HomeMy WebLinkAboutRDA Packet 2001/08/14
~{f?
-.-
~
CllY OF
CHUlA VISTA
TUESDAY, AUGUST 14, 2001 COUNCIL CHAMBERS
6:00 P.M. PUBLIC SERVICES BUILDING
(immediately following the City Council meeting)
.JOINT MEETING OF THE
REDEVELOPMENT AGENCY I CITY COUNCIL
OF THE CITY OF CHULA VISTA
CALL TO ORDER
ROLL CALL
Agency/Council Members Davis, Padilla, Rindone, Salas; Chair/Mayor Horton
CONSENT CALENDAR
The staff recommendations regarding the following itemlsl listed under the Consent Calendar will be enacted
by the Agency by one motion without discussion unless an Agency member, a member of the public or City
staff requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out
a "Request to Speak Form" available in the lobby and submit it to the Secretary of the Redevelopment Agency
or the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Action
items. Items pulled by the public will be the first items of business.
1. JOINT RESOLUTION OF THE CITY COUNCIL AND REDEVELOPMENT
AGENCY OF THE CITY OF CHULA VISTA [AI APPROVING LOAN
AGREEMENTS AND RElATED RESTRICTIVE COVENANTS; THE
AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE
REDEVElOPMENT AGENCY, CITY OF CHULA VISTA, AND MAIN PLAZA, LP
(FORMED BY AVALON COMMUNITIES) AND AUTHORIZING THE
CHAIRMAN OF THE REDEVELOPMENT AGENCY/MAYOR TO EXECUTE
SAID AGREEMENTS; AND [B] APPROPRIATING $1,510,000 FROM THE
UNAPPROPRIATED BALANCE IN THE LOW AND MODERATE INCOME
HOUSING FUND AND $300,000 FROM THE CITY'S HOME FUNDS FOR
FINANCIAL ASSISTANCE TO MAIN PLAZA, LP FOR THE DEVElOPMENT
AND OPERATION OF MAIN PLAZA-On June 13, 2000, the Agency/City
approved a special use permit, density bonus, and conditionally approved
financial assistance in the form of a loan not to exceed $1,060,000 to
Avalon Communities LLC for the development of a mixed-use project
comprised of 106 affordable multi-family units and 15,000 square feet of
retail commercial space known as Main Plaza. On June 19, 2001, the
Redevelopment Agency and City Council conditionally approved additional
financial assistance in an amount not to exceed $750,000 ($300,000 from
the City's HOME funds and $450,000 from the Agency's low and Moderate
Income Housing Set-Aside fund) for the project. As a condition of the
Agency/City's financial assistance, the developer is to enter into loan
agreements with the Agency/City specifying the terms of the financial
assistance. The developer must also enter into a regulatory agreement
specifying the terms for development and use of the project as an affordable
housing development for low and moderate-income households for a period
of 55 years. The required loan Agreements and Affordable Housing
Agreement have been prepared and are being presented for Agency/Council
consideration. [Community Development Director]
4/5THS VOTE REQUIRED
STAFF RECOMMENDATION: Agency/Council adopt the resolution.
ORAL COMMUNICATIONS
This is an opportunity for the general public to address the Redevelopment Agency on any subject matter
within the Agency's jurisdiction that is not an item on this agenda. IState 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 Agency on such a subject, please complete the "Request to Speak Under Oral Communications
Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to
the meeting. Those who wish to speak, please give your name and address for record purposes and follow up
action.
2. OTHER BUSINESS
3. DIRECTOR'S REPORTlS)
4. CHAIR/MAYOR REPORT(S)
5. AGENCY/COUNCil COMMENTS
ADJOURNMENT
The meeting will adjourn to a Closed Session and thence to a regular meeting of
the Redevelopment Agency on August 21, 2001 at 6:00 p.m., immediately
following the City Council meeting in the City Council Chambers.
CLOSED SESSION
Unless Agency Counsel, the Executive Director, City Councilor the Redevelopment Agency states otherwise at
this time, the Agency/Council will discuss and deliberate on the following itemlsl of business which are
permitted by law to be the subject of a closed session discussion, and which the Agency/Council is advised
should be discussed in closed session to best protect the interests of the City. The Agency/Council is required
by law to return to open session, issue any reports of final action taken in closed session, and the votes taken.
However, due to the typical length of time taken up by closed sessions, the videotaping will be terminated at
this point in order to save costs so that the Agency/Council's return from closed session, reports of final action
taken, and adjournment will not be videotaped. Nevertheless, the report of final action taken will be recorded
in the minutes which will be available in the Office of the Secretary to the Redevelopment Agency and the City
Clerk's Office.
Redevelopment Agency, August 14, 2001 Page 2
6. CONFERENCE WITH lEGAL COUNSEL REGARDING ANTICIPATED
LITIGATION -- Pursuant to Government Code Section 54956.9(b)
One Case
7. CONFERENCE WITH lEGAL COUNSEL REGARDING EXISTING LITIGATION --
Pursuant to Government Code Section 54956.9(a)
Agency vs. Rados Bros. [Case No. GIC734557-1]
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT
The City of Chula Vista, in complying with the Americans with Disabilities Act IADAI, request individuals who
require special accommodates to access, attend, and/or participate in a City meeting, activity, or service
request such accommodation at least 48 hours in advance for meetings and five days for scheduled services
and activities. Please contact the Secretary to the Redevelopment Agency for specific information at 1619)
691-5047 or Telecommunications Devices for the Deaf ITDDI at 1619) 585-5647. California Relay Service is
also available for the hearing impaired.
Redevelopment Agency, August 14, 2001 Page 3
JOINT REDEVELOPMENT AGENCY / CITY COUNCIL
AGENDA STATEMENT
ITEM NO.: I
MEETING DATE: 08/14/01
ITEM TITLE: CONSIDERATION OF LOAN AGREEMENTS AND AN AFFORDABLE
HOUSING AGREEMENT FOR A MIXED USE AFFORDABLE HOUSING
DEVELOPMENT, KNOWN AS MAIN PLAZA
JOINT RESOLUTION OF THE CITY COUNCIL AND REDEVELOPMENT
AGENCY OF THE CITY OF CHULA VISTA [AI APPROVING LOAN
AGREEMENTS AND RELATED RESTRICTIVE COVENANTS; THE
AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY, CITY OF CHULA VISTA, AND MAIN
PLAZA, LP (FORMED BY AVALON COMMUNITIES) AND
AUTHORIZING THE CHAIRMAN OF THE REDEVELOPMENT
AGENCY/MAYOR TO EXECUTE SAID AGREEMENTS; AND [BI
APPROPRIATING $1,510,000 FROM THE UNAPPROPRIATED
BALANCE IN THE LOW AND MODERATE INCOME HOUSING FUND
AND $300,000 FROM THE CITY'S HOME FUNDS FOR FINANCIAL
ASSISTANCE TO MAIN PLAZA, LP FOR THE DEVELOPMENT AND
OPERATION OF MAIN PLAZA
SUBMITTED BY: COMMUNITY DEVELOP~ENT DIRECTOR ~ ~
REVIEWED BY: EXECUTIVE DIRECTOR(¿t Q~
4/5THS VOTE: YES 0 NOD
BACKGROUND
On June 13, 2000, the City ond Agency opproved 0 special use permit, density bonus, ond
conditionally approved financial assistonce in the form of a loan not to exceed $1,060,000 to
Avalon Communities LLC for the development of a mixed-use project comprised of 106 affordoble
multifomily units ond 15,000 square feet of retail commerciol space (reference Resolution No.
1673). On June 19, 2001, the City Council ond Redevelopment Agency conditionolly opproved
odditionol financial assistonce in an amount not to exceed $750,000 ($300,000 from the City's
HOME funds ond $450,000 from the Agency's Low ond Moderate Income Housing Set-Aside fund)
for the project. The project, known as "Main Plozo", is proposed to be located on the northeost
corner of Main Street and Broodway within the Southwest Redevelopment Project Areo and the
Montgomery Specific Plan. (Exhibit 1)
In May 2001, the California Debt Limit Allocation Committee (CDLAC) oworded the project 0 bond
ollocotion of opproximotely $6.5 million. The bonds must close by August 16, 2001. In order to
complete this tronsadion, stoff is recommending that the Redevelopment Agency and the City
(- I
PAGE 2, ITEM NO.:
MEETING DATE: 08/14/00
opprove financial assistance in the toto I amount of $1,510,000 from the Agency's Low and
Moderate Income Housing Set-aside Fund and $300,000 from the City's HOME funds. As a
condition of the Agency's ond City's financial ossistance, the developer, Moin Plazo L.P. (formed by
Avalon Communities LLC) is to enter into a loon agreement with the Agency and the City specifying
the terms of the financial assistance. The developer must also enter into a regulatory agreement
specifying the terms for development ond use of the project as an offordable housing development
for low ond moderate-income households for 0 period of fifty-five (55) yeors. The required Loon
Agreements and Related Restrictive Covenants and Affordable Housing Agreement have been
prepared ond are attached as Exhibits 2, 3, and 4.
RECOMMENDATION
Thot the Redevelopment Agency of the City of Chula Vista ond the City of Chula Visto [a] approve
loan agreements and reloted restrictive covenants in substantial form; the affordoble housing
agreement by ond between the Redevelopment Agency, the City of Chulo Vista ond Moin Plaza,
LP (formed by Avolon Communities) and outhorizing the Chairmon of the Redevelopment
Agency/Mayor to execute said agreement; ond [b] appropriating $1,510,000 from the
unappropriated balance in the Low and Moderate-Income Housing fund and $300,000 from the
City's HOME funds far finoncial assistonce to Moin Plozo.
BOARDS/COMMISSIONS RECOMMENDATION
Not opplicable.
DISCUSSION
The Proposed Proiect
The project will include 106 affordoble housing units and 15,000 square feet of retail
commerciol spoce with 180 residential ond 73 commercial parking spaces. The mixed-use
building will contain 15,000 square feet of ground-level commercial space, with residentiol
garages in the back and 2-levels of residential above the garages. There are seven residential
buildings throughout the site.
There will be 0 totol of 106 housing units, consisting of 52 two-bedroom units, 30 three-bedroom
units, ond 24 four-bedroom units. The proposed project will also offer a swimming pool,
community room, gorages, ond social services provided by 0 locol social ogency, Cosa Fomilior.
Redevelopment Aqency Loan
The Agency Loan of $1,060,000 will be made on the following terms:
1. The loon repoyment will be secured by 0 Deed of Trust and Promissory Note for the
property on behalf of both the Redevelopment Agency of the City of Chulo Vista and
recorded agoinst the Project property.
I-~
PAGE 3, ITEM NO.:
MEETING DATE: 08/14/00
2. Funds sholl be used only for those costs directly reloted to the residentiol units of the
Project.
3. The term of the loan sholl be fifty-five (55) years.
4. The outstanding balonce shall occrue with simple interest ot 3 percent per annum.
5. Payment of principal and interest on the Agency/City Loan shall be made, on an annual
basis, out of 0 fund equol to fifty percent (50% of the "Residual Receipts", rentol income
from the project minus debt service on the bonds, poyment of the deferred developer fee,
and reasonoble operating expenses.
6. Developer will be required to operate the project cansistent with the Regulotory
Agreements required by the Project's tax-exempt bond and tax credit finoncing and the
covenants imposed by these Agreements, the Affordable Housing Agreement, ond the
requirements of the Special Use Permit for the Project.
Redevelopment Aaency/Citv Loan
The Agency Loan of $ 750,000 will be made on the following terms:
1. Developer shall submit within 0 timely manner opplications for funding of the remoining
approximately $3.8 million financing gop (the "Finoncing Gop") to the State Farmworker
Housing Grant (FWHG) Program for the next funding cycle ond other appropriote funding
programs identified by the Developer or the City/Agency for the development of the
residential units of the Project. Developer sholl exercise its best efforts to obtain any or 011 of
the Finoncing Gap proceeds and to identify potentiol additional sources for some. Any
Financing Gap proceeds shall be immediately applied to repay the City/Agency Loan of
$750,000 on 0 first priority bosis.
2. Funds shall be used only for those costs directly related to the residentiol units of the Project.
3. The loon repayment will be secured by Deeds of Trust and Promissory Notes for the property
on behalf of both the City of Chulo Vista and the Redevelopment Agency of the City of Chula
Vista ond recorded agoinst the Project property.
4. The term of the loon sholl be fifty-five (55) yeors.
5. The outstanding balonce shall accrue with simple interest at 3 percent per onnum.
6. Payment of principal and interest on the Agency Loan sholl be made, on an onnual basis, out
of 0 fund equal to fifty percent (50% of the "Residual Receipts", rental income from the
project minus debt service on the bonds, payment of the deferred developer fee, and
reosonable operating expenses.
7. Developer will be required to operate the project consistent with the Regulatory Agreements
required by the Project's tax-exempt bond and tox credit financing ond the covenonts
imposed by these Agreements, the Affordable Housing Agreement, and the requirements of
the Speciol Use Permit for the Project.
(- 3
PAGE 4, ITEM NO.:
MEETING DATE: 08/14/00
Income ond Rent Restrictions
It is the intent that these units will sotisfy the requirements of the City's program for the provision
of offordoble rental housing opportunities throughout the City and the revitalizotion of the
western side of the City. The Loon Agreements and Reloted Restrictive Covenants for the
City/Agency's financial assistance restricts rents and occupancy of 49 percent of the 106 units (51
units) for lower income households, with 10 units for very low ot 50 percent of the Areo Medion
Income (AMI) and 41 units for low income households at 60 percent of AMI. The requirements of
the other funding sources will result in the remoining 55 units being affordable for households at
60 percent of AMI.
Pursuant to the HOME Investment Partnerships Program requirements, out of the total of one-
hundred six (106) units in the Project, six (6) three-bedroom units ore being assisted with HOME
funds (the "HOME-assisted units") ond must meet 011 of the HOME Progrom requirements for the
term of the offordobility restrictions on the units.
The restricted rents will be based upon HUD income limits established for the current fiscal year.
Rent ond occupancy restrictions will be maintoined for a period of no less than 55 years and will
bind 011 subsequent owners, so that the commitment remoins in force regordless of ownership.
The City's and Agency's affordability and low income restrictions is limited to only 49 percent of
the units and therefore, the proiect is exempt under Article XXXIV of the State Constitution. Article
XXXIV of the Colifornia Constitution (Article 34) requires that voter opproval be obtoined before
any "state public body" develops, constructs or acquires a "low rent housing project". A
redevelopment agency is a "state public body" for purposes of Article 34, and as a result, if 0
redevelopment agency participotes in development of a "low rent housing project" and that
porticipotion rises to the level of development, construction, or acquisition of the project by the
ogency, approvol by the electorate pursuant to Article 34 is required for the project. Projects
which are less than 50 percent restricted are not considered "public housing" for purposes of
Article XXXIV.
The income and rent restrictions outlined above are incorporated into the Affordable Housing
Agreement and Loan Agreements for the Agency and Agency/City Loan, which will be recorded
agoinst the property. The affordoble housing commitment will bind all subsequent owners of
Moin Plaza, so thot the commitment remains in force regordless of ownership, except in limited
circumstonces following a defoult and foreclosure on the project. These agreements are being
presented for consideration by the City Council and Agency.
AQency/Citv Risks ond Mitiaation Measures
There are two areos of risk which the Agency/City needs to be cognizont. Listed below are these
risks and meosures staff hos identified and incorporated into the transoction to reduce these risks:
Risk One - No Repoyment of Aaency and Aaency/Citv Loon. The Agency will be
providing $1,060,000 ond the Agency/City will be providing $750,000 in the form of 3
1-4
PAGE 5, ITEM NO.:
MEETING DATE: 08/14/00
percent simple interest loans to the developer to assist with the development costs of the
project. Repayment of the loons will be made from fifty percent (50%) of the residual
receipts, which is the amount left oyer ofter 011 expenses ore deducted from the income
received. It is possible that the Agency/City will not receive total poyment an the loans.
Mitigation: The likelihood of repoyment is high given there is significant
demand for these units and the vocancy rote is low. The revenue
bose is very relioble. The operating costs of the Project are
standard. The Developer and its joint venture partners hove
significont experience and on excellent track record with this type of
development project. Should problems occur, the Agency/City will
be involved with the Developer to assure proper hondling.
Risk Two - Subordinotion of Aaency and Aaency/Citv Loans: It is anticipoted thot the
Agency ond Agency/City Loons ond the Affordable Housing Agreement's covenants will
be subordinate to the Bonds. Should the developer or a subsequent owner be unable to
perform under the conditions of the Bond Indenture, or the Agreement, Regulatory
Agreement, the Agency/City may need to be cure any loan defaults or lose the
affordability restrictions On the project.
Mitigation: The presence of other mojor financiol commitments, such os the tax
credit investments, means that other stokeholders depend on the
short and long-term success of the project. By its noture,
affordoble housing presents some, but very limited market risk
because of the deeply discounted rents. Finally, while the
Agency/City is vulnerable due to its subordinate financing, it helps
to make the bonds finonciable.
FISCAL IMPACT
If approved, the loon amounts of $1,060,000 ond $ 750,000 will be opproprioted from the
unapproprioted balance in the Low/Moderate Income Housing Set-oside and HOME funds (a
toto I of $1,510,000 from the Agency's Low and Moderate Income Housing Set-Aside fund and
$300,000 from the City's HOME funds) for the project. Currently, the Agency's Low and
Moderate Income Housing Set-Aside fund has an ovailable balance of approximately $5.5
million. The City's HOME fund has an available bolance of $1 .2 million. Funds for staff services
are budgeted in the staff services portion of the Housing Division budget. Any repayment of
these loons will be deposited into the Low ond Moderote Income Housing Set-oside fund and
HOME funds for further use in providing affordable housing progroms.
/- s-
PAGE 6, ITEM NO.:
MEETING DATE: 08/14/00
ATTACHMENTS
1. Location Map
2. Agency Loan Agreement ond Related Restricted Covenants
3. Agency ond City Loan Agreement ond Reloted Restricted Covenonts
4. Affordable Housing Agreement
[HINES] nCOMMDEV\STAFF.REP\O8-14-01\A 113 Main Plaza loon Ooc>.doc
(- G.
RESOLUTION NO.
(COUNCIL RESOLUTION NO. )
JOINT RESOLUTION OF THE CITY COUNCIL AND THE REDEVELOPMENT
AGENCY OF THE CITY OF CHULA VISTA [A] APPROVING LOAN
AGREEMENTS AND RELATED RESTRICTIVE COVENANTS; THE
AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY, CITY OF CHULA VISTA, AND MAIN PLAZA, LP
(FORMED BY AVALON COMMUNITIES) AND AUTHORIZING THE CHAIRMAN
OF THE REDEVELOPMENT AGENCY/MAYOR TO EXECUTE SAID
AGREEMENTS; AND [B] APPROPRIATING $1,510,000 FROM THE
UNAPPROPRIATED BALANCE IN THE LOW AND MODERATE INCOME
HOUSING FUND AND $300,000 FROM THE CITY'S HOME FUNDS FOR
FINANCIAL ASSISTANCE TO MAIN PLAZA, LP FOR THE DEVELOPMENT AND
OPERATION OF MAIN PLAZA
WHEREAS, the City of Chula Vista is an entitlement/participating jurisdiction for the U.S.
Department of Housing and Urban Development (HUD) funding programs and is awarded on an
annual basis a formula grant from the HOME Investment Partnership Program (HOME); and
WHEREAS, HOME funds are designed exclusively to create affordable housing
opportunities for low-income households through the construction, purchase, and/ar rehabilitation of
affordable housing for rent or homeownership or provide direct rental assistance to low-income
people; and
WHEREAS, California Health and Safety Code Sections 33334.2 and 33334.6 authorize
and direct the Redevelopment Agency of the City of Chula Vista (the "Agency") to expend a certain
percentage of all taxes which are allocated to the Agency pursuant to Section 33670 for the
purposes of increasing, improving and preserving the community's supply of low and moderate
income housing available at affordable housing cost to persons and families of low- and
moderate-income. lower income, and very low income; and
WHEREAS, pursuant to applicable law the Agency has established a Low and Moderate
Income Housing Fund (the "Housing Fund"); and
WHEREAS, pursuant to Health and Safety Code Section 33334.2(e), in carrying out its
affordable housing activities, the Agency is authorized to provide subsidies to or for the benefit of
very low income and lower income households, or persons and families of low or moderate income,
to the extent those households cannot obtain housing at affordable costs on the open market, and to
provide financial assistance for the construction and rehabilitation of housing which will be made
available at an affordable housing cost to such persons; and
WHEREAS, pursuant to Section 33413(b), the Agency is required to ensure that at least
15 percent of all new and substantially rehabilitated dwelling units developed within a project area
under the jurisdiction of the Agency by private or public entities or persons other than the Agency
shall be available at affordable housing cost to persons and families of low or moderate income; and
WHEREAS, Avalon Communities LLC ("Developer") propases to construct a mixed use
project of 15,000 square feet of commercial retail and a 106 unit multifamily rental development, with
10 units affordable to very low households at 50 percent of the Area Median Income (AMI), 41 units
affordable to low households at 60 percent of the Area Median Income (AMI) and 55 units affordable
1- 7
Resolution No.
Page 2
to moderate-income households at or below 120 percent of AMI to be located on the northeast
corner of Main Street and Broadway within the Southwest Redevelopment Project Area ("Project");
and
WHEREAS, out of the total of one-hundred six (106) units in the Project, six (6) three-
bedroom units are being assisted with HOME funds (the "HOME-assisted units"); and
WHEREAS, in order to carry out and implement the Redevelopment Plan for the Agency's
redevelopment projects, the City's Consolidated Plan and the affordable housing requirements and
goals thereof, the Agency and City propose to enter into an Agency Loan Agreement and Related
Restricted Covenants (the "Agency Loan Agreement") and an Agency and City Loan Agreement and
Related Restricted Covenants (the "Agency/City Loan Agreement") with the Developer, together with
an "Affordable Housing Agreement" which would be recorded as an encumbrance to the Project,
pursuant to which the Agency and City would make loans to the Developer (the "Agency Loan" and
"Agency/City Loan", respectively), and the Developer would agree to develop and operate the
Project in accordance with the requirements of the Agency and Agency/City Loan Agreements,
restrict occupancy of 51 of the apartment units in the Project to very low and lower income
households, and 55 of the apartment units to moderate income households, and rent those units at
an affordable housing cost; and
WHEREAS, the Agency and Agency/City Loan Agreements will leverage the investment
of the Agency and City by requiring the Developer to obtain additional financing for the construction
and operation of the Project through a combination of a loan obtained from the proceeds of
multifamily mortgage revenue bond financing and an equity contribution by a limited partner investor
in consideration for the "4% Tax Credits" to be generated by the Project; and
WHEREAS, the Project is located within the Agency's Southwest Redevelopment Project
Area and development and aperation of the Project pursuant to the Agency and Agency/City Loan
Agreements would benefit the Agency's redevelopment project areas by providing affordable
housing for persons who currently live and work within those redevelopment project areas; and
WHEREAS, the Agency has adopted an Implementation Plan pursuant to Health and Safety
Code Section 33490, which sets forth the objective of providing housing to satisfy the needs and
desires of various age, income and ethnic groups of the community, and which specifically provides
for the rehabilitation of rental housing units through Agency assistance; and
WHEREAS, the Agency and Agency/City Loan Agreements further the goals of the Agency
and City to facilitate the creation of affordable housing which will serve the residents of the
neighborhood and the City as set forth in the Implementation Plan and the Consolidated Plan; and
WHEREAS, the Legislature declares in Health and Safety Code Section 36000, et seq., that
new forms of cooperation with the private sector, such as leased housing, disposition of real property
acquired through redevelopment, development approvals, and other forms of housing assistance
may involve close participation with the private sector in meeting housing needs, without amounting
to development, construction or acquisition of low rent housing projects as contemplated under
Article XXXIV of the State Constitution; and
WHEREAS, Health and Safety Code Section 37001 provides that a low rent housing project
under Article XXXIV of the State Constitution does not include a development which is privately
owned housing, receiving no ad valorem property tax exemption, other than exemptions granted
(- f'
Resolution No.
Page 3
pursuant to subdivision (f) or (g) of Section 214 of the Revenue and Taxation Code, and the
Agreement restricts less than 49 percent of the units within the Project to persons of low and very
low income; and
WHEREAS, the Project will not receive any ad valorem property tax exemption, other than
exemptions granted pursuant to subdivision (f) or (g) of Section 214 of the Revenue and Taxation
Code, and the Agreement restricts less than 49 percent of the units within the Project to persons of
low and very low income; and
WHEREAS, Health and Safety Code Section 37001.5 provides that a public body does not
develop, construct, or acquire a low rent hausing project under Article XXXIV of the State
Constitution when the public body provides assistance to a low rent housing project and monitors
construction or rehabilitation of the project to the extent of carrying out routine governmental
functions, performing conventianal activities of a lender, and imposing constitutionally mandated or
statutorily authorized conditions accepted by a grantee of assistance; and
WHEREAS, the Loan Agreements provide for assistance by the Agency and City ta the
Project, and the Agency and City's monitoring of construction of the Project to the extent of carrying
out routine governmental functions, performing conventional activities of a lender, and imposing
constitutionally mandated or statutorily authorized conditions accepted by a grantee of assistance;
and
WHEREAS, the Agency and City have duly considered all terms and conditions of the
proposed Agency and Agency/City Loan Agreements and Affordable Housing Agreement and
believes that these Loan Agreements and Affordable Housing Agreement are in the best interests of
the Agency and the City and the health, safety, and welfare of its residents, and in accord with the
public purposes and provisions of applicable State and local law requirements;
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA
DOES RESOLVE AS FOLLOWS:
Section 1. The Agency hereby finds that the use of funds from the Agency's Low and
Moderate Income Housing Fund pursuant to the Loan Agreements, for the development and
operation of real property will be of benefit to the Agency's redevelapment project areas for the
reasons set forth above.
Section 2. The Agency hereby determines that the Project is not a "low rent housing
project" within the meaning of Article XXXIV of the State Constitution, and that the assistance to be
provided pursuant to the Loan Agreements does not constitute development, construction or
acquisition of a low-rent housing project within the meaning of Article XXXIV of the State
Constitution. This Resolution is hereby deemed to constitute a final approval of a proposal which
may result in housing assistance benefiting persons of low income, within the meaning of Health and
Safety Code Section 36005 .
Section 3. The Agency and City Council hereby [A]approve the Agency and Agency/City
Loan Agreements and Related Restrictive Covenants and Affordable Housing Agreement in
substantially the form presented to the Agency and City, subject to such revisions as may be made
by the Agency Executive Director/City Manager or his designee subject to the review and approval
of the Agency/City Attorney. The Chairman of the Agency/Mayor is hereby authorized to execute
(- c¡
Resolution No.
Page 4
the Loan Agreements and Affordable Housing Agreemen't on behalf of the Agency and City and [B]
appropriates $1,510,000 from the unappropriated balance in the Low And Moderate Income Housing
Fund and $300,000 from the City's HOME funds for financial assistance to Main Plaza, LP for the
development and operation of Main Plaza. A copy of the Loan Agreements and Affordable Housing
Agreement when executed by the Agency and City shall be placed on file in the office of the
Secretary of the Agency and the City Clerk.
Section 4. The Executive Director of the Agency/City Manager (or his designee) is
hereby authorized, on behalf of the Agency/City, to make revisions to the Loan Agreements and
Affordable Housing Agreement which do not materially or substantially increase the Agency and
City's obligations thereunder or materially or substantially change the uses or development permitted
on the Site, to sign all documents, to make all approvals and take all actions necessary or
appropriate to carry out and implement the Loan Agreements and Affordable Housing Agreement
and to administer the Agency and City's obligations, responsibilities and duties to be performed
under the Loan Agreements, Affordable Housing Agreement and related documents. Any such
revisions ar modifications to the Loan Agreements or the Affordable Housing Agreement are subject
to the review and approvai of the Agency/City Attorney.
PRESENTED BY APPROVED AS TO FORM BY
Chris Salomone
Director of Community Develapment
J:ICOMMOEVIRESOSICC Reso Main Plaza Loan Oocs.doc
(-to
.- ATTACHMENT 1
~
(- ((
LOCATOR :~~~1r: AVALON COMMUNITIES, LLC PROJECT DESCRIPTION:
C) INITIAL STUDY
PROJECT 1689 Broadway
ADDRESS: Request Proposed construction of a 15,000 sq.fl mixed-use
commercial building and 106 affordable housing units
SCALE: I FILE NUMBER: with 181 residential and 75 commercial parking
NORTH No Scale IS - 00-47 spaces provided.
h:\home\planning\hector\locators\ISO047 .cdr 05/17/00
ATTACHMENT 2
RECORDING REQUESTED BY:
Redevelopment Agency ofthe City ofChula Vista
WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of Chula Vista
Attn: Housing Manager
276 Fourth Avenue
Chula Vista CA 91910
No fee for recording pursuant to
Government Code Section 27383
(I>pace abovejor Kecoraer s use)
LOAN AGREEMENT
AND RELATED RESTRICTED COVENANTS
THIS LOAN AGREEMENT AND RELATED RESTRICTED COVENANTS (the
"Agreement") is entered into as of 2001 between the
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body, corporate and
politic ("Agency"), and MAIN PLAZA loP. ("Borrower"), and/or its successors or assignees.
ARTICLE 1
Recitals
1.1 Authority.
Agency is a public body, corporate and politic, exercising governmental functions and powers and
organized and existing under the Community Redevelopment Law of the State of California (Health
and Safety Code Section 33000, et seq.) and is authorized to enter into binding agreements for the
purpose of protecting public health, safety, and welfare.
1.2 Available Funds.
Agency has available funds from the Agency's Low and Moderate-Income Housing Fund which can
be used for the purposes of funding the obligations of the Agency under this Agreement in
accordance with the Community Redevelopment Law of the State of California.
1.3 The Property.
Borrower is or will become the legal owner of the fee title to the real property located on the
northeast carner of Main Street and Broadway within the Southwest Redevelopment Project Area
and the Montgomery Specific Plan in the City of Chula Vista, as described in the attached Exhibit
"A", which is incorporated herein (the "Property").
1 1-1;)-
1.4 Project.
Borrower proposes to construct 106 affordable housing units and] 5,000 square feet of retail
commercial space. The residential units will consist of with 10 units affordable to very low
households at or below 50 percent of the Area Median Income ("AMI"), 41 units affordable to low-
income households at or below 60 percent of AMI, and the remainder of the units (other than the unit
which may be made available to an on-site manager) affordable to moderate income households at or
below 120 percent of the Area Median Income (the "Project"). The Project will be subject to certain
affordable housing obligations pursuant to the Regulatory Agreement and Declaration of Restrictive
Covenants and the Borrower, the Housing Authority of the City of Chula Vista and
(the "Regulatory Agreement").
1.5 Agency Financial Assistance to Borrower.
Through the development and operation of the Project, Agency and Borrower desire to provide very
low, lower and low and moderate income households with affordable housing opportunities within
the City in accordance with the Community Redevelopment Law and the Agency's redevelopment
plans. In order to accomplish this goal, the Agency desires to make a loan from its Low and
Moderate Income Housing Fund to Borrower for a portion of the costs of the acquisition and
construction of the Project, subject to certain conditions designed to assure the implementation of the
Project in accordance with the redevelopment plans, state and federal law, and as otherwise provided
herein.
1.6 Interests of the Agency and the Public.
The acquisition, construction and operation af the Project pursuant to this Agreement, and the
fulfillment generally of this Agreement, are in the vital and best interests of the Agency and the
welfare of the residents of the City of Chula Vista, and in accordance with the public purposes and
provisions of applicable federal, state, and local laws and requirements.
1.7 Hausing Objectives and Goals.
The Project accommodates several of the City's Comprehensive Housing Plan Objectives, which are
expressly noted in the Housing Element as priorities for the City. The objectives this Project serves
are:
(I) Achievement of a balanced residential community through integration of low and moderate
income housing throughout the City, and the adequate dispersal of such housing to preclude
establishment of specific low-income enclaves.
(2) The provision of adequate rental housing opportunities and assistance to households with low
and very low incomes, including those with special needs such as the elderly, handicapped, single-
headed households, large families and those "at-risk" ofhomelessness.
WHEREFORE, based upon the foregoing recitals and in consideration of their mutual and
prospective promises and subject to the terms and conditions hereinafter set forth, the parties do
hereby agree as follows:
2 /- 13
ARTICLE 2
Definitions
The following terms as used in this Agreement shall have the meanings given unless
expressly provided to the contrary:
2.1 "Affordable Housing Agreement" means that certain agreement, in substantially the form set
forth in Exhibit D attached hereto and incorporated herein, which sets forth Borrower's
obligations to maintain the Project as an affordable multifamily housing project for very low,
lower and low and moderate income households, and other obligations related to the operation
and management of the Project, which shall be recorded in the order of priority set forth in this
Agreement.
2.2 "Agency" means the Redevelopment Agency of the City of Chula Vista, a public body,
corporate and politic, having its offices at 276 Fourth Avenue, Chula Vista, California 91910.
The term "Agency" as used herein also includes any assignee af, or successor to, the rights,
powers, and responsibilities of the Redevelopment Agency of the City ofChula Vista.
2.3 "Agency Loan" means the loan for an amount of One Million Sixty Thousand Dollars
($1,060,000) by the Agency to Borrower, which loan is the subject of this Agreement.
2.4 "Agency Note" shall mean the promissory note, in substantially the form set forth in Exhibit B
attached hereto and incorporated herein, in the principal amount of One Million Sixty
Thousand Dollars ($1,060,000), evidencing the Agency Loan.
2.5 "Agency Trust Deed" shall mean that certain deed oftmst, in substantially the form set forth in
Exhibit C attached hereto and incorporated herein, which secures Borrower's obligations
pursuant to the Agency Note, which shall be recorded in the order of priority set forth in this
Agreement.
2.6 "Agreement" means this Loan Agreement and Related Restricted Covenants.
2.7 "Bonds" means multifamily mortgage revenue bonds issued by the
å{Ji/s,s'ùiff in the approximate aggregate amount of as set forth in Section
3.1 of this Agreement.
3 I-I{
2.8 "Borrower" means Main Plaza LP.. The term "Borrower" includes any legally permissible
assignee or successor to the rights, powers, and responsibilities of Borrower hereunder,
follawing such assignment and succession, in accordance with Section 11.10 of this
Agreement.
2.9 "Certificate of Completion" shall have the meaning ascribed in Section 9.8 ofthis Agreement.
The form of the Certificate of Completion shall be as set forth in Exhibit G to this Agreement,
which is incorporated herein.
2.10 "City" shall mean the City of Chula Vista, a municipal corporation, organized under the laws
of the State of Cali fomi a and having its offices at 276 Fourth Avenue, Chula Vista, California
91910.
2.11 "Development Fee" and "Deferred Development Fee" shall have the meaning ascribed in
Section 8.1.
2.12 "Effective Date" means the date first appearing in this Agreement above.
2.13 "Gross Revenue" shall have the meaning ascribed in Section 4.5.
2.14 "Housing Manager" means the Housing Manager of the Community Development Department
of the City.
2.15 "Permanent Lender" means the
2.16 "Permanent Loan" means the loan to be made by the Permanent Lender to the Borrower with
the proceeds of the Bonds.
2.17 "Permanent Loan Documents" means the Loan of even date herewith by and among
the Permanent Lender, and the Borrower, and the
promissory note, deed into pursuant to such Loan
Agreement.
4 (-IS-
2.18 "Project" shall have the meaning ascribed in Section 1.4 of this Agreement.
2.19 "Project Budget" means that certain budget referred to in Section 4.11 of this Agreement and
attached hereto as Exhibit F, which is incorporated herein by this reference, which budget may
not be materially changed without the prior approval of the Housing Manager, which approval
shall not be unreasonably withheld (a material change is a change that causes the total Project
cost to increase or decrease by three percent (3%) or more from what is shown in Exhibit F).
2.20 "Project Pro Fonna" means that certain Project Pro Forma referred to in Section 4.11 of this
Agreement and attached hereto as Exhibit G, which is incorporated herein by this reference,
which pro fonna Borrower represents to be a good faith projection of the information set forth
therein.
2.21 "Property" means that certain real property legally described in Exhibit "A" which is attached
hereto and incorporated herein.
2.22 "Property Manager" means the property management company managing the Project, whether
or not the Project is managed by Barrower. The tenn Property Manager shall not mean the on-
site property manager.
2.23 "Reasonable Operating Expenses" shall have the meaning ascribed in Section 4.5.
2.24 "Regulatory Agreement" means the and Declaration of Restrictive
Covenants and the Borrower, the and
2.25 "Residual Receipts" shall have the meaning ascribed in Section 4.5.
2.26 "Restricted Units" means the residential units in the Project whose rent levels and occupancy
are to be restricted as set forth in Section 10.2 of this Agreement.
2.27 "Schedule of Perfonnance" means that certain Schedule of Perfonnance attached hereto as
Exhibit J and incorporated herein, as the same may be modified or extended pursuant to
Sections 9.4 and 13.3 hereaf.
2.28 "Title Insurer" means
ARTICLE 3
Financing of the Project
3.1 Summary of Financing.
Borrower's current sources and uses of funds summary for the Project is attached hereto as Exhibit
D, which is incorporated herein. Borrower contemplates a total project budget of approximately
Borrower shall obtain construction and pennanent loan financing funded by two
mortgage revenue bonds issued the Housing Authority of the City of Chula
Vista in the aggregate amount (the "Bonds"). Agency shall loan to
Borrower the amount of $1,060,000 each housing unit in the Project),
secured by the Agency Trust Deed, shall be subordinate to the Permanent Loan funded by the
Bonds. Borrower shall also apply for an allocation of "4%" tax credits for the Project from the
5 I-I fo
California Tax Credit Allocation Committee ("TCAC") which will support an equity investment in
Borrower by an investor limited partner in the amount of approximately $: o. ..', '. : " . Agency
acknowledges that the foregoing amounts (other than the amount of the Agency Laan) are
approximations and may change.
ARTICLE 4
Agency Loan
4.1 Amount.
Subject to the terms and conditions set forth herein, the Agency hereby commits to loan to Borrower
the total sum of $1 ,060,000 (the "Agency Loan") to be applied solely for payment of a portion of the
costs of the acquisition and construction of the Property.
4.2 Interest.
The outstanding principal amount of the Agency Loan shall accrue simple interest at the rate of three
(3%) percent per annum.
4.3 Borrower's Obligations.
The following conditions must be fully satisfied as reasonably determined by the Agency in order to
obligate the Agency to make the Agency Loan:
a. Borrower shall have submitted a complete application for a preliminary allocation of
"4%" low-income housing tax credits from the California Tax Credit Allocation Committee in the
amount set forth in the Sources and Uses attached hereto as Exhibit E, or such greater or lesser
amount as may be mutually agreed to by the parties.
b. Borrower shall have acquired fee title to the Property, or shall be acquiring fee title to
the Property concurrently with the disbursement of the Agency Loan.
c. Borrower shall have received a firm commitment for an equity contribution from an
investor limited partner in Borrower of not less than which number is subject to
adjustment pursuant to the Funding Agreement between Borrower's limited partner
investor, or such lesser amount as may be mutually agreed to by the parties. The Agency shall not
unreasonably withhold or delay its consent to Borrower's request to approve such a lower amount.
d. Borrower shall have obtained a firm commitment for the Permanent Loan in an
amount equal to the net proceeds of the Bonds or such greater or lesser amount as may be mutually
agreed to by the parties, and the Permanent Loan shall have closed or be ready to close concurrently
with the Agency Loan.
e. Borrower shall have duly executed (and acknowledged, if applicable) the Agency
Note, the Agency Trust Deed and the Affordable Housing Agreement, and shall have submitted the
same into the escrow established for the Borrower's acquisition of the Property, and the Agency
Trust Deed and Affordable Housing Agreement shall be ready to be recorded concurrently with the
recording ofthe grant deed conveying title to the Property to the Borrower as an encumbrance to the
Property, subordinate only to the liens securing the Bonds, the Regulatory Agreement and other
nonmonetary encumbrances approved by the Agency.
6 1-/7
f. Borrower shall have submitted to the Agency, and Agency shall have reviewed and
approved, in its reasonable discretion, any and all loan documents, regulatory agreements or grant
contracts to be executed by or otherwise to be binding upon Agency or Borrower in connection with
its acquisition of the Property, its construction and operatian of the Project and/or its financing
thereof, including without limitation the Permanent Loan Documents, the regulatory agreement to be
executed and recorded in favor of the TCAC (the "TCAC Regulatory Agreement"), and the
partnership agreement of the Borrower and documents executed pursuant thereto, such as guaranties
and funding agreements.
g. Borrower shall have provided the Agency with satisfactory evidence that Borrower's
general and limited partners have approved this Agreement and the related Agency Loan documents
and authorizing Borrower's signatories to execute this Agreement and the related Agency Loan
documents on its behalf.
h. The Title Insurer or another title insurance company reasonably acceptable to the
Agency shall have unconditionally committed to issue the Lender's Policy to the Agency in
accordance with Section 4.9 hereof.
i. Borrower shall have submitted to the Agency a copy of an executed property
management agreement for the Project with Chelsea Investment Corporation, a California
corporation, or another experienced property manager which is reasonably acceptable to the parties,
in accordance with Section 10.8 hereof.
j. At least 60 days shall have passed since the Agency's final approval of this
Agreement. Alternatively, the Borrower shall have provided to the Agency (i) an opinion of legal
counsel, in a form and from legal counsel which is reasonably satisfactory to the Agency, that the
Project is not a "low rent hausing project" subject to the requirements of Article XXXIV of the
California Constitution, or (b) an agreement in a form and from a party which is reasonably
satisfactory to the Agency, in which the party agrees to indemnify, defend and hold harmless the
Agency from any losses or liability arising from a legal claim that the Agency Loan violates the
provisions of Article XXXIV of the California Constitution.
k. Borrower shall have satisfied all other obligations under this Agreement required to
be performed prior to the closing on the Agency Loan, and shall not be in default in any of its
obligations under the terms of this Agreement. All representations and warranties of Borrower
contained herein shall be true and correct in all material respects on and as of the date of the
disbursement ofthe Agency Loan as though made at that time.
4.4 Source of Agency Loan.
The source ofthe Agency Loan is the Agency's Low and Moderate-Income Housing Fund. Pursuant
to California Community Redevelopment Law the Project must meet all of the California
Community Redevelopment Law requirements for the term of the affordability restrictions on the
units set forth herein.
7 I-If?
4.5 Repayment.
Payments under the Agency Loan shall be made as follows:
a. Repayment of the Agency Loan shall be deferred during construction of the Project.
Commencing on the Initial Payment Date (defined below), payment of principal and interest on the
Agency Note shall be made, on an annual basis, in an amount equal to fifty percent (50%) of the
"Residual Receipts" (defined below) derived from the Property and/or the operation of the Project.
Such amounts shall be paid on a priority basis to all other debt service on the Property, except for the
Permanent Loan funded with the proceeds of the Bonds and the Deferred Development Fee (as
defined below), if any. Residual Receipts shall be calculated by Borrower each and every year
commencing with the first anniversary of the issuance af the Certificate of Completion by the
Agency. The fifty percent (50%) Residual Receipts payments, if any, shall be made on or before
thirty (30) days after the later of (i) the first year anniversary of the issuance of the Certificate of
Completion by the Agency or (ii) the first year anniversary of the date on which the Deferred
Development Fee, if any, has been paid in full (the "Initial Payment Date"), and on or before 30 days
after each subsequent yearly anniversary of the Initial Payment Date.
b. "Residual Receipts" is specifically defined as the "Gross Revenue" (as defined
below) from the Project minus the "Reasonable Operating Expenses" (as defined below) for the same
period.
(i) "Gross Revenue" shall mean all revenue, income, receipts, and other
consideration actually received from operation and leasing of the Project. Gross Revenue shall
include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other
rental subsidy payments received for the dwelling units, all cancellation fees, price index
adjustments, and any other rental adjustments to leases or rental agreements; proceeds from vending
and laundry room machines; the proceeds of business interruption or similar insurance to the extent
not applied to the Permanent Loan; the proceeds of casualty insurance to the extent not utilized to
repair or rebuild the Project or applied to the Pennanent Loan; and condemnation awards for a taking
of part or all of the Project for a temporary period to the extent not applied to the Permanent Loan or
used to repair or restore the Project. Gross Revenue shall also include the fair market value of any
goods or services provided in consideration for the leasing or other use of any portion of the Project.
Gross Revenue shall not include tenants' security deposits, loan proceeds, capital contributions or
similar advances or payments from reserve funds.
(ii) "Reasonable Operating Expenses" shall include any and all reasonable and
actually incurred costs associated with the ownership, operation, use or maintenance of the Property,
calculated in accordance with generally accepted accounting principles. Such expenses may include,
without limitation, property and other taxes and assessments imposed on the Project; premiums for
property damage and liability insurance; utilities not directly paid for by the tenants including water,
sewer, trash collection, gas and electricity, maintenance and repairs including pest control,
landscaping and grounds maintenance, painting and decorating, cleaning, general repairs, and
supplies; tenant relocation costs and expenses; license fees or certificate of occupancy fees required
for operation of the Project; general administrative expenses directly attributable to the Property
including advertising and marketing, security services and systems, and professional fees for legal,
audit and accounting; property management fees and reimbursements including on-site manager and
assistance manager expenses; asset management fees payable to the investor limited partner of the
Borrower in an amount which does not exceed the amount set forth therefor in the Sources and Uses,
8 1-/9
Project Budget and Pro Fonna attached hereto; a property management fee in an amount which does
not exceed the amount set forth in the Sources and Uses, Project Budget and Pro Forma attached
hereto, cash deposited into a reserve for capital replacements of the Project improvements and an
operating reserve (and such other reserve accounts required with respect to the Bonds and the
Pennanent Loan Documents) in such amounts as are required by the Pennanent Lender and as may
be reasonably required by Project equity investors; tenant services costs; debt service payments
(excluding debt service due to Agency from Residual Receipts of the Project) on financing for the
Project; supplemental management fees in an amount which does not exceed the amount set forth in
the Sources and Uses, Project Budget and Pro Fonna attached hereto; and payment of the Deferred
Development Fee. In no event shall expenditures, including attorneys' fees or litigation costs,
normally required to be paid out of the Replacement Reserve, be treated as Reasonable Operating
Expenses unless specifically approved in writing by the Agency. For purposes of the foregoing
definition of "Reasonable Operating Expenses," any property management fee or partnership
management fee which is paid to Borrower shall at no time exceed an amount as is customary and
standard for affordable housing projects similar in size, scope and character to the Project.
Notwithstanding the foregoing, for purposes of this calculation, Reasonable Operating Expenses shall
not include the following: expenses of social services, principal and interest payments on any debt
subordinate to the Agency Note, depreciation, amortization, depletion or other non-cash expenses,
incentive partnership asset management fees payable to the Borrower or its affiliate (other than the
supplemental management fee described above), or any amount expended from a reserve account.
c. The fifty percent (50%) of Residual Receipts remaining after the annual Residual
Receipts payments on the Agency Note may be retained and used by Borrower in Borrower's sole
discretion.
d. Except as otherwise expressly provided hereunder, Borrower's obligation to repay the
Agency Loan shall be limited to Borrower's annual payment, until the Agency Loan is repaid in full,
of fifty percent (50%) of the Residual Receipts as described above for a period from the completion
of the Project until the date which is fifty-five (55) years following the date of the Agency's issuance
of the final Certificate of Completion for the Project (but in no event later than fifty-seven (57) years
from the date of execution of the Agency Note) (the "Conditional Maturity Date"). Upon the
Conditional Maturity Date, Agency shall have the option, at any time, in its sole discretion, but after
good faith discussions with Borrower as to available options, upon ninety (90) days' written notice to
Borrower, to (a) declare the remaining balance of all amounts owed under the Agency Note
immediately due and payable, or (b) to require installment payments under the Agency Note based
upon (i) a restated principal balance comprised, in the aggregate, of any and all outstanding principal
and interest under the Agency Note existing as of the date of Agency election, (ii) a prospective fixed
interest rate per annum equal to the prime rate then in effect for Bank of America, San Diego office,
or such other rate mutually agreed to by the Agency and Borrower, and (iii) monthly installments of
principal and interest paid over the course of an amortization schedule to be detennined by the
Agency in its sole discretion, not to be less than ten (10) years. In the event that Agency elects
repayment approach (b), Borrower agrees to execute an amendment to the Note in favor of Agency
reflecting the amended repayment terms described above.
e. Notwithstanding the foregoing, in the event that Borrower, or any successors thereto,
materially breaches the terms of this Agreement, the Agency Note, the Agency Trust Deed, or the
Affordable Housing Agreement, or triggers a due on sale, transfer or encumbrance provision set forth
in the Agency Note or Agency Trust Deed, the Agency shall have the right in its sole discretion, to
declare immediately due and payable all outstanding principal, interest and other sums due under the
9 (-;Lo
Agency Note, or to pursue any and all other remedies provided herein, under the Agency Note,
Agency Trust Deed, or the Affordable Housing Agreement, or as otherwise provided at law or in
equity.
4.6 Prepayment.
Borrower may prepay the principal and any interest due the Agency under the Agency Note prior to
or in advance of the time for payment thereof as provided in the Agency Note, without penalty;
provided, however, that Borrower acknowledges that certain provisions hereof and the provisions of
the Affordable Housing Agreement and the Regulatory Agreement will be applicable to the Project
in accordance with their respective terms even though Borrower may have prepaid the Agency Note.
4.7 Assumption.
In the event the Project is sold or transferred as approved by the Agency or otherwise permitted
pursuant to Section 11.10 hereof, the Agency Loan shall be fully assumable by the approved or
permitted transferee. The Agency Loan shall not be assumable by any other transferee.
4.8 Use of Loan Proceeds.
Borrower shall use Agency Loan proceeds only to pay for a portion of the cost of the acquisition of
the Property, and to pay for the cost of the Lender's Policy (as defined below).
4.9 Lien Priority. Title Insurance.
As a condition to the obligations of Agency to fund the Agency Loan, there shall be no liens or
encumbrances upon the Property having priority over the Agency Trust Deed, other than: (a) the
deed of trust securing the Permanent Loan; (b) the Affordable Housing Agreement. (c) the
Regulatory Agreement, and (d) those existing non-monetary encumbrances which are disclosed in
title reports delivered to Agency and which have not been objected to by the Agency in writing.
Such priority shall be evidenced by an AL T A lender's insurance policy, including title endorsements
reasonably requested by the Agency with liability equal to the amount of the Agency Loan, or such
other amount as may be mutually agreed to by the parties (the "Lender's Policy") to be issued to
Agency by Chicago Title Company at the close of escrow for the Borrower's acquisition of the
Property. Borrower shall be responsible for the cost of the Lender's Policy, which may be paid for
from the proceeds of the Agency Loan.
4.10 Subordination: Refinancing.
Agency agrees to take such actions as may be necessary to subordinate the Agency Trust Deed to the
Permanent Loan or any future refinancings thereof; provided, however, that any such subordination
to the Permanent Loan shall be evidenced by a recorded subordination agreement containing such
notice, cure, loan purchase or assumption and Project purchase rights as may be reasonably required
by the Agency in a form to be approved by the Agency's attorney, which approval shall not be
unreasonably withheld.
4.11 Borrower's Evidence of Financial Capability.
The anticipated sources and uses of funds for acquisition of the Property and construction of the
Project are set forth in the Project Budget (Exhibit F). The financial projections for the Project are
10 (-"J.. /
set forth in the Project Pro Forma (Exhibit G). The Agency acknowledges that the numbers in the
foregoing exhibits may change, subject to reasonable Agency approval of such changes.
Upon request but in no event later than the disbursement of the Agency Loan proceeds, Borrower
shall submit to the Agency Housing Manager evidence reasonably satisfactory to the Agency
Housing Manager that Borrower has the financial capability necessary for the acquisition of the
Property and the construction of the Project thereon in accordance with this Agreement, the Project
Budget, and the Project Pro Forma. Such evidence of financial capability shall include the following:
a. a copy of the partnership agreement, funding agreement, and other documents
evidencing commitments for equity financing.
b. a copy of the construction contract between Borrower and its general contractor for
all of the improvements required to be constructed by Borrower hereunder, which shall be deemed to
be certified by Borrower to be a true and correct copy thereof.
c. a copy of the regulatory agreement to be required by TCAC, and other verifiable
documentation that Borrower will receive an allocation of "4%" low income housing tax credits with
respect to the Project.
