Loading...
HomeMy WebLinkAboutRDA Packet 1994/10/11 Tuesday, October 11, 1994 Council Chambers 6:00 p.m. Public Services Building (immediately following the City Council meeting) Joint Meeting of the Redevelonment Agencv/Citv Council of the Citv of Chnla Vista CALL TO ORDER 1. ROLL CALL: Agency/Council Members Fox -' Horton -, Moore -, Rindone -, and Chairman/Mayor Nader -' 2. APPROVAL OF MINUTES: October 4, 1994 BUSINESS 3.A. COUNCIL RESOLUTION 17682 APPROViNG A HOUSiNG DEVELOPMENT AND LOAN AGREEMENT iNCLUDiNG AFFORDABILITY COVENANTS AND ASSOCIATED LOAN DOCUMENTS WITH SOUTH BAY COMMUNITY SERVICES FOR THE ACQUISITION AND REHABILITATION OF 12 UNITS AT 17 FOURTH A VENUE FOR TRANSITIONAL HOUSiNG FOR HOMELESS FAMILIES; AUTHORIZiNG THE MAYOR TO EXECUTE SAID AGREEMENT AND ASSOCIATED DOCUMENTS; AND APPROPRIATiNG $360,016 iN FEDERAL HOME PROGRAM FUNDS iN ORDER TO FUND CITY'S LOAN OBLIGATION THEREUNDER AND CITY'S LOAN REPAYMENT OBLIGATION THEREUNDER WITH RESPECT TO 50% OF A $200,000 LISC LOAN TO SOUTH BAY COMMUNITY SERVICES--On 7128/92 the Council/Agency gave conditional approval of financial assistance to South Bay Community Services (SBCS) to acquire and rehabilitate 12 units at 17 Fourth Avenue for transitional housing for homeless families. SBCS is now ready to acquire the property after securing all necessary sources of funding and satisfy the conditions of the Cityl Agency loan. Staff is requesting a minor modification in loan terms, loan document approval, and an appropriation of funds. Staff recommends approval of the resolutions. f41StIlSVòt\\R¡¡¡¡mriim B. AGENCY RESOLUTION APPROViNG A HOUSiNG DEVELOPMENT AND LOAN AGREEMENT AND ASSOCIATED LOAN DOCUMENTS WITH SOUTH BAY COMMUNITY SERVICES FOR THE ACQUISITION AND REHABILITATION OF 12 UNITS AT 17 FOURTH AVENUE FOR TRANSITIONAL HOUSiNG FOR HOMELESS FAMILIES; AUTHORIZiNG THE CHAIRMAN TO EXECUTE SAID AGREEMENT AND ASSOCIATED DOCUMENTS; AND APPROPRIATiNG $118,000 iN REDEVELOPMENT AGENCY LOW- AND MODERATE-iNCOME HOUSiNG FUNDS iN ORDER TO FUND AGENCY'S LOAN REPAYMENT OBLIGATION THEREUNDER WITH RESPECT TO 50% OF A $200,000 LISC LOAN TO SOUTH BAY COMMUNITY SERVICES 14J!t1išVôiiigii¡¡;em Agenda -2- October 11, 1994 ORAL COMMUNICATIONS This is an oppoTtunity for the general public to address the Redevelopment Agency on any subject matter 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. OTHER BUSINESS 4. DIRECTOR'S/CITY MANAGER'S REPORTIS) 5. CHAIRMAN'S/MAYOR'S REPORTIS) 6. AGENCY/COUNCIL MEMBER COMMENTS ADJOURNMENT The meeting will adjourn to the Regular Redevelopment Agency Meeting on Tuesday, October 18, 1994 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chambers. ****** COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT The City of Chula Vista, in complying with the Americans With Disabilities Act (ADA), request individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least forty-eight hours in advance for meetings and five days for scheduled services and activities. Please contact the Secretary to the Redevelopment Agency for specificinformationat (619) 691-5047 or Telecommunications Devices for the Deaf (TDD) at (619) 585-5647. California Relay Service is also available for the hearing impaired. [C:IWP51 IAGENCYIAGENDASll 0-11-94.AGD] _.- MiNUTES OF A JOINT MEETiNG OF THE REDEVELOPMENT AGENCY/ CITY COUNCIL OF THE CITY OF CHULA VISTA Tuesday, October 4, 1994 Council Chambers 6:56 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Agency/Council Members Fox, Horton, Moore, Rindone, and Cbairman/Mayor Nader ALSO PRESENT: John D. Goss, Director/City Manager; Bruce M. Boogaard, Agency/City Attorney; and Beverly A. Authelet, City Clerk 2. APPROVAL OF MiNUTES: September 20, 1994 MSUC (Rindone/Fox) to approve the minutes of September 20, 1994 as presented. CONSENT CALENDAR (Item pulled: 4) 3. WRITTEN COMMUNICATIONS: None. 4.A RESOLUTION 17673 APPROViNG SUBLEASE AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND THE COUNTY OF SAN DIEGO FOR THE LEASiNG OF LEGISLATIVE OFFICE SPACE FOR THE FIRST DISTRICT SUPERVISOR'S FIELD OFFICE--City staff has negotiated a new agreement to continue leasing office space to San Diego County in the City's Legislative Office Building for the First District Supervisor from 7/1194 through 6/30/97. Staff recommends approval of the resolutions. (Administration) Pulled from the Consent Calendar. B. RESOLUTION 1425 ACKNOWLEDGiNG AND APPROViNG SUBLEASE AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND THE COUNTY OF SAN DIEGO FOR THE LEASiNG OF LEGISLATIVE OFFICE SPACE Agency/Council Member Rindone stated the City was responsible for custodial services and routine maintenance. He questioned why custodial services had been included. Jim Thomson, Deputy City Manager, responded that the general terms of the contract were similar to those in the State leases. That had been negotiated by the prior Finance Director prior to his involvement and, therefore, he conld not respond. StAff could return with further information if Council wanted to continue the item. Agency/Council Member Rindone stated he would not oppose the item, but requested that when the leases were brought back to Council for consideration that the City's/Agency's costs be covered. Mr. Thomson stated the leases with the State expired at the end of November of 1994. The State had a standard lease which required lessors to provide the custodial services. Agency/Council Member Moore questioned when the City/Agency started collecting rent from the 1st District Snpervisor. Mr. Thomson responded that it would be the first time. There were two different leases with the County: 1) a 50 year lease with 38 years remaining; and 2) a lease that came about after the fire in the former health building. At .2 -I Minutes October 4, 1994 Page 2 that point Council felt there should be a standard rent, similar to those paid by the State, when the initial term expired. The supervisor had two suites. * * * Agency/Council Member Fox returned to the dias at 7:07 p.m. * * * RESOLUTIONS 17673 AND 1425 OFFERED BY AGENCY/COUNCIL MEMBER RINDONE, reading of the text was waived, passed and approved unanimously. * * END OF CONSENT CALENDAR * * PUBLIC HEARiNGS AND RELATED RESOLUTIONS AND ORDiNANCES None Submitted. ORAL COMMUNICATIONS None ACTION ITEMS 5. REPORT REQUESTiNG AUTHORIZATION FOR THE EXECUTIVE DIRECTOR TO PREPARE A LEASE AND TO HOLD A PUBLIC HEARiNG FOR INTERIM USE OF AGENCY PROPERTY LOCATED AT 801 BROADWAY BY THE URBAN CORPS -- The Agency recently purchased the South Bay Chevrolet Dealership at 801 Broadway as part of the Auto Park project. There are currently no re- use proposals for this site. The Conservation Coordinator has requested temporary use of the site by the Urban Corps for an oil recycling education program. The Agency is requested to authorize the Executive Director to hold the required public hearing and prepare a lease with the Urban Corps for the purpose of operating an oil recycling education program. Staff recommends tbat the Agency accept the report. (Community Development) Member Nader stated it was the property that was originally being looked at by the Kidz Biz program and that they had shifted their interest to a parcel that was formally occupied by Shakey's Pizza. He questioned where that process currently stood. Chris Salomone, Director of Community Development. responded that the terms of the lease had been accepted by South Bay Community Services about two weeks ago. South Bay Community Services wanted the lease negotiated and boped to bave activity for Halloween. The terms were acceptable to the owner and applicant. Member Nader questioned if staff anticipated that the Shakey's Pizza site lease for South Bay Community Services completed prior to the public hearing. Mr. Salomone responded that was staffs expectations. * * * Agency/Council Member Fox left the dias at 6:59 p.m. * * * Member Horton questioned when South Bay Chevrolet would move into their new facility on Otay Valley Road. Mr. Salomone responded that they were planning to move the vehicles on 10/14/94 and would have a grand opening within a week or so of that date. Member Horton questioned if the Otay Valley Road construction work was completed. ~-.:t Minutes October 4, 1994 Page 3 Mr. Salomone responded that the Director had a report on the construction. Member Horton questioned if there were any other problems. Mr. Salomone responded that there were a couple of loose ends regarding landscaping for South Bay Chevrolet. Fuller Ford had a Desigu Review meeting that went very well. He did not see any obstacles that would interfere with the grand opening. Member Rindone questioned how much square footage the lease would comprise of the total building. David Meacham, Conservation Coordinator, responded that the lease was for all of the building that faced Broadway, but would not use the adjoining or separate service space. It was approximately one acre of the five acres. Member Rindone stated he could support the interim use because if there was any reasonable offer for purchase the lease would not conflict in any way. MSC (Rindone/Moore) to accept the report and staff recommendation. Approved 4-0-1 with Fox absent. Member Horton questioned how much the Agency would be receiving. Mr. Meacham responded that there was approximately $6,000 in the grant set aside for overhead costs and that money would be paid to the Agency for rent. The only other purpose anticipated for those funds would be paying other City departments for plans or permits associated with utilizing the facility. It was possible, if the grant was completed, and there were other line items that had not been totally used up in the budget, staff could request a transfer of those funds and, therefore, pay closer to the market value of the property. ITEMS PULLED FROM THE CONSENT CALENDAR Item pulled: 4. The minutes will reflect the published agenda order. OTHER BUSINESS 6. DIRECTOR'S/CITY MANAGER'S REPORT IS) a. Mr. Goss informed the Agency that the Chairman had autborized a joint special meeting of the Council/Agency for Tuesday, October 11th to cnnsider the issue of 17 Fourth Avenue transitional housing. There was concern that a weeks delay to tbe regular meeting would jeopardize acquisition of the site. b. Mr. Goss reported the completion of the Otay Valley Road improvement project on 9/28/94. South Bay Chevrolet would be moving in on 10/14/94 and Fuller Ford would move in November. 7. CHAIRMAN'S/MA YOR'S REPORTIS) - None 8. AGENCY/COUNCIL MEMBER COMMENTS - None .2. -,3 Minutes October 4, 1994 Page 4 ADJOURNMENT ADJOURNMENT AT 7:12P.M. toa Special Joint Agency/City Council meeting on October 11,1994, immediately following the City Council Meeting and thence to the Regular Redevelopment Agency Meeting on October 18, 1994 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chambers. Respectfully submitted, BEVERLY A. AUTHELET, CMC, City Clerk "'"' by: ~ 02 -Jf REDEVELOPMENT AGENCY/COUNCIL AGENDA STATEMENT ¡, Item 3..., Meeting Date 10/11/94 ITEM TITLE: COUNCil: RESOLUTION /16 RJ- Approving a Housing Development and loan Agreement Including Affordability Covenants and associated loan documents with South Bay Community Services (SBCS) for the acquisition and rehabilitation of 12 units at 17 Fourth Avenue for transitional housing for homeless families; authorizing the Mayor to execute said Agreement and associated documents; and appropriating $360,016 in Federal HOME Program funds in order to fund City's loan obligation thereunder and City's loan repayment obligation thereunder with respect to 50% of a $200,000LISC Loan to SBCS AGENCY: RESOLUTION pl:<~ Approving a Housing Development and Loan Agreement and associated loan documents with South Bay Community Services (SBCS) for the acquisition and rehabilitation of 12 units at 17 Fourth Avenue for transitional housing for homeless families; authorizing the Chairman to execute said Agreement and associated documents; and appropriating $118,000 in Redevelopment Agency Low and Moderate Income Housing Funds in order to fund Agency's loan repayment obligation thereunder with respect to 50% of a $200,000 LlSC Loan to SBCS SUBMITTED BY, Commooi" D"""'"m"", Di",,'" ~ REVIEWED BY: City Manager/Executive Directo¡J~ {4/5ths Vote: Yes L No_J BACKGROUND: On July 28, 1992 the City Council/Agency gave conditional approval of financial assistance totalling $498,000to South Bay Community Services (SBCS) to acquire and rehabilitate 12 units at 17 Fourth Avenue for transitional housing for homeless families. The provision of transitional housing is identified as an objective in the City's Housing Element and a priority in the Comprehensive Housing Affordability Strategy (CHAS). SBCS has been working to secure all necessary sources of funding and satisfy the conditions of the City/Agency loan. At this point. they are ready to acquire the property, and staff is returning to the Agency/Council to request a minor modification in loan terms, loan document approval, and an appropriation of funds. Council/Agency has also provided funding for Casa Cuatro, the short-term housing project next door at 31 Fourth Avenue, which is the first step in assisting homeless families referred from social service agencies. These two projects are intended to function in tandem, with 17 Fourth Avenue providing longer-term housing for families leaving short- term housing and returning to permanent housing. Both projects were the subject of public hearings at that time; the neighborhood received written notice; and SBCS held a public meeting in the neighborhood to inform them of the project proposals and the public hearings. RECOMMENDATION: That the Council/Redevelopment Agency adopt the resolutions approving the Housing Development Agreement and associated loan documents with South -3 -I Page 2, Item~b Meeting Date 10-11-94 Bay Community Services to acquire and rehabilitate 17 Fourth Avenue for transitional housing; authorizing the Chairman to execute the agreement and associated documents; and appropriating $360,016 of HOME Funds and $118,000 in Redevelopment Agency Low and Moderate Income Housing Funds therefor. BOARDS/COMMISSIONS RECOMMENDATION: The Housing Advisory Commission, at a special meeting held on September 14, voted to support the project and recommend that the Council/Agency approve the change in the payback terms for the $200,000 loan from Local Initiatives Support Corporation (USC). DISCUSSION: This report will discuss the status of the transitional housing development, the City/Agency financial participation, and the components of the Housing Development and Loan Agreement. The Fiscal Impact section discusses the financial implications of the Agreement, including financial risk. Attachment A is a comparative summary of the financial structures of the original conditional approval and the new, recommended arrangement. Project Status When this item went before the Agency/Council on July 28, 1992, the Agency/Council conditionally approved funds to be used for the following: 1. A $250,000deferred loan with repayment from excess project income (residual receipts), if any, and 2. One Hundred Twenty-Four Thousand Dollars ($124,000) to pay half of the $200,000 loan from SAMCO or the Low Income Housing Fund (UHF), both affordable housing funding lender consortia, plus applicable interest. 3. The Agency/City further agreed to guarantee 100% of the loan from SAMCO or UHF, in the event SBCS's could not pay their half of the loan from project income or corporate donations. This funding was approved subject to the following conditions: 1. That SBCS obtain commitments for the rest of the funding required for the project. 2. That all necessary environmental and land use approvals be obtained. 3. That the City approve a property management plan and resident screening process. 