9, 1995.
m.
A pedestrian
entrance with
along the east
sidewalk connecting the hospital main
"H" Street sidewalk shall be installed
side of the central driveway.
n. An effort shall be made to extend the colonade and it's
design components of the spinal pedestrian walk as far
west as possible.
Failure to present the development proposal to the Redevelopment
Agency for final action within one year from the date of this
letter shall cause the approval and endorsement of this project to
become null and void unless a written request for an extension is
received and granted by the Design Review Committee prior to tho:
expiration date.
If you have any questions in regards to this matter, please call me
at 691-5090.
Sincerely,
~rn~
cc: James A. Leary AIA, 9845 Erma Road, Suite 205A, San Diego, CA
92131
.1
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CITY OF CHULA VISTA
40 /;)- A-
EXHIBIT B
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EXH I BIT c..
EXHIBIT C
1
ATTACHMENT NO. 12
2
FAILURE TO CONSTRUCT IN-LIEU TAX PAYMENTS SCHEDULE
3
1. As used in this Attachment No. 12, the following
4 definitions shall apply:
'.
5 (a-) "Actual Tax Roll Valuation" shall mean, for
any given work of improvement, the incremental increase in
6 the Assessor's revaluation of the Site as a result of the
completion of such work of improvement.
7
(b) "Applicable Tax Rate" shall mean the tax rate
8 then currently being applied by the Assessor to compute real
property taxes, now currently one percent (1%).
9
10
(c)
Completion has
improvement.
"Completed" shall mean that a Certificate of
been issued with respect to the given work of
11
(d) "Estimated Tax Roll Valuation" shall mean:
12 (i) with respect to the First Phase medical office building,
~9,200,000.00, (ii) with respect to the Second Phase medical
13 office building, $9,200,000.00 and (iii) with respect to the
Second Phase parking garage, $5,600,000.00, which amounts
14 shall be adjusted upward by two percent (2%) on August 31,
1992, and, thereafter, adjusted upward (as previously
15 adjusted pursuant to this Section l(d)) by two percent (2%)
each subsequent August 31.
16
2. The following amounts shall, collectively,
17 constitute "Failure to Construct In-Lieu Tax Payments":
18 (a) In the .event that the First Phase medical
office building has not been Completed by the third
19 anniversary of the date which is the earlier to occur of:
(i) the close of escrow contemplated in Article II, and
20 (ii) eight (8) months following Agency's execution of this
Agreement, the product of the Estimated Tax Roll Valuation
21 for the First Phase medical office building multiplied by the
Applicable Tax Rate;
22
(b) In the event the Second Phase medical office
23 building has not been Completed by the fifth anniversary of
the date which is the earlier to occur of: (i) the close of
24 escrow contemplated in Article-II, and (ii) eight (8) months
following Agency's execution of this Agreement, a sum equal
25 to twenty-five percent (25%) (which percentage shall be
subject to adjustment as provided in Section 3(b), below) of
26 the product of the Estimated Tax Roll Valuation for the
Second Phase medical office building multiplied by the
27 Applicable Tax Rate;
28
J\A023J92B.NW2
ATTACHMENT NO. 12
Page 1
tf~ {7 C-
1 (c) In the event the Second Phase parking garage
has not been'Comp1eted by the fifth anniversary of the date
2 which is the earlier'to occur of: (i) the close of escrow
contemplated in Article II, and (ii) eight (8) months
3 following Agency's execution of this Agreement, a sum equal
to fifteen percent (15%t~which percentage shall 'be subject
4 to adjustment as provided in Section 3(b), below) of the
product of the'Estimated Tax Roll Valuation for the Second
5 Phase parking garage multiplied by the Applicable Tax Rate;
and
6
(d) Notwithstanding the fact that any particular
7 given work of improvement has been Completed (whether timely
or not), as provided above (such date of Completion, for the
8 purposes of this Section 2(d), being the calculation date
described in Section 3(a),fbelow), in the event that:
9 (x) the product of the Actual Tax ~oll Valuation for such
Completed work of improvement multiplied by the Applicable
10 Tax Rate is less than (y) the product of the Estimated Tax
Roll Valuation for such Completed work of improvement multi-
11 plied by the Applicable Tax Rate, such difference (or, with
respect to the Second Phase parking garage, 60% of such
12 difference) shall constitute Failure to Construct In-Lieu Tax
'Payments.