4.12 Reports and Accounting of Residual Receipts.
a. In connection with the annual repayment of the Agency Loan, commencing upon the
Initial Payment Date, the Borrower shall furnish the Agency with an audited statement duly certified
by an independent firm of certified public accountants approved by the Agency, setting forth in
reasonable detail the computation and amount of Residual Receipts during the preceding calendar
year.
b. The Borrower shall keep and maintain in accordance with Section 13.4 hereof full,
complete and appropriate books, recards and accounts necessary or prudent to evidence and
substantiate in full detail Borrower's calculation of Residual Receipts. All such books, records, and
accounts shall be open to and available for inspection by the Agency, its auditors or other authorized
representatives in accordance with Section 13.4 hereof.
ARTICLE 5
Agency Note and Deed of Trust
5.1 Security for Loan.
Borrower's obligations to pay the Agency Loan shall be evidenced by the Agency Note, and shall be
subject to the terms and conditions contained therein. The Agency Note shall provide for simple
interest at the rate of three percent (3%) per annum. Among other things, the Agency Note shall
further provide that the Agency Note is non-recourse and that payments of principal and interest shall
be made only from fifty percent (50%) of the Residual Receipts (as defined in Article 4 hereof).
The Agency Note shall be secured by the Agency Trust Deed encumbering the Property as a second
priority deed of trust. The Agency Trust Deed shall further provide that the occurrence of any
material breach or default under this Agreement shall constitute a "default" or "event of default"
under the Agency Trust Deed. Prior to the close of escrow for the Borrower's acquisition of the
Property, Borrower shall execute and deliver to Agency the Agency Note and the Agency Trust
11 I-';¿~
Deed. The Agency Trust Deed shall be recorded with the Office of the San Diego County Recorder
in accordance with Agency's instructions to escrow. Borrower shall be responsible for any and all of
Agency's escrow, title and recording costs arising in connection with the Agency Loan, such costs to
be paid by Borrower through escrow.
5.2 Nonrecourse Obligation.
Nothing herein contained shall be deemed to cause Borrower (or any of its partners, or any of their
respective directors, officers, employees, partners, principals or members) personally to be liable to
payor perform any of its obligations evidenced hereby, and the Agency shall not seek any personal
or deficiency judgment on such obligations, and the sole remedy of the Agency with respect to the
repayment of the Agency Loan shall be against the Property; provided, however, that the foregoing
shall not in any way affect any rights the Agency may have (as a secured party or otherwise)
hereunder or under the Agency Note or Agency Trust Deed, or any other rights the Agency may have
to: (a) recover directly from the Borrower any funds, damages or costs (including, without
limitation, reasonable attorneys' fees and costs) incurred by the Agency as a result of fraud,
intentional misrepresentation or intentional waste by Borrower; or (b) recover directly from the
Borrower any condemnation or insurance proceeds, or other similar funds or payments attributable to
the Property which under the terms af the Agency Trust Deed should have been paid to the Agency
and any costs and expenses incurred by the Agency in connection therewith (including, without
limitation, reasonable attorneys' fees and costs).
ARTICLE 6
Disbursement of Agency Development Loan
6.1 Disbursement.
The Loan Proceeds shall be disbursed on behalf of Borrower in the escrow established for
Borrower's
ARTICLE 7
California Community Redevelopment Law Requirements
7.1 Requirements.
Because the source of the Agency Loan is the Agency's Low and Moderate-Income Housing Fund,
Borrower is required to acquire, rehabilitate and operate the Project in compliance with all
requirements of California Community Redevelopment Law (Health and Safety Code, Division 24),
as said code may be amended or suspended from time to time.
Not by way of limitation ofthe foregoing, in compliance with Health and Safety Code, Division 24,
from the Effective Date of this Agreement through the end of the term that the units are required to
remain affordable pursuant to the California Community Redevelapment Law, Borrower, as the
operating entity, shall comply with all of the following requirements:
a. Use of the Agency Low and Moderate Income Housing Funds. Low and Moderate
Income Housing Funds shall be used only for eligible costs (see, e.g., Health and
Safety Code Section 33334.3) in accordance with the Project Budget and Project Pro
12 ( -;¿3
Forma; all acquisition and development activities shall be completed within the times
referenced in the Schedule of Performance attached hereto, as said times may be
extended in accordance with Sections 9.4 and 13.3 hereof.
b. Affordabilitv. The units shall meet the affordability requirements set forth in Section
] 0.2 herein.
c. Housing Standards. Borrower shall maintain units in compliance with local housing
code requirements or the provisions of this Agreement, whichever requirements are
more restrictive.
d. Records and Reports. In addition to the other provisions ofthis Agreement, including
without limitation Section 4.12(b) hereof, Borrower shall provide to Agency all
records and reports relating to the Project that may be reasonably requested by
Agency in order to enable it to perform its recordkeeping and reporting obligations
pursuant to Health and Safety Code Sections 33080.1 and 33418.
e. Enforcement of Agreement. In addition to the other provisions set forth herein,
Agency shall have the authority to enforce Borrower's obligation to comply with the
California Community Redevelopment Law as set forth in this Agreement.
f. Duration of Covenants. In accordance with Health and Safety Code Section 33334.3,
the covenants in this Section 7.1 relating to Borrower's compliance with the
California Community Redevelopment Law shall remain in effect for the longest
feasible time but not less than a period of at least fifty-five (55) years from the date of
the Agency's issuance of the final Certificate of Completion for the Project.
g. Monitoring. Not less than ance every two years during the period cavered by this
Section 7.1, Agency may review Borrower's activities and operations under this
Agreement and Borrower's compliance with the requirements of the California
Community Redevelopment Law, including, but not limited to, Borrower's
compliance with the requirements of this Section 7.1. Such review may include an
on-site inspection of the Project (including unit interiors, subject, however, to the
rights of tenants in possession). If such an on-site inspection of the Project is to be
undertaken, Agency shall coordinate such inspection with Borrower and/or the
Property Manager.
ARTICLE 8
Development Fee
8.1 Development Fee.
Avalon Communities, LLC, a California limited liability company ("Developer"), shall be entitled to
a development fee, which includes general overhead and profit, in the amount which does not exceed
the amount set forth therefor in the Sources and Uses, Project Budget and Pro Forma attached hereto,
and in no event greater than the maximum amount permitted pursuant to the Low Income Housing
Tax Credit statutes and regulations (the "Development Fee"). It is anticipated that a portion of the
Development Fee shall be paid by Borrower from the proceeds of the financing for the acquisition
and construction of the Project upon the close of such financing, with the balance of the
13 1-.2<1
Development Fee (the "Deferred Development Fee") to be paid from Gross Revenue of the Project
and equity contributions to Borrower made after the closing. The Borrower's obligation to pay the
Deferred Development Fee shall be evidenced by a promissory note (the "Deferred Development Fee
Note"). In the event there are any cost savings realized in the construction of the Project, all
available funds attributable to such cost savings shall also be applied to the Deferred Development
Fee. Regular payments on the Deferred Development Fee Note shall be made on an annual basis out
of the Gross Revenues of the Project. Such amounts shall be paid to Developer on a priority basis to
all other debt service on the Property except for the Permanent Loan. Developer shall specifically be
entitled to payment of the Deferred Development Fee before payment of the amounts due to Agency
pursuant to the Agency Note. The Deferred Development Fee Note shall not be secured by any liens
upon the Property.
ARTICLE 9
Development of the Project
9.1 Work to be Performed.
Borrower agrees to develop the Property so that it consists of a multi-family residential project
consisting of 106 units, and to operate the Project for occupancy by very low, lower and low and
moderate income households, subject to the terms of this Agreement, the Scope of Work attached
hereto as Exhibit I and incorporated herein, the Permanent Loan Documents, the Affordable Housing
Agreement, and the Regulatory Agreement (the "Project"). The Project shall consist of
approved by the City in connection with issuance of the building permit(s), and with the terms of and
conditions of all land use permits and approvals required by the City to the extent such permits and
approvals are required by applicable law. The Project's units and occupancy shall be restricted in
accordance with the terms of this Agreement. If Borrower desires to make any change in any
construction or building plans after the same have been approved, Borrower shall submit the
proposed change to the appropriate body for approval, if and to the extent required by applicable law.
Borrower shall be responsible for all construction and installation and for obtaining all the necessary
permits.
9.2 Compliance with Permits and Laws.
Borrower and its contractors shall carry out the develapment of the Project and operation of the
Project in conformity with all applicable laws, regulations, and rules of the governmental agencies
having jurisdiction, including without limitation all legally applicable conditions and requirements of
California Community Redevelopment Law (Health and Safety Code, Division 24); all legally
applicable prevailing wage requirements, if any, the applicability of which is for Borrower to
determine, pursuant to federal and state law, including California Labor Code § 1770 et seq.; all
legally applicable conditions and requirements imposed by the Low Income Housing Tax Credit
Program; all legally applicable labor standards; the legally applicable provisians of the City zoning
and development standards, building, plumbing, mechanical and electrical codes, and all other
provisions of the City Municipal Code, and all legally applicable disabled and handicapped access
requirements, which may include, without limitation, the Americans With Disabilities Act, 42 U.S.C.
Section 12 I 01, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et
seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California Building
Standards Code, Health and Safety Code Section 18900, et seq., and Agency policies adopted
14 1-;zS'
pursuant to said federal standard regulations and requirements. Borrower shall not take any action
which would cause the Project to be construed as a low rent housing project under Article XXXIV of
the California Constitution or otherwise be in violation of Article XXXIV of the California
Constitution.
The work shall proceed only after procurement of each pennit, license, or other authorization that
may be required under applicable law by any governmental agency having jurisdiction, and the
Borrower shall be responsible to the Agency for procurement and maintenance thereof, as may be
required of the Borrower and all entities engaged in work on the Project.
9.3 Costs of Development.
Subject to the terms and conditions ofthis Agreement, Borrower shall be responsible for all costs of
developing the Project, including but not limited to predevelopment costs incurred for items such as
planning, design, engineering, and environmental remediation; all development and building fees; the
cost incurred to demolish and clear any and all existing improvements, furnishings, fixtures, and
equipment from the Property; costs for insurance and bonds (as required); costs for financing;
preparation of the Property for construction; and all on-site construction costs. This Agreement does
not require Borrower to construct any off-site improvements. Borrower shall be responsible for
verifying the adequacy and availability of all utilities. If at any time during the course of the
development of the Project, Borrower exhausts fifty percent (50%) or more of the contingency
amounts set forth in the Project Budget, Agency shall have the right, but not the obligation, to
approve any additional cost overruns (unless such approval has been obtained from the Permanent
Lender), which approval shall not be unreasonably withheld.
9.4 Schedule ofPerfonnance: Progress Reports.
Subject to Section 13.3, Borrower shall begin and complete all construction within the times
specified in the Schedule of Perfonnance, subject to any extension granted by Agency, which
extension shall not unreasonably be withheld upon the written request of the Borrower. Once
construction has cammenced, it shall be continuously and diligently pursued to completion, and shall
not be abandoned for more than fifteen (15) consecutive business days, except when due to causes
beyond the control and without the fault of Borrower, as set forth in Section 13.3 of this Agreement.
During the course of the construction, and prior to the completion of the Project, Borrower shall keep
Agency infonned of the progress of the construction on the Property and, if requested, shall provide
Agency with monthly written progress reports and meet with Agency staff as appropriate. If
requested, Borrower shall furnish a construction schedule to Agency indicating completion dates for
each portion of work showing progress toward completion of the Project.
After completion of construction of the Project and within the time set forth in the Schedule of
Performance (as it may be revised as provided above), Borrower shall provide the Agency Housing
Manager a true and correct copy of the final cost certification submitted to TCAC concerning the
construction of the Project on the Property. Borrower shall provide additional cost infonnation as
may be reasonably requested by the Agency Housing Manager to pennit the Agency Housing
Manager to make such detenninations as is reasonably required for Agency to verify Borrower's
conformance to this Agreement and the Scope of Work, as it may be revised by mutual agreement of
the parties from time to time during the course ofthe construction.
15 !-;¿Co
9.5 Anti-discrimination.
Borrower, for itself and its successors and assigns, agrees that Borrower will not discriminate against
any employee or applicant for employment because ofrace, color, creed, religion, sex, marital status,
ancestry, or national origin in connection with activities undertaken pursuant to this Agreement.
9.6 Right of Access.
For the purpose of assuring compliance with this Agreement, representatives of Agency upon
reasonable prior notice shall have the reasonable right of access to the Property, without charges or
fees, at normal construction hours during the period of construction for the purposes of this
Agreement, including but not limited to the inspection of the work being performed by Borrower in
rehabilitating the Project. Such representatives of Agency shall be those who are so identified in
writing by the Housing Manager. Agency shall indemnify, defend, and hold harmless Borrower and
Borrower's officers, employees, and agents from any damage caused or liability arising out of the
sole negligence or willful misconduct of Agency or its officers, officials, employees, volunteers,
agents, or representatives in their exercise of this right of access; provided that it is understood that
Agency does not by this Section 9.6 assume any responsibility or liability for a negligent inspection
or failure to inspect. Any inspection by Agency pursuant to this section shall be conducted so as not
to interfere or impede the construction or operations ofthe Project.
9.7 Mechanics Liens, Stop Notices, and Notices afCompletion.
a. Subject to Borrower's right to contest set forth in Section 11.4 of this Agreement, if
any claim or lien is filed against the Project ar a stop notice affecting the Agency Loan is served on
the Agency or any other lender or other third party in connection with the Project, then the Borrower
shall, within thirty (30) days after such filing or service, either pay and fully discharge the lien or
stop notice, effect the release of such lien or stop notice by delivering to the Agency a surety bond in
sufficient form and amount, or provide the Agency with other assurance satisfactory to the Agency
that the claim of lien or stop notice will be paid or discharged.
b. If Borrower fails to discharge any lien, encumbrance, charge, or claim in the manner
required in Section 9.7 (a), then in addition to any other right or remedy, the Agency may (but shall
be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Borrower's
expense. Alternately, the Agency may require the Borrower to immediately deposit with the Agency
the amount necessary to satisfy such lien or claim and any costs pending resolution thereof. The
Agency shall use such deposit to satisfy any claim or lien that is adversely determined against the
Borrower.
c. The Borrower shall file a valid notice of cessation or notice of completion upon
cessation of construction on the Project for a continuous period of thirty (30) days or more, and take
all other reasonable steps to forestall the assertion of claims of lien against the Project. The
Borrower authorizes the Agency, but without any obligation, to record any notices of completion or
cessation of labor, or any other appropriate notice that the Agency deems necessary or desirable to
protect its respective interest in the Project.
16 (-:L 7
9.8 Certificate of Completion.
Upon Borrower's satisfactory completion of construction of the Project, Agency shall furnish
Borrower with a Certificate of Completion upon written request therefor by Borrower. Such
Certificate of Completion shall be in a form so as to permit recordation in the Office of the Recorder
of the County of San Diego as set forth in Exhibit G which is incorporated herein.
The Certificate of Completion shall be, and shall so state, a conclusive determination of satisfactory
completion of the construction of the Project and of full compliance with the terms of this Agreement
relating to such construction. After the date of the issuance of the Certificate of Completion, and
notwithstanding any other provisions of this Agreement to the contrary, any party then owning or
thereafter purchasing, leasing, or otherwise acquiring any interest in the Property shall not (because
of such ownership, purchase, lease, or acquisition) incur any obligation or liability under this
Agreement for the construction of the Project. Agency shall not unreasonably withhold the
Certificate of Completion. If Agency refuses or fails to furnish the Certificate of Completion after
written request from Borrower, Agency shall, within fifteen (15) days after such written request,
provide Borrower with a written statement of the reasons Agency refused or failed to furnish such
Certificate of Completion. The statement shall also contain Agency's opinion of the action Borrower
must take to obtain such Certificate of Completion. If the reason for such refusal is confined to the
immediate availability of specific items or materials for landscaping, Agency shall issue its
Certificate of Completion upon the posting of cash deposit or an irrevocable letter of credit in favor
of Agency in an amount representing the fair value of the work not yet completed and in a form
reasonably acceptable to Agency's attorney. A Certificate of Completion is not a notice of
completion as referred to in California Civil Code Section 3093.
9.9 Estoppels.
At the request of Borrower or any holder of a mortgage or deed of trust, Agency shall, from time to
time and upon the request of such holder, timely execute and deliver to Borrower or such holder a
written statement of Agency that no default or breach exists (or would exist with the passage of time,
or giving of notice, or both) by Borrower under this Agreement, the Agency Note, the Agency Trust
Deed and/or the Affordable Housing Agreement, if such be the case, and certifying as to whether or
not Borrower has at the date of such certification complied with any obligation of Borrower
hereunder or under such of those documents as to which such holder may inquire. The farm of any
estoppel letter shall be prepared by the holder or Borrower.
17 ( - .2g'
ARTICLE 10
Uses Of The Property
10.1 Summary.
Borrower covenants and agrees for itself and its successors and assigns to its interest in the Property
that Borrower and such successors and assigns shall devote the Property to uses consistent with
California Community Redevelopment Law, the Permanent Loan Documents, the Regulatory
Agreement, the Affordable Housing Agreement, the Agency Trust Deed, and this Agreement,
whichever is most restrictive, for a period ending fifty-five (55) years from the date of the Agency's
issuance of the final Certificate of Completion for the Project. Agency shall be a third-party
beneficiary under the Regulatory Agreement and shall have full authority to enforce any breach or
default by Borrower under such agreement in the same manner as though it were a breach or default
hereunder. Without Agency's prior written consent, which consent may be withheld in Agency's
sole and absolute discretion, Borrower shall not consent to any amendment of or modification to the
TCAC Regulatory Agreement or Regulatory Agreement which (i) shortens the term of the
affordability restrictions on the units in the Project to a term of less than fifty-five (55) years after the
date of the Agency's issuance of the final Certificate of Completion for the Project or (ii) modifies
the number of units required to be rented at affordable housing costs to persons of specified incomes.
10.2 Affordable Housing.
Borrower covenants and agrees for itself and its successors and assigns to its interest in the Property
that commencing upon the completion of the Project and continuing thereafter for a period of fifty-
five (55) years from the date of the Agency's issuance of the final Certificate of Completion for the
Project, Borrower and such successors and assigns shall devote one hundred five (l05) of the one
hundred six (l06) of the residential units on the Property (hereinafter the "Restricted Units") to its
continuous use as affordable rental housing for very low, lower and low and moderate income
households in accordance with the terms of this Agreement [(the remaining unit may be occupied by
the on-site property manager)], subject to the occupancy restrictions contained in this Section 10.2.
10 Restricted Units shall be made available to very low income households at or below 50 percent of
the Area Median Income ("AMI"), 41 Restricted Units shall be made available to lower-income
households at or below 60 percent of AMI, and 54 Restricted Units shall be made available to low
and moderate income households at or below 120 percent of AMI, all at an affordable rent. Up to
three of the Restricted Units may be rented or provided at an affordable rent to operational or
maintenance employees of the Property Manager who otherwise meet the income requirements
hereof which are applicable to their Restricted Units.
In determining income eligibility for a particular Restricted Unit, Borrower shall be entitled to rely
upon the documentation provided by the prospective tenant as required pursuant to the TCAC
Regulatory Agreement, Affordable Housing Agreement and Regulatory Agreement. Borrower shall
not be required to perform further investigations into the household income other than those which
are required pursuant to such agreements. Throughout this Agreement, wherever it is stated that
Borrower must comply with the affordability requirements and/or verify such compliance, Borrower
shall be entitled to rely upon the tenant documentation discussed in this paragraph.
In addition to the faregoing, the lease agreement for each Restricted Unit in the Project shall restrict
occupancy of the Restricted Unit to a total of five (5) persons for two bedroom units, seven (7)
persons for three bedroom units, and nine (9) persons for four bedroom apartment units. Any
18 1-2.9
violation of such restrictions shall constitute a default by the tenant, unless such occupancy
restriction is found invalid by a court of competent jurisdiction in a final non-appealable judgment in
a lawsuit in which the Project's occupancy restriction is at-issue, or in an applicable and binding
published appellate opinion, or by statute, regulation or other binding court order.
Notwithstanding the maximum income requirements of this Agreement, no tenants whose tenancy
commenced prior to the date of Borrower's acquisition of the Property shall be required to vacate
their units solely because their income exceeds the maximum income levels required hereunder.
Upon vacation of any apartment initially occupied by an ineligible household, that unit shall be
rented to an eligible household at the rents required hereunder.
10.3 Reports.
Borrower, at its expense, shall submit, or cause the Property Manager to submit, to the appropriate
entities any and all reports required to be submitted pursuant to California Community
Redevelopment Law.
10.4 Subordination of Affordability Covenants.
In the event that the Agency finds that an economically feasible method of financing for the
construction and operation of the Project, without the subordination of the affordable housing
covenants as may be set forth in this Agreement, is not reasonably available, the Agency shall make
the affordable housing covenants set forth in this Agreement junior and subordinate to the deeds of
trust and other documents required in connection with the construction and pennanent financing for
the Project approved pursuant to this Agreement, and the TCAC Regulatory Agreement. Any
subordination agreement entered into by the Agency shall contain written commitments which the
Agency finds are reasonably designed to protect Agency's investment in the event of default, such as
any of the following: (a) a right of Agency to cure a default on the loan prior to foreclosure, (b) a
right of Agency to negotiate with the lender after notice of default from the lender and prior to
foreclosure, (c) an agreement that if prior to foreclosure of the loan, Agency takes title to the property
and cures the default on the loan, the lender will not exercise any right it may have to accelerate the
loan by reason of the transfer oftitle to Agency, and (d) a right of Agency to reacquire the Property
from the Borrower at any time after a material default on the loan.
10.5 Condition of the Property.
a. Borrower hereby represents that to the best of its knowledge, except as otherwise
disclosed to the Agency in writing, it is not aware of and has not received any notice or
communication from any government agency having jurisdiction over the Property notifying
Borrower of the presence of surface or subsurface zone Hazardous Materials in, on, or under the
Property, or any portion thereof. "Best knowledge," as used herein, shall mean the actual knowledge
of the Borrower and its officers, directors, employees, agents and representatives, as based upon the
documents and materials in the possession of Borrower, and its officers, employees, agents and
representatives, including the site investigation report or study referred to in Section 10.5(b) herein.
b. In addition to the foregoing, the Borrower has, at its sole cost and expense, engaged
its own environmental consultant to conduct a Phase 1 investigation of the Property and produce a
report thereof, a capy of which has been provided to the Agency by Borrower. Such report
concludes that no Hazardous Materials have been detected on the Property.
19 I-So
c. Borrower shall take all necessary precautions to prevent the release into the
environment of any Hazardous Materials which may be located in, on or under the Property. Such
precautions shall include compliance with all Governmental Requirements with respect to Hazardous
Materials. In addition, Borrower shall install and utilize such equipment and implement and adhere
to such procedures as are consistent with commercially reasonable standards as respects the
disclosure, storage, use, removal and disposal of Hazardous Materials.
d. Borrower shall indemnify, defend and hold Agency harmless from and against any
claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive
damage, or expense (including, without limitation, reasonable attorneys' fees), resulting from, arising
out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous
Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the
Property, no matter when such claim, action, suit or proceeding is first asserted or begun and no
matter how the Hazardous Materials came to be released, used, generated, discharged, stored or
disposed of on, under, in or about, to or from the Property, or by whom or how they are discovered,
or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit,
judgment or license relating to the use, generation, release, discharge, storage, disposal or
transportation of Hazardous Materials on, under, in or about, to or from, the Property. This
indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity
after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including
injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or
death), tangible or intangible property damage, compensation for lost wages, business income, profits
or other economic loss, damage to the natural resource or the environment, nuisance, contamination,
leak, spill, release or other adverse effect on the environment.
e. For purposes of this Agreement, "Hazardous Materials" means any substance,
material, or waste which is or becomes regulated by any local governmental authority, San Diego
County, the State of California, regional governmental authority, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous waste,"
"extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or
25122.7, or listed pursuant to Section 25130 of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section
25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner
Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance,"
or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos,
(vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or
defined as "hazardous" or "extremely hazardous" pursuant to Article II of Title 22 of the California
Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to
Section 311 of the Clean Water Act (33 U.S.C. §1317), (xi) defined as a "hazardous waste" pursuant
to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901, et seq. (42 U.S.C.
§6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 V.S.C. §9601, et seq.
10.6 Marketing Plan.
20 1- 31
Borrower shall submit for the approval of the Agency, which approval shall not unreasonably be
withheld, a plan for marketing the rental of the apartment units in compliance with federal and state
fair housing law. Such marketing plan shall include a plan for publicizing the availability of the
apartment units within the City, such as notices in any City sponsored newsletter, newspaper
advertising in local newspapers and notices in City offices. The marketing plan shall require
Borrower to obtain from the Agency the names of low- and moderate-income households who have
been displaced by the Agency's redevelopment projects, and to notify persons on such list of the
availability of units in the Project prior to undertaking other forms of marketing. The marketing plan
shall provide that the persons on such list of displaced persons be given not fewer than ten (10) days
after receipt of such notice to respond by completing application forms for rental of apartment units,
as applicable.
10.7 Maintenance of Property.
Borrower agrees for itself and its successors in interest ta all or any portion of the Property, to
maintain the improvements on the Property in conformity with applicable provisions of the City
Municipal Code, and shall keep the Property free from any accumulation of debris or waste
materials. During such period, the Barrower shall also maintain the landscaping planted on the
Property in a healthy condition. If at any time Borrower fails to maintain the Property and such
condition is not corrected within five days after written notice from Agency with respect to graffiti,
debris, waste material, and general maintenance, or thirty days after written notice from Agency with
respect to landscaping and building improvements, then Agency, in addition to whatever remedy it
may have at law or at equity, but subject to the rights of the Permanent Lender, shall have the right to
enter upon the applicable portion ofthe Property and perform all acts and work necessary to protect,
maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien
upon the Property, or to assess the Property, in the amount of the expenditures arising from such acts
and work of protection, maintenance, and preservation by Agency and/or costs of such cure,
including a fifteen percent (15%) administrative charge, which amount shall be promptly paid by
Borrower to Agency upon demand.
10.8 Property Management.
The parties acknowledge that the Agency is interested in the long term management and operation of
the Property and in the qualifications of any person or entity retained by the Borrower for that
purpose (the "Property Manager"). Therefore, during the period af the effectiveness of the
affordability covenants set forth herein, the Agency may from time to time review and evaluate the
identity and performance of the Property Manager as it deems appropriate. If the Agency determines
that the performance of the Property Manager is materially deficient based upon the standards and
requirements set forth in this Section 10.8 and the approved Management Plan (as defined below),
the Agency shall provide notice to the Borrower of such deficiencies and the Borrower shall use its
best efforts to correct such deficiencies within a reasonable period of time. Upon the failure of the
Property Manager to cure such deficiencies within the time set forth herein, the Agency shall have
the right to require the Borrower to immediately remove and replace the Property Manager with
another property manager or property management company who is reasonably acceptable to the
Agency, who is not related to or affiliated with the Borrower, and who has not less than five (5) years
experience in property management, including experience managing multifamily residential
developments of the size, quality and scope of the Property.
21 (-3:2...
In addition, the Borrower shall submit for the reasonable approval of the Agency a
detailed "Management Plan" which sets forth in reasonable detail the duties of the Property Manager,
the tenant selection process, a security system and crime prevention program, the procedures for the
collection of rent, the procedures for monitoring of occupancy levels, the procedures for eviction of
tenants, the rules and regulations of the Property and manner of enforcement, a standard lease form,
and other matters relevant to the management of the Property. The management plan shall require
the Property Manager to adhere to a fair lease and grievance procedure and provide a plan for tenant
participation in management decisions. The management of the Property shall be in compliance with
the Management Plan which is approved by the Agency, subject, however, to any requirements of the
Permanent Lender pursuant to the Permanent Loan Documents. The Management Plan may be
revised from time to time upon the approval of the Agency and the Barrower.
10.9 Affordable Housing Agreement.
Certain requirements with respect to the affordable housing obligations and other operational and
maintenance obligations of the Project are set forth in the Affordable Housing Agreement. The
execution and recordation of the Affordable Housing Agreement is a condition precedent to the
disbursement of the Agency Loan, as set forth in Section 4.3 hereaf.
ARTICLE 11
Continuing Obligations of Borrower
II.! Applicability.
For the entire term of the requirements set forth in Section 10.1 hereof, the Borrower shall comply
with the provisions of this Article II.
11.2 Insurance.
Within ten (10) days after the Borrower's acquisition of the Property, Borrower shall furnish to the
Agency duplicate originals or appropriate certificates of insurance coverage evidencing that
Borrower has obtained, or cause to be obtained, insurance coverage with respect to the Property and
Project in type, amount and from insurers with Best's ratings as are reasonably acceptable to Agency
(or have been approved by the Permanent Lender), naming the Agency and its officers, agents,
employees, representatives and their respective successors, as named or additional insureds by
appropriate endorsements. Such policy shall include, without limitation "all risk" property casualty
insurance and comprehensive general liability insurance. Without limiting the generality of the
foregoing, such policy shall also include coverage to insure Borrower's indemnity obligations
provided herein. Borrower covenants and agrees for itself and its successors and assigns that
Borrower and such successors and assigns shall keep such liability policy in full force and effect until
the date that is fifty-five (55) years from the date of the Agency's issuance of the final Certificate of
Completion for the Project.
In addition to any other remedy which Agency may have hereunder for Borrower's failure to
procure, maintain, and/or pay for the insurance required herein, Agency may (but without any
obligation to do so, and subject to the rights of the Permanent Lender under the Permanent Loan
Documents) at any time or from time to time, after thirty (30) days written notice to Borrower,
procure such insurance and pay the premiums therefor, in which event Borrower shall immediately
22 /-33
repay Agency all sums so paid by Agency together with interest thereon at the rate of ten percent
(10%) per annum or the maximum legal rate, whichever is less.
11.3 Proceeds of Insurance.
Should the Project be totally or partially destroyed or rendered wholly or partly uninhabitable by fire
or other casualty required to be insured against by Borrower, Borrower shall promptly proceed to
obtain insurance proceeds and take all steps necessary to promptly and diligently commence the
repair or replacement of the Project to substantially the same condition as the Project is required to be
maintained in pursuant to this Agreement if (i) the Borrower agrees in writing within ninety (90)
days after payment of the proceeds that such repair or rebuilding is economically feasible, and (ii) the
Permanent Lender permits such repair or rebuilding, provided that the extent of Borrower's
obligation to restore the Project shall be limited to the amount of the insurance proceeds actually
received by the Borrower. If the Borrower is unable or is not permitted to repair, replace, or restore
the Project, Borrower must give notice to Agency (in which event Borrower will be entitled to all
insurance proceeds, subject to any autstanding lien obligations, but Borrower shall be required to
remove all debris from the Property) and Borrower may canstruct such other improvements on the
Property as are consistent with applicable land use regulations and approved by the Agency and the
other governmental agency or agencies with jurisdiction.
11.4 Taxes, Assessments, Encumbrances. and Liens.
Borrower shall pay prior to delinquency all real estate taxes and assessments properly assessed and
levied on the Property.
Until the payment in full of all amounts owing under the Agency Note, Borrower shall not place or
allow to be placed thereon any mortgage, trust deed, encumbrance, or lien (except mechanic's liens
prior to suit to foreclose the same being filed) not authorized by this Agreement. Borrower shall
remove or have removed any levy or attachment made on the Property, or assure the satisfaction
thereof, within a reasonable time, but in any event prior to a sale thereunder.
Nothing herein contained shall be deemed to prohibit Borrower from contesting the validity or
amounts of any tax, assessment, encumbrance, or lien, nor to limit the remedies available to
Borrower in respect thereto.
11.5 Hold Harmless.
Borrower agrees to indemnify, protect, defend and hold harmless Agency, and Agency's officers,
agents, employees, representatives and successors, from and against any and all claims, damages,
actions, costs, demands, expenses or liability, including without limitation, reasonable attorneys' fees
and court costs, which may arise from the direct or indirect actions or inactions of the Borrower or
those of its contractors, sub-contractors, agents, employees or other persons acting on Borrowers'
behalf which relate to the Property or Project. This hold harmless agreement applies, without
limitation, to all damages and claims for damages suffered or alleged to have been suffered by
reasons of the operations referred to in this paragraph, regardless of whether or not the Agency
prepared, supplied or approved plans or specifications, or both, for the Property or Project. This
indemnity by Borrower, and all other indemnities set forth herein shall survive any foreclosure of the
Property by the Agency pursuant to the terms of the Agency Trust Deed.
23 1-31
11.6 Further Indemnification of Agency.
It is understood and agreed that the parties hereto have entered this Agreement as a method of
providing necessary assistance to Borrower in connection with the construction of low and moderate
income housing and development of the Property pursuant to all applicable laws and that by
contributing public funds to assist in the accomplishment of such development, or by otherwise
contributing or assisting with the accomplishment of such development, the Agency assumes no
responsibility for insuring that the same is adequately undertaken (including, without limitation, the
existence and/or remediation of any hazardous or taxic substances on the Property) and as a material
consideration to Agency for entering into this Agreement (and not by way of limiting the generality
of Sectian 11.5 above) Borrower agrees to indemnify, protect, defend and hold harmless Agency and
all Agency's representatives, afficers, employees and their respective successors from and against
any and all claims, damages, actions, demands, liabilities, obligations, expenses, losses or costs,
including without limitation, reasonable attorneys' fees and court costs, which may arise or in any
manner connected with the development of the Project pursuant to this Agreement; excluding,
however, from Borrower's indemnity any such liability, losses, damages (including foreseeable or
unforeseeable consequential damages), penalties, fines, expenses (including out-of-pocket litigation
costs and reasonable attorneys' fees) directly or indirectly arising out ofthe actions of Agency or its
employees, contractors, subcontractors or agents.
11.7 Obligation to Refrain from Discrimination.
There shall be no discrimination against, or segregation of, any persons, or group of persons, on
account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the
enjoyment of the Property, nor shall Borrower itself, or any person claiming under or through it,
establish or penn it any such practice or practices of discrimination or segregation with reference to
the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or
vendees of the Property or any portion thereof. Borrower shall further comply with all the
requirements of the Americans with Disabilities Act.
11.8 Fann of Nondiscrimination and Nonsegregation Clauses.
Borrower shall refrain from restricting the rental, sale, or lease of any portion of the Property, or
contracts relating to the Property, on the basis of race, color, creed, religion, sex, marital status,
ancestry, or national origin of any person and shall comply with all the requirements for the ADA.
All such deeds, leases or contracts, shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or herself, his or her
heirs, executors, administrators, and assigns, and all persons claiming under or through them, that
there shall be no discrimination against or segregation of any person or group of persons on account
of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the
grantee himself, or any persons claiming under or through him, establish or penn it any such practice
or practices of discrimination or segregation with reference to the selection, location, number, use, or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed and
further covenants that all such individuals and entities shall comply with all requirements of the
Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 U.S.c.
§ 12101, et seq.). The foregoing covenants shall run with the land."
24 / -35:
b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assigns, and all persons claiming under or through him, and this lease
is made and accepted upon and subject to the following conditions: 'That there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring,
use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee himself, or any
person claiming under or through him, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or occupancy of
tenants, lessees, sublessees, subtenants, or vendees in the land herein lease and the lease shall be
carried out in compliance with all requirements of the Americans with Disabilities Act of 1990, as
the same may be amended from time to time (42 D.S.c. §12101, et seq.).'"
c. In contracts: "There shall be no discrimination against or segregation of any persons
or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national
origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the
transferee himself, or any person claiming under or through him, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use, or occupancy of tenants, lessees, subtenants, sub lessees, or vendees of land and all such
activities shall be conducted in compliance with all the requirements of the Americans with
Disabilities Act of 1990, as the same may be amended from time to time (42 U.S.C. §12101, et
seq.)."
11.9. Effect of Covenants.
a. Unless sooner terminated by Agency as provided for herein, all covenants contained
herein shall run with the land and shall be extinguished and of no further force and effect upon the
fifty-second anniversary of the issuance of the Certificate of Completion for the Project by the
Agency, with the exception of the non-discrimination and non-segregation covenants which shall run
in perpetuity. The cavenants established herein shall, without regard to technical classification and
designation, be binding on the part of Borrower and any successors and assigns to the Property or
any part thereof, and the tenants, lessees, sub lessees and occupants of the Property, for the benefit of
and in favor of the Property and the Agency, its successors and assigns and any successor in interest
thereto. Agency is deemed the beneficiary of such covenants for and in its own right and for the
purposes of protecting the interest of the community and other parties, public or private, in whose
favor and for whose benefit of such covenants running with the land have been provided, without
regard to whether Agency has been, remained, or are owners of any particular land or interest therein.
Agency shall have the right to unilaterally terminate the covenants at any time (subject to the TCAC
Regulatory Agreement) or, if such covenants are breached (subject to any cure rights provided
herein) to exercise all rights and remedies and to maintain any actions or suits at law or in equity or
other proper proceedings to enfarce the curing of such breaches to which it or any other beneficiaries
of this Agreement and the covenants may be entitled, including specific performance (it being
recognized that the breach of such covenants cannot be adequately compensated by monetary
damages), and any and all remedies provided in the Agency Trust Deed and the Agency Note
including, without limitation, foreclosure proceedings against the Property.
b. Without limiting the generality of the foregoing, in the event that there is a breach of
the terms of this Agreement or any covenants provided herein, the Agency shall have the right, but
not the obligation, to take any and all actions the Agency deems necessary, to cure such breach,
including, without limitation, taking possession of the Property for management and/or repair
25 (-3-&,
purposes, and to obtain reimbursement from Borrower for any reasonable costs incurred by the
Agency in the exercise of such remedy. Furthermore, Borrower hereby covenants by and for itself,
its successors and assigns and every person acquiring an interest in the Property, or any part thereof,
that Agency and other public agencies at their sole risk and expense, and subject to the rights of
tenants in possession, shall have the right to enter the Property or any part thereof at all reasonable
times and with as little interference as possible for the purposes of construction, reconstruction,
maintenance, repair or service of any public improvements or public facilities located on the Property
and to ensure compliance with the restrictions and covenants contained herein. Any such entry shall
be made only after reasanable notice to Borrower (provided, however, that entry to ensure
compliance with any restrictians may be without notice to Borrower) and, any damage or injury to
the Property resulting from such entry shall be promptly repaired at the sole expense of the public
agency responsible for the entry except to the extent any such damage or injury arises as a result of
the negligence or willful misconduct of the Borrower or its officers, employees, agents, invitees or
contractors.
c. No violation or breach of the covenants, conditions, restrictions, provisions or
limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or
charge of any mortgage, deed of trust or other financing or security instrument; provided, however,
that any successor of Borrower to the Property shall be bound by such remaining covenants,
conditions, restrictions, limitations and provisians, whether such successor's title was acquired by
foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. Failure to comply with the
covenants, conditions, restrictions, provisions or the limitation contained in this Agreement within
the time period required by Section] 2.] shall constitute a material default hereunder permitting the
Agency to exercise any of its rights or obligations provided hereunder, including, without limitation,
those provided under the Agency Note, or the Agency Trust Deed, or otherwise provided at law or in
equity.
11.10 Prohibition Against Assignment and Transfer.
The qualificatians and identity af Borrower are of particular concern to Agency. It is because of
those qualifications and identity that Agency has entered into this Agreement with Borrower.
Accordingly, for a periad commencing upon the date of this Agreement and ending on the date which
is fifty-five (55) years from the date of the Agency's issuance of the final Certificate of Completion
for the Project, Borrower, without Agency's prior written approval, shall not, whether voluntarily,
involuntarily, or by operation of law, and except as permitted in this Section 11.1 0, (1) undergo any
significant change in ownership (including the sale or conveyance of any of the general partnership
interests in the Borrower), or (2) assign all or any part of this Agreement or any rights hereunder, or
(3) sell, lease, assign or otherwise convey all or any part of the Property or Project, whether
voluntarily, involuntarily, or by operation oflaw.
Notwithstanding the foregoing, the following shall not be considered a significant change in
ownership or an assignment or transfer and shall not require Agency approval for purposes of this
Section 11.1 0:
(i) Transfers to any entity or entities wholly owned and controlled by Borrower
or all of its partners.
26 1-37
(ii) The conveyance or dedication of portions of the Property to the Agency or
other appropriate governmental agency for the formation of an assessment district, or the granting of
easements or pennits to facilitate the development of the Property.
(iii) A sale or transfer of some or all of the limited partnership interests in the
Borrower.
(iv) The leasing of all or any apartment units to tenants in the ordinary course of
business.
(v) The leasing of furniture, fixtures or equipment in the ordinary course of
business, including, without limitation, laundry equipment and facilities, cable television equipment
and facilities, and vending machine equipment and facilities.
(vi) Transfers of property management responsibilities in accordance with Section
10.8 hereof, provided, however, that Borrower shall provide Agency thirty (30) days prior written
notice of any such management change, and that this exception shall be limited to transfers to
property managers with significant experience in managing projects similar to the Project.
Any such assignee shall be subject to all tenns and conditions of this Agreement, including,
without limitation, all affordability restrictions concerning the occupancy of the Property.
Borrower shall deliver written notice to Agency requesting approval of any assignment or
transfer requiring Agency approval hereunder. Such notice shall be given prior to Borrower entering
into a fonnal written agreement with the proposed assignee.
In considering whether it will grant approval to any assignment by Borrower of its interest in
the Property or any portion thereof, which assignment requires Agency approval, Agency shall
consider factors such as (i) the financial strength and capability of the proposed assignee to perfonn
Borrower's obligations hereunder and (ii) the proposed assignee's experience and expertise in the
planning, financing, construction, development, and operation of similar projects.
No assignment, including assignments which do not require Agency approval hereunder, but
excluding assignments for financing purposes, shall be effective unless and until the proposed
assignee executes and delivers to Agency an agreement, in fonn satisfactory to the Agency's
attorney, assuming the obligations of the assignor which have been assigned. Thereafter, the
assignor shall be relieved of all responsibility to Agency for perfonnance of the obligations assumed
by the assignee.
No lender approved by Agency pursuant to Section 4 shall be required to execute an
assumption agreement and such lender's rights and obligations hereunder shall be as set forth in
Section 4.
II.! 0 Secured Financing; Right of Holders.
a. Permitted Encumbrances. Mortgages, deeds of trust, conveyances, and leases-back or
any other form of conveyance required for any financing pennitted and/or approved by the Agency
pursuant to Section 4 hereof are pennitted before Agency's issuance ofthe Certificate of Completion.
27 (-38'
b. Holder Not Obligated to Construct Improvements. The holder of any mortgage or
deed of trust or other security interest authorized by this Agreement shall in no way be obligated by
the provisions of this Agreement to construct or complete the improvements or to guarantee such
construction or completion; provided, however, that nothing in this Agreement shall be deemed or
construed to permit or authorize any such holder (with the exception of the holder of any deed of
trust securing the loan made from the proceeds of the Bonds) to devote the Property or any part
thereof to any uses, or to construct any improvements thereon, other than those uses or improvements
provided for or authorized by this Agreement.
c. Notice of Default to Mortgage, Deed of Trust or Other Secured Instrument Holders;
Right to Cure. Whenever Agency shall deliver any notice or demand to Borrower with respect to any
breach or default by Borrower hereof, Agency shall at the same time deliver a capy of such notice or
demand to each approved holder af record of any mortgage, deed of trust, or other security
instrument which has previously requested such notice in writing. Each such holder shall (insofar as
the rights of Agency are concerned) have the right, at its option within ninety (90) days after the
receipt for the notice, to commence and thereafter to diligently proceed to cure or remedy such
default and add the cost thereof to the security interest debt and the lien on its security interest.
d. Right of Agency to Cure Mortgage, Deed of Trust, or Other Security Instrument
Default. In the event of a default or breach by Borrower of a mortgage, deed of trust, or other
security instrument or lease-back or conveyance for financing prior to the issuance by City of the
Certificate of Completion for the Project, Agency may cure the default prior to completion of any
foreclosure. In such event, Agency shall be entitled to reimbursement from Borrower of all costs and
expenses reasonably incurred by Agency in curing the default, which right of reimbursement shall be
secured by a lien upon the Property to the extent of such costs and disbursements. Any such lien
shall be subject to:
(i) Any mortgage, deed of trust, or other security instrument or sale and lease-
back or other conveyance for financing permitted by this Agreement; or
(ii) Any rights or interests provided in this Agreement for the protection of the
holders of such mortgages, deed of trust, or other security instruments, the lessor under a sale and
lease-back, or the grantee under such other conveyance for financing; provided that nothing herein
shall be deemed to impose upon Agency any affirmative obligations (by the payment of money,
canstruction, or otherwise) with respect to the Property in the event of its enforcement of its lien.
11.11 Right of Agency to Satisfy Liens.
Prior to the issuance by Agency of the Certificate of Completion for the Project, and after Borrower
has had a reasonable time to challenge, cure, or satisfy any liens or encumbrances on the Property,
Agency, after sixty (60) days prior written notice to Borrower, shall have the right, but not the
obligation, to satisfy any liens or encumbrances on the Property; provided, however, that nothing in
this Agreement shall require Barrower ta payor make pravision for the payment of any tax,
assessment, lien, or charge so long as Borrower in good faith shall contest the validity or amount
thereof, and so long as such delay in payment shall not subject the Property to forfeiture or sale.
28 (-3?
ARTICLE 12
Defaults, Remedies, And Termination
12.1 Defaults - General.
Subject to all of the extensions of time available in Section 13.3, failure or delay by any party to
perfonn any term or provision of this Agreement constitutes a default under this Agreement;
however, the party shall not be deemed to be in default if (i) such party cures, corrects, or remedies
such default within thirty (30) days after receipt of a notice specifYing such failure or delay, or (ii) for
such defaults that cannot reasonably be cured, corrected, or remedied within thirty (30) days, if such
party commences to cure, correct, or remedy such failure or delay within thirty (30) days after receipt
of a notice specifying such failure or delay, and diligently prosecutes such cure, correction or remedy
to completion.
The injured party shall give written notice of default to the party in default, specifying the default
complained of by the injured party. Copies of any notice of default given to Borrower shall also be
delivered to the Pennanent Lender and any other pennitted lender requesting such notice. Except as
provided in Section 12.3 herein or as required to protect against further damages, the injured party
may not institute proceedings against the party in default until thirty (30) days after giving such
notice. Except as otherwise expressly provided in this Agreement, any failure or delay in giving such
notice or in asserting any of its rights and remedies as to any default shall not constitute a waiver of
any default, nor shall it change the time of default, nor shall it deprive either party of its rights to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert or
enfarce any such rights or remedies.
12.2 Termination.
12.2.1 Tennination by Agency.
Notwithstanding any other provision of this Agreement to the contrary, in the event that the Agency
is not in default under this Agreement, Agency shall have the right to terminate this Agreement prior
to disbursement of the Agency Loan upon written notice to the other parties if: (i) Borrower commits
a material default hereunder and fails to cure said default within the time specified in Section 12.1
hereof; or (ii) Borrower fails to obtain the necessary approvals from the Tax Credit Allocation
Committee for an allocation of "4%" Low Income Housing Tax Credits under tenns that will restrict
the residential units in the Project to the requirements set forth herein; or (iii) Escrow has not closed
on the conveyance of the Property to Borrower on or before August 14, 2000, as such date may be
extended by agreement of all the parties hereto in their sole and absolute discretion; or (iv) Subject to
extensions af time made pursuant to Section 13.3 hereof, Borrower shall have failed to commence
construction of the Project pursuant to a valid building penn it or permits and is not diligently
proceeding with such construction on or before the time required in the Schedule of Perfonnance and
does nat timely cure such default.
In addition, in the event of Borrower's uncured material default under this Agreement at the time
Agency exercises its right under this Section 12.2 to terminate the Agreement, nothing in this Section
12.2 is intended or shall be interpreted as a limitation of any other legal or equitable rights to which
Agency may be entitled.
29 ! - 40
12.2.2 Termination by Borrower.
Notwithstanding any other provision of this Agreement to the contrary, provided that Borrower is not
in default under this Agreement, Borrower shall have the right to terminate this Agreement prior to
disbursement ofthe Agency Loan, upon written notice to Agency, if: (i) Agency commits a material
default hereunder and fails to cure said default within the time specified in Section 12.1; or (ii)
Escrow has not closed on the conveyance of the Property to Borrower on or before August 14,2000,
as such date may be extended by agreement of all the parties hereto, in their sole and absolute
discretion; or (iii) City fails to approve, after best efforts by Borrower to obtain such approval, such
permits as are required to commence and complete construction afthe Project on the Property.
In addition, in the event of Agency's uncured material default under this Agreement at the time
Borrower exercises its right under this Section 12.2 to terminate the Agreement, nothing in this
Section 12.2 is intended or shall be interpreted as a limitation of any ather legal or equitable rights to
which Borrower may be entitled.
12.3 Legal Actions.
12.3.1 Institution of Legal Actions.
In addition to any other rights or remedies, either party may institute legal action to cure, correct, or
remedy any default, to recover damages for any default, or to obtain any other remedy consistent
with the purpases of this Agreement. Such legal actions must be instituted and maintained in the
Superior Court of the County of San Diego, State of California, or in any other appropriate court in
that county.
12.3.2 Applicable Law.
The laws of the State of California shall govern the interpretation and enforcement of this
Agreement.
12.3.3 Acceptance of Service of Process.
In the event that any legal action is commenced by Borrower against Agency, service of process on
Agency shall be made by personal service upon the Agency Housing Manager or City Clerk, or in
such other manner as may be provided by law.
In the event that any legal action is commenced by Agency against Borrower, service of process on
Borrower shall be made in such manner as may be provided by law, and shall be valid whether made
within or without the State of California.
12.3.4 Action for Specific Performance.
If either the Borrower or Agency defaults with regard to any ofthe provisions ofthis Agreement, the
non-defaulting party shall serve written notice of such default upon the defaulting party. If the
default does not commence to be cured by the defaulting party within thirty (30) days after service of
the notice of default, the non-defaulting party at its option may thereafter commence an action for
specific performance of the terms of this Agreement pertaining to such default, subject to the
provisions of Sections 12.1 and 13.3 hereof.
30 (-c./t
12.3.5 Rights and Remedies are Cumulative.
Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are
cumulative, and the exercise by either party of one or more of its rights or remedies shall not
preclude the exercise by it, at the same or different times, of any other rights or remedies for the same
default or any other default by the other party.
ARTICLE 13
General Provisions
13.1 Notices, Demands. and Communications Between the Parties.
Formal notices, demands, and communications between Agency and Borrower shall be given either
by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express
that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail,
certified mail, postage prepaid, return receipt requested, to the address of the party as set forth below,
or at any other address as that party may later designate by notice:
To Agency: Redevelopment Agency of the City of Chula Vista
276 Fourth Avenue
ChulaVista,CA 91910
Attn: Housing Manager
With a copy to: Redevelopment Agency of the City ofChula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Agency Attorney
To Borrower: Main Plaza loP.
c/o Avalon Communities, LLC
1801 E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attn: Lionel Puig
Notices personally delivered or delivered by document delivery service shall be deemed effective
upon receipt. Notices mailed shall be deemed effective on the second business day following deposit
in the United States mail. Such written notices, demands, and communications shall be sent in the
same manner to such other addresses as either party may from time to time designate by mail.
13.2 Nonliability of Agency Officials and Employees: Conflicts ofInterest.
No member, official, employee, or contractor of Agency shall be personally liable to Borrower in the
event of any default or breach by Agency or for any amount which may become due to Borrower or
on any obligations under the tenns of this Agreement.
No member, official, employee, or agent of Agency shall have any direct or indirect interest in this
Agreement nor participate in any decision relating to this Agreement which is prohibited by law.