4. That the purchase price be reduced from $800,000to $750,000. All of the conditions have been satisfied, as discussed below. Project Financing: The project is estimated to cost $750,000 for acquisition and $90,583 3-~ Page 3, Item .3~1 Ie. Meeting Date 10-11-94 for rehabilitation and administrative costs for a total project cost of $840,583. The cost per unit is $62,500 for acquisition and $7,549 for rehabilitation and administration. Since receiving Council/Agency conditional approval for 17 Fourth Avenue in 1992, SBCS has been working to secure the other sources of funding. They have been in escrow with the owner during this entire period. They recently received a $194,551 loan from the County of San Diego, which together with other financing sources, will allow them to purchase and rehabilitate the property. The project would be financed as follows: Home Savings loan (1 st lien & repayment priority) 114,837 Affordable Housing Program Grant (from bank) 38,368 LlSC Loan (2nd lien & repayment priority) * 200,000 City deferred loan (3rd lien & repayment priority) 250,000 County of San Diego loan (4th lien & repayment priority) 194,551 Corporate & Foundation grants * * 42.827 TOTAL $840,583 * It is proposed that the City and Agency agree to repay 50% of this loan and, in effect, guarantee the other half of the loan (including interest at 6%). The terms of this City/Agency obligation are discussed in more detail below. ** SBCS has raised $35,000 to date, and is seeking additional grants and donations. Environmental and Land Use Approvals: The project is exempt from environmental review and does not need any land use approvals, since the use of the property is not changing. It remains a multi-family residential use. Property Management and Resident Screening: SBCS has submitted a property management plan and a resident screening process which is acceptable to the Community Development Director. The management plan and the screening process ensure that potential residents are either referred from other agencies or are moved from Casa Cuatro, the SBCS short-term housing project located next door. All residents are to be carefully screened by SBCS. There is no tolerance for use of drugs or alcohol or for criminal behavior. Purchase Price: The original purchase price of $800,000 has been successfully negotiated down to $750,000. Citv/Aaencv Financial ParticiDation The structure for City/Agency participation has changed somewhat since the conditional approval on July 28, 1992. The source of funds is now a mixture of the Agency's Low- and Moderate Income Housing Fund and the City's HOME funds, rather than just the Agency Fund as before, which is advantageous in that it preserves more of the Agency Fund, which can be used with greater local discretion. The total financial obligation of the 3-3 Page 4, Item 36,,1D Meeting Date 10-11-94 City/Agency has been reduced. Also, mechanisms for potential repayment of the City/ Agency investment have been created. City Loan: The City will provide a 55-year (with possible extensions to 80 years), 6% interest loan in the amount of $360,016 ($250,000 initially and the remainder to LlSC over a three year period). Payments from SBCS would be based on residual receipts (excess project income) if any funds are generated. The project proforma shows a minimal return, and it is likely that the project will not produce excess income. SBCS will be providing not only very affordable housing, but an array of social services (off site) to help families transition to permanent housing, better jobs, etc. Thus, this type of housing is more expensive than many other types of affordable housing, and most or all project income will be needed to support the project. After 55 years, the loan can be extended by the City up to a total of 80 years using five-year intervals. If SBCS ever sells the project or changes it to an unauthorized use, the loan and accumulated interested is due and payable. The loan was structured as a 55-year loan, with possible extension to 80 years, in order to sustain the affordable housing benefit for the maximum feasible time, as is required by the regulations of the funding sources. It appears unlikely that SBCS will sell or convert use during the term of the loan, as that would trigger total payback of principal and interest to the City. The City would then return the investment income to the designated affordable housing funds for use on other affordable housing projects. After the term of the loan, the payback arrangement changes somewhat. The full principal and interest would still be paid back, but a portion of the repayment would be "held in trust" for SBCS to undertake another affordable housing project with the City/Agency. The portion is determined by the proportional amount of the City participation in the original project cost. [ For instance, if the City/Agency lends $478,000to the project, and the total project cost comes in at $900,000, then the City/Agency has funded 53% of the total project cost ($478,000 + by $900,000 = 53%). Therefore, if the City/Agency were repaid $2 million in principal and interest, 47% or $940,000 would go back to the housing programs fund balances, and 53% or $1,060,000 would go into the "trust" for SBCS projects.] The "trust " simply means that SBCS would receive priority access to these funds for homeless and/or affordable housing purposes. If the City proposed such a use and the City and SBCS could not agree to this specific use after two years of negotiations, then the funds would be returned to the housing programs fund balances. This sharing arrangement is substantially similar to that which was previously approved by the Council in connection with the City loan to SBCS for the adjacent short-term housing project at 31 Fourth Avenue. The City loan will be in third position, subordinate to the conventional loan from Home Savings and the three-year LlSC loan. The project will have sufficient equity to secure the loan. The purchase price is $750,000 and the appraised value is $800,000. The first position loan from Home Savings is for $114,837 and the second position LlSC loan is for $200,000, leaving a land value of $435,163 to cover the $360,016 City loan. In addition, the City and the Agency are co-signing the LlSC loan, so no security is lost by being subordinate to the LlSC loan. After the LlSC loan is repaid in three years, the City/ Agency will be in second position. 3-1 Page 5, Item .3"I~ Meeting Date 10-11-94 Additionally, the City is being required to subordinate its affordability and use covenants to the Home Savings loan. This requirement has been typical of housing projects which the City has financed where we have been subordinate to another loan; however, it is found acceptable in that the Home Savings loan is for $114,837, which is an amount that the City/Agency could practically payoff in response to a foreclosure situation, thereby protecting the City/Agency investment and sustaining the affordability and use covenants. LIse Loan: When the Agency/Council conditionally approved funding the project, sacs planned to obtain a $200,000 loan from SAMCO or UHF, but has found that the Local Initiatives Support Corporation (USC) can offer a better interest rate: 6%, as opposed to 7% +. The 1992 staff report to Council/Agency stated that the $200,000 loan would be paid back over five years. The LlSC loan needs to be paid back over three years, which would require higher payments over those three years, but would result in a savings to the City of $13,500 in interest due to the shorter loan term. The treatment of the LlSC loan would be consistent with the prior Council approval of the proposed SAM CO loan. Both the City and the Agency would participate as follows: 1. The City would repay one half of the loan ($100,000 principal plus $10,016 interest) over three years, using HOME funds. The City would co-sign the LlSC note in order to reflect this obligation. 2. sacs would repay the other one half of the loan over three years, depending on corporate donations raised and on project revenues. It should be noted that the ability of sacs to repay the loan from these sources is not assured, given the uncertain nature of corporate donations and the very low rents required to provide a transitional housing apartment project. Therefore, the Redevelopment Agency would be required to co-sign on the LlSC loan with sacs, thereby being responsible for repayment of principal and interest on the loan to the degree that sacs fails to pay. There is a reasonable expectation that the Agency would be required to repay some or all of the sacs obligation, with a maximum exposure of $118,000. If sacs is unable at any point to make required quarterly repayments, the Agency will have the option of paying interest-only payments or principal and interest payments over the course of the three years, with a balloon payment at the end of Year Three of all outstanding principal and interest, or of total pre- payment at any time without penalty (a range of slightly more that $100,000 to $118,000). sacs will be obligated for an additional two years to raise and direct corporate funds and direct residual project receipts to repaying the Redevelopment Agency for its exposure as a co-obligor. If after five years, they have not raised sufficient funds, the outstanding balance of the Redevelopment Agency's exposure will be incorporated into the City's loan and paid back through residual receipts, if any. DeveloDment Aareement The Development Agreement (attached) contains the terms and conditions of the City/Agency loan. Terms are similar to those approved for the 31 Fourth Avenue short- term housing project. The noteworthy conditions are as follows: 3-5 - - .. Page6,ltem 36.,~ Meeting Date 10-11-94 1. Acquisition will be completed in four months or less and rehabilitation will be completed within two months following acquisition; 2. Existing residents will be allowed to remain as long as they wish, allowing project conversion through attrition. Project history shows that the majority of residents move within six months to one year from the time they move in. This will provide a smooth transition for SBCS when they acquire the project and will save considerable project costs as relocation payments will not be necessary or required. 3. Residual receipts, if any, will be paid on an annual basis. 4. The loan will be evidenced by promissory notes executed by SBCS in favor of the City/Agency and secured by Deeds of Trust (documents attached). 5. Loans are conditioned on City-receipt of HOME funds. 6. Project will be sustained as housing for at-risk homeless families or very-Iow- income families for an indefinite period. The initial loan term is 55 years and can be extended to 80 years with five year extensions at the discretion of the City. City will be repaid as discussed in the "City Loan" section above. 7. Chula Vista residents will be given priority for six of the 12 units. This unit count of 50% of the project corresponds to the proportion of financing provided by the City/Agency (about 50%) FISCAL IMPACT: Approval of the recommendation will result in the following potential fiscal impact on the City and the Redevelopment Agency. 1. City Loan: The City will loan $250,000 in Home Funds to SBCS initially for acquisition and rehabilitation. The loan will accrue interest at 6%. Principal and interest are payable only from residual receipts (rental income after all operating expenses and other debt service). All principal and interest not paid from residual receipts is due and payable if the loan is accelerated due to failure to comply with affordability and use covenants or upon loan term, which is 55 to 80 years, depending on options exercised. Analysis: It appears unlikely that the project will generate substantial residual receipts, so the City should anticipate not receiving repayment until the loan term expires. 2. Lisc Loan: The City and the Agency will co-sign the LlSC loan to SBCS, making the City and the Agency potentially obligated for $228,016 in repayment of principal and interest to LlSC. The City will pay back one half of the LlSC loan principal and interest ($110,016), and will add that repayment amount to the City loan to SBCS !increasing that loan amount to $360,016}. The remaining half of the LlSC loan that is guaranteed by the City and the Agency is to be paid by SBCS from contributions and from residual receipts. If SBCS were unable to pay any or all of that loan portion, the Agency would use the Low and Moderate Income Housing Fund to pay the loan ($11 O,OOOto $118,000, depending on the method and timing of repayment). The Agency resolution appropriates funds to be held for the potential maximum guarantee payment obligation. Any funds expended for the 3..' Page 7, Item ! ...". Meeting Date 10-11-94 guarantee will be added to the City loan amount, creating a maximum City/Agency exposure and SBCS repayment obligation of $478,016. Currently, the City has $1 million in HOME Funds and $342,292 in the Agency Low and Moderate Income Housing Fund. These funds can also be used to fund other affordable housing projects in the City. Currently, the City is working to protect two "at-risk" federal affordable housing projects, establish a first-time homebuyers program, an affordable for- sale housing development and child care center, housing rehabilitation, affordable rental housing, and other projects. In addition, the City is exploring the possibility of accessing new HOME funds that might be de-obligated from other jurisdictions that have not spent their HOME funds. IDGIDISK#51 17-4TH.RA4] IC:IWP51\AGENCYIRA4S1 17-4TH.RA4l 03.7 , . CJI'zu g:> a;} F- !Blank .3-ð' RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: City CI~Fk SPACE ABOVE THIS LINE FOR RECORDER'S USE Assessor Parcel No. 566-010-10-00 No transfer tax is due since this Agreement constitutes a covenant to a public agency, and does not involve a transfer of fee interest. Declarant HOUSING DEVELOPMENT AND LOAN AGREEMENT INCLUDING AFFORDABILITY COVENANTS [17 Fourth Avenue, Chula Vista] THIS HOUSING DEVELOPMENT AND LOAN AGREEMENT (the "Agreement") is entered into this --- day of October, 1994 (the "Effective Date"), by and among the City of Chula Vista, a municipal corporation ("City"), the Redevelopment Agency of the City of Chula Vista, a public body, corporate and politic ("Agency") and South Bay Community Services, a California non-profit public benefit corporation ("Developer"). From time to time herein, the city and the Agency shall be collectively referred to as "City/Agency". RECITALS A. Developer desires (1) to acquire certain improved real property (the "Property") located within the City of Chula Vista at 17 Fourth Avenue, and more particularly described in Exhibit A attached hereto and incorporated herein by this reference, (2) to rehabilitate the Property by making certain improvements and repairs thereto, and (3) to operate a 12-unit transitional hous- ing project (the "Project") for Homeless Families (defined be- low), and/or for Very Low Income Families (defined below) subject to the terms, conditions and covenants set forth herein. B. The total Property acquisition and development cost for the Project is expected to be approximately $840,583. Subject to the terms and conditions set forth herein, Developer expects to ,.. ~..f marshall the following resources in order to finance the acquisition of the Property and development of the Project: (1) a loan from the City of $250,000, to be made from the City's allocation of funding from the United states Department of Housing and Urban Development Home Investment Partnership Program ("HOME Program"); (2) a $194,551 loan from the County of San Diego ("County"); (3) a $114,837 loan from Home Savings of America ("Home Savings") and a $38,368 Federal Home Loan Bank Affordable Housing Program grant through Home Savings; )(4) a $200,000 loan ("LISC Loan") from Local Initiative Suppòrt Corporation ("LISC"), 50% of which shall be repaid by the City from the it's allocation of Home Program Funds and 50% of which shall be guaranteed by the Agency using its Low and Moderate Income Housing Fund ("LoW/Mod Fund") monies; and (5) private donations in the amount of $42,827. C. Through the development and operation of the Project, City, Agency and Developer desire to provide Homeless Families with an alternative affordable housing opportunity within the City, in accordance with the Housing Element of the City's General Plan. In order to accomplish this goal, the City desires to make a contingent loan of HOME Program funds to Developer and the Agency desires to make a loan of LoW/Mod Fund monies to Developer, such monies to be used for the acquisition and rehabilitation, relocation and related development aspects of the Project, subject to certain conditions designed to assure the implementation of the Project in accordance with the General Plan, Federal law, HOME Program regulations, and as otherwise provided herein. WHEREFORE, in consideration of their mutual and respective promises, and subject to the terms and conditions hereinafter set forth, the parties do hereby agree as follows: ARTICLE I ACQUISITION AND DEVELOPMENT OF THE PROPERTY 1.1 Work to be Performed. Developer agrees to (a) acquire the Property, (b) rehabilitate the twelve (12) units (each, a "Unit") of residential housing located at the Property and otherwise prepare them for occupancy by Homeless Families, and (c) operate the Project for occupation by Homeless and/or Very Low Income Families, subject to the terms of Article 3 hereof, and all other terms of this Agreement. To the extent required by the City/Agency, all such work shall be completed in accordance with acquisition, rehabilitation and management plans submitted to and approved by the City/Agency prior to and as a condition precedent to city/Agency entering into any loan, loan repayment or guarantee commitment hereunder. 