13
3. The following shall govern the calculation and
14 payment of Failure to Construct In-Lieu Tax Payments:
15 (a) Such payments shall be made in arrears
commencing upon the first September 1 following (and computed
16 back to) the applicable calculation dates described in
Sections 2(a) through (d), above, and, thereafter, shall
17 continue to be paid on an annual basis until the first
September 1 following the date (the "Expiration Date") which
18 is the expiration of the term of the Redevelopment Plan;
provided, however, that the Expiration Date for Failure to
19 Construct In-Lieu Tax Payments of the categories described in
Section 2(a) through (c), above, shall be the actual date of
20 Completion of the given work of improvement should such date
occur prior to the expiration of the term of the Redevelop-
21 ment Plan. The last September 1st payment of any given
category of Failure to Construct In-Lieu Tax Payments shall
22 be prorated to the Expiration Date.
23 (b) In the event the Second Phase improvements
described above have not been Completed by the first, second
24 or third anniversaries of the calculation date described in
Sections 2(b) and 2(c), above, the corresponding percentages
25 described in Section 2(b) and 2(c), above, for such Second
Phase improvements shall be adjusted, on those anniversaries,
26 respectiVely, as follows ("building/garage"): 50%/30%;
75%/45% and 100%/60%. After the third anniversary of the
27 calculation date described in Sections 2(b) and 2(c), above,
said percentages shall remain constant at 100%/60%.
28
J\A023392B.R'.J2
ATTACHMEN'T'n;n d"
4'-;/Y
1 (c) The categories of Failure to Construct In-
Lieu Tax Payments set forth in Sections 2(a), (b) and (e)"
2 above, shall be SUbject to offset, on a year-bY-Year basis,
by the amount of actual prOperty tax revenues generated (if
3 any) inClUding, without limitation, any possessory interest
taxes, by either: (i) improvements occupied by the Post-
4 Closing Possessory Site Tenants, or (ii) the partial
completion of the given work of improvement, and.received by
5 Agency.
6 (d) The initial required completion dates for the
First Phase and Second Phase medical office bUildings, as
7 described in, respectively, Sections 2(a) and 2(b), shall be
subject to an aggregate (for each Phase) three month exten_
8 sion for "force majeure", as SUch concept is Contained and
administered in Section 604.
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
J\A023392B.NI.J2
ATTACHMENT NO. 12
Ptf~ (3r r!..-
..,
~ PClfJe !Blank!
4/.}6 ~
1
2
3
4
1-
5
6
7 2.
8
9
10
11 3.
12
13
14
15
16 4.
17
18
19
20
21
5.
22
23
24
25
26
27
28
EXHIBIT 0
ATTACHMENT NO. 6
SCHEDULE OF PERFO~~CE
Action
Delivery of Aqency Ootion.
The Participant shall deliver
the Agency Option to the
Agency (Sections 108 and 116).
Submittal of Basic Conceot
Drawinqs. Participant shall
submit basic concept drawings
and preliminary landscaping
plans (Sections 108 and 117).
Environmental Review.
Consideration of Alternative
Prooosals, Resolution of
'Necessitv. Enactment of
Zoninq, and Section 33431
Hearinq. The conditions
precedent set forth in
Sections 109 through 115 shall
be satisfied.
Execution of Aqreement bv
Aqencv. The Agency and City
Council shall hold a public
hearing to authorize execution
of this Agreement by the
Agency, and, if so authorized,
the Agency shall execute and
deliver this Agreement to the
Participant (Sections 108,
900) .
Site Security. The
Participant shall deliver to
Agency the Site Security,
together with all other items
required pursuant to
clauses (i) through (vi) of
Section 119A. (Sections 108
and 116).
J\A023392B.Ni.'2
ATTACHMENT NO. 6
Page 1
Date
On or before the execution
and delivery of this
Agreement by Participant.
Within sixty (60) days
after execution and
delivery of this Agreement
by Participant, but in any
event prior to approval
and execution' of this
Agreement by Agency.
Within sixty (60) days
after execution and
delivery of this Agreement
by Participant, but in any
event prior to approval
and execution of this
Agreement by Agency.
Within sixty (60) days
after execution and
delivery of this Agreement
by Participant, but in no
event prior to the satis-
faction of all conditions
precedent.
On or before the execution
and delivery of this
Agreement by Participant.
4-;)} ])
1
6.
2
3
4
5
6
7.
7
8
9
10 8.
11
12
13
14
15
16
17
18
9.
19
20
21
10.
22
23
24
25
26
27
28
Action
Ooenina of Disoosition Escrow.