31 ( - 4:J--
13.3 Enforced Delay; Extension of Times of Performance.
In addition to specific provisions of this Agreement, and except as expressly set forth in Section 12.2
and this Section 13.3, performance by either party hereunder shall not be deemed to be in default and
such party shall be entitled to an extension of time to perfonn its obligations hereunder where delays
in performance are due to causes beyond the control and without the fault of such party, including as
applicable: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties;
supernatural causes; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes;
lack of transportation; governmental restrictions or priority; litigation; unusually severe weather;
inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or
supplies; acts of the other party; acts or the failure to act of Agency or any other public or
governmental agency or entity (except that any act or failure to act of or by Agency shall not excuse
timely performance by Agency). In addition, nathing in this Section 13.3 is intended or shall be
interpreted to entitle Borrower to an extension of time to close the escrow for acquisition of the
Property orto delay commencement of construction of the Project.
An extension of time for any cause pennitted under this Section 13.3 shall be limited to the period of
the enforced delay and shall commence to run from the time of the commencement of the cause, if
notice by the party claiming such extension is sent to the other party within thirty (30) days of
knowledge of the commencement of the cause, or if no written notice is sent within thirty (30) days,
from the date written notice is sent by the other party.
Times of perfonnance under this Agreement may be extended by mutual written agreement of
Agency and Borrower.
13.4 Inspection of Books and Records.
The Borrower shall keep and maintain at the Project, or elsewhere within the County of San Diego,
full, complete and appropriate books, records and accounts relating to the Project, including all such
books, records and accounts necessary or prudent to evidence and substantiate in full detail
Borrower's calculation of Residual Receipts and compliance with the affordable housing
requirements herein. Books, records and accounts relating to Borrower's compliance with the tenns,
provisions, covenants, and canditions of this Agreement shall be kept and maintained in accordance
with generally accepted accounting principles consistently applied, and shall be consistent with
requirements of this Agreement. All such baoks, records, and accounts shall be open to and available
for inspection by the Agency, its auditors or other authorized representatives at reasonable intervals
during normal business hours upon reasonable prior notice to Borrower. Copies of all tax returns and
other reports that Borrower may be required to furnish any governmental agency shall at all
reasonable times, upon reasonable prior notice to Borrower, be open for inspection by the Agency at
the place that the books, records, accounts of the Borrower are kept. The Borrower shall preserve
records on which any statement of Residual Receipts is based for a period of not less than five (5)
years after such statement is rendered. Agency shall have the right at all reasonable times to inspect
the books and records of Borrower pertaining to the Property and the Project as pertinent to the
purposes of this Agreement. Borrower shall provide its books and records to Agency without
reasonable delay upon no less than five (5) days prior written request by Agency. Agency shall not
request inspection for Borrower's books and records more than once in any twelve (12) month
period, unless Agency is required to obtain information in order to comply with reporting or other
requirements of law herein.
32 (-43
Borrower shall have the right at all reasonable times to inspect the books and records of Agency
pertaining to the Property and the Project as pertinent to the purposes of this Agreement.
13.5 Interpretation.
The terms of this Agreement shall be construed in accordance with the meaning of the language used
and shall not be construed for or against any party by reason of the authorship of this Agreement or
any other rule of construction which might otherwise apply. The section headings are for purposes of
convenience only, and shall not be construed to limit or extend the meaning of this Agreement.
13.6 Entire Agreement, Waivers and Amendments.
This Agreement integrates all of the terms and conditions mentioned herein, or incidental hereto, and
supersedes all negotiations and previous agreements between the parties with respect to all or any
part of the subject matter hereof.
All waivers of the provisions of this Agreement must be in writing and signed by the appropriate
authorities of the party to be charged, and all amendments and modifications hereto must be in
writing and signed by the appropriate authorities of Agency and Borrower.
13.7 Conse n tiRe aso nab I en e ss.
Except when this Agreement specifically authorizes a party to withhold its approval or consent in its
sole and absolute discretion, when either Agency or Borrower shall require the consent or approval
of another party in fulfilling any agreement, covenant, provision, or conditian contained in this
Agreement, such consent or approval shall not be unreasonably withheld, conditioned, or delayed by
the party from whom such consent or approval is sought.
13.8 Severability.
If any term, provision, covenant, or condition of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remainder of this Agreement shall not be
affected thereby to the extent such remaining provisions are not rendered impractical to perform
taking into consideration the purposes of this Agreement. In the event that all or any portion of this
Agreement is found to be unenforceable, this Agreement or that portion which is found to be
unenforceable shall be deemed to be a statement of intention by the parties; and the parties further
agree that in such event, and to the maximum extent permitted by law, they shall take all steps
reasonably necessary to comply with such procedures or requirements as may be reasonably
necessary in order to make valid this Agreement or that portion which is found to be unenforceable.
13.9 Third Party Beneficiaries.
Notwithstanding any other provision of this Agreement to the contrary nothing herein is intended to
create any third party beneficiaries to this Agreement, and no person or entity other than Agency and
Borrower, and the permitted successors and assigns of each of them, shall be authorized to enforce
the provisions of this Agreement.
33 ( - tlcf
13.] 0 Representations and Warranties.
Borrower and each partner of Borrower executing this Agreement on behalf of Borrower represents
and warrants that: (i) Borrower is a limited partnership organized and existing under the laws of the
State of California, in good standing, and authorized to do business and doing business in the County
of San Diego; (ii) Borrower has all requisite power and authority to carry out its business as now and
whenever conducted and to enter into and perfonn its obligations under this Agreement; (iii) by
proper action of Borrower, Borrower's signataries have been duly authorized to execute and deliver
this Agreement; (iv) the execution of this Agreement by Borrower does not violate any provision of
any other agreement to which Borrower is a party; (v) except as may be specifically set forth in this
Agreement, and except for the approval of Borrower's investor limited partner, no approvals or
consents not heretofore obtained by Borrower are necessary in connection with the execution of this
Agreement by Borrower or with the perfonnance by Borrower of its obligations hereunder, and (vi)
no attachments, execution proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization, receivership or other proceedings are pending or threatened against the
Borrower, or any partners of Borrower, nor are any of such proceedings contemplated by Borrower
or any partners of Borrower.
13.11 Execution.
This Agreement may be executed in counterparts, each of which shall be deemed to be an original,
and such counterparts shall constitute one and the same instrument.
13.12 Relationship of Parties.
It is understood that the contractual relationship between the Agency and Borrower is such that
Borrower is an independent entity and not an agent or partner of Agency. Nothing in this Agreement
shall constitute Borrower as the agent or partner or representative of Agency for any purpose
whatsoever.
]3.13 Attorney's Fees.
]f either party to this Agreement is required to initiate or defend litigation in any way connected with
this Agreement, the prevailing party in such litigation, in addition to any other relief which may be
granted, whether legal or equitable, shall be entitled to its actual and reasonable attorney's fees. ]f
either party to this Agreement is required to initiate or defend litigation with a third party because of
the violation of any tenn or provision of this Agreement by the other party, then the party so
litigating shall be entitled to its actual and reasonable attorney's fees from the other party to this
Agreement. Attorney's fees shall include attarney's fees on any appeal, and in addition a party
entitled to attorney's fees shall be entitled ta all other reasonable costs for investigating such action,
retaining expert witnesses, taking depositions and discovery, and all other necessary costs incurred in
such litigation. All such fees shall be deemed to have accrued on commencement of such action and
shall be enforceable whether or not such action is prosecuted to judgment. The parties hereto
acknowledge and agree that each such party shall bear its own legal costs incurred in connection with
the negotiation, approval, and execution of this Agreement.
[NEXT PAGE IS SIGNATURE PAGE]
34 (-L/s-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date specified herein.
"AGENCY"
REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA, a public body, corporate and politic
By:
Its: Chair
ATTEST:
Agency Secretary
"BORROWER"
Main Plaza loP.
By: Avalon Communities, LLC
By:
Lionel Puig, Managing Member
Sol (- tj(P
(HINES) J\COMMDEVlHINES\Mo'o Plo,,-A,ooo, toao A"eemootd" 18I9/Ot 1230 PM]
EXHIBIT A
LEGAL DESCRIPTION
A-I I - 4- 7
EXHIBIT B
PROMISSORY NOTE
B-] ( - 4?
EXHIBIT C
AGENCY DEED OF TRUST
C-) 1- c./ 9
EXHIBIT D
AFFORDABLE HOUSING AGREEMENT
D-] 1- S7J
EXHIBIT E
SOURCES AND USES
E-] 1- 5/
EXHIBIT F
PROJECT BUDGET
F-l (- .;) d-..
EXHIBIT G
PROJECT PRO FORMA
G-] / - :5 3
EXIUBIT H
CERTIFICATE OF COMPLETION
H-l / - ::3>-tf
EXHIBIT I
SCOPE OF WORK
I-I I - ~S-
EXHIBIT J
SCHEDULE OF PERFORMANCE
J-1 1-5G:.
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Redevelopment Agency of
the City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attention: Housing Manager
DEED OF TRUST WITH ABSOLUTE ASSIGNMENT
OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THE PARTIES TO THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made as of
, 2001, are MAIN PLAZA loP. ("Trustor")"r!fà'êj:jelifitJ.'ê/j,'iiifii,'¡I1'$tifr"t:iWilittè.i.iiff
~~(j(j'., a California corporation ("Trustee"), and the REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA, a public body, corporate and politic ("Beneficiary").
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms and conditions in this Deed of Trust,
Trustor irrevocably grants, conveys and assigns to Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of entry and possession, all of that real property
located in the City of Chula Vista, County of San Diego, State of California, described on
Exhibit A attached hereto, together with all development rights or credits, air rights,
water, water rights and water stock related to the real property, and all minerals, oil and
gas, and other hydrocarbon substances in, on or under the real property, and all
appurtenances, easements, rights and rights of way appurtenant or related thereto; all
buildings, other improvements and fixtures now or hereafter located on the real property,
including, but not limited to, all apparatus, equipment, and appliances used in the
operation or occupancy of the real property, it being intended by the parties that all such
items shall be conclusively considered to be a part of the real property, whether or not
attached or affixed to the real property (the "Improvements"); all interest or estate which
Trustor may hereafter acquire in the property described above, and all additions and
accretions thereto, and the proceeds of any of the foregoing; (all of the foregoing being
collectively referred to as the "Subject Property"). The listing of specific rights or
property shall not be interpreted as a limit of general terms.
1.2 ADDRESS. The address of the Subject Property is the northeast comer of Main Street
and Broadway within the Southwest Redevelopment Project Area and the Montgomery
Specific Plan in the City of Chula Vista, California. However, neither the failure to
designate an address nor any inaccuracy in the address designated shall affect the validity
or priority of the lien of this Deed of Trust on the Subject Property as described on
Exhibit A.
-1- (-57
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the purpose
of securing the following obligations ("Secured Obligations"):
(a) Payment to Beneficiary of all sums at any time owing under that certain
Promissory Note of even date herewith executed by Trustor in favor of
Beneficiary in the principal amount of One Million Sixty Thousand Dollars
($1,060,000), and the performance of all covenants and obligations of Trustor
under the Promissory Note and the Loan Agreement and Related Restricted
Covenants of even date herewith between Trustor and Beneficiary ("Loan
Agreement"); and
(b) Payment and performance of all covenants and obligations of Trustor under this
Deed of Trust; and
(c) All modifications, extensions and renewals of any of the obligations secured
hereby, however evidenced, including, without limitation: (i) modifications of the
required principal payment dates or interest payment dates or both, as the case
may be, deferring or accelerating payment dates wholly or partly; or (ii)
modifications ofthe required debt service payments.
2.2 INCORPORATION. All terms of the Secured Obligations and the documents
evidencing such obligations are incorporated herein by this reference. All persons who
may have or acquire an interest in the Subject Property shall be deemed to have notice of
the terms of the Secured Obligations.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Subject to the rights of the beneficiary under the Senior Deed of Trust
(as defined below), Trustor hereby irrevocably assigns to Beneficiary all of Trustor's
right, title and interest in, to and under: (a) all leases of the Subject Property or any
portion thereof, all licenses and agreements relating to the management, leasing or
operation of the Subject Property or any portion thereof, and all other agreements of any
kind relating to the use or occupancy of the Subject Property or any portion thereof,
whether now existing or entered into after the date hereof ("Leases"); and (b) the rents,
issues, deposits and profits of the Subject Property, including, without limitation, all
amounts payable and all rights and benefits accruing to Trustor under the Leases
("Payments"). The term "Leases" shall also include all guarantees of and security for the
lessees' performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and absolute
assignment, not an assignment for security purposes only, and Beneficiary's right to the
Leases and Payments is not contingent upon, and may be exercised without possession
of, the Subject Property.
3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License") to
collect and retain the Payments as they become due and payable, until the occurrence of a
Default (as hereinafter defined). Upon a Default, the License shall be automatically
-2- 1- .5--g
revoked and Subject to the rights of the beneficiary under the Senior Deed of Trust,
Beneficiary may collect and apply the Payments pursuant to Section 6.4 without notice
and without taking possession of the Subject Property. Trustor hereby irrevocably
authorizes and directs the lessees under the Leases to rely upon and comply with any
notice or demand by Beneficiary for the payment to Beneficiary of any rental or other
sums which may at any time become due under the Leases, or for the performance of any
of the lessees' undertakings under the Leases, and the lessees shall have no right or duty
to inquire as to whether any Default has actually occurred or is then existing hereunder.
Trustor hereby relieves the lessees !Tom any liability to Trustor by reason of relying upon
and complying with any such notice or demand by Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable Assignment shall not cause
Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control,
care, management or repair of the Subject Property or for performing any of the terms,
agreements, undertakings, obligations, representations, warranties, covenants and
conditions of the Leases; or (c) responsible or liable for any waste committed on the
Subject Property by the lessees under any of the Leases or any other parties; for any
dangerous or defective condition of the Subject Property; or for any negligence in the
management, upkeep, repair or control of the Subject Property resulting in loss or injury
or death to any lessee, licensee, employee, invitee or other person, unless caused by the
gross negligence or wilful misconduct of Beneficiary or its agents. Beneficiary shall not
directly or indirectly be liable to Trustor or any other person as a consequence of: (i) the
exercise or failure to exercise any of the rights, remedies or powers granted to
Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perform or discharge
any obligation, duty or liability of Trustor arising under the Leases.
3.4 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that as
of the date of this Deed of Trust there are no Leases affecting any portion of the Subject
Property.
3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to: (a)
perform the obligations of lessor contained in the Leases and enforce by all available
remedies performance by the lessees of the obligations of the lessees contained in the
Leases; (b) give Beneficiary prompt written notice of any material default which occurs
with respect to any of the Leases, whether the default be that of the lessee or of the lessor;
(c) exercise commercially reasonable efforts to keep all portions of the Subject Property
that are currently subject to Leases leased at all times at rentals not less than the fair
market rental value; (d) deliver to Beneficiary fully executed, counterpart original(s) of
each and every Lease if requested to do so; and (e) execute and record such additional
assignments of any Lease or specific subordinations of any Lease to the Deed of Trust, in
form and substance acceptable to Beneficiary, as Beneficiary may request. Except as
required or permitted by the Senior Deed of Trust, or its beneficiary, or by the loan
agreement secured thereby, Trustor shall not, without Beneficiary's prior written consent
or as otherwise permitted by any provision of the Loan Agreement: (i) execute any other
assignment relating to any of the Leases; (ii) discount any rent or other sums due under
the Leases or collect the same in advance, other than to collect rent one (1) month in
advance of the time when it becomes due; (iii) terminate, modify or amend any of the
-3- / -~-.:¡
material terms of the Leases or in any material manner release or discharge the lessees
from any obligations thereunder; (iv) consent to any assignment or subletting by any
lessee; or (v) subordinate or agree to subordinate any of the Leases to any other deed of
trust or encumbrance. Any such attempted action in violation of the provisions of this
Section 3.5 shall be null and void. Without in any way limiting the requirement of
Beneficiary's consent hereunder, but subject to the right of the beneficiary under the
Senior Deed of Trust, any sums received by Trustor in consideration of any termination
(or the release or discharge of any lessee) modification or amendment of any Lease shall
be applied to reduce the outstanding Secured Obligations and any such sums received by
Trustor shall be held in trust by Trustor for such purpose.
3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by
Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by Trustor and by each of the lessees, in
recordable form, certifying (if such be the case): (a) that the foregoing assignment and
the Leases are in full force and effect; (b) the date of each lessee's most recent payment
of rent; (c) that there are no defenses or offsets outstanding, or stating those claimed by
Trustor or lessees under the foregoing assignment or the Leases, as the case may be; and
(d) any other information reasonably requested by Beneficiary.
ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary as of the
date hereof ("Effective Date") a security interest, to secure payment and performance of
all of the Secured Obligations, in all of the following described personal property in
which Trustor now or at any time hereafter has any interest (collectively, the
"Collateral"):
All goods, building and other materials, supplies, work in process, equipment,
machinery, fixtures, furniture, furnishings, signs and other personal property,
wherever situated, which are or are to be incorporated into, used in
connection with, or appropriated for the use and operation of Subject Property
(to the extent the same are not effectively made a part af the real property
pursuant to Section 1.1 above) together with all rents, issues, deposits and
profits of the Subject Property (to the extent, if any, they are not subject to
Article 3); all inventory, accounts, cash receipts, deposit accounts, accounts
receivable, contract rights, general intangibles, chattel paper, instruments,
documents, notes, drafts, letters of credit, insurance policies, insurance and
condemnation awards and proceeds, any other rights to the payment of
money, trade names, trademarks and service marks arising from or related to
the Subject Property or any business now or hereafter conducted thereon by
Trustar; all permits consents, appravals, licenses, authorizatians and other
rights granted by, given by or obtained from, any governmental entity with
respect to the Subject Property; all deposits or other security now or hereafter
made with or given to utility companies by Trustor with respect to the Subject
Property; all advance payments of insurance premiums made by Trustor with
respect to the Subject Property; all plans, drawings and specifications relating
to the Subject Property; all funds deposited with Beneficiary pursuant to any
-4- I~roo
loan agreement; all reserves, deferred payments, deposits, accounts, refunds,
cost savings and payments of any kind related to the Subject Property or any
portion thereof; together with all replacements and proceeds of, and additions
and accessions to, any of the foregoing; together with all books, records and
files relating to any of the foregoing.
As to all of the above described personal property which is or which hereafter
becomes a "fixture" under applicable law, this Deed of Trust constitutes and
is filed as a fixture filing under Sections 9313 and 9402(6) of the California
Uniform Commercial Code, as amended or recodified from time to time, and
covers goods which are or are to become fixtures.
4.2 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that:
(a) Trustor has, or will have, good title to the Collateral (except for items that are leased
by Trustor); and (b) Trustor's principal place of business is located at the address shown
in Section 7.9.
4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a "Secured Party"
under the California Uniform Commercial Code, as amended or recodified from time to
time ("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice
and at the expense of Trustor: (a) give notice to any person of Beneficiary's rights
hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and
preserve the Collateral or any rights or interests of Beneficiary therein; ( c) inspect the
Collateral; and (d) endorse, collect and receive any right to payment of money owing to
Trustor under or from the Collateral. Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any property other than cash in satisfaction of
any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written
election of said remedy under UCC §9505, or other applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the occurrence and during the
continuance of a Default (hereinafter defined) under this Deed of Trust, then in addition
to all of Beneficiary's rights as a "Secured Party" under the UCC or otherwise at law:
(a) Beneficiary may (i) upon written notice, require Trustor to assemble any or all of
the Collateral and make it available to Beneficiary at a place designated by
Beneficiary; (ii) without prior notice, enter upon the Subject Property or other
place where any of the Collateral may be located and take possession of, collect,
sell, and dispose of any or all of the Collateral, and store the same at locations
acceptable to Beneficiary at Trustor's expense; (iii) sell, assign and deliver at any
place or in any lawful manner all or any part ofthe Collateral and bid and become
purchaser at any such sales; and
(b) Beneficiary may, for the account of Trustor and at Trustor's expense: (i) operate,
use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate
for the purpose of performing any or all of the Secured Obligations; (ii) enter into
any agreement, compromise, or settlement, including insurance claims, which
Beneficiary may deem desirable or proper with respect to any of the Collateral;
and (iii) endorse and deliver evidences of title for, and receive, enforce and collect
-5. I-to!
by legal action or otherwise, all indebtedness and obligations now or hereafter
owing to Trustor in cannection with or on account of any ar all of the Collateral.
Notwithstanding any other provision hereof, Beneficiary shall not be deemed to
have accepted any property other than cash in satisfaction of any obligation of
Trustor to Beneficiary unless Trustor shall make an express written election of
said remedy under UCC §9505, or other applicable law.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appaints Beneficiary as
Trustor's attorney-in-fact (such agency being coupled with an interest), and as such
attorney-in-fact Beneficiary may, upon the occurrence and during the continuance of a
Default, without the obligation to do so, in Beneficiary's name, or in the name of Trustor,
prepare, execute and file or record financing statements, continuation statements,
applications for registration and like papers necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in or to any of the Collateral, and, upon the
occurrence and during the continuance of a Default hereunder, take any other action
required of Trustor; provided, however, that Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this
Section, so long as no Default exists under this Deed of Trust, Trustor may possess, use,
move, transfer or dispose of any of the Collateral in the ordinary course of Trustor's
business.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TAXES AND ASSESSMENTS. Subject to Trustor's rights to contest payment of taxes,
Trustor shall pay prior to delinquency all taxes, assessments, levies and charges imposed
by any public or quasi-public authority or utility company which are or which may
become a lien upon or cause a loss in value of the Subject Property or any interest
therein. Trustor shall also pay prior to delinquency all taxes, assessments, levies and
charges imposed by any public authority upon Beneficiary by reason of its interest in any
Secured Obligation or in the Subject Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation; provided, however, Trustor shall have
no obligation to pay taxes which may be imposed from time to time upon Beneficiary and
which are measured by and imposed upon Beneficiary's net income.
5.2 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay and
perfonn each Secured Obligation when due.
5.3 LIENS, ENCUMBRANCES AND CHARGES. This Deed of Trust shall constitute a
second priority security interest, junior and subordinate only to a Construction Deed of
Trust with Assignment of Rents, Security Agreement and Fixture Filing, dated
concurrently herewith, made in connection with the loan made by the fJ,)(iv~lQr:!~H,tQ
with the proceeds of multifamily revenue bonds in the amount of
and the refinancing
thereof which have been approved by Beneficiary or are pennitted pursuant to the Loan
-6- (-b:J.-
Agreement (the "Senior Deed of Trust"). Trustor shall immediately discharge any other
lien not approved by Beneficiary in writing that has or may attain priority over this Deed
of Trust. Trustar shall pay when due all obligations secured by or reducible to liens
which shall now or hereafter encumber or appear to encumber all or any part of the
Subject Property or any interest therein, whether senior or subordinate hereto; provided,
however, Trustor shall have the right to contest in good faith any claims and liens for
labor done and materials and services furnished in connection with the construction of
any Improvements and any such claim or lien so contested may remain unpaid during the
period of such contest and any appeal therefrom,
5.4 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS. Proceeds of
casualty insurance policies and condemnation awards shall be disposed of in accordance
with and subject to the conditions contained in the Loan Agreement.
5.5 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY.
Trustor covenants: (a) to insure the Subject Property against such risks as are required
under the Loan Agreement and, at Beneficiary's request, to provide evidence of such
insurance to Beneficiary, and to comply with the requirements of any insurance
companies insuring the Subject Property; (b) to keep the Subject Property in good
condition and repair; (c) except as permitted by the Senior Deed of Trust, or its
beneficiary, or the loan agreement secured thereby, not to remove or demolish the
Subject Property or any part thereof, not to materially alter, restore or add to the Subject
Property and not to initiate or acquiesce in any change in any zoning or other land
classification which affects the Subject Property without Beneficiary's prior written
consent; (d) to complete or restore promptly and in good and workmanlike manner the
Subject Property, or any part thereof which may be damaged or destroyed; (e) to comply
with all laws, ordinances, regulations and standards, and all covenants, conditions,
restrictions and equitable servitudes, whether public or private, of every kind and
character which affect the Subject Property and pertain to acts committed or conditions
existing thereon, including, without limitation, any work, alteration, improvement or
demolition mandated by such laws, covenants or requirements; (f) not to commit or
permit waste ofthe Subject Property; and (g) to do all other acts which from the character
or use of the Subject Property may be reasonably necessary to maintain and preserve its
value.
5.6 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's
sole expense, Trustor shall protect, preserve and defend the Subject Property and title to
and right of possession of the Subject Property, the security hereof and the rights and
powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall
give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the
filing of any action or proceeding, of the occurrence of any damage to the Subject
Property and of any condemnation offer or action.
5.7 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee
accepts this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust or a certified copy thereof
for endorsement, and without affecting the personal liability of any person for payment of
-7- (- ~:3
any indebtedness or performance of any obligations secured hereby, Trustee may,
without liability therefor and without notice: (a) reconvey all or any part of the Subject
Property; (b) consent to the making of any map or plat thereof; and (c) join in any grant
of easement thereon, any declaration of covenants and restrictions, or any extension
agreement or any agreement subordinating the lien or charge of this Deed of Trust.
Except as may be required by applicable law, Trustee or Beneficiary may from time to
time apply to any court of competent jurisdiction for aid and direction in the execution of
the trust hereunder and the enforcement of the rights and remedies available hereunder,
and may obtain orders or decrees directing or confirming or approving acts in the
execution of said trust and the enforcement of said remedies. Trustee has no obligation to
notify any party of any pending sale or any action or proceeding, including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party unless held or
commenced and maintained by Trustee under this Deed of Trust. Trustee shall not be
obligated to perform any act required of it hereunder unless the performance of the act is
requested in writing and Trustee is reasonably indemnified and held harmless against
loss, cost, liability or expense.
5.8 EXCULPATION; INDEMNIFICATION.
(a) Beneficiary shall not directly or indirectly be liable to Trustor or any other person
as a consequence of (i) the exercise of the rights, remedies or powers granted to
Beneficiary in this Deed of Trust; (ii) the failure or refusal of Beneficiary to
perform or discharge any obligation or liability of Trustor under any agreement
related to the Subject Property or under this Deed of Trust; or (iii) any loss
sustained by Trustor or any third party resulting from Beneficiary's failure to
lease the Subject Property after a Default (hereinafter defined) or from any other
act or omission of Beneficiary in managing the Subject Property after a Default
unless the loss is caused by the gross negligence or willful misconduct of
Beneficiary and no such liability shall be asserted against or imposed upon
Beneficiary or its agents, and all such liability is hereby expressly waived and
released by Trustor.
(b) Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses, damages, liabilities, claims, causes of
action, judgments, court costs, attorneys' fees and other legal expenses, cost of
evidence of title, cost of evidence of value, and other expenses which either may
suffer or incur: (i) by reason of this Deed of Trust; (ii) by reason of the execution
of this trust or in performance of any act required or permitted hereunder or by
law; (iii) as a result of any failure of Trustor to perform Trustor's obligations; or
(iv) by reason of any alleged obligation or undertaking on Beneficiary's part to
perform or discharge any of the representations, warranties, conditions, covenants
or other obligations contained in any other document related to the Subject
Property; provided, however, such indemnity does not include matters caused by
the gross negligence or willful misconduct of Beneficiary or its agents. The
above obligation of Trustor to indemnify and hold harmless Trustee and
Beneficiary shall survive the release and cancellation of the Secured Obligations
and the release and reconveyance or partial release and reconveyance of this Deed
-8- I-rot/-
of Trust.
(c) Trustor shall pay all amounts and indebtedness arising under this Section 5.10
immediately upon written demand by Trustee or Beneficiary together with interest
thereon from the date of such demand at the rate of ten percent (10%) per annum.
5.9 SUBSTITUTION OF TRUSTEES. From time to time, by a writing, signed and
acknowledged by Beneficiary and recorded in the Office ofthe Recorder of the County in
which the Subject Property is situated, Beneficiary may appoint another trustee to act in
the place and stead of Trustee or any successor. Such writing shall set forth any
information required by law. The recordation of such instrument of substitution shall
discharge Trustee herein named and shall appoint the new trustee as the trustee hereunder
with the same effect as if originally named Trustee herein. A writing recorded pursuant
to the provisions of this Section 5.11 shall be conclusive proof of the proper substitution
of such new Trustee.
5.10 NONRECOURSE OBLIGATION. Nothing herein contained shall be deemed to cause
Trustor (or any of its partners, or any of their respective directors, officers, employees,
partners, principals or members) personally to be liable to payor perform any of its
obligations secured hereby, and Beneficiary shall not seek any personal or deficiency
judgment on such obligations, and the sole remedy of Beneficiary shall be against the
Subject Property and the Collateral; provided, however, that the foregoing shall not in
any way affect any rights Beneficiary may have (as a secured party or otherwise)
hereunder or under the Promissory Note or Loan Agreement, or any other rights
Beneficiary may have to: (a) recover directly from Trustor any funds, damages or costs
(including, without limitation, reasonable attorneys' fees and costs) incurred by
Beneficiary as a result of fraud, misrepresentation or waste; or (b) recover directly from
Trustor any condemnation or insurance proceeds, or other similar funds or payments
attributable to the Property which under the terms of this Deed of Trust should have been
paid to Beneficiary and any costs and expenses incurred by Beneficiary in connection
therewith (including, without limitation, reasonable attorneys' fees and costs).
5.11 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY.
Without notice to or the consent, approval or agreement of any persons or entities having
any interest at any time in the Subject Property or in any manner obligated under the
Secured Obligations ("Interested Parties"), Beneficiary may, from time to time, release
any person or entity from liability for the payment or performance of any Secured
Obligation, take any action or make any agreement extending the maturity or otherwise
altering the terms or increasing the amount of any Secured Obligation, or accept
additional security or release all or a portion of the Subject Property and other security
for the Secured Obligations. None of the foregoing actions (other than a duly executed
written release) shall release or reduce the liability of any of said Interested Parties, to the
extent such liability exists, or release or impair the priority of the lien of this Deed of
Trust upon the Subject Property.
5.12 RECONVEYANCE. Upon Beneficiary's written request, and upon surrender to Trustee
for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument,
-9- (-roç
or instruments setting forth all obligations secured hereby, Trustee shall reconvey,
without warranty, the Subject Property or that portion thereof then held hereunder. To
the extent permitted by law, the reconveyance may describe the grantee as "the person or
persons legally entitled thereto" and the recitals of any matters or facts in any
reconveyance executed hereunder shall be conclusive proof of the truthfulness thereof.
Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance. When the Subject Property has
been fully reconveyed, the last such reconveyance shall operate as a reassignment of all
future rents, issues and profits of the Subject Property to the person or persons legally
entitled thereto.
5.13 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances,
whether released ofrecord or not, paid in whole or in part by Beneficiary pursuant to this
Deed of Trust or by the proceeds of any loan secured by this Deed of Trust.
5.14 RIGHT OF INSPECTION. Subject to the rights of tenants or occupants of the Subject
Property, Beneficiary, its agents and employees, may enter the Subject Property at any
reasonable time upon twenty-four (24) hours' notice (except in cases of emergency where
no notice is required) for the purpose of inspecting the Subject Property and ascertaining
Trustor's compliance with the terms hereof.
5.15 HAZARDOUS MATERIALS. Without in any way limiting the other representations
and warranties set forth in this Deed of Trust, and except as otherwise disclosed in
written reports and surveys previously delivered to Beneficiary, Trustor hereby
specifically represents and warrants to the best of Trustor's actual knowledge, without
inquiry, as ofthe date of this Deed of Trust as follows:
(a) The Subject Property is not and has not been a site for the use, generation,
manufacture, storage, treatment, release, threatened release, discharge, disposal,
transportation or presence of any oil, flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without limitation, any
substances which are "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under the Hazardous Materials Laws, as
described below, and/or other applicable environmental laws, ordinances and
regulations (collectively, the "Hazardous Materials"). "Hazardous Materials"
shall not include commercially reasonable amounts of such materials used (i) in
laboratories for educational purposes, (ii) in business offices and schools of the
type and nature currently operated by Trustor, (iii) in the ordinary course of
construction of the Subject Property, and (iv) by occupants of residential units for
normal household activities, and by Trustor for normal maintenance and
operations of the Subject Property, all of which materials set forth in (i)-(iv)
above are used and stored in accordance with all applicable environmental laws,
ordinances and regulations.
(b) The Subject Property is in compliance with all laws, ordinances and regulations
relating to Hazardous Materials ("Hazardous Materials Laws"), including, without
-10- (-~¿,
]imitation: the Clean Air Act, as amended, 42 D.S.C. Section 7401 et seq.; the
Federal Water Pollution Control Act, as amended, 33 V.S.C. Section 1251 et seq.;
the Resource Conservation and Recovery Act of 1976, as amended, 42 V.S.C.
Section 6901 et seq.; the Comprehensive Environment Response, Compensation
and Liability Act of 1980, as amended (including the Superfund Amendments and
Reauthorization Act af 1986, "CERCLA"), 42 V.S.C. Section 9601 et seq.; the
Toxic Substances Control Act, as amended, 15 V.S.C. Section 2601 et seq.; the
Occupational Safety and Health Act, as amended, 29 D.S.C. Section 651, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 V.S.C.
Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30
D.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 D.S.C.
Section 300f et seq.; and all comparable state and local laws, laws of other
jurisdictions or orders and regulations.
(c) There are no claims or actions ("Hazardous Materials Claims") pending or
threatened against Trustor or the Subject Property by any governmental entity or
agency or by any other person or entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws.
(d) The Subject Property has not been designated as Border Zone Property under the
provisions of California Health and Safety Code, Sections 25220 et seq. and there
has been no occurrence or condition on any real property adjoining or in the
vicinity of the Subject Property that could cause the Subject Property or any part
thereof to be designated as Border Zone Property.
5.16 HAZARDOUS MATERIALS COVENANTS. Trustor agrees as follows:
(a) Trustor shall not cause or permit the Subject Property to be used as a site for the
use, generation, manufacture, storage, treatment, release, discharge, disposal,
transportation or presence of any Hazardous Materials (other than as provided in
Section 5.l7(a)(i)-(iii) above).
(b) Trustor shall comply and cause the Subject Property to comply with all Hazardous
Materials Laws.
(c) Trustor shall immediately notify Beneficiary in writing of: (i) the discovery of any
Hazardous Materials (other than those set forth in Section 5.17(a)(i)-(iv) above)
on or under the Subject Property; (ii) any knowledge by Trustor that the Subject
Property does not comply with any Hazardous Materials Laws; (iii) any
Hazardous Materials Claims; and (iv) the discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Subject Property
that could cause the Subject Property or any part thereof to be designated as
Border Zone Property.
(d) In response to the presence of any Hazardous Materials on or under the Subject
Property, Trustor shall immediately take, at Trustor's sole expense, in a
commercially reasonable manner, all remedial action required by any Hazardous
-11- (- ~ 7
Materials Laws or any judgment, consent decree, settlement or compromise in
respect to any Hazardous Materials Claims.
5.17 INSPECTION BY BENEFICIARY. At any reasonable time, upon twenty-four (24)
hours' notice (except in cases of emergency where no notice is required) to Trustor, but
subject to the rights of tenants and occupants of the Subject Property, Beneficiary, its
employees and agents, may from time to time (whether before or after the
commencement of a nonjudicial or judicial foreclosure proceeding) enter and inspect the
Subject Property for the purpose of determining the existence, location, nature and
magnitude of any past or present release or threatened release of any hazardous substance
into, onto, beneath or from the Subject Property.
5.18 HAZARDOUS MATERIALS INDEMNITY. Trustor hereby agrees to defend,
indemnify and hold harmless Beneficiary, its directors, officers, employees, agents,
successors and assigns from and against any and all losses, damages, liabilities, claims,
actions, judgments, court costs and legal or other expenses (including, without limitation,
reasonable attorneys' fees and expenses) which Beneficiary may incur as a direct or
indirect consequence of the use, generation, manufacture, storage, disposal, threatened
disposal, transportation or presence of Hazardous Materials in, on or under the Subject
Property. Trustor shall immediately pay to Beneficiary upon written demand any
amounts owing under this indemnity, together with interest from the date of demand
therefor until paid at the rate of ten percent (10%) per annum. TRUSTOR'S DUTY
AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS
BENEFICIARY SHALL SURVIVE THE TERMINATION OF THE LOAN
AGREEMENT AND THE RELEASE, RECONVEYANCE OR PARTIAL
RECONVEYANCE OF THE DEED OF TRUST.
5.19 LEGAL EFFECT. Trustor and Beneficiary agree that: (a) Sections 5.17 through 5.20
are intended as Beneficiary's written request for information (and Trustor's response)
concerning the environmental condition of the real property security as required by
California Code of Civil Procedure §726.5; and (b) each provision in such sections
(together with any indemnity applicable to a breach of any such provision) with respect to
the environmental condition of the real property security is intended by Beneficiary and
Trustor to be an "environmental provision" for purposes of California Code of Civil
Procedure §736, and as such it is expressly understood that Trustor's duty to indemnify
Beneficiary hereunder shall survive: (a) any judicial or non-judicial foreclosure under the
Deed of Trust, or transfer of the Subject Property in lieu thereof, and (b) the release and
reconveyance or cancellation of the Deed of Trust.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term "Default" shall mean (a) the occurrence of
an "event of default" as defined in the Promissory Note or the Loan Agreement beyond
all applicable cure periods provided therein; (b) the failure of Trustor to make any
payment of any amount due hereunder when the same is due and payable, where such
failure has continued for ten (10) days after notice (c) Trustor's failure to observe and
perform any other covenant, condition or agreement on its part to be observed or
-12- (-fc,q
performed under this Deed of Trust for a period of thirty (30) days after written notice
specifying such failure and requesting that it be remedied is given to Trustor by
Beneficiary; provided, however, if the failure stated in the notice is correctable but cannot
be corrected within such thirty (30) day period, Trustor shall have such additional time as
reasonably necessary to effect such cure, provided that such corrective action is instituted
by Trustor within such thirty (30) day period and diligently pursued until the default is
corrected, (d) at the option of Beneficiary, the occurrence of a breach or default (beyond
any applicable cure period) under any other deed of trust to Trustee executed by Trustor
for the benefit of Beneficiary of even date herewith or hereafter executed (the "Other
Deeds of Trust") which secures (i) payment to Beneficiary of sums owing under the Loan
Agreement and/or (ii) the performance of the covenants and obligations of Trustor under
the Loan Agreement, or (e) the failure (in any material respect) of any of the
representations and warranties of Trustor herein to be true and correct when made.
6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee shall
each have all the following rights and remedies; provided, however, Beneficiary and
Trustee may not exercise the rights and remedies under subsections (c), (f) and (g) below
until there has been a Default:
(a) With or without notice, to declare all Secured Obligations immediately due and
payable;
(b) With or without notice, and without releasing Trustor from any Secured
Obligation, and without becoming a mortgagee in possession, to cure any breach
or Default of Trustor and, in connection therewith, to enter upon the Subject
Property and do such acts and things as Beneficiary or Trustee deem necessary or
desirable to protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security of this
Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of
Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or
may be senior in priority to this Deed of Trust, the judgment of Beneficiary or
Trustee being conclusive as between the parties hereto; (iii) to obtain insurance;
(iv) to pay any premiums or charges with respect to insurance required to be
carried under this Deed of Trust; or (v) to employ counsel, accountants,
contractors and other appropriate persons.
(c) To commence and maintain an action or actions in any court of competent
jurisdiction to foreclose this instrument as a mortgage or to obtain specific
enforcement of the covenants of Trustor hereunder, and Trustor agrees that such
covenants shall be specifically enforceable by injunction or any other appropriate
equitable remedy and that for the purposes of any suit brought under this
subparagraph, Trustor waives the defense of laches and any applicable statute of
limitations;
(d) To apply to a court of competent jurisdiction for and obtain appointment of a
receiver of the Subject Property as a matter of strict right and without regard to
-13- (-Cc,9
the adequacy of the security for the repayment of the Secured Obligations, the
existence of a declaration that the Secured Obligations are immediately due and
payable, or the filing of a notice of default, and Trustor hereby consents to such
appointment;
(e) To enter upon, possess, manage and operate the Subject Property or any part
thereof, to take and possess all documents, books, records, papers and accounts of
Trustor or the then owner of the Subject Property, to make, terminate, enforce or
modify Leases of the Subject Property upon such terms and conditions as
Beneficiary deems proper, to make repairs, alterations and improvements to the
Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to
protect or enhance the security hereof;
(f) To execute a written notice of such Default and of its election to cause the Subject
Property to be sold to satisfy the Secured Obligations. As a condition precedent
to any such sale, Trustee shall give and record such notice as the law then
requires. When the minimum period of time required by law after such notice has
elapsed, Trustee, without notice to or demand upon Trustor except as required by
law, shall sell the Subject Property at the time and place of sale fixed by it in the
notice of sale, at one or several sales, either as a whole or in separate parcels and
in such manner and order, all as Beneficiary in its sole discretion may determine,
at public auction to the highest bidder for cash, in lawful money of the United
States, payable at time of sale. Neither Trustor nor any other person or entity
other than Beneficiary shall have the right to direct the order in which the Subject
Property is sold. Subject to requirements and limits imposed by law, Trustee may
from time to time postpone sale of all or any portion of the Subject Property by
public announcement at such time and place of sale. Trustee shall deliver to the
purchaser at such sale a deed conveying the Subject Property or portion thereof so
sold, but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including Trustee, Trustor or Beneficiary may purchase at
the sale;
(g) To resort to and realize upon the security hereunder and any other security now or
later held by Beneficiary concurrently or successively and in one or several
consolidated or independent judicial actions or lawfully taken non-judicial
proceedings, or both, and to apply the proceeds received upon the Secured
Obligations all in such order and manner as Trustee and Beneficiary, or either of
them, determine in their sole discretion;
(h) Upon sale of the Subject Property at any judicial or non-judicial foreclosure,
Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute
discretion) all or any portion of the Secured Obligations. In determining such
credit bid, Beneficiary may, but is not obligated to, take into account all or any of
the following: (i) appraisals of the Subject Property as such appraisals may be
discounted or adjusted by Beneficiary in its sole and absolute underwriting
discretion; (ii) expenses and costs incUtted by Beneficiary with respect to the
-14- (- 7 0
Subject Property prior to foreclosure; (iii) expenses and costs which Beneficiary
anticipates will be incurred with respect to the Subject Property after foreclosure,
but prior to resale, including, without limitation, costs of structural reports and
other due diligence, costs to carry the Subject Property prior to resale, costs of
resale (e.g., commissions, attorneys' fees, and taxes), costs of any hazardous
materials clean-up and monitoring, costs of deferred maintenance, repair,
refurbishment and retrofit, costs of defending or settling litigation affecting the
Subject Property, and lost opportunity costs (if any), including the time value of
money during any anticipated holding period by Beneficiary; (iv) declining trends
in real property values generally and with respect to properties similar to the
Subject Property; (v) anticipated discounts upon resale of the Subject Property as
a distressed or foreclosed property; (vi) the fact of additional collateral (if any),
for the Secured Obligations; and (vii) such other factors or matters that
Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to
the above, Trustor acknowledges and agrees that: (w) Beneficiary is not required
to use any or all of the foregoing factors to detennine the amount of its credit bid;
(x) this Section does not impose upon Beneficiary any additional obligations that
are not imposed by law at the time the credit bid is made; (y) the amount of
Beneficiary's credit bid need not have any relation to any loan-to-value ratios
previously discussed between Trustor and Beneficiary; and (z) Beneficiary's
credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower
than any appraised value of the Subject Property.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all costs,
fees and expenses of Trustee, and of this trust, including, without limitation, cost of
evidence of title and attorneys' fees in connection with sale and costs and expenses of
sale and of any judicial proceeding wherein such sale may be made, Trustee shall apply
all proceeds of any foreclosure sale: (a) to payment of all sums expended by Beneficiary
under the terms hereof and not then re-paid, with accrued interest; (b) to payment of all
other Secured Obligations; and (c) the remainder, if any, to the person or persons legally
entitled thereto.
6.4 APPLICATION OF OTHER SUMS. All sums received by Beneficiary under Section
6.2 or Section 3.2, less all costs and expenses incurred by Beneficiary or any receiver
under Section 6.2 or Section 3.2, including, without limitation, attorneys' fees, shall be
applied in payment of the Secured Obligations in such order as Beneficiary shall
detennine in its sole discretion; provided, however, Beneficiary shall have no liability for
funds not actually received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor Trustee's nor any receiver's entry
upon and taking possession of all or any part of the Subject Property, nor any collection
of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other
security or proceeds of other security, or other sums, nor the application of any collected
sum to any Secured Obligation, nor the exercise or failure to exercise of any other right
or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach,
Default or notice of default under this Deed of Trust, or nullify the effect of any notice of
default or sale (unless all Secured Obligations then due have been paid and perfonned
-15- (- 7/
and Trustor has cured all other defaults), or impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of the lien
of this Deed of Trust.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES. Trustor agrees to
pay to Beneficiary immediately and without demand all reasonable costs and reasonable
expenses incurred by Trustee and Beneficiary pursuant to Section 6.2 (including, without
limitation, court costs and attorneys' fees, whether incurred in litigation or not) with
interest from the date of expenditure until said sums have been paid at the rate of interest
then applicable to the principal balance of the indebtedness as specified in the Loan
Agreement. In addition, Trustor shall pay to Trustee all Trustee's fees hereunder and
shall reimburse Trustee for all expenses incurred in the administration of this trust,
including, without limitation, any attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby irrevocably
appoints Beneficiary and its successors and assigns, as its attorney-in-fact, which agency
is coupled with an interest, upon the occurrence and during the continuance of a default,
(a) to execute and/or record any notices of completion, cessation of labor, or any other
notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the
issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a
deed in lieu of foreclosure, to execute all instruments of assignment or further assurance
with respect to the Leases and Payments in favor of the grantee of any such deed, as may
be necessary or desirable for such purpose, (c) to prepare, execute and file or record
financing statements, continuation statements, applications for registration and like
papers necessary to create, perfect or preserve Beneficiary's security interests and rights
in or to any of the Collateral, and (d) to perform any obligation of Trustor hereunder;
provided, however, that: (i) Beneficiary as such attorney-in-fact shall only be
accountable for such funds as are actually received by Beneficiary; and (ii) Beneficiary
shall not be liable to Trustor or any other person or entity for any failure to act under this
Section.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 MERGER. No merger shall occur as a result of Beneficiary's acquiring any other estate
in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in
writing.
7.2 OBLIGATIONS OF TRUSTOR, JOINT AND SEVERAL. If more than one person
has executed this Deed of Trust as "Trustor", the obligations of all such persons
hereunder shall be joint and several.
7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties
claiming through or under Trustor, and for all parties who may acquire a lien on or
interest in the Subject Property, hereby waives all rights to have the Subject Property
and/or any other property, including, without limitation, the Collateral, which is now or
later may be security for any Secured Obligation ("Other Property") marshaled upon any
-16- (- 7;)....
foreclosure of this Deed of Trust or on a foreclosure of any other security for any of the
Secured Obligations. Beneficiary shall have the right to sell, and any court in which
foreclosure proceedings may be brought shall have the right to order a sale of, the Subject
Property and any or all of the Collateral or Other Property as a whole or in separate
parcels, in any order that Beneficiary may designate.
7.4 RULES OF CONSTRUCTION. When the identity of the parties or other
circumstances make it appropriate the masculine gender includes the feminine and/or
neuter, and the singular number includes the plural. The term "Subject Property" means
all and any part of the Subject Property and any interest in the Subject Property.
7.5 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained
shall be binding upon and inure to the benefit of the heirs, successors and assigns of the
parties here-to; provided, however, that this Section 7.5 does not waive or modify the
provisions of Section 5.12.
7.6 EXECUTION IN COUNTERPARTS. This Deed of Trust may be executed in any
number of counterparts, each of which, when executed and delivered to Beneficiary, will
be deemed to be an original and all of which, taken together, will be deemed to be one
and the same instrument.
7.7 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the
laws of the State of California, except to the extent that F ederallaws preempt the laws of
the State of California.
7.8 INCORPORATION. Exhibit A, as attached, is incorporated into this Deed of Trust by
this reference.
7.9 NOTICES. All notices or other communications required or permitted to be given
pursuant to the provisions of this Deed of Trust shall be in writing and shall be
considered as properly given if delivered personally or sent by first class U.S. mail,
postage prepaid, except that notice of a Default may be sent by certified mail, return
receipt requested, or by Overnight Express Mail or by overnight commercial courier
service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if
mailed by first class mail, and otherwise upon receipt at the addresses set forth below.
For purposes of notice, the addresses of the parties shall be:
-17- / -73
Trustor: Avalon Communities, LLC
1801 E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attention: Lionel Puig
Trustee:
Beneficiary: Redevelapment Agency ofthe City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Executive Director
With a copy to Agency Attorney and Housing Coordinator
Any party shall have the right to change its address for notice hereunder to any other location within
the continental United States by the giving of thirty (30) days notice to the other party in the manner
set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or
other communications delivered to the Subject Property or to Trustor naming Beneficiary, as
addressee, or which could reasonably be deemed to affect the ability of Trustor to perform its
obligations to Beneficiary under the Loan Agreement.
7.10 LOAN AGREEMENT AND PROMISSORY NOTE CONTROL. In the event of
conflict between the terms of this Deed of Trust and the Loan Agreement or the
Promissory Note, the terms of the Loan Agreement and Promissory Note shall prevail,
except that the provisions of 6.2 of this Deed of Trust shall control with respect to rights
and remedies of Beneficiary and Trustee hereunder.
7.11 NONDISCRIMINATION. Trustor herein covenants by and for itself, its heirs,
executors, administrators, and assigns, and all persons claiming under or through it that
there shall be no discrimination against or segregation of, any person or group of persons
on account of race, color, creed, religion, sex, marital status, national origin, or ancestr
-18- (-7Y
PROMISSORY NOTE
Secured by a Deed of Trust
$1,060,000 Date: , 2001
Chula Vista, CA
1. Borrower's Promise to Pay. For value received, the undersigned MAIN PLAZA, L.P.,
("Borrower"), promises to pay to the REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA, a public body, corporate and politic (the "Agency"), or order, at 276 Fourth Avenue, Chula
Vista, California 91910, or such other place as the Agency may designate in writing, the principal
sum of One Million Sixty Thousand Dollars ($1,060,000) (the "principal"), plus interest as set forth
in Section 4 below.
(a) Use Of Funds. Borrower is improving certain real property in the City of Chula
Vista, as legally described in the Loan Agreement (the "Property") with a mixed use development
consisting of 106 affordable housing units and 15,000 square feet of retail commercial space subject
to the terms of the Pennanent Loan Documents, the Regulatory Agreement and Declaration of
Restrictive Covenants, the Affordable Housing Agreement and the TCAC Regulatory Agreement, as
those terms are defined in the Loan Agreement (the "Project"). This Note evidences the loan made by
the Agency to assist Borrower in acquiring and improving the Property for occupation by very low,
lower and low and moderate income households, as more particularly set forth in that certain Loan
Agreement and Related Restricted Covenants between the Borrower and the Agency dated as of
(the "Loan Agreement").
2. Definitions. The term set forth in this Section shall have the following meaning in this Note:
(a) "Transfer" shall mean any sale, assignment or transfer, voluntary or involuntary, of
any interest in the Property. Any transfer without satisfaction of Section 7 of this Note is prohibited.
Capitalized tenns used herein not otherwise defined shall have the meanings set forth in the Loan
Agreement.
3. Security. This Note is secured by the Deed of Trust with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing of the same date as this Note (the "Deed of
Trust"), executed by Borrower, as trustor, in favor of the Agency, as beneficiary, and encumbering
the real property described in the Deed of Trust. The Agency will be entitled to the benefits of the
security provided by the Deed of Trust and will have the right to enforce the covenants and
agreements of Borrower specified within the Deed of Trust.
4. Interest. Simple interest will accrue on the principal balance remaining unpaid from time to
time at the rate of three percent (3%) per annum.