1.2 Timinq of Pro;ect. Developer shall have completed .A'-' '" ../D acquisition of the Property within four (4) months of the Ef- fective Date, completed rehabilitation within two (2) months after acquisition of the Property, and achieved occupancy of substantially all Units by Homeless Families within eighteen (18) months after the acquisition of the Property. Developer's failure to complete such actions within the time periods provided shall constitute a material default under the terms of this Agreement. 1.3 citv and Other Government Permits: Laws. (a) Before commencement of improvement or rehabilitation upon the Property, Developer shall, at its own expense, obtain any and all permits and approvals which may be required by the City or other public agencies affected by such work. By entering into this Agreement, City makes no representations or assurances that the City or other public agencies affected by such work will grant the required permits and approvals required in connection therewith. (b) Developer shall carry out the rehabilitation of the Property and operation of the Project in conformity with all applicable laws, including, without limitation, all applicable federal labor standards, procurement regulations, Americans with Disabilities Act requirements, and City policies adopted pursuant to said federal standards, regulations, and requirements. (c) Developer shall permit all existing inhabitants of the Property to remain at the Property until each such inhabitant relocates of his or her own volition. Developer agrees to notify each inhabitant of its acquisition of the Property and of each inhabitant's right to remain at the Property in accordance with the Uniform Relocation Act and other applicable Federal regulations. 1.4 Hold Harmless: Insurance. (a) 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, attorney's fees and court costs, which may arise from the direct or indirect actions or inactions of the Developer or those of its contractors, subcontractors, agents, employees or other persons acting on Developer's behalf which relate to the Property or Project. This hold harmless agreement applies, without limitation, to all damages and claims for damages suffered or alleged to have been suffered by reason of the operations referred to in this paragraph, regardless of ~ ~~N whether or not city prepared, supplied or approved plans or specifications, or both, for the Property or Project. 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 Trust Deed (defined below). (b) within ten (10) days after the Developer's acquisition of the Property, Developer shall furnish to the city duplicate originals or..?ppropriate certificates of insurance coverage evidencing that Developer has obtained, or caused to be obtained, insurance coverage with respect to the Project in type, amount and from insurers as are reasonably acceptable to city, naming the City/Agency and its officers, agents, employees, representatives, and their respective successors, as named or additional insureds at its option. Such policies shall include, without limitation "all risk" property casualty insurance and comprehensive general liability insurance. Without limiting the generality of the foregoing, such policies shall also include coverage to insure Developer's indemnity obligations provided herein. Such insurance policies shall be maintained and kept in force during all periods that Developer holds title to the Property. 1.5 Anti-Discrimination Durinq Rehabilitation Construction. Developer, for itself and its successors and assigns, agrees that in the construction of improvements to rehabilitate the Property provided for in this Agreement, Developer will not discriminate against any contractor, employee or applicant for employment because of race, color, religion, sex, national origin, or disability. 1.6 Further Indemnification of citv. 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 elimination of blight and redevelopment of the Property pursuant to all applicable laws and that by contributing public funds to assist in the accomplishment of such redevelopment, or by otherwise contributing or assisting with the accomplishment of such redevelopment, the City assumes no responsibility for insuring that Developer's redevelopment of the Property is adequately undertaken (including, without limitation, the remediation of any hazardous or toxic substances on the Property) and as a material consideration to City for entering into this Agreement, (and not by way of limiting the generality of section 1.4(a), above), Developer agrees to indemnify, protect, defend and hold harmless City/Agency and any and all City/Agency's representatives, officers, employees, and their respective successors, from and against any and all claims, damages, actions, costs, demands, liabilities, obligations, expenses, damages, losses or costs, including without limitation, attorney's fees and court costs, which may arise or are in any A" .j ../), manner connected with the redevelopment of the Property pursuant to this Agreement. ARTICLE 2 CITY/AGENCY LOAN 2.1 citv/AqencV Loan Commitment. Subject to the te~~s and conditions set forth herein (a) the City hereby commits to (i) make a loan to the Developer ("city Loan"), in the total amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000); and (ii) repay fifty percent (50%) of the LISC Loan up to a maximum obligation of ONE HUNDRED TEN THOUSAND AND SIXTEEN DOLLARS ($110,016) and (b) the Agency hereby commits to repay fifty percent (50%) of the LISC Loan up to a maximum obligation of ONE HUNDRED EIGHTEEN THOUSAND DOLLARS ($118,000). Both the City Loan and the Agency Loan shall be used by the Developer for the exclusive purpose of assisting in financing the acquisition and rehabilitation of the Property and related development costs. (The "city Loan" and the "Agency Loan" shall be collectively referred to hereinafter as the "City/Agency Loan"). The following conditions must be fully satisfied, as reasonably determined by the City/Agency, in order for the City/Agency obligation to make the City/Agency Loan arises: (i) Developer shall secure final approval of all other funding necessary to acquire and rehabilitate the Property, and to prepare the Project for occupancy by Homeless Families; (ii) City shall have received the full proceeds with which to make the City Loan from the HOME Program; and all other loan documents regulating agreements and grant contracts related to the acquisition of the Property and the development of the Project; (iii) Developer shall provide the CitY/Agency with adequate assurances that the Developer will have access to sufficient operational funds to finance Project operations for a period of one (1) year from the Date of Occupancy (defined below); (iv) Developer shall duly execute (and acknowledge, if applicable) the Notes, the Trust Deeds and all related security documents described in section 2.2 below and deliver the same to the City/Agency or its designated agent; (v) All conditions contained in the purchase agreement governing Developer's acquisition of the Property (other than the deposit of city monies necessary to complete the purchase) shall be fully satisfied or waived in accordance with the provisions thereof; -'iJ"" ..].13 (vi) City/Agency shall have reviewed and approved, in its sole discretion, any and all purchase agreements, loan documents, regulatory agreements or grant contracts to be executed by or otherwise to be binding upon city/Agency or Developer in connection with its acquisition of the Property, its development and operation of the Project and/or its financing thereof. (viii) Developer shall grant to the City an irrevocable offer of dedicatiQp ("IOD") for a strip of land ten (10) feet wide located along from the westerly Property line to be used for street purposes, as such property is further described in the survey document attached hereto as Exhibit !!¡ (ix) Developer shall provide the City/Agency a resolution of its Board of Directors approving this Agreement and the related City/Agency Loan documents and authorizing Developer's Executive Director to execute this Agreement and the related City/Agency Loan documents on its behalf. (x) Developer shall satisfy all other obligations under this Agreement required to be performed prior to the closing on the City/Agency Loan¡ 2.2 Citv/Aqencv Promissory Notes and Deeds of Trust. (a) The Developer's obligation to repay the City Loan shall be evidenced by the promissory note (the "City Note"), in the form of Exhibit C attached hereto and incorporated herein by reference, and shall be subject to the terms and conditions contained therein. The city Note 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 Exhibit D attached hereto and incorporated herein by reference. (b) The Developer's obligation to repay the Agency Loan shall be evidenced by the promissory note (the "Agency Note"), in the form of Exhibit E attached hereto and incorporated herein by reference, and shall be subject to the terms and conditions contained therein. The Agency Note sha.ll be secured by a deed of trust (the "Agency Trust Deed") encumbering the Property as a fourth priority deed of trust in the form of Exhibit F attached hereto and incorporated herein by reference. 2.3 Repavment Obliqations. (a) Payment of all principal and accrued interest on the Agency Loan shall be made on an annual basis by on or before the yearly anniversary of the Effective Date hereof for a period of five (5) consecutive years commencing with the Effective Date hereof to the extent and in the amount of any and all available ~ J ~ 1'1- proceeds raised by Developer through a five year fundraising program approved by the Agency ("Approved Fundraising Program"). Developer agrees to use its best efforts to raise the monies necessary to fulfill its obligations hereunder in accordance with the Approved Fundraising Program. In the event that Developer fails to fulfill its repayment obligations to the Agency hereunder, any and all unpaid principal and interest under the Agency Loan shall be repaid out of any and all "Residual Receipts" in accordance with the terms of repayment set forth in Section 2.3(b) through,(e) below. (b) Except as otherwise provided in Section 2.3{a) above, payment of principal and interest on the City/Agency Loan shall be made, on an annual basis out of any and all "Residual Receipts (defined below) derived from the Property and/or the operations of the Project. Such amounts shall be paid to the City/Agency on a priority basis to all other debt service on the Property except for the $114,837 Home Savings Loan and the $200,000 LISC Loan. Residual Receipts shall be calculated by Developer each and every year commencing with the Date of Occupancy as provided in Section 4.3. Residual Receipts, if any, shall be paid to the City/Agency on or before thirty (30) days after the first year anniversary of the Date of Occupancy and on or before thirty (30) days after each subsequent yearly anniversary thereafter. (c) "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 $114,837 Home Savings Loan and the $200,000 LISC Loan, a property management fee not to exceed 5% of all other such operating expenses, salaries and benefits of an on-site manager, utilities, maintenance, insurance, property and other taxes, repairs, approved alterations, trash collection, reasonable legal fees, and allocable agency van costs, maintenance supplies, administrative overhead directly attributable to the Property, replenishment of capital reserves accounts included in Developer's approved budgets, such amounts 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 projected operating expenses, such amounts to be held in trust exclusively for use for the maintenance and preservation of the Property. 