The Agency shall open an
escrow for conveyance of the
Site to the Participant
(Section 202).
. Deposit in Escrow. Agency
shall deposit into escrow, on
behalf of Participant, the
executed and acknowledged
counterpart copy of the Agency
option (Section 121).
Submittal of Application for
Parcel Map. Participant shall
file a complete application
for the Parcel Map with the
City of Chula Vista
,(Section 314).
Approval bv Citv of Parcel
Map. The City of Chula Vista
shall have approved or
disapproved the Parcel Map
(Section 314).
Submittal of Phase One
Hospital Plans. The
Participant shall submit the
Phase One hospital
construction plans, including
landscaping and grading plans
to the state of California
(Office of statewide Health
Planning and Development, the
City Building and Housing
Department, and the Agency for
plan review and approval
(Section 304).
J\J.023392B.NW2
ATTACHMENT NO. 6
T)- ~ _ -
Date
Within thirty (30) days
after Agency has entered
into the binding agreement
contemplated in clause (i)
of section 111 or has
filed an action in eminent
domain to acquire the
Site.
Immediately following
opening of escrow.
Within three (3) months
after either (i) convey-
ance to Participant of
title to the Site or
delivery of legal posses-
sion of the Site to the
Participant under a writ
of possession, or (ii)
such earlier date as the
City may indicate to
Participant in writing
that it is willing to
process Participant's
application for the Parcel
Map prior to such
conveyance or delivery.
Within six (6) months
after submission by the
Participant of the
complete application for
the Parcel Map.
Within thirteen (13)
months after the execution
of this Agreement by the
Agency.
t{/;2?--J>
Action
1
11. Approval of Phase One Hospital
2 Plans. The state of
California, the City Building
3 and Housing Department and the
Agency shall have finally
4 approved or disapproved the
Phase One hospital plans.
5 Subject to Agency's
obligations under Article III,
6 Participant shall bear full
responsibility to obtain final
7 approval in a timely manner.
8
12. Convevance of Title and
9 Deliverv of Possession. The
Agency shall convey title to
10 and possession of the Site to
the Participant or shall
11 deliver legal possession of
the Site to the Participant.
12 (Sections 203 and 209)
13 13. Submission of Evidence of
Ecruitv or Financinq.
14 Participant shall submit to
Agency evidence of equity or
15 financing, as required by
Section 307A, to develop the
16 Phase One hospital
improvements.
17
14. Commencement of Construction
18 of the Phase One Hospital
Improvements. The Participant
19 shall commence construction of
the Phase One hospital
20 improvements (Section 307).
21
15. Submittal of Phase One Medical
22 Office Buildinq Plans. The
Participant shall submit the
23 Phase One medical office
building plans to the City
24 Building and Housing
Department and the Agency.
25
26
27
28
J\A023392B. m.'2
ATTACHMENT NO. 6
Date
within fourteen {14)
months after Submission to
the state of California,
the City BUilding and
Housing Department and the
Agency of the Phase One
hospital plans.
Closing Date - within four
(4) months after approval
of the Phase 'One hospital
plans, (as described in
item 11, above) as such
date may be re-established
as contemplated pursuant
to Section 104B.
Within thirty (30) days of
Participant's receipt of
all required approvals of
Phase One hospital plans
from State of California,
city Building and Housing
Department and the Agency.
Within four (4) months
after receipt of all
required approvals of
Phase One hospital plans
from State of California,
City Building and Housing
Department and the Agency.
Within eighteen (18)
months after commencement
of Phase One hospital
construction.
i-Y J>
Action
1
16. Approval of Phase One Medical
2 Office Buildinq Plans. The
city Building and Housing
3 Department and the Agency
shall finally approve or
4 disapprove the Phase One
medical office.building plans.
5 Subject to Agency's
obligations under Article III,
6 Participant shall bear full
responsibility to obtain final
7 approval in a timely manner.
8 17. Submission of Evidence of
Eouitv and Financinq.
9 Participant shall submit to
Agency evidence of equity or
10 financing, as required in
Section 307A, to develop the
11 Phase One medical office
building.
12
13 18. Commencement of Construction
of the Phase One Medical
14 Office Buildinq. The
Participant shall commence
15 construction of the Phase One
medical office building.
16
19. Completion of Construction of
17 the Phase One Hospital
Improvements. The Participant
18 shall complete construction of
the Phase One hospital
19 improvements (Section 307).