5. Payments. Payments of principal and interest due under this Note shall be made in
accordance with the payment tenns set forth in Section 4.5 of the Loan Agreement, which such terms
are incorporated herein by this reference. All payments on this Note shall be applied first to payment
of accrued but unpaid interest, and after all such interest has been paid, any remainder shall be
applied to reduction of the principal balance. Unless the Loan Agreement is extended pursuant to the
1 /-7~
terms of the Loan Agreement, all principal and interest shall be due and payable on the date that is
fifty-five (55) years from the date of the Agency's issuance of the Certificate of Completion (as
defined in the Loan Agreement).
6. Borrower's Right To Repay. Borrower has the right to pay, without penalty or premium,
all or any portion of the outstanding amount of this Note prior to the maturity date.
7. No Assumptions of Note. Borrower acknowledges that this Note is given in connection with
the development of the Project as part of a program of the Agency to assist with the provision of
housing for very low, low and moderate income households. Consequently, this Note is not
assumable by transferees of the Property, but is immediately due and payable in full on the date of
the Transfer of the Property, whether voluntary or involuntary, unless such Transfer is permitted by
the Loan Agreement or by the Agency in writing in the Agency's sole and absolute discretion. In
order to implement this provision, the Loan Agreement contains a "DUE ON SALE" provision.
8. Maintenance; Taxes; Insurance. Borrower shall maintain the Property in goad, clean and
orderly condition. Borrower shall promptly pay all property taxes due on the Property prior to any
delinquency and shall comply with the insurance requirements set forth in the Loan Agreement.
9. Default. The occurrence of anyone or more of the following events shall constitute an
"Event of Default": (a) Default under any agreement or other writing executed in favor of the
Agency in connection with this Note, including but not limited to the Loan Agreement or the Deed of
Trust, beyond all applicable cure periods; (b) Default in the payment when due of any installment or
amount of principal or interest due on this Note, beyond the applicable cure period contained in
Section 12.1 of the Loan Agreement; (c) The making by Borrower of any assignment for the benefit
of creditors or the voluntary appointment (at the request or with the consent of Borrower) of a
receiver, custodian, liquidator or trustee in bankruptcy of any of Borrower's property, or the filing by
Borrower of a petition in bankruptcy or other similar proceeding under any law for relief of debtors;
(d) The filing against Borrower (by anyone other than the Agency) of a petition in bankruptcy or
other similar proceeding under any law for relief of debtors, or the involuntary appointment (by
anyone other than the Agency) of a receiver, custodian, liquidator or trustee in bankruptcy of the
property of Borrower, if such petition or appointment is not vacated or discharged within sixty (60)
calendar days after the filing or making thereof; or (e) The occurrence of a default under any note or
deed oftrust to which the Deed of Trust is junior and subordinate, beyond the applicable cure period.
Upon the occurrence of an Event of Default, the Agency may, at its option, declare the entire unpaid
principal balance and accrued interest to be immediately due and payable in full pursuant to Section
10 hereof or pursue any and all other remedies provided at law or in equity. Upon the occurrence of
an Event of Default of the type described in clause (b) above, the entire unpaid principal balance and
unpaid interest accrued thereon shall bear interest, from the date of the Event of Default until such
default is cured, at a rate of nine percent (9%) compounded manthly ("Default Rate").
10. Acceleration. Upon the occurrence of an Event of Default, the Agency shall have the right
to declare the full amount of the principal, interest and other amounts owing under this Note
immediately due and payable. Any failure by the Agency to pursue its legal and equitable remedies
upon an Event of Default shall not constitute a waiver of the Agency's right to declare an Event of
Default and exercise all of its rights under this Note, the Deed of Trust or the Loan Agreement. Nor
shall acceptance by the Agency of any payment provided for in the Note constitute a waiver of the
Agency's right ta require prompt payment of any remaining amounts owed.
2 (-7"
11. No Offset. Borrower hereby waives any rights of offset it now has or may later have against
the Agency, its successors and assigns, and agrees ta make the payments called for in this Note in
accordance with the terms of this Note.
12. Waivers, Borrower and any endorsers or guarantors of this Note, for themselves, their heirs,
legal representatives, successors and assigns, respectively, severally waive diligence, presentment,
protest, and demand, and notice of protest, dishonor and non-payment of this Note, and expressly
waive any rights to be released by reasons of any extension of time or change in terms of payment, or
change, alteration or release of any security given for the payments hereof, and expressly waive the
right to plead any and all statutes of limitations as a defense to any demand on this Note or agreement
to pay the same, and jointly and severally agree to pay all costs of collection when incurred,
including reasonable attorney fees. If an action is instituted on this Note, the Borrower promises to
pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys' fees in such action.
13. No Waiver by the Agency. No previous waiver, failure, or delay by the Agency in acting
with respect to the terms ofthis Note, the Deed of Trust, or any other loan documents in favor of the
Agency executed by Borrower in connection with this Note will constitute a waiver of any breach,
default or failure of conditions under this Note, Deed of Trust, or such other associated documents.
A waiver af any terms must be made in writing.
14. Non Recourse Obligation. Nothing herein contained shall be deemed to cause Borrower (or
any of its partners, or any of their respective directors, officers, employees, partners, principals or
members) personally to be liable to payor perform any of its obligations evidenced hereby, and
Agency shall not seek any personal or deficiency judgment on such obligations, and the sole remedy
of Agency shall be against the Property and the collateral under the Deed of Trust; provided,
however, that the foregoing shall not in any way affect any rights Agency may have (as a secured
party or otherwise) hereunder or under the Deed of Trust or Loan Agreement, or any other rights
Agency may have to: (a) recover directly from Borrower any funds, damages or costs (including,
without limitation, reasonable attorneys' fees and costs) incurred by Agency as a result of fraud,
intentional misrepresentation or intentional waste by Borrower; or (b) recover directly from
Borrower any condemnation or insurance proceeds, or other similar funds or payments attributable to
the Property which under the terms of the Loan Agreement should have been paid to Agency and any
costs and expenses incurred by Agency in connection therewith (including, without limitation,
reasonable attorneys' fees and costs).
15. Late Fees. Borrower acknowledges that if any payment required under this Note is not paid
within fifteen (15) days after the date when the same becomes due and payable, the Agency will
incur extra administrative expenses (i.e., in addition to expenses incident to receipt of timely
payment) and the loss of the use of funds in connection with the delinquency in payment. Because,
from the nature of the case, the actual damages suffered by the Agency by reason of such extra
administrative expenses and loss of use of funds would be impracticable or extremely difficult to
ascertain, Borrower agrees that five percent (5%) of the amount af the delinquent payment shall be
the amount of damages to which the Agency is entitled, upon such breach, in compensation therefor.
Therefore, Borrower shall, in such event, without further notice, pay to the Agency as the Agency's
sole monetary recovery to cover such extra administrative expenses and loss of use of funds,
liquidated damages in the amount of five percent (5%) of the amount of such delinquent payment.
The provisions of this paragraph are intended to govern only the determination of damages in the
event of a breach in the performance of the obligation of Borrower to make timely payments
3 1- 77
hereunder. Nothing in this Note shall be construed as an expressed or implied agreement by the
Agency to forbear in the collection of any delinquent payment, or be construed as in any way giving
Borrower the right, expressed or implied, to fail to make timely payments hereunder, whether upon
payment of such damages or otherwise. The right of the holder hereof to receive payment of such
liquidated and actual damages, and receipt thereof, are without prejudice to the right of such holder
to collect such delinquent payments and other amounts provided to be paid hereunder or under any
security for this Note or to declare a default hereunder or under any security for this Note.
16. Giving Of Notices. Formal notices, demands, and communications between Agency and
Barrower shall be given either by (i) personal service, (ii) delivery by reputable document delivery
service such as Federal Express that provides a receipt showing date and time of delivery, or (iii)
mailing in the United States mail, certified mail, postage prepaid, return receipt requested, to the
address of the party as set forth below, or at any other address as that party may later designate by
notice:
Borrower:
Main Plaza, LP.
c/o Avalon Communities, LLC
180 I E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attn: Lionel Puig
Agency:
Redevelopment Agency of the City ofChula Vista
276 Fourth Avenue
Chula Vista CA 91910
Attn: Housing Caordinator
With copies to: Executive Director and Agency Attorney
The parties may subsequently change addresses by providing written notice of the change in
address to the other parties in accordance with this Section.
17. No Partnership or Joint Venture. The relationship of Borrower and the Agency under this
Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the
Deed of Trust will in no manner make the Agency the partner or joint venturer of Borrower.
18. Joint and Several Obligations. This Note is the joint and several obligation of all makers,
sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns.
19. Attorney's Fees. In the event of any conflict or dispute concerning any term or provision of
this Note or otherwise arising out of this Note, the prevailing party shall be entitled to recover from
the other party any and all reasonable costs and expenses incurred in connection therewith, including,
but not limited to, attorney's fees and court costs, whether or not a legal action is commenced.
20. Controlling Law. This Note shall be construed in accordance with and be governed by the
laws of the State of California.
4 (-7Ft
21. Invalid Provisions. If anyone or more of the provisions contained in this Note shall for any
reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions
shall be deemed severable from the remaining provisions contained in this Note, and this Note shall
be construed as if such invalid, illegal or unenforceable provision had never been contained in this
Note.
22. Amendments. Any amendment, alteration or interpretation of this Note must be in writing
signed and signed by a duly authorized officer of the Agency and Borrower. If there are any
inconsistencies between the terms of this Note and the terms of any of the other loan documents, the
terms of the Loan Agreement will prevail.
[NEXT PAGE IS SIGNATURE PAGE]
5 (- 7<1
IN WITNESS WHEREOF the Borrower has caused this Promissory Note to be executed as
of the day and year first written above.
MAIN PLAZA L.P., a limited partnership
By: Avalon Communities, LLC, a California Limited Liability Company
By:
Lionel Puig, Managing Member
6
(HINES) J,ICOMMDEVlHINESIMalo PI",-Ageooy Note1.'oo 1- <80
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Redevelopment Agency of
the City ofChula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attention: Housing Manager
DEED OF TRUST WITH ABSOLUTE ASSIGNMENT
OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THE PARTIES TO THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made as of
, 2001, are MAIN PLAZA loP. ("Trustor"),('/jjêíæt(¡'f.ie~ii~Qii¡[mùir,tWi.¡,fiær'i'tìf
Tir,ïï&teer', a California corporation ("Trustee"), and the REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA, a public body, corporate and politic ("Beneficiary").
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms and conditions in this Deed of Trust,
Trustor irrevocably grants, conveys and assigns to Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of entry and possession, all of that real property
located in the City of Chula Vista, County of San Diego, State of California, described on
Exhibit A attached hereto, together with all development rights or credits, air rights,
water, water rights and water stock related to the real property, and all minerals, oil and
gas, and other hydrocarbon substances in, on or under the real property, and all
appurtenances, easements, rights and rights of way appurtenant or related thereto; all
buildings, other improvements and fixtures now or hereafter located on the real property,
including, but not limited to, all apparatus, equipment, and appliances used in the
operation or occupancy of the real property, it being intended by the parties that all such
items shall be conclusively considered to be a part of the real property, whether or not
attached or affixed to the real property (the "Improvements"); all interest or estate which
Trustor may hereafter acquire in the property described above, and all additions and
accretions thereto, and the proceeds of any of the foregoing; (all of the foregoing being
collectively referred to as the "Subject Property"). The listing of specific rights or
property shall not be interpreted as a limit of general terms.
1.2 ADDRESS. The address of the Subject Property is on the Northeast comer of Main
Street and Broadway within the Southwest Redevelopment Project Area and the
Montgomery Specific Plan in the City of Chula Vista, California. However, neither the
failure to designate an address nor any inaccuracy in the address designated shall affect
the validity or priority of the lien of this Deed of Trust on the Subject Property as
described on Exhibit A.
-1- I-gf
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the purpose
of securing the following obligations ("Secured Obligations"):
(a) Payment to Beneficiary af all sums at any time owing under that certain
Promissory Note of even date herewith executed by Trustor in favor of
Beneficiary in the principal amount of Four Hundred Fifty Thousand Dollars
($450,000), and the performance of all covenants and obligations of Trustor under
the Promissory Note and the Loan Agreement and Related Restricted Covenants
of even date herewith between Trustor and Beneficiary ("Loan Agreement"); and
(b) Payment and performance of all covenants and obligations of Trustor under this
Deed of Trust; and
(c) All modifications, extensions and renewals of any of the obligations secured
hereby, however evidenced, including, without limitation: (i) modifications ofthe
required principal payment dates or interest payment dates or both, as the case
may be, deferring or accelerating payment dates wholly or partly; or (ii)
modifications of the required debt service payments.
2.2 INCORPORATION. All terms of the Secured Obligations and the documents
evidencing such obligations are incorporated herein by this reference. All persons who
may have or acquire an interest in the Subject Property shall be deemed to have notice of
the terms of the Secured Obligations.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Subject to the rights of the beneficiary under the Senior Deed of Trust
(as defined below), Trustor hereby irrevocably assigns to Beneficiary all of Trustor's
right, title and interest in, to and under: (a) all leases of the Subject Property or any
portion thereof, all licenses and agreements relating to the management, leasing or
operation of the Subject Property or any portion thereof, and all other agreements of any
kind relating to the use or occupancy of the Subject Property or any portion thereof,
whether now existing or entered into after the date hereof ("Leases"); and (b) the rents,
issues, deposits and profits of the Subject Property, including, without limitation, all
amounts payable and all rights and benefits accruing to Trustor under the Leases
("Payments"). The term "Leases" shall also include all guarantees of and security for the
lessees' performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and absolute
assignment, not an assignment for security purposes only, and Beneficiary's right to the
Leases and Payments is not contingent upon, and may be exercised without possession
of, the Subject Property.
3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License") to
collect and retain the Payments as they become due and payable, until the occurrence of a
Default (as hereinafter defined). Upon a Default, the License shall be automatically
revoked and Subject to the rights of the beneficiary under the Senior Deed of Trust,
-2- I-f;).
Beneficiary may collect and apply the Payments pursuant to Section 6.4 without notice
and without taking possession of the Subject Property. Trustor hereby irrevocably
authorizes and directs the lessees under the Leases to rely upon and comply with any
notice or demand by Beneficiary for the payment to Beneficiary of any rental or other
sums which may at any time become due under the Leases, or for the performance of any
of the lessees' undertakings under the Leases, and the lessees shall have no right or duty
to inquire as to whether any Default has actually occurred or is then existing hereunder.
Trustor hereby relieves the lessees ITom any liability to Trustor by reason of relying upon
and complying with any such notice or demand by Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable Assignment shall not cause
Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control,
care, management or repair of the Subject Property or for performing any of the terms,
agreements, undertakings, obligations, representations, warranties, covenants and
conditions of the Leases; or (c) responsible or liable for any waste committed on the
Subject Property by the lessees under any of the Leases or any other parties; for any
dangerous or defective condition of the Subject Property; or for any negligence in the
management, upkeep, repair or control of the Subject Property resulting in loss or injury
or death to any lessee, licensee, employee, invitee or other person, unless caused by the
gross negligence or wilful misconduct of Beneficiary or its agents. Beneficiary shall not
directly or indirectly be liable to Trustor or any other person as a consequence of: (i) the
exercise or failure to exercise any of the rights, remedies or powers granted to
Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perform or discharge
any obligation, duty or liability of Trustor arising under the Leases.
3.4 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that as
of the date of this Deed of Trust there are no Leases affecting any portion of the Subject
Property.
3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to: (a)
perform the obligations of lessor contained in the Leases and enforce by all available
remedies performance by the lessees of the obligations of the lessees contained in the
Leases; (b) give Beneficiary prompt written notice of any material default which occurs
with respect to any of the Leases, whether the default be that of the lessee or of the lessor;
(c) exercise commercially reasonable efforts to keep all portions of the Subject Property
that are currently subject to Leases leased at all times at rentals not less than the fair
market rental value; (d) deliver to Beneficiary fully executed, counterpart original(s) of
each and every Lease if requested to do so; and (e) execute and record such additional
assignments of any Lease or specific subordinations of any Lease to the Deed of Trust, in
form and substance acceptable to Beneficiary, as Beneficiary may request. Except as
required or permitted by the Senior Deed of Trust, or its beneficiary, or by the loan
agreement secured thereby, Trustor shall not, without Beneficiary's prior written consent
or as otherwise permitted by any provision of the Loan Agreement: (i) execute any other
assignment relating to any of the Leases; (ii) discount any rent or other sums due under
the Leases or collect the same in advance, other than to collect rent one (l) month in
advance of the time when it becomes due; (iii) terminate, modify or amend any of the
material terms of the Leases or in any material manner release or discharge the lessees
-3- 1-~3
from any obligations thereunder; (iv) consent to any assignment or subletting by any
lessee; or (v) subordinate or agree to subordinate any of the Leases to any other deed of
trust or encumbrance. Any such attempted action in violation of the provisions of this
Section 3.5 shall be null and void. Without in any way limiting the requirement of
Beneficiary's consent hereunder, but subject to the right of the beneficiary under the
Senior Deed of Trust, any sums received by Trustor in consideration of any termination
(or the release or discharge of any lessee) modification or amendment of any Lease shall
be applied to reduce the outstanding Secured Obligations and any such sums received by
Trustor shall be held in trust by Trustor for such purpose.
3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by
Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by Trustor and by each of the lessees, in
recordable form, certifying (if such be the case): (a) that the foregoing assignment and
the Leases are in full force and effect; (b) the date of each lessee's most recent payment
of rent; (c) that there are no defenses or offsets outstanding, or stating those claimed by
Trustor or lessees under the foregoing assignment or the Leases, as the case may be; and
(d) any other information reasonably requested by Beneficiary.
ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary as of the
date hereof ("Effective Date") a security interest, to secure payment and performance of
all of the Secured Obligations, in all of the following described personal property in
which Trustor now or at any time hereafter has any interest (collectively, the
"Collateral"):
All goods, building and other materials, supplies, work in process, equipment,
machinery, fixtures, furniture, furnishings, signs and other personal property,
wherever situated, which are or are to be incorporated into, used in
connection with, or appropriated for the use and operation of Subject Property
(to the extent the same are not effectively made a part of the real property
pursuant to Section 1.1 above) together with all rents, issues, deposits and
profits of the Subject Property (to the extent, if any, they are not subject to
Article 3); all inventory, accounts, cash receipts, deposit accounts, accounts
receivable, contract rights, general intangibles, chattel paper, instruments,
documents, notes, drafts, letters of credit, insurance policies, insurance and
condemnation awards and proceeds, any other rights to the payment of
money, trade names, trademarks and service marks arising from or related to
the Subject Property or any business now or hereafter conducted thereon by
Trustor; all pennits consents, approvals, licenses, authorizations and other
rights granted by, given by or obtained from, any governmental entity with
respect to the Subject Property; all deposits or other security now or hereafter
made with or given to utility companies by Trustor with respect to the Subject
Property; all advance payments of insurance premiums made by Trustor with
respect to the Subject Property; all plans, drawings and specifications relating
to the Subject Property; all funds deposited with Beneficiary pursuant to any
loan agreement; all reserves, deferred payments, deposits, accounts, refunds,
.4- (- 8'-1
cost savings and payments of any kind related to the Subject Property or any
portion thereof: together with all replacements and proceeds of, and additions
and accessions ta, any of the foregoing; together with all books, records and
files relating to any of the foregoing.
As to all afthe above described personal property which is or which hereafter
becomes a "fixture" under applicable law, this Deed of Trust constitutes and
is filed as a fixture filing under Sections 9313 and 9402(6) of the California
Uniform Commercial Code, as amended ar recodified from time to time, and
covers goods which are or are to become fixtures.
4.2 REPRESENT A nONS AND WARRANTIES. Trustor represents and warrants that:
(a) Trustor has, or will have, good title to the Collateral (except for items that are leased
by Trustor); and (b) Trustor's principal place of business is located at the address shown
in Section 7.9.
4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a "Secured Party"
under the California Uniform Commercial Code, as amended or recodified from time to
time ("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice
and at the expense of Trustor: (a) give notice to any person of Beneficiary's rights
hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and
preserve the Collateral or any rights or interests of Beneficiary therein; (c) inspect the
Collateral; and (d) endorse, collect and receive any right to payment of money owing to
Trustor under or from the Collateral. Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any property other than cash in satisfaction of
any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written
election of said remedy under UCC §9505, or other applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the occurrence and during the
continuance of a Default (hereinafter defined) under this Deed of Trust, then in addition
to all of Beneficiary' s rights as a "Secured Party" under the UCC or otherwise at law:
(a) Beneficiary may (i) upon written notice, require Trustor to assemble any or all of
the Collateral and make it available to Beneficiary at a place designated by
Beneficiary; (ii) without prior notice, enter upon the Subject Property or other
place where any of the Collateral may be located and take possession of, collect,
sell, and dispose of any or all of the Collateral, and store the same at locations
acceptable to Beneficiary at Trustor's expense; (iii) sell, assign and deliver at any
place or in any lawful manner all or any part of the Collateral and bid and become
purchaser at any such sales; and
(b) Beneficiary may, for the account of Trustor and at Trustor's expense: (i) operate,
use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate
for the purpose of performing any or all of the Secured Obligations; (ii) enter into
any agreement, compromise, or settlement, including insurance claims, which
Beneficiary may deem desirable or proper with respect to any of the Collateral;
and (iii) endorse and deliver evidences of title for, and receive, enforce and collect
-5- I-<¡S
by legal action or otherwise, all indebtedness and obligations now or hereafter
owing ta Trustor in connection with or on account of any or all of the Collateral.
Notwithstanding any other provision hereof, Beneficiary shall not be deemed to
have accepted any property other than cash in satisfaction of any obligation of
Trustor to Beneficiary unless Trustor shall make an express written election of
said remedy under DCC §9505, or other applicable law.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appoints Beneficiary as
Trustor's attorney-in-fact (such agency being coupled with an interest), and as such
attorney-in-fact Beneficiary may, upon the occurrence and during the continuance of a
Default, without the obligation to do so, in Beneficiary's name, or in the name of Trustor,
prepare, execute and file or record financing statements, continuation statements,
applications for registration and like papers necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in or to any of the Collateral, and, upon the
occurrence and during the continuance of a Default hereunder, take any other action
required of Trustor; provided, however, that Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this
Section, so long as no Default exists under this Deed of Trust, Trustor may possess, use,
move, transfer or dispose of any of the Collateral in the ordinary course of Trustor's
business.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TAXES AND ASSESSMENTS. Subject to Trustor's rights to contest payment of taxes,
Trustor shall pay prior to delinquency all taxes, assessments, levies and charges imposed
by any public or quasi-public authority or utility company which are or which may
become a lien upon or cause a loss in value of the Subject Property or any interest
therein. Trustor shall also pay prior to delinquency all taxes, assessments, levies and
charges imposed by any public authority upon Beneficiary by reason of its interest in any
Secured Obligation or in the Subject Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation; provided, however, Trustor shall have
no obligation to pay taxes which may be imposed from time to time upon Beneficiary and
which are measured by and imposed upon Beneficiary's net income.
5.2 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay and
perform each Secured Obligation when due.
5.3 LIENS, ENCUMBRANCES AND CHARGES. This Deed of Trust shall constitute a
second priority security interest, junior and subordinate only to a Construction Deed of
Trust with Assignment of Rents, Security Agreement and Fixture dated
concurrently herewith, made in connection with the loan made by the
, with the proceeds of multifamily revenue bonds in amount
and the refinancing
thereof which have been approved y Bene Iciary or are permitted pursuant to the Loan
.6. (- ~b
Agreement (the "Senior Deed of Trust"). Trustor shall immediately discharge any other
lien not approved by Beneficiary in writing that has or may attain priority over this Deed
of Trust. Trustor shall pay when due all obligations secured by or reducible to liens
which shall now or hereafter encumber or appear to encumber all or any part of the
Subject Property or any interest therein, whether senior or subordinate hereto; provided,
however, Trustor shall have the right to contest in good faith any claims and liens for
labor done and materials and services furnished in connection with the construction of
any Improvements and any such claim or lien so contested may remain unpaid during the
period of such contest and any appeal therefrom.
5.4 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS. Proceeds of
casualty insurance policies and condemnation awards shall be disposed of in accordance
with and subject to the conditions contained in the Loan Agreement.
5.5 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY.
Trustor covenants: (a) to insure the Subject Property against such risks as are required
under the Loan Agreement and, at Beneficiary's request, to provide evidence of such
insurance to Beneficiary, and to comply with the requirements of any insurance
companies insuring the Subject Property; (b) to keep the Subject Property in good
condition and repair; (c) except as permitted by the Senior Deed of Trust, or its
beneficiary, or the loan agreement secured thereby, not to remove or demolish the
Subject Property or any part thereof, not to materially alter, restore or add to the Subject
Property and not to initiate or acquiesce in any change in any zoning or other land
classification which affects the Subject Property without Beneficiary's prior written
consent; (d) to complete or restore promptly and in good and workmanlike manner the
Subject Property, or any part thereof which may be damaged or destroyed; (e) to comply
with all laws, ordinances, regulations and standards, and all covenants, conditions,
restrictions and equitable servitudes, whether public or private, of every kind and
character which affect the Subject Property and pertain to acts committed or conditions
existing thereon, including, without limitation, any work, alteration, improvement or
demolition mandated by such laws, covenants or requirements; (f) not to commit or
permit waste ofthe Subject Property; and (g) to do all other acts which from the character
or use of the Subject Property may be reasonably necessary to maintain and preserve its
value.
5.6 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's
sole expense, Trustor shall protect, preserve and defend the Subject Property and title to
and right of possession of the Subject Property, the security hereof and the rights and
powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall
give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the
filing of any action or proceeding, of the occurrence of any damage to the Subject
Property and of any condemnation offer or action.
5.7 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee
accepts this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust or a certified copy thereof
for endorsement, and without affecting the personal liability of any person for payment of
-7- (-<;;>7
any indebtedness or performance of any obligations secured hereby, Trustee may,
without liability therefar and without natice: (a) reconvey all or any part of the Subject
Property; (b) consent to the making of any map or plat thereof; and (c) join in any grant
of easement thereon, any declaration of covenants and restrictions, or any extension
agreement or any agreement subordinating the lien or charge of this Deed of Trust.
Except as may be required by applicable law, Trustee or Beneficiary may from time to
time apply to any court of competent jurisdiction for aid and direction in the execution of
the trust hereunder and the enforcement of the rights and remedies available hereunder,
and may obtain orders or decrees directing or confirming or approving acts in the
execution of said trust and the enforcement of said remedies. Trustee has no obligation to
notify any party of any pending sale or any action or proceeding, including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party unless held or
commenced and maintained by Trustee under this Deed of Trust. Trustee shall not be
obligated to perform any act required of it hereunder unless the performance of the act is
requested in writing and Trustee is reasonably indemnified and held harmless against
loss, cost, liability or expense.
5.8 EXCULPATION; INDEMNIFICATION.
(a) Beneficiary shall not directly or indirectly be liable to Trustor or any other person
as a consequence of (i) the exercise of the rights, remedies or powers granted to
Beneficiary in this Deed of Trust; (ii) the failure or refusal of Beneficiary to
perform or discharge any obligation or liability of Trustor under any agreement
related to the Subject Property or under this Deed of Trust; or (iii) any loss
sustained by Trustor or any third party resulting from Beneficiary's failure to
lease the Subject Property after a Default (hereinafter defined) or from any other
act or omission of Beneficiary in managing the Subject Property after a Default
unless the loss is caused by the gross negligence or willful misconduct of
Beneficiary and no such liability shall be asserted against or imposed upon
Beneficiary or its agents, and all such liability is hereby expressly waived and
released by Trustor.
(b) Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses, damages, liabilities, claims, causes of
action, judgments, court costs, attorneys' fees and other legal expenses, cost of
evidence of title, cost of evidence of value, and other expenses which either may
suffer or incur: (i) by reason of this Deed of Trust; (ii) by reason of the execution
of this trust or in performance of any act required or permitted hereunder or by
law; (iii) as a result of any failure of Trustor to perform Trustor's obligations; or
(iv) by reason of any alleged obligation or undertaking on Beneficiary's part to
perform or discharge any of the representations, warranties, conditions, covenants
or other obligations contained in any other document related to the Subject
Property; provided, however, such indemnity does not include matters caused by
the gross negligence or willful misconduct of Beneficiary or its agents. The
above obligation of Trustor to indemnify and hold harmless Trustee and
Beneficiary shall survive the release and cancellation of the Secured Obligations
-8- (-~?
and the release and reconveyance or partial release and reconveyance of this Deed
of Trust.
(c) Trustor shall pay all amounts and indebtedness arising under this Section 5.10
immediately upon written demand by Trustee or Beneficiary together with interest
thereon from the date of such demand at the rate of ten percent (10%) per annum.
5.9 SUBSTITUTION OF TRUSTEES. From time to time, by a writing, signed and
acknowledged by Beneficiary and recorded in the Office ofthe Recorder of the County in
which the Subject Property is situated, Beneficiary may appoint another trustee to act in
the place and stead of Trustee or any successor. Such writing shall set forth any
information required by law. The recordation of such instrument of substitution shall
discharge Trustee herein named and shall appoint the new trustee as the trustee hereunder
with the same effect as if originally named Trustee herein. A writing recorded pursuant
to the provisions of this Section 5.11 shall be conclusive proof of the proper substitution
of such new Trustee.
5.10 NONRECOURSE OBLIGATION. Nothing herein contained shall be deemed to cause
Trustor (or any of its partners, or any of their respective directors, officers, employees,
partners, principals or members) personally to be liable to payor perform any of its
obligations secured hereby, and Beneficiary shall not seek any personal or deficiency
judgment on such obligations, and the sole remedy of Beneficiary shall be against the
Subject Property and the Collateral; provided, however, that the foregoing shall not in
any way affect any rights Beneficiary may have (as a secured party or otherwise)
hereunder or under the Promissory Note or Loan Agreement, or any other rights
Beneficiary may have to: (a) recover directly from Trustor any funds, damages or costs
(including, without limitation, reasonable attorneys' fees and costs) incurred by
Beneficiary as a result of fraud, misrepresentation or waste; or (b) recover directly from
Trustor any condemnation or insurance proceeds, or other similar funds or payments
attributable to the Property which under the terms of this Deed of Trust should have been
paid to Beneficiary and any costs and expenses incurred by Beneficiary in connection
therewith (including, without limitation, reasonable attorneys' fees and costs).
5.11 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY.
Without notice to or the consent, approval or agreement of any persons or entities having
any interest at any time in the Subject Property or in any manner obligated under the
Secured Obligations ("Interested Parties"), Beneficiary may, from time to time, release
any person or entity from liability for the payment or performance of any Secured
Obligation, take any action or make any agreement extending the maturity or otherwise
altering the terms or increasing the amount of any Secured Obligation, or accept
additional security or release all or a portion of the Subject Property and other security
for the Secured Obligations. None of the foregoing actions (other than a duly executed
written release) shall release or reduce the liability of any of said Interested Parties, to the
extent such liability exists, or release or impair the priority of the lien of this Deed of
Trust upon the Subject Property.
-9- / -~c:¡
5.12 RECONVEYANCE. Upon Beneficiary's written request, and upon surrender to Trustee
for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument,
or instruments setting forth all obligations secured hereby, Trustee shall reconvey,
without warranty, the Subject Property or that portion thereof then held hereunder. To
the extent permitted by law, the reconveyance may describe the grantee as "the person or
persons legally entitled thereto" and the recitals of any matters or facts in any
reconveyance executed hereunder shall be conclusive proof of the truthfulness thereof.
Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance. When the Subject Property has
been fully reconveyed, the last such reconveyance shall operate as a reassignment of all
future rents, issues and profits of the Subject Property to the person or persons legally
entitled thereto.
5.13 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances,
whether released of record or not, paid in whole or in part by Beneficiary pursuant to this
Deed of Trust or by the proceeds of any loan secured by this Deed of Trust.
5.14 RIGHT OF INSPECTION. Subject to the rights of tenants or occupants of the Subject
Property, Beneficiary, its agents and employees, may enter the Subject Property at any
reasonable time upon twenty-four (24) hours' notice (except in cases of emergency where
no notice is required) for the purpose of inspecting the Subject Property and ascertaining
Trustor's compliance with the terms hereof.
5.15 HAZARDOUS MATERIALS. Without in any way limiting the other representations
and warranties set forth in this Deed of Trust, and except as otherwise disclosed in
written reports and surveys previously delivered to Beneficiary, Trustor hereby
specifically represents and warrants to the best of Trustor's actual knowledge, without
inquiry, as of the date ofthis Deed of Trust as follows:
(a) The Subject Property is not and has not been a site for the use, generation,
manufacture, storage, treatment, release, threatened release, discharge, disposal,
transportation or presence of any oil, flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without limitation, any
substances which are "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under the Hazardous Materials Laws, as
described below, and/or other applicable environmental laws, ordinances and
regulations (collectively, the "Hazardous Materials"). "Hazardous Materials"
shall not include commercially reasonable amounts of such materials used (i) in
laboratories for educational purposes, (ii) in business offices and schools of the
type and nature currently operated by Trustor, (iii) in the ordinary course of
construction of the Subject Property, and (iv) by occupants ofresidential units for
normal household activities, and by Trustor for normal maintenance and
operations of the Subject Property, all of which materials set forth in (i)-(iv)
above are used and stored in accordance with all applicable environmental laws,
ordinances and regulations.
-10- (-90
(b) The Subject Property is in compliance with all laws, ordinances and regulations
relating to Hazardous Materials ("Hazardaus Materials Laws"), including, without
limitation: the Clean Air Act, as amended, 42 D.S.C. Section 7401 et seq.; the
Federal Water Pollution Control Act, as amended, 33 US.C. Section 1251 et seq.;
the Resource Conservation and Recovery Act of 1976, as amended, 42 D.S.C.
Section 6901 et seq.; the Camprehensive Environment Response, Compensation
and Liability Act of 1980, as amended (including the Superfund Amendments and
Reauthorization Act of 1986, "CERCLA"), 42 D.S.C. Section 9601 et seq.; the
Toxic Substances Control Act, as amended, 15 D.S.c. Section 2601 et seq.; the
Occupational Safety and Health Act, as amended, 29 D.S.C. Section 651, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 D.S.C.
Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30
D.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 D.S.C.
Section 300f et seq.; and all comparable state and local laws, laws of other
jurisdictions or orders and regulations.
(c) There are no claims or actions ("Hazardous Materials Claims") pending or
threatened against Trustor or the Subject Property by any governmental entity or
agency or by any other person or entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws.
(d) The Subject Property has not been designated as Border Zone Property under the
provisions of California HeaJth and Safety Code, Sections 25220 et seq. and there
has been no occurrence or condition on any real property adjoining or in the
vicinity of the Subject Property that could cause the Subject Property or any part
thereof to be designated as Border Zone Property.
5.16 HAZARDOUS MATERIALS COVENANTS. Trustor agrees as follows:
(a) Trustor shall not cause or permit the Subject Property to be used as a site for the
use, generation, manufacture, storage, treatment, release, discharge, disposal,
transportation or presence of any Hazardous Materials (other than as provided in
Section 5. I 7(a)(i)-(iii) above).
(b) Trustor shall comply and cause the Subject Property to comply with all Hazardous
Materials Laws.
(c) Trustor shall immediately notify Beneficiary in writing of: (i) the discovery of any
Hazardous Materials (other than those set forth in Section 5.17(a)(i)-(iv) above)
on or under the Subject Property; (ii) any knowledge by Trustor that the Subject
Property does not comply with any Hazardous Materials Laws; (iii) any
Hazardous Materials Claims; and (iv) the discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Subject Property
that could cause the Subject Property or any part thereof to be designated as
Border Zone Property.
-11- 1- 9/
(d) In response to the presence of any Hazardous Materials on or under the Subject
Property, Trustor shall immediately take, at Trustor's sole expense, in a
commercially reasonable manner, all remedial action required by any Hazardous
Materials Laws or any judgment, consent decree, settlement or compromise in
respect to any Hazardous Materials Claims.
5.17 INSPECTION BY BENEFICIARY. At any reasonable time, upon twenty-four (24)
hours' notice (except in cases of emergency where no notice is required) to Trustor, but
subject to the rights of tenants and occupants of the Subject Property, Beneficiary, its
employees and agents, may ITom time to time (whether before or after the
commencement of a nonjudicial or judicial foreclosure proceeding) enter and inspect the
Subject Property for the purpose of determining the existence, location, nature and
magnitude of any past or present release or threatened release of any hazardous substance
into, onto, beneath or ITom the Subject Property.
5.18 HAZARDOUS MATERIALS INDEMNITY. Trustor hereby agrees to defend,
indemnify and hold harmless Beneficiary, its directors, officers, employees, agents,
successors and assigns from and against any and all losses, damages, liabilities, claims,
actions, judgments, court costs and legal or other expenses (including, without limitation,
reasonable attorneys' fees and expenses) which Beneficiary may incur as a direct or
indirect consequence of the use, generation, manufacture, storage, disposal, threatened
disposal, transportation or presence of Hazardous Materials in, on or under the Subject
Property. Trustor shall immediately pay to Beneficiary upon written demand any
amounts owing under this indemnity, together with interest from the date of demand
therefor until paid at the rate of ten percent (10%) per annum. TRUSTOR'S DUTY
AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS
BENEFICIARY SHALL SURVIVE THE TERMINATION OF THE LOAN
AGREEMENT AND THE RELEASE, RECONVEYANCE OR PARTIAL
RECONVEYANCE OF THE DEED OF TRUST.
5.19 LEGAL EFFECT. Trustor and Beneficiary agree that: (a) Sections 5.17 through 5.20
are intended as Beneficiary's written request for information (and Trustor's response)
concerning the environmental condition of the real property security as required by
California Code of Civil Procedure §726.5; and (b) each provision in such sections
(together with any indemnity applicable to a breach of any such provision) with respect to
the environmental condition of the real property security is intended by Beneficiary and
Trustor to be an "environmental provision" for purposes of California Code of Civil
Procedure §736, and as such it is expressly understood that Trustor's duty to indemnify
Beneficiary hereunder shall survive: (a) any judicial or non-judicial foreclosure under the
Deed of Trust, or transfer of the Subject Property in lieu thereof, and (b) the release and
reconveyance or cancellation of the Deed of Trust.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term "Default" shall mean (a) the occurrence of
an "event of default" as defined in the Promissory Note or the Loan Agreement beyond
all applicable cure periods provided therein; (b) the failure of Trustor to make any
-12- (-C{;;'"
payment of any amount due hereunder when the same is due and payable, where such
failure has continued for ten (10) days after notice (c) Trustor's failure to observe and
perform any other covenant, condition or agreement on its part to be observed or
performed under this Deed of Trust for a period of thirty (30) days after written notice
specifying such failure and requesting that it be remedied is given to Trustor by
Beneficiary; provided, however, if the failure stated in the notice is correctable but cannot
be corrected within such thirty (30) day period, Trustor shall have such additional time as
reasonably necessary to effect such cure, provided that such corrective action is instituted
by Trustor within such thirty (30) day period and diligently pursued until the default is
corrected, (d) at the option of Beneficiary, the occurrence of a breach or default (beyond
any applicable cure period) under any other deed of trust to Trustee executed by Trustor
for the benefit of Beneficiary of even date herewith or hereafter executed (the "Other
Deeds of Trust") which secures (i) payment to Beneficiary of sums owing under the Loan
Agreement and/or (ii) the performance of the covenants and obligations of Trustor under
the Loan Agreement, or (e) the failure (in any material respect) of any of the
representations and warranties of Trustor herein to be true and correct when made.
6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee shall
each have all the following rights and remedies; provided, however, Beneficiary and
Trustee may not exercise the rights and remedies under subsections (c), (f) and (g) below
until there has been a Default:
(a) With or without notice, to declare all Secured Obligations immediately due and
payable;
(b) With or without notice, and without releasing Trustor from any Secured
Obligation, and without becoming a mortgagee in possession, to cure any breach
or Default of Trustor and, in connection therewith, to enter upon the Subject
Property and do such acts and things as Beneficiary or Trustee deem necessary or
desirable to protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security of this
Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of
Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or
may be senior in priority to this Deed of Trust, the judgment of Beneficiary or
Trustee being conclusive as between the parties hereto; (iii) to obtain insurance;
(iv) to pay any premiums or charges with respect to insurance required to be
carried under this Deed of Trust; or (v) to employ counsel, accountants,
contractors and other appropriate persons.
(c) To commence and maintain an action or actions in any court of competent
jurisdiction to foreclose this instrument as a mortgage or to obtain specific
enforcement of the covenants of Trustor hereunder, and Trustor agrees that such
covenants shall be specifically enforceable by injunction or any other appropriate
equitable remedy and that for the purposes of any suit brought under this
subparagraph, Trustor waives the defense of laches and any applicable statute of
limitations;
-13- 1-93
(d) To apply to a court of competent jurisdiction for and obtain appointment of a
receiver of the Subject Property as a matter of strict right and without regard to
the adequacy of the security for the repayment of the Secured Obligations, the
existence of a declaration that the Secured Obligations are immediately due and
payable, or the filing of a notice of default, and Trustor hereby consents to such
appointment;
(e) To enter upon, possess, manage and operate the Subject Property or any part
thereof, to take and possess all documents, books, records, papers and accounts of
Trustor or the then owner of the Subject Property, to make, terminate, enforce or
modify Leases of the Subject Property upon such terms and conditions as
Beneficiary deems proper, to make repairs, alterations and improvements to the
Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to
protect or enhance the security hereof;
(f) To execute a written notice of such Default and of its election to cause the Subject
Property to be sold to satisfy the Secured Obligations. As a condition precedent
to any such sale, Trustee shall give and record such notice as the law then
requires. When the minimum period of time required by law after such notice has
elapsed, Trustee, without notice to or demand upon Trustor except as required by
law, shall sell the Subject Property at the time and place of sale fixed by it in the
notice of sale, at one or several sales, either as a whole or in separate parcels and
in such manner and order, all as Beneficiary in its sole discretion may determine,
at public auction to the highest bidder for cash, in lawful money of the United
States, payable at time of sale. Neither Trustor nor any other person or entity
other than Beneficiary shall have the right to direct the order in which the Subject
Property is sold. Subject to requirements and limits imposed by law, Trustee may
from time to time postpone sale of all or any portion of the Subject Property by
public announcement at such time and place of sale. Trustee shall deliver to the
purchaser at such sale a deed conveying the Subject Property or portion thereof so
sold, but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including Trustee, Trustor or Beneficiary may purchase at
the sale;
(g) To resort to and realize upon the security hereunder and any other security now or
later held by Beneficiary concurrently or successively and in one or several
consolidated or independent judicial actions or lawfully taken non-judicial
proceedings, or both, and to apply the proceeds received upon the Secured
Obligations all in such order and manner as Trustee and Beneficiary, or either of
them, determine in their sole discretion;
(h) Upon sale of the Subject Property at any judicial or non-judicial foreclosure,
Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute
discretion) all or any portion of the Secured Obligations. In determining such
credit bid, Beneficiary may, but is not obligated to, take into account all or any of
the following: (i) appraisals of the Subject Property as such appraisals may be
-14- 1-9'1
discounted or adjusted by Beneficiary in its sole and absolute underwriting
discretion; (ii) expenses and costs incurred by Beneficiary with respect to the
Subject Property prior to foreclosure; (iii) expenses and costs which Beneficiary
anticipates will be incurred with respect to the Subject Property after foreclosure,
but prior to resale, including, without limitation, costs of structural reports and
other due diligence, costs to carry the Subject Property prior to resale, costs of
resale (e.g., commissions, attorneys' fees, and taxes), costs of any hazardous
materials clean-up and monitoring, costs of deferred maintenance, repair,
refurbishment and retrofit, costs of defending or settling litigation affecting the
Subject Property, and lost opportunity costs (if any), including the time value of
money during any anticipated holding period by Beneficiary; (iv) declining trends
in real property values generally and with respect to properties similar to the
Subject Property; (v) anticipated discounts upon resale of the Subject Property as
a distressed or foreclosed property; (vi) the fact of additional collateral (if any),
for the Secured Obligations; and (vii) such other factors or matters that
Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to
the above, Trustor acknowledges and agrees that: (w) Beneficiary is not required
to use any or all of the foregoing factors to determine the amount of its credit bid;
(x) this Section does not impose upon Beneficiary any additional obligations that
are not imposed by law at the time the credit bid is made; (y) the amount of
Beneficiary's credit bid need not have any relation to any loan-to-value ratios
previously discussed between Trustor and Beneficiary; and (z) Beneficiary's
credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower
than any appraised value of the Subject Property.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all costs,
fees and expenses of Trustee, and of this trust, including, without limitation, cost of
evidence of title and attorneys' fees in connection with sale and costs and expenses of
sale and of any judicial proceeding wherein such sale may be made, Trustee shall apply
all proceeds of any foreclosure sale: (a) to payment of all sums expended by Beneficiary
under the terms hereof and not then re-paid, with accrued interest; (b) to payment of all
other Secured Obligations; and (c) the remainder, if any, to the person or persons legally
entitled thereto.
6.4 APPLICATION OF OTHER SUMS. All sums received by Beneficiary under Section
6.2 or Section 3.2, less all costs and expenses incurred by Beneficiary or any receiver
under Section 6.2 or Section 3.2, including, without limitation, attorneys' fees, shall be
applied in payment of the Secured Obligations in such order as Beneficiary shall
determine in its sole discretion; provided, however, Beneficiary shall have no liability for
funds not actually received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor Trustee's nor any receiver's entry
upon and taking possession of all or any part of the Subject Property, nor any collection
of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other
security or proceeds of other security, or other sums, nor the application of any collected
sum to any Secured Obligation, nor the exercise or failure to exercise of any other right
or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach,
-15- !-c¡S-
Default or notice of default under this Deed of Trust, or nullify the effect of any notice of
default or sale (unless all Secured Obligations then due have been paid and performed
and Trustor has cured all other defaults), or impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an
affinnation by Beneficiary of any tenancy, lease or option or a subordination of the lien
of this Deed of Trust.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES. Trustor agrees to
pay to Beneficiary immediately and without demand all reasonable costs and reasonable
expenses incurred by Trustee and Beneficiary pursuant to Section 6.2 (including, without
limitation, court costs and attorneys' fees, whether incurred in litigation or not) with
interest from the date of expenditure until said sums have been paid at the rate of interest
then applicable to the principal balance of the indebtedness as specified in the Loan
Agreement. In addition, Trustor shall pay to Trustee all Trustee's fees hereunder and
shall reimburse Trustee for all expenses incurred in the administration of this trust,
including, without limitation, any attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby irrevocably
appoints Beneficiary and its successors and assigns, as its attorney-in-fact, which agency
is coupled with an interest, upon the occurrence and during the continuance of a default,
(a) to execute and/or record any notices of completion, cessation of labor, or any other
notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the
issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a
deed in lieu of foreclosure, to execute all instruments of assignment or further assurance
with respect to the Leases and Payments in favor of the grantee of any such deed, as may
be necessary or desirable for such purpose, (c) to prepare, execute and file Ot record
financing statements, continuation statements, applications for registration and like
papers necessary to create, perfect or preserve Beneficiary's security interests and rights
in or to any of the Collateral, and (d) to perform any obligation of Trustor hereunder;
provided, however, that: (i) Beneficiary as such attorney-in-fact shall only be
accountable for such funds as are actually received by Beneficiary; and (ii) Beneficiary
shall not be liable to Trustor or any other person or entity for any failure to act under this
Section.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 MERGER. No merger shall occur as a result of Beneficiary's acquiring any other estate
in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in
writing.
7.2 OBLIGATIONS OF TRUSTOR, JOINT AND SEVERAL. If more than one person
has executed this Deed of Trust as "Trustor", the obligations of all such persons
hereunder shall be joint and several.
7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties
claiming through or under Trustor, and for all parties who may acquire a lien on or
interest in the Subject Property, hereby waives all rights to have the Subject Property
-16- /-9(..
and/or any other property, including, without limitation, the Collateral, which is now or
later may be security for any Secured Obligation ("Other Property") marshaled upon any
foreclosure of this Deed of Trust or on a foreclosure of any other security for any of the
Secured Obligations. Beneficiary shall have the right to sell, and any court in which
foreclosure proceedings may be brought shall have the right to order a sale of, the Subject
Property and any or aJl of the Collateral or Other Property as a whole or in separate
parcels, in any order that Beneficiary may designate.
7.4 RULES OF CONSTRUCTION. When the identity of the parties or other
circumstances make it appropriate the masculine gender includes the feminine and/or
neuter, and the singular number includes the plural. The term "Subject Property" means
all and any part of the Subject Property and any interest in the Subject Property.
7.5 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained
shall be binding upon and inure to the benefit of the heirs, successors and assigns of the
parties here-to; provided, however, that this Section 7.5 does not waive or modify the
provisions of Section 5.12.
7.6 EXECUTION IN COUNTERPARTS. This Deed of Trust may be executed in any
number of counterparts, each of which, when executed and delivered to Beneficiary, will
be deemed to be an original and all of which, taken together, will be deemed to be one
and the same instrument.
7.7 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the
laws of the State of California, except to the extent that Federal laws preempt the laws of
the State of California.
7.8 INCORPORATION. Exhibit A, as attached, is incorporated into this Deed of Trust by
this reference.
7.9 NOTICES. All notices or other communications required or permitted to be given
pursuant to the provisions of this Deed of Trust shall be in writing and shall be
considered as properly given if delivered personaJly or sent by first class U.S. mail,
postage prepaid, except that notice of a Default may be sent by certified mail, return
receipt requested, or by Overnight Express Mail or by overnight commercial courier
service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if
mailed by first class mail, and otherwise upon receipt at the addresses set forth below.
For purposes of notice, the addresses of the parties shall be:
-17- 1-97
Trustor: Main Plaza loP. (Limited Partnership)
C/o Avalon Communities, LLC (Limited Liability Company)
1801 E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attention: Lionel Puig
Trustee:
Beneficiary: Redevelopment Agency ofthe City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Executive Director
With a copy to Agency Attorney and Housing Coordinator
Any party shall have the right to change its address for notice hereunder to any other location within
the continental United States by the giving of thirty (30) days notice to the other party in the manner
set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or
other communications delivered to the Subject Property or to Trustor naming Beneficiary, as
addressee, or which could reasonably be deemed to affect the ability of Trustor to perform its
obligations to Beneficiary under the Loan Agreement.
7.10 LOAN AGREEMENT AND PROMISSORY NOTE CONTROL. In the event of
conflict between the terms of this Deed of Trust and the Loan Agreement or the
Promissory Note, the terms of the Loan Agreement and Promissory Note shall prevail,
except that the provisions of 6.2 of this Deed of Trust shall control with respect to rights
and remedies of Beneficiary and Trustee hereunder.
7.11 NONDISCRIMINATION. Trustor herein covenants by and for itself, its heirs,
executors, administrators, and assigns, and all persons claiming under or through it that
there shall be no discrimination against or segregation of, any person or group of persons
on account of race, color, creed, religion, sex, marital status, national origin, or ancestry
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Subject
Property, nor shall the grantee of any person claiming under or through it, establish or
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 Subject Property.
[Signature on next pagel
-18- !-'1'i
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year
set forth above.
"TRUSTOR"
MAIN PLAZA, LP.
By: AVALON COMMUNITIES, LLC, a California Limited
Liability Company
By:
Lionel Puig
By: CASA FAMILIAR, a California nonprofit public
benefit corporation, General Partner
By:
Andrea Skorepa, Executive Director
(ALL SIGNATURES MUST BE ACKNOWLEDGED)
S-1
[HINES) J,\COMMDEV\HINES\Moin Plow-Agency Dee9 of "",12.doo 1-19
DESCRIPTION OF SUBJECT PROPERTY
Exhibit A to Deed of Trust with Absolute Assignment of Leases and
Fixture Filing executed by MAIN PLAZA LP., as Trustor to
California corporation, as Trustee for the benefit of the
CITY OF CHULA VISTA, a public body, corporate and politic, as Beneficiary, dated as of
,2001.
All the certain real property located in the City of Chula Vista, County of San Diego, State of
California, described as follows:
(_(DO
STATE OF CALIFORNIA
COUNTY OF SS.