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/Agency's debt limitation, including, without the County Loan except as otherwise provided ,. ~ ../5 herein. (d) For so long as the Property is subject to a Restricted Operations Period, as such period may be extended by the City/Agency from time to time in accordance with Section 3.7, below, except as otherwise provided in Section 2.3(a), above, Developer's obligation to repay the City Loan and the Agency Loan shall be limited to Developer's annual payment of Residual Receipts as described above. Upon the expiration, or otherwise termination of the Restricted Operations Period, the city 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 Note immediately due and payable, or (b) to require installment payments under the Note based upon (i) a restated principal balance comprised, in the aggregate, of any and all outstanding principal and interest under the Note existing as of the date of City/Agency's election, (ii) a prospective interest rate per annum equal to the Prime Rate then in effect for Wells Fargo Bank, San Diego office, or such other rate mutually agreed to by the city 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 its sole discretion, not to be less than five (5) years. In the event that City/Agency elects repayment approach (b) Developer agrees to execute an endorsement to the Note in favor of city/Agency reflecting the amended repayment terms described above. (e) In the event that the Property is sold or otherwise transferred at any time after the Restricted Operations Period, as it may be extended from time to time in accordance with section 3.7 below, regardless of whether or not such sale is voluntary or involuntary on the part of either city/Agency or Developer, as between City/Agency and Developer, the parties agree as follows: Any and all sales or other proceeds in excess of an amount equal to the sum of (i) the current outstanding principal balance and all accrued but unpaid interest under the City Note and the Agency Note (the "City/Agency Loan Balance") and (ii) any direct costs to the City/Agency incurred as a result of such sale including, without limitation, the costs to the City/Agency of prosecuting a foreclosure action or a condemnation action, shall be distributed to the Developer. All remaining sales or other proceeds shall be distributed to the city/Agency as follows: (x) first, an amount equal to the product of the City Agency Loan Balance multiplied by a fraction, the denominator of which shall be equal to the total Property acquisition and Project development costs for the Project, but not to exceed $900,000, and the numerator of which shall be equal to the sum of the City Loan and Agency Loan amounts advanced to the Developer or LISC to fund the acquisition and/or development of the Project, shall be retained by the City/Agency for use as the ~ .3.. /~ City/Agency determines in its sole discretion; (y) all remaining sales or other proceeds (the "Developer Targeted Monies") shall be retained by the City/Agency in a trust account to be appropriated for the acquisition, development, rehabilitation, operations of (or otherwise use in connection with) affordable housing projects subject to the mutual approval of such appropriations by the required vote of the City Council and the Board of Directors for Developer. In the event that City proposes to Developer a use for all or a portion of the Developer Targeted Monies and Dev~loper and the city cannot reach agreement with respect to such proposed use, the City in its reasonable discretion, by giving written notice to Developer ("At Risk Notice"), may declare the portion of the Developer Targeted Monies proposed for such use to be "at risk" of reversion to the city to be used in the City/Agency's sole discretion. In the event that the City/Agency and Developer have not resolved their disagreement over the use of any such "at risk" monies within two years after the date of city/Agency's At Risk Notice, such monies, together with accrued interest thereon shall revert to the City/Agency to be used by the City/Agency in its sole discretion. The parties agree to exercise their best efforts to reach agreement as to the use of the Developer Targeted Monies in order to avoid the need for the city/Agency to issue an At Risk Notice and the ultimate reversion to the CitY/Agency as provided above. Such best efforts shall include meeting and conferring on an expedited schedule with Developer as to a resolution. (f) Notwithstanding the foregoing, in the event that Developer, or any successors thereto, materially breaches the terms of this Agreement, the Notes, or the Trust Deeds, or triggers a due on sale, transfer or encumbrance provision set forth in the Note or Trust Deed, 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. 2.4 Lien Prioritv. Title Insurance. As a condition to City/Agency obligation to fund the City Loan and the Agency Loan, there shall be no liens or encumbrances upon the Property having priority over the Trust Deeds, other than (a) the Deed of Trust securing the Home Savings Loan, (b) the Deed of Trust securing the LISC Loan, and (c) 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 Attorney 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 .A' ..3,17 the City/Agency Attorney (at Developer's expense), concurrently with the closing of the City Loan and the Agency Loan, with combined liability equal to the amount of $475,000. 2.5 Fundinq of Citv Loans: Sources of Citv Loan. (a) The City shall deposit $235,000 of the City Loan (the "Acquisition Funds") into an existing escrow account #30399- MSB at Park Camino Escrow, which has been established for the acquisition of the ProPßrty, or a separate sub-escrow account, at City's option, upon receipt of written proof satisfactory to the City Attorney that all conditions to the city's obligation to make the city Loan hereunder have been fully satisfied. Such funds shall remain uncashed until such time as all other conditions to close of escrow including the deposit of other funds necessary to complete the purchase, have been satisfied. In the event that Developer fails to acquire title to the Property within one hundred twenty (120) days after City's deposit of the Acquisition Funds into escrow, City, at its sole option, with unilateral written instructions to escrow, may require that all such proceeds be immediately returned to City. Concurrent with the closing of Developer's purchase of the Property, the Acquisition Funds shall be released to the seller of the Property and this Agreement and the City/Agency Trust Deeds, in accordance with the City instructions to Escrow, shall be recorded with the Office of the San Diego County Recorder. Developer shall be responsible for any and all of Agency's escrow, title and recording costs arising in connection with the City/Agency Loan, such costs to be paid by the Developer through escrow. (b) Of the remaining amount of the City Loan, $15,000 (the "Rehabilitation Funds") 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 rehabilitation work performed as of the date of such application or amounts otherwise due to contractors or subcontractors performing rehabilitation work on the Property. As a condition to City's obligation to make any distribution of Rehabilitation Funds, Developer shall provide the Community Development Director with (a) an invoice submitted by the contractor or subcontractor performing the work describing the work performed and specifying the amount owed in connection therewith; (b) appropriate mechanic's lien releases in a form acceptable to the City if deemed necessary by the City Attorney, and (c) any other reasonable information, documentation or certifications requested by City to assure, the quantity and quality of the work performed. (c) Of the remaining amount of the City Loan, $110,016 shall be funded to the extent necessary to fulfill the City's obligation under the promissory note evidencing the LISC Loan ~ ../1 (the "LISC Note") to make quarterly payments to LISC in the amount of $9,168 per quarter for a period of three years, such payments constituting fully amortized principal and interest payments at the rate of 6% per annum with respect to 50% of the principal balance of the LISC Loan. (d) It is understood that the source of the proceeds for the City Loan are derived from the federal HOME Program or as otherwise determined by the city in its sole discretion. Any amounts of the City Lo~~ not distributed to Developer in accordance with the provisions hereof shall be retained by the city, at City's election, to be offset against outstanding principal of the City Loan. 2.6 Fundinq of the Aqencv Loan: Sources of the Aqencv Loan. (a) The Agency Loan in the maximum amount of $118,000 shall be funded to the extent necessary to fulfill the Agency obligation under the LISC Note as follows: (i) To make quarterly payments to LISC in the amount of $1,500 per quarter for a period of three years, such payments constituting interest only payments at the rate of 6% per annum with respect to 50% of the principal balance of the LISC Loan; and (ii) to make a balloon payment to LISC in the amount of $100,000 upon the three year maturity date of the LISC Note. Notwithstanding the foregoing, Agency's obligation to make such disbursements of the Agency Loan shall arise only to the extent Developer fails to make such payments itself in accordance with its primary obligation to do so under the LISC Note and pursuant to section 2.3(a) of this Agreement. (b) It is understood that the source of the proceeds for the Agency Loan are derived from the LoW/Mod Fund or as otherwise determined in the Agency's sole discretion. Any amounts of the Agency Loan not distributed to Developer in accordance with the provisions hereof shall be retained by the Agency to be offset against outstanding principal of the Agency Loan. ARTICLE 3 COVENANTS RUNNING WITH THE LAND 3.1 Use and Maintenance Covenants. Developer covenants and agrees, for itself, its successors and assigns, and every person acquiring an interest in the Property or any part thereof, that the Developer will: (a) Use at least 12 units of the Property solely for ~ ~-I! (i) residential housing for Homeless Families that are such upon initial tenancy at a rental rate not to exceed 30% of the families' actual gross income, pursuant to the terms and conditions of Developer's Unit Leases and related documents for the Project or (ii) subject to the restrictions set forth below, for residential housing for Very Low Income Families at a rental rate not to exceed 30% of the then current qualifying income for such families, described below. For purposes of this Agreement, the term "Homeless Families" shall mean two or more persons related by blood, marri~ge, or adoption, or two or more unrelated individuals bearing the generic character of living together as a relatively permanent bona fide housekeeping unit sharing such needs as cooking facilities, in each such case, at least one of which shall be a minor (a person under the age of 18 years) who, because of their economic circumstances, are sleeping on a regular basis in a place not designed or constructed for habitation by members of an individual family unit ("Non- Habitable Sleeping Location") including, but not limited to, a park, street, sidewalk, vehicle, open space area or shelter, or who, because of their economic circumstances, are in the process of being evicted from a dwelling with the reasonable prospect that they will have to sleep on a regular basis in a Non- Habitable Sleeping Location, or who, because of their economic circumstances, are disabled persons being discharged from institutions with the reasonable prospect that they will have to sleep on a regular basis in a Non-Habitable Sleeping Location. Such definition shall be amended to the extent required in order to conform with HOME Program regulations, as amended from time to time. For purposes of this Agreement, the term "Very Low Income Families" shall mean families (as defined above) having an annual income no greater than 50% of the San Diego County median income, as established by the United States Department of Housing and Urban Development (HUD), as such parameter has been established and may be amended by applicable Federal or California law; (b) Maintain and repair the Property in a decent, safe and sanitary condition, and according to all applicable building codes, at its sole expense. (c) Operate the Property and Project in conformance with the HOME Program regulations, the City's HOME program description and the terms and conditions of California law governing the use of Low/Mod Fund monies. 3.2 Conversion to Verv Low Income Housinq Tenants. Developer covenants and agrees, for itself, its successors and assigns, and every person acquiring an interest in the Property or any part thereof that Developer shall use its best efforts to obtain adequate operational funding for the continuous provisions of twelve (12) units of residential housing for Homeless Families. In the event that (a) adequate operational funding is not available for the operation of one or more Units for a period ~ ~'2D of three months or greater, (b) Developer has reasonably exhausted (i) all available appeals of decisions to deny such funding and (ii) alternative sources of funding, and (c) Developer provides City/Agency with reasonable proof of the occurrence of (a) and (b), then Developer may elect to convert such Unites) to use for providing residential housing to Very Low-Income Families, subject to city/Agency approval, in its sole discretion. In the event that any such conversion is so elected by Developer and approved by the City/Agency, Developer agrees to exercise its best efforts to attempt to obtain sufficient funds to reconvert the converted Units back to use for occupation by Homeless Families. From time to time, the City/Agency may require the Developer to submit to the CitY/Agency written proof reasonably satisfactory to the City/Agency of Developer's "best efforts" to reconvert such Units. 3.3 prioritv Residencv. To the extent permitted by applicable law, provided they qualify for the vacant Unit, as described above, priority for occupancy shall be given to Chula vista residents for six (6) of the twelve (12) units. Such priority shall be assured pursuant to the terms of a priority occupancy plan to be submitted to the City/Agency for its approval; such approval shall be a condition precedent to City/Agency's obligation to fund the City Loan and Agency Loan. 3.4 Obliaation to Refrain from Discrimination. Developer herein covenants and agrees for itself, its successors and assigns, and every person acquiring an interest in the Property, or any part thereof, that there shall be no discrimination against or segregation of any person or groups of persons on account of race, color, religion, sex, sexual orientation, national origin, disability, or familial status in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, or any part thereof, nor shall Developer 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, subleases, or vendees in the Property. 3.5 Form of Nondiscrimination and Nonseareqation Clause. Developer shall refrain from restricting the rental, sale or lease of the Property on the basis of race, color, religion, sex, national origin, disability, or familial status of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (i) In deeds: "The grantee herein covenants by ~ 3-2./ and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, sexual orientation, national origin, disability, or familial status in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 in the land herein conveyed. The foregoing covenants shall run with the. land." (ii) In leases: "The lessee herein covenants by and for himself, his heirs,executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, sexual orientation, national origin, disability, or familial status 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 leased." (Hi) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, sexual orientation, national origin, disability, or familial status in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the 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 the land." 3.6 Covenants Aqainst Permittinq Occupancy bY Persons Usinq Druqs or Alcohol and Violent Offenders (a) Developer covenants and agrees, for itself, its successors and assigns, and every person acquiring an interest in the Property or any part thereof, that to the extent permitted by ~ ß ..;!2. applicable law, no Unit shall be knowingly rented to, or permitted to be occupied by: (i) any person who is currently using, or recently has used illicit drugs or excessive alcohol (but not including a "recovering" drug or alcohol abuser who is enrolled in a on-going treatment program and has not recently used illicit drugs or alcohol): or, (ii) any person who has, within the period of time extending back two (2) years prior to any period of occupancy, or proposed occupancy, been convicted of any offense which had as one or more of its elements either (i) the possession, sale o~.use of any illicit drug or (ii) the use of violence or force; provided, however, that Units'may be rented to or permitted to be occupied by past users of violence or force in domestic violence cases if such perpetrator provides proof of current and proficient participation or completion of a certified program for batterers. (b) Each agreement pursuant to which any person occupies, or obtains the right to occupy, any Unit shall contain (and is hereby deemed to contain) provisions describing the restrictions set forth above, and making the violation thereof (whether a violation at the commencement of occupancy, by subsequent conviction or by permitting a convicted person to subsequently occupy) grounds for immediate termination of any right of continued occupancy under such agreement by such convicted person or any other person, which termination right Developer covenants and agrees (as described above) that it will vigorously enforce. (c) It is understood and agreed that the purpose of this section 3.6 is to provide for decent, safe living environments, and to the extent any provision of this Section 3.6 is determined by a court of competent jurisdiction to be overly broad, such provision shall be narrowed as may be required by such court to permit enforcement thereof to achieve the purposes described above. 