20 20. Completion of Construction of
the Phase One Medical Office
21 Buildinq. The Participant
shall complete construction of
22 the Phase One medical office
building.
23
24
25
26
27
28
J\A02J392B.!{l,.,T2
ATTACHMFN'T' NO. F
Date
Within six (6) months
after submittal of
Phase One medical office
building plans to the City
Building and Housing
Department and the Agency.
Within thirty (30) days of
Participant's receipt of
all required approvals of
the Phase One medical
office building.
Within four (4) months
after receipt of approval
of Phase One medical
office building plans.
Within thirty (30) months
after commencement of
construction.
Within one (1) year after
completion of Phase One
hospital construction.
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EXHIBIT E
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Assumptions used for Comparative Revenue Flows
I. Sales tax revenues are not included.
2. 1992 increases in tax increments reflect property sale minus demolition of improvements.
3. 1993 and 1994 under Original Plan reflect demolition and taking half of the property off
of the tax roles. Under Revised and City proposals, property is still on tax roles
4. 1995 reflects partial construction of medical office building under Original Plan; payment
of past due in lieu under City Plan is considered negated by past tax credits.
5. 1996 reflects construction of Phase I medical office building (or payment of in lieu) under
Original Plan; payment of past due in lieu under City proposal is negated by past tax credits.
6. 1997 reflects taking 3/4 of the property off of the tax roles under Revised Plan; taking
half of the property off of the tax roles under the City Plan.
7. 1998 reflects the construction of the Phase II medical office building (or payment of in
lieu) under Original Plan; construction of Oncology Center under Revised Plan; construction
of Oncology Center under City Plan.
8. 2003 reflects construction of Phase II medical office building (one bldg.) under Revised
and the City plans. The difference is that, under the City Plan, in lieu payments are due if
the building is not constructed.
9. 2005 is year second office building and parking garage would be constructed under
Revised and City Plans.
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EXHIBIT F
CllY OF
CHUlA VISTA
OFFICE OF THE CITY MANAGER
December 5, 1996
Mr. Martin Buser
Executive Vice President, Health Services
Scripps Health
4275 Campus Point Court
San Diego, CA 92121
Re: Scripps Hospital Expansion - Chula Vista: -Request for In-Lieu Payment
Dear Mr. Buser:
As you are aware, Scripps Hospitals entered into an Owner Participation Agreement (OPA) with the
Chula Vista Redevelopment Agency that was approved on NovemBer 7, 1991, concerning
redevelopment of the 8,9 acre site at the northeast corner of Fifth Avenue and "H" Street, adjacent
to Scripps Hospital. The OPA included a development schedule for the site and made provision for in-
lieu tax payments to the Agency if development of Phase I and II did not Occur in accordance with the
schedule,
Attachment 12 of the OPA states that in-lieu payments for the proposed Phase I medical office
building, if not constructed, would begin to accrue three years from the earliest to OCcur of: closing
on the property (which occurred in February 1993); or eight months foliowing execution of the OPA
(which occurred on November 7, 1991), The effective date that in-lieu payments for the Phase I
medical office building began to accrue is July 7, 1995, three years and eight months following
execution of the OPA. The first in-lieu payment was due September 1, 1995 and the second
September 1, 1996. The Agency is thus owed two in-lieu payments,
The amount of in-lieu payment due to the City for Scripps' failure to complete the Phase I
development, as described in attachment 12 of the OPA, is $92,000 annually, to be adjusted by two
per cent (2%) on August 31, 1992 and similarly on every August 31 thereafter, The current amount
due to the Agency is described below:
Amount due as of Sept. 1, 1995 (prorated from July 7, 1995)
Amount due as of August 31, 1996
Amount due as of Sept, 1, 1996 (total amount currently due)
$ 14,979,02
$ 99,583,76
$114,562.78
Attachment 12 also provides that the failure to construct in-lieu payments shall be subject to offset
on a year-to-year basis. The offset includes actual property tax revenues generated, including any
possessory interest taxes, from improvements occupied by Post-closing possessory site tenants or
taxes generated by the partial compietion of improvements on the site, We determined that two post-
closing possessory site tenants were in place in July 1995 and remain in place to this date: Express
Gas and Arby's. Based upon current assessed valuations for these improvements, the offset is:
For 1 995
For 1996
$ 186,12
$1183,20
The total amount now due to the City is thus estimated as $113,193.46,
276 FOURTH AVENUE. CHULA VISTA. CALIFORNIA 91910 . (619) 691-5031 . FAX (619) 585-5612
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