On this day of ,19_, before me
a Notary Public in and for the State of California, personally appeared
personally known to me (ar proved on the basis of satisfactary evidence) ta be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in hislher/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal
Signature
My commission expires
-2- /-(01
PROMISSORY NOTE
Secured by a Deed of Trust
$450,000 Date: , 2001
Chula Vista, CA
1. Borrower's Promise to Pay. For value received, the undersigned MAIN PLAZA, L.P.,
("Borrower"), promises to pay to the REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA, a public body, corporate and politic (the "Agency"), or order, at 276 Fourth Avenue, Chula
Vista, California 91910, or such other place as the Agency may designate in writing, the principal
sum of Four Hundred Fifty Thousand Dollars ($450,000) (the "principal"), plus interest as set forth
in Section 4 below.
(a) Use Of Funds. Borrower is improving certain real property in the City of Chula
Vista, as legally described in the Loan Agreement (the "Property") with a mixed use development
consisting of 106 affordable housing units and 15,000 square feet of retail commercial space subject
to the terms of the Permanent Loan Documents, the Regulatory Agreement and Declaration of
Restrictive Covenants, the Affordable Housing Agreement and the TCAC Regulatory Agreement, as
those terms are defined in the Loan Agreement (the "Project"). This Note evidences the loan made by
the Agency to assist Borrower in acquiring and improving the Property for occupation by very low,
lower and low and moderate income households, as more particularly set forth in that certain Loan
Agreement and Related Restricted Covenants between the Borrower and the Agency dated as of
(the "Loan Agreement").
2. Definitions. The term set forth in this Section shall have the following meaning in this Note:
(a) "Transfer" shall mean any sale, assignment or transfer, voluntary or involuntary, of
any interest in the Property. Any transfer without satisfaction of Section 7 of this Note is prohibited.
Capitalized terms used herein not otherwise defined shall have the meanings set forth in the Loan
Agreement.
3. Security. This Note is secured by the Deed of Trust with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing of the same date as this Note (the "Deed of
Trust"), executed by Borrower, as trustor, in favor of the Agency, as beneficiary, and encumbering
the real property described in the Deed of Trust. The Agency will be entitled to the benefits of the
security provided by the Deed of Trust and will have the right to enforce the covenants and
agreements of Borrower specified within the Deed of Trust.
4. Interest. Simple interest will accrue on the principal balance remaining unpaid from time to
time at the rate of three percent (3%) per annum.
5. Payments. Payments of principal and interest due under this Note shall be made in
accordance with the payment terms set forth in Section 4.5 of the Loan Agreement, which such terms
are incorporated herein by this reference. All payments on this Note shall be applied first to payment
of accrued but unpaid interest, and after all such interest has been paid, any remainder shall be
applied to reduction of the principal balance. Unless the Loan Agreement is extended pursuant to the
1
l-tOd--
terms of the Loan Agreement, all principal and interest shall be due and payable on the date that is
fifty-five (55) years from the date of the Agency's issuance of the Certificate of Completion (as
defined in the Loan Agreement).
6. Borrower's Right To Repay. Borrower has the right to pay, without penalty or premium,
all or any portion of the outstanding amount of this Note prior to the maturity date.
7. No Assumptions of Note. Borrower acknowledges that this Note is given in connection with
the development of the Project as part of a program of the Agency to assist with the provision of
housing for very low, low and moderate income households. Consequently, this Note is not
assumable by transferees of the Property, but is immediately due and payable in full on the date of
the Transfer of the Property, whether voluntary or involuntary, unless such Transfer is permitted by
the Loan Agreement or by the Agency in writing in the Agency's sole and absolute discretion. In
order to implement this provision, the Loan Agreement contains a "DUE ON SALE" provision.
8. Maintenance; Taxes; Insurance. Borrower shall maintain the Property in good, clean and
orderly condition. Borrower shall promptly pay all property taxes due on the Property prior to any
delinquency and shall comply with the insurance requirements set forth in the Loan Agreement.
9. Default. The occurrence of anyone or more of the following events shall constitute an
"Event of Default": (a) Default under any agreement or other writing executed in favor of the
Agency in connection with this Note, including but not limited to the Loan Agreement or the Deed of
Trust, beyond all applicable cure periods; (b) Default in the payment when due of any installment or
amount of principal or interest due on this Note, beyond the applicable cure period contained in
Section 12.1 of the Loan Agreement; (c) The making by Borrower of any assignment for the benefit
of creditors or the voluntary appointment (at the request or with the consent of Borrower) of a
receiver, custodian, liquidator or trustee in bankruptcy of any of Borrower's property, or the filing by
Borrower of a petition in bankruptcy or other similar proceeding under any law for relief of debtors;
(d) The filing against Borrower (by anyone other than the Agency) of a petition in bankruptcy or
other similar proceeding under any law for relief of debtors, or the involuntary appointment (by
anyone other than the Agency) of a receiver, custodian, liquidator or trustee in bankruptcy of the
property of Borrower, if such petition or appointment is not vacated or discharged within sixty (60)
calendar days after the filing or making thereof; or (e) The occurrence of a default under any note or
deed of trust to which the Deed of Trust is junior and subordinate, beyond the applicable cure period.
Upon the occurrence of an Event of Default, the Agency may, at its option, declare the entire unpaid
principal balance and accrued interest to be immediately due and payable in full pursuant to Section
10 hereof or pursue any and all other remedies provided at law or in equity. Upon the occurrence of
an Event of Default of the type described in clause (b) above, the entire unpaid principal balance and
unpaid interest accrued thereon shall bear interest, from the date of the Event of Default until such
default is cured, at a rate of nine percent (9%) compounded monthly ("Default Rate").
10. Acceleration. Upon the occurrence of an Event of Default, the Agency shall have the right
to declare the full amount of the principal, interest and other amounts owing under this Note
immediately due and payable. Any failure by the Agency to pursue its legal and equitable remedies
upon an Event af Default shall not constitute a waiver of the Agency's right to declare an Event of
Default and exercise all af its rights under this Note, the Deed of Trust or the Loan Agreement. Nor
shall acceptance by the Agency of any payment provided for in the Note constitute a waiver of the
Agency's right to require prompt payment of any remaining amounts owed.
2 1-/0.3
11. No Offset, Borrower hereby waives any rights of offset it now has or may later have against
the Agency, its successors and assigns, and agrees to make the payments called for in this Note in
accordance with the terms of this Note.
12. Waivers. Borrower and any endorsers or guarantors of this Note, for themselves, their heirs,
legal representatives, successors and assigns, respectively, severally waive diligence, presentment,
protest, and demand, and notice of protest, dishonor and non-payment of this Note, and expressly
waive any rights to be released by reasons of any extension of time or change in terms of payment, or
change, alteration or release of any security given far the payments hereof, and expressly waive the
right to plead any and all statutes of limitations as a defense to any demand on this Note or agreement
to pay the same, and jointly and severally agree to pay all costs of collection when incurred,
including reasonable attorney fees. If an action is instituted on this Note, the Borrower promises to
pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys' fees in such action.
13. No Waiver by the Agency. No previous waiver, failure, or delay by the Agency in acting
with respect to the terms of this Note, the Deed of Trust, or any other loan documents in favor of the
Agency executed by Borrower in connection with this Nate will constitute a waiver of any breach,
default or failure of conditions under this Note, Deed of Trust, or such other associated documents.
A waiver of any terms must be made in writing.
14. Non Recourse Obligation. Nothing herein contained shall be deemed to cause Borrower (or
any of its partners, or any of their respective directors, officers, employees, partners, principals or
members) personally to be liable to payor perform any of its obligations evidenced hereby, and
Agency shall not seek any personal or deficiency judgment on such obligations, and the sole remedy
of Agency shall be against the Property and the collateral under the Deed of Trust; provided,
however, that the foregoing shall not in any way affect any rights Agency may have (as a secured
party or otherwise) hereunder or under the Deed of Trust or Loan Agreement, or any other rights
Agency may have to: (a) recover directly from Borrower any funds, damages or costs (including,
without limitation, reasonable attorneys' fees and costs) incurred by Agency as a result of fraud,
intentional misrepresentation or intentional waste by Borrower; or (b) recover directly from
Borrower any condemnation or insurance proceeds, or other similar funds or payments attributable to
the Property which under the terms of the Loan Agreement should have been paid to Agency and any
costs and expenses incurred by Agency in connection therewith (including, without limitation,
reasanable attorneys' fees and costs).
15. Late Fees. Borrower acknowledges that if any payment required under this Note is not paid
within fifteen (15) days after the date when the same becomes due and payable, the Agency will
incur extra administrative expenses (i.e., in addition to expenses incident to receipt of timely
payment) and the loss of the use of funds in connection with the delinquency in payment. Because,
from the nature of the case, the actual damages suffered by the Agency by reason of such extra
administrative expenses and loss of use of funds would be impracticable or extremely difficult to
ascertain, Borrower agrees that five percent (5%) of the amount of the delinquent payment shall be
the amount of damages to which the Agency is entitled, upon such breach, in compensation therefor.
Therefore, Borrower shall, in such event, without further notice, pay to the Agency as the Agency's
sole monetary recovery to cover such extra administrative expenses and loss of use of funds,
liquidated damages in the amount of five percent (5%) of the amount of such delinquent payment.
The provisions of this paragraph are intended to govern only the determination of damages in the
event of a breach in the performance of the obligation of Borrower to make timely payments
3 (-/0'1
hereunder. Nothing in this Note shall be construed as an expressed or implied agreement by the
Agency to forbear in the collection of any delinquent payment, or be construed as in any way giving
Borrower the right, expressed or implied, to fail to make timely payments hereunder, whether upon
payment of such damages or otherwise. The right of the holder hereof to receive payment of such
liquidated and actual damages, and receipt thereof, are without prejudice to the right of such holder
to collect such delinquent payments and other amounts provided to be paid hereunder or under any
security for this Note or to declare a default hereunder or under any security for this Note.
16. Giving Of Notices. Formal notices, demands, and communications between Agency and
Borrower shall be given either by (i) personal service, (ii) delivery by reputable document delivery
service such as Federal Express that provides a receipt showing date and time of delivery, or (iii)
mailing in the United States mail, certified mail, postage prepaid, return receipt requested, to the
address of the party as set forth below, or at any other address as that party may later designate by
notice:
Borrower:
Main Plaza, L.P.
c/o Avalon Communities, LLC
180 I E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attn: Lionel Puig
Agency:
Redevelopment Agency of the City of Chula Vista
276 Fourth Avenue
Chula Vista CA 91910
Attn: Housing Coordinator
With copies to: Executive Director and Agency Attorney
The parties may subsequently change addresses by providing written notice of the change in
address to the other parties in accordance with this Section.
17. No Partnership or Joint Venture. The relationship of Borrower and the Agency under this
Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the
Deed of Trust will in no manner make the Agency the partner or joint venturer of Borrower.
18. Joint and Several Obligations. This Note is the joint and several obligation of all makers,
sureties, guarantors and endorsers, and shall be binding upon them and their successars and assigns.
19. Attorney's Fees. In the event of any conflict or dispute concerning any tenn or provision of
this Note or otherwise arising out of this Note, the prevailing party shall be entitled to recover from
the other party any and all reasonable costs and expenses incurred in connection therewith, including,
but not limited to, attorney's fees and court costs, whether or not a legal action is commenced.
20. Controlling Law, This Note shall be construed in accordance with and be governed by the
laws of the State of California.
4
1- 10 ~
21. Invalid Provisions. If any one or more of the provisions contained in this Note shall for any
reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions
shall be deemed severable from the remaining provisions contained in this Note, and this Note shall
be construed as if such invalid, illegal or unenforceable provision had never been contained in this
Note.
22. Amendments. Any amendment, alteration or interpretation of this Note must be in writing
signed and signed by a duly authorized officer of the Agency and Borrower. If there are any
inconsistencies between the terms of this Note and the terms of any of the other loan documents, the
terms of the Loan Agreement will prevail.
[NEXT PAGE IS SIGNATURE PAGE]
5
I -(0(.
IN WITNESS WHEREOF the Borrower has caused this Promissory Note to be executed as
of the day and year first written above.
MAIN PLAZA L.P., a limited partnership
By: Avalon Communities, LLC, a California Limited Liability Company
By:
Lionel Puig, Managing Member
6 1- (0 7
(HINES) J,'COMMDE\AHINESIM,'o Pim-Agoooy Nolo2doo
ATTACHMENT 3
RECORDING REQUESTED BY:
Redevelopment Agency/City of the City ofChula Vista
City ofChula Vista
WHEN RECORDED MAIL TO:
Redevelopment Agency/City of the City ofChula Vista
Attn: Housing Manager
276 Fourth Avenue
Chula Vista CA 91910
City ofChula Vista
Attn: Housing Manager
276 Fourth Avenue
Chula Vista CA 91910
No fee for recording pursuant to
Government Code Section 27383
(!>pace alJovejor J(ecoraer s Use)
LOAN AGREEMENT
AND RELATED RESTRICTED COVENANTS
THIS LOAN AGREEMENT AND RELATED RESTRICTED COVENANTS (the
"Agreement") is entered into as of 2001 between the
REDEVELOPMENT AGENCY/CITY OF THE CITY OF CHULA VISTA, a public body, corporate
and politic ("Agency/City"), the CITY OF CHULA VISTA, a municipal corporation ("City") and
MAIN PLAZA loP. ("Borrower"), and/or its successors or assignees.
ARTICLE 1
Recitals
1.1 Authority.
Agency/City is a public body, corporate and politic, exercising governmental functions and powers
and organized and existing under the Community Redevelopment Law of the State of California
(Health and Safety Code Section 33000, et seq.). City is a municipal corporation, organized and
exiting under the laws of the State of California. Agency and City are authorized to enter into
binding agreements for the purpose of protecting public health, safety, and welfare.
1.2 Available Funds.
Agency/City has available funds from the Agency/City's Low and Moderate-Income Housing Fund
which can be used for the purposes of funding the obligations of the Agency/City under this
Agreement in accordance with the Community Redevelopment Law of the State of California.
/- (0<6
City has been allocated funds from the United States Department of Housing and Urban Development
("HUD") pursuant to the federal government's HOME Investment Partnerships program (42 U.S.C. '
1274, ~ ~.) which can be used, subject to final HUD approval, for the purposes of funding certain City
obligations under this Agreement in accordance with HOME regulations (24 C.F.R. ' 92 ~ ~.).
1.3 The Property.
Borrower is or will become the legal owner of the fee title to the real property located on the
northeast corner of Main Street and Broadway within the Southwest Redevelopment Project Area
and the Montgomery Specific Plan in the City of Chula Vista, as described in the attached Exhibit
"A", which is incorporated herein (the "Property").
1.4 Project.
Borrower proposes to construct 106 affordable housing units and 15,000 square feet of retail
commercial space. The residential units will consist of with 10 units affordable to very low
households at or below 50 percent of the Area Median Income ("AMI"), 41 units affordable to low-
income households at or below 60 percent of AMI, and the remainder of the units (other than the unit
which may be made available ta an on-site manager) affordable to moderate income households at or
below 120 percent of the Area Median Income (the "Project"). The Project will be subject to certain
affordable housing obligations pursuant to the and Declaration of Restrictive
Covenants and among the Borrower, the and
(the "Regulatory
1.5 Agency/City Financial Assistance to Borrower.
Through the development and operation of the Project, Agency/City, City, and Borrower desire to
provide very low, lower and low and moderate income households with affordable housing
opportunities within the City in accordance with the Community Redevelopment Law, the
Agency/City's redevelopment plans, and the Housing Element of the City General Plan. In order to
accomplish this goal, the Agency/City desires to make a loan from its Low and Moderate Income
Housing Fund and HOME funds to Borrower for a portion of the costs of the acquisition and
construction ofthe Project, subject to certain conditions designed to assure the implementation of the
Project in accordance with the redevelopment plans, the General Plan, state and federal law, HOME
program regulations, and as otherwise provided herein.
1.6 Interests of the Agency/City, City and the Public.
The acquisition, construction and operation of the Project pursuant to this Agreement, and the
fulfillment generally ofthis Agreement, are in the vital and best interests of the Agency/City and the
welfare of the residents of the City of Chula Vista, and in accordance with the public purposes and
provisions of applicable federal, state, and local laws and requirements.
1.7 Housing Objectives and Goals.
The Project accommodates several of the City's Comprehensive Housing Plan Objectives, which are
expressly noted in the Housing Element as priorities for the City. The objectives this Project serves
are:
/-101
(I) Achievement of a balanced residential community through integration of low and moderate
income housing throughout the City, and the adequate dispersal of such housing to preclude
establishment of specific low-income enclaves.
(2) The provision of adequate rental housing opportunities and assistance to households with low
and very low incomes, including those with special needs such as the elderly, handicapped, single-
headed households, large families and those "at-risk" ofhomelessness.
WHEREFORE, based upon the foregoing recitals and in consideration of their mutual and
prospective promises and subject to the terms and conditions hereinafter set forth, the parties do
hereby agree as follows:
ARTICLE 2
Definitions
The following terms as used in this Agreement shall have the meanings given unless
expressly provided to the contrary:
2.1 "Affordable Housing Agreement" means that certain agreement, in substantially the form set
forth in Exhibit D attached hereto and incorporated herein, which sets forth Borrower's
obligations to maintain the Project as an affordable multifamily housing project for very low,
lower and low and moderate income households, and other obligations related to the operation
and management of the Project, which shall be recorded in the order of priority set forth in this
Agreement.
2.2 "Agency/City" means the Redevelopment Agency/City of the City of Chula Vista, a public
body, corporate and politic, having its offices at 276 Fourth Avenue, Chula Vista, California
91910. The term "Agency/City" as used herein also includes any assignee of, or successor to,
the rights, powers, and responsibilities of the Redevelopment Agency/City of the City of Chula
Vista.
2.3 "Agency/City Loan" means the loan for an amount of Four Hundred Fifty Thousand Dollars
($450,000) by the Agency/City to Borrower, which loan is the subject of this Agreement.
2.4 "Agency/City Note" shall mean the promissory note, in substantially the form set forth in
Exhibit B attached hereto and incorporated herein, in the principal amount of Four Hundred
Fifty Thousand Dollars ($450,000), evidencing the Agency/City Loan.
2.5 "Agency/City Trust Deed" shall mean that certain deed of trust, in substantially the form set
forth in Exhibit C attached hereto and incorporated herein, which secures Borrower's
obligations pursuant to the Agency/City Note, which shall be recorded in the order of priority
set forth in this Agreement.
2.6 "Agreement" means this Loan Agreement and Related Restricted Covenants.
2.7 "Bonds" means multifamily mortgage revenue bonds issued by the
in the approximate aggregate amount of as set forth in Section
Agreement.
(-((()
2.8 "Borrower" means Main Plaza LP.. The term "Borrower" includes any legally permissible
assignee or successor to the rights, powers, and responsibilities of Borrower hereunder,
following such assignment and succession, in accordance with Section 12.10 of this
Agreement.
2.9 "Certificate of Completion" shall have the meaning ascribed in Section 10.8 of this Agreement.
The form of the Certificate of Completion shall be as set forth in Exhibit G to this Agreement,
which is incorporated herein.
2.10 "City" shall mean the City of Chula Vista, a municipal corporation, organized under the laws
of the State of California and having its offices at 276 Faurth Avenue, Chula Vista, California
91910.
2.11 "City Loan" means the loan for an amount of Three Hundred Thousand Dollars ($300,000) by
the City to Borrower, which loan is the subject of this Agreement.
2.12 "City Note" shall mean the promissory note, in substantially the form set forth in ~j!:b!¡~~~!lliill:;
attached hereto and incorporated herein, in the principal amount of Three Hundred Thousand
Dollars ($300,000), evidencing the City Loan.
2.13 Trust Deed" shall mean that certain deed of trust, in substantially the form set forth in
attached hereto and incarporated herein, which secures Borrower's obligations
the City Note, which shall be recorded in the order of priority set forth in this
Agreement.
2.14 "Development Fee" and "Deferred Development Fee" shall have the meaning ascribed in
Section 9.1.
2.15 "Effective Date" means the date first appearing in this Agreement above.
2.16 "Gross Revenue" shall have the meaning ascribed in Section 4.5.
2.17 "Housing Manager" means the Housing Manager of the Community Development Department
of the City.
2.18 "Permanent Lender" means the
2.19 "Permanent Loan" means the loan to be made by the Permanent Lender to the Borrower with
the proceeds of the Bonds.
2.20 "Permanent Loan Documents" means the Loan Agreement of even date herewith by and among
the Permanent Lender, :Dilij.!~w~îtjita.iifi1$¡¡¡¡¡¡i!ilVi!îm¡¡iija.l'ijb¡¡1Iîiø)Í' and the Borrower, and the
promissory note, deed of trust and other documents entered into pursuant to such Loan
Agreement.
2.21 "Project" shall have the meaning ascribed in Section 1.4 of this Agreement.
2.22 "Project Budget" means that certain budget referred to in Section 4.11 of this Agreement and
attached hereto as Exhibit F, which is incorporated herein by this reference, which budget may
not be materially changed without the prior approval of the Housing Manager, which approval
I-fit
shall not be unreasonably withheld (a material change is a change that causes the total Project
cost to increase or decrease by three percent (3%) or more from what is shown in Exhibit F).
2.23 "Project Pro Forma" means that certain Project Pro Forma referred to in Section 4.11 of this
Agreement and attached hereto as Exhibit G, which is incorporated herein by this reference,
which pro forma Borrower represents to be a good faith projection of the information set forth
therein.
2.24 "Property" means that certain real property legally described in Exhibit "A" which is attached
hereto and incorporated herein.
2.25 "Property Manager" means the property management company managing the Project, whether
or not the Project is managed by Borrower. The term Property Manager shall not mean the on-
site property manager.
2.26 "Reasonable Operating Expenses" shall have the meaning ascribed in Section 4.5.
2.27 and Declaration of Restrictive
Covenants and
2.28 "Residual Receipts" shall have the meaning ascribed in Section 4.5.
2.29 "Restricted Units" means the residential units in the Project whose rent levels and occupancy
are to be restricted as set forth in Section 11.2 of this Agreement.
2.30 "Schedule of Performance" means that certain Schedule of Performance attached hereto as
Exhibit J and incorporated herein, as the same may be modified or extended pursuant to
Sections 10.4 and 14.3 hereof.
2.31 "Title Insurer" means
ARTICLE 3
Financing of the Project
3.1 Summary of Financing.
Borrower's current sources and uses of funds summary for the Project is attached hereto as Exhibit
which is herein. Borrower contemplates a total project budget of approximately
shall obtain construction and permanent loan financing funded by two
mortgage revenue bonds issued by the
(.f1i'W~(.f¡¡~Wi!¡fลกrnei; in the approximate aggregate amount of (the "Bonds").
Agency/City shall loan to Barrower the amount of $450,000 (approximately $4,245 for each housing
unit in the Project), secured by the Agency/City Trust Deed, which shall be subordinate to the
Permanent Loan funded by the Bonds. City shall loan to Borrower the amount of $300,000
(approximately $2,830 for each housing unit in the Project), secured by the City Trust Deed, which
shall be subordinate to the Permanent Loan funded by the Bonds. Borrower shall also apply for an
allocation of "4%" tax credits for the Project from the California Tax Credit Allocation Committee
("TCAC") which will support an equity investment in Borrower by an investor limited partner in the
(-((;;L
amount of approximately $',:"" ,,"':'" ",,>,. Agency/City acknowledges that the foregoing amounts
(other than the amount of the Agency/City Loan) are approximations and may change.
ARTICLE 4
Agency/City Loan
4.1 Amount.
Subject to the terms and conditions set farth herein, the Agency/City hereby commits to loan to
Borrower the total sum of $450,000 (the "Agency/City Loan") and $300,000 (the "City Loan"),
respectively, to be applied salely for payment of a portion of the costs of the acquisition and
construction of the Property.
4.2 Interest.
The outstanding principal amount of the Agency/City Loan shall accrue simple interest at the rate of
three (3%) percent per annum.
4.3 Borrower's Obligations.
The following conditions must be fully satisfied as reasonably determined by the Agency/City in
order to obligate the Agency/City to make the Agency/City Loans:
a. Borrower shall have submitted a complete application for a preliminary allocation of
"4%" low-income housing tax credits from the California Tax Credit Allocation Committee in the
amount set forth in the Sources and Uses attached hereto as Exhibit E, or such greater or lesser
amount as may be mutually agreed ta by the parties.
b. Borrower shall have submitted within a timely manner applications for funding of the
remaining approximately $3.8 million financing gap (the "Financing Gap") to the State Farmworker
Housing Grant (FWHG) Program for the next funding cycle and other appropriate funding programs
identified by the Developer or the Agency/City for the development of the residential units of the
Project. Developer shall exercise its best efforts to obtain any or all of the Financing Gap proceeds
and to identify potential additional sources for same. Any Financing Gap proceeds shall be
immediately applied to repay the Agency/City Loan of a total of $750,000 on a first priority basis.
c. Borrower shall have acquired fee title to the Property, or shall be acquiring fee title to
the Property concurrently with the disbursement of the Agency/City Loan.
d. Borrower shall have received a firm commitment for an equity contribution from an
investor limited partner in Borrower of not less than which number is subject to
adjustment pursuant to the Funding Agreement between Borrower's limited partner
investor, or such lesser amount as may be mutually agreed to by the parties. The Agency/City shall
not unreasonably withhold or delay its consent to Borrower's request to approve such a lower
amount.
e. Borrower shall have obtained a firm commitment for the Permanent Loan in an
amount equal to the net proceeds of the Bonds or such greater or lesser amount as may be mutually
agreed to by the parties, and the Permanent Loan shall have closed or be ready to close concurrently
with the Agency/City Loan.
1-((3
f. Borrower shall have duly executed (and acknowledged, if applicable) the
Agency/City Note, the Agency/City Trust Deed and the Affordable Housing Agreement, and shall
have submitted the same into the escrow established for the Borrower's acquisition of the Property,
and the Agency/City Trust Deed and Affordable Housing Agreement shall be ready to be recorded
concurrently with the recording of the grant deed conveying title to the Property to the Borrower as
an encumbrance to the Property, subordinate only to the liens securing the Bonds, the Regulatory
Agreement and other nonmonetary encumbrances approved by the Agency/City.
g. Borrower shall have submitted to the Agency/City, and Agency/City shall have
reviewed and approved, in its reasonable discretion, any and all loan documents, regulatory
agreements or grant contracts to be executed by or otherwise to be binding upon Agency/City or
Borrower in connection with its acquisition of the Property, its construction and operation of the
Project and/or its financing thereof, including without limitation the Permanent Loan Documents, the
regulatary agreement to be executed and recorded in favor of the TCAC (the "TCAC Regulatory
Agreement"), and the partnership agreement of the Borrower and documents executed pursuant
thereto, such as guaranties and funding agreements.
h. Borrower shall have provided the Agency/City with satisfactory evidence that
Borrower's general and limited partners have approved this Agreement and the related Agency/City
Loan documents and authorizing Borrower's signatories to execute this Agreement and the related
Agency/City Loan documents on its behalf.
i. The Title Insurer or another title insurance company reasonably acceptable to the
Agency/City shall have unconditionally committed to issue the Lender's Policy to the Agency/City in
accordance with Section 4.9 hereof.
j. Borrower shall have submitted to the
management agreement for the Project with
(l"(!iml:îliJ.iî/, a California corporation, or another
acceptable to the parties, in accordance with Section 11.8
k. At least 60 days shall have passed since the Agency/City's final approval of this
Agreement. Alternatively, the Borrower shall have provided to the Agency/City (i) an opinion of
legal counsel, in a form and from legal counsel which is reasonably satisfactory to the Agency/City,
that the Project is not a "low rent housing project" subject to the requirements of Article XXXIV of
the California Constitution, or (b) an agreement in a form and from a party which is reasonably
satisfactory to the Agency/City, in which the party agrees to indemnify, defend and hold harmless the
Agency/City from any losses or liability arising from a legal claim that the Agency/City Loan
violates the provisions of Article XXXIV of the California Constitutian.
I. Borrower shall have satisfied all other obligations under this Agreement required to
be performed prior to the closing on the Agency/City Loan, and shall not be in default in any of its
obligations under the terms of this Agreement. All representations and warranties of Borrower
contained herein shall be true and correct in all material respects on and as of the date of the
disbursement of the Agency/City Loan as though made at that time.
1-/1'1
4.4 Source of Agency Loan.
The source of the Agency Loan is the Agency's Low and Moderate-Income Housing Fund. Pursuant
to California Community Redevelopment Law the Project must meet all of the California
Community Redevelopment Law requirements for the term of the affordability restrictions on the
units set forth herein.
4.4 Source of City Loan.
The source of the City Loan is funds to be obtained by City from HUD pursuant to the federal
government's HOME Investment Partnerships Program (42 V.S.C. ' 12741 ~ ~.). Pursuant to the
HOME Investment Partnerships Program requirements, out of the total of one-hundred six (106) units in
the Project, six (6) three-bedroom units are being assisted with HOME Investment Partnerships Program
funds (the "HOME-assisted units") and must meet all of the HOME Investment Partnerships Program
requirements for the term of the affordability restrictions on the units. The specific units to be designated
HOME-assisted units may change from time to time in Developer's sole discretion, provided that the
aggregate number and category of said units remains the same.
4.5 Repayment.
Payments under the Agency/City Loan shall be made as follows:
a. Any Financing Gap proceeds shall be immediately applied to repay the Agency/City
Loan of a total of $750,000 on a first priarity basis as required by Section 4.3.b. Repayment of any Or
all of the Agency/City Loan shall be deferred during construction of the Project. Commencing on the
Initial Payment Date (defined below), payment of principal and interest on the Agency/City Note
shall be made, on an annual basis, in an amount equal to fifty percent (50%) of the "Residual
Receipts" (defined below) derived from the Property and/or the operation of the Project. Such
amounts shall be paid on a priority basis to all other debt service on the Property, except for the
Permanent Loan funded with the proceeds of the Bonds and the Deferred Development Fee (as
defined below), if any. Residual Receipts shall be calculated by Borrower each and every year
commencing with the first anniversary of the issuance of the Certificate of Completion by the
Agency/City. The 'fifty percent (50%) Residual Receipts payments, if any, shall be made on or
before thirty (30) days after the later of (i) the first year anniversary of the issuance of the Certificate
of Completion by the Agency/City or (ii) the first year anniversary of the date on which the Deferred
Development Fee, if any, has been paid in full (the "Initial Payment Date"), and on or before 30 days
after each subsequent yearly anniversary of the Initial Payment Date.
b. "Residual Receipts" is specifically defined as the "Gross Revenue" (as defined
below) from the Project minus the "Reasonable Operating Expenses" (as defined below) for the same
period.
(i) "Gross Revenue" shall mean all revenue, income, receipts, and other
consideration actually received from operation and leasing of the Project. Gross Revenue shall
include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments Or other
rental subsidy payments received for the dwelling units, all cancellation fees, price index
adjustments, and any other rental adjustments to leases Or rental agreements; proceeds from vending
and laundry room machines; the proceeds of business interruption or similar insurance to the extent
not applied to the Permanent Loan; the proceeds of casualty insurance to the extent not utilized to
1- (IS-
repair or rebuild the Project or applied to the Permanent Loan; and condemnation awards for a taking
of part or all of the Project for a temporary period to the extent not applied to the Permanent Loan or
used to repair or restore the Project. Gross Revenue shall also include the fair market value of any
goods or services provided in consideration for the leasing or other use of any portion of the Project.
Gross Revenue shall not include tenants' security deposits, loan proceeds, capital contributions or
similar advances or payments from reserve funds.
(ii) "Reasonable Operating Expenses" shall include any and all reasonable and
actually incurred costs associated with the ownership, operatian, use or maintenance of the Property,
calculated in accordance with generally accepted accounting principles. Such expenses may include,
without limitation, property and other taxes and assessments imposed on the Project; premiums for
property damage and liability insurance; utilities not directly paid for by the tenants including water,
sewer, trash collection, gas and electricity, maintenance and repairs including pest control,
landscaping and grounds maintenance, painting and decorating, cleaning, general repairs, and
supplies; tenant relocation costs and expenses; license fees or certificate of occupancy fees required
for operation of the Project; general administrative expenses directly attributable to the Property
including advertising and marketing, security services and systems, and professional fees for legal,
audit and accounting; property management fees and reimbursements including on-site manager and
assistance manager expenses; asset management fees payable to the investor limited partner of the
Borrower in an amount which does not exceed the amount set forth therefor in the Sources and Uses,
Project Budget and Pro Forma attached hereto; a property management fee in an amount which does
not exceed the amount set forth in the Sources and Uses, Project Budget and Pro Forma attached
hereto, cash deposited into a reserve for capital replacements of the Project improvements and an
operating reserve (and such other reserve accounts required with respect to the Bonds and the
Permanent Loan Documents) in such amounts as are required by the Permanent Lender and as may
be reasonably required by Project equity investors; tenant services costs; debt service payments
(excluding debt service due to Agency/City from Residual Receipts of the Project) on financing for
the Project; supplemental management fees in an amount which does not exceed the amount set forth
in the Sources and Uses, Project Budget and Pro Forma attached hereto; and payment of the Deferred
Development Fee. In no event shall expenditures, including attorneys' fees or litigation costs,
normally required to be paid out of the Replacement Reserve, be treated as Reasonable Operating
Expenses unless specifically approved in writing by the Agency/City. For purposes of the foregoing
definition of "Reasonable Operating Expenses," any property management fee or partnership
management fee which is paid to Borrower shall at no time exceed an amount as is customary and
standard for affordable housing projects similar in size, scope and character to the Project.
Notwithstanding the foregoing, for purposes of this calculation, Reasonable Operating Expenses shall
not include the following: expenses of social services, principal and interest payments on any debt
subordinate to the Agency/City Note, depreciation, amortization, depletion or other non-cash
expenses, incentive partnership asset management fees payable to the Borrower or its affiliate (other
than the supplemental management fee described above), or any amount expended from a reserve
account.
c. The fifty percent (50%) of Residual Receipts remaining after the annual Residual
Receipts payments on the Agency/City Note may be retained and used by Borrower in Borrower's
sole discretion.
d. Except as otherwise expressly provided hereunder, Borrower's obligation to repay the
Agency/City Loan shall be limited to Borrower's annual payment, until the Agency/City Loan is
repaid in full, of fifty percent (50%) of the Residual Receipts as described above for a period from
I-lib
the completion of the Project until the date which is fifty-five (55) years following the date of the
Agency/City's issuance af the final Certificate of Completion for the Project (but in no event later
than fifty-seven (57) years from the date of execution of the Agency/City Note) (the "Conditional
Maturity Date"). Upon the Conditional Maturity Date, Agency/City shall have the option, at any
time, in its sole discretion, but after good faith discussions with Borroweras to available options,
upon ninety (90) days' written notice to Borrower, to (a) declare the remaining balance of all
amounts owed under the Agency/City Note immediately due and payable, or (b) to require
installment payments under the Agency/City Note based upon (i) a restated principal balance
comprised, in the aggregate, of any and all outstanding principal and interest under the Agency/City
Note existing as af the date of Agency/City election, (ii) a prospective fixed interest rate per annum
equal to the prime rate then in effect for Bank of America, San Diego office, or such other rate
mutually agreed to by the Agency/City and Borrower, and (iii) monthly installments of principal and
interest paid over the course of an amortization schedule to be determined by the Agency/City in its
sole discretion, not to be less than ten (10) years. In the event that Agency/City elects repayment
approach (b), Borrower agrees to execute an amendment to the Note in favor of Agency/City
reflecting the amended repayment terms described above.
e. Notwithstanding the foregoing, in the event that Borrower, or any successors thereto,
materially breaches the teffils of this Agreement, the Agency/City Note, the Agency/City Trust Deed,
or the Affordable Housing Agreement, or triggers a due on sale, transfer or encumbrance provision
set forth in the Agency/City Note or Agency/City Trust Deed, the Agency/City shall have the right in
its sole discretion, to declare immediately due and payable all outstanding principal, interest and
other sums due under the Agency/City Note, or to pursue any and all other remedies provided herein,
under the Agency/City Note, Agency/City Trust Deed, or the Affordable Housing Agreement, or as
otherwise provided at law or in equity.
4.6 Prepayment.
Borrower may prepay the principal and any interest due the Agency/City under the Agency/City
Note prior to or in advance of the time for payment thereof as provided in the Agency/City Note,
without penalty; provided, however, that Borrower acknowledges that certain provisions hereof and
the provisions of the Affordable Housing Agreement and the Regulatory Agreement will be
applicable to the Project in accordance with their respective teffils even though Borrower may have
prepaid the Agency/City Note.
4.7 Assumption.
In the event the Project is sold or transferred as approved by the Agency/City or otherwise peffilitted
pursuant to Section lUO hereof, the Agency/City Loan shall be fully assumable by the approved or
permitted transferee. The Agency/City Loan shall not be assumable by any other transferee.
4.8 Use of Loan Proceeds.
Borrower shall use Agency/City Loan proceeds only ta pay for a portion of the cost of the acquisition
of the Property, and to pay for the cost of the Lender's Policy (as defined below).
1-1/7
4.9 Lien Priority, Title Insurance.
As a condition to the obligations of Agency/City to fund the Agency/City Loan, there shall be no
liens or encumbrances upon the Property having priority over the Agency/City Trust Deed, other
than: (a) the deed oftrust securing the Permanent Loan; (b) the Affordable Housing Agreement, (c)
the Regulatory Agreement, and (d) those existing non-monetary encumbrances which are disclosed
in title reports delivered to Agency/City and which have not been objected to by the Agency/City in
writing. Such priority shall be evidenced by an ALTA lender's insurance policy, including title
endorsements reasonably requested by the Agency/City with liability equal to the amount of the
Agency/City Loan, or such other amount as may be mutually agreed to by the parties (the "Lender's
Policy") to be issued to Agency/City by Chicago Title Company at the close of escrow for the
Borrower's acquisition of the Property. Borrower shall be responsible for the cost of the Lender's
Policy, which may be paid for from the proceeds of the Agency/City Loan.
4.10 Subordination; Refinancing.
Agency/City agrees to take such actions as may be necessary to subordinate the Agency/City Trust
Deed to the Permanent Loan or any future refinancings thereof; provided, however, that any such
subordination to the Permanent Loan shall be evidenced by a recorded subordination agreement
containing such notice, cure, loan purchase or assumption and Project purchase rights as may be
reasonably required by the Agency/City in a form to be approved by the Agency/City's attorney,
which approval shall not be unreasonably withheld.
4.11 Borrower's Evidence of Financial Capability.
The anticipated sources and uses af funds for acquisition af the Property and construction of the
Project are set forth in the Project Budget (Exhibit F). The financial projections for the Project are
set forth in the Project Pro Forma (Exhibit G). The Agency/City acknowledges that the numbers in
the foregoing exhibits may change, subject to reasonable Agency/City approval of such changes.
Upon request but in no event later than the disbursement of the Agency/City Loan proceeds,
Borrower shall submit to the Agency/City Housing Manager evidence reasonably satisfactory to the
Agency/City Housing Manager that Borrower has the financial capability necessary for the
acquisition of the Property and the construction of the Project thereon in accordance with this
Agreement, the Project Budget, and the Project Pro Forma. Such evidence of financial capability
shall include the following:
a. Copy of the partnership agreement, funding agreement, and other documents
evidencing commitments for equity financing.
b. Copy of the construction contract between Borrower and its general contractor for all
of the improvements required to be constructed by Borrower hereunder, which shall be deemed to be
certified by Borrower to be a true and correct copy thereof.
c. Copy of the regulatory agreement to be required by TCAC, and other verifiable
documentation that Borrower will receive an allocation of "4%" low income housing tax credits with
respect to the Project.
I-/«g'
4.12 Reports and Accounting of Residual Receipts.
a. In connection with the annual repayment of the Agency/City Loan, commencing
upon the Initial Payment Date, the Borrower shall furnish the Agency/City with an audited statement
duly certified by an independent firm of certified public accountants approved by the Agency/City,
setting forth in reasonable detail the computation and amount of Residual Receipts during the
preceding calendar year.
b. The Borrower shall keep and maintain in accordance with Section 14.4 hereof full,
complete and appropriate books, records and accounts necessary or prudent to evidence and
substantiate in full detail Borrower's calculation of Residual Receipts. All such books, records, and
accounts shall be open to and available for inspection by the Agency/City, its auditors or other
authorized representatives in accordance with Section 14.4 hereof.
ARTICLE 5
Agency/City Note and Deed of Trust
5.1 Security for Loan.
Borrower's obligations to pay the Agency/City Loan shall be evidenced by the Agency/City Note,
and shall be subject to the terms and conditions contained therein. The Agency/City Note shall
provide for simple interest at the rate of three percent (3%) per annum. Among other things, the
Agency/City Note shall further provide that the Agency/City Note is non-recourse and that payments
of principal and interest shall be made only from fifty percent (50%) of the Residual Receipts (as
defined in Article 4 hereof).
The Note shall be secured by the Agency/City Trust Deed encumbering the Property as
priority deed oftrus!. The Agency/City Trust Deed shall further provide that
occurrence any material breach or default under this Agreement shall constitute a "default" or
"event of default" under the Agency/City Trust Deed. Prior to the close of escrow for the Borrower's
acquisition of the Property, Borrower shall execute and deliver to Agency/City the Agency/City Note
and the Agency/City Trust Deed. The Agency/City Trust Deed shall be recorded with the Office of
the San Diego County Recorder in accordance with Agency/City's instructions to escrow. Borrower
shall be responsible for any and all of Agency/City's escrow, title and recording costs arising in
connection with the Agency/City Loan, such costs to be paid by Borrower through escrow.
5.2 Nonrecourse Obligation.
Nothing herein contained shall be deemed to cause Borrower (or any of its partners, or any of their
respective directors, officers, employees, partners, principals or members) personally to be liable to
payor perform any of its obligations evidenced hereby, and the Agency/City shall not seek any
personal or deficiency judgment on such obligations, and the sole remedy of the Agency/City with
respect to the repayment of the Agency/City Loan shall be against the Property; provided, however,
that the foregoing shall not in any way affect any rights the Agency/City may have (as a secured
party or otherwise) hereunder or under the Agency/City Note or Agency/City Trust Deed, or any
other rights the Agency/City may have to: (a) recover directly from the Borrower any funds,
damages or costs (including, without limitation, reasonable attorneys' fees and costs) incurred by the
Agency/City as a result of fraud, intentional misrepresentation or intentional waste by Borrower; or
(b) recover directly from the Borrower any candemnation or insurance proceeds, or other similar
/-119
funds or payments attributable to the Property which under the terms of the Agency/City Trust Deed
should have been paid to the Agency/City and any costs and expenses incurred by the Agency/City in
connection therewith (including, without limitation, reasonable attorneys' fees and costs).
ARTICLE 6
Disbursement of Agency/City Development Loan
6.1 Disbursement.
The Loan Proceeds shall be disbursed on behalf of Borrower in the escrow established
for Borrower's
ARTICLE 7
California Community Redevelopment Law Requirements
7.1 Requirements.
Because one source of the Agency/City Loan is the Agency's Low and Moderate-Income Housing
Fund, Borrower is required to acquire, rehabilitate and operate the Project in compliance with all
requirements of California Community Redevelopment Law (Health and Safety Code, Division 24),
as said code may be amended or suspended from time to time.
Not by way of limitation of the foregoing, in compliance with Health and Safety Code, Division 24,
from the Effective Date of this Agreement through the end of the term that the units are required to
remain affordable pursuant to the California Community Redevelopment Law, Borrower, as the
operating entity, shall comply with all of the following requirements:
a. Use of the Agency Low and Moderate Income Housing Funds. Low and Moderate
Income Housing Funds shall be used only far eligible costs (see, e.g., Health and
Safety Code Section 33334.3) in accordance with the Project Budget and Project Pro
Forma; all acquisition and development activities shall be completed within the times
referenced in the Schedule of Performance attached hereto, as said times may be
extended in accordance with Sections lOA and 14.3 hereof.
b. Affordability. The units shall meet the affordability requirements set forth in Section
IL2 herein.
c. Housing Standards. Borrower shall maintain units in compliance with local housing
code requirements or the provisions of this Agreement, whichever requirements are
more restrictive.
d. Records and Reports. In addition to the other provisions ofthis Agreement, including
without limitation Section 4.12(b) hereof, Borrower shall provide to Agency all
records and reports relating to the Project that may be reasonably requested by
Agency in order to enable it to perform its recordkeeping and reporting obligations
pursuant to Health and Safety Code Sections 33080.1 and 33418.
!-(~O
e. Enforcement of Agreement. In addition to the other provisions set forth herein,
Agency shall have the authority to enforce Borrower's obligation to comply with the
California Community Redevelopment Law as set forth in this Agreement.
f. Duration of Covenants. In accordance with Health and Safety Code Section 33334.3,
the covenants in this Section 7.1 relating to Borrower's compliance with the
California Community Redevelopment Law shall remain in effect for the longest
feasible time but not less than a period of at least fifty-five (55) years from the date of
the City's issuance of the final Certificate of Completion for the Project.
g. Monitoring. Not less than once every two years during the period covered by this
Section 7.1, Agency may review Borrower's activities and operations under this
Agreement and Borrower's compliance with the requirements of the California
Cammunity Redevelopment Law, including, but not limited to, Borrower's
compliance with the requirements of this Section 7.1. Such review may include an
on-site inspection of the Project (including unit interiors, subject, however, to the
rights of tenants in possession). If such an on-site inspection of the Project is to be
undertaken, Agency shall coordinate such inspection with Borrower and/or the
Property Manager.
ARTICLE 8
HOME Requirements
8.1 Requirements.
Because the source of the City Loan is funds to be obtained by City from HUD pursuant to the federal
government's HOME Program, Developer is required to construct and operate the Project in compliance
with all requirements of the HOME Program and the HOME Regulations (24 C.F.R. ' 92 ~ ~.), as said
regulations may be amended or suspended from time to time.
Not by way of limitation of the foregoing, in compliance with 24 C.F.R. ' 92.504(c), from the Effective
Date of this Agreement through the end of the tenn that the HOME-assisted units are required to remain
affordable pursuant to the HOME Regulations, Developer, as the operating entity, shall comply with all of
the following requirements:
a. Use of the HOME Funds. HOME funds shall be used only for eligible costs (see, e.g., 24
C.F.R. ' , 92.206,92.214) in accordance with the Project Budget and Project Pro Forma;
all pre-construction and construction activities shall be completed within the times
referenced in the Schedule of Perfonnance attached hereto, as said times may be
extended in accordance with
b. Affordability. The HOME-assisted units shall meet the affordability requirements of the
HOME Regulations (24 C.F.R. ' 92.252), the TCAC Regulatory Agreement (as defined
or this Agreement, whichever is more restrictive, as more particularly set forth in
herein.
c. Proiect Requirements. Developer shall comply with all project requirements set forth in
Sections 92.250-92.258 of the HOME Regulations, as applicable in accordance with the
type of project assisted, or with the provisions of this Agreement, whichever
requirements are more restrictive.
( -/:J-I
d. Housing Qualitv Standard. Developer shall maintain HOME-assisted units in compliance
with applicable Housing Quality Standards and local housing code requirements or the
provisions of this Agreement, whichever requirements are more restrictive.
e. Developer shall perform those affirmative marketing
set in 24 C.F.R. ' 92.351 or in the marketing plan described in
of this Agreement, whichever are more restrictive.
f. Records and Reports. In addition to the other provisions of this Agreement, including
without limitation Section hereof, Developer shall provide to City all records and
reports relating to the may be reasonably requested by City in order to enable
it to perform its record keeping and reporting obligations pursuant to Sections 92.508 and
92.509 of the HOME Regulations.
g. Enforcement of Agreement. In addition to the other provisions set forth herein, City shall
have the authority to enforce Developer's obligation to comply with the HOME
Investment Partnerships Program and the HOME Regulations as set forth in this
Agreement.
h. Duration of Covenants Re HOME-Assisted Units. In accordance with 24 C.F.R. Sections
92.252(e) and 92.504(c)(3)(ix), the covenants in this Section relating to Developer's
compliance with the HOME Investment Partnerships and the HOME
Regulations shall remain in effect for a period of at least twenty years after project
completion.
i. Monitoring. Not less than once every two years during the period covered by this Section
2.7, City may review Developer's activities and operations under this Agreement and
Developer's compliance with the requirements of the HOME Investment Partnerships
Program and the HOME Regulations, including, but not limited to, Developer's
compliance with the requirements of this Section iliillilllliill. Such review may include an on-
site inspection of the Project (including unit interiors). If such an on-site inspection of
the Project is to be undertaken, City shall coordinate such inspection with Developer
and/or the Property Manager. The monitoring required pursuant to this paragraph shall
be in compliance with the requirements of24 C.F.R. ' 92.504(d).
ARTICLE 9
Development Fee
9.1 Development Fee.
Avalon Communities, LLC, a California limited liability company ("Developer"), shall be entitled to
a development fee, which includes general overhead and profit, in the amount which does not exceed
the amount set forth therefor in the Sources and Uses, Project Budget and Pro Forma attached hereto,
and in no event greater than the maximum amount permitted pursuant to the Low Income Housing
Tax Credit statutes and regulations (the "Development Fee"). It is anticipated that a portion of the
Development Fee shall be paid by Borrower from the proceeds of the financing for the acquisition
and construction of the Project upon the close of such financing, with the balance of the
Development Fee (the "Deferred Development Fee") to be paid from Gross Revenue of the Project
and equity contributians to Borrower made after the closing. The Borrower's obligation to pay the
I-Id-d.-
Deferred Development Fee shall be evidenced by a promissory note (the "Deferred Development Fee
Note"). In the event there are any cost savings realized in the construction of the Project, all
available funds attributable to such cost savings shall also be applied to the Deferred Development
Fee. Regular payments on the Deferred Development Fee Note shall be made on an annual basis out
of the Gross Revenues of the Project. Such amounts shall be paid to Developer on a priority basis to
all other debt service on the Property except for the Permanent Loan. Developer shall specifically be
entitled to payment of the Deferred Development Fee before payment of the amounts due to
Agency/City pursuant to the Agency/City Note. The Deferred Development Fee Note shall not be
secured by any liens upon the Property.
ARTICLE 10
Development of the Project
10.1 Work to be Performed.
Borrower agrees to develop the Property so that it consists of a multi-family residential project
consisting of 106 units, and to operate the Project for occupancy by very low, lower and low and
moderate income households, subject to the terms of this Agreement, the Scope of Work attached
hereto as Exhibit I and incorporated herein, the Permanent Loan Documents, the Affordable Housing
Agreement, and the Regulatory Agreement (the "Project"). The Project shall consist of
approved by the City in connection with issuance of the building permit(s), and with the terms of and
conditions of all land use permits and approvals required by the City to the extent such permits and
approvals are required by applicable law. The Project's units and occupancy shall be restricted in
accordance with the terms of this Agreement. If Borrower desires to make any change in any
construction or building plans after the same have been approved, Borrower shall submit the
proposed change to the appropriate body for approval, if and to the extent required by applicable law.
Borrower shall be responsible for all construction and installation and for obtaining all the necessary
permits.
10.2 Compliance with Permits and Laws.
Borrower and its contractors shall carry out the development of the Project and operation of the
Project in conformity with all applicable laws, regulations, and rules of the governmental agencies
having jurisdiction, including without limitation all legally applicable conditions and requirements of
California Community Redevelopment Law (Health and Safety Code, Division 24); all legally
applicable prevailing wage requirements, if any, the applicability of which is for Borrower to
determine, pursuant to federal and state law, including California Labor Code §1770 et seq.; all
legally applicable conditions and requirements imposed by the Low Income Housing Tax Credit
Program; all legally applicable labor standards; the legally applicable provisions of the City zoning
and development standards, building, plumbing, mechanical and electrical codes, and all other
provisions of the City Municipal Code, and all legally applicable disabled and handicapped access
requirements, which may include, without limitation, the Americans With Disabilities Act, 42 U.S.C.
Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section I I 135, et
seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California Building
Standards Code, Health and Safety Code Section 18900, et seq., and Agency/City policies adopted
pursuant to said federal standard regulations and requirements. Borrower shall not take any action
which would cause the Project to be construed as a low rent housing project under Article XXXIV of
16 (-/.23
the California Constitution or otherwise be in violation of Article XXXIV of the California
Constitution.