3.7 Duration of Covenants: Enforcement. (a) The covenants contained herein shall run with the land and remain in effect commencing with the Developer's acquisition of the Property, and thereafter, for an initial period of fifty- five (55) years commencing with the Date of Occupancy, which is defined as the date upon which the first qualified tenant takes occupancy of a unit on the Property. The City/Agency, in its sole discretion, may elect to extend the effectiveness of the restrictive covenants provided herein for five (5) successive five (5) year periods by notifying Developer, or the then current owner of the Property, in writing, of such election prior to the expiration of the restricted operations period then in effect, and recording an amendment to this Agreement, signed by the City/Agency, reflecting such election. This initial 55-year restriction period, as extended by the City/Agency from time to ~ ..! ...2.. 3 time pursuant to the terms hereof, shall be referred to as the "Restricted Operations Period". The covenants established herein shall, without regard to technical classification and designation, be binding on the part of the 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 it~ own right and for the purposes of protecting the interests 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, remain, or are owners of any particular land or interest therein. City/Agency shall have the right to unilaterally terminate the covenants at any time 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 Trust Deed and the Note including, without limitation, foreclosure proceedings against the Property. (b) without limiting the generality of the foregoing, in the event the actual rent collected by Developer for any Unit is in excess of the maximum rent allowed for such Unit in violation of this Agreement, the amount by which any actual rent collected for such unit exceeds such maximum rent for such 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 Section 3.2, 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. (c) 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 ~ J..J'I for management and/or repair purposes, and to obtain reimbursement from the 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 the City/Agency and the 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 pu*poses 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. Any such entry shall be made only after reasonable notice to the Developer (provided, however, that entry to ensure compliance with the Restrictions may be made 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. (d) 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 limitations contained in the 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 Note or Trust Deed, or otherwise provided at law or in equity. ARTICLE 4 PROPERTY MANAGEMENT AND MONITORING PROVISIONS 4.1 Propertv Manaqement Plan. Developer shall prepare and submit a Property Management Plan (Plan) to the Community Development Director for the City/Agency prior to the rental of any Unit. The Plan shall include policies and procedures by which the property will be managed and the name of a proposed property management agent who has low-income housing management experience. As part of the Plan, the Developer shall provide at its sole expense a full-time resident property manager who will occupy one of the Units of the adjacent short-term housing ~ 3 ..J.5 project or the Project. The Community Development Director shall have 10 days from the receipt of said Plan to approve or disapprove all or part of the Plan. Subsequent to final approval of the Plan, any amendment proposed by the Developer to said Plan shall be submitted to the Community Development Director for approval. 4.2 Replacement of Proper tv Manaqement Aqent. In the event that the Property Management agent is not managing the property in a manner consistent with the Property Management Plan, then the Developer shall replace said agent within 30 days of a written request from the Community Development Director. In the event that the Developer wishes to replace the Property Management agent for any reason, then the Developer shall submit a written request to the Community Development Director to hire a new Property Management agent. The Community Development Director shall have ten days to approve or disapprove the request. 4.3 Repòrtinq. Developer shall, on a annual basis, provide a written report ("Report") to the City/Agency for the previous twelve months which includes demographic information on all the tenants which have occupied the units. In addition, the Report shall include a financial statement of the income, operating expenses, and Residual Receipts, if any for the Property. The Report shall be submitted to the Community Development Director within 30 days of the end of the applicable twelve month period. 4.4 Monitorinq. Developer shall fully cooperate with City/Agency staff in connection with the city/Agency's structuring and administration of a program to monitor affordable housing within the City. without limiting the generality of the foregoing, such monitoring program shall provide a mechanism whereby, on an annual basis, the definitions provided in section 3.1 are adjusted for the annual change in median income promulgated by HUD. ARTICLE 5 GENERAL PROVISIONS 5.1 Bindinq Effect of Aqreement. The burdens of this Agreement bind and the benefits of this Agreement inure to the parties' successors and assigns; provided, however, that in no event shall Developer be entitled to assign any of its rights hereunder without the prior written consent of city/Agency, which may be withheld in City/Agency's sole and absolute discretion, except that such consent shall not be unreasonably withheld with respect to an assignment thereof to another non-profit corporation with the demonstrated capability to implement the ~ J~:J.' Project. 5.2 Relationship of Parties. It is understood that the contractual relationship between City/Agency and Developer is such that Developer is an independent entity and not an agent of City/Agency. 5.3 Notices. All notices, demands and correspondence required or provided for under this Agreement shall be in writing and delivered in person.or dispatched by certified mail, postage prepaid. Notice required to be given to City/Agency shall be addressed as follows: City of Chula Vista 276 Fourth Avenue Chula vista, California 91910 Attn: Community Development Director Notice required to be given to Developer shall be addressed as follows: Executive Director South Bay Community Services 315 Fourth Ave., Ste. E Chula Vista, CA 91910 A party may change its address by giving notice in writing to the other party. Thereafter, notices, demands and other pertinent correspondence shall be addressed and transmitted to the new address. 5.4 Attornevs' Fees. In the event of any conflict or dispute concerning the interpretation or enforcement of any of the terms or provisions of this Agreement or otherwise arising out of this Agreement, the prevailing party shall be entitled to recover from the other party any and all reasonable costs and expenses incurred in connection therewith, including, without limitation, attorneys' fees and court costs, whether or not a legal action is commenced. 5.5 Costs of Implementinq Aqreement. Any and all title fees, recording fees, escrow fees or other costs related to the implementation of the terms of this Agreement shall be borne 100% by Developer. 5.6 Rules of Construction. This Agreement, together with all agreements referred to herein, constitutes the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiation or previous agreements between the parties, either written or oral with ~ j ,*,7 - - -. 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 City/Agency or by Developer. All amendments hereto must be in writing signed by the appropriate authorities of the City/Agency and by Developer. 5.7 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and which shall be deemed a single agreement. ,. 5.8 Severability. If any part of this Agreement is held invalid, the remaining terms and conditions shall not be effected unless their enforcement under the circumstances would be unreasonable, inequitable or otherwise frustrate the purposes of this Agreement. 5.9 Time. Time is of the essence of this Agreement and of each and every term and condition hereof. 5.10 Survival; Defaults. (a) It is understood that any and all indemnities provided herein by Developer to the City/Agency and/or city/Agency shall survive any termination of this Agreement or foreclosure, release or reconveyance of the Trust Deed or Security Agreement. All other obligations of Developer hereunder shall likewise survive any release or reconveyance of the Trust Deed or Security Agreement. It is understood that except for those obligations under the Note which derive from this Agreement, none of Developer's obligations hereunder shall be secured by the Trust Deed or Security Agreement; provided, however, that it is understood that any default hereunder shall constitute an "Event of Default" under the Trust Deed. (b) Developer shall be in default hereunder if it shall fail to observe or perform any covenant, condition, restriction or provision contained herein on its part to be observed or performed which continues after written notice to Developer and failure to cure within ten (10) business days of receipt of such notice except where by the nature of such default five days is insufficient, in which case until such time as it is reasonably possible in which to cure such default in City/Agency's discretion. The provisions of this Section 5.10 (b) are intended to govern when a default occurs under this Agreement, it being understood that there are separate provisions under the Notes, Trust Deeds which govern when a default occurs thereunder. (c) No reference in this Agreement to any particular right or remedy city/Agency may have in the event of any particular default shall be construed as limiting any ~ .3~2r other rights or remedies City/Agency may have at law or in equity as a result of said default or any other default by Developer hereunder. 5.11 Third Partv Beneficiary. In addition to those rights to which City/Agency is entitled, as specifically provided elsewhere in this Agreement, city/Agency shall be deemed to be a third party beneficiary to each and every other provision of this Agreement which runs in favor of City/Agency. other than the foregoing, there shall,~e no third-party beneficiaries under the terms of this Agreement. 5.12 Authority. Developer represents and warrants that: (a) it has the full legal right, power and authority to enter into and to fully perform its obligations under the terms of this Agreement and, upon execution of this Agreement, (b) the persons executing this Agreement, and all other agreements contemplated hereby, on behalf of the Developer are the duly designated agents of the Developer and are authorized to do so, and (c) that the execution of this Agreement has been authorized by a duly adopted resolution of its Board of Directors. Prior to closing on the City Loan and the Agency Loan, upon city/Agency's request, Developer shall provide City with a Resolution of its Board of Directors authorizing Developer to enter into this Agreement and all other agreements referred to herein, the form of such resolution to be subject to the City/Agency's prior written approval. (End of page, next page is signature page) ¿ ~~2-' IN WITNESS WHEREOF, this Agreement has been executed by the parties on the day and year first above written. "CITY" "AGENCY" THE CITY OF CHULA VISTA, THE REDEVELOPMENT AGENCY CALIFORNIA, a municipal corporation OF THE CITY OF CHULA VISTA ,. By By Mayor Chairman ATTEST: ATTEST: City Clerk Agency Secretary APPROVED AS TO FORM: "DEVELOPER" SOUTH BAY COMMUNITY SERVICES, a California non-profit public benefit city/Agency Attorney corporation By: Kathryn Lembo Executive Director ~ ~..3Þ Attachment List EXHIBIT A- Description of Property EXHIBIT B - IOD EXHIBIT C- City Note EXHIBIT D- City Deed of Trust EXHIBIT E - Agency Note EXHIBIT F - Agency Deed of Trust , . 'b' 31 , . ~ gJ ClfJ F- !Blank B .. 32-- EXHIBIT A DESCRIPTION OF PROPERTY [TO BE INSERTED] > . COUNCIL AUTHORIZES THE CITY ATTORNEY TO INSERT PROPER EXHIBIT IN FINAL FORM OF AGREEMENT 3 r33 , . ~ SF CUj ¿ !Blank 3 ,3'" EXHIBIT B rOD COUNCIL AUTHORIZES THE CITY ATTORNEY TO INSE~T PROPER EXHIBIT IN FINAL FORM OF AGREEMENT .3" 35 - . ~ gJ Clf} ~ !Blank ~..31ø EXHIBIT "C" PROMISSORY NOTE SECURED BY DEED OF TRUST $360,016 October -, 1994 This Promissory Note ("Note") is executed pursuant to that certain Housing Development and Loan Agreement Including Affordability Covenants (the "Agreement") dated as of October, 1994, by and among Sou~q Bay Community Services, a California-nõñ- 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 THREE HUNDRED SIXTY THOUSAND AND SIXTEEN DOLLARS ($360,016), 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 six (6) 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 Section 2.3 (b) through (f), of the Agreement, 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 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 "./ 3-37 -- .. 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 (Le., 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 ..Y 3--3f 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" pther 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 Notes 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 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. 12. This Note shall be governed by and construed /'" 3'~~ 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: (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. 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: \HOMEIATTORNEYISHEL TR3 .NOT .;" ~ ' '10 EXHIBIT "0" RECORDING REQUESTED BY AND WHEN RECORDED MAIL'TO: City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: City Clerk SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST. ASSIGNMENT OF RENTS. SECURITY AGREEMENT AND FIXTURE FILING The parties to this DEED OF TRUST, ASSIGNMENT OF RENTS SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made this ----- day of October, 1994, are SOUTH BAY COMMUNITY SERVICES, a California non-profit public benefit corporation ("Trustor"), whose address is 315 Fourth Avenue, Suite E, Chula Vista, California, a California corporation ("Trustee"), and the CITY OF CHULA VISTA, CALIFORNIA, a municipal corporation ("Beneficiary"), whose address is 276 Fourth Avenue, Chula Vista, California. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in that certain Housing Development and Loan Agreement Including Affordability Covenants ("Agreement") dated as of October, 1994 between Trustor, Beneficiary, and the Redevelopment Agency of the City of Chula vista. GRANT IN TRUST Trustor irrevocably grants, transfers and assigns to Trustee, in trust, with power of sale, that certain real property located in the city of Chula Vista, County of San Diego, State of California, described in Exhibit "A" attached hereto and made a part hereof, together with all easements and other rights now or hereafter appurtenant thereto and all improvements now or hereafter located thereon, including any and all existing and future lease, sublease, license and similar occupancy or use agreements with respect thereto, and any and all chattels, fixtures, equipment and machinery now or later to be attached / j --1/1 thereto, placed in or on, or used in connection with the use, enjoyment, occupancy or operation of all or any part thereof (such real property, appurtenances, contracts and improvements being referred to herein as the "Property"), and together with the rents, issues and profits thereof, subject, however, to the right, power and authority given to and conferred upon Beneficiary by Paragraph 11 below to collect and apply such rents, issues and profits. OBLIGATIONS SECU~?D This Deed of Trust is given for the purpose of securing: (i) payment of the indebtedness evidenced by that certain Promissory Note Secured by Deed of Trust (the "City Note") of even date herewith, in the principal amount of THREE HUNDRED SIXTY THOUSAND AND FIFTY DOLLARS ($360,050.00), executed by Trustor to the order of City; (H) performance of each agreement of Trustor herein contained; (Hi) payment and performance of any future advances and any additional existing or future obligations of Trustor to Beneficiary when evidenced by a writing or writings executed by both parties reciting that they are so secured; and (iv) any and all amendments, modifications, renewals and/or extensions of any of the foregoing, including but not limited to amendments, modifications, renewals or extensions which are evidenced by new or additional instruments, documents or agreements or which change the rate of interest on any obligations secured hereby. TO PROTECT THE SECURITY OF THIS DEED OF TRUST TRUSTOR AGREES: 1. To keep the Property in good condition and repair; not to remove or demolish any building or other improvement thereon except as otherwise provided in the Agreement; to complete or restore promptly and in good and workmanlike manner any building or other improvement 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, covenants, conditions, restrictions, leases and other agreements affecting the 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 the Property in violation of any law, covenant, condition, restriction, lease or other agreement affecting the Property; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of the Property may be reasonably necessary, the specific enumerations herein not excluding the general. without the prior written consent of Beneficiary except as otherwise provided pursuant to the terms of the Agreement, Trustor shall not make any alteration to the Property, or commence or continue any work of improvement or other action, which will or may decrease the value of the ",7' 3~l/y Property or any portion thereof; and should Beneficiary at any time determine that Trustor has commenced or is continuing in any such alteration, work of improvement or other action, Trustor shall immediately upon demand by Beneficiary cease such alteration, work of improvement or other action, and promptly restore the Property to its original condition. Beneficiary, its agents or employees may, at any reasonable time and from time to time, enter upon the Property and inspect the same and any books and reports pertaining thereto. 2. To provìae, maintain and deliver to Beneficiary fire and other liability insurance on the Property covering such risks and in such form and amount as may be required by Beneficiary from time to time, with insurers satisfactory to Beneficiary and with loss payable to Beneficiary as its interest may appear, and upon request Trustor will deliver the original of such policy or policies to Beneficiary. Beneficiary may, at its option, settle, compromise or adjust any insurance claims in such manner as Beneficiary may determine. Any amount collected under any fire or other insurance policy may be applied by Beneficiary upon any obligations secured hereby and in such order as Beneficiary may determine, or, at the option of Beneficiary, the entire amount so collected or any part thereof may be released to Trustor, on such terms and conditions as Beneficiary may require. 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 title to the Property, the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including without limitation cost of evidence of title and reasonable attorneys' fees, incurred by Beneficiary or Trustee in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust. Trustor shall give Beneficiary prompt written notice of any such action or proceeding. 4. To pay: (a) at least 10 days before delinquency, all taxes and assessments affecting the Property, including without limitation assessments on appurtenant water stock; (b) when due, all other encumbrances, charges and liens, with interest, on the Property or any part thereof; (c) all costs, fees and expenses of this Trust, including without limitation all fees and expenses of Trustee; and (d) all costs and expenses, including without limitation reasonable attorneys' fees, incurred by Beneficiary or Trustee in connection with the enforcement or foreclosure of this Deed of Trust and/or the collection of the obligations secured hereby, whether or not suit is filed. 5. Should Trustor fail to make payment or to do any act as herein provided, Beneficiary or Trustee, but without , .3 -'13 obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, and at the expense of Trustor, may: make or do the same in such manner and to such extent as either may deem necessary in order to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes; appear in and defend any action or proceeding purporting to affect title to the Property, 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, incur any liability, expend whatever amounts Trustee or Beneficiary may determine in their sole discretion to be necessary therefor (including without limitation cost of evidence of title), employ counsel and pay reasonable attorneys' fees. If Beneficiary shall elect to pay any tax constituting a lien against the Property, Beneficiary may do so in reliance upon any bill, statement or assessment procured from the appropriate office, without inquiring into the accuracy thereof or into the validity or enforceability of such tax; and in making any payments to protect the security hereof, Beneficiary shall not be bound to inquire into the validity of any apparent or threatened adverse title, claim, encumbrance, charge or lien before making an advance for the purpose of preventing or removing the same. Trustor hereby indemnifies Beneficiary and Trustee for all liabilities, losses and expenses, including without limitation reasonable attorneys' fees, suffered or incurred by Beneficiary or Trustee by reason of any action taken by Beneficiary or Trustee under this paragraph. 6. To pay immediately and without demand all sums expended by Beneficiary or Trustee pursuant to the provisions hereof, including without limitation all costs and expenses incurred pursuant to Paragraph 5 hereof and reasonable attorneys' fees expended in connection with the enforcement or foreclosure of this Deed of Trust and/or the collection of the obligations secured hereby, together with interest thereon from the date of expenditure at the Default Rate, all such amounts and such interest thereon constituting a portion of the obligations secured hereby. 7. Any award of damages in connection with any taking or condemnation, or for injury to the Property by reason of public use, or for damages for private trespass or injury thereto or for any other reason, is assigned and shall be paid to Beneficiary as further security for the obligations secured hereby, and Beneficiary shall be entitled at Beneficiary's option to commence, appear in and prosecute, in Beneficiary's own name, any action or proceeding and to make any compromise or settlement in connection with any such taking or damage; and upon receipt of such moneys Beneficiary may hold the same as such further security, or apply or release the same in the same manner and ~ 3~~ with the same effect as above provided for disposition of proceeds of fire or other insurance. 8. By accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare a default for failure so to pay. 9. At any time or from time to time and without notice upon written req~est of Beneficiary and presentation of this Deed of Trust and the Note or other obligations secured hereby for endorsement, and without liability therefor, and without affecting the personal liability of any person for payment of the obligations secured hereby, and without affecting the security hereof for the full amount secured hereby on all Property remaining subject hereto, and without the necessity that any sum representing the value of any portion of the Property affected by the Trustee's action be credited on the obligations, Trustee may, regardless of consideration: (a) reconvey all or any part of the Property; (b) consent to the making and recording, or either, of any map or plat of the Property; (c) join in granting any easement thereon; or (d) join in or consent to any extension agreement or any agreement subordinating the lien, encumbrance or charge hereof. 10. Upon written request of Beneficiary, and upon surrender of this Deed of Trust and all notes and other obligations secured hereby to Trustee for cancellation or endorsement, and upon payment of its fees and charges, Trustee shall reconvey, without warranty, the Property then subject hereto. Any reconveyance, whether full or partial, may be made in terms to "the person or persons legally entitled thereto," and the recitals therein of any matters or facts shall be conclusive proof of the truthfulness thereof. 11. Trustor hereby absolutely (and not merely as security) irrevocably grants, transfers and assigns to Beneficiary, during the continuance of these trusts, all of Trustor's right, title and interest in and to the rents, issues and profits of the Property. Prior to the occurrence of any event of default hereunder, Trustor shall have the right to collect such rents, issues and profits as they become due and payable. Upon the occurrence of any event of default hereunder, Trustor's right to collect such rents, issues and profits shall cease and Beneficiary shall have the right, with or without taking possession of the Property, to collect all rents, issues and profits including those past due and unpaid. Failure or discontinuance of Beneficiary at any time, or from time to time, to collect such rents, issues and profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. Nothing contained herein, nor the exercise of the right by Beneficiary to collect ..... 3 .. J./S the rents, issues and profits shall be, or be construed to be, an affirmation or approval by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor a subordination of the lien of this Deed of Trust to, any such tenancy, lease or option. The collection of rents, issues and profits and the application thereof to the indebtedness secured hereby shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. In collecting and receiving the rents, issue and profits of the Property, and/or in taking posse~~ion thereof, Beneficiary shall be entitled to exercise all of the rights, remedies and powers of an owner thereof, may conduct the business of Trustor in Beneficiary's own name or in the name of Trustor, may use any and all of Trustor's properties and facilities, and may deal with Trustor's creditors, debtors, tenants, lessees, agents, employees and other Persons and/or companies having any relationship whatsoever with Trustor, and alter or amend any contracts between them, in any manner Beneficiary may determine. All rights, remedies and powers given to Beneficiary herein may be exercised by Beneficiary either in person, by agent or by a receiver to be appointed by a court. 12. The parties intend for this Deed of Trust to create a lien on the Property, and an absolute assignment of the rents, all in favor of Beneficiary. The parties acknowledge that some of the Property and some or all of the rents may be determined under applicable law to be personal property or fixtures. To the extent such Property or rents constitute personal property, Trustor as debtor hereby grants Beneficiary as secured party a security interest in all such Property and rents, to secure payment and performance of the secured obligations. This Deed of Trust constitutes a security agreement under the California Uniform Commercial Code, covering all such Property and rents. 13. Trustor shall execute one or more financing statements and such other documents as Beneficiary may from time to time require to perfect or continue the perfection of Beneficiary's security interest in any Property or rents. Trustor shall pay all fees and costs that Beneficiary may incur in filing such documents in public offices and in obtaining such record searches as Beneficiary may reasonably require. In case Trustor fails to execute any financing statements or other documents for the perfection or continuation of any security interest, Trustor hereby appoints Beneficiary as its true and lawful attorney-in-fact to execute any such documents on its behalf. If any financing statement or other document is filed in the records normally pertaining to personal property, that filing shall never by construed as in any way derogating from or impairing this Deed of Trust or the rights or obligations of the parties under it. ~ 3-¥' 14. This Deed of Trust constitutes a financing statement filed as a fixture filing under section 9402(6) of the California Uniform Commercial Code, as amended or recodified from time to time, covering any property which now is or later may become fixtures attached to the Property. 15. All sums secured hereby shall, at the option of Beneficiary, immediately become due and payable without notice to Trustor, on any sale or other transfer, whether voluntary or involuntary, of all or,~ny part of the Property or any interest therein unless expressly authorized by Beneficiary in writing. 16. If this Deed of Trust is given to secure obligations of any person or entity other than Trustor (such person or entity being hereinafter referred to as "Principal"), Trustor waives notice of default, presentment, demand for payment, protest, notice of protest, notice of nonpayment or dishonor, and all other notices and demands of any kind whatsoever; and Trustor consents and agrees that Beneficiary may, from time to time, without notice or demand and without affecting the enforceability or security hereof: (a) take, alter, enforce or release any additional security for the obligations secured hereby; (b) renew, extend, modify, amend, accelerate, accept partial payments on, release, settle, compromise, compound, collect or otherwise liquidate the obligations secured hereby or any security therefor, and bid and purchase at any sale; or (c) release or substitute Principal or any guarantors of the obligations secured hereby. Upon the occurrence of an event of default hereunder, Beneficiary may enforce this Deed of Trust independently of any other remedy or security Beneficiary may at any time hold in connection with the obligations secured hereby, and it shall not be necessary for Beneficiary to proceed upon or against, and/or exhaust, any other remedy or security before proceeding to enforce this Deed of Trust. Until all obligations secured hereby are paid in full, Trustor waives all right of subrogation. 17. There shall be a "default" or "event of default" hereunder upon the occurrence of any of the following events: (a) default in the payment or performance of any obligations secured hereby or contained herein; or (b) the occurrence of any material breach or default under the Agreement. 18. Upon the occurrence of any default or event of default hereunder, all sums secured hereby shall, at the option of Beneficiary, immediately become due and payable without notice to Trustor, and Beneficiary may execute and deliver to Trustee written declaration of default and demand for sale and written notice of default and of election to cause to be sold the Property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, all notes and other obligations secured hereby, and all ",.. 