The work shall proceed anly after procurement of each permit, license, or other authorization that
may be required under applicable law by any governmental Agency/City having jurisdiction, and the
Borrower shall be responsible to the Agency/City for procurement and maintenance thereof, as may
be required of the Borrower and all entities engaged in work on the Project.
10.3 Costs of Development.
Subject to the terms and conditions of this Agreement, Borrower shall be responsible for all costs of
developing the Project, including but not limited to predevelopment costs incurred for items such as
planning, design, engineering, and environmental remediation; all development and building fees; the
cost incurred to demolish and clear any and all existing improvements, furnishings, fixtures, and
equipment from the Property; costs for insurance and bonds (as required); costs for financing;
preparation afthe Property for construction; and all on-site construction costs. This Agreement does
not require Borrower to construct any off-site improvements. Borrower shall be responsible for
verifying the adequacy and availability of all utilities. If at any time during the course of the
development of the Project, Borrower exhausts fifty percent (50%) or more of the contingency
amounts set forth in the Project Budget, Agency/City shall have the right, but not the obligation, to
approve any additional cost overruns (unless such approval has been obtained from the Permanent
Lender), which approval shall not be unreasonably withheld.
lOA Schedule of Performance: Progress Reports.
Subject to Section 14.3, Borrower shall begin and complete all construction within the times
specified in the Schedule of Performance, subject to any extension granted by Agency/City, which
extension shall not unreasonably be withheld upon the written request of the Borrower. Once
construction has commenced, it shall be continuously and diligently pursued to completion, and shall
not be abandoned for more than fifteen (15) consecutive business days, except when due to causes
beyond the control and without the fault of Borrower, as set forth in Section 14.3 of this Agreement.
During the course of the construction, and prior to the completion of the Project, Borrower shall keep
Agency/City informed of the progress of the construction on the Property and, if requested, shall
provide Agency/City with monthly written progress reports and meet with Agency/City staff as
appropriate. If requested, Borrower shall furnish a construction schedule to Agency/City indicating
completion dates for each portion of work showing progress toward completion of the Project.
After completion of construction of the Project and within the time set forth in the Schedule of
Performance (as it may be revised as provided above), Borrower shall provide the Agency/City
Housing Manager a true and correct copy of the final cost certification submitted to TCAC
concerning the construction of the Project on the Property. Borrower shall provide additional cost
information as may be reasonably requested by the Agency/City Housing Manager to permit the
Agency/City Housing Manager to make such determinations as is reasonably required for
Agency/City to verify Borrower's conformance to this Agreement and the Scope of Work, as it may
be revised by mutual agreement of the parties from time to time during the course of the
construction.
17 I -( ~4-
10.5 Anti-discrimination.
Borrower, for itself and its successors and assigns, agrees that Borrower will not discriminate against
any employee or applicant for employment because of race, color, creed, religion, sex, marital status,
ancestry, or national origin in connection with activities undertaken pursuant to this Agreement.
10.6 Right of Access.
For the purpose of assuring compliance with this Agreement, representatives of Agency/City upon
reasonable prior notice shall have the reasonable right of access to the Property, without charges or
fees, at normal construction hours during the period of construction for the purposes of this
Agreement, including but not limited to the inspection of the work being performed by Borrower in
rehabilitating the Project. Such representatives of Agency/City shall be those who are so identified
in writing by the Housing Manager. Agency/City shall indemnity, defend, and hold harmless
Borrower and Borrower's officers, employees, and agents from any damage caused or liability
arising out of the sole negligence or willful misconduct of Agency/City or its officers, officials,
employees, volunteers, agents, or representatives in their exercise of this right of access; provided
that it is understood that Agency/City does not by this Section 10.6 assume any responsibility or
liability for a negligent inspection or failure to inspect. Any inspectian by Agency/City pursuant to
this section shall be conducted so as not to interfere or impede the construction or operations of the
Project.
10.7 Mechanics Liens, Stop Notices, and Notices of Completion.
a. Subject to Borrower's right to contest set forth in Section 11.4 of this Agreement, if
any claim or lien is filed against the Project or a stop notice affecting the Agency/City Loan is served
on the Agency/City or any other lender or other third party in connection with the Project, then the
Borrower shall, within thirty (30) days after such filing or service, either pay and fully discharge the
lien or stop notice, effect the release of such lien or stop notice by delivering to the Agency/City a
surety bond in sufficient form and amount, or provide the Agency/City with other assurance
satisfactory to the Agency/City that the claim of lien or stop notice will be paid or discharged.
b. If Borrower fails to discharge any lien, encumbrance, charge, or claim in the manner
required in Section 10.7 (a), then in addition to any other right or remedy, the Agency/City may (but
shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Borrower's
expense. Alternately, the Agency/City may require the Borrower to immediately deposit with the
Agency/City the amount necessary to satisfy such lien or claim and any costs pending resolution
thereof. The Agency/City shall use such deposit to satisfy any claim or lien that is adversely
determined against the Borrower.
c. The Borrower shall file a valid notice of cessation or notice of completion upon
cessation of construction on the Project for a continuous period of thirty (30) days or more, and take
all other reasonable steps to forestall the assertion of claims of lien against the Project. The
Borrower authorizes the Agency/City, but without any obligation, to record any notices of
completion or cessation of labor, or any other appropriate notice that the Agency/City deems
necessary or desirable to protect its respective interest in the Project.
18 I -/25:
10.8 Certificate of Completion.
Upon Borrower's satisfactory completion of construction of the Project, Agency/City shall furnish
Borrower with a Certificate of Completion upon written request therefor by Borrower. Such
Certificate of Completion shall be in a form so as to permit recordation in the Office of the Recorder
of the County af San Diego as set forth in Exhibit G which is incorporated herein.
The Certificate of Completion shall be, and shall so state, a conclusive determination of satisfactory
completion of the construction of the Project and offull compliance with the terms of this Agreement
relating to such construction. After the date of the issuance of the Certificate of Completion, and
notwithstanding any other provisions of this Agreement to the contrary, any party then owning or
thereafter purchasing, leasing, or otherwise acquiring any interest in the Property shall not (because
of such ownership, purchase, lease, or acquisition) incur any obligation or liability under this
Agreement for the construction of the Project. Agency/City shall not unreasonably withhold the
Certificate of Completion. If Agency/City refuses or fails to furnish the Certificate of Completion
after written request from Borrower, Agency/City shall, within fifteen (15) days after such written
request, provide Borrower with a written statement of the reasons Agency/City refused or failed to
furnish such Certificate of Completion. The statement shall also contain Agency/City's opinion of
the action Borrower must take to obtain such Certificate of Completion. If the reason for such
refusal is confined to the immediate availability of specific items or materials for landscaping,
Agency/City shall issue its Certificate of Completion upon the posting of cash deposit or an
irrevocable letter of credit in favor of Agency/City in an amount representing the fair value of the
work not yet completed and in a form reasonably acceptable to Agency/City's attorney. A
Certificate of Completion is not a notice of completion as referred to in California Civil Code Section
3093.
10.9 Estoppels.
At the request of Borrower or any holder af a martgage or deed of trust, Agency/City shall, from
time to time and upon the request of such holder, timely execute and deliver to Borrower or such
holder a written statement of Agency/City that no default or breach exists (or would exist with the
passage of time, or giving of notice, or both) by Borrower under this Agreement, the Agency/City
Note, the Agency/City Trust Deed and/or the Affordable Housing Agreement, if such be the case,
and certifying as to whether or not Borrower has at the date of such certification complied with any
obligation of Borrower hereunder or under such of those documents as to which such holder may
inquire. The form of any estoppel letter shall be prepared by the holder or Borrower.
19 /-IJ.-(p
ARTICLE 11
Uses Of The Property
11.1 Summary.
Borrower covenants and agrees for itself and its successors and assigns to its interest in the Property
that Borrower and such successors and assigns shall devote the Property ta uses consistent with
California Community Redevelopment Law, the Permanent Loan Documents, the Regulatory
Agreement, the Affordable Housing Agreement, the Agency/City Trust Deed, and this Agreement,
whichever is most restrictive, for a period ending fifty-five (55) years from the date of the
Agency/City's issuance afthe final Certificate of Completion for the Project. Agency/City shall be a
third-party beneficiary under the Regulatory Agreement and shall have full authority to enforce any
breach or default by Borrower under such agreement in the same manner as though it were a breach
or default hereunder. Without Agency/City's prior written consent, which consent may be withheld
in Agency/City's sole and absolute discretion, Borrower shall not consent to any amendment of or
modification to the TCAC Regulatory Agreement or Regulatory Agreement which (i) shortens the
term of the affordability restrictions on the units in the Project to a term of less than fifty-five (55)
years after the date of the Agency/City's issuance of the final Certificate of Completion for the
Project or (ii) madifies the number of units required to be rented at affordable housing costs to
persons of specified incomes.
11.2 Affordable Housing.
Borrower covenants and agrees for itself and its successors and assigns to its interest in the Property
that commencing upon the completion of the Project and continuing thereafter for a period of fifty-
five (55) years from the date of the Agency/City's issuance of the final Certificate of Completion for
the Project, Borrower and such successors and assigns shall devote one hundred five (105) of the one
hundred six (106) of the residential units on the Property (hereinafter the "Restricted Units") to its
continuous use as affordable rental housing for very low, lower and low and moderate income
households in accordance with the terms of this Agreement [(the remaining unit may be occupied by
the on-site property manager)l, subject to the occupancy restrictions contained in this Section 11.2.
10 Restricted Units shall be made available to very low income households at or below 50 percent of
the Area Median Income ("AMI"), 41 Restricted Units shall be made available to lower-income
households at or below 60 percent of AMI, and 54 Restricted Units shall be made available to low
and moderate income households at or below 120 percent of AMI, all at an affordable rent. Up to
three of the Restricted Units may be rented or provided at an affordable rent to operational or
maintenance employees of the Property Manager who otherwise meet the income requirements
hereof which are applicable to their Restricted Units.
In determining income eligibility for a particular Restricted Unit, Borrower shall be entitled to rely
upon the documentation provided by the prospective tenant as required pursuant to the TCAC
Regulatory Agreement, Affordable Housing Agreement and Regulatory Agreement. Borrower shall
not be required to perform further investigations into the household income other than those which
are required pursuant to such agreements. Throughout this Agreement, wherever it is stated that
Borrower must comply with the affordability requirements and/or verify such compliance, Borrower
shall be entitled to rely upon the tenant documentation discussed in this paragraph.
In addition to the foregoing, the lease agreement for each Restricted Unit in the Project shall restrict
occupancy of the Restricted Unit to a total of five (5) persons for two bedroom units, seven (7)
20 (-(J--'7
persons for three bedroom units, and nine (9) persons for four bedroom apartment units. Any
violation of such restrictions shall constitute a default by the tenant, unless such occupancy
restriction is found invalid by a court of competent jurisdiction in a final non-appealable judgment in
a lawsuit in which the Project's occupancy restriction is at-issue, or in an applicable and binding
published appellate opinion, or by statute, regulation or other binding court order.
Notwithstanding the maximum income requirements of this Agreement, no tenants whose tenancy
commenced prior to the date of Borrower's acquisition of the Property shall be required to vacate
their units solely because their income exceeds the maximum income levels required hereunder.
Upon yacation of any apartment initially occupied by an ineligible household, that unit shall be
rented to an eligible household at the rents required hereunder.
11.3 Reports.
Borrower, at its expense, shall submit, or cause the Property Manager to submit, to the appropriate
entities any and all reports required to be submitted pursuant to California Community
Redevelopment Law.
I\.4 Subordination of Affordability Covenants.
In the event that the Agency/City finds that an economically feasible method of financing for the
construction and operation of the Project, without the subordination of the affordable housing
covenants as may be set forth in this Agreement, is not reasonably available, the Agency/City shall
make the affordable housing covenants set forth in this Agreement junior and subordinate to the
deeds of trust and other documents required in connection with the construction and permanent
financing for the Project approved pursuant to this Agreement, and the TCAC Regulatory
Agreement. Any subordination agreement entered into by the Agency/City shall contain written
commitments which the Agency/City finds are reasonably designed to protect Agency/City's
investment in the event of default, such as any of the following: (a) a right of Agency/City to cure a
default on the laan prior to fareclosure, (b) a right of Agency/City to negotiate with the lender after
notice of default from the lender and prior to foreclosure, (c) an agreement that if prior to foreclosure
of the loan, Agency/City takes title to the property and cures the default on the loan, the lender will
not exercise any right it may have to accelerate the loan by reason of the transfer of title to
Agency/City, and (d) a right of Agency/City to reacquire the Property from the Borrower at any time
after a material default on the loan.
1\.5 Condition of the Property.
a. Borrower hereby represents that to the best of its knowledge, except as otherwise
disclosed to the Agency/City in writing, it is not aware of and has not received any notice or
communication from any government Agency/City having jurisdiction over the Property notifying
Borrower of the presence of surface or subsurface zone Hazardous Materials in, on, or under the
Property, or any portion thereof. "Best knowledge," as used herein, shall mean the actual knowledge
of the Borrower and its officers, directors, employees, agents and representatives, as based upon the
documents and materials in the possession of Borrower, and its officers, employees, agents and
representatives, including the site investigation repart or study referred to in Section 11.5(b) herein.
b. In addition to the foregoing, the Borrower has, at its sole cost and expense, engaged
its own environmental consultant to conduct a Phase I investigation of the Property and produce a
21 !-/";...:r
report thereof, a copy of which has been provided to the Agency/City by Borrower. Such report
concludes that no Hazardous Materials have been detected on the Property.
c. Borrower shall take all necessary precautions to prevent the release into the
environment of any Hazardous Materials which may be located in, on or under the Property. Such
precautions shall include compliance with all Governmental Requirements with respect to Hazardous
Materials. In addition, Borrower shall install and utilize such equipment and implement and adhere
to such procedures as are consistent with commercially reasonable standards as respects the
disclosure, storage, use, removal and disposal of Hazardous Materials.
d. Borrower shall indemnify, defend and hold Agency/City harmless from and against
any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive
damage, or expense (including, without limitation, reasonable attorneys' fees), resulting from, arising
out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous
Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the
Property, no matter when such claim, action, suit or proceeding is first asserted or begun and no
matter how the Hazardous Materials came to be released, used, generated, discharged, stored or
disposed of on, under, in or about, to or from the Property, or by whom or how they are discovered,
or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit,
judgment or license relating to the use, generation, release, discharge, storage, disposal or
transportation of Hazardous Materials on, under, in or about, to or from, the Property. This
indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity
after closing, cost or expense arising from or aut of any claim, action, suit or proceeding, including
injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or
death), tangible or intangible property damage, compensation for lost wages, business income, profits
or other economic loss, damage to the natural resource or the environment, nuisance, contamination,
leak, spill, release or other adverse effect on the environment.
e. For purposes of this Agreement, "Hazardous Materials" means any substance,
material, or waste which is or becomes regulated by any local governmental authority, San Diego
County, the State of California, regional governmental authority, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous waste,"
"extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25 I 17 or
25122.7, or listed pursuant to Section 25130 of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section
253 I 6 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner
Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance,"
or "hazardous waste" under Sectian 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos,
(vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or
defined as "hazardous" or "extremely hazardous" pursuant to Article I I of Title 22 of the California
Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardaus substances" pursuant to
Section 3 I I of the Clean Water Act (33 V.S.C. § 1317), (xi) defined as a "hazardous waste" pursuant
to Section 1004 of the Resource Conservation and Recovery Act, 42 V.S.C. §690 I, et seq. (42 V.S.C.
§6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive
Environmental Respanse, Compensation, and Liability Act, 42 V.S.C. §9601, et seq.
22 /-/2-'1
11.6 Marketing Plan.
Borrower shall submit for the approval of the Agency/City, which approval shall not unreasonably be
withheld, a plan for marketing the rental of the apartment units in compliance with federal and state
fair housing law. Such marketing plan shall include a plan for publicizing the availability of the
apartment units within the City, such as notices in any City sponsored newsletter, newspaper
advertising in local newspapers and notices in City offices. The marketing plan shall require
Borrower to obtain from the Agency/City the names of low- and moderate-income households who
have been displaced by the Agency/City's redevelopment projects, and to notify persons on such list
of the availability of units in the Project prior to undertaking other fonns of marketing. The
marketing plan shall provide that the persons on such list of displaced persons be given not fewer
than ten (10) days after receipt of such notice to respond by completing application fonns for rental
of apartment units, as applicable.
11.7 Maintenance of Property.
Borrower agrees for itself and its successors in interest to all or any portion of the Property, to
maintain the improvements an the Property in conformity with applicable provisions of the City
Municipal Code, and shall keep the Property free from any accumulation of debris or waste
materials. During such period, the Borrower shall also maintain the landscaping planted on the
Property in a healthy condition. If at any time Borrower fails to maintain the Property and such
condition is not carrected within five days after written notice from Agency/City with respect to
graffiti, debris, waste material, and general maintenance, or thirty days after written notice from
Agency/City with respect ta landscaping and building improvements, then Agency/City, in addition
to whatever remedy it may have at law or at equity, but subject to the rights of the Permanent Lender,
shall have the right to enter upon the applicable portion of the Property and perfonn all acts and work
necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property,
and to attach a lien upon the Property, or to assess the Property, in the amount of the expenditures
arising from such acts and work of protection, maintenance, and preservation by Agency/City and/or
costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall be
promptly paid by Borrower to Agency/City upon demand.
11.8 Property Management.
The parties acknowledge that the Agency/City is interested in the long tenn management and
operation of the Property and in the qualifications of any person or entity retained by the Borrower
for that purpose (the "Property Manager"). Therefore, during the period of the effectiveness of the
affardability cavenants set farth herein, the Agency/City may from time to time review and evaluate
the identity and perfonnance of the Property Manager as it deems appropriate. If the Agency/City
detennines that the perfonnance of the Property Manager is materially deficient based upon the
standards and requirements set forth in this Section 11.8 and the approved Management Plan (as
defined below), the Agency/City shall provide notice to the Borrower of such deficiencies and the
Borrower shall use its best efforts to correct such deficiencies within a reasonable period of time.
Upon the failure of the Property Manager to cure such deficiencies within the time set forth herein,
the Agency/City shall have the right to require the Borrower to immediately remove and replace the
Property Manager with another property manager or property management company who is
reasonably acceptable to the Agency/City, who is not related to or affiliated with the Borrower, and
who has not less than five (5) years experience in property management, including experience
managing multifamily residential developments of the size, quality and scope of the Property.
23 /-(3AJ
In addition, the Borrower shall submit for the reasonable approval of the Agency/City
a detailed "Management Plan" which sets forth in reasonable detail the duties of the Property
Manager, the tenant selection process, a security system and crime prevention program, the
procedures for the collection of rent, the procedures for monitoring of occupancy levels, the
procedures for eviction of tenants, the rules and regulations of the Property and manner of
enforcement, a standard lease fonn, and other matters relevant to the management of the Property.
The management plan shall require the Property Manager to adhere to a fair lease and grievance
procedure and provide a plan for tenant participation in management decisions. The management of
the Property shall be in compliance with the Management Plan which is approved by the
Agency/City, subject, however, to any requirements of the Penn anent Lender pursuant to the
Pennanent Loan Documents. The Management Plan may be revised from time to time upon the
approval of the Agency/City and the Borrower.
11.9 Affordable Housing Agreement.
Certain requirements with respect to the affordable housing obligations and other operational and
maintenance obligations of the Project are set forth in the Affordable Housing Agreement. The
execution and recordation of the Affordable Housing Agreement is a condition precedent to the
disbursement of the Agency/City Loan, as set forth in Section 4.3 hereof.
ARTICLE 12
Continuing Obligations of Borrower
12.1 Applicability.
For the entire term of the requirements set forth in Section 12. I hereof, the Borrower shall comply
with the provisions of this Article 12.
12.2 Insurance.
Within ten (10) days after the Borrower's acquisition of the Property, Borrower shall furnish to the
Agency/City duplicate originals or appropriate certificates of insurance coverage evidencing that
Borrower has obtained, or cause to be obtained, insurance coverage with respect to the Property and
Project in type, amount and from insurers with Best's ratings as are reasonably acceptable to
Agency/City (or have been approved by the Pennanent Lender), naming the Agency/City and its
officers, agents, employees, representatives and their respective successors, as named or additional
insureds by appropriate endorsements. Such policy shall include, without limitation "all risk"
property casualty insurance and comprehensive general liability insurance. Without limiting the
generality of the foregoing, such policy shall also include coverage to insure Barrower's indemnity
obligations provided herein. Borrower covenants and agrees for itself and its successors and assigns
that Borrower and such successors and assigns shall keep such liability policy in full force and effect
until the date that is fifty-five (55) years from the date of the Agency/City's issuance of the final
Certificate of Completion for the Project.
In addition to any other remedy which Agency/City may have hereunder for Borrower's failure to
procure, maintain, and/or pay for the insurance required herein, Agency/City may (but without any
obligation to do so, and subject to the rights of the Permanent Lender under the Pennanent Loan
Documents) at any time or from time to time, after thirty (30) days written notice to Borrower,
procure such insurance and pay the premiums therefor, in which event Borrower shall immediately
24 1-/3/
repay Agency/City all sums so paid by Agency/City together with interest thereon at the rate of ten
percent (10%) per annum or the maximum legal rate, whichever is less.
12.3 Proceeds of Insurance.
Should the Project be totally or partially destroyed or rendered wholly or partly uninhabitable by fire
or other casualty required to be insured against by Borrower, Borrower shall promptly proceed to
obtain insurance proceeds and take all steps necessary to promptly and diligently commence the
repair or replacement of the Project to substantially the same condition as the Project is required to be
maintained in pursuant to this Agreement if (i) the Borrower agrees in writing within ninety (90)
days after payment of the proceeds that such repair or rebuilding is econamically feasible, and (ii) the
Permanent Lender permits such repair or rebuilding, provided that the extent of Borrower's
obligation to restore the Project shall be limited to the amount of the insurance proceeds actually
received by the Borrower. If the Borrower is unable or is not permitted to repair, replace, or restore
the Project, Borrower must give notice to Agency/City (in which event Borrower will be entitled to
all insurance proceeds, subject to any outstanding lien obligations, but Borrower shall be required to
remove all debris from the Property) and Borrower may construct such other improvements on the
Property as are consistent with applicable land use regulations and approved by the Agency/City and
the other governmental Agency/City or agencies with jurisdiction.
12.4 Taxes, Assessments, Encumbrances, and Liens.
Borrower shall pay prior ta delinquency all real estate taxes and assessments properly assessed and
levied on the Property.
Until the payment in full of all amounts owing under the Agency/City Note, Borrower shall not place
or allow to be placed thereon any mortgage, trust deed, encumbrance, or lien (except mechanic's
liens prior to suit to foreclose the same being filed) not authorized by this Agreement. Borrower
shall remove or have removed any levy or attachment made on the Property, or assure the satisfaction
thereof, within a reasonable time, but in any event prior to a sale thereunder.
Nothing herein contained shall be deemed to prohibit Borrower from contesting the validity or
amounts of any tax, assessment, encumbrance, or lien, nor to limit the remedies available to
Borrower in respect thereto.
12.5 Hold Harmless.
Borrower agrees to indemnify, protect, defend and hold harmless Agency/City, and Agency/City's
officers, agents, employees, representatives and successors, from and against any and all claims,
damages, actions, costs, demands, expenses or liability, including without limitation, reasonable
attorneys' fees and court costs, which may arise from the direct or indirect actions or inactions ofthe
Borrower or those of its contractors, sub-contractors, agents, employees or other persons acting on
Borrowers' behalf which relate to the Property or Project. This hold harmless agreement applies,
without limitation, to all damages and claims for damages suffered or alleged to have been suffered
by reasons of the operations referred ta in this paragraph, regardless of whether or not the
Agency/City prepared, supplied or approved plans or specifications, or both, for the Property or
Project. This indemnity by Borrower, and all other indemnities set forth herein shall survive any
foreclosure of the Property by the Agency/City pursuant to the terms of the Agency/City Trust Deed.
25 (-/3d-.
12.6 Further Indemnification of Agency/City.
It is understood and agreed that the parties hereto have entered this Agreement as a method of
providing necessary assistance to Borrower in connection with the construction of low and moderate
income housing and development of the Property pursuant to all applicable laws and that by
contributing public funds to assist in the accomplishment of such development, or by otherwise
contributing or assisting with the accomplishment of such development, the Agency/City assumes no
respansibility for insuring that the same is adequately undertaken (including, without limitation, the
existence and/or remediation of any hazardous or toxic substances on the Property) and as a material
consideration to Agency/City for entering into this Agreement (and not by way of limiting the
generality of Section 12.5 above) Borrower agrees to indemnify, protect, defend and hold harmless
Agency/City and all Agency/City's representatives, officers, employees and their respective
successors from and against any and all claims, damages, actions, demands, liabilities, obligations,
expenses, losses or costs, including without limitation, reasonable attorneys' fees and court costs,
which may arise or in any manner connected with the development of the Project pursuant to this
Agreement; excluding, however, from Borrower's indemnity any such liability, losses, damages
(including foreseeable or unforeseeable consequential damages), penalties, fines, expenses (including
out-of-pocket litigation costs and reasonable attorneys' fees) directly or indirectly arising out of the
actions of Agency/City ar its employees, contractors, subcantractors or agents.
12.7 Obligation to Refrain from Discrimination.
There shall be no discrimination against, or segregation of, any persons, or group of persons, on
account of race, color, creed, religion, sex, marital status, ancestry, or national arigin in the
enjoyment of the Property, nor shall Borrawer itself, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or segregation with reference to
the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or
vendees of the Property or any portion thereof. Borrower shall further comply with all the
requirements of the Americans with Disabilities Act.
12.8 Form of Nondiscrimination and Nonsegregation Clauses.
Borrower shall refrain from restricting the rental, sale, or lease of any portion of the Property, or
contracts relating to the Property, on the basis of race, color, creed, religion, sex, marital status,
ancestry, or national origin of any person and shall comply with all the requirements for the ADA.
All such deeds, leases or contracts, shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or herself, his or her
heirs, executors, administrators, and assigns, and all persons claiming under or through them, that
there shall be no discrimination against or segregation of any person or group of persons on account
of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the
grantee himself, or any persons claiming under or through him, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number, use, or
occupancy of tenants, lessees, subtenants, sub lessees, or vendees in the land herein conveyed and
further covenants that all such individuals and entities shall comply with all requirements of the
Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 V.S.C.
§12101, et seq.). The foregoing covenants shall run with the land."
26 I - / .33
b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assigns, and all persons claiming under or through him, and this lease
is made and accepted upon and subject to the following conditions: 'That there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring,
use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee himself, or any
person claiming under or through him, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or occupancy of
tenants, lessees, sublessees, subtenants, or vendees in the land herein lease and the lease shall be
carried out in compliance with all requirements of the Americans with Disabilities Act of 199O, as
the same may be amended from time to time (42 U.S.C. §121O1, et seq.).'"
c. In contracts: "There shall be no discrimination against or segregation of any persons
or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national
origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the
transferee himself, or any person claiming under ar 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, sub lessees, or vendees ofland and all such
activities shall be conducted in compliance with all the requirements of the Americans with
Disabilities Act of 199O, as the same may be amended from time to time (42 V.S.C. §12101, et
seq.)."
12.9. Effect of Covenants.
a. Unless sooner terminated by Agency/City as provided for herein, all covenants
contained herein shall run with the land and shall be extinguished and of no further force and effect
upon the fifty-second anniversary of the issuance of the Certificate of Completion for the Project by
the Agency/City, with the exception of the non-discrimination and non-segregation covenants which
shall run in perpetuity. The covenants established herein shall, without regard to technical
classification and designation, be binding on the part of Borrower and any successors and assigns to
the Property or any part thereof, and the tenants, lessees, sublessees and occupants of the Property,
for the benefit of and in favor of the Property and the Agency/City, its successors and assigns and
any successor in interest thereto. Agency/City is deemed the beneficiary of such covenants for and in
its own right and for the purposes of protecting the interest of the community and other parties,
public or private, in whose favor and for whose benefit of such covenants running with the land have
been provided, without regard to whether Agency/City has been, remained, or are owners of any
particular land or interest therein. Agency/City shall have the right to unilaterally terminate the
covenants at any time (subject to the TCAC Regulatory Agreement) or, if such covenants are
breached (subject to any cure rights provided herein) to exercise all rights and remedies and to
maintain any actions or suits at law or in equity or other proper proceedings ta enforce the curing of
such breaches to which it or any other beneficiaries of this Agreement and the covenants may be
entitled, including specific performance (it being recognized that the breach of such covenants cannot
be adequately compensated by monetary damages), and any and all remedies provided in the
Agency/City Trust Deed and the Agency/City Note including, without limitation, foreclosure
proceedings against the Property.
b. Without limiting the generality ofthe foregoing, in the event that there is a breach of
the terms of this Agreement or any covenants provided herein, the Agency/City shall have the right,
but not the obligation, to take any and all actions the Agency/City deems necessary, to cure such
27 ( -/3</
breach, including, without limitation, taking possession of the Property for management and/or repair
purposes, and to obtain reimbursement from Borrower for any reasonable costs incurred by the
Agency/City in the exercise of such remedy. Furthermore, Borrower hereby covenants by and for
itself, its successors and assigns and every person acquiring an interest in the Property, or any part
thereof, that Agency/City and other public agencies at their sole risk and expense, and subject to the
rights of tenants in possession, shall have the right to enter the Property or any part thereof at all
reasonable times and with as little interference as possible for the purposes of construction,
reconstruction, maintenance, repair or service of any public improvements or public facilities located
on the Property and to ensure compliance with the restrictions and covenants contained herein. Any
such entry shall be made only after reasonable notice to Borrower (provided, however, that entry to
ensure compliance with any restrictions may be without notice to Borrower) and, any damage or
injury to the Property resulting from such entry shall be promptly repaired at the sole expense of the
public Agency/City responsible for the entry except to the extent any such damage or injury arises as
a result of the negligence or willful misconduct of the Borrower or its officers, employees, agents,
invitees or contractors.
c. No violation or breach of the covenants, conditions, restrictions, provisions or
limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or
charge of any mortgage, deed of trust or other financing or security instrument; provided, however,
that any successor of Barrower ta the Property shall be bound by such remaining covenants,
conditions, restrictions, limitations and provisions, whether such successor's title was acquired by
foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. Failure to comply with the
covenants, conditions, restrictions, provisions or the limitation contained in this Agreement within
the time period required by Section 13.1 shall constitute a material default hereunder permitting the
Agency/City to exercise any of its rights or obligations provided hereunder, including, without
limitation, those provided under the Agency/City Note, or the Agency/City Trust Deed, or otherwise
provided at law or in equity.
12.10 Prohibition Against Assignment and Transfer.
The qualifications and identity of Borrower are of particular concern to Agency/City. It is because of
those qualifications and identity that Agency/City has entered into this Agreement with Borrower.
Accordingly, for a period commencing upon the date of this Agreement and ending on the date which
is fifty-five (55) years from the date af the Agency/City's issuance of the final Certificate of
Completion for the Project, Borrower, without Agency/City's prior written approval, shall not,
whether voluntarily, involuntarily, or by operation of law, and except as permitted in this Section
12.10, (I) undergo any significant change in ownership (including the sale or conveyance of any of
the general partnership interests in the Borrower), or (2) assign all or any part of this Agreement or
any rights hereunder, or (3) sell, lease, assign or otherwise convey all or any part of the Property or
Project, whether voluntarily, involuntarily, or by operation of law.
Notwithstanding the foregoing, the following shall not be considered a significant change in
ownership or an assignment or transfer and shall not require Agency/City approval for purposes of
this Section 12.10:
(i) Transfers to any entity or entities wholly owned and controlled by Borrower
or all of its partners.
28 1-/35:
(ii) The conveyance or dedication of portions of the Property to the Agency/City
or other appropriate governmental Agency/City for the formation of an assessment district, or the
granting of easements or permits to facilitate the development ofthe Property.
(iii) A sale or transfer of some or all of the limited partnership interests in the
Borrower.
(iv) The leasing of all or any apartment units to tenants in the ordinary course of
business.
(v) The leasing of furniture, fixtures or equipment in the ordinary course of
business, including, without limitation, laundry equipment and facilities, cable television equipment
and facilities, and vending machine equipment and facilities.
(vi) Transfers of property management responsibilities in accordance with Section
12.8 hereof, provided, however, that Borrower shall provide Agency/City thirty (30) days prior
written notice of any such management change, and that this exception shall be limited to transfers to
property managers with significant experience in managing projects similar to the Project.
Any such assignee shall be subject to all terms and conditions of this Agreement, including,
without limitation, all affordability restrictions concerning the occupancy of the Property.
Borrower shall deliver written notice to Agency/City requesting approval of any assignment
or transfer requiring Agency/City approval hereunder. Such notice shall be given prior to Borrower
entering into a formal written agreement with the proposed assignee.
In considering whether it will grant approval to any assignment by Borrower of its interest in
the Property or any portion thereof, which assignment requires Agency/City approval, Agency/City
shall consider factors such as (i) the financial strength and capability of the proposed assignee to
perform Borrower's obligations hereunder and (ii) the proposed assignee's experience and expertise
in the planning, financing, construction, development, and operation of similar projects.
No assignment, including assignments which do not require Agency/City approval hereunder,
but excluding assignments for financing purposes, shall be effective unless and until the proposed
assignee executes and delivers to Agency/City an agreement, in form satisfactory to the
Agency/City's attorney, assuming the obligations of the assignor which have been assigned.
Thereafter, the assignor shall be relieved of all responsibility to Agency/City for perfarmance of the
obligations assumed by the assignee.
No lender approved by Agency/City pursuant to Section 4 shall be required to execute an
assumption agreement and such lender's rights and obligations hereunder shall be as set forth in
Section 4.
12.10 Secured Financing; Right of Holders.
a. Permitted Encumbrances. Mortgages, deeds oftrust, conveyances, and leases-back or
any other form of conveyance required for any financing permitted and/or approved by the
Agency/City pursuant to Section 4 hereof are permitted before Agency/City's issuance of the
Certificate of Completion.
29 I-/B-~
b. Holder Not Obligated to Construct Improvements. The holder of any mortgage or
deed of trust or other security interest authorized by this Agreement shall in no way be obligated by
the provisions of this Agreement to construct or complete the improvements or to guarantee such
construction or completion; provided, however, that nothing in this Agreement shall be deemed or
construed to permit or authorize any such holder (with the exception of the holder of any deed of
trust securing the loan made from the proceeds of the Bonds) to devote the Property or any part
thereof to any uses, or to construct any improvements thereon, other than those uses or improvements
provided for or authorized by this Agreement.
c. Natice of Default to Mortgage, Deed of Trust or Other Secured Instrument Holders;
Right to Cure. Whenever Agency/City shall deliver any notice or demand to Borrower with respect
to any breach or default by Borrower hereof, Agency/City shall at the same time deliver a copy of
such notice or demand to each approved holder of record of any mortgage, deed of trust, or other
security instrument which has previously requested such notice in writing. Each such holder shall
(insofar as the rights of Agency/City are concerned) have the right, at its option within ninety (90)
days after the receipt for the notice, to commence and thereafter to diligently proceed to cure or
remedy such default and add the cost thereof to the security interest debt and the lien on its security
interest.
d. Right of Agency/City to Cure Mortgage, Deed of Trust, or Other Security Instrument
Default. In the event of a default or breach by Borrower of a martgage, deed of trust, or other
security instrument or lease-back or conveyance for financing prior to the issuance by City of the
Certificate of Completion for the Project, Agency/City may cure the default prior to completion of
any foreclosure. In such event, Agency/City shall be entitled to reimbursement from Borrower of all
costs and expenses reasonably incurred by Agency/City in curing the default, which right of
reimbursement shall be secured by a lien upon the Property to the extent of such costs and
disbursements. Any such lien shall be subject to:
(i) Any mortgage, deed of trust, or other security instrument or sale and lease-
back or other conveyance for financing permitted by this Agreement; ar
(ii) Any rights or interests provided in this Agreement for the protection of the
holders of such mortgages, deed of trust, or other security instruments, the lessor under a sale and
lease-back, or the grantee under such other conveyance for financing; provided that nothing herein
shall be deemed to impose upon Agency/City any affirmative obligations (by the payment of money,
construction, or otherwise) with respect to the Property in the event of its enforcement of its lien.
12.11 Right of Agency/City to Satisfy Liens.
Prior to the issuance by Agency/City of the Certificate of Completion for the Project, and after
Borrower has had a reasonable time to challenge, cure, or satisfy any liens or encumbrances on the
Property, Agency/City, after sixty (60) days prior written notice to Borrower, shall have the right, but
not the obligation, to satisfy any liens or encumbrances on the Property; provided, however, that
nothing in this Agreement shall require Borrower to payor make provision for the payment of any
tax, assessment, lien, or charge so long as Borrower in good faith shall contest the validity or amount
thereof, and so long as such delay in payment shall not subject the Property to forfeiture or sale.
30 (-/37
ARTICLE 13
Defaults, Remedies, And Termination
13.1 Defaults - General.
Subject to all of the extensions of time available in Section 14.3, failure or delay by any party to
perform any term or provision of this Agreement constitutes a default under this Agreement;
however, the party shall not be deemed to be in default if (i) such party cures, corrects, or remedies
such default within thirty (30) days after receipt of a notice specifying such failure or delay, or (ii) for
such defaults that cannot reasonably be cured, corrected, or remedied within thirty (30) days, if such
party commences to cure, correct, or remedy such failure or delay within thirty (30) days after receipt
of a notice specifying such failure or delay, and diligently prosecutes such cure, correction or remedy
to completion.
The injured party shall give written notice of default to the party in default, specifying the default
complained of by the injured party. Copies of any notice of default given to Borrower shall also be
delivered to the Pennanent Lender and any other pennitted lender requesting such notice. Except as
provided in Section 13.3 herein or as required to protect against further damages, the injured party
may not institute proceedings against the party in default until thirty (30) days after giving such
notice. Except as otherwise expressly provided in this Agreement, any failure or delay in giving such
notice or in asserting any of its rights and remedies as to any default shall not constitute a waiver of
any default, nor shall it change the time of default, nor shall it deprive either party of its rights to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert or
enforce any such rights or remedies.
13.2 Termination.
13.2.1 Termination bv Agency/City.
Notwithstanding any other provision of this Agreement to the contrary, in the event that the
Agency/City is not in default under this Agreement, Agency/City shall have the right to terminate
this Agreement prior to disbursement of the Agency/City Loan upon written notice to the other
parties if: (i) Borrower commits a material default hereunder and fails to cure said default within the
time specified in Section 13.1 hereof; or (ii) Borrower fails to obtain the necessary approvals from
the Tax Credit Allocation Committee for an allocation of "4%" Low Income Housing Tax Credits
under tenns that will restrict the residential units in the Project to the requirements set forth herein; or
(iii) Escrow has not closed on the conveyance of the Property to Borrower on or before August 14,
2000, as such date may be extended by agreement of all the parties hereta in their sole and absolute
discretion; or (iv) Subject to extensions of time made pursuant to Section 14.3 hereof, Borrower shall
have failed to commence construction of the Project pursuant to a valid building pennit or pennits
and is not diligently proceeding with such construction on or before the time required in the Schedule
of Performance and does not timely cure such default.
In addition, in the event of Borrower's uncured material default under this Agreement at the time
Agency/City exercises its right under this Section 13.2 to tenninate the Agreement, nothing in this
Section 13.2 is intended or shall be interpreted as a limitation of any other legal or equitable rights to
which Agency/City may be entitled.
31 (-/87
13.2.2 Termination by Borrower.
Notwithstanding any other provision of this Agreement to the contrary, provided that Borrower is not
in default under this Agreement, Borrower shall have the right to terminate this Agreement prior to
disbursement of the Agency/City Loan, upon written notice to Agency/City, if: (i) Agency/City
commits a material default hereunder and fails to cure said default within the time specified in
Sectian 13.1; or (ii) Escrow has not closed on the conveyance of the Property to Borrower on or
before August 14, 2000, as such date may be extended by agreement of all the parties hereto, in their
sole and absolute discretion; or (iii) City fails to approve, after best efforts by Borrower to obtain
such approval, such permits as are required ta commence and complete constructian of the Project on
the Property.
In addition, in the event of Agency/City's uncured material default under this Agreement at the time
Borrower exercises its right under this Section 13.2 to terminate the Agreement, nothing in this
Section 13.2 is intended or shall be interpreted as a limitation of any other legal or equitable rights to
which Borrower may be entitled.
13.3 Legal Actions.
13.3.1 Institution of Legal Actions.
In addition ta any other rights or remedies, either party may institute legal action ta cure, correct, or
remedy any default, to recover damages for any default, or to obtain any other remedy consistent
with the purposes of this Agreement. Such legal actions must be instituted and maintained in the
Superior Court of the County of San Diego, State of California, or in any other appropriate court in
that county.
13.3.2 Applicable Law.
The laws of the State of California shall govern the interpretation and enforcement of this
Agreement.
13.3.3 Acceptance of Service of Process.
In the event that any legal action is commenced by Borrower against Agency/City, service of process
on Agency/City shall be made by personal service upon the Agency/City Housing Manager or City
Clerk, or in such other manner as may be provided by law.
In the event that any legal action is commenced by Agency/City against Borrower, service of process
on Borrower shall be made in such manner as may be provided by law, and shall be valid whether
made within or without the State of California.
13.3.4 Action for Specific Performance.
If either the Borrower or Agency/City defaults with regard to any of the provisions of this
Agreement, the non-defaulting party shall serve written notice of such default upon the defaulting
party. If the default does not commence to be cured by the defaulting party within thirty (30) days
after service of the notice of default, the non-defaulting party at its option may thereafter commence
an action for specific performance of the terms of this Agreement pertaining to such default, subject
to the provisions of Sections 13.1 and 14.3 hereof.
32 1~(3'1
13.3.5 Rights and Remedies are Cumulative.
Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are
cumulative, and the exercise by either party of one or more of its rights or remedies shall not
preclude the exercise by it, at the same or different times, of any other rights or remedies for the same
default or any other default by the other party.
ARTICLE 14
General Provisions
14.1 Notices, Demands, and Communications Between the Parties.
Formal notices, demands, and communications between Agency/City and Borrower shall be given
either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal
Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States
mail, certified mail, postage prepaid, return receipt requested, to the address of the party as set forth
below, or at any other address as that party may later designate by notice:
To Agency/City: Redevelopment Agency/City of the City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Housing Manager
With a copy to: Redevelopment Agency/City of the City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Agency/City Attorney
To Borrower: Main Plaza L.P.
c/o Avalon Communities, LLC
180 I E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attn: Lionel Puig
Notices personally delivered or delivered by document delivery service shall be deemed effective
upon receipt. Notices mailed shall be deemed effective on the second business day following deposit
in the United States mail. Such written notices, demands, and communications shall be sent in the
same manner to such other addresses as either party may from time to time designate by mail.
14.2 Nonliability of Agency/City Officials and Employees: Conflicts of Interest.
No member, official, employee, or contractor of Agency/City shall be personally liable to Borrower
in the event of any default or breach by Agency/City or for any amount which may become due to
Borrower or on any obligations under the terms of this Agreement.
No member, official, employee, or agent of Agency/City shall have any direct or indirect interest in
this Agreement nor participate in any decision relating to this Agreement which is prohibited by law.
33 (-/40
14.3 Enforced Delay; Extension of Times of Performance.
In addition to specific provisions of this Agreement, and except as expressly set forth in Section 13.2
and this Section 14.3, performance by either party hereunder shall not be deemed to be in default and
such party shall be entitled to an extension of time to perform its obligations hereunder where delays
in performance are due to causes beyond the control and without the fault of such party, including as
applicable: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties;
supernatural causes; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes;
lack of transportation; governmental restrictions or priority; litigation; unusually severe weather;
inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or
supplies; acts of the other party; acts or the failure to act of Agency/City or any other public or
governmental Agency/City or entity (except that any act or failure to act of or by Agency/City shall
not excuse timely performance by Agency/City). In addition, nothing in this Section 14.3 is intended
or shall be interpreted to entitle Borrower to an extension of time to close the escrow for acquisition
of the Property or to delay commencement of construction of the Project.
An extension of time for any cause permitted under this Section 14.3 shall be limited to the period of
the enforced delay and shall commence to run from the time of the commencement of the cause, if
notice by the party claiming such extension is sent to the other party within thirty (30) days of
knowledge of the commencement of the cause, or if no written notice is sent within thirty (30) days,
from the date written notice is sent by the other party.
Times of performance under this Agreement may be extended by mutual written agreement of
Agency/City and Borrower.
14.4 Inspection of Books and Records.
The Borrower shall keep and maintain at the Project, or elsewhere within the County of San Diego,
full, complete and appropriate books, records and accounts relating to the Project, including all such
books, records and accounts necessary or prudent to evidence and substantiate in full detail
Borrower's calculation of Residual Receipts and compliance with the affordable housing
requirements herein. Books, records and accounts relating to Borrower's compliance with the terms,
provisions, covenants, and conditions of this Agreement shall be kept and maintained in accordance
with generally accepted accounting principles consistently applied, and shall be consistent with
requirements of this Agreement. All such books, records, and accounts shall be open to and available
for inspection by the Agency/City, its auditors or other authorized representatives at reasonable
intervals during normal business hours upon reasonable prior notice to Borrower. Copies of all tax
returns and other reports that Borrower may be required to furnish any governmental Agency/City
shall at all reasonable times, upon reasonable prior notice to Borrower, be open far inspection by the
Agency/City at the place that the books, records, accounts of the Borrower are kept. The Borrower
shall preserve records on which any statement of Residual Receipts is based for a period of not less
than five (5) years after such statement is rendered. Agency/City shall have the right at all
reasonable times to inspect the books and records of Borrower pertaining to the Property and the
Project as pertinent to the purposes of this Agreement. Borrower shall provide its books and records
to Agency/City without reasonable delay upon no less than five (5) days prior written request by
Agency/City. Agency/City shall not request inspection for Borrower's books and records more than
once in any twelve (12) month period, unless Agency/City is required to obtain information in order
to comply with reporting or other requirements oflaw herein.
34 1-14!
Borrower shall have the right at all reasonable times to inspect the books and records of Agency/City
pertaining to the Property and the Project as pertinent to the purposes of this Agreement.
14.5 Interpretation.
The terms of this Agreement shall be construed in accordance with the meaning of the language used
and shall not be construed for or against any party by reason of the authorship of this Agreement or
any other rule of construction which might otherwise apply. The section headings are for purposes of
convenience only, and shall not be construed to limit or extend the meaning of this Agreement.
14.6 Entire Agreement, Waivers and Amendments.
This Agreement integrates all of the terms and conditions mentioned herein, or incidental hereto, and
supersedes all negotiations and previous agreements between the parties with respect to all or any
part of the subject matter hereof.
All waivers of the provisions of this Agreement must be in writing and signed by the appropriate
authorities of the party to be charged, and all amendments and modifications hereto must be in
writing and signed by the appropriate authorities of Agency/City and Borrower.
14.7 Con sent/Reasonab I en e ss.
Except when this Agreement specifically authorizes a party to withhold its approval or consent in its
sole and absolute discretion, when either Agency/City or Borrower shall require the consent or
approval of another party in fulfilling any agreement, covenant, provision, or condition contained in
this Agreement, such consent or approval shall not be unreasonably withheld, conditioned, or
delayed by the party from whom such consent or approval is sought.
14.8 Severability.
If any term, provision, covenant, or condition of this Agreement is held by a court of competent
jurisdictian to be invalid, void, or unenforceable, the remainder of this Agreement shall not be
affected thereby to the extent such remaining provisions are not rendered impractical to perform
taking into consideration the purposes of this Agreement. In the event that all or any portion of this
Agreement is found to be unenforceable, this Agreement or that portion which is found to be
unenforceable shall be deemed to be a statement of intention by the parties; and the parties further
agree that in such event, and to the maximum extent permitted by law, they shall take all steps
reasonably necessary to comply with such procedures or requirements as may be reasonably
necessary in order to make valid this Agreement or that portion which is found to be unenforceable.
14.9 Third Partv Beneficiaries.
Notwithstanding any other provision of this Agreement to the contrary nothing herein is intended to
create any third party beneficiaries to this Agreement, and no person or entity other than Agency/City
and Borrower, and the permitted successors and assigns of each of them, shall be authorized to
enforce the provisions of this Agreement.
35 !-14;}-.
14.10 Representations and Warranties.
Borrower and each partner of Borrower executing this Agreement on behalf of Borrower represents
and warrants that: (i) Borrower is a limited partnership organized and existing under the laws of the
State of California, in good standing, and authorized to do business and doing business in the County
of San Diego; (ii) Borrower has all requisite power and authority to carry out its business as now and
whenever conducted and to enter into and perform its obligations under this Agreement; (iii) by
proper action of Borrower, Borrower's signatories have been duly authorized to execute and deliver
this Agreement; (iv) the execution ofthis Agreement by Borrower does not violate any provision of
any other agreement to which Borrower is a party; (v) except as may be specifically set forth in this
Agreement, and except for the approval of Borrower's investor limited partner, no approvals or
consents not heretofore obtained by Borrower are necessary in connection with the execution of this
Agreement by Borrower or with the performance by Borrower of its obligations hereunder, and (vi)
no attachments, execution proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization, receivership or other proceedings are pending or threatened against the
Borrower, or any partners of Borrower, nar are any of such proceedings contemplated by Borrower
or any partners of Borrower.
14.11 Execution.
This Agreement may be executed in counterparts, each of which shall be deemed to be an original,
and such counterparts shall constitute one and the same instrument.
14.12 Relationship of Parties.
It is understood that the contractual relationship between the Agency/City and Borrower is such that
Borrower is an independent entity and not an agent or partner of Agency/City. Nothing in this
Agreement shall constitute Borrower as the agent ar partner or representative af Agency/City for any
purpose whatsoever.
14.13 Attorney's Fees.
If either party to this Agreement is required to initiate or defend litigation in any way connected with
this Agreement, the prevailing party in such litigation, in addition to any other relief which may be
granted, whether legal or equitable, shall be entitled to its actual and reasonable attarney's fees. If
either party to this Agreement is required to initiate or defend litigation with a third party because of
the violation of any term or provision of this Agreement by the other party, then the party so
litigating shall be entitled to its actual and reasonable attorney's fees from the other party to this
Agreement. Attorney's fees shall include attorney's fees on any appeal, and in addition a party
entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action,
retaining expert witnesses, taking depositions and discovery, and all other necessary costs incurred in
such litigation. All such fees shall be deemed to have accrued on commencement of such action and
shall be enforceable whether or not such action is prosecuted to judgment. The parties hereto
acknowledge and agree that each such party shall bear its own legal costs incurred in connection with
the negotiation, approval, and execution of this Agreement.
[NEXT PAGE IS SIGNATURE PAGE]
36 ( - ! 4-3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date specified herein.
"AGENCY/CITY"
REDEVELOPMENT AGENCY/CITY OF THE
CITY OF CHULA VISTA, a public body, corporate
and politic
By:
Its: Chair
ATTEST:
Agency/City Secretary
"BORROWER"
Main Plaza LP.
By: Avalon Communities, LLC
By:
Lionel Puig, Managing Member
S-1 (-I<-It!
(HINES) J\COMMDEV\HINESIM,'o PI",-Clty & A9000Y Lo," Ag,.,oo 1819101 12'32 PM]
EXHIBIT A
LEGAL DESCRIPTION
A-I I - /4-'S:'
EXHIBIT B
PROMISSORY NOTE
B-] ( - I 4- "
EXHIBIT C
AGENCY/CITY DEED OF TRUST
C-! 1-14-7
EXHIBIT D
AFFORDABLE HOUSING AGREEMENT
D-l I - / 4- ~
EXHIBIT E
SOURCES AND USES
E-] '/1
1-/'7
EXHIBIT F
PROJECT BUDGET
F-l ( - !:;¡---z>
EXHIBIT G
PROJECT PRO FORMA
G-! (- I ~ (
EXHIBIT H
CERTIFICATE OF COMPLETION
H-] / -I S .;J....
EXHIBIT I
SCOPE OF WORK
I-I (- /::; 3
EXHIBIT J
SCHEDULE OF PERFORMANCE
J-1 1- I t;,-zf
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City ofChula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attention: Housing Manager
DEED OF TRUST WITH ABSOLUTE ASSIGNMENT
OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THE PARTIES TO THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING of made as of
, 2001, are MAIN PLAZA L.P. ("Trustor"),
iz!úS~l!1e¡¡¡i, a California corporation ("Trustee"), and the CITY
corporation ("Beneficiary").
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms and conditions in this Deed of Trust,
Trustor irrevocably grants, conveys and assigns to Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of entry and possession, all of that real property
located in the City of Chula Vista, County of San Diego, State of California, described on
Exhibit A attached hereto, together with all development rights or credits, air rights,
water, water rights and water stock related to the real property, and all minerals, oil and
gas, and other hydrocarbon substances in, on or under the real property, and all
appurtenances, easements, rights and rights of way appurtenant or related thereto; all
buildings, other improvements and fixtures now or hereafter located on the real property,
including, but not limited to, all apparatus, equipment, and appliances used in the
operation or occupancy of the real property, it being intended by the parties that all such
items shall be conclusively considered to be a part of the real property, whether or not
attached or affixed to the real property (the "Improvements"); all interest or estate which
Trustor may hereafter acquire in the property described above, and all additions and
accretions thereto, and the proceeds of any of the foregoing; (all of the foregoing being
collectively referred to as the "Subject Property"). The listing of specific rights or
property shall not be interpreted as a limit of general terms.
1.2 ADDRESS. The address of the Subject Property is the northeast comer of Main Street
and Broadway within the Southwest Redevelopment Project Area and the Montgomery
Specific Plan in the City of Chula Vista, California. However, neither the failure to
designate an address nor any inaccuracy in the address designated shoJI affect the validity
or priority of the lien of this Deed of Trust on the Subject Property as described on
Exhibit A.
-1- I - I ~-'S'
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the purpose
of securing the following obligations ("Secured Obligations"):
(a) Payment to Beneficiary of all sums at any time owing under that certain
Promissory Note of even date herewith executed by Trustor in favor of
Beneficiary in the principal amount of One Million Sixty Thousand Dollars
($1,060,000), and the performance of all covenants and obligations of Trustor
under the Promissory Note and the Loan Agreement and Related Restricted
Covenants of even date herewith between Trustor and Beneficiary ("Loan
Agreement"); and
(b) Payment and performance of all covenants and obligations of Trustor under this
Deed of Trust; and
(c) All modifications, extensions and renewals of any of the obligations secured
hereby, however evidenced, including, without limitation: (i) modifications of the
required principal payment dates or interest payment dates or both, as the case
may be, deferring or accelerating payment dates wholly or partly; or (ii)
modifications of the required debt service payments.
2.2 INCORPORATION. All terms of the Secured Obligations and the documents
evidencing such obligations are incorporated herein by this reference. All persons who
may have or acquire an interest in the Subject Property shall be deemed to have notice of
the terms of the Secured Obligations.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Subject to the rights of the beneficiary under the Senior Deed of Trust
(as defined below), Trustor hereby irrevocably assigns to Beneficiary all of Trustor's
right, title and interest in, to and under: (a) all leases of the Subject Property or any
portion thereof, all licenses and agreements relating to the management, leasing or
operation of the Subject Property or any portion thereof, and all other agreements of any
kind relating to the use or occupancy of the Subject Property or any portion thereof,
whether now existing or entered into after the date hereof ("Leases"); and (b) the rents,
issues, deposits and profits of the Subject Property, including, without limitation, all
amounts payable and all rights and benefits accruing to Trustor under the Leases
("Payments"). The term "Leases" shall also include all guarantees of and security for the
lessees' performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and absolute
assignment, not an assignment for security purposes only, and Beneficiary's right to the
Leases and Payments is not contingent upon, and may be exercised without possession
of, the Subject Property.
3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License") to
collect and retain the Payments as they become due and payable, until the occurrence of a
Default (as hereinafter defined). Upon a Default, the License shall be automatically
-2- (- /.J~
revoked and Subject to the rights of the beneficiary under the Senior Deed of Trust,
Beneficiary may collect and apply the Payments pursuant to Section 6.4 without notice
and without taking possession of the Subject Property. Trustor hereby irrevocably
authorizes and directs the lessees under the Leases to rely upon and comply with any
notice or demand by Beneficiary for the payment to Beneficiary of any rental or other
sums which may at any time become due under the Leases, or for the perfonnance of any
of the lessees' undertakings under the Leases, and the lessees shall have no right or duty
to inquire as to whether any Default has actually occurred or is then existing hereunder.
Trustor hereby relieves the lessees from any liability to Trustor by reason of relying upon
and complying with any such notice or demand by Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable Assignment shall not cause
Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control,
care, management or repair of the Subject Property or for perfonning any of the tenus,
agreements, undertakings, obligations, representations, warranties, covenants and
conditions of the Leases; or (c) responsible or liable for any waste committed on the
Subject Property by the lessees under any of the Leases or any other parties; for any
dangerous or defective condition of the Subject Property; or for any negligence in the
management, upkeep, repair or control of the Subject Property resulting in loss or injury
or death to any lessee, licensee, employee, invitee or other person, unless caused by the
gross negligence or wilful misconduct of Beneficiary or its agents. Beneficiary shall not
directly or indirectly be liable to Trustor or any other person as a consequence of: (i) the
exercise or failure to exercise any of the rights, remedies or powers granted to
Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perform or discharge
any obligation, duty or liability of Trustor arising under the Leases.
3.4 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that as
of the date of this Deed of Trust there are no Leases affecting any portion of the Subject
Property.
3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to: (a)
perfonn the obligations of lessor contained in the Leases and enforce by all available
remedies performance by the lessees of the obligations of the lessees contained in the
Leases; (b) give Beneficiary prompt written notice of any material default which occurs
with respect to any of the Leases, whether the default be that of the lessee or of the lessor;
(c) exercise commercially reasonable efforts to keep all portions of the Subject Property
that are currently subject to Leases leased at all times at rentals not less than the fair
market rental value; (d) deliver to Beneficiary fully executed, counterpart original(s) of
each and every Lease if requested to do so; and (e) execute and record such additional
assignments of any Lease or specific subordinations of any Lease to the Deed of Trust, in
fonn and substance acceptable to Beneficiary, as Beneficiary may request. Except as
required or pennitted by the Senior Deed of Trust, or its beneficiary, or by the loan
agreement secured thereby, Trustor shall not, without Beneficiary's prior written consent
or as otherwise pennitted by any provision of the Loan Agreement: (i) execute any other
assignment relating to any of the Leases; (ii) discount any rent or other sums due under
the Leases or collect the same in advance, other than to collect rent one (I) month in
advance of the time when it becomes due; (iii) tenninate, modify or amend any of the
-3- / - 1::;'-7
material terms of the Leases or in any material manner release or discharge the lessees
from any obligations thereunder; (iv) consent to any assignment or subletting by any
lessee; or (v) subordinate or agree to subordinate any of the Leases to any other deed of
trust or encumbrance. Any such attempted action in violation of the provisions of this
Section 3.5 shall be null and void. Without in any way limiting the requirement of
Beneficiary's consent hereunder, but subject to the right of the beneficiary under the
Senior Deed of Trust, any sums received by Trustor in consideration of any termination
(or the release or discharge of any lessee) modification or amendment of any Lease shall
be applied to reduce the outstanding Secured Obligations and any such sums received by
Trustor shall be held in trust by Trustor for such purpose.
3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by
Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by Trustor and by each of the lessees, in
recordable form, certifying (if such be the case): (a) that the foregoing assignment and
the Leases are in full force and effect; (b) the date of each lessee's most recent payment
of rent; (c) that there are no defenses or offsets outstanding, or stating those claimed by
Trustor or lessees under the foregoing assignment or the Leases, as the case may be; and
(d) any other information reasonably requested by Beneficiary.
ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary as of the
date hereof ("Effective Date") a security interest, to secure payment and performance of
all of the Secured Obligations, in all of the following described personal property in
which Trustor now or at any time hereafter has any interest (collectively, the
"Collateral"):
All goods, building and other materials, supplies, work in process, equipment,
machinery, fixtures, furniture, furnishings, signs and other personal property,
wherever situated, which are or are to be incorporated into, used in
connection with, or appropriated for the use and aperation of Subject Property
(to the extent the same are not effectively made a part of the real property
pursuant to Section l.l above) together with all rents, issues, deposits and
profits of the Subject Property (to the extent, if any, they are not subject to
Article 3); all inventory, accounts, cash receipts, deposit accounts, accounts
receivable, contract rights, general intangibles, chattel paper, instruments,
documents, notes, drafts, letters of credit, insurance policies, insurance and
condemnation awards and proceeds, any other rights to the payment of
money, trade names, trademarks and service marks arising from or related to
the Subject Property or any business now or hereafter conducted thereon by
Trustor; all permits consents, approvals, licenses, authorizations and other
rights granted by, given by or obtained from, any governmental entity with
respect to the Subject Property; all deposits or other security now or hereafter
made with or given to utility companies by Trustor with respect to the Subject
Property; all advance payments of insurance premiums made by Trustor with
respect to the Subject Property; all plans, drawings and specifications relating
to the Subject Property; all funds deposited with Beneficiary pursuant to any
-4- (-IS"&'
loan agreement; all reserves, deferred payments, deposits, accounts, refunds,
cost savings and payments of any kind related to the Subject Property or any
portion thereof; together with all replacements and proceeds of, and additions
and accessions to, any of the foregoing; together with all books, records and
files relating to any of the foregoing.
As to all of the above described personal property which is or which hereafter
becomes a "fixture" under applicable law, this Deed of Trust constitutes and
is filed as a fixture filing under Sections 9313 and 9402(6) of the California
Uniform Commercial Code, as amended or recodified from time to time, and
covers goods which are or are to become fixtures.
4.2 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that:
(a) Trustor has, or will have, good title to the Collateral (except for items that are leased
by Trustor); and (b) Trustor's principal place of business is located at the address shown
in Section 7.9.
4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a "Secured Party"
under the California Uniform Commercial Code, as amended or recodified from time to
time ("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice
and at the expense of Trustor: (a) give notice to any person of Beneficiary's rights
hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and
preserve the Collateral or any rights or interests of Beneficiary therein; (c) inspect the
Collateral; and (d) endorse, collect and receive any right to payment of money owing to
Trustor under or from the Collateral. Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any property other than cash in satisfaction of
any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written
election of said remedy under UCC §9505, or other applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the occurrence and during the
continuance of a Default (hereinafter defined) under this Deed of Trust, then in addition
to all of Beneficiary' s rights as a "Secured Party" under the UCC or otherwise at law:
(a) Beneficiary may (i) upon written notice, require Trustor to assemble any or all of
the Collateral and make it available to Beneficiary at a place designated by
Beneficiary; (ii) without prior notice, enter upon the Subject Property or other
place where any of the Collateral may be located and take possession of, collect,
sell, and dispose of any or all of the Collateral, and store the same at locations
acceptable to Beneficiary at Trustor's expense; (iii) sell, assign and deliver at any
place or in any lawful manner all or any part of the Collateral and bid and become
purchaser at any such sales; and
(b) Beneficiary may, for the account of Trustor and at Trustor's expense: (i) operate,
use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate
for the purpose of performing any or all of the Secured Obligations; (ii) enter into
any agreement, compromise, or settlement, including insurance claims, which
Beneficiary may deem desirable or proper with respect to any of the Collateral;
and (iii) endorse and deliver evidences of title for, and receive, enforce and collect
-5- 1-¡S1
by legal action or otherwise, all indebtedness and obligations now or hereafter
owing to Trustor in connection with or on account of any or all of the Collateral.
Notwithstanding any other provision hereof, Beneficiary shall not be deemed to
have accepted any property other than cash in satisfaction of any obligation of
Trustar to Beneficiary unless Trustor shall make an express written electian of
said remedy under UCC §9505, or other applicable law.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appoints Beneficiary as
Trustor's attorney-in-fact (such agency being coupled with an interest), and as such
attorney-in-fact Beneficiary may, upon the occurrence and during the continuance of a
Default, without the obligation to do so, in Beneficiary's name, or in the name of Trustor,
prepare, execute and file or record financing statements, continuation statements,
applications for registration and like papers necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in or to any of the Collateral, and, upon the
occurrence and during the continuance of a Default hereunder, take any other action
required of Trustor; provided, however, that Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this
Section, so long as no Default exists under this Deed of Trust, Trustor may possess, use,
move, transfer or dispose of any of the Collateral in the ordinary course of Trustor's
business.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TAXES AND ASSESSMENTS. Subject to Trustor's rights to contest payment of taxes,
Trustor shall pay prior to delinquency all taxes, assessments, levies and charges imposed
by any public or quasi-public authority or utility company which are or which may
become a lien upon or cause a loss in value of the Subject Property or any interest
therein. Trustor shall also pay prior to delinquency all taxes, assessments, levies and
charges imposed by any public authority upon Beneficiary by reason of its interest in any
Secured Obligation or in the Subject Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation; provided, however, Trustor shall have
no obligation to pay taxes which may be imposed from time to time upon Beneficiary and
which are measured by and imposed upon Beneficiary's net income.
5.2 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay and
perform each Secured Obligation when due.
5.3 LIENS. ENCUMBRANCES AND CHARGES. This Deed of Trust shall constitute a
second priority security interest, junior and subordinate only to a Construction Deed of
Trust with Assignment of Rents, Security Agreement and Fixture Filing, dated
concurrently herewith, made in connection with the loan made by the (~~:I1ìiil!íî:îÎii'ii~!í
with the proceeds of revenue bonds in the amount of
and the refinancing
thereof which have been approved by or are pursuant to the Loan
-6- (-Iroò
Agreement (the "Senior Deed of Trust"). Trustor shall immediately discharge any other
lien not approved by Beneficiary in writing that has or may attain priority over this Deed
of Trust. Trustor shall pay when due all obligations secured by or reducible to liens
which shall now or hereafter encumber or appear to encumber all or any part of the
Subject Property or any interest therein, whether senior or subordinate hereto; provided,
however, Trustor shall have the right to contest in goad faith any claims and liens for
labor done and materials and services furnished in connection with the construction of
any Improvements and any such claim or lien so contested may remain unpaid during the
period of such contest and any appeal therefrom.
5.4 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS. Proceeds of
casualty insurance policies and condemnation awards shall be disposed of in accordance
with and subject to the conditions contained in the Loan Agreement.
5.5 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY.
Trustor covenants: (a) to insure the Subject Property against such risks as are required
under the Loan Agreement and, at Beneficiary's request, to provide evidence of such
insurance to Beneficiary, and to comply with the requirements of any insurance
companies insuring the Subject Property; (b) to keep the Subject Property in good
condition and repair; (c) except as permitted by the Senior Deed of Trust, or its
beneficiary, or the loan agreement secured thereby, not to remove or demolish the
Subject Property or any part thereof, not to materially alter, restore or add to the Subject
Property and not to initiate or acquiesce in any change in any zoning or other land
classification which affects the Subject Property without Beneficiary's prior written
consent; (d) to complete or restore promptly and in good and workmanlike manner the
Subject Property, or any part thereof which may be damaged or destroyed; (e) to comply
with all laws, ordinances, regulations and standards, and all covenants, conditions,
restrictions and equitable servitudes, whether public or private, of every kind and
character which affect the Subject Property and pertain to acts committed or conditions
existing thereon, including, without limitation, any work, alteration, improvement or
demolition mandated by such laws, covenants or requirements; (f) not to commit or
permit waste of the Subject Property; and (g) to do all other acts which from the character
or use of the Subject Property may be reasonably necessary to maintain and preserve its
value.
5.6 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's
sole expense, Trustor shall protect, preserve and defend the Subject Property and title to
and right of possession of the Subject Property, the security hereof and the rights and
powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall
give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the
filing of any action or proceeding, of the occurrence of any damage to the Subject
Property and of any condemnation offer or action.
5.7 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee
accepts this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust or a certified copy thereof
for endorsement, and without affecting the personal liability of any person for payment of
-7- /-/(, (
any indebtedness or performance of any obligations secured hereby, Trustee may,
without liability therefor and without natice: (a) reconvey all or any part of the Subject
Property; (b) consent to the making of any map or plat thereof; and (c) join in any grant
of easement thereon, any declaration of covenants and restrictions, or any extension
agreement or any agreement subordinating the lien or charge of this Deed of Trust.
Except as may be required by applicable law, Trustee or Beneficiary may from time to
time apply to any court of competent jurisdiction for aid and direction in the execution of
the trust hereunder and the enforcement of the rights and remedies available hereunder,
and may obtain orders or decrees directing or confirming or approving acts in the
execution of said trust and the enforcement of said remedies. Trustee has no obligation to
notify any party of any pending sale or any action or proceeding, including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party unless held or
commenced and maintained by Trustee under this Deed of Trust. Trustee shall not be
obligated to perform any act required of it hereunder unless the performance of the act is
requested in writing and Trustee is reasonably indemnified and held harmless against
loss, cost, liability or expense.
5.8 EXCULP AnON; INDEMNIFICA nON.
(a) Beneficiary shall not directly or indirectly be liable to Trustor or any other person
as a consequence of (i) the exercise of the rights, remedies or powers granted to
Beneficiary in this Deed of Trust; (ii) the failure or refusal of Beneficiary to
perform or discharge any obligation or liability of Trustor under any agreement
related to the Subject Property or under this Deed of Trust; or (iii) any loss
sustained by Trustor or any third party resulting from Beneficiary's failure to
lease the Subject Property after a Default (hereinafter defined) or from any other
act or omission of Beneficiary in managing the Subject Property after a Default
unless the loss is caused by the gross negligence or willful misconduct of
Beneficiary and no such liability shall be asserted against or imposed upon
Beneficiary or its agents, and all such liability is hereby expressly waived and
released by Trustor.
(b) Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses, damages, liabilities, claims, causes of
action, judgments, court costs, attorneys' fees and other legal expenses, cost of
evidence of title, cost of evidence of value, and other expenses which either may
suffer or incur: (i) by reason of this Deed of Trust; (ii) by reason of the execution
of this trust or in performance of any act required or permitted hereunder or by
law; (iii) as a result of any failure of Trustor to perform Trustor's obligations; or
(iv) by reason of any alleged obligation or undertaking on Beneficiary's part to
perform or discharge any of the representations, warranties, conditions, covenants
or other obligations contained in any other document related to the Subject
Property; provided, however, such indemnity does not include matters caused by
the gross negligence or willful misconduct of Beneficiary or its agents. The
above obligation of Trustor to indemnify and hold harmless Trustee and
Beneficiary shall survive the release and cancellation of the Secured Obligations
-8- /-/('à
and the release and reconveyance or partial release and reconveyance ofthis Deed
of Trust.
(c) Trustor shall pay all amounts and indebtedness arising under this Section 5.10
immediately upon written demand by Trustee or Beneficiary together with interest
thereon from the date of such demand at the rate of ten percent (10%) per annum.
5.9 SUBSTITUTION OF TRUSTEES. From time to time, by a writing, signed and
acknowledged by Beneficiary and recorded in the Office of the Recorder of the County in
which the Subject Property is situated, Beneficiary may appoint another trustee to act in
the place and stead of Trustee or any successor. Such writing shall set forth any
information required by law. The recordation of such instrument of substitution shall
discharge Trustee herein named and shall appoint the new trustee as the trustee hereunder
with the same effect as if originally named Trustee herein. A writing recorded pursuant
to the provisions of this Section 5.11 shall be conclusive proof of the proper substitution
of such new Trustee.
5.10 NONRECOURSE OBLIGATION. Nothing herein contained shall be deemed to cause
Trustor (or any of its partners, or any of their respective directors, officers, employees,
partners, principals or members) personally to be liable to payor perform any of its
obligations secured hereby, and Beneficiary shall not seek any personal or deficiency
judgment on such obligations, and the sole remedy of Beneficiary shall be against the
Subject Property and the Collateral; provided, however, that the foregoing shall not in
any way affect any rights Beneficiary may have (as a secured party or otherwise)
hereunder or under the Promissory Note or Loan Agreement, or any other rights
Beneficiary may have to: (a) recover directly ITom Trustor any funds, damages or costs
(including, without limitation, reasonable attorneys' fees and costs) incurred by
Beneficiary as a result of fraud, misrepresentation or waste; or (b) recover directly from
Trustor any condemnation or insurance proceeds, or other similar funds or payments
attributable to the Property which under the terms of this Deed of Trust should have been
paid to Beneficiary and any costs and expenses incurred by Beneficiary in connection
therewith (including, without limitation, reasonable attorneys' fees and costs).
5.11 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY.
Without notice to or the consent, approval or agreement of any persons or entities having
any interest at any time in the Subject Property or in any manner obligated under the
Secured Obligations ("Interested Parties"), Beneficiary may, from time to time, release
any person or entity from liability for the payment or performance of any Secured
Obligation, take any action or make any agreement extending the maturity or otherwise
altering the terms or increasing the amount of any Secured Obligation, or accept
additional security or release all or a portion of the Subject Property and other security
for the Secured Obligations. None of the foregoing actions (other than a duly executed
written release) shall release or reduce the liability of any of said Interested Parties, to the
extent such liability exists, or release or impair the priority of the lien of this Deed of
Trust upon the Subject Property.
-9- (-lfo3
5.12 RECONVEYANCE. Upon Beneficiary's written request, and upon surrender to Trustee
for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument,
or instruments setting forth all obligations secured hereby, Trustee shall reconvey,
without warranty, the Subject Property or that portion thereof then held hereunder. To
the extent permitted by law, the reconveyance may describe the grantee as "the person or
persons legally entitled thereto" and the recitals of any matters or facts in any
reconveyance executed hereunder shall be conclusive proof of the truthfulness thereof.
Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance. When the Subject Property has
been fully reconveyed, the last such reconveyance shall operate as a reassignment of all
future rents, issues and profits of the Subject Property to the person or persons legally
entitled thereto.
5.13 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances,
whether released of record or not, paid in whole or in part by Beneficiary pursuant to this
Deed of Trust or by the proceeds of any loan secured by this Deed of Trust.
5.14 RIGHT OF INSPECTION. Subject to the rights of tenants or occupants of the Subject
Property, Beneficiary, its agents and employees, may enter the Subject Property at any
reasonable time upon twenty-four (24) hours' notice (except in cases of emergency where
no notice is required) for the purpose of inspecting the Subject Property and ascertaining
Trustor's compliance with the terms hereof.
5.15 HAZARDOUS MATERIALS. Without in any way limiting the other representations
and warranties set forth in this Deed of Trust, and except as otherwise disclosed in
written reports and surveys previously delivered to Beneficiary, Trustor hereby
specifically represents and warrants to the best of Trustor's actual knowledge, without
inquiry, as of the date of this Deed of Trust as follows:
(a) The Subject Property is not and has not been a site for the use, generation,
manufacture, storage, treatment, release, threatened release, discharge, disposal,
transportation or presence of any oil, flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without limitation, any
substances which are "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under the Hazardous Materials Laws, as
described below, and/or other applicable environmental laws, ordinances and
regulations (collectively, the "Hazardous Materials"). "Hazardous Materials"
shall not include commercially reasonable amounts of such materials used (i) in
laboratories for educational purposes, (ii) in business offices and schools of the
type and nature currently operated by Trustor, (iii) in the ordinary course of
construction of the Subject Property, and (iv) by occupants of residential units for
normal household activities, and by Trustor for normal maintenance and
operations of the Subject Property, all of which materials set forth in (i)-(iv)
above are used and stored in accordance with all applicable environmental laws,
ordinances and regulations.
-10- I -(t, t./
(b) The Subject Property is in compliance with all laws, ordinances and regulations
relating to Hazardous Materials ("Hazardous Materials Laws"), including, without
limitation: the Clean Air Act, as amended, 42 D.S.C. Section 7401 et seq.; the
Federal Water Pollution Control Act, as amended, 33 V.S.C. Section 1251 et seq.;
the Resource Conservation and Recovery Act of 1976, as amended, 42 D.S.C.
Section 6901 et seq.; the Comprehensive Environment Response, Compensation
and Liability Act of 1980, as amended (including the Superfund Amendments and
Reauthorization Act of 1986, "CERCLA"), 42 D.S.c. Section 9601 et seq.; the
Toxic Substances Control Act, as amended, 15 D.S.C. Section 2601 et seq.; the
Occupational Safety and Health Act, as amended, 29 V.S.C. Section 651, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 D.S.C.
Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30
V.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 D.S.C.
Section 300f et seq.; and all comparable state and local laws, laws of other
jurisdictions or orders and regulations.
(c) There are no claims or actions ("Hazardous Materials C]aims") pending or
threatened against Trustor or the Subject Property by any governmental entity or
agency or by any other person or entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws.
(d) The Subject Property has not been designated as Border Zone Property under the
provisions of California Health and Safety Code, Sections 25220 et seq. and there
has been no occurrence or condition on any real property adjoining or in the
vicinity of the Subject Property that could cause the Subject Property or any part
thereof to be designated as Border Zone Property.
5.16 HAZARDOUS MATERIALS COVENANTS. Trustor agrees as follows:
(a) Trustor shall not cause or permit the Subject Property to be used as a site for the
use, generation, manufacture, storage, treatment, release, discharge, disposal,
transportation or presence of any Hazardous Materials (other than as provided in
Section 5. I 7(a)(i)-(iii) above).
(b) Trustor shall comply and cause the Subject Property to comply with all Hazardous
Materials Laws.
(c) Trustor shall immediately notify Beneficiary in writing of: (i) the discovery of any
Hazardous Materials (other than those set forth in Section 5.17(a)(i)-(iv) above)
on or under the Subject Property; (ii) any knowledge by Trustor that the Subject
Property does not comply with any Hazardous Materials Laws; (iii) any
Hazardous Materials Claims; and (iv) the discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Subject Property
that could cause the Subject Property or any part thereof to be designated as
Border Zone Property.
-11- /- (c.Ç"'
(d) In response to the presence of any Hazardous Materials on or under the Subject
Property, Trustor shall immediately take, at Trustor's sole expense, in a
commercially reasonable manner, all remedial action required by any Hazardous
Materials Laws or any judgment, consent decree, settlement or compromise in
respect to any Hazardous Materials Claims.
5.17 INSPECTION BY BENEFICIARY. At any reasonable time, upon twenty-four (24)
hours' notice (except in cases of emergency where no notice is required) to Trustor, but
subject to the rights of tenants and occupants of the Subject Property, Beneficiary, its
employees and agents, may from time to time (whether before or after the
commencement of a nonjudicial or judicial foreclosure proceeding) enter and inspect the
Subject Property for the purpose of detennining the existence, location, nature and
magnitude of any past or present release or threatened release of any hazardous substance
into, onto, beneath or from the Subject Property.
5.18 HAZARDOUS MATERIALS INDEMNITY. Trustor hereby agrees to defend,
indemnify and hold harmless Beneficiary, its directors, officers, employees, agents,
successors and assigns from and against any and all losses, damages, liabilities, claims,
actions, judgments, court costs and legal or other expenses (including, without limitation,
reasonable attorneys' fees and expenses) which Beneficiary may incur as a direct or
indirect consequence of the use, generation, manufacture, storage, disposal, threatened
disposal, transportation or presence of Hazardous Materials in, on or under the Subject
Property. Trustor shall immediately pay to Beneficiary upon written demand any
amounts owing under this indemnity, together with interest from the date of demand
therefor until paid at the rate of ten percent (10%) per annum. TRUSTOR'S DUTY
AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS
BENEFICIARY SHALL SURVIVE THE TERMINATION OF THE LOAN
AGREEMENT AND THE RELEASE, RECONVEYANCE OR PARTIAL
RECONVEYANCE OF THE DEED OF TRUST.
5.19 LEGAL EFFECT. Trustor and Beneficiary agree that: (a) Sections 5.17 through 5.20
are intended as Beneficiary's written request for infonnation (and Trustor's response)
concerning the environmental condition of the real property security as required by
California Code of Civil Procedure §726.5; and (b) each provision in such sections
(together with any indemnity applicable to a breach of any such provision) with respect to
the envirornnental condition of the real property security is intended by Beneficiary and
Trustor to be an "envirornnental provision" for purposes of California Code of Civil
Procedure §736, and as such it is expressly understood that Trustor's duty to indemnify
Beneficiary hereunder shall survive: (a) any judicial or non-judicial foreclosure under the
Deed of Trust, or transfer of the Subject Property in lieu thereof, and (b) the release and
reconveyance or cancellation of the Deed of Trust.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the tenn "Default" shall mean (a) the occurrence of
an "event of default" as defined in the Promissory Note or the Loan Agreement beyond
all applicable cure periods provided therein; (b) the failure of Trustor to make any
-12- 1- ((;G
payment of any amount due hereunder when the same is due and payable, where such
failure has continued for ten (10) days after notice (c) Trustor's failure to observe and
perform any other covenant, condition or agreement on its part to be observed or
performed under this Deed of Trust for a period of thirty (30) days after written notice
specifying such failure and requesting that it be remedied is given to Trustor by
Beneficiary; provided, however, if the failure stated in the notice is correctable but cannot
be corrected within such thirty (30) day period, Trustor shall have such additional time as
reasonably necessary to effect such cure, provided that such corrective action is instituted
by Trustor within such thirty (30) day period and diligently pursued until the default is
corrected, (d) at the option of Beneficiary, the occurrence of a breach or default (beyond
any applicable cure period) under any other deed of trust to Trustee executed by Trustor
for the benefit of Beneficiary of even date herewith or hereafter executed (the "Other
Deeds of Trust") which secures (i) payment to Beneficiary of sums owing under the Loan
Agreement and/or (ii) the performance of the covenants and obligations of Trustor under
the Loan Agreement, or (e) the failure (in any material respect) of any of the
representations and warranties of Trustor herein to be true and correct when made.
6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee shall
each have all the following rights and remedies; provided, however, Beneficiary and
Trustee may not exercise the rights and remedies under subsections (c), (f) and (g) below
until there has been a Default:
(a) With or without notice, to declare all Secured Obligations immediately due and
payable;
(b) With or without notice, and without releasing Trustor from any Secured
Obligation, and without becoming a mortgagee in possession, to cure any breach
or Default of Trustor and, in connection therewith, to enter upon the Subject
Property and do such acts and things as Beneficiary or Trustee deem necessary or
desirable to protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security of this
Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of
Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or
may be senior in priority to this Deed of Trust, the judgment of Beneficiary or
Trustee being conclusive as between the parties hereto; (iii) to obtain insurance;
(iv) to pay any premiums or charges with respect to insurance required to be
carried under this Deed of Trust; or (v) to employ counsel, accountants,
contractors and other appropriate persons.
(c) To commence and maintain an action or actions in any court of competent
jurisdiction to foreclose this instrument as a mortgage or to obtain specific
enforcement of the covenants of Trustor hereunder, and Trustor agrees that such
covenants shall be specifically enforceable by injunction or any other appropriate
equitable remedy and that for the purposes of any suit brought under this
subparagraph, Trustor waives the defense of laches and any applicable statute of
limitations;
-13- /-1'-1
(d) To apply to a court of competent jurisdiction for and obtain appointment of a
receiver of the Subject Praperty as a matter of strict right and without regard ta
the adequacy of the security for the repayment of the Secured Obligations, the
existence of a declaration that the Secured Obligations are immediately due and
payable, or the filing of a notice of default, and Trustor hereby consents to such
appointment;
(e) To enter upon, possess, manage and operate the Subject Property or any part
thereof, to take and possess all documents, books, records, papers and accounts of
Trustor or the then owner of the Subject Property, to make, terminate, enforce or
modify Leases of the Subject Property upon such terms and conditions as
Beneficiary deems proper, to make repairs, alterations and improvements to the
Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to
protect or enhance the security hereof;
(f) To execute a written notice of such Default and of its election to cause the Subject
Property to be sold to satisfy the Secured Obligations. As a condition precedent
to any such sale, Trustee shall give and record such notice as the law then
requires. When the minimum period of time required by law after such notice has
elapsed, Trustee, without notice to or demand upon Trustor except as required by
law, shall sell the Subject Property at the time and place of sale fixed by it in the
notice of sale, at one or severaJ sales, either as a whole or in separate parcels and
in such manner and order, all as Beneficiary in its sole discretion may determine,
at public auction to the highest bidder for cash, in lawful money of the United
States, payable at time of sale. Neither Trustor nor any other person or entity
other than Beneficiary shall have the right to direct the order in which the Subject
Property is sold. Subject to requirements and limits imposed by law, Trustee may
from time to time postpone sale of all or any portion of the Subject Property by
public announcement at such time and place of sale. Trustee shall deliver to the
purchaser at such sale a deed conveying the Subject Property or portion thereof so
sold, but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including Trustee, Trustor or Beneficiary may purchase at
the sale;
(g) To resort to and reaJize upon the security hereunder and any other security now or
later held by Beneficiary concurrently or successively and in one or several
consolidated or independent judicial actions or lawfully taken non-judicial
proceedings, or both, and to apply the proceeds received upon the Secured
Obligations all in such order and manner as Trustee and Beneficiary, or either of
them, determine in their sole discretion;
(h) Upon sale of the Subject Property at any judicial or non-judicial foreclosure,
Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute
discretion) all or any portion of the Secured Obligations. In determining such
credit bid, Beneficiary may, but is not obligated to, take into account all or any of
the following: (i) appraisals of the Subject Property as such appraisals may be
-14- /-Ifø(j
discounted or adjusted by Beneficiary in its sole and absolute underwriting
discretion; (ii) expenses and costs incurred by Beneficiary with respect to the
Subject Property prior to foreclosure; (iii) expenses and costs which Beneficiary
anticipates will be incurred with respect to the Subject Property after foreclosure,
but prior to resale, including, without limitation, costs of structural reports and
other due diligence, costs to carry the Subject Property prior to resale, costs of
resale (e.g., commissions, attorneys' fees, and taxes), costs of any hazardous
materials clean-up and monitoring, costs of deferred maintenance, repair,
refurbishment and retrofit, costs of defending or settling litigation affecting the
Subject Property, and lost opportunity costs (if any), including the time value of
money during any anticipated holding period by Beneficiary; (iv) declining trends
in real property values generally and with respect to properties similar to the
Subject Property; (v) anticipated discounts upon resale of the Subject Property as
a distressed or foreclosed property; (vi) the fact of additional collateral (if any),
for the Secured Obligations; and (vii) such other factors or matters that
Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to
the above, Trustor acknowledges and agrees that: (w) Beneficiary is not required
to use any or all of the foregoing factors to detennine the amount of its credit bid;
(x) this Section does not impose upon Beneficiary any additional obligations that
are not imposed by law at the time the credit bid is made; (y) the amount of
Beneficiary's credit bid need not have any relation to any loan-to-value ratios
previously discussed between Trustor and Beneficiary; and (z) Beneficiary's
credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower
than any appraised value of the Subject Property.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all costs,
fees and expenses of Trustee, and of this trust, including, without limitation, cost of
evidence of title and attorneys' fees in connection with sale and costs and expenses of
sale and of any judicial proceeding wherein such sale may be made, Trustee shall apply
all proceeds of any foreclosure sale: (a) to payment of all sums expended by Beneficiary
under the tenus hereof and not then re-paid, with accrued interest; (b) to payment of all
other Secured Obligations; and ( c) the remainder, if any, to the person or persons legally
entitled thereto.
6.4 APPLICATION OF OTHER SUMS. All sums received by Beneficiary under Section
6.2 or Section 3.2, less all costs and expenses incurred by Beneficiary or any receiver
under Section 6.2 or Section 3.2, including, without limitation, attorneys' fees, shall be
applied in payment of the Secured Obligations in such order as Beneficiary shall
detennine in its sole discretion; provided, however, Beneficiary shall have no liability for
funds not actually received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor Trustee's nor any receiver's entry
upon and taking possession of all or any part of the Subject Property, nor any collection
of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other
security or proceeds of other security, or other sums, nor the application of any collected
sum to any Secured Obligation, nor the exercise or failure to exercise of any other right
or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach,
-15- 1-1&.9
Default or notice of default under this Deed of Trust, or nullify the effect of any notice of
default or sale (unless all Secured Obligations then due have been paid and performed
and Trustor has cured all other defaults), or impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of the lien
afthis Deed of Trust.
6.6 PAYMENT OF COSTS. EXPENSES AND ATTORNEYS' FEES. Trustor agrees to
pay to Beneficiary immediately and without demand all reasonable costs and reasonable
expenses incurred by Trustee and Beneficiary pursuant to Section 6.2 (including, without
limitation, court costs and attorneys' fees, whether incurred in litigation or not) with
interest from the date of expenditure until said sums have been paid at the rate of interest
then applicable to the principal balance of the indebtedness as specified in the Loan
Agreement. In addition, Trustor shall pay to Trustee all Trustee's fees hereunder and
shall reimburse Trustee for all expenses incurred in the administration of this trust,
including, without limitation, any attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby irrevocably
appoints Beneficiary and its successors and assigns, as its attorney-in-fact, which agency
is coupled with an interest, upon the occurrence and during the continuance of a default,
(a) to execute and/or record any notices of completion, cessation of labor, or any other
notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the
issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a
deed in lieu of foreclosure, to execute all instruments of assignment or further assurance
with respect to the Leases and Payments in favor of the grantee of any such deed, as may
be necessary or desirable for such purpose, (c) to prepare, execute and file or record
financing statements, continuation statements, applications for registration and like
papers necessary to create, perfect or preserve Beneficiary's security interests and rights
in or to any of the Collateral, and (d) to perform any obligation of Trustor hereunder;
provided, however, that: (i) Beneficiary as such attorney-in-fact shall only be
accountable for such funds as are actually received by Beneficiary; and (ii) Beneficiary
shall not be liable to Trustor or any other person or entity for any failure to act under this
Section.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 MERGER. No merger shall occur as a result of Beneficiary's acquiring any other estate
in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in
writing.
7.2 OBLIGATIONS OF TRUSTOR. JOINT AND SEVERAL. If more than one person
has executed this Deed of Trust as "Trustor", the obligations of all such persons
hereunder shall be joint and several.
7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties
claiming through or under Trustor, and for all parties who may acquire a lien on or
interest in the Subject Property, hereby waives all rights to have the Subject Property
-16. (-(70
and/or any other property, including, without limitation, the Collateral, which is now or
later may be security for any Secured Obligation ("Other Property") marshaled upon any
foreclosure of this Deed of Trust ar on a foreclosure of any other security for any of the
Secured Obligations. Beneficiary shall have the right to sell, and any court in which
foreclosure proceedings may be brought shall have the right to order a sale of, the Subject
Property and any or all of the Collateral or Other Property as a whole or in separate
parcels, in any order that Beneficiary may designate.
7.4 RULES OF CONSTRUCTION. When the identity of the parties or other
circumstances make it appropriate the masculine gender includes the feminine and/or
neuter, and the singular number includes the plural. The term "Subject Property" means
all and any part of the Subject Property and any interest in the Subject Property.
7.5 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained
shall be binding upon and inure to the benefit of the heirs, successors and assigns of the
parties here-to; provided, however, that this Section 7.5 does not waive or modify the
provisions of Section 5.12.
7.6 EXECUTION IN COUNTERPARTS. This Deed of Trust may be executed in any
number of counterparts, each of which, when executed and delivered to Beneficiary, will
be deemed to be an original and all of which, taken together, will be deemed to be one
and the same instrument.
7.7 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the
laws of the State of California, except to the extent that Federal laws preempt the laws of
the State of California.
7.8 INCORPORATION. Exhibit A, as attached, is incorporated into this Deed of Trust by
this reference.
7.9 NOTICES. All notices or other communications required or permitted to be given
pursuant to the provisions of this Deed of Trust shall be in writing and shall be
considered as properly given if delivered personally or sent by first class U.S. mail,
postage prepaid, except that notice of a Default may be sent by certified mail, return
receipt requested, or by Overnight Express Mail or by overnight commercial courier
service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if
mailed by first class mail, and otherwise upon receipt at the addresses set forth below.
For purposes of notice, the addresses of the parties shall be:
-17- 1-/7/
Trustor: Avalon Communities, LLC
1801 E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attention: Lionel Puig
Trustee:
Beneficiary: City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Community Development Director
With a copy to City Attorney and Housing Coordinator
Any party shall have the right to change its address for notice hereunder to any other location within
the continental United States by the giving of thirty (30) days notice to the other party in the manner
set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or
other communications delivered to the Subject Property or to Trustor naming Beneficiary, as
addressee, or which could reasonably be deemed to affect the ability of Trustor to perform its
obligations to Beneficiary under the Loan Agreement.
7.10 LOAN AGREEMENT AND PROMISSORY NOTE CONTROL. In the event of
conflict between the terms of this Deed of Trust and the Loan Agreement or the
Promissory Note, the terms of the Loan Agreement and Promissory Note shall prevail,
except that the provisions of 6.2 of this Deed of Trust shall control with respect to rights
and remedies of Beneficiary and Trustee hereunder.
7.11 NONDISCRIMINATION. Trustor herein covenants by and for itself, its heirs,
executors, administrators, and assigns, and all persons claiming under or through it that
there shall be no discrimination against or segregation of, any person or group of persons
on account of race, color, creed, religion, sex, marital status, national origin, or ancestry
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Subject
Property, nor shall the grantee of any person claiming under or through it, establish or
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 Subject Property.
[Signature on next pagel
-18- 1- 17 ~
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year
set forth above.
"TRUSTOR"
MAIN PLAZA LP., (Limited Partnership)
By: A V ALON COMMUNITIES, LLC (Limited Liability
Company)
By:
Lionel Puig
By: CASA FAMILIAR, a California nonprofit public
benefit corporation, General Partner
By:
Andrea Skorepa, Executive Director
(ALL SIGNATURES MUST BE ACKNOWLEDGED)
S-1
(HINES( J,\COMMOEV\HINES\Malc Plaw-Clly Deed ar '",I.d=
(-/73
SCHEDULE I
DESCRIPTION OF SUBJECT PROPERTY
Exhibit A to Deed of Trust with Absolute Assignment of Leases and
Fixture Filing executed by MAIN PLAZA L.P., as Trustor to
California corporation, as Trustee for the benefit of the CITY OF
corporate and politic, as Beneficiary, dated as of ,2001.
All the certain real property located in the City of Chula Vista, County of San Diego, State of
California, described as follows:
Page 1 of Schedule 1- /7cf
STATE OF CALIFORNIA
COUNTY OF ss.
On this day of ,19_, before me
a Notary Public in and for the State of California, personally appeared
personally known to me (or proved on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal
Signature
My commission expires
(-/7S"
PROMISSORY NOTE
Secured by a Deed of Trust
$300,000 Date: , 200]
Chula Vista, CA
1. Borrower's Promise to Pay. For value received, the undersigned MAIN PLAZA, LP.,
("Borrower"), promises to pay to the CITY OF CHULA VISTA, a public body, corporate and politic
(the "City"), or order, at 276 Fourth Avenue, Chula Vista, California 91910, or such other place as
the City may designate in writing, the principal sum of Three Hundred Thousand Dollars ($300,000)
(the "principal"), plus interest as set forth in Section 4 below.
(a) Use Of Funds. Borrower is improving certain real property in the City of Chula
Vista, as legally described in the Loan Agreement (the "Property") with a mixed use development
consisting of 106 affordable housing units and 15,000 square feet of retail commercial space subject
to the terms of the Permanent Loan Documents, the Regulatory Agreement and Declaration of
Restrictive Covenants, the Affordable Housing Agreement and the TCAC Regulatory Agreement, as
those terms are defined in the Loan Agreement (the "Project"). This Note evidences the loan made by
the City to assist Borrower in acquiring and improving the Property for occupation by very low,
lower and low and moderate income househalds, as more particularly set forth in that certain Loan
Agreement and Related Restricted Covenants between the Borrower and the City dated as of
(the "Loan Agreement").
2. Definitions. The term set forth in this Section shall have the following meaning in this Note:
(a) "Transfer" shall mean any sale, assignment or transfer, voluntary or involuntary, of
any interest in the Property. Any transfer without satisfaction of Section 7 of this Note is prohibited.
Capitalized terms used herein not otherwise defined shall have the meanings set forth in the Loan
Agreement.
3. Security. This Note is secured by the Deed of Trust with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing of the same date as this Note (the "Deed of
Trust"), executed by Borrower, as trustor, in favor of the City, as beneficiary, and encumbering the
real property described in the Deed of Trust. The City will be entitled to the benefits of the security
provided by the Deed of Trust and will have the right to enforce the covenants and agreements of
Borrower specified within the Deed of Trust.
4. Interest. Simple interest will accrue on the principal balance remaining unpaid from time to
time at the rate of three percent (3%) per annum.
5. Payments. Payments of principal and interest due under this Note shall be made in
accordance with the payment terms set forth in Section 4.5 ofthe Loan Agreement, which such terms
are incorporated herein by this reference. All payments on this Note shall be applied first to payment
of accrued but unpaid interest, and after all such interest has been paid, any remainder shall be
applied to reduction ofthe principal balance. Unless the Loan Agreement is extended pursuant to the
terms of the Loan Agreement, all principal and interest shall be due and payable on the date that is
1 /-/?(,
fifty-five (55) years from the date of the City's issuance of the Certificate of Completion (as defined
in the Loan Agreement).
6. Borrower's Right To Repay. Borrower has the right to pay, without penalty or premium,
all or any portion of the outstanding amount of this Note prior to the maturity date.
7. No Assumptions of Note. Borrower acknowledges that this Note is given in connection with
the develapment of the Project as part ofa program of the City to assist with the provision of housing
for very low, low and moderate-income households. Consequently, this Note is not assumable by
transferees of the Property, but is immediately due and payable in full on the date of the Transfer of
the Property, whether voluntary or involuntary, unless such Transfer is permitted by the Loan
Agreement or by the City in writing in the City's sole and absolute discretion. In order to implement
this provision, the Loan Agreement contains a "DUE ON SALE" provision.
8. Maintenance; Taxes; Insurance. Borrower shall maintain the Property in good, clean and
orderly condition. Borrower shall promptly pay all property taxes due on the Property prior to any
delinquency and shall comply with the insurance requirements set forth in the Loan Agreement.
9. Default. The occurrence of anyone or more of the following events shall constitute an
"Event of Default": (a) Default under any agreement or other writing executed in favor of the City in
connection with this Note, including but not limited to the Loan Agreement or the Deed of Trust,
beyond all applicable cure periods; (b) Default in the payment when due of any installment or
amount of principal or interest due on this Note, beyond the applicable cure period contained in
Section 12.1 of the Loan Agreement; (c) The making by Borrower of any assignment for the benefit
of creditors or the voluntary appointment (at the request or with the consent of Borrower) of a
receiver, custodian, liquidator or trustee in bankruptcy of any of Borrower's property, or the filing by
Borrower of a petition in bankruptcy or other similar proceeding under any law for relief of debtors;
(d) The filing against Borrower (by anyone other than the City) of a petition in bankruptcy or other
similar proceeding under any law for relief of debtors, or the involuntary appointment (by anyone
other than the City) of a receiver, custodian, liquidator or trustee in bankruptcy of the property of
Borrower, if such petition or appointment is not vacated or discharged within sixty (60) calendar
days after the filing or making thereof; or (e) The occurrence of a default under any note or deed of
trust to which the Deed of Trust is junior and subordinate, beyond the applicable cure period. Upon
the occurrence of an Event of Default, the City may, at its option, declare the entire unpaid principal
balance and accrued interest to be immediately due and payable in full pursuant to Section 10 hereof
or pursue any and all other remedies provided at law or in equity. Upon the occurrence of an Event
of Default of the type described in clause (b) above, the entire unpaid principal balance and unpaid
interest accrued thereon shall bear interest, from the date of the Event of Default until such default is
cured, at a rate of nine percent (9%) compounded monthly ("Default Rate").
10. Acceleration. Upon the occurrence of an Event af Default, the City shall have the right to
declare the full amount of the principal, interest and other amounts owing under this Note
immediately due and payable. Any failure by the City to pursue its legal and equitable remedies
upon an Event of Default shall not constitute a waiver of the City's right to declare an Event of
Default and exercise all of its rights under this Note, the Deed of Trust or the Loan Agreement. Nor
shall acceptance by the City of any payment provided for in the Note constitute a waiver of the City's
right to require prompt payment of any remaining amounts owed.
2 (-/17
11. No Offset. Borrower hereby waives any rights of offset it now has or may later have against
the City, its successors and assigns, and agrees to make the payments called for in this Note in
accordance with the terms of this Note.
12. Waivers. Borrower and any endorsers or guarantors of this Note, for themselves, their heirs,
legal representatives, successors and assigns, respectively, severally waive diligence, presentment,
protest, and demand, and notice of protest, dishonor and non-payment of this Note, and expressly
waive any rights to be released by reasons of any extension of time or change in terms of payment, or
change, alteration or release of any security given for the payments hereof, and expressly waive the
right to plead any and all statutes of limitations as a defense to any demand on this Note or agreement
to pay the same, and jointly and severally agree to pay all costs of collection when incurred,
including reasonable attorney fees. If an action is instituted on this Note, the Borrower promises to
pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys' fees in such action.
13. No Waiver by the City. No previous waiver, failure, or delay by the City in acting with
respect to the tenns ofthis Note, the Deed of Trust, or any other loan documents in favor of the City
executed by Borrower in connection with this Note will constitute a waiver of any breach, default or
failure of conditions under this Note, Deed of Trust, or such other associated documents. A waiver
of any tenns must be made in writing.
14. Non Recourse Obligation. Nothing herein contained shall be deemed to cause Borrower (or
any of its partners, or any of their respective directors, officers, employees, partners, principals or
members) personally to be liable to payor perform any of its obligations evidenced hereby, and City
shall not seek any personal or deficiency judgment on such obligations, and the sole remedy of City
shall be against the Property and the collateral under the Deed of Trust; provided, however, that the
foregoing shall not in any way affect any rights City may have (as a secured party or otherwise)
hereunder or under the Deed of Trust or Loan Agreement, or any other rights City may have to: (a)
recover directly from Borrower any funds, damages or costs (including, without limitation,
reasonable attorneys' fees and costs) incurred by City as a result of fraud, intentional
misrepresentation or intentional waste by Borrower; or (b) recover directly from Borrower any
condemnation or insurance proceeds, or other similar funds or payments attributable to the Property
which under the tenns of the Loan Agreement should have been paid to City and any costs and
expenses incurred by City in connection therewith (including, without limitation, reasonable
attorneys' fees and costs).
15. Late Fees. Borrower acknowledges that if any payment required under this Note is not paid
within fifteen (15) days after the date when the same becames due and payable, the City 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 City by reason of such extra administrative expenses
and loss of use of funds would be impracticable or extremely difficult to ascertain, Borrower agrees
that five percent (5%) of the amount of the delinquent payment shall be the amount of damages to
which the City is entitled, upon such breach, in compensation therefor. Therefore, Borrower shall, in
such event, without further notice, pay to the City as the City's sole monetary recovery to cover such
extra administrative expenses and loss of use of funds, liquidated damages in the amount of five
percent (5%) of the amount of such delinquent payment. The provisions of this paragraph are
intended to govern only the determination of damages in the event of a breach in the performance of
the obligation af Borrower to make timely payments hereunder. Nothing in this Note shall be
3 (-/78
construed as an expressed or implied agreement by the City to forbear in the collection of any
delinquent payment, or be construed as in any way giving Borrower the right, expressed or implied,
to fail to make timely payments hereunder, whether upon payment of such damages or otherwise.
The right of the holder hereof to receive payment of such liquidated and actual damages, and receipt
thereof, are without prejudice to the right of such holder to collect such delinquent payments and
other amounts provided to be paid hereunder or under any security for this Note or to declare a
default hereunder or under any security for this Note.
16. Giving Of Notices. Formal notices, demands, and communications between City and
Borrower shall be given either by (i) personal service, (ii) delivery by reputable document delivery
service such as Federal Express that provides a receipt showing date and time of delivery, or (iii)
mailing in the United States mail, certified mail, postage prepaid, return receipt requested, to the
address of the party as set forth below, or at any other address as that party may later designate by
notice:
Borrower:
Main Plaza, loP.
c/o Avalon Communities, LLC
180 I E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attn: Lionel Puig
City:
Redevelopment City of the City of Chula Vista
276 Fourth Avenue
Chula Vista CA 91910
Attn: Housing Coordinator
With copies to: Executive Director and City Attorney
The parties may subsequently change addresses by providing written notice of the change in
address to the other parties in accordance with this Section.