3-1./7 documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in such 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 making payment to the Trustee at the time of sale by means of (i) cash, in lawful money of the united States, (ii) a cashier~s check drawn on a state or national bank, a state or federal credit union, or a state or federal savings and loan association domiciled in this state, or (iii) a cash equivalent which has been designated in the notice of sale as acceptable to the Trustee; each payable at the time of sale. Trustor shall have no right to direct or determine whether the Property shall be sold as a whole or in separate parcels or the order of the sale of separate parcels or the part of the Property to be sold, if only a part is sold. Trustee may postpone the sale of all or any portion of the 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, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including without limitation cost of evidence of title and reasonable attorneys' fees in connection with the sale, Trustee shall apply the proceeds of the sale to payment of: all sums expended under the terms hereof not then repaid with accrued interest at the rate set forth herein; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. 19. This Deed of Trust 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 holder and owner, including pledgee, of the note or other obligations secured hereby whether or not named as a beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and vice versa, and the singular number includes the plural and vice versa. Where more than one person or entity signs this Deed of Trust, their obligations hereunder shall be joint and several. 20. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of any pending sale under any other deed of trust or of ~ 3-11 any action or proceeding in which Tr~stor, Beneficiary or Trustee shall be a party unless brought by Trustee. 21. Beneficiary, or any successor in ownership of any obligations 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 Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be con~~usive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the predecessor Trustee, succeed to all of its title, estate, rights, powers and duties. Such instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded and the name and address of the new Trustee. 22. No power or remedy herein conferred is exclusive of, or shall prejudice, any other power or remedy of Trustee or Beneficiary given by law or under any other agreement between Trustor and Beneficiary. Each such power or remedy may be exercised from time to time as often as deemed necessary by Trustee or Beneficiary. 23. For any statement regarding the obligations secured hereby, Beneficiary may charge the maximum amount permitted by law at the time of the request therefor. 24. This Deed of Trust shall be governed by California law. 25. Trustor hereby requests that a copy of any notice of default and a copy of any notice of sale be mailed to Trustor at Trustor's mailing address set forth above. "Trustor": SOUTH BAY COMMUNITY SERVICES a California non-profit, public benefit corporation By Kathryn Lembo Title: Executive Director .1-'1' ,.t§"" "Beneficiary" THE CITY OF CHULA VISTA Tim Nader, Mayor ,. Attest Beverly Authelet City Clerk Approved as to form by Bruce M. Boogaard City Attorney M: IhooelattorneYI sbesdeed. 1 .3 -,50 ~ EXHIBIT "A" Legal Description [To be inserted] , . .3 -SJ ~ , . ~ rP a;} £ !Blank j-52- EXHIBIT "E" PROMISSORY NOTE SECURED BY DEED OF TRUST $118,000 October -, 1994 This Promissory Note ("Note") is executed pursuant to that certain Housing Development and Loan Agreement Including Affordability Covenants (the "Agreement") dated as of October, 1994, by and among South Bay Community Services, a California-noñ- 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 ONE HUNDRED EIGHTEEN THOUSAND DOLLARS ($118,000), 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 six (6) 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 Section 2.3 (a) through (f) 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 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 ~ .3 -53 -.- .. 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. 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 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. 6. 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. 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 öf damages in the event ~ 3 -!i'f 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 an~?ther 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 Notes 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. 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 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. 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 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. "",.,.- J -S"S 12. This Note shall be governed by and construed 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: (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. 15. The Agency each waive 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 By Its: M: \HOME\ATTORNEY\SHEL TR2. NOT "",.. 3-5' -..- .. EXHIBIT "F" RECORDING REQUESTED BY,. AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of Chula vista 276 Fourth Avenue Chula Vista, California 91910 Attention: City Clerk SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST, ASSIGNMENT OF RENTS. SECURITY AGREEMENT AND FIXTURE FILING The parties to this DEED OF TRUST, ASSIGNMENT OF RENTS SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made this - day of October, 1994, are SOUTH BAY COMMUNITY SERVICES, a California non-profit public benefit corporation ("Trustor"), whose address is 315 Fourth Avenue, suite E, Chula Vista, California, a California corporation ("Trustee"), and the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ("Beneficiary"), whose address is 276 Fourth Avenue, Chula Vista, California. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in that certain Housing Development and Loan Agreement Including Affordability Covenants ("Agreement") dated as of October --,1994 between Trustor, Beneficiary, and the City of Chula vista. GRANT IN TRUST Trustor irrevocably grants, transfers and assigns to Trustee, in trust, with power of sale, that certain real property located in the City of Chula Vista, County of San Diego, State of California, described in Exhibit "A" attached hereto and made a part hereof, together with all easements and other rights now or hereafter appurtenant thereto and all improvements now or hereafter located thereon, including any and all existing and future lease, sublease, license and similar occupancy or use agreements with respect thereto, and any and all chattels, fixtures, equipment and machinery now or later to be attached thereto, placed in or on, or used in connection with the use, enjoyment, occupancy or operation of all or any part thereof (such real property, appurtenances, ~ 3-57 contracts and improvements being referred to herein as the "Property"), and together with the rents, issues and profits thereof, subject, however, to the right, power and authority given to and conferred upon Beneficiary by Paragraph 11 below to collect and apply such rents, issues and profits. OBLIGATIONS SECURED This Deed of Trust is given for the purpose of securing: (i) payment of the indebtedness evidenced by that certain Promissory Note Secured by the Deed of Trust (the "Agency Note") of even date herewith, with a maximum principal amount of ONE HUNDRED EIGHTEEN THOUSAND DOLLARS ($118,000), executed by Trustor to the order of Agency; (ii) performance of each agreement of Trustor herein contained; (iii) payment and performance of any future advances and any additional existing or future obligations of Trustor to Beneficiary when evidenced by a writing or writings executed by both parties reciting that they are so secured; and (iv) any and all amendments, modifications, renewals and/or extensions of any of the foregoing, including but not limited to amendments, modifications, renewals or extensions which are evidenced by new or additional instruments, documents or agreements or which change the rate of interest on any obligations secured hereby. TO PROTECT THE SECURITY OF THIS DEED OF TRUST TRUSTOR AGREES: 1. To keep the Property in good condition and repair; not to remove or demolish any building or other improvement thereon except as otherwise provided in the Agreement; to complete or restore promptly and in good and workmanlike manner any building or other improvement 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, covenants, conditions, restrictions, leases and other agreements affecting the 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 the Property in violation of any law, covenant, condition, restriction, lease or other agreement affecting the Property; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of the Property may be reasonably necessary, the specific enumerations herein not excluding the general. without the prior written consent of Beneficiary except as otherwise provided pursuant to the terms of the Agreement, Trustor shall not make any alteration to the Property, or commence or continue any work of improvement or other action, which will or may decrease the value of the Property or any portion thereof; and should Beneficiary at any time determine that Trustor has commenced or is continuing in any such alteration, work of improvement or other action, Trustor shall immediately upon demand by Beneficiary cease such alteration, ~ 3-51' work of improvement or other action, and promptly restore the Property to its original condition. Beneficiary, its agents or employees may, at any reasonable time and from time to time, enter upon the Property and inspect the same and any books and reports pertaining thereto. 2. To provide, maintain and deliver to Beneficiary fire and other liability insurance on the Property covering such risks and in such form and amount as may be required by Beneficiary from time to time, with ins~Fers satisfactory to Beneficiary and with loss payable to Beneficiary as its interest may appear, and upon request Trustor will deliver the original of such policy or policies to Beneficiary. Beneficiary may, at its option, settle, compromise or adjust any insurance claims in such manner as Beneficiary may determine. Any amount collected under any fire or other insurance policy may be applied by Beneficiary upon any obligations secured hereby and in such order as Beneficiary may determine, or, at the option of Beneficiary, the entire amount so collected or any part thereof may be released to Trustor, on such terms and conditions as Beneficiary may require. 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 title to the Property, the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including without limitation cost of evidence of title and reasonable attorneys' fees, incurred by Beneficiary or Trustee in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Benef iciary to foreclose this Deed of Trust. Trustor shall give Beneficiary prompt written notice of any such action or proceeding. 4. To pay: (a) at least 10 days before delinquency, all taxes and assessments affecting the Property, including without limitation assessments on appurtenant water stock; (b) when due, all other encumbrances, charges and liens, with interest, on the Property or any part thereof; (c) all costs, fees and expenses of this Trust, including without limitation all fees and expenses of Trustee; and (d) all costs and expenses, including without limitation reasonable attorneys' fees, incurred by Beneficiary or Trustee in connection with the enforcement or foreclosure of this Deed of Trust and/or the collection of the obligations secured hereby, whether or not suit is filed. 5. Should Trustor fail to make payment or to do any act as herein provided, 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, and at the expense of Trustor, may: make or do the same in such manner and to such extent as either may deem necessary in order to protect the security hereof, Beneficiary or Trustee being authorized to enter ~ ~ -51 upon the Property for such purposes; appear in and defend any action or proceeding purporting to affect title to the Property, the security hereof or the rights or powe:r:s of Beneficiary or Trustee; pay, purchase, contest or comprom~se 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, incur any liability, expend whatever amounts Trustee or Beneficiary may determine in their sole discretion to be necessary therefor (including without limitation cost of evidence of title), employ coun€~l and pay reasonable attorneys' fees. If Beneficiary shall elect to pay any tax constituting a lien against the Property, Beneficiary may do so in reliance upon any bill, statement or assessment procured from the appropriate office, without inquiring into the accuracy thereof or into the validity or enforceability of such tax; and in making any payments to protect the security hereof, Beneficiary shall not be bound to inquire into the validity of any apparent or threatened adverse title, claim, encumbrance, charge or lien before making an advance for the purpose of preventing or removing the same. Trustor hereby indemnifies Beneficiary and Trustee for all liabilities, losses and expenses, including without limitation reasonable attorneys' fees, suffered or incurred by Beneficiary or Trustee by reason of any action taken by Beneficiary or Trustee under this paragraph. 6. To pay immediately and without demand all sums expended by Beneficiary or Trustee pursuant to the provisions hereof, including without limitation all costs and expenses incurred pursuant to Paragraph 5 hereof and reasonable attorneys' fees expended in connection with the enforcement or foreclosure of this Deed of Trust and/or the collection of the obligations secured hereby, together with interest thereon from the date of expenditure at the Default Rate, all such amounts and such interest thereon constituting a portion of the obligations secured hereby. 7. Any award of damages in connection with any taking or condemnation, or for injury to the Property by reason of public use, or for damages for private trespass or injury thereto or for any other reason, is assigned and shall be paid to Beneficiary as further security for the obligations secured hereby, and Beneficiary shall be entitled at Beneficiary's option to commence, appear in and prosecute, in Beneficiary's own name, any action or proceeding and to make any compromise or settlement in connection with any such taking or damage; and upon receipt of such moneys Beneficiary may hold the same as such further security, or apply or release the same in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 8. By accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare a default for failure so to pay. ~ .3-'0 9. At any time or from time to time and without notice upon written request of Beneficiary and presentation of . this Deed of Trust and the Note or other obligations secured hereby for endorsement, and without liability therefor, and without affecting the personal liability of any person for payment of the obligations secured hereby, and without affecting the security hereof for the full amount secured hereby on all Property remaining subject hereto, and without the necessity that any sum representing the value of any portion of the Property affected by the Trustee's action be credited on t~e obligations, Trustee may, regardless of consideration: (a) reconvey all or any part of the Property; (b) consent to the making and recording, or either, of any map or plat of the Property; (c) join in granting any easement thereon; or (d) join in or consent to any extension agreement or any agreement subordinating the lien, encumbrance or charge hereof. 10. Upon written request of Beneficiary, and upon surrender of this Deed of Trust and all notes and other obligations secured hereby to Trustee for cancellation or endorsement, and upon payment of its fees and charges, Trustee shall reconvey, without warranty, the Property then subject hereto. Any reconveyance, whether full or partial, may be made in terms to "the person or persons legally entitled thereto," and the recitals therein of any matters or facts shall be conclusive proof of the truthfulness thereof. 