17. No Partnership or Joint Venture. The relationship of Borrower and the City under this
Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the
Deed of Trust will in no manner make the City the partner or joint venturer of Borrower.
18. Joint and Several Obligations. This Note is the joint and several obligation of all makers,
sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns.
19. Attorney's Fees. In the event of any conflict or dispute concerning any term or provision of
this Note or otherwise arising out of this Note, the prevailing party shall be entitled to recover from
the other party any and all reasonable costs and expenses incurred in connection therewith, including,
but not limited to, attorney's fees and court costs, whether or not a legal action is commenced.
20. Controlling Law. This Note shall be construed in accordance with and be governed by the
laws of the State of California.
4
1-/79
21. Invalid Provisions. If anyone or more of the provisions contained in this Note shall for any
reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions
shall be deemed severable from the remaining provisions contained in this Note, and this Note shall
be construed as if such invalid, illegal or unenforceable provision had never been contained in this
Note.
22. Amendments. Any amendment, alteration or interpretation of this Note must be in writing
signed and signed by a duly authorized officer of the City and Borrower. If there are any
inconsistencies between the terms of this Note and the terms of any of the other loan documents, the
terms of the Loan Agreement will prevail.
[NEXT PAGE IS SIGNA TORE PAGEl
5
(-I'?O
IN WITNESS WHEREOF the Borrower has caused this Promissory Note to be executed as
of the day and year first written above.
MAIN PLAZA L.P., a limited partnership
By: Avalon Communities, LLC, a California Limited Liability Company
By:
Lionel Puig, Managing Member
6 (-18(
(HINES) J"COMMDE\AHINESIMo'o Plm-Clty NoIo.doo
ATTACHMENT 4
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of Chula Vista
City ofChula Vista
276 Fourth Avenue
Chula Vista CA 91910
Attn: Housing Manager
No fee for recording pursuant to
Government Code Section 27383
(Space above for Recorder's Use)
AFFORDABLE HOUSING AGREEMENT
THIS AFFORDABLE HOUSING AGREEMENT (the "Agreement") is entered into as of
August -' 2001, between the REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA, a public body, corporate and politic ("Agency"), the CITY OF CHULA VISTA, a municipal
corporation ("City") and MAIN PLAZA L.P., a California limited partnership ("Property Owner")
and/or its successors or assignees.
ARTICLE 1- Recitals
1.1 Authority.
Agency/City is a public body, corporate and politic, exercising governmental functions and powers
and organized and existing under the Community Redevelopment Law of the State of California
(Health and Safety Code Section 33000, et seq.). City is a municipal corporation, organized and
exiting under the laws of the State of California. Agency and City are authorized to enter into
binding agreements for the purpose of protecting public health, safety, and welfare.
\.2 Property Owner.
Property Owner is the legal owner of the fee title to the real property located at 1025 Broadway in the
City of Chula Vista, which is described in the attached Exhibit A, which is hereby incorporated
herein ("the Real Property"). The Real Property is currently improved with an existing 55-unit
mobilehome community and a used car sales lot.
1.3 Loan Agreement.
Property Owner, Agency, and City have entered into two Loan Agreements and Related Restricted
Covenants dated as of August -' 2001 (the "Loan Agreements"), whereby the Agency and City
have agreed to make loans to the Property Owner, and the Owner has agreed to develop, construct,
and operate the Real Property as an affordable housing project. The execution and recording of this
Affordable Housing Agreement is a requirement of the Loan Agreements.
1 / -I t¡¡;}.....
1.4 Density Bonus.
Property Owner has submitted to City a proposal for the development of low income housing on the Real
Property pursuant to State Government Code Section 65915, the City's Senior Housing Development
Policy and Chapters 19.04, 19.54, and 19.58 of the Chula Vista Municipal Code.
1.5 Project.
Property Owner proposes to construct 106 affordable housing units and 15,000 square feet of retail
commercial space. The residential units will consist of with 10 units affordable to very low
households at or below 50 percent of the Area Median Income ("AMI"), 41 units affordable to low-
income households at or below 60 percent of AMI, and the remainder of the units (other than the unit
which may be made available to an on-site manager) affordable to moderate income households at or
below 120 percent of the Area Median Income (the "Project").
1.6 State Density Bonus Law.
The City is required to provide Property Owner with incentives for the production of low-income
housing units within the development if Property Owner agrees or proposes to construct certain
percentages of the development for low and/or very low-income households.
1.7 Grant of Density Bonus and Additional Incentives.
The Agency and City Council of the City ("City Council"), in response to Property Owner's application,
approved a density bonus and additional incentives for the Real Property under Special Use Permit SUPS
00-09. Said resolution is attached as Exhibit B and is incorporated herein.
1.8 Agreement.
The Agency and City Council established in Agency Resolution No. 1674/Council Resolution 2000-
193 as a condition to approval of the Conditional Use Permit, a requirement that an agreement be entered
into between City and Property Owner providing for (i) the density bonus and (ii) the creating and
maintaining of a specified percentage ofthe dwelling units on the Real Property for low income housing.
1.9 Intent.
These parties intend that this Agreement constitute the agreement referred to in Paragraphs 1.3 and 1.8.
AGENCY, CITY, AND PROPERTY OWNER HEREBY AGREE AS FOLLOWS:
ARTICLE 2- Development Standard
2.1 Density Bonus.
Property Owner is entitled to construct and maintain on the Real Property 106 dwelling units, a twenty-
four percent (24%) increase in density. Such density bonus will increase the allowable project density
from 86 to 106 dwelling units (20 additional units).
2 (-1'(.3
2.2 Other Standards.
The pennitted uses of the Real Property, the density of use thereof, the maximum height and size of
buildings thereon, and provisions for reservations or dedication of land for public purposes and all other
standards of development of the Real Property will be governed by each of the following as presently
constituted ("the Development Standards"):
2.2.1 General Plan: "Retail Commercial" designation in City's General Plan.
2.2.2 Zone Regulations: The regulations for Central Commercial with a Precise Plan (CCP).
2.2.3 Design Review: The Design Review Committee's approval of the project as referenced
in DRC 00-62 and any exhibits referred to therein at their meeting on June 5, 2000.
2.2.4 Density: The provisions of Paragraph 2.1.
2.2.5 Parking: Property Owner shall provide no less than one and a half residential parking
spaces per dwelling unit, a reduction from the 1.5 parking spaces per one-bedroom and 2 parking
space requirement for each two-bedroom unit as specified in Section 19.62.050 (13) of the City of
Chula Vista Municipal Code. For every seven residential parking spaces, one space may be a
"compact space", an increase from the one compact space for every ten residential spaces
required.
Property Owner shall provide no less than one parking space per 206 square feet of floor space
for retails stores, shops, etc. or 73 spaces for the commercial retail component of the project, a
reduction from the one parking space per 200 square feet of floor space specified in Section
19.62.050 (26) of the City ofChula Vista Municipal Code.
2.2.6 Open Space: Property Owner shall provide a courtyard area, recreation area, and a
balcony or patio area for each housing unit consistent with the approved Design Review
Committee application (DRC 00-62). The project is allowed a reduction in the usable open space
requirement for multi-family projects as specified in Section 19.28.090 of the City ofChula Vista
Municipal Code.
2.2.7 Front Setback/Landscaping Buffer: Property Owner shall provide a 10 foot landscape
buffer along Main Street and Broadway, a reduction from the IS foot landscape buffer required
per the Montgomery Specific Plan. Reductions in the Front Setback/Landscaping Buffer
requirement must meet the conditions of approval established in Agency Resolution No.
I 674/Council Resolution 2000-193 approving the Special Use Pennit for the Project.
2.3 Low and Moderate Income Housing.
All 106 dwelling units shall be continuously occupied only by and affordable to households of very low,
low or moderate income as set forth in Article 4.
2.4 Conflict.
In the event of conflict between Paragraph 2.1 and any other of the Development Standards, Paragraph
2.1 will prevail.
3 /-/~t./
2.5 Effect of Termination Pursuant to Article 4.
Termination pursuant to Paragraph 4.6 will not affect, or render inapplicable, the foregoing Development
Standards.
ARTICLE 3- Low Income Housing
3.1 Definitions.
For the purposes of this article, the following definitions apply:
3.1.1 "Area Median Income" means the latest median income from time to time determined
by the United States Department of Housing and Urban Development (pursuant to Section 8
of the United States Housing Act of 1937) for the San Diego Standard Metropolitan
Statistical Area.
3.1.2 "Low Income Tenants" means individuals or families with an income which does not
exceed 60 percent of the Area Median Income, as adjusted for household size and as most
recently determined by the U.S. Department of Housing and Urban Development.
3.1.3 "Moderate Income Tenants" means families with an income which does not exceed
120 percent of the Area Median Income, as adjusted for household size and as most recently
determined by the U.S. Department of Housing and Urban Development.
3.1.4 "Very Low Income Tenants" means individuals or families with an income which
does not exceed 50 percent of the Area Median Income, as adjusted for household size and as
most recently determined by the U.S. Department of Housing and Urban Development.
3.1.5 "Very Low Income Apartment" means any of the ten (10) apartment units on the Real
Property which shall be continuously occupied only by and affordable to a Very Low Income
Tenant.
3.1.6 "Low Income Apartment" means any of the forty-one (41) apartment units on the
Real Property which shall be continuously occupied only by and affordable to a Low Income
Tenant.
3.1.7 "Moderate Income Apartment" means any of the fifty-four (54) apartment units on
the Real Property which shall continuously be occupied only by and affordable to a Moderate
Income Tenant.
3.1.8 "Affordable Apartment" means anyone of the apartments defined in Paragraph 3.1.5
through 3.1.7; "Affordable Apartments" means all of such apartments collectively.
3.1.9 "Manager's Unit" means that unit on the real property occupied by a resident
property manager which may be exempt from occupancy restrictions.
3.1.10 "Rent" means the total of monthly payments for all of the following: (a) use and
occupancy of the apartment unit and land and facilities associated therewith, (b) any
separately charged fees or service charges assessed by the lessor which are required of all
tenants, other than security deposits, and (c) a reasonable allowance for utilities not included
4 I-IS'S-
in the above costs, excluding telephone service, which takes into consideration an adequate
level of service.
3.1.11 "Housing Manager" means the Housing Manager of the Agency.
3.2 Qualification of Tenants.
As to the Affordable Apartments, the following will apply:
3.2.1 1 BR Very Low Incame Apartments. Each one bedroom Very Low Income
Apartment will be leased to a household of up to three persons which is a Very Low Income
Tenant.
3.2.2 2 BR Very Low Income Apartments. Each two bedroom Very Low Income
Apartment will be leased to a household of up to five persons which is a Very Low Income
Tenant.
3.2.3 3 BR Very Low Income Apartments. Each three bedroom Very Low Income
Apartment will be leased to a household of up to seven persons which is a Very Low Income
Tenant.
3.2.4 I BR Low Income Apartments. Each one bedroom Lower Income Apartment will be
leased to a household of up to three persons which is a Lower Income Tenant.
3.2.5 2 BR Lower Income Apartments. Each two bedroom Lower Income Apartment will
be leased to a household of up to five persons which is a Lower Income Tenant.
3.2.6 3 BR Lower Income Apartments. Each three bedroom Lower Income Apartment will
be leased to a household of up to seven persons which is a Lower Income Tenant.
3.2.7 1 BR Moderate Income Apartments. Each one bedroom Moderate Income Apartment
will be leased to a household of up to three persons which is a Moderate Income Tenant.
3.2.8 2 BR Moderate Income Apartments. Each two bedroom Moderate Income
Apartment will be leased to a household of up to five persons which is a Moderate Income
Tenant.
3.2.9 3 BR Moderate Income Apartments. Each three bedroom Moderate Income
Apartment will be leased to a household of up to seven persons which is a Moderate Income
Tenant.
3.3 Monthly Rent.
As to the Affordable Apartments, the following will apply:
3.3.1 Very Low Income Apartments. The monthly rent charged for all the Very Low
Income Apartments shall not exceed one-twelfth of the amount obtained by multiplying 30
percent times 50 percent of the Area Median Income, as adjusted far household size and
assuming the unit sizes and household sizes specified in paragraph 3.3.4.
5 (-I '(to
3.3.2 Lower Income Apartments. The monthly rent charged for all the Low Income
Apartments shall not exceed one-twelfth of the amount obtained by multiplying 30 percent
times 60 percent of the Area Median Income, as adjusted for household size and assuming
the unit sizes and household sizes specified in paragraph 3.3.4.
3.3.3 Moderate Income Apartments. The monthly rent charged for all the Moderate
Income Apartments shall not exceed one-twelfth of the amount obtained by multiplying 30
percent times 110 percent of the Area Median Income, as adjusted for household size and
assuming the unit sizes and household sizes specified in paragraph 3.3.4.
3.3.4 Units Sizes and Appropriate Household Sizes. The following represents the
adjustments to be made in calculating the monthly rent for very low, lower, and moderate-
income restricted apartments:
Unit Size Household Size
One Bedroom Two Persons
Two Bedroom Three Persons
Three Bedroam Four Persons
3.4 Proof of Qualification.
Property Owner will obtain from each person(s) to whom Property Owner rents an Affordable
Apartment a "Supplemental Rental Application" ("the Application ") in the form of Exhibit B
attached hereto and incorporated herein (or such other form as Agency may from time to time adopt
and of which Agency notifies Property Owner in writing). Property Owner will be entitled to rely on
the Application and the supporting documents thereto in determining the eligibility of such person(s)
to rent such Affordable Apartment. Property Owner will retain the Application and supporting
documents for a period of at least three years after the applicant thereof ceases to occupy such
Affordable Apartment.
Copies of the most recent Supplemental Rental Application for Very Low, Lower and Moderate
Income Tenants commencing or continuing occupancy of an Affordable Apartment shall be attached
to the semi-annual report to be filed with the Agency in compliance with Section 3.6 of this
Agreement.
An Affordable Apartment accupied by a qualified tenant who at the commencement of the
occupancy qualifies as a very low income, low income or moderate income household shall be
treated as occupied by a Very Low, Low Income Tenant or Moderate Income Tenant (as applicable)
until a recertification of such tenant's income in accordance with Section 3.4. I below demonstrates
that such tenant no longer qualifies as a Very Low, Low or Moderate Income Tenant in accordance
with the standards set forth in this Article 3.
Notwithstanding the maximum income requirements of this Agreement, no tenants whose tenancy
commenced prior to the date of Property Owner's acquisition of the Property shall be required to
vacate their units solely because their income exceeds the maximum income levels required
hereunder. Upon vacation of any apartment initially occupied by an ineligible household, that unit
shall be rented to an eligible household at the rents required hereunder.
6 1-IV7
3.4.1 Recertification of Income. Immediately prior to the first anniversary date of the
occupancy of an Affordable Apartment by a qualified tenant, and on each anniversary date
thereafter, the Property Owner shall recertify the income of the occupants of each Affordable
Apartment by obtaining a completed Supplemental Rental Application based upon the
current income of each occupant of the Affordable Apartment. In the event the
recertification demonstrates that such household's income exceeds the income at which such
household would qualify, such household will no longer qualify as a Very Low Income
Tenant, Low Income Tenant or Moderate Income Tenant, and the Property Owner will rent
the next available unit of comparable or smaller size to one or more Very Low Income
Tenant, Low Income Tenants or Moderate Income Tenants.
3.5 Waiver.
Property Owner may apply in writing to the Housing Manager for a waiver, as to a specifically
designated Affordable Apartment. Each such application will be accompanied by written data or
other evidence relied upon by Property Owner to show that, for the near future, there will be no
reasonable demand for such Affordable Apartments(s). Within 30 days after receipt of any such
application, the Housing Manager will, in writing, either grant or disapprove the requested waiver;
the failure of the Housing Manager to act within said period will be deemed to be approval of such
requested waiver. If such waiver is granted, Property Owner may lease the Affordable Apartment(s)
affected by the granted waiver to such person(s) and at such rental as Property Owner detemlÎnes,
subject to each of the fallowing:
3.5.1 Month-to-Month Tenancy. Anything in Paragraph 3.5 to the contrary
notwithstanding, the lease or rental agreement will create only a month-to-month tenancy.
3.5.2 Termination of Waiver. At any time after granting any such waiver, the Housing
Manager may, by writing delivered to Property Owner, terminate such grant. Within five
days after such delivery, Property Owner will appropriately notify the tenant (s) and occupant
(s) (of the Affordable Apartment (s) for which the grant of waiver has been terminated) that
the month-to-month tenancy thereof will be and become terminated one month after delivery
of such notification by Property Owner. Property Owner will take reasonable steps to
effectuate such termination, including diligent commencement and prosecution of an
unlawful detainer action.
3.6 Records, Audits.
Property Owner will submit to Agency semi-annual certified rent rolls, disclosing with respect to
each Affordable Apartment (i) monthly rent rate, (ii) number of occupants for which the Affordable
Apartment is rented, and (iii) the income of such occupant(s) and in the form of Exhibit C attached
hereto and incorporated herein (or such other form as Agency may from time to time adopt and of
which Agency notifies Property Owner in writing). If Agency reasonably believes that vialations of
the rent, occupancy and/or income requirements of this Agreement have occurred, and that an audit is
necessary to verify a submitted rent roll, it will so notify Property Owner in writing thereof. Within
ten days after delivery of said notice, Property Owner will deliver to Agency the names of three
certified public accountants doing business in the metropolitan San Diego area. Agency will
promptly deliver to Property Owner the former's approval of one or more of said names. The audit
will be completed by an approved certified public accountant, at Property Owner's cost, within 60
7 /-I'?~
days after the delivery to Property Owner of Agency's said approval. The certified public accountant
will promptly deliver a copy of the written audit to Agency.
3.7 Term.
The term during which this Article 2 applies commences on the date hereof. Said term ends on the
date which is fifty-five (55) years after the date of issuance of a final certificate of completion for the
Project.
3.8 Reports.
Property Owner, at its expense, shall submit, or cause the Property Manager to submit, to the
appropriate entities any and all reports required to be submitted pursuant to California Community
Redevelopment Law.
3.9 Subordination of Affordability Covenants.
In the event that the Agency finds that an economically feasible method of financing for the
rehabilitation and operation of the Project, without the subordination of the affordable housing
covenants as may be set forth in this Agreement, is not reasonably available, the Agency shall make
the affordable housing covenants set forth in this Agreement junior and subordinate to the deeds of
trust and other documents required in connection with the construction and permanent financing for
the Project approved pursuant to the Loan Agreement, and the TCAC Regulatory Agreement. Any
subordination agreement entered into by the Agency shall contain written commitments which the
Agency finds are reasonably designed to protect Agency's investment in the event of default, such as
any of the following: (a) a right of Agency to cure a default on the loan prior to foreclosure, (b) a
right of Agency to negotiate with the lender after notice of default from the lender and prior to
fareclosure, (c) an agreement that if prior to foreclosure of the loan, Agency takes title to the property
and cures the default on the loan, the lender will not exercise any right it may have to accelerate the
loan by reason of the transfer of title to Agency, and (d) a right of Agency to reacquire the Real
Property from the Property Owner at any time after a material default on the loan.
ARTICLE 4-Uses Of The Real Property
4.1 Condition of the Real Property.
a. Property Owner shall take all necessary precautions to prevent the release into the
environment of any Hazardous Materials which may be located in, on or under the Real Property.
Such precautions shall include compliance with all Governmental Requirements with respect to
Hazardous Materials. In addition, Property Owner shall install and utilize such equipment and
implement and adhere to such procedures as are consistent with commercially reasonable standards
as respects the disclosure, storage, use, removal and disposal of Hazardous Materials.
b. Property Owner shall indemnify, defend and hold Agency harmless from and against
any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive
damage, or expense (including, without limitation, reasonable attarneys' fees), resulting from, arising
out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous
Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the
Real Property, no matter when such claim, action, suit or proceeding is first asserted or begun and no
8 /-/<8'9
matter how the Hazardous Materials came to be released, used, generated, discharged, stored or
disposed of on, under, in or about, to or from the Real Property, or by whom or how they are
discovered, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation,
permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or
transportation of Hazardous Materials on, under, in or about, to or from, the Real Property. This
indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity
after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including
injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or
death), tangible or intangible property damage, compensation for lost wages, business income, profits
or other economic loss, damage to the natural resource or the environment, nuisance, contamination,
leak, spill, release or other adverse effect on the environment.
c. For purposes of this Agreement, "Hazardous Materials" means any substance,
material, or waste which is or becomes regulated by any local governmental authority, San Diego
County, the State of California, regional governmental autharity, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous waste,"
"extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or
25122.7, or listed pursuant to Section 25130 of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section
25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner
Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance,"
or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos,
(vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or
defined as "hazardous" or "extremely hazardous" pursuant to Article II af Title 22 of the California
Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to
Section 311 of the Clean Water Act (33 U.S.c. § 1317), (xi) defined as a "hazardous waste" pursuant
to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.c. §6901, et seq. (42 U.S.c.
§6903) or (xii) defined as "hazardous substances" pursuant to Sectian 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.c. §9601, et seq.
d. For purposes of this Agreement, "Governmental Requirements" means all laws,
ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the
County of San Diego, the City, or any other political subdivision in which the Property is located,
and of any other political subdivision, agency or instrumentality exercising jurisdiction over the
Agency, the Borrower or the Property.
4.2 Marketing Plan.
Property Owner shall submit for the approval of the Agency, which approval shall not unreasonably
be withheld, a plan for marketing the rental of the apartment units in compliance with federal and
state fair housing law. Such marketing plan shall include a plan for publicizing the availability of the
apartment units within the City, such as notices in any City sponsored newsletter, newspaper
advertising in local newspapers and notices in City offices. The marketing plan shall require
Property Owner to obtain from the Agency the names of low- and moderate-income households who
have been displaced by the Agency's redevelopment projects, and to notify persons on such list of
the availability of units in the Project prior to undertaking other fonTls of marketing. The marketing
9 /-/90
plan shall provide that the persons on such list of displaced persons be given not fewer than ten (10)
days after receipt of such notice to respond by completing application forms for rental of apartment
units, as applicable.
4.3 Maintenance of Real Property.
Property Owner agrees for itself and its successors in interest to all or any portion of the Real
Property, to maintain the improvements on the Real Property in conformity with applicable
provisions of the City Municipal Code, and shall keep the Real Property free from any accumulation
of debris or waste materials. During such period, the Property Owner shall also maintain the
landscaping planted on the Real Property in a healthy condition. If at any time Property Owner fails
to maintain the Real Property and such condition is not corrected within five days after written notice
from Agency with respect to graffiti, debris, waste material, and general maintenance, or thirty days
after written notice from Agency with respect to landscaping and building improvements, then
Agency, in addition to whatever remedy it may have at law or at equity, but subject to the rights of
the Permanent Lender, shall have the right to enter upon the applicable portion of the Real Property
and perform all acts and work necessary to protect, maintain, and preserve the improvements and
landscaped areas on the Real Property, and to attach a lien upon the Real Property, or to assess the
Real Property, in the amount of the expenditures arising from such acts and work of protection,
maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent
(15%) administrative charge, which amount shall be promptly paid by Property Owner to Agency
upon demand.
4.4 Property Management.
The parties acknowledge that the Agency is interested in the long term management and operation of
the Real Property and in the qualifications of any person or entity retained by the Property Owner for
that purpose (the "Property Manager"). Therefore, during the period of the effectiveness of the
affordability covenants set forth herein, the Agency may from time to time review and evaluate the
identity and performance of the Property Manager as it deems appropriate. If the Agency determines
that the performance of the Property Manager is materially deficient based upon the standards and
requirements set forth in this Section 4.4 and the approved Management Plan (as defined below), the
Agency shall provide notice ta the Property Owner of such deficiencies and the Property Owner shall
use its best efforts to correct such deficiencies within a reasonable period of time. Upon the failure
of the Property Manager to cure such deficiencies within the time set forth herein, the Agency shall
have the right to require the Property Owner to immediately remove and replace the Property
Manager with another property manager or property management company who is reasonably
acceptable to the Agency, who (if required in the reasonable discretion of the Agency) is not related
to or affiliated with the Property Owner, and wha has not less than five (5) years experience in
property management, including experience managing multifamily residential developments of the
size, quality and scope of the Real Property.
In addition, the Property Owner shall submit for the reasonable approval of the Agency a detailed
"Management Plan" which sets forth in reasonable detail the duties of the Property Manager, the
tenant selection process, a security system and crime prevention program, the procedures for the
collection of rent, the procedures for monitoring of occupancy levels, the procedures for eviction of
tenants, the rules and regulations of the Real Property and manner of enforcement, a standard lease
form, and other matters relevant to the management of the Real Property. The management plan
shall require the Property Manager to adhere to a fair lease and grievance procedure and provide a
10 1-;2...00
plan for tenant participation in management decisions. The management of the Real Property shall
be in compliance with the Management Plan which is approved by the Agency, subject, however, to
any requirements of the Pennanent Lender pursuant to the Pennanent Loan Documents. The
Management Plan may be revised from time to time upon the reasonable approval of the Agency and
the Property Owner.
4.5 Insurance.
Within ten (10) days after the Property Owner's acquisition of the Real Property, Property Owner
shall furnish to the Agency duplicate originals or appropriate certificates of insurance coverage
evidencing that Property Owner has obtained, or cause to be obtained, insurance coverage with
respect to the Real Property and Project in type, amount and from insurers with Best's ratings as are
reasonably acceptable to Agency (or have been approved by the Pennanent Lender), naming the
Agency and its officers, agents, employees, representatives and their respective successors, as named
or additional insureds by appropriate endorsements. Such policy shall include, without limitation "all
risk" property casualty insurance and comprehensive general liability insurance. Without limiting
the generality of the foregoing, such policy shall also include coverage to insure Property Owner's
indemnity obligations provided herein; unless Property Owner can demonstrate to the Agency's
reasonable satisfaction that such coverage is not available, or is not available at a commercially
reasonable cost consistent with the Project Budget. Property Owner covenants and agrees for itself
and its successors and assigns that Property Owner and such successors and assigns shall keep such
liability policy in full force and effect until the date that is fifty-two (52) years from the date of the
City's issuance of the final certificate af completion for the Project.
In addition to any other remedy which Agency may have hereunder for Property Owner's failure to
procure, maintain, and/or pay for the insurance required herein, Agency may (but without any
obligation to do so, and subject to the rights of the Permanent Lender under the Permanent Loan
Documents) at any time or from time to time, after thirty (30) days written notice to Property Owner,
procure such insurance and pay the premiums therefor, in which event Property Owner shall
immediately repay Agency all sums so paid by Agency together with interest thereon at the rate of
ten percent (10%) per annum or the maximum legal rate, whichever is less.
4.6 Proceeds of Insurance.
Should the Project be totally or partially destroyed or rendered wholly or partly uninhabitable by fire
or other casualty required to be insured against by Property Owner, Property Owner shall promptly
proceed to obtain insurance proceeds and take all steps necessary to promptly and diligently
commence the repair or replacement of the Project to substantially the same condition as the Project
is required to be maintained in pursuant to this Agreement if (i) the Property Owner agrees in writing
within ninety (90) days after payment of the proceeds that such repair or rebuilding is economically
feasible, and (ii) the Pennanent Lender penn its such repair or rebuilding, provided that the extent of
Property Owner's obligation to restore the Project shall be limited to the amount of the insurance
proceeds actually received by the Property Owner. If the Property Owner is unable or is not
pennitted to repair, replace, or restore the Project, Property Owner must give notice to Agency (in
which event Property Owner will be entitled to all insurance proceeds, subject to any outstanding lien
obligations, but Property Owner shall be required to remove all debris from the Real Property) and
Property Owner may construct such other improvements on the Real Property as are consistent with
applicable land use regulations and approved by the Agency and the other governmental agency or
agencies with jurisdiction.
11 (-cUJl
4.7 Taxes, Assessments, Encumbrances, and Liens.
Property Owner shall pay prior to delinquency all real estate taxes and assessments properly assessed
and levied on the Real Property.
Until the payment in full of all amounts owing under the Agency Note, Property Owner shall not
place or allow to be placed thereon any mortgage, trust deed, encumbrance, or lien (except
mechanic's liens prior to suit to foreclose the same being filed) not authorized by the Loan
Agreement. Property Owner shall remove or have removed any levy or attachment made on the Real
Property, or assure the satisfaction thereof, within a reasonable time, but in any event prior to a sale
thereunder.
Nothing herein contained shall be deemed to prohibit Property Owner from contesting the validity or
amounts of any tax, assessment, encumbrance, or lien, nor to limit the remedies available to Property
Owner in respect thereto.
4.8 Hold Harmless.
Property Owner agrees to indemnify, protect, defend and hold harmless Agency, and Agency's
officers, agents, employees, representatives and successors, from and against any and all claims,
damages, actions, costs, demands, expenses or liability, including without limitation, reasonable
attorneys' fees and court costs, which may arise from the direct or indirect actions or inactions of the
Property Owner or those of its contractors, subcontractors, agents, employees or other persons acting
on Property Owners' behalf which relate to the Real Property or Project. This hold harmless
agreement applies, without limitation, to all damages and claims for damages suffered or alleged to
have been suffered by reasons of the operations referred to in this paragraph, regardless of whether or
not the Agency prepared, supplied or approved plans or specifications, or both, for the Property or
Project. This indemnity by Property Owner, and all other indemnities set forth herein shall survive
any foreclosure of the Real Property by the Agency pursuant to the terms of the Agency Trust Deed.
4.9 Further Indemnification of Agencv.
It is understood and agreed that the parties hereto have entered the Loan Agreement as a method of
providing necessary assistance to Property Owner in connection with the rehabilitation of very low,
lower and low and moderate income housing and rehabilitation of the Real Property pursuant to all
applicable laws and that by contributing public funds to assist in the accomplishment of such
rehabilitation, or by otherwise contributing or assisting with the accomplishment of such
rehabilitation, the Agency assumes no responsibility for insuring that the same is adequately
undertaken (including, without limitation, the existence and/or remediation of any hazardous or toxic
substances on the Real Property) and as a material consideration to Agency for entering into the Loan
Agreement (and not by way of limiting the generality of Section 4.8 above) Property Owner agrees to
indemnify, protect, defend and hold harmless Agency and all Agency's representatives, officers,
employees and their respective successors from and against any and all claims, damages, actions,
demands, liabilities, obligations, expenses, losses or costs, including without limitation, reasonable
attorneys' fees and court costs, which may arise or in any manner connected with the rehabilitation of
the Project pursuant to the Loan Agreement; excluding, however, from Property Owner's indemnity
any such liability, losses, damages (including foreseeable or unforeseeable consequential damages),
penalties, fines, expenses (including out-af-pocket litigation costs and reasonable attorneys' fees)
arising out of the sole negligence of Agency or its employees, contractars, subcontractors or agents.
12 /-~O;;;l.."
4.10 Obligation to Refrain from Discrimination.
There shall be no discrimination against, or segregation of, any persons, or group of persons, on
account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the
enjoyment of the Real Property, nor shall Property Owner itself, or any person claiming under or
through it, establish or 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 Real Property or any portion thereof. Property Owner shall further
comply with all the requirements of the Americans with Disabilities Act.
4.11 Form of Nondiscrimination and Nonsegregation Clauses.
Property Owner shall refrain from restricting the rental, sale, or lease of any portion of the Real
Property, ar contracts relating to the Real Property, on the basis of race, color, creed, religion, sex,
marital status, ancestry, or national origin of any person and shall comply with all the requirements
for the ADA. All such deeds, leases or contracts, shall contain or be subject to substantially the
following nondiscrimination or nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or herself, his or her
heirs, executors, administrators, and assigns, and all persons claiming under or through them, that
there shall be no discrimination against or segregation of any person or group of persons on account
of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the
grantee himself, or any persons claiming under or through him, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number, use, or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed and
further covenants that all such individuals and entities shall comply with all requirements of the
Americans with Disabilities Act of 1990, as the same may be amended from time to time (42 V.S.C.
§ 121 0 I, et seq.). The foregoing covenants shall run with the land."
b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assigns, and all persons claiming under or through him, and this lease
is made and accepted upon and subject to the following conditions: 'That there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring,
use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee himself, or any
person claiming under or through him, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or occupancy of
tenants, lessees, sub lessees, subtenants, or vendees in the land herein lease and the lease shall be
carried out in compliance with all requirements of the Americans with Disabilities Act of 1990, as
the same may be amended from time to time (42 V.S.C. §12101, et seq.).'"
c. In contracts: "There shall be no discrimination against or segregation of any persons
or group afpersons on account ofrace, color, creed, religion, sex, marital status, ancestry, or national
origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the
transferee himself, or any person claiming under or through him, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use, or occupancy of tenants, lessees, subtenants, sub lessees, or vendees of land and all such
activities shall be conducted in compliance with all the requirements of the Americans with
13 1- 02-03
Disabilities Act of 1990, as the same may be amended from time to time (42 U.S.c. §121O1, et
seq.)."
ARTICLE 5 - Breach
5.1 Breach by Agency.
If Agency breaches any of its covenants contained in this Agreement, Property Owner will have
available to it all legal and equitable remedies afforded by the laws ofthe State ofCalifomia.
5.2 Breach by Property Owner.
If, with respect to any Affordable Apartment, Property Owner breaches this Agreement by charging
higher rent than that herein pennitted, Property Owner will, immediately upon Agency's demand, (i)
reduce the rent to that pennitted herein and (ii) refund to any tenants who theretofore paid such
higher rent the amount of the excess, together with interest hereon at the rate of 10 percent per
annum, computed from the date(s) of payment of the excess by said tenants to the date of said refund.
The provisions of this paragraph constitute a third-party beneficiary contract in favor of such tenants.
Further, Agency is hereby granted the power (but not the duty) to act as attorney-in-fact of such
tenants in enforcing this paragraph.
5.3 Breach by Property Owner.
If, with respect to any Affordable Apartment, Property Owner breaches this Agreement by leasing to
tenants who are not, pursuant to paragraph 3.2, qualified, Property Owner will, immediately upon
Agency's written demand, and at Property Owner's sole cost, take all lawful steps to terminate such
leasing.
5.4 Remedies Not Exclusive.
The remedies set forth in Paragraphs 5.2 and 5.3 are not exclusive, but are in addition to all legal or
equitable remedies otherwise available to Agency.
ARTICLE 6 - General Provisions
6.1 Assignment.
The rights and obligations of Property Owner under this Agreement may be transferred or assigned,
provided such transfer or assignment is made as a part of the conveyance of the fee of all or a portion
of the Real Property. Any such transfer or assignment will be subject to the provisions of this
Agreement. During the term of this Agreement, any such assignee or transferee will observe and
perform all of the duties and obligations of Property Owner contained in this Agreement as such
duties and obligations pertain to the portion of said real property so conveyed.
6.2 Amendment or Cancellation of Agreement.
This Agreement may be amended from time-to-time or cancelled by the mutual consent of the parties
hereta but only in the same manner as its adoption. The tenn "this Agreement" includes any such
amendment properly approved and executed.
14 1-,;).0 Ý
6.3 Enforcement.
Unless amended or cancelled as provided in Section 6.2, this Agreement is enforceable by any party
to it despite a change in the applicable general or specific plans, zoning, subdivision or building
regulations adopted by City which alter or amend the rules, regulations or policies governing
permitted uses of the land, density and design.
6.4 Binding Effect of Agreement.
The burdens of this Agreement bind and the benefits of the Agreement inure to the parties'
successors or assignees in interest.
6.5 Relationship of Parties.
It is understood that the contractual relationship between Agency and Property Owner is such that
Property Owner is an independent contractor and not an agent of Agency.
6.6 Notices.
All notices, demands or requests provided for or permitted to be given pursuant to this Agreement
must be in writing. All notices, demands or requests to be sent to any party shall be deemed to have
been properly given or served if personally served or deposited in the United States mail, addressed
to such party, pastage prepaid, registered or certified, with return receipt requested, at the addresses
identified herein as the places of business for each of the designated parties.
Agencv:
Redevelopment Agency of the City ofChula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: Community Development Director
Property Owner:
Main Plaza LP.
c/o Avalon Communities, LLC
1801 E. Parkcourt Place
Building E, Suite 204
Santa Ana, CA 92701
Attn: Lionel Puig
A party may change its address by giving notice in writing to the other party. Thereafter, notices,
demands and requests shall be addressed and transmitted to the new address.
ARTICLE 7 - Conflicts of Law
7.1 Conflict of City and State or Federal Laws.
In the event that state or federal laws or regulations enacted after this Agreement has been entered
into prevent or preclude compliance with one or more provisions of this Agreement, or require
changes in plans, maps or permits approved by the City, the parties will:
15 / -;2.0 S
7.1.1 Notice and Copies: Provide the other party with written notice of such state or federal
restriction, provide a copy of such regulation or policy and statement of conflict with the
provisions of this Agreement.
7.1.2 Modification Conferences: The parties will, within 30 days, meet and confer in good
faith in a reasonable attempt to modify this Agreement to comply with such federal or state
law or regulation.
7.2 Agency Board Hearings.
Thereafter, regardless of whether the parties reach an agreement on the effect of such federal or state
law or regulation upon this Agreement, the matter will be scheduled for consideration by the
governing board of the Agency. The Agency, at such meeting, will detennine the exact modification
or suspension which shall be necessitated by such federal or state law or regulation. Property Owner,
at the meeting, will have the right to offer oral and written testimony. Any modification or
suspension will be taken by the affinnative vote of not less than a majority of the authorized voting
members of the governing board of the Agency.
7.3 Cooperation in Securing Permits.
The Agency shall cooperate with the Property Owner in the securing of any permits which may be
required as a result of such modifications or suspensions.
ARTICLE 8 - Miscellaneous Provisions
8.1 Rules of Construction.
The singular includes the plural and the neuter gender includes the masculine and the feminine. Any
terms used herein which are not defined herein shall have the meaning given to such tenns in the
Loan Agreement.
8.2 Severability.
The parties hereto agree that the provisions are severable. If any provision of this Agreement is held
invalid, the remainder of this Agreement will be effective and will remain in full force and effect
unless amended or modified by mutual consent of the parties.
8.3 Entire Agreement, Waivers and Amendments; Regulatory Agreement to Control.
Except far the Regulatory Agreement, this Agreement, together with any other written document
referred to or contemplated herein, embody the entire Agreement and understanding between the
parties relating to the subject matter hereof. Notwithstanding any provision in this Agreement to the
contrary, so long as the Regulatory Agreement is in effect, the tenns of the Regulatory Agreement
shall control with respect to the Very Low Income Apartments. Neither this Agreement nor any
provision hereof may be amended, modified, waived, or discharged except by an instrument in
writing executed by the party against which enforcement or such amendment, waiver, or discharge is
sought.
16 I -d.-D (ó
8.4 Capacities of Parties.
Each signatory and party hereto hereby warrants and represents to the other party that it has legal
authority and capacity and direction from its principal to enter into this Agreement, and that all
resolutions or other actions have been taken so as to enable it to enter into this Agreement.
8.5 Governing LawNenue.
This Agreement shall be governed by and construed in accordance with the laws of the State of
California. Any action arising under or relating to this Agreement shall be brought only in the
Federal or State courts located in San Diego County, State of California, and if applicable, the City of
Chula Vista, or as close thereto as possible. Venue for this Agreement, and perfonnance hereunder,
shall be the City of Chula Vista.
[NEXT PAGE IS SIGNATURE PAGEl
17 1-,;2.07
IN WITNESS WHEREOF the parties hereto have caused this agreement to be executed as
of the day and year first written above.
MAIN PLAZA, LP, a California limited partnership
By: A V ALON COMMUNITIES, LLC, a California limited
liability company, General Partner
By:
Lionel Puig, Managing Member
REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA, a public body, corporate and politic
Chair
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
John M. Kaheny, Agency Attorney
S-1
(IflNES) J\COMMDEVlHINESIM,i, Pl~. AlToed.", "",i" A,~m,",OOC I-d.-O r;
[SIGNATURE PAGE CONTINUED]
CITY OF CHULA VISTA, a municipal corporation of the State
of California
David D. Rowlands, Jr., City Manager
ATTEST:
Susan Bigelow, City Clerk
APPROVED AS TO FORM:
John M. Kaheny, City Attorney
S-2
(HINES) JICOMMDEWiINESlMo;, PI~ AITo",obl, Hoo';'8 A",'="I.OOC 1-;)-<;9
STATE OF CALIFORNIA )
) ss
COUNTY OF SAN DIEGO )
On before me, , Notary Public, personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose names(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that
by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC
/-.J-lO
STATE OF CALIFORNIA )
) ss
COUNTY OF SAN DIEGO )
On before me, , Notary Public, personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose names(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in hislher/their authorized capacity(ies), and that
by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC
(-;;Lf I
EXHIBIT A
LEGAL PROPERTY DESCRIPTION
All that certain real property situated in the City of Chula Vista, County of San Diego, State
of California, described as follows:
/-.,;J.ld.--
EXHIBIT B
AGENCY RESOLUTION 1674
(COUNCIL RESOLUTION 2000-193)
1-;;;"'13
EXHIBIT C
( - ~( '-/-
~..~ 2J
-z .5 .æ~
°0 .... ",Z
~..¡jJ §~E.
.... => 8
ûiø5
jo::;:
'õ ~..~
"0 E
"g~ g¡
c-w;::
;;:;
$ mZ ~
.a I"'): Z
E I!!;-
I- ~ = .2 §-.;'¡,
0:: Q) G> c""
0 . 0 0:: J¡ ,,>
Do Ó >. ON
!!:! ..Z..:E '"
... ..!!! X 2 "C ..
C) ¡.="'O'" G>5 ""CG> ;f'.;f'.;f'.;f'.
Z LL 0 1:)2 ã;'!!E
D: E CÐ ~~8
g II! ~ a.::EÆ:
- 0::
Z '
0 5 .?:-
2 z .J! ;5:!i! ...
C) '2 !ลก,g~
~ ::I ::E ::: 0
I ~:g 'õ ¡ijgg 8
~\ ~> 0 ò 0:X:- ro-
=}¡J6~ ~ z I- ~ <F> <F> <F>
u~ J!!
m ~c
« G> o~
C :c ó§-
~ ~ zg
LL .0 J! 0 N
~ ~ '2
... ::I "C
..J ,- -
« "C 0 ,g
::I G> . .,
z 1:) 0 m
Z .- Z =
~ ~ ~
- - G> ~ C
~ g 0:: ~ 15
00 Q) E ~
c ~ oj
~ G> Z 8
N '" '"
.- E E E
00 g g ~ ~...
0 EQ -c -c ijJ ~ ëë '"
"C'CQ)Q)<DI- 0"0>
m .3 <D <D + 0 ::Ell: CD
00 ~ N M I- <F> <F> <F> <F>
g¡ ¿ .
¡¡¡IDOO.. ë"
E -c ~ z ~ ~ ".~
~ ~ rf ~ ~ 'C men
Õ Õ Õ ~ g ~ N
.~ .~ ~ g- õ .~ Ó ..!!!
~~oã3(J Q) z c.
c..c..UI-«O:: .. E
C m
::I ¡jj
.,..: N ..;
1-;;2./ S-
» Q)
1-.-1 c: g
¡j ~ ;;~~
gjw 5E è..
LLg 8
';i.¡,g
,!¡II:::¡
...G>c
0 E ,-
G> 0 E
-" <II
<II C ><
c-w
M -
~ I tOZ
~ I!! ~E.
~ .2 go ~
Ii;: ~ ~g>
0 0 ON
a.. CD
w
II:: -CG> *' *' *' *' *' *' *' *' *' *' *' *' *' *' *' *' *'
C) 0 5j.!! E
~ ~ã:8
:5 c.:::ii.=
I-
Z ,.,
0 S:!2.~
:::ii CO..
C) oiE
Z :::~8
,-( iñ J!I 0,=
~~¡¡¡ ~~ ð {:.' :J: V> V> V> V> V> V> V> V> V> V> V> V> V> V> V> V> V> (ij
711 6~ :J: to ~
O~ ...'C -5
m ~[ ro
<I: 0:::1 Q)
C z" ...
It: " 0
0 0 =
LL ~
LL ~
<I: :!2 ~
...J 0 3
<I: i ....,
~ to ~
Z :::I <:
Z ~ ro
<I: ... =
. - 0 ~
i g G> ~
W Q) E ~
IJ <: <II ro
::> Z :J
...., <:
ro
~~ ....,
0 ='C -
g~ ~
:::ii V> V> V> V> V> V> V> V> V> V> V> V> V> V> V> V> V> 'E
.Q
:J
.. ê~ ø
~ -¡¡¡- ~¡¡j .e
ro - Q)
Z ro <:
- 0 .-
~:;:- 0 =c
'e- ~ :: æ
c.. <I: C 0
::I
. . . . . . ci ~ Ñ M ~ ~ ~ ~ ~ m ci
~ ~ CD ~ CD m - - - - - - - - - - N
/-d)/(..
» Q)
I-..J C g
1315 ~.~.~
g;w5EC
u. ~ 8
Ød,ð
jø::'g
"""c
0 E'-
..0 E
......
lOCO<
C-w
'" -
ffi I~~
.c f! ..-
~ .2 g. ~
~ ¡¡¡ ~g>
0 0 ON
Il. CD
W
II:: .. c" 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'. 'if'.
C) 0 ;.!!!E
z .. '00
- Iii""
~ a..:I!'s
I-
Z >-
0 £:5!~
::¡¡; cO..
C) 0 ]iE
Z ~!! 8
,.cii) J!O,S
::J.~¡¡¡~~5 ~J: """"""""""""""""""""""""'" (¡j
'li¡ §~ J: Q)
( zw ~ ~
U..J ....c ~
m ~[ rn
<C 0= Q)
c z" ....
II:: .. 0
0 0 E
~ ~
~ ~
<C :5! ~
..J 0 ~
<C ]i ....,
~ ø ~
Z = c:
Z ~ rn
<C .... E
, - 0 ~
:¡¡ ~ .. ~
W Q) E ~
If) § :iJ! g¡
...., c:
rn
b~ ....,
0 =1: -
ð& I
:I! '" '" '" '" '" '" '" '" '" '" '" '" '" '" '" '" '" 'E
.c
:J
.. ~~ ø
~ ~ d:iñ .E
~ m ~
1:5 g . =
Q)"" 0 ~
'e- ~ ~ m
Il. « c 0
::¡
~ N M ~ ~ ~ ~ = ø 0 ~ N M ~ ~ ~ ~
"I "I "I "I "I "I "I "I "I M M M M M M M M
(-d),./7
>- Q)
~..J c;g
ÕZ.- "'Z
0 ""'5.-
g¡w :5. EG.
u.g¡ 8
ø~g
jO::;¡¡
"""c
0 E'-
.. 0 E
-u..
.. c ><
C-w
;;; ~
... I J! ~
~ I!! ;.~
~ .2 §Or!
~ ¡¡¡ ~.::¡>-
0 0 ON
0. ...
W
0:: ë c;" ;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.;f!.
(!) 0 ...!!!.E
~ ~.-g 8
~ o..::E.5
I-
Z ,..
0 :¡:".,.
::E ëõ..
(!) O~E
Z ~. ¥! 8
:< iñ :I. 0 .5
~~1~~~5 ¡2J: .,..,..,..,..,..,..,..,..,..,..,..,..,..,..,..,..,. ~
";Íj'l 6~ J: Q)
~w J! ~
U ..J .... c; '5
m ~[ rn
« 0::1 Q)
C zu -
0:: u 0
0 0 £
u. ~
u. ~
« ~ ~
..J 0 ~
« ~ ,
~ 0 ~
Z ::I c:
Z ~ rn
« .... £
~ - 0 ~
::E g .. ~
W Q) E 2:-
rJ § :!1! g¡
~ c:
rn
~.,. ,
.::::-
0 ë¡ ëã
00:: ~
::E .,..,..,..,..,..,..,..,..,..,..,..,..,..,..,..,..,. 'Ë
..c
~
.. Ë~ (/)
~ ã) ¡'i¡iii .E
~ rn ~
t5 e. . =
Q) - 0 ~
'e ~ :: æ
0.« c 0
::::J
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ; g ~ ~ ~ ~
/-02/8'
>- OJ
~....J <: g
Õ 15 :.; ~~
~ W § Eè
u.. g¡ 8
ø~.8
! II:¡
....ellc
0 E'-
ell 0 E
-u..
.. co<
c-w
M -
~ I .I!!.~
..c I!!;~
E 0 CI.+
OJ .- " I!!
I;:: ¡¡j ~t!>-
0 0 ON
C. CD
W
II: - Cell'#.
C) 0 ;.!!E
~ ~'i 8
~ n.=u:
I-
Z >-
0 :¡;'C...
::¡; ëõell
C) DiE
z ~~8
<¡¡j :l°E
~~¡¡¡ ~~ 5 ~J: .,. (ij
7;,/1 ô:S J: (l)
I fw .I!! ~
U ...J .... C '5
m ~[ rn
« 0" (l)
c zu .....
II: u 0
0 0 £
u.. ~
u.. ~
« ~ ~
...J 0 -
« i ~
~ ø ~
Z " c
Z ~ (1
« .... £
~ - 0 ~
::¡; g ell ~
W Q) E ~
IJ § ~ ~
, c
b... ~
.c-
D ë¡ (ij
~~ ~
.,. E
..c
:J
.. ê~ ø
Q)E;"':" 'c ¡¡j 0
rn 2 m .....
z ~ ~
ü ~ .
Q)"'" 0 ~
'e ~ ~ æ
c.. « c a
::J
~ ~ ~ ~ m ci ~ N M ~ ~
~ ~ ~ ~ ~ CD CD CD CD CD CD
I - ,;J...J 9
~I~
";/0;;
O1YOf
CHULA VlSfA
SEMI-ANNUAL AFFORDABLE HOUSING MONITORING REPORT
Owner's Certification
I am the owner or owner's representative for an affordable housing development in the
City of Chula Vista, which is bound by a Housing Agreement with the City.
I certify under penalty or perjury that the attached rent roll for affordable units at my
project is true and correct to the best of my knowledge and complies with the terms and
conditions stipulated in the Affordable Housing Agreement, or any agreement that
implements the same, with the City of Chula Vista.
Name
Title
Signature Date
1-.).;)...0
~!f?
-;/'"-;
CI1YOf
CHUIA VISTA
SUPPLEMENTAL RENTAL APPLICATION
The rental unit for which you are applying has received governmental assistance under
programs to encourage more affordable housing. As a result, the unit carries a rent level
restriction and is restricted to occupancy by low and moderate-income households.
The information required on this form is necessary to determine you income eligibility to
occupy the unit. You must report all household income. Information provided will be
confidential and not subject to public disclosure pursuant to State Government Code
Section 6254(h).
1. Rental Unit Address
2. Head of Household Name
3. Household Members
Household Name Date of Birth Age
Member No.
1 (Head of Household)
2
3
4
5
4. Total Current Annual Household Income from all Sources:
Household Source Income
Member No.
1 (Head of
Household)
$
TOTAL
I-,;)~I
Supplemental Rental Application
Page 2 of 2
5. Total Gross Annual Household Income shown on most recent Federal Tax return
(attach copies of most recent Federal Tax returns for all household members
receiving income).
Total Gross Annual Income $
6. Unit Size: Bedrooms
7. Monthly Rental Rate: $
APPLICANT'S STATEMENT
I certify, under penalty of perjury, that the foregoing information is true and correct to the
best of my knowledge. I understand that any misrepresentation of the information
contained herein may be cause for eviction.
Signature Date
Applicant
OWNER'S STATEMENT
Based on the foregoing information, I certify, under penalty of perjury, that the applicant is
eligible to occupy this restricted affordable unit. Eligibility is based on finding that the
applicant household's current annual income is $ and does not exceed the
current maximum household income of $ allowed under the terms of a
Development Agreement with the City of Chula Vista regarding this residential
development.
Name
Title
Signature Date
I - d.:l :J...