11. Trustor hereby absolutely (and not merely as security) irrevocably grants, transfers and assigns to Beneficiary, during the continuance of these trusts, all of Trustor's right, title and interest in and to the rents, issues and profits of the Property. Prior to the occurrence of any event of default hereunder, Trustor shall have the right to collect such rents, issues and profits as they become due and payable. Upon the occurrence of any event of default hereunder, Trustor's right to collect such rents, issues and profits shall cease and Beneficiary shall have the right, with or without taking possession of the Property, to collect all rents, issues and profits including those past due and unpaid. Failure or discontinuance of Beneficiary at any time, or from time to time, to collect such rents, issues and profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. Nothing contained herein, nor the exercise of the right by Beneficiary to collect the rents, issues and profits shall be, or be construed to be, an affirmation or approval by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor a subordination of the lien of this Deed of Trust to, any such tenancy, lease or option. The collection of rents, issues and profits and the application thereof to the indebtedness secured hereby shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. In collecting and receiving the rents, issue and profits of the Property, and/or in taking possession thereof, Beneficiary shall be ~ 3-'1 entitled to exercise all of the rights, remedies and powers of an owner thereof, may conduct the business of Trustor in Beneficiary's own name or in the name of Trustor, may use any and all of Trustor's properties and facilities, and may deal with Trustor's creditors, debtors, tenants, lessees, agents, employees and other Persons and/or companies having any relationship whatsoever with Trustor, and alter or amend any contracts between them, in any manner Beneficiary may determine. All rights, remedies and powers given to Beneficiary herein may be exercised by Beneficiary either in person, by agent or,QY a receiver to be appointed by a court. 12. The parties intend for this Deed of Trust to create a lien on the Property, and an absolute assignment of the rents, all in favor of Beneficiary. The parties acknowledge that some of the Property and some or all of the rents may be determined under applicable law to be personal property or fixtures. To the extent such Property or rents constitute personal property, Trustor as debtor hereby grants Beneficiary as secured party a security interest in all such Property and rents, to secure payment and performance of the secured obligations. This Deed of Trust constitutes a security agreement under the California Uniform Commercial Code, covering all such Property and rents. 13. Trustor shall execute one or more financing statements and such other documents as Beneficiary may from time to time require to perfect or continue the perfection of Beneficiary's security interest in any Property or rents. Trustor shall pay all fees and costs that Beneficiary may incur in filing such documents in public offices and in obtaining such record searches as Beneficiary may reasonably require. In case Trustor fails to execute any financing statements or other documents for the perfection or continuation of any security interest, Trustor hereby appoints Beneficiary as its true and lawful attorney-in-fact to execute any such documents on its behalf. If any financing statement or other document is filed in the records normally pertaining to personal property, that filing shall never by construed as in any way derogating from or impairing this Deed of Trust or the rights or obligations of the parties under it. 14. This Deed of Trust constitutes a financing statement filed as a fixture filing under section 9402{6) of the California Uniform Commercial Code, as amended or recodified from time to time, covering any property which now is or later may become fixtures attached to the Property. 15. All sums secured hereby shall, at the option of Beneficiary, immediately become due and payable without notice to Trustor, on any sale or other transfer, whether voluntary or involuntary, of all or any part of the Property or any interest therein unless expressly authorized by Beneficiary in writing. 16. If this Deed of Trust is given to secure ..,.". .3-"- obligations of any person or entity other than Trustor (such person or entity being hereinafter referred to as "Principal"), Trustor waives notice of default, presentment, demand for payment, protest, notice of protest, notice of nonpayment or dishonor, and all other notices and demands of any kind whatsoever; and Trustor consents and agrees that Beneficiary may, from time to time, without notice or demand and without affecting the enforceability or security hereof: (a) take, alter, enforce or release any additional security for the obligations secured hereby; (b) renew, extend, modify, amend, accele~te, accept partial payments on, release, settle, compromise, compound, collect or otherwise liquidate the obligations secured hereby or any security therefor, and bid and purchase at any sale; or (c) release or substitute Principal or any guarantors of the obligations secured hereby. Upon the occurrence of an event of default hereunder, Beneficiary may enforce this Deed of Trust independently of any other remedy or security Beneficiary may at any time hold in connection with the obligations secured hereby, and it shall not be necessary for Beneficiary to proceed upon or against, and/or exhaust, any other remedy or security before proceeding to enforce this Deed of Trust. until all obligations secured hereby are paid in full, Trustor waives all right of subrogation. 17. There shall be a "default" or "event of default" hereunder upon the occurrence of any of the following events: (a) default in the payment or performance of any obligations secured hereby or contained herein; or (b) the occurrence of any material breach or default under the Agreement. 18. Upon the occurrence of any default or event of default hereunder, all sums secured hereby shall, at the option of Beneficiary, immediately become due and payable without notice to Trustor, and Beneficiary may execute and deliver to Trustee written declaration of default and demand for sale and written notice of default and of election to cause to be sold the Property, which notice Trustee shall caUSe to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, all notes and other obligations secured hereby, and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in such 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 making payment to the Trustee at the time of sale by means of (i) cash, in lawful money of the united states, (ii) a cashier's check drawn on a state or national bank, a state or federal credit union, or a state or federal savings and loan association domiciled in this state, or (iii) a cash equivalent which has been designated in the notice of sale as acceptable to the Trustee; each payable at the time of sale. Trustor shall have no right to direct or determine whether ....,- ,3-'.3 the Property shall be sold as a whole or in separate parcels or the order of the sale of separate parcels or the part of the Property to be sold, if only a part is sold. Trustee may postpone the sale of all or any portion of the 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 shal!. be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including without limitation cost of evidence of title and reasonable attorneys' fees in connection with the sale, Trustee shall apply the proceeds of the sale to payment of: all sums expended under the terms hereof not then repaid with accrued interest at the rate set forth herein; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. 19. This Deed of Trust 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 holder and owner, including pledgee, of the note or other obligations secured hereby whether or not named as a beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and vice versa, and the singular number includes the plural and vice versa. Where more than one person or entity signs this Deed of Trust, their obligations hereunder shall be joint and several. 20. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of any 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. 21. Beneficiary, or any successor in ownership of any obligations 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 Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the predecessor Trustee, succeed to all of its title, estate, rights, powers and duties. Such instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded and the name and address of the new Trustee. .-.8" 3-'-1 22. No power or remedy herein conferred is exclusive of, or shall prejudice, any other power or remedy of Trustee or Beneficiary given by law or under any other agreemènt between Trustor and Beneficiary. Each such power or remedy may be exercised from time to time as often as deemed necessary by Trustee or Beneficiary. 23. For any statement regarding the obligations secured hereby, Beneficiary may charge the maximum amount permitted by law at the time of the req~~st therefor. 24. This Deed of Trust shall be governed by California law. 25. Trustor hereby requests that a copy of any notice of default and a copy of any notice of sale be mailed to Trustor at Trustor's mailing address set forth above. "Trustor": SOUTH BAY COMMUNITY SERVICES a California non-profit, public benefit corporation By Kathryn Lembo Title: Executive Director THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Tim Nader, Chairman Attest Agency Secretary Approved as to form by Bruce M. Boogaard Agency Attorney M: IhooelattorneYlsbcsdeed. 2 ~ ~ -¿,.s EXHIBIT "A" Legal Description [To be inserted] , . ~ 3-¿'~ ¡76f:t-- RESOLUTION JQW{ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A HOUSING DEVELOPMENT AND LOAN AGREEMENT INCLUDING AFFORDABILITY COVENANTS AND ASSOCIATED LOAN DOCUMENTS WITH SOUTH BAY COMMUNITY SERVICES (SBCS) FOR THE ACQUISITION AND REHABILITATION OF 12 UNITS AT 17 FOURTH AVENUE FOR TRANSITIONAL HOUSING FOR HOMELESS FAMILIES; AUTHORIZING MAYOR TO EXECUTE SAID AGREEMENT AND ASSOCIATED DOCUMENTS, AND APPROPRIATING $360,016 IN FEDERAL HOME PROGRAM FUNDS IN ORDER TO FUND CITY'S LOAN OBLIGATION THEREUNDER AND CITY'S LOAN REPAYMENT OBLIGATION THEREUNDER WITH RESPECT TO 50% OF A $200,000 LISC LOAN TO SBCS WHEREAS, South Bay Community Services (hereinafter "SBCS") is a non-profit community-based organization with the ability to acquire, rehabilitate, and manage affordable housing and provide services to homeless and displaces families; and WHEREAS, SBCS is requesting $360,016 in HOME funds to acquire and rehabilitate 12 units at 17 Fourth Avenue for transitional housing for homeless and displaced families; and WHEREAS, the provision of transitional housing units is identified as an objective in the Housing Element and a priority in the Comprehensive Housing Affordability Strategy; and WHEREAS, the City has Federal HOME funds available for affordable housing projects; and WHEREAS, the City desires to loan $360,016 in Federal HOME funds to SBCS for acquisition and rehabilitation of 17 Fourth Avenue transitional housing project. WHEREAS, the project qualifies as a Categorically Exempt project under the California Environmental Policy Act and has been duly noticed and filed as such. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA does hereby find, order, determine and resolve that the City of Chula Vista hereby appropriates $360,016 in Federal HOME funds for a loan to South Bay Community Services for the acquisition and rehabilitation of 12 units at 17 Fourth Avenue for transitional housing; BE IT FURTHER RESOLVED, that the recitals and findings set forth above are true and correct and incorporated herein by this reference. BE IT FURTHER RESOLVED, that the City Council approves the Housing Development Agreement and associated loan documents for 17 Fourth Avenue and authorizes the Mayor to sign said documents; 3- ,1 BE IT FURTHER RESOLVED, that the City Attorney or his designee is authorized to make minor non-substantive changes to the Housing Development Agreement and associated loan documents in order to ensure that the documents fully agree with the documents of the other lenders for 17 Fourth Avenue. APPROVED AS TO FORM BY: fuL-. =-~ ~~~ IB:117-4THCC.RESI ¡C:IWP51ICOUNCILIRESOSI 17-4THCC.RESI .3 ..l.~ I J./,2/o RESOLUTION xxxx RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING A HOUSING DEVELOPMENT AND LOAN AGREEMENT AND ASSOCIATED LOAN DOCUMENTS WITH SOUTH BAY COMMUNITY SERVICES (SBCS) FOR THE ACQUISITION AND REHABILITATION OF 12 UNITS AT 17 FOURTH AVENUE FOR TRANSITIONAL HOUSING FOR HOMELESS FAMILIES; AUTHORIZING THE CHAIRMAN TO EXECUTE SAID AGREEMENT AND ASSOCIATED DOCUMENTS; AND APPROPRIATING $118,000 IN REDEVELOPMENT AGENCY LOW AND MODERATE INCOME HOUSING FUNDS IN ORDER TO FUND THE AGENCY'S LOAN REPAYMENT OBLIGATION THEREUNDER WITH RESPECT TO 50% OF A $200,000 LlSC LOAN TO SBCS WHEREAS, South Bay Community Services (hereinafter "SBCS") is a non-profit community-based organization with the ability to acquire, rehabilitate, and manage affordable housing and provide services to homeless and displaced families; and WHEREAS, sacs is requesting that the Agency co-sign the $200,000 LlSC loan to sacs for 17 Fourth Avenue; and WHEREAS. sacs also requests that the City pay half the LlSC loan plus applicable interest using Federal HOME project funds, and $110,016 is being requested in a separate action for said payment; and WHEREAS, the provision of transitional housing units is identified as an objective in the Housing Element and a priority in the Comprehensive Housing Affordability Strategy; and WHEREAS, in accordance with California Health and Safety Code Section 3334.14(a)(4). the Agency has agreed to subordinate its affordability covenants to Home Savings' loan based upon Agency's finding and determination that no economically feasible alternative method of financing, refinancing or assisting 17 Fourth Avenue is reasonable available, and the Agency's subordination agreement shall include written commitments protecting the Agency's right to cure a default under the Home Savings' Loan consistent with the written commitments set forth in such Section 33334.14(a)(4); and WHEREAS, the project qualifies as a Categorically Exempt project under the California Environmental Quality Act and as a Categorical Excluded project under the National Environmental Policy Act and has been duly noticed and filed as such. NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA does hereby find, order, determine and resolve to appropriate $118,000 in Redevelopment Agency Low and Moderate Income Housing Funds to cover half the LlSC loan plus applicable interest so that if sacs defaults on the loan, the Agency can make payments on their behalf in accordance with our role as co-obligator. BE IT FURTHER RESOLVED, that the Agency approves the Housing Development Agreement, LlSC loan documents, and other associated loan documents for 17 Fourth Avenue and authorizes Chairman to sign said documents; 3.~~ l'f~ Resolution ~ Page 2 BE IT FURTHER RESOLVED. that the City Attorney or his designee is authorized to make minor, non-substantive changes to the Housing Development Agreement, LIse loan guarantee and associated loan documents in order to ensure that the documents fully agree with the documents of the other lenders for 17 Fourth Avenue. BE IT FURTHER RESOLVED. that the recitals and findings set forth above are true and correct and incorporated herein by this reference. APPROVED AS TO FORM BY: ~~ (~ gaard .~ ~ ene s - IB:117-4THAG.RESJ [C:IWPS1 IAGENCYIRESOSI 1 7-4THAG.RESJ 3-70